Who’s counting

Originally posted on September 24 on Inside Edge 2, my blog for Inside Housing

The disposal of public land for new homes looks destined to go down as one of the great housing fiascos of this decade.

An extraordinary report published on Thursday by the Public Accounts Committee (PAC) reveals complacency on an epic scale within the Department for Communities and Local Government (DCLG).

The report is a follow-up to an investigation by the National Audit Office into a programme announced n 2011 by a certain former housing minister (no prizes for guessing which one) to ‘release enough public land to build as many as 100,000 new, much-needed, homes and support as many as 25,000 jobs by 2015’. In March this year the DCLG proclaimed mission accomplished: land with capacity for 109,950 homes across 942 sites had been sold.

However, in a report published in June, the NAO found that ‘the target measured a notional number of expected homes, not actual homes built’. On top of that, a quarter of the 100,000 ‘homes’ were on land that had been sold before Grant Shapps set the target or on land that was categorised as ‘sold’ when its owner simply moved outside the public sector (Royal Mail was privatised and British Waterways moved to a charitable trust).

Individual departments did not monitor what happened to the sites after they were sold so the NAO could not say how many actual homes were built. And the DCLG did not collect information on the amount of money raised by the sales, so the NAO could not say if the government secured value for money.

This week’s PAC report is if anything even more damning because it comes after the DCLG had chance to respond to the NAO criticisms. Chair of the committee Meg Hillier says:

‘The Government cannot tell us how many of these homes now exist – or will ever exist. Instead it appears simply to have hoped huge numbers of houses would spring up across the country.’

You’d have thought that if you were going to claim success in disposing of land for 100,000 homes, you might actually count them. But no, the DCLG told the PAC, the yardstick for success was potential for new homes: ‘The target was not to build homes; it was to release land.’

The PAC rejects this line completely:

‘We do not accept these narrow interpretations. We do recognise that the Department sought assurances from land-owning departments that the land in question had a reasonable prospect of being developed, but this is no substitute for knowing whether the prospects actually materialised. The number of houses built or under construction is a common sense measure of impact, and is easily collected, but the Department chose not to monitor it.’

The reason? Fear of upsetting housebuilders:

‘The Department told us that it was a conscious decision not to collect information on the number of actual homes built, and it had neither asked individual departments to collect that information, nor done so itself at programme level. It said it had decided not to “because we were really worried about putting a burden on developers and basically making public sector land some sort of bureaucratic problem for them in a way that private sector land was not”.’

Needless to say, the issue of whether affordable homes should be built for the public benefit on a finite supply of public land was not even considered:

‘The Department told us that, while it promoted affordable homes through other means and quite a lot of the sites in this programme were being developed with a strong affordable homes element, there was no specific target within the 100,000 for how many of these homes should be affordable.’

The PAC is also ‘sceptical as to whether departments achieved value for money from the sale of individual sites’. Some could not produce basic information about the sales; there was previous concern about lack of expertise in land sales (notably in the privatisation of Royal Mail and losses to the taxpayer); and the DCLG was unaware of guidance other departments should have been following or of RICS guidance that market value should be based on sale ‘without compulsion’ (when the target and the timescale for achieving it were all about compulsion).

The DCLG argument was that’ building houses wasn’t a criterion for the programme, so how could it be a criterion for value for money?’ and it was up to other departments to ensure they got good value.

However, the PAC found that some selling departments could not produce basic information about contracts and in some cases sales proceeds had not been recorded for reasons of ‘commerical confidentiality’. It concludes:

‘We do not accept the Department’s argument that it would have been an unacceptable burden on developers for them to provide basic information on what they had done with assets bought from the public sector: all developers have data on housebuilding starts, completions and sales. Nor do we accept that the amount of any sale proceeds from the disposal of publicly-owned assets should be kept confidential – Parliament and the taxpayer are entitled to greater transparency than that.’

Those past failures would be bad enough on their own. However, the government is planning even bigger disposals of public land in future: the 2013 spending review set targets for government departments to dispose of £5 billion of land between 2015 and 2020; the 2014 Autumn Statement included an ambition to dispose of enough land for 150,000 homes; and land sales also seem certain to be part of the spending review in November.

Have the government in general and the DCLG in particular learned their lesson? While the PAC welcomes DCLG commitments to take the NAO recommendations into account, it adds that it was ‘concerned by its caution when challenged on whether it would be collecting information on the number of homes actually built’.

Or as PAC chair Meg Hillier puts it:

‘It is an insult to taxpayers that the potential economic benefits arising from the sale of public land should be put at risk by such short-sighted Government mismanagement. With the next housing target already announced the Government needs to learn from its mistakes.’

As ministers prepare the ground for cuts to the housing programme by attacking the ‘not particularly impressive’ record of housing associations, they might want to look in the mirror.