London LHG Housing Hustings: Tackling the Big Issues

A packed audience at the University of Westminster last night heard a passionate and knowledgeable debate about housing in the capital between all six potential Labour mayoral candidates.

gareththomasGareth Thomas addresses the packed Housing Hustings

diane abbottDiane Abbott talks to the media as she arrives

sadiqkhan2christian wolmartessa jowelldavid lammy

Left to right: Sadiq Khan, Christian Wolmar, Tessa Jowell, David Lammy.

The overall quality of the mayoral debate is significantly higher than the Leadership debate – which is being fought in the full glare of the media, with virtually all the press just waiting for opportunities to denounce whoever becomes the winning candidate, and start the ‘destroy Miliband’ operation all over again on a new person. Caution rules.

The London debate, by contrast, is largely being fought in the glare of the membership (and supportership, if there is such a word). The 250 people present last night knew their stuff, got right to the key issues, and took no rubbish. They didn’t want daft or unrealistic policies, or high blown rhetoric, but they absolutely wanted radical and practical policies that would tackle the real problems London has.

Someone tweeted that there was little focus on private renting given how many Londoners now rely on the sector: there was little disagreement and therefore nothing to argue about. All six had stories about bad landlords and Tessa described the appalling overcrowding she saw in a home in Newham. There was universal support for measures to restrain rents, to license landlords, to get tough on landlords who operate outside the law, and to either legislate against rip-off lettings agents or to set up non-profit alternatives. They all understood what could be done within the existing powers and what would need to be campaigned for. Christian was blunt: ‘The private rented sector is here to stay. We need to make it a stable place to live.’

There was also unanimity about the desirability of some form of land value tax, although there were different ways of arriving at one. Gareth was particular strong in stating that we won’t solve the housing crisis unless we sort out the land market. Christian has proposed a specific route from business rates to a land value tax in gradual steps.

Sparks flew on the issue of estate ‘regeneration’, which is becoming a big issue as developers eye up inner London estates as potential sites. David and Sadiq denounced regeneration as ‘social cleansing’. Sadiq was emphatic: ‘I will not allow council estates to be knocked down.’ Diane agreed: ‘Housing is about people and communities. What we have seen in the name of regeneration has been social cleansing.’ David was particularly  angry about what is happening in his own constituency of Tottenham in Haringey. Tessa argued that you have to start from the condition of the properties and that rebuilding may be the right solution if they produced mixed communities. She came under pressure about her supporter, Lord Andrew Adonis, who has written in support of widespread rebuilding of estates (see also a longer critique by Duncan Bowie here). Tessa and Christian had very different interpretations about what he had said.

A question about housing policies for outer London, and how Labour can win there, led to a vigorous debate about the green belt, which became David against the rest as he strongly supports building on some green belt land, because not enough houses can be achieved solely on brownfield. ‘We give more land over to golf than homes’, he said. Diane argued that it would be giving in to developers and such a policy would just put up land prices. Sadiq stressed that ‘there isn’t a single solution in outer London as each bit of outer London is different’ and said ‘I will not allow our greenbelt to be built on’.

Everyone got exercised by the use of the word ‘affordable’ but everyone used it. The word has been stripped of any meaning by the Tories, and most candidates seemed content to talk about council or social housing although Sadiq also has specific policies for creating new intermediate homes at ‘Living Rents’, by which he means one-third of incomes. All agreed it was a nonsense to link rents to market rents. In a side argument, Diane got into a row with Tessa about the level of ‘affordable’ or social housing achieved in the Olympic Park.

All of the candidates were in favour of greater devolved powers to the London mayor, although they mentioned different ones. Gareth goes furthest, saying London should be a ‘city state’ and using this example: ‘Scotland is about to cancel Right to Buy. If Scotland has the power then I want London to have that power’.

Tessa got on the wrong side of the audience on homelessness. She was, I think not unreasonably, arguing that rough sleeping will never be totally eradicated because there will always be new cases. All the candidates spoke about rough sleeping, Christian thought Boris Johnson had taken the issue seriously, the others emphatically didn’t. No-one spoke of other forms of homelessness and the growing use of temporary accommodation out of borough and sometimes out of London.

Apart from land, the issue of building new homes recurred throughout the debate. Most candidates are in favour of a new homes agency to move development along, disagreeing only in the form that it should take. Christian called for a target of 50% social housing (not just ‘affordable’) in new development and argued that ‘Increasing owner occupation should no longer be an objective. Nor should rising house prices.’ Diane doubted the usual assertion that building more new homes would bring prices under control: ‘Building more homes is necessary but building more homes is not sufficient.’ She said.

A flavour of the debate can be found through #labourhousing where there are also plenty of photographs. This is my favourite tweeter joining the debate.

Harry Leslie Smith ‏@Harryslaststand

It’s wrong that many must live like my generation did in perpetual rent poverty to keep the 1% wealthy #labourhousing

harryleslie smith

I’m sure I’ve missed many points, but hopefully this gives a taste of how it went. Please add comments if you feel I have overlooked an essential point or got something wrong.

All of the candidates are welcome to further the debate through #redbrickblog

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London mayor: the housing policies of Christian Wolmar

This is the last in a series of six articles on the housing policies of the Labour mayoral candidates. There are many overlaps between them but also some important differences. In the run up to the selection vote, #redbrickblog will look at some of the issues arising during the debate.

Christian Wolmar on housing

As a mayoral candidate, Christian Wolmar is the long distance runner, or perhaps cyclist would be a better analogy to choose. He entered the race in 2012, known as a transport journalist but not as a politician, with the objective of raising issues that required ‘long-term thinking’. Ever since, he has toiled around London speaking at meetings and getting himself better known – to the extent that he is now noticed in opinion polls and achieved the number of nominations he needed to continue to the shortlist.

Despite his background in transport, Wolmar describes housing as the number one problem facing any incoming mayor. He does have a historic connection to the issue, working on the magazine Roof in the 1980s (when I was at Shelter). And, like David Lammy, before the Election he published a long report on his own housing policies – called Putting a roof over our Heads: the Wolmar for London Housing Vision.  Like all the candidates, his policies are a mix of things he would do with current powers and things he would like extra powers to do.

Despite the proper focus in the London housing debate on new building, Wolmar stresses the importance of the fact that the stock of houses is relatively old and expensive to maintain, with 15% dating from the 19th century and more than half from before 1940 – only one in ten have been built since 1991.

He is scathing about what is currently being built in the capital. He condemns the current mayor’s ‘affordable homes’ policy, with rents up to 80% of an escalating market value ‘which, for the most part, is completely unaffordable for ordinary Londoners’. He objects to the building of so many luxury homes, especially the dominance of overseas sales: ‘Big claims (by Johnson) about the numbers of new homes are irrelevant if many are designed solely for an export market that will not house any Londoners. We need the right sort of homes.’ He therefore supports restrictions on foreign sales and a return to a comprehensive programme of social rent.

For private tenants, he supports limits on rent increases, raising examples from California, New York and Germany, and better security of tenure.

Of course, having worthy aims is one thing, finding the money is another. Here Wolmar backs a fundamental reform of property taxes, starting with the proposals of the London Finance Commission in 2013. To be effective, the London mayor needs access to resources on a comparable basis to the mayors of New York or Paris. This is essential, he says, because of the problems of dealing with London’s current size and its rate of population growth.

Wolmar’s ‘Housing Vision’ is organised around 8 straplines:

  • Devolve property taxes to London: Primarily council tax and business rates, including setting tax rates, banding and discounts and, crucially, revaluation. The package should be fiscally neutral, and he excludes Stamp Duty from the devolved package.
  • Update council tax: Introducing new higher tax bands to end the regressive nature of council tax.
  • Create a land value tax: Starting by revising business rates so they are based on site values.
  • A better deal for renters: A move towards longer tenancies, rent increases during tenancies capped at RPI, a ban on rip-off letting fees by agents. Revise the London Rental Standard (currently voluntary) and set up a Rogue Landlords Taskforce to tackle landlords operating outside the law.
  • A new homes delivery agency: The current mayor’s housing strategy requires an inadequate 42,000 extra homes a year. Wolmar would establish a New Homes Delivery Agency to focus on getting brownfield sites developed, buying land wherever possible at pre-planning values.
  • Stop the wrong sort of development: As mayor, Wolmar would ‘call in’ more developments, insisting on more affordable housing and refusing schemes like Earls Court.
  • Restrict overseas buyers: Tackling empty homes and buy-to-leave will be a priority, including greater use of compulsory purchase.
  • Retrofit home insulation: A much faster and more ambitious programme is needed.

Wolmar’s achievement in getting through to the shortlist as someone who has never been an MP or even a councillor is significant and he has achieved his first aim of improving the debate. We will have to wait to see how his efforts translate into votes – but he is an optimistic outsider: “I really believe I can do this. After all, [New York mayor] Bill de Blasio started out fourth in the primary.”

 

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London mayor: the housing policies of Gareth Thomas MP

This is the fifth in the series of articles about the housing policies of Labour’s mayoral candidates.

Gareth Thomas on housing

Gareth Thomas MP, who retained his Harrow West seat at the 2015 Election despite the outer north London swing to the Conservatives, is a former Minister and shadow spokesperson, working mainly on the foreign policy and international development briefs.

But it is the fact that he is a Labour and Co-operative MP and also chair of the Co-operative Party (since 2000) that provides the biggest clue to his position on housing. Gareth follows the long tradition of Co-op Party support for progressive housing policies and especially co-operative ownership and management.

At the election he argued for 10% of the new housing being promised by Labour to be in co-ops (20,000 out of 200,000). He explains his support for co-op housing like this:

Co-op housing helps create a sense of community with tenants involved in key decisions and able to shape a little more the area they live in. Some of the power that would otherwise sit with the private, Council or housing association landlord is instead placed in the hands of the very people who live in the homes.

And he singles out Coin Street as an example of what can be achieved:

Coin Street’s success in building affordable co-op housing in one of Britain’s most desirable locations with its spectacular views across the capital should be an inspiration to the next Mayor to use their own Housing Company to repeat that success many times over.

In recent years he has supported the setting up of council-owned companies to help build new or lease existing properties to meet local need. He has proposed setting up a London Housing Company to help attract finance into building more affordable social housing, including co-op housing. Similarly, he has called for a change in the law to allow mutuals to raise capital from bonds along the lines of the scheme in France, and he has encouraged housing associations to borrow more from ordinary Londoners, building homes with ‘money that would previously have been saved in Isas, premium bonds and interest bearing deposit accounts.’

Gareth has used local constituency examples to illustrate some of his housing policies. For example, he highlighted the Old Post Office site in Harrow, where there are very few affordable homes in a 300-plus flat development. He says this shows that ‘Boris (Johnson)’s refusal to insist on any basic minimum proportion of affordable homes is a critical factor in London’s ever growing shortage of affordable homes.’

The next Mayor should, he says, ‘set an increasing minimum target for affordable homes in new housing developments. 15% in a Mayor’s first year, 25% in their second year, 35% in year 3, 40% in year 4 with 50% being the target for each of a new Mayor’s second term….. A slowly rising affordable housing requirement for developers will help them to plan long term, incentivise them to start developments earlier, and deliver more of the genuinely affordable homes London desperately needs.’

A highlight of Gareth’s campaign has been the emphasis he has put on London becoming a ‘City State’, on a par with Scotland and Wales, able to make its own decisions over the wealth the city creates and becoming more able to tackle the poverty and deprivation that is found there. In particular he thinks London should have greater control over property taxes, although he would also support greater local control over income tax.

I have my doubts about the city state idea (being a Geordie, can Newcastle be one too?), but Gareth does have a neat line about London needing a Barnet formula just as Scotland has the Barnett formula.

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London mayor: the housing policies of David Lammy MP

This is the fourth in a series of six articles on the housing policies of each of the shortlisted mayoral candidates.

David Lammy on housing

As an early declared candidate for mayor, and to his credit, David Lammy, the MP for Tottenham, published a detailed 40 page report on his housing policies as long ago as August 2014. (The full report can be read here). The report describes the housing crisis in London, and the facts he reports will be familiar to readers of Red Brick: failure in housebuilding, escalation in house prices and rents, unaffordability, bad housing conditions in the private rented sector, and homelessness.

In his analysis of the issue, Lammy started with the economic case for housebuilding and the continuing costs to business of enduring housing shortages, and the threat they pose for the future. He highlighted the advantages that housebuilding could bring to the Treasury, writing that ‘making housing affordable is also the only fair and sustainable way of reducing the UK’s burgeoning housing benefit bill.’ But he does not see housing entirely as a matter of economics: ‘The quality and location of our homes dictate the quality of our lives, and we need more homes not just to meet demographic demand and economic need, but to improve the quality of life for millions of Londoners.’

So what were the key conclusions and recommendations of his report? He divided them into three sections.

First, on building the homes we need, he made a number of proposals relating to land. He called for a register to be created of all land, public and private, which could be suitable for housing. He called for a faster release of public sector land. He wanted to intensify development in some places, with higher densities and high rise housing in central London and near transport hubs, and he called for greater innovation to achieve higher densities in new terraced housing and low rise blocks. He also supported moves to encourage smaller developers, to improve council planning capacity, and to launch a ‘help to build’ scheme.

Controversially, Lammy clashed with CPRE when he called for a review of all green field land within London, for the release, perhaps with land swaps, of poor quality greenbelt land, and for stronger links between new housing development and transport infrastructure spending. He made the point about the green belt more colourfully in a tweet on May 22, when he said: ‘Greenbelt regulations allow older generations to protect their golf courses while young people can’t afford a decent home. Needs to change.’

Writing on Red Brick in September 2014, Lammy was strongly critical of Boris Johnson’s so-called ‘affordable rent programme:

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

Secondly, on meeting the affordability challenge, Lammy called for a new definition of affordability, linking rents to incomes and setting an upper limit on the proportion of income that ‘affordable housing’ can consume – which he has since defined as 50%. He wanted to set a minimum acceptable number of affordable homes to be provided in developments, and he also proposed a review of the Community Infrastructure Levy.

For councils, he wanted to lift the cap on prudential borrowing in the housing revenue account, to control the right to buy by reducing discounts, requiring replacement homes, and introducing new covenants on sales that would, for example, prohibit future private renting. He wanted councils to be able to raise extra funds for housebuilding by adding additional council tax bands and he wanted to incentivise councils to build by allowing them to keep part of any savings achieved in housing benefit as a result of building new council houses.

Thirdly, to keep rents down Lammy supported the introduction of a ‘rent stabilisation policy’ with ‘sensible rent controls’ including a cap on rent increases, linked to longer tenancies and strengthened security of tenure. He also wanted to introduce a London-wide register of landlords.

Lammy said it was ‘wilful ignorance’ to ignore the scale of the challenge:

‘There is no quick fix, no magic wand to be waved at a problem that has been left to worsen for decades, but there are substantial steps we can take to address the crisis. London is at a pivotal juncture. If we put in place effective long-term policies now, we can ensure that the London of 2030 will still be the greatest city in the world. Continue to practice wilful ignorance for the scale of our housing challenge, however, and 21st Century London will fail to deliver on its promise.’

If his report still represents the core of his housing policy, Lammy has added some points since its publication. He has proposed a London Value Tax on overseas investors who leave homes empty, which he claims could raise £650 million to invest in council housing. And earlier in June, he proposed to build 30,000 new social homes paid for through funds from the GLA group of organisations and a new London Housing Bond. His plans to issue up to £10 billion worth of bonds during his mayoralty also involved a new new organisation called Homes for London directly funding the building of new homes.

Like all the candidates, in spelling out his views Lammy does not say much about which ideas can be delivered within the mayor’s current powers and what would require new legislation or additional devolved powers. It will be a test both of the new mayor’s powers of persuasion and of the Conservative government’s genuine willingness to devolve power to a politician with whom they disagree. By throwing down the housing gauntlet early on, Lammy has encouraged a focus on housing policy which is to be welcomed.

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Labour MP acts against unfit homes

If you ask someone in the street ‘should residential accommodation be fit for human habitation?’ the answer in all probability will be ‘of course’. The question has a certain logical consistency. If you decide something is ‘unfit for human habitation’ you would imagine that there are absolute rules to prevent a human from living in it, and that someone seeking to profit from such accommodation would be liable to damages at least.  If only life was so clear.

130 years ago, in 1885, Parliament in its wisdom first decided that residential accommodation that is rented out should be ‘fit for human habitation’ by passing the Housing of the Working Classes Act. Incorporated into subsequent pieces of legislation, the provision is now contained in the 1985 Landlord and Tenant Act (section 8).
The problem with this apparently progressive Victorian legislation was that it tied the definition to rent limits which, unsurprisingly, have come to mean nothing due to inflation. The present rent limits are £40 for a contract prior to 1957 and £80 for a contract since 1957 (in London; £26 and £52 respectively elsewhere). I suspect anyone finding a home for rent at even £80 would be overjoyed – and here we are talking per annum and not per week.

This weakness has been spotted before. In 1996 the Law Commission called for the rent caps to be removed, a proposal supported in principle by the Court of Appeal, which remarked on the unsatisfactory state of the law when tenants are “…wholly without remedy in the civil courts against their landlords, however grievously their health may have suffered because they are living in damp, unfit conditions…” (Issa v Hackney London Borough Council (1997) 29 H.L.R. 640).

There are of course other statutory provisions which impinge on housing standards, but, for various reasons, they are all insufficient for ensuring that properties are fit for human habitation. I am grateful to the excellent Housing Law Practitioners Association for the following explanation:

(a) The primary repairing obligation imposed on landlords is s.11, Landlord and Tenant Act 1985. This requires the structure and exterior of the property to be maintained, as well as any equipment for e.g. supply of heating or hot water. The difficulty with this is that it does not assist where a property is uninhabitable due to a design defect, so long as the structure is sound.
(b) The provisions of Part 1, Housing Act 2004 allow local authorities to serve notices on landlords which, if appropriate, can require remedial works to be carried out. This remedy is insufficient, however, since it is dependent on a properly resourced enforcement regime in each local authority area and, in any event, cannot be used where the local authority is itself the landlord.
(c) The possibility exists of a tenant bringing a private prosecution for a statutory nuisance under the Environmental Protection Act 1990. The unreality of leaving a tenant to prosecute his landlord is obvious.

Today, Karen Buck, MP for Westminster North – an area with a long history of unfit housing going back to Rachman and beyond – introduced a private members’ Bill, The Homes (Fitness for Human Habitation) Bill, which seeks to remedy the long term neglect of what should be a basic provision in housing law. The Bill’s core provision is to abolish the rent limits. Tenants would be able to claim redress for a breach of an implied term of the tenancy by suing for damages or getting an injunction, avoiding the current dependence on a local authority serving a notice. The procedure to be used by the tenant follows that already in use for repairing obligations.

The Bill modernises the definition of what constitutes unfitness by adding Category 1 hazards under the 2004 Housing Act to the list of factors. HLPA point out that this would ensure that, for example, Category 1 carbon monoxide poisoning would now be included. The Bill provides necessary protection for landlords where the cause of unfitness is due to the actions of the tenant or a natural disaster or phenomenon, and it makes clear that the landlord is not liable for property owned by the tenant.

As a specific but important clarification of the law, this appears to be a perfect topic for a private members’ Bill. And who could be opposed to it? We shall soon see.

Information for this piece from Karen Buck MP and the Housing Law Practitioners Association

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London mayor: the housing policies of Sadiq Khan MP

London Labour Housing Group has organised a Housing Hustings on July 2 to enable Labour Party members and registered supporters to quiz the candidates for the Labour nomination on housing. It will be chaired by Dave Hill of the Guardian. Register for the Housing Hustings via Eventbrite.

This is the third in a series of pieces (in alphabetical order) on each of the Labour mayoral candidates’ housing policies as they have been announced so far.

Sadiq Khan on housing

Sadiq Khan, currently MP for Tooting, did not declare his candidacy for mayor of London until the General Election was over and done. He has therefore had to play catch-up with some other candidates who declared much earlier. His recent speeches and articles have devoted much of their content to housing, and he is backed by the only Labour politician to have actually run housing in the capital, Ken Livingstone.

Khan’s recent form on housing policy goes back to 2013 when he edited a series of essays on London for the Fabian Society, including writing the housing chapter. Along with other candidates, he puts housing at the top of his list of priorities, saying that a solution to the housing crisis is ‘the single biggest thing that Londoners need from their next Mayor’.

His pitch starts with London’s communities and the loss of social benefits that are following the shortage of new and affordable homes. He says:

‘It (the shortage) also raises a fundamental issue of what kind of city we want London to be. Do we want it to be the preserve of the wealthy alone, or do we want it to be an inclusive city where everyone has the potential to thrive? One of the things I love most about London is its a place where people from all walks of life live side by side. We notice when our neighbours are struggling and our communities are changing and it affects us all – not just those at the very top and the very bottom.’

Khan is adamant that there is no silver bullet: ‘Fixing the crisis will require us to roll up our sleeves every day, and get on with the hands-on work of bringing forward land, getting developments approved and then getting on with building them.

To do that he will set up a new London Homes Team at City Hall – not an external organisation, but an in-house dedicated housing development team who will be charged with sorting out the financing of new homes, dealing with the current mayor’s scandalous underspend. He will launch a London Home Bond to bring in private investment and fight for greater financial devolution to London and more freedom for boroughs to invest in more affordable homes.

Khan thinks that the tenure of the housing being built is important. He would reinstate the 50% target for genuinely affordable homes as a share of all new build, to tackle the ‘massive windfalls’ being enjoyed by landowners currently and ensure that planning powers are used to ensure that local tenants and first-time buyers are offered first chance on new homes.

Noting that the Tory Manifesto did not even mention private tenants, Khan’s policies have been most innovative in relation the private rented sector, going beyond the policy proposed by Labour in the election. In particular, he wants the government to give the mayor the power to freeze rents in the city. He also plans to establish a London-wide not-for-profit letting agency that would promote longer term, stable tenancies for responsible tenants and good landlords. Bad landlords would be ‘named and shamed’ and tougher action taken against offenders. He says: ‘As the Tories shrug their shoulders, I’m determined to show that we can do more to help Londoners who are renting privately.

He would introduce a new London Living Rent tenure, going back to Livingstone’s idea that new affordable housing should be divided between social rented homes and ‘intermediate’ homes aimed at people who cannot afford to buy but are essential to London’s economy. By offering rents linked to a third of average renters’ incomes, these tenants would be helped to save for a deposit to become buyers in the future.
In relation to the new government, he is committed to campaigning against the reduction in the benefit cap and selling off housing association homes, putting him at a distance from most of the Labour Leadership candidates. ‘Together’, he says, ‘these policies will exacerbate the crisis and rip London’s communities apart.’

Finally, it is worth noting that Khan has been a strong advocate of building Garden Cities outside London. In his Fabian essay, he argued that we must ‘look outside London’ and recalled the Atlee government’s achievements:

The last Labour government to inherit a housing crisis near the scale we face today was Clement Attlee’s. Within a year of taking office, the Labour government opened the first of eight new garden towns in the south east. These new towns provided wonderful environments for London’s workforce to live in, with quick and easy commuter links into the city. They eased the pressure on London’s housing stock and, crucially, were built far quicker than could have been possible within the city.
Everyone recognises that new cities must play a major role in London’s future, yet nothing is happening. If we win the general election (sic), we must urgently get on with the job. We will give new town development corporations the financial backing and additional powers they need to get on and build the next generation of new towns and garden cities.

It will be interesting to see if, as mayor, Sadiq Khan will be able to work effectively with the Tory government to get a new generation of Garden Cities off the ground.

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The economic and fiscal case for social rented housing is unanswerable

SHOUT, the campaign for social rented homes, has stolen a march (together with the National Federation of ALMOs) by commissioning the global macroeconomic research company Capital Economics to undertake independent research into the fiscal and economic case for building 100,000 new social rented homes each year.

This was inevitably something of a risk. Could the case for a major programme of building social rented homes be made under rigorous scrutiny and analysis?

SHOUT’s core argument – that a major programme of new social rented homes offers not only the best housing solution for people on low incomes but would also be beneficial for the wider economy, reduce the requirement for housing benefit, increase work incentives, and be positive fiscally – needed to be tested in a robust way. The key question: should building 100,000 new social rented home a year not only be a flagship housing policy but also a central component of the Long Term Economic Plan?

The Capital Economics report, published today, is unequivocal. ‘The economic and fiscal case for building new social rent housing is unanswerable’.

shout report

If the trends over the last Parliament were to continue into the future – building almost no social rent, a modest amount of ‘affordable rent’ and becoming increasingly reliant on the private rented sector to house people on low incomes – ‘the overall bill for housing benefit is set to accelerate – worsening the government’s structural deficit now but also into the longer term’. The trends, say CE, are unsustainable, as the cost of housing benefit (UK) can be reasonably projected to increase from around £24 billion today to almost £200 billion a year by 2065-66, with households in the private rented sector accounting for 63% of the total, up from 37% today. Building 100,000 social rent homes would reduce public sector net debt as a share of gross domestic product – the holy grail of the Chancellor. A long time frame? Certainly, but this is the horizon for the Office for Budget Responsibility’s long-term fiscal projections. And the point of a Long Term Economic Plan is to make decisions that are, well, long term.

‘Investment in new social rent housing offers a solution that is fiscally sustainable and economically efficient’.

CE make the key point about social rent: it requires both investment, financed by private borrowing, from social landlords, underpinned by a level of upfront contribution from the state. Once built, the servicing of the debt, management and maintenance of the properties and other costs can be covered by rent. Once built, no further subsidy is required. Over an even longer time scale – as homes have to last for even longer that the debt – the homes make a return. ‘A social asset is created which will endure for decades, if not centuries’.

Not only does the equation work in terms of the fiscal trade-off between bricks and benefits, it also works as an economic stimulus. Each pound of investment is estimated to stimulate an extra £2.84 of economic output through the supply chain and the extra spending of employees. Each £1 would stimulate an additional 56p of new tax revenues for the exchequer.

It would also have other beneficial knock-on effects that are harder to estimate and have not been included in the fiscal arithmetic. They note savings that could be made due to improvements in health, well-being, education and energy efficiency. They note possible improvements in policy towards children, due to the security of having a stable home, and to older people, who will have the greater possibilities of living in a suitable home rather than expensive residential care.

CE model the effects of building up gradually to 100,000 social rent homes a year by 2020-21, to enable the commissioning agencies, the construction industry and the supply chain to adapt. So where is the down side? At the start of the programme, the welfare savings and new tax receipts will be less than the money needed in grant to fund the new homes – so initial additional public borrowing is required. CE estimate that this would peak in 2019-20 at no more than 0.13 per cent of GDP. The policy would be creating a net surplus to the public finances by 2034-35. Taking a long term approach to controlling the deficit would, say CE, be welcomed by financial markets.

The report can only be briefly summarised here. It has a wealth of detailed material and many sophisticated calculations to demonstrate the case. It can be pored over by other macro-economists and fiscal experts. But it will become the core text for all of us who care about housing and want a balanced housing policy that encourages both sustainable home ownership and high quality affordable renting. Housing policy is off the rails; it is totally ineffective whilst at the same time being hugely expensive. ‘No direction home’ as Bob Dylan would say.

There is a solution. I have waited 30 years for the case to be made as well as it is in this report. Just a little political bravery could put us on the genuine path to solving the housing crisis in a generation. It is a policy that could be adopted by any and all political parties because it works, fiscally, macro-economically, and in social policy terms.

Because, as Capital Economics say, the economic and fiscal case for building 100,000 new social rented homes a year is UNANSWERABLE.

 

 

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London mayor: the housing policies of Dame Tessa Jowell

London Labour Housing Group has organised a Housing Hustings on July 2 to enable Labour Party members and registered supporters to quiz the candidates for the Labour nomination on housing. It will be chaired by Dave Hill of the Guardian. Register for the Housing Hustings via Eventbrite.

This is the second in a series of pieces (in alphabetical order) on each of the Labour mayoral candidates’ housing policies as they have been announced so far.

Tessa Jowell on Housing

Tessa Jowell put housing at the top of her list of priorities when she was interviewed by Andrew Marr last Sunday. Operating under her ‘One London’ banner, she says she will ‘tackle the housing crisis with Olympian effort’ and will demonstrate this priority by creating a new body called Homes for Londoners – a housing equivalent of Transport for London within the GLA – on day 1 of her mayoralty, building on a Ken Livingstone idea from the last mayoral election. She would chair HfL and appoint a Housing Commissioner to drive her policies forward.

Tessa points out that the last time London was building the homes it needed, in the 1970s, the GLC and the boroughs were contributing 23,000 a year. The council she was a senior member of even back then, Camden, provided many of them. She points to increasingly extreme housing needs in London – from overcrowding to damp to the lack of affordability – but is also clear that housing is essential to London’s economy, commenting that:

‘Unchecked, the homes crisis risks triggering an economic crisis, with talented staff being priced out of the capital. With 100,000 new Londoners joining our city every year this a dynamic crisis that intensifies with every day we let slip by. We cannot take our economic success for granted – without action on homes, London’s economy is at serious risk. A city which cannot retain its talented workers cannot retain its status as a great city.’

In getting homes built, she would start with the mayor’s own land, committing to building 2,000 affordable homes a year on that land – although it is not yet clear if she intends the mayor to be the direct builder, the commissioner, or the funder of these schemes. She would plan to work in partnership with Government, councils and the private sector to develop a long term plan for homes in the capital. And she makes a commitment to build homes across the tenures: ‘Using that partnership we need to create a step change in the numbers of all types of homes – social rent, genuinely affordable rent, rent-to-buy and home ownership’ with an emphasis on building communities and not just housing.

She identifies a number of urgent tasks for HfL: to mobilise all the resources of London to get building; to develop the skilled workforce needed to overcome shortages; to start a new generation of purpose built rented homes at reasonable rents; to chamion the rights of boroughs to intervene in the private rented sector; to sponsor a new ‘rent to buy’ programme; to use use planning powers to require affordable home ownership; and to take a tougher stance on empty homes.

‘The time for excuses’, she says, ’has long since gone. I will not allow Londoners to be denied access to homes because they happen to live in a borough not interested in growth, or live next to public land whose owner is too nervous to propose major new developments.’

Tessa has been extremely critical of the Government’s plans to extend the right to buy to housing association tenants. It is a policy that is ‘blind to what is happening in London’, forcing associations to sell homes at huge discounts and funding it by forcing councils to sell off the most valuable homes on the open market. Tessa believes that this runs the risk  that ‘the majority of the money raised from selling off council homes will be here in London’ but the benefit could end up going elsewhere – to areas where tenants are more able to buy. ‘Under the new plans’, she said, ‘instead of getting to grips with council waiting lists we would have to expend almost all of our energy, resources and land just to replace the homes that are being sold off.’

Like all the other candidates, she will have to undertake a detailed assessment of the powers already available to the mayor and the extra powers that she will have to campaign for – with a Government in power that is hostile to social housing, to borrowing, and to intervention. Over the next few weeks, it will be reasonable to anticiapte more detail on how some of Tessa’s Olympian ideals will be turned into practical policies. More will need on how the mayor’s existing planning powers can be used, how resources will be generated, how she would redress the balance between social rented and affordable rented, and how the mayor can mobilise a major effort to improve conditions in the private rented sector.

 

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London mayor: The housing policies of Diane Abbott MP

London Labour Housing Group has organised a Housing Hustings on July 2 to enable Labour Party members and registered supporters to quiz the candidates for the Labour nomination on housing. It will be chaired by Dave Hill of the Guardian.

Register for the Housing Hustings via Eventbrite.

It is good news that all six candidates for the Labour nomination who reached the threshold of receiving five nominations have been included in the forthcoming ballot. All six have given prominence to their views on housing and we can anticipate a decent debate. Below is the first in a series of pieces (in alphabetical order) on each of the candidates’ housing policies as they have been announced so far.

Diane Abbott MP on Housing

As she risks following Tony Benn into the limited ranks of left-wing national treasures, Diane Abbott still has the ability to say stuff that others are more restrained in saying. It shows how old I am that Diane is sometimes now described as a veteran. However I remember her stint as a councillor for Harrow Road Ward in Westminster (1982-86) which happened even before Shirley Porter went gerrymandering with housing policy. Diane became MP for Hackney North and Stoke Newington in 1987, breaking the mould as the first black woman MP. Like all black leaders in the 1980s she became a target for the right wing press and, it appears, she was even regarded by the intelligence services as a threat to the British state. Cuddling up to Michael Portillo on Andrew Neil’s sofa has softened her image somewhat and she now gets murmurs of empathetic approval rather than hisses when on programmes like Any Questions.

It is impossible to be an MP for a constituency like Hackney North and not have strong views on housing. Since she let it be known she was interested in becoming mayor, she has had plenty to say on the subject. Like all candidates, her policy statements are a mix of things that are within the mayor’s powers already and things that would need a major extension of powers, which may or may not be forthcoming in light of the new Tory Government’s supposed commitment to devolution.

She has strongly supported a return to policies which require developers to provide a share of affordable housing in developments, criticising Tory strides away from the policy which provided 3 in 5 of new affordable homes nationally in 2010. As mayor, she says, she would veto any planning application which did not match or exceed a quota of 40% affordable homes or make an equivalent contribution to a London Homes Fund. ‘Above all’, she says, ‘I would be a champion of building public housing’ and would campaign for councils to be able to borrow to build.

Diane has specifically called for priority to be given to building on London’s brownfield sites and continuing the protection given to the green belt. She argues that building on the greenbelt may be the ‘easy option’ for developers, but the homes would not be where families need them to be, would require much more expensive infrastructure, and would involve turning our backs on London’s long standing commitment to protect biodiversity.

In terms of the private rented sector, at the end of last year Diane aligned herself with Generation Rent’s position on rents, including a 50% landlord tax on those setting rents above a cap set at half the relevant local council tax band, although she later said that theirs was just one of many methods. She has called for boroughs to have the power to introduce rent controls, although it is unclear if they would have local discretion or whether all rents would be set on a formula (as proposed by Generation Rent). As mayor, she would chair a ‘Rent Board’ to implement and monitor whichever method of rent control is chosen. Writing recently, Diane commented with approval on the tightening of rent controls in Berlin, ’not a major Marxist conurbation’, saying that ‘Any major international city, without measures to stabilise rent, runs the risk of its rental market spiralling out of the ordinary person’s reach.’

Diane would also make the existing mayor’s London Rental Standard mandatory and work with boroughs to introduce city-wide landlord licensing, building on initiatives like Newham’s, to bring about a tough enforcement regime on housing standards. She supported Labour’s national plan to ban unfair lettings fees and to make longer tenancies the norm, but thought that they ‘did not go far enough’.

Diane supported the Mansion Tax ‘in principle’ because it was a redistributive proposal, but like other London MPs, criticised its implications for older Londoners who bought houses in once unfashionable parts of London that were then gentrified around them. She got into a spat with Scottish Labour Leader Jim Murphy for saying that the tax would fund additional nurses in Scotland, money that she said would be ‘expropriated from London’.  More broadly she has supported proposals, for example from the London Finance Commission, that London should keep a larger share of its property taxes.

As the campaign intensifies, like all of the candidates, Diane will get more opportunities to expand on these policies and to explain how they might come to be implemented.

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Osborne’s rules threaten to end new council house building

Requiring governments to run budget surpluses earned the headlines from the Chancellor’s Mansion House speech. But few noticed that he also wants to ditch the principle that borrowing is the best way to fund capital investment.

The reasons for borrowing to invest are obvious: it enables the project to be done now, when it’s needed, and the costs are spread over the project’s life, with accountants following familiar rules to ensure that expected income will more than meet the costs of the debt. Gordon Brown enshrined the principle in the term ‘prudential borrowing’, which has applied in local government since 2003. The rules then encoded by CIPFA have been followed for 12 years without any apparent breach. Any council investment must follow the CIPFA code, with council housing uniquely limited since April 2012 by additional, Treasury-imposed borrowing caps. Nevertheless, the system has begun to produce results for housing. In the three years since that date, 5,640 new council houses have been started. In the previous three years, there were 3,440 starts, and in the three before that, less than 700.

All this is threatened by Osborne. Whatever the merits of legislating to run a budget surplus ‘in normal times’, no past chancellor, and no other modern government as far as I’m aware, has ruled out borrowing for capital investment. If the new rule extends to capital as well as revenue spending, there will be two big consequences. The first is that government (whether central or local) will have to run budget surpluses to build up an investment fund before it can embark on a housing project or infrastructure investment, leading to years of delay. The second is, of course, that governments will turn to private investors to fill the gap, because they won’t be restricted by the daft rules to be imposed on the public sector. To be able to turn rental income into investment, councils will again be tempted along the routes of stock transfer or PFI deals; otherwise they’ll be forced to limit themselves to building the handful of houses each year that can be paid for from revenue surpluses.

Of course we don’t yet know the details of what is proposed and sense may prevail when the full implications sink in (not least because of what it would mean for favoured schemes like new roads and bridges). Nevertheless, it adds to a growing list of threats to council housing in particular and social rented housing in general. My list of the most recent ones is this:

  1. The new Affordable Homes Programme (AHP) – which precludes building for letting at social rents.
  2. Conversions – the last AHP (which ended in March) led to 80,000 homes being built but at the cost of converting more than 80,000 existing homes from social rents to ‘Affordable Rents’. Even more conversions will be needed for the new AHP.
  3. Right to buy sales – council starts (see above) have been vastly exceeded by sales and the gap will grow as discounts are increased.
  4. Right to buy 2 for housing associations – like RTB1, it will see social rented homes sold and (perhaps) replaced by units at Affordable Rents.
  5. Planning gain (section 106) – numbers of units delivered will fall as more loopholes open up, allowing obligations to be reduced or avoided completely.
  6. Estate redevelopment – with encouragement from the housing minister, more homes will be demolished and the new units will be less affordable and fewer still will be let at social rents.
  7. Welfare reforms – the next wave will hit social housing even harder, making it especially difficult to house larger families and pushing more low-income tenants out of their homes.
  8. Discretionary housing payments – helping to mitigate the effects of the bedroom tax and other ‘reforms’, are being cut year-on-year.
  9. High-value council house sales – yet-to-be-defined plans will force councils to sell off their most valuable properties as they fall vacant; if replaced, they will be with homes at Affordable Rents.

If we add the possible end of prudential borrowing to this list, it starts to look like a concerted attack on social housing (and particularly on council housing). At the very least, the combined effects of RTB1, sales of high-value property, welfare reform and the threatened borrowing changes are likely to make most councils think twice about their council house building programmes. Yet only recently the new secretary of state was proudly pointing to the increase in council house building over the last five years, and even Grant Shapps thought he’d unleashed a significant amount of house building with council housing finance reform in April 2012. Who would have thought that those 170 new council housing business plans, drawn up with the encouragement of Conservative ministers, would turn to dust after three short years?

There has been a vigorous debate recently about the threats to social housing, involving bloggers Tom Murtha, Colin Wiles and Joe Halewood being opposed by the more optimistic Hannah Fearn. They’ve rightly focussed on issues like the planned cut in the overall benefit cap and RTB2. The list above shows how the threats are accumulating, and the problem is that it seems any list will soon be out of date. Whether what’s happening is a ‘slow death’ or a ‘killer blow’, talk of the mortuary no longer seems premature.

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