OK Brandon, let’s see the evidence

The right to buy has become a big issue again. The new Housing Minister, Brandon Lewis, has taken a bullish stance, as reported widely in the newspapers yesterday, for example here and here.

The new controversy follows endless reports about Councils being unable to meet their housing responsibilities due to the lack of new social lettings becoming available, and a particular story from Harrow in outer London which illustrated the perverse outcome of councils selling homes under the right to buy only to rent them back as private rented dwellings to meet urgent needs. Harrow estimated that it was now spending half a million pounds renting back homes it has been forced to sell. The Council loses twice – selling an asset at a huge discount from its true value – now over £100,000 in London – then paying over the odds to get it back again. This is true now in many council areas and is a huge waste of money.

Lewis claimed that ‘every additional home sold is now being replaced with a new affordable home for a new social tenant’ and that ‘Critics of right to buy are enemies of home ownership’.

There have always been two major criticisms of right to buy, and neither is about the principle that tenants should be allowed to buy. The first is that large discounts are totally unjustified and unfair. Council tenants get pilloried for being subsidised when they are not, but these new home owners get a subsidy/gift of £100,000 or more without a word of criticism. In fairness, why does the Government not give everyone who wants to own a home £100,000, why is it restricted to social tenants? The answer is that the policy is not about promoting home ownership: the ‘rejuvenated’ right to buy is just one of many Government policies aimed at getting rid of social rented housing altogether.

Government gives people £100K! Policy a great success!

It is also not about promoting home ownership in another way – as illustrated by the Harrow example. Increasingly right to buy purchasers take their discount then either become a private landlord themselves or sell on to the many private landlords waiting in the wings wanting to snap up flats for letting. It is estimated that a third of London sales go this way. Of course, privately-let flats on estates are much more expensive than social rents if they are let to people on housing benefit – so the taxpayer pays again. Frequently they are over-occupied by sharers and become a source of nuisance to neighbours. And in some cases Councils have no option but to lease them back to meet their own needs. What folly!

Lewis’s assertion about replacement needs a specific challenge. The Government never releases real evidence to show how its claim about replacement stacks up but commentators are united that it is nowhere near one for one replacement. However, as with any policy brought in by Grant Shapps, there is a trick. Lewis’s comment refers to replacing the ‘additional’ homes being sold – ie the increase due to the change in policy – rather than the total homes sold. And the other trick is that the replacement homes are at ‘affordable rents’ – at up to 80% of market rents – not ‘social rents’.

It’s not one for one and it certainly is not like for like.

There is plenty of previous Red Brick commentary on RTB – just search in the box near the top of the page – for example Monimbo’s excellent article here.

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I’m troubled and I don’t know why*

There is nothing wrong with a Government setting up a special programme to help those families facing the most disadvantage to overcome the problems they face. Indeed it is laudable to see resources devoted to this objective. So why is it that the Coalition’s ‘Troubled Families’ programme makes me feel very uncomfortable and even hostile?

The unusually high profile civil servant who runs the scheme, Louise Casey, was on Newsnight this week (from 11.50) to discuss it following an interview she gave to the Sunday Times. Professional though she is, I was left with the strong impression that the Government will be claiming to have ‘turned round’ increasingly large numbers of families on the basis of rather flimsy evidence and a low threshold for measuring success. The measure of success also seemed to be rather bureaucratic, based on local authorities making claims under the scheme’s ‘payments by results’ system.

Statistics have been published that assert that 40,000 families were ‘turned round’ by March 2014. But we are left in the dark as to what this exactly means. Has a family really been ‘turned round’ because a child’s exclusion rate from school has declined? Have they been ‘turned round’ permanently? If they have been ‘turned round’, how long will they stay on the scheme? And why have some authorities been so much more successful than others? There is a very wide disparity. Is it because some are better at turning round families – or better at claiming the money?

There was the usual confusion in the media about the figures involved. Full Fact is investigating where the latest and widely-used figure that these families cost £30 billion a year has come from and whether it has some kind of official endorsement. David Cameron has extended the scheme from 120,000 families to a staggering 500,000 families. The £30 billion may well be a grossing up of the official estimate made at the start of the programme that the 120,000 families ‘cost’ £9 billion a year – a figure which was strongly questioned by Full Fact at the time. No evidence that I have seen has been produced to show who the extra 400,000 families are or what their problems might be.

Figures like these feed the media frenzy about ‘Shameless’ families sponging off the state – ‘the rise of the underclass’ as the Daily Mail called it this week. But it is important to point out that there were serious doubts about the methodology from the off, including on Red Brick, here and here.  The initial criteria suggested that these families faced unemployment, living in poor accommodation or mental or physical ill-health or disability. This is far from the ‘Shameless’ stereotype which focuses on fecklessness and wilful bad behaviour rather than the underlying causes of poverty. None of the criteria for counting the families capture dysfunctionality in the way the Government claims – families who are ‘off the barometer in the number of problems they have’ as Louise Casey described them.

There are many and good reasons for supporting family intervention programmes, and there is good research to back up the claims for their effectiveness. But as the Government scheme progresses, and in the run-up to the Election, we should be very wary and sceptical about the claims Cameron makes for it.

‘I’m troubled and I don’t know why’ performed by Bob Dylan and Joan Baez in 1963.

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Giving away council houses

Next June it will be 40 years since it was first proposed that council houses should be given away to tenants. It was too radical even for Margaret Thatcher, but there is always someone who will resuscitate a daft idea. This time it’s Paul Kirby, the erstwhile head of the No.10 policy unit.

You can read the maths on his blog. What you can’t do is find any notion that social housing has any value other than its sale price. Like right to buy (which presumably Kirby regards as a timidly unambitious policy), it ignores social housing as an asset: something that needs looking after and will serve future generations. I imagine that what annoys such pundits about the sale of the Royal Mail is not that it was done cheaply but that the buyers were forced to pay for it.

I also imagine that Eric Pickles would be happy to adopt Kirby’s plan, but for the moment his hands are tied. He’s doing his best, however, and in the last few weeks we have seen three further steps towards making the right to buy even more generous – to the buyers. First, in July, maximum discounts rose to £77,000 (£102,700 in London) and from now on will increase in step with inflation. Second, the maximum discount for a house, previously 60%, became 70% (in line with that for a flat). Third, this month, the government implemented what Eric charmingly calls ‘Flo’s law’, which sets a cap on the service charges that councils can impose on leaseholders, most of whom are in flats bought via the right to buy.

All of these undermine the asset value of social housing but the third actually shifts costs from the right to buy purchaser back to the local authority. When the original consultation took place last year, CIH, London Councils and others warned that, effectively, council tenants would have to subsidise major renovations in blocks of flats where there are leaseholders, in order to keep service charges within the new limits. However, this government increasingly treats the consultation phase of its proposals as it would the Royal Assent to legislation: an unfortunate requirement that delays the outcome but is otherwise unlikely to change it. Councils have been left to work out whether they should forego government subsidy so as to continue to be able to apportion service charges fairly, or whether they should partly absorb them into their housing revenue accounts (which means tenants subsidising neighbouring owners who have already been subsidised once via the discounts they received when they bought their flats).

Pickles can’t of course resist putting the blame for high service charges on councils and is ‘appalled’ by how they treat leaseholders. It’s also true that buyers can find themselves landed with massive charges when roofs or lifts are replaced, and immediately blame the local authority for charging them while tenants get the work for ‘free’. Pickles is keen to perpetuate this myth, even though achieving the Decent Homes Standard is government policy and, of course, tenants are paying for improvements through their rents.

What he doesn’t say is that, when people exercise the right to buy, no one warns them about long-term repairs costs. Councils are limited to telling buyers what service charges will be for the next five years, and must be careful not to obstruct the sale process. The government’s own web page for buyers who will be leaseholders restricts itself to mentioning the five-year service charge estimate, and only vaguely mentions the bigger charges that might come later. Of course, this dedicated government website, facebook page and leaflets are aimed at talking up right to buy, not reminding buyers of the costs.

It so happens that the folly of right to buy (that would also result in spades if Paul Kirby’s mad idea was ever implemented), was also beautifully illustrated this month. Harrow Council finds itself spending half a million quid leasing back 35 former council homes, sold at discounts of up to £100,000, so that it can provide temporary accommodation for the homeless. Councillor Glen Hearnden was quoted in Inside Housing as saying:

‘We lose twice with the government scheme, we lose the property from our stock and then we pay to rent it back. It all adds up to our residents suffering. It feels like we are fighting the fires caused by an overheating housing market whilst the government is stood on our hose pipe.’

Paul Kirby doesn’t so much want to stand on the hose as cut off the water supply. Naturally, his proposal to give away council homes is also given the hard sell:

‘I would say to both left-wingers and right-wingers, it’s not often that any politicians get the chance to do something dramatic to sort out poverty overnight, especially in a way that costs the tax-payer a lot less. Given that both Left and Right can win from this proposal, they only lose by doing nothing, leaving all that money tied-up in the 4m homes, the poor still poor and the welfare bill climbing every year. So why not do it? Unless, either of them has got a better idea?’

Monimbó is not so immodest as to speak for the whole of the ‘Left’, but I do suggest that, to see many better ideas than his, Paul Kirby could read through Red Brick.

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Some good ideas for using just a tiny fraction of those surpluses

With housing associations surpluses flying through the roof – the 15 biggest London associations recording more than £1 billion for the first time – this is a good moment to consider what more these huge organisations with their huge surpluses (and often huge salaries) could do to support some of the poorest people on earth. Here are two different possibilities where a tiny, almost unnoticeable, fraction of the surplus would go a long way and do a lot of good.

Homeless International was founded by housing associations in 1987 and the bulk of its support has come from the housing sector. The organisation works to transform slums across the developing world: one billion people live in slums and HI supports slum dwellers to tackle the challenges of housing and basic services in their communities. Homeless International’s method of working is to promote community–led and sustainable development through local partners. It operates in many countries including the Philippines, Sri Lanka, Zambia and Zimbabwe.

One billion people live in slums

One billion people live in slums

Donation is made easy through the membership process of the National Housing Federation. One way associations could support HI is by participating in its guarantee fund, which uses deposits and donations to help partners operating around the world access bigger loans from financial institutions. Many more associations could take part. It is also easy to involve staff in fundraising for HI, see their staff page.

On a smaller scale, a well-established project with a long connection with the UK housing sector works in Masaya, Nicaragua, to provide solar energy to small and isolated communities that have never had electricity before.

One of the homes provided with solar electricity near Masaya, Nicaragua

One of the homes provided with solar electricity near Masaya, Nicaragua

Project Sun’ is financed by donations from housing associations in the UK, charities and individual donors, and operates through a revolving fund which has a high level of repayment (70-80%). It was once the beneficiary of the Chartered Institute of Housing’s Presidential Appeal and has been backed by organisations such as Midland Heart, Places for People, Southern Housing, Cairn Housing Association, LHA-ASRA, New Leaf and the Longhurst Group. Donations can be made to the project through Leicester Masaya Link Group, which runs various town twinning projects. They are looking to partner with more UK charities willing to make loans for onward lending to households who need electricity. More reports on projects in Nicaragua can be found on John Perry’s excellent Two Worlds blog.

The housing sector has an excellent record of support for projects such as these. But much more could be done and at little cost.

So, if you count your surpluses in many tens of millions, these are only two good suggestions for making a tiny fraction of the money work really hard for some of the poorest people on earth.

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Another inglorious failure

It’s not that we like being proved right, especially when things in housing are so dire, but the Financial Times’ analysis of the Government’s New Homes Bonus leads us automatically into ‘we told you so’ territory. Mind you, analysis of most other Government policies – ‘affordable rent’, ‘help to buy’, ending regional planning, and so on – tends to lead to similar conclusions. But there are few policies where more has been claimed and less has been delivered than the NHB – and the likely outcome was not only predicted by Red Brick but also by former Labour Housing Shadow Alison Seabeck way back in April 2011.

The scheme itself was meant to be a reward to councils that encouraged housebuilding, who would get a subsidy equivalent to the council tax income on the property for six years after it was built. There was some Treasury funding at first but the main method of funding the plan was to ‘top slice’ normal council grants. There was therefore always going to be a redistributive effect from some councils and to others. Given that a lot of development is a windfall activity (some councils have to do nothing to see development in their areas, others have to struggle hard to get any) it was always likely to be unfair, a reward for the lucky.

Authors Jim Pickard and Andy Sharman (registration required) conclude that the NHB ‘has shifted cash from poor northern councils to rich areas in the south with little evidence that it has boosted homebuilding.’ They quote the National Audit Office finding that there is ‘little evidence’ that the bonus has change councils’ behaviour in terms of planning, contradicting ex Minister Mark Prisk’s claim that it would bring about ‘at least 400,000 additional homes’.

According to the authors, NHB has cost £2.2 billion so far – which happens to be 50% more than the annual affordable grant programme. For that money, to justify itself the policy should be delivering major improvements in housing approvals and delivery. It plainly isn’t.

Although the new Minister, Brandon Lewis, demonstrates an ability to say the blindingly obvious – ‘Areas building the most homes receive the most money’ he said – the FT’s analysis of winners and losers shows a strong redistribution away from the most deprived councils, filling the coffers of the least deprived. Funnily enough, the main losers are Labour councils and the main winners are Tory and Liberal councils.

The reasons are obvious – and were obvious when the policy was introduced. Housebuilding tends to be focused in those places where the economy is strong and housing demand is high – builders only build what they can sell. The building of these homes would have happened anyway and was not incentivised by the Bonus, nor has it changed council behaviour. In that sense it is a complete waste of money and an unnecessary punishment visited on poor areas.

And think what might have happened if the money had instead been spent on providing grant for genuinely affordable social rented homes.

 

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‘Poor doors’ and a ‘failed brand’

Photo from therealdeal.com

Photo from therealdeal.com

The Mayor of New York probably has enough on his plate without keeping up with Red Brick. But if he did, he’d find we are much bigger fans of his than we are of Boris Johnson. Told of the new practice of installing ‘poor doors’ in New York apartments, where providing a proportion of affordable housing has been a condition of their receiving building permits, Bill De Blasio said he intended to outlaw them. Back in Britain’s capital, however, installing poor doors seems to be an established practice that fails to trouble his London homologue.

Are poor doors the ultimate sign that social housing is a ‘failed brand’? The story came at the end of a week in which, as Red Brick reported, there was a live Guardian debate that saw the issue raised several times. A week earlier, Boris Worrall of Orbit Housing said that the social housing brand is ‘broken’, although he distinguished the brand from the product. Three weeks before that, Peter Hall’s blog picked up Red Brick’s story about the slow demise of social housing and argued that it would be better to subject it to euthanasia than to try to revive it. Not surprisingly, our friends in SHOUT have been vigilant in defending both the brand and the product. Colin Wiles took part in the Guardian discussion (along with Steve from Red Brick) and went on to challenge the notion of social housing having ‘failed’ or being ‘damaged’ in his column for Inside Housing.

Where does this leave us? There is a suspicion that this ‘failed brand’ debate comes about because some in the sector are positioning themselves to abandon social housing all together. After all, Boris Worrall has elsewhere proclaimed that ‘social housing is dead’. The NHF is hosting what it calls its HotHouse debate about the future of housing associations, one suggestion being that local authorities should be left to house those most excluded and vulnerable, perhaps predominantly in social rented properties. This would free up housing associations to cater for the more aspirational members of Generation Rent. Peter Hall’s argument is that it would be better for housing providers simply to create good quality rented housing, charging discounted rents to poorer tenants and full market rents to those able to pay them.

Probably few would oppose the idea that building some houses for sale or market rent can be a useful way to cross-subsidise social rented dwellings, but can this be done on a big enough scale? In Peter Hall’s example, only one third of the units are at social rents. Alan Holmans, the well-known expert on housing demographics, has pointed out that if we ever build 250,000 homes per year then indeed one-third of them will need to be at subsidised prices. But this means that for the Hall model to work across the board, we would need to capture all of the profits from the housebuilding industry. However tempting to Red Brick this might be, this simple calculation shows why we still need actual subsidy.

As Colin Wiles reminds us, another point that some would wilfully ignore is that both the need for and popularity of social housing are enormous. The Resolution Foundation’s report Home Truths showed that some 1.3 million low/middle-income households face housing costs which take one-third or more of their income. So far, few of these are in the social sector. But in 2012/13 alone there was a net loss of over 40,000 units that would have been let at social rents, so already we are putting parts of the social sector beyond the reach of broad numbers of low-income households, when we should be doing the opposite.

Kate Davies has also entered this debate, from a slightly different viewpoint. She says she admires the aspirational tenants ‘who get good jobs and go on to become homeowners’, but at the same time says we do need social housing as a safe haven for vulnerable people. However well-intentioned, this serves to confirm rather than confront the failed brand argument. It moves us much closer towards the position that the sector is (as she puts it) for ‘poor’ or ‘damaged’ people who can’t be self-sufficient. Ironically, this is the ambulance service view of social housing which persists in the U.S. and which De Blasio aims to challenge.

It’s a regrettably short leap from describing tenants as vulnerable to telling them that it’s all their fault. The media don’t necessarily make that leap – they don’t need to, there are enough viewers and below-the-line commentators who’ll do that for them. Arguing for sympathy rather than condemnation won’t work, especially when half those ready to condemn probably do so because they believe their own circumstances are more deserving of help from the state.

What’s the way forward? As Colin did, we need to keep on banging on about the scale of need that exists and of the supply that’s required. Given that we have an economy in which huge numbers on low and middle incomes find neither renting or buying affordable, low-cost housing is vital and only the social sector can provide the numbers of homes needed. Furthermore, if we were able to do this, we’d soon find that we were housing fewer vulnerable people and more who are simply working in low-paid jobs. (After all, those in work currently account for the fastest growing segment of housing benefit claims.)

But we also need to get a grip on our own perceptions of the sector we run. The fact that new lettings usually go to the most vulnerable applicants shouldn’t blind us to the broad range of people who still live in social housing, even after 30 years of ‘residualisation’. Kate Davies admonishes those who promote social housing as an ‘idealised workers’ paradise’ but it’s equally misleading to go to the other extreme. In my view, talking about ‘failed’ or ‘broken’ bands does just this, and undermines the case we need to make for massive investment so that the sector can properly cater for many more of those who need and want to live in it.

A small lesson can be drawn from a different piece on the Guardian Housing Network. Residents of the Aylesbury Estate objected to the way their homes have been regularly portrayed by Channel 4, including in the opening images of ‘Benefits Street’. The short clip, called an ‘ident’ in the trade, shows a monochrome estate, apparently after a rain storm, populated by pigeons and strung with washing lines and bin bags. Residents helped produce their own, alternative clip, showing the estate in a very different light, featuring the varied groups of people who actually live there. Both the film and the fact that they did it should remind us that there are (still) plenty of vibrant people living in social housing who are getting on with their lives. They suffer much more than we do if where they live is described as ‘failed’ or ‘broken’. Social housing pundits, please note.

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Who is affordable housing for?

Wide differences in approach to the future of social housing and of social housing providers were exposed in a Guardian Live online debate yesterday.

The debate, entitled ‘Who is affordable housing for?’ included a range of housing association representatives and other commentators. The first question that the title of the session begged was what is meant by the word ‘affordable’? Since the 2008 Act, affordable housing has come to mean anything that is sub-market. It has been applied by some authorities (notably the former administration in Hammersmith and Fulham) to include market homes for sale that have been discounted by a few percentage points. The master of spin, Grant Shapps, invented the phrase ‘affordable rent’ to describe his new programme of homes built with grant, but as he was cutting the grant by 60% they became anything but affordable in most cases. Most providers now count their output of homes using the word ‘affordable’ to include rented homes at up to 80% of the market rent, shared ownership which can only be afforded by people earning well above the average, and so on. This obscures the fact that very few of the homes now being produced are social rented available at traditional social rent levels and with security of tenure.

In the debate, several people argued that housing associations (and increasingly councils) have been pushed into being more commercial as capital grant has been removed, and that this move should be welcomed and embraced. I accept that, and have no problem with profit-making activities such as build for sale being undertaken in order to cross-subsidise new social rented homes. The problem is that over time the tail has started wagging the dog and it has an impact on the values and ethos of the organisation. Instead of being commercial to further the mission of the organisation – to provide genuinely affordable homes to people in housing need – the objective becomes development itself. In some cases, build anything anywhere as long as we grow. Associations start to see themselves and describe themselves as developers. I just do not see very many of them trying to squeeze every possible unit of social rented housing out of their developments.

The problem over the definition of ‘affordable’ housing is that it confuses the debate about who the homes are for. Some participants talked about the fact that the housing crisis has plunged many more people, higher up the income range, into housing need, and that agencies should therefore offer a wider range of products geared to meeting this wider variety of needs. Again, this is a matter of balance and emphasis and we have to make a judgement on whether we want to provide homes for people on minimum incomes or people on higher incomes who are struggling to buy. Ken Livingstone recognised the wider range of needs but took a strong line on the balance to be struck: of the affordable housing produced, the target would be to achieve 70% as social rent and 30% as ‘intermediate’ tenures such as shared ownership and sub-market renting. Normally the intermediate housing would be targeted in some way, for example towards key workers or towards people in the on or around average incomes. In a short period we have moved to a totally different policy position, where the proportion of affordable homes in development has been allowed to reduce and the share going to social rented homes is moving towards zero. The Mayor of London has even taken the possibility of requiring social rented out of the London Plan and has specifically excluded social renting from his funding regime.

Added to the mix were comments that social housing is a ‘damaged brand’ and that allocations policies cause ‘sink estates’ where the majority of tenants are ‘benefit dependent’. This was a charge laid at the door of council estates in previous decades but is it right now? First, virtually all developments are now mixed tenure, with social housing in a small minority, so it is hard to see how the ‘monotenure’ problem could arise. Secondly, allocations policies do not favour unemployed over employed people because they emphasise housing needs not income or status. Third, there is a confusion, deliberate or otherwise, between tenants who are unemployed (ie on Jobseekers allowance) and tenants who do not work – a category that includes elderly people, people with small children, people with severe disability of ill-health, and so on. Social housing is not a tenure of unemployment as it is often characterised. And fourth, rents for new homes are so high that most low paid people in work require benefits to be able to pay the rent. This is the fastest growing group of people receiving housing benefit. If the aim is to have more people on estates not receiving benefits then rents should come down not go up.

A final theme I would pick up from the debate is the desire of a number of housing associations to have more control and more flexibility in what they do – who they offer homes to and how much they charge. In my view it is broadly right for the local authority to set priorities for allocations in an area, but within a national code which specifies the factors to be taken into account – like giving reasonable preference to homelessness. I don’t think councils should have carte blanche (for some reason the Tory administration in Hammersmith always comes to mind as an example) to decide who gets housed, and, because they are not the elected strategic body, the argument is even weaker for housing associations to be able to adopt their own policies. On rents, there have been lots of criticisms of the ‘target rents’ policy, but it had the benefit of being consistent and certain and it reduced many of the anomalies in the system from the previous regimes. It must be wrong for a tenant to move into a property at an ‘affordable rent’ and find they are paying twice as much as the social rented tenant next door.

Previous thoughts on the role of housing associations can be found here

And my wider views on the importance of social rented housing can be found here.

The debate can be found here and the Guardian Housing network will publish a summary later in the week.

 

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Housing and welfare policy – still pale and stale

Does that fact that both Eric Pickles and Iain Duncan Smith are still in the same cabinet seats mean that David Cameron thinks they are doing a good job? Two prime candidates for the chop this week seem to have successfully defied their critics. What does this say about housing and welfare policy?

If the prime role of the DWP was seen as delivering welfare reform and that of the DCLG was to deliver more housing and more effective local government, then clearly both IDS and Eric have failed miserably. Welfare reform is being haltingly rolled out, it’s beset by administrative problems and its talisman project, universal credit, looks like a disaster that has been prevented only by the continuing delays in its implementation. To coincide with the reshuffle, the DWP brought out the first round of research into the impact of the bedroom tax, showing that only 4.5% of those affected had actually moved to smaller properties, yet this was one of the main stated aims of the policy. Almost at the same time, the Institute of Fiscal Studies reported that changes to the local housing allowance have had no impact on curbing private sector rents, another policy objective: instead they’ve simply hit claimants’ pockets.

Unlike DWP, Eric’s department seems to have gone in for remarkably little independent scrutiny. Perhaps it’s just as well. As the just-departed housing minister struggled in the recent Commons housing debate to claim that housebuilding is increasing, he was assailed by evidence to the contrary. Reports which foresee the end of local government as we know it, such as this recent one from the LGA, go ignored.

However, I suspect we’re judging both men by the wrong yardsticks. In considering IDS’s survival, Jules Birch suggests it’s an example of ‘wet-bed syndrome’. For an explanation, he directs the reader to the Stumbling and Mumbling blog, which uses IDS as an example of why idiots succeed. However, my eye was caught by one of the comments at the end of the blog. It suggests the most likely reason that IDS remains in post because he is, in Cameron’s eyes, actually a success. Perhaps his brief was ‘to knacker the benefits system so that claimants increasingly give up, while shovelling large amounts of public money to favoured suppliers’, and in so doing demonstrate ‘the incompetence of the state in managing services’. If that was really the brief, the commentator points out, he’s done startlingly well.

Similarly, if Pickles was sent to DCLG to preside over the biggest cuts in any government department, and start the process of marginalising both social housing and local government, depriving them of resources and winding them down, he seems to be halfway there.

Perhaps though, both mens’ success factors are even more subtle than that. IDS seems to believe he’s successfully pursuing a completely new strategy of welfare reform that will replace a ‘broken system’. This enables him to look genuinely baffled when anyone suggests that he might, instead, be simply destroying the one we already have. Pickles’ talent is the opposite one: while local government cries out for a strategy for how it can reconfigure so as to operate with only a slim proportion of its present income, Pickles busies himself with the issues that really bother him, like the continued production of free council newsletters. Has there ever been a local government minister who has turned such a deaf ear to the concerns of local government? Aren’t both secretaries of state, in their different ways, brilliant at putting up smokescreens to hide the destruction they’re carrying out?

Among the serious consequences of their activities is one that’s overlooked by most of the media. It’s been said often enough in the past that the two departments (responsible for welfare and housing) are dealing with two aspects of the same policy area: you can’t separate benefits policy from policy on rents, allocations, regulation of landlords or a whole host of housing issues. To state the obvious, if you cut benefits, tenants get into arrears and landlords’ income falls; similarly if housing policies lead to higher rents then this pushes up the benefits bill. One of the big consequences of both departments’ apparent indifference to the real effects of their policies is the widening gap between them on these key areas of overlap.

For example, the bedroom tax (sorry, the ‘removal of the spare room subsidy’) had four objectives: save money, improve work incentives, encourage mobility (i.e. get people to move around more) in the social sector and make better use of the housing stock. The last two are housing objectives, but were the DWP’s colleagues in DCLG asked about them? It goes without saying that DWP didn’t listen to warnings from the sector itself that moves on the required scale would be impossible. There were also warnings about the impact on landlords’ earnings, and lo and behold the research shows that arrears were up 16% in the months after the tax started.

Over at DCLG the policy to impose Affordable Rents is also being rolled out, with 40,000 homes let at the higher rents last year that would previously have been let at social rents. Given that the proportion of the new tenants dependent on benefits is exactly the same as for social lettings, 80% of the cost of the new policy is being passed straight back to DWP.

So the bedroom tax cuts social landlords’ income and saves DWP money, while Affordable Rent increases landlords’ income and costs DWP money. Not to worry: IDS thinks the evidence shows that the bedroom tax has made a ‘promising start’ while Eric… continues to fret about fortnightly bin collections.

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Regeneration or Gentrification?

How to improve housing conditions in an area whilst keeping the cost of living there within the reach of people on low incomes has been a key issue in housing for as long as I can remember, and especially in London. In the 1970s I was involved in campaigns to protect low-cost housing against gentrification in Paddington and then more widely. At that time a lot of social housing was being built (Tory Westminster alone was producing nearly 1,000 homes a year, mostly on former railway land), so the gentrification process was restricted to the private sector.

In the 1960s people like Rachman made huge fortunes by removing established tenants and packing houses with immigrants who could not get housing elsewhere, profiting from overcrowding. As market conditions changed, in the 1970s the practice of ‘winkling’ became common. Speculative landlords still bought run-down inner city property and shifted established tenants out, but now they were more likely to convert the houses for a newer richer group who could afford higher rents or to buy.

In Islington the campaign against the notorious estate agent Prebble became the focus of regular demonstrations outside their offices in Upper Street – and heavy-handed police action it also has to be said. There were long campaigns to save traditional local communities across Inner London, including Barnsbury, Covent Garden and Pimlico. In some boroughs, councils and progressive housing associations intervened by buying out landlords, rehousing the tenants and improving the properties for future social tenants.

Thatcher ended council municipalisation programmes after 1979 but this was also followed by a major shift in emphasis amongst housing associations from the purchase and refurbishment of street properties towards new build. In turn this was followed by the deregulation of the private rented sector, leaving us with an unfettered market that has been busily gentrifying the capital as shortage has grown and values have risen. We have seen the gradual transformation of many of London’s traditional working class communities into much more affluent and expensive neighbourhoods. The process is well known but, with a growing number of hotspots and the advent of the global super-rich, it is now spreading well into outer London. By restricting the ability of people on low incomes to live in more affluent areas, the welfare reforms are probably the final nail in the coffin of these historic communities.

The ability of poorer people to stay in affluent neighbourhoods has become more and more dependent on the availability of social housing in those areas, a big and hugely valuable legacy of generations of housing policy in inner London. In the 1980s the focus rightly turned to look at the quality of the many estates built between the wars and after WW2. Well-intentioned ‘estate regeneration’ schemes started in an era when the supply of social rented homes was sufficient to enable extensive ‘decanting’ to take place, and tenants were normally promised the right to local rehousing in a new or refurbished home at social rents. A succession of Government schemes brought estate improvements which benefitted existing residents.

The phenomenal rise in property prices in London brought attention to inner London estates because they sit on extremely valuable acres in good locations. If only their latent value could be released, whole areas could be transformed and new neighbourhoods created. In the most valuable places, like along the river, new ‘quarters’ could be created and profits could be used to build new social housing elsewhere. Government, national and local, realised that regeneration could be done with little or no subsidy as long as sufficient private homes for sale could be included. As public borrowing remained constrained, private borrowing by developers, including housing associations, became the natural model.

The politics of housing through this era meant that council housing had few friends. The new generation of Tories were mainly hostile and council housing was not quite a New Labour thing. Developers obviously wanted as much private housing as possible and many housing associations were transitioning away from social housing provision towards mixed tenure development with social housing a smaller and smaller proportion. The perceived wisdom was that council estates, even in otherwise rich parts of London, were drab ‘monotenure’ concrete monstrosities dominated by unemployment and criminality. It was obviously much better if they were replaced by bright new developments of ‘mixed tenure’ homes.

Of course some of the estates were shockingly built and many were also badly managed, but even so it has been rare for tenants to call for redevelopment rather than refurbishment. The normal call is for the community to be preserved, for refurbishment to take place and for better management and maintenance to be put in place.

Despite the appearance of being high density, many estates use land inefficiently. Spare land and rising values meant that opportunities for adding to the stock (or densification) began to open up, sufficient to finance and facilitate a wholesale regeneration or redevelopment. The finance tail was finally wagging the housing strategy dog. The bigger the scale, the grander the vision, the greater the planners’ desire to sweep away nasty council estates and replace them with ‘mixed communities’, the less influence residents seemed to have. Big estate regeneration schemes in London involved the loss of tens of thousands of social rented homes that were replaced by more housing, but much less social housing. Regenerated estates contributed little to meeting the needs of the waiting list, often they were a net drain. In a borough like Brent, which has had four or five major estate regeneration schemes, the wider implications for supply have been felt for many years.

In recent years some Labour boroughs have insisted on the complete reprovision of the social rented housing involved in the scheme, but this has rarely been achieved. Despite often good intentions, rising costs during a scheme tend to create pressures to increase the number of homes for sale and to reduce the amount available for social rent. More recent, the obscenity of unaffordable ‘affordable rent’ has added another layer of confusion as promises focus on badly defined ‘affordable homes’ rather than social rented homes. Some developers think that the social housing element will depress private sale values and will do anything to wriggle out. And on top of it all, we now have a London Mayor who actively intervenes to promote ‘regeneration’ that has next to no social rented provision and who uses his powers to block or prevent Labour boroughs who wish to ensure a fair share of social renting in redevelopments.

Last week the Homes and Communities Agency and the Mayor launched the bidding process for the latest miniscule housing pot, this time it is the £150m fund for estate regeneration schemes to start in 2015/16. Some of the reasons for regenerating estates given in the prospectus sound ok: they include estates that were built at quite low densities that do not always use land well. And I would support the prospectus’s statement that ‘The best regeneration projects actively involve residents so that the new homes and area are re-developed to meet local needs, provide well-designed and high quality new homes and reflect a sense of community identity.’ However in practice it is hard to believe that this is what most estate regenerations are about.

The rules around the new scheme help explain why ‘regeneration’ has moved away from the aim of serving the interests of existing residents and people in housing need towards a corrupted vision of what a mixed London neighbourhood should look like. Despite all the talk about how poor these estates are, the Government money is delivered as loans not as subsidy. The Government’s investment must be returned, schemes must ‘work with the grain of the market’, and total public funding will be required to be less that 50% of the total project costs. It says ‘Funding will only be delivered to private sector partners’ and the delivery body must not be classifiable as a public sector body.

It is a good thing therefore that the London Assembly’s Housing Committee has launched an investigation into the ‘Demolition and Refurbishment of London’s Social Housing Estates’. I hope their work will focus on the loss of genuinely affordable housing through so-called regeneration over the past few years and look for improvements in future. I also hope that Labour London boroughs will take a stronger line – protecting existing communities and delivering social housing must be the top priorities.

Developers are eyeing up estates across the capital in the currently febrile property market. Council estates have been the bulwark against gentrification since the 1970s. They are the largest remaining pool of genuinely affordable homes and must be protected. London Tenants Federation have estimated that more than one-third of new social rented homes built in London from 2007 to 2013 were just replacements for others that were demolished.

The first evidence session for the Assembly investigation comprised mainly tenants’ groups (and including the often forgotten leaseholders) from around the capital and makes interesting viewing – it can be found here .

LTF is to be congratulated for the work they have done in this field. They have issued advice to tenants facing regeneration and redevelopment proposals – which can be found here.

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False and dangerous myths?

Why would Inside Housing want to attack the idea of councils having more borrowing power to build new homes? After all it runs campaigns like Grant Britain Homes that call for more investment in affordable housing. Yet it’s just labelled the demands for greater borrowing freedom a False and dangerous myth. The opinion column accompanies a piece of research which used Freedom of Information requests to find out how councils were using their current borrowing ‘headroom’. The data show that councils like Wigan and Kirklees had £45 million of unallocated borrowing power and that many others had not yet borrowed up to the maximum of the ‘caps’ set by government when self-financing began in April 2012.

There seem to be no problems with the data (although individual councils might have issues with how they’ve been reported). The problem is that a story about how the early stages of self-financing for councils are working out has been turned into an opportunity to try to rubbish the case for changing the borrowing rules.

The argument seems to hinge on the fact that ‘most of the £2.9 billion of investment already available is untapped’. That’s to say, in February, just 22 months after self-financing began, councils hadn’t yet borrowed to the maximum they will be allowed to borrow (if nothing changes) for the next 30 years. Well, that’s hardly surprising, is it? Even those many councils who are bursting to build new homes are hardly likely to have got new developments on site in less than two years. The fact that there was an upsurge in council starts in the first quarter of this year is probably still down to earlier grants made available by the HCA, rather than councils’ expanded programmes after self-financing began.

While it’s true that a number of councils don’t yet have firm plans to build, that’s not surprising either. Demand and needs will be different across the country: in some cases demand may be limited, in others investment in the existing stock is the priority, and others may have used up their available supplies of land. Undoubtedly, too, there is a degree of caution in the face of welfare reform and spending cuts that have hit other council services. But neither the purpose of a change in borrowing rules nor the forecasts of possible outcomes depended on all councils using their full borrowing headroom, much less within such a short time.

Strangely, in another article by the same journalist Keith Cooper, this time for the Spectator, with the provocative title Why Owen Jones is wrong on housing, he points out (correctly) that around half of councils have less than £10 million borrowing headroom. The ignorant reader might think this is a lot of money, but of course – even if all spent on new build – it would barely amount to 100 new homes over the course of 30 years, quite apart from finance needed to improve the existing stock. Perhaps inadvertently, he adds to the case that Red Brick and others have long been making, that the borrowing caps are far too restrictive. His other results confirm that, in addition, they are arbitrary in their effects, with some councils having no spare borrowing capacity at all and a large number only having enough for the investment they need to make in their own stock.

But the problem about the Inside Housing (and Spectator) pieces isn’t the detail – it’s the overall message that the need for more borrowing power is a ‘myth’ and those calling for it are ‘misguided’. In a robust response, Tom Copley, Labour spokesperson at the GLA, pointed out that even Cooper’s figures show that six out of ten councils badly want to build more homes, and many are held back by the borrowing caps. Keith Cooper and Inside Housing are to be praised for their detailed research on this and other issues about local authority housing finance, but they should be much more careful how they present their findings. Those who are opposed to building more council houses or who doubt local government’s ability to spend wisely will be only too quick to make use of alarmist articles like those that appeared last week.

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