MR PADDY MCINTYRE, MR STEWART CUDDY AND MR COLM MCCAUGHLEY

27 APRIL 2004

  Q180 Mr Pound: Chairman, can I just ask a quick supplementary. You talked about capital receipts flowing to the Housing Executive, presumably this is on a slightly different model from the GB model?

  Mr McIntyre: It is.

  Q181 Mr Pound: Could you give us some indication of the percentage of right to buy capital receipts which actually went to you to be recycled?

  Mr McIntyre: We can supply a note in some detail on this. Basically, I would guess, up until this past four or five years, the Housing Executive was gaining the benefit of all of its capital receipts. Subsequently, unlike England where I think, if I recall, 25% of it or a certain percentage has been used to pay off the local authorities debt, we have always had access to the full capital receipts that we have generated. What has been happening over this past five years, and I may not be totally accurate there but I can confirm it in writing, has been that a planning figure has been set by Government which we have included in our budgets for the use of capital receipts. In the year just past, for example, the planning figure, I think, was £110 million whereas we generated something of the order of £150-160 million worth of capital receipts. The balance of that went back into the system. We can bid for it and sometimes get some of the money back for housing but on occasions it is used to support other Government priorities, such as health expenditure or educational expenditure. Would it be helpful, Chairman, if I was to supply a note on the exact figures around that one?

  Q182 Reverend Smyth: Am I right in saying that possibly it was more beneficial to the tenants in that they were allowed to buy at a better rate than sometimes in England?

  Mr McIntyre: The levels of discount have broadly been in line with the right to buy scheme in England, broadly in line. There has been some variation from time to time but obviously we have not had the capping until fairly recently, of the discount level. Certainly there has been very significant capping around the London area of discounts where they are somewhat lower than the discount levels which we currently have available. Did you want to add something to that?

  Mr McCaughley: Up until recently there was virtual absolute parity between the two schemes, and, in fact, now there is no such thing as a single English scheme that is regionally based so we cannot draw those straight lines of comparability any longer. The discount rate in Northern Ireland would be broadly comparable to a number of the English regions.

  Q183 Reverend Smyth: In its submission to this Committee, the Chartered Institute for Housing has proposed a number of changes to the house sales scheme. Would the Housing Executive be prepared to provide the Committee with a written response on these proposals?

  Mr McIntyre: Indeed, Chairman, there is quite a lengthy list of changes which, I suspect, would take up quite a while to go through them. I am quite happy to do that in writing.

  Q184 Reverend Smyth: Thank you very much. Can I ask you what are the short, medium and long-term implications for the Housing Executive of the decline in its stock resulting from the house sales scheme? What are the implications for the Housing Executive as the nature of its stock in terms of quality and character changes due to house sales?

  Mr McIntyre: I will deal with that fairly briefly. First of all, let us look at the impact of supply, the availability of dwellings for letting purposes. Some research which we have just completed, and which we are quite happy to make available to the Committee because we believe it is a very important piece of research in this area, tells us that in terms of dwellings available for letting, the short-term implication is fairly insignificant. The research tells us that most of those people who bought would not have bought elsewhere, would not have moved out of that stock and, therefore, the impact on lettings in the short-term is insignificant from house sales. The impact over a longer period of time is rather significant and the supply of dwellings available for re-letting will begin to fall. In terms of the impact on the organisation, I suppose the simple rule would be your stock is falling, therefore your organisation should be declining and, indeed, that is a very obvious view that people might take. But the reality is that since 1995 the Housing Executive has been asked to take on a number of new, significant roles in and around our involvement in inclusivity, neighbourhood renewal, the fuel poverty area and so forth. We have been shedding staff to reflect the loss in stock but not as significant as you might anticipate because we have had to pick up other significant roles. In the longer term very definitely our cost structures will have to reduce and the real challenge to the organisation, and Rev Smyth will know this quite well, the real strength of our organisation is our local network of offices and the connections we have with local communities and so forth. Faced with a declining stock, it is how we manage to get a balance between that and the importance of our network of local offices. In terms of the changes to the stock, the simple answer here is, if we are going to be managing a larger number of flats, the people we are dealing with are going to be more vulnerable, are going to need more support, are going to need more intensive management. If you look at our waiting list, these days demand is for small units of accommodation. So house sales to some extent, I suppose, is providing a match between the waiting list and the type of household that we have on the waiting list.

  Q185 Reverend Smyth: When you mentioned the sale of flats and managing of flats, has the Housing Executive been slow in selling to the individual tenant rather than actively selling to a developer who is supposed to develop, and has not done it particularly in one area that I am very much aware of?

  Mr McIntyre: I think I know the case, Chairman. I would not claim to know the details of it.

  Q186 Chairman: You have got an advantage over the rest of us.

  Mr McIntyre: If I am not mistaken I think it is a case in the Donegal Road where as opposed to disposing of individual tenants we disposed of the block to a developer who took some time to get his plans into place.

  Q187 Reverend Smyth: I hope we see them some time. Can I move on from that point and ask what arguments could be made for and against the introduction of a "right of first refusal" in Northern Ireland?

  Mr McIntyre: We would argue that it should be included in any review of the house sales scheme that is completed. It is used in Northern Ireland at the moment on a selective basis and on a voluntary basis where in areas of high housing need the Housing Associations will be directed on to our estates to look out for properties going back on the market to try and acquire them. It has got to be done on a value for money basis and it has got to be done on the basis that there is a need that it must satisfy. We are using it selectively in areas of high, urgent housing need. We would support the inclusion of it in any review of the house sales scheme that the Minister carries out.

  Q188 Chairman: On a 10 year basis similar to the housing?

  Mr McIntyre: Yes.

  Q189 Mr Bailey: I want to ask about co-ownership. What evidence is there that the co-ownership scheme meets identified housing need rather than just simply demand?

  Mr McIntyre: Co-ownership, and I know that you have had evidence from co-ownership, meets the needs of those people who cannot buy a house. The average income is something like £13,500, which is about half the average income of a person buying a dwelling outright or under a mortgage, therefore where would those applicants go if it were not for co-ownership? In that sense they are likely to go on the waiting list of the Housing Executive or, alternatively, they are going to look for private renting. On that basis we would argue that they do meet a form of housing need. One of the things we are planning to do, and will be commissioning shortly, is some research which will look at co-ownership applicants, look at where they might have gone if co-ownership had not been available and so forth, and that will provide some more detailed information. Our argument is that co-ownership has been very successful. The research that has been carried out demonstrates that it is very successful and makes a valuable contribution to housing those people who are on low incomes and who otherwise might be excluded from housing.

  Q190 Mr Bailey: I realise that I am probably asking you to pre-empt the result of your research but what changes do you think might be made to co-ownership schemes to have them employed more strategically?

  Mr McIntyre: One of the things we are doing now is talking to co-ownership about where they can play a significant role in terms of strategies within the housing market generally. I think, for example, of the work that Stewart has mentioned around affordability indicators. Clearly one would want to target the efforts of co-ownership in those areas which are identified as having affordability problems. We see a role for co-ownership in urban renewal areas and helping to put back mixed tenure property into areas which are predominantly owner-occupied at the minute and those owner-occupiers tend to be low income as well. We do latent demand testing in rural areas to try and identify what unmet need there is and, whilst we are identifying unmet need for social housing, we are identifying unmet need for low cost, affordable housing and ownership, working in tandem with the Housing Executive would be an advantage.

  Q191 Mr Bailey: Could I just go on to resources and future options. In the past the Chartered Institute of Housing has put forward a number of potential options for changes to the role of the Housing Executive. Which of these options do you think has the greatest potential to impact positively on the future provision and management of social housing?

  Mr McIntyre: As I recall it, the Institute put forward seven options to the Social Development Committee starting with the do nothing one, there was one related to a post office type role, a range of options in the middle which were large scale or partial voluntary transfer, arms' length management companies and so forth. How we commenced at that stage was through the work that HCAS has been carrying out for both the Housing Executive and the Department jointly, which will address the strategic options available for the future management and maintenance of the Housing Executive stock. In a sense those recommendations have gone into that evaluation, which was an evaluation based on Treasury models, Treasury guidance, and on guidance issued by the Office of the Deputy First Minister. I think, as the Department did explain in their evidence, that particular evaluation is currently being considered by the Department economists. It needs to be signed off there and will go to DFP who will also be asked to take a view on it. That is where it is at the moment and that is how those models that were represented by the Chartered Institute of Housing have found their way into the evaluation.

  Q192 Mr Bailey: Do you actually agree with the assessment of Chapman Hendy?

  Mr McIntyre: The assessment is that for the short to medium term—I know the Department have said this and that has still got to be endorsed by ministers and all sorts of things—the best option at this point in time would seem to be the public sector investment route. There are a lot of assumptions around that, assumptions to do with capital receipts, assumptions to do with the continued level of funding and so forth. They are independent, their experts have done this for many local authorities around the United Kingdom and since we employed them I think we have got to accept the advice that has been given to us.

  Q193 Mr Bailey: Why do you think the report took so long?

  Mr McIntyre: I will maybe ask my colleague, Mr McCaughley, who was the Executive's manager of that report along with the Department, not because we do not have an answer, we have a very clear answer on that as to why it has taken the time it has.

  Mr McCaughley: It did take a long time but in many respects having been in contact with other places like Glasgow and Birmingham perhaps it was not unduly long. What happened basically was on the advice of the consultants we delayed closure on this particular evaluation until we had greater detail and clarification from the Treasury about newly emerging models in England. So the view was taken we could have closed the book on it earlier but we would not have had enough detail around prudential borrowing and ALMOs to make a fair and comprehensive assessment of all the options available to us.

  Q194 Chairman: Can I just tease that answer a little bit more. The DSD in giving evidence to us said that at this stage it would be as likely as not the status quo would be the option. Why has it taken so long to get approval to no change? Surely if any of the other options would have been decided or preferred then they could have said "Well, the time delay is in us investigating and looking at the changes to the Housing Executive". When the recommendation is no change, status quo, what on earth can be taking them so long to sign off?

  Mr McCaughley: It is the depth of the study itself. At the end of the day the study involves a 30 year projection of all your investment requirements, a 30 year projection of all your income streams, an assessment of your ability as an organisation. There is no such thing, I suspect, as the status quo in public service these days and the report does not say that. It is a public sector route but there are conditions that the HCAS recommends and we must take action on. So really, as I say, like Glasgow and Birmingham, all the data must be validated. We have sent our own auditors in to validate it and give it a clean bill of health and I suspect the Department will want to be fully assured that the information in the report is comprehensive and accurate.

  Q195 Chairman: So it is a change or no change?

  Mr McCaughley: It is a public sector route with conditions that the Housing Executive is required to do things by way of its performance and its cost.

  Q196 Mr Hepburn: What changes do you think could be made in the planning system that would provide more social affordable housing? What changes do you think could be made to try and secure more land for housing development in areas of high need?

  Mr McIntyre: If I could maybe wind those two questions into one if that is okay with you, Mr Hepburn. We see at a strategic level the key change that will arise around the securing of more land for affordable housing and social rented housing will arise out of PPS12. That role requires us to prepare for each area plan a fairly detailed housing needs assessment covering rented housing, affordable housing, supported housing, housing for travellers and so forth, so that need has been identified at that level. Beyond that, the intention of PPS12 is that will feed into the area plans and the area plans will make provision for land to allow that need to be met. At that level, strategic level, planning level, we see PPS12 being key. It is not too far away from some of the things which are emerging out of the Barker Study which are saying the same things, that the housing and planning organisations must work more closely together, land must be identified for low cost housing and rented housing so that end of it is not too different from the Barker end as well. At an operational level in the planning service—and I know you are taking evidence from DoE and they will be much better able to advise you of this than I can do—the plan is to modernise the planning service itself, and it is really about streamlining processes because one of the biggest issues was the length of time taken to get planning approvals for new build programmes which is quite significant. There is more that could be done there. At a scheme by scheme level there is liaison going on between the Department and the planning service which certainly on the basis of last year's programme has been effective in getting planning approvals out of the system earlier to allow schemes to start earlier than has been the case in the past. So really three issues: the strategic role of PPS12, the issues around modernising the planning service and the actual liaison of the schemes themselves and the quality of the planning application from housing associations which had been, I gather, a bit of a problem which has now been sorted out as well.

  Q197 Mr Hepburn: What do you think the impact was of the delay in publishing PPS12?

  Mr McIntyre: PPS12 is quite new ground for everyone who has been involved in it here. I guess the answer to this is the extension of the three year housing programme to five. Land is generally attached to most of that programme so in the short to medium term it is probably not a problem. Beyond that, getting PPS12 cleared is absolutely critical for both supporting a programme but also for supporting the Department's programme of finalising area plans over this next few years. We need to get PPS12 sorted out so that we can input to those area plans, which is your local development framework in GB terms. There is a programme of new area plans scheduled and it is important that PPS12 is finalised to support that programme.

  Q198 Mr Luke: You have talked about the option of no change in the way that you work here, and I can understand obviously that argument. We have talked about Glasgow and we have seen how the Glasgow model has developed, or has not developed. My own local authority is going through the same sort of five year investigation about the best model to put forward. In the context we are all working with, the financial regimes mean that we have fewer resources and obviously in Northern Ireland that will be the same case, there will be fewer resources for housing in Northern Ireland. What alternative ways have you looked at of capturing alternative capital investment?

  Mr McIntyre: In many ways. If we take the new build programme, the capital investment, part of it has been funded privately in the same way as it is in the rest of the United Kingdom. In terms of the management maintenance of our stock we have gone through the UK model of assessing what is the best option and whether or not we should be bringing finance into it. In terms of the Private Finance Initiative and so forth, the Assembly here commissioned a very significant report into the role of PFI in supporting capital investment in Northern Ireland. The initial focus is really on major infrastructure schemes to do with roads, health, hospitals and so forth. PFI has been assessed as part of the strategic option review which we referred to earlier. We have looked at PFI as being a route, for example, of funding some particular types of housing programme. One which comes to mind is the very significant heating replacement programme here in Northern Ireland. We looked at that, it did not prove to be value for money. We will continue to look at PFI as and when particular capital investment programmes arise. I am thinking here of the maintenance strategy which we have in place with the Department which sees a significant investment required to upgrade and modernise single person dwellings. PFI is a model looked at in terms of funding that particular capital investment because it is a single programme.

  Q199 Mr Luke: Obviously the money you have also affects the standards that are set. I know the GB Government has set a standard for decent homes. Obviously over the UK all council houses or houses owned by the public sector should come up to a decent homes standard by 2010. I believe you are developing a strategy, can you give us some insight into how that is going and when you expect that to be published?

  Mr McIntyre: Okay. Could I maybe ask my colleague, Mr McCaughley, to pick that up?

  Mr McCaughley: Yes. In developing the strategy we were very aware of progress in other regions in terms of setting and dealing with standards. In particular we had the English model, decent homes standard, which at the end of the day is a very basic standard; we had Wales and Scottish views as well. We had the PSA review of decent homes. I think the thing which struck us was the expectation from Government and from the various regions that you have to look now beyond decent homes, look to what impact that investment will have on neighbourhood renewal, what impact it will have on community safety, on health and safety, on fuel and poverty. We meshed all those views together and we looked at the costs against different standards, decent homes, health and safety and a much more comprehensive Northern Ireland version of a housing quality standard. We took into account future prices and costs associated with raising standards, not only in terms of products, but in the construction industry and what they deliver to us. The bottom line coming out is that we really do need to reprioritise our programmes in the years ahead. It is a matter for the Government to decide whether Northern Ireland gets a decent homes standard or some variation thereof, but if a decent homes standard was to be applied in Northern Ireland we would be in a position by 2010 to meet all the targets set therein. It is basically around thermal efficiency, which is the one area in which the Northern Ireland housing stock fails and there is a strategy already in place to handle that. We await the view of the Department on the need for us to really redirect and reprioritise our programmes.