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Housing and the Credit Crunch

Absolutely. Again, that points to the need for the Government to keep a close eye on how a scheme is operating so that they can get early intelligence as to whether they need to step it up, or, as I said, step it down a bit and reallocate the money elsewhere. I want briefly to touch on housing associations. We welcome many of the steps that have been taken to increase social housing grant money to housing associations. We were convinced again of the sense in the Government's decision to create the Homes and Communities Agency. That decision, and the fact that the agency is up and running, have been particularly helpful during the credit crunch. The HCA has been able to respond more flexibly and in a more timely manner than might have been possible if we had still had the two separate agencies, the Housing Corporation and English Partnerships. The HCA definitely was created at just the right time, and it has come into its own, so to speak. Similarly, we welcome the proactive approach taken by the Tenant Services Authority to facilitate dialogue between housing associations and lenders. We were concerned by the evidence that we heard in December about the way in which some lenders seemed to take advantage of any slight change in housing association governance to increase the costs of borrowing. One example was a housing association that had been attempting to reduce its costs by a sensible reorganisation, which it put off because, had the reorganisation gone ahead, it would have incurred enormously increased borrowing costs. The bank would have taken advantage of the change to alter the terms on which it lent to the housing association. We thought that such behaviour was particularly unhelpful. We had concerns about the interaction between housing associations and their lenders, and we continue to have concerns about the ability of housing associations to deliver new housing under the model of finance that was in operation before the credit crunch. I will conclude by saying that this report was intended to be a snapshot of the situation in December, and the follow-up report was to be a further snapshot. We are beginning to see some slight green shoots in the housing market, which, clearly, are welcome, but the scale of the turnaround that is required, if we are to get back on target to deliver the number of homes that are required to meet people's needs, is so great that we think that the Government need to continue to look at what more they can do to get the upsurge in house building back on track more quickly. They need to look not just at the amount of money that they are putting into rejuvenating house building but at whether there might be further measures that they need to take. They also need to think about the longer term: when we do come out of the recession, will there need to be a bit of a rethink overall about the models for financing new house building? In particular, do new ways need to be found to bring in private finance in addition to direct Government funding?