Meg Hillier MP, Chair of the Committee of Public Accounts, today said:
"The Government should be embarrassed by the failings uncovered by the PAC's inquiry into land disposal. Its entire approach has been wishful thinking dressed up as public policy. It also demonstrates an alarming complacency over the future of an irreplaceable public asset. Many thousands of people desperately need homes and an effective land disposal programme should provide two significant benefits: much-needed housing and much-needed cash for the public purse.
Yet the Government has no record of how many homes have been built or are under construction. It has no record of sale proceeds, nor their value in relation to prevailing market prices. There is no means of knowing whether taxpayers are getting a good deal from the sale of their land. We are told enough public space has now been sold off to accommodate more than 100,000 homes at nearly 950 sites. Land disposed of by the Ministry of Defence alone could hold an estimated 39,000 properties.
The Government cannot tell us how many of these homes now exist - or will ever exist. Instead it appears simply to have hoped huge numbers of houses would spring up across the country. Government departments have been instructed to draw up plans for further spending cuts and many people are rightly worried about the effects these will have on struggling public services.
It is an insult to taxpayers that the potential economic benefits arising from the sale of public land should be put at risk by such short-sighted Government mismanagement. With the next housing target already announced the Government needs to learn from its mistakes."
Potential for new homes
In June 2011, the Housing Minister announced that government planned to "release enough public land to build as many as 100,000 new, much-needed, homes and support as many as 25,000 jobs by 2015". The Department for Communities and Local Government (the Department) holds policy responsibility for the target as a whole, with individual government departments responsible for identifying surplus land, estimating the number of potential dwellings, and disposing of the land.
The Homes and Communities Agency was responsible for collating and reporting data to monitoring boards, and also acted as the property disposal agent for the Department itself. The Department's data shows that, by the end of March 2015, government had disposed of land with capacity for an estimated 109,950 homes, across 942 sites.
The biggest contributors were the Ministry of Defence (around 39,000 homes), the Homes and Communities Agency (around 21,000, on behalf of the Department for Communities and Local Government) and the Department of Health (around 15,000).
No proof of success
The Department for Communities and Local Government cannot demonstrate the success of the land disposal programme in addressing the housing shortage or achieving value for money because it does not collect information on the actual number of houses built or under construction, the proceeds from land sold, or whether the parcels of land were sold at market value. Instead, it chose to focus only on a notional number for 'potential' capacity for building houses on the land sold by individual departments in order to determine 'success'.
The Department also counted towards the programme's target the capacity of land sold before the programme had even started. It did not collect basic information necessary to oversee the programme effectively and, where it did collect programme-level data, there were omissions and inconsistencies.
Weaknesses must be addressed
With much greater ambitions for land disposals in the new Parliament, the Department must address the weaknesses in the current programme, and the Department has accepted that it needs to improve its general monitoring.
If it is to oversee the new programme effectively then this must specifically include tracking sale proceeds and progress with the actual construction of new homes, and overseeing the programme in a way that gives Parliament and the taxpayer much greater assurance over the value for money achieved from all disposals.
Summary of conclusions and recommendations
- The Department cannot assess whether the programme delivered value for money for the taxpayer. The Department's view is that the success of the programme is defined by having disposed of land with the potential capacity for more than 100,000 homes, and that the value for money of individual sales is just the responsibility of individual departmental Accounting Officers. We do not accept these narrow interpretations.
Recommendation: In taking forward the new target, the Department and the Homes and Communities Agency must apply a broader test of value for money, which must include sale proceeds and progress in the actual construction of new homes. Taxpayers deserve to know how many homes have actually been built.
- We are sceptical as to whether departments achieved value for money from the sale of all individual sites. The Department stressed to us that responsibility for securing value for money on individual land sales rested with the individual selling departments. We are sceptical whether this was achieved.
Recommendation: We will hold the Department to account for the value for money of the new programme. It should, therefore, set out how it will gain assurance that all land-owning departments and public bodies have achieved value for money from all disposals.
- The Department adopted a very wide interpretation of what it could count towards achieving its target. The Department claims the programme has sold enough land to support an estimated 109,950 homes. In counting the notional number of homes for which land had been released, the Department counted over 15,000 from land sold before the programme started, and over 10,000 from land which had simply moved outside the public sector.
Recommendation: In taking forward its new target to release land for up to 150,000 homes between 2015 and 2020, the Department must only count the number of homes built, or commenced, on land disposed of during the programme. This should also include the number of affordable homes.
- The Department was unable to confirm how many jobs the programme created.
Recommendation: The Department must set out clearer parameters for job creation and collect and audit data to ensure that claimed new jobs are in fact created.
- The Department and the Homes and Communities Agency have not provided effective oversight of the programme. After the programme started slowly the Cabinet Office Implementation Unit intervened in 2012 and outlined some significant concerns about achieving the target. After the Cabinet Office's report, government took various steps and there was an acceleration of disposals in the second half of the programme. However, the Department still did not collect basic information we would have expected for it to oversee the programme effectively - for example, copies of sales contracts.
Recommendation: The Department must be clear with individual departments as to the guidance they are expected to follow, and must set clear documentary and data requirements.
- There were significant omissions in the Department's data collection. Most worryingly, the Department did not collect information on the number of homes actually built or under construction, or on sales proceeds, both of which are fundamental to assessing the value for money of the programme.
Recommendations: In addition to setting minimum documentary and data requirements for all land-owning departments, the Department must design and implement a data validation process.
The Department should also review how it can increase transparency of agreed commercial terms for land disposals to provide greater assurance to the taxpayer that value for money has been achieved.
- It is essential that the Department delivers value for money from future land disposals. We will want to see how the Department and the Homes and Communities Agency plan to implement the new programme.
Recommendation: Alongside its usual Treasury Minute response, the Department should provide us with a fuller report on its progress with setting up the new programme, including objectives, how it will measure success and monitor progress, and how it has addressed National Audit Office recommendations.