Y Pwyllgor Llywodraeth Leol a Thai

Local Government and Housing Committee

05/06/2024

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Altaf Hussain
Carolyn Thomas Yn dirprwyo ar ran Lee Waters
Substitute for Lee Waters
James Evans
John Griffiths Cadeirydd y Pwyllgor
Committee Chair
Luke Fletcher

Y rhai eraill a oedd yn bresennol

Others in Attendance

Clarissa Corbisiero Cyfarwyddydd Polisi a Materion Allanol, Cartrefi Cymunedol Cymru
Director of Policy and External Affairs, Community Housing Cymru
David Rees Prif Swyddog, Cynllunio Strategol, Cyngor Abertawe
Principal Officer, Strategic Planning, Swansea Council
David Ward Prif Weithredwr, Tirion
Chief Executive, Tirion
Dorian Payne Rheolwr Gyfarwyddwr, Castell Group
Managing Director, Castell Group
Emily Owen Aelod o'r Cabinet, Cyngor Bwrdeistref Sirol Conwy
Cabinet Member, Conwy County Borough Council
Jim McKirdle Swyddog Polisïau Tai, Cymdeithas Llywodraeth Leol Cymru
Housing Policy Officer, Welsh Local Government Association
Katie Clubb Pennaeth Gwasanaeth, Gwasanaethau Tai Strategol, Cyngor Bwrdeistref Sirol Conwy
Head of Service, Strategic Housing Service, Conwy County Borough Council
Mark Hand Cyfarwyddwr Cymru, Gogledd Iwerddon a Chymorth Cynllunio Lloegr, Sefydliad Cynllunio Trefol Brenhinol Cymru
Director of Wales, Northern Ireland and Planning Aid England, Royal Town Planning Institute
Mark Harris Cynghorydd Cynllunio a Pholisi yng Nghymru, Ffederasiwn Adeiladwyr Cartrefi
Planning and Policy Advisor Wales, Home Builders Federation
Matthew Dicks Cyfarwyddwr, Sefydliad Tai Siartredig Cymru
National Director, Chartered Institute of Housing Cymru
Rosie Jackson Rheolwr Strategaeth a Datblygu Tai, Cyngor Abertawe
Interim Housing Strategy and Development Manager, Swansea Councill

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Angharad Era Dirprwy Glerc
Deputy Clerk
Jennie Bibbings Ymchwilydd
Researcher
Rachael Davies Ail Glerc
Second Clerk

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.

The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.

Cyfarfu’r pwyllgor yn y Senedd a thrwy gynhadledd fideo.

Dechreuodd y cyfarfod am 09:15.

The committee met in the Senedd and by video-conference.

The meeting began at 09:15.

1. Cyflwyniad, ymddiheuriadau, dirprwyon a datgan buddiannau
1. Introductions, apologies, substitutions and declarations of interest

Welcome, everyone, to this meeting of the Local Government and Housing Committee. We've received apologies from Lee Waters MS, and Carolyn Thomas MS is attending as a substitute. Croeso, Carolyn. Welcome back. It's not long since you were here regularly, of course. As we've previously noted, Sarah Murphy, who was briefly a member of the committee, has recused herself from all committee business following her appointment as a Minister, but Sarah does remain a member of the committee until a replacement is elected. But, obviously, Sarah isn't here today. 

This meeting is being held in hybrid format. Aside from adaptations relating to conducting proceedings in that way, all Standing Order requirements remain in place. The public items of this meeting are being broadcast live on Senedd.tv, and a Record of Proceedings will be published as usual. The meeting is bilingual, and simultaneous translation is available. Are there any declarations of interest from members of the committee? There are not.

2. Cyflenwad tai cymdeithasol: Sesiwn dystiolaeth 3
2. Social housing supply: Evidence session 3

We will move on to the second item on our agenda today, our third evidence session with regard to the committee's inquiry into social housing supply in Wales. I'm very pleased to welcome our two witnesses here today: Matthew Dicks, national director of the Chartered Institute of Housing Cymru; and Clarissa Corbisiero, director of policy and external affairs for Community Housing Cymru. Croeso. 

Let me begin with an initial question or two before we turn to other committee members. Firstly, in terms of how we measure housing need in Wales, how effective do you think are the current methods of measuring housing need, both nationally within Wales and more locally?

I'm happy to start, if that's okay. Local housing market assessments are absolutely critical in this and are incredibly important, both in terms of understanding different types of need but also importantly for the content that we're talking about today to make sure that that high-quality data flows through into prospectuses locally and helps to direct available grant to where it's most needed. We're really pleased that the Welsh Government is working with local authorities to update LHMAs. That's a really important task. We do think that there is some work to do to join up LHMAs with other data sources that exist in a local area, for example with rapid rehousing plans or with the population assessments that are done under the Well-being of Future Generations (Wales) Act 2015. We think that, if we can link all of these different pieces of data up, we can get a proper understanding of need, including homelessness demand, which will help shape services. In some parts of Wales, you might see this play out in different ways. For example, in some areas of Wales, we might have a lower demand for social housing. You might also, if you link up better with social services data, be able to spot where you might need some specialist accommodation. That might then feed through to services but also to specialist funding for that accommodation. So, linking up the system is a really important part of it. 

Clarissa, do you have a sense of how easy that would be to do? Because obviously when you get to different computer systems and administrative systems, it can be a lot more complicated than it sounds. Would you be in a position to have a view on that?

I don't underestimate how difficult it is to link up data systems. It's very easy to say, isn't it, and very difficult to do. But, with some of this, we do have opportunities when we're thinking about new plans and new strategies. Rapid rehousing is a great example. Local authorities have very recently been pulling together those rapid rehousing plans. So, when we're at the start of something, let's think wider, I think. But you're absolutely right, Chair, that it is tricky, particularly across boundaries. And I do wonder if perhaps there's a role for regional partnership boards and wider organisations to think about data as a strategic project, because it matters for so many of the service planning models. 

It certainly does. It's an issue we always rub up against. Matt, did you want to add anything?

Yes. Just building on that point, how many times have we discussed in this committee data and the lack of the right kind of data or the data we want? What do we want the data to tell us? I think that's the biggest point to make about LHMAs, which Clarissa was making. I'll point you to the Tyfu Tai Cymru report on need and desirability that we published back in February. That had a big focus on the fact that we've got the quantitative data, but it's that qualitative data that we're perhaps missing—the type of housing, not identifying overcrowding, not identifying multigenerational need et cetera, not identifying enough in terms of the type of housing. There is a massive demand on one-bed accommodation at the moment—it's about where we need that and how we need to get that up in scale and quantity et cetera. So, I think that's the main point to make: we need to work on how we get that more qualitative data, because we're failing to recognise hidden housing need, I think, in the data we have at the moment.

It's almost that the process should be to focus on local housing need assessments rather than housing markets. I think that's one way of looking at it. And some of the suggestions we've had in that work we did for Tyfu Tai Cymru were around the Welsh Government leading on a regular, Wales-wide census-like housing survey to ensure that we get that robust housing data. Because I think the biggest point we highlighted in our written evidence was the rising levels of homelessness, particularly with rents in the private rented sector 29 per cent higher in 2024 than at the beginning of the pandemic. So, the need assessment is based on old data as it is, but even if we get new data, is it the right data, is it the qualitative data that we need to make the right choices about the types of housing that we need to build?

09:20

That's useful, and I'm sure, as we go through this inquiry, we're going to be giving considerable thought to those data issues, because they are very important for obvious reasons. In terms of delivery of housing and your view on the land division's work here on delivering homes on exemplar sites, how do you think that work would be best taken forward?

On the exemplar sites, 6,000 homes was the ambition, across 27 sites—I think it's 2,600 affordable over five years. That's part of the jigsaw, obviously, but in terms of the housing crisis we face, is it at the pace and scale that we need, with other elements of the strategy as part of the jigsaw? Is it ambitious enough? I'd point you back to the Lynn Pamment review, back in 2019, in terms of their recommendations around land and use of public land. It's quite clear, and I'll quote from it. They recommended that

'An arms-length body should be established by the Welsh Government to act as a hub for public sector land management and professional services. This body should work alongside individual departments / bodies to provide capacity and resources to accelerate development of public land assets.'

I think that recommendation came in response to the response from stakeholders. The sector is very clear on what they want to see in terms of the use of public land and how it's all joined up and those back-office functions around compulsory purchase order et cetera. But I think it was also in response to their analysis of Ystadau Cymru, which identified a lack of knowledge about public estates within Ystadau, and fragmented governance and limited capacity over strategic housing enabling functions, like section 106 and CPO. So, I think that's what the Lynn Pamment review was thinking about: joining things up and pulling those functions together in a more strategic fashion.

I think that that's where we were getting with the discussion around Unnos. What's going to happen with that following the ending of the co-operation agreement? Our hope would be that that moves forward to create some kind of strategic entity, as it were—some sort of land agency that is arm's length to pull that expertise and those skills together, and that entrepreneurial spirit almost in terms of scaling up the building of social housing, because this project—addressing the scale of the crisis we face—is beyond the political cycle. It's a longer term cycle than the political cycle—it needs to be five, 10, 15 years in the making. So, we need that strategic vision to continue through whatever we're seeing at a political level.

On that point on the arm's-length body, are we going back to the future with things like the Development Board for Rural Wales—that type of thing where you had a development board—or the Welsh Development Agency? Is that the sort of thing that you're talking about here, which is separate from Government, which did have that entrepreneurial drive to get things done and develop sites? It was a bit wider, as they were more economic units, but is it a similar set-up to that?

That is a model, and I think, from my recollection of the Pamment review, that was what was in their thinking. How arm's length the body needs to be is a matter of political choice, isn't it, and choices are difficult. 

On that point, Matt's absolutely right: there are different models that you can use. But I guess the key point here is you need a body of resource, whether it's within the Welsh Government or outside, and if it's outside of the Welsh Government, it's a conversation about what value does that get you; does that get you leverage and greater flexibility, I guess, is the discussion to have. But I guess the key things that any body needs to have is it needs to be able to focus on building transparency about the landholdings that are already out there—so, opening up the e-PIMS system, making it much clearer, and also talking to departments about their surplus public landholdings—are they surplus, are they suitable for housing—and have that internal expertise. And sometimes have a little bit of grit in the conversation, actually, about really is there something here that you could make available through this pipeline. And also a source of internal expertise. We saw this happen probably a decade ago in England, where they had a very similar situation and they looked to the Homes and Communities Agency to provide that internal expertise and that challenge to bring forward a pipeline of sites.

I guess the last thing I would just point to—Matt's absolutely right that there's been some good work done by the land division, and I think 'exemplar sites' was exactly the right word to use, actually, in terms of demonstrating what could be done—is that there are so many individual pockets of best practice out there, whether it's through the land division or through working with the NHS or otherwise. But the key here, and what a more focused and longer term approach to this would do, is to scale up that good practice, to make it much more commonplace. For example, the NHS guidance talks about social value and making sure that social value is considered when disposal is made on a much more widespread basis. I completely agree with Matt that you need a much more focused and long-term approach to that, and a bigger scale than we currently have.

09:25

I was just thinking it could be useful to ask the Minister where are we at with the cadastral mapping, which we've thought about previously, haven't we, at committee, when we looked at land value tax as well. And when we talk about public land, I know local authorities look at what land they've got and then they would look at what land local government have got. I know in north Wales, Betsi Cadwaladr are looking at setting up a housing and health committee, because they're looking at housing. There's the police as well; I know, speaking to the police and crime commissioner in north Wales, they've got a lot of land as well, and estates. So, it looks like we could do with joining up all the public estates. You mentioned the land development board, but there's also public services boards as well, and I wonder if they discuss it at that level, the land availability. So, just working through all these ideas and suggestions going forward, if they could be captured. Is that something that you've come across, that there have been calls for the police to look at their estate as well as health and other public land?

I think north Wales is a great example, actually, because there's quite a lot of co-operation that's happening across north Wales in terms of the associations working together as part of the north Wales growth deal and about how you can use surplus public sector land, but also how you can bind together as a coalition of associations to think about larger packages of land that might be too risky for one on their own, but actually, as a collective, you might be able to do that. So, it's a different conversation; it's a more strategic conversation. But I think you're right: there are structures that could help us to do that.

Doing that at scale as well is much more affordable, because they're saying that it's difficult. Rural areas need housing, but building in small pockets of land can be really difficult, and getting that resource—the builders there, plumbers—whereas if you can develop over a larger area, it's financially easier, and also getting the resources there, the building materials and the builders. Talking to housing associations recently, they were saying that. So perhaps building at scale and joining up might be better.

Yes, and I think Clarissa hit the nail on the head when she was talking about the NHS social value side of things. There is a culture shift that's needed here in the way we think about how we use public land and the value we attach to it. I think there's a question that you're going to come onto later about what the guidance should be or the guiding principle for land use by local authorities. At the moment, it's value for money, we've got to get it at market price. But actually, there's a social value to building social housing, affordable housing, or all types of housing on those sites, and the cost-benefit to Government, to society as a whole—. We did the cost-benefit analysis for the implementation of the right to adequate housing, and there's £11.5 billion-worth of savings if you give every single person the adequate housing they need over a period of time, and £2 billion of that to local authorities. So, we have to change the paradigm. The scale of the crisis we face means that we have to make those radical decisions, and I think a step along the road to an entity that pulls all that together at a more strategic level and delivers at a higher scale and pace, and the use of public land—

09:30

[Inaudible.]—at last. [Laughter.]

Diolch, Gadeirydd. How important are acquisitions in all the delivery aspects of things? We've talked a lot or we've heard a lot about the different capital programmes that are available to help move things along. I suppose there'd be a double question here: if it is important when we look at these capital projects, are there ways of improving them or are they fit for purpose as they currently stand? So, we'll start with Clarissa.

Thank you. So, acquisitions are a really important part of the mix, and I think there's a lot of focus on the 20,000 target, and, overall, it's absolutely a force for good in focusing minds and bringing grant through the system. But a really important, newer element of that is the transitional accommodation capital programme, TACP. That really has allowed housing associations to scale up their acquisitions programmes. It has allowed them to think more broadly about reconfiguring existing stock. I think the focus here should be about more social housing in the system, with new being a big element of that, but, actually, we need to make the best use of what we've got. Given the challenges that we see, the numbers of people in temporary accommodation, we cannot wait for everything to come through the planning and consenting system, we need to think really creatively, and TACP has been important in that.

I think what's really interesting is it was massively oversubscribed last year, from what I understand, so there's huge appetite there to be able to do more around acquisitions and remodelling. We'd like to see it scaled up, we'd like to see the same approach that the Welsh Government has taken to social housing grant taken to TACP, so that multi-year settlement that builds confidence over time. So, you could have a real long-term acquisition strategy that would allow you to not gear up for a grant funding round and then come back down again. It would allow you to smooth that over a period, taking a more strategic and long-term view, because we think there's lots more opportunity.

One of the things that we've been looking at is the scope for right to buy buy-backs, which present a real opportunity. Our estimate is that there are probably about 130,000 right to buys out there. Now, obviously, not all of those are eligible for buy-backs or anything like that, but there is a real interest in thinking about whether or not there is scope to increase the number of buy-backs, because, of course, they're on a similar footprint. You haven't got the challenges of a different kind of quality, they're easier to retrofit, all those kinds of things. So, a longer term and multi-year settlement for TACP, making it just part of the grant mix, would really help.

On acquisitions, I've said before that I was cabinet member for housing in Powys, and I was always very keen on acquisitions. Bringing ex-council homes back into the stock, I thought, was a very good thing. But one thing that I always felt was a bit of an annoyance—well, not an annoyance, but a difficulty sometimes is that Government keep changing the goalposts with regard to EPC ratings and the energy ratings of properties. There are some ex-council properties where the only way you'll get some of the EPC ratings is to flatten them and to build a new house on top of them, and that was the only way you could access some of the grants as well. If they didn't conform to these EPC ratings, they wouldn't give you enough money to actually retrofit them and bring them up to standard. So, I'm just interested: is that an issue that you see across the piece in Wales with acquisitions, that this can be a blocker to actually bringing them back in, because some of them will never make EPC ratings A and B, no matter how much you try?

You're absolutely right, and it absolutely is still. You're right, not all right to buy buy-backs are possible to bring up to standard, but I guess the footprint helps you in the sense of space standards. But some of the challenges for associations when they're looking at acquisitions are exactly the point that you just made, that, actually, yes, you might get funding for the upfront cost of acquiring the home, but the cost of bringing that up to standard is enormous. Now, TACP gives you some time to do that, so you're not required to have it at Welsh housing quality standard immediately, which helps, but, still, you have to do that cost-benefit analysis internally to see whether or not it is worth the grant over the long term. So, that is a real challenge, that diversification of standards.

Yes, I concur with that. I was going to make the point that right to buy buy-back is a key development in acquisitions, because, as Clarissa was saying, in terms of space standards and size standards, et cetera, a lot of those ex-council houses will be easier to bring up to standard than, perhaps, if you're buying from the PRS. So, at the moment, if you're buying a lot from the private rented sector, then it'll cost more to build them up to WHQS, and you only have those five to 10 years. So, are we saying that we'll be able to solve the housing crisis in 10 years and be able to afford to bring that existing stock up to standard before we have to sell it back on, and then be back to square one? So, yes, it's a lot of balancing.

09:35

It's whether you want houses now or whether you want houses in 10 years' time.

And getting them both means compromise, doesn't it, and sometimes—. Do you find—? Sorry, John, to cut back across.

Do you find sometimes that Government don't, perhaps, see the practicalities of some of it? It's very easy, when you're sat in Cathays, to come up with these lovely ideas of how we're going to do things, but actually the delivery and the practicalities of it on the ground are very different to some of the policies that sometimes come out of Cathays Park.

Well, yes, because, as I was saying, political cycles are a lot shorter than housing development cycles, which is why we're heavily focused, as an organisation, on the right to adequate housing being enshrined in law, because it holds current and future Governments to that process and it goes across Senedd terms and ensures the investment and the priority coming in.

If I could just add, Chair, I think one of the things that we would say is that there is a lot of energy and focus and scrutiny placed on policy making, and quite right too, but there is less placed on implementation and understanding the cumulative impact of what is an absolutely vast reform agenda. And for delivery organisations on the ground—and I can only speak for housing associations, but I suspect we are not alone—actually, you are trying to take forward groundbreaking legislation and requirements on multiple fronts. That not only adds cost, it adds risk, but also the capacity is very, very limited. And so, there have been examples where Welsh Government have been very pragmatic, so, around the target and the headwinds, actually, we've seen a really pragmatic hands-on approach, and that's been really helpful. We'd love to see that same approach to thinking about how you then implement the reform agenda across the WHQS, for example, or the new homelessness legislation, so that, actually, you see things in the round and across the silos. Because, as delivery organisations, you're dealing with all of it, all at the same time, and it's a strain.

I mean, the counterintuitive is: where would we be if we hadn't had the pandemic? We were lobbying the Government hard before the pandemic to get a longer term cycle of commitment to social housing grant, and we got it over the three-year spending review, and before the pandemic, we had three years of funding at 2019 prices. But obviously, we've had the pandemic, we've had huge inflationary uplift, so that money's not worth what it was; it's worth a lot less than it was three or four years ago. So, it's events as well that affect the decision making.

We've touched on it quite a bit there in terms of the scale of the challenge we're talking about now, in terms of getting up to speed with social housing and resolving the crisis. How do we look at, say, modern methods of construction as a potential solution to getting up to speed with numbers? Is that something that is worth looking at? And then, thinking about what you've just said around delivery, how do you actually deliver that? Because I agree with everything that you said; we focus a lot on policy and sometimes the implementation of that policy and the delivery of that policy fall through the cracks.

Yes. I think modern methods of construction are a really important part of the mix. There are no silver bullets here, but we need as many different kinds of strands as possible and there is lots of activity already taking place. So, we've got a number of housing associations that are working with MMC factories and pushing through a pipeline—United Welsh, Cartrefi Conwy, Tai Tarian amongst many others—and there is a lot of appetite to do more. But your question was, 'How? How can we scale that up?'

Some of the challenges are around the planning and consenting system. Planning is often used as a kind of catch-all, but it really is both that we're talking about here. There is so much uncertainty in that system, and for a modular programme, you really need to be quite exact about when those properties are going to be able to come on site. Otherwise, you end up, like Legal & General did in England, with an airfield full of modular units ready to go, with nowhere to put them, which is obviously hugely expensive, highly risky and not particularly sustainable. So, you need much more clarity over when things are going to come through the system, and I'm sure we'll talk more about planning here, but looking at that system end to end and thinking about how we can build some more certainty into it, whilst not losing any of the scrutiny that is absolutely essential, is important.

A second thing that would help is the standardisation of different house types and, again, that would help things move more quickly; it would be much clearer, much simpler to be able to produce those units quite quickly. And there are some things—. We know that the Welsh Government has got a project under way, but the demand is such that, actually, we see some housing associations not really being able to wait for that to finish and having to make their own decisions in the meantime. So, we're keen that there's some speed put behind that work to standardise different house types. I think that would really make a difference.

There are some things that have helped. During COVID, the Government relaxed some of the permitted development rights, which allowed you to be able to move much more quickly. We can see some associations working with their local authorities to think about how you can use modular units to help with the temporary accommodation crisis, moving people out of bed and breakfasts and into a home. We know that a number of local authorities are working really collaboratively with their housing association partners to look at garage sites, infill sites—those kinds of things—and all of that helps. But that permitted development right is only for a year, so, again, all of the risk is on the developer, on the association. You can take it for a year and get it up, but then you've got to retrospectively apply, so that risk comes back in again. So, what can be done to either fast-track that or extend the period that you've got for permitted development?

I guess the last thing I would say is that some of this is about hearts and minds, demonstrating that this is possible and that it is efficient, it is cheaper, but, actually, what you need is a bit of scale behind it. I think the Welsh Government can play a really important convening role there, but we've got a number of associations that would both be pleased to talk to this committee, but also to work with the Welsh Government and local authorities to put some scale behind this.

09:40

I'd echo all of that. We mentioned United Welsh. Just some statistics for you: they have the capacity to deliver 500 modular affordable homes a year, with construction around six weeks less than a traditional build. So, that shows the pace that we can uplift with modular build, and we've got, as Clarissa said, several examples of hubs around the country. How do we scale that up? I think we're back to the discussion that we were having earlier about land and what this land division entity or facilitating entity should be or should look like, and back to that discussion around what Unnos was going to be, I think, in terms of pulling all of those things that Clarissa was talking about into this one entity that can function and pull all of that together—that can pull the parcels of public land together, that can pull the compulsory purchase order and section 106 expertise together, that can pull together the planning at a more strategic level, and focus that and build more hubs around Wales.

At a more basic level, it's an economic driver, isn't it? We're all talking about growth. The number of jobs that a facility like United Welsh is offering—not just direct jobs, but in the local supply chains, upskilling et cetera, and creating net-zero skills, you know—. We use the term 'no-brainer' sometimes, don't we, but it seems like a sensible way to pull all of that together.

Just on modular homes, I'm a big believer in modular homes, but one thing I'm interested in is how—we're going to move on to finance, but how the financing of that actually works, because it's not classed as a standard method of construction. So, I'm interested, from the housing association point of view—. Obviously, you have to borrow money from lenders—you don't get all of your money from the Welsh Government. How do lenders see the building of modular homes? Are they quite receptive to giving money to build those types of properties? I'm interested because I know that if, say, I wanted to build a modular home, I wouldn't get a mortgage on it—a lot of high-street lenders and big banks won't borrow on them because of the risks associated. I'm just interested: do you ever see any issues with borrowing money on modular homes? I'm just interested, really.

Yes, I think I would describe it as it having been a journey, to be honest. Again, it's a bit like what I said earlier about hearts and minds, and getting people—lenders and others—to feel confidence in this as a build type. I think key things in that are: you're building modular homes, and it's not all or nothing. Sometimes, parts of the home are modular and other parts are traditional builds; you can mix and match some of this. But they're meeting development quality requirement standards, for example, so all of those kinds of things help to build confidence in it.

The association I spoke to yesterday about this reported no challenges in terms of accessing finance, so I think things have moved quite a long way. There may still be pockets of work to do, and, as you mentioned, accessing mortgages can still be challenging. Building that confidence is absolutely central in this, but things have moved forward positively.

Thank you, Chair. Coming to the finance and house building, can you share your views on the funding environment for social house building? Are the grant regime and rent settlement providing you with enough certainty to provide these houses?

On grants in particular, what has been fantastic is the Welsh Government taking that multi-year approach to the social housing grant; that's made a big difference. So, where they have been able to introduce confidence or certainty in a really uncertain system, that has really helped, and we've been really grateful for the protection of that funding, year on year, in what we know has been a very, very difficult budgetary environment. So, that's been great.

We would like to see a similar approach to the end of the Senedd period and—let's be optimistic here—beyond. I think, for us at CHC, £1 billion for the social housing grant is record-breaking funding. We would like to see that seen as a floor going forward. Matt mentioned earlier that's based on 2019 prices. The cost of building a home has gone up about £100,000 since then. So, that needs to be factored in. None of this is cheap, I understand, but the social housing grant is an absolutely core part of that. I previously mentioned putting TACP on a similar footing would really help. 

On your question about rents, a long-term rent framework is absolutely central to our ability as a housing association sector to be able to build the homes that we need, to be able to invest in existing homes. We're really pleased that the Minister has extended the current policy for a further year. Again, that builds in some certainty, but we know that we're slowly running out of ground here in terms of the current policy. We need a swift but detailed conversation with Welsh Government and partners about what comes next so that we have a policy that balances affordability with sustainability and viability, so we can keep that investment going in social housing.

09:45

Yes, it's just the old 'affordability of rent' versus 'enough money in the system to develop', isn't it? Just going back to the record investment, obviously, that's to be welcomed, and longer term certainty over SHG. But we were working out yesterday, the £365 million that we had this year for SHG—that money that was set three years ago so it's worth £40 million less than it was three years ago at the beginning of the spending review period.

We've had rent settlements that have been difficult—the Government didn't know we were going to have 11 per cent inflation, the Government didn't know that we were going to have war in Ukraine and the impact on supply chains. I think the cost of timber is up 40 per cent, and that was before the inflationary pressures came in. This was 2021. So, huge, huge difficulties. I ask the question, where would we be if we hadn't had the war in Ukraine, and we hadn't had COVID, and other impacts? So, credit to the Welsh Government, they listened to us and they gave us that long-term certainty, but we are where we are.

But even before those pressures came in, I would question whether the 2.2 per cent of total Government spend in Wales that goes on housing—that's the average over the period since 2006. I think we worked out last year it was 4.5 per cent of the Welsh Government budget on housing. Is that representative of the scale of the crisis that we face, in terms of the investment that we think needs to go in to developing social and affordable housing? Obviously, there are other demands on the Welsh Government budget, but is that the scale of investment that we need in order to address the scale of the crisis?

Back to health and housing. The budget increased for housing last year—we were able to scrape a little bit extra through. It went to the SHG, and I think some more went to the TACP. I just want to ask a question again about TACP. Because a lot of the council houses are 1930s to 1950s builds, and when they're pepper-potted—. Because they've been bought back under rent to buy, you can see that difference in the roofs, where they've had new roofs recently, and cladding, new windows, doors—Welsh Government funding to help insulate them as well. So, buying back those that have been sold under the rent to buy, using the TACP, I guess, is a good way, then, of using it and bringing them up to standard. So, I just wanted to make sure that was captured, really, rather than—. Earlier we talked about sometimes knocking down housing and rebuilding. I just think that sometimes that's—. It depends. It's a balance, isn't it?

My question is, earlier we talked about housing associations collaborating more, perhaps collaborating more on land, but also perhaps investment as well. Is there potential for them to collaborate more on investment? And this is to unlock private finance. James should be asking this question, rather than me, but—

09:50

Thank you. Yes, you're absolutely right, private finance is a really important part of the funding mix for housing associations. They're able to blend to blend public finance with private finance and make every pound of public money go much, much further. And not only that, but as organisations that exist in and for communities, they spend their money in Wales—so, 89p in every £1 spent in Wales. We want to get that number up. We think the WHQS has an opportunity to do that, but the important point is that the money is spent here.

And is that through procurement? That's a measure, isn't it, as part of the contract?

Absolutely. So, they'll use their procurement, they'll use their buy-in power, but they'll also use their role as important local employers in a local area, and also to think about not only how they support apprenticeships, but also to invest in local businesses, so it's not feast or famine, to give them a long-term sustainable future. 

On your point about private finance, £3.5 billion of private finance is coming into Wales through housing associations, which wouldn't be here otherwise. They've got borrowing capacity of up to about £4.5 billion by 2027. So, it's a significant amount of money that's coming into Wales through associations. And on your question about partnership, there are a number of partnerships taking place across Wales that do give opportunities to stretch that borrowing a little bit further. So, the Welsh Housing Partnership, for example, a collaboration of four housing associations—what's interesting from a financial point of view there is that the borrowing doesn't get attributed to any one housing association, which means that it's shared, which means that you can flex that borrowing a bit more.

But it is challenging out there. Housing associations are competing in a UK market for competitive rates of borrowing, and we know that the long-term cost of borrowing has gone up. So, just to give you an example, long-term gilts have gone up from 1.2 per cent in 2022 up to 4 per cent, and housing associations are having to price in some of that going forward, and take a much more prudent approach, which can limit their cost base to borrow. Their cost base has gone up. Matt mentioned earlier the headwinds that we're facing. The cost of maintenance has gone through the roof, it's almost doubled in this time, as well as the cost of building new homes going up. And it's important not to underestimate the actions of Government here. The actions of Government make a bit difference to the competitiveness of the borrowing that you can access. So, rent settlement is really important; the regulatory regime is really important. And it can, for those that have got private bonds, be as important as one or two notches in terms of the ability for them to borrow at a competitive rate.

There's a lot of money coming into Wales, but the environment is challenging for associations. And, again, lenders will look at the scale of the reform agenda, or look at the support that Welsh Government provides. And it's important just to say, just to finish, that it's not just one type of borrowing. So, traditional borrowing is still an important part of the mix, but there's a whole range of borrowing products that housing associations use, including pension funds, wide bonds and private placements.

I know pension funds have come in, haven't they, quite often? Okay. Shall I ask the next question?

This one's on planning—a big one. Just your analysis of planning at the moment, and what improvement do you think could be made to help with the planning system?

I suppose the first point to make is—let me, again, give some stats for you—the reduction of 16 per cent in planning consents in the year to December 2023, and a 42 per cent fall since 2022 for housing development sites. So, there's a significant reduction in consents being granted, which is clear evidence there's an issue within the system. And I think a big part of it—there are elements in terms of the planning regs, the planning legislation and the system itself—is there's been a 25 per cent drop in town planners, and this is an England-and-Wales figure, between 2013 and 2020—

England and Wales, yes. This is Royal Town Planning Institute survey work. And 80 per cent of local authorities—again, England and Wales—have had difficulty in recruiting in the last two years. So, there's a strain on the planning system and the development of capability within local authorities more widely. We're working with Welsh Government currently on scoping the idea of a development academy to drive more skills into local authority development teams, including planning. So, I think that's a big element of it, and I think we can look at what's happening across the border in terms of Government bursaries, going through RTPI, to drive new blood into the town planning system. So, they're getting bursaries to educate town planners and put them into local authority planning teams.

Obviously sustainable drainage systems and phosphates have been an issue. There's ongoing work on that and that is being addressed, but obviously that's been a huge, huge problem. And it’s just back to the land stuff, isn't it? That availability of land coming through and those skills, those wider skills, within local authority development teams around compulsory purchase orders, around section 106, which we may come on to. There's not enough resource within the system to push those through at more pace and scale. So, I think those are the main elements around the planning system.

09:55

Thank you. Planning is often used as a bit of a catch-all term, isn't it? And I'm certainly talking about the planning system but also the wider consenting system here. So, the whole process from start to end. And I think we would agree with the Competition and Markets Authority in their assessment of the role of the planning and consenting system placing a downward pressure on house building in Wales. I think that their assessment is spot on. What has been challenged is the length and complexity of the process, and the points Matt has made about capacity are absolutely crucial within that, but also we know that different consenting regimes are not lined up, they're not talking to each other. We've got associations with applications that are stuck waiting with the SuDS approving body for over a year to get on site, and that is not uncommon. We know that there's a SuDS review that's taking place. We're looking forward to working with Welsh Government on the outcomes. But also predictability; it’s a highly unpredictable regime. So, thinking about—. As you would expect in a local system, there are high levels of variation across local planning authorities, and one of the areas of variation is the amount of delegated authority that is provided. And we would be interested to understand that a little bit more, and actually when applications are coming through that are in line with the local plan, that meet all the requirements, actually—does it really need to go through to committee? There's length and complexity and risk, let's be honest, associated with that. Some things that would help: capacity, as Matt said, and we would be really open to a conversation with local planning authorities about how planning performance agreements could be used, indeed how planning fees could be used, particularly if they're ring-fenced, so that that money goes into the service.

We think that there could be a really useful piece of work looking at the statutory consultee regime. Our members report that sometimes it's like a really painful game of snakes and ladders. You think you've got so far, then something comes in at the last minute and sends you right back to the starting point. So, again, almost like a systems-thinking approach—how can that be reviewed? The CMA suggested two things, which I think are both worth consideration: looking at the numbers of statutory consultees, but also thinking about the timescales that they have to respond, and how that is phased, so that, again, you're building confidence within the system.

And then I guess the last point I would make is that we know that dedicated action works. So, the work that the Welsh Government has done on phosphates has made a difference. Putting political will and resource behind this has helped. In particular, I would point to the deep-dives that the Welsh Government civil servants have run with a number of statutory consultees, getting everybody in the room and saying, ‘What's the issue here? Let's map through who is waiting for what.’ Now, you could argue you shouldn't have to do that. If a system is working effectively, you really shouldn't have to be getting people in a room to theoretically bang heads together. But that has been needed and it has made a difference. And so taking that enquiring mindset and dedicated approach to the consenting system, alongside planning, we think would be a really valuable piece of work.

I think, going back to that, because every public service is under pressure—Natural Resources Wales, planners—the buck gets passed. So, then you have to bring them together and say you've got to work together and get a plan in place, which is what has happened now. But resources have to be put behind it.

About delegation, it's been raised with me with housing associations that some local authorities have higher levels of delegation. It's been proposed about using corporate joint committees more to help with sharing resources of planning officers. Is there still, then, a certain level of planning officers, or a number, whether they're in each authority or shared, which is a concern? But do you think that would help with that imbalance regarding delegation—if that was to happen, there'd be better consistency?

I guess there are two issues, I suppose. There's the issue about where the decision is made. Is it made at full committee or is it delegated to officers? And there's a second issue, which is about how do we make sure we've got enough expertise and capacity across the system? I think the sharing of resource and expertise could be a really important way of doing that, but you can only pull the elastic band so far, can't you? So, the capacity issue is central to this as well.

Just to say, is that an issue that is hoovered up by this strategic delivery mechanism that we've been talking about? 

10:00

Yes. And then, if it's spread, accountability again. Or, driving it forward—you know, the higher the level sometimes, how can you drive that forward? Thank you.

Yes. Do you think sometimes Welsh Government need to be a bit harder on some developers as well? We've got our local development plans across the country, and when I was a cabinet member for planning I saw developments come back round in two different reiterations of a unitary development plant and a local development plan, and not a shovel has gone in the ground once. Do you think there should be an element from Welsh Government around planning reform in general around some of the—? There are developers who do sit on good housing sites, good brownfield sites as well, to try and keep that supply-and-demand element going to keep driving the price up in the private market.

Do you think there should be an element of use it or lose it? If you don't use it, you're going to lose the planning permission. Then that is an element, and then we might talk about compulsory purchase, where Government can say, 'Well, we're just going to acquire this site, you've been sat on it for too long, you don't intend to do anything with it, you're just holding on to it as a pension investment, or you're holding on to it because you're just waiting for the price to rise.' Is there a point where Government does have to step in and say, 'We do have a housing crisis and we need to actually get these houses developed, and you're not going to sit on this land any more?'  

The Competitions and Market Authority looked at that particular point and I thought they made some interesting conclusions, which were that they didn't think that there was excessive land banking taking place, although land holdings were higher than they would like. Take from that what you will. But your point about getting things through the system I think is really well made, and it is a frustration, I think, for housing associations. So, I think there is something to explore there, I think, in terms of how you get a system that incentivises progress through the system, rather than—. It's quite transactional at the moment, isn't it? The power sometimes doesn't feel like it's quite in balance. 

I think we have an issue—. I'm surrounded by brownfield sites, and they're developing on greenfield because it's easier, so it's trying to—. I'm quite interested in that suggestion of compulsory land purchase back as a suggestion.

Or land value capture more widely—there's a discussion about that. Vacant land tax was very much one of the five suggestions after we got tax-raising powers in 2018. I think there were some issues around competency, weren't there? But I think, as Clarissa has said, I don't think land banking is a particular issue in Wales, and there are different views on whether it actually makes any impact, but I think it's certainly worth exploring. The Minister said at our conference recently that budgets aren't going to get that much better. Whoever gets in on 4 July is going to stick to spending plans, so what the Welsh Government's budget is going to look like is probably similar to what we have now. So, we need other ways of bringing land into use and bringing finance in to support that.

I can indeed move on. I want to talk about land in general now, but I was going to ask you about guiding principles for—. I know we're a bit short on time now, but I've got a couple of questions to ask about the guiding principles that Welsh Government should have over public land. I know you said about the social value, so I'm probably not going to labour that, if that's okay, because I think we've covered that off, unless there's anything further you want to add there. But one question I did want to ask is about 106s. I always thought 106s were a really good way in which we can actually deliver property and actually deliver communities that we want to see. Do you think there's a role for the Welsh Government to be more proactive in helping local authorities with those 106 negotiations, because I find, with some local authorities, some house builders will dig their heels in and say, 'If you're not going to do it, we're not going to build', or 'If you don't move, we're not going to build'? And a lot of local authorities, as we said before, don't have the skills and expertise in the legal departments, don't have the skills in the planning departments, and I wouldn't say they roll over, but they tend to concede a lot more, probably, easily than they should do on 106s. Do you think this is where the land division in Welsh Government should step in and really help local authorities and say, 'We will help you to deliver 106s'?

'Yes' is the short answer. Some work is already ongoing. We've supported a Welsh Government project around enforcement, so that's around CPOs and section 106 enforcement and other back-office functions around that. So, 'yes' I think is the answer. But I think you've hit the nail on the head, and we were talking about it earlier. That capacity within local authorities to be stronger against developers who kick back on section 106 I think is the big issue here. So, it's back to that question of driving capacity into local authorities, from our perspective.

Just a couple of points. On your previous point, James, about how can we get things through the system quicker, I think there is a challenge back to local planning authorities about how they use their resources. And so, do we all stand in a queue and wait our turn, or, actually, does the local authority have the power? Is it enabled to have the power? I don't know the answer to that question, to be honest. But does it have the power to be able to say, 'Actually, we have a temporary accommodation crisis, we're spending huge amounts of money on this, we're going to prioritise the order in which we deal with these planning applications', to be able to direct its resources to match its priorities? So, that's one thing, I think, alongside your point on private house builders, that might be worth thinking about.

On section 106, sometimes the challenge is around the variation of standards. So, building regulations are different to DQR; DQR is at a higher standard. So, again, that can be a frustration, sometimes, for housing associations taking on a section 106 property that then requires retrofit—like gas boilers in it, or something like that. So, that can be a frustration—not an insurmountable one, but it can be challenging.

Your point about should the Welsh Government be proactive in helping the negotiations—sometimes, it can feel a bit David and Goliath, can't it, a little bit. And I do think that some additional support would be helpful; whether that is through the local government community, or whether it's through Welsh Government, I think local authorities are probably better placed to answer than I. But I do know that the Planning Advisory Service, which I think only operates in England at the moment, that does provide that kind of wider support. And that point that Matt made earlier about the hollowing out of the profession, the difficulties in recruitment, all of that makes this challenge much, much more difficult, I think.

10:05

And just coming back, sorry, it's not a separate question from the question you were going to ask about the guiding principles for land. Section 106 is, in effect, land value capture, isn't it? It's the one we use because it's there. It's delivering, what, around 30 per cent of our social housing building, so it's a key component at this stage, but we focus on it because it's there. The question we need to ask is: are there better ways of capturing that land value, or using that land value, and using that public land for better use, so that we don't have to rely on section 106 so much?

How do you think there's a way of helping developers as well? Because a lot of developers—. I'm sure other Members around this table have had developers come to them, and say, 'Oh, if this 106 element is put on me, I'm going to pull out of the whole site because it's not viable.' How do you debunk some of those myths as well? Because they will say, 'Well, if I've got to build a house to this standard, the whole site is unviable for me, and I can't build it, because I've got to make money to build the next site, and that's just the way the world goes round.' What messaging can be used by Government to actually help developers, to say, 'Well, actually, it's not as bad as you think'? Do you think some of the costings they give can be a bit inflated sometimes, or exaggerated, to try and make their case?

I do wonder whether there is something—it goes back to the initial question that we started this committee with—around the role of the land division, and exemplar sites can help show—. Some of this is helping to show that this is possible, this is absolutely possible. So, there is something about showing rather than telling, sometimes.

Yes. Okay. I'm going to finish here, Cadeirydd, in the interests of time.

Yes. We'll just try and squeeze in Altaf's last question, if we may. Altaf.

Thank you very much. Now, when it comes to the communities, I was listening yesterday to Newsnight, and there was a gentleman who said that we should not be calling these houses 'social' or 'affordable' houses, we should call them 'council houses'. I don't know; that was his opinion. Now, how often do objections from local communities obstruct or delay developments, and is there any good practice, where you can get along with communities in building these houses?

I think stigma is a huge issue that we really have to address. It was one of our five key asks in our manifesto, ahead of the last Senedd elections, in terms of addressing stigma. We did some public attitudes work in 2020. The vast majority of people support affordable and social housing—75 per cent of people in Wales support the right to adequate housing, and two thirds say they need more social housing in their community. But when you come to, 'Well, do you want it built near you?', that rockets down, down to 39 per cent amongst homeowners. So, it's a clear, clear issue there; whether it's driven by poverty porn, or whatever, we need to address it. So, we need a huge campaign, public-facing campaign, to address those issues. Because two thirds of people who live in social housing have a really positive experience to tell, and the standard of social housing is the best we've got in our housing stock—let's face it. So, there's a huge, positive story. So, I think that's one element of it, and a big, important element of it.

And I point you back to our Tyfu Tai Cymru report, which we launched in February, in terms of need and desirability, and around that assessment of need, in terms of the qualitative stuff—you know, engaging with communities. Communities engage with type and design rather than size and requirement and need, and I think we need to drill community engagement into the development process more deeply. So, I think that's one of the main recommendations that came out of that work. And then, in that way, you're starting to address that stigma issue as well.

10:10

I agree with everything Matt has said, and not much to add, really, other than there's a huge amount of work—and important work—that goes in upfront to working with communities, to try and understand any concerns about a proposed housing development, both at the pre-application stage, but also through amending scheme designs and bringing them back. So, that work happens upfront. Rural housing enablers is a good example of work that takes place in rural areas. Again, that thinks about how you might think about what difference this would make to a local community. But there's a real challenge here, isn't there? There's a scheme in the Vale of Glamorgan that has been on hold for six years, as a result of community objections. It's a derelict scheme, it can't be used for anything else; it's just been overturned at judicial review. So, that's six years it's taken. So, it's a real challenge, and we understand there are sometimes legitimate community concerns about new developments being built, but the role of local councillors and local MSs can make a real difference, actually, as advocates for the wider need and taking a wider view about the need for housing and the pressures that the whole community is facing.

And why just rural housing enablers? Why not urban housing enablers?

Okay. Thank you very much for coming in to give evidence to committee this morning. You will be sent a transcript in the normal fashion, to check for factual accuracy. Diolch yn fawr.

Gohiriwyd y cyfarfod rhwng 10:12 a 10:16.

The meeting adjourned between 10:12 and 10:16.

10:15
3. Cyflenwad tai cymdeithasol: Sesiwn dystiolaeth 4
3. Social housing supply: Evidence session 4

Okay. We've reached the third item on our agenda today, our fourth evidence session with regard to the committee's inquiry into social housing supply. I'm very pleased to welcome, joining us in person, Katie Clubb, head of service for strategic housing for Conwy County Borough Council, and Emily Owen, cabinet member for the authority; and joining us virtually, Jim McKirdle, housing policy officer with the Welsh Local Government Association, Rosie Jackson, interim housing strategy and development manager with Swansea Council, and David Rees, principal officer for strategic planning with Swansea Council. Thank you all very much for giving evidence to committee this morning. Let me begin with an initial question on measuring housing need. What's your view on the new local housing market assessment process, and does that give us a clear picture of housing need? Who would like to begin? Any volunteers?

Hello, I'm David Rees. I've had some involvement on the Swansea LHMA.

Obviously, it's very good from the point of view of ensuring consistency across Wales in terms of the time frames of people doing the studies to keep them up to date, and the methodology is consistent across the board. From a planning point of view, some of the results are throwing up very high social rent single-bed needs, and it's important to meet those needs if that's what's being identified, but also I think, when you're creating places, it's important that, perhaps, the LHMA isn't the only evidence base that is considered; there might be particular circumstances in an area that mean that there's already a high proportion of a certain type of affordable housing, so you don't want to necessarily build a high proportion of single-bed social rent flats in one place. So, what I'm trying to say is, really, it's a very useful evidence base, but something that needs to be taken account of in the mix with other things—local knowledge at that local level.

The other thing we've found is it's very much based on past trends, and I've not necessarily got the answers for this, but if you take, for example, a place like the Gower where people who were in housing need might have had to move out of the area, there's no evidence of them forming in that area, so it may be underestimating the need in certain parts of Swansea, and, again, that's why we want to take into account other evidence bases.

Yes. We did hear in our previous evidence session today that perhaps it would be good if the data that's available through those local housing market assessments are joined up with other data streams. Is that something you think would be valuable, and how achievable is that?

10:20

Yes, I think—[Interruption.] Sorry, go on.

Sorry, I don't want to keep talking when there are other people who should be talking as well, but I think that would definitely be—. Our LDP has got text in the policy that says the LHMA will be an important part of the evidence base, but also linked to other information sources and the knowledge of the local affordable housing officer and the surrounding environment—what housing is already in that area.

Okay. Would anybody like to offer a view on other data streams, formal data streams that could be linked in and joined up?

I think linking everything in so that, when our LDP comes out, it is more joined up, obviously, is always a good thing. I think it's quite challenging. So, we've done the new LHMA and, as David said, it has come up with a very large number compared to what we had previously. I think that's put the frighteners on people quite a bit, given the scale of which we're talking and how big the jump is. But I think it's really important to remember that it's not a new-build target. I don't think it's clear enough at the moment that that isn't a new-build target—there are lots of other factors that come in, that we're working really hard on, that will account for that number as well. And I think we need to really build on the other policies and how it all works and links in together. And recognising that, obviously, from the LHMA work, we're looking at hitting that 20,000 new-homes target that Welsh Government has, which is great, but my worry is, even with the new LHMA process, from which, I must say, it's really useful to have benchmarking data, because I found it really difficult to compare between local authorities to gauge how we're doing and whether there are areas where we could improve, because everyone measures it completely differently—. I found it quite tricky to be able to gauge that. So, this is a positive step in that regard. But in regard to trying to get that 20,000 new-homes target, this is part of the process in order to do that. But I suppose my concern, and I'm sure we'll touch on this a bit later, with that target, is we're so focused on that new-homes element, I'm not sure we're monitoring the net. In Conwy, certainly, we are losing properties, and the net figure is a lot, lot lower than the new-homes figure.

I was just going to add to what David said, really. Yes, it's given us not so much of a shock, it's not unexpected, but the affordable housing need is significantly higher than it was previously, which wasn't unexpected, but the proportion of one-bedroomed properties is extremely high. So, from a housing management perspective, we wouldn't want to be just building one-bedroomed properties, and I think the housing market assessment takes into account the current level of homelessness as unmet need. I think us, along with all other local authorities, have had a significant increase in homelessness applications and the amount of people in temporary accommodation since COVID and, quite rightly, with the 'all in' pledge, a focus on priority need, so that everybody gets accommodation. But what that's doing is putting a huge increase in the amount of people in temporary accommodation, and those are the sorts of figures that are fed into the local housing market assessment. But, really, for longer term community planning, housing planning, we need mixed communities. We can't just build one-bedroomed properties. There is going to have to be that balance. So, I just wanted to add to that, really.

And our waiting lists, as well—. Our local authority waiting list information is what we've used as the example of unmet need. In Swansea, we don't have a common waiting list, which I think is a problem for us when it comes to it, because there's risk of double counting and that kind of thing, in terms of the waiting list information, and that's probably something for us to look at in terms of how we record that data. But that is a factor. So, I would just echo, really, what's been said, in that the local housing market assessment can't be the only piece of evidence, and in think, in Swansea, certainly with the LDP, planning colleagues have always taken that approach. The LDP has always been part of the assessment of need. So, that was my comment on that, really.

10:25

Yes, I wanted to touch on, obviously, that we've built into ours the shift, the numbers on homelessness and the temporary accommodation figures, and linking our LHMA back to our rapid rehousing plan and making that link around homelessness. I think I'd also just mention the caution around the data that we do use from housing registers—the two main sources. Obviously, that's the social housing register. We do have a common housing register, which makes that helpful, but it's a tool the registers use to allocate social housing. So, actually, people in those initial triage discussions are steered, and if there are areas with very little housing, they're told about that, and, sometimes, they may choose a different area based on that. So, you see then that the register creates—it's almost like a self-fulfilling prophecy that areas with low levels of housing may not have that high demand, because people don't choose them. So, it is a tool for allocating housing, and, sometimes, then, when you use it as a data set, it isn't necessarily accurate. And I think it's quite important that that's noted when it goes into documents like that. And, similarly with the affordable housing register—the intermediate register—in general, we notice that where there is a development going up, people will start to register their interest in those homes there. So, again, it’s a register as a tool for allocating rather than the data, and we’ve just got to be aware of that when we’re looking at it.

Not to repeat what my colleagues have said, but I think it’s true to say that expectations of the new LHMA process are very high, and that comes from a variety of groups. Rosie has mentioned homelessness, but also, whenever you’re discussing the accessible housing requirements, or the needs of larger households, there’s a reflection that the LHMA process can be improved, and using additional data of the kind that you’ve already signalled is part of that. So, I don’t think anybody thinks that the LHMA is a finished product; it’s part of an improvement. It’s better than the previous version, and the consistency is very much welcomed, as Councillor Owen has said, but also the Welsh Government's role in making data available to underpin that consistency, and I’m sure that we can further develop those arrangements to improve in the next iteration of LHMAs.

Okay. Thanks for that. We'll move on then to delivery and how we increase the supply of social housing. What are the major challenges for social landlords in increasing supply? What are the major problems, the major reasons why perhaps we're not able to see that provision of social housing developing and increasing as we would like? Emily.

While we’re talking about this, I think we’ve got to remember that we’re coming at this on the back of COVID, and that significantly impacted developers and house builders. Developers have gone bust in many places, and that’s really had an impact on how fast we can get schemes off the ground. Obviously, there are financial constraints and the funding, but I think the TACP funding has been excellent, and has really let us use that element of flexibility, which has been really helpful. Seeing the SHG money that’s coming in, we’ve got quite a healthy pipeline for stuff, but there is a worry after COVID and developers are struggling—the cost of materials is going up, everything is going up, and we’re trying to be more innovative. We want good-quality houses that are EPC A and are really good houses, but they come at a cost. So, there, again, everything is just going up and up and up for people to be able to deliver it.

My concern is that, now everything’s coming online after COVID and things are moving again, do we have the capacity within developers, within north Wales as our area, to do that if all local authorities’ pipelines are all starting to look healthy at the same time? Is that feasible? But I think that we’re coming out of that time of COVID, so I’m hoping that, naturally, some of the developments will come on board faster. I know, in other areas, there have been phosphate issues and things like that that have had to be overcome as well. And I think, on the land element of this, we have our own land that we are prioritising for housing, but the land that’s left comes with challenges, because, otherwise, it would have been used already. So, if we’re using that on the back of everything else, local authorities are finding things financially extremely difficult, and have done for many years. So, we've cut and cut and cut. Some of our officers have been cut to the point where they don't exist, and that's just—. Referencing back to the first question about the LHMA, we don't have a research team any more, so it's quite tricky to be able to get some of that out, and I suppose that will go on with the other bits that we've done.

But some of the good things that we have been doing are that we've got fast-track programmes going on for those projects that are bringing in over 50 per cent of affordable housing delivery. So, we're recognising some of the challenges that are going on and working really closely with our RSL partners so that we can bring stuff forward quicker, to really try and escalate that affordable housing churn to come out. Because we really have seen a dip since COVID, and I think that's where the TACP money has been really helpful, because we're so far into this crisis, it's so deep, that we're never going to build our way out of it. We've got to use building as a tool to getting out, but it's very much a part of the process, and buying housing back is a quicker way of doing it. But I'm sure we'll come on to that later. That comes with its own challenges, let's say.

10:30

Okay, Emily. Thanks very much. Would anybody like to add anything to that? Jim.

Councillor Owen has mentioned a number of the constraints there. I would start with land availability generally. I think that that always has been and perhaps always will be a restraint on development. Phosphates is an issue in some parts of Wales, which hopefully is being overcome through proactive action. General rises in costs and the costs of borrowing, much higher interest rates than a few years ago, which means that the cost of borrowing is greater. The general rise in build costs means that the amount of social housing grant required and investment required to develop homes has increased. Councillor Owen also mentioned contractors going out of business, so the availability of contractors who are able to take the risks of development has seen a reduction across Wales.

I think, generally, we can't see development on its own as part of the work of a social landlord, either a council or an RSL. It's part of an overall financial environment that we're operating in. So, there needs to be as much certainty around the general financial environment as possible, with a stable rent policy, so that income is predictable, so that you can plan through your business planning processes effectively, and have the uncertainty removed over any other investments. I'm thinking particularly of investment in existing stock, as a landlord's first priority has got to be the maintenance of and safety of existing stock. So, removing all the uncertainty over the requirements to meet WHQS 2023, for example, and costs around retrofitting, would be a major influence on investment decisions and part of that overall environment around investment decisions for development.

I'm going to build on that a bit around the standards, because I was going to talk—. I think we mentioned in our written response the pressures on social landlords in terms of the investment in their own stock versus those delivery plans, but also in terms of the TACP. The TACP, as Emily said, was a really great opportunity, the flexibility that it bought and that ability for us to move more quickly in terms of acquisitions, but we have experienced some issues in terms of the standards that have needed to be met. I think it's really important that I'm clear here that we all want the most important things around decent, quality housing that helps people's health and well-being. So, when I talk about standards, the examples we have are where we had properties—brand-new-build properties—that we could have used TACP to bring in, but literally a bedroom might have been 30 cm too small on the size standard and we weren't able to bring it back, or ex-council properties that had been council properties that were unable to be brought back in, either around those energy requirements or size standards. So, I'm not talking about advocating for low-standard homes, but I guess there's a recognition, in Conwy, that we have such a high number of people, and still at this time some families, living in bed-and-breakfast accommodation, so it felt almost ludicrous that we couldn't bring back some of these homes to use as social homes because of those standards. So, there's something around that flexibility going forward, albeit aiming, over the longer term, to meet the standards that we absolutely support.

Okay, Katie. Thanks very much for that. Okay, I'll bring in other committee members—. Sorry, Rosie. Yes, Rosie.

Sorry, I was just going to add. What has been said by Councillor Owen and Katie really echoes with what the situation is with Swansea as well. So, just on the issue around land, what we've found is that, again, we're in the same position, we're using our housing revenue account landholdings because that's what we have left. All of the substantial and developable land has been sold off in the years prior to the local authorities being able to develop. What we've found is that the land and building development fund is a really, really useful fund for us, which we've used on several schemes now to take out the abnormal costs, really, to make the land suitable. So, that's something we would really like to see continue.

In terms of the standards that Katie just mentioned, we'd have a similar issue, whereby we've got quite a strong acquisition programme in terms of buying back ex-local-authority properties. That's outstripped our new-build programme at the moment, anyway, although we have got a pipeline. We've bought about 156 properties back, but some of them, because of the size of bedrooms, particularly, haven't met the grant requirements. And whilst there is flexibility, we've sometimes made the decision to purchase them purely with HRA funding, because we still wanted them. So, I would agree with Katie that there needs to be more flexibility in terms of, if you're buying back an ex-council property, why would you not say that that's suitable for people to live in in terms of standards?

The other thing as well is that, in terms of—. I don't know if we'll come on to a question in a bit more detail in terms of planning, but in Swansea, we've got a really good relationship with planning and planning colleagues, but some of the issues are around the sustainable drainage systems approving body and the sustainable drainage requirements, which are new. There is much less resource in SAB teams than there is in planning teams, but they deal with the same number of applications. And those are where we see delays, really, not necessarily on the planning side, but on the SAB scheme. It's new for developers, it's new for RSLs and it's new for local authorities, and that's certainly an area of challenge in terms of those requirements and how schemes get impacted by them and the delays, really, because of a lack of resources, I think, to deal with the number of applications that come through. 

10:35

Okay, Rosie. Thanks for that. Yes, we will be coming on to planning and other issues in a bit more detail later on. Sorry, Emily.

It's okay. Sorry, I just wanted to touch on something that Rosie mentioned, because I think it was a really good point. I just wanted to highlight what Rosie was saying about the standards and then them deciding to buy, through the HRA, that property. I think it's a really big point that just highlights the difference between stock-holding and non-stock-holding authorities, because we're not stock holding, we don't have that ability to do it. So, when our RSL partners are saying, 'We don't want to buy those older properties or ex-council properties because they're not going to meet standards', or, 'It's going to cost us a lot of money in order to do that; we'd rather reinvest', we can't do very much about that. And there is a big difference, and I think you'll see it with the homelessness numbers. You can almost draw a line where it looks at the data of those stock-holding and non-stock-holding authorities, because there's that inability to do it because of the new legislation.

People who are presenting as homeless become the statutory responsibility of the council at the time of presentation, but they're not the statutory responsibility of the RSLs. So, there is a real mishmash as to where this is going, because if we don't have the ability to buy those properties anyway—. We have bought a few through the TACP, so I'm very pleased. I think we've got about five now, but it's very different from the 156 that Rosie's been able to buy back in. I think it really does go to show the different challenges that local authorities are facing because of the set-up. And it's just a point, really, to highlight that whilst the grant flexibility has been great, we have still found it really challenging to buy back those acquisition properties, and one of the reasons that's being cited to us, really, is the standards in the future and how much it's going to cost and whether that aligns with different RSLs' business plans, when we don't have the ability. Because it would cost us a lot less money to buy that property than it would do to keep that family in a bed and breakfast. I just wanted to highlight that, really.

Diolch, Cadeirydd. If we could just think about, for a moment, the Welsh Government's grant regime, is that supporting the building of social housing in the way that it should be? Ultimately, is it working? Katie.

Yes, we've already mentioned—. I think it's really important to mention the TACP and the difference that that has made and how that has undoubtedly made a difference. Because I think it's really hard, when you think about when that 20,000 homes target was set and the unprecedented circumstances we've been through since then in terms of, we are not where we should be because we know that contractors have gone into administration, we know of all the material and labour costs, we know that some of those schemes haven't come through, so the TACP and that flexibility was a really important development.

And I think that flexibility is the message that we'd be giving going forward. So, we are ready; we do have a healthy pipeline now and the worry is that some of our RSL partners might be phasing some of this forward, whereas if we can pull grant forward, we can probably do more now to make up for that lost time. But it needs that flexibility of the amount of grant, but I think, also, between those funding streams, that flexibility, like that which came with TACP in terms of being able to do things a bit differently.

So, that would be the message. It's worked really well, but there's the potential now for it to, I don't know what the word is, 'stretch' I guess, so that it's not set out over a few years, so that we can work at the pace that we need to. We have such—and I'll keep going back to it—an urgent situation in terms of our homelessness in Conwy and when we're there, you see that when you talk about targets and 20,000 homes and you talk about the units, actually, the reality of what that means—. And I think, as Emily said, for us, it won't just be about the new build or that target, there are lots of other areas: the existing homes that we have and reopening some of those; the empty homes we're bringing back into use; the Leasing Scheme Wales. For us, it's around that broader, affordable need that matches to our local need at the moment.

10:40

Yes, I would agree with everything that Emily has said, really. We've used TACP in Swansea. We're lucky, we've got a generous social housing grant allocation; we've got very active housing associations. We're at the start really of our journey with the social housing grant, because although we've built new-build properties, it's only relatively recently that local authorities have been able to access the social housing grant. We used innovative housing programme grants to fund some of our earlier new-build schemes, hastening to add that, on our new-build schemes, although we've had five, they've availed us of 88 properties. So, you can see the difference in what we're doing with acquisitions and new builds, but we have got a pipeline that's developing now to bring more schemes forward and a few larger sites, which will up that for us.

In terms of our feedback from RSLs, the standard viability model has been updated in terms of the assumptions within it and costs, and they have informed us that that is working better for them. But I think one of the caveats on that is that the financial assumptions in the SVM need to be regularly updated, I think, because costs increase so rapidly; it's really important that it's kept under review and regularly updated. I think it happens on an annual basis at the moment. Whether or not there's a question that that could be done more frequently, I don't know, but certainly a close track needs to be kept on live cost increases.

The other thing, from a local authority perspective, is that the social housing grant gets paid to local authorities in arrears, so, on completion of schemes. Now, that does have an impact on the financial viability of schemes. We will tend to press forward with schemes anyway, but housing associations get their grant in advance currently, although I understand that Welsh Government is looking at that position at the moment—I'm sure that Community Housing Cymru will have already mentioned it—and that will have an impact on RSLs' viability. Our concern is whether it would have an impact on us achieving full spend of the social housing grant year in, year out. I know there are probably other factors at play for Welsh Government to consider in terms of that decision, but that will be an issue going forward, particularly for RSLs, if that regime changes, and we would prefer to be able to get grant either upfront or certainly as staged payments as schemes are developed.

Yes, only to—. Not to repeat the points that have been made—Rosie has made my point about payment in arrears. I think I'd repeat the point about as much certainty as possible across the whole financial framework for RSLs and councils. The grant levels at the moment—investment by Welsh Government—are at unprecedented levels and we've certainly not, within living memory, seen that level of investment. It would be great if that could continue, but we need certainty around business planning to have the confidence to invest in development going forwards. So, I'm just making the pitch again about the whole financial package being what’s important to landlords when making those investment decisions.

10:45

In the interest of time, I'll move to my final question, Chair, specifically around the exemplar sites that are being delivered via the Welsh Government’s land division. Do you think it’s feasible to expect local authorities to be taking on the land assembly role? Emily.

To be honest, that’s not really been our experience. We have been taking on most of it, and it’s only more recently that we’ve been looking at working with the land division to do some of the bits that really need unblocking. There are opportunities to work more collaboratively together with it. I think what we’re finding is some of the things that the Welsh Government land division is currently looking at are the really complex sites that have been blocked by infrastructure or Welsh Water or something that is really quite complex, and we do not have the capacity, time, skills in some areas, to try to unblock that at speed. So, yes, absolutely, we are working together more. For us, it will definitely be beneficial to keep that relationship going.

In terms of what Councillor Owen said, we’re always keen to work with the Welsh Government in identifying sites that would be appropriate for us, but from a local authority development side, we’re dealing with relatively small sites and we wouldn’t have the capacity or expertise to take on any roles, I wouldn’t say, that the Welsh Government are doing. I think that would be better suited as a central issue. As Councillor Owen said, they’re dealing with larger complex sites. That’s not something I think that we would be in a position to take over. But we would certainly want to work with them and identify if there are plots of land that as a local authority we could develop or work with RSL partners to bring forward.

Can I just ask Rosie and Emily: is that because of statutory consultees taking so long? That was raised earlier—NRW and Dŵr Cymru et cetera.

Yes, sometimes it is. There's infrastructure stuff as well. There are other things that play. But yes, the statutory consultees take an extremely long time.

Are you talking about the sites—

I can't really speak to that, because we haven't really had much experience of that directly working with the Welsh Government on those; there might be a planning input into that. Generally, in terms of planning and statutory consultees, yes, that process can take longer, not from a planning perspective, but just in terms of getting responses, particularly around highways and drainage. But that comes down to capacity and resources within authorities, which—I think it's already been mentioned—is really challenging at the moment. There aren't necessarily the resources to do things as quickly as they should be done. 

Can I just ask Jim as well: in your experience, do local authorities still have rural housing enablers, and even urban housing enablers, to do that housing assessment of need? Because it sounds to me that they don't. 

There still are some rural housing enablers in Wales. I'm going to say I think there are four, maybe three, mostly operating in north-west Wales, although I think south Powys and north Monmouthshire also has a rural housing enabler, and they're still supported in part by Welsh Government funding.

Thank you. And can I just ask Emily—? You said you've got little land left for development now that you could develop on. Earlier, we were talking about sharing of public land, maybe owned by the police or owned by health. Is that an issue for you in north Wales, or are people talking regionally across public bodies?

There's definitely a bigger piece of work that needs to go on with this, with the health board in north Wales in particular. I think the will's there; I think there's a capacity issue within that and being able to actually move things forward. I don't think they're holding it back because they don't like the idea of it. But just trying to get that momentum and to get stuff moving I think is a big piece of work that needs to be done.

Thank you. That's interesting to know. And just on planning generally, what are the main issues? We've talked about capacity. The Welsh Government are talking about maybe using CJCs and sharing of planning officers to help. Earlier, there was also talk about delegated authority as well, so there's inconsistency there—that some local authorities might use delegated powers more than others and may want to take things to planning committee more. Do you think CJCs might help with that? Will it help with capacity? Your views on that, please.

10:50

I think with the CJCs I'd like to see exactly what it means and exactly what is being suggested with it. Streamlining is a great idea. My worry is that it will just become duplication and we'll still end up doing stuff at local level and at CJC level as well. So, I'd like to explore that a little bit more, but I'm absolutely up for a more co-ordinated approach. I'd just caution that, obviously, the CJC in north Wales covers quite a large area, and something that may be strategic in Wrexham, for example, may not be strategic in Conwy. So, it's just about how does that work and exploring that a bit further.

Are you saying that maybe CJCs are a bit too big, and, maybe, if it was planning, if it was divided into two, or—?

I'd like to see how the proposal is planning to work. I do think that we need some more strategic approaches to really drive forward, particularly on the housing situation. I don't necessarily think that CJCs are a bad idea to place that, but we just need to think about how that's going to work in practice so that we don't end up duplicating stuff. Really, with all that you were saying about delays in planning and things, it's making sure that that pre-app stage is really utilised. We know that there are developments that we have at the moment where, actually, a lot of these issues could have been teased out at that pre-app stage. If people are engaging at that point, lots of the time that is spent dealing with things further down the line—. It could have all been sorted much earlier on. So, it's just that importance of early engagement with the local authority, with the RSLs, and the community as well.

CJCs are set up with statutory responsibility around the strategic development plan and the regional transport plan, and I think there are lots of expectations about the potential of CJCs. Authorities are certainly up for conversations about collaboration, about regional working where it works, where there's evidence that it can produce benefits. I think that co-designing any future expansion of regional working is something that needs to be done between the Welsh Government, local authorities and other stakeholders in order to achieve those benefits, rather than for it to be a centrally dictated change in the role of CJCs. I would say that if there are additional duties placed on CJCs, then they need to come with additional resources. It can't simply be about sucking up resources from within councils to a regional level. We've already heard about the lack of resources within some functions in local authorities, and simply replacing that with a regional approach could exacerbate that.

Can you just clarify whether CJCs are funded by local authorities? They have to give some funding, don't they, to them. Yes. Okay. And there are also the public services boards, the regional partnership boards, and the economic ambition board as well. So, are they the best place? I don't know. David. 

I was just going to add that I'm a planning policy officer involved in delivery of sites in Swansea, and we've certainly got a lot of good sites that are making progress. The issue that we've found is that there's been a bit of a lag in them getting onto site, and that's partly because of the multidisciplinary nature of planning. There are so many very important and well-intentioned developer requirements, such as SuDS, new ecology standards, and just the complexity of making sure that developments create the quality of place in placemaking terms, and this does take time. I wouldn't say it's necessarily the decision-making part of planning that needs to be looked at, and I think with the CJCs, there will be issues with local democracy, taking the decisions away from the local councillors to a body that isn't necessarily made up of—. I'm not completely sure how CJCs are made up.

I'd really want to emphasise that it's the interface between the different specialisms—from drainage and highways colleagues, the statutory undertakers like Welsh Water and NRW. Planning ends up as a sort of co-ordinator of all these disciplines, and they all need to be moving on the same timeline, and each comment from one will have knock-on effects and often mean that something needs to be redesigned. For example, on streetscenes, with the introduction of SuDS, trying to get street trees and SuDS into streets means that it's not a simple process to get roads adopted. And that, then, leads to delays after the planning consent. So, these aren't necessarily all delays leading up to the planning decision, and it can take another 18 months to get on site because of all the road adoption and separate SuDS procedures that need to be gone through.

10:55

Diolch, Cadeirydd. I know that we're exceptionally short on time now, so my questions will be pointed to a few individuals, if that's okay. My first question will be to Jim, because I think it's fair if it goes to the WLGA. Research from the Home Builders Federation found that local authorities are not spending all their section section 106 contributions. The research found that—and I'll get the figure right—£71.4 million was unspent across 14 local authorities. Can you give us a response to these findings from the WLGA's perspective, please?

I'm afraid I can't. I did look for the research and wasn't able to find it and I haven't been made aware of it by HBF or anyone else. So, unfortunately, I'm not in a position to give you a response.

Does anybody else want to have a punt? Because we're very short on time, I don't—. Emily.

I have checked, and we are spending our section 106 funding. We've put stuff in like setting dates within the legal agreement to make sure that that is happening and having that enhanced oversight with our planning enforcement team being proactive with the developers to make sure that the developers are contributing in a timely fashion. But I have to admit I'm not an expert on section 106.

I can only speak from a Swansea perspective, and David can come in on the other section 106 contributions, but for our affordable housing section 106 contributions, we spend them. We always aim to achieve on-site affordable housing development with schemes, but where that's not possible, we will receive the commuted sums and that has largely funded our acquisition programme. So, we're spending it. Obviously, there are other section 106 contributions as well, so I don't know if David's got a comment on that from a Swansea perspective.

In Swansea, we've got a central team of planners and people from the finance department co-ordinating a database on section 106, working with all the different departments, and not spending them is not an issue from our point of view. Obviously, there's a small time lag between receiving money and it being put to use on a project that's been identified, but there would be safeguards in place in terms of the co-ordination that we're doing centrally to make sure that that runs smoothly.

Jim, would you be able, perhaps, to look into this further and get back to the committee, if you're able to?

I'm sure if we're able to access the research and talk to colleagues, then we'll be able to come back with some information to the committee, yes. 

As we're short on time, Cadeirydd, I'm happy if we write to the witnesses on the other points. 

Thank you very much. Under the Levelling-up and Regeneration Act 2023, the Welsh Government has just announced that it will consult on the new compulsory purchasing powers. Do you think it will make any difference?

In Conwy, we haven't had much cause to use these. It's going to be a resource issue in terms of compulsory purchase powers. I think anything that streamlines would always be welcome, so in terms of any review or anything that streamlines the process. I think the recognition, in terms of the potential around this, is recognising the resources available to councils at the moment and what we can do with those. And we'd always hope to get to a position where we wouldn't need to use them anyway. But I think the message in terms of a review would be that streamlining any process would be good.

Similarly, we haven't had detailed discussions. There's only been an announcement about this, and we look forward to the consultation. However, the notion of removing the hope value, which, I understand, is part of the proposal to reduce overall land costs, is something that's worth exploring within the barriers to development, I would suggest. 

11:00

Great, thank you very much. Coming to my last question, about the communities, how can communities be effectively engaged in social housing developments in their areas? Do you know of any good practice that could help you to build these developments without any problems?

I think that early engagement is really important, both with planning, councillors, and communities, making sure that people know what it is that we're trying to achieve. I think making sure that we're constantly trying to tackle the stigma of social housing and bringing communities on board with us when we're going through projects—. I think part of the thing that I have most when I'm trying to kind of 'sell' developments to communities is, 'But that's not affordable for me, so it's not affordable housing, because that's not affordable for me', and I think that is a really big issue that we need to make sure we are tackling. In Conwy we've got an average wage of around £30,000, and, when you're looking at private rent, a small two-bed is £1,000 a month, which means that intermediate houses, because our partners are linking intermediate houses directly with private rent—. It's 80 per cent of private rent, that's £800 a month, and that's still not affordable for people.

I know that Welsh Government's intention wasn't for intermediate houses to be linked directly to that at 80 per cent; it's more in line with the local housing allowance rate. But that's not happening, and there's that huge cohort of people we're seeing presenting as homeless who are kind of a new cohort, who, actually, don't have complex needs, they are working, it's just there's just no way that they can afford—. Our nurses, our cleaners, our cafe staff, they just cannot afford that kind of rent, and it's a simple problem of, actually, they're quite self-sustaining, it's just that their outgoings and income don't match. So, I think making sure that, when we are talking about communities and social housing, it's really linking that and saying what's in this for you and your communities, and it's not just about—. We've got a huge issue with homelessness and we absolutely need to address it, and we need to get people out of bed and breakfasts in a big way, but we also need to be thinking about these communities for the future, and really have that future generations Act mindset when we're talking about developing new communities and new developments so that the development becomes sustainable and it's not reactionary to the current situation that we're in.

I think, just on that, some of the community stuff that I've spoken to communities about more recently is that there's a bit of frustration that we've got lots of shops in town centres—. Now, we talk about 'town centre first' and brownfield sites and regeneration, which is great, but we've got lots of flats above shops that are one-bedroomed, perfectly reasonable flats, and they seem to be a bit of an enigma. No-one really knows what to do with them, because the access is difficult, or there's a shared entrance or there's 30 cm too small of a bedroom or something—there's something that's going on with them. But, actually, if you go to Colwyn Bay in Conwy, you will see hundreds of these empty properties above shops that, actually, could be in use, and that's part of the solution to trying to move this forward, but I don't think anyone has really got a grip on knowing what to do with that.

So, I think that, like all of the things we're talking about with communities, it's about having those conversations with them to bring them on board early, and really making sure that they know that this is for local people, this is for communities as a whole, and just making sure that we're not purely reacting to the current situation we find ourselves in so that we're futureproofing, moving forwards.

Okay, could I just ask one final question? Back to section 106, and how we might get more houses provided through section 106, we've heard suggestions that Welsh Government might support local authorities in negotiating with developers around viability. Is that something that has mileage, do you think? Is that something that you think would help?

I can—. I mean, it could do. I think we've got to—. It's really hard, isn't it, when all of the costs are going up, and we know that costs are going up, and we know that viability is genuinely an issue in places, because we're seeing developers go bust, and that is really tricky. As we said, we are trying to build those homes that are really good quality and they're smart, different types of homes. It's really difficult to keep increasing the cost, increasing the cost, and then saying, 'Oh, and there's 106, and there's this and there's that.' We're trying to be smart with 106 and using it in different ways and topping up sites where you've got a percentage of affordable homes—we're seeing if we can use that 106 money to increase that, things like that with the developer. So, I'm sure Welsh Government helping with the developer is welcome, I'm just not sure that sites are—. Because everything's going up and costs are going up, everything is going up for developers as well.

11:05

I personally work on viability assessments with developers, using the Burrows-Hutchinson model that we've had developed across the region and that now is being largely used across Wales. I think any support and training would be very useful for officers. I've been lucky enough to have training through the work we've been doing, but I think what would be really useful is some form of national guidance on viability assessments, for example, if something that comes into play is sometimes unrealistic—expectations of landowners on the value of their land, and not taking into account all the developer requirements that are now being placed on developments, such as the cost of things like extra responsibilities, like SuDS, but also the land take that can take, meaning that fewer houses will be built, which affects the viability—and something that gives policy officers like myself a basis to go back to and refer to in the negotiations. I know this has been discussed with Welsh planning officers and there is a piece of work being funded by the Planning Officers Society Wales to introduce a technical document that local authorities could refer to, but the more weight that that document could have, maybe, at the national level, the better.

Do you believe, if developers could give gifted housing, which you could borrow against, that could be a way forward, especially if you haven't got housing stock to begin with? I know we did it in Flintshire. Would that be something that developers might be mindful of doing?

Yes. I think developers are really keen to work with us and RSLs at the moment, to be honest, because they are—. Given the housing situation and the market at the moment, if we've got sites that are 50 per cent affordable, for example, then they know that 50 per cent of that site is going to be bought at the specific price, and they know the cost of those pretty early on. So, I think developers are willing to work with RSLs more than they have been previously.

Okay, thanks very much. Thanks to you all for giving evidence to committee today, Jim, Rosie, David, Emily and Katie; thank you all very much. You will be sent a transcript to check for factual accuracy. Diolch yn fawr. Okay, committee, we'll break until 11:15.

11:15

Gohiriwyd y cyfarfod rhwng 11:08 ac 11:15.

The meeting adjourned between 11:08 and 11:15.

4. Cyflenwad tai cymdeithasol: Sesiwn dystiolaeth 5
4. Social housing supply: Evidence session 5

Okay. Welcome back, everyone. We've reached item 4 on our agenda today, our fifth evidence session with regard to the committee's inquiry into social housing supply. I'm very pleased to welcome, joining us here in person, David Ward, chief executive for Tirion, Dorian Payne, managing director with the Castell Group, Mark Hand, director of Wales, Northern Ireland and Planning Aid England, Royal Town Planning Institute, and Mark Harris, planning and policy advisor Wales with the Home Builders Federation. Thank you, all, very much for coming in to give evidence to committee today.

Perhaps I might begin with an initial question in terms of meeting housing need. We've heard already as a committee that the type of homes being built in Wales are not always in line with what people need, for example, there are a high number of single people in temporary accommodation and an undersupply of one-bedroomed properties. So, how joined up do you think social house building is in relation to the types of homes that people need? Who would like to offer an initial view? David.

Yes, I think it's a point well made. Our one-bed apartments, through our schemes, are very popular. They tend to be more popular than the two-bed homes as well. But I think, more importantly, getting the right mix of tenure is important. So, we think that, whilst we support a focus on social rent, there is a bit of a gap in intermediate rent. A lot of people are looking for better value in the rental market, particularly now as the rental costs have gone up so much. So, we think that there's a real opportunity to, certainly from our perspective, bring private institutional finance in to plug that gap and provide a better mix of tenure.

Thank you, Chair. I won't repeat what David said, but I'd agree. I think, from a planning delivery perspective, for local planning authorities it is very joined up. So, housing officers within councils will specify on a site-by-site basis what the exact local need is, down to that they need, I don't know, 10 three-bedroomed, five-person semi-detatched houses, five bungalows. So, that is very well joined up and links directly to local need from the housing waiting list. But I think where the massive gap lies is that it's way off the numbers that we need. And I think, linked to the point that David mentioned, it's around getting that balance between evidence that very clearly points to social rent, one-bedroomed units in particular, and creating mixed communities, which is a different range of types of affordable housing and sizes.

Thank you. So, from a developer's perspective, an SME development company, we're demand led. So, what we do is we work with housing associations and developing local authorities, and one of the first things we do is look for demand—what mix is required, what tenure is required—which comes back from, as you've said, the housing officer being joined up already with the waiting list, so they already know what's in demand in what area. But, being an SME developer, our problem is that we specialise in brownfield sites, regeneration sites, on a small scale, so that's very restrictive in the constraints themselves: the sites are awkward layouts, they're surrounded, they've got different constraints all around them. So, to maximise the site from its viability point of view, to cover landowners' expectations and make it work, because of the cost of building—and, with that regeneration of small-scale sites, you don't get the benefits of economy of scale. Sometimes we can't necessarily meet the exact requirement of the housing officers, but the local authorities or housing associations still believe they can rent those properties. So, what we've seen, as one point, really, in terms of the join-up question is, I do believe it is joined up. There is a process already in place and we follow that process with our partners, but sometimes there's a crossover where that particular development site itself can't hit the full requirements. So, there's this negotiation between housing associations and local authorities, housing officers, to get grant support to bring that site forward. Does that make sense?

11:20

Yes, just very quickly, I agree with everything that's been said. I think another factor—and I think we'll come on to it, maybe, in other questions—is the delay in planning. So, if you're looking at, for instance, sites that are allocated in plans and then brought forward, you can be looking at anything up to 10 years that it takes to get those sites. Now, the demand for housing changes as a result of lots of factors, and something could happen tomorrow that could mean that no longer is it one-bed flats we need. I think it was probably about seven or eight years ago everybody stopped building one-bed flats because they just weren't seen as the right thing to build. So, that's another difficulty—that the demand is now, but the planning system takes a long time to deliver homes, so it's not necessarily in line with what the actual demand is.

Thinking back that seven or eight years, then, Mark, why was that the view then in terms of single-bedroomed properties? Can you remember?

I think it predated the bedroom tax issue, but it also was around, if I remember rightly, a lot of registered social landlords trying to minimise stock turnover. So, the problem with the one-bed flat is the minute that person maybe gets a partner or gets a child, you've got to find them a bigger property and you've got to move them on. So, it was seen as a time when you weren't getting charged for empty spaces. It was better to have a bit of extra room because that gave you more flexibility and you could stay in your house, stay in your community, and that was seen as better.

Yes, sure. Okay. In terms of delivery, what are the main barriers, would you say, that developers face when they're trying to bring forward housing supply? What are the main difficulties, the main challenges? 

Well, I have quite a few on my list, so I'll try to be quick. Again, as Castell Group, we are an SME development company, which I believe shouldn't be forgotten in the delivery of social and affordable housing. I want to make that very clear because we are in a housing crisis and local development plans are behind, et cetera, so all that puts pressure on allocating much larger swaths of land to be delivered, which can only allow larger house builders or companies to deliver. But SMEs have really good skill sets to contribute to helping provide new housing and be good partners as well, which will also help the skills shortage too, bringing them through. So, I want to start with that.

But, in terms of delivering new housing and the challenges, yes, you've got land availability. I think you always will have land availability, though, as an issue, because land availability also means viability of land and landowners' expectations. Nobody can control that, so that's always a big part. We've always struggled with the price landowners want versus what we can pay, especially in areas where it works more for private than it does for social and affordable, because district valuers may come around and down-value the land value, which means housing associations can't buy the land, because it's undervalued, whereas other developers can. So, I think there is a problem with land valuations. That is a point that should be looked into.

In addition, though, by far the big elephant in the room is planning. Planning is really complicated. Also, you can't predict it, so it's quite subjective. That's a big barrier for SMEs because we can't afford to risk £50,000 or £60,000 or £70,000 and it not come off. We follow the process of pre-application advice, pre-application consultation, and then full planning. But the timescale to get that through—. If you're already within the settlement boundary—I don't want to take away from the other gentleman here—it takes so long. It takes longer to get the legal consents than it actually does to build new housing—that’s what we’ve found. We build much faster than it takes for the whole process. So, by the time you factor in pre-application, PAC, full planning, then you've got section 106, which takes months, and it really shouldn't do, only then can the judicial review period start, after the decision notice has been released. That's a further six weeks, and you can't sell the site or do anything until that point. Only then can you start after the decision notice pre-commencement conditions, which are still prevalent in use in the planning system and they shouldn't be, really, in my opinion—you can't start a site, and that could take years. So, I believe planning is a huge problem.

There are also, I believe, too many silos. The sector is siloed—i.e. highways and planning will disagree and you'll be at loggerheads. The sustainable drainage approving body and planning will disagree, and you could have a three-month delay just on choosing the type of asphalt that goes in the housing layout where the whole housing scheme is agreed, but highways want the road to be impermeable, SAB want it to be permeable. No-one is agreeing and you can't get a decision for three months just on that one item alone. I've got lots more, but I'll let the other gentlemen kick in. 

11:25

Thank you. I think, in terms of delivery, some of the main barriers are around land, and I think all of our members and all the developers, registered social landlords and private companies say that they would deliver more if land was available, and that comes down to local development plans, primarily. So, it's about having those up to date, but also having ambitious plans that do look for growth and meeting housing need. And I think there can be a tendency in national policy to look to past trends and population growth data, rather than thinking about how plans can be used as a policy tool to implement positive change—you know, how do we address things like ageing populations, affordable housing need? It needs some growth. Clearly, that growth has to be in the right places, but that land has to be there. So, I think that land availability is certainly one.

Linked with that is the challenge that Dorian's already mentioned around viability of sites and increasing policy requirements. So, one of the key issues that we hear about objecting to development is around infrastructure. You're probably aware that section 106 planning contribution agreements can be used for things like school places, highway improvements, active travel links, all sorts of things, and affordable housing, but there's only so much money in the pot and that cake is trying to be sliced up into increasingly more slices, which means that something isn't getting what it needs, and quite often it's affordable housing that takes some of that hit. 

Complexity of the planning system that's been mentioned just now is a challenge, but I think there are elements of that complexity that are introduced for good reason. So, you'll be aware of things around phosphates recently, and we'll come back to that probably in a couple of minutes, and around things like environmental protection, around SABs—so, sustainable drainage systems for developments are there with perfectly good intent, preventing developments from flooding in the future—and also ecological benefits. So, that complexity is there for good reason, but it has added to some of those processes and delays.

And when we were chatting outside, I think we fixed a few problems within 10 minutes—with things like legal agreements, it can feel like you're doing the first one ever every single time a council is doing legal agreements for section 106. That surely could be standardised a bit more, and simplified. 

Site sizes can be a challenge. As was mentioned from a SME perspective, LDPs quite often allocate large sites, and there are some benefits around doing that in terms of getting more bang for your buck as a council. So, there's infrastructure demand on a bigger site—for example, if you're over 700 homes, you probably need an on-site primary school, and that can be much easier than trying to extend local facilities that may not have the physical capacity to be extended. So, there can be, perhaps, an ease in going for larger sites from a council's perspective than pepper-potting small bits of development here and there, but that does, by definition, tend to exclude SMEs from the process, and they could bring a lot to the table in terms of delivery.

A lot of the issues around who builds what is with the landowner. Unless a local authority actually owns the land, they wouldn't have a say in parcelling it up for small SMEs or self-build plots; it will be down to the market to decide. And I guess one of the other things with that is, in the way LDPs are done, you start off with a call for sites for landowners or developers to put forward sites for inclusion. That is a time-consuming and very expensive process. So, for smaller parcels of land, smaller companies can be excluded from that process from the outset, and it almost lends itself more to the bigger sites and bigger developers. So, that's one challenge to be explored, I think. 

I agree with everything that's been said so far, but if I can just concentrate on our area of expertise, which is delivering very large strategic regeneration sites, I think, of the challenges that we've faced recently, construction cost inflation has been a major one. We've seen one site's costs go up by almost 30 per cent in a two-and-a-half-year period. So, that's been a big challenge. Tightening credit markets and access to finance have become much more difficult since the mini-budget of 2022. That's created huge issues for us. I agree with everything in planning, but, for us, big projects, development and construction capacity, and skills and resources in the supply chain are really big issues. And I think that, if you couple that with restraints in capacity from the utility companies, particularly electricity now—we're moving towards an all-electric development proposition—we have real issues in dealing with National Grid in terms of getting the capacity that's required to move to the new technologies.

So, what I think is that, if you put all of those things in combination, then doing large, strategic regeneration sites is just too difficult for the vast majority of organisations. And we have to find a way of trying to unlock that by bolting these things together and having a more strategic view of how we deal with this. As far as we're concerned, we absolutely support the SMEs' role in all of this, but, unless we start delivering our big brownfield regeneration sites and have a portfolio of sites going forward, we are not going to start addressing this crisis that we're facing at the moment.

11:30

Yes. I'm, obviously, here representing private house builders. I think a lot of the conversations we hear around this issue are around how councils and RSLs can deliver more affordable homes. But the statistics show that 30 per cent of the affordable homes in Wales are delivered as part of private developments. So, whatever we do, whatever we hopefully get done with the planning system, or any of the other systems that we'll talk about today that are causing delays, we need to make sure they apply equally to all tenures and all sectors, and not see priority necessarily for the affordable housing sector, because, ultimately, that will reduce not increase the supply.

If you don't mind, Members, I'll come back with just a couple of extra points. I think two other key issues that are barriers to delivery result around the voices that are heard. So, many of these decisions are made by locally elected members. You're quite often hearing voices from objectors, who tend to be people with homes, in this context, and you don't tend to hear from people on the housing waiting lists—younger generations, who really need this housing. And that can sway decision making, or end up resulting in some very short-term thinking. And that can also be a real challenge when doing LDPs and a lot of pressures against growth that is needed. The evidence on housing need is really, really clear; the challenge is doing that. And one of the biggest objections coming up is around infrastructure capacity, our members are telling us. So, it's fixing some of those other barriers. That can be water, sewer infrastructure, transport infrastructure, and, more importantly, more recently, has been health infrastructure. So, there's a recurring theme that, 'If there are more homes, I'll never get a GP appointment'. So, all of those bigger issues that you'll be facing are very much interlinked with this problem.

Mark, just on that point about planning committees and local members, and, obviously, they will want to reflect the views of local communities, we did hear a suggestion that there might be greater use of delegated powers. Obviously, there's a balance there, in terms of the local democratic nature of the planning system, but is that something you think has some mileage?

I'm not aware—and I'm not sure if colleagues here would disagree—that that's a particular problem in Wales. Typically, around 90 per cent, 95 per cent of decisions are made under delegated powers at the moment. I think, as you alluded to, there has to be that democratic accountability, and it will be those bigger developments that naturally go before elected members, and do rightly have a bit more public airing and a bit more public concern, and it needs to be explored and done in an open and transparent way. So, I think it would be very difficult to create a system that just facilitated these schemes going through under delegated powers. I'm not sure how that would really sit comfortably with the democratic side of the process.

I think one of the things that is problematic is what should happen is the allocation of a site in an LDP should give every stakeholder certainty that, in principle, that site will be developed for housing or employment, or whatever that allocation is. And it still feels like there isn't that certainty. You know, schemes can go before planning committees, and there's a debate about should there be housing at all—that argument should not be on the table; it's more about more site-specific things. So, if there's a way of cracking that, I think that might help.

11:35

I think, yes, that's where the frustration comes in, that you go through what is a lengthy three, four, five painful LDP process, you get your site allocated for housing. During that, the infrastructure has been looked at, the highways has been looked at, the school places have been looked at, all the issues have been looked at, and then it ends up at committee, because a member just goes, 'I want it to go to committee.' I think that's what should be challenged. They need to explain why. If it goes to committee, we can't discuss the principle, we can't discuss the highway issues, we can't discuss the school issues, because they've all been resolved; you have to show that there's some issue that hasn't been resolved, through the LDP process. That might be a way of dealing with it.

Just to add a point onto that, again, this is from an SME's perspective, where the predominant amount of sites that we do are already within a settlement boundary: white land, brownfield, small infill, windfall sites, et cetera. The vast majority of our sites go to planning committee. I don't believe that they need to; I think definitely that the use of delegated powers, especially for these smaller-scale sites—and when I mean 'small', they're still classed as major sites; they're still above 10. You know, 10, 15, 20, and it can be 30 as well—30 homes—but it's inconsistent. So, we've had as high as 36 homes be approved under delegated powers, but then we've also had a site as small as seven have to go to committee. So, it can change all the time, because, obviously, if councillors want it to go to committee, they can just request it. If one of their local constituents have objected, all it takes is one councillor to request it to go to committee, and it will go to committee. But I've sat in quite a lot of committees, and you have things like housing extensions in there that can take over an hour to get decided, and it's just—. Personally, I think it's a barrier; I really do think it needs to be looked at. Planning officers don't seem to have as much authority, really, as what I would expect them to have as a planning officer. But, of course, I know you've got to balance it with the local impact, and brownfield sites, infill sites, do have an impact on the direct local community.

So, we've had a site as small as 14 social housing have nearly 1,000 objections. There are only 30 houses in the cul-de-sac, but that's what happens. That goes to committee, it takes two years to get consent, finally, because it is in white land, the principal development is accepted, and it is policy compliant, and, obviously, we're building it now, but it could've already been built. People could've already been living in there, and that is the challenge. And I know there's no very quick answer for it, but I would agree it does need looking at, and for us—I slightly disagree with Mark on that—most of ours go to planning committee, and I don't think they need to.

Can I ask quickly? What you said is correct, but the problem is how are you going to to sell that to communities, because communities—? You never get along with the communities. When they telephone you, when they ask you, you never are there, and it is through their councillor that they make their local development authorities answerable and accountable. You don't remain accountable there.

So, I respect that as well, so thank you. What I would say is what we found, you know, delivering over 100 social housing, being in construction for over 230 social housing homes, having a pipeline of 1,000 social homes across the entire south of Wales, with lots of different RSLs and local authorities, there is a huge social stigma in society, and that is just the bottom line. And councillors—I've spoken to them directly—who would like to personally support our scheme cannot support our scheme because of the community. They cannot change their mind. They do not want social housing. I've written it down here that the common sentence that I get when I spoke to them—. And I don't really go out any more, speaking to communities, and I'll tell you why, because they can be aggressive. And their response is, 'We want to see more social housing, but not here', so—.

Diolch, Cadeirydd. Sticking with delivery, if I could go to David, with Tirion. As part of the written evidence that you provided to the committee prior to this session, you described a business model based on pension fund investments. I was just wondering if you could describe how that model would work and how scalable it is.

So, it's the model we're deploying at the Mill in Cardiff and at Whiteheads in Newport and hopefully, shortly, at Parc Eirin, so it's a proven model now. We have a relationship with M&G Investments, the pension fund, and the way it works is we take a site to them and say, 'This is the proposition on the site. This is what we think the rents will look like. This is the overall make-up of the site', we do some initial work with them to make sure that they're comfortable that it's an investment they can potentially make. We then work with the project sponsor, quite often Welsh Government, and we take a loan from Welsh Government on the sites that we've worked on with Welsh Government. A loan is then—

11:40

No, because these are historic loans, so they date back to 2013, the loans that we originally took, although we are negotiating a loan with the development bank for our current scheme at Parc Eirin, so there's been a sort of shift in that. The loan is used for site preparation and planning work, essentially, planning and design; we then jointly agree with the sponsor at the point of planning whether the project can go forward or not, and at that point we take the site on and we find the construction finance to build the project. At the end of the project, we refinance it with M&G based on the terms that we've agreed with them, and we repay the loan with interest, and the units will sit in a bespoke charitable vehicle for 50 years, and we're responsible for managing and maintaining those affordable units for that 50-year period. Once the 50-year period is up, they become completely debt-free, but they're still enshrined in our charitable structure, so they're retained as affordable units thereafter.

So, it's a structure we've developed with M&G, but it's not exclusive to M&G, and we have other institutions out there who are interested. The big issue is it's about scale, as I mentioned earlier. So, by the time we finish the sites we're doing with M&G now, it's about £140 million that they will have invested in. Most of the bigger pension funds are looking for £100 million plus, but preferably £300 million plus, so the key message is, if we have a portfolio, major regeneration sites in Wales—I'm sure we all know sites across south Wales that have been sat there for a very long time, particularly in the post-industrial period—we could put together a portfolio, the institutions would be massively interested in a 20-year financing programme, and that is the game-changer that we're proposing. 

So, how would you get around the scalability issue, then, if you take away? Is that the way you would go about it, or is there—?

Yes. I think it's about negotiating with any potential investor about what they want, but essentially it's very straightforward because what they really want is rental assets that will grow in line with their pension obligations, so they're not looking for huge profits, they're not looking to make—. But if you have a 50-year programme that matches their annuity obligations that they have to all their pension holders, then it's stable, reliable income for them, and because of that it's extremely efficient. So, no social housing grant is going into any of our schemes at the moment. So, we're doing 449 affordable units at the Mill, no social housing grant; we're doing 268 in Newport, no social housing grant; we're doing 115 at Parc Eirin with no social housing grant. And it's because the money is 50-year based and it's super efficient, so it's the cheapest money you can get for housing. That's essentially how it works. 

It was interesting to understand a 50-year period—. What is the shelf life of these properties?

So, you can imagine the pension funds are very interested in design quality, management quality, placemaking, all these things that underpin the sustainability of the estates we build for them. So, the initial planned maintenance and reactive maintenance programme, which is looking after the properties—we have to demonstrate an 80-year programme with the pension funds, and then every three years there's a rolling programme and we have to provide evidence. They actually sit on the board of the vehicle, overseeing the investment as well, to make sure that these properties are well maintained, are let, well managed, because they have obviously put a lot of money into making them up.

Well, that's the maintenance programme that we have to demonstrate. We would hope they would last a lot longer than that. That's our obligation in the transaction to them. We have to demonstrate a rolling, 80-year maintenance programme.

11:45

Yes. So, our most recent scheme in Newport—they're all compliant with Welsh Government standards at the moment. The ones in Cardiff were compliant at the time, but, obviously, regulations have changed. We know it's a moving landscape. We've been fully compliant, it's just they take a long time to build out, so things change during the period of the construction.

Sorry, Chair, can I quickly pick up one point that was made, and it links to other things? We've heard, previously, about how the planning process takes a long time and it's costly and there's a lot of upfront cost. Interestingly, for the SMEs, which HBF do represent as well, most banks won't lend money for the planning process. They'll lend once you've got your planning ticket, but that pre-funding, which Dorian mentioned—£50,000, which is probably quite cheap for planning nowadays—you've got to find that money yourself.

So, that's what's restricting a lot of SMEs. The large public limited companies obviously can afford to do that. 

Diolch, Cadeirydd. I was going to come on to modern methods of construction and the role they can play in addressing the backlog we have, in terms of social housing and the need to build them. I was going to ask about the barriers, but I think, in the first set of questions, we've touched on quite a few barriers that I think would be quite relevant here—planning being one of them. So, I just wanted to put it out there. Are there any other additional barriers to modern methods of construction specifically that you can see? David.

Yes, so I think there are two key areas here. The first one, again, goes back to pipeline, and I think, essentially, MMC is a manufacturing process. If you were really going to make it cost competitive and scale up businesses that can deliver it, they need a guaranteed order book. So, it's sort of plays back into the need to have big schemes and small schemes running with some sort of guarantee that they're going to proceed so that they can plan their businesses and be part of the supply chain.

There are some other smaller areas that are a challenge. We've done quite a bit of research on this. So, modular that comes in a complete unit is quite difficult to align with the contractor you have on site. So, there's this grey area of who's responsible for what. There's a lot of double counting in the cost of developments. So, you have two contractors, effectively, operating. So, you double your costs in certain areas, on prelims et cetera, and the relationship between those two organisations is a huge challenge. We've pretty much decided, in the short-to-medium term, that closed, panelised systems that can be brought to site and assembled on site is the best current way of doing it, because that negates all those double-counting-of-costs issues. So, there are challenges, but the main one is providing a pipeline so the manufacturers can invest in their businesses.

David, you might disagree, with your expertise, but my understanding would also be that MMC requires a degree of standardisation, and that might be worth thinking about, in terms of the future shape of policy. So, at the moment, some councils are looking at things like policies requiring net-zero-carbon homes for the future. So, that would not just mean potentially different standards between England and Wales, but you could end up with 25 slightly different policies in Wales, which wouldn't be manageable or sensible. So, I think there's a need to think about futureproofing those processes as well. And if there is a move towards that kind of policy, then it's better that it's either covered by building regs or a standard national policy, rather than little variations around Wales, which I think would be impossible for the industry to meet. But, with your permission, if colleagues are free to disagree with what I've said, I'm at the edge of my technical expertise.

Thank you. I agree with both David and Mark. It's also something I've done quite a bit of research in. I actually did modern methods of construction as part of my dissertation for my Master's, for which I interviewed about 20 different registered social landlords, and also used our own development company as a base. So, we've built in many different methods, including my team members. We've gone the full standard, from traditional, all the way through to full modular. And there are challenges. You've definitely hit them on the head. You can't do modular in residential without the pipeline and without standardisation; it just will not work. It would be really expensive. I know it was done with the innovative funding, but it was just not value for money from a scale point of view. We also—the same as David—have actually found that closed panel timber-frame systems are actually the most flexible and fast to build. By far, though, I would say that modern methods of construction isn't the solution to building faster in the housing crisis. As I've already said, for us, it's the planning system, the legal point of view to get to, actually, a shovel in the ground that takes longer, sometimes double the time to actually build these houses.

And then the other thing I would say, though, is what we've found is that, on the delivery side, cash flow and cash flow management of these modern methods of construction is really challenging. With full modular, for example, the vast majority of it needs to be paid before it gets to site. There are a lot of smaller housing associations who cannot take that risk. They can only pay you when it's onsite. The developers cannot take that risk. You really struggle to get the funding for that, and also, I don't know if it's changed by now, but back when I did my research on it, housing associations were telling me that, in their portfolio, when it comes to securitisation and refinancing, if their portfolio had too high an exposure to MMC, i.e., modular—really, MMC—they would be restricted in their funding, which is something—I don't know if it's changed now—to look into, because unless you have a pipeline, standardisations, warrantees and funding, and an expertise, obviously, you can't do it.

But, yes, with timber-frame closed panel systems, I believe, you will deliver the housing you need in the time you need, rather than the full modular, because you still have to do the full-on groundworks and have a contractor on site. There are still lots of issues when it arrives on site. So, that's where I am, anyway.

11:50

I have a particular interest in modular housing, but I think one of the problems we've had over the years is that, as politicians and policy makers, we talk about it quite a bit as being potentially a way of solving the problem, but I think the pipeline point is particularly important. Anecdotally, I hear, on a semi-regular basis, of people going off to set up a business specifically around modular housing, only to find that there's no business, essentially, and then the company folds. 

So, what I would say on that is that if L&G can fail at delivering modular housing—and I went to their factory to have a look, and it was extremely impressive, fully automated, and the technology was amazing—and they can't get it to work, because there's not enough pipeline, then that demonstrates the challenge we've got in front of us.

Great. I don't know if Mark wants to come in before I hand back to you, Chair. 

I think that linked to that is just remembering the number of homes we build in Wales. It's only between 5,000 and 6,000 homes a year. So, if you're talking about big-scale pipelines, there are cities in England that build more than that. And when you spread it out across Wales, then, yes, it becomes difficult.

We have, haven't we? [Laughter.] Are there any other improvements you think that could be made? [Interruption.] He's got a big list there. [Laughter.]

Thanks, Chair. So, in terms of the Royal Town Planning Institute, we have 27,000 members around the world, about 1,300 in Wales. But what the data is showing over recent years is that the number of private sector members has increased and public sector has decreased. And I think that's partly a reflection of jobs and opportunities out there. So, the system, which we touched on earlier, has become relatively complex. So, there’s a team of experts needed to just submit an application, which has grown, but the team of people in local planning authorities making those decisions and getting those applications through has shrunk.

So, Welsh Local Government Association data is showing that local planning authority budgets more than halved between 2008 and 2022, which is really concerning, and there’s some really helpful evidence that the RTPI has collated, and, helpfully, the Chartered Institute of Housing Cymru has put it in their evidence to you. But 25 per cent of planners left the public sector between 2013 and 2020. So, there’s a real issue around resources and funding.

So, I think, in terms of dealing with that—. Sorry, I should also mention that some of those resource issues are beyond local planning authorities. So, with organisations like Natural Resources Wales who are a key stakeholder in the planning process, and also other council departments, so highways engineers, ecologists, for example, recruitment issues in those sectors also impact on the planning team itself.  

In terms of solutions, I think there are a few things that this committee and the Welsh Government could help with. Everybody I've spoken to throughout the sector would support higher planning application fees, because it's recognised that the cost of an application doesn't meet the cost of service delivery. But, that is subject to the caveat that that money is ring-fenced to improve planning services, and that's a real challenge, because the way the public sector is funded at the moment is broken, and there are some very, very real challenges for councils to face in terms of funding, and some pressures, ironically, partly around homelessness and temporary accommodation, but social care, education, and they are the priority funding areas, so planning isn't seeing that investment. So, if there is an increase in cost to the customer, that should be reflected by that funding being a service improvement, and I think everybody would agree that that would be welcomed.

11:55

Mark, have you got—? I wouldn't expect a figure, but what sort of increase, realistically, would enable the improvements that are necessary?

Gosh, that's hard to answer. I know that local authorities have written to the Minister and requested a 20 per cent fee increase, but I think that's alongside a bit of work that looks at full cost recovery and what that would mean. That is quite a piece of work and I think would need a bit of a sanity check as well. For example, the application service has a very clear customer in the sense of the applicant who benefits at the end, whereas for a planning policy team, an LDP, you could argue that the entire community is the customer. I know everyone benefits from that certainty about what's protected, what developments looks like. And then enforcement is a separate category. So, I think there is a huge amount of work to be done around that, and that might not even be a neat solution, because you might find that your neighbour's small house extension proportionately would have a big fee increase, and the really big development by a public limited company that is making profits would not increase as much. So, that has its own political and appropriateness connotations. So, I couldn't give you an exact figure, I'm afraid, Chair. 

I think the other couple of things that the Welsh Government could help with would be around apprenticeships. At the moment, there is a lack of apprenticeships and ways into the planning profession, so if we could get more people in and if there were funded opportunities so that people could be released to become qualified, then that would be fantastic. There are some schemes in different nations, but some of those are only available to the private sector, so that's not helping the key challenge here. So, I think work around that.

And then potentially a more extreme example would be to have planning listed as a shortage profession, and for that to be considered around immigration policies, albeit that would be sort of a UK Government thing that you would be lobbying for, if you were to agree, rather than a Welsh Government decision.

Thanks, and yes, great points there, Mark, as well. I won't take up too much time. We've discussed quite a lot on planning, but I would say, if I just run through some of our observations, some of them might not have easy solutions.

What we've found working through the process from the beginning, the pre-application advice itself is a great tool. It's absolutely needed, definitely, in my opinion. The only problem we have with the pre-application advice is that we do not always get consultees responding to that, which makes it very risky to go into the planning. Again, that comes back to resource, not just in planning and planning officers though, but the wider consultees, i.e. highways predominantly. It's really difficult to get highways to respond, and they are a major consultee. If they say 'no', you cannot do the development site. Also, we've had it where planning officers have gone back on what they've said on the pre-application advice. I know they caveat it and say you can't rely on it, but I'm just putting it out there on record that that does cause issues to SMEs. I don't think there's more of a—.

Anyway, the next step then is the PAC process, which at the moment is required for any dwelling-houses above 10 or over 1,000 sq m. We don't find the PAC process fit for purpose at all, in my opinion. I don't think it adds any value, really. I'm going to be a bit radical there, and people may disagree. But either way, I think it needs looking at. I personally think the threshold either needs increasing from 10 or, at the very least, it really needs an overhaul, because it's basically an extra month and a bit, and all the developers I know and ourselves internally and the consultees, they all know it's not fit for purpose, so why are we still doing it? That needs changing, in my opinion.

Then, we've got the planning application process itself. That will really, in my opinion—

12:00

Sorry. Pre-application consultation, which is after pre-app—. Well, you don't have to do a pre-app, but it's the—. You'd explain it better than me, Mark.

Okay. I didn't want to give the wrong technical definition.

Okay. So, again, that's that one. In the planning application process, again a lot of that comes down to resource and budgets, really, and more people and investment. I think that the eight-week time frame itself is just really unrealistic. We've all discussed that. I just don't think that should be the benchmark, because you're setting everybody up for that expectation and it will always be failed, in my opinion. In today's world—. That eight-week timescale came in, what, just after world war two as a requirement; we're in 2024 now. With the amount of reports you need and consultations you need to get permission, it will never be eight weeks, unless you introduce permitted developments. So, I would stress actually increasing the timescale, as well as increasing the fee. If you think about PPAs—sorry for the acronym as well, but that's—

I didn't want to give the wrong technical thing as well. We just know these acronyms and what they do. That is an extra 30 per cent on the planning application fee and you're meant to get enhanced timescales. We've done them and still had consultees not respond on time. So, you can pay the extra money, but how is it actually going to increase resource, which is the important thing?

We're also happy for increased timescales. Instead of saying it's eight weeks, say it's going to be longer, but what happens if it goes over? At the moment, you have two options: you either agree an extension of time, which then basically puts the planning authority back in time budget, or you go for non-determination, get it declined and go to appeal, which takes 10 months. So, as an SME developer, what options do you really have, other than to sit there and wait and just keep e-mailing and chasing, chasing and chasing?

Sorry, I'm nearly finished. Then, after the planning application process, if the next step is the section 106—. Well, before that, it's the decision, and I've already discussed about the committee and delegated powers. I think more delegated powers need to be used and, I think, fewer committees. That's my personal opinion. Section 106, the legal obligation to capture contributions, that also needs looking at, because it shouldn't take three months to have a £15,000 contribution signed up on a legal agreement, which holds up the entire rest of the process. It really is what we would call in construction on the critical path. So, that needs looking at and I think, with templates, it could really be standardised.

After section 106, you've then got condition discharge, and I think that with the condition discharge process, we're still using too many pre-commencement conditions. The whole development has been agreed, but yet you could still have a pre-commencement condition that is related to something about landscaping at the very end of the project. I don't agree with that, and you can't start the site, so why have it? It's just a wording change.

They are the key bits of planning. The only other thing I'd say, to put it on record as well, is that should Welsh Government introduce a new policy, like what happened with the PPW, 'Planning Policy Wales' amendment with ecology—. I understand we're in an ecological emergency, but bringing in a new policy with immediate effect and affecting everything that's already in the planning system was absolutely crushing to new housing that was immediately being brought forward. We personally have sites, and so do other developers, that were allocated for development in the local development plan that cannot be brought forward because of a new immediate impact on policy, when we've already, as key stakeholders, made the decision, it's been in the process for nearly 18 months, and now it's halted. That's 20 homes in an area with a housing waiting list, and it was allocated under different circumstances. Now, it may not be able to be developed.

So, that's the only thing I would say, and just increase a bit more that clarity between SAB and planning. I know they're both needed, but when they disagree and it takes three months to get a simple solution on tarmac, that is unproductive.

I'll try to keep it short and build on some of the stuff that has been said: the resource issue and it being wider than planners. We talk about planning and we often think about planners, but it's highways and all the others. I think the other thing is that we're seeing more and more new legislation coming in, which then needs extra skills that there aren't resources for. So, I think the best example recently is that there's some legislation around noise studies that are now required. Within the consultation, the Welsh Government admitted themselves that there wasn't anybody in Wales who actually knew how to do these studies, yet they're a requirement for developers to put in. So, if the resources aren't there—. I think also then, there's the clear guidance around that new legislation. The biodiversity net gain that Dorian just talked about, what it says is 'proportionate to the development'. Each local authority determines that differently. One will ask for a 10-page report for something very simple; another will ask for one side of A4. If there'd been clearer guidance and model forms and model guidance, that would speed things up.

This issue has been around for a long time—this isn't a new issue; we've been talking about this for four or five years. I still think the right people haven't banged heads together to actually talk about some solutions—and that's the Welsh Government, the WLGA, the RTPI and developers. I tried to do it myself on a small scale and didn't get anywhere with it, really. I have to say, again, being a little bit controversial, we hear the Minister talking about one of the answers being regional working, but I don't understand that—I don't see how that's going to help. It doesn't generate more people—it's the same pool of people, just dealing with it regionally. I think it's just going to add political difficulties.

12:05

Does anybody think that corporate joint committees might be a useful vehicle? David.

We're attracted to the idea of regional planning, but on the proviso that it is deliberately set up to deliver development on a more strategic level. I've already talked about delivering many more units at a strategic level, but we've got issues around aligning development with major public infrastructure investment, for example. That might be the south Wales metro, which is a good example of that. We've talked about investment in utilities—at the moment, it's extremely fragmented. There is no joined-up thinking about how you need to deliver utilities across a much wider region to facilitate development. And it would be very much on the presumption that, if you have a major site allocated, the presumption is in favour of delivering it, rather than putting it back into the rather cumbersome and lengthy planning process that we've talked about. We think that there are some lessons to learn from the city region concept, for example, and we think that some of our European cousins do it a lot better than we do. But what we don't want—and I think this is Mark's concern—is to add another layer of bureaucracy in the planning system. That's absolutely the last thing we need.

That could be using the north Wales economic ambition board for strategic planning to do with highways, as you said, and infrastructure, but then, when it comes to local planning decisions, they're probably best placed with local authorities. 

I don't disagree with what's been said there, and I've championed the idea of what I refer to as 'the development team approach'. I think the Minister has recently mentioned that as well. The problem is that, at the moment with resources as they are, what will happen in Wales, if that goes ahead, is that they will take people out of local authorities to create that team. So, yes, you'll have a team that will deal with one or two big applications, but for all the other smaller applications and the SMEs, there will be even fewer people to deal with them, so that will slow that down. So, overall, you won't get an improvement.

I would suggest that the bulk of what David suggested will be in play shortly with the CJCs that have been established. Their remit is to do a strategic development plan, a regional transport plan and also consider economic well-being. I think once those things are in place, that will naturally start informing infrastructure investments and they'll be targeted at those areas. I would personally suggest that we let those things get up and running before we suggest adding things to the CJCs, and that will take some time. I also think that probably the actual decision making on those schemes, once it's in the strategic development plan, is best placed locally. I think that comes back to some of that democratic accountability that we talked about, albeit that there should be that certainty—it's in the adopted strategic development plan or the regional transport plan, and therefore the presumption is that it is happening, and the consideration before the local authority should be about what are the nuts-and-bolts details: exactly how many homes, what are the distances between those homes and the existing properties next door and those kind of amenity and very local issues, not the principles that should be established and left.

I think we have touched on a lot of things, and it was a joy to listen to you all. I was a member of one of the planning committees at Bridgend County Borough Council, so it was all happening there. But we've heard that there are skills capacity gaps in the construction sector in Wales, and it is said that one of the solutions is to go on making the social sector homes and everything. What's your opinion about it? David.

12:10

What I would say—and it's a point I've made several times already today—is it's about the scale of the the pipeline. If you've got enough construction projects going forward, then that gives construction companies the ability to build their businesses, invest more in apprenticeships, invest more in skills. It gives the public sector bigger organisations to deal with in terms of training programmes. Without that, the incentive to develop our skills base is not there, and it's going to be a continuing struggle. So, certainty of what collectively we're all doing and delivering over a 10 or 20-year period is where we need to be.

I would agree. This is where I wholeheartedly believe you need large, strategic skills, but you also need SMEs, because there's going to be a lot of supply chain and skills coming through that want to remain in the SME market. It's different, as you've already mentioned—different skill sets and expertise. This is why we're still encouraging SME developments. For example, in Bridgend, in their new LDP, not one site under 100 homes was allocated. So, it's very difficult for SMEs. Doing what we can to keep allowing SMEs to keep building is very important.

A lot of construction companies have moved out of the social delivery market because of recent risks. You all heard and know about the high cost inflation that came through, decimating a lot of contractors. Some contractors were on tens of millions of pounds of contracts. Cost went up 25 per cent; nobody is on a 25 per cent margin in social housing. It does not exist. You're lucky to make over 10 per cent and that's if you're being very efficient. But people choose to build social housing even for what's classed as a lower margin industry-wide, because they have certainty of payment and cash flow. But when inflation comes in and rips that margin away and puts you into a loss position, you cannot sustain it; it's not sustainable. And what we're finding now that that's kind of settling is we still, as an SME developer, struggle to get fluctuation provisions from housing associations, even today.

Very recently, we've signed a contract, we cannot get a fluctuation provision, so we're still taking all of that cost inflation risk. Hopefully it doesn't happen again, but it's because of the way the grant system is set up. The housing associations get a grant—social housing grant or however they fund it—that grant allowance gets crystallised, so their price needs to be fixed because their model is fixed. So, I understand why. If there is a risk that the cost is going to go up 5, 6 or 7 per cent, they've got no allocated pot of funding to deal with that. Their response is, 'If it happens again, hopefully the Welsh Government help again, and hopefully we'll be okay.' But from a construction point of view, there's going to be a lot of diversification away from social because of that cost risk.

I think one big thing to encourage skill sets, encourage SMEs, so some of them will grow into becoming full strategic large-scale players, is to introduce more creative procurement and collaboration, pain and gain approaches, something changing in the grant structure to allow for risk, and then you will end up with better value for money. Because at the moment, we, as well as everybody else, have to price in risk that may not materialise, because if it does materialise, we're eating it all. That's what I would say.

No, it's all right. I think we've touched on the LDP previously, and the utility infrastructure.

I'll just ask one further question, then, in terms of what guiding principle or principles the Welsh Government should adopt in terms of managing publicly owned land. Because we do hear a lot of points made about land in the public estate and how that might be suitable for house building and how that might be achieved. Do you have views on what factors the Welsh Government should take into account in terms of managing publicly owned land and what the guiding principles should be? 

Things change all the time, but certainly a few years ago, you'd go in and meet the Welsh Government and it would seem like they didn't actually even know what land they owned, in all honesty. Let's accept they can work out what land they own, it's then is it suitable for housing, and if it is suitable for housing, what are the constraints. Get as many of those issues sorted out so that you can then get it to the market ready to deliver. It just seems to take a very long time. There's a very large piece of land just outside Penarth that the Welsh Government are selling at the moment, at Lower Cosmeston. It's an incredibly painful process that the bidders are having to go through and a lengthy process to get to a position to be able to build on that site. 

One of the things you'll often hear is the land development authority used to do this well, so why don't you bring back something like that. That's almost the easy answer, isn't it? Other people might be able to comment, but I think there is a lack of commercialism within the Welsh Government. A lot of the people who are responsible for bringing this land forward have only ever worked within Government and have not worked on the other side, so lack that understanding.

12:15

Should there be some new entity to take forward the use of publicly owned land for housing? David. 

I think it's more about how you structure the delivery of any given site, particularly big sites. Mark might not agree with this, but I think selling into the market at the front end of a very big project is problematic, because by their very nature, they change over the course of time and it's very difficult to control what your outcomes are from day one. So, our view, and it's the way we've done the Mill, and in Newport, to a certain extent, is that the public sector partners can control the delivery of the site, but let the private sector do what they're best at, which is delivering houses for sale. If you can do that, you can drive more money into a regeneration project and get better outcomes for everyone. So, you don't just have a single source of revenue, which is house sales; you have institutional funding that helps deliver your affordable housing. That releases additional money through section 106 for community facilities. It's a much better way of delivering a much bigger project. It's completely different for SMEs. As far as SMEs are concerned, they want a nice supply of smaller sites that are ready to go and can be developed. But with these bigger 10, 12, 15-year projects, it's much better in my view that the public sector maintains some control of the delivery from the outset and facilitates the private sector, rather than the other way around.

I think in terms of guiding principles, I would suggest a starting point is a recognition there is a housing crisis. That gets talked about, but it doesn't seem to be the top of the policy hierarchy, or perhaps have as much emphasis as it needs. In terms of the commerciality of land, I would agree there is a need for making sure there is a public land register that's identified. Public bodies do own land, but it might not necessarily be in the right locations. So, for example, a lot of councils own historic county farms, which probably are not in the right place for developments, by definition of being farms and in the countryside. So, I think that needs a bit of a sanity check.

In terms of the commerciality arguments that have been raised, where public bodies do own land, and we've already talked about how cash-strapped those bodies are, there's that decision that needs to be made between making the best return from an asset versus the best social good, and there is a legal requirement for those public bodies to get the best value for the public. So, it's some clarity about whether that's a financial value or a social value, and I think public bodies probably aren't quite sure which way they're meant to be going and almost get pushed towards finance because of the current situation. So, I think that clarity would be helpful and that acceptance: are you looking for land sale receipts or are you looking for policy-compliant affordable housing delivery, or even a higher proportion of affordable housing delivery and other policy aspirations around net-zero carbon, for example? It's understanding what is the goal and then making that clear.

Thank you very much, and thank you all for coming in to give evidence to committee today, Mark and Mark, Dorian and David. Thank you all very much. You will be sent a transcript to check for factual accuracy in the usual way. Diolch yn fawr.

12:20
5. Papurau i'w nodi
5. Papers to note

The next item on the agenda today is papers to note. There's one paper, which is a letter from the National Residential Landlords Association to the Cabinet Secretary for Housing, Local Government and Planning in relation to the private rented sector. Are Members content to note the paper? You are.

6. Cynnig o dan Reol Sefydlog 17.42 i benderfynu gwahardd y cyhoedd o weddill y cyfarfod
6. Motion under Standing Order 17.42 to resolve to exclude the public from the remainder of the meeting

Cynnig:

bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod yn unol â Rheol Sefydlog 17.42(ix).

Motion:

that the committee resolves to exclude the public from the remainder of the meeting in accordance with Standing Order 17.42(ix).

Cynigiwyd y cynnig.

Motion moved.