CORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 693 -i

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Communities and local government Committee

The PERFORMANCE of the department

Monday 12 November 2012

Sir Bob Kerslake, Sir Michael Pitt, David Prout, Pat Ritchie,
Sue Higgins AND Peter ScHofield

Evidence heard in Public Questions 1-175

USE OF THE TRANSCRIPT

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Oral Evidence

Taken before the Communities and Local Government Committee

on Monday 12 November 2012

Members present:

Mr Clive Betts (Chair)

Bob Blackman

Simon Danczuk

Bill Esterson

David Heyes

James Morris

Mark Pawsey

John Stevenson

Heather Wheeler

________________

Examination of Witnesses

Witnesses: Sir Bob Kerslake, Permanent Secretary, DCLG, Sir Michael Pitt, Chief Executive, Planning Inspectorate, David Prout, Director General, Localism, DCLG, Pat Ritchie, Chief Executive, Homes and Communities Agency, Sue Higgins, Director General, Finance and Corporate Services, DCLG, and Peter Schofield, Director General, Neighbourhoods, DCLG, gave evidence.

Q1 Chair: Welcome to you all to this first live evidence session into the performance of the Department for Communities and Local Government. Firstly, we have got the serious players today, and then we have the entertainment with the Secretary of State in a few weeks’ time. Thank you all very much for coming. For the sake of our records, could you just say who you are and your position? That would be very helpful.

Sir Bob Kerslake: Good afternoon. My name is Bob Kerslake. I am Permanent Secretary at the Department for Communities and Local Government.

Pat Ritchie: Hello. I am Pat Ritchie. I am Chief Executive of the Homes and Communities Agency.

Sir Michael Pitt: My name is Mike Pitt. I am Chief Executive of the Planning Inspectorate.

Sue Higgins: I am Sue Higgins. I am Director General of Finance and Corporate Services.

David Prout: David Prout, Director General, Localism.

Peter Schofield: Hello. I am Peter Schofield, Director General for the Neighbourhoods group.

Q2 Chair: You are all most welcome. I suppose we could almost say that as the Department size gets smaller, the number of witnesses gets larger each time, but you are still all welcome to this session this afternoon.

The first question, very obviously, is the issue of the core purpose of the Department, and how consistently it has been applied. When staff were interviewed, they were concerned that there was not the consistency of application of the core purpose of the Department. Now, maybe you will tell us that that is all in the past and that it has all changed now, but also maybe you can reassure us that being in the Department part of the time and looking at your wider role as Head of the Civil Service does not detract from that consistency of application.

Sir Bob Kerslake: We think we have got a very clear and consistent core purpose, Chair. We have centred it on three things: better places, better government and a better Department. The evidence from our pulse survey suggests that there is quite a high, and indeed increasing, level of awareness around those key themes. We do think we have got a clear core purpose and a very clear set of priorities to work on. It is inevitable in a Department that has gone through quite a fundamental change in the way it thinks about its role that there is still work to do with staff to ensure that they all fully understand that. Indeed, there is still work to do to make sure managers fully understand and apply it. We think we do have a clear purpose and that there is a high level of consistency about how we approach that purpose. The level of awareness of that has definitely grown from this time last year, when we spoke to you.

Q3 Chair: Then there is an acceptance that there was something lacking last year, which has now been rectified. Is that correct?

Sir Bob Kerslake: We would say last year the Department was going through a huge amount of change, in terms of its size and shape, its key programmes, and what Ministers were looking for. Inevitably, that had some impact, and we spoke about it at the time. A year on, we have moved on on all those issues. There is a high level of certainty about the things we are doing, the priorities. There is much more certainty now about structure and staffing. That allows us to carry on working on this issue of communication with staff.

Q4 Chair: A few years ago when we looked at the Department’s role, we felt it was not punching its weight in Whitehall, and was often seen as a side player rather than a core player. Has that changed? Has your new role in the Civil Service helped to relocate the Department at the heart of things?

Sir Bob Kerslake: It has changed and I think my role helps for this reason: the Department has positioned itself as a Department that works for places. It covers a whole range of issues that affect places. We are also a Department that wants to transfer power. We are cross-cutting, in the way in which we see our role across Whitehall. We have done quite a lot of things to strength our influencing role across the Department. David Prout, for example, chairs a group of directors-general across Whitehall. I chair a group of permanent secretaries working on issues around place and local public service. Peter, jointly with BIS, chairs a group that is leading on local growth. Sue plays a key role in the work on corporate, financial and other services. In many different ways now, we are much more influential players across Whitehall. The fact that I have the Head of the Civil Service role emphasises that, in the sense that there is a connection between local issues, local governance and central governance in a way there might not have been in the past.

Q5 Chair: You will be trying to convince us next that DWP actually understand localism, but we probably cannot get that far just yet, can we?

Sir Bob Kerslake: If we had more time, Chair, I would have a go. We think we have made progress there as well.

Q6 Chair: Is there a sense in which the localist agenda and themes are being connected now across Whitehall, and is there any chance we might actually see a copy of the report from 18 months ago that was done on this?

Sir Bob Kerslake: As I said before to you, Chair, when we talked about it coming out in the summer we did not say which summer. Let me just deal with your substantive point about Departments. This Friday, I went to see a Jobcentre Plus in Hounslow. What was very striking was, first, the extent to which that Jobcentre had made connections with other Departments and other services-they have really got the point about partnering being crucial in their role-and secondly, the way in which the Department had devolved power to that local Jobcentre, so they have much more discretion to do things locally. So even in a service that has been historically criticised for being centralist, I think you can see real evidence of change. I do not think that is all down to our influence, but we have played a significant part in that change. I do not know if other colleagues wanted to come in on that. David?

David Prout: One of the key points is that localism does not equal local governmentism. Right across Whitehall, Departments are devolving power and decision making from Whitehall to lower tiers of government or to partners at a more local level, and local authorities themselves are devolving power. Whether it is on our agenda, devolving right down to neighbourhood level on neighbourhood planning, or whether it is on the schools agenda, devolving down to the individual school, or on the health agenda, devolving to the professionals in clinical commissioning groups, or, indeed, devolving the public health function to local authorities, all of these are examples of localism. Some of them are devolving to local government, some of them are devolving beyond local government, and others are devolving to new bodies. Of course, this week we will have the PCC elections, and that is another radical form of devolution from Whitehall to new local political institutions.

Q7 Chair: We probably have not got time to explore that one today, but just one other issue before I pass on to colleagues: I met the Chair of the Better Regulation Executive the other day, who informed me that DCLG had a rather low score in terms of the impact assessments that were being done on regulation. 25% was the score for green on the traffic light system, but 40% was the Whitehall average. That is not a terribly good performance.

David Prout: I am not sure those are the most uptodate statistics. We had a session with the Better Regulation Task Force in the Department the other day, when they came to talk to the Senior Civil Service. We talked to them about the changes that they are making to their regulatory procedures, some of which have been overly burdensome and we have found difficult to comply with.

Q8 Chair: That is maybe their problem, but the issue he raised with us was that in terms of the way we do impact assessments-about changing regulations or removing regulations, which is very important, not only for its own sake but because the changes are going to be beneficial-you have got 25% green light, and 40% was the Whitehall average.

David Prout: If those are correct figures-

Q9 Chair: Is that figure wrong?

David Prout: No. I do not think they are the most uptodate statistics. Certainly, when they came to see us the other day they said that we had radically improved what we were doing.

Q10 Chair: So there are better statistics than these, or more uptodate ones.

David Prout: I think that we have improved on that, yes.

Q11 Chair: So you have figures to show that.

Sir Bob Kerslake: We will come back to you on that, Chair.1

Q12 Bill Esterson: The Government’s Public Bodies Review suggested that the Department was to make savings of £231 million from a combination of its own budget and local government by 2014-15, through the merger and abolition of quangos. Are you on track for this, and what scope is there for further cuts to the departmental budget?

Sir Bob Kerslake: We are definitely on track to deliver the rationalisation of our arm’s length bodies and the savings. We are confident we can keep within the budget that we have been allocated, not just for the Department, but for the whole of the family. In fact, as you will be aware, we are reducing the number of arm’s length bodies by two thirds and we are well on track to deliver. Sue, do you want to go through the numbers?

Sue Higgins: Yes. We are currently forecasting £231 million, so that is the most uptodate position. Most of the changes took effect from 1 April, where we were merging IPC with PINS. We had closed down a number of bodies, including the TSA, and we have now just moved our UDCs to local government. The only sizeable remaining body is the Audit Commission.

Q13 Bill Esterson: The Secretary of State says that you are to have a more economic focus. Can you tell us whether you have the skills within your workforce to run an economic Department and is this not going to be increasingly hard, given the size of the cutbacks that have been made in your overall budget?

Sir Bob Kerslake: The evidence speaks for itself. We have been party to helping set up the Local Enterprise Partnerships. We have played a key role in that. We are responsible for the Enterprise Zones; 24 of those are up and running. We have played a key role in the City Deals and, of course, the Homes and Communities Agency has taken on the economic assets transfer from the Regional Development Agencies. We have already achieved an awful lot in relation to our local growth role. We have achieved that by reviewing how we use our resources across the Department. It was one of the key things we talked about last time we came to speak to you: we have a much more flexible approach to using our resources, and where we get growth in some areas and reductions in others in terms of tasks for the Department, we redistribute resources. We have both the capacity and the skills to deliver our local growth role. The evidence of our delivery and track record on that is pretty strong. Peter, do you want to come in on that as well?

Peter Schofield: I joined the Department in March from the Treasury, where I was Director of the Enterprise and Growth Unit. I brought some of the change of focus that helped to support the transition that Bob has described. We are working with Local Enterprise Partnerships, which are very much business-led, and they are taking the lead in their local areas in terms of developing an economic strategy and bringing together the right set of skills at a local level. That is part of what we are doing. We are also increasingly changing the role that we are taking, much more in terms of being an enabler, including some of the elements of the Housing Strategy that were announced both in November last year and again in September; the introduction of things like guarantees for housing rather than grant finance. These are all changes in our approach, and, as Bob says, our delivery record speaks for itself. We are bringing in the skills we need, both within the Department and at the local level.

Q14 Bill Esterson: Could you just say a bit about how that is helping SMEs, which after all are in the best place to grow and to create jobs?

Sir Bob Kerslake: There are two ways I would pick out. One is that we have established the Growing Places Fund, which works very locally, and individual local authorities guide the direction of those funds with their business partners. I know from talking to Local Enterprise Partnerships that SMEs are of absolutely critical importance, including infrastructure to unlock the opportunities for SMEs. That is one example of what we have done. You will know that there was further funding put in place, for example on support for smaller businesses on business rates. That is another example of that. Thirdly, we have had a further round of Get Britain Building, specifically targeted at the smaller house builders. So there are some very direct examples of the way in which we are working with SMEs.

Bill Esterson: I am sure we will come back to the Get Britain Building scheme when we turn to planning later.

Q15 Simon Danczuk: Sir Bob, as Head of the Civil Service, how embarrassed are you by your Department’s ranking as the worstperforming Department in the Civil Service People Survey 2011?

Sir Bob Kerslake: We spoke about this last year-

Simon Danczuk: We did. I remember that.

Sir Bob Kerslake: -just ahead of the numbers. I was very clear last year that at the time we did the survey we were going through the most intense part of our restructuring. Staff at that point barely knew whether they had a job or not and, not surprisingly, the survey results took their toll. We have done a lot of work in the last year, led by the whole team but particularly by Sue, seeking to address some of those issues that came up. I obviously cannot tell you exactly the impact of that, because, again, we have timed it just before the staff survey results for this year come out. Hopefully, they will give us some indication. We did a sixmonth pulse survey and that gave us some confidence that we have shifted some of those numbers to a better place. It was a product of a particular point in time. We have put a lot of effort into it. We are in no way complacent about the challenge of leading change effectively, but there is some evidence that we are making an impact.

Q16 Simon Danczuk: Moderately embarrassed then, would you say?

Sir Bob Kerslake: Clearly, you would want the figures to be better. As I said last year, you have got to reflect when things are happening in Departments. I am sure there will be other Departments this year going through intense change, which will see this come through in their numbers. The key thing is not that you go through these points, but that you recognise that and try to move on from it.

Q17 Simon Danczuk: Other Departments have been making structural changes just as your Department has. On employee engagement, which is a significant measure, the figure in 2009 was 53%, then in 2010 it was 48%, and then in 2011 it was 40%. That is pretty bad. You are bottom of the 16 Departments. It is bad.

Sir Bob Kerslake: As I said earlier, we were clearly disappointed with the numbers. You are absolutely right to say every Department is going through a lot of change, but a lot of this depends on where you are in the change process. As I said a few minutes ago, we were at a very particular point in the change process in DCLG where we were announcing, or had just announced, the changes around the vast bulk of staff-whether people have jobs or not. That was just at the point we did the survey and it had an impact. I am not denying that fact. If you reduce a Department by over a third, as we did over the best part of a year or so, it is bound to have an impact. We have done a lot to address that issue in the last year and I am hoping we made some difference.

Q18 Simon Danczuk: So you expect an improvement in the next survey results. Where do you think the Department will be in the ranking, instead of 16th?

Sir Bob Kerslake: I cannot say that because I do not know how other Departments have moved relative to us, of course.

Q19 Simon Danczuk: It could still be at the bottom of pile, then.

Sir Bob Kerslake: I cannot possibly say where we will be until I see the results. I can say that the pulse survey I referred to earlier showed some evidence of movement in the numbers.

Q20 Simon Danczuk: With all due respect Sir Bob, you are the Head of the Civil Service. You are not just looking after DCLG. You must have a feel for what is going on in other departments as well. You must have an indication of where you think DCLG will be in relation to other Departments that you oversee.

Sir Bob Kerslake: I have indeed, but I cannot predict the outcome of a survey until I have seen the results of it.

Q21 James Morris: Can I just come back to this point that the Chairman was raising about the status of the Department in Whitehall? When the Minister for Planning came to us I suggested to him in the gentlest of terms that some of the recent planning changes, as it were, had the whiff of Treasury influence on them, and I just wonder whether you would agree that some of the changes that we have seen or proposals around planning belie a Treasury influence over the Department.

Sir Bob Kerslake: Of course, we have a member of the Treasury on our team. That might tell you something. But seriously, look at the changes we have made around planning in the round.

Q22 James Morris: I am focusing on the more recent changes.

Sir Bob Kerslake: It is relevant to talk about this in context because a huge amount of what we have done around planning is to push power down. We have moved away from the top-down targets of the regional strategies, as you know. That has been a key change. You will know that we have introduced neighbourhood planning. More than 200 places are now engaging in that very bottom-up process. You will know that we reduced the size of the guidance.

Q23 James Morris: What I am asking is: am I right to detect a discussion within the Government, across Whitehall, which has led to some degree to a retreat from some of those localist positions that you are describing?

Sir Bob Kerslake: No. This is why I wanted to just give you some context, Mr Morris, if I can. The third thing is to say we have radically simplified the guidance to local authorities through the changes to the National Planning Policy Framework, which we have reduced, as you know, to below 50 pages. The vast weight of what we have done has been about cutting out bureaucracy, cutting out layers, passing down power to local authorities and to neighbourhoods, but we have to recognise that in a period where growth is a priority, we have to bear down on authorities that are not performing to a reasonable standard. Those authorities that perform well will have nothing fear from the new regime.

Q24 James Morris: Sorry to interrupt again, but do you see that as a return, as it were, to the bad old days of your Department essentially being one that comes up with central performance measures and then imposes them on local government?

Sir Bob Kerslake: No, because local authorities will set their own standards on all of these issues. What we are saying is because of the importance of economic growth and its impact on the country, it is not unreasonable for us to say that where there is a clear case of underperformance we will need to tackle that. I do not think those two things are in contradiction. The vast bulk of issues are determined locally according to local plans, and the local plan remains at the centre of the planning process. We do have a reasonable right to say where planning performance falls short of what is reasonably to be expected by local businesses there is a reasonable case for us to look at that.

Q25 James Morris: Was that policy developed within your Department?

Sir Bob Kerslake: Yes, it was.

Q26 James Morris: Could I just move on to ask a couple of questions about the relationship between the Department and the Homes and Communities Agency? In the Homes and Communities Agency’s annual report it says, "DCLG and HCA have also been reviewing how sponsorship should work going forward, and a number of important workstrands around engagement and policy are being taken forward." Does that mean that the two have not really been talking together?

Sir Bob Kerslake: We have been very much talking together. Peter, do you want to take that first? Then perhaps Pat will want to come in.

Peter Schofield: Yes, it is absolutely vital that the Homes and Communities Agency and its board take responsibility for delivering on the range of services and programmes that they are taking forward. We have been reviewing the way that we work together to make sure that the relationship is strategic and clearly empowers the board within the strategic and policy framework developed by Ministers, and, to be frank, to cut down on the number of meetings and focus the meetings and contacts we have on those key strategic issues. That is what we are trying to deliver. Pat will be able to take a view as to how it works from her side.

Pat Ritchie: The review has led to a simplified set of relationships, where we have a clear monthly reporting arrangement, which is a policy and performance meeting, through which most of the contact is channelled. That is based on measuring performance against our corporate plan, which is the main document for setting out our targets.

Q27 James Morris: Who sets the targets? Do you come with a proposal that then is approved by the Department or does the Department come to you and say, "These are the targets we would like you to be hitting"?

Pat Ritchie: It is a sort of joint process of identifying the projects and the programmes, and then being clear about the potential to deliver through programmes. A number of the existing programmes have fouryear targets anyway. The Affordable Homes Programme and Get Britain Building, for example, have targets over a number of years, and they are reflected in the corporate planning process. It is a joint process signed off by our board and Ministers in the Department, and we monitor that through a clear set of monthly meetings.

Q28 Mark Pawsey: I am going to ask a question about the European Regional Development Fund. I’m not sure which of our witnesses is responsible for that. Is that Sue?

Sue Higgins: It is a mixture. Policy would be Peter; planning would be me.

Q29 Mark Pawsey: The Committee noted last year that a large proportion of the Department’s underspend came from failure to allocate the ERDF. We have still got 28% unallocated that needs to be allocated by the end of 2013. I am wondering if you can tell us what steps you have taken to make certain that that money is allocated by the end of the period.

Sue Higgins: We are working hard on that through the programme. We did have a backended programme. At the moment, of the €3.2 billion for the period 2007 to 2013, we have spent €1.3 billion, but we are fairly confident that by the end of the period we will be pretty much spent, and it was already planned to be backend loaded.

Q30 Mark Pawsey: There is a concern that at the present rate £0.4 billion will be unallocated, and that would seem to everybody here to be a massive waste. How can you reassure us that we are not going to end up in that position?

Sue Higgins: Clearly, we are doing everything we can. We are having monthly meetings of the board, as well as workinglevel meetings, to keep the pressure and the attention on. We have put standard systems in place across project delivery teams across the country to try to maximise the amount that we can spend, minimise the amount of errors, and stick to the N+2 targets.

Q31 Mark Pawsey: Can you reassure us that there is not a race towards the end of the period and that some perhaps lessthanworthy schemes might not be allocated just to get the money spent?

Sue Higgins: No, because in accordance with managing public money under the European rules, we are trying to do everything to ensure that the criteria are met and they are robust projects that are match funded, appropriate and fit for purpose. To repeat, it was a backend loaded programme in any event.

Peter Schofield: It might also be worth bearing in mind that the money can actually be paid out up until 2015, so there is time.

Q32 Mark Pawsey: It needs to be allocated. You need to have identified the project.

Peter Schofield: Yes, and we are very much on the trajectory that we wanted to be on in terms of that process.

Q33 Mark Pawsey: So you are confident that the money will be allocated?

Peter Schofield: Yes.

Q34 Mark Pawsey: Can I just ask you also about the regional disparity? You are unable to move funds from one region to another and there are some regions where projects are clearly coming forward faster than in others. What steps are you taking to even out those disparities and perhaps encourage those regions that are rather tardy in identifying projects to bring them forward?

Peter Schofield: One of the great things that has happened because the responsibility has come into the Department from the RDAs is that we are able to look across the whole piece in a much more active way to see where there is underspend, and we are getting the projects going. I am also able to move my Programme Delivery Team resource, so it can go where it needs to go between the different local offices. We are able to monitor that and move the resource to where it needs to go, and we are working very closely with local partners to identify the projects and bring them forward.

Q35 Mark Pawsey: Have you any observations as to why some areas are not bringing forward projects in the way they should be?

Peter Schofield: I think we are on the trajectory that we wanted to be on, so I would not say that we have any particular problem in any particular area, but clearly different parts of the country are in a different position in terms of their local economic opportunities. The money is allocated in a way that reflects the economic need in different places. Of course, there is also the need to find match funding, and we are working very closely with BIS and with local partners just to make sure that Local Enterprise Partnerships are aware of the sources of matched finance and are able to access that.

Sir Bob Kerslake: Despite the changes with the abolition of the RDAs and the funding, we have managed to sustain progress on ERDF last year very well, and we have managed to find match funding. The key is that it is locally led. We provide the backup, the machinery to it, but the key responsibility is at a local level.

Q36 Chair: There can, of course, be a difference between allocating 100% and spending 100%. Are you giving us an absolute categorical assurance that 100% will be spent?

Sir Bob Kerslake: Nobody would give you a categorical assurance but we are confident we are on track, as Peter has said.

Q37 Chair: Is it not worth thinking about allocating more than 100% to make sure you have a margin for error? That used to happen in the past, as I understand it.

Sue Higgins: That is something we actively discuss and consider at the board and we have gone higher on the proportion at the moment, but we are confident that should give us the trajectory that we want. If we need to go above it, it is not something we are closed to considering as we get nearer to the end of the period.

Q38 Chair: So you still have flexibility to do that if necessary.

Sue Higgins: We can take a judgment to do that. We have not as yet, but we are alert to it, because we are trying to manage the risk and maximise the use that we get out of the European funding.

Q39 Chair: And you are looking to do that if you have any concerns about not spending 100%?

Sue Higgins: Yes.

Q40 John Stevenson: As you will appreciate, the Regional Growth Fund is an important part of Government policy. Back in September 2012, the Public Accounts Committee expressed their concerns at that time that only £60 million of £1.4 billion had actually been spent on frontline projects. Do you want to explain where we are now with how much of the £1.4 billion has been spent on frontline projects?

Sir Bob Kerslake: I did not quite catch the beginning-this is the Regional Growth Fund.

John Stevenson: Yes.

Sir Bob Kerslake: We have made quite a lot of progress on the Regional Growth Fund since that report. The process did take time to get going at the beginning, particularly around going through the due diligence process, but if you look at the numbers for bands one and two I think we are on something like 90% of the funds where there is a firm allocation to projects at this stage. So there is good evidence of progress on this, and our aim is to see if we can pin down and complete the process for the vast bulk of round one and round two projects by Christmas. The funding goes out over time, as always has been the case.

Q41 John Stevenson: Could you indicate at this moment in time how much has actually been allocated to frontline programmes? Back in September it was £60 million.

Sir Bob Kerslake: We have allocated £1.4 billion for the two rounds, so we have allocated the whole sum. The issue I was talking about is how far that has then been translated into firm agreements with projects, and that is a very high number now.

Peter Schofield: To give you some numbers in terms of the number of bids, £1.4 billion was allocated to 235 programmes, and we have got a firm and agreed position on 208 of those 235.

Q42 John Stevenson: So the full £1.4 billion has been allocated, to 235 projects, effectively.

Peter Schofield: Yes, to 235 projects.

Q43 John Stevenson: Of which you seem to have reached agreement on two hundred and-

Peter Schofield: 208, and we are working over the autumn to-

Q44 John Stevenson: Of that £1.4 billion, how much has actually gone to those projects or those businesses?

Peter Schofield: How much has actually been paid out? I do not know. As Sir Bob says, that is something that then goes on over a period of time, year by year.

Q45 John Stevenson: I appreciate that, but you must know how much is going out at that particular moment in time. Somebody must be accounting for it.

Sir Bob Kerslake: I cannot give you a precise figure. I will supply that to you outside the meeting.2

Q46 John Stevenson: Would it be possible to have that figure? On your estimates-because I think they will be estimates-how many jobs have been attributed to the RGF or will be?

Sir Bob Kerslake: We calculate that it will leverage in £7 billion of private sector money and create or safeguard 300,000 jobs over the life of the programme.

Q47 John Stevenson: Could you divide that into how many are safeguarded and how many are created?

Sir Bob Kerslake: I have not got that number here but, again, I will go back and check if we can break it down.3

Q48 Chair: Is that a net figure? In other words, if the Regional Growth Fund had not happened would none of those 300,000 jobs be around?

Sir Bob Kerslake: No, there is a separate number that adjusts for potential calculated displacement. That is the gross number of jobs that we have contracted.

Q49 Chair: Right. When you give us the figures, could you give us the net figures as well?

Sir Bob Kerslake: We will do that as well.

Q50 Bill Esterson: In 2010 there was a report from Michael Ball, which argued that the planning process was a major barrier to house construction and wider economic growth. What is the evidence the Department uses to support the argument that the planning system is a drag on development and the wider economy?

Sir Bob Kerslake: What evidence do we have on the planning system? Peter, do you want to come in here?

Peter Schofield: Yes. There are a number of different elements to this. Over the last four years we have seen major applications that have been decided within 13 weeks fall from 71% to 58%. These are major developments that are being considered by local authorities and also that is quite a significant fall over four years. At the same time, 10% took over a year. Another key factor is the number of decisions that are taken by local authorities that are then overturned on appeal. For major applications, that has now reached 43%. So these are some of the factors we took into account in the announcement that was made on 6 September, which was looking at the way in which the performance by local planning departments is assessed and the decision about introducing, as part of the Growth and Infrastructure Bill, the mechanism in extremis to enable decisions to be taken by the Planning Inspectorate.

Q51 Bill Esterson: Local authorities would argue that the scale of cuts that many of them have had to take has meant that they do not have the staff to achieve the same time scales that they used to. Is that what local authorities are saying to you, or are they giving other reasons? I am assuming you have asked them.

Sir Bob Kerslake: Mike, you deal directly with them.

Sir Michael Pitt: Yes, indeed. We do work very closely with local governments. In fact I was having a conversation with the RTPI on this very subject of staffing levels within local authority planning departments, and the view that they had come to was that in many cases the numbers of fully qualified planners and technical assistants had reduced and this was creating some difficulties for local authorities.

Sir Bob Kerslake: We are saying, of course, that there are proposals to increase the planning fees to assist local authorities on their resourcing.

Q52 Bill Esterson: If there are fewer planning officers, as you just acknowledged, surely that is the bigger driver. Does that not come back to the point that James was making, that this is being centrally imposed and it is not being left to the localities?

Sir Bob Kerslake: No. The choices about priorities on the funding lie with local authorities. There is actually an incentive in the system now, through the New Homes Bonus and in the future through the localising of business rates, for local authorities to be progrowth. The fee levels that they are able to charge are being allowed to increase. There is quite a lot here that is down to local choice and local incentive in the way in which local authorities operate. We should not, in a sense, say this is all down to financial pressures. I do not want to diminish the financial pressures but we should not put it all down to that. The very fact that there are variations between authorities tells you that some have recognised this point.

Q53 Bill Esterson: I think a lot of local authorities would disagree. Coming on to the point about evidence, do you use an approach where you collect evidence to back up policies rather than developing policies on the basis of evidence?

Sir Bob Kerslake: We develop policies on the basis of the evidence we have, but clearly there will be ideas put forward and those need to be evaluated against the evidence available. In truth, it is going to be a combination of both. There will be ideas coming forward, both from within Government and outside. We need to test those against the evidence. Similarly, we will look at the evidence, as Peter just highlighted, and say, "Look, we are getting rates and approvals that are falling and in some authorities they are not high enough. What are we going to do about it?" It is going to be a combination of the two.

Peter Schofield: I should also add, there is quite a lot of work the Department is doing to support local planning departments; for example, in local plan making with the LGAs, the Planning Advisory Service and PINS themselves are helping local planning departments when new plans come for examination. There is support in terms of the way that neighbourhood planning is working, and when it comes to the section 106 agreements there is quite a lot of support coming from the Department in terms of helping local planning departments mediate with local developers. The measures that we have described are very much in extremis. We are trying to make the system work as effectively as possible and putting as much resource and support in as we can to make that happen.

Sir Bob Kerslake: We are saying that whilst the speed of approvals has gone down, the number, the percentage, that are approved is at a 10year high of 87%. We must not see this as a onesided story at all.

Q54 Bill Esterson: Which makes the point I was going to ask you. Is there not a danger always in politics that the evidence that suits the argument is the evidence that is pushed forward most strongly at the expense of some of the other evidence in devising policies?

Sir Bob Kerslake: No, we have generally looked at what the problem is. The problem was that in some authorities the rate of approval and speed of approval was too slow. In some the rate of approval was too low, and a lot were getting overturned on appeal. Had we adopted a view that said, "Right, that means that we are going do something that affects every authority", that would have been wrong, because it would not have differentiated. We are differentiating here on very clear evidence about different performances.

Bill Esterson: It still sounds very centralising to me.

Q55 James Morris: Isn’t the key point of the evidence not necessarily about the number of applications and the speed? Isn’t the key evidence in terms of economic analysis, which is that planning compared to other factors is a disproportionate barrier to housing construction and economic growth? Isn’t that the key point? If you set aside the fact that we may or may not have a slow planning process, where is the economic evidence that, relative to other factors that restrain growth in housing and the economy, planning is the most important factor? Do we have evidence?

Peter Schofield: I do not think we are saying that planning is the most important factor, but we are saying we need a planning system that works.

James Morris: It is quite central to Government policy in this area. It has been mooted as central to unlocking economic growth and housebuilding. Relative to other factors, it has been given a very much stronger weight in public speeches and rhetoric.

Q56 Bill Esterson: Isn’t lack of finance the much bigger issue?

Peter Schofield: Planning is an issue. Lack of finance is an issue. We are trying to address all of those. You quoted Professor Ball’s work from Reading University, which feeds into some of this.

Q57 Chair: That is because he is the only academic who agrees with you.

Peter Schofield: As I say, the statistics and the figures that we are looking at are identifying a problem in some parts of the country in terms of the way the planning system is supporting growth. What we are trying to do is to get the planning system to work effectively, which is about getting local plans agreed.

Q58 James Morris: I understand the point you are making. I understand the Government has a policy to improve the planning system, but does it have more weight than taking measures in other areas? Is there evidence that in relation to other factors and other levers that we might take in the economy, the planning system is the key item?

Sir Bob Kerslake: Let me try that. We have not suggested planning is the only one, but we do see it as incredibly important. The speed of planning is incredibly important in a period where there is an absolute imperative to deliver growth. There is a high discount here. If you lose time on economic projects, whether housing or other projects, the consequences are very significant for the economy. So a planning system that moves slowly turns down things which then get overturned on appeal-

Q59 James Morris: It sounds intuitively correct, I understand that. Intuitively it sounds right, but is there actual economic evidence of that being the case?

David Prout: There is very best evidence about the regulatory burden imposed in this country compared to other countries. This country does not perform well in comparison to other countries in terms of the perceived burden imposed by regulation here. If you are starting a new business or building new developments in this country, the planning system is going to be the first thing you look at. The planning system in this country is complex. It does introduce uncertainties into any planning application and that adds cost.

Sir Bob Kerslake: It is worth saying that if we were only doing something on planning your point might stand but, as Peter said, we are introducing a very substantial guarantees scheme to help with funding. We are helping with funding for buyers. We have got substantial money going into the Growing Places Fund and into infrastructure. There is a whole raft of initiatives to drive growth, but one of the factors you have got to deal with and you cannot ignore is how the planning system works.

Q60 Heather Wheeler: To slightly widen this out between Sir Bob and Sir Michael, clearly the aim for Government agencies is to be fleet of foot, and not to bind people’s hands. I would never expect you to talk about a particular case, but obviously South Derbyshire is the fifth fastest growing district in the country. We have the most bizarre situation where the planning inspectors are insisting that an appeal is being held, when actually a developer and the council want to negotiate and they do not want to spend the £200,000 it is going to cost on lawyers and what have you, but the Inspectorate say, "No, no, it is going to appeal and that is all there is to it". I find that bizarre. That sounds like you are putting the shackles on, not being fleet of foot at all.

Sir Michael Pitt: I am finding that very difficult to understand. First of all, the developer’s application would have had to be turned down or not determined by the local planning authority, and then an appeal is submitted only if the developer themselves decides to make that submission. We cannot insist on anybody making an appeal to us. Far from it, we are a demandled organisation. We wait for the developers to come forward to say that they are aggrieved by the decision of the local planning authority.

Q61 Heather Wheeler: Your argument would be you encourage the developer to withdraw the appeal.

Sir Michael Pitt: No, if a developer wishes to appeal the decision of the local authority or the fact that the decision has not been made by a local authority, that is entirely their choice. If they decide to do so, we will handle that in the usual way.

Sir Bob Kerslake: We cannot talk about individual cases, as you say, but the whole emphasis of the planning system that we have is on local plans determined by the local authorities, local decision making and only using the appeal process when that fails to resolve the issue. That is the whole emphasis of our system.

Q62 Mark Pawsey: Can I just put it to you that one of the key problems with the planning system is that there is a huge variation between different local authorities? Some have an enormous appetite for growth and are happy to put lots of resources into plan making and others are much more tardy. Can I ask what steps you are taking, in an era of localism, to provide a more standardised approach across the planning system, which would give more comfort to those who are willing to develop?

Sir Bob Kerslake: This goes to the heart of the issue. Let me pick out three ways we are working. First, we have gone for incentives. We are trying to create a model that will drive incentives for local authorities to make the progrowth decisions. We calculate the localising of business rates will have a very significant advantage in terms of economic growth.

Second, we have said we want to create a simplified process, where local authorities are not weighed down by topdown targets, or overcomplex guidance from us, hence the NPPF within that. In theory what we have said is, where local authorities are not performing to a reasonable standard-as Peter said, we are talking about people who are systemically underperforming-we take alternative action and use Mike’s team to do the work. This is a model that is low-risk in the way it works; it has local incentives, local plans, simplified processes from Government, getting off the back of local authorities. If you reach a situation where a local authority, despite those two things, is still not performing then there has to be some way of handling that; that is the model we have got.

Peter Schofield: There is a fourth aspect that I will mention: local authorities working together on the ground. I would draw the Committee’s attention to the Black Country Local Enterprise Partnership area, where all the planning authorities have got together and agreed a planning charter. For any business or developer, any householder who is making an application in that area, there is a common way of managing it.

Q63 Mark Pawsey: Are you actively encouraging that?

Peter Schofield: We are actively encouraging that. We are very supportive of the work that they are doing.

Sir Michael Pitt: I was just going to add that there is now a duty to cooperate between local authorities. We always come back to the fundamental point about the local plan; a lot of authorities still do not yet have a local plan, although the number is increasing quite significantly now. The Planning Inspectorate has invested a very substantial amount of inspector time, working directly one-to-one with local authorities and seminars, to encourage as many local plans to be prepared as quickly as possible.

Q64 Chair: Before we move on, one point Mr Schofield: you mentioned the key point about the major applications, and the fact that they should be dealt with in 13 weeks, but the number that have been dealt with has fallen from 71% to 58%.

Peter Schofield: Yes.

Chair: That figure surely includes some applications where there is a performance agreement between the applicant and the local authority, which has actually agreed from the very beginning that more than 13 weeks would be taken. Your figures include those, do they?

Peter Schofield: Those figures would include that.

Q65 Chair: Your figures are not really fit for purpose, then.

Peter Schofield: I do not think that is fair, Chair.

Q66 Chair: It is making a major decision about removing an obstacle in the planning system, yet your figures that you are doing it on do not really hold water.

Peter Schofield: There is a relatively small number of planning performance agreements. Obviously, as you say, Chair, where they are agreed that is something that is agreed between the local authority and the developer as a way forward. I will check the data and get back to you.

Chair: More information on that would be helpful.4

Q67 David Heyes: Presumably the doubts that are being expressed in this line of questioning, about the quality of the evidence base for your policy, could be resolved if there was more external scrutiny of the Department’s policies. When the Committee visited the Department-you were very brave to have us in-one of the concerns that we picked up was that there was insufficient external scrutiny of departmental policies. What would you say about that?

Sir Bob Kerslake: I think we are subject to very high levels of external scrutiny-

David Heyes: The stats do not agree with you.

Sir Bob Kerslake: -not least of which is through this Committee, through freedom of information inquiries, of which we get a large number, through consultation that we have on all of our major policies. There is quite a lot of challenge and scrutiny in what we do as a Department, at almost every level of what we do.

Peter Schofield: It also may help the Committee to know about some of the open policymaking work we are doing currently; for example, the whole way in which we are tackling the number of pages of planning guidance is being done through an external group, who are taking the work forward themselves. Similarly the review that we are doing on building standards, local standards and how that relates to building regulations is something that we are doing with an external group, very much in an open policymaking way. It is trying to do this in collaboration with external providers of advice and external people.

Sir Bob Kerslake: To add one last point on that, when we talked about the proposals on business rate retention, we published our evidence base for saying what we thought the economic impact was, and we calculated that it could deliver something like £10 billion to the economy until 2020. That information is available in the public domain to be scrutinised.

Q68 David Heyes: What scope is there in the process for local authorities to provide some of that scrutiny? Sir Michael, you said you are working very closely with local authorities. There must be some sort of feedback process into the Department from local authorities, as part of that interaction. How does that work? How significant is that in influencing your policymaking?

Sir Michael Pitt: Perhaps I could roll that out a bit by saying that we have a Planning Reference Group, which works with the Planning Inspectorate, containing, at the moment, about 140 different organisations, including local government itself. We meet them from time to time, and there are a lot of electronic communications as well. I meet regularly with DCLG colleagues and feed back what local government and other stakeholders are saying about the planning system, and the work of the Planning Inspectorate.

Q69 David Heyes: It would be easy for you to dismiss that. Whatever you do, local authorities will complain; they will say there is not enough money, they cannot achieve what they are supposed to, because of your malign influence: that is common currency. Surely that trigger makes it easier for you to dismiss the feedback that you receive from local authorities.

Sir Michael Pitt: One or two of us here have spent a large part of our careers in local government.

David Heyes: Moaning about the Department.

Sir Michael Pitt: I take very seriously what local authorities are saying to me. I regard them as very much our clients; as I say, we work closely with them, and we ask for their views on every hearing and every planning inquiry that we undertake. We have a proper survey of their views, which feeds back to us as an organisation, and also feeds up to DCLG.

Sir Bob Kerslake: It is worth adding to that that both David and I meet regularly with local authority chief executives to get their feedback on issues, as well as what we do through the formal consultations, so it is not just that. Of course, as you rightly say, when I was a chief executive I might well have moaned occasionally about the Department; I do it less often now.

You can reasonably disentangle what might be a general desire to have a go at the Department from points that people are making that we listen to. A lot of what we do does get adapted and changed from the feedback we get from local government. It is absolutely critical; in fact, quite a lot of the policy is developed with local government. You should not get a sense in which we do this stuff in isolation; we talk regularly, all the time, to local government about what we are doing.

Q70 David Heyes: It is a fact that you have significantly reduced the amount of research and analysis; I guess with budget cuts you have scaled that down quite a lot. That must have had an impact on your ability to generate evidencebased policy.

Sir Bob Kerslake: No, I do not think so, because for all of our policies we do impact assessments, as we talked about earlier, and we have got some quite significant pieces of evaluation and research work, still going on. What we have done is reduce our general research programme, but we are still doing some very significant work.

Sue Higgins: We have got over £2 million of research in the pipeline, and when there is significant need, this set of Ministers prefer us to go on a case by case basis. We are also working with the centre about other evidence bases that we can build into. Going back to the business rate example, we also use peer review. We had the LSE reviewing our models. We have just done the review on the back of the McPherson analytical review, and we feel relatively confident that we have got strong bases and we have got strong analytics in place. That is not to say that we cannot improve.

Q71 Bob Blackman: I will move on to the performance of the Department in some detail, and colleagues will no doubt be asking a few detailed questions about particular subject areas. Can I just look the impact indicators that you have got for the Department? You have got eight overall indicators, two of which are sub-divided, so that broadly makes 10 impact indicators, of which seven could be called for housing, one for fire, one for funding and one for planning applications. So, the overall emphasis is on housing and the development of housing for the future, which is a great thing. However, in the last year, four of those indicators have no data available, five you have not achieved any progress on, and only one you have achieved progress on. It does not appear, from the information supplied to us, that you have made very much in the way of performance improvement. The National Audit Office have criticised your ability to control expenditure, and also the balance of funding in key business areas. What are you going to do to improve on this performance?

Sir Bob Kerslake: I would fundamentally challenge that comment, Chair. I have two or three points. On the business plan delivery we achieved a very high level of delivery against our tasks; we are second only to the Cabinet Office in Whitehall, so we were a high performer on business plan delivery. On management of finance, we are at the top of the performance, in terms of predicting estimates on our spending.

Sue Higgins: For the cash forecasting we are consistently in the top three; and we were the first to lay on qualified accounts.

Q72 Bob Blackman: You do not accept the National Audit Office’s criticism of your Department.

Sir Bob Kerslake: I am slightly puzzled by it. All I can say is that we have significantly improved our cash forecasting, and are now the top performing across Whitehall on this. We have consistently delivered both the efficiency savings we had to make and delivery of our programmes as well. If you look at our outturn for last year, we were also the first to complete the Whole of Government Accounts. On any measure you care to make, we have delivered on our tasks, our spending and our changes to the structure of the Department. These are all strong achievements.

Q73 Bob Blackman: Presumably you set the impact assessment indicators.

Sir Bob Kerslake: We were asked to identify some indicators where we would expect impact from our policies, and we can see impact from our policies. What I cannot say is whether there have been other factors, particularly in relation to housing, that have impacted on the total number of houses. If you look at the individual initiatives the Department has taken forward, you can see tangible delivery of those initiatives, and tangible numbers of them as well.

Q74 Bob Blackman: This data comes from your Annual Report that suggests that you are only making progress in one area; four areas you have not got data on; and five areas you are not performing. That is your assessment of your performance.

Sir Bob Kerslake: No. What I said to you was that we identify a set of indicators. What we have been consistently measured on is our delivery of the tasks in the business plan where we do well, but some of those impact indicators are affected by wider issues to do with the economy and levels of activity in it.

Q75 Bob Blackman: Is there any point in having these indicators if you do not either perform against them or produce data on them?

Sir Bob Kerslake: We were not set targets for those areas for very good reasons, and what we have been measured on is, as I said before, the number of tasks we have delivered and the impact of our specific initiatives. We cannot alone, as a Department, impact on the wider economy.

Q76 Bob Blackman: Can I be clear, who sets these targets? Is it you as Head of the Department? Is it your Ministers? Is it the Cabinet Office?

Sir Bob Kerslake: To be very clear, we set the tasks and agree the business plan with the Cabinet Office. As I said earlier, we have done well on that. We identify impact indicators, but have not set targets for those impact indicators. They are areas that we seek to measure in terms of our overall performance, but, as I said earlier, for precisely the reason that they are impacted by wider economic factors, it would be impossible for us to be held entirely responsible for what happens on some of those impact indicators. We can be held to account for the tasks we have delivered and our specific projects.

Peter Schofield: To give some examples of that, we have a whole host of initiatives as part of delivering the housing strategy, and most of those initiatives run up until 2015, but we are on trajectory for delivering those. We monitor our performance on a very regular basis, and our argument would be on the housing elements, as Sir Bob has said, we are on track for delivering the initiatives.

Q77 Bob Blackman: We are going to look at specific issues in a minute; I am looking at the broader aspects of the overall indicators. I would say there is not much point in having these indicators, unless you are measuring against them, and you are producing progress. That has got to be the front line point of having these indicators, surely.

Sir Bob Kerslake: What we were asked to do was identify indicators that related to the activities in the Department. As I said earlier, we were not set specific performance targets on those indicators, precisely because they are affected by wider factors such as the economy.

Q78 Bob Blackman: Do you accept the National Audit Office criticism that you are not making progress on these indicators?

Sir Bob Kerslake: I accept that some of them, because of the wider economic factors I have talked about, have not moved in the direction that Government would necessarily want them to have done.

Q79 Bob Blackman: Do you think they should be adjusted, so that they are indicators that you can either control or influence, rather than being subject to external influence?

Sir Bob Kerslake: As I say, the bit that we can control, and we do control, and we do well on, is the delivery of the tasks in the business plan and the impact of the specific initiatives, such as Get Britain Building, that we are responsible for.

Q80 Bob Blackman: Really, we should not have these indicators at all; they give no indication of where your performance is going.

Sir Bob Kerslake: They are a wider illustration of what is happening in the key area of housing and others; that is what they show.

Q81 Bob Blackman: One of the dangers of these sorts of impact indicators is that people concentrate all their efforts in trying to produce a result on those particular areas. As it happens, you are not doing that; you are not performing. However, there are other areas, such as regeneration, where there is no impact indicator at all. Does that mean you are not doing anything on it? What is happening?

Sir Bob Kerslake: No, of course not. If those impact indicators were the only measure of the Department’s success, I would take your point. But look at the set of tasks that we have been asked to do through the business plan, and you can see very hard evidence for us delivering. We have done what we said we would do on a whole raft of things, whether it is regeneration, whether it is taking the Bill through Parliament and delivering community rights. In all of these areas there is hard evidence of us having done what we said we would do in the last year.

Q82 Bob Blackman: In other words, your answer to us is that we need to drill down now into the individual tasks, etc, that your Department is performing in order to assess how your Department is performing.

Sir Bob Kerslake: Precisely that. I am saying, look at the tasks and whether we have delivered them, and look at the projects that we have been responsible for, and whether they have made the impact that they said they would. Those are the two things we can be held to account for.

Q83 John Stevenson: I think it was Macmillan who used to boast about building 300,000 houses a year. As I understand it, since 1980, there has only been one year where we have exceeded 200,000 completions. Last year we dropped below 118,000. How confident can you be that in this present year, and future years, we will get those numbers back up?

Sir Bob Kerslake: We are doing a lot of initiatives that we think will move the numbers up, as I said earlier, and those are making a real impact. Peter, do you want to take us through some examples?

Peter Schofield: Let us just talk about some other dimensions of demand that drive additional housebuilding. In terms of build for owner occupation, one of the big obstacles has been the accessibility of mortgages for people who want to buy homes. Private sector housebuilders are building according to demand. With the FirstBuy and the NewBuy schemes we are enabling people who would not otherwise be able to buy newbuild houses to buy, and those are generating additional construction.

In terms of affordable homes and social housing, we have 170,000 new affordable homes being built over the period up until 2015, and we are on target to achieve that. Then there are some other exciting areas of potential new sources of housebuilding demand. One is the private rented sector. In recent years the private rented sector, although there is huge demand for it, has not been a big driver of additional housebuilding construction.

The Department asked Adrian Montague, at Christmas last year, to do a review, in particular looking at how you can bring new institutional investment into the private rented sector. He reported in August, and the Government announced its response in September. We are doing a whole load of initiatives; I talked earlier about £10 billion of guarantees to support new finance for expanding the rented sector. We are putting in place a new expert taskforce, and we have got a new £200 million equity fund.

That is a way of driving new housebuilding coming from demand, which is there, but has not traditionally translated itself into new housebuilding. We are trying to work in each of those different areas: new build for owner occupation, new build for social/affordable rent, and new build for private rent.

Q84 John Stevenson: Would you anticipate the numbers being built in the coming years to exceed what they presently are at?

Peter Schofield: As Sir Bob said, the unknown here is how much the economy and economic headwinds are going to affect what is done through activity that the Government does not support at all, which just happens-so straightforward private sector housebuilding. That is the thing that we cannot legislate for; we can only do the sorts of things that I was describing earlier. Obviously, we can go through each scheme and talk about the number of homes we expect them all to build. The intention is to build up from where we were, to get much closer to the level of housebuilding we need to start to meet additional demand in each year.

Sir Bob Kerslake: Can I just add a couple of points? It is important to remember that the housing market fell off a cliff in 2007. We saw a very dramatic fall-off of starts in housing, and it is going to take some while before we build back up again. We can give you confidence about the projects we are delivering: whether we are on track to deliver 170,000 affordable homes; whether we are on track to deliver the impact of FirstBuy, and so on. Whether or not the numbers as a whole get back to what we all seek to achieve is a product of a whole raft of things that we do not directly control in the Department, including the wider economy, interest rates, wider access to funding.

Q85 John Stevenson: I accept that. I have a question for Pat Ritchie. The Homes and Communities Agency housing starts in 2011-12 were down at just under 16,000. Could you explain why that is the case?

Pat Ritchie: Last year we delivered 56,000 completions, as reported in our Annual Report, and 13,800 starts on site, which is what we had anticipated in the change between the old National Affordable Housing Programme and the new Affordable Housing Programme, which was really just bedding in last year. Overall, we are on target to deliver a contribution of 123,000 to the 170,000 Peter referred to overall. The rest of that target is made up by London’s contribution to the 170,000. We would expect that we will deliver the completions in our corporate plan target this year, which is 19,900, so we are on track to deliver as expected in the trajectory and the programme overall.

Q86 John Stevenson: You believe you will build 80,000 by 2014-15.

Pat Ritchie: We will deliver 123,000 overall as part of the contribution to the 170,000, which is what the programme is designed to do.

Q87 Mark Pawsey: We all do accept that we are not building enough homes, and one of the solutions to the problems of not building enough homes is to make more Government land available. I wonder if somebody could tell us how much Government land has been made available in the last year or two and, very crucially, how many homes will be built on that land?

Sir Bob Kerslake: The target is to deliver, in this Parliament, enough land to build 100,000 homes. We have identified more land than is needed for that, and we are working very closely across Government, with Departments, to ensure that that figure is met.

Q88 Mark Pawsey: How are we doing? How much have we sold so far? How many homes will the land that has been sold so far build?

Peter Schofield: Where we are so far today is that we have sold land with enough capacity for 33,000 homes.

Q89 Mark Pawsey: Right, so there is a long way to go.

Peter Schofield: There is a long way to go, but this is up until 2015, and there are a whole load of different things that we are doing to make sure that this happens. For example, we are putting in place "build now, pay later" deals, where there is market demand to enable that to happen. We are working very closely with those other Departments that have considerable amounts of public land: Ministry of Defence, Department for Transport, DEFRA and DH. It is scrutinised by a Cabinet Committee.

Q90 Mark Pawsey: I am wondering if you can tell us about the pilots that were announced in April 2012 that were due to run to 2014. What is that project all about?

Sir Bob Kerslake: I assume you mean the land auctions. Do you?

Mark Pawsey: The previous Housing Minister said in April 2012 that the Department was initiating pilots, which would run until March 2014, so we were wondering if you could provide us with an update on those pilots and what conclusions you have drawn from the pilots.

Sir Bob Kerslake: We are struggling to know which pilots. Is it the land auctions?

Peter Schofield: If it is the land auctions programme, we are going to have delivered two land auctions pilots by December of this year, working with local authorities; the first two are in Hastings, and then some others in Richmondshire.

Q91 Mark Pawsey: Are they running fast enough, in your view?

Peter Schofield: They are. As I say, we will have delivered the results of that by December. I do not think that those are going to be the bulk, by any means, of the contribution to the 100,000 that I was talking about earlier; far more of that will come from the Departments that I was listing. The key for us is to ensure not only that we play our part with the Homes and Communities Agency, but that we equip and support other Government Departments to deliver.

Q92 Mark Pawsey: We all recognise that the Ministry of Defence owns a lot of land, some of which may be surplus to requirements, but what discussions are you having with the MOD, for example, in terms of making their land available?

Sir Bob Kerslake: I chair a crossWhitehall group of Departments, including the Ministry of Defence, to drive the delivery of their lands. We are working very closely with all the Departments who are contributing to that 100,000 figure, pushing them hard. We have also commissioned Tony Pidgley from Berkeley Homes to undertake a review, and he will be reporting shortly on that.

Q93 Mark Pawsey: Do you think there is the same impetus to get land made available in other Departments as exists in your own Department?

Sir Bob Kerslake: There is a very high impetus to deliver this, and it comes from the Prime Minister downwards; there is a high level of commitment.

Q94 Mark Pawsey: Do other Departments share your drive and motivation to get this land available to build the houses that we are so seriously lacking?

Sir Bob Kerslake: We are very, very committed to it, and I think they are committed to it, and we are making sure that they deliver their part of the number.

Q95 Mark Pawsey: Are you confident that the target that has been set will be achieved?

Sir Bob Kerslake: We think we can deliver it; as we said, we are on 33,000 now. We will push very hard to make sure we hit that target.

Q96 Chair: You sell land at fairly low value now in terms of where the market is; do you get a guarantee that the houses are being built within a certain period of time?

Sir Bob Kerslake: As part of the deal we looked to Departments to get houses on the ground quickly, and it is not in the Department’s interest to have sold a piece of land and then nothing happens to it.

Q97 Chair: The organisations buying it have to build there within a certain period of time.

Sir Bob Kerslake: I cannot describe every single development deal on every piece of land, but the general direction for Departments is that they do agreements that commit the buyer of the land to deliver housing as part of the sale.

Q98 Chair: That is left to individual Departments, is it?

Sir Bob Kerslake: Individual Departments do the commercial deals, at the moment, but the clear steer for them is that they sell the land with the aim of delivering housing within a reasonable timescale.

Pat Ritchie: We have been directly supporting the Departments to help them structure those deals, for example, through "build now, pay later" or through overage arrangements. We have provided enabling support across Departments to help them dispose based on our expertise in disposing of our own land.

Q99 Chair: Are you ensuring then that they put in a clause to make sure that the houses are built within a certain period of time? There is no point selling the land off, if you do not build anything on it, is it?

Pat Ritchie: The target relates to developable units on the land, but each scheme is different, and within each one we have made structured deals with the Departments that allow housing to be developed.

Q100 Chair: Allow-they do not require.

Pat Ritchie: They really vary across different schemes.

Q101 Chair: Would it be a good idea to have a cross-departmental policy?

Pat Ritchie: Examples include our own land: Lancaster Moor, for example, with 440 houses and infrastructure going in this week to bring forward. Usually there is a payback to the Department, to ourselves, built into the scheme.

Q102 Chair: Wouldn’t it be a good idea to have a crossdepartmental policy?

Sir Bob Kerslake: We do have a policy of saying they sell land to build houses on it and we want them to build in the requirement, but what it is very hard to do is to make it an absolute decision in an absolute period of time, for precisely the reasons that Pat has given.

Q103 Chair: Would it be possible to have some figures on the sites across Departments in the last two years; how much land has been sold, how many units can be put on it, and how many of those units are required to be built within a certain period of time?

Sir Bob Kerslake: We will go back and look at whether we can give you those numbers, Chair.5

Q104 Simon Danczuk: The Government has said that it will replace the estimated 10,000 affordable homes it thinks will not be built as a result of renegotiating section 106 agreements. How did the Department come up with that figure of 10,000 homes that will not be built?

Sir Bob Kerslake: It is based on a fairly good analysis of the sites that were in the system, aided by some external data on this. We calculated it based on known sites across the country. Peter, do you want to say a bit more about that?

Peter Schofield: There are 1,400 housing schemes, with 75,000 units on-these are over 10 units-which are stalled. We have made an assessment of that in terms of the proportion of those where there is affordable housing. A point I would make about the impact assessment is that, of course, the reforms to the section 106 are basically designed to help to unlock the sites which are unviable. If they are unviable then they are unlikely to be part of our 170,000 programme, because the 170,000 affordable home programme, as Pat says, is on target.

This is unlocking additional sites. It is a conservative estimate, based on the 75,000 units that I was describing, the proportion of those where there might be a section 106 agreement that requires affordable housing, and what proportion of those would lead to affordable housing, and then what proportion of those are going to be unlocked as a result of this.

Q105 Simon Danczuk: You are quite comfortable with the figures; you think they are fairly accurate, so you do not think we are going to lose more affordable homes than 10,000.

Peter Schofield: As I said, Mr Danczuk, it is a conservative estimate, but, as you know, as part of the announcement on 6 September there was a £300 million additional grant for new affordable homes and bringing new empty properties back. The new affordable homes will be eligible for the £10 billion of Government guarantees to expand the rented sector that I described earlier. Even if there were to be a loss of affordable homes, there is additional grant finance, and additional guarantees.

Sir Bob Kerslake: We have calculated that could be up to 15,000, so we have covered off the number, and the point that Peter has emphasised is these are sites that were stalled anyway. If we unlock them, we are going to get more affordable housing in the shortterm than we might otherwise have got. What we were calculating was the loss over the potential life of the project, not the current shortterm loss.

Q106 Simon Danczuk: You mentioned the impact; what about the negative effect that will be caused around the mix of the social and private housing in that area? One of the beauties of section 106 is that it creates mixed communities. You are reversing that, in effect. Is there anything that suggests that is going to be the case?

Peter Schofield: I do not think I would agree with that, Mr Danczuk, because what I would say is that these are houses that are not being built for anyone; they are stalled. The idea here is to adjust section 106 agreements to make these sites viable, and then we can get the houses coming through. I do imagine that there will still be affordable housing as part of the package; this is something that needs to be reviewed on a schemebyscheme basis, looking at viability, but it is the viability to bring some houses through on schemes where currently there is no building. There are no affordable homes, and no homes for market sale or market rent.

Sir Bob Kerslake: This is about reducing the number of affordable homes, not eliminating them from schemes.

Q107 Simon Danczuk: Sir Michael, under the proposals in the Growth and Infrastructure Bill, developers are going to come to appeal to planning inspectors, to assess the economic viability of the section 106 agreement. How qualified is the Planning Inspectorate to assess economic matters in this way?

Sir Michael Pitt: We already deal with section 106 agreements where the agreement has been in place for more than five years. In the last year or two we have dealt with something like 15 or 20 of these per year, and so inspectors already have expertise in dealing with section 106 and looking at viability issues.

I am sort of accepting a point you might want to make here: that this is quite challenging work, and you do need specialist advice on how you check the viability of sites. It is very often disputed that the views of the local authority, for example, will be different to the views of the developer. Therefore the inspector is going to have to look at the evidence very carefully, and sometimes may well need an independent assessor to give supporting evidence as to which way the inspector should go.

Q108 Simon Danczuk: So, you will have to bring in outside help to do that.

Sir Michael Pitt: We are not ruling out that possibility. It is a key issue for me that the work of the Inspectorate is regarded as sound and accurate. If we feel that the relevant level of skills and expertise is not available internally then I would seek to get an assessor; that is something we do on complex cases.

Q109 Simon Danczuk: Finally, briefly, Sir Michael, to what extent is the Community Infrastructure Levy a barrier to development?

Sir Michael Pitt: I do not think it should be a barrier to development. You will be familiar with the arrangements whereby inspectors will examine the proposals coming forward from local authorities. Local authorities normally are getting professional advice in drawing up their schedules, and the evidence given by local authorities is open to challenge by the private sector. What we have to hope for is that the final CIL schedule is realistic in the light of the sites and the viability of sites in that particular local authority area.

If you look at the experience so far, by and large the proposals coming forward from local authorities have been accepted by inspectors. I suspect that there will be some evidence though of inspectors adjusting the figures coming from local authorities in the not too distant future.

Q110 Bob Blackman: We have touched earlier on planning, the impact of major planning applications and the rate of determination, but I want to look at this in a bit more detail. Obviously the percentage that is being determined in the target time frame has dropped, quite considerably, to 57%, as opposed to 70%-odd the previous year. At the same time, the productivity of case officers looking at these planning applications has improved, which suggests that local authorities are reducing the number of case officers there are, but they are making them perform better. That can have two impacts. One is that the targets are not realistic any more, and I would like to hear your view on that; maybe the targets should be adjusted. Equally, there may be a laxity on the vigour with which they are pursuing the actual decisionmaking. I wonder if you have a particular view on either of those.

Sir Bob Kerslake: Going back to your earlier point, I do not think that we have any evidence of that. There is evidence of local authorities getting more efficient; that is good. There is evidence of local authorities changing the way they do their business to be more progrowth, and that is also good. For example, as I say, the number of approvals of planning applications is at a 10-year high at 87%. There is some good evidence of local authorities changing the way they do things to become more efficient and more progrowth. Our argument has always been about those who have not made that change and what we do about that.

Q111 Bob Blackman: The key issue here is that this could go on, couldn’t it? Is the target realistic on major planning applications that 13 weeks is the time frame?

Sir Bob Kerslake: Sorry, I did not answer that question-apologies. I do not think there is any reason why we should change that target; I think it is still a target that we would want to keep as a basis for measuring. There will be reasons why some projects go beyond that time scale, but we think it is a reasonable target to carry on with.

Peter Schofield: In terms of the development of the local plan, if you have got a robust local plan in place, that should facilitate the case officer work, in terms of assessing any individual applications. One of the great things we have seen over recent months is the acceleration in the rate of plan making. That provides the opportunity for local communities to shape development in their area. It also provides greater certainty to developers who will know where is a suitable place for them to make applications. It should make life easier for planning departments in terms of being able to turn around those cases more quickly.

Sir Bob Kerslake: In a period where growth is an absolute imperative, to think of reducing that target, I think, would be very unwise.

Q112 Bob Blackman: What about splitting this target by saying it is an absolute target, 13 weeks, but if the developer and the local authority agree, then we take that out of the assessment? We are assessing those planning applications, those authorities, that do not have an agreement, but are just not performing at all well.

Sir Bob Kerslake: We do have the planning performance agreement process that we talked about earlier, which we can take into account. If there is an agreement between the developer and the local authority to take longer over an application that is quite possible to be done within the current system.

Q113 Bob Blackman: Currently we are looking at figures that bring all those things together, so if authorities and developers have agreed that they do not want to go down the route of appeals, but they may take longer to determine the planning application, they get included within that time frame. It does not seem right or fair on the local authorities that have reached agreement with the developers not to have this time mark. Do you have a reaction to that?

Sir Bob Kerslake: We have got to have some way of measuring performance on local authorities. If there is a situation where they have a large number of PPAs, or it was impacting on their number, there would be an opportunity for them to identify that in terms of any feedback they give to us.

David Prout: We would encourage all local authorities dealing with major applications to have extensive preapplication discussions with the developer. The great thing about that is you have a much more flexible discussion before the planning application is made. Once the application is made, you are locked into the regulatory system; it is much more difficult to change things and to adapt your plans in response to consultation. Best practice is you have extensive preapplication discussions, you consult on that with the public, you put in an application, which has a very good chance of being approved.

Q114 Bob Blackman: In terms of the assessment of planning applications, because of the reduction in the number of planning officers, have you seen any evidence at all of a fall-off in the way that these planning applications are being determined, and the way that the planning officers are looking at the detail?

Sir Michael Pitt: Can I add a snippet here? We monitor closely the numbers of appeals coming to the Planning Inspectorate. My ambition is to reduce them as much as possible, because appeals are friction in the planning system. In fact, the trend over the last few years has been a gentle reduction in the number of appeals coming to the Planning Inspectorate, which is an indication that local planning authorities are resolving similar difficulties and doing better on planning and handling their development management.

Sir Bob Kerslake: I will add one last point that we did not do justice on your question about the measurement. We clearly measure nationally the number, the 13-week figure, and we measure for individual authorities. We are introducing a new regime, as Nick Boles said when he spoke to you; we will take into account authorities that have a large number of PPAs that go beyond that period.

Q115 Chair: That is an interesting point to pick up. I am interested in the new regime, but Sir Michael has just said planning authorities are getting better and having fewer appeals. That does not quite square up, but never mind.

Sir Bob Kerslake: There are two measures here, Chair, if I might. One is about the speed of the handling of applications, and one is the extent to which they are taking positive decisions and resolving issues on those applications. I said earlier that the speed has gone down, but the rate of approval has gone up.

Q116 Chair: The number of appeals that were upheld is one of the criteria that will be used. Let us go on to Sir Michael, if I could. You have been put in the hot seat now; you are not only going to be there as the appeal body, but you are going to have to look at, in a small number of cases perhaps, the planning applications at first instance. Sat down there in Bristol, how are your inspectors possibly going to do that in a way that gives local communities confidence that they will get an equal opportunity to have their say, as they would if the local authority were determining the application?

Sir Michael Pitt: First of all, the design work on how this would be done in practice is still under way, so we do not have sharp answers.

Q117 Chair: You do not know.

Sir Michael Pitt: No, I am going to go on and say one or two things, Chair. First, there are some administrative things that must be done; for example, the posting of notices has to be done in the locality of the application itself. A developer would expect to have conversations with the determining body about the nature of their application. Also, there should be some sort of right for local people to put their points of view across before the decision is made. Clearly we will have to create circumstances.

The ideal way of doing this is to work closely with the local authority concerned, to see if we can have joint co-operation with them to undertake some of those duties in the locality of the application. My final point is to say that our inspectors all work from home; in other words, our inspectors are from Land’s End to John O’Groats. Therefore, they are familiar with the locality where they are operating; we try and avoid conflicts of interest, but nevertheless they will be familiar with the general area of the applications. Therefore, inspectors are there on the ground and can liaise with local communities.

Q118 Chair: Your inspectors, then, will be doing the job that a planning officer would normally be doing in a local authority. If a local councillor, or one of us, a Member of Parliament, were in that situation, they would be there to have a talk to us and advise us, presumably. Where a local community would normally get from their local council, a public meeting, an exhibition, an opportunity to express their views in a variety of ways, will those avenues of public expression still be open?

Sir Michael Pitt: Chair, these are all questions we are addressing at the moment. We are absolutely confident that we will find answers to all those questions. The issue for us is doing it cost-effectively.

Q119 Chair: The answer may be that the public will not get all the avenues if it is too costly to call a public meeting, to have an exhibition, to send out 300 or 400 leaflets advising people; that may not happen.

Sir Michael Pitt: We will strive to ensure that members of the public get the same opportunity to put their points of view about a proposal as they have under the current arrangements.

Q120 Chair: That is an interesting commitment that you are trying to achieve, and a very important one. Have you got the resources to do it? Already there has been some criticism of the slowness of dealing with planning appeals. The Secretary of State is saying that you have got to prioritise those of a commercial or economic nature. You have got all these extra tasks to do, and you have got to cut your budget as well.

Sir Michael Pitt: The performance of the planning inspectorate last financial year was the best ever on record, in terms of timeliness and quality. We measure these things very accurately indeed; I will not give you chapter and verse now, but I would be very happy to back that up by hard data. We started this financial year in a strong position. Clearly, there will be resource implications in terms of the proposals, including the one we are just discussing. They need to be worked up in detail, and that will be a matter for discussion between myself and DCLG to ensure we get the right answer: a costeffective solution.

Q121 Chair: When will that be done by?

Sir Michael Pitt: Those discussions are ongoing currently.

Q122 Chair: When can we have an answer about the way in which you would be conducting the hearing of planning applications?

Sir Michael Pitt: That will be ultimately a matter for Ministers. We will be putting a submission to Ministers in due course that will set out in detail the procedures, and we would hope to have a ministerial decision on the way in which we go about that work. Obviously, whichever choice is made about the arrangements, there could well be cost implications, so we have to balance resources and budget to the methodology.

Q123 Mark Pawsey: Sir Michael, when the Planning Minister came to talk to us a little while ago we were talking about the National Planning Policy Framework, and he reminded us that it will only work where local authorities draw up local plans. Many local authorities have been slow about doing that, and the Minister said that the only way he could do it was to use the bully pulpit of Government to try to persuade them to do so. How effective are you at using the bully pulpit of Government with recalcitrant local authorities?

Sir Michael Pitt: It is probably not a phrase I subscribe to. We have said once or twice already this afternoon that local plans are at the centre of this. My personal point of view is, for a leader of a council or councillors, there is no higher order task than planning the future of their community. We regard this as vital; hence the reason that we have invested so heavily in supporting local government in the preparation of plans.

Q124 Mark Pawsey: There are local authorities who have never done one, do not know how to do one and who would rather, in fact, put on one side that horrible plan-making bit, try and deal with it by developer control and then blame the Planning Inspectorate when things go wrong, or when developments come forward they do not want. How can you change that? What can you do to change that?

Sir Michael Pitt: Clearly, there are consequences for local authorities that do not have a local plan. Councillors have views about where they want development to take place in their local area.

Q125 Mark Pawsey: In some instances they have views where they do not want development to take place. How is your approach going to deal with that?

Sir Michael Pitt: It is true to say that there are councils that have been prepared to leave that final decision to an inspector, rather than make the tough decisions themselves in their planning committees. That is something I regret, and I would encourage all local authorities to take ownership of this and to lead themselves in terms of preparing local plans and dealing with those difficult planning applications that come along.

Q126 Mark Pawsey: I would say that, if there is a local authority that really does not want to get on with doing a local plan, there is nothing to compel them to do one. We could end up with the system we have had over many years, which is unsatisfactory, with decisions coming to your Inspectorate, because there is no local plan.

Sir Bob Kerslake: It is worth saying that of course there is that possibility, but if you look at numbers, they suggest that local authorities have absolutely got the message. We had 48 local plans adopted since May 2011, compared with only 100 over the previous seven years, so we are seeing a very significant acceleration in local authorities taking forward local plans. As Michael said, there are real consequences for local authorities if they do not take their local plans through; in effect, the presumption in favour of sustainable development kicks in.

If they do not have a progrowth local plan, they miss out on the opportunities that are there through localising of the business rates. There are very powerful incentives and consequences if they do not produce plans. I am personally of the view that they will all be, as we speak, working hard to deliver one.

Q127 Mark Pawsey: If I might ask, Sir Michael, what about the quality of these plans? In some instances, these are authorities that have not really got into plan-making before. What is your assessment of the quality of the plans coming forward, particularly from those that have not drawn up a local plan previously?

Sir Michael Pitt: The quality is mixed. Some are really excellent documents indeed, and dealt with at great speed by the inspector concerned; sometimes there has to be an adjournment. These are evidencebased plans; they have to be sound. The inspector is acting impartially in looking at the evidence; in those cases, and we have quite a few of them, where inspectors have not been convinced by the evidence, an adjournment takes place and the local authority concerned goes back, looks at the data, and comes back with a revision to their plan.

We are trying to maintain standards as much as we possibly can. I am quite clear that we should not be pernickety about this: better to have a plan that is effective and reasonable, rather than try and have a perfect local plan that gets delayed and delayed. It is about getting that balance right.

Q128 Mark Pawsey: Are there some instances where plans that are less than thorough and less than perfect have been accepted by your inspectors?

Sir Michael Pitt: We would not accept a plan that is less than thorough, but we might accept one that is less than perfect, and we rely heavily on the judgment of the inspectors who are looking at the evidence in great detail.

Q129 Mark Pawsey: We have already heard, from our earlier discussions, about how important housebuilding is. What assessment are your officers and inspectors making of proposals for housebuilding? Are they rejecting plans where proposals are not ambitious enough?

Sir Michael Pitt: Yes. The key to this is in the National Planning Policy Framework. Inspectors are looking for a five-year supply. They are looking for a five-year supply of not just sites, but sites that are viable, and likely to go ahead. There are good examples already where inspectors have called an adjournment and refused to agree to a local plan where it was not possible for the local authority to demonstrate that they had that five-year supply.

Q130 Heather Wheeler: Following on from that, there is a real problem with localism that, in effect, the top down targets have gone, but you are saying that you will be rejecting the local plans of councils who are not ambitious enough about extensions of housing build. Figures out of the air: the National Audit Office might want 50,000 houses in my area; the old target was 33,000. Funnily enough my people do not want anything like that; they probably would settle at 20,000 to 25,000. Our people might go out and communicate, negotiate and consult, and come back with a settled communityled plan for 23,000, but you will reject it, because it is not ambitious enough. If the people do not want it, the people do not want it.

Sir Michael Pitt: The duty on the local authority is to fulfil the needs of their local area, and local areas need housing: they need housing for young people; they need housing to complement the creation of jobs and employment. What we are looking for here, and what the local authority is being expected to deliver, is a balanced answer, with good evidence, good data, to demonstrate that they are meeting the needs of the area. That may be different in different local authorities; it will vary across the country depending on needs, but the inspectors are very skilful; they are looking for that evidence, and when they see it they will approve the plan.

Heather Wheeler: That is a very good answer.

Q131 James Morris: Just a quick question about neighbourhood planning. This was a central feature of the Localism Act; I wonder how you are getting on.

Peter Schofield: The relevant element of the Localism Act came in in April, so that is when the provision came in to allow that. As Sir Bob has already said, DCLG are funding 200 neighbourhood planning frontrunners. Those 52 have reached the first stage, which is designating the area that they are going to cover.

Q132 James Morris: Are they mainly rural areas?

Peter Schofield: There is a range; they are a number of different places. I can give you some interesting case studies. Thame in Oxfordshire, for example, was designated in April, so spot-on when the relevant provision came in. That is now looking for independent examination over the course of the year, and it will go to a referendum, which they are scheduling for May of next year. That is looking to build something like 775 homes over a 15-year period, but it is a great example of an area that is shaping the development they want; they need the homes, but they have identified where they want them to be.

Q133 James Morris: In terms of the way that neighbourhood planning now relates to the local plan, now we have some new proposals coming in for greater powers for the Planning Inspectorate, do you think we are in danger of underpowering the potential of neighbourhood plans? Are they really going to have that much influence?

Peter Schofield: No, I think they have got a huge potential influence. The key here is communities getting together and making the most of those opportunities. They do have to show that they are fulfilling the evidence requirements that Sir Mike was mentioning earlier. If an area needs houses, the neighbourhood plan needs to show that the houses are being built. It is an opportunity to identify together in a community the places where you want those homes to be built. It is all part of the structure.

Q134 James Morris: In terms of an objective, how many neighbourhood plans would the Department want to have in place across the country in two years’ time?

Peter Schofield: We would like all of our frontrunners to get there.

Q135 James Morris: Is that 200?

Peter Schofield: We are working with 200. Obviously they will not all get there, but we are putting in considerable effort and support to enable that to happen. For example, we are funding four separate organisations who will work with those frontrunners to provide them with services and support to enable them to do that.

Q136 James Morris: Sorry, just finally, when you said, "Some of them will not get there", who is going to be the judge of that?

Peter Schofield: As I said earlier, the plans have to pass a referendum; 50% of local people have to support them. That is the final stage of the process. They have to command community approval, as well as meeting the criteria in terms of meeting the need that Sir Mike was talking about earlier.

Q137 Bob Blackman: The Olympics and Paralympics are over-a tremendous success, a project delivered to budget and on time. Now the big challenge is legacy, which I want to talk about. How is the Department supporting the legacy programme and how much money is going into it?

Sir Bob Kerslake: Well, quite a lot. You will know that we have transferred a large part of the responsibility for delivering the legacy to the Mayor, particularly on the physical assets. As part of an overall deal with the Mayor, we are putting in something like £3 billion over three years, so we are putting in significant funding through the settlement that has been done with the Mayor.

We are also working through local partners as well, and with DCMS, on ensuring that the sporting and other aspects of that legacy are delivered. Specifically on the physical legacy, we worked very closely with the Mayor; we have transferred responsibilities. The Mayor has operators in place for the majority of the key sporting assets that were there at the Olympics, and he is working on the two remaining.

Peter Schofield: To add some colour to that, up until the point where the programme was transferred to the Mayor in April, we had contributed £26.6 million to the public realm improvements that Sir Bob was talking about. You asked, Mr Blackman, about funding. As Sir Bob says, there is a £3 billion funding settlement to the Mayor as a whole. We do not ring-fence that, but we have agreed a statement of expectations with the Mayor as to what he will be delivering through the Olympic Park and the Olympic legacy.

There is a whole host of different things, for example, around the refitting of the Olympic Park and its reopening, infrastructure, cycle ways, other transport networks that will run through it and, crucially, given the discussion that we were having earlier, 7,000 new homes. There is a whole series of different elements that we have agreed as part of his funding settlement as a whole.

Sir Bob Kerslake: Six out of the eight sites have operators identified for them.

Q138 Bob Blackman: A lot of the venues were temporary venues, which will be brought down and then moved off elsewhere. Equally there are Olympic venues that are outside the Olympic Park. Does the Department have any involvement with those venues or with that element; or is that Culture, Media and Sport?

Sir Bob Kerslake: That is principally a matter for the Mayor, but prior to the Games we worked very closely on the development of the masterplanning that was done through the development agency that was working on the Olympics-the legacy company.

Q139 Bob Blackman: For example, some of the venues were temporary and they are going to be taken to other parts of the country completely-nowhere in London. Presumably they pass from the Mayor to someone else. I want to understand if it is your Department, or if it is Culture, Media and Sport, or whoever, that controls that?

Sir Bob Kerslake: On the specific issue about temporary venues and what might happen to them, Culture, Media and Sport will play the biggest role there, because our primary role has been about the legacy post the Olympics. As Peter said, we have been actively involved in the masterplanning and subsequent development of the site.

Q140 David Heyes: The LGA have been doing some modelling on what they fear to be a huge funding gap, particularly in relation to adult social care; they refer to the Barnet graph of doom. Authorities in my area have produced something that is even more pessimistic than the Barnet model. The picture that is being painted is really quite frightening in its impact on the most vulnerable members of our society in a four to five-year time horizon. Do you share these fears? What work have you done to produce your own projections?

Sir Bob Kerslake: We have done a lot of work with the sector and with the Department of Health on the impact of care costs. We think the Barnet Graph of doom overstates the potential impact, but we are very aware of the challenges on local government. It is worth saying that there are things that are happening that I think can help on this; there is a lot of work going on between health and care to bring those services together, because that can achieve savings. There is a lot of work we are doing through the Community Budget initiatives that involve health and care as well. Of course, you will know the Government is reflecting on what it does in relation to the Dilnot Report.

There is a lot happening in this area. We do not in any sense underestimate some of the challenges local authorities face on this, but there is some good evidence that local authorities have been very innovative in how they have managed the funding pressures they have faced.

David Prout: The Barnet graph of doom goes well beyond this spending review period. It makes assumptions about the level of funding that will be available based on extrapolations from where we are currently, which will not necessarily hold true, so that the line in terms of the funding available to local authorities is hypothetical. It also makes assumptions based on increasing demand and the cost of meeting that demand at local level. All graphs ever produced by the Department of Health show an inexorable increase in demand; there is always a funding gap between what Government provides and the projected level of demand, but local authorities are very creative-

Q141 David Heyes: The LGA projection is based on maintaining services at current levels.

David Prout: I think the LGA model is based on increased demand and projections from an aging population.

Q142 David Heyes: How can they not do that?

David Prout: The way in which those demands are met and the way in which services are provided change over time. It is the most pessimistic interpretation of future local authority funding levels and future demand that creates the catastrophic graphs that we have seen.

Sir Bob Kerslake: Two points will change on that. First, local authorities are able, as I talked about earlier, to secure higher income, particularly if we are successful in making the local business rate retention drive growth. Second, local authorities working with health can and will achieve a more effective and efficient delivery of their services. I am sure of that.

Q143 David Heyes: This gap can be closed by local authorities being more efficient; it is as simple as that, is it?

Sir Bob Kerslake: I do not think it is just about more efficiency. It is about, as David said, seeking to influence demand. It is about how you bring health and care services together. And it is how local authorities are aiming to secure additional income, particularly if they are successful in driving growth, as I talked about earlier.

Q144 David Heyes: The projections I have seen from one of my local authorities entail some of the most savage and heartrending potential cuts in the quality and the range of services to be provided. You are saying that that is driving out inefficiency.

Sir Bob Kerslake: What I am trying to say is that inevitably all projections are based on a certain set of assumptions: that the costs inexorably go up, that you have limited capacity to deliver savings, that the income lines for local authorities are fixed. If you take those two things into account, it is not surprising you end up with a growing gap. I am saying all those assumptions are able to be tested over time, and that is why we should not assume that it will be anything like the Barnet graph of doom.

Q145 David Heyes: One quick follow-up question to that: if you assume it will not be that bad, how are you monitoring what the impact will be?

David Prout: We are monitoring the spend that local authorities are putting into adult and children’s social care. Over the last two years the amount of money going into adult social care has gone up slightly; on children’s social services it has gone down, but not down by as much as local authorities have been reducing their spend overall. The evidence is that local authorities have been protecting those services over the last two years.

We know that local authorities, and local public health services at local level, are planning to redesign their services. What we feel is that they have used these two years well, protected spend in these two years, and worked with their local partners on the redesign of services. We expect them to be able to drive more efficiency. The way that is done changes from authority to authority.

Sir Bob Kerslake: We do not suggest this is not a challenge; it is. We are quite up front with that. But we do not believe it is as apocalyptic as the Barnet graph of doom indicates.

Q146 Chair: The only difference might be that, if you just assume local authority revenues carried on at a constant, you simply have the graph of doom four or five years later.

David Prout: You can create a graph of doom by feeding all sorts of assumptions into it.

Q147 Bob Blackman: Turning to more immediate matters: welfare payments, both in terms of council tax benefit and also direct payments. There are four direct payment demonstration projects going on currently. What is the time scale for assessment of the results of those projects?

Peter Schofield: They started in June, and they will finish next June. They are being assessed in real time as we go along. We are working closely with the Department for Work and Pensions as they assess and develop their plans for implementing Universal Credit.

Q148 Bob Blackman: Universal Credit comes in in April 2013 effectively, in terms of the full direct payments. Are we going to get any assessments out of pilot projects, so they can reflect that in the national scheme?

Peter Schofield: Yes, indeed. The direct payments will be introduced in waves, so the more vulnerable groups will not be incorporated at the early stage. The whole point of these demonstration projects is to get us into a position in which we can look at the impact of direct payment on a whole host of different measures and aspects.

Q149 Bob Blackman: You are assessing this as you are going along, which is fine. Is that a published document? How do we get to see what the information is and what the results are?

Peter Schofield: It is a process that we are doing jointly with the DWP.

Q150 Bob Blackman: I accept you are doing the process, but our job is to scrutinise the performance. How do we do that effectively if we do not see any data?

Peter Schofield: I do not know the timing of publication. Why don’t I come back to the Committee?6

Bob Blackman: It would be helpful if you could.

Sir Bob Kerslake: To be very, very clear about the relationship, Universal Credit will be introduced on a rollout basis from October 2013 to 2017, so we will have plenty of opportunity to take on board the results of the work we are doing in the four pilot areas.

Q151 Bob Blackman: Clearly there are risks associated with this level of change, which I think everyone understands. A very sensible decision has been made to do pilot projects, which is good.

Sir Bob Kerslake: Your question is: will you be able to see the outcome?

Q152 Bob Blackman: Yes. Will the Committee be able to examine whether this is being done before there is a national rollout? Pilot projects are all very well, but a national rollout could be a concern.

Sir Bob Kerslake: The issue, as much as anything, is about how you do the rollout and what safeguards you can build in to the system. I do not think it will stop the rollout, but it may impact on how it is rolled out.

Peter Schofield: There are specific issues-the Committee will be familiar with these-with discussions about the speed at which you might switch back to direct payment, the rate of clawback? What are the implications of this for cash flow for registered social providers of housing? What are the implications for the individuals? These are all aspects that we are monitoring very carefully; we will come back to the Committee on the timetable for publication of the results.7

Q153 Bob Blackman: That is very helpful. In terms of the council tax benefit arrangements, £100 million has been found to help local authorities implement this. Where has the money come from?

Sir Bob Kerslake: It has come from identified underspends within the Department’s budgets.

Q154 Bob Blackman: There is no impact on money that local authorities would receive.

Sir Bob Kerslake: It is coming specifically out of the DEL budgets. It is an additional £100 million pounds available to local government for this specific purpose.

Q155 Bob Blackman: Fine; that is good. You are obviously taking a view on how local authorities are preparing for council tax benefit; do you think they are going to be ready in time for next April?

Sir Bob Kerslake: The evidence suggests that they are well advanced on this; they are out for consultation on their schemes. They know what the timetable is; it has been signalled well in advance. Of course, we have completed the Act, and so on, so we feel they are well on track to deliver what they need to do.

Q156 Bob Blackman: Are they going to have computer software developed in time to make the assessments and make the awards?

David Prout: Yes they will.

Q157 Bob Blackman: Will they all?

David Prout: I would be amazed if any do not, yes.

Q158 Mark Pawsey: Could I follow that theme and ask about the results of initiatives? You have got a new initiative: the Community Budgets. They were set up to deal with troubled families. I wonder if you could give us some early indications of how that project is going.

Sir Bob Kerslake: The Troubled Families Programme is going very well; it has been received very positively in local government, with a high level of partnership. All local authorities have taken action to identify the number of families they are going to work on in the first year, and that takes us a long way towards the target.

Q159 Mark Pawsey: Sir Bob, how about the issue of accountability? These are different bodies coming together to deal with these troubled families, and nobody is accountable. Who is responsible?

Sir Bob Kerslake: We are quite clear that the local authorities take the lead role here, working with other partners. Local authorities clearly are accountable.

Q160 Mark Pawsey: Are local authorities responsible for spending other people’s money?

Sir Bob Kerslake: No, the local authorities receive funding through Government, set against some clear targets and expectations, so it is a payment by results model, with some up-front payment. They themselves identify how many families they are working with, when, and how they are going to work with them.

Q161 Mark Pawsey: Isn’t the danger of a pooled resource that nobody is ultimately accountable, because everybody has got a little bit of input, and if the target is not met we can always blame somebody else?

Sir Bob Kerslake: There is clearly a risk of that, but the way we have got round that problem is that we have got very direct agreements with local authorities. Yes, those local authorities will bring in other partners to work with them, but it is local authorities that we sign the agreements with in order to tackle the families.

Q162 Mark Pawsey: Earlier you referred to the success of the scheme. What are the criteria for success? We were told there were 120,000 troubled families; I was quite interested to know where that figure was plucked from, and how that came about. What does success look like? How do we know when these families are no longer troubled, and what are we doing to prevent, if one family is dealt with, another family coming along to keep the numbers consistent?

Sir Bob Kerslake: There is clearly an issue of stock and flow, but the number was originally worked through as an overall number from the Social Exclusion Unit, linked to the number of families in deprivation. What we have done in this initiative is to work the numbers from the local authorities at the bottom up. As I said earlier, local authorities have already come forward and identified a very substantial number of families to work with over the current year. We have clear criteria for identifying those families and we have clear criteria for success in dealing with those families.

Q163 Mark Pawsey: Can you give us some of the criteria for success?

Sir Bob Kerslake: The criteria are around one of the members of the family getting into work, in terms of children’s attendance at school, in terms of people’s involvement in crime.

Q164 Mark Pawsey: Who is monitoring all this; who is measuring those things?

Sir Bob Kerslake: It is all being monitored very precisely and carefully through the Troubled Families Unit.

Q165 Mark Pawsey: Within each authority?

Sir Bob Kerslake: Within each authority, but across the whole of the country through the Troubled Families Unit led by Louise Casey.

Q166 Simon Danczuk: The bit we have all been waiting for: business rates.

Chair: You thought you had got away with it.

Simon Danczuk: What assessment has been made of the risk of the Business Rates Retention Scheme failing to incentivise local authorities?

David Prout: The question was raised in the summer consultation and it is an issue that we have had a lot of responses on, with evidence being produced by local authorities across country, and we are reflecting on those responses at the moment.

Q167 Simon Danczuk: You have done an assessment. What is your assessment of the potential failure, in terms of it not incentivising local authorities?

David Prout: Our aim is to create a scheme that does incentivise.

Q168 Simon Danczuk: Yes, I realise that. What is your assessment of whether it is going to incentivise them? We are running out of time here, aren’t we? We are in November, and it is next year.

David Prout: The scheme as it will finally be published will provide a significant incentive.

Q169 Simon Danczuk: You are completely confident of that.

David Prout: I am, yes.

Q170 Simon Danczuk: Excellent, okay. You just talked about consultation, and earlier we talked about evidencebased policymaking, and Sir Bob gave the example of consultation. In terms of the business rate revaluation moving from 2015 to 2017, there has been no consultation on that whatsoever. Your own retail guru, Mary Portas, described it as a "tragedy for the high street". Why have you not consulted on what is a major change in policy?

Sir Bob Kerslake: There has been a lot of feedback on the issue.

Simon Danczuk: All of it negative, Sir Bob.

Sir Bob Kerslake: No, no, no. Trust me, if we had gone ahead-

Simon Danczuk: Trust me, I have read it all. I can list the organisations that are negative about it.

Sir Bob Kerslake: You have not let me finish answering the question.

Simon Danczuk: Sorry.

Sir Bob Kerslake: What I was trying to say was that if we had gone ahead with the revaluation, and it had led to the dramatic changes that it would have done, in terms of the multiplier and the bills that individual businesses paid, there would have been a very negative impact from that. We could see from the work we had done, which we have been quite happy about publishing, and in order to keep stability in the system over a period of quite significant economic flux and challenge, it made sense to move back the date to 2017.

Q171 Simon Danczuk: But you did not consult on it.

Sir Bob Kerslake: We made the announcement; Ministers were clear where they wanted to go based on the information they had available.

Q172 Simon Danczuk: You did not consult on it, and the point I am getting to is around evidencebased policy. One consequence is that, as a consequence of that policy, Rochdale ends up subsidising Regent Street in London in terms of business rates. Let me move on to a different aspect of business rates. Bob mentioned performance measures, and you said, Sir Bob, that we needed to drill down and find out what the facts were, which is exactly what I did in terms of discretionary relief on nondomestic rates. I wrote to the Secretary of State, and said, "Which local authorities have used section 69 of the Localism Act 2011 to pass on discretionary business rate relief?" The answer came back, "This information request is not held centrally". We tried drilling down. I quite like the policy of local authorities having the ability to reduce rates on a particular street, or something like that. But, as a Department, in terms of evidence and measureable performance, you do not hold the information centrally and you cannot tell me who is doing it.

Sir Bob Kerslake: With respect, Mr Danczuk, we are damned if we do and damned if we don’t. We have tried deliberately to cut down the number of areas in which we require local authorities to provide us information, precisely because the feedback from local authorities was that we demanded too much information at the centre of Government. That inevitably is going to mean that local authorities have powers and discretions that we are not measuring the impact of at local level.

Q173 Simon Danczuk: We do not know whether the legislation there is being used.

Sir Bob Kerslake: We have given local authorities an ability to exercise their discretion, and it is down to them whether they exercise it.

Q174 Chair: One of the criticisms made of the new Business Rates Retention Scheme is it is just so complicated that virtually no one can understand it. Can I suggest that when you do your staff survey next year you put an additional question in, in which maybe you ask all members of staff if they can describe the scheme in 100 words, and then you can award a prize to yourself, David Prout, and the one other member of staff that can actually do it.

Sir Bob Kerslake: Any scheme that you can come up with for the financing of local government, with its different needs, issues and sizes, is going to be quite complex; nobody has ever suggested otherwise.

Q175 Chair: When the Secretary of State introduced it he said it was a "new simpler scheme".

Sir Bob Kerslake: Well, it is. I think it is simpler than what we have had before. You can have your own judgment about that, but the core principle about local authorities retaining 50% is very clear, and it will provide very clear incentives to local authorities in terms of their progrowth behaviour. I would challenge the question whether you can ever come up with a completely simple scheme; I do think we have come up with a scheme that provides clear and simple incentives to local authorities.

David Prout: Setting it up is indeed a complex matter, but local authority members will be able to say, for each pound of business rate increase in their area, how much money will be retained locally, and that is the clear incentive that we need from this scheme. As delivered it will be simple.

Chair: I will not go on and ask you to describe the scheme; I think it is quite complicated. Nevertheless, I think we have probably reached the end of the issues we would like to raise with you this afternoon. Thank you very much to Sir Bob and everybody else for coming along and asking our questions.


[1] Ev

[2] Ev

[3] Ev

[4] Ev

[5] Ev

[6] Ev

[7] Ev

Prepared 14th October 2013