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The housing baton passes to Sir Michael Lyons

In our last two blogposts we have pointed out the vital importance of securing a large amount of investment if Labour is to achieve its target of 200,000 homes a year by 2020 and expressed our concern at the implications of Ed Balls strict line on ‘no more borrowing’ under the next Labour Government. We were looking to Ed Miliband’s speech today  (click link for full text) to raise our hopes.
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In a generally excellent speech, with its huge commitment to restoring the National Health Service, housing was given high priority as one of Miliband’s ‘six goals’ within Labour’s ten year plan. Here’s what he said in the key passage about housing:

Goal 5
And a plan for your family doesn’t just depend on wages, jobs and education. What is it that provides us with security in life and faith in the future? The love of the people we care most about. Decent work properly rewarded. And the confidence and security that comes from having our own home.
So many people in Britain today don’t have that. That most British of dreams, the dream of home ownership, has faded for so many. Under this government, Britain has the lowest level of house-building since the 1920s.
So our fifth national goal is that for the first time in fifty years we will make sure this country is building as many houses as we need. By 2025, doubling the number of first time buyers who get on the housing ladder each year. Again, we will need a national effort to achieve. We will stop the large developers sitting on land and we will back the thousands of small developers and construction companies with access to new loans. There will be new towns, garden cities and suburbs with a half a million new homes. And housing will be a top priority in our capital investment programme. Because we need to start Britain building again.

The phrase ‘building as many houses as we need’ is striking. The current commitment to build 200,000 a year by 2020 is seen by many to be stretching given the well-rehearsed problems with housing delivery. As all national estimates of need are miles beyond 200,000, ‘as many as we need’ is an extraordinary ambition if it is to be taken literally. It implies that beyond 2020 we must have policies in place to increase the number up towards 300,000 and perhaps even beyond that.
The exclusive emphasis on home ownership is disappointing – not because increasing the number of homes for first time buyers is to be sniffed at, but because it fails to acknowledge the importance of providing homes at genuinely affordable rents for those who will never be able to afford to buy. Home ownership has now been declining for a decade and it is almost as if no-one has noticed that a major structural change has taken place. Simply on political grounds the votes of people who want and need to rent count the same as those who are likely to be able to buy. And genuinely affordable rented homes will be just as important in creating balanced communities in garden cities and new towns as new homes for owner occupation.
The only phrase that covers the social housing programme – ‘And housing will be a top priority in our capital investment programme’ – re-states the tougher fiscal stance set out by Ed Balls yesterday. No promise involving extra borrowing, so no promise on the borrowing cap that limits how many new homes councils can provide. It is hard to translate the phrase ‘a top priority’ into hard cash and real bricks and mortar.
It will be hard for Emma Reynolds to put a positive spin on the Eds’ speeches but she has the job of making this appear coherent to housing world.
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From my point of view, I can only say it is disappointing. I was looking for a commitment on the social housing programme and especially on the council housing cap. I was looking for an ambition that a decent proportion of the 200,000 target would be genuinely affordable homes and not just a few more acres of Barrett and Wimpy homes (welcome though they are as part of a balanced housing programme). I was looking for a strong statement to move ‘from benefits to bricks’ through increased investment.
I keep hearing noises that Sir Michael Lyons and his team have written a strong report that will make a real difference to housing delivery. But if he is meeting his terms of reference he is most likely to be recommending raising the cap and using public borrowing to invest as well as making proposals for the private sector. And the level of grant remains critical to getting rents right and beginning the long task of rebalancing away from a dependence on benefit. I think Lyons’ task has been made harder by the new fiscal stance and (I speculate) this might be a reason for delay.
So the housing baton passes to Lyons and I just hope he can impersonate Usain Bolt in the last leg of the relay.

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Ed Balls' speech – the wrong balance between austerity and investment?

The abject failure of the Tories to build enough new homes, and especially enough new genuinely affordable homes, should present Labour with a golden opportunity. The housing statistics are stark and concern about where a growing population will live has been rising. It is now not only the number of homeless, overcrowded and sharing households, it is the number of 30 year olds living back with parents, the ‘generation rent’ forced to shell out on exploitative rents instead of saving for a deposit. There is growing concern that in the high pressure areas of the country, housing shortage and very high housing costs are a major brake on the economy.
Labour’s policy appeared to be moving in the right direction. By adopting the target of building 200,000 homes a year by the end of the next parliament – not enough to do the job, but a start – Labour demonstrated some commitment. By establishing the Lyons Commission – expected to report this week but now supposedly a few weeks away (a worrying development) – Labour showed it was willing to get into real detail about making the land and development markets work better. And there was a huge head of steam behind calls to end the artificial ‘cap’ on councils borrowing to build new council houses.
Ed Balls is a very clever man, the architect of the stunning announcement on Bank of England independence to set interest rates after the 1997 Election. So I’m hoping that yesterday’s speech only told half of the story and Ed Miliband has grabbed all the good stuff for his speech today.
Everyone in the Party will have views on austerity and the fact that it makes ordinary people and the poor pay for the Bankers’ crisis. But the point that concerns us on a housing blog is Balls’ strong statement that there will be no new policies that increase public borrowing in the next Parliament. Searching for a silver lining, he did say that housing would get increased priority within the existing capital expenditure limits, and that line was also being spun by housing spokesperson Emma Reynolds during the day. That could well mean that the ‘cap’ will be loosened or even lifted and that councils will be able to expand their building programmes – something that is absolutely essential if the 200,000 target is to be met. But the question is begged – giving housing greater priority at the expense of what other capital programmes? I can’t imagine HS2 being reversed to make room for the housing programme and other capital programmes have their own strong justifications.
There is a general belief that the private sector can build a bit more and housing associations can build a bit more, but that the 200,000 target will not be met unless councils are unleashed – see for example the evidence from SHOUT to the Lyons Commission for the full argument (and summary below). I can see nothing but economic benefit from extra council borrowing. It is good borrowing: it creates a capital asset that will bring in income for decades to come; it creates jobs that are still much needed; and it has a long supply chain generating far more economic activity than the original investment. And borrowing is and will remain cheap. Yet Balls’ whole speech was couched as if capital spending was a bad thing because it adds to total government borrowing and therefore the ‘deficit’. (See an interesting article in the FT (paywall) on what the various borrowing figures mean).
There is a further challenge. More borrowing to build does not necessarily produce homes that are genuinely affordable, even if they are built by councils. To get down to traditional social rent levels, subsidy is needed. Good councils, like Islington, are finding new ways of cross-subsiding new council homes to keep rents down. But the national programme would need significantly more grant to enable rents to be kept to sensible levels. The grant programme has been cut by more than 60% since the Coalition came in, which is why rents for new social homes are so ridiculously high.
For many of us, determining how much grant is available is the key decision that Labour has to make in the housing field. Building more homes at genuinely affordable rents is the essential first step towards removing the growing dependence in the housing system on housing benefit. Every home built with grant for social rent saves money forever in the benefits system.
Two previous promises have been made about increasing grant but these appear to have disappeared from current consideration. First, an increase in grant to grow the housing programme was promised out of the proposed Bankers’ Bonus Tax. And secondly, an increase was promised out of the proceeds of the sale of 4G bandwidth. If these are now consigned to history, there are currently no promises about grant levels.
There was also no sign in Balls’ speech that labour will take more radical steps like taking council borrowing for housing out of the prime measure of public borrowing, bringing the UK into line with standard international debt measures and treating councils as ‘public corporate bodies’ who should determine their borrowing on prudential grounds within their own business plans rather than as a conglomeration with central Government. Maybe that will be Balls’ next ‘Bank of England’ moment in May next year.
Imposing a borrowing straightjacket on housing will be a disaster for Labour’s housing ambitions. If housing is to have higher priority within existing spending plans we need to know how much priority and the cost in terms of other programmes. And to give confidence to the people who will actually deliver the 200,000 promise, something signidficant must be said about grant.
Ever the optimist that one day the housing penny will drop, attention turns to Ed Miliband today. There is some speculation that housing will feature big in his speech. Personally, I think it must.
 

SHOUT submission to Lyons Commission

Key Messages
A very significant increase in house building, of all tenures, is required. The Review’s starting point of 200,000 a year by 2020 may well be too low.
The total 200,000 new homes a year (or more) must include at least 100,000 new social homes:

  • an increase in the social housing stock on this scale is needed to provide good quality housing for hard-working people on low to middle incomes at a cost which enables them to have a good quality of life
  • welfare reform will not succeed without it. It would significantly increase the extent to which work pays, remove the need for many households to claim welfare benefit, and reduce the costs of welfare for others
  • Developing new housing on this scale will create a hugely valuable national asset, which will generate economic and social returns indefinitely
  • We won’t get 200,000 homes a year without building 100,000 social properties a year. Garden Cities, and other big new settlements or urban extensions will only be deliverable and socio-economically sustainable with proportionate levels of social housing development

“Social housing” must mean housing at rents comparable to traditional social housing rents. The ‘affordable rent’ tenure introduced under the current government is not in fact affordable for hard-working families, it cannot be financed sustainably by social landlords, and it is poor value for money for the taxpayer.
We can afford 100,000 new social units a year. Its cost is equivalent to just a few days of welfare spending. Even if the entire £4.5bn a year cost beyond current housing capital had to be found within spending totals, it could be accommodated. In fact, the net impact on public spending totals would be significantly reduced by savings on welfare, health and other programmes, and the provision of units by private developers through s106. It would be an investment which would carry on producing benefits to the taxpayer and society indefinitely.
There is a strong case for reclassifying the housing borrowing and spending of local authorities outside the core public sector definitions, in line with international practice and the self-financing business model of social housing.

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Social housing is popular, but social landlords are not. Is that the message?

Since September dawned, two interesting reports have been published recording views about social housing and social housing landlords.
The first, from the Housing Partners consultancy, reported on a huge (but self-selecting) survey of tenants. It said that only 22% of the 61,000 tenants surveyed felt that their landlord ‘cared about them or their family’ and less than one-third felt that their landlord listened to their concerns.
The report focused on failures in communication and recommended that landlords should put much more effort into getting to know their tenants and treating them as customers. Although the results are much poorer than the picture painted by landlords’ own satisfaction surveys, there is plenty in the results to raise concern amongst landlords (the report draws no distinction between housing associations and councils).
The Fabian Society’s report Silent Majority, based on a national survey and focus groups, looks at one of the often-cited reasons given for poor performance in housebuilding – that there is not widespread support amongst the public for social housing.
Even though most people see social housing as a service for other people, ‘not for me’, a clear majority (57%) support more social housing being built, and only 15% oppose the idea. The proportion opposed rises when the question refers to the local area, but only to 27% – much lower than many would suppose given all the talk about NIMBY opposition.
The report notes that stigma remains a problem for social housing – calling for more effort to be put in to addressing it – but this concern does not translate into opposition to more being provided.
Political differences emerge from the survey. Net support for new social housing was at +66% for Labour voters and +62% for LibDems but fell to +27% for UKIP and a very low 16% for Tory supporters. The authors comment:

The survey provides a clear steer on the characteristics of people more likely to oppose new social housing in their area. They are people in rural areas; people in the south of England; home owners; and those intending to vote for the Conservative party or the UK Independence Party (UKIP) at the next general election.

Both reports contain intriguing and thought-provoking survey results. But for me two points stand out. First, NIMBYs should not be feared as much as they are because there is good support – the silent majority – for new housing and much more support than is commonly recognised for social housing. Developers thinking clearly about how to get local communities on their side and how to ameliorate the local impact of development are working along the right lines. Secondly, it might just be social landlords that are failing as organisations, and not social housing that is failing as a tenure. Landlords could certainly do more to improve their tenant services and to boost their own popularity with their tenants – and more widely.
Hopefully these reports will encourage those landlords who describe social housing as ‘a failed brand’ to think again. It would help all of us who want to see more affordable homes built if they could be more positive about the sector’s key product.

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That sinking feeling*

It would be easy to condemn this weeks’ Policy Exchange report on ‘turning round’ Britain’s council estates. But it is important to separate out the spin and editorialising from the evidence in the report. Published by a think tank with a less obvious agenda, Gavin Knight’s report might have had something useful to say about reinventing the art of community development.
Regrettably the report trades in the usual stereotypes. It starts with a rhetorical flourish: ‘The riots of August 2011 were an eruption from the violent underbelly of our inner cities.’ Then comes the statistical mirage: Step 1: 40% of those before the Courts were on a DWP benefit. Step 2: ‘young rioters were more likely to be from deprived areas’. Step 3: ‘many’ deprived people live on social housing estates. Step 4: Many social housing estates are ‘sink estates’. Step 5: the biggest leap of all – the riots of 2011 started on a sink estate, Broadwater Farm in Tottenham (I think they may be 3 decades out on that one). Step 6: Conclusion: The problem we must tackle is council sink estates.
Most of the 2011 rioting in Tottenham, and in other areas, happened in shopping streets, and in mixed areas. There is no evidence of any link to tenure. The excellent London Citizen’s Tottenham inquiry identifies reasons for the riots, based on the evidence of hundreds of local people, and none have anything to do specifically with tenure or Broadwater Farm. Indeed, in their report the only mention of the Farm is to record the many contributions to the Inquiry made by residents  in support of wider improvements in Tottenham, in youth services, in shopping, in police relations, and so on. Regeneration is supported but the emphasis is more on the High Street and on business start-ups, there is no mention of estates separate from the rest of the area.
The thought process leading from the riots to the description of social housing estates as ‘a national embarrassment’ is the usual lazy prejudice and stereotyping. It leads to newspapers like the Express talking about ‘ghettoes’ and the direct association of a tenure with poor education, single parents, child neglect, domestic violence, low levels of employment and gang warfare. Undoubtedly these are real problems on social housing estates but it is a parody and a caricature to pretend that these problems are not just as severe elsewhere and in other tenures.
Behind the spin and the usual Policy Exchange right-wing editorialising, I found some good points in the report and some good evidence to support a return to the community development approach, something of a lost profession. This approach is just as relevant in areas with a predominance of private renting or low income home ownership as anywhere else.
Knight is right to emphasise the importance of crime and police-community relations, although he ignores the point that the cuts are leading to a major reduction in the highly effective neighbourhood policing approach that brought about many improvements. He is right to see the need to support and back local leaders, especially local residents. He is right to argue for ‘interventions’ (eg to promote work and training) to take place in the heart of the area and not at service points well away from the area. He is right to say that communities must themselves be the agents of change. He is right to say that existing resources could be better deployed, for example by agencies working more collaboratively, although he fails to address the implications of the cuts to many services (eg youth) that are taking place now. And he is very right to emphasise the importance of supporting women, not only to improve their personal circumstances but also because they usually turn out to be the community leaders that are needed.
So some interesting stuff here, and in the case studies (although I don’t know the local circumstances to be able to comment on the veracity of the text). But when we turn to the recommendations, the spin and political ideology of Policy Exchange take over again. Council estates undoubtedly need investment, and some need transformation, but the recommendations are once again about ‘turning round’ ‘sink estates’ by setting a ‘National Estate Recovery Board’ working closely with, yes you guessed it, the ‘Troubled Families Team’.
Take out the stereotyping and demonization of council housing, and the highly political focus on one tenure, and I suspect there will be significant agreement around the author’s broad conclusion:

Perhaps the most remarkable thing about the case studies in this report is how effective a series of very small-scale, very simple, very inexpensive interventions proved to be. By being locally-minded, determined and creative, individuals were able to catalyse huge change. Leaking, crumbling, gang-ravaged estates are a powerful symbol of inequality in Britain. All political parties need to offer positive, innovative and cost-effective solutions to the multiple, complex problems residents face every day. It is time to go into these estates and help these communities to rebuild themselves.

* ‘That Sinking Feeling’ was a 1980 Bill Forsyth film about 4 unemployed Glasgow teenagers who steal stainless steel sinks from a warehouse and sell them on. The term ‘sink estate’ has no known derivation despite its common media usage.

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OK Brandon, let’s see the evidence

The right to buy has become a big issue again. The new Housing Minister, Brandon Lewis, has taken a bullish stance, as reported widely in the newspapers yesterday, for example here and here.
The new controversy follows endless reports about Councils being unable to meet their housing responsibilities due to the lack of new social lettings becoming available, and a particular story from Harrow in outer London which illustrated the perverse outcome of councils selling homes under the right to buy only to rent them back as private rented dwellings to meet urgent needs. Harrow estimated that it was now spending half a million pounds renting back homes it has been forced to sell. The Council loses twice – selling an asset at a huge discount from its true value – now over £100,000 in London – then paying over the odds to get it back again. This is true now in many council areas and is a huge waste of money.
Lewis claimed that ‘every additional home sold is now being replaced with a new affordable home for a new social tenant’ and that ‘Critics of right to buy are enemies of home ownership’.
There have always been two major criticisms of right to buy, and neither is about the principle that tenants should be allowed to buy. The first is that large discounts are totally unjustified and unfair. Council tenants get pilloried for being subsidised when they are not, but these new home owners get a subsidy/gift of £100,000 or more without a word of criticism. In fairness, why does the Government not give everyone who wants to own a home £100,000, why is it restricted to social tenants? The answer is that the policy is not about promoting home ownership: the ‘rejuvenated’ right to buy is just one of many Government policies aimed at getting rid of social rented housing altogether.

Government gives people £100K! Policy a great success!

It is also not about promoting home ownership in another way – as illustrated by the Harrow example. Increasingly right to buy purchasers take their discount then either become a private landlord themselves or sell on to the many private landlords waiting in the wings wanting to snap up flats for letting. It is estimated that a third of London sales go this way. Of course, privately-let flats on estates are much more expensive than social rents if they are let to people on housing benefit – so the taxpayer pays again. Frequently they are over-occupied by sharers and become a source of nuisance to neighbours. And in some cases Councils have no option but to lease them back to meet their own needs. What folly!
Lewis’s assertion about replacement needs a specific challenge. The Government never releases real evidence to show how its claim about replacement stacks up but commentators are united that it is nowhere near one for one replacement. However, as with any policy brought in by Grant Shapps, there is a trick. Lewis’s comment refers to replacing the ‘additional’ homes being sold – ie the increase due to the change in policy – rather than the total homes sold. And the other trick is that the replacement homes are at ‘affordable rents’ – at up to 80% of market rents – not ‘social rents’.
It’s not one for one and it certainly is not like for like.
There is plenty of previous Red Brick commentary on RTB – just search in the box near the top of the page – for example Monimbo’s excellent article here.

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I'm troubled and I don't know why*

There is nothing wrong with a Government setting up a special programme to help those families facing the most disadvantage to overcome the problems they face. Indeed it is laudable to see resources devoted to this objective. So why is it that the Coalition’s ‘Troubled Families’ programme makes me feel very uncomfortable and even hostile?
The unusually high profile civil servant who runs the scheme, Louise Casey, was on Newsnight this week (from 11.50) to discuss it following an interview she gave to the Sunday Times. Professional though she is, I was left with the strong impression that the Government will be claiming to have ‘turned round’ increasingly large numbers of families on the basis of rather flimsy evidence and a low threshold for measuring success. The measure of success also seemed to be rather bureaucratic, based on local authorities making claims under the scheme’s ‘payments by results’ system.
Statistics have been published that assert that 40,000 families were ‘turned round’ by March 2014. But we are left in the dark as to what this exactly means. Has a family really been ‘turned round’ because a child’s exclusion rate from school has declined? Have they been ‘turned round’ permanently? If they have been ‘turned round’, how long will they stay on the scheme? And why have some authorities been so much more successful than others? There is a very wide disparity. Is it because some are better at turning round families – or better at claiming the money?
There was the usual confusion in the media about the figures involved. Full Fact is investigating where the latest and widely-used figure that these families cost £30 billion a year has come from and whether it has some kind of official endorsement. David Cameron has extended the scheme from 120,000 families to a staggering 500,000 families. The £30 billion may well be a grossing up of the official estimate made at the start of the programme that the 120,000 families ‘cost’ £9 billion a year – a figure which was strongly questioned by Full Fact at the time. No evidence that I have seen has been produced to show who the extra 400,000 families are or what their problems might be.
Figures like these feed the media frenzy about ‘Shameless’ families sponging off the state – ‘the rise of the underclass’ as the Daily Mail called it this week. But it is important to point out that there were serious doubts about the methodology from the off, including on Red Brick, here and here.  The initial criteria suggested that these families faced unemployment, living in poor accommodation or mental or physical ill-health or disability. This is far from the ‘Shameless’ stereotype which focuses on fecklessness and wilful bad behaviour rather than the underlying causes of poverty. None of the criteria for counting the families capture dysfunctionality in the way the Government claims – families who are ‘off the barometer in the number of problems they have’ as Louise Casey described them.
There are many and good reasons for supporting family intervention programmes, and there is good research to back up the claims for their effectiveness. But as the Government scheme progresses, and in the run-up to the Election, we should be very wary and sceptical about the claims Cameron makes for it.
‘I’m troubled and I don’t know why’ performed by Bob Dylan and Joan Baez in 1963.

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Some good ideas for using just a tiny fraction of those surpluses

With housing associations surpluses flying through the roof – the 15 biggest London associations recording more than £1 billion for the first time – this is a good moment to consider what more these huge organisations with their huge surpluses (and often huge salaries) could do to support some of the poorest people on earth. Here are two different possibilities where a tiny, almost unnoticeable, fraction of the surplus would go a long way and do a lot of good.
Homeless International was founded by housing associations in 1987 and the bulk of its support has come from the housing sector. The organisation works to transform slums across the developing world: one billion people live in slums and HI supports slum dwellers to tackle the challenges of housing and basic services in their communities. Homeless International’s method of working is to promote community–led and sustainable development through local partners. It operates in many countries including the Philippines, Sri Lanka, Zambia and Zimbabwe.

One billion people live in slums
One billion people live in slums

Donation is made easy through the membership process of the National Housing Federation. One way associations could support HI is by participating in its guarantee fund, which uses deposits and donations to help partners operating around the world access bigger loans from financial institutions. Many more associations could take part. It is also easy to involve staff in fundraising for HI, see their staff page.
On a smaller scale, a well-established project with a long connection with the UK housing sector works in Masaya, Nicaragua, to provide solar energy to small and isolated communities that have never had electricity before.
One of the homes provided with solar electricity near Masaya, Nicaragua
One of the homes provided with solar electricity near Masaya, Nicaragua

Project Sun’ is financed by donations from housing associations in the UK, charities and individual donors, and operates through a revolving fund which has a high level of repayment (70-80%). It was once the beneficiary of the Chartered Institute of Housing’s Presidential Appeal and has been backed by organisations such as Midland Heart, Places for People, Southern Housing, Cairn Housing Association, LHA-ASRA, New Leaf and the Longhurst Group. Donations can be made to the project through Leicester Masaya Link Group, which runs various town twinning projects. They are looking to partner with more UK charities willing to make loans for onward lending to households who need electricity. More reports on projects in Nicaragua can be found on John Perry’s excellent Two Worlds blog.
The housing sector has an excellent record of support for projects such as these. But much more could be done and at little cost.
So, if you count your surpluses in many tens of millions, these are only two good suggestions for making a tiny fraction of the money work really hard for some of the poorest people on earth.

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Another inglorious failure

It’s not that we like being proved right, especially when things in housing are so dire, but the Financial Times’ analysis of the Government’s New Homes Bonus leads us automatically into ‘we told you so’ territory. Mind you, analysis of most other Government policies – ‘affordable rent’, ‘help to buy’, ending regional planning, and so on – tends to lead to similar conclusions. But there are few policies where more has been claimed and less has been delivered than the NHB – and the likely outcome was not only predicted by Red Brick but also by former Labour Housing Shadow Alison Seabeck way back in April 2011.
The scheme itself was meant to be a reward to councils that encouraged housebuilding, who would get a subsidy equivalent to the council tax income on the property for six years after it was built. There was some Treasury funding at first but the main method of funding the plan was to ‘top slice’ normal council grants. There was therefore always going to be a redistributive effect from some councils and to others. Given that a lot of development is a windfall activity (some councils have to do nothing to see development in their areas, others have to struggle hard to get any) it was always likely to be unfair, a reward for the lucky.
Authors Jim Pickard and Andy Sharman (registration required) conclude that the NHB ‘has shifted cash from poor northern councils to rich areas in the south with little evidence that it has boosted homebuilding.’ They quote the National Audit Office finding that there is ‘little evidence’ that the bonus has change councils’ behaviour in terms of planning, contradicting ex Minister Mark Prisk’s claim that it would bring about ‘at least 400,000 additional homes’.
According to the authors, NHB has cost £2.2 billion so far – which happens to be 50% more than the annual affordable grant programme. For that money, to justify itself the policy should be delivering major improvements in housing approvals and delivery. It plainly isn’t.
Although the new Minister, Brandon Lewis, demonstrates an ability to say the blindingly obvious – ‘Areas building the most homes receive the most money’ he said – the FT’s analysis of winners and losers shows a strong redistribution away from the most deprived councils, filling the coffers of the least deprived. Funnily enough, the main losers are Labour councils and the main winners are Tory and Liberal councils.
The reasons are obvious – and were obvious when the policy was introduced. Housebuilding tends to be focused in those places where the economy is strong and housing demand is high – builders only build what they can sell. The building of these homes would have happened anyway and was not incentivised by the Bonus, nor has it changed council behaviour. In that sense it is a complete waste of money and an unnecessary punishment visited on poor areas.
And think what might have happened if the money had instead been spent on providing grant for genuinely affordable social rented homes.
 

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Who is affordable housing for?

Wide differences in approach to the future of social housing and of social housing providers were exposed in a Guardian Live online debate yesterday.
The debate, entitled ‘Who is affordable housing for?’ included a range of housing association representatives and other commentators. The first question that the title of the session begged was what is meant by the word ‘affordable’? Since the 2008 Act, affordable housing has come to mean anything that is sub-market. It has been applied by some authorities (notably the former administration in Hammersmith and Fulham) to include market homes for sale that have been discounted by a few percentage points. The master of spin, Grant Shapps, invented the phrase ‘affordable rent’ to describe his new programme of homes built with grant, but as he was cutting the grant by 60% they became anything but affordable in most cases. Most providers now count their output of homes using the word ‘affordable’ to include rented homes at up to 80% of the market rent, shared ownership which can only be afforded by people earning well above the average, and so on. This obscures the fact that very few of the homes now being produced are social rented available at traditional social rent levels and with security of tenure.
In the debate, several people argued that housing associations (and increasingly councils) have been pushed into being more commercial as capital grant has been removed, and that this move should be welcomed and embraced. I accept that, and have no problem with profit-making activities such as build for sale being undertaken in order to cross-subsidise new social rented homes. The problem is that over time the tail has started wagging the dog and it has an impact on the values and ethos of the organisation. Instead of being commercial to further the mission of the organisation – to provide genuinely affordable homes to people in housing need – the objective becomes development itself. In some cases, build anything anywhere as long as we grow. Associations start to see themselves and describe themselves as developers. I just do not see very many of them trying to squeeze every possible unit of social rented housing out of their developments.
The problem over the definition of ‘affordable’ housing is that it confuses the debate about who the homes are for. Some participants talked about the fact that the housing crisis has plunged many more people, higher up the income range, into housing need, and that agencies should therefore offer a wider range of products geared to meeting this wider variety of needs. Again, this is a matter of balance and emphasis and we have to make a judgement on whether we want to provide homes for people on minimum incomes or people on higher incomes who are struggling to buy. Ken Livingstone recognised the wider range of needs but took a strong line on the balance to be struck: of the affordable housing produced, the target would be to achieve 70% as social rent and 30% as ‘intermediate’ tenures such as shared ownership and sub-market renting. Normally the intermediate housing would be targeted in some way, for example towards key workers or towards people in the on or around average incomes. In a short period we have moved to a totally different policy position, where the proportion of affordable homes in development has been allowed to reduce and the share going to social rented homes is moving towards zero. The Mayor of London has even taken the possibility of requiring social rented out of the London Plan and has specifically excluded social renting from his funding regime.
Added to the mix were comments that social housing is a ‘damaged brand’ and that allocations policies cause ‘sink estates’ where the majority of tenants are ‘benefit dependent’. This was a charge laid at the door of council estates in previous decades but is it right now? First, virtually all developments are now mixed tenure, with social housing in a small minority, so it is hard to see how the ‘monotenure’ problem could arise. Secondly, allocations policies do not favour unemployed over employed people because they emphasise housing needs not income or status. Third, there is a confusion, deliberate or otherwise, between tenants who are unemployed (ie on Jobseekers allowance) and tenants who do not work – a category that includes elderly people, people with small children, people with severe disability of ill-health, and so on. Social housing is not a tenure of unemployment as it is often characterised. And fourth, rents for new homes are so high that most low paid people in work require benefits to be able to pay the rent. This is the fastest growing group of people receiving housing benefit. If the aim is to have more people on estates not receiving benefits then rents should come down not go up.
A final theme I would pick up from the debate is the desire of a number of housing associations to have more control and more flexibility in what they do – who they offer homes to and how much they charge. In my view it is broadly right for the local authority to set priorities for allocations in an area, but within a national code which specifies the factors to be taken into account – like giving reasonable preference to homelessness. I don’t think councils should have carte blanche (for some reason the Tory administration in Hammersmith always comes to mind as an example) to decide who gets housed, and, because they are not the elected strategic body, the argument is even weaker for housing associations to be able to adopt their own policies. On rents, there have been lots of criticisms of the ‘target rents’ policy, but it had the benefit of being consistent and certain and it reduced many of the anomalies in the system from the previous regimes. It must be wrong for a tenant to move into a property at an ‘affordable rent’ and find they are paying twice as much as the social rented tenant next door.
Previous thoughts on the role of housing associations can be found here
And my wider views on the importance of social rented housing can be found here.
The debate can be found here and the Guardian Housing network will publish a summary later in the week.
 

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Regeneration or Gentrification?

How to improve housing conditions in an area whilst keeping the cost of living there within the reach of people on low incomes has been a key issue in housing for as long as I can remember, and especially in London. In the 1970s I was involved in campaigns to protect low-cost housing against gentrification in Paddington and then more widely. At that time a lot of social housing was being built (Tory Westminster alone was producing nearly 1,000 homes a year, mostly on former railway land), so the gentrification process was restricted to the private sector.
In the 1960s people like Rachman made huge fortunes by removing established tenants and packing houses with immigrants who could not get housing elsewhere, profiting from overcrowding. As market conditions changed, in the 1970s the practice of ‘winkling’ became common. Speculative landlords still bought run-down inner city property and shifted established tenants out, but now they were more likely to convert the houses for a newer richer group who could afford higher rents or to buy.
In Islington the campaign against the notorious estate agent Prebble became the focus of regular demonstrations outside their offices in Upper Street – and heavy-handed police action it also has to be said. There were long campaigns to save traditional local communities across Inner London, including Barnsbury, Covent Garden and Pimlico. In some boroughs, councils and progressive housing associations intervened by buying out landlords, rehousing the tenants and improving the properties for future social tenants.
Thatcher ended council municipalisation programmes after 1979 but this was also followed by a major shift in emphasis amongst housing associations from the purchase and refurbishment of street properties towards new build. In turn this was followed by the deregulation of the private rented sector, leaving us with an unfettered market that has been busily gentrifying the capital as shortage has grown and values have risen. We have seen the gradual transformation of many of London’s traditional working class communities into much more affluent and expensive neighbourhoods. The process is well known but, with a growing number of hotspots and the advent of the global super-rich, it is now spreading well into outer London. By restricting the ability of people on low incomes to live in more affluent areas, the welfare reforms are probably the final nail in the coffin of these historic communities.
The ability of poorer people to stay in affluent neighbourhoods has become more and more dependent on the availability of social housing in those areas, a big and hugely valuable legacy of generations of housing policy in inner London. In the 1980s the focus rightly turned to look at the quality of the many estates built between the wars and after WW2. Well-intentioned ‘estate regeneration’ schemes started in an era when the supply of social rented homes was sufficient to enable extensive ‘decanting’ to take place, and tenants were normally promised the right to local rehousing in a new or refurbished home at social rents. A succession of Government schemes brought estate improvements which benefitted existing residents.
The phenomenal rise in property prices in London brought attention to inner London estates because they sit on extremely valuable acres in good locations. If only their latent value could be released, whole areas could be transformed and new neighbourhoods created. In the most valuable places, like along the river, new ‘quarters’ could be created and profits could be used to build new social housing elsewhere. Government, national and local, realised that regeneration could be done with little or no subsidy as long as sufficient private homes for sale could be included. As public borrowing remained constrained, private borrowing by developers, including housing associations, became the natural model.
The politics of housing through this era meant that council housing had few friends. The new generation of Tories were mainly hostile and council housing was not quite a New Labour thing. Developers obviously wanted as much private housing as possible and many housing associations were transitioning away from social housing provision towards mixed tenure development with social housing a smaller and smaller proportion. The perceived wisdom was that council estates, even in otherwise rich parts of London, were drab ‘monotenure’ concrete monstrosities dominated by unemployment and criminality. It was obviously much better if they were replaced by bright new developments of ‘mixed tenure’ homes.
Of course some of the estates were shockingly built and many were also badly managed, but even so it has been rare for tenants to call for redevelopment rather than refurbishment. The normal call is for the community to be preserved, for refurbishment to take place and for better management and maintenance to be put in place.
Despite the appearance of being high density, many estates use land inefficiently. Spare land and rising values meant that opportunities for adding to the stock (or densification) began to open up, sufficient to finance and facilitate a wholesale regeneration or redevelopment. The finance tail was finally wagging the housing strategy dog. The bigger the scale, the grander the vision, the greater the planners’ desire to sweep away nasty council estates and replace them with ‘mixed communities’, the less influence residents seemed to have. Big estate regeneration schemes in London involved the loss of tens of thousands of social rented homes that were replaced by more housing, but much less social housing. Regenerated estates contributed little to meeting the needs of the waiting list, often they were a net drain. In a borough like Brent, which has had four or five major estate regeneration schemes, the wider implications for supply have been felt for many years.
In recent years some Labour boroughs have insisted on the complete reprovision of the social rented housing involved in the scheme, but this has rarely been achieved. Despite often good intentions, rising costs during a scheme tend to create pressures to increase the number of homes for sale and to reduce the amount available for social rent. More recent, the obscenity of unaffordable ‘affordable rent’ has added another layer of confusion as promises focus on badly defined ‘affordable homes’ rather than social rented homes. Some developers think that the social housing element will depress private sale values and will do anything to wriggle out. And on top of it all, we now have a London Mayor who actively intervenes to promote ‘regeneration’ that has next to no social rented provision and who uses his powers to block or prevent Labour boroughs who wish to ensure a fair share of social renting in redevelopments.
Last week the Homes and Communities Agency and the Mayor launched the bidding process for the latest miniscule housing pot, this time it is the £150m fund for estate regeneration schemes to start in 2015/16. Some of the reasons for regenerating estates given in the prospectus sound ok: they include estates that were built at quite low densities that do not always use land well. And I would support the prospectus’s statement that ‘The best regeneration projects actively involve residents so that the new homes and area are re-developed to meet local needs, provide well-designed and high quality new homes and reflect a sense of community identity.’ However in practice it is hard to believe that this is what most estate regenerations are about.
The rules around the new scheme help explain why ‘regeneration’ has moved away from the aim of serving the interests of existing residents and people in housing need towards a corrupted vision of what a mixed London neighbourhood should look like. Despite all the talk about how poor these estates are, the Government money is delivered as loans not as subsidy. The Government’s investment must be returned, schemes must ‘work with the grain of the market’, and total public funding will be required to be less that 50% of the total project costs. It says ‘Funding will only be delivered to private sector partners’ and the delivery body must not be classifiable as a public sector body.
It is a good thing therefore that the London Assembly’s Housing Committee has launched an investigation into the ‘Demolition and Refurbishment of London’s Social Housing Estates’. I hope their work will focus on the loss of genuinely affordable housing through so-called regeneration over the past few years and look for improvements in future. I also hope that Labour London boroughs will take a stronger line – protecting existing communities and delivering social housing must be the top priorities.
Developers are eyeing up estates across the capital in the currently febrile property market. Council estates have been the bulwark against gentrification since the 1970s. They are the largest remaining pool of genuinely affordable homes and must be protected. London Tenants Federation have estimated that more than one-third of new social rented homes built in London from 2007 to 2013 were just replacements for others that were demolished.
The first evidence session for the Assembly investigation comprised mainly tenants’ groups (and including the often forgotten leaseholders) from around the capital and makes interesting viewing – it can be found here .
LTF is to be congratulated for the work they have done in this field. They have issued advice to tenants facing regeneration and redevelopment proposals – which can be found here.