‘Sell expensive council houses’ says the Telegraph headline. The HCA’s Prospectus for its 2015-18 programme, also published yesterday, couldn’t be more blunt. They ‘expect bidders to explain how many properties they are planning to sell… and why they have chosen not to dispose of more’.
The ostensible reason for flogging off even more of the family silver is to enable providers to build more homes with less grant. But I think there are two other reasons. One is that it feeds the myth that councils are irresponsibly sitting on properties that the average punter can only dream of buying. The Telegraph story was illustrated by yet another picture of what is claimed as Britain’s most expensive council home. At the moment it’s a pair of houses recently sold by Southwark. Not long ago it was a gatekeeper’s lodge in Kentish Town. Either way, readers will have their prejudices confirmed, that ‘subsidised’ tenants are living in palatial homes, and that council housing is run by people who couldn’t get a receptionist job in an estate agents.
The other underlying reason is that this is all part of the war on social mix. There are now so many examples of policy acting against mixed communities and – specifically – of the rights of people on low incomes to live near jobs in central London, that it is pretty obviously intentional. Bedroom tax, the benefits cap, shipping homeless families out of London, the Mayor’s indifference to his own affordable housing requirements, the redevelopment of big chunks of social housing to create expensive new flats – all these are grist to the mill. If, at the age of 83, Dame Shirley Porter still keeps up with politics, she must be delighted that her ‘homes for votes’ scam has now been adopted as official government policy.
Even taken at face value, the policy can be seen as endorsement of the Policy Exchange idea of selling off as much valuable stock as possible. Their 2012 report Ending Expensive Social Tenancies was analysed in Red Brick by Tony Clements, and his argument that it represented both bad economics and bad social policy still holds. But it now presumably has the backing of PE’s former housing specialist Alex Morton, described (with no apparent irony) as one of the jewels in the think-tank’s crown, who has just been recruited to the Downing Street policy unit.
Just to prove that the No.10 policy unit is a hot-bed of housing policy ideas, its former head Paul Kirby popped up last month with the suggestion that selling the family silver should not only underpin the HCA programme but could sort out the whole housing market. In his version, councils would sell off every house that fell vacant, and part of the proceeds would be turned into grant for replacement homes. In the process, he seems to ignore both the debt on the house that’s sold and the new borrowing on the one that’s built, which would both become a charge to the rents of the remaining tenants.
When, at the age of 91, Harold Macmillan inveigled against selling the family silver he didn’t mention council homes. But since his governments built so many of them he would certainly have been entitled to do so. He was making the point that selling off valuable assets in times of financial trouble may well be a mistake. It’s one that I discussed in Red Brick when looking at arguments made two years ago in Stuart Lowe’s book The Housing Debate. Social housing is a very valuable commodity, and while we might want to (and indeed should) use its value creatively, there are always plenty of people who simply want to run it down and at the same time strip it of its best assets. Right to buy did this in spades; now that it’s a policy that has largely run its course, new ways of disposing of the family silver are evidently required.
Red Brick readers have a better idea: keep as much social housing as we can, let at its current rents, because demand is high from large parts of the population who simply can’t afford anything more expensive. Furthermore, as well as being valuable in themselves, council homes in particular have very low debt levels (only £17,000 per unit). Let’s use this asset value to build more of them at similar rents. This will need subsidy, but this is much better value than hiking rents up to ‘affordable’ levels and having to pick up the tab through housing benefit.
If anyone in the No.10 policy unit doubts that this case stacks up, let them look at the calculations by accountants PwC in their 2011 report The Numbers Game. They clearly show the long-term value of using capital grant to build new houses for letting at social rents, as against using less grant, letting them at higher rents and allowing housing benefit to take the strain. Given their subtitle, ‘increasing housing supply and funding in hard times’, it’s a conclusion that might even have been endorsed by that nice Mr Macmillan.
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