Report

by the Comptroller
and Auditor General

Department for Communities and Local Government

Disposal of public land for new homes: a progress report

HC 510 Session 2016-17 12 July 2016

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Report by the Comptroller and Auditor General

Ordered by the House of Commons
to be printed on 11 July 2016

This report has been prepared under Section 6 of the National Audit Act 1983 for presentation to the House of Commons in accordance with Section 9 of the Act

Sir Amyas Morse KCB
Comptroller and Auditor General
National Audit Office

8 July 2016

We reviewed the government’s progress to “sell land for more than 160,000 homes” by 2020. This work follows on from our June 2015 investigation into the first programme.

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The National Audit Office study team consisted of:
Eleanor Fairbairn, Andrew Maloney, Anne Jennings, Mark Edward and Laura Fawcus, under the direction of Simon Reason.

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Summary

1 The government aims to “release surplus public sector land in England with capacity for at least 160,000 new homes” by April 2020.1 The Department for Communities and Local Government (DCLG) has overall responsibility for achieving this. Individual departments are responsible for identifying and disposing of land to meet their contributions as set out in the Spending Review and Autumn Statement 2015. The new programme began in May 2015.

2 In June 2015, we reported on the first land disposals programme.2 This had a target 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”.3

3 The Committee of Public Accounts (the Committee) took evidence on our June 2015 report. It concluded that DCLG could not demonstrate how the programme had helped to address the housing shortage or achieved value for money.4 The Committee made a number of recommendations on the new programme. In particular, it recommended that DCLG:

produce guidance for departments disposing of land;

collect sufficient information to oversee the new programme effectively; and,

set out how it will assure itself that value for money is achieved for all future disposals.

Scope of this work

4 This report updates the Committee on DCLG’s progress setting up the new programme. Part One sets out the programme’s objectives. Part Two highlights DCLG’s actions in response to the Committee’s recommendations. Part Three outlines departments’ progress during the first year of the programme. The Committee’s full conclusions and recommendations and the government’s response are set out in Appendix Two.

5 Between June 2015 and March 2016, several departments including DCLG gave evidence to the Committee on the number of homes built on land sold during the first programme. We have reviewed and summarised this evidence in Appendix Three.

6 This follow-up report does not look at the government’s separate ambition to release local authority land with capacity for at least 160,000 homes, or the government’s wider ambition to “deliver 1 million new homes” by 2020. We are planning to publish further work on the wider housing landscape later this year.

Key findings

Progress against the Committee’s recommendations

7 The 2015 Spending Review set out departments’ contributions to the land disposals programme. In December 2014 the Housing Minister committed to release enough land for 150,000 new homes by 2020. DCLG, supported by HM Treasury and the Cabinet Office, discussed land disposals with senior officials and ministers from all major land-owning departments through the Spending Review 2015 settlement process, and sought to agree contributions that were both achievable and stretching. In November 2015, the Spending Review announced department’s individual contributions towards the revised 160,000 commitment. Departments have expressed varying degrees of confidence in their ability to meet their contributions to the programme commitment (paragraphs 1.6 and 2.7, and Figure 2).

8 As with the first programme, the DCLG accounting officer is responsible for the delivery of the programme, and the accounting officers of individual departments are responsible for ensuring each land sale represents value for money for the taxpayer. Each department must be able to demonstrate that they have taken robust decisions on value for money for each site disposed of, and that their delivery plans outline how they will assure their accounting officers of this. Individual accounting officers confirm to DCLG that a sale represents value for money (paragraphs 2.26 to 2.33).

9 DCLG has given departments a programme handbook that sets out the overall objectives and other details of the programme, but has not yet published these details.5 The handbook was issued to departments in December 2015 and updated in April 2016. The main objective of the programme is “to release surplus public sector land in England with capacity for at least 160,000 new homes” by April 2020. DCLG promised the Committee that it would publish details of the key aims, objectives, scope, data and monitoring arrangements for the programme in spring 2016. DCLG has not yet published these details; it intends to outline its approach in summer 2016, and provide further details on monitoring in autumn 2016 (paragraphs 2.5 and 2.6).

10 DCLG has set out individual departments’ responsibilities to collect data, retain evidence and report information. DCLG has set out, through its handbook, how disposals will count against the commitment and how housing capacity will be estimated and counted. Departments are responsible for collecting and retaining data on their contributions. They must capture specific information in relation to their land sales and submit it quarterly to the Homes and Communities Agency (HCA) and the Cabinet Office. DCLG does not require departments to monitor the actual number of homes built, as this is not an objective of the programme. The HCA records the quarterly information from departments on land disposals, and Cabinet Office records information on the amount of money raised from land sales by each department. The Cabinet Office monitors this financial information as a part of its oversight of the government’s wider commitment to deliver at least £5 billion of receipts by 2020 through the release of surplus public land and property (paragraphs 2.15 to 2.19, 2.20 to 2.24, and Figure 3).

11 DCLG has committed to monitoring the broad progress of land development, including the number of homes built. The Committee stated in its last report that it will hold DCLG to account for the value for money of the programme as a whole. Accounting officers of departments that are disposing of land confirm to DCLG that sales of individual sites are value for money. DCLG considers that if each individual sale is value for money, then the programme overall is value for money. It therefore uses the confirmations provided by departments to assure itself that the programme is value for money.6 Alongside this, DCLG plans to monitor the broad progress of land development (including the number of homes built) and publish an annual report for the new programme. DCLG had committed to publishing wider details of the programme, including how it will assure itself that programme outcomes are achieved, in spring 2016. DCLG has not yet published this information. It told us it plans to provide further details on how it will monitor the progress of land development in autumn 2016 (paragraphs 2.26 to 2.38).

Progress delivering against the commitment to date

12 By the end of March 2016, government had disposed of land with capacity for an estimated 8,580 homes, across 77 sites, which represents 5% of the programme. DCLG told us the amount of money raised from these sales is £72 million, with future estimated receipts expected to be a further £197 million, subject to sale conditions being met. The government has also disposed of land for a further 4,853 homes over the same period, but the HCA has not yet obtained sufficient evidence that the sites will be developed for housing. The HCA is working to obtain this evidence. If these sites are validated, progress to date would represent 8% of the programme. The programme, and progress against it, relates to the disposal of land with capacity for housing, not actual homes built. The development of these sites could take many years to complete (paragraphs 3.2 and 3.3).

13 Departments have identified further surplus, and potentially surplus, sites with capacity to support an estimated 104,461 homes, representing a further 65% of the programme. However, over 50% of the estimated housing capacity identified is on sites considered ‘high risk’. DCLG defines high-risk sites as sites with “one or more issues preventing exchange of contracts before 31 March 2020 which are very unlikely to be resolved, meaning the site could slip out of the programme”.7 For example, departments’ delivery plans include land that could have residential potential but is currently in use and not yet declared surplus. The sale of this land will depend on other policy decisions, including the outcome of the Footprint Strategy at the Ministry of Defence and the Prison Estate Transformation Programme at the Ministry of Justice (paragraphs 3.4 to 3.7 and 3.13, and Figure 5, Figure 6 and Figure 7).

14 DCLG’s forecasts show that in order to meet the commitment, the departments must collectively dispose of more sites in each of the next four years than they did in the highest-performing year of the first programme. Nearly a third more surplus land capacity will need to be released in the next four years than in the previous programme. Departments estimate that sites with capacity for 29,001 homes will be released in 2016-17. Over the next four years disposals will need to be over 36,000 potential homes per year if the 160,000 commitment is to be reached by 2020 (paragraph 3.14, and Figure 9).

Conclusion

15 DCLG has made progress in setting up the new public sector land disposals programme: departments’ contributions, responsibilities and data collection arrangements are all in place. It has, however, been a relatively slow start. We are now over one year into the five year programme and DCLG has not yet finalised how it will monitor the number of homes built, or made much of the details of the scheme public. Departments we spoke to are focused on releasing surplus land, and have set delivery plans for the duration of the programme. However, much of the land identified for sale is still in operational use and decisions on whether it is surplus will be taken later in this Parliament. The fact that the first full ten months of the programme has delivered somewhere between 5 and 8% of the total commitment means significant delivery risks remain.

1 HM Treasury, Spending Review and Autumn Statement 2015, Cm 9162, November 2015.

2 Comptroller and Auditor General, Disposal of public land for new homes, Session 2015-16, HC 87, National Audit Office, June 2015.

3 Department for Communities and Local Government, Government plans release of public land to build 100,000 homes, June 2011. Available at: www.gov.uk/government/news/government-plans-release-of-public-land-to-build-100-000-homes

4 HC Committee of Public Accounts, Disposal of public land for new homes, Second Report of Session 2015-16, HC 289, September 2015.

5 Department for Communities and Local Government, Programme handbook for departments and arm’s-length bodies, unpublished.

6 The land disposing departments are those with a housing capacity contribution outlined in the Spending Review and Autumn Statement 2015, plus NHS organisations.

7 See footnote 5.

Part One

The land disposals programme

1.1 This part of the report explains the land disposals programmes’ objectives and outlines the key events (Figure 1).

First programme (2011 to March 2015)

1.2 On 8 June 2011, the Housing Minister announced that the 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”.8

1.3 The Department for Communities and Local Government (DCLG) was responsible for meeting this target, and individual departments (including DCLG) were responsible for identifying surplus land from their estate, estimating the potential housing capacity of the sites, and disposing of them. This first programme ended on 31 March 2015.

Previous National Audit Office findings and Committee of Public Accounts recommendations

1.4 In June 2015, we published a report following an investigation into the government’s progress against the 100,000 homes target and found that:

The government had disposed of land with enough capacity to build 109,590 new homes over 942 sites. However, the target measured the notional number of expected homes, not actual homes built.

There was no supporting documentation or economic evidence showing how the target was set or how it was allocated between the departments involved.

Departments did not routinely monitor what happened to a site after disposal so there was no information on how many homes were built on the land.

DCLG did not collect information on sales proceeds across the programme.9

1.5 The Committee of Public Accounts (the Committee) took evidence on our June 2015 report. It concluded that DCLG could not demonstrate the success of the land disposal programme in addressing the housing shortage or achieving value for money.10 The Committee made recommendations for DCLG to address when setting up the new programme. The Committee’s recommendations, and the government’s response, are summarised in Appendix Two.

Current programme (May 2015 to 2020)

1.6 In December 2014, the government announced a new commitment to “release enough formerly-used surplus public sector land for 150,000 new homes between 2015  and 2020”.11 After this, the Spending Review and Autumn Statement 2015 announced the commitment “to sell land for more than 160,000 homes” by 2020.12

Accountability

1.7 DCLG has overall responsibility for the programme. Spending Review 2015 set out individual contributions for the estimated housing capacity of land to be released by each department (Figure 2).

1.8 Individual departments are responsible for identifying land to meet their contributions and for disposing of this land within the timescales of the programme. As with the first programme, the accounting officers of individual departments are responsible for ensuring each land sale represents value for money for the taxpayer.

1.9 As part of the Spending Review 2015, the government also committed to a wider goal to deliver at least £5 billion of receipts by 2020 through the release of surplus public land and property across the UK. The Cabinet Office is responsible for monitoring the money raised from the sales.

Governance of the programme

1.10 DCLG has put in place a new governance structure for the programme. DCLG, HM Treasury, Cabinet Office, and representatives from No.10 and the departments form a Programme Board.13 This is chaired by DCLG’s Housing Supply Director. The Programme Board meets monthly to: monitor programme delivery; resolve issues; and act as a decision-making forum.

1.11 The Programme Board reports to the Housing Implementation Taskforce. This is a Cabinet-level group whose remit is to “increase the supply of new housing by helping first-time buyers onto the property ladder, implementing Right to Buy and driving public sector land sales”.14 Ministers attend this group, which holds individual departments to account for their progress towards their contributions. The group meets monthly and regularly reports to the Prime Minister and the Cabinet.

1.12 Finally, a Steering Group attended by departmental accounting officers, meets when required to provide further oversight of the programme.

Assessing progress since June 2015

1.13 In its report on the first programme the Committee made recommendations in relation to seven key areas of the programme.15 We have looked at the new programme with these in mind. Part Two provides more detail on:

the set up of the new programme (paragraphs 2.2 to 2.7);

what counts towards achieving the commitment (paragraphs 2.8 to 2.14);

setting clear guidance for departments (paragraphs 2.15 to 2.19);

implementing a data validation process and encouraging transparency (paragraphs 2.20 to 2.25);

recording sale proceeds and actual construction of new homes to assess value for money (paragraphs 2.26 to 2.33);

gaining assurance of value for money from all disposals (paragraphs 2.34 to 2.38); and

setting out parameters for job creation (paragraphs 2.39 to 2.42).

8 Department for Communities and Local Government, Government plans release of public land to build 100,000 homes, June 2011. Available at: www.gov.uk/government/news/government-plans-release-of-public-land-to-build-100-000-homes

9 Comptroller and Auditor General, Disposal of public land for new homes, Session 2015-16, HC 87, National Audit Office, June 2015.

10 HC Committee of Public Accounts, Disposal of public land for new homes, Second Report of Session 2015-16, HC 289, September 2015.

11 Department for Communities and Local Government, New measures will provide thousands of new homes, December 2014. Available at: www.gov.uk

12 HM Treasury, Spending Review and Autumn Statement 2015, Cm 9162, November 2015.

13 References throughout the report to ‘departments’ refers to the six departments identified in Figure 2.

14 Department for Communities and Local Government, Programme handbook for departments and arm’s-length bodies, unpublished.

15 See footnote 10.

Part Two

Progress against the Committee of Public Accounts’ recommendations

2.1 This part explains how the Department for Communities and Local Government (DCLG) has responded to the Committee of Public Accounts’ (the Committee’s) recommendations and what action it has taken to incorporate them into the new programme.

The set up of the new programme

2.2 The Committee concluded in its report on the first programme that “it is essential that [DCLG] learn lessons for its new programme and deliver value for money from future land disposals”.16

Committee of Public Accounts’ recommendation

2.3 The Committee asked DCLG to 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 the recommendations in the NAO report”.17 In our June 2015 report, we recommended that in “setting further targets, the quantum should be based on a robust assessment of what departments can achieve”.18

Government’s response

2.4 DCLG noted the recommendation and said it would write to the Committee to update it on progress when it published the key aims, objectives, scope, data and monitoring arrangements for the programme in spring 2016.19

Key actions taken and commentary

2.5 In December 2015, DCLG provided departments with a programme handbook (‘the handbook’), which sets out the objectives of the programme, and the relevant responsibilities of those involved, and provides guidance on key aspects (for example, eligibility criteria for scoring housing estimates).20 The handbook states that the aim of the new programme is to “drive housing supply by releasing surplus public sector land for new homes”, and that its main objective is “to release surplus public sector land in England with capacity for at least 160,000 new homes” by April 2020.

2.6 DCLG promised the Committee that it would publish details of the key aims, objectives, scope, data and monitoring arrangements for the programme in spring 2016. DCLG has not yet published details of the new programme; it intends to outline its approach in summer 2016, and provide further details on monitoring in autumn 2016 (paragraph 2.38).

2.7 DCLG, supported by HM Treasury and the Cabinet Office, discussed land disposals with senior officials and ministers from all major land-owning departments through the Spending Review 2015 settlement process, and sought to agree contributions that were both achievable and stretching. However, departments have expressed varying degrees of confidence in their ability to meet their contributions to the programme. Part Three of this report outlines each department’s progress in selling land, and identifying land for future sale.

What counts towards achieving the commitment

2.8 We previously reported that the government had disposed of land with enough capacity to build 109,590 new homes over 942 sites.21 This figure included housing capacity from land sold before the programme had started, and land that had moved outside the public sector, for example when a public body converted to a charity. The Committee concluded that DCLG had “adopted a very wide interpretation of what it could count towards achieving its target.”22

Committee of Public Accounts’ recommendation

2.9 The Committee recommended that “[in] taking forward its new target to release land for up to 150,000 homes between 2015 and 2020, [DCLG] 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”.23

Government’s response

2.10 The Government did not accept this recommendation, as the “key objective of the new programme is to dispose of surplus land with capacity for at least 160,000 homes by 2020.”24 The government noted that the types of disposal that will be counted against the new commitment will be set out in the new programme guidance.

Key actions taken and commentary

2.11 Despite not accepting this recommendation, DCLG has issued guidance, through the handbook, on how disposals will count against the commitment and how housing capacity will be estimated and counted. A site cannot score against the programme commitment unless there is at least a conditional sale contract in place, and there is sufficient evidence of planning certainty that the site will be developed for housing. Evidence of planning certainty may include “positive commitment or support from the local planning authority, inclusion in a local plan, outline planning permission or full planning permission”.25

2.12 For the purpose of this programme, DCLG has defined ‘housing’ as any of the following:

a new market home;

affordable or starter home;

new rental accommodation;

new student accommodation;

new key worker accommodation, including housing for health service and military service personnel and family accommodation, provided this adds to net housing supply;

an Annington’s home previously leased to the Ministry of Defence and sold to the market;26 and

a care home.

2.13 The handbook provides guidance on how to estimate the housing capacity of land and count it against the programme commitment. Departments should estimate the housing capacity of a site based on planning permission approval, an allocation given in a local plan, or information provided through a valuation or other formal site assessment. Before planning approval is given, departments should use their judgement to estimate capacity, or alternatively use a standard assumption of 40 dwellings per net developable hectare. DCLG guidance notes that “capacity reported must represent a net increase in the available housing stock”.27

2.14 DCLG told us that, as with the previous programme, it does not require departments to monitor the number of homes built, as this is not the programme’s objective. However, DCLG has committed to monitoring the broad progress of land development for the new programme as a part of its assurance process (see paragraph 2.37).

Setting clear guidance for departments

2.15 The Committee concluded that “[DCLG] and the Homes and Communities Agency have not provided effective oversight of the programme” as they “did not collect basic information we would have expected for it to oversee the programme effectively”.28

Committee of Public Accounts’ recommendation

2.16 The Committee recommended that DCLG “be clear with individual departments as to the guidance they are expected to follow” and “set clear documentary and data requirements”.29

Government’s response

2.17 The government accepted this recommendation, and committed to publish guidance on the new programme in spring 2016. It noted that the guidance will set out arrangements for monitoring and assuring the programme, and requirements for collecting data and evidence.30

Key actions taken and commentary

2.18 In its handbook, DCLG has set out individual departments’ responsibilities for collecting data, retaining evidence and reporting information. These responsibilities are summarised in Figure 3.

2.19 Departments are responsible for collecting and retaining data on their contributions to the programme commitment. They must capture the following information for their land sales:

site details including address, reference number, site size, heritage value, forecast date of planned disposal, and a risk rating denoting the likelihood of sale;

a forecast number of housing units that will fall within the programme, and the status of any planning allocation or permission;

the date that a development agreement or contract was signed, the housing capacity to be claimed and the name of the purchaser; and

receipt information including forecast and actual sale proceeds, running costs, type of sale and the date the receipt is to be recognised.

Implementing a data validation process and encouraging transparency

2.20 The Committee was concerned that “programme-level information was incomplete or inconsistent with the individual departments’ records” and that DCLG had “failed to record other key information required to run the programme, including the means by which sites were sold”.31

Committee of Public Accounts’ recommendation

2.21 The Committee recommended that DCLG must “design and implement a data validation process” for the data it collects. It suggested that DCLG “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”.32

Government’s response

2.22 The government accepted this recommendation. DCLG committed to providing departments with guidance on the process for challenging and validating data. The response also highlighted Cabinet Office’s work to increase transparency in commercial terms for land disposals; the Cabinet Office expects to publish this work in spring 2016.33

Key actions taken and commentary

2.23 In its handbook, DCLG has set out data validation and quarterly monitoring processes for the new programme. Departments must submit quarterly monitoring information to both the Homes and Communities Agency (HCA) and the Cabinet Office. The HCA records and reviews the information relating to housing capacity, and checks that it is complete and that the scoring criteria have been applied correctly when a site has been logged as sold. The Cabinet Office records and reviews the information relating to the amount of money raised from land and property sales. The HCA and the Cabinet Office have assigned individuals to a particular department, and they review the quarterly returns against their understanding of a department’s estate. The teams ensure that there is sufficient evidence for each site sold to score it against the programme commitment, including the HCA checking for evidence of a sale and of ‘planning certainty’.

2.24 The HCA is not required to validate the information departments provide on the sites identified for future disposal. The HCA is not responsible for challenging whether sales have achieved value for money, although it does ask departments to confirm that they have followed guidance on value for money. The HCA told us that the quality of the data it receives is improving, but some information that departments provide is incomplete. For example, departments may not include sites in their information returns that the HCA is aware should be included. The HCA is working with departments to resolve these issues.

2.25 We have confirmed that the Cabinet Office is leading a cross-government review to consider ways in which government can increase transparency of commercial terms in relation to land disposals. This review is expected to publish in the summer.

Recording sale proceeds and actual construction of new homes to assess value for money

2.26 The Committee concluded that DCLG “cannot assess whether the programme delivered value for money for the taxpayer” as it has chosen not to monitor the number of houses built or under construction on land disposed of under the programme, nor the amount of money received from these sales.34

Committee of Public Accounts’ recommendation

2.27 The Committee recommended that “[in] taking forward the new target, [DCLG] 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”.35

Government’s response

2.28 The government did not accept this recommendation, as the “key policy objective of the [programme] is to dispose of surplus land with capacity for 160,000 homes by 2020”.36 DCLG agreed that disposals should represent value for money; however, it disagreed that a new framework was needed to achieve this, as individual departments’ accounting officers are responsible for ensuring that departments achieve value for money in their disposals of land. DCLG also noted that it monitors housing starts and completions as a part of the government’s wider housebuilding strategy, and that it has implemented, with Cabinet Office, “quarterly monitoring arrangements to record receipts from land and property asset sales across the whole government estate”.

Key actions taken and commentary

2.29 Each department must be able to demonstrate that it has taken robust decisions on value for money for each disposed site, and that its delivery plans outline how assurance is given to accounting officers.37

2.30 In the handbook, DCLG refers departments to Managing public money and the Protocol for disposal of surplus public land and buildings to guide departments’ decisions on the disposal of land. Managing public money states that departments should value assets at market prices and that they have up to three years to dispose of land, once it is declared surplus.38 Protocol for disposal of surplus public land and buildings outlines the process for identifying developable and viable land and property. It gives 40 working days for other public sector agencies and departments to identify new uses for this land.39

2.31 In our June 2015 report, Disposal of public land for new homes, we identified a potential tension between the disposal time frame required by Managing public money guidance and the programme’s objectives to speed up land disposals.40 We commented that DCLG had not issued guidance to departments on how to manage these tensions. This remains the case, as DCLG considers that the guidance available addresses any potential risk to the programme of this nature, and it was not made aware of any instances of the tension arising during the previous programme. DCLG would not expect any department to dispose of sites unless each disposal represented value for money.

2.32 DCLG confirmed that it does not require departments to monitor the number of homes built as this is not the programme’s objective. As a part of the joint data collection exercise (see paragraph 2.23) the Cabinet Office collects information from departments and arms-length bodies on sales proceeds for all property disposals. DCLG does not monitor sales proceeds as a part of the land programme. The Cabinet Office is responsible for monitoring the money raised from all land and property sales (i.e. not only land sold for housing) across government and meeting the commitment to deliver at least £5 billion of receipts by 2020 from land and property.

2.33 Between June 2015 and March 2016, several departments including DCLG gave evidence to the Committee on the number of homes built on land sold in the first programme. Departments do not routinely collect this data, and had produced the information only in response to the Committee’s request. As a part of this follow-up, we asked departments how they had collected this information, and asked for supporting documentation. We have summarised the evidence provided to the Committee, and our findings from this exercise, in Appendix Three.

Gaining assurance of value for money from all disposals

2.34 The Committee said that it was “sceptical as to whether departments achieved value for money from the sale of all individual sites” as “departments could not readily produce basic information about the sales that would be essential to supporting any value for money case”.41

Committee of Public Accounts’ recommendation

2.35 The Committee recommended that as it will “hold [DCLG] to account for the value for money of the new programme”, DCLG should “set out how it will gain assurance that all landowning departments and public bodies have achieved value for money from all disposals”.42

Government’s response

2.36 The government accepted this recommendation. DCLG responded that the details of its approach would be set out in the guidance it intends to publish on the new programme in spring 2016. DCLG noted that it obtained its assurance that all disposals of land achieve value for money through the evidence requirements given to departments, and through the validation process which asks departments to confirm that they have complied with the relevant guidance.43

Key actions taken and commentary

2.37 DCLG had committed to publishing wider details of the programme, including how it will assure itself the programme outcomes are achieved, in spring 2016. DCLG has not yet published this information but told us it gets assurance from:

its review of departments’ delivery plans;

data validation and monitoring of programme outcomes;

oversight provided by the Programme Board and the Housing Implementation Taskforce; and

the confirmations received from departments on the value for money for individual site sales.

2.38 Accounting officers of land disposing departments confirm to DCLG that sales of individual sites are value for money. DCLG told us it considers that if each individual sale is value for money, then the programme overall must be value for money. It therefore uses the confirmations provided by departments to assure itself that the programme itself is value for money. DCLG also plans to monitor the broad progress that developers are making on land released in this Parliament, including the number of homes built. It will publish an annual report setting out its progress towards the 160,000 homes commitment. DCLG told us it plans to provide further details on how it will monitor the progress of land development in autumn 2016.

Setting out parameters for job creation

2.39 In addition to a housing capacity target, the first programme included an explicit objective to “support as many as 25,000 jobs”.44 DCLG was able to provide an estimate of the jobs created using a standard assumption, but “was unable to confirm how many jobs the programme created”.45

Committee of Public Accounts’ recommendation

2.40 The Committee recommended that for future programmes, DCLG should “set out clearer parameters for job creation and collect and audit data to ensure that claimed new jobs are in fact created”.46

Government’s response

2.41 The government accepted this recommendation. DCLG responded that “[where] programmes have explicit requirements to record job creation clear parameters will be set at the outset and data will be collected and reviewed”. It noted that “[job] creation is not however an explicit objective of the new programme”.47

Key actions taken and commentary

2.42 DCLG told us that creating jobs is not an objective of the new programme. It will, therefore, not collect data to ensure that jobs are created as a result of the programme. DCLG has given a commitment to agree standard definitions and a common approach to measuring and evaluating the outcomes of programmes where creating jobs is an objective.48

16 HC Committee of Public Accounts, Disposal of public land for new homes, Second Report of Session 2015-16, HC 289, September 2015.

17 See footnote 16.

18 Comptroller and Auditor General, Disposal of public land for new homes, Session 2015-16, HC 87, National Audit Office, June 2015.

19 HM Treasury, Government responses on the First to the Third reports from the Committee of Public Accounts: Session 2015-16, and progress on Government Cash Management, Cm 9170, December 2015.

20 Department for Communities and Local Government, Programme handbook for departments and arm’s-length bodies, unpublished.

21 See footnote 18.

22 See footnote 16.

23 See footnote 16.

24 See footnote 19.

25 See footnote 20.

26 See the Annington website at: www.annington.co.uk

27 See footnote 20.

28 See footnote 16.

29 See footnote 16.

30 See footnote 19.

31 See footnote 16.

32 See footnote 16.

33 See footnote 19.

34 See footnote 16.

35 See footnote 16.

36 See footnote 19.

37 In some instances, accountability may not rest with the departmental accounting officer. For example accounting officers of individual NHS Trusts are responsible for ensuring value for money requirements are met in respect of NHS land sales.

38 HM Treasury, Managing public money, May 2012 (with revisions to August 2015), available at: www.gov.uk

39 Homes and Communities Agency, Protocol for disposal of surplus public land and buildings, June 2015, available at: www.gov.uk

40 See footnote 18.

41 See footnote 16.

42 See footnote 16.

43 See footnote 19.

44 Department for Communities and Local Government, Government plans release of public land to build 100,000 homes, June 2011, available at: www.gov.uk

45 See footnote 16.

46 See footnote 16.

47 See footnote 19.

48 HM Treasury, Government responses on the Fourth to the Eighth reports from the Committee of Public Accounts: Session 2015-16, Cm 9190, January 2016.

Part Three

Progress against the programme commitment

3.1 This part examines the Department for Communities and Local Government’s (DCLG’s) progress towards delivering the new programme commitment up to March 2016.

Current status

3.2 From 9 May 2015 to 31 March 2016, the government has disposed of land with capacity to support 8,580 homes, across 77 sites, which represents 5% of the programme commitment.49 DCLG told us the amount of money raised from these sales is £72 million, with future estimated receipts expected to be a further £197 million, subject to sale conditions being met. We have not audited this figure as a part of our work for this report.

3.3 The government has also disposed of land for a further 4,853 homes over the same period, but the Homes and Communities Agency (HCA) has not yet obtained sufficient evidence that the sites will be developed for housing (see paragraph 2.11). The HCA is working to obtain this evidence. If these sites are validated, progress to date would represent 8% of the programme. The progress relates to housing capacity, not actual homes built as the development of projects on these sites could take many years to complete.

Sites identified for future disposal

3.4 In addition to the sites sold so far, as at March 2016 departments have identified surplus, and potentially surplus, sites with capacity to support 104,461 homes. This represents 65% of the programme. Figure 4 shows where these sites are located, based on the estimated housing capacity of each site.

3.5 Departments’ provide a risk rating for each site identified for future disposal. The rating is based on the likelihood of the site being sold within this Parliament (before the end of the programme). A little over half of the potential homes identified are on land considered ‘high-risk’ (Figure 5). DCLG defines this as a site for which “there is at least one issue preventing exchange of contracts which is very unlikely to be resolved before the end of the programme”.

3.6 Issues that may prevent the exchange of contracts include, for example, situations where the decision to deem a site ‘surplus’ depends on other policy decisions (see paragraph 3.8) or where departments anticipate difficulties obtaining planning approval. Half of the identified sites, with an estimated capacity for 58,178 homes, have no planning status.

3.7 DCLG recognises that the issues relating to high-risk sites may mean that they ‘slip out of the programme’. The 10 largest high-risk sites (by estimated housing capacity) are forecast to contribute 27,617 potential homes, or 17% of the programme commitment. Figure 6 shows that, in the unlikely scenario that all of the ‘high-risk’ sites are not sold before the end of the programme, delivery against the commitment would be 63,062 (39% of the commitment) based on the current forecast. DCLG and the HCA are working with departments to reduce the risk of these sites, and to identify further sites for disposal.

Departments’ plans to achieve their contributions

3.8 Each department involved in the programme must develop a delivery plan setting out how it will achieve its contribution to the programme commitment (the Department for Business, Innovation & Skills did not have to produce a plan due to the relative size of its contribution). The plans include details of the sites identified to contribute to the disposals commitment, the probable timings of the disposals and the possible risks to delivery (Figure 7). DCLG provided support to departments in producing their initial delivery plans in early 2016, and are responsible for reviewing each plan every six months when it is updated.

3.9 So far, DCLG is the only department to have identified enough potential sites to reach its contribution (Figure 8). To address the risk that identified sites might not be sold in the required time frame, some departments intend to identify potential sites in excess of their contribution. DCLG is the only department to have identified any contingency (sold and identified housing capacity is currently 102% of the DCLG target). The others are still working towards achieving their contributions.

Analysis and commentary

3.10 In the first 10 months of the new programme, to March 2016, departments disposed of land with capacity to support 8,580 homes. Land with capacity for a further 4,853 potential homes has also been sold but the HCA requires more information from departments before ‘planning certainty’ (see paragraph 2.11) can be validated and the sale scored against the programme. Taken together, these represent a maximum 13,433 potential homes: departments anticipated selling sites with capacity for 15,000 potential homes in the same period, and DCLG is content that the programme is on profile.

3.11 In the final year of the first programme (2014-15) disposals amounted to 32,293 potential homes (Figure 9). DCLG expected delivery to drop from this level in the first year of the new programme as it needed to spend time agreeing departments’ contributions, designing the programme structure and producing programme guidance. DCLG issued guidance to departments in December 2015, which, along with the Spending Review, may have contributed to the relatively slow start. DCLG observe that some of the issues the Handbook covers, including what was within the scope of the programme, could not be resolved until contributions were agreed in the Spending Review in November 2015. Its view, therefore, is that the Spending Review process affected the speed at which the programme could start.

3.12 Departments must identify further land with capacity to support at least 42,106 homes (26% of the commitment) to achieve their contributions by 2020. In the last quarter of 2015-16, departments identified surplus land with capacity to support 19,777 homes, taking the total land capacity identified for the programme as a whole to 117,894. DCLG told us it continues to review the situation through its quarterly monitoring and meetings with departments. However, it has not formed an expectation of how many sites it would have hoped to have been identified by this point.

3.13 Departments told us that for many of the sites identified for disposal, the land is still in use and disposal depends on other policy decisions. For example, at the Ministry of Defence many of the identified sites rely on the outcome of the Footprint Strategy, and at the Ministry of Justice further sites for disposal will be identified as a result of the Prison Estate Transformation Programme. Decisions on whether the land is surplus will therefore be taken later in this Parliament.

3.14 Over the next four years overall disposals will need to be over 36,000 potential homes per year if the government is to achieve the 160,000 commitment. Departments are currently forecasting that they will sell land with capacity to support 29,001 homes in 2016-17.

49 The official start date of the new programme is 9 May 2015, following the 2015 General Election, as the programme aims to release land during this Parliament.

Appendix One

Our investigative approach

Scope

1 We conducted a follow-up investigation into the government’s commitment to “sell land for more than 160,000 homes” by 2020. The scope of investigation was as follows:

the Department for Communities and Local Government’s (DCLG’s) progress in setting up the new programme (Part One);

the key actions DCLG has taken for each of the Committee’s recommendations (Part Two); and

the progress departments have made in the first full year of the new programme (Part Three).

Methods

2 In examining these issues, we drew on a variety of evidence sources. We reviewed the:

a DCLG’s programme handbook;

b first year quarter three (ending 31 December 2015) and quarter four (ending 31 March 2016) monitoring reports;

c land disposal delivery plans of all the departments with a Spending Review 2015 land disposal contribution; and

d meeting minutes.

We interviewed individuals from:

e each of the departments with a Spending Review 2015 land disposal contribution;

f DCLG with responsibility for implementing the new programme; and

g Homes and Communities Agency (HCA) with responsibility for monitoring and validating the programme data.

We also analysed:

h the first year quarter four (ending 31 March 2016) data set on all sold sites and sites identified for potential disposal.

Appendix Two

The Committee of Public Accounts’ September 2015 recommendations and the government’s response

Appendix Three

Evidence on progress of the first programme

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