Minister’s questions

ROOF: Can you guarantee social housing grant for social rented homes won’t be diverted to ownership schemes for key workers?

HILL: We have set out plans for key worker funding over the next two years. Future proposals are subject to the next spending review.

ROOF: Kate Barker said even if the supply of new homes doubled, housing stock would only increase by one per cent. This would have little impact on house prices. So, is unaffordable housing now the norm?

HILL: We never claimed our proposals would cause the absolute level of house prices to fall. With an existing stock of more than six million homes in London and the South East regions, the impact is clearly going to be modest. In my view, the impact of the Barker Review in increasing overall supply of housing will help those who currently cannot afford housing. Making the industry more responsive will also dampen some of the excessive volatility in prices.

ROOF: The Housing Bill proposes allowing developers other than housing associations to bid for social housing grant. Will you ensure profits made by private companies on schemes part-funded by social housing grant does not go to shareholders but is used for public purposes?

HILL: It would be unacceptable for money intended for public purposes to be distributed to shareholders. But that is not the same as a company making a legitimate profit on the overall venture, reflecting the risks it has taken and the investments that it has made and funded.

I acknowledge that the treatment of ‘staircasing’ receipts is critical. The existing system ensures grant is recycled into social housing or back to the corporation. Wherever public money is used it must be properly and transparently accounted for, and shown to have been used as intended. This will apply as rigorously to receipts falling to a non-registered social landlord (RSL).

ROOF: How do you intend to do this?

HILL: The corporation will enter into a contract with a non-RSL to which it is awarding a grant. This issue will need to be addressed in the contract. The detail is still under discussion, and we need to identify the most appropriate mechanism, but the two obvious possibilities are that receipts are returned to the Housing Corporation, or that they are transparently re-used by the grant recipient for affordable housing.

ROOF: Will you ring-fence profits made by developers so that they can be used for providing more affordable housing?

HILL: There is a difference between the legitimate profit made by a profit-making organisation, and the public money such a company receives for a specific purpose.

No, I do not envisage ‘ring-fencing profits’. But no grants will be given to a non-RSL unless the Housing Corporation is satisfied that it will result in the best value for money that public benefit is secure.

ROOF: How will private companies bidding for social housing grant be regulated?

HILL: The important thing is the objective – what are we trying to achieve? We must safeguard public money and ensure that is used for the intended purpose. We must get more for every pound spent than we get now. And stakeholders have to have confidence in the system. The relationship between the Housing Corporation and the non-RSL recipient of grant will be managed through a contract, not a regulatory relationship, because governance and management of limited companies are for shareholders and directors, and their compliance with company law is for other authorities. The role of the corporation is to safeguard public money. It can do this, for example, by making sure that a charge is put on the property. As with any other contract, the corporation will monitor its fulfilment to ensure all requirements – on time, quality, price or looking after the interests of tenants and residents – are met. If they are not, the corporation will need to enforce against that contract.

ROOF: Some housing associations say they have the skills and cash flow to lead large mixed tenure developments. Would you like to see more of this?

HILL: I would like to see the Housing Corporation devise schemes that maximise the potential to deliver sustainable communities. I would also like to see both RSLs and non-RSLs bidding for funds to deliver these. And I would like to see public money used in grants to whichever can deliver the best value for money overall.

If housing associations are saying this, and can back it up with track records of effective management and value-for-money delivery, then they are demonstrating the competitive spirit that this proposal is intended to release, and I welcome that.

ROOF: Are you concerned housing associations might take on too much risk?

HILL: I would be concerned about any organisation that took on too much risk.

Housing associations come in all shapes and sizes – from the tiny to the very large. The purpose of regulating RSLs is firstly to ensure the regulator knows about each one, what it can do, what it can’t, and how well it performs. And secondly, where the performance is weak, take steps to improve it. This means the Housing Corporation in England (or the National Assembly for Wales) is properly informed and equipped to assess RSLs’ bids.

ROOF: During the third quarter of 2003, 36,260 households were accepted for housing by local authorities, 8 per cent more than the same period in 2002. At the end of September 93,930 households were living in temporary accommodation, up 10 per cent on last year. The communities plan for ‘growth areas’ aims to solve longer term general housing supply, but what is being done about the immediate lack of perm-anent homes for homeless households?

Hill: Great strides have been made in drastically reducing rough sleeping, and families forced to live in B&Bs, in line with our targets. But I recognise that there’s also a need to provide long-term housing giving homeless people security and stability.

The increase of housing supply along with affordable housing is an important part of tackling homelessness. In 2003/04 we are expecting funding to the Housing Corporation to deliver 22,200 homes. From 2004/05 it will be for the regions and regional housing boards to decide how to use those funds. But as we said in our report More Than a Roof, housing alone is not enough, we must deal with the reasons why people are homeless, whether it’s relationship breakdown, debt, drug misuse or domestic violence. Tackling these personal factors more effectively is central to the our approach. Giving local authorities and voluntary organisation resources to tackle homelessness, and its causes, at grassroots level, is also vital.

That’s why my department is allocating £260 million over the next three years to help local authorities sustain reductions in rough sleeping, end the scandal of homeless families having to raise their children in B&B hotels, and develop new approaches to tackle and prevent home-lessness more effectively. We expect to see real reductions in homelessness.

ROOF: Will you introduce targets for reducing homeless households in temp-orary accommodation?

HILL: The department has a target to achieve a better balance of housing supply and demand. One of the measures that we’re achieving this is the number of families with children in temporary accommodation (TA). We’ve just consulted on introducing a performance indicator on the number of families with children in TA.

Many local authorities have set themselves targets within their homelessness strategies to reduce inappropriate use of TA. I hope more will set themselves stretching targets to reduce homelessness and meet those targets.

ROOF: Have you dropped the decent homes targets for 2004 or 2010 or both?

HILL: Neither. We remain committed to giving every social tenant the opportunity of a warm, weatherproof and more modern home by 2010. We are making progress on this - between 2001 and 2004 we will have reduced the number of non decent homes by around half a million and will achieve our milestone of reducing the number of non decent homes by a third in 2004.

Achieving the 2010 target is challenging. Clearly we won’t be able to make every social home decent if there are local authorities and their tenants who do not take up the options available – PFI, transfer and ALMO - to bring in additional resources to deliver decent homes. There is no fourth way.

ROOF: If there will be no second round of low demand pathfinder schemes, will there be any alternative funding programme for places not included in the first schemes?

HILL: No firm decisions have been made yet.

Keith Hill is minister for housing