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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The overwhelming case for new public housing

The Fabians have published a timely and strong new report written by John Healey and John Perry making ‘the overwhelming case for new public housing’.

It is timely because it appears as the Election enters the short campaign and the outcome is so uncertain. Housing has featured in the Election but in a familiar guise, as if the – undoubtedly important – issue of access to home ownership was the only thing that matters. I suppose we should be pleased to have had a minor reprise of the 1950s and 1960s Election campaigns when the parties traded housebuilding promises.

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John Healey

Healey and Perry summarise the housing crisis and challenge the Parties: “It is a measure of a nation’s politicians whether they can rise to the big challenges their country faces. Housing is now such a test.”

john perry

John Perry

At its core, the crisis is a simple calculation: we need to build 250,000 homes a year yet  2012-13 saw just 108,000 new homes completed, the lowest since the 1920s, rallying to a not much better 119,000 in 2013-14. Rather less than half what is needed. Healey and Perry emphasise that a bigger contribution is required from everybody – commercial housebuilders, housing associations and councils – but that “Above all, strong leadership and smart action from government is imperative.” And that new public housing must be central to a new national political mission.

The desire for action is expressed across most of the political spectrum. They quote the call of ‘The Good Right’ for “a Harold Macmillan-sized, state supported housebuilding programme”. The Good Right are too canny to be too directly critical of the Government, but they come very close.

Healey and Perry make the case for more social housing in 5 simple points:

  • First, the private market cannot build 250,000 new homes, and never has.The public sector must step up to fill the gap.
  • Second, genuinely affordable social housing (and not the Government’s aberration of ‘Affordable Rent’) is needed to make the new homes affordable for the millions of households on low incomes who cannot access any form of housing today.
  • Third, building social housing is the best way to get value for money from public spending: over 30 years the public purse makes a profit because of lower housing benefit payments, and public spending is a lever for major private investment as well.
  • Fourth, it will help make work pay: housing costs are a critical disincentive to earning more.
  • And fifth, public investment would be an important boost to the economy.

“Recent modelling by John Healey shows that working up to building 100,000 new social rented homes a year by the end of the next parliament would not only pay for itself in less than 30 years but provide a net benefit to the public purse of £12bn through lower housing benefit cost.”

The report identifies the three biggest challenges to a major new programme as cost, public support and delivery.

On cost, they point out a number of ways that more social homes could be built without cost to the public purse: a revival of the principle of ‘planning gain’ from private development, the need to ‘borrow to invest’ (creating a long term asset and yielding a financial return).

On public support, they point to rising majorities in polls supporting more social housing, and the improved policies that many councils are implementing to engender public support. They point to the importance of challenging the ‘maginalisation’ of social housing and creating mixed communities.

On delivery, they acknowledge the scale of the challenge and the vital importance of a new target for new social homes, the need for Government funding and land, and the requirement for a new sense of social obligation from developers.

To my mind the case is well made in this report and is irrefutable. The Government’s policies to date – which, at a tangent, have always been totally contrary to the stated policies of the acquiescent Liberal Democrats – have become increasingly focussed on demand-side initiatives when the clear need, as was obvious from the analysis in the Lyons report, is for extensive action on the supply side.

We are close to the launch of the Parties’ Manifestoes. We will look at them here on Red Brick with as much objectivity as we can muster (which isn’t always a lot). It may be too much to hope for that, if any of the Parties emphasise social housing, the media will cover the issues.

Potential first time buyers are important prospective voters for parties to try to impress, but so are those who will never be able to buy and whose housing needs will only ever be met by good quality genuinely affordable social housing. They all have one vote each.

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Massive swing to the SHOUT Party in 24 Housing ‘Power Player’ Poll

Each year 24 Housing invites more than 400 leading figures in the housing world to nominate five people who they think have had the biggest impact on housing during the last year. This year’s ‘Power Player‘ survey is published today.

The Power Player list has a selective constituency and isn’t scientific but it is a bit of fun, gets tongues wagging, and most people seem quite pleased to be on it rather than off it.

The SHOUT out headline from this year’s poll is the remarkable impact that the ‘Social Housing Under Threat’ campaign has had in less than a year of making a fuss about the importance of social rented housing. Eight members of the SHOUT steering group make it into the top 50 – although they all have other strings to their bow, like Tom Murtha who also chairs HACT and is 16th.

Other campaigners also do well, including Alex Hilton of Generation Rent, which has continued to make a lot of noise on behalf of private tenants, and Adrian Capon, the instigator of #housingday .

It almost seems unnecessary to mention that David Orr of the National Housing Federation has achieved a hat trick of top places. The successful ‘Homes for Britain’ campaign and rally and the general high profile of NHF mean it has been a good year for him, despite an undercurrent of criticism from SHOUT and elsewhere that NHF has stopped talking about the sector’s core product, social rented housing, and is seguing into the role of representing large non-profit housebuilders.

As the Election campaign is just underway, it is intriguing to see how the politicians have done. Labour’s Emma Reynolds leaps up from 15th to become the top politician, stealing ahead of George Osborne into 5th place, a good result given how hard it is to have an impact from opposition. Osborne slips 4 places to 6th, but he is clearly the person who decides housing policy in the Government, having just committed more than twice the annual affordable housing budget in one go on his new Help to Buy ISA. There is some money left, just not for affordable housing.

You would expect the current Housing Minister to make the list, and he does. Anybody remember his name? Yes it’s Brandon Lewis and he comes in at an insulting 49th. Not very good given that Grant Shapps was once top of the pile (or was it Michael Green?), and even the already-forgotten Kris Hopkins (13th last year) and Mark Prisk (5th in 2013) did rather better than that. Let’s hope Emma Reynolds and Brandon Lewis have the same relative power after May 7th.

Amongst the politicians, housing’s pantomime villain Iain Duncan Smith is in at 15th, recognition of the impact that the welfare reforms are having, and it is interesting to note that Lesley Griffiths, the Welsh Minister for communities and tackling poverty makes it in at 23rd and a former Housing Minister, John Healey, who has written a lot about housing recently and help instigate SHOUT, is in at 26th. Labour’s housing commission chair Sir Michael Lyons is 27th.

One slight improvement is that more women are recognised this year, up from 12 to 15. But intriguingly, women take half the places in the top dozen, with ex-DCLG and new CIH chief executive Terrie Alafat coming 4th followed by Emma Reynolds, Carol Matthews of Riverside, outgoing CIH chief Grainia Long, Alison Inman who is involved with CIH, TPAS and SHOUT, and Geeta Nanda, CEO of Thames Valley HA.

A rather large number of housing association chief executives feature, but there seems an underlying swing from the very large associations (who are still well represented, for example by David Montague of L&Q and Brendan Sarsfield of Family Mosaic) to the medium-sized associations who have been making more noise about the future direction of the sector. Tony Stacey of South Yorkshire HA, who leads the Placeshapers group of associations, is 2nd and Nick Atkin of Halton is 3rd. But some big players who have previously featured, like David Cowans of Places for people and Kate Davies of Notting Hill, have slipped out. The regulators also appear: Julian Ashby and Matthew Bailes of the HCA at 13th and 20th respectively.

Only 20 years ago many of the most important figures in housing were council housing directors. As far as I can see, none make this year’s list although the council sector is represented by its ALMOs: NFA chair Sue Roberts of Wolverhampton Homes, Eamon McGoldrick of NFA and Helen McHale of Stockport Homes.

And a final word about bloggers. Colin Wiles leapfrogs Jules Birch and myself into 18th after a productive year writing for a variety of journals but also as co-ordinator of SHOUT.

 

 

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City Villages – the wrong solution to London’s housing crisis

Last week on Red Brick we discussed a series of essays edited by Lord Andrew Adonis for the Institute of Public Policy Research (IPPR) proposing the transformation through redevelopment of existing council estates into ‘City Villages’.

Duncan Bowie has written the following analysis and detailed critique of the report. Duncan writes in a personal capacity but is convenor of the Highbury Group on Housing Delivery – an independent group of specialists from public, private and independent sectors from housing, planning and related professions which prepares proposals for Government – as well as being a member of the EC of London Labour Housing Group. He has worked in London housing and planning for many years, including for Ken Livingstone when he was Mayor.

The wrong solution to London’s housing crisis

By Duncan Bowie

Andrew Adonis’s introductory chapter seeks to describe the housing crisis in London and propose that the shortage can be met through redeveloping London’s council estates at higher densities. It seeks to bring together the proposals out forward by the various contributors to the anthology.

There are a number of fundamental errors in the basic assumptions in the report. The first paragraphs appear to confuse the data on London’s housing requirements with the London Plan’s capacity target. The Mayor’s 2014 Strategic Housing Market Assessment gives an annual requirement of 62,000 homes a year on the assumption that, as in previous estimates, the backlog of housing need is met within the 10 year plan period. The London Plan also refers to a lower target of 49,000 homes a year, but this is based on only meeting the backlog over 20 years. The 42,000 target in the newly adopted 2015 London Plan is based on the capacity specifically identified in the 2014 Strategic Housing Land Availability Assessment (SHLAA). There is therefore an estimated supply deficit of 20,000 homes a year, even of the available capacity is brought forward on the assumed timescale.

This would be a fairly optimistic assumption. In 2013/4, the latest period for which reliable data is available, as published on 27th March in the Mayor’s Annual London Plan Monitoring Report for 2013/4, net completions were 28,325 homes, comprising 23,986 net new homes from new build and conversions and 4,779 net new household spaces in non self contained accommodation, primarily student flats. Of the 23,986 net additions of self contained accommodation, 20,422 were net additions from new building, 1,225 were net gains from conversions of existing property, and 2,289 were net gains from change of use of non-residential property. The figures were net of 1,643 units demolished, 1,767 losses from conversions and 141 loss from change of use of residential property to non-residential uses. The distinction between net and gross output is important given the IPPR proposals involve significant demolition of existing property.

A second key mistake in the report’s set of assumptions is the reference to London’s existing development density. On page 11 of the report, Adonis states that ‘in central London, the average density of new projects is 78 dwellings per hectare’, and then this is contrasted with much higher figures for Paris, Barcelona, and Kowloon in Hong Kong. In fact as reported in the London Plan annual monitoring report, in 2013/4, the average density of new development proposals – consented schemes – in London as a whole was 137 dwellings per hectare. For central London boroughs, the figures were as follows: City of London 431, Tower Hamlets 430, Hammersmith and Fulham 390, Southwark 283, Hackney 242, Lambeth 214, Islington 199, Westminster 177, Wandsworth 162, and Kensington and Chelsea 144. Camden was below the London average at 128 dwellings per hectare. These figures are borough averages – some of the high rise developments have been at densities of over 2,000 dwellings per hectare, above the 1,700 figure quoted for Kowloon. The top of the highest sustainable density range in the London Plan – for central London sites with excellent public transport access, is actually 435 dwellings per hectare. Some outer London boroughs are also seeing relatively high densities for new developments, for example Greenwich at 222 dwellings per hectare, Croydon 165, Newham 149, Brent 147 and Sutton and Waltham Forest, both at 140 dwelling per hectare. Development densities in London have doubled over the last decade – Adonis’s figures are actually 10 years out of date, and fail to acknowledge the change in the nature of London’s development output.

Adonis focuses on the large number of council estates in London, making the curious comment that ‘this is far larger than commonly appreciated, including by many local authority leaders.’ This ignores two rather important points – that significant proportions of homes on ‘council estates’ are no longer council homes, having been sold under Right to Buy, and that the proportion of London’s households who live in housing which is council owned has fallen by half over the last 30 years to only 23% in 2014. On page 9, the report refers to only a fraction of council estates having been redeveloped in the last decade or with redevelopment underway. This ignores the significant redevelopment programme in the period before 2005, for example the t redevelopment programmes in the 1990’s and early 2000’s in boroughs such as Newham, Tower Hamlets, Hackney, Southwark and Waltham Forest, with several thousand homes in high rise and slab block estates demolished.

The report also ignores the issue of what type of housing London’s households in housing need can actually afford. The recent Strategic Housing Market Assesment demonstrated that 52% of households in housing need cannot afford market homes. The SHMA estimated that the annual need for social rented homes in London was 15,700 homes . This compares with the 3,580 social rented homes completed in 2013/4. This figure will fall further given the Government and the Mayor have stopped funding new social rented homes, with resources now being focused on new rented homes with rents at up to 80% of market rent.

The report also ignores the early programmes such as Estate Action which involved significant investment in rehabilitating older council blocks, and the more recent homes programme. Demolishing blocks in which there has been significant public sector investment seems to be not very good use of public money. Moreover buying back flats from leaseholders who have acquired properties on a subsidised basis under Right to Buy legislation to then demolish the homes represents a significant loss of public resources. In demolishing 1960’s and 1970’s estates, we need to bear in mind that in some cases local authorities and in fact council tenants in general are still paying off the debt charges for the original construction, as loan repayment periods can be longer than the life of the buildings financed.

The fundamental problem of the proposed approach is to view council homes as public assets which can be sold rather than as public assets which have a long term and appreciating value in their own right, and which can themselves provide security for new borrowing for new investment. There is a second problem, which is the conception that council homes are primarily assets rather than actually consumer goods – ie are occupied by households as homes, and generally by households unable to access market housing options. On page 11, Adonis tries to deal with the issue of displacement. He states that residents do not need to be displaced by redevelopment, as the number of homes on an estate can be increased, especially if adjacent land is used. Leaving aside the issue that redeveloping adjacent land will often in itself lead to the loss of businesses and jobs, that in practice, in the majority of redevelopment schemes, social housing demolished is not replaced – most replacement affordable housing is at much higher rents, and often does not replicate either the dwelling mix, in terms of bedroom size, or the space standards of the demolished homes. Redevelopment is often predicated on much higher development densities – with less open space and reduced social infrastructure. In a context where there is no significant government funding for new homes, apart from some repayable loans, ir becomes extremely difficult for a council or developer to ensure the one-for-one replacement which was originally a planning policy requirement at least in the London context.

On page 11, Adonis refers to the fact that Inner London’s population is below its 1939 peak. This rather ignores the extent of overcrowding in Inner London at that time, and the intention of the postwar Government, as set out in the Abercrombie Plan and the New Towns programme, to relieve that overcrowding by providing new homes for lower and middle income households, not just in suburban London as had been delivered in the interwar period, but in the new and expanded towns beyond the Green Belt. The report ignores the extent to which overcrowding actually increased in much of Inner London and outer west and outer East London between 2001 and 2011, while the fall in population in inner west London in areas such as Westminster and Kensington and Chelsea actually reflects the under-occupation and vacancy in private sector stock, including newly constricted prime property, rather than any reduction in the number or floorspace of homes available. The report refers to the fact that Georgian terraces in Kensington and Holland Park are at quite high densities ( though somewhat lower if you include the space in the private Georgian squares), but has no suggestion as to how to make these valuable properties affordable to lower and middle income households, or how to replicate their built form, but not their price, within estate regeneration schemes. On page 12, Adonis quotes Yolande Barnes’ Savills study that recent regeneration schemes have ‘typically doubled residential densities while improving housing quality and amenities’. That study, however gives no real examples or compares space standards and price before and after regeneration.

On page 13, Adonis refers to living conditions on some estates as ‘chronically bad’, and ‘scandalous’. Estates are referred to as ‘sink estates’, ‘notorious’ and ‘doomed’. This emotive language is not very helpful. Where estates are in poor condition because of historic underinvestment, it should be recognised that investment in repair, maintenance and management could significantly improve the quality life of residents. The report does not recognise the extent to which forced transfer, and loss of home impacts on a household’s quality of life, especially where the transfer is to a location where a household has no connections and which may be a greater distance in terms of travelling time and cost from work and family members, friends and the childrens’ schools.

Adonis is also grossly out of touch in his depiction of council estates as ‘sink estates’, full of the most deprived. In London, council housing has always acommodated as tenants a broad spectrum of middle-level occupations as well as lower-skill people. Furthermore the ‘Right to Buy’ has meant many tenants, prospering in their work, could remain on their estates as owners, while the re-sale of purchased units further diversified estate populations. It is thus just untrue that council estates in London are full of the poorest.

One of the curious aspects of the Adonis’s introductory chapter and the report as a whole ( despite the inclusion of Peter Hall’ resurrected essay) is that it sees the densification of council estates as THE solution to London’s housing shortage. Not only is the issue of shortage seen only in quantitative terms, with no thought to the issue of which households are in housing need and what they can afford, but the report fails to consider the range of other development options, whether in the form of incremental suburban intensification and infill development in low density areas, urban extensions to London or the Home County towns. Many of the contributors to the report are opposed to development through urban extensions, whether or not in the Green Belt, or to major new settlements beyond London, remaining partisan advocates of the so called ‘urban renaissance’ . Other contributors are explicit promoters of their own specific densification schemes, whether developers seeking to maximise returns or council leaders trying to move their boroughs ‘up market’. There is no consideration of which development option or combination of options is most sustainable in economic, environmental or social terms, Moreover, there is no recognition that if you reduce the supply of affordable housing in one area, you need to compensate with additional provision somewhere else, and that this option does not actually come cheap or avoid political controversy. In conclusion the proposal is ill informed, not cost effective in terms of use of public resources, socially divisive, damaging to the social and economic sustainability of London and highly disruptive in terms of the impacts on tens of thousands – possibly hundreds of thousands of lower income Londoners. It will not solve London’s housing shortage and would make the lives of a large proportion of London’s population much worse than they are at present.

Duncan Bowie
28.3.15

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Cameron fails the empathy test

David Cameron was totally thrown in the TV interview with Jeremy Paxman by the first question about people using food banks. He failed the empathy test, showed no interest in the people affected and resorted immediately to his learned statistics about the number of jobs the Government has created and so on.

Cameron is plainly uncomfortable dealing with the reality of poverty in Britain, some of it long lasting and much of it created by his policies – notably, in the case of food banks, his capricious and punitive removal of benefits under the ‘sanctions’ regime and the bedroom tax.

His discomfort arises from two things: first, he does not want to be exposed as the heartless and cruel person he is, willing to inflict such harsh policies; and secondly, he does not seem to have the first idea or any experience at all about the lives of poor people on which to base his response.

In the interviews, housing was once again the dog that didn’t bark. It plainly wasn’t on Paxman’s radar. Which is a pity because I would have liked the next question after food banks to have been about homelessness. I think Cameron would have been equally at a loss to understand what it is and how brutal it has become.

Of course the discourse of homelessness presupposes the concept of a home. Cameron talks about this a lot, but only in the context of people who aspire to buy. Then he goes dewy-eyed and waxes lyrical about a ‘home of your own’ and how it underpins everything else: a place of safety, health, family life, self-worth, well-being, prosperity, and community. He never mentions the importance of ‘home’ in the context of tenants paying hopelessly over the odds for a hovel, or having to pay for an ‘extra’ but much needed bedroom, or families dumped in bed and breakfast hotels.

He simply does not understand that it is the very concept of ‘a home’ and its vital importance in our lives that is the moral driver behind ending homelessness.

Labour’s record on homelessness can best be described as mixed. Important rights were restored and then gradually whittled away again as councils came under increasing pressure from the shortage of supply and rising demand of all kinds. All councils learned about ‘gatekeeping’ although some strayed well into illegality.

But since 2010 the policies of the Coalition – the Tories do not surprise me, but the complicity of the LibDems is genuinely shocking – have had appalling consequences. The numbers of households applying to councils and being accepted has kept going up since the Coalition came in despite the most draconian policies and bureaucratic barriers being imposed.

The trends are clear and the records of the different Governments are there to be seen. It took Labour some years after 1997 to get rising homelessness under control, but there was then an unbroken period of 6 years when both the number of households accepted as homeless and the number in temporary accommodation fell. Households in TA fell by more than two-thirds between 2003 and 2010.

Since 2011 the number of ‘acceptances’ (around 48% of applications under the Act are ‘accepted’) has risen steeply again as have the numbers in temporary accommodation (although the latter has seemingly plateaued).

Cameron’s warm words about the importance of family life and of children getting a good start is empty rhetoric for homeless people. Of the 61,970 households in TA at the end of 2014, 46,700 included 90,450 children. Worse, 2,030 of these households were in bed and breakfast accommodation, an increase of 31% on the previous year. Scandalously, 780 had been in B&B for more than the legal limit of 6 weeks, an increase of 55% from the previous year end.

It is no surprise that there is a concentration in London. But the London-specific feature that is most noteworthy is households located in TA in a different district from their own.  Nationally there were 16,000 such households , of which 93% (14,830) were from London, a 29% increase on the previous year. In the global scheme of things these numbers may seem small, but each one involves a household facing total dislocation in their lives, a change of schools, a loss of family support and community. It is always particularly worrying when families are in contact with children’s social work services; some of the worst abuse cases in recent years have involved families who became lost between different districts.

All statistics are taken from the latest official ‘Statutory Homelessness’ statistics released by DCLG on 26 March 2015. The statistical release contains a lot of useful background information concerning homelessness, including a summary explanation of the law and links to detailed tables.

On a side note: my friend Chris Holmes used to object to the use of the term ‘statutory homelessness’ on the grounds that there is no such thing as ‘non-statutory homelessness’ – all homeless people have rights under the law, even if it is limited to advice and assistance rather than a duty to secure accommodation. This is not just a semantic point: the DCLG report is shocking enough, but it is important to note that ‘acceptances’ are those who have been able to make a formal application under the Act and meet all of the criteria (priority group, unintentionally homeless). Many more are ‘discouraged’ from applying, simply do not know their rights, or do not qualify for ‘the main duty’. Other recent information suggests that single homelessness, whether sofa-surfing or living on the streets or in hostels, is also increasing steadily.

 

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City Villages or ghettoes for the rich?

I have a bright idea. London has a terrible housing crisis. There is a general shortage of homes of all kinds and a specific shortage of genuinely affordable housing. So let’s sell off the only genuinely affordable homes we already have and ‘redevelop’ large estates containing concentrations of the only genuinely affordable homes we have, replacing them with a mixture of much less affordable and downright unaffordable homes.

Doesn’t work for you? Well actually, it doesn’t work for me either. But this is exactly what a large number of housing people are doing in London today. And they want more. With developers all around London eyeing up estates for their next big killing, egged on by the mayor and councils like Barnet, it is a good time to have a hard think about what public policy should be.

A timely set of essays published this week by the Institute of Public Policy Research looks at the possibilities of transforming London’s, and especially Inner London’s, council estates into ‘City Villages’, with higher densities providing many more homes. There are lots of good ideas here, and a brilliant historical piece by the late Peter Hall, summing up in a few pages the successes and failures of London planning over 70 years. There are several interesting case studies from around the London boroughs. But two things got my goat.

First, in what at first I thought was a joke, they have a chapter by a representative of Capco about their Earls Court development. A city village (if 7,500 homes is a village) of rich people replacing long-standing social tenants with virtually no new social housing is not my idea of progress and has no place in such a report. People would be better off reading Dave Hill’s many reports on the development.

Tenants from West Ken and Gibbs Green estates demonstrate against the former Tory Council's plans for Earls Court.

Tenants from West Ken and Gibbs Green estates demonstrate against the former Tory Council’s plans for Earls Court.

And secondly, some of the essays are littered with casual prejudicial statements and phrases. Council housing estates are ‘mono-tenure’ (no such thing exists in London anymore, if anywhere) and lazy descriptions like ‘dysfunctional’ are used. The worst examples are exploited to generalise and condemn all estates. London’s housing market is indeed dysfunctional, but council estates are not top of my list for reform. Some authors seem to operate on the assumption that there is no community on estates because the people are poor; I wish they would look around at some of the campaigns going on in London now (for example in Barnet). Amazingly, when the surface is scratched you find estates are full of gifted people doing all kinds of great things in their communities. And when it comes to it, they can fight and organise!

The chapters in IPPR’s book are diverse and come from different standpoints. In some of the chapters there is recognition that a clear aim of regeneration should be to protect the existing residents and to replace the social rented housing like for like. In their  case study, Jules Pipe and Philip Glanville, writing about Hackney’s Woodberry Down, make it clear that this was an explicit objective that seems to be being achieved. But in others there is the usual lack of definition of ‘social housing’ and what is being discussed is the ‘Affordable Rent’ model, which is often not affordable at all. If people like Capco are not to be trusted, then neither are some of London’s biggest housing associations, who are switching as fast as they can from traditional social rent to ‘Affordable Rent’ at much higher rents. It is the central nonsense of housing policy: cut the upfront investment that would keep rents low, creating a commitment to pay higher housing benefit for ever.

Stephen Howlett of Peabody goes with the grain of the National Housing Federation’s calls for more ‘freedoms’ for housing associations by proposing ‘more flexible rents’. He says: ‘To increase affordability in London, a new, more flexible rent model that is based on a combination of the market rent and the tenant’s ability to pay, including the ability to move to shared ownership and/or outright ownership when appropriate, might offer an affordable solution for Londoners.’ Of course, the model is one thing: what matters is how many £££s people are going to be charged. To my mind, the only likely outcome from such new formulations would be rents that are significantly higher than social rents; landlords would have a direct incentive to find higher income tenants to get more rent (as is already happening with ‘Affordable Rent’). It is only social rents that produce quality homes that people on low incomes can afford.

Lord Andrew Adonis, who put the book together with IPPR’s Bill Davies, has proved to be a radical influence on the London scene recently, especially around transport. Here, he describes the need to more than double the rate of housebuilding in the capital. He has a nice vision of ‘hundreds’ of properly planned, mixed-tenure, socially mixed City Villages replacing existing estates. No-one doubts that there is a lot of potential to build extra homes on local authority land within estates, and that long-term comprehensive regeneration is the best answer in some cases, but I find the overly-grandiose vision unconvincing; the existing estates also had beautiful masterplans published before they were built with famous architects pointing to the parks and community facilities. The problem is that so much gets lost in the delivery, and these days social housing is the first to go when costs rise as they invariably do. My instinct is to prefer the approach of Islington Council, looking estate by estate for development opportunities to add vital social rented homes to the stock. I do not share the authors’ view that it is somehow wrong for Islington to have so many council housing estates using up some of the most valuable land in the country.

Adonis tries to contradict the ‘assumption’ that existing residents will be displaced by wealthier incomers. ‘This need not, nor should it be, the case, since redevelopment will usually mean a much better use of land with typically around twice the density of the existing estate’. But the proof of the pudding is in the evidence. A recent well-researched report by the London Assembly on regeneration in London discovered the huge scale of losses of social rented homes over the past decade – more than 8,000 in a relatively small number of comprehensive schemes. When you look around London now, things are getting worse: the political and financial drive behind development is to create ghettoes for the rich and profits for the developer. If that doesn’t change, City Villages will not become the cohesive mixed communities that Adonis dreams about.

The other issue that is critical to the regeneration of large estates is the problem known by the unpleasant name of ‘decanting’. Even if genuine commitments are made to existing tenants that they will be rehoused back in the new development on like for like terms, they often have to be rehoused elsewhere for a number of years. The normal solution is an alternative social rented unit provide by the council or a housing association – and ‘decants’ often have power to get what they want. Flats let to decants are not available to rehouse others on the waiting list or parked in temporary accommodation. In some boroughs the opportunity cost of the decanting programme has been huge. The impact of a major redevelopment on the flow of homes for new lettings is rarely recognised, and the IPPR report envisages redevelopment on a huge scale.

The issue of tenure is central to the consideration of major regeneration or redevelopment of existing estates. It is not just a matter of crude numbers of new homes – what is built at what rent and for whom matters just as much.

Social housing is our most important housing asset. Losses through regeneration and continuing losses though right to buy, ‘conversions’ to unaffordable ‘Affordable Rent’ and market sales to bring in the cash to pay for new build, create major questions which those in favour of the new City Villages need to answer – and don’t in these essays. If these questions can be answered and the provision of rented homes at genuinely affordable social rents becomes a primary objective in such schemes, then the proposed intensification and better optimisation of land use might be more of a runner.

 

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Throwing money at the housing market

What’s the best way of spending an extra £2bn to boost housing output? Is it really to give every first-time buyer couple a lump sum of up to £6,000?

George Osborne has committed future governments to spend £2,165 millions over the next five years to subsidise first-time buyers towards building their deposits. This is a new spending commitment: the Office of Budget Responsibility has already flagged it up as one of only five ‘very high risk’ Budget proposals, and it’s the most expensive of the five. The cost estimate is little more than a shot in the dark – if you’re giving money away from a supposedly bottomless pot, how can you possibly know how many people will want to dip into it?

It’s not as if this is the only ruse by the Chancellor which is stacking up commitments for future governments. As the UK Housing Review 2015 shows for the first time, the measures to boost the house market or subsidise developers were already due to clock up a massive figure over the period to 2020. The Budget give-away (sorry, ‘Help to Buy ISA’) brings the total commitment in terms of grants, loans and guarantees to a staggering £33bn. As Jules Birch asked in his live blog on the Budget, what would the reaction have been when the government first proposed equity loans (Help to Buy 1) and mortgage guarantees (Help to Buy 2), if it had said the next stage would be to give people free money?

It so happens that the sums now being allocated towards boosting the market are precisely double the total of grants, loans and guarantees for building affordable homes (£16.5bn). Furthermore, just looking at grants alone, the ISA scheme means that the government is now committed to direct spending over £2.7bn on the private market. To put this in perspective, this is equal to 58% of the commitment in grant over the same period to the Affordable Homes Programme (£4.7bn). Is Osborne really saying that handing over dollops of cash to first-time buyers can be justified, while the supposed need to tackle the deficit is forcing down direct investment in affordable house building to its lowest level for more than a decade?

This not only makes nonsense of government arguments about austerity, it also shows yet again that the government favours the better-off, as of course the scheme will dispense money in inverse proportion to need. Why? – because the lucky couples who have the incomes (or the bank of mum and dad) that enable them to save the maximum of £24,000 will hit the jackpot – £6,000 – in terms of government subsidy towards their deposit. It is not difficult to see that the scheme might be so attractive that it costs much more than the amount budgeted for it, perhaps forcing a cut in the already depleted Affordable Homes Programme.

And to make the most obvious point last, if a tranche of first-time buyers suddenly has access to bigger deposits, while supply of new housing continues to stagnate, the likely effect is a boost in house prices. In other words, while some lucky ISA holders will now get onto the property ladder, for those who can’t save as much it will be even more difficult than before to buy their first home. Given evidence from Zoopla that the current Help to Buy scheme is already feeding higher prices while having little effect on supply, this outcome seems inevitable. But perhaps this is just what Osborne quietly wants to achieve?

It’s perhaps not surprising in an election period that the government has given up on rational attempts to increase house building in favour of making promises of free money. But as Jan Crosby of accountants KPMG cryptically commented: “It would be better to have an ISA to help fund the building of new homes – not the buying of them.” Indeed. However, a future Labour government could do even better, it could put this money towards bringing housing investment back up to the levels achieved in 2010, as Red Brick has just argued. Someone has to call a halt to this housing market madness, who will have the guts to at least describe it as what it is?

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After Osborne’s Budget, social housing can win the Election for Labour

There has been so much commentary on the Budget that it seemed pointless to add to the noise already generated. But there is a truism about Budgets – the first day’s assessment is almost pointless, it is the second day that really matters, when all of the experts have had a good go over the figures and the Chancellor’s initial spin has been discounted. And the best place to turn is usually Paul Mason on Channel 4 and the Institute of Fiscal Studies.

It is become clearer as the Election approaches that the key moment in George Osborne’s Chancellorship was when he realised that his extremely tight fiscal policy was stopping the economy from recovering, and he relaxed his demands for cuts. By reverting to what was in effect Alastair Darling’s deficit reduction plan, set out before the 2010 Election, Osborne abandoned his own suicidal plan to remove the deficit entirely by 2015. Instead he has achieved a reduction of about one-third in money terms, dressing the whole thing up as a cut in half through a re-presentation of the statistics (talking about the deficit as a share of growing GDP).

Having got away with it once, he is now trying to play the same trick again. By presenting huge cuts in the first 2-3 years of the new Parliament, and by selling off nationalised banking assets (probably cheaply) earlier, Osborne can make it look like the deficit reduction objective is being achieved more quickly, that total national debt is starting to come down, and that the good times will then return. Jam tomorrow! It has nothing to do with economics, it is entirely a matter of political calculation.

The IFS point out that the cuts now proposed in the next 2 years are so large as to be unachievable – 5% in each year, twice the size of any cuts achieved in any one year of the 2010-2015 Parliament. Once you have taken into account the ‘protected’ departments, the cuts required in the remainder – including the Tory touchstone department of Defence – are unmanageable in such a short time frame. That is why Ed Balls is now speculating that Osborne would have to raise VAT again or remove the protection to departments like Health.

After the first 2 years, Osborne’s rollercoaster, as the Office for Budget Responsibility dubbed it, comes into play. It was only in December that Osborne set out a projection for a budget surplus of £23 billion for 2019-20. He has now revised that to a mere £7 billion – as the IFS notes, this is the biggest single change in the budget, and it transforms the prospects for public spending. Paul Johnson of the IFS called this ‘a pretty remarkable‘apparent change in economic philosophy’. Paul Mason described it this way: ‘George Osborne simply blinked: he looked at the scale of austerity he promised in December and realised it wasn’t politically going to be that popular’.

Even now Osborne’s figures rely heavily on the long-promised but never specified £12 billion cut in welfare spending. Even Duncan Smith at his most rabid will struggle to achieve that without touching pensioner benefits. That’s why IFS have challenged the Tories to put forward their welfare plans before rather than after the Election.

It is much more rational, and far less disruptive, to adopt a more gradual profile to end up in the same place, and to mix the burden of deficit reduction with tax rises and not rely entirely on public spending cuts as the Tories will do. A new Labour Government from May 7 would inherit a very bad year of cuts already underway, but could then take a much more sensible and planned approach to public spending in 2016.

The IFS also point to other factors that make the outlook for public spending more benign – notably inflation and the cost of debt interest. And the value of a new approach was reinforced by Stephanie Flanders, once of the BBC but now at JP Morgan, speaking on the Daily Politics, when she said that although the deficit figures look big they are of little interest to international financiers because their focus is on the prospects for growth. Growth is the mechanism that reduces the deficit without swingeing cuts – a lesson Osborne has partially but not fully learned.

The economic and political opportunity for Labour lies in the IFS conclusion that ‘our latest estimates suggest that Labour would be able to meet its fiscal targets with no cuts at all after 2015-16’. And going one step further on Channel 4 News, the aptly-named Soumaya Keynes of IFS said ‘If you take Labour’s plans, they might not need to cut spending at all by departments, in fact they could maybe increase departments spending by about £9 billion.’  Paul Mason summarised: ‘Ed Balls could, if he wished, do no cuts at all over the next 5 years and we could end up with Labour spending more over the next parliament; in other words, austerity ends on May 7th. This is a new situation created by George Osborne.

It is not too late for Labour to make a game-changing proposal which fits the emerging public mood against austerity and the new public understanding that it damages the wider economy if the Government stops spending, especially on investment. It will surprise no-one to learn that I would favour a plan to increase housing investment back to 2010 levels by 2016 (it will take some time to gear up anyway).

A big increase in grant for social rented homes would have a multiplier effect through the supply chain. Grant at 40% (rather than the current less than 20%) would generate matching private borrowing by housing associations, increase construction output and employment, generate tax revenues, and hold out the prospect of permanent year-on-year savings in housing benefit as the ‘benefits to bricks’ effect of lower rents works through. The preparatory year could be spent setting up public sector sites and challenging private developers to ‘use it or lose it’. A return to a robust s106 planning gain policy would maximise the benefit on mixed development sites.

If IFS are right, we would get all of these benefits without preventing Labour from meeting its aim to balance current spending as early as possible in the next parliament.

Housing has been rising up the political agenda. The Tories only have ultimately self-defeating demand-side plans which will eventually work through into prices. These can be left in place for the moment. Instead, Labour could have a bold supply-side policy which breaks through the sterile debate.

In short, social housing can win the Election for Labour.

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UK Housing Review sets out the challenges for all the Parties

The annual compendium of housing facts and figures was published yesterday by the Chartered Institute of Housing*. Now in its 23rd edition, it pulls together all of the key housing data and presents it in a digestible format, with lots of tables and diagrams. The analysis is particularly strong in linking housing activity to broader economic and fiscal trends and to welfare reform.

The added value of the document is the excellent commentary on the data provided by authors Steve Wilcox, John Perry and Peter Williams. I was going to summarise what I thought were the key points to emerge from their articles, but I can’t do better than Jules Birch in his quick fire blog.

Of particular importance is the huge shift that has taken place under the Coalition from financial support for affordable housing to financial support for private sector activity. This is also a shift from grant to loans and guarantees, including schemes such as Help to Buy, Build to Rent, and the PRS Guarantee. As Jules says, “The scale of these financial instruments entails state intervention in the housing market that would have been unimaginable before 2007.”  Not that it seems to have done much good if you look at the other facts and figures in the Review.

As the Election approaches, the most challenging chapter for all of the political parties is John Perry’s ‘Ten unresolved issues for the next government’. What an agenda it is:

  1. How do we double the numbers of homes built each year?
  2. Can we ensure the supply of more land available for housing?
  3. Can we meet the housing needs of different generations and income groups?
  4. Can we recognise the role of housing costs in feeding the growth in working age poverty?
  5. How do we provide additional social housing without making rents unaffordable?
  6. Can the tax and regulatory systems help create a more equitable housing market?
  7. How do we raise the standards of new housing?
  8. Can we address the problems of an ageing housing stock?
  9. How do we stop people falling out of the system into homelessness and destitution?
  10. Can we develop a long-term housing strategy?

On the last point, the Review highlights the ‘come today gone tomorrow’ nature of the Minister of Housing job. It lists all 35 people to hold the role since 1945, contrasted against a chart showing housing output. Of course, some Ministers were members of the Cabinet, others not, and some held the job as part of a much larger portfolio (like Aneurin Bevan).

The abiding question is how a much poorer country managed to produce vastly more homes 60-70 years ago than we do now, and a much larger percentage of it was affordable. If the experience then can’t be repeated, at least the ambition could be. As the chart so neatly shows, the difference lies in the collapse and disappearance of public sector output in the late 1970s and early 1980s that has continued since, a deliberately created shortage in supply that has never been balanced out by an equivalent increase in private and housing association output.

From 1945-54 the Housing Ministry changed hands only once, from Bevan to Harold Macmillan. Their success can be seen in the figures. But less famously, the most productive Housing Minister of them all was Richard Crossman in the 1960s. And he had the collapse of Ronan Point to contend with.

* The 2015 UK Housing Review is available here. Not cheap, but much of the data will be published free online later in the month here. Previous editions are also available on the site.

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