IPPR’s brave new world

Today’s final report from the Institute for Public Policy Research’s comprehensive review of housing has a huge array of good ideas for new investment, home ownership, and private renting.  It bravely attempts to take an overview of the whole housing system and the long term policies that might improve access and affordability for everyone.  Inevitably there are questions about funding and practicability, and occasionally principle, with regard to many of the proposals, but that is only to be expected in this type of forward-looking report.  In my view it goes awry on two topics: an extreme version of localisation of all housing expenditure and an approach to social housing that buys into the Tory view of social housing and social tenants.

On new supply, IPPR’s raft of proposals include a new national investment bank, encouraging pension funds to invest in housing, a new tax on overseas buyers for homes over £2m, changing the fiscal rules to encourage public investment, and increasing housing capital expenditure by £750m in the next spending review.  They also support a shake-up of the development industry and the planning system, including a land value tax on undeveloped developable land and ‘a wave’ of new towns.

The report identifies the major pressures in the market that are pushing home ownership rates down, but strongly advocates measures to maintain levels of home ownership as high as possible, to meet aspirations, including stronger regulation of mortgages.  It supports the extension of the right to buy to housing associations to support home ownership but with little assessment of the implications for renters, potential renters or housing asscoiation finances.

Many of the specific proposals on the private rented sector are good, starting from the observation that the nature of the people housed in the sector is changing rapidly and now includes many more families with children and others who wish to put down roots rather than be mobile.  The report therefore favours improved security of tenure, and ‘something for something’ deals between landlords and local authorities.  The discussion about rent controls seems to face both ways – against control in principle but in favour for example of ‘local deal making’ for the LHA sub-market.  There is a tendency for rent issues to be addressed bureaucratically, for example recommending setting up a tripartheid rent stabilisation board tells us who would make decisions but not what decisions they should make – higher or lower rents, linked to what factors, at what rate of increase?

Although the report is well intentioned in stating that renters should have an experience as similar as possible to that enjoyed by home owners, support for fixed term tenancies as ‘the norm’ for social housing is a total contradiction of that principle.  The report assumes such a policy will improve supply through higher turnover but offers no numbers or timeframe, and it has little to say about the factors that would be taken into account when deciding whether to renew a tenancy or not.  Astonishingly, they argue that someone whose circumstances have improved should be offered the opportunity to buy a share of the property at the end of their fixed term, removing it from the supply completely.  Either this policy is about improving supply through greater turnover or it is not.

Existing social housing allocations policies are seen to lead to ‘segregation’, which I think misses the point.  Despite the talk we do not plan for mixed communities and have an elitist model of home ownership, which means developers do not want their sale values diluted by having social tenants next door.  Starting with a false premise, IPPR end up supporting the Localis and Shapps agenda of ending housing allocation according to need and shuffling more people off to the private rented sector.  Bizarrely, the people IPPR list as being more deserving of social rented homes (eg people in low paid employment) are not excluded from existing allocations systems, with the exception of ‘people struggling to get on the housing ladder’, such a large group that giving them priority would be meaningless.

The report makes the classic and lazy error of ‘blaming’ the 1977 homelessness legislation and fails to even consider why the law was changed: the hugely inappropriate and discriminating allocations policies of the past (housekeeping standards tests, residency requirements that excluded immigrants, knowing a councillor, and the rest).  The homelessness legislation caused no significant problems until supply collapsed in the 1980s, after which any allocations system would have struggled.  Perhaps we can agree that shortage of supply, the right to buy, the removal of discrimination, and the introduction of legislation more focused on objective measures of need combined to narrow the range of people being rehoused – but lack of supply was the biggest factor.  And in the circumstances of a deliberately diminished and residualised sector, the fact that social renting now houses a disproportionate number of low income and vulnerable households means that it is doing its job, not failing to do its job.

IPPR’s final set of recommendations is in the interesting area of trying to rebalance subsidy away from rents towards building homes, shifting money from the demand side to the supply side, from revenue spending to capital spending.  Their primary solution is devolution of all funding to councils, with a single grant for both housing benefit and capital spending, allowing councils the opportunity to achieve a gradual shift in priority in accordance with local circumstances.

I agree with the criticism that CLG and DWP have pulled against each other and failed to develop a national strategy for housing.  Unfortunately I think IPPR’s proposed solution is institutional (who makes the decisions rather than what change in policy will actually achieve the objective) and would create a whole new set of problems without necessarily solving the old ones.

The fundamental barrier to switching from personal subsidy to bricks and mortar is that you have to cut the former to increase the latter; it won’t work within a fixed budget without leaving some people worse off and housing less affordable.  If it leads to divergent policies between areas, localisation would also cause a ‘postcode lottery’ (one of the reasons for introducing a national HB system in the first place).  It also leaves too many people to the mercy of the Hammersmiths and Westminsters, who would spend the money on all the wrong things.  Housing markets are also not local but regional and sub-regional, so I can see the argument more strongly in London than I can in areas where there is no regional tier and very fragmented local government.

The report is stimulating and a good read and should provoke plenty of debate.

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4 Responses to IPPR’s brave new world

  1. Pingback: IPPR’s radical strategy for housing (June 2012) | A Bird's Eye View of Housing

  2. Pingback: Switching from benefits to building

  3. Pingback: Switching from benefits to building | Red Brick

  4. Pingback: Homelessness safety net: going, going, gone? | Red Brick

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