Oral evidence: Disposal of Public Land for New Homes, HC 289

Oral evidence, 15 July 2015.

Witnesses

Melanie Dawes, Permanent Secretary, Department for Communities and Local Government, Andy Rose, Chief Executive, Homes and Communities Agency, and Peter Schofield, Director General, Neighbourhoods, Department for Communities and Local Government.

Chair

Good afternoon, everybody. Welcome to the Public Accounts Committee and, for those of you who are visitors to Parliament for the first time, to Parliament. I welcome our witnesses today on the issue of DCLG land disposals for housing. We have Andy Rose from the Homes and Communities Agency, Melanie Dawes, the new permanent secretary—congratulations—at the Department for Communities and Local Government, and Peter Schofield, who is the director general who had overall responsibility for this project, I believe. I should explain to the Committee that Melanie, as a fairly new permanent secretary—I think you started in the Department on 1 March—asked for Peter to come along, as he was directly hands-on on this in the Department. First, we have a couple of declarations of interest to make. Stewart, I think you had something to declare.

Mr Jackson

Yes, I would like to remind Members of my entry in the Register of Members’ Financial Interests in respect of my consultancy regarding housing, planning and regeneration.

Mr Bacon

I am the founder of the all-party group on self-build, custom and community housebuilding and place-making, and I got a Bill through Parliament that became the Self-build and Custom Housebuilding Act on 26 March. Also, when our all-party group had a trip to Berlin last summer to look at alternative methods of getting housing delivery, Mr Schofield came with us.

Chair

In the small Westminster bubble in which we all operate, but I’m sure that will not hold Richard back in his questioning today! Stewart and Richard will lead today’s session, but before we move to that, I want to welcome the new permanent secretary and say that this is a pretty extraordinary Report. As a Department, you did not know whether land was being sold at the right price, how many homes should have been built and how many homes have been built, and we will not know for some time—perhaps before the end of the decade—whether the target has been met. Do you have an opening response to the Report before we move to the main questioning?

Melanie Dawes

Absolutely, thank you. First, we found this a very helpful Report. We are just beginning to set out our target and our overall objectives for the new Parliament, so there is lots of useful guidance and recommendations in here for us to take into account. But in the end, I think this was a very successful programme for the DCLG and the other Government Departments involved in the last Parliament. We set out to achieve land disposals towards new housing on a scale that had not been achieved before. At the point of every disposal, we had a very rigorous process to see what quantum of housing was likely to be released. Looking at all that data, we actually exceeded the number.

Mr Bacon

Can you just repeat that? I didn’t hear it. The quantum of housing was what?

Melanie Dawes

The quantum of housing was in line with our target.

Mr Bacon

I thought you said, but I am not sure: “the quantum of housing that was likely to be released.”

Melanie Dawes

The quantum of housing that was likely to be built on the land that was released was in excess of the target we set ourselves of 100,000. The final number was just under 110,000.

Chair

As I said, and as the Report demonstrates, you do not actually know whether there was value for money in the land sales because you do not know how much money came in or how many houses have been built, but you are telling us that it is a successful programme. That defies the evidence in the Report.

Melanie Dawes

I don’t think it does. Perhaps I can take the points in turn. On value for money, there are two separate questions. First, did we release land towards that number of homes? Yes, we did, and perhaps we can come on to the details of how we measured that. The NAO looked at all that data and confirmed that we met the target. The second question is whether all those individual sales or releases of land were done in accordance with value for money tests. Those decisions were taken by individual accounting officers in the Departments concerned. We never sought as a programme—and I don’t think we should have done—to second-guess those VFM decisions. It is absolutely core that the accounting officers who own the land need to be making those judgment calls. The NAO found no concerns on that front, either through their regular audits or as part of this investigation. This, of course, was not a value for money study. That is just my response on the value for money question specifically. I am sure we will come on to the other issues in turn.

Chair

But you are the accounting officer for the Department for Communities and Local Government, whose overall project it was. Measures are therefore needed for the other accounting officers to meet, and the Report says that there weren’t very clear measures, so you have some responsibility for setting the tone and the way in which the programme was rolled out through the other Departments that were going to deliver towards this total.

Melanie Dawes

Our accountability as a Department was for the overall target of releasing land towards 100,000 homes, and we had to work with other Departments, and with all the various Ministers and officials involved, to agree what their contribution to that target would be. It was then up to those Departments to make those sales and to ensure that, as they did so, each one was done on a value for money basis.

Chair

But as a Department, you did not go back to check whether those targets had been met, did you?

Melanie Dawes

We did. What we were measuring was whether, at the point of sale—we had a number of assurances that we put each sale through—we thought there was a good chance, a strong chance, that homes would be built on that land. We did that by looking for things such as whether planning permission had already been sought, whether it was in a local plan and a number of other measures. There was pretty tight guidance and assurance of that by the Homes and Communities Agency, which ran the assurance of the numbers at the programme level. That was the basis on which we set out that we achieved just under 110,000 homes.

Chair

Stewart, I will hand over to you. The permanent secretary says that it is a fantastically successful project.

Mr Jackson

This is one of the most damning reports that we have had before us in the last five years. How you could possibly describe it as a success is beyond me. Given that you signed off this report, are you aware that 79% of projects were either incomplete or had no records whatsoever? There was no documentation to verify value for money or any other issues raised by the NAO. In what possible sense could you regard that as a success? You cannot possibly say that it was a success in terms of value for money because we simply don’t know. Before you answer that, can I ask you a more general question?

Melanie Dawes

By all means.

Mr Jackson

With respect, you are moving away from the absolute kernel of this issue, which is that you were effectively tasked in June 2011 by the then Housing Minister to facilitate the building of 100,000 homes.

Melanie Dawes

We were tasked to oversee a programme across Government to release land with capacity for 100,000 homes. We were not tasked and we never set out—this is probably quite important in addressing the difference of view that, in all honesty and with good faith, we appear to have with you about whether we succeeded—to oversee the house building. We set out to release land, that being one of the big constraints in the housing market in England.

Mr Jackson

Well, yes, but in your earlier answer you also made reference to planning permissions, local planning authorities, core strategies and those sorts of things. There is no evidence whatsoever that there was any systematic analysis or overview of each of the 942 sites. You seem to be saying, “We are managing a target.” Well, we can all manage a target. I mean, I am managing the target of getting out of bed in the morning and coming to work, but what am I actually achieving at the end of it? Your target was to build 100,000 homes, as the lead Department, with the Homes and Communities Agency. It is all very well your saying, “Well, the language was a bit opaque”; we’ll come on to that in a minute. But that was your principal target, and I think—

Melanie Dawes

I really must be absolutely clear, Mr Jackson. The target was not to build homes; it was to release land.

Mr Jackson

That was the policy objective.

Melanie Dawes

That was ultimately why we would want to release the land, but the target of this programme was to release land. Up until the last Parliament, we had never achieved more than a couple of thousand homes’ worth of land ever, and we way exceeded that—

Chair

But as Stewart says, releasing land on its own does not provide the homes that our constituents want to live in. Their interest is whether you got anywhere near the 100,000. But I will let Stewart carry on.

Mr Jackson

Can I just say—?

Melanie Dawes

Can I just answer your question about the numbers, because that is quite an important—?

Chair

Can you just let Stewart carry on with his question and then you can answer?

Mr Jackson

I do think you are being a little bit nonchalant about what was, after all, a very important policy objective, which is to deliver 100,000 homes. And I do not think it is acceptable, given what you were tasked by Ministers to do, for you to say, “Well, our job was really just to draw up a target, give it to a Department and that was it.” That is just not acceptable. In particular, you do not seem to have developed any methodology for ensuring that the land was disposed of, in terms of scrutiny in a timely way. I will let you answer, but I want you to answer this point specifically. I am looking at the top of page 15, at paragraph 2.18. As permanent secretary and accounting officer, are you really happy with the fact that you, as the lead Department working with the HCA, were not collecting any information about the value of the disposed land, the sale proceeds, the means by which the site was sold, copies of contracts, and the number of houses built on the land sold? Surely, as the lead Department, that was unsatisfactory.

Melanie Dawes

Can I just be really clear? The NAO Report sets out what our target was. The opening paragraph makes that clear: “To release enough public land to build as many as 100,000 new homes.” I am not trying to dance on a pinhead here; that really is a very different thing from having a target actually to build those homes. Clearly, it was really important that we did not just sell some site without any understanding of whether or not homes were actually going to be built, so we put in place a very detailed assurance process—Andy can perhaps go into that detail if you would like us to go into it—that made sure that when we were releasing land, there was a really good chance that homes were actually going to be built on it. Recently, we have looked at 100 sites that were included in our final target and we found that more homes are going to be built on those sites as of current plans and current construction even than we counted. So we are doing some retrospective checking here and it shows that the figures that we included in the target are, if anything, rather conservative. So we had a pretty rigorous process to check—

Mr Jackson

You didn’t. That is completely untrue. In paragraph 2.17, on page 14, the HCA says, “There is no consistent approach to calculating the number of homes that will occupy a site, although the HCA conducts a sense check”—whatever that is—“of the incoming data and provides challenges to Departments on what they could count towards the target as potential homes.”

Melanie Dawes

I can be clear that no figure was included in our final outcome numbers unless the HCA had signed it off. So there was no sense in which another Department was able to say, “Well, we think the correct figure is 2,500 homes”, if the HCA said, “No, you haven’t got enough assurance. The planning permission isn’t certain enough. We don’t think the developers are really going to do this. You can’t count those numbers.” And there were a number of places where that happened, where the Department thought it had done enough and the HCA said, “No, you haven’t. We can’t include that in the target.” That was the process we went through in the programme, for which we as a Department were accountable.

Andy Rose

Can I just step in, because I think, Mr Jackson, you said the HCA said there was no consistent approach, but I think it’s the report that says there was no consistent—?

Mr Jackson

No, I said the NAO.

Andy Rose

I beg your pardon—my mistake. But the process that we went through, first of all there was a definition that was agreed. This all went through effectively a programme board, then we would have regular meetings with each of the Departments and we would go through a robust check about whether the forecast going through was consistent with the definition. So we would agree very much—again you will be aware that the HCA played two roles: one is providing check and assurance; and one is as a land-owning entity. Our role was to validate that those numbers were consistent with the methodology, which we did and which we agreed with the Department at the time. I am very comfortable that those numbers—

Mr Jackson

Let me stop you there. The essence of this is—are you talking about monitoring construction of houses?

Andy Rose

No, absolutely not.

Mr Jackson

Okay. So you are praying in aid the rather nebulous concept of potential capacity.

Andy Rose

What I am saying is there was an agreed methodology set by the programme board—

Mr Jackson

Of potential capacity.

Andy Rose

—for the capacity, which was, as the permanent secretary said, the design of the programme. So all I am saying is that the methodology, and the check with the Department to show consistency, was not random: it was actually quite precise. The numbers were agreed with the Department: I note the NAO’s finding, which is disappointing, which was that it was hard to validate those numbers retrospectively, but I am confident that the numbers were agreed with the Department and actually fed into the final number—

Chair

I want to bring in the Comptroller and Auditor General.

Sir Amyas Morse

Just to remind you of the fact that you explicitly agreed to this Report, so just be careful, please, about how doubtful you sound about it, because we cleared this not just with the Department, but with you.

Melanie Dawes

For absolute clarity, I have no problems with the Report at all, but I do not think that it is saying that we set out to achieve a house building target. You are saying that we set out to achieve a target for the release of land, and you are also saying that we met that target. The NAO raise a number of issues in the Report about whether we should have monitored actual house building. The NAO does recommend that. We decided during the programme that we should not, 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.

Mr Bacon

You were really worried about putting a burden on developers to let you know what they had done with assets that they had got from you—in some cases for free—with a build now, pay later interest-free loan. The difference between this and a purely private-private situation is that these were public assets—that is the difference. I am interested in this approach of yours to what your responsibility is in relation to value for money. We can all read paragraph 1, which you quoted, which says, “release enough public land to build as many as 100,000 new…homes”—carefully drafted and watered down. To what extent do you think that whether homes are built or not is a criterion in judging the value for money of the programme? Is that a criterion?

Melanie Dawes

I think that it would really concern me—

Mr Bacon

Sorry, it is a really simple, binary thing. Just listen to the question. If you could answer my question rather than a different one that I did not ask, that will really save time. The question is—is the actual building of homes a criterion in determining the value for money of this, your programme?

Melanie Dawes

I do not think that were ever seeking to actually build homes. We were seeking to release land—

Mr Bacon

That is not my question. With respect, my question was not: were you seeking to build homes or not? Your answer, “With respect, I don’t think we were seeking to build homes,” is a good answer to the question, “Ms Dawes, were you seeking to build homes or not?” but that was not my question. My question, just to repeat it, was whether the actual building of homes—rather than the notional building of homes—was a criterion for the value for money of the programme. From what you have said so far, it sounds like the answer might be no, but, if that is the case, I would like to hear you say it.

Melanie Dawes

Perhaps I can add the second half of that sentence.

Mr Bacon

I don’t want you to add; I just want you to answer the question.

Melanie Dawes

Please, on this incredibly important question of value for money, just give me a few sentences to answer the question. Our target was to release land. That is the basis on which I believe our success should be judged. Clearly it would be a real concern—

Mr Bacon

I am asking you a different question. With respect, I am not asking you on what basis you think should be judged. We will decide on which basis we think you should be judged on your use of assets that belong to the public. I am asking you whether building houses—actual houses—was a criterion for the value for money of the programme. It is a very simple question. Either it was a criterion for the successful delivery of value for money or it wasn’t.

Melanie Dawes

Building houses wasn’t a criterion for the programme, so how could it be a criterion for value for money?

Mr Bacon

So the answer to my question is no.

Chair

Ms Dawes, if the taxpayers watching this have looked at the headlines of the report and the press release that the Minister sent out, the message that they will receive is, “We are going to build more homes. We are going to get the wind under the wings of developers and get these homes built for our constituents.” You are sitting here before us and saying, honestly and truly, that that was not a criterion. You are using sophistry, and you are obfuscating. Your literal, narrow target as a Department may have been the land release but the real outcome for your paymasters, the Ministers, all of us and all our constituents was the actual homes that people will live in. Surely, you can simply acknowledge that that was an important criterion of the value for money of this taxpayers’ asset.

Peter Schofield

I just—

Chair

Can Ms Dawes answer that and then we will bring you in?

Melanie Dawes

Clearly the overall aim was to boost the housing market and eventually build homes—

Mr Bacon

But surely the extent to which you do that or not is a criterion of whether it is successful or not.

Melanie Dawes

Please, Mr Bacon, you need to give me a little bit of time to answer. I tried to answer your question earlier by saying that I would be very concerned, as accounting officer, if we released land that we counted as being likely to be built on for homes and then it turned out that no homes were ever built. In my opinion, that would clearly not be value for money. However, that is why I take a lot of assurance from the fact that we put in a very serious process, which Andy described, whereby all the land that Departments were selling had to have something like planning permission or be included in the local plan so that we were confident that it would lead to house building. The sampling that we have done recently suggests that those figures were accurate, which is why we are confident that the land we sold for housing will lead to house building.

Peter Schofield

Can I just add a bit more flesh to that? Paragraph 8 on page 6 clearly states that in some cases it would take 20 years to build out the site. That is inevitable. On many large sites, it takes a long time to build it out. The crucial thing is whether the land that we released was likely to be built on. As Andy said, there was a clear process by which we assess whether the land already has planning permission for new homes. If it does—big tick. Okay, some of the land might not have planning permission. As the Report says, there are often good cases where it makes sense not to sell the land with planning permission. In that case, the crucial question is: what assurance do you have that it would get planning permission? Is it in the local plan? Is it included in a strategic housing land assessment?

Mr Jackson

I am sorry, Mr Schofield, but there is no documentation in that audit trail to support that you were looking that far into the future regarding the likely disposal of the land and the residential development that would follow in terms of the local planning authority. Only 21% of the projects in the audit were found to have any supportive documentation. You say that you were looking forward, despite the fact that you had this very opaque objective and the data was poor; you cannot support that because there is no documentation to back up your argument.

Peter Schofield

I am not sure that I would agree with that, Mr Jackson. In some cases it takes 20 years to build out, as the NAO Report says. The HCA, as the NAO found, had a robust process of checking, at the time of disposal, quite how many homes we should score against the disposal. As the NAO rightly says, there is a question about whether Departments were keeping records of how many homes were built out beyond that. That is a helpful recommendation for the next stage of the process in this Parliament. The key thing is: did we actually release the land and, when we released and scored it, did we have a reasonably robust view about how many homes were likely to be built on it, albeit that it would take potentially 20 years to build out?

Mr Jackson

Let’s try to get some consensus before we get too fractious on the figures. Do you agree that there was a lack of clarity at the beginning between notional and actual numbers delivered, aside from the fact that there was clearly no methodology? Do you agree that there was a lack of clarity, given the policy objective to build 100,000 homes?

Peter Schofield

The policy objective is clearly set out in the Report, which sets out the process we went through in 2011. It was both a top-down and a bottom-up approach challenging Departments and coming up with the targets that we were going to set Department by Department, and we were then clear which sites were going to be brought forward to a large extent to achieve those targets. In some cases, it was going to be quite a big challenge for Departments to achieve those targets. The NAO records, quite rightly, some of the concerns that Departments had that we were being potentially too ambitious. But if you look at the numbers in figure 1—

Mr Jackson

Can I stop you there, because the Report actually says that you did not have any supporting data to formulate those targets? Thereafter, you did not have any supporting data to see whether the targets were being met in the individual Departments.

Peter Schofield

But the great thing is, if you compare figure 1 and figure 4 of the Report, what you see is that, although maybe at the time the Departments felt that this was ambitious, by and large they delivered and overachieved. That was a great success. I have described the way in which Departments responded. We then verified the numbers that were scored in each case.

Mr Jackson

Can I ask Ms Dawes a specific question? Putting aside what we have said about lack of data and lack of clarity and the tension between notional and actual value and notional and actual delivery, why, if it was going so well, did the Cabinet Office and Treasury weigh in to express their concern about the efficacy of this policy?

Melanie Dawes

It was a target that was very new for government. We had never attempted to achieve this before. We started it when the housing market was very weak, as I am sure you will remember, in 2011 in particular. The Department itself acted very quickly when progress was pretty slow at the beginning. The Report says that, and we would certainly agree with that. We acted pretty fast. We set up a review with Tony Pidgley from Berkeley Homes and got expert advice. We discussed with the Cabinet Office the implementation unit doing their review and it was done alongside DCLG officials, and then we acted on all the recommendations. So this was a topic that got a huge amount of interest from Cabinet Ministers, and there were lots of meetings about it. I think that was appropriate. It was a big priority and there was a huge amount of commitment to achieving it. But I think the Department was pretty fast to act on the slow start and to put in place quite a lot of improvements quite quickly. It was a new thing we were trying to do.

Chair

Can I bring in Matthew Rees here? Matthew, could you describe the way that the Department recorded the data?

Matthew Rees

There was a series of interactions between the HCA and various departmental officials to complete a large and elaborate spreadsheet—that is evidenced by a series of conversations and email traffic—to populate estimates of house-building targets.

Chair

The spreadsheet is too big to print and full of anecdotes. Stewart, do you want to carry on?

Mr Jackson

You did slightly light a blue touch paper with Mr Bacon on this. Can I clarify, for the record, that you said it was impracticable to measure the actual homes built because it was too onerous on the developers? Did you actually say that?

Melanie Dawes

That was a judgment that was taken for the last programme.

Mr Jackson

So your Department, which is huge and employs thousands of people, could not have employed one or two people to look at specific planning portals that are available across the country to take you through the progress of each individual development, which, as you know, because you are the permanent secretary, has an allocated case load number or planning committee number, and you could not have collated that information on each of the disposals. Are you really asking us to believe that?

Melanie Dawes

I am simply telling you about the judgment that was made at the time and why it was made. This is an area that the NAO recommend we try harder on next time, and we are going to look at that and see what we can do.

Mr Jackson

It is not complicated.

Mr Bacon

I am amazed.

Melanie Dawes

All I can do, Mr Jackson, is give you a factual description of why it was decided. It was not done by accident; it was a conscious decision. You are challenging that. The NAO has challenged it. In fact, the HCA did have quite comprehensive data on the sites that it was responsible for, because it is their day job to be out there with developers in the housing market, so that was quite straightforward for them. We did not ask Departments to monitor it and we did not do it at a programme level for any other sites.

Mr Jackson

It is common sense, isn’t it?

Melanie Dawes

We are going to look at doing better next time. That is all I can say.

Mr Jackson

Even I as the local MP will ring a planning officer and say, “That planning application that went through in committee last October—when do you think there will be any building on it, because I would like to go and have a look round because I take an interest in that sort of thing?” Why is it not possible for you to have rung up the Ministry of Defence and say, “What is happening with your disposal in Gosport or Aldershot? How many houses are physically there?” I cannot understand why that would be so difficult.

Melanie Dawes

The reason we decided not to do it was for the reasons I set out, but we are going to look at this for the new programme. It was a really helpful recommendation.

Mr Bacon

What were the reasons? You said it was onerous. Onerous for whom?

Chair

Onerous for developers.

Melanie Dawes

We were really concerned that if you put some kind of tracking system on developers, it would be onerous. You do not have to do it that way; I agree with you. Maybe at the time we could have thought of different ways of doing it.

Chair

There is a tracking system on them, anyway, through the planning system.

Melanie Dawes

All I am doing is explaining why that decision was made.

Mr Bacon

It is essentially a case of asking developers to tell you how many houses they have built. They have to know this, anyway. Sitting suspended for a Division in the House. On resuming—

Chair

Apologies. Stewart, if you can pick up from where you left off, we can continue.

Mr Jackson

Did you think it was appropriate to include in the target disposals of British Waterways and Royal Mail, which strictly speaking were outside the remit of the target?

Melanie Dawes

At the start of the programme those bodies and the sites that we included were in the public sector. DEFRA and the Shareholder Executive did a lot of work with Royal Mail and British Waterways to get some of their sites ready for disposal for housing. I think it is legitimate that they were included, because of that work that went in. Again, we have done some checking to ensure that that land is actually going to be built on for homes. We can say that more than 90% of the Royal Mail sites and the British Waterways sites have still got that assurance in place. In some cases construction has started. The land has actually been sold for housing and that is being acted upon. There are various sites we did not—

Mr Jackson

But you are not monitoring it, so you do not know.

Melanie Dawes

We have gone back and done some checking. Again, what we are relying on for all of this programme is that, at the point of release of the land, and in this case the point of release into the private sector, we had enough assurance that the land was going to be built on for housing, as I and Peter explained earlier.

Chair

Can I bring in Matthew Rees from the NAO?

Matthew Rees

There is a question of consistency about the Government’s broader evidence on this. On the Royal Mail hearing it was quite clear. We were concerned whether the land had been encaptured at the price at which the company had been sold. One response from the Department was that the land would not be built on for about 13 years. There is a significant ambiguity about what the programme is, and whether an asset is being sold, scored one way or ignored another way.

Mr Jackson

That is 10,000 to your 109,000 target.

Peter Schofield

I do not disagree with what Matthew says, but it goes back to what I was saying earlier about many of these sites—that they could take potentially 20 years to be built up. The crucial thing is that the work that was done by the Shareholder Executive in the case of Royal Mail and by DEFRA in the case of British Waterways got sites that might otherwise have been locked up.

Mr Jackson

But no houses are being built; that is the point. That leads me beautifully on to my penultimate question.

Peter Schofield

Can I just disagree with your point about no houses being built? There are examples in the Royal Mail. I give you one: Rathbone Place in the west end where 142 homes are currently being built. That is part of the estate that was scored. The others will come through over time, as planning permissions—

Mr Jackson

How did you find out about that one?

Peter Schofield

Because since the NAO Report we have gone back and checked.

Mr Jackson

You picked up the phone to Westminster City Council. That is a brilliant start.

Sir Amyas Morse

Am I to take it that now you think it is a good thing to check on whether things have been built or not? Now you think that’s good, is it going to be part of your practice from now on? We are pleasantly surprised—all of this has happened since our Report was finished—that you are now checking on when things are being built. Is that what you are going to do in future?

Melanie Dawes

I said earlier that we absolutely think that your recommendation that we should do more monitoring is right.

Sir Amyas Morse

You have started doing it already.

Melanie Dawes

I did say that a couple of times. We do want to do that. There is nothing like appearing in front of you today to focus our minds on having really checked that in recent months. It has been a very helpful point of assurance for us.

Mr Jackson

You need to do a fundamental review of this whole policy, because it was not just a matter of not monitoring properly. It was not having a methodology, accountability or idea of value for money.

Melanie Dawes

We obviously do not agree with all those points.

Mr Jackson

You agree with the Report and that is what the Report says.

Melanie Dawes

The Report does not say that.

Mr Jackson

Let’s not quibble about it. You may be very opaque in your language, but the NAO tend to be not so opaque. It is pretty scathing of your role. Let me ask you two questions—

Chair

Let Ms Dawes answer that first.

Melanie Dawes

We are right now putting in place a new programme for the next phase of land release towards the target of up to 150,000 that we have been set by Ministers. We absolutely are going to take into account the National Audit Office’s recommendations as we do that. It is extremely good timing.

Sir Amyas Morse

Frankly, if you have been doing this since we finished our Report—you know our phone number and it would have been easy for you, instead of producing this on the day, to have discussed this information with us and to have given us an opportunity to look at it. That is the normal practice in this Committee, as I am sure you know. Producing a rabbit out of a hat at a hearing is something that does happen from time to time and, generally, the practice of the Committee is to discount such evidence.

Melanie Dawes

Okay. We will certainly share our evidence on those sites with the NAO—

Mr Bacon

One would have hoped that you would have done that already. That is the point.

Melanie Dawes

This is evidence that we have gathered over the past few years.

Mr Jackson

Page 22 of the Report states that the Cabinet Office’s implementation unit reviewed the progress of the ongoing work on land disposals in October 2012 and outlined some significant concerns, particularly around departmental capacity. Bearing in mind that this was about 18 months on from when the project started, what did you specifically do to address those concerns? If we accept your premise that you were not responsible for building houses, just setting targets—I think that that is unsatisfactory, but there we go—what were you actually doing, in practical terms, as a catalyst for other Departments to build homes?

Melanie Dawes

Our aim was to ensure that land was released. That was our aim. It was quite tangible. It was not just a case of setting a target. We had to ensure that land was released.

Mr Jackson

That is not my question.

Melanie Dawes

I just keep coming back to that because there is a central disagreement about what we were trying to achieve.

Mr Jackson

I have already met you halfway. Although your targets were imprecise, the language was fluffy and there was no methodology, I will put all those big issues to one side. What were you actually doing to ensure that the Department for Transport, the Ministry of Defence and other Departments were physically building houses, which was what your Ministers had tasked you to facilitate?

Melanie Dawes

Can I ask Peter to give you the details of our actions? They are on page 23, but Peter can perhaps explain them.

Peter Schofield

So a whole series of actions are listed in figure 7 on page 23. There were some structural things and an investment fund, all of which is set out. I think your specific question, Mr Jackson, is about what we were doing to support expertise in Departments and a number of things were going on. The Homes and Communities Agency was running workshops for Departments, including the Department of Health, which was an important Department in the programme. Some staff were seconded in and we also seconded some staff into some of the key Departments. The HCA made available a support called ATLAS, which helps large sites move forward through planning. The HCA also helped Departments to work with local authorities. The HCA has great expertise in how to address community concerns about developments locally. There was also support regarding commercial agreements. Section 4 of the NAO Report has a whole series of the different types of commercial deals that were done in order to release land and to encourage development on that land. Of course, as figure 7 on page 23 sets out, the HCA then took on some of the land as part of the transfer process and actually did the disposal on behalf of the Department. In addition to the HCA’s work, the Government Property Unit was also in action, both supporting and challenging from the centre. It ensured that every accounting officer had in a place an effective asset management strategy and that there was a proper competency framework and support for estates management specialists in each Department, including support for continuous professional development. Like the HCA, it also put experts into Departments to help them run their operations. While all of that support was going on, you had, for example, the growth and infrastructure committee chaired by the Chancellor of the Exchequer, the growth and enterprise committee chaired by the Prime Minister, and the head of the civil service, Sir Bob Kerslake, chairing groups of senior officials. So as well as the support, there was a huge amount of focus. In addition, we had the investment funds, which were helping to de-risk sites, improve site accessibility and deal with contamination issues. As the Report rightly says, after a slow start, this action was put in place and figure 3 shows the amazing build-up in momentum of sites moved to the market. We reached our target in time for the end of March.

Chair

I would be careful, Mr Schofield, before drawing attention to figure 3 on page 17, because that figure includes land disposed and homes built from 1997 onwards. How many Governments ago is that—four? Just shy of 16,000 homes were counted into the total before the programme was launched, which surely underlines the fact that the Department did not have a grip on the numbers.

Peter Schofield

I don’t think so. The point I was making, Madam Chair, was the momentum from 2011 onwards.

Chair

I acknowledge that there is momentum after that, but 16,000 of the total were counted in before the programme started.

Peter Schofield

Paragraph 3.4 in the Report sets out that that was one of the objectives of the programme—to release sites that had been stalled from previous sales. That was one of the things we were being asked to deliver alongside the programme.

Mr Jackson

This is really just a giant site allocations plan, which most county councils and borough councils do every four or five years—they do a land supply. Admittedly, they do not pick the builders going on each piece of land, but they are legally obliged to produce a five-year land supply, a core strategy and a site allocations plan, depending on whether they are a district council, county council or a unitary authority. That is all you have done. You are saying, “I’ve hit my target of targets.” That is what you have done. It is a bit Sir Humphrey this afternoon, if I may say so. It is very eloquently put, and you answered very clearly, but the point is building homes for people, not having wonderful targets and bar charts. That is our frustration. Four years after the Minister tasked you with this very important project, you should be in a position to come to the Committee—you actually should have laid papers before us saying, “This is the number of houses that have physically been built as of 31 March 2015.” That would have been helpful. You cannot do that, and I suspect that is a very big omission, which you need to address pretty urgently.

Peter Schofield

I understand the challenge. All I would say, going back to what you said at the beginning of the question, is that this did not feel like just a site allocation process. The Report gives a sense that Departments felt under pressure. They felt under pressure to sell land and to think about their estate management strategy in a way they had not before.

Chair

The Comptroller and Auditor General is itching in his chair.

Sir Amyas Morse

First, it is quite clear to me and it says in the Report—the permanent secretary asked me whether I could confirm what it says in the Report—that the Department’s objective, as the policy lead, was to release the equivalent number of sites for homes. That is what it was, and that is what our Report says. Mr Schofield, you very helpfully go into detail about what you describe as the focus; another word for that might be pressure. There was a terrific amount of pressure within Government to get these targets achieved at a very late point in time. My interest is whether you believe that that level of pressure being applied to the Departments—which had been rather slow early on, because they were not too keen to sell all this land—might have made it rather difficult for them to discharge their duty in regard to value for money. There were not any letters of direction sought in connection with this, as far as I know. It is a reasonable concern. You had one Committee led by the Chancellor and the other led by the Prime Minister, all sending very eloquent letters to colleagues to tell them how important this was. A huge pressure was being brought to bear at every level in Government to meet the objective of releasing the land. My concern—I think it is a reasonable one—is whether this is something that supported or inhibited the protection of value for money. Is that a fair challenge at least?

Peter Schofield

It is a fair challenge—the challenge that you made in the Report, which we accepted. Likewise, I think you accepted in what you wrote that there was no evidence that this was a problem in reality. I accept that there is a theoretical challenge. The reality, as I said earlier in reply to Mr Jackson, was that, alongside the pressure—that was all about ensuring that the objective of effective asset management was high up the priority list for a Department for which this is not normally a day job—support was required to make that happen. You have seen a massive improvement in the expertise available in Departments, centrally with the Government Property Unit and, I might also say, the Home and Communities Agency, to ensure that we are—as Government and the whole public sector—much more effective in our management of assets. One great thing about better management of assets is that you identify surplus assets that can be released for housing, which is clearly a key objective for the Government, as it is for this Committee.

Chair

The Committee always welcomes any development of expertise in managing taxpayers’ money but I still think the point remains that if we cannot actually count the homes built as a result of this policy, we are in sticky territory.

Mrs Trevelyan

I have a quick question that was triggered by figure 7, which says that “the Chancellor was considering transferring the land to the HCA without passing receipts to the departments” if the process did not speed up. That, as has been said, could be conceived as pressure. It is very difficult to see the proceeds released. Most of the Report says, “information not available.” We consider public assets to belong to the taxpayer. They do not belong to the Government. If they are sold for a new use, it ought to be self-evident that we can see how much they have been sold for. If that money is then going back into the Department, we should be able to follow that through to departmental accounts. I am confused as to why that is not obvious.

Melanie Dawes

You are quite right. We did not collect that information in the last programme at the programme level. It is in individual Government accounts. You are right that you cannot see sales proceeds for this programme. We are hoping—in fact, we are sure—that we will be able to address this with the new programme because, as you will know, we have a target to release £5 billion overall from public asset sales. We are working with the Cabinet Office to put our programme objectives alongside theirs so that, together, the programmes will be able to capture the proceeds and all the data in a much better way.

Mrs Trevelyan

Is it not terribly straightforward if the land is transferred to a developer and there is a transfer of funds or future funds? Is that not a simple number that is recorded somewhere? Is that piece of information not gathered?

Melanie Dawes

Sometimes it is quite complicated because of the nature of the different ways in which the land was released. I absolutely accept that this is something that we need to improve on in the next programme, and we will. I cannot really say more than that.

Chair

We acknowledge your desire to improve on what you have done. That is helpful.

Nick Smith

Mr Schofield, when you were challenged on how many homes had been built, you talked about working out how many had been built on the Rathbone Place site—the old Royal Mail site just north of Oxford Street. The obvious question to ask of you first is: how many homes have been built? We have seen the estimates. We are very concerned that there is nothing tangible there. You must have done, in the past few days I expect, some sort of tally or best estimate of how many homes have been built. Do you have anything for us at all?

Peter Schofield

I think we can look particularly at the sites that the Homes and Communities Agency disposed of. It was scored at just over 20,000 homes. That is figure 4 in the Report. Of those, in the latest numbers that the HCA has, they have started work on 6,900 and something like 2,000 of those have been completed.

Nick Smith

So, in real figures, you estimated about 20,000. You have completed 2,000 and you think you will have 6,000.

Peter Schofield

No, sorry.

Nick Smith

Say it again then.

Peter Schofield

I would go back to what I said earlier on in the hearing. Often, with some of these sites, it might take up to 20 years.

Nick Smith

Yes, we get that.

Peter Schofield

We expect all 20,000 to be built over time. The question is the sale.

Nick Smith

Go through again what you just said.

Peter Schofield

I will go through it again and Andy can correct me, because he probably has got the numbers immediately at his fingertips. But it was something like—

Nick Smith

This is back of the envelope—just before you came here today?

Peter Schofield

No. Figure 4 has something like 20,000 being the number of homes anticipated to be released on land sold by the HCA. Of those, something like 6,900 have already been started, so the diggers are there—

Nick Smith

Nearly 7,000.

Peter Schofield

—and of those, something like 2,000 have actually been completed.

Nick Smith

So you have got a target of 20,000 and you have completed 2,000.

Chair

People are living in 2,000, approximately—they have been sold.

Peter Schofield

Yes. Andy had better do the numbers

Andy Rose

I am conscious of not bringing in information that was not previously reported, so I need to be sensitive to that.

Nick Smith

Well, Mr Schofield did when he talked about one of those sites, so I am just following that line.

Andy Rose

And again, these are clearly dynamic numbers. The latest numbers I am aware of, in our target, our contribution was 20,930 and at the latest figures I have received—again, you will appreciate that these move on a daily basis—just around 6,200 homes had been started and around 2,000 homes had been completed.

Nick Smith

We have just heard that three times now.

Andy Rose

Sorry, Peter said 6,900—

Chair

That is helpful; we have that now for the record.

Andy Rose

But I just wanted—Peter said 6,900, which is slightly more.

Chair

Sure, about 10%.

Mr Bacon

Perhaps we could briefly summarise your early evidence, Ms Dawes, because we had this contretemps about what the policy was, and therefore whether you had achieved it or not. Going back to page 1 of the Report, which you quoted, it says, “release enough public land to build as many as 100,000 new…homes”. I think I am not representing you—please tell me if I am—but your evidence is that your job was to release land towards homes, to use your own words.

Melanie Dawes

Yes.

Mr Bacon

And by doing that, you had achieved your target. It was not a criterion for you whether houses actually got built; that was not your target. That might have been a broader issue, but your job was to release land towards homes. Is that a fair summary so far?

Melanie Dawes

It is. I will just add one point. I completely agree with that, but in releasing that land, we absolutely had to be assured that homes were very likely to be built on it.

Mr Bacon

Right. That is very interesting, because I was about to come on to summarise the next part of what I thought you had said, which was that, none the less, despite the fact that that was not your target—that was simply about releasing land towards homes—at the same time you would be very concerned if there were no progress towards building houses.

Melanie Dawes

Yes. It would suggest that our assurance that homes were very likely to be built on that land was simply not good enough.

Mr Bacon

Yes. So, in other words, to use your most recent formulation and a fairly clear word, you “absolutely” had to assure yourself that it was “very likely”, again to use your phrase—quite how you determine whether it is “very likely” that something is “absolutely” so, or whether it is “absolutely” the case that something is “very likely”, I will leave to others to judge. But your evidence is that you had to make sure that it was absolutely very likely that houses would be built, even though that was not your target.

Melanie Dawes

That absolutely was part of the target. Simply to have released land for a supermarket car park would not have been meeting our objectives. We were only interested in land that had enough certainty, through having planning permission or being included in a local plan. Otherwise, the land did not count.

Mr Bacon

Okay. And earlier on you talked about value for money and you also said that your check, as it were, was: were all the sales individually conducted in accordance with value for money tests?

Melanie Dawes

Yes.

Mr Bacon

What I am slightly surprised by is that, coming along with this programme, an intelligent lay person would say, “Fine. How much land are we going to sell? How many houses will we get on it? How much money will we, the taxpayer, get for the land we are selling for x number of houses?” Those are questions to which I would have thought anybody would want to know the answer quite early on to answer the question, “How much bang are we getting for our buck?” But you don’t know the answers to those questions, do you?

Melanie Dawes

We did not ever seek to do that kind of programme-level understanding of the overall sales.

Mr Bacon

Right—that is what surprises me. Because, right at the beginning, if the aim of the exercise were to release land towards houses, I would have thought that a common-sense—the HCA was referred to earlier by Mr Jackson as doing a sense check for all of this, and a sense check would be precisely to try roughly to answer that question. So you have got 109,590 homes that you want to see built on these 942 sites. Do you have some idea of what the gross development value of those 109,000 homes is, or would be, because they are not all built yet?

Melanie Dawes

The simple answer is no, we do not. We never sought to approach the programme in that way.

Mr Bacon

Why not?

Melanie Dawes

As I said, our aim was to achieve the outcome of the land release for homes. A further aim for all accounting officers was to make sure that as they sold the individual assets, they did so with value for money.

Mr Bacon

How do you know? How do you get to the value for money point unless you start at the top and work backwards? For example, if you take 109,590 homes and you say that they will be sold for £200,000 each, you get to £21.9 billion. If you say that they will be sold for £400,000 each, you get to £43.8 billion. So your gross development proceeds will be somewhere south of £43 billion, but we do not know how far south. We also do not know what the costs are going to be, because there will be land that is fairly straightforward, land that has got big planning problems around it, and land that needs decontamination and so on. Surely the starting point in answering the value for money question is: how big is our pie? What will be produced by all this? And then to say: given all the development costs that will be involved, what would be a fair share of the pie for the developers? Given all the decontamination costs, what would be a fair share for the decontamination and the remedial work? And you work your way through until you get to the final and, for us, the most interesting question: what net, net, net would be a fair share for the taxpayer? But you cannot begin to answer. You have no way of answering that question or getting anywhere near that number. You have just shoved off the responsibility of doing that to a plethora of different accounting officers around the system, haven’t you?

Melanie Dawes

This is the difference between—

Mr Bacon

Sorry, is that a yes or no?

Melanie Dawes

I don’t think there is a clear, simple answer. I am not trying to overcomplicate this, but in the end I think that if you had the permanent secretaries of Transport, Health or Defence here, they would see it as their primary responsibility to make sure that the asset sales had value for money when they were made. I should point out that often—in fact, usually—the highest value that you will get for an asset is for housing, particularly in the current housing market. So the price issue is very likely to be consistent with a housing objective. But if accounting officers were going to get any discount on the market value and therefore any discount on the—

Mr Bacon

Sorry, you mean when the buyer was going to get a discount on the market value. When you say the accounting officers are going to get a discount on the market value, you mean the buyer.

Melanie Dawes

No, if the accounting officer is going to accept any discount on a sale, they would have had to justify that with value for money. It does happen quite a lot. For example, if you are releasing a site for a school or for some other reason, there might be quite good public policy reasons, consistent with value for money, why an asset might not be sold for the highest available price. As I said, with our programme, usually that was not a tension. Sometimes we did put money in to get a site ready for sale. In every case, that has to be justified as adding to the value that is ultimately received, so all of that money will be recovered through the sale proceeds. Very specific decisions were taken in those instances.

Mr Bacon

If I can just take you to one of the case studies, let us start with case study 10. This is the Department for Transport on page 41. How does the accounting officer in this case satisfy himself that the Department for Transport achieved value for money?

Melanie Dawes

By the way, I can confirm that that site has got planning permission, although the NAO was not able to obtain the data.

Nick Smith

Can you speak up a little? The acoustics are terrible in this room.

Melanie Dawes

They are. I can confirm that that site has got planning permission for 84 homes, so slightly shy of our number of 90, but none the less it has got permission. This site was sold in 2008. The accounting officer will have been looking at a range of factors. I do not know the details—

Mr Bacon

Neither does the National Audit Office. The Report says, “The National Audit Office was not able to obtain some details of the disposal from the Department for Transport.” Why would that have been?

Melanie Dawes

I do not know what information the NAO asked for in that respect. As I said, we have information on the planning status of it.

Peter Schofield

To answer the specific question of how the DFT ensured that it got value for money, the text is quite helpful. It sets out that it went through an auction process and they put in place clawback provisions.

Mr Bacon

Mr Rees, could you say what the information was that you could not obtain?

Matthew Rees

We asked for a standard pack of information on all of the schemes. We recorded the key facts, just showing where we were not able to obtain the information we needed.

Mr Bacon

Why was that? Because they did not hold it?

Matthew Rees

In many cases, it was either not possible to get it from the HCA or, where there was a private developer involved, we were sometimes unable to get it directly from them.

Mr Bacon

Ms Dawes, case study 8 on page 39. How would the accounting officer have established that it was value for money?

Melanie Dawes

Again, they would have gone through the detailed commercial case. There is a huge array of guidance available from the Treasury and the HCA on valuation.

Mr Bacon

They don’t even have a copy of the contract. You say they would have gone through it, but they don’t even hold a copy of the contract.

Peter Schofield

This was a sale by British Waterways.

Mr Bacon

So, you expect in this case the contract would have been held by British Waterways?

Peter Schofield

British Waterways owned a share in the development and then disposed of that share.

Mr Bacon

Whether there was overage or clawback, it says the information was not provided.

Peter Schofield

We do not know what discussions there were or whether the NAO spoke to British Waterways on that one.

Chair

Could Matthew answer that point?

Matthew Rees

We have not spoken directly on that one.

Melanie Dawes

Can I make a point about record keeping? I think some of these points came up earlier. The NAO makes the point, quite rightly, that the records that Departments had were not what they should have been. We are quite concerned that, when the NAO went in and asked for this information after the event, it was not there. That is something we absolutely need to address.

Mr Bacon

If the information is not there, how does one audit whether there was value for money?

Melanie Dawes

Again, from our point of view for the programme, the HCA records are there.

Mr Bacon

I am not talking about the ones that are there. I am talking about the ones we know are not there, because the Report says they are not there.

Melanie Dawes

Again, the value for money of the individual sales is not something that we sought to second-guess in the programme, but it is something that the NAO will have looked at as part of its regular audit.

Chair

I want to bring in David Mowat on these cases and I will come back to you.

David Mowat

The point is about accountability. You do not regard yourself as accountable for whether or not value for money was achieved, where it was not your Department that was the accounting officer. Is that correct?

Melanie Dawes

Not on any individual sale, no. I think that is the responsibility of the accounting officer.

David Mowat

In the example of case study 8, which was not your Department or HCA, your position would be that you and your programme director are not accountable for that value for money, because that is not what you were directed at. You were directed at getting the land released.

Melanie Dawes

Getting the land released, that is right.

Mr Bacon

I would accept that.

Melanie Dawes

We would be really concerned if we were confusing accountabilities.

Mr Bacon

But that makes it all the more important that the person who is the accounting officer has access to the information. That is my point.

Chair

I think that was David’s point, too. Can we let David finish?

David Mowat

I just wanted clarity on that, because you regard your accountability, as you have defined it in paragraph 1, as getting those 942 packages of land released, and therefore the accountability of whether it was value for money—unless it was the HCA—was outwith your Department, and the accounting officers, if they did not do that, were not doing their job. It would not have been to do with you or your programme director. Is that right?

Melanie Dawes

Yes, that is right.

Peter Schofield

Paragraph 11 on page 7 is very clear about accountability for individual sites.

Mr Bacon

Can I just take you to two more case studies briefly? The one on page 35 is case study 4. This is a site that I think was an old RAF station, where I am pleased to say there is going to be lots of self-build, I believe. One has got in there the volume of the land. It was 187 hectares and the proceeds from the disposal were £27.3 million. Do you think it fair and reasonable for those data—the volume of the land and the proceeds from the disposal—to be disclosed in that way?

Melanie Dawes

In a way, I assume the NAO assure themselves of that before disclosing it.

Peter Schofield

It is worth saying that this was an exchange between two public sector bodies. It was a purchase by Cherwell district council from the Ministry of Defence. In terms of auditability and transparency, in this case it is appropriate.

Mr Bacon

But in each case, whether it is being sold to another public sector body or a separate private sector body, it is still a public asset being sold, so the taxpayer has an interest in knowing the value at which the transaction took place—yes?

Peter Schofield

Absolutely. We need to be satisfied, as paragraph 11 says, that this was done in a value-for-money way. But in this case, it was a local authority making the purchase of the site as well, so I think there is a strong case.

Mr Bacon

Yes, fine, and so much the better from the point of view of extra layers of transparency. What I am not clear about, if you turn to case study 9 on page 40, is why different considerations applied because the buyer is a private sector buyer. The vendor is still a public sector vendor—in this case, the London Legacy Development Corporation. We know that there are going to be 1,850 homes, but the details of the sales contracts are “not provided due to commercial confidentiality”. How do we, on behalf of the taxpayer, assess whether this deal was value for money or not?

Peter Schofield

The onus will be on the accounting officer of the LLDC to be satisfied that this was a value-for-money deal. I do not know enough about the way that the LLDC would be disclosing information in their accounts as to whether this is something—

Mr Bacon

It is not disclosed. The NAO did not put the number in here because presumably, Mr Rees, you could not get it.

Matthew Rees

Yes. That has not been provided to us.

Mr Bacon

You could not get the number—the National Audit Office could not get the number. The point, Ms Dawes, is that this is a public asset that has been sold and the NAO cannot find out what it was sold for. I will repeat my question: how can we be sure that public, taxpayers’ value was secured?

Melanie Dawes

The way to assure yourself is to look at the accounts of the individual holders of those assets, which the NAO have done as part of their audits. I am not suggesting that the Committee do that, but that is where the information and the audit would have taken place.

Mr Bacon

What?

Chair

Perhaps we should bring in the Comptroller and Auditor General in to clarify this.

Sir Amyas Morse

Thank you for that suggestion. When we audit people’s accounts, we are providing a true and fair opinion of the overall accounts. It is not automatic that we look at value for money on transactions; it is just not done like that. For us to look at value for money by a particular body, we have to pick a transaction out and look at it for a reason. I am sorry to disappoint you, but that is not how it works.

Mr Bacon

In any case, my question was not a financial audit question; it was a value-for-money question. How do we satisfy ourselves that this transaction was good value for the taxpayer?

Melanie Dawes

My answer is that it is a question for the individual accounting officer in that department. I completely acknowledge that we did not set out to be able to answer those questions through this programme. It is just not one of the things we set out to do—not for individual sales.

Mr Bacon

Is not the whole basis of managing public money when disposing land that you are able to answer those questions?

Peter Schofield

Paragraph 11 is very clear. The accounting officer is not accountable to Melanie; they are accountable to Parliament on their own behalf.

Mr Bacon

We may have to have a few more hearings on this. When I asked you that question, Ms Dawes, you shrugged.

Melanie Dawes

If the NAO’s regular audit of the accounts has not provided a systematic way of looking at these things and there is a concern—

Mr Bacon

You are missing the point. The NAO asked for and could not get this specific piece of information. That being the case, how do we assess whether this transaction was value for money?

Peter Schofield

I think it comes back—I will repeat the point—to the obligation of the accounting officer in each case, as paragraph 11 says, to satisfy themselves that the transaction was value for money. I do not know whether you were being frivolous in your suggestion, Mr Bacon, about the Committee’s agenda, but if you wanted to, I imagine that would be the way to satisfy yourselves.

Mr Bacon

I was not being frivolous at all. Do you know who the accounting officer for the London Legacy Development Corporation is?

Sir Amyas Morse

I have a funny feeling it might be the Mayor of London.

Peter Schofield

It is a GLA body.

Chair

The hon. Member for Uxbridge and South Ruislip, as we know him here.

Mr Bacon

Can I ask about interest-free loans—the build now, pay later question referred to in the Report? How many dwellings have been completed—

Chair

Nick is bursting to come in on the last point.

Nick Smith

I want to follow up on your last points about the London Legacy Development Corporation and the contract amount for that plot of land. Earlier, Mr Schofield, you told us about how many homes were being built on the Royal Mail site at Rathbone Place. How much money has been gleaned from that sale?

Peter Schofield

By Royal Mail plc?

Nick Smith

Yes.

Peter Schofield

I don’t know the answer to that question.

Nick Smith

So you know the number of homes but not the money?

Peter Schofield

Yes.

Nick Smith

Can you find out? They are a privatised organisation, aren’t they? Can you let us know how much money that plot went for?

Peter Schofield

Why don’t we speak to the Department for Business, Innovation and Skills, which has the shareholdings of Royal Mail and see whether we can get that information?

Nick Smith

My point is, therefore, if you can do it for that, can’t you do it for the London Legacy Development Corporation and find out how much the contract for that plot is?

Peter Schofield

Can we take that away and see what we can come back to the Committee with?

Nick Smith

So you will write back to us with the amount of money for that contract?

Peter Schofield

I don’t want to promise something. I don’t know whether I can find it but I will take the request and we will come back to you with what we can find.

Chair

We will pursue that. While we are on the subject of Royal Mail, one of the other big issues about these disposals is the notorious example of Mount Pleasant sorting office, where the land was sold by the public body as a car park and then became a housing site with a small amount of affordable housing and a lot of expensive, luxury housing. That is not value for money, whichever way you cut it. Did the Department have any measures in place to stop those sorts of shenanigans—I suppose that would be a polite word for it?

Melanie Dawes

It has certainly been subject to a lengthy judicial process. I do not know whether my colleagues can answer on that specific site. I was not involved on those details at the time.

Peter Schofield

Yes, it certainly is not our Department. We were not involved in the sale.

Chair

I know it wasn’t your Department but this is the programme that DCLG is responsible for.

Peter Schofield

Yes, but I understand that there is a planning matter here, which is quite difficult for us to comment on.

Chair

Okay, I will leave that for now but we may come back to it.

Mr Bacon

The great fear about this entire programme is that, when it is looked back on when all the houses are built in n number of years—12 or 15 years, or however long it is—a lot of people will have made a killing, and you, on behalf of the taxpayers driving this programme, along with other accounting officers in other Departments who are individually responsible for the disposal of particular sites, will not collectively have done enough to secure value for money. The great fear is that, of the total pie, whatever that turns out to be—£43 billion, £33 billion, £25 billion or whatever—the taxpayer will not have got enough of it.

Melanie Dawes

I appreciate that we cannot answer that question at the programme level. We have to rely on accounting officers doing their jobs properly in Departments.

Mr Bacon

My worry is that you didn’t even try to answer that question at the programme level. You didn’t even come up with a rule of thumb or a basic, rough sense check on what it ought to look like.

Melanie Dawes

I accept that we cannot answer that question at the programme level, but I am not sure that we do accept that, somehow, accounting officers were unequipped with the information that they needed. There is a lot of guidance on how to sell assets appropriately for different uses—

Mr Bacon

On that point, which guidance was made available to Departments to help them in the process?

Peter Schofield

There was guidance on build now, pay later, which I think is referred to in the Report.

Melanie Dawes

There is the RICS red book as well. There is a variety—

Mr Bacon

What about the Government’s own guidance? The RICS red book is a nice quick, articulate-sounding—

Chair

I have the RICS red book here.

Mr Bacon

How very convenient.

Chair

Would it be helpful to read out the RICS definition of “market value”? It says, “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.” One of the issues here was that there was a three-year deadline on that, which quite clearly suggests that there was a compulsion to sell. It doesn’t actually really meet what is written in the red book.

Melanie Dawes

Well, there wasn’t a deadline. There was certainly an aim to achieve the sales by the final target date but any accounting officer that had had a concern—

Chair

So people could go over the three years?

Melanie Dawes

If an accounting officer had a concern that they would have to sell an asset too soon and that that would cause a value for money problem—

Chair

Can you give us an example of where that happened?

Melanie Dawes

No, I don’t have an example of where that happened. I can give you a couple of examples of where they didn’t act inappropriately, but I can’t give you any examples of where they did.

Peter Schofield

There are a couple of big MOD sites that we had originally expected to be sold. For example, we thought Ashchurch in Gloucestershire might be part of the programme, but in the end it wasn’t sold before March. It was assumed that Lodge Hill, which is in the Medway area, would be part of the programme, but it wasn’t sold in the end because it was classified as a site of special scientific interest by Natural England.

Chair

So it wasn’t sold because it was a site of scientific interest, rather than because it would have been sold too cheaply if it went within the three years.

Peter Schofield

It goes back to what we were saying at the beginning about the assurance of housing development.

Chair

The point was that if a site has to be sold within three years, once you get to two and a half years the developer knows they have got the Department over a barrel on selling that taxpayer asset, because they have got to sell it quickly. My point is, can you give an example of one that went over the three years because it would have been a fire sale?

Peter Schofield

Ashchurch in Gloucestershire was a classic example. Those two were very large sites, relative to the rest of the programme. This was a significant issue, in terms of delivering the overall number. They weren’t sold, but there were good, specific reasons in both cases.

Chair

They weren’t delayed because of the fear of selling them off cheaply in a fire sale. They were delayed for other, external reasons.

Peter Schofield

They were delayed for a series of reasons, which were different in each case. I appreciate that. The point I was making is that there was quite rightly pressure on the accounting officer for effective asset management. Where there were good reasons not to proceed with the sale, even though potentially it might have been a challenge for us to achieve our overall targets if those sales didn’t go forward, they didn’t go forward, and we had to find other ways of achieving the target.

Mr Bacon

Can we go back to the question of the guidance? Ms Dawes, you were talking earlier about there being a lot of guidance around. You mentioned the RICS red book, and the Chair quoted from it. What other guidance did the Government have that you—the Department driving this and therefore advising other Departments on the requirements of the programme—provided or made sure was provided to Departments?

Melanie Dawes

I am going to ask Andy to give you a bit more detail about the expertise that the HCA were bringing to the table. They provided a lot of expert support, which was not always there in Departments at the beginning of the programme.

Andy Rose

I will provide one word of clarification on what was actually clarified as disposal.

Mr Bacon

Sorry, can you speak up?