Author: monimbó

Ruling out extra borrowing that adds to government debt or has to be paid for from taxes is fair enough, but council housing investment needn’t do either. That is the message that Labour’s Treasury team still seemed unwilling to receive at this week’s Labour conference.
Ed Balls earlier appeared to leave scope for extra borrowing for capital investment but then closed the option down in his Manchester speech. Following this, Chris Leslie said the economic situation would preclude extra borrowing for new homes and that those who expected it to happen would be disappointed.
Obviously, the Treasury team has two concerns, one is getting down the level of government debt, and the other is avoiding new spending that will have to be funded by making cuts elsewhere or by raising taxes. However, the argument in favour of building council houses – as opposed to, say, hospitals or schools – is that the investment needn’t impact either on government debt or on taxes.
Council housing and one or two other areas where Labour might want to invest (an example is rail infrastructure) are different from most areas of public sector investment in these two key respects. They can be funded from charges (in the case of housing, from rents) and the borrowing only counts against national debt because of current Treasury rules. Chris Leslie seemed to gloss over these distinctions. He was quoted as saying:
‘But those of us who believe in having a collective public realm for public services – whether it’s the NHS, education, housing – have to prove to the public that we can live within our means and manage efficiently those particular budgets.’
He added that injecting capital funding into social housing could ‘make a big difference’ to the housing sector, but ‘what I can’t do is raise your expectations and promise you that straight after the election there will be this splurge in borrowing’.
Fair enough. And Labour understandably doesn’t want to frighten the horses now by promising a change in borrowing rules that would embrace international conventions rather than those that traditionally (and uniquely) apply in the UK. However, it could tell the truth, which is that council housing investment is funded through rents not taxes, and there are councils which have the potential to finance new investment from their rental income but are prevented from doing so by the current borrowing caps. It could say that it wants to explore the possibilities for extra borrowing to build homes, given that it needn’t cost the taxpayer more and that it’s a vital part of achieving Labour’s 200,000 homes target. When in power, it could then look at embracing international rules about borrowing that are already used as the yardstick to compare Britain with its competitor economies.
We could add to the case by pointing out that money spent on house building – unlike that spent on schools and hospitals – also feeds quickly back into jobs and extra tax income. This is because houses can go on site more speedily than just about any other form of capital investment, so the boost they give to the economy (and returns to the Exchequer) are faster.
So, lumping housing investment in with health and education is to misrepresent housing’s unique case. Of course, new schools and hospitals are highly desirable, but because they provide services that are free to the public, the investment inescapably boosts government debt and adds to taxes. Housing is different. Treasury team, please note!

Labour’s conference this week needs to be about more than how to respond to the referendum result or whether to bail out the NHS. Important though they are, how to put flesh on the bones of Ed Miliband’s pledge to reach a target of 200,000 new homes per year in the next parliament is vital too, and as with the NHS he shouldn’t back away from committing resources to it.
The Lyons Review, due out shortly, should provide a detailed blueprint for how to deliver 200,000 homes and more. But the plan has to be backed by resources if it’s to have a chance of working, and this is where the two Eds come in. It simply can’t be assumed that the target can be met by relying on the private sector alone. A marker has been put down by Tom Copley, Nicky Gavron and a mixture of Labour councillors and parliamentary candidates in London, demanding that Lyons calls for changed borrowing rules for local authorities and that this is in the Labour manifesto. They make a point with which Lyons will surely agree, that historically councils made a massive contribution to total output and they need to do so again. While it’s true that housing associations now make the bigger input to new building, if we are really to achieve the near doubling in output that Ed Miliband wants, both parts of the social sector will have to make a step-change in delivery along with the private sector. Achieving the target through expansion of private output alone is simply unrealistic.
There are several key elements to this. First, the reform of council housing finance, begun by John Healey in the last parliament, needs to be completed by giving councils wider borrowing powers. Ideally, as Red Brick has long argued, borrowing rules would be changed. But if that is not an immediate prospect, then at least a mechanism is needed to allow councils whose borrowing headroom is too low to get more, especially those who have ambitious but thwarted new build plans.
Second, the issue of grant cannot be ignored. While many councils will build without grant, it’s obvious that associations and some councils need grant and that the current regime is not working. Simply continuing with the second Affordable Homes Programme due to start next April will not deliver the number of homes needed at properly affordable rents. The programme must be reappraised. At present it threatens to produce the worst of all worlds: too few homes, designed to be let at rents that are too high. The warning signs are there from the poor response to the Mayor’s section of the programme in London. Even if new resources can’t be found, at the very least the programme must be reconfigured, with the available funding for housing protected and very clearly targeted.
The third key issue is the balance between rents and benefits. The coalition’s policies have been grossly irresponsible, pushing up welfare costs in both the short and longer term and having no regard to the realities of many tenants being in low-paid, insecure and part-time work. Policy needs to be reframed to push back against higher rents and enforced benefit dependency. The worst outcome would be simply to continue the present policy drift.
Finally, local authorities need to be firmly on board as partners in driving towards the 200,000 target, using their strategic housing and planning powers. But again, the reality of how local government capacity has been shredded by the coalition needs to be faced. Housing and planning services have been hit by some of the biggest local government cuts. Together the services account for only around three per cent of local spending, so the problem is not unresolvable. But neither can it be ignored if councils are going to set the local strategies and deal with the planning applications that will be needed if housing supply is to be doubled.
None of the above are comfortable messages for the two Eds, but who said that building 200,000 homes per year would be easy? It won’t be enough to set a paper target, make some reforms to the planning system, and hope for the best. The Lyons report will surely both make that obvious and show what needs to be done if the ambitious target is to be delivered. And although Lyons can’t say it, the Labour Party also needs to ensure it’s the very highest priority and that the test of any shifts in budgets or further welfare changes will be whether they or not they help deliver it.
While Ed Miliband was in Scotland perhaps he had the opportunity to draw useful lessons that could be applied if Labour forms the next government in Westminster. For example, did anyone tell him that Scotland’s 32 councils build ten times as many council houses per head as their equivalents in England? If Scottish local authorities already enjoy the freedom to borrow sustainably from their rental income, perhaps ‘devo max’ can be used to apply the same rules south of the border.

Nick Boles, the former planning minister, was a fan of bungalows. When he called for more to be built last year, especially for older people, he drew praise from the Telegraph and the Guardian (the latter characteristically reminded us that ‘Under Milk Wood’ was written in a bungalow). The government’s streamlined planning guidance, issued on Boles’ watch, specifically told councils to build more bungalows. He warned that councils would need to open up more land for development if they did so, but that there would be less opposition to them ‘because of their popularity’.
When Boles was given a different job in the July reshuffle, bungalow enthusiasts feared the worst. Fortunately, his replacement, Brandon Lewis, proved equally keen: within a month he’d repeated Boles’ call for more ‘quintessentially British’ bungalows, calling on us to love them ‘a little bit more’. At the same time, he made clear that they needn’t necessarily be built on greenfield sites: ‘there are lots of areas that are not built on that are not beautiful green fields or are not necessarily classified as brownfield’. He even pointed out how wonderful the bungalows are in his own constituency, Great Yarmouth.
So when Saffron Housing Trust made a planning application to build ten bungalows on old railway land in Great Yarmouth, they must have thought they were onto a good thing. With various provisos, there were no official objections to the scheme and the planning department recommended it should go ahead. The two Labour ward councillors backed the scheme, in part because it would resolve fly-tipping and other problems on the vacant site.
The officers’ assessment showed that over 500 people were waiting for housing in the area, most wanting one- or two-bed properties and nearly two-thirds needing single floor accommodation. Clearly the bungalows would be oversubscribed. The households on the waiting list might well have agreed with their MP when he said you need ‘somewhere you can move to which is ideal for you without having to go into what you might see as a retirement home’.
However, the NIMBYs struck. Adjoining residents had got used to having the land as a free car park: 53 objected and a petition against the project raised 47 signatures. Councillors set aside their own assessment of housing needs and voted to reject the scheme at their meeting in May.
At this point a judicious intervention by the local MP and planning minister might have sorted things out, even though he’d stressed that it was ‘not up to him where new homes were built – that was a choice for local councils’. However, it turns out that in his own patch he is opposed to the council ‘forcing yet more housing on the community’. In his recent newsletter, he says the 10 bungalows would have caused ‘traffic chaos’ and that ‘out-of-touch’ Labour councillors were ‘defying the will of local people’ (setting aside, presumably, the hundreds of households who would gladly have applied for the homes if they’d been built).
Colin Wiles, discussing Lewis’s original enthusiasm for bungalows, noted in Inside Housing that George Orwell spoke about ‘the power of holding two contradictory beliefs in one’s mind simultaneously, and accepting both of them’. Colin was referring to the minister being at the same time in favour of low-density, single-storey developments, and worrying about the need to use more agricultural land for housing. As it happens, this small development in Great Yarmouth would have met both tests. It turns out, however, that Brandon Lewis’s ‘contradictory beliefs’ are far less complicated than Colin thought. Bungalows are to be universally welcomed, except in Great Yarmouth.
Acknowledgement: research for this piece was prompted by a news item in 24.dash.com
 

Next June it will be 40 years since it was first proposed that council houses should be given away to tenants. It was too radical even for Margaret Thatcher, but there is always someone who will resuscitate a daft idea. This time it’s Paul Kirby, the erstwhile head of the No.10 policy unit.
You can read the maths on his blog. What you can’t do is find any notion that social housing has any value other than its sale price. Like right to buy (which presumably Kirby regards as a timidly unambitious policy), it ignores social housing as an asset: something that needs looking after and will serve future generations. I imagine that what annoys such pundits about the sale of the Royal Mail is not that it was done cheaply but that the buyers were forced to pay for it.
I also imagine that Eric Pickles would be happy to adopt Kirby’s plan, but for the moment his hands are tied. He’s doing his best, however, and in the last few weeks we have seen three further steps towards making the right to buy even more generous – to the buyers. First, in July, maximum discounts rose to £77,000 (£102,700 in London) and from now on will increase in step with inflation. Second, the maximum discount for a house, previously 60%, became 70% (in line with that for a flat). Third, this month, the government implemented what Eric charmingly calls ‘Flo’s law’, which sets a cap on the service charges that councils can impose on leaseholders, most of whom are in flats bought via the right to buy.
All of these undermine the asset value of social housing but the third actually shifts costs from the right to buy purchaser back to the local authority. When the original consultation took place last year, CIH, London Councils and others warned that, effectively, council tenants would have to subsidise major renovations in blocks of flats where there are leaseholders, in order to keep service charges within the new limits. However, this government increasingly treats the consultation phase of its proposals as it would the Royal Assent to legislation: an unfortunate requirement that delays the outcome but is otherwise unlikely to change it. Councils have been left to work out whether they should forego government subsidy so as to continue to be able to apportion service charges fairly, or whether they should partly absorb them into their housing revenue accounts (which means tenants subsidising neighbouring owners who have already been subsidised once via the discounts they received when they bought their flats).
Pickles can’t of course resist putting the blame for high service charges on councils and is ‘appalled’ by how they treat leaseholders. It’s also true that buyers can find themselves landed with massive charges when roofs or lifts are replaced, and immediately blame the local authority for charging them while tenants get the work for ‘free’. Pickles is keen to perpetuate this myth, even though achieving the Decent Homes Standard is government policy and, of course, tenants are paying for improvements through their rents.
What he doesn’t say is that, when people exercise the right to buy, no one warns them about long-term repairs costs. Councils are limited to telling buyers what service charges will be for the next five years, and must be careful not to obstruct the sale process. The government’s own web page for buyers who will be leaseholders restricts itself to mentioning the five-year service charge estimate, and only vaguely mentions the bigger charges that might come later. Of course, this dedicated government website, facebook page and leaflets are aimed at talking up right to buy, not reminding buyers of the costs.
It so happens that the folly of right to buy (that would also result in spades if Paul Kirby’s mad idea was ever implemented), was also beautifully illustrated this month. Harrow Council finds itself spending half a million quid leasing back 35 former council homes, sold at discounts of up to £100,000, so that it can provide temporary accommodation for the homeless. Councillor Glen Hearnden was quoted in Inside Housing as saying:
‘We lose twice with the government scheme, we lose the property from our stock and then we pay to rent it back. It all adds up to our residents suffering. It feels like we are fighting the fires caused by an overheating housing market whilst the government is stood on our hose pipe.’
Paul Kirby doesn’t so much want to stand on the hose as cut off the water supply. Naturally, his proposal to give away council homes is also given the hard sell:
‘I would say to both left-wingers and right-wingers, it’s not often that any politicians get the chance to do something dramatic to sort out poverty overnight, especially in a way that costs the tax-payer a lot less. Given that both Left and Right can win from this proposal, they only lose by doing nothing, leaving all that money tied-up in the 4m homes, the poor still poor and the welfare bill climbing every year. So why not do it? Unless, either of them has got a better idea?’
Monimbó is not so immodest as to speak for the whole of the ‘Left’, but I do suggest that, to see many better ideas than his, Paul Kirby could read through Red Brick.

The Mayor of New York probably has enough on his plate without keeping up with Red Brick. But if he did, he’d find we are much bigger fans of his than we are of Boris Johnson. Told of the new practice of installing ‘poor doors’ in New York apartments, where providing a proportion of affordable housing has been a condition of their receiving building permits, Bill De Blasio said he intended to outlaw them. Back in Britain’s capital, however, installing poor doors seems to be an established practice that fails to trouble his London homologue.
Are poor doors the ultimate sign that social housing is a ‘failed brand’? The story came at the end of a week in which, as Red Brick reported, there was a live Guardian debate that saw the issue raised several times. A week earlier, Boris Worrall of Orbit Housing said that the social housing brand is ‘broken’, although he distinguished the brand from the product. Three weeks before that, Peter Hall’s blog picked up Red Brick’s story about the slow demise of social housing and argued that it would be better to subject it to euthanasia than to try to revive it. Not surprisingly, our friends in SHOUT have been vigilant in defending both the brand and the product. Colin Wiles took part in the Guardian discussion (along with Steve from Red Brick) and went on to challenge the notion of social housing having ‘failed’ or being ‘damaged’ in his column for Inside Housing.
Where does this leave us? There is a suspicion that this ‘failed brand’ debate comes about because some in the sector are positioning themselves to abandon social housing all together. After all, Boris Worrall has elsewhere proclaimed that ‘social housing is dead’. The NHF is hosting what it calls its HotHouse debate about the future of housing associations, one suggestion being that local authorities should be left to house those most excluded and vulnerable, perhaps predominantly in social rented properties. This would free up housing associations to cater for the more aspirational members of Generation Rent. Peter Hall’s argument is that it would be better for housing providers simply to create good quality rented housing, charging discounted rents to poorer tenants and full market rents to those able to pay them.
Probably few would oppose the idea that building some houses for sale or market rent can be a useful way to cross-subsidise social rented dwellings, but can this be done on a big enough scale? In Peter Hall’s example, only one third of the units are at social rents. Alan Holmans, the well-known expert on housing demographics, has pointed out that if we ever build 250,000 homes per year then indeed one-third of them will need to be at subsidised prices. But this means that for the Hall model to work across the board, we would need to capture all of the profits from the housebuilding industry. However tempting to Red Brick this might be, this simple calculation shows why we still need actual subsidy.
As Colin Wiles reminds us, another point that some would wilfully ignore is that both the need for and popularity of social housing are enormous. The Resolution Foundation’s report Home Truths showed that some 1.3 million low/middle-income households face housing costs which take one-third or more of their income. So far, few of these are in the social sector. But in 2012/13 alone there was a net loss of over 40,000 units that would have been let at social rents, so already we are putting parts of the social sector beyond the reach of broad numbers of low-income households, when we should be doing the opposite.
Kate Davies has also entered this debate, from a slightly different viewpoint. She says she admires the aspirational tenants ‘who get good jobs and go on to become homeowners’, but at the same time says we do need social housing as a safe haven for vulnerable people. However well-intentioned, this serves to confirm rather than confront the failed brand argument. It moves us much closer towards the position that the sector is (as she puts it) for ‘poor’ or ‘damaged’ people who can’t be self-sufficient. Ironically, this is the ambulance service view of social housing which persists in the U.S. and which De Blasio aims to challenge.
It’s a regrettably short leap from describing tenants as vulnerable to telling them that it’s all their fault. The media don’t necessarily make that leap – they don’t need to, there are enough viewers and below-the-line commentators who’ll do that for them. Arguing for sympathy rather than condemnation won’t work, especially when half those ready to condemn probably do so because they believe their own circumstances are more deserving of help from the state.
What’s the way forward? As Colin did, we need to keep on banging on about the scale of need that exists and of the supply that’s required. Given that we have an economy in which huge numbers on low and middle incomes find neither renting or buying affordable, low-cost housing is vital and only the social sector can provide the numbers of homes needed. Furthermore, if we were able to do this, we’d soon find that we were housing fewer vulnerable people and more who are simply working in low-paid jobs. (After all, those in work currently account for the fastest growing segment of housing benefit claims.)
But we also need to get a grip on our own perceptions of the sector we run. The fact that new lettings usually go to the most vulnerable applicants shouldn’t blind us to the broad range of people who still live in social housing, even after 30 years of ‘residualisation’. Kate Davies admonishes those who promote social housing as an ‘idealised workers’ paradise’ but it’s equally misleading to go to the other extreme. In my view, talking about ‘failed’ or ‘broken’ bands does just this, and undermines the case we need to make for massive investment so that the sector can properly cater for many more of those who need and want to live in it.
A small lesson can be drawn from a different piece on the Guardian Housing Network. Residents of the Aylesbury Estate objected to the way their homes have been regularly portrayed by Channel 4, including in the opening images of ‘Benefits Street’. The short clip, called an ‘ident’ in the trade, shows a monochrome estate, apparently after a rain storm, populated by pigeons and strung with washing lines and bin bags. Residents helped produce their own, alternative clip, showing the estate in a very different light, featuring the varied groups of people who actually live there. Both the film and the fact that they did it should remind us that there are (still) plenty of vibrant people living in social housing who are getting on with their lives. They suffer much more than we do if where they live is described as ‘failed’ or ‘broken’. Social housing pundits, please note.

Does that fact that both Eric Pickles and Iain Duncan Smith are still in the same cabinet seats mean that David Cameron thinks they are doing a good job? Two prime candidates for the chop this week seem to have successfully defied their critics. What does this say about housing and welfare policy?
If the prime role of the DWP was seen as delivering welfare reform and that of the DCLG was to deliver more housing and more effective local government, then clearly both IDS and Eric have failed miserably. Welfare reform is being haltingly rolled out, it’s beset by administrative problems and its talisman project, universal credit, looks like a disaster that has been prevented only by the continuing delays in its implementation. To coincide with the reshuffle, the DWP brought out the first round of research into the impact of the bedroom tax, showing that only 4.5% of those affected had actually moved to smaller properties, yet this was one of the main stated aims of the policy. Almost at the same time, the Institute of Fiscal Studies reported that changes to the local housing allowance have had no impact on curbing private sector rents, another policy objective: instead they’ve simply hit claimants’ pockets.
Unlike DWP, Eric’s department seems to have gone in for remarkably little independent scrutiny. Perhaps it’s just as well. As the just-departed housing minister struggled in the recent Commons housing debate to claim that housebuilding is increasing, he was assailed by evidence to the contrary. Reports which foresee the end of local government as we know it, such as this recent one from the LGA, go ignored.
However, I suspect we’re judging both men by the wrong yardsticks. In considering IDS’s survival, Jules Birch suggests it’s an example of ‘wet-bed syndrome’. For an explanation, he directs the reader to the Stumbling and Mumbling blog, which uses IDS as an example of why idiots succeed. However, my eye was caught by one of the comments at the end of the blog. It suggests the most likely reason that IDS remains in post because he is, in Cameron’s eyes, actually a success. Perhaps his brief was ‘to knacker the benefits system so that claimants increasingly give up, while shovelling large amounts of public money to favoured suppliers’, and in so doing demonstrate ‘the incompetence of the state in managing services’. If that was really the brief, the commentator points out, he’s done startlingly well.
Similarly, if Pickles was sent to DCLG to preside over the biggest cuts in any government department, and start the process of marginalising both social housing and local government, depriving them of resources and winding them down, he seems to be halfway there.
Perhaps though, both mens’ success factors are even more subtle than that. IDS seems to believe he’s successfully pursuing a completely new strategy of welfare reform that will replace a ‘broken system’. This enables him to look genuinely baffled when anyone suggests that he might, instead, be simply destroying the one we already have. Pickles’ talent is the opposite one: while local government cries out for a strategy for how it can reconfigure so as to operate with only a slim proportion of its present income, Pickles busies himself with the issues that really bother him, like the continued production of free council newsletters. Has there ever been a local government minister who has turned such a deaf ear to the concerns of local government? Aren’t both secretaries of state, in their different ways, brilliant at putting up smokescreens to hide the destruction they’re carrying out?
Among the serious consequences of their activities is one that’s overlooked by most of the media. It’s been said often enough in the past that the two departments (responsible for welfare and housing) are dealing with two aspects of the same policy area: you can’t separate benefits policy from policy on rents, allocations, regulation of landlords or a whole host of housing issues. To state the obvious, if you cut benefits, tenants get into arrears and landlords’ income falls; similarly if housing policies lead to higher rents then this pushes up the benefits bill. One of the big consequences of both departments’ apparent indifference to the real effects of their policies is the widening gap between them on these key areas of overlap.
For example, the bedroom tax (sorry, the ‘removal of the spare room subsidy’) had four objectives: save money, improve work incentives, encourage mobility (i.e. get people to move around more) in the social sector and make better use of the housing stock. The last two are housing objectives, but were the DWP’s colleagues in DCLG asked about them? It goes without saying that DWP didn’t listen to warnings from the sector itself that moves on the required scale would be impossible. There were also warnings about the impact on landlords’ earnings, and lo and behold the research shows that arrears were up 16% in the months after the tax started.
Over at DCLG the policy to impose Affordable Rents is also being rolled out, with 40,000 homes let at the higher rents last year that would previously have been let at social rents. Given that the proportion of the new tenants dependent on benefits is exactly the same as for social lettings, 80% of the cost of the new policy is being passed straight back to DWP.
So the bedroom tax cuts social landlords’ income and saves DWP money, while Affordable Rent increases landlords’ income and costs DWP money. Not to worry: IDS thinks the evidence shows that the bedroom tax has made a ‘promising start’ while Eric… continues to fret about fortnightly bin collections.

Why would Inside Housing want to attack the idea of councils having more borrowing power to build new homes? After all it runs campaigns like Grant Britain Homes that call for more investment in affordable housing. Yet it’s just labelled the demands for greater borrowing freedom a False and dangerous myth. The opinion column accompanies a piece of research which used Freedom of Information requests to find out how councils were using their current borrowing ‘headroom’. The data show that councils like Wigan and Kirklees had £45 million of unallocated borrowing power and that many others had not yet borrowed up to the maximum of the ‘caps’ set by government when self-financing began in April 2012.
There seem to be no problems with the data (although individual councils might have issues with how they’ve been reported). The problem is that a story about how the early stages of self-financing for councils are working out has been turned into an opportunity to try to rubbish the case for changing the borrowing rules.
The argument seems to hinge on the fact that ‘most of the £2.9 billion of investment already available is untapped’. That’s to say, in February, just 22 months after self-financing began, councils hadn’t yet borrowed to the maximum they will be allowed to borrow (if nothing changes) for the next 30 years. Well, that’s hardly surprising, is it? Even those many councils who are bursting to build new homes are hardly likely to have got new developments on site in less than two years. The fact that there was an upsurge in council starts in the first quarter of this year is probably still down to earlier grants made available by the HCA, rather than councils’ expanded programmes after self-financing began.
While it’s true that a number of councils don’t yet have firm plans to build, that’s not surprising either. Demand and needs will be different across the country: in some cases demand may be limited, in others investment in the existing stock is the priority, and others may have used up their available supplies of land. Undoubtedly, too, there is a degree of caution in the face of welfare reform and spending cuts that have hit other council services. But neither the purpose of a change in borrowing rules nor the forecasts of possible outcomes depended on all councils using their full borrowing headroom, much less within such a short time.
Strangely, in another article by the same journalist Keith Cooper, this time for the Spectator, with the provocative title Why Owen Jones is wrong on housing, he points out (correctly) that around half of councils have less than £10 million borrowing headroom. The ignorant reader might think this is a lot of money, but of course – even if all spent on new build – it would barely amount to 100 new homes over the course of 30 years, quite apart from finance needed to improve the existing stock. Perhaps inadvertently, he adds to the case that Red Brick and others have long been making, that the borrowing caps are far too restrictive. His other results confirm that, in addition, they are arbitrary in their effects, with some councils having no spare borrowing capacity at all and a large number only having enough for the investment they need to make in their own stock.
But the problem about the Inside Housing (and Spectator) pieces isn’t the detail – it’s the overall message that the need for more borrowing power is a ‘myth’ and those calling for it are ‘misguided’. In a robust response, Tom Copley, Labour spokesperson at the GLA, pointed out that even Cooper’s figures show that six out of ten councils badly want to build more homes, and many are held back by the borrowing caps. Keith Cooper and Inside Housing are to be praised for their detailed research on this and other issues about local authority housing finance, but they should be much more careful how they present their findings. Those who are opposed to building more council houses or who doubt local government’s ability to spend wisely will be only too quick to make use of alarmist articles like those that appeared last week.

The latest affordable housing figures show that numbers of new social rented homes have fallen by half. The year before, they’d fallen by more than half. So whereas for the three years up to 2011/12 we were producing around 34,000 new homes for social renting each year, now it’s less than 8,000.
It’s not as if this is a temporary lull. From 2015, there’ll be virtually no social rented output funded by the Homes and Communities Agency, so although local authorities will continue to build and let at social rents from their own resources, we can expect a further sharp fall in output. Furthermore, any recycled receipts from right to buy sales can only be used to build homes at higher, Affordable Rents (not social rents).
Despite these obstacles, councils recently said that they want to produce half their new build for letting at social rents, and that overall local authority output will rise to about 5,000 new units per year. But even if it does, it looks like total production of homes at social rents will fall by a further 50% and perhaps more.
This matters, because (as Red Brick readers know only too well) Affordable Rents are getting very close to market levels. The picture is shown in this year’s UK Housing Review. Affordable Rents for new build properties run at nearly 80% outside London and at 69% in London (but go up to 80% in some Boroughs). Overall, in 2012/13 there were some 27,000 lettings by associations at Affordable Rents, and on average the ‘premium’ on social rents is a startling 55%.
Even more important than the statistics on new build are those on the overall stock of housing let at social rents. Nick Raynsford MP has been doing some digging on this issue, but what this has mainly revealed is that the data are incomplete and confusing. Accurate and comparable data only seem to be available for the two years 2011/12 and 2012/13. These show that councils had a net loss of 11,769 social rented units in the year ending April 2013, while housing associations lost 3,278. By that date, associations owned almost 40,000 homes let at Affordable Rents and councils owned just over 1,000. We know that the current Affordable Homes Programme (that ends in March next year) is based on converting about 75,000 existing homes to Affordable Rents over the life of the programme: this undoubtedly explains some of the loss of social rented stock even though the AHP had (in April 2013) still two years to run.
The loss of around 15,000 social rented homes in one year may seem a small amount – given that the total social housing stock was still 4.2 million. But it’s the beginning of a worrying trend, given that almost all new build effort is going into producing homes that are more expensive than social rented ones (whether for rent or sale), and the existing stock is being eaten away by conversions, demolitions and sales (including, of course, the accelerating right to buy). With right to buy sales now running at 11,000 per year and rising, it’s a safe bet that the net loss of social rented homes in the year to April 2014 will turn out to be much greater than the year before, and that by April 2015 the loss will be bigger still.
Postscript (25 June 2014): Although the statistics are far from clear, a different calculation of the loss of social rented homes in the housing association stock in the year to April 2013 suggests a bigger figure than is shown in my original post. Using the stock losses and gains reported in section 5 of the HCA’s Statistical Data Return 2012/13, and deducting stock now let at Affordable Rents (section 3), the loss would be 23,025. Added to the fall in council housing numbers noted above, the total loss of social rented stock in the year ending April 2013 rises to almost 35,000, or about 20,000 more than in my original calculation.

Will the government eventually respond to the Elphicke Review by boosting housebuilding by local councils?
While Red Brick has understandably concentrated on Labour’s Lyons Review, in the past week submissions closed for the more limited review being carried out for the government by Natalie Elphicke, due to report later this year. It’s limited because it focuses only on local authorities (both as housebuilders and as facilitators of housebuilding) and doesn’t go much wider. But more especially its remit specifically excludes any options that would involve more borrowing or changing the borrowing rules. So, can it achieve anything?
One of the few bright spots in recent housebuilding statistics was the number of new starts by councils in the first quarter of this year (1,090). Described by Eric Pickles as part of a ‘resurgence’ in housebuilding, he claimed the overall level of new starts was due to Help to Buy and higher council starts were down to increased right to buy receipts. More realistically, while it would be encouraging if council output were now to start to increase significantly, there are a number of reasons for being cautious. The first is that this is only one quarter’s figure. Second, we have the fact that the new Affordable Homes Programme virtually excludes social rented schemes, whereas councils want to build around half their new output for letting at social rents (according to research last year by ARCH). And third, as pointed out by Red Brick before, while right to buy receipts are increasing they are nowhere near allowing full replacement of properties sold.
One test of the rigor of the Elphicke Review will be whether it examines the claims about reinvestment of right to buy receipts and makes any proposals to change the current rules. It’s highly likely that several submissions will mention this issue, as it’s high on the list of local authority concerns. In relation to new build, another common worry is that, unless the so-called ‘cost floor’ rules are strengthened, councils could find themselves having to sell newly built houses through the RTB in 15 years time and in the process make a significant loss. Some councils are thought to be hesitant about building within the HRA for just that reason, preferring deals which allow them nominations to houses built without being subject to the risk of falling foul of right to buy in future.
Another test will be whether, even though it can’t recommend changes in the borrowing rules, Elphicke does at least review the evidence for what relaxed rules could achieve and the scope for minor changes. After all, the government itself has offered minor concessions in the scheme it announced in the Autumn Statement which might release an extra £300 million of borrowing.
The Elphicke Review will only have credibility with local authorities if it avoids the blame game and the temptation to recommend further sales of the family silver. It’s right for Elphicke to look at ways in which councils can raise their game in encouraging development, but if it criticises poor performers it should also be clear that councils only carry a small part of the responsibility for the failure to build enough houses. It should look critically at the changes to the planning system which Pickles has imposed, including the ending of regional housing targets, rather than simply repeating and endorsing his endless criticism of recalcitrant councils. Its remit doesn’t extend to the role of developers themselves, but it can at least point to some of the endemic problems that see their share prices and profits going up while their output only increases with painful sluggishness.
Above all, Elphicke should point out that is deeply cynical of government to criticise local planning authorities for not planning for sufficient housing when it lacks an adequate housing strategy itself. The one the coalition published in November 2011, Laying the Foundations, was little more than a ragbag of recycled policies, not a strategy with targets and the means to achieve them.
Curiously, insofar as Laying the Foundations mentioned a figure of how many houses we need to build, it used the DCLG’s then official projections of increases in numbers of households, by 232,000 households per year to 2033. This would exceed Labour’s 200,000 target, and be within spitting distance of the 250,000 per year target often mentioned as being required. The problem is that private housebuilders have, since 1980, only built an average of 125,000 dwellings annually and on only four occasions did they exceed 150,000. Even if we suppose their output might be pushed up to 160,000, this still leaves a lot to be built by social landlords and clearly won’t be achieved with anything like current funding arrangements which struggle to deliver over 50,000 homes.
Elphicke should say that a step change in output can only be achieved with a clear plan, that sets targets and plausible means of achieving them, allocates responsibilities and finance, gets buy-in from the different parts of the industry and is properly monitored. This goes against the grain of how the coalition conducts housing policy, but unless and until someone does it the “deep, deep structural problems” that Mark Carney says afflict the British housing market will remain unsolved.

New York Mayor Bill de Blasio is ‘going big’ on his plans for affordable housing, according to the New York Times. In his 116-page plan launched this week, the new mayor promised to build or keep 200,000 affordable units over the next ten years, trumping previous mayor Bloomberg’s 165,000 units over 12 years. De Blasio intends to invest $8.2 billion of city money, which he thinks will lever in sufficient funds to create over $40bn of investment in total. If it works, the plan will keep 120,000 apartments already let at affordable rents that are in danger of being lost, and create 80,000 more. He announced the programme at a new development site in Brooklyn which, when finished, will let 50% of its apartments at affordable rents.
As Red Brick has pointed out before, New York’s mixed communities are heavily dependent on rents kept low through regulation or subsidy. The new plans are specifically aimed at low-income families – those earning less than $25,000 for a family of four. This is because, of the city’s rent payers, one third spend more than half their income on rents and utility bills, whereas the city’s own guideline maximum is 30% of income. The current problem is that the city is losing more rent-regulated apartments than it builds, and once out of regulation rents go sky high. De Blasio wants to identify neighbourhoods vulnerable to gentrification, and “lock in” affordable rents before it’s too late.
Apart from subsidy, the essence of the de Blasio plan is to permit higher-rise developments providing they meet affordable housing quotas and that the units are guaranteed as affordable forever. This is thought to be risky, as some developers may simply refuse to build if they have to comply with the new norms. However, the president of the influential Real Estate Board of New York said the plan provides “a realistic road map for solutions”, so there is hope that the private sector will co-operate.
The ambition and pace of the plan is exciting given that the new mayor was only elected in November. His focus on very affordable housing is in complete contrast to the Johnson plan for London, whose result has been to push even so-called “affordable” rents up still higher. And as Steve said at the time of de Blasio’s victory, his ideas could be an inspiration for Labour: set an ambitious, well-constructed plan, and go for it soon after the election while your new mandate can help nullify any opposition.