Brandon tells it like it is

This year’s soon-to-be-forgotten Housing Minister, Brandon Lewis, lists his favourite interviewers as Jeremy Paxman on TV and John Humphrys on radio. So that means he is already my polar opposite as I can stand neither of those rather unpleasant, rude, macho egotists.

This week ‘Bungalow Brandon’ burst forth with a frank and honest statement: he wants housing associations to abandon building homes with Government grant.

According to Inside Housing, Lewis said it would be ‘great’ if housing associations withdrew from capital funding programmes because it would save taxpayers’ money. With Chancellor George Osborne committing the Tories to around £25 billion in additional cuts if they win the Election, it would appear that Lewis is softening up the sector for further reductions in grant – on top of the 60% cut imposed in 2010 – or even its elimination.

For those in the sector that seem to relish the thought of a future without grant – because it indulges their wildest commercial fantasies – Lewis’ statement might feel like justification. However, as David Orr of the NHF commented, it is ‘ridiculous’ to imagine that social landlords could build sub-market housing everywhere without grant.

The 60% cut in grant in 2010 ushered in the era of the grotesquely-named ‘affordable rent’ product at up to 80% of market rents. However the available money was not even adequate to sustain this programme – and so landlords were required to ‘convert’ existing social rented homes to ‘affordable rents’ (up to a doubling) when they became vacant, and they were also required to sell more property on the open market, coyly dressed up as ‘asset management’.

So the Tory future has rents being forced up through reductions in subsidy at the same time as Iain Duncan Smith is planning another major round of cuts in housing benefit – hitting those in low paid jobs particularly hard.

For individual tenants the consequences of these policies are severe – rents rising inexorably because AR tracks the market and housing benefit reducing in real terms at a rapid pace. Raising tax thresholds will be no compensation for a tenant in an AR property earning the minimum wage. The outcome can only be increasing impoverishment and a higher risk of homelessness.

The impact on the public finances is also uncertain. Reduced subsidy leads to higher rents leads to higher HB – even if the gap between rent and benefit grows. And the increased risk of homelessness leads to more households being placed in either temporary accommodation or rehoused in private renting, with even greater HB consequences. The more resonant the argument becomes in favour of moving ‘from benefits to bricks’ the faster the Tories move in the other direction.

The simplistic obsession with ‘the deficit’ (is it really the biggest issue facing the country?) and the national debt ignores the distinction between bad borrowing (e.g. to fund day to day running) and ‘good borrowing’, using historically low interest rates to invest in the future, generate an income stream forever and cut the benefit bill. Ed Balls once agreed with this argument, but apparently no more.

Labour’s timidity on good borrowing is sad to see, but they are still a long way from the George Osborne/Brandon Lewis position. ‘Not as bad as the Tories’ is hardly a positive vision for the future, even if it is true. Shortly we will see if Sir Michael Lyons can conjure up a picture of rising investment in social housing. Labour needs him to pull a rabbit out of the hat. It would help if the housing sector could stop waffling about their innovative commercial initiatives and shout out a more basic message about the crucial need for more Government investment.

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5 Responses to Brandon tells it like it is

  1. Pingback: The dog that never barks – will housing feature in the General Election campaign? | Red Brick

  2. Pingback: Ben Reeve Lewis Friday Newsround #174

  3. paul calland says:

    The “game” of cut the grant and push up the rents began way back in the late eighties. Housing associations have colluded in this fiscal madness, no doubt to massage the egos of chief executives who fancy themselves a “proper business dudes”. The association I work for is a fairly traditional LSVT, where again the “borrowing” to pay for historic catch up works/improvements is paid for by ever higher rents (ie target rents increasing at a rate faster than inflation). Never mind the ludicrously titled “affordable rents”….they aren’t!….nearly half of our tenants at average rents below target rents get help through housing benefit. That means either rents are too high, or incomes are too low OR a combination of both. As the comedian Rich Hall put it ” it’s not rocket surgery”!!!!!!!

    The UK has a totally wasteful bill of over £25 billion for housing benefit and rising. A consequence of building too few homes, not replacing over a million RTB homes sold off half price, and cutting grant to build new homes and pushing rents up even higher. It is paying for housing “on the never never”. Apparently our housing minister can’t see the HB bill, bless him, as it is in another department. Sadly he is not alone, as a succession of them since Sir George Young’s infamous “let benefits take the strain” in 1992, have failed to spot the blindingly obvious….the emperor got no bloody clothes on…..he’s starkers and has been for years ladies and gentlemen.

  4. runner500 says:

    It is a depressing future, you cannot have genuinely affordable housing without grant, you have to subsidise bricks and mortar to ensure that housing association tenants are not forced into a poverty trap. Successive Tory Housing Ministers either don’t get this or aren’t allowed to get it. Sadly, the message coming from the Labour conference was little better.

  5. Fairly sure that for some housing associations – generally the bigger ones’, and the bigger groups in particular – no grant = no regulation ( which they virtually is now anyhow ), and therein lies the appeal. Freedom to do as little or as much as they wish, involve or not involve their tenants, charge rents at with few restrictions, pay staff what they want, and stuff their boards with their cronies ( no change there then ). No grant will make associations even more less transparent and less accountable, two issues that they are often accused of; right in some cases, less so in others. Hard to believe that not too long ago associations were called the “voluntary sector”. I’ve not heard at terminology used in some time !

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