Half a great housing strategy – unfortunately, the wrong half

The new London Housing Strategy from the Mayor of London is half a great document. The analysis is broadly sound and it is quite well written and clear. The critical weakness is that the policy prescriptions just don’t match up to the problems identified and the proposals fall apart under scrutiny.

The strategy revolves around a classic Boris Johnson trick. As you’d expect, the document identifies the need for additional housing, concluding there is a requirement for market, intermediate and social rented homes. It estimates that just short of 16,000 homes for social rent are needed each year. Then it switches to how the Mayor will provide these homes. Now you see it now you don’t, suddenly the phrase ‘social rent’ disappears and is replaced by ‘Affordable Rent’. You want juicy apples at 40p each! I’ve got dry oranges, £1 a go.

Unaffordable ‘Affordable Rent’ is of little use to London. Under the current programme (2011-14) rents are far too high and the programme is partly paid for by selling existing social rented homes on the market and ‘converting’ many others from social rent to ‘Affordable Rent’ when they become vacant. The desperate attempt to keep up the headline number of ‘affordable homes’ being built is at the expense of ever more social rented homes being removed from the stock. It is a disgrace but it is also a con. What used to be called ‘intermediate rent’ levels under Ken Livingstone – sub-market homes targeted at key workers – is now the main offer to people on very low incomes in acute housing need (assuming they are not diverted into the private rented sector first).

Now, to give Johnson a little credit, he has realised the error of the Government’s ways in relation to ‘Affordable Rent’. So he has edged back towards the Livingstone categorisation of affordable rented homes into ‘social rent’ and ‘intermediate rent’ but without admitting it. In the new programme (2015-18) 40% of the affordable homes he hopes to provide will be shared ownership and 60% will be ‘Affordable Rent’. But the AR component will be split into two: half of it (ie 30% of the programme total) will be capped at 50% of market rents and the other half will be pushed up to the top of the range, ie 80% of market rents. He regards the former as being targeted to vulnerable people, downsizers, tenants affected by regeneration, or people on benefits; and the latter towards people ‘in work’. This division is a nonsense due to the very low incomes of many people in work. Rents at 80% of London market rates are so high that they push more and more people in work onto housing benefit, so they face very high marginal rates of tax and benefit withdrawal – the very opposite of ‘making work pay’.

To be helpful in the extreme, it could be argued that the ‘capped’ programme is vaguely equivalent to social rent. Johnson’s own analysis concludes that there is a need to build 16,000 homes for social rent a year for at least 20 years. So what will his strategy deliver? He claims it ‘seeks to deliver 45,000 affordable homes over 3 years’, or 15,000 a year. Of these, 30% will be at ‘capped’ rents, around 4,500.

So Johnson’s strategy fails before it starts. Instead of the needed 16,000 social rented homes, on a generous interpretation he will provide 4,500 homes for ‘capped affordable rents’.

The strategy makes much of how many affordable homes Johnson has delivered so far. And here lies the second trick. It takes a long time to finance, plan and build homes. Johnson inherited Ken Livingstone’s 2008-11 programme, funded in full by Gordon Brown’s Government until 2010. It was a big part of Labour’s National Affordable Housing Strategy. This one Labour programme delivered a huge slice of what Johnson now claims as his achievement – 11,500 homes in 2008/09, 12,600 in 2009/10, 12,500 in 2010/11, 15,400 in 2011/12, and as many as 6,800 in 2012/13, 5 years into Johnson’s mayoralty. Nearly two-thirds of these homes were for social rent.

Johnson’s main programme, cunningly called the Affordable Housing programme, took 3 years to get running. It produced 265 affordable homes in 2011/12, 671 in 2012/13, and 1,582 in 2013/14 (11 months up to end of February). Around 560 of these were for social rent.

So there we have it. Johnson’s fine strategy is a cover for a total failure in delivery. Most of his claims to have produced affordable homes turn out to be the achievements of Ken Livingstone and Gordon Brown. His own programme has been characterised by delay and confusion and failed delivery. When some supposedly affordable rented homes come through, we find that they are at unaffordable rents. And when he announces his new strategy, with a fanfare, a whole five years into his mayoralty, we find it plans for an even more serious  deficit of homes at social rents or their equivalent into the future.

Fail, fail, and fail again.

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One Response to Half a great housing strategy – unfortunately, the wrong half

  1. Pingback: Ben Reeve Lewis Friday Newsround #150 (on a Thursday)

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