The Institute for Public Policy Research (IPPR) has put its hard-earned credibility and reputation for good quality research and intellectual reasoning on the line by publishing a flimsy pamphlet by Frank Field MP and David Davies MP on extending the right to buy to include all housing association tenants.
At first sight it seems fair that all social tenants should have the same right to buy, but the pamphlet doesn’t even mention let alone consider the issue that housing associations are not public bodies; they receive a (declining) measure of subsidy but that doesn’t necessarily give Government the right to say that they should dispose of their assets at a substantial discount without compensation. Try that one on the farmers.
In an attempt to appear progressive, they say they want to do something about the ‘chronic shortage of social housing’ and blame this on ‘the low turnover of tenancies’. Turnover has indeed fallen as tenants’ alternative options have reduced, but the two big hits in terms of the collapse in new lettings are the failure to build new homes and the huge reduction in the volume of properties in the council sector due to…. the right to buy. Where is the analysis of the impact of the historic RTB on housing opportunities? There is none.
Then there are the usual stereotypes, in this case ‘the subsidised tenant’: ‘Social tenants have little financial incentive to give up their subsidised rent and become owner-occupiers. The subsidy for social housing rent varies by region but is substantial. Social rents are well below market rents.’ So being charged a rent below market rent is ‘a subsidy’ despite the fact that it is not market provision. Council housing makes a profit; despite initial investment in the form of capital grant even housing association new build homes make a profit over their lifetimes, and normally a large capital gain to boot, so where is the subsidy? And even if you accept the idea that opportunity cost (ie the rent you could make by letting on the market) is a subsidy, it is a hypothetical sum of money, so it is just wrong to say it is ‘taxpayer-subsidised’.
And why does the word ‘subsidised’ not appear before ‘owner-occupiers’? Living in London, the relief I get as a matter of course from capital gains on my home – a tax subsidy not available for any other asset – is far greater than anything a tenant is ever likely to see. Indeed, especially in London, it would be interesting to know how much tax revenue has been lost through tenants buying at a discount then selling at a huge mark up a few years later, free of tax.
There is no attempt to provide an intellectual justification, even in their own terms, for arguing that giving tenants a discount on market rents is so reprehensible but giving a discount on market value to another tenant to exercise the right to buy is such a fine thing to do.
Then we have the knocking copy: tenants who are ‘highly paid union leaders’ (plural?) and well-known MPs (sorry Mr Dobson). Fair enough – nothing wrong with knocking copy, he said quickly – but in this case a bit unoriginal. And the dodgy, not to say made-up, statistics: ‘In Westminster alone, more than 2,000 social tenants earn over £50,000 a year, with around 200 on six-figure salaries.’ Really? They shouldn’t believe everything they’re given by Tory Central Office or Westminster Council press office.
And, worst of all, there is no analysis of how much the sales would generate to contribute to new investment (the authors supposed goal). Just an assumption that the money raised could be spent: ‘Crucial to this policy’s success – both in increasing home ownership and increasing the supply of new homes – is that all the funds generated from sales are spent on the building of new social housing.’ I couldn’t quite believe this so checked the online interview given by Field, and he says it again. So they are either ignorant of the fact that the sold homes will be carrying outstanding debt – and that paying it off would have first call on the money raised – or they think it should be left for other tenants to pay for. Their hopelessly optimistic view of how much can be generated from RTB sales was clearly contradicted by Tony’s last post, which showed how poor the actual returns from sales are. The Government’s new scheme will not meet its aim of replacing homes sold ‘one for one’ let alone ‘like for like’, and neither will these proposals.
As Field and Davies’ headline call for housing association tenants to have the RTB is also a longstanding Tory policy, I suspect this is an advance scouting trip on behalf of the Government to guage the response. As such, it would be more appropriately published by Localis rather than IPPR.