Why doesn’t Kensington & Chelsea council want to assume direct management control of its own housing stock?

By Ross Fraser

In the aftermath of the Grenfell Tower fire, many local residents expressed the view that the outsourcing of housing management and (in part) major works programmes to the KCTMO had contributed to the disaster.  They also called for the TMO to be wound up.

Residents were clear, and continue to insist, that they want the council’s housing stock to be managed directly by the council.   They believe that direct political control of the housing stock by elected councillors is preferable to any outsourcing arrangement.

Recently, LB Kensington & Chelsea has decided to terminate its management agreement with the KCTMO – which will mean that the TMO is going to be wound up.

However, LB Kensington & Chelsea is now urgently meeting housing associations to determine whether they would be willing to manage part or all of the management of the its housing stock.

This puts housing associations in a difficult position.  They want to do as much as they can to help the victims of Grenfell and others who have also lost their homes as a result of the disaster. But they know – particularly as the public enquiry evolves – that organisations acting against the express wishes of local residents will not be welcome.

Which begs the question: why can’t Kensington & Chelsea recreate a housing department?

There is no shortage of support available.  The highly experienced Barry Quirk is running the council and knows all about housing from his time as Chief Executive at LB Lewisham.  The government has sent in a Task Force to advise the council – which includes the highly-respected Chris Wood who has been Director of Housing in three London boroughs.   They could visit LB Wandsworth to see how an excellent housing department operates.

With council elections set for next year it might be wise for the council to work jointly with local residents – and in complete transparency – to explore a range of options in a measured manner.  Decisions can be made post-election.

But common-sense still seems to be in short supply amongst the council leadership.

 

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The strange case of a government housing policy that won’t happen

By Ross Fraser

Everyone in the sector will recall the surprise late insertion into the 2015 Conservative election manifesto of a policy to extend the right to buy to housing association tenants – funded by the enforced sale of council assets.

I recall chairing a post-election consultation meeting between DCLG and housing association CEOs and local authority directors of housing in July 2015 – when DCLG asked for advice on how to implement the sale of council assets.

Over two years on, DCLG still hasn’t arrived at a formula setting out how it will calculate the value of assets to be disposed by each authority – let alone consult the sector on it.   There is a simple reason for this – developing the formula is extremely difficult and ensuring that all authorities will deem it ‘fair’ is simply impossible.

Then there is the issue that the bulk of asset sales are likely to fall on the London stock-retaining boroughs.  A flat rate formula (requiring say the top 5% in value of all English retained council stock to be sold when vacant) will not raise enough money to fund the extension of right to buy to associations, so any levy is likely to be tougher on London. The authorities most-affected will be Conservative controlled councils such as Kensington & Chelsea, Westminster and Wandsworth.   The leadership of these councils has indicated complete opposition to the government’s proposals.

It is unsurprising, therefore, that there was no reference in the 2017 Conservative election manifesto to housing association right to buy or forced council asset sales.

Post-Grenfell – and DCLG’s apparent refusal to support council (and housing association) reinvestment in fire safety – the concept of forced asset sales has become even more toxic.

Then there is the fact that the policy requires secondary Parliamentary approval before it can be enacted.  The government only has a simple majority with DUP support.  Inside Housing has reported that up to 15 Conservative MPS are prepared to either vote against the measure or abstain – presumably including members whose constituencies fall within Conservative-controlled London boroughs.  And as we have been recently reminded, DUP support for the government’s legislative programme does not extend to social or welfare legislation.

The simple fact is that the forced asset sales measure will never gain Parliamentary approval and will eventually go the way of the now discarded Pay to Stay proposals.    And if there are no forced asset sales there will be no extension of the right to buy to housing association tenants.

My advice to DCLG is ‘come clean’ and formally drop the policy – any further work is a waste of time.  Councils need to know where they stand as, according to senior sources in local government, the uncertainty is holding back their ability to invest in new housing, essential maintenance and fire safety remedial works.   It’s in no-one’s interest to maintain this facade any longer.

 

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Nobody’s Perfect

By Ross Fraser

“Nobody’s perfect” (Closing line of Some Like It Hot: Billy Wilder 1959)

Red Brick readers will be familiar with local authority concerns about the lack of alignment between new housing association supply and the social rent housing they need to meet their statutory obligations to those in housing need.

But the problem goes deeper.  New lets are only 12% of the quantum of social lettings each year.  The government-enforced conversion of social rent lets into higher ‘Affordable Rent’ lets is of equal concern.  Around 25% of housing association lets are now at the (so called) Affordable Rent.

The issue of affordability of housing association lettings is the primary reason that relationships between authorities and associations have deteriorated in recent years.  Yet few authorities have acted proactively by sitting down with housing association partners and defining what affordability means at a local level, across a range of housing products (rental and for sale) and what changes will be required to housing association rent policy to meet local needs.

In Building Bridges – A guide to better partnership working between local authorities and housing associations, we argue that authorities should take the lead by setting up Local Housing Affordability Frameworks which research the topic of affordability on a local authority or sub-regional basis and negotiate a deal with housing associations in respect of new supply and relets.    We propose that the cost of this work is shared equally by authorities and their housing association partners.

Authorities might be surprised by the commitment of the best associations – like Sovereign which refused ‘on principle’ to convert social rent lets into affordable rents or Family Mosaic (now merged with Peabody) which secured grant for Affordable Rent housing and then let it at social rents through extensive cross subsidy.

Building Bridges also explores the vexed issue of nominations and allocations.   Authorities are getting frustrated by associations refusing nominations because the applicant won’t be able to afford a (so called) Affordable Rent.   Authorities are alarmed by those associations that are letting new homes on Rightmove rather than making them available for council nominees.

But associations validly complain that housing registers are being restricted to the very poor or locally connected, when there is clear evidence of housing need and a desire for mobility amongst young professionals and aspirant working families and a need to jointly intervene in the private rented sector.  As a result, housing registers are no longer an accurate measurement of local housing need.  Authorities are failing to work together at a sub-regional level to ensure mobility across housing markets and are (perhaps understandably) focusing their housing strategy on social rent and neglecting demand for other housing ‘products’.

In Building Bridges, we propose a new tech-driven system of allocations (linked to the local affordability framework) that covers all housing products – social rent, Affordable Rent, market rent, low cost home ownership – and ensures a steady supply of appropriate nominations for each.  Again, we propose that the cost of this work is shared equally by authorities and their housing association partners.  We propose that this system is operated collaboratively – and can be led by the authority or, where capacity is limited, by a well-resourced regional housing association.  Midland Heart housing association is already operating such a scheme in the West Midlands.

Yet if authorities have valid criticisms about associations they should realise that its government funding policy that is the primary reason that associations aren’t supplying the homes and allocations that they need.  Sure, there is a quota of associations that see themselves as property developers rather than as part of the social housing sector but the vast majority of associations want a return to government funding of social rent.

Authorities should also recognise that (not everywhere but very often) their performance on planning needs to improve.  Only 41% have local plans which comply with the NHPPF.  And it’s the authorities without compliant plans that are worst offenders in helping bring new sites to market.  Only a minority of authorities have a planning strategy that makes sites available for genuinely affordable housing for five years.   This is completely indefensible.  Clearly, the 40% cut in planning staff in recent years and the loss of ‘enabling’ officers have contributed to this problem but why don’t authorities follow the example of mega-cash-strapped Bristol and increase investment in planning and enabling notwithstanding their financial pressures?

In Building Bridges, we propose a range of actions that authorities can take to maximise social rent housing provision, support development that can cross-subsidise non-grant-funded provision of social rent and combat developer attempts to undermine section 106 agreements – which currently account for 45% of new housing association supply.

The message for authorities in Building Bridges is simple.   If you engage proactively with associations on affordability and allocations, and manage the market, you are more likely to get what you need from associations.   And get your own act together on planning.

Ross Fraser

Building Bridges – A guide to better partnership working between local authorities and housing associations was published on 25 September by the Chartered Institute of Housing, sponsored by Vivid Homes and the Association of Retained Council Housing and written by Ross Fraser, John Perry and Gemma Duggan.  It is available online.


 

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Tories try to steal Labour clothes

Investing in council housing was just one of the new policies that Theresa May pinched from Labour in her disastrous speech. Tackling student debt, mental health, energy prices and even organ donations all figured in the list of stolen policies she launched at the Tory conference. But there was another one that was uniquely Tory: putting an extra £10 billion into Help to Buy loans, which means the scheme will make over £22 billion worth of loans in total, all to help those already well up the income ladder.

How much difference will the £2 billion for social housing over five years actually make? First the positives. It raises the total allocated to ‘affordable’ housing investment to £9 billion over the next few years, or to £10 billion if other bits and pieces are taken into account. But as Red Brick pointed out recently, this compares with over £30 billion in support for the private market, and this was before the Tories added the extra £10 billion for Help to Buy. So the split between affordable and private market investment has just got worse – but at least there is more cash in the ‘affordable’ pot.

Second, it recognises that grant has to be higher if rents are to be kept down. An average grant of £80,000 (based on £2 billion generating 25,000 new homes) is higher than that being paid by Sadiq Khan for ‘London Affordable Rent’ units in the capital and probably quite a bit higher than is needed to build social rented homes elsewhere. Even if the grant level comes down, possibly leading to higher output, it should be enough to deliver a significant number of homes at genuinely affordable rents.

Third, the announcement is coupled with a new policy on rents to kick in in 2020. There are a number of caveats about this too, but at least there is recognition that higher grant alone won’t lead to more investment: stability of rental income is also important.

Now the downsides. First, if it produces 25,000 social rented units, that’s a drop in the bucket compared with the 122,000 already lost (through right to buy, and conversion to higher ‘affordable’ rent) since 2011. If output reaches 5,000 per year, it will only restore social rent building to the level of a couple of years ago and will be well below the peak years of Labour’s National Affordable Housing Programme when social rent output alone reached nearly 40,000 units.

Second, we don’t yet know the mix – will all these be new homes for social rent? Why not also improve the mix of the existing programme, to deliver more social rent (not permitted until this week’s announcement) alongside the other ‘products’? If the government is serious, it needs to re-evaluate its whole programme, not merely tag on a bit of new money.

Third, while this is billed as extra council housing, in practice housing associations are going to be much better placed to use the new money. Relations been them and local councils, already under strain, might be made worse. Why are they better placed? Because with the extra certainty of rising rents after 2020, and their already much greater development capacity, they can bid very competitively for the new cash. Just when collaboration between the two parts of the sector is most needed, it might only happen if the GLA and HCA specifically prioritise bids that give councils a role.

Finally, councils continue to be hamstrung by constraints over which they have little control unless the government steps in and makes additional changes. Right to buy sales continue, with heavy restrictions on the use of receipts (including a prohibition on combining them with grant aid). Borrowing caps are still in place, and councils have suffered more than associations have from the recent curbs on rent increases. Despite the government remaining silent on the promised right to buy for housing association tenants, the threat to force councils to sell their higher value stock hasn’t been removed: this has already made councils cautious about building more houses that might simply have to be sold off. And as well, councils have been hit more than associations by the need to invest in tower blocks following the Grenfell Tower fire, with no promise of government help.

Despite these reservations, the new money is better than a poke in the eye with a bent stick. Even if May’s stated ambition of a ‘new generation of council houses’ is hardly likely to result, it’s much better than the Cameron-Osborne attitude that council housing was obsolete and only served to create more Labour voters. The fact that Labour already has a plan to build much more council housing (and housing at social rents built by associations) is given added credibility by the Tory proposals, inadequate though they are. If the Tories are convinced that a Corbyn government will turn Britain into a ‘failed socialist state’ as Phillip Hammond suggested, why are they so keen to borrow the policy ideas that (according to them) will achieve exactly this outcome?

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Where will the money come from for Labour’s housing plans?

Labour was under scrutiny at its conference last week for the announcement of supposedly costly policies that can only be funded by tax increases or extra borrowing. One such promise of course was to end PFI contracts, and it was immediately challenged by Margaret Hodge. However, PFI has continuing high costs and big profits are being made by the contractors: whether the annual cost of rescinding contracts will exceed that of leaving them in place will hinge on the terms of compensation. Ditching PFI could well be a good deal.

Labour’s plan to build up to 100,000 social rented homes is another commitment that needs costing but fortunately there is an argument that it could actually save money. In the long term, as shadow minister John Healey has shown (and, as Steve just reminded us, was confirmed by work by Capital Economics for SHOUT), building to let at low rents will pay for itself via savings in housing benefit. The problem is that the savings accrue over 30 years while the capital cost must be borne now.

Fortunately George Osborne pumped such large sums into housing, with commitments running years ahead, that there is plenty of scope for finding this money from the existing housing budget. None of this appeared in the government’s housing white paper earlier this year, of course, nor can we expect to see figures in Sajid Javid’s promised green paper on social housing. But the details – insofar as they can be pieced together from different government sources – are there in the September update of the annual UK Housing Review.

In a new estimate it says that, from now until 2020/21, some £8 billion will be spent on ‘affordable’ housing (mainly Affordable Rent and shared ownership), and most of this money is made up of the two concurrent Affordable Homes Programmes run by the HCA and GLA. However, far more money – the Review estimates it at over £31 billion – will be spent on propping up the private market (see pie chart).

This is largely Osborne’s legacy – a raft of Treasury-led initiatives aimed either at helping builders directly or helping people to buy. Much of the money is in the form of loans or guarantees rather than grants, but the costs are huge and in some cases will run on into the future, growing year-on-year. (This applies to the Help to Buy and Lifetime ISAs, which give cash payments to people when they buy a house, and will cost over £2 billion annually if allowed to continue beyond 2020.)

The NHF has already suggested that the money for Starter Homes (whose original allocation was £2.3 billion) could be better spent on building for social rent, and CIH has proposed that diverting £1.5 billion annually would allow a programme to build 28,000 social rented homes per year. The list of programmes that could be trimmed or ended is impressive, for example (in addition to Starter Homes):

  • Help to Buy equity loans (potentially over £12 billion, the white paper said £8 billion is already committed)
  • Help to Buy and Lifetime ISAs (£4.2 billion to 2020/21)
  • Home Building Fund (loan finance for developers – £3 billion)

Yet rather than cut such programmes, Sajid Javid has promised today (Sunday) that an extra £10 billion will be pumped into Help to Buy. We’ve yet to see how this will work (and if it is really new money), but if added to the total of private sector support it would reduce the proportion of government spending going to affordable housing from 21% to just 16%.

Of course if changes are made by Labour there will be squeals of rage that the party no longer wants to help first-time buyers, but there is surely scope to target the available money on those who really can’t afford a deposit (rather than those who could save the cash by waiting for another year or two) and release some of it for those who have no hope of buying and are stuck paying ever higher private sector rents.

The point is that Osborne’s schemes may have had individual targets but were not part of an overall plan for housing. The February white paper barely mentioned government spending and made no attempt at an overall appraisal of the different programmes. Untouched, Osborne ‘s legacy will represent a huge commitment for an incoming government. The builders will, of course, argue that the incentives are vital to keep them building, but the truth is that while they have become dependent on subsidy their output has hardly grown in proportion to the extra sums being spent each year. Labour’s Treasury team should commit to a review, alongside the housing ministry, of how the total spend of £40 billion plus can be reconfigured. The aim should be to ensure that much more of it is directed to helping those struggling to rent, not only those struggling to buy.

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Not much controversy here

Jeremy Corbyn’s speech to Labour Party Conference on Wednesday has caused a bit of a stir, notably his comments on regeneration and rent control. So what did he actually say and are they new departures?

He said a lot about Grenfell, focusing on the fact that it was an avoidable disaster and looking at events from the tenants’ perspective. He said it indicted ‘failed housing policies… and yawning inequality’. I don’t disagree, but I would repeat my warning that we have to be careful how we talk about the disaster. Grenfell does not tell us that social housing is a bad idea. When the Tories say ‘we must now talk about social housing’ I don’t think they want to have more of it and to make it better.

The most important announcement in Corbyn’s speech was that there would be a Labour enquiry into social housing policy – parallel to the government’s – with Shadow Housing minister John Healey looking at its building, planning, regulation and management. He promised that Labour would listen to tenants across the country and bring forward a radical programme of action.

In support of his core contention that ‘a decent home is a right for everyone whatever their income or background’ Corbyn listed a number of policies which I don’t think are controversial within Labour:

  • insist that every home is fit for human habitation (which the Tories have consistently voted down).
  • ‘control rents’ – despite much of the comment since the speech I suspect this is not a major new departure but a reiteration of the Manifesto commitments, possibly with some strengthened ‘Berlin-style’ delegated powers for large cities, and perhaps more interventionist policies like the London controls on Airbnb – which is of course a form of rent control.
  • tax undeveloped land held by developers – using the Ed Miliband formulation of “Use it or lose it”.

Corbyn’s most significant area of new policy, and possibly controversy, concerned regeneration, where his comments mirrored a resolution passed by Conference. He said ‘Regeneration is a much abused word. Too often what it really means is forced gentrification and social cleansing, as private developers move in and tenants and leaseholders are moved out.’

He established a basic principle: Regeneration should be for the benefit of the local people, not private developers. So, people must get a home on the same site and the same terms as before with ‘No social cleansing, no jacking up rents, no exorbitant ground rents’. And there should be a ballot of existing tenants and leaseholders before any redevelopment scheme can take place.

I thought Aditya Chakrabortty, in an otherwise interesting column for the Guardian, over-egged the new policy by claiming that Corbyn had declared war on some Labour Councils. Personally, I think Corbyn’s requirements are the minimum and I would go further. It is not enough simply to offer a new home to those who wish to return after regeneration – and some councils have had to be dragged into doing that – with the majority of new homes being for private sale. Regeneration – where it involves providing more homes in total – must make a net contribution towards meeting the housing needs of the district in question. Homes taken from the pool of rented homes to ‘decant’ residents from the area to be regenerated must as an absolute minimum be replaced in number and in kind within the completed scheme. Otherwise it is the homeless and badly housed who pay the real price of the regeneration scheme. There should be no dodges like replacing social rent with so-called ‘affordable rent’ or even ‘affordable home ownership’ – there should be a requirement that new social rent homes will replace those that have been lost. If that cannot be achieved through comprehensive redevelopment, then other options should be pursued, including partial redevelopment and infill. Many perfectly good estates are being proposed for redevelopment when what they need is better management and some investment to make them better places to live.

It was good to see Jeremy focus on housing in his speech, but all I see are sensible pragmatic policies that are a million miles better than what we have to suffer now. Not much controversy here. It is the review of social housing policy that carries most hope of future radical steps.  

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Investment to beat the housing crisis

Current policy of increasing reliance on the private rented sector and allowing the stock of sub-market rental housing to dwindle is not “fiscally sustainable and economically efficient” says the SHOUT** campaign in its submission to the 2017 Budget.

SHOUT’s core proposition is that there should be a long term government commitment to a sponsored programme rising to 100,000 new units a year of housing at genuinely affordable rents, alongside other tenures, which would:

  • bring down the cost to government of supporting low-income households
  • address the longstanding and serious economic weakness of under-supply of housing which has been so resistant to other policy approaches
  • via Right to Buy or formal rent to buy schemes, offer a pathway towards home ownership;
  • help address pressures on public services, notably health and social care.

The long term case for building social rented homes was set out in 2015 in the report for SHOUT by Capital Economics ‘Building New Social Rent Homes: an Economic Appraisal’, updated in 2016 to add additional analysis of the implications of alternative possible outcomes from the UK’s exit from the European Union.

shout report

SHOUT’s programme would increase the requirement for public borrowing in the short term, with a peak impact on the PSBR of 0.13% in 2020 as the costs kick in but the benefits are yet to be realised. SHOUT points out that the positive impact on the public finances in the longer term are extremely strong and that there would be significant benefits in other programmes, especially in health, education, and social care.

They also point out that the government is already committed to spending over £40 billion by 2020-21 on programmes and incentives designed (not always very effectively) to boost housing supply – there is scope for reallocation within this total to fund the proposed increase in social rented supply. Homes are also an asset on the public balance sheet and generate a permanent income stream.

SHOUT’s submission also addresses two other important issues, both of which require policy to be set consistently across both CLG and DWP programmes.

  • the need for a stable, fair and sustainable settlement for social housing rents – the rent regime has become muddled with unclear objectives and unpredictable outcomes as important changes in rents and social security payments have been introduced. Policies for housing investment, rents and welfare must be properly co-ordinated. SHOUT is doing more work on rent policy for publication at a later date.
  • ensuring that existing and new supported housing is viable: the current uncertainty caused by restricting benefit to the local LHA rate needs to be lifted in the Budget, and SHOUT supports recommendations made by the DWP and CLG Select Committees for a new funding mechanism for supported housing.

The Budget submission is an excellent summary of the case for additional investment including many charts.

**SHOUT  is a volunteer – run campaign making the case for investment in genuinely affordable homes and demonstrating the positive effects that such housing has on people and communities. SHOUT can be followed on Twitter at @4socialhousing and its website is  http://www.4socialhousing.co.uk

 

 

 

 

 

 

 

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Why Labour needs to get serious about community housing

Red Brick is delighted to publish a guest blog by the St. Ann’s Redevelopment Trust (StART), the community land trust in Haringey, about the work they are doing and the broader case for CLTs.

Across the capital, Labour councils have long been aware of the growing housing crisis that has seen homeownership falling, a massive growth in the numbers of private renters living in poverty, and a lack of social housing for ordinary Londoners.

Everyone knows that major action is needed, yet this is leading to a ‘regeneration predicament’, where because something must be done, doing anything to build new homes is seen as progress.

This attitude, combined with a lack of central government funding for housing associations, and the continued bar on councils borrowing the amounts required for a new generation of council housing, has led many labour councils to rely too heavily on private developers as the only means of driving up housing starts.

But increasing the number of homes built in London is only one part of the solution, as Sadiq Khan recognised when he said we need to build ‘the right kinds of homes’. As the market is so out of control, simply building any number of homes for market sale or rent will not be a housing solution for most people.

And with regeneration projects leading to a net loss of social housing across the city, and a lack of transparency about how levels of affordable housing are decided on new developments, it’s no wonder that residents are angry and suspicious, while councils say they are just trying to build new homes.

The current model isn’t working, and if councils want to deliver the largest amount of affordable homes, which will be accessible to future generations, while being supported by their residents, they need to start focusing on large-scale community housing.

Community land trusts (CLTs) can provide higher levels of genuinely affordable homes because they do not seek a profit and are based on long-term investment; furthermore, the model of creating homes that don’t inflate in value with the open market means they remain affordable for future purchasers and renters.

The vital nature of genuine affordability aside, though, what’s so exciting about community-led housing is the way it ensures locals have a proper stake in any future development, whether they are living on the site or not.

Community-led housing takes in the concerns of people in an area and translates them into projects that meet local needs, on a design basis that suits the area and with the ability to provide a range of other community facilities so that these developments create long-term benefit for the whole neighbourhood.

st anns

Our project, St. Ann’s Redevelopment Trust (StART), seeks to build 800 homes on NHS land in the London Borough of Haringey. Homes will be for sale and rent, with 75% genuinely affordable, controlled by the community and remaining affordable in perpetuity.

Our plans include maintaining and supporting the unique biodiversity that currently exists on the site, as well as ensuring that a health legacy is retained, by ensuring the development complements the adjoining NHS facilities that will be renewed following the sale of the land. We will also be retaining a number of the historic buildings on the site that previously formed part of the old hospital.

Our vison has been developed though public events, on and offline surveys, and interactions with 100s of local residents, meaning we are able to bring forward a locally-supported proposal with much higher density than was proposed when the site got outline planning permission.

We also believe that creating a community asset that will put a dent in Haringey’s housing crisis and make links with its surroundings is a much better use of public land than just selling off the site to the highest private bidder.

Across the country, land belonging to the NHS, Ministry of Defence, Ministry of Justice, and of course councils, is being sold off to private developers when it could remain in the community.

A number of CLTs have been developed in recent years, but it’s time for councils and the Labour Party to support them at scale, and recognise the important ways they can contribute to a sustainable housing supply.

London’s communities need a new approach that makes housing about their needs and aspirations, and remains affordable in the long-term.

As we move towards the 2018 local elections, all Labour councils should be thinking about how they can support community housing, and we hope that StART can be part of the change in direction that London so desperately needs.

You can find out more about StART at www.startharingey.co.uk or on Twitter @startharingey

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Who will pay to reclad the tower blocks?

Media coverage of the Grenfell Tower fire has been dogged by confusion as to where the money came from for the original work and who will pay for the remedial work now needed to the country’s tower blocks. This is understandable: council housing finance is complicated, but the danger is that the confusion could let the government off the hook.

The fact that Grenfell Tower is owned by a wealthy borough with buoyant council tax income is an important factor in the moral argument about how the fire could have been allowed to happen. But in accounting terms Kensington and Chelsea’s council tax is irrelevant, since its council housing finance (its Housing Revenue Account) is ring-fenced and can’t legally be subsidised through taxes on residents. Like any other council, K&C borrows the money for capital works such as recladding a tower block, and the costs are met either from rents, from the sale of homes under the right to buy (after the Treasury has taken its cut) or – if available – from government grant.

The last Labour government made substantial subsidy available to bring council housing up to its Decent Homes Standard, but this ended under the coalition. With the decline in funding for energy-efficiency work, councils now pay for refurbishment of most tower blocks and other council housing from the rents they receive from tenants. The financing of a project like cladding a tower block is also complicated by flats having been sold under the right to buy, now owned on leasehold, very likely by private landlords. Leaseholders have to pay their share of the cost of major works, often supported by loans from the council.

What are the implications for the massive remedial works now likely to be needed to the country’s tower blocks? Even local politicians, like Julie Dore, leader of Sheffield City Council, seem to misunderstand housing finance, saying that if councils fund the work themselves it will be at the cost school building and other infrastructure investment. However, without a significant change in legislation, councils won’t be able to tap into other capital budgets to get the work done: if their Housing Revenue Accounts won’t support it, their only other source is government grant.

This is where things get even trickier, because having initially appeared to promise financial support the government is now backtracking. It says there is ‘no guarantee’ of any money, that councils will have to look to their own funds first, and extra support will be on a ‘case by case’ basis. So let’s spell out what the options are.

First, councils and housing associations could in theory dip into their Housing Revenue Accounts, principally financed from rents. Council housing is self-financing, and like housing associations receives no day-to-day government subsidy. When councils made their self-financing settlement with the government in April 2012, it was on the basis that they’d be left with sufficient resources to meet foreseeable needs. There are two problems with this, however: the potentially huge volume of extra investment now required after the Grenfell fire was hardly foreseeable, and – as Red Brick has been pointing out – the Treasury has systematically undermined the self-financing settlement over the last five years. They’ve forced councils and housing associations to cut rents, not to help tenants but (as IFS has shown) largely to reduce Treasury spending on benefits. As a result, by 2020 councils will have lost the equivalent of 60% of their maintenance funding. Those that had built up reserves to deal with eventualities like Grenfell are eating into them to keep services going. And their capacity to borrow for new investment has been drastically reduced.

Second, councils might get ‘case by case’ help, as DCLG has suggested. But will this be extra money? DCLG might simply lift the caps that restrict councils’ borrowing (if not being able to borrow is the issue) or let them raise rents (if they need extra income to pay for the new investment). If not accompanied by government grant, this is simply another way of forcing the cost back onto tenants. Some suggest that extra money might come from the so-called Bellwin scheme. This could be useful, but it is only for emergency work (e.g. stripping off old cladding) not for new investment. Also, it is paid in arrears, so councils will be unsure whether they can recover their costs or not.

Third, the government might indeed offer some form of subsidy, which might or might not cover 100% of the extra costs. But beware of which pot this money comes from. If there is no increase in the government’s capital budget for housing, then it will be at the expense of building new affordable homes. It will be a while before anyone has a proper estimate of what the cost of remedial works might be. One expert says that to reclad an individual tower block costs about £1.2 million, and others have suggested that this means a total cost exceeding £600 million. If costs were were to be of this order, and had to be met from existing capital budgets, they would absorb over 40% of the new money earmarked for rented housing in the last Autumn Statement.

Why should tower blocks be reclad, anyway? Isn’t it better just to leave them unclad? Much has been made of Grenfell Tower being refurbished for cosmetic reasons, but of course the main reason for cladding is to improve the thermal insulation of the dwellings. This has led to stupid headlines such as Grenfell: Clad in Climate-Change Politics. However, only this week we have been reminded that fuel poverty will kill 80 elderly people every day this winter. Insulation is vital to help reduce fuel bills, providing of course that it is done properly. As Colin Wiles has pointed out, this means that unsafe cladding must be replaced by non-combustible materials installed according to thorough safety practices. A debate has already started in the insulation industry about the massive implications of the Grenfell fire for their work. And one lesson for government must surely be that it is much better to build homes to high energy-efficiency standards in the first place, rather than have to stick insulation on their outside walls at a later date.

Apart from the tragic consequences of the Grenfell fire for the residents affected, it’s clear not only that the effects are very reaching but also that we are only in the early stages of assessing what they might be, what will be the costs, and what changes will be required to policies and practice in housing design, housing management, fire safety, building regulations, energy efficiency work and other aspects of public administration. Many have said that the disaster is a ‘wake-up call’. One aspect that we must be wide awake to is how Grenfell’s aftermath is to be paid for across the social housing sector:  it mustn’t be paid for by tenants, and it mustn’t be paid for at the expense of new investment in affordable homes. Or as Steve said a week ago, ‘Central government should foot the bill, sharing the load. That’s why we all pay taxes.’

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Tenants and the homeless must not be made to pay for the tower block fire safety crisis

I have found it hard to comment on the Grenfell Tower disaster. Words cannot convey the horror of it, and everything I tried to write felt hopelessly inadequate. Others succeeded where I failed, and I would recommend thoughtful pieces penned by Chris Creegan, Municipal Dreams, and Giles Peaker amongst others.

I was so angry at the ineptitude of the council’s and the government’s response and so in awe of the magnificent response of the emergency services and the local community. They are in total contrast to each other.

grenfell

pic: Metropolitan Police

I was also stunned that within hours some people started to use the fire to attack social housing. One tweeter said: ‘The nature + quality of social housing is probably the single biggest post-war British policy failure’ and there were plenty of a similar ilk. Others reverted to well-worn dystopian myths and Clockwork Orange imagery about council estates. Yesterday, first Theresa May and then Sajid Javid said we should pay more attention to social housing, but I found that menacing rather than reassuring. The dreaded Iain Duncan Smith called for tower blocks to be flattened and replaced by nice houses with gardens, presumably without the council tenant tag.

Grenfell does not tell me that we should have less social housing, or that private housing is somehow superior, or that tower blocks are bad – on the contrary we need more social housing of all types and, whatever its height, it should be of a highest possible standard. And it should be better resourced and better managed.

The best memorial to all those who have lost their lives in Grenfell is that we as a nation choose collectively to invest in safe and secure public housing for all who need it.

Municipal Dreams blog

I do not know if cuts in spending on fire services and deregulation of some aspects of fire safety contributed to the Grenfell fire. But after a long period of decline, fire deaths have been rising again, and fire chiefs have put this down to cuts of up to 50% in some places. The fire statistics do not help us understand if there is a specific problem in social housing, but it seems highly unlikely. In the vast majority of cases, fires in towers are contained and the building does what it is supposed to do. The social factor that seems to have the biggest correlation with death by fire is age, with people over 80 particularly vulnerable. They live in all tenures. In the 1980s at Shelter I spent a lot of time working with the Campaign for Bedsit Rights trying to get standards in multi-occupied property raised after many fire deaths in such properties, including the appalling fire in a rabbit warren terrace of bedsits in Clanricarde Gardens in 1981, where 8 people died a mere mile from Grenfell Tower.

Will the Prime Minister today guarantee that local authorities will be fully funded for an urgent review of tower block safety and all remedial action that is necessary, including the installation of sprinklers when appropriate, so that they can proceed in a matter of days with that comfort? Does she agree that regulation is a necessary element of a safe society, not a burden, and will she legislate swiftly when necessary to ensure that all high-rise residents are safe?

Karen Buck MP, House of Commons, 22 June.

Heightened concern about fire safety in towers can be traced back to the previously worst tower block fire at Lakanal House in Southwark in 2009, when 6 people died. Exterior cladding panels were identified as having helped the fire to spread fast both laterally and vertically, as with Grenfell. Yesterday Mrs May said “All recommendations from the coroner on the Lakanal House inquiry have been acted on” but this was strongly disputed by the local MP, Harriet Harman, and others. It is clear that the requested review of building regulations has not been concluded and published.

Even more damning of government is the lack of action in response to a series of letters from the All Party Parliamentary Group (APPG) on fire safety, chaired by the Conservative Sir David Amess, which included calls for sprinklers to be fitted in all towers. And the Tory obsession with deregulation was highlighted by the Guardian yesterday, reporting that the government-connected Red Tape initiative has been discussing how to reduce ‘the burden’ of fire regulations post-Brexit, including for external cladding.

I have spent much of my working life defending both social housing as a housing model and social tenants as an unfairly derided class of people. Rather than the stereotype of chain-smoking can-carrying foul-mouthed council tenants, after the Grenfell Tower fire  a succession of residents described the events in the tower, the failings of the council and the TMO, and the strength of their community with extraordinary eloquence. As their back-stories emerged, we learned of the remarkable range of people living in the tower, people of all faiths and none, often with amazing and sometimes horrific histories. Their common point was that by some chance they had ended up in the cosmopolitan community of north Kensington (David Cameron’s Notting Hill is a few streets but a world away). In the aftermath of the fire we learned of the extraordinary compassion and dedication of ordinary people willing to help each other.

The surviving residents and those evacuated from surrounding homes were initially treated with callous disregard until the community stepped up and stepped in as the death toll rose. Some of the stories of neglect and indifference by the council tell me that rather more than the chief executive of Kensington and Chelsea should resign. It was the council’s job to organise the non-uniform response and they failed miserably and absolutely. They evidently turned down offers of assistance from neighbouring boroughs and the GLA, arrogantly assuming they could do the minimum required. They appeared not to understand the extent of their duty to all residents in an emergency under the homelessness legislation. Above all, they did not seem to care much. They were overwhelmed and it took days before more competent people were brought in. I am not alone in thinking that a civil emergency on this scale required military expertise: I am sure the army could have sorted communications and logistics in hours especially with so much community help. Traumatised victims could and should have been helped much faster with a range of services to meet both their physical and emotional needs.

Responsibility for the fire will continue to be debated, not least in the House of Commons as it was yesterday. As the Guardian’s John Crace pointed out, Theresa May has had legal advice, but has been found to be ‘morally wanting’, and during questions ‘the sound of backs being covered was all too audible’. Fingers are being pointed, and I suspect responsibility will be located at several stages in the very long chain from building regulations to contractor. The specifics may have to await the criminal investigation and the public inquiry.

We also have to wait to see how many other towers are dressed in flammable cladding, it is possibly quite a few, and not all in social housing. Some Councils, like Camden, have already started removing suspect cladding, and it is hoped that blocks can be made safe quickly without rehousing becoming necessary.

Grenfell Tower alone has required between 100 and 200 replacement homes to be found from a diminishing stock of social housing. Attention has focused on one block of ‘luxury flats’ being bought by the City of London, but it turns out these were always destined to be some form of social housing. No information has been made available on the rents and service charges that will be levied, what form of tenancy will be offered and for how long. The first principles are that residents should be suitably rehoused and not be out of pocket.

As the supply of new genuinely affordable social rented homes has collapsed to a little over 1,000 homes nationally last year, from 36,000 in 2010, most of the homes that are likely to be available will be at so-called ‘affordable rents’ at up to 80% of market rents. Rehoused tenants must not be expected to pay those rents, the difference should be made up by the council. Some DWP rules have been suspended for these residents, but it has also been said that they would have to pay bedroom tax if they ended up with a spare room. That is grotesque.

The numbers matter. Unless extra social housing is provided in total then the people who will actually pay for this crisis will be those homeless families or people on the housing waiting list who will not be rehoused as a consequence. One way round this would be government to fund the purchase of an equivalent number of homes on the open market – as happened in the early 1990s to mitigate the housing market slump.

Theresa May was as slippery as can be when challenged about how the works to blocks like Grenfell will be paid for. It could be hundreds of millions. This should be a central government commitment, a new fund provided by the whole country to avoid another tragedy. May wouldn’t commit, just saying it will be done. What is most likely is that government will allow councils to borrow more to pay for the works, with the cost falling to the housing revenue account. And there’s the rub: unless there is specific subsidy or grant, extra borrowing on the HRA will be funded in the long term by tenants through their rents. Tenants will pay for a fire safety crisis that is not of their making.

It is absolutely right that the victims of the fire should have top priority and should be rehoused as quickly as possible. No-one will disagree that similar panels should be stripped from other blocks. No-one will object to an extensive programme of fire safety improvements, including for example sprinklers, in all towers currently without them. But, whoever is found to be responsible, it is not right that the actual burden of putting things right should fall on existing tenants and homeless people waiting for a home. Central government should foot the bill, sharing the load. That’s why we all pay taxes.

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