Public Accounts Committee

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

Wednesday 15 July 2015

Ordered by the House of Commons to be published on 15 July 2015

Watch the meeting: http://parliamentlive.tv/event/index/df5740dc-0a36-438a-80f5-a06621dac001

Members present: Meg Hillier (Chair); Mr Richard Bacon; Deidre Brock; Kevin Foster; Mr Stewart Jackson; Clive Lewis; Nigel Mills; David Mowat; Teresa Pearce; John Pugh; Nick Smith; Karin Smyth; Mrs Anne-Marie Trevelyan

Sir Amyas Morse, Comptroller and Auditor General, National Audit Office, Marius Gallaher, Alternate Treasury Officer of Accounts, Adrian Jenner, Director of Parliamentary Relations, National Audit Office and Matthew Rees, Director, National Audit Office, were in attendance.

Examination of Witnesses

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

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

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

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

              Q1 Chair: In the small Westminster bubble in which we all operate, but I’m sure that will not hold Richard back in his questioning today! Stewart and Richard will lead today’s session, but before we move to that, I want to welcome the new permanent secretary and say that this is a pretty extraordinary Report. As a Department, you did not know whether land was being sold at the right price, how many homes should have been built and how many homes have been built, and we will not know for some time—perhaps before the end of the decade—whether the target has been met. Do you have an opening response to the Report before we move to the main questioning?

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

              Q2 Mr Bacon: Can you just repeat that? I didn’t hear it. The quantum of housing was what?

              Melanie Dawes: The quantum of housing was in line with our target.

              Q3 Mr Bacon: I thought you said, but I am not sure: “the quantum of housing that was likely to be released.”

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

              Q4 Chair: As I said, and as the Report demonstrates, you do not actually know whether there was value for money in the land sales because you do not know how much money came in or how many houses have been built, but you are telling us that it is a successful programme. That defies the evidence in the Report.

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

              Q5 Chair: But you are the accounting officer for the Department for Communities and Local Government, whose overall project it was. Measures are therefore needed for the other accounting officers to meet, and the Report says that there weren’t very clear measures, so you have some responsibility for setting the tone and the way in which the programme was rolled out through the other Departments that were going to deliver towards this total.

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

              Q6 Chair: But as a Department, you did not go back to check whether those targets had been met, did you?

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

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

              Q7 Mr Jackson: This is one of the most damning reports that we have had before us in the last five years. How you could possibly describe it as a success is beyond me. Given that you signed off this report, are you aware that 79% of projects were either incomplete or had no records whatsoever? There was no documentation to verify value for money or any other issues raised by the NAO. In what possible sense could you regard that as a success? You cannot possibly say that it was a success in terms of value for money because we simply don’t know. Before you answer that, can I ask you a more general question?

              Melanie Dawes: By all means.

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

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

              Q8 Mr Jackson: Well, yes, but in your earlier answer you also made reference to planning permissions, local planning authorities, core strategies and those sorts of things. There is no evidence whatsoever that there was any systematic analysis or overview of each of the 942 sites. You seem to be saying, “We are managing a target.” Well, we can all manage a target. I mean, I am managing the target of getting out of bed in the morning and coming to work, but what am I actually achieving at the end of it? Your target was to build 100,000 homes, as the lead Department, with the Homes and Communities Agency. It is all very well your saying, “Well, the language was a bit opaque”; we’ll come on to that in a minute. But that was your principal target, and I think—

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

              Mr Jackson: That was the policy objective.

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

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

              Q9 Mr Jackson: Can I just say—?

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

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

              Mr Jackson: I do think you are being a little bit nonchalant about what was, after all, a very important policy objective, which is to deliver 100,000 homes. And I do not think it is acceptable, given what you were tasked by Ministers to do, for you to say, “Well, our job was really just to draw up a target, give it to a Department and that was it.” That is just not acceptable. In particular, you do not seem to have developed any methodology for ensuring that the land was disposed of, in terms of scrutiny in a timely way.

              I will let you answer, but I want you to answer this point specifically. I am looking at the top of page 15, at paragraph 2.18. As permanent secretary and accounting officer, are you really happy with the fact that you, as the lead Department working with the HCA, were not collecting any information about the value of the disposed land, the sale proceeds, the means by which the site was sold, copies of contracts, and the number of houses built on the land sold? Surely, as the lead Department, that was unsatisfactory.

              Melanie Dawes: Can I just be really clear? The NAO Report sets out what our target was. The opening paragraph makes that clear: “To release enough public land to build as many as 100,000 new homes.” I am not trying to dance on a pinhead here; that really is a very different thing from having a target actually to build those homes.

              Clearly, it was really important that we did not just sell some site without any understanding of whether or not homes were actually going to be built, so we put in place a very detailed assurance process—Andy can perhaps go into that detail if you would like us to go into it—that made sure that when we were releasing land, there was a really good chance that homes were actually going to be built on it.

              Recently, we have looked at 100 sites that were included in our final target and we found that more homes are going to be built on those sites as of current plans and current construction even than we counted. So we are doing some retrospective checking here and it shows that the figures that we included in the target are, if anything, rather conservative. So we had a pretty rigorous process to check—

              Q10 Mr Jackson: You didn’t. That is completely untrue. In paragraph 2.17, on page 14, the HCA says, “There is no consistent approach to calculating the number of homes that will occupy a site, although the HCA conducts a sense check”—whatever that is—“of the incoming data and provides challenges to Departments on what they could count towards the target as potential homes.”

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

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

              Mr Jackson: No, I said the NAO.

              Andy Rose:  I beg your pardon—my mistake. But the process that we went through, first of all there was a definition that was agreed. This all went through effectively a programme board, then we would have regular meetings with each of the Departments and we would go through a robust check about whether the forecast going through was consistent with the definition.

              So we would agree very much—again you will be aware that the HCA played two roles: one is providing check and assurance; and one is as a land-owning entity. Our role was to validate that those numbers were consistent with the methodology, which we did and which we agreed with the Department at the time. I am very comfortable that those numbers—

              Q11 Mr Jackson: Let me stop you there. The essence of this is—are you talking about monitoring construction of houses?

              Andy Rose: No, absolutely not.

              Q12 Mr Jackson: Okay. So you are praying in aid the rather nebulous concept of potential capacity.

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

              Mr Jackson: Of potential capacity.

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

              Q13 Chair: I want to bring in the Comptroller and Auditor General.

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

              Melanie Dawes: For absolute clarity, I have no problems with the Report at all, but I do not think that it is saying that we set out to achieve a house building target. You are saying that we set out to achieve a target for the release of land, and you are also saying that we met that target.

              The NAO raise a number of issues in the Report about whether we should have monitored actual house building. The NAO does recommend that. We decided during the programme that we should not, because we were really worried about putting a burden on developers and basically making public sector land some sort of bureaucratic problem for them in a way that private sector land was not.

              Q14 Mr Bacon: You were really worried about putting a burden on developers to let you know what they had done with assets that they had got from you—in some cases for free—with a build now, pay later interest-free loan. The difference between this and a purely private-private situation is that these were public assets—that is the difference. I am interested in this approach of yours to what your responsibility is in relation to value for money.

              We can all read paragraph 1, which you quoted, which says, “release enough public land to build as many as 100,000 new…homes”—carefully drafted and watered down. To what extent do you think that whether homes are built or not is a criterion in judging the value for money of the programme? Is that a criterion?

              Melanie Dawes: I think that it would really concern me—

              Q15 Mr Bacon: Sorry, it is a really simple, binary thing. Just listen to the question. If you could answer my question rather than a different one that I did not ask, that will really save time. The question is—is the actual building of homes a criterion in determining the value for money of this, your programme?

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

              Q16 Mr Bacon: That is not my question. With respect, my question was not: were you seeking to build homes or not? Your answer, “With respect, I don’t think we were seeking to build homes,” is a good answer to the question, “Ms Dawes, were you seeking to build homes or not?” but that was not my question. My question, just to repeat it, was whether the actual building of homes—rather than the notional building of homes—was a criterion for the value for money of the programme. From what you have said so far, it sounds like the answer might be no, but, if that is the case, I would like to hear you say it.

              Melanie Dawes: Perhaps I can add the second half of that sentence.

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

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

              Q17 Mr Bacon: I am asking you a different question. With respect, I am not asking you on what basis you think should be judged. We will decide on which basis we think you should be judged on your use of assets that belong to the public. I am asking you whether building houses—actual houses—was a criterion for the value for money of the programme. It is a very simple question. Either it was a criterion for the successful delivery of value for money or it wasn’t.

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

              Q18 Mr Bacon: So the answer to my question is no.

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

              Peter Schofield: I just—

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

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

              Q19 Mr Bacon: But surely the extent to which you do that or not is a criterion of whether it is successful or not.

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

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

              Q20 Mr Jackson: I am sorry, Mr Schofield, but there is no documentation in that audit trail to support that you were looking that far into the future regarding the likely disposal of the land and the residential development that would follow in terms of the local planning authority. Only 21% of the projects in the audit were found to have any supportive documentation. You say that you were looking forward, despite the fact that you had this very opaque objective and the data was poor; you cannot support that because there is no documentation to back up your argument.

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

              Q21 Mr Jackson: Let’s try to get some consensus before we get too fractious on the figures. Do you agree that there was a lack of clarity at the beginning between notional and actual numbers delivered, aside from the fact that there was clearly no methodology? Do you agree that there was a lack of clarity, given the policy objective to build 100,000 homes?

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

              Q22 Mr Jackson: Can I stop you there, because the Report actually says that you did not have any supporting data to formulate those targets? Thereafter, you did not have any supporting data to see whether the targets were being met in the individual Departments.

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

              Q23 Mr Jackson: Can I ask Ms Dawes a specific question? Putting aside what we have said about lack of data and lack of clarity and the tension between notional and actual value and notional and actual delivery, why, if it was going so well, did the Cabinet Office and Treasury weigh in to express their concern about the efficacy of this policy?

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

              But I think the Department was pretty fast to act on the slow start and to put in place quite a lot of improvements quite quickly. It was a new thing we were trying to do.

              Q24 Chair: Can I bring in Matthew Rees here? Matthew, could you describe the way that the Department recorded the data?

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

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

              Q25 Mr Jackson: You did slightly light a blue touch paper with Mr Bacon on this. Can I clarify, for the record, that you said it was impracticable to measure the actual homes built because it was too onerous on the developers? Did you actually say that?

              Melanie Dawes: That was a judgment that was taken for the last programme.

              Q26 Mr Jackson: So your Department, which is huge and employs thousands of people, could not have employed one or two people to look at specific planning portals that are available across the country to take you through the progress of each individual development, which, as you know, because you are the permanent secretary, has an allocated case load number or planning committee number, and you could not have collated that information on each of the disposals. Are you really asking us to believe that?

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

              Q27 Mr Jackson: It is not complicated.

              Mr Bacon: I am amazed.

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

              Q28 Mr Jackson: It is common sense, isn’t it?

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

              Q29 Mr Jackson: Even I as the local MP will ring a planning officer and say, “That planning application that went through in committee last October—when do you think there will be any building on it, because I would like to go and have a look round because I take an interest in that sort of thing?” Why is it not possible for you to have rung up the Ministry of Defence and say, “What is happening with your disposal in Gosport or Aldershot? How many houses are physically there?” I cannot understand why that would be so difficult.

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

              Q30 Mr Bacon: What were the reasons? You said it was onerous. Onerous for whom?

              Chair: Onerous for developers.

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

              Q31 Chair: There is a tracking system on them, anyway, through the planning system.

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

              Mr Bacon: It is essentially a case of asking developers to tell you how many houses they have built. They have to know this, anyway.

              Sitting suspended for a Division in the House.

              On resuming—

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

              Q32 Mr Jackson: Did you think it was appropriate to include in the target disposals of British Waterways and Royal Mail, which strictly speaking were outside the remit of the target?

              Melanie Dawes: At the start of the programme those bodies and the sites that we included were in the public sector. DEFRA and the Shareholder Executive did a lot of work with Royal Mail and British Waterways to get some of their sites ready for disposal for housing. I think it is legitimate that they were included, because of that work that went in.

              Again, we have done some checking to ensure that that land is actually going to be built on for homes. We can say that more than 90% of the Royal Mail sites and the British Waterways sites have still got that assurance in place. In some cases construction has started. The land has actually been sold for housing and that is being acted upon. There are various sites we did not—

              Q33 Mr Jackson: But you are not monitoring it, so you do not know.

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

              Chair: Can I bring in Matthew Rees from the NAO?

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

              Q34 Mr Jackson: That is 10,000 to your 109,000 target.

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

              Q35 Mr Jackson: But no houses are being built; that is the point. That leads me beautifully on to my penultimate question.

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

              Q36 Mr Jackson: How did you find out about that one?

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

              Q37 Mr Jackson: You picked up the phone to Westminster City Council. That is a brilliant start.

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

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

              Sir Amyas Morse: You have started doing it already.

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

              Q38 Mr Jackson: You need to do a fundamental review of this whole policy, because it was not just a matter of not monitoring properly. It was not having a methodology, accountability or idea of value for money.

              Melanie Dawes: We obviously do not agree with all those points.

              Q39 Mr Jackson: You agree with the Report and that is what the Report says.

              Melanie Dawes: The Report does not say that.

              Q40 Mr Jackson: Let’s not quibble about it. You may be very opaque in your language, but the NAO tend to be not so opaque. It is pretty scathing of your role. Let me ask you two questions—

              Chair: Let Ms Dawes answer that first.

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

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

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

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

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

              Q41 Mr Jackson: Page 22 of the Report states that the Cabinet Office’s implementation unit reviewed the progress of the ongoing work on land disposals in October 2012 and outlined some significant concerns, particularly around departmental capacity. Bearing in mind that this was about 18 months on from when the project started, what did you specifically do to address those concerns? If we accept your premise that you were not responsible for building houses, just setting targets—I think that that is unsatisfactory, but there we go—what were you actually doing, in practical terms, as a catalyst for other Departments to build homes?

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

              Q42 Mr Jackson: That is not my question.

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

              Q43 Mr Jackson: I have already met you halfway. Although your targets were imprecise, the language was fluffy and there was no methodology, I will put all those big issues to one side. What were you actually doing to ensure that the Department for Transport, the Ministry of Defence and other Departments were physically building houses, which was what your Ministers had tasked you to facilitate?

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

              Peter Schofield: So a whole series of actions are listed in figure 7 on page 23. There were some structural things and an investment fund, all of which is set out. I think your specific question, Mr Jackson, is about what we were doing to support expertise in Departments and a number of things were going on. The Homes and Communities Agency was running workshops for Departments, including the Department of Health, which was an important Department in the programme. Some staff were seconded in and we also seconded some staff into some of the key Departments. The HCA made available a support called ATLAS, which helps large sites move forward through planning. The HCA also helped Departments to work with local authorities. The HCA has great expertise in how to address community concerns about developments locally.

              There was also support regarding commercial agreements. Section 4 of the NAO Report has a whole series of the different types of commercial deals that were done in order to release land and to encourage development on that land. Of course, as figure 7 on page 23 sets out, the HCA then took on some of the land as part of the transfer process and actually did the disposal on behalf of the Department.

              In addition to the HCA’s work, the Government Property Unit was also in action, both supporting and challenging from the centre. It ensured that every accounting officer had in a place an effective asset management strategy and that there was a proper competency framework and support for estates management specialists in each Department, including support for continuous professional development. Like the HCA, it also put experts into Departments to help them run their operations.

              While all of that support was going on, you had, for example, the growth and infrastructure committee chaired by the Chancellor of the Exchequer, the growth and enterprise committee chaired by the Prime Minister, and the head of the civil service, Sir Bob Kerslake, chairing groups of senior officials. So as well as the support, there was a huge amount of focus.

              In addition, we had the investment funds, which were helping to de-risk sites, improve site accessibility and deal with contamination issues. As the Report rightly says, after a slow start, this action was put in place and figure 3 shows the amazing build-up in momentum of sites moved to the market. We reached our target in time for the end of March.

              Q44 Chair: I would be careful, Mr Schofield, before drawing attention to figure 3 on page 17, because that figure includes land disposed and homes built from 1997 onwards. How many Governments ago is that—four? Just shy of 16,000 homes were counted into the total before the programme was launched, which surely underlines the fact that the Department did not have a grip on the numbers.

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

              Q45 Chair: I acknowledge that there is momentum after that, but 16,000 of the total were counted in before the programme started.

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

              Q46 Mr Jackson: This is really just a giant site allocations plan, which most county councils and borough councils do every four or five years—they do a land supply. Admittedly, they do not pick the builders going on each piece of land, but they are legally obliged to produce a five-year land supply, a core strategy and a site allocations plan, depending on whether they are a district council, county council or a unitary authority. That is all you have done.

              You are saying, “I’ve hit my target of targets.” That is what you have done. It is a bit Sir Humphrey this afternoon, if I may say so. It is very eloquently put, and you answered very clearly, but the point is building homes for people, not having wonderful targets and bar charts. That is our frustration. Four years after the Minister tasked you with this very important project, you should be in a position to come to the Committee—you actually should have laid papers before us saying, “This is the number of houses that have physically been built as of 31 March 2015.” That would have been helpful. You cannot do that, and I suspect that is a very big omission, which you need to address pretty urgently.

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

              Chair: The Comptroller and Auditor General is itching in his chair.

              Sir Amyas Morse: First, it is quite clear to me and it says in the Report—the permanent secretary asked me whether I could confirm what it says in the Report—that the Department’s objective, as the policy lead, was to release the equivalent number of sites for homes. That is what it was, and that is what our Report says.

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

              Peter Schofield: It is a fair challenge—the challenge that you made in the Report, which we accepted. Likewise, I think you accepted in what you wrote that there was no evidence that this was a problem in reality. I accept that there is a theoretical challenge. The reality, as I said earlier in reply to Mr Jackson, was that, alongside the pressure—that was all about ensuring that the objective of effective asset management was high up the priority list for a Department for which this is not normally a day job—support was required to make that happen.

              You have seen a massive improvement in the expertise available in Departments, centrally with the Government Property Unit and, I might also say, the Home and Communities Agency, to ensure that we are—as Government and the whole public sector—much more effective in our management of assets. One great thing about better management of assets is that you identify surplus assets that can be released for housing, which is clearly a key objective for the Government, as it is for this Committee.

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

              Q47 Mrs Trevelyan: I have a quick question that was triggered by figure 7, which says that “the Chancellor was considering transferring the land to the HCA without passing receipts to the departments” if the process did not speed up. That, as has been said, could be conceived as pressure.

              It is very difficult to see the proceeds released. Most of the Report says, “information not available.” We consider public assets to belong to the taxpayer. They do not belong to the Government. If they are sold for a new use, it ought to be self-evident that we can see how much they have been sold for. If that money is then going back into the Department, we should be able to follow that through to departmental accounts. I am confused as to why that is not obvious.

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

              Q48 Mrs Trevelyan: Is it not terribly straightforward if the land is transferred to a developer and there is a transfer of funds or future funds? Is that not a simple number that is recorded somewhere? Is that piece of information not gathered?

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

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

              Q49 Nick Smith: Mr Schofield, when you were challenged on how many homes had been built, you talked about working out how many had been built on the Rathbone Place site—the old Royal Mail site just north of Oxford Street. The obvious question to ask of you first is: how many homes have been built? We have seen the estimates. We are very concerned that there is nothing tangible there. You must have done, in the past few days I expect, some sort of tally or best estimate of how many homes have been built. Do you have anything for us at all?

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

              Q50 Nick Smith: So, in real figures, you estimated about 20,000. You have completed 2,000 and you think you will have 6,000.

              Peter Schofield: No, sorry.

              Nick Smith: Say it again then.

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

              Nick Smith: Yes, we get that.

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

              Nick Smith: Go through again what you just said.

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

              Q51 Nick Smith: This is back of the envelope—just before you came here today?

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

              Nick Smith: Nearly 7,000.

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

              Q52 Nick Smith: So you have got a target of 20,000 and you have completed 2,000.

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

              Peter Schofield: Yes. Andy had better do the numbers

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

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

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

              Q53 Nick Smith: We have just heard that three times now.

              Andy Rose: Sorry, Peter said 6,900—

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

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

              Chair: Sure, about 10%.

              Q54 Mr Bacon: Perhaps we could briefly summarise your early evidence, Ms Dawes, because we had this contretemps about what the policy was, and therefore whether you had achieved it or not. Going back to page 1 of the Report, which you quoted, it says, “release enough public land to build as many as 100,000 new…homes”. I think I am not representing you—please tell me if I am—but your evidence is that your job was to release land towards homes, to use your own words.

              Melanie Dawes: Yes.

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

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

              Q55 Mr Bacon: Right. That is very interesting, because I was about to come on to summarise the next part of what I thought you had said, which was that, none the less, despite the fact that that was not your target—that was simply about releasing land towards homes—at the same time you would be very concerned if there were no progress towards building houses.

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

              Q56 Mr Bacon: Yes. So, in other words, to use your most recent formulation and a fairly clear word, you “absolutely” had to assure yourself that it was “very likely”, again to use your phrase—quite how you determine whether it is “very likely” that something is “absolutely” so, or whether it is “absolutely” the case that something is “very likely”, I will leave to others to judge. But your evidence is that you had to make sure that it was absolutely very likely that houses would be built, even though that was not your target.

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

              Q57 Mr Bacon: Okay. And earlier on you talked about value for money and you also said that your check, as it were, was: were all the sales individually conducted in accordance with value for money tests?

              Melanie Dawes: Yes.

              Q58 Mr Bacon: What I am slightly surprised by is that, coming along with this programme, an intelligent lay person would say, “Fine. How much land are we going to sell? How many houses will we get on it? How much money will we, the taxpayer, get for the land we are selling for x number of houses?” Those are questions to which I would have thought anybody would want to know the answer quite early on to answer the question, “How much bang are we getting for our buck?” But you don’t know the answers to those questions, do you?

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

              Q59 Mr Bacon: Right—that is what surprises me. Because, right at the beginning, if the aim of the exercise were to release land towards houses, I would have thought that a common-sense—the HCA was referred to earlier by Mr Jackson as doing a sense check for all of this, and a sense check would be precisely to try roughly to answer that question. So you have got 109,590 homes that you want to see built on these 942 sites. Do you have some idea of what the gross development value of those 109,000 homes is, or would be, because they are not all built yet?

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

              Q60 Mr Bacon: Why not?

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

              Q61 Mr Bacon: How do you know? How do you get to the value for money point unless you start at the top and work backwards? For example, if you take 109,590 homes and you say that they will be sold for £200,000 each, you get to £21.9 billion. If you say that they will be sold for £400,000 each, you get to £43.8 billion. So your gross development proceeds will be somewhere south of £43 billion, but we do not know how far south. We also do not know what the costs are going to be, because there will be land that is fairly straightforward, land that has got big planning problems around it, and land that needs decontamination and so on.

              Surely the starting point in answering the value for money question is: how big is our pie? What will be produced by all this? And then to say: given all the development costs that will be involved, what would be a fair share of the pie for the developers? Given all the decontamination costs, what would be a fair share for the decontamination and the remedial work? And you work your way through until you get to the final and, for us, the most interesting question: what net, net, net would be a fair share for the taxpayer? But you cannot begin to answer. You have no way of answering that question or getting anywhere near that number. You have just shoved off the responsibility of doing that to a plethora of different accounting officers around the system, haven’t you?

              Melanie Dawes: This is the difference between—

              Mr Bacon: Sorry, is that a yes or no?

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

              Q62 Mr Bacon: Sorry, you mean when the buyer was going to get a discount on the market value. When you say the accounting officers are going to get a discount on the market value, you mean the buyer.

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

              Q63 Mr Bacon: If I can just take you to one of the case studies, let us start with case study 10. This is the Department for Transport on page 41. How does the accounting officer in this case satisfy himself that the Department for Transport achieved value for money?

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

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

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

              Q64 Mr Bacon: Neither does the National Audit Office. The Report says, “The National Audit Office was not able to obtain some details of the disposal from the Department for Transport.” Why would that have been?

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

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

              Q65 Mr Bacon: Mr Rees, could you say what the information was that you could not obtain?

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

              Q66 Mr Bacon: Why was that? Because they did not hold it?

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

              Q67 Mr Bacon: Ms Dawes, case study 8 on page 39. How would the accounting officer have established that it was value for money?

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

              Q68 Mr Bacon: They don’t even have a copy of the contract. You say they would have gone through it, but they don’t even hold a copy of the contract.

              Peter Schofield: This was a sale by British Waterways.

              Q69 Mr Bacon: So, you expect in this case the contract would have been held by British Waterways?

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

              Q70 Mr Bacon: Whether there was overage or clawback, it says the information was not provided.

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

              Q71 Chair: Could Matthew answer that point?

              Matthew Rees: We have not spoken directly on that one.

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

              Q72 Mr Bacon: If the information is not there, how does one audit whether there was value for money?

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

              Q73 Mr Bacon: I am not talking about the ones that are there. I am talking about the ones we know are not there, because the Report says they are not there.

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

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

              Q74 David Mowat: The point is about accountability. You do not regard yourself as accountable for whether or not value for money was achieved, where it was not your Department that was the accounting officer. Is that correct?

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

              Q75 David Mowat: In the example of case study 8, which was not your Department or HCA, your position would be that you and your programme director are not accountable for that value for money, because that is not what you were directed at. You were directed at getting the land released.

              Melanie Dawes: Getting the land released, that is right.

              Q76 Mr Bacon: I would accept that.

              Melanie Dawes: We would be really concerned if we were confusing accountabilities.

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

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

              Q77 David Mowat: I just wanted clarity on that, because you regard your accountability, as you have defined it in paragraph 1, as getting those 942 packages of land released, and therefore the accountability of whether it was value for money—unless it was the HCA—was outwith your Department, and the accounting officers, if they did not do that, were not doing their job. It would not have been to do with you or your programme director. Is that right?

              Melanie Dawes: Yes, that is right.

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

              Q78 Mr Bacon: Can I just take you to two more case studies briefly? The one on page 35 is case study 4. This is a site that I think was an old RAF station, where I am pleased to say there is going to be lots of self-build, I believe. One has got in there the volume of the land. It was 187 hectares and the proceeds from the disposal were £27.3 million. Do you think it fair and reasonable for those data—the volume of the land and the proceeds from the disposal—to be disclosed in that way?

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

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

              Q79 Mr Bacon: But in each case, whether it is being sold to another public sector body or a separate private sector body, it is still a public asset being sold, so the taxpayer has an interest in knowing the value at which the transaction took place—yes?

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

              Q80 Mr Bacon: Yes, fine, and so much the better from the point of view of extra layers of transparency. What I am not clear about, if you turn to case study 9 on page 40, is why different considerations applied because the buyer is a private sector buyer. The vendor is still a public sector vendor—in this case, the London Legacy Development Corporation. We know that there are going to be 1,850 homes, but the details of the sales contracts are “not provided due to commercial confidentiality”. How do we, on behalf of the taxpayer, assess whether this deal was value for money or not?

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

              Q81 Mr Bacon: It is not disclosed. The NAO did not put the number in here because presumably, Mr Rees, you could not get it.

              Matthew Rees: Yes. That has not been provided to us.

              Q82 Mr Bacon: You could not get the number—the National Audit Office could not get the number. The point, Ms Dawes, is that this is a public asset that has been sold and the NAO cannot find out what it was sold for. I will repeat my question: how can we be sure that public, taxpayers’ value was secured?

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

              Q83 Mr Bacon: What?

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

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

              Q84 Mr Bacon: In any case, my question was not a financial audit question; it was a value-for-money question. How do we satisfy ourselves that this transaction was good value for the taxpayer?

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

              Q85 Mr Bacon: Is not the whole basis of managing public money when disposing land that you are able to answer those questions?

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

              Q86 Mr Bacon: We may have to have a few more hearings on this. When I asked you that question, Ms Dawes, you shrugged.

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

              Q87 Mr Bacon: You are missing the point. The NAO asked for and could not get this specific piece of information. That being the case, how do we assess whether this transaction was value for money?

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

              Q88 Mr Bacon: I was not being frivolous at all. Do you know who the accounting officer for the London Legacy Development Corporation is?

              Sir Amyas Morse: I have a funny feeling it might be the Mayor of London.

              Peter Schofield: It is a GLA body.

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

              Q89 Mr Bacon: Can I ask about interest-free loans—the build now, pay later question referred to in the Report? How many dwellings have been completed—

              Chair: Nick is bursting to come in on the last point.

              Q90 Nick Smith: I want to follow up on your last points about the London Legacy Development Corporation and the contract amount for that plot of land. Earlier, Mr Schofield, you told us about how many homes were being built on the Royal Mail site at Rathbone Place. How much money has been gleaned from that sale?

              Peter Schofield: By Royal Mail plc?

              Q91 Nick Smith: Yes.

              Peter Schofield: I don’t know the answer to that question.

              Q92 Nick Smith: So you know the number of homes but not the money?

              Peter Schofield: Yes.

              Q93 Nick Smith: Can you find out? They are a privatised organisation, aren’t they? Can you let us know how much money that plot went for?

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

              Q94 Nick Smith: My point is, therefore, if you can do it for that, can’t you do it for the London Legacy Development Corporation and find out how much the contract for that plot is?

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

              Q95 Nick Smith: So you will write back to us with the amount of money for that contract?

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

              Q96 Chair: We will pursue that. While we are on the subject of Royal Mail, one of the other big issues about these disposals is the notorious example of Mount Pleasant sorting office, where the land was sold by the public body as a car park and then became a housing site with a small amount of affordable housing and a lot of expensive, luxury housing. That is not value for money, whichever way you cut it. Did the Department have any measures in place to stop those sorts of shenanigans—I suppose that would be a polite word for it?

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

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

              Q97 Chair: I know it wasn’t your Department but this is the programme that DCLG is responsible for.

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

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

              Q98 Mr Bacon: The great fear about this entire programme is that, when it is looked back on when all the houses are built in n number of years—12 or 15 years, or however long it is—a lot of people will have made a killing, and you, on behalf of the taxpayers driving this programme, along with other accounting officers in other Departments who are individually responsible for the disposal of particular sites, will not collectively have done enough to secure value for money. The great fear is that, of the total pie, whatever that turns out to be—£43 billion, £33 billion, £25 billion or whatever—the taxpayer will not have got enough of it.

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

              Q99 Mr Bacon: My worry is that you didn’t even try to answer that question at the programme level. You didn’t even come up with a rule of thumb or a basic, rough sense check on what it ought to look like.

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

              Q100 Mr Bacon: On that point, which guidance was made available to Departments to help them in the process?

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

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

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

              Chair: I have the RICS red book here.

              Mr Bacon: How very convenient.

              Q101 Chair: Would it be helpful to read out the RICS definition of “market value”? It says, “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.” One of the issues here was that there was a three-year deadline on that, which quite clearly suggests that there was a compulsion to sell. It doesn’t actually really meet what is written in the red book.

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

              Q102 Chair: So people could go over the three years?

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

              Q103 Chair: Can you give us an example of where that happened?

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

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

              Q104 Chair: So it wasn’t sold because it was a site of scientific interest, rather than because it would have been sold too cheaply if it went within the three years.

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

              Q105 Chair: The point was that if a site has to be sold within three years, once you get to two and a half years the developer knows they have got the Department over a barrel on selling that taxpayer asset, because they have got to sell it quickly. My point is, can you give an example of one that went over the three years because it would have been a fire sale?

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

              Q106 Chair: They weren’t delayed because of the fear of selling them off cheaply in a fire sale. They were delayed for other, external reasons.

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

              Q107 Mr Bacon: Can we go back to the question of the guidance? Ms Dawes, you were talking earlier about there being a lot of guidance around. You mentioned the RICS red book, and the Chair quoted from it. What other guidance did the Government have that you—the Department driving this and therefore advising other Departments on the requirements of the programme—provided or made sure was provided to Departments?

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

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

              Mr Bacon: Sorry, can you speak up?

              Andy Rose: Yes. As for the definition of a disposal, the NAO Report identifies that not all disposals were the same. They might have been freehold, up-front or they might have been under a building lease. There are a number of different mechanisms, so there was clarity around what defined a disposal. That is very much something that the HCA would test when each sale was made.

              Another definition, which I think you were going to come on to in a second, related to build now, pay later, guidance on which the Department issued in December 2011. Certainly, the HCA fed into it. There were a number of documents to help people define what qualified as a disposal. This was back in 2011 when the markets were tough and house builders’ balance sheets were quite constrained. A number of options were put forward to Departments about how they might—

              Q108 Mr Bacon: But I am really talking about central guidance provided by Government to advise Departments on what to do when disposing of property. Was there a kind of bible that you could go to?

              Peter Schofield: “Managing public money” is absolutely the bible for these purposes. What Andy is saying is that bible was supplemented with some specific guidance on some of the more difficult, challenging commercial transactions, some of which are set out quite well in chapter 4 of the NAO’s Report. Build now, pay later is one of the examples of that.

              Q109 Mr Bacon: I was thinking of this one. It is published by the OGC, and it is called “Guide for the disposal of surplus property”. It sounds quite relevant to me.

              Melanie Dawes: The OGC?

              Q110 Mr Bacon: Yes, and I am told that it is the extant advice. Is that correct? I am just curious, because no one has mentioned it. I am told that this document—“Guide for the disposal of surplus property”, published in November 2005 by the OGC; obviously it would have been taken over by the Major Projects Authority—is the extant Government advice on what you do when you have a question of how to deal with the disposal of surplus property. Is that correct? Is this the extant advice?

              Melanie Dawes: I am not familiar with the OGC document. I do not know whether that has been reissued by the part of the Cabinet Office that has taken over the OGC since 2005. I am simply not aware of that document.

              Q111 Mr Bacon: It is slightly scary that this appears to be the central document dealing specifically with this narrow domain of the disposal of surplus property, and none of you appears to have heard of it.

              Chair: I think Mr Rees can shed some light on this.

              Matthew Rees: We validated the accuracy of Mr Bacon’s statement yesterday with your team, so there is an email exchange that confirms that that is the document.

              Q112 Mr Bacon: But you have not even heard of it. Isn’t that an eloquent comment on the way you have approached this?

              Melanie Dawes: That is one of the bits of advice that is available for accounting officers—

              Q113 Mr Bacon: It is the main bit of advice.

              Melanie Dawes: We accept that, and we accept what Matthew has just said.

              Matthew Rees: It was the Cabinet Office, actually, rather than DCLG.

              Q114 Mr Bacon: But the OGC sat within the Treasury/Cabinet Office. It is now in the Efficiency and Reform Group, but I am told the advice is still the current version.

              You mentioned build now, pay later. By way of Mr Smith’s question, in relation to that which was done under build now, pay later, how many homes have been built? How much money have we got?

              Peter Schofield: Well, if I am right, something like 27 of the 28 sites sold by the HCA were under build now, pay later. I have not got the exact breakdown, but I think the numbers are similar to the ones that I gave to Mr Smith.

              Q115 Mr Bacon: Did you say 27 of the—

              Peter Schofield: I think it is 27 of the 28.

              Q116 Mr Bacon: Was build now, pay later confined to the HCA? Was it spread across all the different Departments? I am looking for a global figure of how many houses and how much money.

              Andy Rose: I do not have that number. I can confirm that number.

              Q117 Chair: Can you get that information to us?

              Andy Rose: We can certainly get it for the HCA.

              Q118 Mr Bacon: I would like it for all of them if possible.

              Melanie Dawes: We will see what we can do. I do not know whether we will be able to get the values from Departments, for the reasons we have been describing.

              Mr Bacon: Mr Gallaher, I have one for you. Figure 4 on page 19—

              Chair: We should say the Alternate Treasury Officer of Accounts.

              Q119 Mr Bacon: Yes, sorry. Mr Gallaher, the Alternate Treasury Officer of Accounts, you will see on page 19 there is a chart of the various Departments and their disposals. One can go through them and see in the case of the Ministry of Defence there are 153 sites. Would I be right in thinking the accounting officer for all of those was Mr Jon Thompson, the permanent secretary of the MOD?

              Marius Gallaher: Of the Ministry of Defence, yes.

              Q120 Mr Bacon: And for the Homes and Communities Agency, it would be Mr Rose?

              Marius Gallaher: Indeed.

              Q121 Mr Bacon: So you cover off on all those 133. For the Department of Health, we established earlier it would be a mixture, because some of it might be foundation hospitals and some of it might be the trust development authority. It could be held in various places. Is it possible that you can send us a list of all the accounting officers responsible for all those sites?

              Marius Gallaher: Yes, we could do that.

              Q122 Mr Bacon: There are 942 sites in total, but it will not be 942 accounting officers. It will be a radically smaller number than that, but I imagine that for the public corporations where it says there are 27, there might be 27 different names. I am guessing. If you give us a list of all the accounting officers and the bodies that they work for, that will be very helpful.

              Chair: Thank you. I am going to bring in David Mowat, Deidre and Karin Smyth.

              Q123 David Mowat: Quickly, I am not sure I understood what you told us. There are 942 separate deals that have taken place. Life being as it is, some of those will be good deals, some will be bad deals and some will be average. I guess the issue for the Committee is whether the time pressure that the programme must have been trying to put on, because it was a step change, would have made an appreciable difference in the percentage of good deals to bad deals to average deals. It might be reasonable that it does, because the thrust of policy is to get rid of that land. Would you comment on that?

              Melanie Dawes: As Pete has said, I cannot think of an example, and Peter has not raised one either, of where we think a Department felt that their value for money judgment was being swayed by time pressure. I genuinely cannot recall any of those. Whether or not any Department will have struck a deal that turned out not to be a great one—as you say, quite possibly. These deals are things that will be evolving over a number of years in terms of the homes being built and also in terms of things like clawback provisions, so some of the financial detail will evolve over time.

              Q124 David Mowat: Just for clarity, had the programme not existed and nothing had happened, figure 3 in your view would have carried on at that low level, and that big kick up at the end of it is due to the programme, in your judgment. There is a three-year rule about disposals, anyway. Given that the programme was, as we have ascertained, quite loose in its governance because a lot of the actual activity was in the Departments that you are not accountable for, what would have happened if it had not existed? Would there have been some kind of upsurge anyway?

              Melanie Dawes: I suspect there would have been some increase, because Departments like the MOD were disposing of surplus assets on a scale that was unusual compared with previous years. I am confident—I observed some of this from where I was at the time in the Cabinet Office—that without this programme, there would not have been anything like the pace of sales or the expertise of selling to bring the things into the housing market that were brought in.

              Q125 David Mowat: In a way, the judge and jury of Mr Schofield’s efforts on all this was the delta that has been caused by the programme. The question that arises is: how large is that delta? Are you pretty sure that it is considerable?

              Melanie Dawes: I am pretty sure that there is a delta. It is pretty hard to say exactly what it would have been. I am sure some of those sites would have been sold for housing without the programme, but not on this scale and not as many for housing specifically. That is my sense.

              Q126 David Mowat: A final question, if I may: in some of the Report’s case studies that we covered, there was questioning about not getting the figures and value for money and all that sort of stuff. If I were in your position, I would say, “That’s a little unfair,” because that is not what you or your programme are, in your view, accountable for. So in a sense, it is directed at different Departments. Is that your view?

              Melanie Dawes: In a sense, yes. To ask that question of the programme as a whole is perfectly fair, but this was not a value-for-money study and did not seek to look specifically at the value-for-money question. It has emerged out of the NAO’s work and you are raising it today, but the accountabilities for the programme were as I described. We did not attempt to take accountability for individual value-for-money sales in Departments.

              Q127 Chair: You said earlier that you had not heard from Departments that they were concerned about the pace. Paragraph 1.6 of the Report on page 10 says: “Departments informed us that they were not consulted adequately when targets were increased and felt they were over-ambitious, and did not always reflect delivery constraints.” It then goes on to give some examples. You have acknowledged that you agree with the NAO Report.

              Melanie Dawes: Yes. There are two slightly separate points. First, I am not aware of any example of an accounting officer raising concerns that their value-for-money process would be in some way affected by an inappropriate deadline. We are clear about that. I think we would have heard about that at the programme level, because of the very tight governance and quite extensive conversations that were going on.

              Q128 Chair: Tight governance?

              Melanie Dawes: In the sense of driving towards the overall target of land release, yes. My predecessor, Bob Kerslake, was holding very regular meetings on this with other accounting officers around the table. I honestly think that if there had been a concern about a VFM judgment, it would have been raised.

              Q129 Chair: I am sorry; when you cannot even tell us the number of homes that are going to or had been built, the phrase “tight governance” just does not chime right.

              Melanie Dawes: Okay. I accept that you might not accept that language. Your point about the pressure being put on Departments, which is in the NAO Report—that particularly relates to the period of target setting where, as the NAO Report shows quite clearly, the initial numbers that Departments came up with were exceeded by the end of the Parliament. There were some quite tough and challenging conversations between the programme, between Ministers and between Departments. Some Departments were probably too cautious, with hindsight, but we are trying to make sure that it is a bit more collaborative this time round. We are doing it now, before the spending review, so that it can be factored into the plans in a better way than last time.

              Q130 Chair: This Committee does not have a problem with any Department that is trying to get value for taxpayers or having robust discussions with Departments. That is not the issue; it is about whether those discussions were to force up a number in order to retrospectively meet a target, rather than actually get the result for taxpayers. At the moment, I think it is fair to say, from what the Committee has said and what people said to me when they were reading the Report, that we are not massively convinced that there is a big delivery yet for our constituents.

              Q131 Deidre Brock: There was a disconnect in your stated aim of facilitating the disposal of land to make it possible to build up to 100,000 houses. You are very clear that, certainly at the beginning of this programme, the building of the houses and the monitoring of their progress was not a major concern. But if you were not concerned with the house building, why did you introduce clawback, for example, if the land was not developed? How would you know about that if you were not monitoring this? If you are not robustly monitoring progress of housing delivery, surely the Department is in danger of appearing only interested in flogging public land and not in that target, which was the Government’s stated aim.

              Melanie Dawes: Andy might want to talk about why we thought clawback was appropriate. I will say prior to that that it is very important that any Department that has a clawback provision in its deal is monitoring that actively. It means they still have work to do after the deal has been struck. That would absolutely be part of what a Department needs to be doing.

              Andy Rose: I think there is a difference between being worried about whether houses are ultimately built and whether the design of the programme was specifically about that. Clawback is a mechanism so that if they are not acting in a way that you have anticipated—there might have been some uncertainty—it gives you the ability to buy back. I do not think it is not being worried whether houses are ultimately built.

              A lot of these tools that are used—I mentioned the building lease before, and clawback—are mechanisms to ensure that happens or there is some other remedy. Those are absolutely tools that Departments—and we certainly—use to ensure that you are able to judge ultimately whether what you hope would happen, would happen.

              Q132 Deidre Brock: Did the Department take measures to prevent, say, land banking? I notice that one of the case studies mentions actions that were taken to prevent that in that instance. Were you centrally suggesting to the different Departments that were negotiating these deals actions they could take, that specific one, for example? Land banking would very much affect the number of houses that could be built.

              Melanie Dawes: Yes, it would be a concern for me, again as I was saying earlier to Mr Bacon, if we had simply sold into developers’ land banks and nothing was happening. In some cases we did introduce provisions that ensured that that was not going happen. Peter Schofield may be able to give examples of that. That is exactly the sort of thing we did to ensure that we were not just selling and nothing would happen, but that houses were actually likely to be built. Would you like to give an example?

              Peter Schofield: Chapter 4 sets out the seven different methods of disposal that different Departments went through. Only in the case of direct sales would it be even remotely appropriate for the Department to say, “I’ve sold and that’s it.” All the others involve an ongoing relationship between the vendor Department and the developer or purchaser in each case.

              The way most of those would work, as comes out quite clearly in this chapter, is that they would relate to milestones around build-out. It is quite interesting because we do look more at a macro level at what is happening in terms of the risk of land banking across the house building sector. If you just look at the eight largest builders over the last four years we have seen a reduction. We have looked at between 2009 and 2013, when we have the last set of numbers, and we have seen the length of land banks in those developers fall rather than rise. I don’t think it is an issue, but some of the methods set out in chapter 4 are the way that vendors would be able to ensure that land is being built on.

              Q133 Deidre Brock: But by getting involved in that, does it not belie your stated claim that you are only there to facilitate the disposal of land in order potentially to create housing for 100,000 or more?

              Peter Schofield: Chapter 4 talks about the methods that different vendor Departments take in each case. Obviously, the Homes and Communities Agency is one of those vendors and in those cases it will be the HCA that is responsible for being the counterparty for those agreements. In other cases, as is set out in chapter 4, it will be another Department. Mr Bacon asked earlier about some of the guidance that is available and we talked about the guidance that is available on build now, pay later.

              Chair: This is a good time to bring in Karin Smyth.

              Q134 Karin Smyth: Partly on that point, and partly following Mr Bacon’s point earlier about advice, I am interested in what thought is given to the impact of local market conditions on selling and opportunities to sell. You said earlier that 2011 was a low year. I will check for Bristol, but Bristol is a rising market in land value and has been for some time. Across the country that will vary. I am interested in how that figures in your calculations.

              Andy Rose: The HCA has a large network across the country—a large operating area—so we would work very closely with the local authority on its local plan. Telford is an interesting example; there is a huge amount of land held in Telford and we own a great amount of it, but rather than just putting the land into the market very quickly, we have a joint strategy with the local authority on how land is released into the market.

              Q135 Karin Smyth: Would that count in these figures, or would that be held back for later?

              Andy Rose: It would count in the figures if it was part of the local plan and it met the definition, but we would manage the release of that land in conjunction with the local partner. Telford is an interesting example of where we might work with the local partner and consider that releasing too quickly might actually be a problem. So the definition will drive that and, yes, partly where it sits in the local plan is relevant; then how we work with the local authority is also relevant. One of the things that the HCA brings to this is very strong relationships with local authorities and understanding of their local plans.

              Q136 Karin Smyth: On that point, there are three sites in Bristol South and interestingly two of them were not known to me when I looked at the names—I had to investigate what they are called. One of them is still a bit of a mystery and another one goes under a completely different name. Is that something to do with where the data are collected and transported from the local figures into some of these figures? Perhaps I will leave that with you for later.

              Peter Schofield: I’m not sure.

              Matthew Rees: Generally speaking, we have had a lot of difficulty matching locations: missing data on postcodes and obviously site name changes. That has been a general theme of our audit.

              Q137 Karin Smyth: The third, interestingly, is actually undergoing planning consultation today on building, but it has taken two years to get to that point. We are interested in the building of houses for our constituents and the hold-up caused by issues of about who owns that land. A lot of the land is owned by Bristol City Council, so I am interested in how you are sharing knowledge with them and they with you to achieve the policy goal, which is, ultimately, to build more houses.

              Andy Rose: We have set up a joint property board with Bristol, so we share information on the board.

              Q138 Karin Smyth: I am also interested in further up the Department and across the country—local authorities generally.

              Melanie Dawes: Yes. It depends a bit on individual sites, but certainly through the HCA—this is one of the areas of expertise they have been able to bring in: that local network, which they have across the country. So where it is particularly important to understand a local authority’s plan for wider housing and economic regeneration, we are quite well placed to make links either from DCLG or from the HCA.

              Again, in the next programme we are going to be deepening those links even more. We will be linking with the One Public Estate programme run from the Cabinet Office, which is very consciously trying to build up a picture by local authority of public sector land so that we can be more strategic about this in local areas and in closer partnership with local authorities.

              Q139 Nigel Mills: Can I go back to the idea that individual Departments are under pressure to meet their own share of the 100,000 target? There is clearly a tension. If I want to sell a piece of land to get the most homes on, that may not be the mix that gets me the highest value. So which target are people trying to meet in this situation—are they under pressure to get the maximum per piece of land or to get the best value?

              Melanie Dawes: They have to weigh up a number of objectives, potentially. So sometimes it might be right to release for very low value for a wider public benefit, such as a school, as I was saying earlier. Usually, though, part of our assurance is that the highest value is for housing development. It is not very usual for our objectives to compete with the financial objective for Departments; that is more likely to happen in other areas of public policy.

              Q140 Nigel Mills: The highest value is for four-bedroom luxury houses, not for one-bedroom starter flats, but you can get a lot more one-bed homes on a piece of land—that is the tension. If you make me get the maximum number of homes, I will put 300 very low value, tiny things on, but if you make me get the most money, I will want a mix.

              Peter Schofield: I was going to say two things. Going to your general point, Mr Mills, a lot of the time the challenge is less about value for money and more about the incentive to release the land by making changes in operational activity to get activity off the land and make it surplus. That goes alongside a drive for operational efficiency; so you get operational efficiency and release of value going side by side. In terms, then, of your specific point about the composition of the land as it gets planning permission, that is a debate to be had with the local authority as part of the planning process; and the local authority, quite rightly as they put their local plan together, will have a view to local housing need. In some places the need will be for small one-bed flats in the way you describe; in other cases it will be for larger properties, or, more likely, an appropriate mix of the two.

              Q141 Nigel Mills: You said that some Departments went through a planning permission process before they disposed of the land, which is eminently sensible; but most planning authorities would be pushing you to have more smaller homes than luxury homes, because they want the affordable housing targets to be met. So if a Department has to meet a 1,000-home target in selling land, and it chooses to put twice as many low-value houses on one piece of land, that would not be a problem for planning permission, I suspect. The Department would probably be very keen, but it may not be good value in terms of getting the best price for the land. Is this something that is looked at? Have we got two competing targets—“How do I meet my number of homes target?” and “How do I get most value?”

              Peter Schofield: I do not see them competing in that way, but when a public sector vendor of land negotiates with a developer, the dynamics with the local planning authority will be the same as with any other landowner and any other developer; it is all about the mix in terms of housing need and making the site viable for development. Those are often quite long and complex discussions and they will be different, obviously, in different cases.

              Q142 Chair: Mr Mills is spot on. It is not your direct Department, but it is an issue about Government disposals: the NAO Report on the Royal Mail showed that the proceeds of the sale did not reflect the value of the land held in any way, and that the property did not deliver value for money. That Report mentions, in part 2, page 17, at paragraph 2.4, the NAO recommendations about how assets should be disposed, and “removed from public companies prior to privatisation where possible”. Those were not followed in the sale of Royal Mail land, and that was where the Mount Pleasant issue was very big.

              Nigel Mills is hitting an important issue here about value for money for the taxpayer, which may not always be, as you, Melanie Dawes, have acknowledged as permanent secretary, just in cash terms. Sometimes it is in the value of the housing for our constituents. It seems to me that there is a bit of a tension in this area; not a policy tension particularly—there may be, but that is not for us to consider—but a value for money tension. You have got a target of numbers, but it does not really measure whether you are building luxury homes or starter homes for young couples. Is that a fair comment?

              Melanie Dawes: We do not seek through this programme to second-guess the decisions of the local planning authorities. We are not seeking to do that, so often they may well be quite disputed and there may well be issues.

              Q143 Chair: But you have said several times, “We would not have agreed these into the target, into the programme, if there was not planning permission, either agreed on the site or likely to be agreed,” so you have got a fair idea, or you should have a fair idea, of how many and what type of homes. Are they going to meet the needs of people in Amber Valley, people in Bristol or people in Hackney? As the programme lead Department, you should have a grip on that in broad terms.

              Melanie Dawes: Yes, I agree with that.

              Q144 Chair: And do you think you have had? Because it does  not come across to me.

              Peter Schofield: Just to be clear, that was very much part of the HCA challenge process that we mentioned earlier on in the hearing. The whole process involved whether the site had planning permission, which meant that it had been through the process that Mr Mills described. If not, had it been identified in the local plan, which meant that it still related to the local housing need? Had it been through a strategic housing land availability assessment, which, again, is part of the process whereby we identify land and try to match it to the strategic housing need?

              Q145 Chair: May I just go back to the point about the speed of things? Have you a letter from Terrie Alafat at the Department for Communities and Local Government, dated 1 March 2013, which said to colleagues at the Department that one Melanie Dawes, head of the economic and domestic affairs team at the Cabinet Office at the time, was writing to your predecessor in the Department to urge Departments to provide DCLG with action plans—underlined—on how they would meet disposal targets by noon on Thursday 14 March? There was quite a pressure to get those action plans in. You were in the driving seat at the time. Can you really convince us that in the two-week period for getting the action plan in place all those things that we have just covered—the right mix of housing, planning permission for the site—were absolutely covered and you were confident that the homes would be built?

              Melanie Dawes: I will be honest with you: I do not remember that particular example. At the time I was leading the Cabinet Secretariat’s economic and domestic element, so I would have almost certainly been writing in support of a Cabinet Committee that was meeting to discuss those issues.

              Chair: It was a guess, yes?

              Melanie Dawes: There was a lot of information that Departments would have already had so we may well have set quite a tight deadline. I have not got that letter in front of me and certainly do not have my own actual letter, but we would not have been seeking to drive Departments to a decision on a sale that was inappropriate. I would have been extremely concerned if the process had led to that. We may well have been putting pressure on people to be a bit clearer about their action plans. That was the stuff that the Cabinet Committees were trying to get clearer.

              Sir Amyas Morse: I just wanted to go back to your previous remarks. You said that there might be occasions when it made sense to sell off land more cheaply because of a greater policy objective. Would that apply to the target that you were seeking? In other words, was that a view you were propounding to accounting officers as you encouraged them to comply with their target—that there was an overall policy objective to get this land out there, and that that was more important than maximising the price? I do not necessarily regard that as a bad thing. I am only mentioning it because you said it earlier on, so I wondered whether that was something you would have regarded as applicable in this case.

              Melanie Dawes: I do not think it was applicable, no, in the sense that it was not a trade-off that was very likely to emerge. I am not aware of any particular examples where that trade-off was a problem that was raised.

              Peter Schofield: Chair, may I answer your question on the letter dated 1 March 2013? If you look at the helpful schedule in figure 7 on page 23 of the Report, you will see that 1 March 2013 was after quite a long process. The HCA had already reviewed capacity on surplus land held by other Government Departments in early 2012—a year earlier. In mid-2012, Departments were asked to bring forward sites planned for disposal. Departments were then asked, throughout 2012-13, to find more land that they could sell and to speed up disposals that were stalling. I get the impression very clearly—I recall quite a lot of this myself—that the letter from Melanie was at the end of a year-long process of working with Departments. This was not a case of saying, “You’ve got two weeks.” They had had a year, and this was at the end of the process.

              Q146 Chair: Absolutely, and there was clearly frustration for Ministers on the Cabinet Committee that things were not moving fast enough, which is a reflection on the programme.

              I draw your attention to a DCLG document, “Land value estimates for policy appraisal”, which was published in February 2015. It looks at the per hectare price of land. I will not quote the figures, but the one including London is large and the one excluding London is considerably smaller. It then has a list of 12 points called “Assumptions applying to residential land values only”. The second point in that list begins: “The figures provided assuming nil Affordable Housing provision”. That is the guidance you are working to, and it is assuming no affordable housing on these sites.

              It is quite concerning for all of us, cross-party and across the country, that a number of our constituents need affordable housing but the Government Departments’ approach to land valuation does not factor it in. That rather cuts across all the talk about working with the grain of local planning and local communities; your own figures say that you do not count affordable housing in the land value.

              Melanie Dawes: I am not familiar with that piece of guidance. Did you see it, Peter?

              Peter Schofield: No, but I will remind myself about—

              Chair: Perhaps you could have a look at that, while—

              Melanie Dawes: What is the page again?

              Chair: Page 12, then at the back, the “Assumptions”, in Annex A, page 14.

              While you are having a look at that, I will briefly bring in Anne-Marie Trevelyan, who will be very quick, then Nick Smith, and Richard Bacon will be summing up.

              Q147 Mrs Trevelyan: Thank you, Chair. I have a specific question. When you set the programme at 100,000 new homes, was there an aim within the Department that some of those would be affordable homes across the country? Is it, “Just 100,000—we don’t care what’s built”, or is it, “100,000, knowing that in some parts of the country we will need affordable housing, so let us say that we are aiming for 10% affordable housing”? Missing the fact that you have not then tracked what sort of homes were built or are going to be built, so you don’t know the answer, was that in the thought process at all at its opening?

              Melanie Dawes: We were very clear that we had objectives for affordable housing and needed to release public sector land for houses. We did not try to have an element of the affordable homes programme delivered directly through this programme. That was happening—it did happen, the numbers were met—across the country as a whole, but as I was saying earlier we did not ever try to second-guess a local plan or—

              Q148 Mrs Trevelyan: But this 100,000 did not include any element of appreciation that some of that would need to be affordable homes.

              Melanie Dawes: We were trying to reach that target through a different route—

              Mrs Trevelyan: What target? Of that 100,000, how many?

              Melanie Dawes: The target that we had for affordable homes in the last Parliament.

              Mrs Trevelyan: Within that 100,000, that would be how many?

              Melanie Dawes: Well, we did not set a number for the 100,000 to be affordable homes, although quite a lot of the sites are being developed with a strong affordable homes element. But we did not attempt to manage the affordable homes programme or the affordable homes objectives as part of this programme. We kept the two separate, because otherwise it would have involved going into individual sites and trying to persuade the local planning authorities to do something different.

              Q149 Mrs Trevelyan: But you say that you were working on a local plan basis with local communities. There would have been an obvious link there. Not to monitor it seems strange.

              Peter Schofield: The key point about the affordable homes programme is that we have a section 106 approach that applies to all land, not just land that we sell. That is one of the key ways, alongside the grant that has been paid and the borrowing that has been achieved by a housing association. We have seen 263,000 affordable homes built since 2010.

              With regard to page 4, which I take it you are talking about, Madam Chair, this is the guidance about policy appraisal of economic analysis—how you carry out investment appraisal. It says: “As the purpose of these values is to appraise land projects from a social perspective, the values here assume nil Affordable Housing provision, because the additional benefits to society of policy compliance are assumed to offset the associated reduction in market value. This means that they should not be seen as estimates of market values.”

              So it is very clear about the purpose—when you do an investment appraisal, you need to take into account the economic and social benefits of affordable housing, and then offset it against the opportunity cost of not having any affordable housing. The way I read this, when you do an investment appraisal, net off the two, because they are seen to offset each other. However, they in no way cut across the Government’s objectives on affordable housing, which, as I said in my answer to Ms Trevelyan, are summed up by the achievements since 2010 of building 263,000 affordable homes and the commitment to build 275,000 affordable homes over the course of this Parliament.

              Chair: We have got those figures on the record. We will leave that one there, because it is getting late. I will bring Teresa Pearce in for her quick comment, then Nick Smith.

              Q150 Teresa Pearce: Ms Dawes, just to take you back to the very beginning, when we disagreed about the target, you believed that your target was to release enough public land. That was to facilitate 100,000 new homes—but also 25,000 jobs by this year. Have you? Have you tracked any new jobs? Have you made that part of the guidance for the people who disposed of the land?

              Melanie Dawes: Can you answer that question, Peter?

              Peter Schofield: I think that was a reference to house building jobs. I can provide the Committee with the latest numbers of house building jobs.

              Q151 Teresa Pearce: They would be new jobs related to the disposal of the land, which is what the objective of the disposal was?

              Peter Schofield: May I come back to the Committee in terms of what we have available on house building jobs?

              Q152 Chair: If you cannot now, perhaps you could write to us. The press release for “Build Now, Pay Later” talked about 25,000 new jobs, but the “Build Now, Pay Later” document talked about 200,000 new jobs. That is a big difference—an eightfold difference—so perhaps you could write to us.

              Peter Schofield: You want me to cover both points in the letter.

              Q153 Chair: Can you clarify which was the correct figure and why there were two wildly different figures?

              Q154 Nick Smith: Mr Rose, you and your colleagues, at the top of the meeting, were very generous to the NAO. You said that they had done a good job of explaining how we all, but particularly you, needed better data in the future so that we could better assess performance and understand the value-for-money aspects of your work. But I understand that the NAO’s concerns about the data that you provided echo the findings of a Growth Implementation Committee report in 2013. Why did you not address in 2013 the problem about data about which the NAO has repeated concerns in this Report?

              Andy Rose: I think that the comments were attributable to the permanent secretary, not me. Our chief role in this was providing the challenge and scrutiny, not setting up the programme, so I am not sure whether it was me who made those observations or it was the HCA that was challenged. If the question is about the data more generally, it was not the HCA that established the programme for how the data was collected. We had two roles: one was as a landowner; the other was to provide the scrutiny and challenge to the process. So I think I’m going to—

              Q155 Nick Smith: In Wales, we call it a hospital pass when you give it to one of your colleagues.

              Andy Rose: Well, the record will show it, but I am not sure that those comments were attributable to me.

              Q156 Nick Smith: So Mr Schofield, why didn’t you act on the recommendations of the Growth Implementation Committee in early 2013 to improve your data?

              Peter Schofield: I think that page 23 sets out all the things that we did do to respond to the Growth Implementation Committee. As I recall, a lot of the focus was on our data in terms of the pipeline of sales that were coming forward in order to deliver the target, because the focus of the Growth Implementation Committee was on achieving the target set out at the beginning of this Report, which was the release of land for 100,000 homes.

              Melanie Dawes: I think we did address the findings of that report, but that clearly was not sufficient to meet the NAO’s concerns that the data were not available in Departments and could not be used, therefore, to validate the programme outputs that we had reported. We do take that point. There is something here about needing to improve on that, but they are perhaps slightly different recommendations.

              Q157 Nick Smith: Let us try to bring this up to date. In the middle of the session today, you talked about your target—back of the envelope—of 20,000 homes to be built by your Department; 7,000 being in hand and 2,000 being completed. So you have hit, over the past few years, about 10% of your target. When will you have built the other 90% of your target? When will you finish this?

              Melanie Dawes: We do not seek to have an estimate of exactly when all 100,000 homes—

              Q158 Nick Smith: No, I am just talking about you, your Department, your responsibility. You have built 2,000 homes. When are you going to finish the other 18,000?

              Peter Schofield: The numbers that Andy described—I think it was 6,200—

              Melanie Dawes: Of the HCA—

              Peter Schofield: Of the HCA ones, 6,200 had started and 2,000 had finished. That means that 4,200 are in construction, and you normally expect them to take about a year to 18 months to build out, so I imagine that in a year to 18 months, we should be at that 6,200. You are right: the question then is about the pipeline beyond that.

              Q159 Nick Smith: When will you have completed the balance—the 13,000?

              Melanie Dawes: We don’t know; no one knows.

              Peter Schofield: But what we can do is—a number of these will be in the category of the sorts of transactions described in chapter 4. We will have a clear understanding of that, so we can come back.

              Q160 Nick Smith: You just don’t know.

              Melanie Dawes: For the HCA sites, we can probably give you some information that gives a much clearer sense of the timeline.

              Chair: It’s less than a fifth of the total.

              Melanie Dawes: Because we have that very different relationship, through the HCA sites, with the local areas, we do not have that information. We have been very clear about that today; we do not have that for the departmental sites.

              Q161 Chair: One of the questions that we always ask in this Committee is this. You are the accounting officer, Ms Dawes, as permanent secretary. We have two other professionals here, too. But where does the buck stop on this programme? Who is responsible; who is the accounting officer for the programme of delivery?

              Melanie Dawes: For the programme of delivery, it is me; it is this Department, yes.

              Q162 Chair: But you cannot tell us any of these figures. You cannot tell us how many homes have been built and when homes will be completed by. You have acknowledged that you will be monitoring the system differently in the future as a result of the NAO Report, but you have not done it in the past, and I am still puzzled as to how you can come here and say that it is all going really well.

              Melanie Dawes: I am sorry, we just do rather disagree on this, but I have come in as the new accounting officer here and I genuinely believe that we have achieved what we set out to achieve, which was to sell land with a high degree of confidence that the sale would lead to more than 100,000 homes being built. The reason why I had that confidence was the assurance that we gave about the planning permissions and so on being there. I cannot say that we have a pipeline that shows exactly when all the homes will be built, so we will see if we can provide more information on that for the future. I doubt that it will ever be completely perfect, because some of that will involve private sector contracts and the NAO has found that you cannot always get those data easily. So that is why we were a bit cautious about putting a very comprehensive reporting requirement in place, but we will look at that for the future. I am confident that the land was released and that we have an assurance that it will lead to home building. That was what we set out to achieve.

              Q163 Mr Bacon: I must say that you have defined success in a very careful and narrow way that enables you to pronounce that you have succeeded, but I think, frankly, that you are the only one who is convinced. We are certainly not. You have displayed a touching faith that planning permissions necessarily lead to housing starts, and that does not necessarily follow at all. In my constituency, I have thousands and thousands of planning permissions extant, without their necessarily leading to housing starts – across the country it is probably in the millions.

              The problem that we face, which is why we are all so concerned about this, as well as angry that value for taxpayers may not have been achieved, is that we have a big housing problem in this country and we thought that this programme was part of trying to solve it, but you are not able to tell us to what extent it has done so. The problem is that the supply of housing does not rise to meet the demand for housing. If it did, we would not have a problem. I am not saying that it’s all your fault, although the DCLG is the prime Government Department in this space and, over the past 50 years, various iterations—different versions—of your Department have been responsible for the whole planning environment. The chief planner sits in your Department. Of course, it is a complex landscape with privately held land, developers, an open stock market, planning authorities and so on, but the fact is that the system is broken; it does not work. If it did, we would not be here having this discussion.

              What I would like to know is what you are going to do differently in the future, particularly with these 150,000 that are talked about from the autumn statement for 2014 onwards, to ensure that we get faster delivery. Will it include an element of self-build? I regret to say that the self-build in the Self-build and Custom Housebuilding Act 2015 does not require you to ensure that land gets built on, but it does require local authorities to take account of local interests. But one thing is very clear, and there is a lot of evidence for this from the Netherlands, Germany and elsewhere—Mr Schofield saw some of this. When you engage the interests of the people who are going to be most directly affected by it, namely, the people who are going to live there, you get a much higher build-out rate, which at least ostensibly is what you say you want.

              Melanie Dawes: I agree with you. We think that self-build and more SME builders, are things we need to push very hard on from a wider perspective in our housing strategy over the next few years. The planning announcements last Friday streamlined the system quite a lot, and we hope that they will also contribute to accelerating build-out. This particular programme was mainly aimed at releasing land, but, of course, you are right that there is a whole array of other things that we need to do to fix the housing market.

              Q164 David Mowat: Very quickly, I think that the difference between us is the definition of scope. You have defined it as the release of land, which should lead to houses being built, and the thrust of the Committee’s questions was that scope should have been the work needed to deliver 100,000 houses, which was what the Minister said in the first place. I think that that is true, and I think that your definition is narrower than ours—narrower than we are comfortable with.

              Melanie Dawes: I think that that is the difference between us, yes.

              Q165 David Mowat: Given what we are saying, if you were to do another programme like this, would you take our version of scope in order to judge yourself?

              Melanie Dawes: We are putting together the new programme and we will certainly reflect on this conversation and on the NAO’s Report. We will definitely try to record the asset sales. That is an important ingredient that will allow us to look across the piece at the financial value that has been achieved from the programme. That is something that we can do now, because the Cabinet Office work is going on in tandem with ours. It will be much more straightforward.

              If I am being truly honest, the difference is that we will be cautious about monitoring and pushing for homes actually to be built once we have sold a site. Obviously, we may find none the less that such things as clawback and some of the other mechanisms that we put in place, which assure us that the build-out will happen, are still part of the programme, but we will want to be careful about monitoring the private sector in the build-out. Having said that, we need to improve our monitoring so that we can provide assurance that it is not a mirage and that we have not sold the land off for the wrong reasons.

              Chair: I welcome the statement that you want to improve your monitoring. I take it as some acknowledgement that it has not been good. It is a shame, because at the beginning I gave you an opportunity to comment, and we could have done this a lot quicker if you had acknowledged the problems a little earlier.

              You have talked about the new project that you are working on. One of the aims of this Committee is what we could call pre-scrutiny of the value for money and effectiveness of major projects ahead of their launch. We happily offer, with support from the NAO, to look at the next project before it is implemented, if you think that would be helpful.

              All three witnesses indicated assent.

              We might find other ways of doing that, but we offer that first in a friendly way in an attempt to achieve the aim that we are all working towards—more homes for our constituents. You have promised to provide us with certain information, and I make it clear that we could do with that within a week so that we can meet our deadlines.

              Enough has been said. This Report exercised Committee members prior to the hearing. You get the feeling in the hearing that we are not just here as Members individually. We represent thousands of people out there who have a real interest in delivering effectively and providing homes to our constituents. I hope that that is uppermost in your minds—I am sure that it is—when you are out there, doing it and providing good value for the taxpayer. Thank you very much for coming along. Our Report will be published in September, because the House is sitting for only a few days more before then. We look forward to sending it to you and getting your reaction to it. Thank you very much indeed.

              Oral evidence: Disposal of Public Land for New Homes, HC 289                            45