One (stifled) cheer for the Autumn Statement

It is hard to imagine a housebuilding policy that could be more extreme than the position reached by David Cameron and George Osborne last year. Having virtually ended new programmes of social rented homes, in favour of the so-called ‘affordable rent’ programme, they went one step further and pulled the plug on AR in favour of total reliance on subsidised home ownership products. The Government was only going to offer help to those who already had incomes that brought them within touching distance of home ownership. The rest could go hang.

Theresa May and Philip Hammond have rowed back from this position a little way. Quite how far is still unclear. The headline extra money that Hammond announced in the Autumn Statement sounds less impressive when you realise it covers a five year programme from 2016-2021. They will spend in half a decade what some might think is a reasonable programme for a single year.

It is good news that there will be more money for grant for new homes. The penny has dropped that a policy based on subsidising and supporting demand for home ownership is bound to fail in the medium term because the subsidy will feed into price increases unless there is a corresponding increase in supply, thereby defeating the original purpose. Subsidising supply is a much better thing to do. More grant will enable a bigger share of each development to be ‘affordable’ and, depending on the policies of the funder and the delivery body, should also ensure that some of the programme is for social rent. More grant makes negotiating s106 planning gain agreements easier.

It is also good news that there will be more money available for infrastructure to support housebuilding. Inadequate infrastructure has been a big barrier to many developments. However, there is still a lot to play for in operational terms to make the money work hard. Public funding of more infrastructure should mean more development is viable, producing more homes and more affordable homes, but, if not managed well, it could just feed into developer profits by reducing their costs. There is also a risk that it becomes another way of paying for roads. Programme management and effective negotiation will be key to getting the best possible social return.

It is also good news that the Government is now willing to see the grant that is available go into a wider range of forms of tenure – although the Treasury documents only talk about ‘affordable rent’ (ie rents at up to 80% of market rents) despite the Government’s talk of having policies that work for everybody. The extra money does not yet mean there will be  a new stream of social rented homes.

Strategic funding bodies – the London Mayor and the Homes and Communities Agency in the rest of England – will be encouraged to help people who fall into Theresa May’s  definition of ‘Just About Managing’, whatever that is. But a genuinely inclusive policy would also be aimed at those who are ‘Just About Sinking’. At this point a slightly less regressive housing investment policy comes face to face with a regressive benefits policy. Despite a small amount of amelioration, the impact of the new benefit cap and the general squeeze on benefits has not yet been felt. There are dire expectations that these changes, matched with a growing lack of access to private renting for people on benefits, will lead to a surge in homelessness over the next period. Measured against such need, the extra money begins to look very modest indeed.

The news has been well received in London, which will get the lion’s share of the new cash for investment. Sadiq Khan and his housing deputy mayor, James Murray, have played blinders so far, getting the balance right between shouting from the rooftops about London’s needs, winning the argument that housing is the biggest barrier to economic growth in the capital, negotiating stealthily with Ministers who are more open-minded than their predecessors, convincing them that they can help deliver Government priorities as well as promoting their own. Khan is now in a strong position: he controls the funding pot, can set the terms of trade, and is refining the planning requirements. Housing associations and developers are already beginning to go with the grain of his policies, just as they did with Ken Livingstone, and, miserably, just as they did with Boris Johnson. I think the new administration is genuinely committed to getting a social rent programme moving again. The extra cash oils all the wheels of their policy.

Outside London the response of the HCA to the new flexibility is harder to predict, and I have yet to see a response from them. In some places new combined authorities and, next year, the Metro mayors will have a much bigger say in what happens. Elected authorities should seek movement away from the priorities set out in the current Shared Ownership and Affordable Homes programme 2016-2021 – which was described by the HCA itself as ‘a decisive shift towards support for home ownership’. As the HCA is due to announce initial allocations under the programme shortly, effective intervention from local areas is needed now.

Together with decisions like dropping ‘pay to stay’, the deferment at least of forced sales of council high value homes, and action on letting agents’ fees, Gavin Barwell has made a strong departure from the policies of Cameron and Osborne. Yet the Office for Budget Responsibility raises doubt that the balance of new policies will increase housebuilding, predicting a reduction not an increase in housing association output.

So, should we welcome the new direction in policy? Well, that’s a big word. My feeling is that it is rather like going 10 rounds with Anthony Joshua. You would welcome the fact that he has stopped hitting you so hard. You also know that the pain is going to endure, but there is genuine relief that things might be less bad than they could have been.

It’s a victory for all those who have campaigned against the extremes of Government policy, but I can only give it one (stifled) cheer.

The response of SHOUT the campaign for social housing can be found here.

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Thinking it through

The latest housebuilding figures, and especially the disastrously low figures for affordable homes and the virtual disappearance of new homes for social rent, have refocused attention on housebuilding.

In the run up to the Autumn Statement there has been some speculation that there will be a new Government housing initiative. Whether this will just be another doomed attempt to rejuvenate home ownership or something likely to be more effective, we will just have to wait and see.

One indicator that housebuilding really has risen high up the political agenda is the number of reports being issued by think tanks and others of all political persuasions. Thinking about and making recommendations about housing is in overdrive, and it is hard to keep up. So I thought I’d draw attention to a few reports I’ve looked at recently. (My apologies to those I have missed).

The Respublica think tank reported on ways in which the Government could finance the huge number of homes that the country needs. Its report, Going to Scale, proposes setting up a long-term National Housing Fund which would deliver 75,000 homes a year ‘and get the housing market to work for the many’ by dealing with the ‘fundamental problems of number, pace and scale’. The NHF would be a fully returnable £100 billion investment over 10 years with Government acting as a guaranteed buyer of new homes built by housing associations and small and medium sized builders, building up their capacity at the same time and reducing dependence on a few volume housebuilders. The report is critical of schemes to help people buy homes if there is insufficient action on the supply side to ensure the availability of new homes on the market. The homes would be let to economically active tenants who aspire to buy at a later date. Homes could be subsidised and targeted to specific groups such as key public sector workers. The scale would mean low borrowing costs and give builders the confidence to develop many more sites and faster. The report however has nothing to offer those on lower incomes who will never be able to buy.

An even more surprising report comes from Localis, much panned in these pages over the years for their sadly influential report calling for the end of social housing. Power Behind the Home makes the case for devolution as the key to building more homes, giving local authorities greater flexibility around finance and land. Their theory is that there isn’t one housing market in crisis but ‘hundreds in need of correction’, with each area needing a different prescription. After consulting key local government stakeholders, the report says that a better national housing strategy is still needed but it should set the political direction and be permissive in nature. For local authorities, the report proposes the lifting of the HRA debt cap, the setting up of combined authorities’ housing companies, the full retention of right to buy receipts locally and restrictions on the letting out of RTB properties, the levying of council tax on empty development sites, and ‘powers to freeze land values where there is a mayoral development corporation.

Also on the theme of devolution, the IPPR North think tank’s new report also calls for radical new powers to be devolved to new regional city mayors. Closer to Home sets out the challenges faced by the new metro mayors due to be elected in 2017, also using the argument that there is not one housing market, but many. It says the approach to devolution has been piecemeal and partial so far, with greater central control due to the National Planning Framework, Homes and Communities Agency conditions and prescriptive policies like Starter Homes and Right to Buy. In some areas it believes mayors should be able to determine issues such as building on green belts, the local retention of stamp duty receipts, and the release of public sector land, receive direct capital grant funding in return for raised housing targets, and have greater control over planning frameworks to co-ordinate housing and infrastructure.

Over towards the Labour Party, the report of the Redfern Review, commissioned by Labour’s Shadow Housing Minister John Healey MP, looks in detail at the reasons for the decline in home ownership over the past decade. The report says that home ownership has dropped from 71% to 64% since 2003 but for people aged 25-34 it has dropped from 59% to 37% – a huge drop. It accepts that house price growth is one contributor to this decline but not the biggest – which it says is the decline in access to mortgages (due to static or falling incomes as well as credit restrictions) especially since the financial crisis. It concludes that additional housing supply alone is unlikely to shift the homeownership rate in the near future because of the rate of household formation. Politically, the report calls for a long-term cross party non-partisan approach to housing that focuses on all tenures to create a fair market for all, with the establishment of an independent Housing Commission to own the national strategy. ‘What is needed is decades of consistent supply improvements, in both quantum and particularly location….  Longer term thinking and cross-party co-operation is needed so developers can safely invest in larger projects and in infrastructure.’

A new report from the Centre for Regional Economic and Social Research at Sheffield Hallam University by Tom Archer and Ian Cole takes a more critical look at the volume housebuilders. Profits before Volume points out that their performance over the last few years has seen a sharp increase in their level of profits and a much more modest increase in their output. Reasonably they point out that the business model applied by these developers over the past few years has escaped much scrutiny compared to the endless analysis of the faults of the planning system and other factors. These firms guard against volatility by controlling the release of land from their landbanks, which strengthens their negotiating position on individual sites. Consolidation in the sector has reduced the number of small and medium sized companies, putting the big companies in an even stronger position. Their strategies are understandable in that they are still working through the implications of the 2008 crash and especially by rewarding shareholders who were deprived of dividends then. Their conclusion is that these large builders are likely to continue to fail increase output to help supply meet demand.

I suspect that the sensible conclusion looking at all of these reports and others is that there is no single silver bullet but a wide range of new policies and funding are needed to make a difference. The common thread through all of the reports is the need for long-term thinking and the need to create long-term confidence that development will be supported in a variety of ways.

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However, given that the worst housing performance since 2010 has been the number of genuinely affordable homes (see chart sourced from Neal Hudson @resi_analyst on Twitter) I would also like a much stronger focus on the policies that will deliver decent homes to people on the lowest incomes who will depend on rented homes for as far ahead as anyone can see. In a month which has seen a resurgence in interest in the rising crisis of homelessness, the policies we need are not just those that will build more homes generally but those that will build homes which are genuinely affordable to everyone on the income distribution.

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The Redfern Review into the decline of home ownership

BY Dermot Mckibbin, Beckenham CLP*

This review was commissioned by the John Healey MP Shadow Secretary of State for Housing though is independent of the Labour Party. Peter Redfern, the Chief  Executive for Taylor Wimpey chaired the review. (click here Redfern Review for more details)

The review reflects John Healey’s  determination to put widening the opportunities for home ownership at the heart of Labour’s approach to housing. It is a signifiant development in the Labour Party’s housing policy for a tenure group that it is often ignored by the Left.

The review takes the view that the fall of home-ownership in England from 71% to 60% frustrates the legitimate desire of most people to own their own home. There have been too many short term initiatives in housing policy. Solutions seeking to improve home ownership without considering the impact on other tenures will be unsuccessful.

The reason for this decline are  several. Real house prices rose by 151% from the end of 1996 to the end of 2006, while real earnings have risen only about a quarter as much as that. The growth of buy to let mortgages and the global economic crisis have also contributed.

The review does not adequately address whether subsidising demand for house buyers is inflationary. Page 15 claims their studies show that 1% increase in the number of dwellings would reduce house prices by 1%. However on page 49 the review concedes that a 1% increase in housing stock lowers housing prices by 1.8%. This inconsistency is not adequately explained.

Student loans and tuition fees have hindered young people from saving enough to pay for a deposit. The number of 25-34 year olds living at home with their parents has increased by 1 million between 1997 to 2015. No consideration is given as to how this group would benefit from rent controls in the private rented sector.

The solution is decades of consistent improved supply. This can only on be achieved by a political consensus between all major political parties. The Help to Buy Equity Loan Scheme even though it is inflationary needs to be retained and better targeted especially towards young people. Under this scheme the Government lends buyers  up to 20% of the cost of a newly built home. Buyers only need a 5% cash deposit and a 75% mortgage to make up the rest. This scheme is very beneficial for builders.

The right to buy ‘one for one’ replacement policy should be extended so that all council homes sold should be replaced and not just some. Housing  policy making would be improved by the setting up of an independent Housing Commission similar to the Infrastructure Commission.

The review concedes that Help to Buy: Equity Loan will inflate house prices to the extent that it does not create incremental supply. According to a 2016  government evaluation study, this means that for every 100 homes built through the support of these equity loans, 57 would have been built anyway. The evaluation study and not the review itself mentions that this scheme is funded to the tune of £9.7 billion until 2020 and is expected to cover up to 194,000 new home buyers. The review does not question whether this  amount of public subsidy is fair.

Ideas to support existing home owners to remain in their homes were apparently outside the scope of the review.  These are:

  • Unemployed home owners only receive state help with their housing costs for 12 months.
  • Giving low income home owners greater help to improve their properties.
  • Greater legal rights when lenders take possession proceedings against home owners.

No mention is made about the problems faced by leaseholders as covered by the Guardian in a series of articles recently. Taylor Wimpey and others have been criticised  for their policy of building leasehold houses and then selling on the freehold. The lease contained a clause that doubled the ground rent every 10 years. According to the owners their house is now unsaleable.

Research by the Coalition Government has found out that there are more leaseholders than previously thought in England and Wales. The figure is up from 2 million to over 4 million. London alone has two thirds of all leaseholders in England and Wales. Over 60% of all newly built properties are flats. Any proposals to improve the  rate of home ownership needs to address this widely ignored research.

The Redfern Review will hopefully start a much needed debate within the Labour Party about owner occupation and the leasehold housing market. There needs to be much a much wider debate about whether the Help to buy: Equity Loan scheme represents value for money.

 

*Dermot Mckibbin is a retired housing lawyer who until recently worked for Greenwich Housing Rights. He is interested in leasehold reform.

 

 

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Still ‘500 miles’ from home, today it is 50 years since Cathy

The film Cathy Come Home, directed by Ken Loach and written by Jeremy Sandford, can be seen in full here. It is highly recommended if you have never seen it. The credits track was ‘500 miles from my home’ by Sonny & Cher, hence the title of this piece.

I would also like to draw attention to another blog remembering Cathy, by Tom Murtha on Inside Housing, which can be found here. Inside Housing has launched a campaign to mark this week’s 50th anniversary of the landmark film – campaign logo below and more information here.  It is also carrying an interview with the Director on his feelings about what has happened since he made Cathy. (IH’s Cathy anniversary stories are free to read and not behind the paywall).

Much to their credit, a group of housing associations has also been organising ‘Homes for Cathy’ events and activities around the anniversary. Many associations were founded at this time as concern for the homeless grew, one being Shepherds Bush HA, who held an anniversary event this week.

More links and reflections can be found by using the hashtags #CathyComeHome and #Cathyat50

Below are my thoughts.

50 years ago today the BBC screened ‘Cathy Come Home’ as one of its series of Wednesday Plays.

I remember it as if it was yesterday. I was 16 and I have more memories of 1966 than of any other year of my childhood or youth – the World Cup, ‘O’ Levels, Aberfan, the escalation in Vietnam, the first General Election I paid attention to, the Moors murder trial, the Rhodesia crisis, Revolver by the Beatles (Dylan’s Blonde on Blonde was also released but I wasn’t aware of it at the time). And Cathy……..

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I have seen the film dozens of times (it was a regular feature when I used to give talks while working for Shelter in the 1980s) but it is hard to explain the impact the first showing had. Years later it was voted the ‘best single television drama’ and ‘the UK’s most influential TV programme of all time’. Twelve million people watched it that first night, about a quarter of the population. No-one had ever seen anything like it, it was so realistic. And genuinely shocking. It felt like everyone had watched that Wednesday Play, and everyone talked about it the next day. No single TV programme could have that kind of impact today, with hundreds of channels and many other distractions.

My Dad was a plasterer, in work nearly all the time, my Mam a part-time cleaner, and we could hardly be described as well off. We lived in a council house – a Bevan house – on the large Montagu estate near what was then the northern city boundary of Newcastle. The house was of an amazingly high standard, front and back gardens that were my Dad’s pride and joy, and at the top of the road the Kenton Bar was the last building before open countryside stretching all the way to Cheviot. It could be tough but it was a great place to grow up. Until I saw the film it was unimaginable to me that people like Cathy could exist or that stories like hers were possible. All she ever needed was the one thing we had – an affordable council house, a secure and comfortable base on which to build a life.

There was little public consciousness of homelessness prior to the film, and the revelation that homelessness could lead to children being taken away from their family was shocking. It is so shaming that the number of homeless people is vastly bigger now. Ken Loach’s latest film, ‘I, Daniel Blake’, is also having a serious impact and shows how little some things have changed. Its theme has echoes of Cathy. The circumstances are different, but the core story is the same: a decline from a contented and stable life into poverty, caused by ill health (Daniel’s heart attack and Reg’s accident at work), the experience of state institutions that punish rather than support, ending in destitution and total break-down.

I met Ken Loach when I worked at Shelter in the 1980s, I think introduced by Des Wilson, the founding Shelter Director. I tried to interest him in doing another film on housing and showed him around the sights of Paddington, the dozens of bed and brekfast hotels housing homeless families in Bayswater, the huge and squalid multi-occupation terraces of Sutherland Avenue and the rapidly deteriorating Mozart Estate, then only 10 years old but already neglected by Westminster Council. He didn’t bite but proved to be both charming and quite hostile to the very idea of soggy liberal housing charities (something that made more sense as his own political position became better known). There ended my career as the second Jeremy Sandford.

50 years since Cathy means that the 50th anniversary of Shelter is imminent. The two were widely assumed to be linked but in fact it was just a remarkable coincidence that Shelter was launched a few days after the film was shown. It still gave Shelter huge impetus. Now a large organisation providing vital advice services, it seems to have lost some of its campaigning edge and punches below its weight in terms of influencing public attitudes and Government policy.

Cathy was the start of my political awakening, an event in my teens only matched by reading Robert Tressell’s ‘The Ragged-Trousered Philanthropists’ and being exposed to ‘ideas’ at University that converted my working class chip into a vague leftish philosophy. I have suffered periods of optimism since – 1974 especially, and 1997. But the 50th anniversary of Cathy, the resurgence of homelessness matched by the apparent indifference of much of UK Housing, Labour’s divisions and ineffectuality, all in the context of a global resurgence in nationalism and intolerance, make me feel that I have been deluded for fifty years in thinking that, as day follows night, each generation will do better than the last.

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What happens when a homelessness reduction Bill meets a homelessness increase policy?

A surprising degree of consensus has broken out in support of the Homelessness Reduction Bill, a private members Bill due to be debated in the House of Commons tomorrow (Friday), with backing now being given by both the Government and by the Opposition as well as the Local Government Association (whose members will have to implement it) and the charitable homelessness sector, primarily Crisis, which is in enthusiastic support. The Bill will need to get the backing of 100 MPs in a division tomorrow to be able to pass the first substantive stage and then go into Committee for more detailed scrutiny.

The version of the Bill to be debated tomorrow (it has already been amended from the original version after negotiations with the LGA and scrutiny by the CLG Select Committee) can be found on the House of Commons Library site here and the Library has also done an exceptional (as usual) Briefing Paper for those interested in the detail, which can be found here.  There is a summary and a full briefing, covering not only the Bill but the current legislative framework and the various measures of homelessness. You can also sign up to regular Library bulletins on the Bill if it progresses to further Parliamentary stages. The scrutiny report by the CLG Select Committee is also of interest and can be found here. All of this background activity suggests that there is an expectation that the Bill might go the distance.

The Bill seeks to bring into English practice something similar to the system developed in Wales which is widely deemed to have been successful in reducing homelessness by providing early intervention and support and proper advice and assistance to all homeless people not just those deemed to be in priority need. Bob Blackman MP, the Tory sponsor, has said he wants the English system to do more to prevent homelessness in addition to being a safety net (one with large holes these days I have to say). He believes councils do not engage early enough when people are threatened with homelessness, especially from a private tenancy, single people are often turned away without advice, and there is too much variation in council practice.

Of course any improvement in the provision of services and enhancement of the rights of people threatened with homelessness is to be welcomed. My purpose here is to make a few more general comments.

First, the system introduced in Wales was carefully developed after detailed research and in close consultation between the Welsh Government and local councils – a method they call coproduction – and it has been regarded as being a success in its first year of operation, providing advice to a wider range of people and preventing homelessness actually occurring for many. Sensibly, there is close monitoring of the outcomes so the Welsh Government is in a good position to assess progress. Given the budget cuts imposed on Wales it is an outstanding piece of cooperative governance. However, the pressures in Wales, great through they are, are not as overwhelming as those in some parts of England and especially in London. It is good news that the LGA has considered the Bill in detail before agreeing to support it with a few amendments, but it will still be hard for some councils to respond in the way intended.

Secondly, there are doubts about some of the detailed content of the Bill which should be borne in mind if it goes into Committee. Those interested in the legal detail – how the Bill might operate and its impact on the existing legislation – are advised to follow Giles Peaker’s contributions on the Nearly Legal blog. After consideration, Giles also supports the Bill’s second reading, saying: ‘Overall, taken as a whole, the Bill is a positive step and my view is that second reading should be strongly supported. But there are some serious issues and drafting points that need to be addressed in committee and subsequent stages.’

Third, my cautionary tale. I was closely involved with Shelter during the implementation of the 2002 Homelessness Act. This introduced mandatory homelessness reviews and each council was obliged to put in place a homelessness strategy. There were positive changes to the priority need categories. In parallel, Government adopted a target to reduce the number of households in temporary accommodation by half (which was achieved a few years later). It all seemed so positive. Sadly the emphasis in strategies on the prevention of homelessness, combined with strong Government moves towards meeting the TA target, had some perverse outcomes. In particular, the desire to increase prevention led to the introduction of ‘housing options’ services which too often spilled over into stronger gatekeeping, as we have reported on Red Brick before. Use of TA came down (until the Tories took over in 2010) but it seemed this was often at the expense of homeless people who were turned away rather than an improvement. Similarly, councils have been under an advice and assistance duty in relation to single homeless people before, but with only limited results.

Fourth, the title ‘Homelessness Reduction’ is a total misnomer and gives a false flavour of what is happening in the housing world. Councils, especially in the highest demand areas, are struggling to find even temporary accommodation at present and the supply of genuinely affordable permanent accommodation will continue to fall as a result of Government policy. Councils have faced massive cuts to budgets and most have struggled to maintain any kind of advice service. The impact of many of the social security changes, especially the new benefit cap, has yet to be felt and there is likely to be a significant rise in homelessness as a result.

Homelessness can only sensibly be seen in the wider context of housing supply and poverty. None of the relevant policies and none of the indicators are going in the right direction. I hope this Bill will provide more support for individuals facing the trauma of threatened homelessness and will help many of them to postpone homelessness or obtain other accommodation: if it does, it is worth supporting just for that. But let no-one be in any doubt that homelessness is going to get worse not better. Cathy will not be coming home any time soon.

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Let’s get our gentrification story even straighter

Dave Hill is an award-winning (and deservedly so) commentator on London and I’ve never had much cause to take issue with him. But on the issue of regeneration/gentrification (they are not the same but let that pass for now) he takes a line that is a deliberate challenge to the developing orthodoxy. As someone who can’t avoid the charge of being a metropolitan leftie – although I’m not sure it’s an insult – it is important to take his commentary seriously.

Dave’s latest blog for the Guardian – Let’s get our gentrification story straight – sets out his argument. I would summarise it as this:

Gentrification is now getting blamed for destroying London’s soul. Pejoratively, it characterises demographic change as colonisation by the rich and the pushing out of the working class. Reaction to it has created a political battlefield across the capital. There are genuine anxieties but the analysis of it is not as solid or righteous as it seems. It has been going on for decades. It is the product of (Inner) London’s revitalisation after the era of decline and falling population. Ordinary people have always migrated to the suburbs and continue to do so. Growth and the failure to meet housing demand cause competition for space. Yet there are still high levels of social housing in the most gentrified boroughs, like Islington. Poverty rates are still high. There are also benefits: like middle class pressure for better schools. It is not a simple battle between communities and gentrifiers. Urban neighbourhoods are constantly changing. He quotes the Centre for Cities who say it is a ‘myth that creative incomers are to blame’ and the true root of the problem is ‘poor city management’. Dave concludes by saying we need a constructive practical flexible political response ‘that helps to shape urban change to best and most equitable effect’.

I hope I’ve done his argument justice in one paragraph. But the point of this is that I absolutely agree with the last two sentences – I would also agree it is the product of revitalisation – but I would get there through a different logic. Location and city growth theory would predict that something like this would happen in a free market. A rich centre, spreading outwards, surrounded by a poorer ring with more affluent suburbs beyond. Over the last thirty years, London’s poorer ring has moved out organically. It appears to me that parts of what used to be Outer London now resemble what Inner London used to be like. Market responses are leading to large family houses being divided up into a lot of small (and profitable) flats and sharing of existing accommodation (sometimes to the point of overcrowding) is becoming more common. When I first moved to north Paddington in the 1970s the area was a mix of private renting and cheap home ownership, housing mainly working class English, Irish and West Indian families. Physical conditions were pretty awful. This population has now gone – I assume by moving out to Harlesden,  Willesden, Cricklewood and beyond – it is now a cosmopolitan area where houses have been converted to flats occupied mainly by professional people of all nationalities, but with private renting winning the battle against home ownership over the last decade. It has not yet reached the point of neighbouring Notting Hill or Queens Park where even middle class professionals can’t compete.

So a growing city produces organic but often predictable market change. It is the outcome of millions of individual decisions, most of them quite rational given the circumstances of the individuals concerned. But there is another factor: it is not a free market for space, it is a regulated market. Government, national and local, sets a framework of planning policy, housing regulation, subsidy and tax. To do so, it must have objectives in mind. Ken Livingstone’s objectives as mayor were totally different from Boris Johnson’s. Market-driven change can be facilitated through laissez-faire policies or channelled through policies designed to protect good features of London (like, I would argue, mixed communities) and to provide housing to those who cannot compete in the market (through, for example, social housing).

Two of the most important public policies that have affected London concern Government attitudes to tenure. First, the deregulation of private renting and the encouragement of ‘buy to let’ which has become such a big force in London, to the point where it is displacing home ownership. And secondly, the failure to provide enough additional homes of all kinds but especially those designed to meet the needs of people on lower incomes, now compounded by active policies to reduce the number of social rented homes.

These were political choices: other choices were available, the outcome could have been very different, and the City could have been shaped to better preserve the rich tapestry of mixed communities which most people see as one of London’s greatest attributes.

In the 1970s and 1980s the struggle against ‘gentrification’ focused on private landlords and estate agents who were ‘winkling’ tenants out (infamously, Prebbles in Islington which led to a bitter campaign). Now, there are big issues in the private sector like the impact of the housing benefit caps, and rents that are generally unaffordable, but most areas of predominantly private housing in Inner London have already seen transformative change.

Most of the protests that are taking place concern plans to redevelop existing council estates which find themselves sitting on very valuable land which could be more intensively and profitably used, but often at the expense of the existing residents. It’s hard without researching each development to be precise about the rights and wrongs, but the London Assembly Housing Committee last year looked at 50 council estates that had been ‘regenerated’ in the previous decade, bringing some transparency to the debate for the first time. In total, some 67,000 homes had been proposed to replace 34,000 but there was huge tenure shift. The increase was largely in market homes with some ‘intermediate’ but there was a large loss of homes for social rent – down from 30,000 to 22,000.

These regeneration schemes were having clear redistributional impacts. The 8,000+ lost social rent dwellings alone could have provided homes for one in six of the households forced to live in temporary accommodation in London (often a long way outside London) in 2015 – not an answer to the housing crisis but a damn good start. The Committee made a number of important recommendations, many of which will form the basis of the revamped policy on regeneration being adopted by Sadiq Khan.

So, City Government has failed. The policy framework facilitated rapid organic market change that benefited some people at the expense of others and produced outcomes that simultaneously enriched London life (revitalisation) and impoverished it (loss of traditional mixed communities and homes for people on lower incomes). So I agree with Dave – it needs a constructive flexible response to shape these changes. But we need to have clear objectives. It’s not about blaming incomers, it’s about adopting public policies that protect the poorest from paying the price.

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More on ‘troubled families’

‘A tale of Cameron’s prejudice and hubris’ was how Red Brick described this a couple of days ago, and subsequent events have shown Steve’s words to be correct even if the picture is a little more complicated than first appeared. If the official evaluation of the Troubled Families Programme wasn’t damning enough, one of the authors – Jonathan Portes of the NIESR – tore into the programme this week in his Not the Treasury View blog. He says the programme is ‘a perfect case study of how the manipulation and misrepresentation of statistics by politicians and civil servants – from the Prime Minister downwards – led directly to bad policy’.

Portes’ problem isn’t with the fact that the TFP tried to do something but heroically failed. As he says, if government intervention is always so tame as to be successful we’ll never try anything ambitious and learn from the mistakes. No, what he’s concerned about is the duplicity of politicians in never admitting that such a programme might not be the best thing since sliced bread: no nuance was allowed the cloud the impression that, indeed, 120,000 families had had their lives changed massively and permanently. This is how Portes summarises it:

‘… the key point here – and the indictment of politicians and civil servants – is not that the TFP didn’t achieve what it set out to do. That’s unfortunate of course… [but] If new programmes never failed to deliver the promised results, that would show government was not taking enough risks. That is should not be the issue. Indeed, many social policy experts thought that the basic principles underlying the programme made a lot of sense.   The point is that it was the government’s deliberate misrepresentation of the data and statistics that led to badly formulated targets, which in turn translated into a funding model that could have been designed to waste money.’

He blames not only government ministers for this, but also Louise Casey who runs the programme. He quotes her as saying, “If No 10 says bloody ‘evidence-based policy’ to me one more time, I’ll deck them”.

As it happens, Casey had her chance to get back at Portes on Wednesday when she and two other civil servants were grilled by the Public Accounts Committee. Listening to the proceedings gives an interesting glimpse of central government policy-making. Casey says Portes has misrepresented the evidence. Her argument seems to be that while they have piles of data that show (for example) the families’ school attendance is better and they’re resulting in fewer police call-outs, much of this doesn’t show up in the part of the evaluation on which Portes bases his case. However, it’s a little difficult for even the forceful Dame Louise to sound convincing when the key finding of the department’s published report is ‘the lack of evidence that [the scheme] has had an impact on the outcomes that it seeks to affect for families’.

Listening to the PAC discussion suggests an important reason why this happened. One of the original models was the Dundee Families Project, and indeed someone from it assisted the DCLG team. But that project invested £10,000 per family over a long term, at a time when local services were, if anything, growing rather than being cut. The Troubled Families Programme spent £4,000 per family and it coincided with other services being decimated. Phase 2 of the project, we are told, will have to manage on less than £2,000 per family.

Behind the hype there are real issues here and I guess Louise Casey knows this as well as anyone: where families do have multiple problems, they are going to need a range of co-ordinated interventions stretching over a significant period of time. Aiming to ‘turn them round’ in a couple of years or less can easily be a facile exercise. Whether wittingly or otherwise, the TFP has colluded with ministers (and here Eric Pickles must be identified, along with David Cameron) who wanted to apply a relatively cheap sticking plaster to a problem while continuing to disable the services like Surestart, Schools for the Future and, of course, genuinely affordable rented housing, that are really essential in tackling these issues. It’s difficult, if not impossible, for civil servants to point this out in a hostile political environment. You can understand them – and desperate local authorities – clutching at straws. But this shouldn’t let government off the hook, and that’s why Jonathan Portes’ views, however bluntly expressed, are very important.

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Troubled families: a tale of Cameron’s prejudice and hubris

Back in 2012 Red Brick dubbed the Government’s ‘Troubled Families’ programme ‘policy-based evidence making’. The newly-released (and sneaked out) evaluation of the billion pound programme proves our point. Despite constant claims by Government that the programme was ‘turning round’ the lives of hundreds of thousands of families – to the point that they massively expanded the scheme after a couple of years – the much-delayed evaluation report says the programme had ‘no measurable impact’.

This is no surprise – if you set something up on a completely false premise you get the wrong outcomes. To justify the policy, Government took a range of statistics that reflected the disadvantage suffered by some families and misrepresented them as showing that the families were dysfunctional – not the victims of economic and social reality, or mental incapacity, or disability, or abuse, or bad housing, or poverty, but to blame for their own social pathology. They were feckless and the Government was going to force more feck on them. It enabled the Tories to stigmatise and demonise a group of families as being responsible for social breakdown and even for the riots.

Much as the media are intrigued by the unusual (for a senior civil servant) personality of the ‘Tsar’ appointed to run the programme, Louise Casey, the Troubled Families policy was another catastrophic failure by David Cameron.

Cameron was an extremely judgemental man, and many of his judgements were plain wrong. ‘You’re talking about blame’, he said, ‘about good behaviour and bad behaviour, about morals.’ He called it the ‘Shameless culture’. His launch speech was full of stereotypes ripped from the pages of the Daily Mail – sink schools, sink estates, choosing to live on the dole, rampaging teenagers. And the big lie: these families had been subjected to ‘compassionate cruelty, swamped with bureaucracy, smothered in welfare yet never able to escape.

I wrote on Red Brick at the time: Ultimately (it) reads like a script from the loathsome Jeremy Kyle Show: pointing at the Chavs and moralising about their sub-human behaviour. And it achieved one of its early aims: good media coverage, with the Daily Mail of course talking about the ‘Criminal culture at the heart of feckless families: Shocking report lifts lid on incest, abuse and spiral of alcohol abuse’.

The fundamental flaw in the analysis – that the government was taking a set of families who were undeniably poor and disadvantaged, and redefining them – without a shred of evidence – as dysfunctional and antisocial.

Jonathan Portes

Of course there were good points about service delivery which will strike a chord with anyone who has been worked with ‘multiply deprived’ families. Too many agencies, too little coordination despite too many meetings, a failure to work with each family holistically, family plans that never get delivered, bizarre rules to access services. And the central solution – a key worker for each family – offered some hope that the system, if not the family, could be turned around.

The failure of the original analysis, and the use and abuse of statistics, was compounded by setting up the project on a ‘payment by results’ basis and an extraordinarily low threshold for allowing councils to say that a family had been ‘turned around’. If a child attends school a bit more often, probably coincidentally to any intervention, and the Government gives a cash-strapped council some money for it, guess what the outcome is? Yes, the headline claim that the Government turned round more than 105,000 troubled families, saving taxpayers an estimated £1.2 billion. And as Jonathan Portes of the NIESR, part of the evaluation team, says: This was untrue: the £1.2 billion is pure, unadulterated fiction.’

Desperate for cash, councils ran rings round a complicit Government, and a programme with no measurable outcomes was deemed a success by all involved. Like Boris Johnson’s Garden Bridge, this was David Cameron’s vanity project designed to sort a problem that was defined by his own prejudice. We all pay and no one benefits. And just like Boris, not one word of apology: in the post-truth world one Government Minister even had the audacity to write an article over the weekend claiming that the programme had worked.

The real failure was that Cameron’s politics and his hubris meant that a large sum of money that could have been used to genuinely help families facing real problems was squandered.

Previous Red Brick pieces as the story unfolded

https://redbrickblog.wordpress.com/2011/10/22/erics-troubled-families/

https://redbrickblog.wordpress.com/2011/12/18/shooting-the-troubled/

https://redbrickblog.wordpress.com/2012/06/11/policy-based-evidence-making/

https://redbrickblog.wordpress.com/2012/07/20/louise-casey-jeremy-kyle-and-the-zombie-statistic/

https://redbrickblog.wordpress.com/2014/08/21/im-troubled-and-i-dont-know-why/

 

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Is the tide turning at last?

It’s always hard to spot the precise moment a tide peaks and turns. But after a year of severe depression about our housing prospects, to the point recently where I considered stopping writing about it, I have had a minor awakening of optimism.

Mind you, my newly emerging view after the major party conferences is not all that positive: just a feeling that things do not have to get worse inexorably year on year. As far as Labour is concerned, there is the flow of plain speaking backed by rigid determination to turn things around coming out of City Hall since Sadiq Khan was elected mayor with James Murray as his deputy mayor responsible for housing. There is also the final banishment of the hostility to council housing in the Party that undermined policy throughout the life of the Labour Government: it is now commonly accepted by all wings that council building is an essential part of the mix needed to solve the housing crisis.

My remaining concern (apart from the limited chances of actually getting elected to deliver anything) is the reported disagreement as to whether the planned 500,000 new social homes should all be council houses or a mix of council and housing association building. I understand the hostility towards some housing associations, but the sector must be part of the plan if we are to build the necessary homes. From a standing start, councils simply could not start producing 100,000 homes a year: it would take years to obtain the capacity and expertise. They would be set up to fail, and that is the last thing anyone wants. Associations do have capacity and, within a framework of clear Government priorities and adequate grant, they could turn the tap on more quickly.

As for the Conservative Party, there are signs that a new broom is being taken to the old housing policy. At last we have ministers and a growing body of opinion in the country accepting that the Cameron/Osborne ‘one tenure’ policy – the exclusive promotion of home ownership – is miles removed from a ‘one nation’ policy designed to provide homes that are suitable and affordable for all. They have realised that the policy of subsidising demand for home ownership in a desperate attempt to reverse its decline was bound to fail because it would add to upward pressure on prices. To stretch the analogy, Cameron and Osborne were like King Canute, but in their case they were failing to stop the tide of home ownership going out.

It is widely claimed that Labour lost in 2015 because it lacked economic credibility. Yet the Conservatives have ended up following a path on deficit reduction which is pretty close to that set out by Alastair Darling in 2010, but with a lot of additional pain. And they are now adopting the language of Ed Miliband and Ed Balls to distinguish between different types of borrowing: with historically low borrowing costs it makes absolute sense to borrow to invest in homes and infrastructure. It all proves, if proof was needed, that austerity was a political choice and that many of the cuts to public services could have been avoided if different choices had been made around tax cuts.

I am not about to get carried away. The U turn is not yet a sharp 180 degree spin. As Rachel Reeves MP wrote on LabourList, the Chancellor’s speech to the Tory Conference was a “a chaotic cocktail of vague promises and u-turns that work for no one.”  Philip Hammond and Sajid Javid have not suddenly been converted to the cause of Keynsian economics. Nor will they adopt a housing policy which promotes social housing as much as I think is needed – despite the growing evidence that it would be a sound bet for the taxpayer as well as for the people needing homes. Social housing only got an occasional mention at their conference, and the Housing Minister, Gavin Barwell, almost ruined the new mood by making an extraordinary comment that building council housing would deepen and entrench inequality. Thinking that moving from an unaffordable private letting or temporary accommodation or a parent’s home into an affordable council house makes life worse is beyond rational reasoning. But at last they are accepting that rented housing matters and that more ‘affordable’ rented housing is essential. It’s a start – and SHOUT’s man on the spot Martin Wheatley has written a perceptive analysis of what was said at the conference fringe meeting on housing.

The best outcome of the shift in thinking that is taking place would be if some of the new or reallocated money being announced comes out in the form of grant to enable the mayor in London and the HCA in the rest of the country to back new programmes of social housebuilding. Sadiq Khan is in a position to make great use of any funding but he will need to have full flexibility in its use and the Government will need to back him in his determination to get more affordable homes in private development.

The historic evidence is absolutely clear that it was the ending of housebuilding by councils, combined with the failure of the private and housing association sectors to replace their contribution, that was the biggest single factor behind the current desperate shortage. It is great that Labour is firmly behind a large new programme of building and it is encouraging that SHOUT’s proposed programme of social housebuilding at least gets a fair hearing at the Tory conference and garners some support amongst liberal conservative groups like Bright Blue. SHOUT’s plan would set us back on the course that we should have been on for the last 40 years.

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Investing in social housing: a good deal for the taxpayer whatever happens after Brexit

New research for SHOUT, the campaign for social housing, and a *coalition of agencies, shows that the case for investing in social housing remains very strong despite the decision to leave the European Union.

Last year, SHOUT and others* commissioned analysis from economic researchers Capital Economics to show what would happen to the economy if the Government invested in 100,000 new social rented homes each year. The research showed much better value outcomes for taxpayers in the long term as well as improved living standards for so many households.

The new analysis looks at the outcomes if we have an economically ‘good’ or ‘bad’ Brexit, assessing four different scenarios for what might happen to growth and interest rates. In the initial years of such a programme the incremental housing benefit savings and new tax receipts will be less than that needed to fund the government’s contribution to the new homes – so additional borrowing will be required. But over 50 years it would generate material savings to the Exchequer, ranging from £102 billion to £319 billion (in today’s prices).

Building 100,000 new homes for social rent each year would boost employment and domestic demand at a time when the economy is likely to be weaker. Of the alternative ways of boosting infrastructure investment, housing has the clear advantage of generating income through the rents tenants pay, which at the least cover the costs of management and maintenance of the new assets. In addition to having the direct benefit of 4 million new homes over the next 50 years, the programme would benefit all age groups and lead to significant improvements in wellbeing, health, educational attainment and ability to access work.

The short term increase in borrowing that would be required to fund the programme is estimated to be between £6.5 and £7 billion. This is equivalent to two weeks’ spending on the NHS (or less than a month’s worth of the supposed savings from leaving the EU claimed by the Brexit campaign).

Capital Economics commented:

“Not all borrowing is the same. It would be quite right to be concerned about an increase in public debt in order to fund the day-to-day costs of public services. Borrowing to invest or save, as for this policy, is prudent however and would likely be welcomed rather than met with alarm.”

SHOUT campaigner Martin Wheatley said:

“This research shows that public investment in lower rent rental housing can and should be central to Theresa May’s ambition to help those families who are “just getting by.”  As well as providing a secure home at a rent households can afford, such investment would save the taxpayer billions in the long term. Support for a council house-building renaissance, alongside development by other social landlords and the private sector is critical if the Government is to achieve its ambitions for 200,000 or more new homes per year.”

The full 2015 report can be found here.

The updated 2016 Brexit analysis can be found here.

*The research has been commissioned by ARCH (which represents Councils that have retained their council housing stock), the Local Government Association, the National Federation of ALMOs, and SHOUT.

Follow SHOUT at @4socialhousing

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