Talking aspiration

The most over-used and least defined word of the moment is ‘aspiration’. Some Labour leadership candidates use it in almost every sentence. Not understanding it cost Labour the election says Alan Johnson and many others, including Alan Milburn, who must by now have met every one of his monetary aspirations several times over.

Of course, the Tories use it a lot, it is part of their lexicon. They use the word in inverse proportion to the ability of people to achieve their desire for a better life. The flatter the wages, the more they claim to support aspiration in work. The faster home ownership falls, the more they use it to describe their housing policies. The new Communities Minister, Greg Clark, said yesterday that their new right to buy for housing association tenants (RTB2) was driven by the Government’s desire to meet the ‘aspiration’ of 86% of the population to own their home – before admitting that there is a huge gap between their preference and the reality of housing affordability.

I come from an ‘aspirational’ working class background, brought up on a Newcastle council estate. My parents wanted their children to succeed and do better than they had. For my Dad, that would have meant a real apprenticeship and a trade. For my Mum, it meant staying on at school and trying for College. She got her way, at the considerable cost of me not bringing in a wage, and I got into University. My fees were paid by the council, and I got a grant, enough to live on. It led to a decent career, good pay, and home ownership. So I think I understand aspiration and social mobility, how it works, and the kind of Government policies needed to make it happen. But for my parents the top priority in their list of aspirations was the advancement of their children. Becoming home owners was a secondary consideration.

By the time I was in my 50s I was a board member at Notting Hill Housing Trust and the word ‘aspiration’ was used almost as often as the dreaded phrase the ‘housing ladder’. Whenever I heard either of these, it would be followed by a proposal to reduce the amount of social rented housing in the development programme and to increase the amount of shared ownership. Shared ownership was evidently ‘aspirational’ and social rent was for people who were part of the ‘dependency culture’ (or ‘chavs’ as they were called once). It seemed to me to be a perversion of the idea of aspiration to link it to one of many possible ambitions and a single tenure. People’s aspirations are their own affair, not restricted to the definition imposed by Iain Duncan Smith or housing association bosses. It is a complex concept and it should not be reduced to the simplistic idea that people only want to be richer or own a specific asset.

If you are one of the millions who are homeless or overcrowded or living with parents or living in a hugely expensive but crap private flat, you may well aspire to a decent, genuinely affordable, secure social rented home where you can begin to build a better life for yourself and your family. The first rung on the housing ladder is somewhere you can genuinely call home, a place you can afford where you cannot be turfed out on someone else’s whim. You might see it as your home for ever, the foundation for everything else you want to do, the bricks and mortar blanket that keeps your children safe and warm and allows them to settle in one school. It might lead to you getting a job or a better job or a training place or you might have a mission to improve your community and not just your personal finances.

Whenever I have worked on delivering social rented homes, I have always felt that I was also delivering on aspiration. I should make it clear, because annoyingly I always have to make it clear, that supporting a much bigger supply of social rented housing does not mean that I am against home ownership or shared ownership. It means I believe in a rounded balanced housing policy which aims to meet the needs and desires of everyone. I am against policies which assist better off people at the expense of poorer people – like subsidising home ownership whilst removing subsidy from social housing, or denying people access to council housing so homes can be sold to pay for RTB2.

In housing policy terms, when I was helping write the draft London Housing Strategy, this involved finding the right balance – ultimately a political judgement but based on huge amounts of evidence about affordability – between market and sub-market housing, and (within sub-market housing) between social rented housing which would be allocated on the basis of need and intermediate housing which was aimed at people on bigger incomes who still couldn’t afford to buy outright. Ken Livingstone instinctively understood this need for balance.

To the complete contrary, Tories, and in particular Iain Duncan Smith, think that social housing tenancies ‘stifle aspiration’. Back in the day, his Centre for Social Justice working group, chaired by the Chief Executive of Notting Hill Housing Group, started the argument for shorter social tenancies and selling off the most valuable social homes, perversely all in the name of aspiration and social mobility. Duncan Smith said that social housing was no longer the ‘tenure of choice for the aspirational working class’. In practice, his policies force more and more people into the very inferior option of private renting, at hugely greater cost to the state. I am absolutely certain that these policies meet the aspirations of no-one.

The logical extension of his thinking is to accelerate the sale of the housing association stock through RTB2. ‘Here, have £100,000 and become a Tory’ is their real slogan. They also hope to obscure the basic fact of the modern housing market: home ownership is declining and private renting is taking its place. The Tories do not want people to understand this.

If, like so many commentators, some Labour Party leadership candidates explain the election defeat as a failure to understand aspiration, it is time for them to turn the word into policy and to offer a bit of definition. I cannot for the life of me see the point made by one candidate that the Mansion Tax was anti-aspirational. The policy had its problems, especially in my bit of north-west London, but I simply can’t see that taxing the most valuable 0.5% of properties has anything to do with blocking aspiration. If that is the case, the USA, which has much heavier property taxes than us, must be the most anti-aspirational country in the world.

I suspect the reality is that ‘failing to understand aspiration’ ranks with ‘being anti-business’ and ‘spending too much’ as a totally unconvincing explanation of Labour’s defeat.

 

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Labour must nail the lies about the deficit and debt

One of the first questions that all the Labour leadership contenders have been asked by journalists – it’s almost like it is co-ordinated – was “did Labour spend too much before the 2010 Election?

The journalists know it puts the candidates on the spot because it was an audience question (probably from a planted Tory) during the Question Time session with Ed Miliband. It raised an incredulous titter, followed by denunciation in the media, when Ed answered “no”.

So far the candidates that have faced the question have looked or sounded flustered and uncertain and have dissembled. Yvette Cooper got lost in a long description of the banking crisis, which wasn’t the question. But Liz Kendall got it totally wrong. She said “yes”.

As on many things, Ed Miliband was absolutely right. But the blame game is being played and history is being rewritten. I expect it from the Mandelsons and Milburns of this world, but members of his shadow team should know the facts.

The truth has been the main casualty in the debate about Labour’s spending record. The Tories and the LibDems both supported Labour’s spending plans before the banking crash, and I don’t recall them resisting the investment of vast amounts of public money in saving the banks. Personally, I can say that if Gordon Brown hadn’t acted decisively and astonishingly bravely on the night that the Royal Bank of Scotland went down then I wouldn’t have been able to get any money out of the hole in the wall the next day. Those that have been most critical in 2015 of Labour’s spending had nothing whatsoever to say about it at the time, pre-crash or post-crash.

So ‘Labour profligacy’ became a major election issue, created by the Tories and fanned by the media. The public believed it to be true. But what are  the facts?

Monimbo99 has shown before on Red Brick that Total Managed Expenditure as a proportion of GDP was lower under Labour than under the Tories for the first seven years of the Blair/Brown era, and only rose above it by about one percentage point for four further years, until the banking crisis in 2008/09 when both government borrowing and government debt shot up as a proportion of GDP.

If we compare public spending (always as a percentage of GDP) across recent governments, the last Labour government turns out to be the least profligate, even compared with the Thatcher-Major governments (graph taken from Colin Talbot’s Whitehall Watch blog).

Public spending as percentage of GDP under different governments (1965-2015)https://redbrickblog.files.wordpress.com/2013/01/public-spending-graph.jpg?w=546&h=285

Monimbo99 concluded his prescient blog by saying: “The figures underline the point that Labour in power achieved much without historically high levels of spending, until hit by the (global) economic crisis.”

Although the most significant Tory scare story was about the imagined prospect of a Labour/SNP coalition, they also created and exploited an undercurrent of fear in the population about Labour’s spending plans in the future, based primarily on this distorted view of the past.

The argument about future spending plans was largely manufactured. After the election, Investment advisers Rathbones commented that “in recent weeks investors have been unfazed by the election and markets relatively becalmed.” Markets, they say, were so sanguine because, looking at the parties’ fiscal positions, “the difference in the fiscal position by 2020 would be negligible, especially within a global context.” Labour’s extra borrowing “would have been relatively immaterial at a macroeconomic level…… By the end of the next Parliament in 2020, this would mean only a 5% difference in public sector net debt to gross national income (GNI). The 77% under Labour (against 72% for the Tories) would still leave the UK with the second-lowest net debt to GDP in the G7 countries, well below the US and France. In spite of the rhetoric about austerity, there was little to choose between the two main parties, and investors reacted accordingly.”

Rathbones also remind readers that George Osborne “effectively abandoned austerity in 2011-12….. no doubt influenced by its electoral prospects.” And “we have some doubts about the Conservatives’ plans to revive austerity in 2017 and 2018.

The point of all this is: Labour was stuffed in the election by lies about its economic record in government, and by lies about its future intentions. In the debate about the party’s future direction, and in the pitches being made by the various candidates, it would be awful to just capitulate to these terrible falsehoods.

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Nepal Earthquake appeals

 richard nepalThe beauty of Nepal, from Richard Crossley’s collection.

The twin earthquakes in Nepal have been devastating, with huge loss of life, infrastructure and homes. Nepal was already the 16th poorest country in the world.

Emergency aid from the UK has been provided with great generosity by the British public – £23m by 6 May – but the second earthquake has made the challenge even greater. You can read more about the UK aid effort here.

Below is information about 3 different ways of giving support to the Nepalese people: the general DEC appeal, a more targeted appeal through Reall (formerly Homelessness International), and very localised support for the village of Khiraule, for which our friend Richard Crossley fundraised before his death last year, having visited and walked in the country.

DEC

The Disaster Emergency Committee (DEC) represents the big international charities that undertake emergency relief work and co-ordinates their fundraising. They receive financial donations but can also handle donations to help meet immediate requirements such as food tents blankets and medical equipment. Their donation website is here.

REALL (formerly Homeless International)

ReallFormerly known as Homeless International, Reall – or Real Equity for All – is a UK-based international development charity dedicated to alleviating bad housing conditions across the developing world. It was established in 1989 by the social housing community in the UK and has a focussed approach to tackling the problem of slums. It works through partner organisations in Africa and Asia which have their roots in poor communities, helping to build self-reliant and sustainable enterprises.

Reall’s partner agency in Nepal is called Lumanti. Reall’s appeal for Nepal can be found here. This is what they say about Lumanti’s work:

LUMANTI was established in 1993 and works with poor communities across Nepal to improve housing and basic services, establish community-based finance schemes and influence government policies around slum upgrading. Reall’s partnership with LUMANTI helps it to expand its work on the ground to benefit even more poor people and to influence national policies affecting slum dwellers and the urban poor. We are working closely with LUMANTI to help it find cost-effective, replicable and sustainable solutions to Nepal’s urban housing issues.

Donations to Reall for LUMANTI will directly support them in their work to rehabilitate and reconstruct homes and villages across the country. They are a permanent organisation and will be there after the international relief effort withdraws.

When the international spotlight has moved on from this tragic disaster, the people in Nepal will have very little in the way of support to rebuild the homes they have lost. Emergency relief provides much needed immediate support, however the money does not go towards the rehabilitation of a country so devastatingly hit. We build earthquake resistant houses and infrastructure, and our work with Lumanti will ensure long term support for the communities we work with. In the next two to three months, we will coordinate with Lumanti the work that emergency relief does not fund. We will be out in the field, assessing the damage and providing financial and organisational support to help rebuild people’s homes and lives.

As far as we can establish all the homes that have been built by Lumanti have been resistant to the earthquake. We want to be able to build more homes like this for the people that really need it.

KHIRAULE

KhirauleOur friend Richard Crossley fulfilled a lifelong ambition to trek through Nepal three years ago. He struck up a great friendship with Lhakpa Sherpa from the village of Khiraule, and fundraised for the village when he returned home. Lhakpa and his family were unhurt by the earthquake and he joined a New Zealand rescue team to take aid into remote areas. He has asked for help to repair and rebuild the houses in Khiraule as he is aware that the Government of Nepal is unable to assist.

If you would like to donate in Richard’s memory, you can send cheques to Lhakpa’s wife, Pat Steel, at Barbondale Cottage, Barbon, Via Carnforth, LA6 2LS. The donations at this point are non-charitable but they are trying to change the objectives of the Khiraule Education and Health Project through the Charity Commission to cover the rebuilding work. Once this has been achieved the money raised can be transferred and become charitable. At that point they will ask donors to sign a Gift Aid form, so please make sure you enclose your full name and address.

The Khiraule Education and Health Project’s website can be found here.

You can read more background on Nepal on the DFID website.

Photos taken from Reall and Khiraule websites, and from Richard Crossley’s collection.

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Be wary of those who say they already know why Labour lost

Those who have been quickest into print or on to the airwaves after the awful defeat on 7 May are not to be trusted. For them there is no period of reflection, no attempt to consider their own fixed views in the new context. Their ready solutions could have been written at any time in the last few years; they have said what they always say and have nothing new to offer. Their purpose is either personal advantage, because they are likely to be candidates, or to rubbish Ed Miliband and in particular his decision to move on from New Labour.

I defy anyone at this stage to have a genuinely rounded analysis, especially those who have already boiled it all down to simple solutions. Stella Creasy’s Guardian piece on Saturday argued that we have to deal with the grief first and go through the grieving stages, and I’m probably somewhere between denial and anger, moving into depression. Half of me wants to sound battle cries and the other half wants to give up and quietly slip away. Half of me sees the mayoral contest in London as the next great challenge, half of me thinks it’s not worth the candle because a Tory Government will be ruthless in controlling a Labour mayor.

Some people who were obviously not tired enough after Thursday have had a lot to say about reaching out to middle England, being ‘business-friendly’ and speaking to ‘aspirational’ people. But, when pressed, where are their policies different from what Ed Miliband has been saying these past few years? Labour was spun as anti-business because it wanted to tax the rich a bit more and because it attacked the big corporates, not because it had weak pro-business policies. Should we have dropped the tax proposals or the energy price freeze to reduce the damage? Of course not. Nor did Labour focus on the poorest 10% as is alleged, for example by Alan Milburn today, and it did not ignore middle England. In housing, the emphasis was entirely on first-time buyers and people who have good incomes but are still forced to rent. Apart from Bedroom Tax, hardly a word was said about social housing in the whole campaign.

Quite a few mistakes were made after 2010. We did not defend the record of Gordon Brown in saving the global financial system, which he did, because we were embarrassed by him. We didn’t build on public anger about bankers by setting in concrete the link between the global banking crisis and the recession. We allowed the Tories to blame Labour’s spending for the crisis despite the fact that the Tories supported Labour’s spending plans up to the banking collapse. We were never comfortable with austerity nor brave enough to oppose it, and it showed.

So of course there are lessons to learn but I do not accept the view that our policy offer and post-New Labour positioning was all wrong. We were blamed for the recession and could not restore our reputation for economic competence, but we still made net gains in England. The result in London was patchy but it became even more of a Labour city. We were punished in Scotland and the Tories fed and exploited unpleasant anti-Scotland feeling in England which helped them win but could break up the Union. Labour was squeezed between two nasty nationalisms.

But it is vital to remember that 2015 was nothing like 1997. Then the big crisis, falling out of the Exchange Rate Mechanism, happened on the Tories’ watch. This time it happened on Labour’s. Then Scotland remained safely Labour, this time the referendum and rampant nationalism happened.

More than anything I feel that the defeat was the revenge of Murdoch and the other newspaper-owning billionaires. Can Labour ever win in the face of their dominance and hostility? Perhaps Ed Miliband’s greatest mistake was to take on Murdoch and to show integrity over phone-hacking and Leveson. He did not play the game according to their rules and he did not travel around the world to dance to Murdoch’s tune as Blair once did. Should Miliband have been more accommodating on policy to keep them onside? Was that possible? Could we have won the Election that way?

I do not accept that the papers have diminished influence these days: they set the tone, and the lazy broadcast media simply follow their lead. Their front pages are blazoned across every TV public affairs programme and their journalists populate programmes like Question Time. Miliband eating a bacon sandwich was repeated thousands of times – on the BBC as much as in the Sun – and was one small part of a deliberate strategy to undermine and ridicule him. The fact that he nearly rose above it is a remarkable tribute to him and I resent the fact that some people have now turned against him. Cameron’s gaffes were mentioned but washed over. Miliband would not have survived leaving his child behind in the pub or being a Bullingdon boy or forgetting which football team he supported. Will any new Labour leader suffer in the same way?

It will be the same again next time, newspapers will still be owned by the same people and have the same bias, and the broadcast media will be no better – indeed the BBC will be much worse. One other lesson this time is that, in politics rather than celebrity, social media is not yet as powerful as everyone involved with it pretends it to be.

The depressing reality is that negative campaigning and propagandising worked. No amount of navel-gazing and blame-gaming will change that. The Tories are much better at it than us. Without hiring a Lynton Crosby, can Labour retain its integrity whilst being stronger in attack and much better at rebuttal? Are there ways of working round media bias without giving in to it?

So was Miliband ‘too left wing’? It is the media message and some people’s mantra. I can’t see it myself. He wanted to regulate markets a bit more, spend a bit more public money, and tax the rich a bit more, but it was all incremental and at the margins. The Tories managed to align in the public mind the interests of the rich with the interests of business. In fact they are very different, and the behaviour of the rich over the past 20 years is the antithesis of a successful long term economic plan. They also managed to make welfare cuts popular – Labour must remember that you cannot overcome huge prejudice and the stigmatization of ‘scroungers’, built up over many years and fanned even by some in the Labour party, in a single Election campaign.

So, like everyone else, I have some views on why Labour lost but they are not necessarily well-formed. We need to debate the pros and cons so we can be better next time. But a false analysis based on pre-determined views that Labour was ‘too left wing’ or ‘not left wing enough’ will get us nowhere.

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A clash of values

In an important interview Ed Miliband yesterday spelled out the contents of Labour’s first Queen’s Speech. Speaking to the Guardian he tried to refocus the Election back on to policy and away from the appalling England v Scotland tactics we have seen from the Tories recently.

He described the central battle of the Election to be ‘a clash of values’. How right he is. On this blog over the last five years we have commented constantly on the policies of the Coalition Government. We have stressed that many of the core Tory housing policies were contained not in their Manifesto but in a pamphlet written for the Localis Think Tank before the Election, which set out their approach to the marketisation of social housing. We have monitored their policies from the first Budget cut of over 60% in the affordable housing budget, through the introduction of endless and self-defeating demand subsidies for home ownership, through the stream of policies designed to end social rented housing, through their ripping up of the homelessness safety net, through their indolence over private renting, to their unbelievable decision to give subsidies of more than £100,000 to make the right to buy work for housing association tenants – to be funded by selling off every valuable council house that becomes available for letting in places like Westminster.

And the Lib Dems? Despite their well-written and comprehensive housing Manifesto – much of it repeated again this time – Lib Dem Ministers in DCLG have been poor and uninfluential and have gone along with every single rabid policy put forward by Grant Shapps, Michael Green, and their successors. They have been absolutely hopeless and have offered no mitigation whatsoever.

Miliband’s proposed Queen’s Speech identified 10 Bills that would be introduced in the next session that will be the policy of the Government in less than one month’s time.

To focus on the issues that will have an impact on housing: The Bills will include a finance bill that would introduce the mansion tax; a freeze on energy prices until 2017 with powers to reduce charges; bills to tackle low pay by banning zero-hours contracts, make it illegal to use agency workers and immigrant labour to undercut wages; an NHS time to care bill that will end the market framework and begin the integration of the health and social care services; a bill to close tax loopholes, including those around stamp duty.

And finally, there would be what is described as a ‘More Homes and Fair Rents Bill’, which is:

A bill that would give councils new “use it or lose it” powers to stop developers sitting on land; create local development corporations to build homes at scale where the private sector has failed to; and allow the development of garden cities and suburbs, creating more than half a million new homes. It would also ban extortionate letting agents’ fees and make caps on three-year tenancies at inflation rates the rule, not the exception.

On top of that, in the one policy that alone justifies a Labour vote, Ed Miliband has not only pledged to end the Tory and LibDem Bedroom Tax which he described as ‘indefensible’ and ‘cruel’, he has promised to act immediately:

‘We’ll get to work immediately to ensure that families no longer lose out. So on day one of a Labour government, we free families from the burden of the bedroom tax.’

Of course I concur with many colleagues in the Labour Party who would like to see an even stronger housing policy. In particular, I would like to see a much more explicit commitment to social rented housing and to the increased affordable housing programme that is essential to providing a large slice of the promised 200,000 new homes a year in the form of genuinely affordable homes. We will have to wait and see what the Eds’ promise that housing will have ‘highest priority’ in Government capital spending amounts to in pounds shillings and pence.

However I am reassured by the fact that Ed Miliband went big on housing for 2-3 days last week, making housing his ‘Sixth Pledge’, suggesting it is a genuine priority for him, and by the less well-reported comments of Emma Reynolds on the need to link rents to earnings rather than market rates – in my view the foundation of a progressive policy that could deliver a new generation of genuinely affordable homes and begin the long march back ‘from benefits to bricks’.

And I thought the Miliband responses to Inside Housing‘s questions were also encouraging, including his comments on reviewing one for one replacement of right to buy homes, his understanding of the reversal of progres on homelessness, and his statement that:

Labour is committed to building more affordable homes in the next Parliament, including homes for social rent, and that’s why capital investment for housing will be a top priority.

Red Brick comes out for Labour’ is not a headline that is going to cause ripples in the Election campaign. ‘The Guardian comes out for Labour’ is slightly more important, and a welcome reversal of the appalling decision they made to back the LibDems in 2010. The poor misguided souls have seen some light, and I will be able to start buying the rag again.

If it wasn’t for the extraordinary happenings in Scotland, too complex to go into here and now, the whole debate at this moment would be around the size of Ed Miliband’s majority. There would be no talk of being neck and neck. On some polls Labour is ahead in England and Wales, not something that the Tory backwoodsmen shouting about ‘English votes for English laws’ will understand. Apart from Scotland, Labour’s comeback is a much bigger achievement than the Party is given credit for. In my patch, London, Labour’s lead is stunning.

Miliband’s success has involved swimming against the tide. Almost universal media hostility (including for a long time from the Guardian) makes it so hard to get any reasonable point across. Housing policy is reduced to the glow of housing wealth, first time buyers and housing benefit scroungers. Journalism in the broadcast media is shockingly poor so they re-run whatever is in the right wing press, and even devote whole programmes to showing us what is in the papers – 75% owned by a few right wing billionaires.

So will Friday morning bring that awful feeling that we experienced in 1992, when people switched to the Tories in the last week, or can Miliband hold and even improve on his position? If he wins, in my view the feeling will be even better than 1997.

 

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The super rich push out the rich push out the middle class push out the poor. Welcome to London the Global City.

Attending Hustings meetings in and around the area where I live – central and inner west London – is a depressing business. The fact that the meetings I have attended are in marginal seats tells me that the population there is more mixed than is commonly supposed. The statistics show that there is a lot of deprivation in the area, children living in poverty, and poor standard housing. There are lots of these meetings but they seem to be dominated by a certain type of punter. Mansion Tax is raised a lot; Bedroom Tax doesn’t get a mention. I doubt if this is true anywhere else in the country.

Savills estimate there are 76,000 properties in London liable for Mansion Tax and all their owners seem to have been to a Hustings in the last few weeks. Two of the meetings I have attended have been organised by faith groups. In one case Mansion Tax was raised by the priest, in the other it was the first pre-arranged question asked. In both cases some people got really hot under the collar about it. Poverty and homelessness didn’t get a look in.

People who are really quite well off by any definition see themselves as victims, and they see Mansion Tax as the last straw. They see themselves as being punished for working hard and buying a property in the area on a big mortgage when houses were just very expensive not mega-inflated like now. They have mixed feelings about what is happening to their community: their properties are valuable because they have been virtuous but they resent the fact that their areas are now falling prey to ‘bankers and foreigners’. Gentrification should only go so far: barristers good, bankers bad, foreigners worst of all. They have no  concept that their riches are a windfall gain, an unearned bonanza, visited on them by stupid housing policies over a generation. They feel they deserve it but they seem to have no awareness that it is much worse for many others.

Some of them are undoubtedly ‘asset rich but income poor’. Partly as a result of Tory propaganda they believe they are going to be taxed out of their family home and out of the area, and are not mollified by the policy allowing deferment for those not earning enough to pay the higher rate of tax: it seems £42,000 is not that much.

It is undoubtedly the case that people are being pushed out of most areas close to the centre of London. It is a process that has been going on for 40 years but it has greatly accelerated in the last few years, especially in the era of London as ‘The Global City’. London property is now one of the favourite places to put your millions for hundreds of  thousands of rich people, especially Chinese, looking for a safe haven and a potential home to emigrate to if the going gets tough at home.

The fact that the feeling of victimhood stretches to people who are merely rich living in £3m houses is an extraordinary realisation. What hope does it offer for people on low and moderate incomes who have never been able to afford to buy anything at all?

An excellent article on the CityMetric website by the Chartered Institute of Housing’s John Perry describes the ways in which people on low incomes are being banished from central London. He identifies five:

  1. Welfare reform means people on low incomes can’t afford to rent: since the caps were imposed, people in receipt of Local Housing Allowance has plummeted, by as much as 30-35% in Westminster and Kensington and Chelsea. Young people fare worst.
  2. Homeless families get a tougher deal in London: homelessness continues to rise rapidly in London, increasingly because people have had their private tenancy ended – 38% of the total. Use of temporary accommodation is rising rapidly and is likely to be offered outside London.
  3. Council housing is being sold off: twice as many homes were sold by London boroughs in 2013-14 as the year before. One-third of right to buy properties are now rented out privately.
  4. Social lettings are going down: the consequence of losing stock is falling lettings, down to a mere 21,400 by councils and housing associations in 2013-14. Waiting list restrictions are also now commonplace.
  5. Social homes are more expensive: housing associations have gone for so-called ‘Affordable Rents’ big time, rents are on average £60 a week more than social rents.

These are the pressures that are leading to an almost un-reported clear-out of people on low incomes from central London. Areas that have been genuinely mixed communities for generations are being changed rapidly. And when people living in £2-3m houses feel that change is happening too fast and are fearful (justified or not) that they might be pushed out as well because of the new Tax, you really do have to wonder what kind of city we are creating.

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The hypocrisy of Mr Clegg

Ed Miliband exploded housing onto the Election agenda today with his speech about Labour’s proposals for the private rented sector.(previously discusssed on Red Brick for example here and here).

It provoked some ridiculous responses, some stupid responses, and some downright hypocrisy.

Eric Pickles, after 5 years of doing sweet F A for private tenants, chose to quote the right wing Swedish economist Assar Lindbeck, almost but not quite correctly, claiming that he said ‘Next to bombing, rent control is the most effective way to destroy a city’. I think Eric should reflect a little more on his huge cuts in local government finance and the destruction of local services before he says that.

When the policy was first announced, Labour was attacked by Grant Shapps for ‘Venezuelan style rent controls’. The Tories still cannot decide whether to denounce the scheme as an appalling left wing attack on the nature of capitalism or to brand it as ‘a gimmick’, to quote Boris Johnson today. The reds under the beds theme has been carried on by the Resident Landlords Association who called it ‘a 1970s left wing policy’.

But the accolade for rank hypocrisy goes to Nick Clegg, rumoured to have once been Deputy Prime Minster. The gruesome Clegg really went to town, starting by saying the policy was ‘superficially attractive’ before concluding that ‘more and more landlords will simply quit altogether’.

That struck me as strange because I have a habit of reading party manifestoes, and the Lib Dems have traditionally been in favour of both greater security of tenure and restricting rent rises. Their 2015 Manifesto contains some interesting statements, talking for example of ‘new ‘family friendly tenancies, which limit annual rent increases’. In a section called Protecting private tenants and leaseholders, amongst other things they say:

More and more people – including families – are renting in the private sector for the long term. We believe private renting is an important part of the housing market, but the balance has shifted too far against the tenant, and more needs to be done to help people making a home in rented property.

We will:

  • Improve protections against rogue landlords and encourage a new multi-year tenancy with an agreed inflation-linked annual rent increase built in.
  • Enable Local Authorities to operate licensing schemes for rental properties in areas where they believe it is needed.
  • Establish a voluntary register of rented property where either the landlord or the tenant can register the property, to improve enforcement and tax transparency.
  • Ban letting agent fees to tenants if the transparency requirements we introduced are not successful in bringing fees down to an affordable level by the end of 2016.
  • Extend the use of Rent Repayment Orders to allow tenants to have their rent refunded when a property is found to contain serious risks to health, and withhold rent from landlords who have not carried out court-ordered improvements within a reasonable period of time.

Now the space between this policy on private tenancies and rents and Labour’s is negligible, but even so the great Leader chose to attack Labour rather than show a measure of agreement. He could have tried to win the policy argument but instead chose to have a dig at Miliband. Once again he put himself on the Tory side of the rhetorical argument even when his party policy is a reasonable one. Believing one thing and saying another to make a political point is the sort of hypocricy that Clegg says he hates.

Today certainly has been a field day for the nation’s amateur economists, or political journalists as they are sometimes known. Andrew (‘Andy’ to his pal Boris Johnson) Marr warmed to the theme, twice telling Ed Miliband that all reputable economists say that rent controls lead to reduced investment and supply. I don’t think he’s done enough research.

The Tories have been quoted all day saying that it is always wrong to interfere in markets, but they can be dismissed for spouting nonsense as they have already supported huge interventions in housing markets (eg with the Help to Buy). One clever chap talked about rent control leading to sub-optimal outcomes.

This ‘free market’ critique beggars at least 3 questions.

  • First, Labour is not proposing ‘classic’ rent controls but a mechanism for making rents predictable during a tenancy, along the lines of the German model, which is regarded as having successfully regulated private renting there for many years, even by economists. The rent policy is part of a raft of proposed changes, including standard 3 year tenancies and a clamp down on fees charged by lettings agents.
  • Second, the UK rental market, especially in London, simply cannot be viewed through a simplistic Boris Johnson-style classic economic supply and demand model – a kind of flawless world of enterprise and perfect knowledge that predicts that price controls will lead to reduced supply. In the real world, landlords have been in direct competition with potential home owners to buy existing properties in a highly complex and rapidly changing market, but one in which landlords have possessed significant advantages. Very little of the demand for buy to let has led to new supply because most buy to letters have bought existing property.
  • Third, private renting is just not a ‘free’ market to start with, it is surrounded and underpinned by any amount of rules, especially around mortgages, and it receives remarkably favourable tax treatment. The ‘market’ is also distorted by the existence of housing benefit. Government having a say on rents is just another brick in the wall of sensible regulation. As the private rented market is already staggeringly sub-optimal, it is almost quaint for these people to have such faith in the ‘free’ market: regulated markets do much better.

In a day of knocking copy, I also wonder if Generation Rent were pleased or distressed to see the Telegraph headline: Labour’s rent controls could see families evicted, left-wing campaign group warns’. I find it hard to believe that private tenants think that Labour’s proposals will ‘make no difference’ as Generation Rent claimed.

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Extreme value properties: tax them or sell them off?

I attended a Hustings event in a Catholic church in North West London. For me, the most remarkable point of a quite entertaining evening was when the priest rose to ask a question. What would it be? Poverty? Food banks? Bedroom tax? Help for the starving of the world? No, he asked about Mansion Tax and the problems his parishioners would have paying it. Perhaps I will send him a few Cafod leaflets, or perhaps Trussell Trust?

This little tale illustrates the point that the Mansion Tax has some traction in parts of London, despite being generally popular. Not enough to change the political direction, but it has become an issue that lots of people talk about. Despite Labour’s best efforts, there has been quite an effective disinformation campaign by the Conservatives. Several candidates have sent out thousands of letters designed to look like an official demand for the tax from the local council – ‘Mansion Tax Revaluation Information’ – implying that people would have to pay up to £20,000. In some constituencies the Tory candidates appear to talk about nothing else.

Of course the Tories, and therefore most of the media, never mention Labour’s two most important caveats on the policy:

  • First, that the £2 million starting threshold will rise linked to increases in prime property values, not any other index, so that the number of homes caught by the tax should not increase. Because people are not aware of this, the most worried people are those who will not pay it but fear that they might have to.
  • Secondly, that there is a powerful deferral mechanism so that anyone earning £42,000 or less will not have to pay the tax out of income, it can become a charge on the property when it is sold. This addresses the ‘asset rich income poor’ problem but it has not entered the consciousness: so many people simply say that they cannot afford to pay £250 a month and will have to move.

A common theme amongst complainants goes like this: ‘We bought our house with a big mortgage thirty years ago and we have carried out big improvements. It’s not our fault that property prices have risen so much and the house is now worth so much. It is our family home and it is unfair for us to be forced to move.’ Apart from illustrating that they are not aware of the deferral policy, there is a touching belief that the rise in value is down to their own efforts and not an unearned windfall from being in the right place at the right time through the property bubble – the point that justifies this tax.

Conservatives are being disingenuous in another way as well. The fact is that many of them believe in raising more tax on high value property, just not Labour’s Mansion Tax. Paul Dimoldenberg has traced many of their policy pronouncements on this issue.

Just one example illustrates the point. Conservative MP for Westminster South until Parliament was prorogued, Mark Field, is in favour of re-banding council tax and adding new bands to the top (similar in principle to the Mansion Tax). He says:

“..the (current Council) tax is not even particularly proportionate to property values, with the same amount levied on all homes valued at over £320,000 in 1991 prices. This means that around half of all houses in the capital are now placed in the same council tax band even if their size, location and value are vastly different. A Knightsbridge oligarch, for instance, is paying £1353.48 annual council tax for a £60 million home – exactly the same as properties worth one-thirtieth that sum.
Let us take Westminster as our example here. In this Central London borough, a Band H property would now likely be worth over £2 million and there are now just under 15,000 of such homes. But there is a vast difference between a £2 million flat in Pimlico and a home valued at £60 million at One Hyde Park. So the local authority might be empowered to impose two additional bands – there could be, for instance, Band H for prime properties worth between £2 and £5 million; Band I for so-called ‘intermediate prime’ properties in the £5 to £15 million bracket; and finally Band J for super prime properties worth over £15 million”.

Now Conservatives are not going from door to door saying ‘oppose Labour’s Mansion Tax, support the Tory super council tax’. Perhaps Labour should tell people on their behalf.

Stunningly high property values in the central/west/north-west London constituencies have a big impact in relation to another Tory policy: the right to buy. Under their current proposals, the cost of discounts (up to £103,000 in London) for housing association tenants exercising the right to buy will be met by forcing councils to sell their most valuable or expensive council housing.

The detail of the policy reveals their definition of ‘expensive’: over £340K for a one bed flat, £400K for a 2 bed, and so on. In Westminster, the cheapest 1, 2, and 3 bed flats are above the threshold. This means that it is likely that every flat becoming available for letting in Westminster will have to be sold. Paul Dimoldenberg reveals that Westminster Council estimates that 410 council flats will become empty and available for letting in 2015-16. All of these flats will have to be sold off and, in the current market, are likely to go to property speculators, foreign buyers and buy-to-let landlords. As Paul says:

The stark implications of this policy is that no local families will ever be rehoused in Westminster again as the Council will be forced to sell off all its flats which come vacant. Only the rich will ever be able to live in Westminster. This will be a hammer blow to local communities all over Westminster.

The impact in neighbouring boroughs like Camden and Hammersmith will be less dire but still very dramatic. In these constituencies it is to be hoped that the Tories’ sell off plans will replace the Mansion Tax as the main topic of conversation. Even for priests.

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Tories merge with Poundland

The Tory Manifesto was plainly written by Poundland, using the old Tesco mantra ‘pile it high and sell it cheap’.

The Tories have nothing to say to tenants – literally. Their housing policy for one tenure only – home ownership – tells us what has been wrong with housing policy for 40 years. You cannot have a housing policy that ignores that huge section of the population who are not and never will be home owners.

It is also the case that you cannot have an effective housing policy that fails to look at the inter-relationships between tenures. Despite all the talk in their Manifesto about believing passionately in home ownership, the Tories have no analysis whatsoever to explain why home ownership has been falling – for more than a decade and throughout their time in Government. If home ownership is their sole objective, they have spent a fortune – and failed.

In reality the Tories have divided loyalties, they are conflicted between competing views of capitalism. They like the image of the proud homeowner, and indeed that is what most of us who commentate on housing are ourselves. But on the quiet they are also the party of the private landlord – big time – and especially the buy-to-let landlord. They won’t admit that if it wasn’t for the buy-to-let market housebuilding would have been even more pathetic than it has been over the past five years. They won’t admit that the only way of seriously promoting first time ownership would be to restrain buy-to-letters (and probably foreign purchasers as well) who are competing for the same properties and bidding up prices due to their tax advantages. And they won’t admit that their stated aim: ‘Everyone who works hard should be able to own a home of their own’ is simply and flatly unachievable.

The way the housing market works, made far worse by Tory (and LibDem, let us not forget) demand subsidies, means that the closer aspiring home owners get to their target the further it moves away. The waste of billions on subsidies, loans and guarantees to help home owners is pointless and economically illiterate. First law of economics: if supply is unchanged, and demand rises, prices go up.

So they turn to their other obsession: putting the public sector’s assets up for grabs in Poundland. Or worse, this time they’re putting somebody else’s assets up for sale in Poundland. Now that really is innovative.

Others have written and will write about the damage done by RTB1 and the threat to housing supply from RTB2 – both in terms of re-lets lost and new supply undermined. But the biggest disgrace lies in the method by which this will be funded.

Their policy of extending the Right to Buy “to tenants in (surely ‘of’ – Ed?) Housing Associations to enable more people to buy a home of their own” will be funded by requiring COUNCILS to sell off their most valuable council houses as they become vacant.

Even if there was some logic to selling the most valuable homes, which there isn’t, Councils have a thousand higher priorities than using the money to pay £77,000 – £103,000 in subsidy to a housing association to fund the discount they will be forced to give to one of their tenants and then spend even more on building replacements. This will cost BILLIONS.

There are many unanswered questions. Here are some for starters.

  • The most valuable Council properties are concentrated in Inner London. Will those councils have to sell almost everything when it becomes vacant? How will they ever meet their own huge housing needs?
  • Half of all councils have no housing stock at all. What will happen in those areas? Or will this involve one council subsidising home ownership in another council’s area?
  • The housing impact of RTB1 was felt over many years through a reduced rate of letting – and a reduced flow of rent income. People who could have been in council homes instead had to live in temporary accommodation for years or in private housing. Both are hugely expensive indirect costs. Have the Tories even considered this?

After reading this evil stuff, do I have the strength to read yesterday’s Green Manifesto? Maybe, but regrettably it will be as relevant to what happens after the Election as this blog, which isn’t saying a lot. And later today we can read the LIbDems (who delivered not a single one of their own housing policies in five years of Government) and UKIP. The last one may prove to be the most extraordinary.

 

*My apologies to Poundland, a very fine institution, who may not want to be associated with cheap Tories.

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Labour Manifesto: For housing, it’s a couple of steps in the right direction

No housing surprises were expected in the Labour Party Manifesto, launched this morning by Ed Miliband. And no surprises was what we got.

All of the housing policies have been previously announced and widely trailed. There is a strong reliance on the conclusions of the Lyons Report on housebuilding, which set out a comprehensive and detailed agenda for achieving the Party’s target of 200,000 homes a year by 2020. And there is a strong commitment to reform in the private rented sector, with 3 year tenancies as standard, the capping of rent increases during a tenancy, landlord registration, and strict controls over letting agents.

It is only the fact that these key policies have become so familiar that prevents them from being seen as political big ticket items. Everyone knows that 200,000 new homes each year (as a start), getting close to a doubling of current output, is a stretching target. Just saying ‘make it 300K’ doesn’t improve the policy, it just makes the likely disappointment all the greater.

Some will describe the private rented sector package as not being sufficiently radical because it is not ‘real rent control’, but it is close to the German system which has been a relative success over many years, and is a bigger reform than it is given credit for. It could be that the strict regulation of agents will make most difference – benefiting both tenants and landlords. But it is quite wrong of ‘Generation Rent’ and others to say there is no difference between the Parties on private renting. The Tories stand for further deregulation and believe that an even freer market is needed to encourage more landlords to invest.

In this age when symbolic policies are so important, one short stark message is of vital importance in this Manifesto:

Half a million families have been hit by the Bedroom Tax, and two thirds of those affected are disabled, or have a disabled family member.

It is cruel, and we will abolish it.

Labour’s Manifesto also includes a specific commitment to reversing the upward trend of homelessness which is very welcome.

So is it what I want to see? Of course not, but then again that has been true of every Manifesto I’ve ever read. It is not explicit on capital funding for housing – the central determinant in getting a large proportion of the 200K new build as genuinely affordable homes. There is a generalised commitment to giving housing top priority in Government capital spending, but a lot more water will flow under the bridge before we know what that means. My aim would be an early return to 2010 housing grant levels, which would mean it is in the same ball park as the cost of the ‘Help to Buy ISA’ so casually announced by Osborne in the budget. Going back to a £2 billion plus housing budget is not a big deal in Government spending terms, but would transform our housing prospects. Despite all the emphasis on first time buyers, it is the performance and output of the social housing sector that will determine whether 200K is achieved or not. And to deliver its mission of providing decent homes at genuinely affordable rents, the social housing sector needs more grant.

One specific disappointment is that the large amount of behind-the-scenes work that Labour did on a ‘benefits to bricks’ policy – subsidising housing construction not housing rents through housing benefits – has not come to full fruition in the Manifesto. There are nods in this direction – a proportion of housing benefit savings due to councils negotiating private rents down will be kept locally for re-investment – and the underlying principle is asserted that ‘Government spends far too much money dealing with the symptoms of problems, instead of investing smaller amounts in dealing with their causes.’

Shadow Chief Secretary to the Treasury Chris Leslie’s famous ‘zero based budget reviews’ seem to have passed over housing too quickly. It is not just ‘benefits to bricks’ – the Tories have committed vast sums to subsiding housing demand, which can only in the long term lead to house price increases. Diverting some of these additional demand subsidies into social housing grant would give us a programme to be proud of.

It will surprise no-one if I say that a Labour Government is essential to set a new direction of travel in housing. The last five years of Tory dogma and LibDem complicity have been unambiguously bad for housing. There have been no silver linings. A Labour victory will not mean the problems are solved, but it will mean that housing campaigns will have more focus and they will be aimed at people who will listen and at least half understand what is being said.

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