The myth of the war between generations: the Tories punish them all equally

As campaigning was temporarily suspended today in memory of the murdered MP Jo Cox, many will recall her watchwords ‘There is more that unites us than divides us.’

There have been lots of phoney wars in this election, especially with the new Leader of UKIP/Tory Theresa May blaming foreigners and immigrants for most of our problems. One false dividing line is the so-called war between the generations. This morning on the Marr show, DWP Secretary of State Damian Green claimed that the Tories’ new social care for the elderly policy is about promoting ‘inter-generational fairness’.

It is fashionable (but wrong) to say that the older generation are having it easy at the expense of the younger generation. People over 65 have paid into the state system all of their working lives in a social contract that should mean they are looked after through their old age. Even now 1.6 million pensioners officially live in poverty according to Age UK. The issue is not inter-generational, it is that the few have got richer and the many have got poorer across all generations.

I do not suffer from the seemingly natural tendency towards conservatism amongst older people, nor do I share the nostalgia of many for an imagined better past. But these feelings have been exploited by the Conservatives. With their friends at the Daily Mail, they have convinced many elderly voters that they are on their side. The evidence is less convincing: it was Cameron’s ‘triple lock’ on pensions that established their pro-elderly credentials, but at the same time they were stripping away funding for social care and raising the pension age. Women have been hit very hard by deferring the pension age. There are also many people in physical and draining jobs – my Dad worked on building sites all his life and was exhausted when he retired at 65 – who will fall out of work in their 60s and spend years waiting for their pension, being subjected to the humiliation of seeking benefits in the nasty and vindictive climate created by Iain Duncan Smith.

The Tories were warned constantly about the damage being done to social care by their cuts. Cameron liked to pretend that austerity would be met by efficiencies and savings in the back room. This was never true and front-line services have been savaged, especially when they were not backed by specific statutory rights. The cuts in social care have had a serious knock-on to the NHS, due to (the rather unpleasantly named) ‘bed blocking’ – where people are not able to leave hospital because even short-term care is not available at home.

Many councils tackled the cuts by first removing low level services like garden maintenance and shopping. Low level they may have been, but for many these were a lifeline and the watershed between independence and dependence. Such services were often provided through local charities who offered volunteering opportunities for young people and some great inter-generational work was done. As the cuts deepened, even services for those most in need were pared back and scandals like the ’15 minute visit’ and poverty wages (many carers are not paid for the time spent travelling between appointments) became more common. Everyone agrees it is both better and cheaper to enable an older person to stay at home, and it is normally their wish to do so.

In housing, older people have been failed too. There have been far too few options for older people, whether tenants or owners, to downsize into more suitable accommodation, releasing larger homes for others to rent or buy. Although May’s current proposals will hit at home owners, the extraordinarily successful sheltered accommodation service run mainly by councils and new supported housing projects have been fatally undermined by changes in funding regimes.

dementia tax

So, having captured the grey vote, they think securely, the Tories feel they can now take it for granted. Their ‘triple whammy’ – ending the pensions triple lock, removing winter fuel payments for most, and requiring people to pay for care at home with their house – means they have lost any claim to be the pensioners’ friend.

Their social care policy is perverse. In many cases a family carer lives with the older person, doing much of the care but relying on council services a lot of the time. If these external care needs are high, the carer’s sacrifice will now be rewarded, when the older person dies, by having to sell the house to repay the cost of the care received. The carer, who may have devoted years of their life to this role, will be both grieving and having to oversee the sale of the home. They will in effect make themselves homeless, and in most  of the country they will not inherit enough to buy another home. It is a callous mind that could invent such a system.

The new system contains no incentive to enable an older person to remain in their home. If their care needs are high, for example if they have dementia but are physically able, their estate will be diminished to £100,000 whatever they do. They might as well go into an expensive care home. Yet Theresa May has the gall to say that her plan is ‘the best way to enable more people to stay in their homes because they won’t be worried about the cost of care because they will know that will be sorted after they have died’. She appears not to know anything about older people and how they see the world.

And remember, not one penny piece of the exchequer savings made by this policy will be redirected into support for young people, who are being punished at the same time with policies ranging from tuition fees to the removal of housing benefit for 18-21 year olds. Instead, the money will actually be used for the Tory priorities of reducing corporate taxes and taxes on high earners. As the Tories take it out on older people, the myth of the war between generations deserves to be exposed.

dementia tax 2

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Can Labour deliver 100,000 social homes annually within five years?

This was the headline promise from the leaked version of Labour’s manifesto. How feasible is it?

Labour seems to have stepped back from a much more ambitious – arguably, far too ambitious – target of delivering 500,000 affordable homes over a five-year parliament. The new pledge – if it is included in the final manifesto – is still ambitious but appears much more realistic. It says ‘By the end of the next Parliament we will be building at least 100,000 council and housing association homes a year for genuinely affordable rent or sale’. Let’s have a closer look at what it would require.

Assuming for the moment that ‘genuinely affordable’ has the same meaning as under the coalition, the statistics show that neither Labour nor the coalition came close to delivering 100,000 units in recent years. DCLG’s live table 1000 shows that Labour’s peak output was 61,090 in 2010/11, and the coalition managed 66,700 in 2014/15. Output fell sharply in the following year, to only 32,630, because the end of the previous financial year had been the cut-off date for the previous Affordable Homes Programme.

The pre-election Tory government had a target of ‘delivering 275,000 new affordable homes between 2015 and 2020’, suggesting output of 55,000 per year, far below Labour’s new target but higher than current performance (albeit, of course, the definition of ‘affordable’ is now widening and its meaning in the this context isn’t defined). In crude terms, therefore, Labour is both aiming to almost double the Tories’ planned output and tighten the definitions to make affordability ‘genuine’.

Can it be done? The first and most obvious requirement is money. John Healey, Labour’s housing spokesperson, developed his ideas on a Labour building programme in reports for the Fabian Society and for the Smith Institute a couple of years ago. The chart shows how the programme would build up over 5 years, from about the level that it’s at now.

Roll this forward to start two years later, in 2017/18, and you get an idea of what Labour’s programme might be. Just over a fifth would be non-grant-funded, which now seems a little unambitious given that the NHF’s regular bulletins show about 40% of homes get no grant funding. Healey’s Smith Institute paper also forecast 16,000 homes coming from developer contributions, of which 80% would require grant: in fact, NHF figures suggest about 40% of homes come via developer contributions, most without grant funding. The proportions with nil grant and via developer contributions heavily overlap, and of course more grant would be needed if rents were to be ‘genuinely affordable’, but the NHF figures suggest that the Healey plan is far from unrealistic in its expectations of how much can be achieved without grant.

Healey’s costings rely heavily on savings in housing benefit, which of course are real but accrue over the long term, and the credibility of the plan when judged by bodies like the OBR and IFS hangs on the immediate capital and revenue costs. The main element of his plan would require grant levels of £60,000 per unit to deliver many more dwellings for let at social rents, rising to about 78,000 (out of the total 100,000 target) in the fifth year. This would cost about £4.6 billion in capital in the final year, without taking account of savings in the benefits bill.

How feasible is that level of expenditure? As it happens, it’s comparable to spending in the last year of Labour’s National Affordable Housing Programme, which invested an average £3 billion per year and reached close to £4 billion in 2010/11. After taking into account the limited inflation since then, there is hardly any difference between to two. Furthermore, as Red Brick readers know, the Tory government is currently investing a massive £50 billion in housing, via grants, loans and guarantees, over the period to 2020/21. Only some 16% of this is destined for affordable housing. Even with Labour’s apparent commitment to keeping the Help to Buy scheme, there is plenty of scope for redirecting more of this money into social housing.

Of course there are many other pieces of the jigsaw that need to be put in place, not all of which can be examined here. First, social landlords’ finances have to be stabilised, which means a coherent policy on social rents to replace the frequent changes and recent drastic cuts made by the Tories. Second, the council housing finance settlement, which John Healey pioneered as minister, needs to be reinstated as he originally intended (it has been ripped to shreds by the Tories). Third, reforms will be needed to achieve more planning permissions, developer contributions and land supply, building on the work of the Lyons commission. Fourth, especially following the EU referendum, there is a growing problem in the building industry of both capacity and standards. Fifth, there is urgent work needed on the Tories’ so-called welfare reforms to ensure that the worst elements are curbed and that tenants can pay their rents. And sixth, we must not (like the Tories) neglect the existing stock, which also needs massive investment to maintain and exceed Labour’s very successful Decent Homes Standard.

This is why building up to higher output over five years, making full use of housing associations, councils and developer contributions, is very sensible. It not only allows the financial contribution to be stepped up progressively but also gives time to tackle the other massive challenges of delivering such a big change in government housing investment priorities. But no one should argue either that the programme isn’t feasible financially or that it’s not needed. This programme is ambitious but, with care and effort by a new dedicated Minister of Housing, it could be delivered.

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Dissolution disillusion

In a splendid journalistic error*, the Times reported that Sir Eric Pickles is expected to be given a seat in the House of Lords ‘as part of Mrs May’s disillusion honours list’. It may of course have been a deliberate choice of words, as Eric contributed quite a lot to the failure of housing policy during his years in charge.

In and around his former housing brief, the dissolution of Parliament meant a deluge of last minute actions. Most important, the Homelessness Reduction Bill became an Act just in time. Red Brick’s line has been that the Act is very worthwhile but underfunded and has virtually no chance of succeeding in its basic aims in the high-pressure areas of the country, and especially in London. This is because every other aspect of Government policy, from the lack of supply of social housing to the dreadfully punitive changes in benefits, will lead inexorably to an increase in homelessness at the same time as local authorities’ ability to respond is reducing fast. The Act will need a lot of scrutiny as it is implemented, but for those who have the energy to read the whole thing, it can be found here.

The Communities and Local Government and Work and Pensions Select Committees managed to publish their joint inquiry report on The  Future of Supported Housing. They conclude that the Government’s proposed funding model for supported housing is unlikely to achieve the objective of establishing long-term and sustainable funding, echoing the unanimous view of the sector itself. Rather than relying on housing benefit or universal credit up to the local housing allowance level, with a top-up fund available for disbursement to councils, the Committees support the introduction of a Supported Housing Allowance which would reflect the diversity of the sector, with separate funding mechanisms for emergency accommodation and refuges.

The CLG Committee also published its report on Capacity in the Homebuilding Industry. Starting with the now unanimous view that ‘the housing market is broken’ the Committee sought to find out whether the homebuilding industry was capable of boosting housebuilding output to the levels required. Their conclusions suggest that it is not! They found the industry dominated by a small number of volume housebuilders, and that their commercial self-interest means they have ‘little incentive to build any quicker’. A far greater mix of builders and more competition is needed. They identify the speculative land market as a particular problem, with high prices leading to increased densities and less affordable housing, and recommend that their successors return to this issue. They want to increase the role of local councils and call for changes to the limitations on councils’ ability to borrow to build. Local authorities, they conclude, do not have the tools they need to make an effective contribution to solving our housing crisis. They support growth in housing association activity, but note that they ‘require greater certainty over their income from social rent’ and that ‘they must remain conscious of their charitable objectives’. They also caution about the growing skills crisis facing the industry and the dangers posed by the process of leaving the European Union.

And finally in this little round-up, the Public Accounts Committee published its report entitled Housing: The State of the Nation. Despite the slightly grand title, the report looks at two main issues – the ‘housing gap’ (England) and ‘getting more out of housing benefit’. The housing gap section has a familiar analysis of the huge failure in housebuilding compared to need, and its effects. Even if the Government meets its objective of 1 million homes over five years, it will not come close to meeting the actual level of need. The Committee criticises ‘The Department’s lack of ambition on such a fundamental issue’. The section on housing benefit complains specifically about the lack of information available ‘on the impacts and value for money of the roughly £21 billion that the Government spends each year on housing benefit’, and highlights in particular ‘the poor value for money obtained from the £8 billion or so of housing benefit with which it annually subsidises private landlords’.

With the Election underway, Labour has already made a number of announcements about its housing policies, including a commitment to providing 500k genuinely affordable homes during a Parliament and a raft of policies to improve standards in the private rented sector. It’s a good start, and we will try to look at all of the main Manifestoes as they are published.

 

*spotted by Private Eye

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Why I care so much about housing associations: they will be critical to delivering Jeremy Corbyn’s housebuilding target

While Boris Johnson mutters inanely about mugwumps, Jeremy Corbyn has tried hard to raise the housing issue in the election over the last couple of days and has started to trail Labour’s manifesto commitment to build a million homes.

Despite the media fascination with Johnson’s clowning, I think Jeremy’s core point – Labour will build more homes and more social rented homes – has come across well.  It was good to see his real passion for the subject during his visit to Harlow today.

It seems any debate about housing during elections – the same happened in 2010 and 2015 – is dogged by deliberate obfuscation about what is being discussed. At PMQs on Wednesday, Corbyn’s question to Theresa May was met by the well-rehearsed stock answer that Cameron delivered so many times before – the Tories have built more council houses than Labour did when it was in office.

It happens to be true, but what does it tell us? It tells us that the Labour Government didn’t want councils to be major builders – it’s one of my main beefs with Labour during the Government years. Instead, the money was put into housing associations to provide social rented housing and shared ownership. Mrs May never addresses that. The only comparison that matters between the two governments is how many homes for social rent were provided by councils AND housing associations together. Here the Labour Government wins hands down and many times over.

Sadly, the same confusion dogged the interview at lunchtime between Andrew Neil and Jack Dromey on the Daily Politics. Neil is just about the only interviewer who asks intelligent questions about housing because he has bothered to look up the figures and learn the difference between starts and completions. But even Neil compared apples and bananas in his questions. Mr Corbyn, he said, has committed to 500,000 new council and housing association homes over a Parliament but the only evidence we have to go on is Labour’s record in office. And then, the switch – he quoted the figures for council homes only. And he repeated the point a few times – the Tories build more council houses than Labour, so why should we believe Corbyn’s commitment?  And that was followed by another confusion, as Sayeeda Warsi started quoting housebuilding figures for the UK while Neil was talking England (or was it England and Wales?).

The viewer sadly must be left completely bewildered, and I hope Andrew Neil will return to the issue again.

Fortunately, Jeremy Corbyn managed to be very clear in his speech in Harlow that the commitment is to build 500,000 new council and housing association homes over the next Parliament. I know it’s a mouthful, but truncating the commitment to ‘council houses’ removes the meaning. Most people involved with housebuilding know that it would be virtually impossible to reach a target of completing 100,000 council homes a year even by the end of the Parliament, and certainly impossible to do it each year starting this year. Even if the resources and borrowing powers were available, it would take several years to gear up, to assemble the land, design the schemes, procure the building contracts, and get started on site. It would be a very good thing to do, but it would not produce the homes fast enough.

So, meeting Labour’s target will be dependent on getting housing associations to provide the homes. They are in a much stronger position than councils to accelerate housebuilding and have a track record of being able to produce homes for social rent and for shared ownership. To meet the target, councils will need to be the planners and the strategists and housing associations will need to be the primary deliverers.

As readers will be aware, I have my criticisms of housing associations. But if a new Labour Government had a clear direction and policy, and made the resources and powers available, I believe housing associations would respond. Most will do so with great enthusiasm, but even those associations who (shall we say) aren’t keen ‘to do social rent’ anymore would follow the money.

John Healey has also been all across the media promoting Labour’s message and has published his new report on Housing Innovations being undertaken by Labour Councils. It’s a recommended read.

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It is critically important that housing associations rediscover their mission of meeting housing need

Below is the article I wrote for the Guardian this week on the changing role of housing associations, following a series of articles by the Guardian’s John Harris.

The article has caused a lot of interest, including nearly 400 shares and 130 comments below the line on the article, Twitter responses and personal messages of agreement sent to me. The chief executive of the National Housing Federation, David Orr, also wrote a response for the Guardian, for which I provide the relevant link below so people can make up their own minds.

The relevant links are as follows –

My article (see also comments submitted)

David Orr’s response

John Harris’ articles

Housing associations face storm of complaints over new-build homes
Leaking sewage and rotten floorboards: life on a ‘flagship’ housing estate
Guilt by association: the housing developments that went sour
MPs call for sweeping changes to housing association regulation

Housing associations are critically important, but have lost their way

Too many housing associations have focused on being developers. They have lost sight of their mission to provide good homes at genuinely affordable prices.

Housing associations vary a lot and it is not easy to generalise. Most small and medium-sized associations retain their overriding commitment to meeting housing need and to providing good services to their tenants and residents. But there is growing concern at the attitude of some – I emphasise not all – that have become developers first and foremost.

Ten to 15 years ago, associations started getting into private development as a way of generating surpluses, which could be added to the significant grant they received from central government to provide more social housing and affordable home ownership.

Now what was once the tail wags the dog. The primary interest is maxing numbers of new homes irrespective of who they are for and they have all but abandoned their mission to provide social rented homes for the poorest. One of the worst practices – encouraged by the government – has been to convert homes previously let at a social rent rate, typically 50% of market rates, into so-called “affordable” rent, at up to 80% of market rates, so they can make more money out of them.

In the early 2000s the work of housing associations was brought into the light by a new regulatory regime. Associations that had talked a great job for years were shown to have only “one star” services (out of three) following Audit Commission inspections. External scrutiny led to a fast rate of improvement and by the end of the decade, most had achieved three stars: a great example of regulator and regulated working together for the benefit of the customer.

Then, in 2010, the incoming coalition government abolished the regulator, abolished the Audit Commission, and slashed public support for affordable housing by 60% in the first year alone. The results were predictable: rapid commercialisation, a speedy departure from the traditional mission to house the homeless, a decline in service responsiveness, and a desire to switch every available penny into new development.

Why does this matter so much? Simple: housing associations are critically important institutions. They never replaced council housing, as was once intended, but they provided good homes at genuinely affordable rents and prices to people who could not compete in the housing market. Homeless and badly-housed people depended on them to deliver because no one else would.

There is some hope that London mayor Sadiq Khan will pull big associations back from the brink and make them relevant again. He is insisting on more genuinely affordable homes, including social rent, in new developments and is targeting his budget accordingly.

It is desperately important that housing associations – built on public subsidy and mostly charities – gear up to meeting housing need and providing high-quality services again. We also need a new generation of council housing. If we could get both these things, we would stand a hope of tackling the housing crisis.

Steve Hilditch

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Ambition to Build

Below is my contribution to the Spring Edition of Fabian Review, Ambition to Build. Labour has a strong set of policies which command a lot of support across the Party, but we need to do more to ensure that our strategy will meet the scale of our housing crisis.

 

To mark the recent 40th anniversary of the death of Anthony Crosland, I re-read his influential 1971 Fabian Pamphlet  ‘Towards a Labour Housing Policy.’, which led to a serious re-think within the Labour Party.

It made me conclude that, although Labour has developed a substantial set of housing policies which attract wide support, skilfully marshalled by shadow Secretary of State John Healey MP, I have growing doubts that they will meet the scale of the task, which is so much bigger than any of us could have imagined possible a decade ago. To meet the challenge, we must find more ambitious, radical and transformative solutions. Of the many areas to explore, there are five I would like to highlight here.

First – where will the money for investment come from? After 2010 the Coalition massively cut traditional housing investment – 60% in the 2010 budget alone. We are now building virtually no new social rented homes. Despite austerity, the Tories have propped up the failing housing market, throwing money at it in the form of subsidies, loans and guarantees. Yet most economists agree that their action on the demand side will increase prices in the longer term, intensifying unaffordability with little impact on supply. The main rented programme – so-called ‘affordable rent’ – was an abuse of language with very high rents.

Based on Treasury figures, a new Government reverting to Labour’s balanced 2010 priorities would have a bonanza of £32 billion available as subsidy for genuinely affordable housing including a major new programme of social rent. That is a transformative amount.

Secondly, and linked, we must finally end the Treasury conventions that discriminate against public investment. It’s an old story, but a good one. No other country in Europe accounts for public investment as we do. That’s why foreign state-owned companies can invest in our utilities when we can’t. Council borrowing for housing, which pays for itself by generating an income stream (rents), should be taken out of the main measure of public borrowing – as happens across Europe. Councils, controlled by effective prudential rules, could become major contributors to housing supply once more.

Thirdly, a century ago Winston Churchill called land ownership ‘the mother of all monopolies’, describing owners as benefitting from ‘enrichment without service’. Land values are not created by owners but by all of us. The public should share in land value appreciation, especially when planning permission – the process by which the community takes on the costs and externalities of development – is provided. Instead of selling land, public sector land purchase and effective value capture would give greater control over outcomes and moderate the high cost of land that underpins the housing crisis.

Fourthly, private renting is the last great unmodernised industry, with outdated standards and management. Labour should now go well beyond the 2015 ‘Miliband’ reforms. There is better understanding now of how other countries successfully regulate rents without undermining the market. Tenancies should be longer, grounds for eviction clearer and rules concerning harassment and illegal eviction tougher. Crucially, there should be a revolution in standards. Landlords should be licensed, with a crack-down on letting hazardous or non-decent homes. We don’t accept hazardous food or cars, why allow hazardous homes?

Fifthly, there is the whole question of rents and benefits. Out of control house values and dysfunctionality mean that intervention in ‘market’ rents is justified. The Tory policy of linking public rents to market rents is not rational. Instead, council and housing association charges should be linked to the collective cost of provision plus a return to encourage further investment. Subsidy is needed to get the homes built but then they will ‘wash their own face’ for decades to come. Rent setting should be open and predictable with tenants in comparable properties paying comparable rents. Vicious benefit caps, which penalise people with little or no choice in the housing market – should be ended. Over time the subsidy system should move ‘from benefits to bricks’ – supporting greater supply at lower rents, reducing the need for benefits.

That’s five for starters. So many other areas could be mentioned – including rights for homeless people, the crisis in estate regeneration, construction standards, the use of energy, and how to promote ‘yimbyism’ (yes in my backyard). It’s a debate to which we can all contribute.

Finally, Tory policies have been piecemeal, forged around soundbites. The more they mention strategy the less there is of it. Labour should develop a comprehensive housing strategy, with a strong emphasis on important regional variations, which takes a clear view of future investment needs and how they will be met, adopts a balanced view of tenure with fair treatment for renters and owners, and has as a core principle that there must be a decent housing solution for everyone, irrespective of their position on the income distribution.

Housing is central to the pursuit of equality, social justice, economic progress, health and well-being. We do not have to go on as we are. As Anthony Crosland showed all those years ago, other choices are available.

March 2017

A previous post on the legacy of Anthony Crosland – A Basic Right of Citizenship – can be found here, together with a fascinating comment from Brian Lund, who very fairly disagrees with some of my points. Brian’s latest excellent book – Understanding housing policy (Understanding Welfare: Social Issues, Policy and Practice series) is now available on Amazon and on Kindle.

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Don’t hold your breath, Theresa May tells homeless

A Parliamentary Question on homelessness today from Labour MP Siobhain McDonagh either caught the Prime Minister unbriefed or showed how totally complacent she is about the growing numbers of people being left without a home.

McDonagh’s question (view here) came from the Corbyn mould, being based on the experience of a constituent. She asked:

Last week, through no fault of her own, Amy and her young daughter became homeless. After months of looking for a flat, she finally went to Merton Council, who told her they could only offer temporary accommodation in Birmingham, 140 miles away from her job, from her daughter’s school, and from the friends and family that make it possible for her to be a working single mum. Can I ask the Prime minister, in one of the richest cities in the world, where Russian oligarchs and Chinese banks own scores of properties and leave them empty, how can it be right that a London-born, working family like Amy have not a room to live’.

And Theresa May replied

Well the issue obviously of housing in the London borough of Merton is one that the Honourable Lady and I worked on many years ago when we were on the Housing Committee together, and I recognise that she has raised a concern for her particular constituent. Obviously I won’t comment on the individual case, but what I will say is that what’s important is that overall the government is dealing with the issue of homelessness, we are ensuring that we are building more homes, we are giving more support to people to get into their own homes, but this is something that will take time as we ensure that those properties are available and as we ensure that we maintain the record that we have of providing housing support across all types of housing in this country.’

So Amy will have to wait. Given that she probably needs an affordable rather than a market home, she will have to wait a long time. Given that she probably needs a rented home, May’s ‘more support’ doesn’t apply to her. And as for the government’s record of ‘providing housing support across all types of housing’, it must have slipped her mind that most government support now goes to propping up the housing market while renters are subject to ever growing list of caps, freezes and exclusions.

The answer is doubly disappointing because this week there has been something of a focus on homelessness. The second overview of housing exclusion in Europe by FEANTSA – which was well reviewed by Dawn Foster for the Guardian Housing Network – showed how homelessness is rising and reaching a crisis point across Europe – except Finland, where new approaches are being tried – especially in big cities. The UK features badly, being near the bottom of the European rankings. This should be ringing alarm bells everywhere, but especially in countries like ours that are doing particularly badly.

Meanwhile,  the latest Housing Monitor from Crisis and the Joseph Rowntree Foundation reported that councils were finding it increasingly difficult to find accommodation in the private rented sector for a wide range of homeless people, from single people to large families, and that the roll out of Universal Credit and the next round of benefit cuts would make matters worse. It quotes one south of England council respondent as saying: “LHA (Local Housing Allowance) is staggeringly out of step with actual market rents, to the extent that there are virtually no properties… let at LHA rates. Coupled with landlords’ increasing reluctance to accept people on benefits, and unwillingness to offer anything beyond an initial 6 month AST (Assured Shorthold Tenancy), it is now all but impossible to place people into the private sector.

McDonagh tweeted that Theresa May’s response was ‘completely inadequate’. Given that Theresa May should also be aware that the Homelessness Reduction Bill (a worthy piece of legislation which will be overwhelmed by the reality of rising numbers as soon as it reaches the Statute Book) is due its Third Reading in the House of Lords tomorrow and will receive Royal Assent shortly, the phrase ‘completely inadequate’ is about as mild a term as she could have chosen.

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Hammond’s not for turning

From the Evening Standard

We normally look in vain for more housing investment in a Tory Budget, and this one had no surprises. Hammond ignored housing and in so doing merely confirmed what we already knew: he’d already made an almost imperceptible shift away from subsidising the private market towards more ‘affordable’ housing in his Autumn Statement last year. That was enough. Housing’s got what it’s going to get for the next four years, in addition to putting up with further, deeply damaging welfare cuts and reductions in rental income.

Along with the Budget, this week saw publication of the UK Housing Review, celebrating 25 years since it was first created as the Housing Finance Review by the Joseph Rowntree Foundation, and edited by Steve Wilcox ever since. One of its many virtues is that it painstakingly documents what the government spends on housing and enables us to get some perspective on what is currently happening.

This is a task made much more difficult since George Osborne was chancellor, as he bequeathed a bewildering array of initiatives, almost all to bolster the private market, and many spearheaded by the Treasury rather than DCLG. The new edition of the UK Housing Review has a necessarily huge table which is the only place where you can see these in full (go to the Review’s website, and look for the 2017 commentary chapters, table 2.4.1).

Comparison is not straightforward as different initiatives span different timescales, but the broad picture is that 84% of the money that the government is spending in this parliament on grants, loans or guarantees will prop up the private market via infrastructure, cheap loans to builders, support for first-time buyers, starter homes and other measures. The remainder consists of the conventional programmes aimed at affordable housing, but even these include substantial amounts for shared ownership and rent to buy, while leaving nothing for new building to let at social rents. Hammond’s earlier Autumn Statement did indeed shift the proportion going to affordable housing, from a measly 14% to a hardly more impressive 16%. But that still leaves a colossal £43 billion to be spent on schemes such as Help to Buy, ISAs for first-time buyers, starter homes and all the rest.

Even this doesn’t cover all the government’s incentives for home ownership, as it only takes in capital investment. To this we have to add right to buy discounts, what remains of the home renovation grant programme, income support for mortgage interest, and a range of tax incentives also documented in the Review. Despite this, as we saw in last week’s latest English Housing Survey, the proportion of households who are owner-occupiers is stubbornly resistant to government incentives to increase it.

And as we also saw last week, when the government has spare cash, affordable housing investment has a lower priority than making very modest contributions to reducing national debt. John Healey’s PQ showed that over £800 million of the receipts received via right to buy since it was ‘reinvigorated’ in April 2012 have gone to the Treasury. He calculates that this could have financed over 12,500 homes if councils had been allowed to keep the cash. I calculate that its contribution to reducing the national debt is roughly 0.05%.

This picture not only stands in contrast to Labour government housing investment programmes, but even to the coalition government at the time when it published its equivalent to the housing white paper in 2011. Laying the Foundations may have been lacking as the strategic document it claimed to be, but at least at that time government spending was more balanced. The coalition was still spending the bulk of Labour’s National Affordable Housing Programme, which together with the coalition’s first Affordable Homes Programme totalled some £4.7 billion. Initiatives to promote home ownership and stimulate the market, such as FirstBuy, came to a modest £2.7 billion. This means that, before Help to Buy and a load of other expensive stimulants to the private sector, almost two-thirds of government investment was going towards affordable housing, including of course still quite a significant proportion of homes for social rent. If Hammond had switched priorities in his Budget to those that applied just six years ago, he would have unleashed a bonanza of £32 billion of affordable housing investment, without spending an extra penny. Dream on.

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The mother of all monopolies

Even with the most knowledgeable of housing audiences, eyes tend to glaze over whenever the issue of land is raised. To most it is just a huge expense and a barrier to building more homes. Not many people understand how the land market in the UK operates and how it impacts not only the housing market but also the wider economy. I studied the ‘economics of location’ as part of my degree but I still put this issue in the box marked ‘too difficult’ or ‘might try to understand that one day’.

Fortunately, more housing people are looking at the issue these days and there is some hope that an effective land policy might emerge as a result. Last week I reviewed Duncan Bowie’s new book, which has a lot to say about land and planning for housing, and this week another highly relevant new book is published  by Zed Books called ‘Rethinking the economics of land and housing’ (also available on Amazon and Kindle) by Josh Ryan-Collins, Toby Lloyd and Laurie Macfarlane with the New Economics Foundation.

It’s good to know from some of the early reviews that the book is highly accessible given the dryness of the subject (mine hasn’t arrived yet – I decided it wasn’t the sort of thing I’d want to read electronically) but Toby Lloyd has written an excellent taster for the Guardian.

Toby starts by recounting the many housing policies that have failed to meet the promise of solving the housing shortage and traces their failure back to our inability to address the role of land in the economy.

Land is obviously important for housebuilding, but the land problem goes much deeper than our housing shortage. It lies right at the heart of many of the economic problems we face today. Financial instability, mounting inequality, debt overhangs and the puzzle of stagnant productivity are all direct results of our failure to properly account for and manage land in the modern economy.

He traces the history of land ownership and the role it has played in impoverishing people as any additional value that they managed to create from the land was quickly absorbed by rising rents. He looks at the various attempts to justify private land ownership as the driving force transferred from agriculture to housing and notes the importance of partial public ownership in maintaining land supply. He traces the development of boom and bust in housing and the importance of financial deregulation in creating the over-investment in residential property that we suffer from today.

Lloyd argues that land is inherently scarce and its control inherently political: the normal rules of supply and demand are inoperable and the market is inevitably both dysfunctional and volatile. We therefore have ‘to break the positive feedback cycle between the financial system, land values and the wider economy, and to capture more of the unearned windfalls private landowners currently pocket at the expense of society at large.’ That can only come through financial regulation, tax reform and more direct intervention.

Lloyd ends with the famous description by Winston Churchill of land ownership as ‘the mother of all monopolies’. Churchill’s speech – delivered in 1909 – is one of the great reads,  hugely ahead of its time and still relevant today.

Churchill (1909) complained of the ‘enrichment which comes to the landlord who happens to own a plot of land on the outskirts or at the centre of one of our great cities, who watches the busy population around him making the city larger, richer, more convenient, more famous every day, and all the while sits still and does nothing.

Enrichment without service’ is still a primary feature of land ownership. More than a century after Churchill’s prescient analysis, the time has come for all of us to get to grips with the issue, and this book will help us do it.

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A basic right of citizenship

This week saw the 40th anniversary of the death of Anthony Crosland. He served as a Cabinet Minister in the 1960s and 1970s Labour Governments, including as Foreign Secretary (dying in Office in 1977), President of the Board of Trade, Environment Secretary, and Education Secretary, where he made great strides towards comprehensive education.

Normally regarded as a Gaitskellite revisionist, Crosland’s famous book The Future of Socialism, published in 1956, had a great influence on me when I read it in the 1970s. His central contention was that socialism should be about ‘ends’ not ‘means’; it should not be equated simply with the ownership of the means of production but should be judged by its contribution to ending poverty and improving the lives and prospects of ordinary people through the provision of the high quality public services across the board. His beliefs were put into practice as Education Secretary through his determination to replace Grammar Schools with a system of properly funded local Comprehensives, and as Environment Secretary in the 1974 minority Labour Government when he pursued a progressive housing policy.

Crosland also wrote a seminal Fabian pamphlet in 1971 called ‘Towards a Labour Housing Policy.’ (Herbert Morrison Memorial Lecture, Fabian Tract 410, available in the LSE Digital Library). This pamphlet was hugely influential at the time but it also has many resonances today.

Writing more than a year into the Heath Government, Crosland reflected on the 1964-70 Labour Government’s record – a huge building programme achieved, with increased subsidies that ‘helped keep council rents at reasonable levels’; increased help for new home owners through the Option Mortgage scheme and 100% mortgages, taking home ownership above 50% for the first time; increased help through improvement grants and the 1969 Act’s general improvement area programme; greater security of tenure and fair rents for private tenants under the 1965 Rent Act.

Yet, he argued, these achievements did not mean that Labour had solved the housing problem: far from it, major changes were needed to future housing policy. He referenced homelessness, overcrowding and insecurity; the too-slow action on slum clearance (despite also saying that ‘we have had too much of the bulldozer’); housing subsidies that ‘did not reach down to the poorest families’; and inequity between tenures: home owners received indiscriminate tax relief, council rents were a muddle with inconsistent practice around the country, there was little help with rent for private tenants, and furnished tenants remained outside the Rent Acts.

He started his assessment of future policy needs by stating the duty of government: to make sure needs are met and to tackle poverty and squalor.

‘It must be possible – indeed it is in our view a basic right of citizenship – for every household…. to have a minimum civilised standard of dwelling adequate for a decent comfortable and private household life.’

He then sets the need for government action against the failings of the free market:

‘(Our objectives) will not be met by the free play of market forces. A free market is wholly irrelevant to the most urgent problem, since the homeless and the over crowded are generally poor people who could not conceivably afford the market price of decent housing.’

So we cannot have a market solution to the housing problem. Some part of the building programme must be public: some part of the housing stock must be leased or owned at less than the economic cost: and the government must bear a final responsibility for the overall housing situation.’

So what did he advocate? Here are some of his practical policy proposals:

  • A third force between councils and owner occupation and a less marginal role for housing associations;
  • A strategic role for councils as well as their traditional role of building and managing homes, together with stronger metropolitan and regional planning for new homes;
  • Stronger default powers when councils fail to deliver homes;
  • A reorganisation of finance so that the most hard-pressed areas receive the greatest aid;
  • Greater involvement of community and neighbourhood organisations in the design of urban renewal;
  • Bring housing together with other aspects of urban poverty and deprivation.
  • Resist the Heath government’s plans to increase council rents: Labour should end the relationship between public rents and private rents – ‘there is no analogy here’; low rents essential to keep the pressure off the rebates system, otherwise the rebate scheme will have to cover even those on average earnings; Tory rents will lead to council housing making a profit and subsidising the Exchequer.
  • Welcome the extension of rebates to private tenants, but there should be strict regulations over the fixing of rents and the state of repair. Furnished tenants, excluded from the Tory proposal, should be fully included.
  • Tackle the unfair and indiscriminate subsidy to home owners through mortgage interest tax relief.

It was a strong programme then, and Crosland later went some way towards delivering it during his time as Secretary of State for the Environment. Extraodinarily, it has many echoes now 45 years later. And the fundamentals on which his policy platform was based – government subsidy to ensure many more homes are built, housing costs that were affordable without means testing, linking housing to other policy areas like social services, the economy and the physical environment, and the principle of equitable treatment between tenures – stand the test of time.

As a supposed revisionist in the 1960s and 1970s Crosland would probably be denounced as a leftie now, such is the distance that the political centre has moved in the meantime. But his practical and fair policy proposals, with just a little updating, were sufficiently prescient to guide us now.

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