Investing in housing will help save the NHS

In the third of our special series based on the contributions made to the London Labour Housing Group Conference on 25 October, Environmental Health campaigner and former President of the Chartered Institute of Environmental Health, Dr Steve Battersby MBE, looks at the vital links between housing and health.

BY Steve Battersby

Housing is a key social determinant of health and as such is crucial to tackling health inequity. Those lower down the social gradient of health are not only on lower incomes but have less control over their lives. That is particularly true for those living in the PRS and in the worst of the PRS.

Yet as the size of the PRS increases, the number of EH staff dealing with housing is reducing. EH is often ending up in “regulatory services” which do not make the link between housing and health, nor do they establish effective links on housing with the Directors of Public Health and the Health & Wellbeing Boards. Elected members have a role in making sure there are adequate resources.

The lack of resources means that officers deal only with complaints, which are least likely to come from those living in the worst conditions and who are most vulnerable. So there is a lack of any strategic approach to housing and health.

Enforcement of the provisions in the Housing Act 2004 is inadequate and is unlikely to get better. Even allowing for the faults in the drafting of the 2004 Act there are many provisions that are not used to best effect. I hear too often of the “informal approach” to getting landlords to do works. By all means councils should talk to landlords to decide the best course of action but they should not be strung along. It is better to act and then negotiate (especially if there is a statutory duty to act). Retaliatory eviction may be a concern but too often it is an excuse for inaction. With the right approach by local authorities and a more coherent approach to enforcement it is possible to reduce the risk of such evictions – as Liverpool have shown. It is also another reason why intervention should not be dependent on complaint.

The housing and health connection has been demonstrated by BRE using methodology based on the Housing Health & Safety Rating System - the system for assessing the risks from deficiencies in dwellings. BRE has shown that the real cost of poor housing to society could be in the order of £1.5bn per year.

If Category 1 hazards (as defined using the HHSRS and on which local authorities have a duty to take action under the 2004 Act) were reduced, savings to NHS would be £600 million per year (for the one off costs of remedial action which can sometimes be relatively cheap). In addition there are the social costs over and above the costs to the NHS that probably represents only 40% of total costs

Including the worst energy efficient homes (those with a SAP <41), interventions to improve heating and insulation gives potential savings to the NHS of a further £700 million p.a.

How much is it worth investing to keep people away from needing the NHS – that is reducing demands on the NHS?

To give some indication of the scale of the problem, the English Housing Survey indicates 3.1 million dwellings have at least one Cat 1 hazard and 500,000 have more than one such hazard. In the private rented sector around 780,000 have at least on Cat 1 hazard (19%).

The first criterion of the Decent Homes Standard is that any home should be free of Category 1 hazards. So the HHSRS applies to all sectors, it is only that local housing authorities cannot take legal action against themselves (so Part 1 of the Housing Act 2004 cannot be enforced by the council if it is the organisation in control of the house). That does not mean that the home cannot be inspected and hazards rated using the HHSRS. A Justice of the Peace for the area can even require that the Proper Officer carries out such an inspection and reports to the local authority itself.

To be clear, despite what is sometimes said, local housing authorities can enforce Part 1 of the Housing Act 2004 against housing associations in the same way as they should enforce against private landlords. Housing Association properties may be exempt from the HMO definition and those provisions in the Act, but they are not exempt from Part 1.

Finally, when it comes to housing the NHS 5 Year Forward View mentions housing only in the context of “Accelerating innovation in new ways of delivering care” saying ……” the refurbishment of some urban areas offers the opportunity to design modern services from scratch, with fewer legacy constraints – integrating not only health and social care, but also other public services such as welfare, education and affordable housing.” It does not mention the health impacts of existing homes, those that are crowded and lack space with mould or cold or containing falling hazards. Poor housing not only causes ill health, it prevents people being discharged from hospital.

More than this, if we are to address health inequalities we must look at housing. Think of crowding and lack of space (not the overcrowding standard from the 1930s) and its effect on children. It makes it more difficult to do homework, it affects behaviour at school as well as at home, so compromises educational attainment. The costs of poor housing are  exported and the task of addressing inequalities in health is made more difficult.

So local authorities should have a key role in improving health by action on poor housing. Too often this is not recognized but to put it in financial terms alone can be problem because the potential financial gain from action is accounted for elsewhere. We need a fresh approach, which is possible with the new public health structures, in which local authorities (who can charge for enforcement action) also get wider recognition of the public health improvements achieved by their interventions.

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Time to abandon the debased language of ‘affordability’?

One of the many powerful contributions to the London Labour Housing Conference on October 25 came from Madeleine Davis of the Peabody Ex-Crown Tenants Campaign.

In her speech, she first outlined what happened to the rents of tenants who transferred from the Crown Estate to Peabody Trust in 2011. She then drew some general conclusions about housing costs for people living in ‘intermediate’ housing, and concluded by questioning the current use of the concept of affordability, which has become debased.

The campaign can be followed on Twitter  @norentrises

BY Madeleine Davis

Introduction

I represent a rather specific group of tenants, those whose homes were bought by the Peabody Trust in 2011 from the Crown Estate (the Queen’s property company). We live in around 1200 homes in four different areas of London – Victoria Park (boroughs of Hackney and Tower Hamlets), Millbank (Westminster), Cumberland Market near Regents Park (Camden) and Lee Green in Lewisham.

Peabody bought all four estates for a knockdown price of around £140 million, after a very widely publicised tenant campaign with cross-party political support forced the Crown Estate to drop its asking price from £250m and impose various conditions on the sale.

We were widely thought to have got a good deal. The conditions of sale established protected rent ceilings for existing tenants at 60% of market levels, up to 80% for new tenants, and with a proviso that of every 10 new lets made by Peabody nine of them had to be to keyworkers. Steve Howlett, appearing before the GLA, made a public commitment that he was ‘absolutely committed to keeping these homes affordable and available to the key workers who are so crucial to London’s economy and quality of life’.

However, those of us who represented the tenants warned that any market-linked rent policy would quickly undermine that promise. And so it has proved.

Affordability and our communities: before and after

Let me quickly contrast what we had before the sale was first mooted, with what we have now. Under the Crown Estate (exempt from many of the laws and pressures affecting lesser mortals and indeed housing providers), a sort of benign neglect had prevailed and created something pretty unique. The Crown had run the estates with rents at similar levels to social housing, but with keyworker eligibility conditions attached. Resident turnover was as a result extremely low, in fact a quarter to a third of tenants were rent-act protected. Rent increases for others were at or just above inflation levels.

So what was at stake was housing of a type almost unheard of in the capital by 2010 – enclaves of decent, cheap, long term-rented homes, right in or near the centre of London, where people working in the key public sector jobs that keep the city going – emergency services, the NHS, police, education, transport – could bring up their families and plan a long term future. We had residents who had been in their homes for up to sixty years, families living close to each other, streets where neighbours look out for each other and feel safe. And what is more, this housing was NOT subsidised housing – it made a return for the Crown Estate of around £3m per year.

What we have now is different, and is of broader relevance as a concrete illustration of the nonsense, lies and muddle that that surrounds so-called affordable, sub-market or intermediate rents.

Not long before the decision to sell the Crown Estate had started talking about ceiling rents in relation to ‘market rents’ (they were less than half of those levels, however), and imposing higher annual rent increases. So when Peabody took over, they were able to present a market-linked rent policy as a continuation of that already in force. They immediately did a market valuation. Their plan was to charge 80% for new tenants (in line with the government’s affordable homes framework that also of course controversially extended this into the social rented sector) and to get existing tenants’ rents up as fast as possible to 60% of those levels by imposing increases of 9% per year. This was possible because they defined us as ‘keyworker intermediate’ rather than social housing.

This model (as we expected) is not working for anyone. Peabody found it couldn’t let flats to new keyworkers at 80%, and is now advertising them at 65%. Existing tenants have seen their rents rise by 36% in the last four years. Many –including working families – are now leaving their homes either because their rents are simply unmanageable or because they can no longer see any long term future on these estates (if for instance they have a child). We are seeing instances of people in real hardship. It’s not hard to see why, when Peabody is asking rents of £960 a month (£11520 a year) for a 2 bedroom flat in Victoria Park; or £1200 a month (£14,400 a year) for a 1 bed in Millbank. The blindingly obvious problem is the absurdity of the linkage of rents to market levels rather than income levels.

If instead we take a widely accepted definition of housing affordability – that it should account for a third or less of net income – then a single keyworker occupying a studio bedsit in Millbank would need to be earning £34,560 after tax to afford the rent. A family with one child under two occupying a two bedroom flat in Millbank would need to be taking home £52920 to afford the rent. Such a family is also likely to have to pay £14000 a year in childcare costs if both parents work full time.[1] A family with two children occupying a three bedroom house in Victoria Park would need a take home salary of £47268 to afford the rent.

To put this in some context, the average (full time, before tax) starting salary for a qualified teacher in inner London is £27,270, for a new recruit to the police force, £25,500, and for a registered nurse £25,665. [2]

Yet when we raise these issues with Peabody we are blandly told that rents are set at affordable levels, and in one worrying recent letter, that ‘the current rent on these properties is a long way below what it should be’. Complaints about hardship are met with offers of advice on benefit eligibility. And Peabody are also, we understand, trying to renegotiate the terms of sale with the Crown Estate to open up the housing to non-keyworkers, now they are finding that keyworkers can’t afford the keyworker accommodation they are providing.

We have therefore started actively campaigning again, noting the bitter irony of a situation in which a charitable and supposedly philanthropic body whose founding purpose is to ameliorate the condition of the poor and needy in London, is actually forcing people out of their homes and communities. So we would like to ask for the help of Labour members and politicians here today in publicising our campaign against these rent levels and helping us put pressure on Peabody as our landlord.

Lyons and the London housing crisis

Longer term, it’s the broader context that is of course critical. We are seeing a welcome proliferation of housing-related campaigning, from the E15 mothers to London Renters and Generation Rent. We are also seeing more recognition that these campaigns are different manifestations of a systemic housing crisis, and the development of a more joined up critique of the failure or unwillingness of all political parties to tackle it. Here is where the Labour party (of which, I should say, I am not myself a member), has a real opportunity to make the running, especially in London, where the crisis is most acute and where rents (and of course the house prices to which they are indirectly linked) are so obviously unsustainable.

Now here I am really disappointed with the Lyons report, which accurately diagnoses the roots of the crisis but fails to follow through by recommending adequate measures to tackle it. In relation to its treatment of renters, Lyons doesn’t do nearly enough to challenge the damaging obsession with owner-occupation as the gold standard. Renting is still largely seen as the preserve of the poorest and most vulnerable in the case of social housing, or as a stopgap for young professionals. There is not enough effort to push the idea (common in the rest of Europe) of long term renting as a secure and decent option for large swathes of the population, which it absolutely has to be in London. Instead the Lyons report talks about ‘improving the offer’ on shared ownership schemes, without any discussion of the downsides of these – for there is also a strong case to be made that these schemes (especially in London) are poor value and expensive, trapping people into massive debt in pursuit of a dream they are unlikely ever to realise.

Housing Associations are to have their potential and creativity unlocked – presumably that means that they will come to resemble private developers even more than they do already – on the doubtful Panglossian assumption that they’ll use this increased freedom to cross subsidise for the benefit of all (worth noting here Peabody’s 291million surplus last year) .

Also, the Lyons report continues to talk in the debased and now largely useless language of ‘affordability’, and while trying to persuade us of the benefits of a larger market rented sector, completely ducks the issue of rent control.

Housing for use not for profit

The fundamental issue, of course, is that Lyons continues to frame the whole question in terms of housing as investment rather than housing as an essential human need and shared resource. It doesn’t confront the issue of market failure, instead looking for ways by which the market-driven approach that got us into the mess can be manipulated, enticed and propped up to get us out of it.

So, are there any reasons to be cheerful? I hope that some of them might be in this room. If it’s perhaps too radical and utopian to hope that the Labour Party nationally might reconnect with some of its own radical and utopian traditions and try to reframe the debate in that way, then perhaps London can take a lead, and I know that this group has put forward a lot of useful proposals. At the risk of telling you what you already know, I’ll just highlight a couple of points by way of conclusion.

One useful step might be to abandon the language of ‘affordability’, since we all know it means pretty much nothing any more. We need a clear alternative – and here I notice that the idea of a Living Rent (inspired by successes of Living Wage) is already gaining traction, though at the moment different groups appear to mean different things by it. Certainly rent setting in relation to income and not the market is an extremely useful idea, but needs careful handling given that income disparities in the capital and in individual boroughs are so wide that ‘average’ levels might be very misleading.

Finally, I would like to make a plea for some honest discussion around the future of ‘keyworker’ schemes and so called ‘intermediate’ housing. The term intermediate has usually been used to cover shared-ownership type models aimed mainly at keyworkers, but there has also been a smaller intermediate rented sector, also targeted at keyworkers. These models have largely failed to help those they were meant to, because (as our Peabody example shows) the income levels that are increasingly required are way above those of public sector workers. Boris Johnson’s housing strategy moves away from keyworker eligibility for the First Steps programme, and the Lyons report also points in that direction, reasoning that restricted eligibility constrains supply and instead talking in much broader terms of low and middle income earners.

But think back to 2010. The element of our campaign that most captured political and media support was the idea of London’s essential workers being priced out of the capital – that’s the basis on which we got everyone from Boris Johnson to George Galloway onside. Yet at the moment no party is making any sort of case for keyworker schemes as such. Clearly, a massive investment in new social housing (of the kind that SHOUT is calling for) and greater regulation and control of the private rented sector (as argued for by London Renters, Generation Rent and others), if implemented, would – over time – close the affordability gap. But in the meantime, so called ‘affordable’ schemes are passing beyond the reach of groups of people that London really does need to house in order for it to function.

A ten yard stretch of the street where I live contains five flats that between them house two ambulance drivers, a nurse, a police officer, a teacher and a tube worker. All have families and most work shifts that mean they have to live within reasonable travelling distance of their work. If they are priced out, as is happening, London will be the poorer.

[1] http://www.familyandchildcaretrust.org/News/london

[2] Pay scale information retrieved from : http://www.rcn.org.uk/__data/assets/pdf_file/0020/530228/004405.pdf; http://www.nasuwt.org.uk/consum/groups/public/@salariespensionsconditions/documents/nas_download/nasuwt_012875.pdf; http://www.bbc.co.uk/news/uk-21027176

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SHOUT – the very cross-party campaign for social rented housing

Tim Morton of SHOUT spoke at the London Labour Housing Group Conference ‘2015 – the Housing Election?’ – in Paddington on Saturday 25 October. This is what he said.

Tim Morton

Thank you for inviting me today

SHOUT is a cross party, some would say a very cross party, volunteer campaign that grew from Twitter conversations following John Healey’s Guardian blog last year when he wrote that social housing would be lost unless people stood up to defend it. A group of us found ourselves on Twitter and agreed a manifesto in the spring which we launched at the House of Commons with all party support in June.

John Healey spoke, alongside Gary Porter a Conservative councillor who grew up in council housing and built council houses under the Prescott challenge. John Leech, Lib Dem MP for Manchester Wythenshaw called for the removal of the borrowing cap and Natalie Bennett, leader of the Green Party and Camden resident called for the abolition of the right to buy. Lord Victor Adebowale a cross bench peer talked of his childhood when his family was refused housing in the private rented sector under the “No Blacks, No Irish No Dogs” policy.

My background is that I have spent 30 years working with social housing tenants around tenant control, governance and holding landlords and other agencies to account. I know that the people I work with are passionate about improving their neighbourhoods and ensuring that their providers deliver decent services. I have got increasingly angry at the media portrayal of who lives in social housing as I do not recognise the stereotypes regularly paraded on television and in the tabloid press.

Like everyone in this room SHOUT knows that there is a housing crisis in the UK, and that we need to build at least 200,000 new homes a year and half of those have to be for social rent whether built by councils or housing associations. The last time this country built such numbers was in 1968 and half of the homes were for social rent. The private sector simply cannot build enough homes to meet the need on its own.

How can this be achieved? By removing the borrowing cap for local authorities and changing the accounting rules on public sector borrowing to bring us into line with the rest of the world. The government needs to use public investment up front to enable Housing Associations to build homes at scale – in other words we need Bricks not Benefits.

What impact will this have? We can charge lower rents, and thus a lower housing benefit bill, alongside tenants having disposable income which they can spend in local economies creating more jobs.

We believe that Affordable Rent is a scam predicated on the idea that providers can build homes without subsidy. They may well build them, but they don’t rent them without massive housing benefit subsidy. While the idea was sold as renting to a different group of tenants, in practise the tenants are the same, it’s just that the Housing Benefit claims are bigger. Furthermore there have now been 40,000 conversions of social rented properties to higher Affordable Rent properties, but tenants living next door to each other get no different level of service, their housing officer doesn’t have shinier shoes or better buttons compared to the social rent officer. Finally the affordable rents are tied to the market rent – a market rent which rose 19% in London last year, so adding inevitably to the rise in the Housing Benefit bill.

SHOUT welcomed the Lyons Report as it is full of analysis and data about the housing crisis, we believe it assembles compelling evidence and much of its analysis is correct, but it swerves at the last in its recommendations and its final conclusions are wrong 50,000 social homes by 2020 is simply not enough to address the problem of affordability. We need to invest in bricks not benefits.

Finally what can you do as councillors and Labour Party members? Well the Labour Party is famously a resolutionary party so you could follow Cambridge, Gateshead and Sheffield City Councils and pass a resolution in support of SHOUT. You can continue to argue the case for more public investment and the lifting of the borrowing cap within the Labour Party, and crucially you can encourage tenants to register and to vote.

Thank you.

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Packed London LHG Conference hears Labour’s plans

A packed London LHG conference on Saturday heard Labour Shadow Housing Minister Emma Reynolds MP give a comprehensive review of Labour’s developing housing policy following the Lyons Review. Focusing mainly on getting building again, she also emphasised Labour’s plans to bring some order to the private rented sector.

IMG_1262Shadow Housing Minister Emma Reynolds MP addresses the conference.

The morning session concentrated on the work that campaign groups are doing and what Labour might learn from them. Fascinating speeches by Tim Morton from SHOUT, Alex Hilton from Generation Rent, Madeleine Davis from the Peabody ex-Crown Estate Tenants Group and Environmental Health campaigner Steve Battersby gave everyone a lot of food for thought, especially around the issues of housing costs and affordability.

The afternoon session involved four thoughtful contributions from councillors from London boroughs, Cllr Sarah Hayward Leader of Camden and Housing Cabinet Members Cllr Ahmet Oykener from Enfield, Cllr Lisa Homan from Hammersmith and Fulham and Cllr James Murray from Islington. Despite the many financial constraints and the appalling policies of London Mayor Johnson, all four councils are making significant progress, building more council homes and tackling the private rented sector.IMG_1272

IMG_1274

Top: Cllr Sarah Hayward speaks, flanked by Cllr Ahmet Oykener of Enfield and Cllr Lisa Homan of Hammersmith and Fulham. Bottom: Cllr James Murray of Islington

The day was rounded off by an impassioned speech from London LHG EC member Karen Buck MP - the conference was in her constituency and she highlighted some local issues and trends. The whole day was notable for the expert and robust contributions from a very knowledgeable audience.

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Lyons does 90% of the job

For housing development nerds the Lyons Housing Commission report, published today, is a cracking read. Commissioned by the Labour Party, and launched by Ed Miliband, it is a serious review of all the problems and challenges facing the Party if it is to achieve its ambition in Government of building 200,000 homes a year by 2020.

The report’s analysis is familiar. It sets out the failure to build new homes, which has now gone on for decades and which may take decades to fix. It lists the consequences for individuals: prices and rents rising faster than inflation and faster than incomes; and many people forced to rent privately and suffer insecurity when they would rather buy or rent from a social landlord. And the consequences for the country as a whole: volatility in the national economy and a serious drag on growth.

Lyons identifies two key causes of the crisis. First, not enough land is brought forward for new homes: he calls this ‘artificial scarcity’ which incentivises trading in land rather than building on it, and says that communities and local councils do not have enough powers to overcome it. Secondly, the capacity to build has shrunk: there are a small number of volume housebuilders and very few small and medium enterprises (SMEs) in the market, and the role of the public sector has been massively curtailed, with housing associations not managing to fill the gap.

To get a long term sustained increase, the report calls for ‘long term political leadership’ making housing a national priority. It argues for decisions to be taken locally but, crucially, ‘on the basis of clear commitments that housing need will be met’. That will not go down well in some places.

Delivery nationally will be through a new cross-Government Task Force and a beefed up Homes and Communities Agency (I’m not sure they’re up to the job) and the consolidation and devolution of existing funding streams to local authorities ‘in city and county regions’ – a vital step.

The land market gets a lot of attention. Lyons says it drives the business model for developers as well as restricting the flow of land for sites. Councils’ role should be strengthened and cross-boundary co-operation arrangements improved. It endorses Labour’s existing policies of the ‘Right to Grow’ and ‘Use it or Lose It’ calling for the ability to levy council tax on plots that are not built out and stronger back-up compulsory purchase powers.

Councils are seen as the key agents, with the report calling for them to take on a greater leadership role with stronger powers to act as lead developers. Housing Growth Areas should be established and a new generation of New Homes Corporations to act as delivery agencies, assembling sites and promoting infrastructure.

What gets built is also a crucial consideration. Homes are needed for people on all incomes and people of all ages. ‘Affordable housing’ it says ‘must be a priority for taxpayer funding as the fiscal position improves over time’, reflecting Ed Balls’ new fiscal stance – a key weakness of the plan in my view. The local authority housing revenue account borrowing cap will not be lifted but there should be ‘active management of the overall borrowing headroom by the Treasury’. That will require a revolution in the Treasury.

Lyons endorses the ‘brownfield first’ policy established by the last Labour Government but loosened by the Coalition. It also supports a new generation of Garden Cities, Garden Suburbs, and Expanded Towns, to be delivered by Development Corporations. Financial incentives and guarantees are proposed to help these new settlements get started.

The report contains a step by step ‘Road Map’ for the next Government to follow, including an early Housing and Planning Bill to bring in the various new powers relating to Housing Growth Areas, Corporations, compulsory purchase, unbuilt land tax, stronger strategic plans. Including a new ‘national spatial assessment’ within the national planning framework will also be an important step, but one that is more complex than it is made to sound. A lot will rest on the new Chancellor’s first Budget Statement which will have to deliver a raft of changes.

Despite the huge detail in the report and the careful consideration that lies behind it, it seems likely that the ensuing debate will focus on what will be done for first time buyers. This is a vital but not the only consideration: the obsession of the Government and the media with this one aspect of the housing market tends to distort policies in an unhelpful way (leading for example to demand subsidies which are self-defeating in the long term). Inevitably, Labour’s response to Lyons is also likely to have this focus, and the report makes some helpful proposals that a proportion of new homes should be ‘reserved’ for first time buyers for a period, and that sales to buy-to-let investors or speculators should be restrained.

For me the central debate needs to be around public investment. Labour’s commitment is to build 200,000 homes a year by 2020, and more thereafter. Even looking at the rather optimistic Road Map it is clear that some of the structural, legislative and cultural changes that are needed will take several years to deliver and more years to become effective. I doubt if a single home will be seen by 2020 from the Garden Cities programme, apart from the already-announced Ebbsfleet. The Treasury will need a bomb under it to take on the proactive role that is envisaged. There will continue to be resistance to new homes in many areas and the ‘UKIP factor’ – blaming housing shortage on immigration rather than housing market failure – has yet to peak. Even in areas where there is some commitment to new homes there will not be enough affordable homes.

The role of central Government grant is crucial in making sure that genuinely affordable housing – and by that I mean homes at target rents and not the Coalition phony ‘affordable rents’ – is provided in sufficient numbers. The report fails to meet the widespread demand for the ‘cap’ on HRA borrowing to be removed or at least raised, and instead goes for a more complex sharing arrangement and supports other models such as Local Housing Companies to increase borrowing for investment. But raising the cap and the other ideas for borrowing do not in themselves guarantee target rents, for that either grant or cross-subsidy is required. Here I think the report is weak and reflects the caution displayed by Ed Balls in his Conference speech and subsequently. It also in my view takes too benign a view of housing associations building for sale to cross-subsidise affordable homes; a good idea in principle but in my view many of the biggest associations are obsessed with growth for its own sake and not primarily as a mechanism to achieve more affordable housing. There is an important discussion of the downside of the ‘affordable rent’ model – higher rents leading to unaffordability and a growing demand for housing benefit – and the need for a ‘benefits to bricks’ policy. But ultimately the report fails to go where the logic of its argument takes it – there must be a significant increase in the level of Government capital grant if the Labour Party’s ambitions to build more genuinely affordable homes and to bring the cost of housing benefit down – are to be fully realised. Ed Balls promises that housing will have higher priority within Government capital spending, but we do not yet know how that will translate in pounds shilling and pence.

Leaving aside that central point, it must be said that Lyons has made a raft of recommendations that will assist Ed Balls – here is just a selection.

First, to review the wasteful and redistributive (but in the wrong way) New Homes Bonus. In my view it should be phased out and the money either restored to local government through general support or re-focused through additional housing grant.

Secondly, to ensure that the public sector benefits to a much greater extent from the increase in value of land following development. The report suggests mechanisms which will help ensure that the costs of affordable housing and infrastructure are covered by the uplift in land value.

Thirdly, it stresses that affordable housing is not just provided with the support from Government grant. It is also funded through planning gain, which has diminished greatly during the recession, and there are proposals to make the process of negotiating planning gain more robust. It considers how viability assessments should be conducted, a process used by developers to get out of their obligations despite growing (some might say excessive) profits. I am less convinced by the suggestion that there should be a new arbitration service between councils and developers (which looks like a recipe for delay rather than decisive action).

Fourthly, it supports ‘overage’ agreements, whereby the authority gains a share of the benefit of future value gains on the site.

So, in summary, my first reading of the report tells me that Lyons has done 90% of the job he was asked to do: he negotiates a practical route forward on most of the key issues. And the 10%? Unfortunately he falls into the common trap of using the term ‘affordable’ too loosely, often without definition. The term has become so debased under the Coalition that it is almost meaningless. He should have been more specific in his consideration of the need for ‘social rented’ housing and how much is required from grant and cross-subsidy to provide what is needed.

If the last Labour Government deserved around 4 out of 10 for its housing policies, and the Coalition deserves around 1/10, implementation of Lyons will push Ed Miliband’s Government up to around 6 or 7. It is a significant and welcome advance. But to go higher will require rather less caution from Ed Balls, and a very different view of the importance of capital investment with Government spending programmes.

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The dog that never barks – will housing feature in the General Election campaign?

The Party Conference season is over and now there is the long hard slog to the Election.

Housing – the dog that never barks in Election campaigns – was much discussed but no-one offered real hope of any transformational policies coming along soon. Once again, voters who care about housing will be left with trying to identify ‘the least worst’.

The Tories had nothing to say other than the usual rhetoric about the ‘home ownership dream’ and yet more subsidy for the sector. Apparently they still haven’t noticed that home ownership has been in decline for 10 years: they have no analysis of why that might be. They have nothing to offer the growing number of increasingly desperate private tenants except more of the same. For social tenants and would-be social tenants it is worse than nothing. Apart from a few brave people on the liberal wing of the Party, for example @WeAreBrightBlue , their desire to end traditional social rented housing  dominates their thinking. Osborne’s next round of cuts makes it likely that housing grant will be slashed again and the Housing Minister has started the softening up process on that.

For Labour, Ed Balls’ new fiscal stance - no more borrowing even for investment – caused endless confusion amongst Party spokespeople, even good media performers like Andy Burnham and Caroline Flint – who were ripped apart by simple questions from Andrew Neil about the differences between capital and revenue in relation to the deficit. Regrettably the policy also dented hopes that councils might become major players in housebuilding again. Housing will have ‘higher priority’ within the existing capital programme, but how high is high and what else will become a lower priority instead?

One bold policy – getting rid of the bedroom tax – has been seized on by the party and has been repeated so often it has now been noticed by the wider public. Another bold policy – to invest in a new generation of council houses – could have been an attractive part of Labour’s platform. Now we have to wait and see if the Lyons report has enough ideas to show how Labour might deliver the commitment to 200,000 new homes a year. The proposed private rented sector reforms – moderate and sensible but still subject to regular scare stories about ‘rent control’ – mark it out from the Tories. Maybe private tenants, amongst whom there is often a low turnout because there is so much ‘churn’ in the sector, are waiting to be inspired to register and vote. At least there is something there to campaign around.

I know how to secure a Labour Government. Give me control of the newspapers for 7 months and I would guarantee a romping victory. Labour needs bolder policies, that’s for sure, but the media narrative needs to be challenged. The spin that Labour did badly in the local elections and in this week’s by-elections, and that it is all down to Ed Miliband’s leadership, should be confronted. Labour needs a stronger narrative around the deficit – it isn’t the most important economic issue facing the country – and the 2008 financial collapse, which would have happened whoever was in power. Gordon Brown handled it brilliantly, and the Tories agreed with Labour’s spending policies up until then. Vigorous debate about policy is fine, indeed it is helpful, but recent personal attacks on Ed Miliband from his own side are unforgiveable. They only feed the media monster which is wreaking revenge for his courageous stand on media excesses and the Leveson reforms.

Do I have anything to say about UKIP? They are riding the wave of media fascination, helping create the story as well as reporting it, but UKIP are still the nasty end of the nasty party. They are tapping into ‘working class Tory’ views to broaden their appeal. Their only housing policy of note is to claim that the housing shortage and waiting lists are caused entirely by ‘immigrants’, and at the moment they are getting an easy ride for that message.

And on to the LibDems. Never has a Party created such a large gap between its own policy and its performance in office. I have argued before on Red Brick that the LibDem Party’s policy on paper is the best of all the parties. But their performance in Government on housing has been worse than feeble – they have been complete patsies, supporting bedroom tax, a 60% cut in housing grant, the virtual ending of social housing, unaffordable ‘affordable rents’, doing nothing on private renting, demand subsidies for home ownership, and so on. Once again good things were said at their Conference and grand-sounding policies were passed, including an extraordinarily unlikely plan to build 300,000 houses a year, but their credibility on housing is zero. Clegg failed to mention the housing crisis in his speech, whereas housing was one of Miliband’s six priorities and even Cameron mentioned it.

So housing seems destined to have little bearing on this Election as with previous ones. I doubt if it will get beyond the usual platitudes about home ownership ladders, and maybe some scare stories about ‘rent control’. Unless Labour finds some more bold statements to make, the LibDems will trump them on housebuilding targets and the Tories will trump them on help for home owners. And a big opportunity will have been missed.

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Brandon tells it like it is

This year’s soon-to-be-forgotten Housing Minister, Brandon Lewis, lists his favourite interviewers as Jeremy Paxman on TV and John Humphrys on radio. So that means he is already my polar opposite as I can stand neither of those rather unpleasant, rude, macho egotists.

This week ‘Bungalow Brandon’ burst forth with a frank and honest statement: he wants housing associations to abandon building homes with Government grant.

According to Inside Housing, Lewis said it would be ‘great’ if housing associations withdrew from capital funding programmes because it would save taxpayers’ money. With Chancellor George Osborne committing the Tories to around £25 billion in additional cuts if they win the Election, it would appear that Lewis is softening up the sector for further reductions in grant – on top of the 60% cut imposed in 2010 – or even its elimination.

For those in the sector that seem to relish the thought of a future without grant – because it indulges their wildest commercial fantasies – Lewis’ statement might feel like justification. However, as David Orr of the NHF commented, it is ‘ridiculous’ to imagine that social landlords could build sub-market housing everywhere without grant.

The 60% cut in grant in 2010 ushered in the era of the grotesquely-named ‘affordable rent’ product at up to 80% of market rents. However the available money was not even adequate to sustain this programme – and so landlords were required to ‘convert’ existing social rented homes to ‘affordable rents’ (up to a doubling) when they became vacant, and they were also required to sell more property on the open market, coyly dressed up as ‘asset management’.

So the Tory future has rents being forced up through reductions in subsidy at the same time as Iain Duncan Smith is planning another major round of cuts in housing benefit – hitting those in low paid jobs particularly hard.

For individual tenants the consequences of these policies are severe – rents rising inexorably because AR tracks the market and housing benefit reducing in real terms at a rapid pace. Raising tax thresholds will be no compensation for a tenant in an AR property earning the minimum wage. The outcome can only be increasing impoverishment and a higher risk of homelessness.

The impact on the public finances is also uncertain. Reduced subsidy leads to higher rents leads to higher HB – even if the gap between rent and benefit grows. And the increased risk of homelessness leads to more households being placed in either temporary accommodation or rehoused in private renting, with even greater HB consequences. The more resonant the argument becomes in favour of moving ‘from benefits to bricks’ the faster the Tories move in the other direction.

The simplistic obsession with ‘the deficit’ (is it really the biggest issue facing the country?) and the national debt ignores the distinction between bad borrowing (e.g. to fund day to day running) and ‘good borrowing’, using historically low interest rates to invest in the future, generate an income stream forever and cut the benefit bill. Ed Balls once agreed with this argument, but apparently no more.

Labour’s timidity on good borrowing is sad to see, but they are still a long way from the George Osborne/Brandon Lewis position. ‘Not as bad as the Tories’ is hardly a positive vision for the future, even if it is true. Shortly we will see if Sir Michael Lyons can conjure up a picture of rising investment in social housing. Labour needs him to pull a rabbit out of the hat. It would help if the housing sector could stop waffling about their innovative commercial initiatives and shout out a more basic message about the crucial need for more Government investment.

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Boris on message for once

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Two bad offers for first-time buyers

At the Tory party conference all the housing talk is about getting people to buy, buy, buy. But are the new offers that have been put on the table any good? If I was a first-time buyer, I’d have nothing to do with either of them.

First up was Rent to Buy, which Eric Pickles ‘announced’ at the weekend before the conference started. This meant the scheme has now been announced three times, the first more than a year ago. It was put forward in the 2013 Spending Round last June, when it was welcomed by the Homes and Communities Agency. Then it was announced again in May, when the DCLG expected ‘huge interest’ in it. And – finally, perhaps – by Eric Pickles in the run up to this week’s conference, with the Telegraph taking the bait last Thursday.

It’s difficult to say anything good about the scheme, except perhaps that it might be better than the one David Cameron was to announce a day later (see below). Tenants will have to pay Affordable Rents at up to 80% of market rates, and will be able to buy after seven years. But how could a tenant who doesn’t have a deposit now save for one in seven years, while paying such high rents? The chances are the plucky tenants will remain just that – tenants – eventually creating a problem for the housing association who built the properties and whose finances may well require them to be sold. This is especially the case in London – to which half the money has been directed.

At least the houses will have been built by social landlords and will presumably be of good quality. Under the second scheme called ‘Starter Homes’, the houses will supposedly be 20% cheaper because they are exempt from Community Infrastructure Levy (used to pay for the roads, sewers, etc) and from section 106 obligations (used to require social housing to be included in the scheme or to require a payment in lieu). Local authorities ‘will still get the taxes which pay for the key infrastructure requirements these homes need – but not more’. But what taxes will these be? They’ll also be exempt from ‘future regulations’ like the zero carbon standard (and presumably other standards included in the recent Housing Standards Review). So the homes will – by definition – be sub-standard and will therefore very likely be of the minimum size and quality that builders can get away with.

Then they will be built on ‘brownfield land’ already zoned for development, that is no longer needed for industrial or commercial uses, including public sector sites. This land ‘costs less’ than other land, but isn’t normally made available to build houses on. Making it available will ‘make a saving’ which will be passed on to the buyer.

There is a whole lot of wishful thinking here. How many sites are there that meet these criteria? Has anyone checked? Will public bodies like the NHS really sell land cheaply? – it seems most unlikely. Are the would-be industrial sites contaminated (and needing expensive treatment)? Are any of them in suitable locations for housing developments? Or will the homes be stuck on the edge of town, remote from bus services and schools, and tagged onto business parks or industrial estates?

It’s amazing that the media soak up these stories without posing questions like these. They accept the 100,000 target figure, which appears to be plucked from the air, and don’t ask what kinds of compromise will be needed to make them profitable to builders, or whether local authorities will actually give planning permission for sub-standard houses on undesirable sites.

One can only conclude that the proposal – which carries no government financial support – is aimed solely at the conference goers and at the press. Whether any real first-time buyers will ever see the houses, or if they do whether they’ll want to buy one, is a question for another day.

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Crisis, What Crisis? Tackling the London housing emergency by David Lammy MP

david lammy

The London my young children are growing up in today is very different to the one I grew up in in the 1970s, and the one that greeted my parents when they arrived here from foreign shores in the post-war years. It is not the city of opportunity and aspiration it was when my father came here in 1956. Then, he was able to buy a house for £6,000 and find work and my mother was given the opportunity to learn new skills which enabled her, too, to gain employment. Those kind of opportunities are simply no longer there for many people growing up in the capital. Today, 640,000 Londoners are in low paid jobs, one in four young people are unemployed and the average age of a first time house buyer is set to rise to an astonishing 52 years old.

I don’t need to tell readers of Red Brick that, right now, the biggest obstacle to that opportunity is the housing crisis gripping the capital.

For the last few years I have been inundated with cases in my surgery that relate to housing. It’s the same for my colleagues across the capital. My sense is that for too long politicians have been ducking the tough issues and not engaging with stakeholders from across all sides of the housing industry.

With all this in mind, I recently released a 41-page report with proposals on how to tackle the crisis. It proposed 34 policy solutions that I believe will together get London building, increase the affordability of housing, and tackle soaring rents.

One of the most positive things to come out of the report is that it has stimulated and broadened the debate on housing. Of course, urgent discussion and debate has been taking place on blogs like this and within policy arenas for years, but we need to take strong, solution orientated arguments to the people of London and be honest with them about the difficult decisions we need to make in order to solve the crisis. My report is an attempt to do just that.

Firstly we need to increase the amount of land available for new homes. Initially that requires us to make more land available. Building on brownfield sites should be our first move and is estimated to provide us with over 360,000 new homes. But as high as that figure is, it is nowhere near enough. London needs nearly a million homes by 2021 and more beyond that. We also need to engage, therefore, with the difficult issues that politicians have ducked for decades, and that means challenging the misconceptions around greenbelt.

Ask most people what greenbelt means and they will talk of playing fields and pristine woodland. Much of the greenbelt is exactly that and, of course, that must carefully be protected. But there are some areas of the greenbelt that are not worthy of the name – parts that were designated 70 years ago when they were verdant are now wastelands and car parks.

The city has changed since then, and so have its needs. It is time to rethink a 70-year-old planning policy in order to prevent the current situation in which local councils have to build on playing fields while car parks remain protected.

We also need to correct the mistakes Boris Johnson has made on ‘affordable housing’. He moved the goalposts on affordable housing so that ‘affordable’ rents can now be charged at up to 80% of market value.  As private rents soar, that mean these ‘affordable’ rents are now being set at thousands of pounds per month. The current debate around affordable housing is a farce – politicians have used the phrase ‘affordable’ but have not been honest enough to admit that it means nothing to most Londoners.

We need to redefine what we mean by affordability and make sure affordable means something again. I have proposed linking affordability to average earnings in each borough and capping affordable rents at 60% of market value. This would mean we are not just building more homes but also making them genuinely affordable for Londoners.

The best way to get councils building again is to give them the money to do it. That’s why I have proposed looking at increasing the number of council tax bands. Currently, a family in Bexley or Barnet pay the same as Roman Abramovich in his Belgravia mansion. The current council tax bands are based on 1991 valuations and so, again, they are a part of the system that simply isn’t moving with the times.

All of these ideas will help make buying a home more affordable. But they will take time: building hundreds of thousands of homes cannot happen overnight. In the short term, keeping London affordable means acting quickly to tackle soaring rents. Ed Miliband is completely right to endorse rent stabilisation through control mechanisms, as I outlined back in February of this year [http://www.newstatesman.com/politics/2014/02/we-need-rent-controls-solve-londons-housing-crisis]. My report further outlines what those controls should be, and how they will protect tenants.

To make London a city where we can all can get on and thrive, we need to tackle the capital’s housing crisis, enabling everyone in the capital to make a home here and still have the means to benefit from everything this fantastic city has to offer.

David Lammy’s report ‘Crisis, What Crisis? Tackling the London housing emergency’ is available at www.londonhousingreport.com

 

David Lammy MP is the second declared candidate for the Labour nomination to be London Mayor, following Christian Wolmar.

Red Brick will be happy to carry pieces from any of the candidates in the run up to the selection, which will take place after the General Election.

London Labour Housing Group is also planning to hold ‘Housing Hustings’ during the selection.

David Lammy MP website

Christian Wolmar website

 

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