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LHA on a Shoestring (Eddie, that is)

<strong><span class="has-inline-color has-accent-color">Steve Hilditch</span></strong>
Steve Hilditch

Editor and Founder of Red Brick. Former Head of Policy for Shelter. Select Committee Advisor for Housing and Homelessness. Drafted the first London Mayor’s Housing Strategy under Ken Livingstone.

The excellent blogger Jules Birch, of Inside Housing magazine, demonstrates the value of a good journalistic nose and a bit of statistical persistence. 

Last week, Ministers made much of the comparison between private sector rents, which they claimed the Office for National Statistics showed were down by 5% in a year, and rents where local housing allowance was being paid, up 3%.  This proved, they declared in the House and on the airwaves, that LHA was distorting the market, driving high rents and fuelling profiteering by landlords. 

Birch, aka Inspector Clouseau, smelled a rat.  And in particular that the ONS produces no such statistics.  A few calls later, and Inspector Morse forced the admission from the department that the statistics in fact came from a private property website.  And Inspector Frost then discovered that using the website’s stats as an index was dodgy in the extreme, not to be relied on as an indicator of rents in the sector as a whole let alone the LHA market, and that their analyst was in fact predicting rent rises.  And finally Inspector Taggart demonstrated that all the available evidence shows that LHA does not distort the market after all.  No case to answer.

So, was Ian Duncan Smith misleading the House – sorry, in Parliamentary language, was he ‘inadvertently’ misleading the House?  If this had been Labour Ministers it would have been all over the front pages and Paxman and Humphreys would  demanding an apology, but so far our forensic investigator, Britain’s answer to the Girl with the Dragon Tattoo, has only managed the pages of Inside Housing and not the Daily Mail.

I’m sure that erstwhile Jane Tennisons and Juliet Bravos on Labour’s front bench will pursue further enquiries in Parliament. 

http://www.insidehousing.co.uk/community/blog/mind-the-gap/6512515.blog

(illustration: an inspector’s insignia)

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A nice little earner – or not?

<strong><span class="has-inline-color has-accent-color">Steve Hilditch</span></strong>
Steve Hilditch

Editor and Founder of Red Brick. Former Head of Policy for Shelter. Select Committee Advisor for Housing and Homelessness. Drafted the first London Mayor’s Housing Strategy under Ken Livingstone.

The New Homes Bonus 

As a country we have failed to build enough new homes for more than 30 years.  The coalition’s scrapping of Labour’s system of regional housebuilding targets, which was only starting to have effect, has caused great concern.  Now a little flesh has been put on the bones of their proposed alternative – the New Homes Bonus – in a consultation paper published on 12 November. 

The core proposal is that each council will make its own decisions on the scale and nature of housing development, but they will be incentivised to encourage building through a grant that will match the council tax raised on new homes for the first six years after development.  The benefit to councils (on current figures) over 6 years would be over £8,000 for a Band D property (using the national average) and over £10,000 for a band E property.  An additional flat rate of £350 a year would be paid if a property falls within the definition of ‘affordable’ in PPG3. 

Communities and Local Government department estimates that the cost will rise to over £1 billion a year in year 6 even on current housebuilding numbers, but it is likely to be significantly more if the scheme has the desired effect and housebuilding increases.  A contribution to the cost will come through scrapping the current Housing and Planning Delivery Grant – about £250m a year for the first 4 years – but all other costs – ie £1 billion or more by year 6 – will come out of local authority Formula Grant, so there will obvious gainers and less obvious losers.  Very little is said in the paper about the losers (ie those that will lose more in Formula Grant than they will gain in NHB) and how much impact the overall reduction in Formula Grant will have. 

Despite the wealth of methodology in the paper, the government has no real idea how many extra homes NHB will generate and how much impact an incentive of say £8k a home over 6 years will have.  Is that enough to overcome nimbyism and genuine local concerns?  An estimate is made that by 2016-17 there might be an uplift of 8-13% from the base, but this is not convincing. 

There is no guarantee that the grant will be used to help communities affected adversely by development or to support infrastructure.  It can be spent in any way the beneficiary council chooses – and the document identifies only non-housing uses like council tax discounts, rubbish collection, and providing local facilities like swimming pools.  Most likely in the current climate, it will be used to offset the general cut in Formula Grant that is taking place anyway as part of the CSR.

Will the scheme encourage affordable homes?  The £350 enhancement for affordable homes appears plucked out of thin air.  Who knows if this is a real incentive or not?  Using the PPG3 definition of ‘affordable’ means that everything that is sub-market will be included, and there is no specific incentive to encourage homes for those most in need. 

The scheme does not distinguish between different areas in terms of the need to build.  The benefit will come to those with the greatest capacity to build on easy sites.  Councils with little developable land or no need to build will be concerned about the overall impact this might have on the finances. 

An interesting oddity is the intention that acquisitions that increase the availability of affordable homes would receive the £350 enhancement but not the core NHB.  It is also suggested that the scheme might cover the bringing back into use of empty homes. 

I would strongly urge everyone to read the consultation paper and to get comments in.  We’d be delighted to report your views here on Red Brick. 

Click to access 1767788.pdf

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Simply complex

<strong><span class="has-inline-color has-accent-color">Steve Hilditch</span></strong>
Steve Hilditch

Editor and Founder of Red Brick. Former Head of Policy for Shelter. Select Committee Advisor for Housing and Homelessness. Drafted the first London Mayor’s Housing Strategy under Ken Livingstone.

Hands up if you understand the welfare reforms unveiled yesterday by Iain Duncan Smith.  How can a simplified system be so complex to understand? 

Fortunately the public seem to have a grip and polls show a healthy majority agree with the government’s position.  IDS seems to have pulled off a magic trick.  He will simplify the system into a single Universal Credit by 2013, he has promised to improve substantially the marginal rate (how much people keep from extra earnings taking account of benefit withdrawal), he has promised there will be no cash losers, and he has got the public onside. 

I have little doubt that the golden scenario will begin to unravel with a little more analysis.  Labour’s shadow work and pensions secretary, Douglas Alexander, pointed out that the ‘no cash loss’ promise did not appear to apply to new claimants, and of course turnover is high.  The Child Poverty Action Group were most concerned about the removal of hardship payments drawing attention to the main difficulty in withdrawing benefits from people who refuse to take jobs – making children suffer for the sins of their parents (Mr Duncan Smith likes to use the word sin). 

The simplicity aim has wide support amongst advisers, including the CAB.  The government claims that Universal Credit “will support people both in and out of work, replacing Working Tax Credit, Child Tax Credit, Housing Benefit, Income Support, income-based Jobseeker’s Allowance and income-related Employment and Support Allowance”.  As always, the devil will be in the detail.  UC will be a basic allowance with “additional elements for children, disability, housing and caring”.  Experience tells me that none of the add-ons will be simple to understand or to calculate.  The devil will also be in implementation.  A welfare system that is widely regarded in the media as soft and open to abuse is simultaneously experienced by users as inflexible, harsh and punitive. 

With 5 jobseekers chasing each job, how DWP implements the system will be hugely important.  There will be much stronger ‘conditionality’ – the new word for punishment – but “conditionality will be responsive to an individual’s circumstances.”  As the housing benefit system has been bedevilled by the complexity of handling changes in circumstance, how can the new system become more responsive?  The answer unfortunately relies on IT.  UC “will be calculated and delivered electronically, automatically adjusting credit payments according to monthly income reported through an upgraded version of the ….. tax system”.  I believe this is the same system that has delivered millions of incorrect tax calculations and hundreds of thousands of incorrect tax credits.  The test will be how DWP responds to many thousands of calls challenging their calculations and the many real errors that will be made.  

The proposal has ambitions that many will agree with – simplicity, the integration of out-of-work and in-work support – but also many dangers and risks for the poorest people in society.  And I have a particular fear about administrative chaos.  We may not be able to start evaluating those risks properly until the Welfare Reform Bill is published in January. 

Quotations from the White Paper, which can be found here:

http://www.dwp.gov.uk/policy/welfare-reform/legislation-and-key-documents/universal-credit/

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Indecently decent

A guest post from Maureen C
Like Red Brick I’m pleased to see so much news coverage of housing and benefit issues as this new government appears to announce new, ill thought out policies, most of which they have no mandate from the electorate for, on a daily basis.  Even when the press get things wrong, as they have on some aspects of the HB reforms, it is nevertheless good to get the issues out there.
Grant Snapps made some statements yesterday on proposals to alter funding arrangements for Decent Homes which do not seem to have attracted attention yet. These represent more bad news for the many tenants who still live in homes that do not meet the decent homes standard. Interestingly the background papers on this state ‘46% of council owned non-decent homes will lie in London at end March 2011.’
 
The decent homes standard is fairly basic – it includes having modern kitchens, bathrooms and electrical systems. But the previous government’s arrangements have quietly transformed standards in social housing all over the country. Millions of council properties in particular have been brought up to a decent standard after decades of under investment.
Some councils have done this by transferring their stock to housing associations. But where council tenants, understandably in many cases, voted against wholesale transfers , councils could get access to funding (largely loans) if the arms length management companies (ALMOs) they formed to run the housing got 2 stars in an Audit Commission inspection. The rationale was to incentivise councils to provide better quality, VFM services for their residents and ensure services were built around residents’ needs and preferences. As anyone who lives and works in this area knows -better housing, opportunities and stronger communities need much more than bricks and mortar. But decades of tenants’ pressure to improve services and design fell on deaf ears. No teeth and no real market to power better services.
Inspections assessed this independently and were widely credited with driving up services and standards. The reality is that housing organisations had to up their game and provide better, more customer orientated, VFM services to get 2 stars. These efforts produced good results for tenants that sadly previous decades of tenant and political pressure had failed to deliver. Over 20 ALMOs got top scores of 3 stars for excellent service and 40 have 2 stars – making them the best performing in the sector.
Now Grant Snapps has slashed the funding for future programmes to meet decency standards – down from £680 million to £260 million in 2011/12.
And the pressure is off landlords to improve their services as they no longer need to get 2 stars to access what little funding remains.  Under the banner of reducing the ‘hoops to go through’ funding will be decided upon by the regulator (what’s left of the regulator anyway). The proposals, published by HCA, state ‘We will work with the regulator to achieve appropriate assurance on value for money in the use of funding.’
So much for transparency and accountability.
They had a system that produced better services for tenants and decent homes. It wasn’t perfect but it did produce some of the best outcomes for tenants in social housing we’ve seen for decades. Now we can have no assurance that the reduced funding will fuel better services and choices for tenants who deserve much better than this.  Will this get picked up by the national media?

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HB: more heat than light

<strong><span class="has-inline-color has-accent-color">Steve Hilditch</span></strong>
Steve Hilditch

Editor and Founder of Red Brick. Former Head of Policy for Shelter. Select Committee Advisor for Housing and Homelessness. Drafted the first London Mayor’s Housing Strategy under Ken Livingstone.

Yesterday’s marathon Commons debate on the proposed housing benefit changes produced more heat than light.  There were a lot of apparently conflicting statistics, especially about the number of people affected and the number of people likely to have to move home as a result.


The main government theme – sorry, but I can no longer distinguish between Tory and Liberal members of the government, I had thought the Minister, Steve Webb, was a Liberal Democrat until I heard his speech – was to attack Labour’s ‘scaremongering’.  But as the government has yet to publish any meaningful analysis of the proposals, or to demonstrate how the savings are calculated, the opposition has to rely on its own analysis and that of the housing organisations like the National Housing Federation and Shelter, and all have predicted dire outcomes.


There was an interesting debate about the impact the Local Housing Allowance has had on rent levels in the private rented sector.  In short, Labour argued that rent levels, especially in higher rent areas, have been dragged up by buoyant and growing demand from non-HB tenants, especially the growing group of people who would have become owner occupiers in previous times who now can’t or won’t take a risk on buying.  Therefore LHA, being linked to the median rent, follows the market rather than leads it.  Labour in office had decided to remove the highest rents from the calculation of the median to reduce the impact the top of the market was having on the measure that determined the going LHA rate.
The government benches took two slightly different views; on the backbenches several claimed that the LHA level was determining the rent levels, driving the market up, but the Minister relied on the more limited construction that, as the LHA supported 40% of rent payers in the sector, it must therefore have some effect on the price. 

This seems to me to be a proper debate about a fundamental issue.  How does state intervention impact on a market, especially one with inelastic supply, which caters for the very rich and the very poor and lots in between and has little consumer protection?   We will be more and more dependant on private renting in the future, and this is a question worthy of proper study and analysis.  One factor may be the differences between the market in high rent areas and those in areas where the gap between social and market rents is really quite small and where there are fewer richer people entering the market.


Another noteworthy feature of the debate was the number of speakers from places well away from London.  The government has been keen to keep the debate focused on the more extreme cases where the national cap will now apply, but there were speeches about Glasgow and Sheffield and Sunderland and elsewhere identifying the likely losers and the impact the losses might have on families.


The only real sign of dissent on the government side concerned the proposal to cut HB by 10% for anyone on job seekers allowance for more than a year, irrespective of how hard they had looked for a job, and LibDem Simon Hughes said he would oppose this – although the remainer of his interventions gave me the impression that he might end up supporting the rest of the package, making it much more likely that it will go through.

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Is homelessness next on the hit list?

<strong><span class="has-inline-color has-accent-color">Steve Hilditch</span></strong>
Steve Hilditch

Editor and Founder of Red Brick. Former Head of Policy for Shelter. Select Committee Advisor for Housing and Homelessness. Drafted the first London Mayor’s Housing Strategy under Ken Livingstone.

In the absence of a proper statement as to what the ConDem government’s housing policy is, we are left to pick up jigsaw pieces and try to make a coherent picture out of them.

Lord Freud of Benefit Reform, speaking to the work and pensions select committee, seems to have let one particular cat out of the bag. 

Flying in the face of expert opinion and echoing what David Cameron said on the subject, he argued that the housing benefit reforms would not cause additional homelessness or a need for additional temporary accommodation.  But then, in rather contradictory terms, he argued that it would be very valuable to change the definition of homelessness.  The statutory definition is not as it should be, he complained, because it is more than not having a roof over your head. 

If this is a signal that the government is working on a change in the statutory definition, which has been broadly the same since landmark private member’s legislation in 1977, promoted by a Liberal, then yet more of the most dire forecasts of the housing world will come true.  Freud complains that housing experts are stirring up fears and frightening people, but the pattern at the moment is that, when the worst fears are expressed, they are condemned as scaremongering by Ministers one day only to be confirmed as policy the next.       

As we have noted before, the homelessness legislation is indeed a barrier to the government’s plans to cut housing benefit support, because local authorities will have to take responsibility for some of those displaced.  So the next obvious step is to change the homelessness legislation to enable the HB cuts to be delivered without so many knock-on effects.  In effect, many more people will become homeless under the existing definition, but will not be regarded as homeless by a new definition.  So there is no additional homelessness.  Clever trick, but a trick nonetheless.  

There is a large constituency in this country that believes that the homelessness safety net, imperfect though it is, is one of the core pillars of the welfare state, not just a nice add-on that we can no longer afford.  Out there in the real world there are countless voluntary organisations, faith groups, and concerned citizens who work with homeless people daily and know the real story.  Many regard the manner in which we treat homeless people as a benchmark of our civilisation.  When mobilised, they can be a huge political force, and if I was the coalition government, I wouldn’t want to upset them.