Author: Steve Hilditch

Radical solutions to the housing crisis must focus on land
A new report from the London Assembly has taken a good look at the question of land and has recommended a clear route forward for the next London mayor to move towards introducing a Land Value Tax (LVT). The report proposes a step by step approach with an initial review of the powers that would be necessary for LVT to replace council tax, business rates and stamp duty land tax; an economic feasibility study to model the likely yield of LVT compared to the other taxes; and, if the study is positive, a trial of LVT in a geographically defined area of London.
The report rehearses the reasons behind the need for a radical new departure that has the potential to release far more land for productive use to meet the needs of a city that is growing rapidly in population and requiring the regeneration of many of its older neighbourhoods. It argues that new mechanisms are needed to fund London’s growth – which will continue to feed land and property inflation under current policies. And it argues that LVT would match the current appetite for devolution – with even the current mayor arguing for London to have considerably greater tax-raising powers and the Government already agreeing to devolve business rates by 2020.
As others have before, the report illustrates how the existing structure of property taxation encourages inefficient use of land and deters development. Council tax fails to deal with high value land, business rates fail to address unused land and taxes productive enterprises instead, and stamp duty is a disincentive to land sales.
LVT is defined by the report to be ‘a tax on land, payable by the landowner, at a rate of tax which is determined by the value of the land in its ‘optimum use’ (as decided by a public authority) as opposed to its actual or current use’. There would be a clear incentive to bring forward under-utilised land and the tax has the potential to reduce reliance on Whitehall funding and could lead to substantial community benefits when land values increase following public investment.
There is considerable public support for stronger action to be taken against land banking and against corporations which hold land simply to let it accrue in value without penalty. The report estimates that there are around 2,000 brownfield sites in London that may be available for development, comprising about 2% of the land area. It also comments that almost half the notionally available sites in London were held by those who had no incentive or intention to build. Based on the GLA’s Strategic Housing Land Availability Assessment (SHLAA) in 2012, land classified as ‘potential housing land’ could accommodate 276,000 new homes, equivalent to 7 years extra housing supply.
The theory behind the merits of land taxation is straightforward. Unlike other assets, land has borne no cost of production and it only has value because of its scarcity. As the report says, ‘land value owes nothing to individual effort and everything to the community at large’. The tax is transparent and the asset it taxes is unmoveable – it cannot be shifted to the Cayman Islands!
The report notes that the modern case for a land tax can be traced back to Winston Churchill in 1909. He argued that landowners should be taxed on the benefits they accrue from external developments, which have been provided by the labour, investment and tax payments of others, often through public investment. Although developers do make section 106 and Community Infrastructure Levy payments, these represent only a small fraction of the uplift gained, for example, by new transport infrastructure. If owners of underused or vacant land paid more through a more broadly based land tax, ordinary taxpayers would be required to pay less.
The GLA report is frank about the objections that have been made about LVT. There are significant challenges in introducing any new tax and making it operationally workable. Many of these are practical around identifying ownership but the idea of ‘optimum’ land use is new and potentially complex, and existing land value is often a moveable feast depending on the variable potential value of different developments. It is also frank about the political challenge, pointing out the ridiculous position where council tax is still based on 1991 values due to the perceived political risk of revaluation. The switch would create substantial winners and losers, and the losers will be able to afford lawyers and lobbyists! It therefore identifies some alternatives that have been suggested such as a specific derelict land tax and a system based on incentives rather than taxation, as well as better use of the mayor’s existing powers, including the power to set up area development corporations like for Old Oak and Park Royal.
The approach recommended is therefore gradual and based on a series of investigatory steps, clarifying issues and working towards holding a pilot. But it concludes that the political context is right – a desperate housing shortage, housing becoming a serious brake on growth, and a strong move towards the devolution of powers to elected mayors. For those like me who have long supported the idea of land taxation whilst being doubtful about its political deliverability, this report and its careful approach makes a lot of sense.

Here’s a revelation: I’m getting on a bit. 66 next week, but feeling older in body (especially compared to my tennis-playing and hiking friends) yet far younger in mind.
Another birthday is not the only reason why I’ve been thinking about housing and older people recently. I’ve also been reading a new report from the International Longevity Centre which is disparaging about the way our society is responding to ageing. They conclude that the social care system is crumbling; health care is failing to incentivise prevention of ill health; the housing system is failing, leading to many older people living in housing which does not meet their needs; and there is growing risk of people running out of money in retirement. As the current vogue is to accuse this older generation of feathering their own nests at the expense of future generations, this is quite a challenging list.
Increasing longevity and Government policy changes mean that many older people will no longer fit the stereotypical image of a mortgage-free old age living comfortably in their own home. More will carry debts, including mortgages, into a much later retirement, more will be asset-rich but income poor, more will have problems repairing and heating their homes, more fill face large care bills, more will want to release some of their equity to help sons and daughters get a home rather than wait until they die. They will also sit on a huge amount of empty space – while the Government punishes working age social tenants with a ‘spare’ bedroom, the real issue of under-occupation in housing remains totally untackled.
The Tories have played a clever but typically cynical political game with older people, and it has reaped dividends for them. At the election, Labour had a clear lead over the Tories among 18-34s, social classes D and E, and private and social renters but their vote share fell amongst those aged 65+ to a tiny one in four, with IPSOS MORI recording a 5.5% swing to the Tories since 2010 amongst the age group that is not only increasing fastest but is also the most likely to turn out to vote (78%). The Tories led by 47% to 23% across the age group as a whole. Looking just at tenure across all age groups, the Tories led Labour amongst people who owned their home outright – mainly older people – by 24% but by only 8% amongst those that had a mortgage – despite the housing costs of this latter group falling over the past few years due to low interest rates.
The Tories identified themselves with ‘looking after pensioners’, especially by contrasting their pension reforms and the ‘triple lock’ with Labour’s ‘75p pension increase’ (which was a one-off of course). Pensioners also know they have been protected from the ravages that have befallen working age households who have faced a major income squeeze. Like many popular Tory policies, it is a mirage – my parents were made vastly better off by the Labour Government, especially when wider policies like carer allowances, fuel allowances, and council tax benefit were taken into account. The Tories successfully promoted their headline pension policy amongst existing pensioners whilst undermining the position of poorer pensioners and those needing care, and by totally screwing future pensioners at the same time. (The Resolution Foundation’s reports on Living Standards provide all the background data you’ll ever need).
The electoral figures are worse even than they seem. Many of the older people who supported Labour in 2015 could be described as life-long habitual voters, and I suspect the numbers could scarcely fall any further because of that. It is good that Labour is perceived as a young person’s party, but not enough. The demographics were well known before the 2015 Election, but Manifesto commitments on older people were rarely highlighted in the campaign.
To win in future, Labour must have no less an ambition than to regain its former lead amongst older voters, and it needs to think more seriously about how it appeals to this group. Of course many will vote on general issues like the economy or immigration or health just like the rest of the population, but there must be an advantage in thinking through a comprehensive policy which specifically appeals to older people, whatever their tenure. Labour accepted the triple lock, which helps, but needs to check through the gamut of policies that have affected poorer pensioners, and especially the collapse of the care system. Here, as Andy Burnham rightly said during the election, it is not just about spending more, it is about spending money better, like helping people in their own homes rather than keeping them in expensive hospital beds. It is also vital to highlight and address the fears of people now approaching retirement who have been hung out to dry – especially that cohort of women who expected to retire at 60 but will not now be able to retire until they are 66 or 67.
Ageing has long been a neglected area of housing policy. There have been plenty of ideas and a few programmes but insufficient priority has been given to creating real options and on a sufficient scale. Policy should be based on giving older people real choice rather than just pushing them in a particular direction. Labour’s policy on supporting people had the inadvertent consequence of undermining very popular sheltered housing (by switching money from supporting communal schemes to individual care packages) just as the Tory benefit policies are now undermining the provision of new supported housing. Support for voluntary organisations providing low-level support like shopping and gardening has almost disappeared, as have the projects offering ‘care and repair’ services to home owners that mushroomed in the 1980s. For people with declining health who want to stay in their own home, the central issue is providing far better social care, from domestic support to nursing, and much better post-hospital support. For those who want to stay at home but release some equity, we need a better range of (crucially) properly regulated financial products that people can trust. The state should be acting energetically to help those who would consider moving to somewhere smaller. Very popular schemes under which councils would buy family homes at a discount and provide good quality sheltered housing in return should be reinstated.
These are just a few of many possible suggestions. A forthcoming report on ‘Ageing London’ from the London mayor’s design advisory group will add to the list. But my central point is that Labour should develop an attractive group of real policies, including housing options, which will have a major impact on older people’s lives and help detach them from the bad habit of voting Tory.

A collection of essays in memory of the life and work of Chris Holmes has been published online and is accessible to all. The essays, including contributions from Hattie Llewellyn-Davies, Nick Raynsford, Ann Power, David Orr, Jeremy Swain, Nicola Bacon, Rachel O’Brien and myself, have been written especially for this memorial publication.
The essays reflect the theme of Chris’s “furious commitment” to end homelessness and bad housing.
It is appropriate that they are published this week due to the close association of Xmas and homelessness in so many people’s minds. Furious commitment is exactly what we all need in 2016 to reverse the upward march of the homelessness figures.
The link to the essays is
http://bit.ly/1O1TFxT

I hope you enjoy the essays in memory of such an inspiring person.
Happy New Year.
Steve Hilditch
 

I had intended not to write any blogposts during my extended visit to the antipodes this winter. But the addition of new clauses at very short notice to the Housing and Planning Bill which introduce ‘mandatory fixed term tenancies’ of 2 to 5 years and end security of tenure for new council tenants touches a raw nerve for me. This is a smash and grab raid, stealing a core right from tenants with no real opportunity for debate outside the Bill committee. I am delighted Labour has opposed the change forcefully.
The policy, and the stealth with which it has been introduced, is symbolic of the contempt and loathing this government shows for people on low incomes. They can be moved around like pieces on a chess board to suit the convenience of the government and landlords, or at least be kept in a state of uncertainty as their ability to stay in their home while they are ‘reviewed’ by a housing officer in what will feel like an arbitrary manner. They must not be allowed to settle, to integrate into communities, to put down roots, to provide stability for their children, to build successful lives for themselves.
For people like me, who associate our own ‘social mobility’ with the platform of security and stability achieved by our families due to living in council housing, this is a bitter pill to swallow.
The Tories are not the only people to blame, of course. During her short period as housing minister, Caroline Flint flirted with this idea as well, and plenty of housing ‘professionals’ have made the case for ending what they like to call ‘lifetime tenancies’ – an invented term, quickly picked up by Grant Shapps to make the whole business seem unreasonable. Even now the ethically impoverished National Housing Federation can’t bring itself to defend what remain of tenants’ rights: their argument is that housing associations should be able to let ‘their’ homes to whoever they like and on whatever terms they like. At present they have got their way: the new fixed term tenancy model will apply only to councils while the government continues to work out what to do about the reclassification of housing associations as public sector for the purpose of defining public borrowing.
The story of security of tenure for council tenants is one of bitter struggle. Councils have not always been benign landlords. Even when they wanted to build a lot of council housing to help emancipate the working class they often managed the homes with a rod of iron. They never really shed the mantle of Octavia Hill and consumer rights were a foreign land. Some used the threat of eviction to exert social control and to separate the deserving from the undeserving poor. Labour eventually listened to the case for a charter of tenants’ rights and the Callaghan government sought to enact security of tenure, balanced by strong grounds for possession. Unlikely as it now seems, it was the Thatcher government that put ‘secure tenancies’ into law in the 1980 Act, picking up the Labour legislation and realising quickly that secure tenancies were a necessary foundation for the ‘right to buy’. Thatcher had an ulterior motive, but the tenants’ charter came into existence and brought with it a profound change in the style of housing management, more considered, more balanced, more respectful, more participative, and, when eviction was thought necessary, more evidence-based requiring a judgement in a court of law. Secure tenancies underpinned the modernisation of the social housing sector, even leading eventually (and regrettably) to tenants being called ‘customers’.
Social rented housing is our most precious housing asset. It’s existence broke the historic inevitability that people on low incomes and vulnerable people would also endure homelessness and dreadful housing conditions. It removed the blight of bad housing from generations of children. In my view it was the strongest mechanism of all to achieve genuine social mobility and to give children born into poor families similar opportunities to those enjoyed by better-off families. Many of the key tensions around social housing – the most controversial being who gets it, and who doesn’t – arise not from failure but from its success and popularity and the shortage of supply.
Of course the government and big parts of the housing industry will seek to pacify opponents of the change. It will be helpful to tenants, they say, to have their tenancies reviewed every 2 or 5 years. Most will be renewed, they say. Well, what is the point of that? The policy fails in either direction. If non-renewal is the primary outcome, the vast majority of tenants will end up in private renting, far less suitable for families and more expensive for tenants and the state. If most fixed term tenancies are renewed, the policy will not achieve its purpose of getting moreturnover to create more space for new tenants. The argument that the government is trying to make that people will be helped into owner occupation is, well, pants. A few more will exercise the right to buy, but where is the justice in that? Remain a tenant and get kicked out, buy and you can stay.
We now have a sector that, instead of managing estates effectively and helping tenants to progress in their lives, will be collecting vast quantities of data about their incomes in case they are ‘high earning’ (£30k per household), monitoring what they get up to so they can review their tenancy every few years, and of course checking the immigration status of new tenants to boot. The new Victorians are firmly in charge.
There is an old saying that to incentivise the rich you have to make them richer, to incentivise the poor you have to make them poorer. This is now writ large in housing. If you are or are able to become a home owner, all manner of gifts – let’s call them subsidies – will be showered on you. The Prime Minister will talk endlessly about the important security and stability that being a home owner gives you, and that this in turn creates the conditions for social advancement. Meanwhile, if you are a social tenant, you will be accused of being subsidised even when you are not, your ability to pay your rent will be constantly threatened by bedroom tax or benefit caps or benefit sanctions, you will be denigrated and demonised in the media, and your ability to stay in your home will be subject to the whim of a landlord even if you meet all the terms of your tenancy.
Security for me and not for you. Subsidy for me and not for you. Social status for me and not for you. Insecurity at work and now at home. A two nation government without a doubt.

After 5 years and approaching 700 posts, Red Brick is going to have a winter rest. A hibernation? That sounds like a good phrase, implying a comeback with renewed vigour and energy. That will certainly be needed for the fight ahead. I’m off to New Zealand for two months to look restfully on high mountains, beautiful lakes, and stunning coastlines, from the tropical rainforest and volcanoes of the north to the glaciers and fjords of the south. There may be the occasional flurry: I might be moved to comment on something from afar, my brilliant colleague known here as Monimbo may have a few things to say, and, through the wonders of the internet, I will get any other submissions people care to offer – we have always tried to be an open forum. But we will be troubling your inbox less frequently between now and February. My apologies for those who would like to see more regular rants against the Housing and Planning Bill.
When Tony Clements and I hatched the idea of a ‘progressive’ housing blog five years ago, we were still in the early flush of the coalition. We thought housing would be a big part of the LibDem resistance within the Government – it wasn’t – and we thought housing would become central to a new Labour offer – it didn’t really do that either. We thought that Grant Shapps was a bit of a fool, a spin fetishist and a caricature of a Tory politician. Despite his PR-led approach, he proved to be a transformative figure, and I don’t just mean through his alter ego Michael Green. With a stroke of evil genius, he turned logic on its head by virtually doubling the rent of new social homes and calling his new unaffordable product ‘affordable rent’. Opponents never got past this as the Government and mayor of London constantly talked, usually unchallenged in the media, about their performance in providing affordable homes.
If the truth never reached the public it became common to talk about the policy as ‘Orwellian’. George Orwell’s essay ‘Politics and the English Language’ examined the connection between phrases used by politicians and the debasement of language. He could have been writing with Shapps in mind when he said that political language is about ‘the defence of the indefensible’ and ‘is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind.’ Shapps’ great achievement was to cover up George Osborne’s immediate cut in housing investment of over 60%, probably the most damaging single decision in the history of housing policy. There was scarcely a peep from the LibDems, setting the pattern for total complicity on housing for the rest of the Parliament.
Five years back, our first posts were also about the attack on security of tenure and the dangers of a high rent policy for the long term benefit bill. We argued the case, and still do, for the retention of security for social tenants – I won’t dally with the equally Orwellian term ‘lifetime tenancy’, a concept that doesn’t exist but is much discussed – and the extension of security for private tenants. We supported the ‘benefits to bricks’ approach which has been much debated since – as Tony wrote at the time, Coalition policy was ‘like a great big housing PFI – avoid the capital investment up-front, pay more in the long-term’.
In the early days, and indeed ever since, Red Brick was accused of scaremongering. In the election, Labour had been accused of whipping up unfounded fears about the Tories’ secret and malicious plans. David Cameron himself had personally rebutted claims that the Tories would hike social rents and abolish security of tenure, claiming it was part of a ‘scare campaign’ and that the Tories believed in the ‘security (that social housing) provides’. Nick Clegg joined in: also accusing Labour of scaremongering for saying that housing benefit cuts would compel people to move out of their communities. Yet even the wildest imaginings came to pass and Cameron learned that he could get away with the boldest of denials – as is now even more apparent due to his 2015 commitment not to take away tax credits for working people.
Cameron always reminds me of that old idiom ‘the louder he talked of his honour the faster we counted the spoons’. How does he get away with it? The only available answer lies in the politics of our media – an overwhelmingly right-wing written media and a broadcasting media that is led by the nose by the newspapers. There is a pattern, they destroyed Brown, they destroyed Miliband, and now they are destroying Corbyn (in all three cases with a little help from our own side). In housing, the media are obsessed with virtuous home owners and the stigmatisation of social tenants (unless of course they want to become home owners).
Our belief that the Tories had a secret housing agenda and policies that were hugely different from those set out in their rather benign 2010 manifesto was set out in a post called ‘Less Localism and More Localis’. We argued that the policies that Shapps was actually following were clearly set out in a pamphlet published by the right wing think tank Localis before the election. None appeared in the manifesto. But it was all there in their document: moving social housing towards market rents, removing security of tenure so that the sector would meet temporary and not permanent housing needs, letting housing benefit take the strain before cutting that as well. In short, the full marketisation of social housing. Five years on, it is the writings of Policy Exchange that seem to foretell Government policy.
That blog post also introduced another of our themes: the complicity of much of the housing sector and especially key people in the housing association movement. Two housing association chief executives were fully engaged in the development of the Localis policies. When the Government changed, the sector whinged about the policies but probably less vocally than it had done under Labour. They could have destroyed ‘affordable rent’ by refusing to deliver it on the Government’s terms. Instead, under the pretence of ‘accepting the inevitable’ and playing, in a favourite phrase of the time, ‘the only game in town’, it dawned on us that more than a few of the big associations saw this not as a disaster but as a historic opportunity to break free from regulation and become truly commercial and ‘independent’. They saw their future as really big developers, leaving behind their original mission, their charitable objectives, and the tradition of providing genuinely affordable social housing. They loved the world of big bond launches and mega land deals and wanted to break free from being told to house homeless people by local councils. Of course it is hard to generalise about the huge variety of associations, and many retain their original zeal for meeting housing need, but many of the biggest and most powerful players and their trade body the NHF are now almost beyond redemption.
Red Brick has covered social housing a lot but we have tried to take an eclectic view of the housing world. Just a little bit of training in economics led to the conclusion that the Government’s obsession with demand-side subsidies for home ownership would put prices up in the long run. The objective, better affordability for first time buyers, would continue to move out of reach but large amounts of public money, amounts that make the affordable housing programme look puny, would be spent or forgone or committed as guarantees. We identified the problems with housebuilding to lie less in demand and more on the supply side: in the business model of the existing volume housebuilders, the total failure of the land market, a reactive rather than proactive planning system, and the 35-year long removal of the biggest players, local authorities, from the game. We scoffed at the so-called localism agenda: a policy that moved in two directions at once – highly centralising that which the Government cared about most whilst decentralising what they couldn’t be bothered about. Even so, we found much to praise in the fact that they carried through John Healey’s proposed reform of council housing finance, a genuinely decentralising move that brought enormous potential benefits. After an encouraging start, even this policy has sadly beeen abandoned due to centrally-imposed rent cuts (to reduce housing benefit) and forced council house sales (to fund the right to buy).
Of course, writing ‘the Tories are bastards’ a couple of times a week is not satisfying after a while for any writer – how Mail journalists churn out their poison day after day is beyond me – and it has always been part of the Red Brick focus to look for good policies wherever they emerge, at home or overseas. Here are three regular refrains.
First, housing policy is economic policy, social policy, health policy and education policy rolled into one. Cutting public housing investment was like cutting the throat of the economy, and raising housing investment would have enormously beneficial multiplier effects (as recent work by the SHOUT campaign and by John Healey MP has shown). It is so beneficial that it knocks the case for austerity for six. Put simply, a decent home is the foundation for everything else and everyone should have a place to rest that fits their needs and their families.
Secondly, only a balanced and comprehensive approach to housing policy will do the job. It is pointless to obsess about one tenure, whether it is home ownership, social housing, or private renting. The fortunes of the tenures are closely inter-related and the housing story of the last 100 years can be seen in the chart showing the changing balance between them. The recent decline in both home ownership and social renting, contrasted to the rise in private renting, is, together with overall investment levels, the central housing story of our times. Recent work by Ipsos-Mori shows public support for more housing to be at its highest for many years, with people wanting both more housebuilding generally and more affordable homes, but it still isn’t a decisive issue for them.
Thirdly, it is vital to make the case for direct housing provision for people on low incomes. The mood music is that ‘trickle down’ somehow works in housing. It is a constant unstated assumption. We will have to build a huge number of homes for many years before we begin to see a price effect in terms of values and rents. Building a luxury home on the river or an executive mansion in a leafy area will never have the knock-on effect of helping people in housing need. Providing homes for first time buyers is a good thing to do but it will not release homes for people who will always need to rent because faster household formation amongst the slightly better-off will fill the space. The only reliable way to provide homes to people on low incomes is to build homes specifically for that purpose and to let them directly to people on the basis of need, on genuinely affordable rents and with the security that will allow them to build their lives. The idea of aspiration does not apply solely to home ownership; people on low incomes aspire to a decent home that works for them. The socialised model, whether councils or housing associations or other forms of tenure like co-operatives, is incredibly effective and an efficient use of resources. It works for people in low incomes, and the marketised model does not.
One feature of the blogging world, unlike mainstream journalism, is that it is not dog-eat-dog. Housing bloggers have a lot of respect for each other, even if their politics differ. Whilst Red Brick takes a little rest, there are other bloggers that you can follow if you do not already do so. The most reliable source of great information and analysis anywhere in housing is Jules Birch. He blogs regularly for Inside Housing but an even wider range of material features on his own blog. Also highly recommended is my colleague in SHOUT, Colin Wiles. He now blogs in many places, Inside Housing and the Guardian mainly, but he is always worth a read.
London’s blogging needs are well looked after by Dave Hill of the Guardian. Other blogs I regularly look at include the inspirational Municipal Dreams, the SHOUT campaign blog, the original and always challenging Joe Halewood, the Women in Housing blog, the LibDem Alex Marsh, the JRF’s Julia Unwin, and the many authors of the Shelter blog. It’s also always worth looking out for articles by Rob Gershon and Tom Murtha.
Most of them can also be found on Twitter, which will remain my primary source of news and opinion in the Antipodes. I will continue to tweet @stevehilditch
Thank you for reading. And let me be the first to say: Happy New Year.
Steve Hilditch

Once upon a time, the reclassification of housing associations as ‘public non-financial corporations’ by the Office for National Statistics (ONS), which happened last Friday after years of speculation, would have been seen as a catastrophe. We therefore have to look behind the immediate issue to try to understand why the Government is so sanguine about the apparent disaster of having to add £60 billion of debt to the public balance sheet and why some housing association bosses see it as a great opportunity.
The long-term role of housing associations has been as the ‘third arm’ in housing, sitting between public and private sectors. This made them politically acceptable across the spectrum, sufficiently non-public to keep Tories happy and sufficiently non-private for Labour. Since 1988 they have been in the highly advantageous position of being able to borrow money as ‘private’ organisations, pay tax based on their charitable status, and receive grant from the public sector towards the building of low rent and low cost homes. In return for grant they accepted a regulatory regime governing their management, finances and performance, and were required to co-operate with housing authorities over issues like housing allocations and housing development. In many ways the model has been a great success, although in my view many associations have fallen well below what was possible.
Like flat caps and manual trades unions, Council housing never really fitted with New Labour. After 1997, housing associations – already the Tories’ favoured option – were confirmed as the primary bodies to deliver housing objectives under New Labour – not only building new homes but also accepting the transfer of hundreds of thousands of homes from councils. One reason was the Treasury’s obsession with a particular definition of public borrowing, different from any other European country, which meant that housing association borrowing did not appear on the public sector balance sheet whereas borrowing by councils for the same purpose did.
Extending a policy started by the Tories, the Labour Government saw an opportunity to reduce the level of grant needed to produce social housing, encouraging associations to ‘stretch their assets’ to get more homes for a set amount of public spending through housing association grant. The quid pro quo was that rents would be allowed to rise faster than inflation – in effect housing benefit took the strain. Labour tightened regulation, with associations for example becoming subject to inspection by the Audit Commission, raising the first queries about the ‘private’ classification that housing associations enjoyed within the public borrowing definitions.
Since 2010 the Tory Government has gone to new extremes, reducing grant hugely and forcing rents up towards market levels, thereby requiring housing benefit to take much more strain. Their approach to regulation has been entirely contradictory: they have deregulated in some areas with a fanfare, for example virtually ending oversight of service standards and ending the highly effective inspection regime, but have imposed their ideological priorities such as moving towards market rents (followed bizarrely by a recent rent cut), reducing security of tenure, virtually ending the provision of social rented homes, ‘pay to stay’ and the ‘right to buy’ with its associated forced sale of high value council houses.
It is therefore no surprise that ONS would fulfil their duty to review the classification within the public accounts of housing associations, determining on the basis of the evidence whether their borrowing should be regarded as ‘public’ or ‘private’.
Their review, however, appears to have had nothing at all to do with the recent fuss about right to buy for housing association tenants. One of the key arguments used to get associations to vote for the voluntary ‘deal’ on right to buy was the impending threat of an adverse ONS decision. It is clear from their published decision that their review was based on the legislation passed by Labour in 2008 and the Coalition’s 2011 Localism Act.
The ONS decision has been ‘on the cards’ for some time and it would astonish me if Government was not aware of the likelihood of this change. It is totally disingenuous of the Government to feign surprise. They have had time to think it through. I suspect that their initial public response – that they will bring forward deregulatory measures to return the sector to a private sector classification as quickly as possible – covers a more carefully worked out plan, or at least an ambition. They will not want to simply tip HAs over the line back into a private sector classification, they will want to shove them firmly into the real private sector. If they want to maintain their interfering policies on right to buy, pay to stay, and the rest, they may have to push the boat out a long way on other forms of regulation to change ONS’s balance of opinion.
What might this mean? HAs have already virtually ended the provision of genuinely affordable homes for social rent. They have been selling social housing assets on the market and ‘converting’ empty homes from social rent to much higher ‘affordable rents’ (at up to 80% of market levels). Some have argued consistently for ‘freedom’ to set their own rents and to break away from having to house local authority nominees. Now they are saying that even the ‘affordable rent’ model is unviable, and their other big product, shared ownership, is unviable in high value areas.
Big associations increasingly look like and sound like housing developers who are focused on their total output and the bottom line and much less on what they are building and for whom. They are potentially very useful to a Government which talks big on housing production but has delivered very little in practice. It would be very helpful for them to have a not-for-profit, tax-advantaged, sector providing mainly market homes and delivering one or two top priority programmes like ‘starter’ homes.
The whole movement is being de-linked from concepts of housing need and from the very notion of a housing strategy, because there isn’t one. A few housing association bosses have in the past expressed a desire to become PLC companies and there may be more than a thought or two in Government as to whether the possibility of real privatisation should be opened up.
It is the political and not the technical aspects of the ONS decision that will decide the future.

Having visited China a few years ago, I found the debate about President Xi Jinping’s state visit difficult to assess. There were a lot of side issues that attracted attention – would Jeremy wear a white tie to the banquet seemed to be a fixation for some parts of the media – but the primary issue was human rights.

There are obviously so many abuses in China but there is a balance sheet to be drawn up. Freedom of speech is still ruthlessly suppressed, yet I found the people we met on our trip able to discuss politics openly. Our guide commented that his father absolutely revered Mao Tse Tung, he knew about him as a crucial historical figure, but his own son would be hard pressed to tell you anything about him at all. We discussed openly both the appalling excesses of Mao, the impact of the cultural revolution and the capitalist reforms.

It took Britain and the USA many more generations to move from a feudal economy, and in many respects China has sprinted past us. Huge strides have been made against poverty hunger and disease. They build new homes on a scale we simply cannot imagine. Of course the society still has many brutal elements, however it seems highly likely that political liberalisation will follow economic liberalisation, but at an unpredictable pace. That is why engagement is the best route forward.

Old and new homes side by side in Shanghai. Some campaigns to protect older residential areas have been successful, notably the traditional hutongs courtyard residences in Beijing.

Economic liberalisation, or the introduction of capitalism, has not been all good for China.  It seems that the rising tide of wealth has lifted most, but not all, boats, on the other hand some have been lifted to extreme heights. Millions of Chinese have become extremely wealthy and the opulence of their lifestyles and their growing detachment from the reality of the common people is as offensive as it is in the west. But just like Russian oligarchs, Oil Sheiks and rich Greeks before them, wealthy Chinese want to hedge their bets with their money in case domestic politics changes for the worse (as they see it) or in case the recent economic turbulence and stock market crashes become more permanent features of the Chinese economy.

China built hundreds of thousands of new homes on higher ground to facilitate the relocation of 1.24 million residents to enable the Three Gorges Dam project to proceed. The scale of Chinese ambition is extraordinary. 

Which brings us to housing. President Xi is carrying out further economic reforms, including making it easier for individuals to invest abroad. More than 60% of wealthy Chinese in a recent survey were looking to increase their foreign investment, and their most popular option was residential property. Increasing numbers of wealthy young Chinese go abroad for their education, and their families invest in property when they go. As in Britain, a large investment can also bring the right to reside in the country concerned (never hear UKIP complain about that one). London is a highly desirable destination, but so are other UK cities with good Universities. Despite the huge inflow, the UK is not yet the number one choice, it is still behind USA, Australia and Canada. But London is clearly the destination of choice within Europe, followed by our other University cities. Nearly half a million young Chinese went abroad to study last year, and the number is rising rapidly.
The impact of all of this in the UK is difficult to assess, but added to the supply of rich migrants from other countries it is an increasingly significant factor in the property market. UK property is accepted as a ‘safe haven’ generally, but the so-called ‘golden postcodes’ around good schools and universities and in inner London create property hotspots which in turn ripple out into the wider market. It certainly feeds the expectation of high prices. Developers like to market overseas because investors will buy ‘off plan’, boosting their cash flow. It is no surprise to see them marketing new homes vigorously in many countries and especially across China. It seems unfair to existing UK residents, but there are also suggestions that the London new build market is more fragile than people think and might be teetering on the brink of a downturn without this additional demand to compensate for the fact that so few domestic purchasers can compete at current price levels.
George Osborne has taken a few small steps to regulate this market, in particular by gathering stamp duty from property investors using a corporate structure. Much more action is needed against those who ‘buy to leave’ and foreign property investment would seem to be a good source of tax revenue to help bring the deficit under control. But the biggest lesson is that a housing policy that relies on high demand to encourage greater supply is doomed to chase its own tail. We need less planning liberalisation, as we see in the Housing and Planning Bill, and stronger powers to enable local councils to determine the mix of homes that will appear on particular sites. The only way to house people on very low incomes without recourse to huge housing benefit costs is through social housing, and the only way to have a long term impact in high value areas is to do more to control the cost of land. These are among the issues that the IPPR/Kerslake Commission on housing in London will turn its attention in the next few months. We will await their conclusions with interest.

As we head for next May’s crucial London mayoral election, the London Poverty Profile published by New Policy Institute and Trust for London shows both the depth of poverty in the capital and its changing nature.
Some crucial facts revealed by the study:

• More than ever, the high level of poverty in London is closely associated with housing costs: 27% of Londoners are assessed as living in poverty after housing costs are taken into account, compared to 20% in the rest of England.
• Poverty increasingly affects those in work: the majority of people in poverty are in a working family, and their circumstances are likely to deteriorate hugely if Osborne’s tax credit cuts go through. Despite low unemployment, 700,000 jobs in London pay below the London Living Wage, and the numbers are rising year on year.
• The wealth disparity is huge, with the total wealth of a household on the 10th percentile amounting to only £6,300 compared to £1.1 million for a household on the 90th percentile.

The figures not only illustrate the importance of housing in driving people into poverty, but also how the housing market is changing. The biggest number of people in poverty are now in private renting (860,000), a transformation in the impact of tenure over the last 10 years. The number of children in poverty in the PRS has more than doubled in those 10 years. Not only are these families living in poverty, they are increasingly insecure: in 2014/15 there were 27,000 possession orders granted in London.
Homelessness is once again becoming a critical factor: 48,000 London households are living in temporary accommodation – three times higher than the rest of England put together. More than 15,000 have been placed outside their home borough and an estimated 2,700 have been placed outside London.
Government benefit chages are having a major impact: 10,500 families were affected by the overall benefit cap; if it is lowered as threatened a further 20,000 will be affected.
Given the current debate over tax credits, it is important to note that half of 0-19 year olds (1.1 million) in London live in a family that receives tax credits. Poverty is changing: the number of pensioners in poverty has declined over the last decade – by 30% – but the number of working age adults living in poverty has increased by 30%.
An excellent article this week by Alasdair Rae on The Conversation shows another way of looking at deprivation in London. Using clear maps, Rae compares the distribution of the 10% most deprived districts in London in 2004 with 2015. The index uses a broader range of indicators – relating to income, jobs, education, health, crime, housing and environment – than is used to measure poverty. Rae’s conclusion is that over the country as a whole, nothing much has changed – the places that were deprived in 2004 are still deprived today.
The major exception was London. In 2004, London had 462 of England’s 10% most deprived areas, by 2015 this had declined to 274. On the surface this might seem to be a good thing, but the conclusion is not that the deprivation has been eased to a major degree but that deprived people have been displaced, increasingly pushed by high housing costs and insecurity out to the suburban fringes – areas like Bromley show increases – or out of London altogether. Some boroughs, like Tower Hamlets and Hackney, show the biggest transformation. The conclusions will feed debates about gentrification in London and the need to protect traditionally mixed communities.
The big questions – what is London for? who is London for? what is our vision for its future? deserve to be widely debated as the mayoral election approaches.
 
(NB The full poverty profile data can be viewed here.)

I loved the comment of blogger Colin Wiles that the new Housing and Planning Bill is a ‘Bill of Wrongs’ ‘stuffed full of omissions’. I can’t recall a Bill where so much of the detail is to follow in ‘regulations’ to be made by the Secretary of State. The much-reduced department of communities and local government will have its work cut out to produce the mass of regulation and guidance which the Bill, if passed, requires.
It is an extraordinary Bill, a list of Tory obsessions and prejudices. Below is a quick run through of its key provisions. My apologies if I have missed something significant, especially in the Planning Parts with which I am less familiar. For any of you that like to read the real thing, the whole Bill can be found here  and the slightly more helpful DCLG explanatory notes can be found here, ‘explaining’ each section of the Bill.
For me the crucial points are:

• The Bill reflects the Government’s increasingly narrow and unbalanced housing policy and its obsession with home ownership soundbites. It is bound to fail because it is still largely acting on the demand side, helping people to afford to buy in the hope this will generate supply. They cannot understand that demand side subsidies normally lead to price increases not reductions (and cost the taxpayer a lot of money). There is little point in having 20% off a Starter Home if the process increases the price of Starter Homes. The reality is that home ownership continues to fall, and has done every year since Cameron became Prime Minister, and there is little sign of the trend changing.

• One way of apparently boosting home ownership is to denude the social rented sector through right to buy and other sales. The Government is still in denial that a large share of RTBs become private rentals after a while at hugely inflated rents. There is still no policy to deal with this. The Bill is a double whammy: housing association homes will be sold and the huge cost (up to £103,000 per property in London) will be borne by councils, forcing them to sell off their ‘high value’ council houses as they become vacant. Although there is supposedly a voluntary deal between housing associations and the Government to implement RTB, the Bill is clear that it is statutory really, it will just be enforced via the regulator. Only the 165 councils with retained stock will have to pay for the policy, which heaps insult on top of injury.

• Mandatory high rents for social tenants with reasonable incomes (over £30,000 nationally, £40,000 in London) has also been dubbed the ‘right to buy incentive scheme’. What tenant would pay a rent up to market level when the alternative is to be given a subsidy of £103,000 to buy the home instead? For the first time to my knowledge, social landlords will collect detailed information on all of their tenants’ incomes, and they will share information with HMRC for verification purposes. This would include private companies undertaking social housing management. In my view, the bureaucracy involved in this will be burdensome and will detract from more important housing management tasks. Although HISTs (high income social tenants) will become part of the jargon, it is worth remembering that a couple, each earning £15,000 a year, will be caught by this. Hardly high income. Oh, and just to rub it in, any additional income received by councils will be remitted to the Treasury.

• Again by regulation, housing associations will gain more ‘freedoms’. They think this is a prize and have been campaigning for it for some time. They largely want freedom to set their own rents and more freedom not to have to accept council nominees into their homes. Both move associations away from being part of the local strategic network and will distance them from the cause of meeting local housing need. We will see what the Government actually offers in the regulations.

• The Bill removes councils’ specific duties to assess the needs of Gypsies and Travellers and to adopt a strategy. Provision will of course become even less satisfactory as a result and this is a sop to the nasty party.

• The Government is showing some interest in better regulation of the private rented sector if this Bill and the Immigration Bill – described by Andy Burnham as “unpleasant and insidious” – are read together. As always they are motivated by the wrong things, for example the IB forces landlords inappropriately to become immigration officers. The H&P  Bill reminds me of the policy to have a ‘National Living Wage’ – take a popular policy, steal the words, implement something which is inadequate and does not reflect the original concept. Here they have picked up the concept of ‘rogue landlords’ and they will go on endlessly about how they are dealing with them despite the fact they are only edging along.

The Bill has 8 parts and briefly they are as follows.
Part 1 deals with ‘New Homes’. It sets out the Government’s policy on ‘Starter Homes’ for first time buyers under the age of 40. Planning authorities are put under a specific duty to promote Starter Homes. Starter Homes are new dwellings available at 20% below market price, up to a maximum price of £250,000 or £450,000 in London. Details will be set out in regulations (one of Colin’s ‘omissions’) but defined residential developments will only get planning permission if various requirements to include Starter Homes are met. Councils will not be allowed to have local policies contrary to the Government’s policy (whatever happened to devolution and localism?).
This part also places duties on councils to make sites available for ‘self-builders’ to meet demand.
Part 2 deals with ‘rogue landlords’ and Letting Agents. This introduces the idea of ‘Banning orders’ to prevent a person from letting or managing housing if guilty of offences which will be defined later. A banning order would prevent a person holding an HMO licence.
The Government will set up and operate a database of ‘rogue landlords’, which councils will keep up to date. Rent repayment orders can also be obtained against landlords who breach a banning order or commit other offences.
Part 3 changes the procedure for landlords seeking to recover premises which have been abandoned.
Part 4 deals with social housing.

• Chapter 1 (bizarrely) sets out in statute the implementation of the ‘voluntary’ right to buy for housing associations. It empowers the Government to pay grant to cover the cost of discounts awarded under the scheme – these will actually be paid out by the HCA and the GLA in London. The regulator will monitor ‘compliance’ with ‘criteria’ set out by the Government. (How this is different from a statutory RTB I do not know).
• Chapter 2 is the mechanism by which the Government will force councils to fund the RTB discounts by selling vacant high value housing. They will be required to make a payment to the Government calculated on the basis of the value of their property that becomes vacant. This will apply to the 165 stock-holding authorities, who will be under a duty to ‘consider’ selling the homes (but a duty to pay the levy to Government). There is also provision for the Government and councils to do a deal to use the money in some other way to provide housing. (There is no reference to non-stock-holding councils and the assumption must be that the 165 will be paying for the discounts of everyone else as well). The definition of becoming vacant excludes renewal of fixed term tenancies and successions. The precise calculations will be set out in regulations.
• Chapter 3 gives the Government more powers to reduce regulation of private registered providers. Details will be in regulations. Housing associations have been campaigning for more ‘freedom’ to set rents and allocate housing on their own criteria.
• Chapter 4 brings in ‘mandatory rents’ for high income social tenants (so-called ‘pay to stay’ for ‘HISTs’). Income thresholds will initially be £30,000 and £40,000 in London. All the detailed definitions, including how to calculate household incomes, will be in regulations. Tenants will be required to declare their incomes. Data will be shared between HMRC and landlords for verification purposes. Landlords will be obliged to charge rents on scales set by the Government and councils will have to pay the additional income to the Treasury. Enforcement will be through the regulator.

Part 5 removes the specific requirement on councils to assess the needs of Gypsies and Travellers and to have a strategy. In future they will be subsumed under the general requirement to assess housing needs. It also excludes people who are not entitled to remain in the UK from holding an HMO licence, allows for enforcement against estate agents to be delegated to local trading standards, and amends the way the price charged to a leaseholder for a lease extension is calculated.
Part 6 deals with Planning. It changes the arrangements for establishing neighbourhood planning areas and strengthens the power of the Secretary of State to amend local development plans. It changes arrangements for planning ‘permissions in principle’ and ‘permitted development’ and requires authorities to maintain a register of brownfield land.
Part 7 makes detailed changes to the process of making compulsory purchase orders.
Part 8 includes general provisions including transitional arrangements, regulations, commencement and short title. There are 11 Schedules.
And a filing cabinet full of ‘regulations’ to follow.
 

It appears that the BBC’s Laura Kuenssberg, James Landale and co have swallowed the Tory Central Office press briefing wholesale. Her headline comments were all about David Cameron’s speech ‘parking his tanks on Labour’s lawn’, occupying ‘the Labour Party’s former ground while it is consumed by its own issues’. Other commentators like Jonathan Freedland joined in. He tweeted: ‘Tories don’t just want to own centre ground, but the centre left too’. ‘The heir to Blair’ said Pippa Crerar.
The Mirror’s Kevin Maguire was an honourable exception: ‘Cameron is the VW of politics. It was another masterclass in deception… Slick, shiny and smooth but lift the bonnet and the dodgy salesman’s flogging a toxic fiddle’.
The most revealing moments after the speech came in the interview by Andrew Neil with Michael Gove. Gove had no answer except ‘Labour crashed the economy’ to Neil’s pointed questions about the Government’s complete failure to stem the fall in home ownership, its ‘lamentable’ housebuilding record, and its determination to decimate tax credits for the working poor.
Neil’s questioning got to the point of the whole Cameron speech: the language of aspiration, equality and opportunity masks an increasingly right wing agenda NOT a drift to the imagined centre-left. There may be tanks, and they may be on Labour’s lawn, but they are only there to get a better shot at the poor.
I saw only one shaft of light in Cameron’s speech – his strong statements against discrimination and in favour of equality of opportunity. The strength of his statement (if not the policies backing it up) reflects the total victory of the so-called ‘loony left’ councils in the 1980s who first shouted these messages loud and proud – and were roundly condemned by Tories and media for doing so.
Cameron gained loud applause by revealing the truth about the housing association right to buy deal. He knows they have avoided a hugely difficult legislative process. He knows they have swerved past the many and growing number of Conservatives who are opposed to it. He knows that the housing associations underplayed their hand and were scared of their own shadows. ‘Some people said this would be impossible. Housing associations would never stand for it. The legislation would never pass. Let me tell you something. Greg Clark, our brilliant communities secretary, has secured a deal with housing associations to give their tenants the Right to Buy their home.’
Housing associations would never stand for it? ….instead, they handed it to the Tories on a plate.
The rhetoric of Cameron’s speech was what we have heard many times before. Only home ownership matters and they will do everything to promote it. Of course, they will ignore the inconvenient truth that there is now a long-lasting trend (a decade) for home ownership to fall and to be replaced by private renting.
Cameron’s big new housing policy announcement, widely trailed in the morning papers, was to change planning policy so that planning agreements will in future count ‘starter homes’ as affordable housing. Planning gain has been the source of most new social housing in the past few years, and a great deal of our new local infrastructure, so that will now go south. Some interpret the new policy to be preventing social housing being achieved in planning deals rather than just including starter homes amongst a range pf option. The so-called ‘affordable housing programme’ is widely expected to be a victim of the soon to be announced spending review, with what money is available also being focused on first time buyers.
With housing associations converting more social housing to higher rents or other tenures, the big question is the one that campaigner Tom Murtha asks time and time again – who will house the poor?
From the Government and from the leaders of our large housing associations, answer comes there none.