Unknown unknowns as Localism faces major test

When is localism not localism? Well, we shall soon find out as Islington Council has announced it is pressing ahead with its plans to build new social rented homes using its own resources rather than participating in the programme being run by the Government’s Homes and Communities Agency.

Islington’s Cabinet Member for Housing, Cllr James Murray, said:

“We have 13,000 families on the waiting list in Islington, most of whom are in severe overcrowding. Only family-sized homes, rented by the council or housing associations, will help families like this – in almost all cases, private or even intermediate housing will not. That’s why we are sending a clear message that for this council, social housing comes first.”

Islington’s move coincides with a report from the National Audit Office which highlights the significant risks involved in the Government’s so-called ‘affordable rent’ programme, which effectively ends Government support for social rented homes in new development.

There are many ‘in principle’ objections to the ‘affordable rent’ programme.  The two key ones are that rents will be set at up to 80% of market rent, which is unaffordable in many parts of the country, and that many of the tenancies will be insecure and time-limited.

But whatever the principles involved, it is also clear that the management of the programme has been seriously deficient.  Inept might be another word to describe it:

  • There has been (at least) one missing year between the end of the previous National Affordable Housing programme and this new programme getting under way.  As a result, affordable housing starts (which includes the AR programme) have collapsed in the hiatus.
  • According to the NAO one in five of the contracts for a programme that supposedly started in 2011 have not yet been signed.
  • The programme is heavily back-loaded so half the homes are planned for the last year, 2015, with a major risk of slippage.
  • Rents of 80% of market rents look unachievable as both providers and councils took fright at the difficulty of letting at such high rents.  If the average is closer to 65% in practice the Government will probably claim credit for keeping rents down rather than putting them up.
  • There is a paucity of information about the impact the programme will have on the finances of housing associations – with grant cut by two-thirds and rents far short of initial predictions, the gap has to be filled by more borrowing, eating into associations’ borrowing capacity and increasing their risk.
  • And finally, Peter has to pay Paul as a significant proportion of the extra high rent will be met by housing benefit – estimated by NAO to be around £1.4 bn.

The programme has been marked by a stunning lack of transparency, some might say secrecy.  Under the guise of commercial confidentiality, almost nothing is known about the contracts signed so far.  We know which providers and how many units and there has been talk in public about average rent levels (eg from the London Mayor and from Grant Shapps) but without any evidence being produced.  So we don’t know what the average rent is, we don’t know what the spread is, we don’t know whether the highest rents have been put on the smallest homes to offer some protection for family homes, we don’t know how many existing homes have been redesignated as AR to help pay for the programme, and we don’t know what type of tenancies have been offered and how many are insecure.  That’s a lot of known unknowns, to borrow a phrase, and there are probably some unknown unknowns as well.

Tomorrow marks 20 days since I put in a Freedom of Information request to the London Mayor for data about the programme.  Unless they’re working weekend overtime at the GLA, they have failed to meet their target response time.  I will of course keep people up to date with any useful response received.

So well done Islington, standing up for their communities and people in need of genuinely affordable homes in their borough.  No doubt their new planning policy – which rejects the AR model as inappropriate for the borough – will come under attack from the Mayor and the Government as they seek to expunge social rented housing from new development.  It could lead to a protracted battle between the borough and the GLA as planning authorities.  The Government will face a real ideological test – will their commitment to localism override their hatred of social renting?  That’s not likely in my view – but watch this space.           

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