Bad Policy, Bad Business

A piece I did for Progress too, on the Policy Exchange report into selling off the most valuable social housing.

Hats off to Policy Exchange for another report that stirs a controversy and which prepares the ground for ministers to move further right.

Their idea to sell off the most valuable social homes is, however, bad policy, bad business and there are better alternatives.

First, bad social policy: this policy may remove people on low and moderate incomes from half of all neighbourhoods, not just the most expensive areas. The report says all social homes should be sold, except if their value is in the bottom half of house prices, concentrating social housing in poorer neighbourhoods.

This will create social segregation. Tories argued when the housing benefit cuts came in that the presence of social housing in every neighbourhood would be a bulwark against segregation, even as many people were pushed out of their private rented homes. As the leader of Westminster Council argued in defence of the benefit cuts: “We have 25,000 social housing tenants completely unaffected by the benefit cap.” By removing affordable housing from expensive areas as well, they would complete the job.

Policy Exchange argues that nobody “has a right to live in the most expensive parts of town”, but it’s not a question of rights. The question is what makes good, sustainable prosperous communities? We know from experience, at homes and abroad, that it isn’t segregation.

Second, it’s bad business: this is a short-term and wasteful use of public assets. A home can only be sold once, but by keeping it as a community asset, its value can be used time and time again. No business would ever dream of a blanket policy to sell its most valuable assets. The most valuable homes are the newest homes, with the highest design standards and greatest energy efficiency. The new affordable housing that is being built now would be first in line for immediate sale, leaving the public with older homes, the most expensive to maintain and with the biggest call on public finances.

It is worrying that central government have endorsed this idea. Social housing belongs to local communities through social landlords: councils and housing associations. The homes do not belong to central government. It would require the government to force councils and housing associations to sell these assets with legislation or regulation. So much for localism.

However, the people at Policy Exchange are right to say that the value which is locked in our social housing is under-used. It should be a priority to put that resource to use. A better solution is for central government to free councils to borrow against the value of their social homes, not just the expensive ones, but all of them.

In other words, let councils ‘remortgage’. The average debt on a social home is about £35,000, well below the value of the home. Let them borrow an extra ten or twenty thousand pounds against some of Britain two million council homes to build more homes. Think of it as a mortgage which is almost paid off, but where the income from the rent could comfortably and prudently repay a slightly larger one.

This would immediately free up far more money to build more homes than the enforced sale of the community’s most valuable assets.

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5 Responses to Bad Policy, Bad Business

  1. Pingback: Is this how to deliver a ‘One Nation’ housing policy? | Red Brick

  2. Pingback: More family silver up for sale | Red Brick

  3. East End says:

    ————————————————————–
    “Policy Exchange argues that nobody “has a right to live in the most expensive parts of town”, but it’s not a question of rights. The question is what makes good, sustainable prosperous communities? We know from experience, at homes and abroad, that it isn’t segregation.”
    —————————————————————-

    Why do you say segregation is not the answer?. I worked hard and I bought a home in a leafy street in the East End. It is a mixed community and there is a housing association estate nearby. Over the years, I have had a lot of bad experiences of anti-social behaviour and criminality, especially from the youths. There have been times, I have wanted to run away and sell up. A lot of it is down to bad parenting and lack of respect for the community. A lot of the professionals have sold up and moved on. The immigration policy brings in people of different living standards. A Jamaican family had a party, and their visitor urinated outside my door. I was told it is acceptable in Jamaica. The families child, then took revenge because I complained about the incident.

    Segregation is the only answer. I don’t want to live in a neighbourhood with scummy people.

    I can’t afford to live in the West End. So why should I pay for people to live in social housing in th West End?.

    After my experiences, do you think I will disagree with the Government’s policy on social cleansing?. Is it fair, some people are living in £1million houses?.

    The left, paint a nostalgic view of the poor as characters from Oliver Twist. I doubt Charles Dickens would have any sympathy for todays chavy youth.

    I want to live in a neighbourhood where it is safe, where people have “good” manners. I don’t care if they are rich or poor!!

    I miss out so much in life, as I cannot afford to live in Notting Hill or Westminister. There is nothing in outer London. The Underground is so expensive and train journeys are long (and I have to think about safety, when return at night).

    They should bring back grammer schools, to give kids the opportunity to escape. That is another fatal failure of the left. IN my school 70% of the pupils spent their time messing around. I remember getting chased in class, by some idiot wanting to pour hydroclauric acid on me. They were not interested in education or bettering themselves. It harmed my education prospects. If I had been in a better school, I would have ended up at a top university. Perhaps, I would have more confidence, to get a better jobs?. Why would a quality teacher, want take a job in an East End school, where his/her talents are wasted on pupils not interested in learning and lack of discipline in class?

    (At least in a private school, you know the parents have paid money and they are determined their kids succeed in education).

  4. Steve Smedley says:

    Sam worth a 3 min read ref subject yesterday

  5. lambourne says:

    This policy is dreadful and wrong for so many reasons many of which have been outline in the last two posts but something that seems to be overlooked is the effect of concentrating social houisng in the ‘poorer’ areas, these areas could be where hard working people have made an investment in buying property as they cannot afford (or do not have the trust funds) to buy in expensive areas! These residents may be low paid public sector workers, but whoever, by deciding to live in a particular area they make a commitment to it, then because it is cheap along come right to buy landlords (largely unregulated) who have no interest in the area just in the rent they can squeeze of out tenants who cannot access social houisng, now they are to be followed by social tenants who have no links with the area and do not want to live there – it doesn’t take much imagination to see what happens meanwhile the tory voters maintain there ‘nice’ neighbourhoods free of any undesirables! Nice to see Harry Phibbs on Newsnight last night advocating this madness – the very same person who reckoned pramsheds with ceiling heights of around 6ft could easily be converted into little cottages on a Hammersmith estate!

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