Roger Blitz sketches the big picture for the new minister

Memo to the secretary of state
From the permanent secretary, Department of Cities, Regions and Places
Friday, 6 May, 2005

Minister, may I first of all take this opportunity to congratulate you on your party鈥檚 most decisive election victory. And may I also extend a warm welcome to you as the first secretary of state of this new, enhanced department.

The prime minister鈥檚 decision to rethink the role of this most imprecise collection of government responsibility came as little surprise to some of us rather seasoned civil servants. Having worked our way through the Department of the Environment, the Department of the Environment, Transport and the Regions, and the Office of the Deputy Prime Minister, we agree that the time is right for a new direction and a name-change that more closely embodies our ethos.

We are cogniscent of your party鈥檚 desire to make communities 鈥渢he bedrock of a decent society鈥�, as the prime minister put it in his acceptance speech last night. And as you said to the press after accepting your place in the new Cabinet, your ambition is to instil in the British psyche 鈥渁 renewed sense of public belonging鈥�. A fine sentiment, may I say. The department looks forward to discovering its full meaning in the days and weeks ahead.

As you might have expected, we have used the purdah period to evaluate the direction of departmental policy in its guise in the last parliament. In our view the department had initial difficulty finding its voice across government as a whole. As the parliament went on, this changed to our advantage, albeit in areas causing increasing difficulty for government 鈥� the council tax, housing need and regional growth imbalances.

These three areas we believe are the spine of this department and progress in each and every one is critical to our overall achievement. On your desk are position papers on each, signed off by myself this morning.

Briefly, they outline short, medium and long-term challenges for your government. The council tax is the most pressing, and although the election campaign not unexpectedly failed to provide a cross-party consensus on its future, it at least served to awaken in the wider public some degree of realisation that a solution is urgent.

In our view, the delivery of housing growth through unelected regional assemblies will continue to create problems

I have scheduled a meeting at 9am on Monday with Sir Michael Lyons to discuss the initial findings of his report on the future of local government finance. It might also be wise to schedule a series of meetings with the director-general of the Confederation of Business Industry to discuss business rate levels.

Might I recommend that we move to early publication of Sir Michael鈥檚 full report as soon as possible? You may also want to consider pressing for a Cabinet subcommittee to look at the future of the council tax. There may be benefit to yourself in 鈥渓ocking in鈥� the prime minister, the chancellor and other senior Cabinet members to whatever solutions emerge for this most intractable of problems. However, such a process might end up diluting the reforms of local government you desire.

On housing need, the Treasury and ourselves have spent the past month discussing the shape and structure of the regional planning supplement, another pressing issue (please find the details enclosed). But in the medium term, I should draw your attention to the chapter on the future of regional assemblies. In our view, the delivery of housing growth through these unelected chambers will continue to create problems, partly because of the resistance building up in these organisations but more fundamentally because of the perceived democratic deficit in the process. Although abolition is a drastic step, we would encourage you to rethink their roles and their membership.

Finally, the paper on regional imbalances illustrates some of the longer-term difficulties your government faces. We have sought to project the impact of the previous administration鈥檚 housing growth policy in the years 2009, 2013 and 2017, in other words the lifetimes of the next three parliaments. As you will see, the gap between northern and southern regions will grow wider, even taking into account the urban regeneration policies in place. You may want to reconsider quite soon the public service agreement for reducing the persistent gap in growth rates in the long term, given the promise made by your predecessors to report progress towards this by 2006.

By the end of next week, you shall also have papers on local government, infrastructure and the regional development agencies, which I am glad to see we have now inherited from the Department of Trade and Industry. There is also up and running a small departmental team looking at the consequences of a failed Olympic bid.

5 questions

The Council of Mortgage Lenders explains its views on HomeBuy, floodplains and off-site manufacture

1. What is your response to the government鈥檚 plans to extend HomeBuy to market housing?

The Council of Mortgage Lenders welcomes the plan to encourage the expansion of homeownership through the HomeBuy scheme, a system that is simpler and less administrative than Shared Ownership. However, the CML believes that there is a need for greater expertise and specialisation in the system. There are numerous housing associations offering HomeBuy, which may result in advice and overall policing of the system becoming too general and insufficient. The CML would like to see fewer housing associations offering the HomeBuy scheme, allowing for greater specialisation.

2. The government鈥檚 planned extension of HomeBuy is based on the principle that most of us aspire to own at least part of our own home. How many people want to be homeowners?

Recent research by the CML has found that 81% of people aspire to own their own home. However, the research also found that over the past 20 years the aspirations of younger people to own their home has fallen dramatically. The most significant fall is in the under-25 age group. In 1983, 79% of those under 25 reported they wanted to be homeowners, yet in 2004 this figure had fallen to 43%. Reasons for this fall may include worsening affordability and increasing amounts of student debt.

3. What is the proportion of lending to first-time buyers?

Our research has found that at present 32% of all lending for home purchasing is to first-time buyers. Although this figure is typical of recent years, when compared with the proportion of lending to first-time buyers in the late 1990s (47% in 1999) it is significantly lower. Again, this is probably the result of affordability.

4. What is the CML鈥檚 stance on the mortgageability of homes on flood risk areas such as the Thames Gateway?

The decision as to whether properties in flood-prone areas are eligible for a mortgage is up to the individual lender. However, the CML is keen to ensure the public are well informed and is working closely with the Association of British Insurers to implement the statement of principles 鈥� a document governing the provision of insurance for households and small businesses. Along with the ABI, the CML is writing to councils where there are developments proposed that go against the advice of the Environment Agency.

5. And on the use of non-traditional methods of construction?

This decision is left to the individual lender (largely driven by the availability of insurance). However, the CML does note the concerns of lenders about non-traditional construction. It is for this reason that the CML has been working with BRE to develop a new certification standard for modern methods of construction. The standard is designed to meet the concerns of lenders regarding durability, wholesale life costs, repairability, insurability and flood resistance. The standard, which has been subject to extensive consultation with lenders, will be launched in June 2005.

Source

RegenerateLive

Postscript

Roger Blitz is the home affairs editor of the Financial Times