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.