A man without a plan

It’s well known that governments are much fonder of dealing with day-to-day ‘events’ than they are of planning for long-term change. But this government not only has an aversion to planning, it seems clueless as to what it might involve. Its much-lauded ‘long-term economic plan’ has resulted in so many missed targets that a full review of government finances has been needed four times (March, July, November and again on March 16) within twelve months, suggesting the plan is not so much long-term as quarterly. Even the government’s most obvious goal of starving public services of funds and cutting the size of the state is simply that, with no road map for how to get there or what public services should be left in place when it does. This was brought home most recently by the LGA’s call for an emergency plan for local government, as over the next five years in many areas it will simply fall apart. What is happening to local government now will happen to other services later, with (presumably) no contingency plans in place, let alone any sort of vision for the role of a smaller state.

By a telling coincidence, it’s not only local government that’s recently asked Cameron for a plan. Examples have come from all sides. For example in social care an emergency is in the offing that has led to the head of the NHS calling for a properly resourced plan to be in place by 2018. Yet government’s response is a bit of half-hearted fire-fighting around the edges, such as the one-year offer to protect housing support services from a devastating cut in income, that in any case only covers part of the threat to their viability. Public health plans are also in disarray because not only has funding been drastically cut, but government hasn’t yet told councils what their budgets are, seven weeks from the start of the financial year.

Another issue is energy, where lack of planning, ham-fisted cuts in subsidies and over-reliance on a dodgy nuclear deal threaten a huge supply gap by 2025. Government is not so much inactive as seemingly unaware that it has any role to play at all, beyond cutting what it thinks are unpopular subsidies for renewables and increasing tax breaks for oil and gas, just as markets (but not government ministers) may be getting the message that fossil fuels have no long-term future. Two other related areas have no discernible plans either – reducing carbon emissions and tackling fuel poverty. Both had targets and plans left by the last Labour government, and were the subject of countless ‘strategies’ under the coalition, but are now either given token attention or ignored. (The coalition’s Carbon Plan, published in 2011, was supposed to updated quarterly; the last update was in 2012.)

The existence of a government target isn’t necessarily evidence of any sort of plan to achieve it, of course. The infamous 100,000 per year net migration target is one such, where despite regular rounds of immigration legislation no one seems to have looked into whether any of the new punitive measures might actually work (‘right to rent’ checks by landlords being the latest). The NHS is still beset by targets, but as Jeremy Corbyn made clear in last week’s PMQs, there is a huge gap between these and the resources available to achieve them. Child poverty is to be redefined so that any target becomes meaningless, simply because government actions (including reducing the stock of affordable housing) have made the old target unachievable (as the government’s own child poverty commission has pointed out). Even where there has been some semblance of a plan – to radically overhaul means-tested benefits by bringing them into one universal credit – implementation has been incompetent and key objectives (like making work pay) undermined by the need to stay within arbitrary caps on welfare spending (which, having only just been set, will now be breached in three of the next five years). Labour was sometimes bad at planning too (John Prescott’s ‘ten year’ transport plan round aground within days of being published), but far better by comparison with the plan-free chaos that now persists across most public services, including of course transport itself.

In housing, a review by the Guardian of recent national housing plans, prompted by John Healey’s announcement of a commission led by Peter Redfern to look at the decline in home ownership, found that the notable examples (Barker, Callcutt and Lyons) were all instigated by Labour. Back in September, Brandon Lewis set a target of building one million homes by 2020. The plan to do this seems be the Housing Bill which, as Red Brick has pointed out, is largely devoted to dismantling social housing.

The target would mean doubling current output, so how is that to be done? Labour’s Lyons Review envisaged a bigger role for local authorities, whereas the present government seems determined to undermine the capacity it created in April 2012 when council housing became self-financing. It has attacked capacity in the housing association sector by cutting rents and turning off the subsidy for new rented housing, instead launching a huge stimulus for home ownership when all the evidence points to massive unmet demand for homes to rent, and even the leading provider of buy to let mortgages is calling for a long-term, comprehensive strategy that looks across the whole market not just at owner-occupation.

hamptons pie chart

Indeed, the chart by Hamptons summarises how much the government’s target for its own investment is distorted by these aims. Over 80% of publicly funded output will now be aimed at owner-occupation, via Starter Homes or shared ownership: the former is new and untried and, while the latter is well-established, in the last five years it has only delivered at about half the output now required. The tried and tested product, housing for below-market rent, is relegated to the ‘other’ category, contributing only 12% of output. Given such a drastic switch of resources, and the limited warning to the housing industry that it was about to happen, what chance is there of these housing targets being actually achieved?

As a former student of town planning I recall that the opposite of planning was represented by a school of decision-making known as disjointed incrementalism. Cameron is a man without a plan, whose model of government could well be this one. Disjointed incrementalism was first described in 1959 by social scientist Charles Lindblom. His other name for it was ‘the science of muddling through’.

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Sticking it on the Bill

Is this England’s worst-ever Housing Bill? Quite possibly. Past legislation has often included useless measures (the rent-to-mortgage scheme in 1993 comes to mind) but they often sat alongside worthwhile ones (in that case, defining the welfare role of social housing). This one has nothing to offer the housing crisis, is malicious in intent and – as lawyers have pointed out – atrociously drafted. It was sketchy from the start and new measures have been tacked on since, worsening the backlog of details we’ve yet to see and making the full impact difficult to assess. It’s a truly noxious mix.

The Bill has just completed its passage through the Commons, so let’s recap. We’ll concentrate on the bits that are most damaging to social housing (and note in passing that there are indeed some useful measures aimed at private renting, even if councils will struggle to take advantage of them).

First, councils will have to sell off higher value stock when it falls vacant. They’ve been given no idea how this will be implemented only that – whether or not they actually sell the houses – they’ll have to pay the money across to the Treasury as if they had sold them. We don’t know if there’ll be any exemptions – for example, will tenant transfers still be allowed? We have a vague promise of two-for-one replacement in London, with no detail on how it will work. And why, if maintaining affordable housing in London is so important, does it have to be sold in the first place?

Second, better-off tenants – defined ridiculously narrowly – will pay much higher rents via pay to stay. Policy on rents has effectively been thrown to the winds, since both councils and housing associations will have to reduce their social rents for the next four years, and yet can still convert existing stock to much higher ‘affordable rents’ to provide income for new development. Associations – but not councils – can keep the money from ‘pay to stay’ (which is optional for associations, but not councils). Labour’s policy of ‘converging’ rents to give a logical rent structure across the social sector is, to put it mildly, a thing of the past.

Third, new social tenancies will now have to be offered on fixed terms – again, a measure that is compulsory for councils but optional for associations. The Tories had the gall to make this fundamental change to secure tenancies in an amendment to the Bill. Not only that, but they describe it as a measure to promote social mobility (well, I suppose being booted out of your home is mobility of sorts). And as the minister said in introducing the amendment, the change ‘may prompt people who may otherwise not have thought about purchasing their own home to do so where they feel they are able to’.

Fourth – and another measure which is optional for associations – is of course the much-weakened housing association right to buy, now only to be piloted and likely to result in only a few hundred sales in the first year. So a much-trumpeted election promise, rushed into the manifesto at the last minute, has effectively fallen apart. The Tories could have foreseen the difficulties themselves if they’d only looked back at what happened in the 1980s when they first tried it. Now they are stuck with a half-baked scheme, loosely connected in an undisclosed way to high-value council house sales, which will supposedly still pay the cost of discounts.

Fifth – and yet another measure which applies only to associations – is the weakened regulatory regime, made necessary by the ham-fisted introduction of right to buy and other changes. Here we have another set of amendments driven entirely by expediency, not by what is right for the sector. As CIH has said in looking at the whole issue of reclassification of housing association debt, the government’s blundering has led to the wrong debate about regulation, which should be driven by ensuring high quality services for tenants, not by the need to meet outdated accounting conventions and saving the Treasury’s face.

Sixth, and coming from right field, we have starter homes, noted here because the government thinks they constitute ‘affordable housing’ and should replace social and ‘affordable’ rented homes in new developments. Starter homes and their likely price levels led to one of the choicer exchanges in the debates on the Bill. New-boy Tory MP Chris Philp said that in ‘his’ borough of Croydon, the average 20% discount means a starter home will be ‘only’ about £220,000 or £250,000 which, he claimed, ‘is extremely affordable’. Sadiq Khan had a quick-fire response: ‘It usually takes a parliamentarian years to become out of touch, but the hon. Gentleman has done it in six months’. Starter homes trash the definition of affordability in two ways: they are too expensive, and they subsidise only the first buyer, not all subsequent occupiers like genuinely affordable homes.

It’s tempting to conclude that these six key measures show that the government as a whole is out of touch, but while this is true it doesn’t mean that their aims are unclear. And one of the clearest of those aims is to destroy council housing in its present form. (We might have said ‘social housing’ here, but housing associations – as we’ve seen – have been given a number of escape clauses.) The Bill reduces security for tenants, will push a lot of them out of the sector and will mean there are far fewer opportunities for new tenants to get good quality homes. It shows the Tories’ true contempt for council tenants: can anyone imagine similar punitive measures being taken against any other large segment of the population?

But its real significance is the way it links to the decisions in the July Budget and the Autumn Statement, which together undermine investment in the existing stock and will likely bring to a halt most councils’ plans for new building (certainly at social rents). Not only must councils cope with less rental income, but grant towards new rented homes has now been stopped (in favour of shared ownership schemes). The Bill further undermines the self-financing settlement (not yet fours old) by taking back into the Treasury the extra money from pay to stay and most of the receipts from high value sales. One housing director has already said she wouldn’t be surprised to see the ‘ring fence’ around council housing budgets disappear, given that it already has gaping holes in it. The Treasury, which hated self-financing from the start, is gleefully making the holes bigger.

Red Brick has pointed out before the dangers of social housing – and especially council housing – being reduced to what Mark Stephens calls ‘an ambulance service’, like social housing in Canada and the US. To achieve this, the Tories need to cut the size of the sector, remove tenants’ security, make tenancies turn over more quickly, let the stock deteriorate and stop adding to it. Until last summer they’d only begun the first of these: once the Bill becomes law, and the Autumn Statement starts to take effect, the attack will be launched on all fronts. Far from tackling ‘sink estates’ as Cameron recently claimed, isn’t it now clear that their real aim is to create them?

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Waving, but not yet sinking

David_Cameron

A hundred of Britain’s ‘most dilapidated and poverty-ridden housing estates’ are to be redeveloped, promises David Cameron. Some will be demolished and rebuilt from their foundations. Just as the last economic crisis had nothing to do with the bankers, it now seems that the cause of the 2011 riots has been pinned down to ‘decades of neglect in rundown housing estates’. But don’t worry, Cameron is going to ‘tear down’ the ‘brutal high-rise towers’ to tackle drug abuse and stamp out gangland culture. Indeed, he’s so serious about it that he’s put aside £140 million to do the job.

Only ten days after writing a blog on the government’s illusionary policies, I didn’t expect a new and even worse example to come along quite so soon. This one’s so bad it’s difficult to know where criticism should begin. Perhaps the old-fashioned physical determinism of assuming that people’s problems are caused by high-rise blocks would be a good start since – if he’d spoken to people who live in them or the councils that manage them – Cameron would have learnt immediately that many provide pleasant homes. Even where they don’t, management problems these days are often down to the fact that ownership is fragmented, with many flats having been sold to absentee private landlords uninterested in anything except getting the rent. And where there are gangs or drug abuse, it’s easier to blame these on the building or on the councils that manage them than to look at wider issues about society that might cast uncomfortable light on government’s spending priorities.

Let’s make the daring assumption that this programme might produce some action on the ground – rash, I know, given what has happened with so many other government housing initiatives. But if so, the biggest thing on which Cameron will need to be pinned down is his commitment to work with tenants – as many as 100,000 of them, he says. So let’s assume he’ll set aside any paternalistic assumptions that he (or a consultant or developer) knows what’s best for them, and that he’ll really start to listen to what tenants want for their estates.

Oddly enough, their likely first priority is unwittingly flagged up by Cameron himself, in the opening words of his Sunday Times article: he says ‘it all comes back to one word: security’. He wants to bring security to families ‘who currently have none at all’. Well this might produce an interesting discussion. He clearly expects this will mean talking about the poor design of estates and tenants’ wish to live in ordinary streets not high-rise blocks. There might be some tenants who want that, but my bet is that most will define ‘security’, or lack of it, in very different terms. Here’s a shot at a few possible answers: community policing by officers we know, that has now disappeared; community centres that catered for young people, now closed; people who are benefit-dependent having very little or no money and getting withdrawn, depressed or worse; most jobs being insecure and offering low wages. And of course, he is highly likely to find tenants worrying about the ending of secure tenancies, or about higher rents that will drive out better-off tenants, or about Greg Clark’s scheme to sell off the best bits of their estates.

The problem with any list like this is that they’re all problems that Cameron’s governments have either created or made worse. And where they haven’t made them worse yet they plan to do so soon. If a tenant says that what worries him sick is not ‘concrete slabs dropped from on high’ but the prospect of being forced to move out of the flat he regards as home, will Cameron listen? If she says that her security comes from having neighbours who are friends and going with them to Friday-night bingo (as a friend who lives in an Islington estate was telling me recently), will Cameron promise that their community will be preserved along with the essential facilities that bring neighbours together?

Conservative governments are not alone in having high-minded views on what the problems and solutions are in poor communities, that bear little relation to experience on the ground. But residents are going to be instantly suspicious of a programme where the solution seems to have been drawn up in advance: knock down the high-rise blocks and build new homes in ‘streets’. Like Lord Adonis and his proposal for City Villages, already demolished (forgive the pun) in Red Brick both by Steve and by Duncan Bowie, the new report views estates as public assets whose value can be better maximised by redevelopment than by keeping the existing homes. (Strangely, I can find no reference in the new report from Savills to the earlier, similar one from ippr).

Both reports have a major failing – well identified by Duncan Bowie – in seeming to forget that these estates are currently providing very affordable housing to tenants who can’t pay higher rents. Before any plan to reconfigure an estate is drawn up, the first consideration must be: how can we keep these tenants here, and continue to give them good homes and secure tenancies, without rents having to be increased and the community being broken up? It’s not as if these issues are new ones: in London especially they are highly topical, as a scan through articles by Dave Hill will demonstrate. Yet Cameron betrays how out of touch he is by failing to mention them.

Also largely ignored is the current role of local authorities, who happen to be the owners of the estates. Cameron says they’ve neglected the estates for decades. Well if that’s the case, who is struggling to run planned maintenance programmes within available budgets, meet the now-forgotten Decent Homes Standard and try to ensure that tenants live in warm and easier-to-heat homes (none of these issues are mentioned in the new report)? The clue that councils are not going to be offered a big role is in the size of the funding package: £140 million won’t buy much regeneration in a single estate, let alone a hundred. As he says, his kind of regeneration will ‘will work best in areas where land values are high’, which is shorthand for developers coming in and making a killing. Stand by for more schemes like Barnett’s West Hendon or Southwark’s Heygate. Not forgetting to mention, of course, the still-pending jewel in the crown: Capco’s redevelopment of Hammersmith and Fulham’s West Kensington and Gibbs Green. As Cameron aptly concludes, ‘together we can tear down anything that stands in our way’.

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What you see isn’t what you get

What matters to an illusionist is how something is perceived, rather than how it actually is. Owen Jones, writing last month, was describing what he called the government’s ‘political sorcery’. He only briefly touched on housing policy. He pointed out that the prime feature of the government’s renegotiation of our EU membership – depriving recent EU migrants of in-work benefits, including their access to housing benefit and social housing – is based on the perception that millions of them are playing the system. But the truth, shown in the chart on tax credit claims from NIESR, is that relatively small numbers claim in-work (as opposed to out-of-work) benefits. In other words, it plays to people’s prejudices about migrants but has little or nothing to do with real problems.

Eastern European tax credits

Jones catalogues other issues which the government has successfully portrayed to their advantage in the same ways – the deficit, its cause, the compelling need to scale back the state. All these are examples of illusionary politics. As he notes, politics is now about sentiments and emotions, even more than about concrete problems. Sentiments are fed not by facts but by emotionally compelling stories of abuses of the system which in the public mind become a general picture of what’s wrong with state benefits and public services.

The same sorcery applies in housing. Council housing is ‘taxpayer-subsidised’, its lucky occupants enjoy ‘lifetime tenancies’, ‘local’ people can’t get houses when they are relet and many occupants are abusing the system by enjoying low rents while they are on ‘higher incomes’. Red Brick has consistently debunked these myths, most recently in Steve’s latest piece and in my July post, but it doesn’t stop the government from perpetuating them. While council housing is beyond the pale, housing associations also came under unjustified attacks designed to secure their acceptance of right to buy (since when the attacks have ended). There are always one or two examples to back up any of these smears, enabling any refutation to be easily dismissed. In any case people have already absorbed the message from the media headlines and pay little attention to any evidence which contradicts it.

As Owen says, this because few voters are political geeks interested in policy details or whether one policy contradicts another. So, for example, the Localism Act promised to give local homes to local people by allowing councils to impose stiff residency tests (cutting London waiting lists by one-third in just two years). But just as prospective tenants thought they might be able to move in next to their in-laws, the government now plans to insist on compulsory sales of high-value council houses that might mean no new lettings at all on the most popular estates (and private landlords buying vacant homes to let to higher-paid tenants who of course aren’t even on the waiting list). Has the clear policy contradiction ever been mentioned by mainstream media?

The biggest illusion of all is surely that the government plans to address the housing shortage. We are the builders, says George Osborne, introducing a Spending Review and a Housing Bill that instead will push up house prices and offer further subsidies and favourable rule changes to developers, who will probably respond by raising output slightly but above all will ensure that their already high profits soar even higher. He constantly draws attention away from his own policy failures: official statistics show private builders completed 125,000 homes per year on average under Labour governments from 1997-2010, while since then they have managed an average 90,000 per year. In Labour’s best two years for private building, 2006-2007, more private homes were built than in three years under the coalition, 2011-2013. Who are the real builders, then?

There will be one million more home owners said the DCLG after the Autumn Statement, while the numbers buying a home with a mortgage have fallen by half a million since 2010. Both before and after the election the government has put the new right to buy for housing association tenants on a policy pedestal, just as critics have pointed out that only small numbers will benefit, at huge cost per household in subsidy. The government now admits it will have to phase in the scheme to avoid an additional burden on public spending, meaning that only a few hundred tenants are likely to benefit in the first year. But what matters is the illusion, not the detail.

There are so many examples of illusionary housing policies that it would be difficult to make a complete list of the government’s doublespeak. Social housing rents are being cut to help those on low incomes, whereas the IFS showed that the main beneficiary is the Treasury. Councils are being empowered to build more homes whereas their capacity is actually being reduced. Housing investment will provide ‘the largest housing programme by government since the 1970s’ even though it won’t get anywhere near doing so. In any case, most of the increase will arrive after the end of this government’s fixed term of office. ‘Increased central funding’ for tackling homelessness ignores the fact that local government will, according to the IFS, have taken an overall 79% cut in its revenue budgets by 2019/20 compared with 2010/11. Government meets its self-imposed ‘welfare cap’ by the same date, but only because the costs of temporary accommodation for homeless households are to be shifted out of the welfare budget and onto local councils. In February, landlords across England will have to start making immigration checks to stop ‘illegal’ migrants from getting new lettings, even though there is little evidence that they are or that the checks will be a deterrent to undocumented migration.

With only a few notable recent exceptions like tax credits, evidence that proves government policy is an illusion is ignored by the media. Even the campaign to maintain tax credits was successfully exploited by Osborne, who stopped the tax credit cuts only to retain them for universal credit applicants, with the same long-term effects. The media (and the Opposition) allowed him to get away with this blatant sleight of hand.

The point is that Cameron/Osborne are carrying out illusionary politics on a grand scale. While Gordon Brown as Chancellor might have set out headline policies for the tabloids while quietly getting on with real policy changes such as bringing council housing up to the Decent Homes Standard, Osborne runs the whole gamut of illusion from macro-economic policy down to the fine detail of ending ‘lifetime’ tenancies, introducing ‘pay to stay’ and ‘cutting’ rents. Nothing escapes his sorcerer’s eye.

Owen Jones argues that Labour urgently needs to address this new way of making and presenting policy, not by copying it but by devising its own effective counter-strategy. It needs to find much better ways to appeal to people’s emotions. In the same way as the Tories have successfully dangled the false hope of getting on the property ladder, Labour needs a coherent housing message that (Jones says) ‘can easily be turned into a pub conversation’. A starting point could be the aspirations of millions of younger households who’ve again be promised home ownership but by 2020 will still be tenants, paying high rents and still unable to save for a deposit. A distinctive set of policies is needed, with a convincing explanation of how they will be funded and carried out, framed so that real households can visualise how they personally (or their sons and daughters) might benefit. This might just do the trick after another five years of Tory illusions.

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‘Furious commitment’ to end homelessness and bad housing: essays in memory of Chris Holmes

A collection of essays in memory of the life and work of Chris Holmes has been published online and is accessible to all. The essays, including contributions from Hattie Llewellyn-Davies, Nick Raynsford, Ann Power, David Orr, Jeremy Swain, Nicola Bacon, Rachel O’Brien and myself, have been written especially for this memorial publication.

The essays reflect the theme of Chris’s “furious commitment” to end homelessness and bad housing.

It is appropriate that they are published this week due to the close association of Xmas and homelessness in so many people’s minds. Furious commitment is exactly what we all need in 2016 to reverse the upward march of the homelessness figures.

The link to the essays is
http://bit.ly/1O1TFxT

I hope you enjoy the essays in memory of such an inspiring person.

Happy New Year.

Steve Hilditch

 

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A bitter pill to swallow

I had intended not to write any blogposts during my extended visit to the antipodes this winter. But the addition of new clauses at very short notice to the Housing and Planning Bill which introduce ‘mandatory fixed term tenancies’ of 2 to 5 years and end security of tenure for new council tenants touches a raw nerve for me. This is a smash and grab raid, stealing a core right from tenants with no real opportunity for debate outside the Bill committee. I am delighted Labour has opposed the change forcefully.

The policy, and the stealth with which it has been introduced, is symbolic of the contempt and loathing this government shows for people on low incomes. They can be moved around like pieces on a chess board to suit the convenience of the government and landlords, or at least be kept in a state of uncertainty as their ability to stay in their home while they are ‘reviewed’ by a housing officer in what will feel like an arbitrary manner. They must not be allowed to settle, to integrate into communities, to put down roots, to provide stability for their children, to build successful lives for themselves.

For people like me, who associate our own ‘social mobility’ with the platform of security and stability achieved by our families due to living in council housing, this is a bitter pill to swallow.

The Tories are not the only people to blame, of course. During her short period as housing minister, Caroline Flint flirted with this idea as well, and plenty of housing ‘professionals’ have made the case for ending what they like to call ‘lifetime tenancies’ – an invented term, quickly picked up by Grant Shapps to make the whole business seem unreasonable. Even now the ethically impoverished National Housing Federation can’t bring itself to defend what remain of tenants’ rights: their argument is that housing associations should be able to let ‘their’ homes to whoever they like and on whatever terms they like. At present they have got their way: the new fixed term tenancy model will apply only to councils while the government continues to work out what to do about the reclassification of housing associations as public sector for the purpose of defining public borrowing.

The story of security of tenure for council tenants is one of bitter struggle. Councils have not always been benign landlords. Even when they wanted to build a lot of council housing to help emancipate the working class they often managed the homes with a rod of iron. They never really shed the mantle of Octavia Hill and consumer rights were a foreign land. Some used the threat of eviction to exert social control and to separate the deserving from the undeserving poor. Labour eventually listened to the case for a charter of tenants’ rights and the Callaghan government sought to enact security of tenure, balanced by strong grounds for possession. Unlikely as it now seems, it was the Thatcher government that put ‘secure tenancies’ into law in the 1980 Act, picking up the Labour legislation and realising quickly that secure tenancies were a necessary foundation for the ‘right to buy’. Thatcher had an ulterior motive, but the tenants’ charter came into existence and brought with it a profound change in the style of housing management, more considered, more balanced, more respectful, more participative, and, when eviction was thought necessary, more evidence-based requiring a judgement in a court of law. Secure tenancies underpinned the modernisation of the social housing sector, even leading eventually (and regrettably) to tenants being called ‘customers’.

Social rented housing is our most precious housing asset. It’s existence broke the historic inevitability that people on low incomes and vulnerable people would also endure homelessness and dreadful housing conditions. It removed the blight of bad housing from generations of children. In my view it was the strongest mechanism of all to achieve genuine social mobility and to give children born into poor families similar opportunities to those enjoyed by better-off families. Many of the key tensions around social housing – the most controversial being who gets it, and who doesn’t – arise not from failure but from its success and popularity and the shortage of supply.

Of course the government and big parts of the housing industry will seek to pacify opponents of the change. It will be helpful to tenants, they say, to have their tenancies reviewed every 2 or 5 years. Most will be renewed, they say. Well, what is the point of that? The policy fails in either direction. If non-renewal is the primary outcome, the vast majority of tenants will end up in private renting, far less suitable for families and more expensive for tenants and the state. If most fixed term tenancies are renewed, the policy will not achieve its purpose of getting moreturnover to create more space for new tenants. The argument that the government is trying to make that people will be helped into owner occupation is, well, pants. A few more will exercise the right to buy, but where is the justice in that? Remain a tenant and get kicked out, buy and you can stay.

We now have a sector that, instead of managing estates effectively and helping tenants to progress in their lives, will be collecting vast quantities of data about their incomes in case they are ‘high earning’ (£30k per household), monitoring what they get up to so they can review their tenancy every few years, and of course checking the immigration status of new tenants to boot. The new Victorians are firmly in charge.

There is an old saying that to incentivise the rich you have to make them richer, to incentivise the poor you have to make them poorer. This is now writ large in housing. If you are or are able to become a home owner, all manner of gifts – let’s call them subsidies – will be showered on you. The Prime Minister will talk endlessly about the important security and stability that being a home owner gives you, and that this in turn creates the conditions for social advancement. Meanwhile, if you are a social tenant, you will be accused of being subsidised even when you are not, your ability to pay your rent will be constantly threatened by bedroom tax or benefit caps or benefit sanctions, you will be denigrated and demonised in the media, and your ability to stay in your home will be subject to the whim of a landlord even if you meet all the terms of your tenancy.

Security for me and not for you. Subsidy for me and not for you. Social status for me and not for you. Insecurity at work and now at home. A two nation government without a doubt.

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It’s not just social rented housing that’s at risk – so is new housing at Affordable Rents

New_housing_with_green_lawns_960x640

Affordable housing is growing ‘at its fastest rate since 1993’, claims the government, with this week’s publication of a fresh set of statistics. But the same figures offer even more evidence of the inexorable decline of social renting. Yes, it’s true that last year’s output of more than 66,000 affordable homes is a significant achievement, but it came about principally because of the rigid cut-off date for the outgoing Affordable Homes Programme (AHP) at the end of March. Less than 10,000 of the new homes built last year were for social rent, and a fifth of those were funded from the remaining stages of the last Labour government’s programme. Overall, looking back to the start of the coalition, nearly four times as many new homes for social rent were built in 2010/11 than were built last year. And if we look ahead to the output from the current AHP that began this April, we can expect few if any new social rented homes to be built from now on.

And new construction is in any case only part of the story of the last four years. It just so happens that the total new build for social rent from all programmes – at 75,810 – was almost exactly matched by the numbers lost through lettings being converted from social rents to higher, Affordable Rents, as they fell vacant. There were 76,259 such conversions. In other words, for every social rented home built, an existing one had its rent put up to anything approaching 80% of market rents to help pay for the overall investment programme. And this is before we consider the effects of losses from right to buy and other causes: right to by alone disposed of over 44,000 social rented homes in those four years. So the outcome is that, while the coalition government built over 75,000 new social rented homes, mainly from programmes bequeathed by Labour, there was a likely net loss from the stock of at least 50,000 social rented lettings in the four years up to April 2015.

Yet even with the reinvigorated right to buy it is too soon to write the social rented sector’s obituary. The stock is still sizeable. But now there will be far fewer new homes being built, and more still will be converted under the government’s current AHP. Shortly, of course, right to buy for housing association tenants will begin to run alongside council right to buy. If and when replacements are built, they’ll no longer be at social rents. As if this were not enough, we also have to contend with the sale of high-value council houses, with details yet to be revealed as part of the Housing Bill.

But with the publication of the Spending Review and of its assessment by the Office for Budget Responsibility, it’s clear that the brief flowering of the government’s alternative rented product, Affordable Rent, will be just that. Originally, the AHP that began in April was to have run for five years, delivering 55,000 units annually to 2019/20, most of them for Affordable Rent. This will no longer happen, despite government claims to have ‘doubled’ housing investment. First, the OBR makes clear that changes like the government-imposed cuts in social landlord rents mean that output from housing associations has already peaked. By 2017/18 it will be down to around 23,000 units annually. Although OBR hasn’t assessed local authority capacity, we already know that many councils have reassessed or even abandoned their building plans because of the rent cuts and other factors. Nevertheless, for the next three years most of the building that does take place will be for letting at Affordable Rents.

But when the government’s investment plans take off, in 2018/19, a huge switch takes place. As Red Brick said last week, practically all the new investment is destined to support home ownership, whether through starter homes or shared ownership schemes. OBR says that associations’ spending on ‘social sector’ new build will fall to only £130 million annually for those three years. This compares to almost £1 billion annually under the current AHP.

By the end of April this year associations had just over 123,000 Affordable Rent dwellings in their stock, from new build and conversions under the previous AHP. By April 2018, this might have grown to perhaps something under 400,000 dwellings, or a bit more than ten per cent of social landlords’ rented stock. After that, under current plans there’ll be little further growth in what was until recently the Tory Party’s favoured form of ‘affordable’ housing. And right to buy will, of course, still be eroding the social rented stock held both by councils and housing associations. It’s not a happy prospect for the provision of housing at below market rents, or for those who can’t jump on the home ownership bandwagon.

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There’ll be a boost to housing investment, but you’ll have to wait for it

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‘I am doubling the housing budget’ said the Chancellor. But what he failed to add was that we’ll have to wait three years to see the extra money. In fact, more than a third of the extra won’t arrive until the next parliament. In the meantime, affordable housing investment will stay at just under £1 billion per year. As John Healey points out, in current prices this is barely 30% of what Labour was investing annually in housing. Even if it reaches £2.4 billion in 2020/21, this will only be a bit more than three-quarters of what Labour was spending before May 2010, calculated at current prices.

Despite this, Osborne claims to have created ‘the biggest house building programme by any government since the 1970s’. ‘We are the builders’ he says. Housing starts are at ‘a seven year high’. But this isn’t true. The DCLG’s own house building figures show 137,490 starts in the last twelve months, slightly under the previous year’s figure and a cool 46,000 lower than starts under Labour in 2007, before the recession hit. Only a fantasist could claim that completing only 135,000 houses in the last year is a roaring success, when we know we need to build at least 100,000 more homes than that.

But I suppose we should be grateful that spending is going up not down. However, it’s only doing so because Osborne is taking a huge gamble by shifting investment to starter homes and shared ownership, away from social rented housing and even from new build at ‘Affordable Rents’. The price is a high one. £2.3 billion of the new funding will go to fund ‘up to 60,000’ starter homes, suggesting a cost in grant of £38,000 each. This is about £14,000 more than the current cost of building a home that is let at Affordable Rent. With an inevitable proviso about right to buy, putting money into rented homes provided through social landlords is at least a semi-permanent investment that benefits a succession of families. Starter Homes can, however, be sold off after five years with the seller pocketing the full value, including the 20% discount. The grant money simply disappears into rising house prices. KPMG had a neat summary when they said that the scheme will, for everyone except the buyers, be ‘purely inflationary’:

‘It also will not create the amount supply the Government says it will, because it will in part cannibalise housing that would have otherwise been built, particularly social housing and rental stock. Such a populist strategy may work for the Government itself, but could cause more issues within the market during the next parliament.’

Delivering 400,000 starter homes sounds a lot, but not when it’s spread over several years and is at the expense of social housing and of conventional new build (since there is nothing to stop builders swapping starter homes for normal ones in order to claim the grant or get out of planning obligations).

Boosting shared ownership to deliver 135,000 units represents another gamble, since at any one time there are only about 100,000 households who currently have a part-share in their property. So for many it’s an unknown quantity that they struggle to understand, it’s not attractive financially in many areas and it becomes a potential liability if you need to sell a home that is still part-rented.

The ‘cannibalisation’ of social housing is evident from the OBR’s forecast of future investment by housing associations. At present, the OBR assumes all £0.96 billion spent in government grants goes to ‘social housing’ (as broadly defined by the Treasury), but forecasts that this will fall to only £130 million for each of the three years 2018/19-2020/21. Overall, housing associations’ investment plans (including capital repairs) are expected to fall to only a little more than half their current level by 2019/20, partly because of the planned cuts in social sector rents. These are potentially massive cuts, even if associations manage to partly compensate for them by getting a share of the action in promoting low cost home ownership.

The point is that with well over £30 billion already committed by this government and the coalition to stimulating the private market before this week’s announcements, they’ve only succeeded in getting developers to complete 23% more homes in the last 12 months than they built in the first year after Labour handed over power. ‘It’s time to do much more’ says the Chancellor. Well, at least we can agree with him on that.

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Going into hibernation

After 5 years and approaching 700 posts, Red Brick is going to have a winter rest. A hibernation? That sounds like a good phrase, implying a comeback with renewed vigour and energy. That will certainly be needed for the fight ahead. I’m off to New Zealand for two months to look restfully on high mountains, beautiful lakes, and stunning coastlines, from the tropical rainforest and volcanoes of the north to the glaciers and fjords of the south. There may be the occasional flurry: I might be moved to comment on something from afar, my brilliant colleague known here as Monimbo may have a few things to say, and, through the wonders of the internet, I will get any other submissions people care to offer – we have always tried to be an open forum. But we will be troubling your inbox less frequently between now and February. My apologies for those who would like to see more regular rants against the Housing and Planning Bill.

When Tony Clements and I hatched the idea of a ‘progressive’ housing blog five years ago, we were still in the early flush of the coalition. We thought housing would be a big part of the LibDem resistance within the Government – it wasn’t – and we thought housing would become central to a new Labour offer – it didn’t really do that either. We thought that Grant Shapps was a bit of a fool, a spin fetishist and a caricature of a Tory politician. Despite his PR-led approach, he proved to be a transformative figure, and I don’t just mean through his alter ego Michael Green. With a stroke of evil genius, he turned logic on its head by virtually doubling the rent of new social homes and calling his new unaffordable product ‘affordable rent’. Opponents never got past this as the Government and mayor of London constantly talked, usually unchallenged in the media, about their performance in providing affordable homes.

If the truth never reached the public it became common to talk about the policy as ‘Orwellian’. George Orwell’s essay ‘Politics and the English Language’ examined the connection between phrases used by politicians and the debasement of language. He could have been writing with Shapps in mind when he said that political language is about ‘the defence of the indefensible’ and ‘is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind.’ Shapps’ great achievement was to cover up George Osborne’s immediate cut in housing investment of over 60%, probably the most damaging single decision in the history of housing policy. There was scarcely a peep from the LibDems, setting the pattern for total complicity on housing for the rest of the Parliament.

Five years back, our first posts were also about the attack on security of tenure and the dangers of a high rent policy for the long term benefit bill. We argued the case, and still do, for the retention of security for social tenants – I won’t dally with the equally Orwellian term ‘lifetime tenancy’, a concept that doesn’t exist but is much discussed – and the extension of security for private tenants. We supported the ‘benefits to bricks’ approach which has been much debated since – as Tony wrote at the time, Coalition policy was ‘like a great big housing PFI – avoid the capital investment up-front, pay more in the long-term’.

In the early days, and indeed ever since, Red Brick was accused of scaremongering. In the election, Labour had been accused of whipping up unfounded fears about the Tories’ secret and malicious plans. David Cameron himself had personally rebutted claims that the Tories would hike social rents and abolish security of tenure, claiming it was part of a ‘scare campaign’ and that the Tories believed in the ‘security (that social housing) provides’. Nick Clegg joined in: also accusing Labour of scaremongering for saying that housing benefit cuts would compel people to move out of their communities. Yet even the wildest imaginings came to pass and Cameron learned that he could get away with the boldest of denials – as is now even more apparent due to his 2015 commitment not to take away tax credits for working people.

Cameron always reminds me of that old idiom ‘the louder he talked of his honour the faster we counted the spoons’. How does he get away with it? The only available answer lies in the politics of our media – an overwhelmingly right-wing written media and a broadcasting media that is led by the nose by the newspapers. There is a pattern, they destroyed Brown, they destroyed Miliband, and now they are destroying Corbyn (in all three cases with a little help from our own side). In housing, the media are obsessed with virtuous home owners and the stigmatisation of social tenants (unless of course they want to become home owners).

Our belief that the Tories had a secret housing agenda and policies that were hugely different from those set out in their rather benign 2010 manifesto was set out in a post called ‘Less Localism and More Localis’. We argued that the policies that Shapps was actually following were clearly set out in a pamphlet published by the right wing think tank Localis before the election. None appeared in the manifesto. But it was all there in their document: moving social housing towards market rents, removing security of tenure so that the sector would meet temporary and not permanent housing needs, letting housing benefit take the strain before cutting that as well. In short, the full marketisation of social housing. Five years on, it is the writings of Policy Exchange that seem to foretell Government policy.

That blog post also introduced another of our themes: the complicity of much of the housing sector and especially key people in the housing association movement. Two housing association chief executives were fully engaged in the development of the Localis policies. When the Government changed, the sector whinged about the policies but probably less vocally than it had done under Labour. They could have destroyed ‘affordable rent’ by refusing to deliver it on the Government’s terms. Instead, under the pretence of ‘accepting the inevitable’ and playing, in a favourite phrase of the time, ‘the only game in town’, it dawned on us that more than a few of the big associations saw this not as a disaster but as a historic opportunity to break free from regulation and become truly commercial and ‘independent’. They saw their future as really big developers, leaving behind their original mission, their charitable objectives, and the tradition of providing genuinely affordable social housing. They loved the world of big bond launches and mega land deals and wanted to break free from being told to house homeless people by local councils. Of course it is hard to generalise about the huge variety of associations, and many retain their original zeal for meeting housing need, but many of the biggest and most powerful players and their trade body the NHF are now almost beyond redemption.

Red Brick has covered social housing a lot but we have tried to take an eclectic view of the housing world. Just a little bit of training in economics led to the conclusion that the Government’s obsession with demand-side subsidies for home ownership would put prices up in the long run. The objective, better affordability for first time buyers, would continue to move out of reach but large amounts of public money, amounts that make the affordable housing programme look puny, would be spent or forgone or committed as guarantees. We identified the problems with housebuilding to lie less in demand and more on the supply side: in the business model of the existing volume housebuilders, the total failure of the land market, a reactive rather than proactive planning system, and the 35-year long removal of the biggest players, local authorities, from the game. We scoffed at the so-called localism agenda: a policy that moved in two directions at once – highly centralising that which the Government cared about most whilst decentralising what they couldn’t be bothered about. Even so, we found much to praise in the fact that they carried through John Healey’s proposed reform of council housing finance, a genuinely decentralising move that brought enormous potential benefits. After an encouraging start, even this policy has sadly beeen abandoned due to centrally-imposed rent cuts (to reduce housing benefit) and forced council house sales (to fund the right to buy).

Of course, writing ‘the Tories are bastards’ a couple of times a week is not satisfying after a while for any writer – how Mail journalists churn out their poison day after day is beyond me – and it has always been part of the Red Brick focus to look for good policies wherever they emerge, at home or overseas. Here are three regular refrains.

First, housing policy is economic policy, social policy, health policy and education policy rolled into one. Cutting public housing investment was like cutting the throat of the economy, and raising housing investment would have enormously beneficial multiplier effects (as recent work by the SHOUT campaign and by John Healey MP has shown). It is so beneficial that it knocks the case for austerity for six. Put simply, a decent home is the foundation for everything else and everyone should have a place to rest that fits their needs and their families.

Secondly, only a balanced and comprehensive approach to housing policy will do the job. It is pointless to obsess about one tenure, whether it is home ownership, social housing, or private renting. The fortunes of the tenures are closely inter-related and the housing story of the last 100 years can be seen in the chart showing the changing balance between them. The recent decline in both home ownership and social renting, contrasted to the rise in private renting, is, together with overall investment levels, the central housing story of our times. Recent work by Ipsos-Mori shows public support for more housing to be at its highest for many years, with people wanting both more housebuilding generally and more affordable homes, but it still isn’t a decisive issue for them.

Thirdly, it is vital to make the case for direct housing provision for people on low incomes. The mood music is that ‘trickle down’ somehow works in housing. It is a constant unstated assumption. We will have to build a huge number of homes for many years before we begin to see a price effect in terms of values and rents. Building a luxury home on the river or an executive mansion in a leafy area will never have the knock-on effect of helping people in housing need. Providing homes for first time buyers is a good thing to do but it will not release homes for people who will always need to rent because faster household formation amongst the slightly better-off will fill the space. The only reliable way to provide homes to people on low incomes is to build homes specifically for that purpose and to let them directly to people on the basis of need, on genuinely affordable rents and with the security that will allow them to build their lives. The idea of aspiration does not apply solely to home ownership; people on low incomes aspire to a decent home that works for them. The socialised model, whether councils or housing associations or other forms of tenure like co-operatives, is incredibly effective and an efficient use of resources. It works for people in low incomes, and the marketised model does not.

One feature of the blogging world, unlike mainstream journalism, is that it is not dog-eat-dog. Housing bloggers have a lot of respect for each other, even if their politics differ. Whilst Red Brick takes a little rest, there are other bloggers that you can follow if you do not already do so. The most reliable source of great information and analysis anywhere in housing is Jules Birch. He blogs regularly for Inside Housing but an even wider range of material features on his own blog. Also highly recommended is my colleague in SHOUT, Colin Wiles. He now blogs in many places, Inside Housing and the Guardian mainly, but he is always worth a read.

London’s blogging needs are well looked after by Dave Hill of the Guardian. Other blogs I regularly look at include the inspirational Municipal Dreams, the SHOUT campaign blog, the original and always challenging Joe Halewood, the Women in Housing blog, the LibDem Alex Marsh, the JRF’s Julia Unwin, and the many authors of the Shelter blog. It’s also always worth looking out for articles by Rob Gershon and Tom Murtha.

Most of them can also be found on Twitter, which will remain my primary source of news and opinion in the Antipodes. I will continue to tweet @stevehilditch

Thank you for reading. And let me be the first to say: Happy New Year.

Steve Hilditch

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Why are the Tories so sanguine about adding £60 billion to public debt?

Once upon a time, the reclassification of housing associations as ‘public non-financial corporations’ by the Office for National Statistics (ONS), which happened last Friday after years of speculation, would have been seen as a catastrophe. We therefore have to look behind the immediate issue to try to understand why the Government is so sanguine about the apparent disaster of having to add £60 billion of debt to the public balance sheet and why some housing association bosses see it as a great opportunity.

The long-term role of housing associations has been as the ‘third arm’ in housing, sitting between public and private sectors. This made them politically acceptable across the spectrum, sufficiently non-public to keep Tories happy and sufficiently non-private for Labour. Since 1988 they have been in the highly advantageous position of being able to borrow money as ‘private’ organisations, pay tax based on their charitable status, and receive grant from the public sector towards the building of low rent and low cost homes. In return for grant they accepted a regulatory regime governing their management, finances and performance, and were required to co-operate with housing authorities over issues like housing allocations and housing development. In many ways the model has been a great success, although in my view many associations have fallen well below what was possible.

Like flat caps and manual trades unions, Council housing never really fitted with New Labour. After 1997, housing associations – already the Tories’ favoured option – were confirmed as the primary bodies to deliver housing objectives under New Labour – not only building new homes but also accepting the transfer of hundreds of thousands of homes from councils. One reason was the Treasury’s obsession with a particular definition of public borrowing, different from any other European country, which meant that housing association borrowing did not appear on the public sector balance sheet whereas borrowing by councils for the same purpose did.

Extending a policy started by the Tories, the Labour Government saw an opportunity to reduce the level of grant needed to produce social housing, encouraging associations to ‘stretch their assets’ to get more homes for a set amount of public spending through housing association grant. The quid pro quo was that rents would be allowed to rise faster than inflation – in effect housing benefit took the strain. Labour tightened regulation, with associations for example becoming subject to inspection by the Audit Commission, raising the first queries about the ‘private’ classification that housing associations enjoyed within the public borrowing definitions.

Since 2010 the Tory Government has gone to new extremes, reducing grant hugely and forcing rents up towards market levels, thereby requiring housing benefit to take much more strain. Their approach to regulation has been entirely contradictory: they have deregulated in some areas with a fanfare, for example virtually ending oversight of service standards and ending the highly effective inspection regime, but have imposed their ideological priorities such as moving towards market rents (followed bizarrely by a recent rent cut), reducing security of tenure, virtually ending the provision of social rented homes, ‘pay to stay’ and the ‘right to buy’ with its associated forced sale of high value council houses.

It is therefore no surprise that ONS would fulfil their duty to review the classification within the public accounts of housing associations, determining on the basis of the evidence whether their borrowing should be regarded as ‘public’ or ‘private’.

Their review, however, appears to have had nothing at all to do with the recent fuss about right to buy for housing association tenants. One of the key arguments used to get associations to vote for the voluntary ‘deal’ on right to buy was the impending threat of an adverse ONS decision. It is clear from their published decision that their review was based on the legislation passed by Labour in 2008 and the Coalition’s 2011 Localism Act.

The ONS decision has been ‘on the cards’ for some time and it would astonish me if Government was not aware of the likelihood of this change. It is totally disingenuous of the Government to feign surprise. They have had time to think it through. I suspect that their initial public response – that they will bring forward deregulatory measures to return the sector to a private sector classification as quickly as possible – covers a more carefully worked out plan, or at least an ambition. They will not want to simply tip HAs over the line back into a private sector classification, they will want to shove them firmly into the real private sector. If they want to maintain their interfering policies on right to buy, pay to stay, and the rest, they may have to push the boat out a long way on other forms of regulation to change ONS’s balance of opinion.

What might this mean? HAs have already virtually ended the provision of genuinely affordable homes for social rent. They have been selling social housing assets on the market and ‘converting’ empty homes from social rent to much higher ‘affordable rents’ (at up to 80% of market levels). Some have argued consistently for ‘freedom’ to set their own rents and to break away from having to house local authority nominees. Now they are saying that even the ‘affordable rent’ model is unviable, and their other big product, shared ownership, is unviable in high value areas.

Big associations increasingly look like and sound like housing developers who are focused on their total output and the bottom line and much less on what they are building and for whom. They are potentially very useful to a Government which talks big on housing production but has delivered very little in practice. It would be very helpful for them to have a not-for-profit, tax-advantaged, sector providing mainly market homes and delivering one or two top priority programmes like ‘starter’ homes.

The whole movement is being de-linked from concepts of housing need and from the very notion of a housing strategy, because there isn’t one. A few housing association bosses have in the past expressed a desire to become PLC companies and there may be more than a thought or two in Government as to whether the possibility of real privatisation should be opened up.

It is the political and not the technical aspects of the ONS decision that will decide the future.

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