Like many others I sit and look at the pile of paper I have about my pension scheme and a fog descends. I was considering sorting it out and buying an annuity last year, but put it off because the process involved using up more brain cells than I felt I could afford.
It turns out for once that laziness and procrastination has a dividend. The Government’s Budget announcement seems to offer me better alternatives than a miserable annuity and opens up the possibility of taking most or all of the whole pension pot and doing something else with it.
So I am in the camp that says that more flexibility is a good thing and I will not weep for the annuities industry losing some of their share value. However I am no better than anyone else at predicting how long I will live and for how long I will need an income. Having the money in the hand could well prove a temptation, even putting to one side LibDem Minister Steve Webb’s ludicrous comment about buying Lamborghinis. Labour has been attacked for making points that are blatantly obvious – if people spend their money early, they may be left with insufficient income and be more dependent on the State later. David Cameron mocks such genuine concerns as being ‘patronising’ but it just shows how out of touch he is with the really difficult decisions that ordinary people have to make.
In his blog for the Financial Times, John McDermott raised an interesting point about what the Coalition is up to. Alongside general concerns that the policy will lead to short-termism and that there may be scope for new charlatans to operate in the market, he wonders how much this liberalisation of pensions has to do with paying for social care.
Sometimes two otherwise benign policies can collide in an unfortunate way, but with this Government more malevolent motivations should always be expected. They want to cap the costs of some aspects of care to avoid people having to sell their homes to pay for it. But now they can sell their pension entitlement instead. By foregoing a regular annuity income they may have capital sitting in the bank or in investments – waiting to be assessed. Even with the cap, care is expensive, and some costs, such as general living costs in a care home, are not included within the cap. ‘Goodbye annuities, hello social care accounts’ says John.
Julia Unwin of the Joseph Rowntree Foundation was one of several charity leaders to also raise concerns about a pensions reform that could lead to people incurring social care costs which they would otherwise have avoided. As I understand it, someone with assets of less than £118,000, or £27,000 excluding their home, will have all their care costs paid. A pension being received in the form of an income from an annuity would be disregarded but a lump sum taken out of their pension pot could take them over the limit.
This flexibility over pensions does not come free. Any amount above 25% being taken out of your pension pot would be subject to tax. George Osborne has spotted that this could contribute painlessly to reducing the deficit in years ahead. Is this a classic case of short term gain but long term pain?
The astonishing advert and tweet published by the Chairman of the Conservative Party, Grant Shapps (aka Michael Green aka Bingo Bob) illustrates the condescending and insulting view that the Tories – the Eton Mess – have of the great British public.
If Bingo Bob thought a penny off a pint and cheaper Bingo would woo millions of working class voters then he was wrong – but it does illustrate that there is no money left, unless it has a political purpose of course.
The Budget holds out little hope for housing and has nothing at all to say about affordable homes. However the detail of the Budget documents always includes some items that get little attention but do have an impact on the housing world, so here are some initial thoughts.
The Government are obviously still thrashing around looking for a magic bullet to get housebuilding up. They have the cheek to claim that the extension of the Help to Buy equity loan scheme counts as ‘further action to boost housing supply’ but it is perhaps more significant that they have not extended the Help to Buy mortgage guarantee scheme – is that an admission that it is misguided? A small builders finance fund is probably quite useful and is something Labour have been talking about. Small and medium-sized builders cite lack of access to finance as a key constraint on their activities.
The Urban Development Corporation for Ebbsfleet has a ring of deju vu about it, possibly because this small New Town has been announced before. A new prospectus for additional Garden Cities will be published but they will be ‘locally-led’, a policy we have criticised on Red Brick before. Their boast that planning approvals for housing are at a 5 year high is not much to write home about given the scale of the recession and the absolute certainty that the economy would eventually recover irrespective of Government actions. Most people will support a little more help being given to self-builders.
I shiver whenever I hear the word ‘regeneration’ these days because I have seen too many council estates being pulled down for private housing with the social rented element not replaced. So a new fund available to private developers will need to be watched. More support for infrastructure around Cambridge and a new rail connection to help open up Barking Riverside (a move supported by London Labour Housing Group in its submission to Lyons) may unlock thousands of new homes. We need many more plans like these. More planning relaxations are to be proposed but the Government still seem to be missing the point that planning authorities need to be working strategically at a regional level and to be operating as proactive bodies rather than just responding to private development proposals.
The Budget also includes welcome changes to the use of ‘corporate envelopes’ to purchase property, thereby avoiding stamp duty land tax, bringing properties of value over £500K into the new regime. It involves the extraordinarily named new Annual Tax on Enveloped Dwellings (ATED).
There is also a pre-announcement of a proposed ‘Right to Move’ for social tenants to increase their mobility for work-related reasons. Options will include giving such tenants priority when a new social home becomes available, and setting aside a pool of vacant lets to enable them to move across local authority boundaries. This seems totally at odds with everything done previously on housing allocations, with a stronger emphasis on residential requirements and ‘locals first’.
There is to be a pilot project on passing a share of development benefits directly to individual households. We will have to wait to see if this is a scheme after the style of Islington’s innovative approach to development.
Boris Johnson was sunning himself in Cannes last week at the World’s greatest property development conference, obscurely called MIPIM (20,000 participants, 2,000 exhibitors from 80 countries) encouraging more global investment in totally unaffordable London property and making jokes in very bad taste about German invasions (watch his speech here if you have 32 minutes to waste in pointless activity).
Meanwhile, Chancellor George Osborne was busily working away at next week’s Budget. With a flick of a pencil, George could double the affordable housing investment programme and it would still be within the margin of error of the housing benefit budget. There are endless changes he could make to fund such an increase – for example, additional taxes on the most expensive properties, penalties for land hoarding, or ending the ridiculously ineffective New Homes Bonus.
But no. Instead Osborne is, according to the Sunday Times (paywall), beavering away on an extension to the Help to Buy scheme. Spun as a scheme designed to help people get on the property ladder, Help to Buy has been widely criticised as being inflationary at a time when the UK economy needs a property bubble like a hole in the head. It is of course a political rather than a housing policy – Osborne believes that rising house prices will make a key sector of the electorate feel richer and therefore better-off.
Right wing commentator Fraser Nelson in the Spectator says that pouring more petrol on the property market fire by extending this ‘discredited’ scheme ‘would be laughable if it were not so plausible.’ It is, he says ‘a flagrant example of politicians using taxpayers’ money in an attempt to buy votes. It’s a sign that Osborne intends to use help-to-buy as an election weapon, and as loaned money doesn’t show up on the deficit figures he’s quite relaxed.’
And he adds: ‘The last conservative leader who tried to manipulate the property market for political purposes (to claim to voters he was on the side of hard-working people etc) was George W Bush – and we all know how subprime lending worked out for America. But before its damage, it did bring a property boom – and that’s what Osborne seems to be trying to seek now.’ He also quotes a report from Bloomberg based on a survey of analysts, which concluded that Help to Buy is ‘creating the illusion of wealth by subsidizing house prices and encouraging a further levering up.’
So what is Labour saying? Labour appears unwilling at this stage to get caught up in an argument about who is in favour and who is against helping aspirational people to buy their own homes. Ed Balls is therefore not presenting a simple ‘end it’ message. Instead he is arguing for major reform, restrictions that would prevent the scheme from creating an unbalanced housing market that could put economic recovery at risk. He would cut the upper limit on the scheme from £600K to £400K, possibly with regional variations, and consider restricting the scheme to first time buyers. He argues : “The lack of funding for affordable housing, alongside a housing market that has been very slow to respond to rising demand, means there is a real risk for our economy” – by which he means greater pressure to raise interest rates faster.
Balls raises the interesting concept of a ‘Help to Build’ scheme as an alternative, using Government guarantees in a different way to help small and medium-sized builders to access finance. He thinks such a scheme could help provide an extra 10,000 homes a year. He has also floated the idea of using Government guarantees to back a new generation of New Town Corporations.
Help to Buy demonstrates that Government money is sloshing around in housing in its billions. Yet it is only when the conversation turns to genuinely affordable housing that the language of austerity reappears. There is no money left we are told. In my view, there is lots of money left. It is just being spent on the wrong things by the wrong people for the wrong purpose.
The RTPI says planners are essential to increased housing output, pointing to their submission to the Lyons Review. But why do they ignore the potential of planning gain created through section 106 agreements?
Neither the RTPI nor the Town and Country Planning Association make much mention of planning gain and section 106 in their submissions to the review, seeming to accept the coalition’s sidelining of the measure since it took office. The government’s attitude to s106 was confirmed this week when its new online guidance also made little mention of its role in providing affordable housing. Yet it’s arguable that it’s one of the most important ways in which planners can contribute to the output of new homes at social rents.
In contrast, three of the other Lyons submissions – from ARCH, CIH and JRF – focussed strongly on the potential revival of s106, and a little background history quickly shows why this is the case. ‘Planning gain’ was first established by section 106 of the Town and Country Planning Act 1990, hence its alternative name. This measure allows planning authorities to oblige developers to include affordable housing (and potentially other things like schools) in their developments, either by setting land aside or by building the homes or by paying cash instead. It took a while for the use of planning gain to grow and for good practice to develop. But by 2010/11, as the graph from Savills shows, s106 accounted for 60 per cent of affordable housing completions.
This is particularly pertinent to Lyons and to Labour as this was the peak year of the old National Affordable Housing Programme, that the Tories brought to a halt in the 2010 Spending Review.
Since then, goaded by the developers, the Tories have poured cold water on s106, coming up with various ways to reduce its impact that culminated in last year’s Growth and Infrastructure Act, which invited developers to appeal against uneconomic s106 requirements. Of course, there was a case for looking at planning obligations after the credit crunch, and many local planning authorities were evidently doing so on a voluntary basis. But it was also apparent that developers would try to kill off s106 in the recession so that it wouldn’t bug them again when the market started to grow. Which of course is what is now happening.
The Tories seem strangely indifferent to the effects of weakened s106 agreements on their own Affordable Homes Programme. But even now they still make a significant contribution, providing 4,820 units in 2012/13 alone, in recent years even with no grant from the Homes and Communities Agency. Clearly they now need to be harnessed as part of Labour’s drive to build 200,000 homes per year: in fact, not to do so would invite failure.
There are plenty of issues about the working of s106, for example why its use is so variable between local authorities. Clearly it needs to be reappraised and guidance strengthened. However, Labour has so far been rather indifferent to it. Roberta Blackman-Woods MP, the planning spokesperson, has said that it would be reviewed alongside the Community Infrastructure Levy with the idea of replacing it with a ‘community investment fund’. The problem with this is that if the planning gain is taken as a financial contribution it misses out many of the successful attributes of s106, especially the fact that land is made available and new developments as a result are often mixed. There is also the danger that, with so much pressure to renew or extend infrastructure under limited capital budgets, that’s where the money will be spent, rather than on housing.
Lyons should be well aware of the risks of dropping s106 and also of the potential gains from keeping and strengthening it. After all, at the peak of output under the last government, when output from planning gain was at its height, we were building 140,000 homes per year in total. Rather than holding back development, section 106 was one of the leading drivers of it.
Alex Marsh, a Liberal Democrat, blogs a lot of sense about housing. But what is most noteworthy about his latest piece, a report on the various housing debates and fringe meetings at LibDem Conference last weekend, is the similarity between the Labour and LibDem parties when it comes to housing policy. Conference-going party members seem to have the same natural instincts.
We’ve commented before on Red Brick that LibDem official Party policy on housing is very strong, and at one point I went so far as to say that I would be happy if Labour adopted it. Some key points from the weekend: the Conference passed a motion which is critical of planning policy in similar terms to those used by Labour; there were robust criticisms of the right to buy and the failure of the policy of replacement; there was solid support for raising the cap on local authority borrowing; there was a widespread desire to switch back to bricks and mortar subsidies and away from reliance on housing benefit; there was backing for mechanisms to tackle landbanking and bring more land forward for development. Alex’s report even confirms similar areas of argument and debate – for example the importance of a brownfield first policy; whether an era of higher housebuilding rates will actually moderate house prices given trends the current housing market; whether there should be German-style private rent controls. From his detailed description of the discussions, I couldn’t spot any major differences between what they discussed and what I hear discussed in the Labour Party every week.
If, depending on the outcome of the General Election (and given the state of the LibDems that may be a big if), Labour was faced with the prospect of governing by forming a coalition or some other kind of pact with the LibDems, then housing should not be the issue that stands in the way. It would take less than an afternoon to come up with an excellent common policy platform that the vast majority of Labour and LibDem members could agree on.
There are two big barriers to this being possible: the historic enmity between the parties (in my own borough, Brent, Labour has had to deal with Sarah Teather) and the disgraceful record on housing of the LibDems in power. Weak LibDem Ministers in the CLG department (Andrew Stunell, Don Foster) have failed to constrain their highly ideological Tory Secretary of State (Eric Pickles) and the initial driver of many of the policies, that most political of men, Grant Shapps. Junior LibDem Ministers have provided full cover. At the top, only Vince Cable has raised doubts about the policy, especially the lack of investment and the risk of house price inflation from help to buy.
Policies supported in Government have been in direct contradiction to the LibDem Party’s stated policy: for example, ending the national social rented programme, ending security of tenure in social housing, supporting huge rent hikes with the ‘affordable rent’ policy, supporting the bedroom tax, failing to regulate private renting, the list goes on.
The LibDems have little credibility left in terms of delivering in Government what they support outside Parliament. If coalition or joint working is to happen, at the very least they will need to admit the error of their ways. Perhaps we should dust off the famous Nick Clegg ‘I’m sorry’ video?
There can be no doubt that the flooding of your home is a dreadful and traumatic event and that Government should be doing far more to improve flood defences and to mitigate the impact of climate change on our homes.
But the most surprising statistic to come out of the floods since Xmas is that the number of homes flooded was less than 6,000 and that media attention escalated when it affected residents in the Thames Valley. There has been a feeling of outrage in some parts of the north where much larger numbers of homes were flooded last year but without the same amount of attention being paid to them by the media and Ministers. No-one said to them that ‘money is no object’.
But there is a more astonishing comparison that can be made: with the number of families made homeless each and every year for reasons that are not as visually photogenic as the floods. You can’t normally see the homeless from a helicopter. The latest figures, showing yet more increases, created scarcely a ripple on the media and there were no statements of intent by David Cameron to spend more money on affordable homes.
Under the Coalition, homelessness is again rising rapidly after many years of falling. In the first full year of the Labour Government, the inheritance from John Major meant that 104,000 families were accepted as homeless by councils in England. It took Labour six years to bring it under control, by which time the figure had risen to 135,000 (2003/04). Each year after that the number of acceptances fell, down to 40,000 in Labour’s last year (2009/10). Since the General Election it has started to rise again, to 44,000 in 2010/11, 50,000 in 2011/12 and 54,000 in 2012/13. (NB figures rounded – they count households who are deemed to be unintentionally homeless and in ‘priority need’, mainly households containing children or a member who is ‘vulnerable’ due to mental or physical ill-health or age).
The detailed homelessness statistics are remarkably consistent year by year (eg which regions are most affected, the reasons for homelessness, the size of households, and so on). But there is one significant recent trend that is noteworthy. Homelessness that is attributed to the ‘end of assured shorthold tenancy’, which was 15% of cases when Labour came into office and fell to 11% in 2009/10, is now on a steep upward curve, rising to 22% in 2012/13 and 25% for calendar year 2013. This is now the biggest single reason for homelessness. It illustrates the ‘revolving door’ of Government homelessness policy: the duty to homeless households is increasingly discharged by placing them in private rented accommodation, but the loss of a private let is the biggest single reason for homelessness.
One of the most controversial aspects of homelessness is the use of temporary accommodation for long periods prior to a housing solution being found. Labour’s slow, but eventually effective, response to rising homelessness is again illustrated by these figures. The number of households in temporary accommodation stood at 47,000 when Labour came into power, but rose to over 101,000 in 2005. Following the implementation of a series of policies designed to meet a Government target to halve the number in TA, the figure began to fall, reducing each year to reach 50,000 when Labour left office (and thereby meeting the target). Since then the trend has been reversed and the number in TA has been rising again, standing just short of 57,000 at the end of 2013.
Households in temporary accommodation contain an astonishing number of 81,000 children. Everything that has ever been written about TA shows that it is bad for children. They become dislocated from school and child care, from friends and family, and from the place they identified as ‘home’. Educational attainment and socialisation suffer and behavioural problems become more common.
Of the households in TA, 7% are in bed and breakfast hotels. 500 households, containing 1,550 children have been resident in B&B beyond the statutory limit of 6 weeks. The contribution of private sector leasing (primarily where the property is managed by a housing association) is waning, and the number of households placed directly into private accommodation on a temporary accommodation basis has grown – doubling from 6,200 at the 2010 Election to 13,500 at the end of 2013. This is a hugely expensive option in terms of housing benefit costs.
Some authorities have great difficulty in procuring temporary accommodation within their own district – which everyone recognises is the best option for families and individuals if they are to retain contact with their network of family, friends, schools, health services and other public services. Receiving authorities also often face additional costs of providing services to these families. Nearly 6,000 households were placed in TA in another district at the time of the General Election, this has now doubled to just short of 12,000.
The problems associated with homelessness and temporary accommodation are at their most acute in London – three quarters of the households in TA are from London – but they are certainly not restricted to the capital.
The geographical concentration of temporary accommodation use is illustrated in a helpful map contained within the official statistics (Live Table 775). The incidence is very low in most parts of the country but there are hot spots around the country and a major concentration in London.
High and rising levels of homelessness are an extreme symptom of wider levels of inequality in British society and our growing failure to meet basic human needs. Someone once said that the way we treat our most vulnerable people is the basic test of our civilisation. Quite.
Friday night’s deadline for Labour’s Lyons Housing Commission brought a burst of last minute submissions from organisations and individuals.
The Commission, chaired by Sir Michael Lyons, was set up after Labour’s Annual Conference in September 2013 when Ed Miliband announced his plans for a Labour Government to increase the supply of new homes in England above 200,000 a year by the end of the next Parliament. It is tasked with drawing up a road map for the housing and planning policies and practice that are required to deliver the new homes and communities we need.
One of the most interesting submissions is from the new campaign group SHOUT, a cross Party group that is arguing the case for a return to traditional social rented housing. It says that, if Labour plans to build 200,000 homes a year, then 100,000 of those need to be at genuinely affordable social rent levels. The group argues that this is the only way to meet the needs of people on low incomes and to increase the extent to which work pays. Rather than ever increasing housing benefit bills, a new social rented programme will create major new assets that will generate social and financial benefits indefinitely. The net impact of the £4.5 bn capital cost would be much less as there would be savings in welfare, health and other programmes. The group also says 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’.
In a comprehensive submission the Chartered Institute of Housing make the case for fully restoring ‘s.106’ requirements. They remind us that ten years ago a significant amount of housing association output came via s.106 planning gain. They raise concerns about the operation of the Community Infrastructure Levy and the fact that it excludes funding for affordable housing. They make the point strongly that achieving 200,000 homes a year requires an increase in investment and that much of that will have to come from the public sector: the private sector has only exceeded 150,000 homes a year 3 times since 1950. They argue that there is a strong value-for-money case for a ‘higher-grant lower-rent’ (ie social rent levels) programme rather than ‘lower-grant higher rent’ (as in ‘affordable rent’). Like almost everyone, they emphasise the need to give councils more freedom to borrow by either raising the ‘cap’ on housing revenue account borrowing or by changing borrowing rules to bring them in line with international conventions.
Former Housing and Planning Minister Nick Raynsford MP sets out some of the key principles that should be followed to reach the target of 200,000 homes. But he emphasises that there is no single magic bullet – the contribution of every provider will have to be maximised to achieve the goal. Mixed tenure development has the most potential for achieving higher volumes of output, schemes involving social and private renting as well as part and full sale. He also supports councils having greater freedom to borrow. And he is one of many making a plea for a ‘benefits-to-bricks’ approach: ‘While in the short-term it is difficult to see how the current level of [housing benefit] expenditure (c. £23 billion) can be reduced without causing substantial homelessness and hardship, the long-term objective must be to redress the unsatisfactory balance in public spending between investment incentives and revenue subsidies.’
The Riverside Group complains of a planning ‘free-for-all’ – ‘a lack of local direction and thus less predictability in securing planning approvals’ and identifies the lack of resources in planning department as a growing barrier to the progress of specific schemes. They argue that the current ‘affordable rent’ regime is unsustainable, dependent on higher rents at a time when welfare reform and uncertain household incomes is causing uncertainty about income streams, and that a doubling of grant per unit is needed. They also focus on issues around regeneration: ‘We are calling for a national enquiry into the future of regeneration, considering how housing and economic regeneration can be considered as part of a single, complementary framework with appropriate investment streams and incentives.’
And finally in this little selection, the London Labour Housing Group identifies the failure of Boris Johnson’s housing policy, especially his removal of requirements in relation to social rented housing from the London Plan and the removal of grant for social rented homes from his affordable housing programme. LLHG say ‘London has been characterised by its inclusivity and social mix, it is rapidly becoming socially polarised.’ They call for a new programme of grant for social rented housing in London – genuinely affordable homes – and a return to the objective of building mixed communities. They say that the principle of ‘planning gain’ must be restored and that it is a disgrace that luxury developments are being built across London with no social housing because it is supposedly ‘not viable’ to include it. They also call for a ‘benefits to bricks’ policy: ‘It is wrong that 95% of public money spent on housing is in the form of housing benefit and only 5% in the form of investment grants. The initial subsidy for social rented keeps rents low for the lifetime of the homes, but it pays for itself eventually through savings in housing benefit compared to either ‘affordable rent’ or requiring people to rent privately.’
There are many other contributions posted on the Your Britain/Lyons website and no doubt more have been received and will be posted shortly. This is undoubtedly a key debate for Labour and we will keep an eye on developments as Sir Michael Lyons and his team complete their review.
It is very frustrating when good new policy gets garbled by our rubbish media. Two very important speeches last week on the future of public services deserve much wider readership and decent commentary. They were Ed Miliband’s Hugo Young lecture and Jon Trickett’s speech to the Fabians.
Miliband’s typically thoughtful speech set out the principles for public services under Labour. He was particularly critical of the fragmentation and lack of integration of the public services under Tory reforms and the lack of openness and scrutiny arising from the contracting culture and commercial confidentiality. Claiming that ‘tackling inequality is the new centre ground of politics’, he said that the times demand a new culture for the public services.
Not old-style, top-down central control, with users as passive recipients of services. Nor a market-based individualism which says we can simply transplant the principles of the private sector lock, stock and barrel into the public sector. The time in which we live and the challenges we face demand that we should always be seeking instead to put more power in the hands of patients, parents and all the users of services.
I meet as many people frustrated by the unresponsive state as the untamed market: the housing case not dealt with, the special educational needs situation unresolved, the problems on the estate unaddressed. And the causes of the frustrations are often the same in the private and public sector: unaccountable power with the individual left powerless to act against it. So just as it is One Nation Labour’s cause to tackle unaccountable power in the private sector, so too in the public sector.
It is worth reading the original speech because some of the coverage was bizarre to say the least. Tom Watson rightly complained about the coverage – ‘I’ll govern like Margaret Thatcher’, ‘I will lead like the Iron Lady’, and so on – calling it ‘a thoughtful speech ridiculously spun’. It even infected Hugo Young’s own Guardian where Asheem Singh of the charity chief executives’ organization ACEVO wrote that ‘Miliband’s public services plan is just Big Society all over again’ and that he was ‘copying Cameron’. This suggests to me that he either hadn’t actually read it or was playing the old game of being seen to criticise both Parties equally. Either way, he didn’t own up to the voluntary sector being major recipients of outsourced contracts but he did show why the sector’s influence over Labour has waned.
Trickett took the argument first into defining the public interest and then into the specifics of procurement. He identified the value of ‘insourcing’ as including greater accountability, identifiable opportunities for performance management, improved public engagement, better strategic governance and an improved public service ethos. He argued the advantages of integration, the need to take a holistic approach to social issues, and the need to expand user influence over decisions. He commented on detailed but important accountability points like private bodies (including, by the way, housing associations) not being subject to Freedom of Information or judicial review.
In many of the examples where things have gone badly wrong under the Tories, he said, the central imperative was shown to be profit rather than service delivery. The problems with outsourcing were proving to be: big transaction costs (preparing, letting, monitoring, evaluating) which were not normally counted; the high incidence and cost of failure (litigation, emergency retendering); the scandal of frequent post tender variations and major cost overruns; and the fact that, in reality, the risk stays with taxpayer and is unpriced.
Why Singh is plain wrong is that Miliband and Trickett both signalled a decisive move away from mandatory outsourcing and tacit privatisation to a new test about what is in the public interest. That has nothing whatever to do with Cameron’s Big Society.
Trickett said it was instructive to watch what the private sector was doing itself. As the public services were being forced into outsourcing and fragmentation, the private sector is bringing services in-house and looking for benefits of integration. They have realised that outsourcing often increased costs, reduced flexibility and rarely involved the transfer of risk to the contractor. Many councils when given the choice – including Tory ones – have ‘insourced’ services that were previously outsourced, and the number of contract terminations is extraodinarliy high.
Prior to 1997, Labour looked to replace compulsory competitive tendering with a ‘Best Value’ regime, which was in effect a new performance management method for the whole of the public sector. In power, New Labour was dazzled by the private sector and had little real belief in the public service ethos. It allowed the same civil servants who ran CCT to then run BV and, guess what, it came to resemble the old system in practice.
Miliband is cut from a different cloth. By shedding ideological assumptions and by challenging unaccountable power and poor service across the board, the public services will at least get a genuine chance to show what they are good at.
(Evening Standard front page headline, 17/02/2014)
Eric Pickles’ disastrous performance as the temporary floods tsar – immediately seeking to blame everyone except the Government rather than getting on with the job – was predictable to anyone who has followed his constant bungling during four years in charge of housing.
Pickles’ calamitous oversight of housing policy, backed by an extraordinarily inept bunch of Ministers (in declining order of impact – Shapps, Prisk and Hopkins), should become a real area of weakness for the Tories over the coming months. It might be an area for Nick Clegg to address if he really does want to cosy up to Labour, because his CLG Ministers have noticeably failed to moderate or mitigate anything Pickles got up to – in particular his attempt to kill off social renting as a meaningful tenancy.
The Coalition has left a vacuum for the Labour Party to fill, which the industrious Jack Dromey was doing to good effect as shadow Minister. He has bequeathed a strong policy notebook to new shadow Emma Reynolds. Under Dromey, there was no question that good and detailed policy was being developed, the real doubt was whether housing policy had moved from niche interest to being genuinely central to the Party’s policy offer. Recent speeches by Ed Balls suggest that at long last the housing agenda, the welfare agenda and the economic agenda are being aligned.
Last night’s screaming Evening Standard headline ‘Miliband goes to war on London Housing’ has been reflected in commentary in several papers today (but without denting the broadcast media’s obsessive interest in flooding in the south of England – which is, apparently, much more newsworthy than previous flooding in the north.
This headline, and the Miliband article that gave rise to it, could be a key breakthrough in the local Election campaign. It coincides with a major housing drive being organised ‘on the ground’ by the London Labour Party and led by shadow London Minister Sadiq Khan.
Miliband’s article is perhaps the most comprehensive statement yet about where the Party has got to with its housing policy. And as the closing date for submissions to Labour’s Lyons Commission on housebuilding approaches, there is more detail and more policy to come.
The key ponts in his article were:
- The affordable housing shortage in Britain is ‘chronic’ and nowhere is this clearer than in London
- The shortage is becoming a critical economic constraint, with the CBI highlighting the lack of suitable housing as the biggest threat to London’s businesses
- ‘The shortage did not begin with this Government’ but it is getting much worse as the Government has failed on housebuilding. In London the mayor is building half his target – and his target is already inadequate.
- The average house price in London is now £600,000 and rents consume more than half the income of many low and middle income Londoners. There are 180,000 households on council waiting lists
- London is facing a growing ‘buy to leave’ crisis with many homes sold to foreign investors who do not then live in them
- Private renting is becoming harder for low income families and there are many unscrupulous lettings agents operating in the market.
The highlights of ‘what Labour will do’ are
- Show the same political commitment as the post war Labour Government – which got housing starts up to 200,000 homes a year from a zero start within a parliament
- Labour will set a target of 200,000 new homes being started a year by 2020 with the Lyons Commission doing the detailed work on the roadmap needed to achieve this
- A new generation of new towns and garden cities around the capital to ease the pressure on London
- A ‘right to grow’ for councils that are frustrated in their homebuilding efforts by neighbouring authorities
- A use it or lose it policy to strengthen the ability of councils to compulsorily purchase land with planning permission which has not been developed
- Controls on developers advertising properties for sale overseas first and new powers to levy double council tax on empty homes
- Radical plans to reform the private rented sector with a register of landlords and new regulation of letting agents to end rip-off fees.
Many of these points have been appraised by Red Brick in the past, with varying degrees of approval – for example on new housebuilding and a new generation of new towns. An overview might say: it’s a good start, but more is needed, especially on how to build more genuinely affordable homes and how to revive social renting. But giving housing real priority on the agenda and building the necessary political will to deliver is the first half the battle. Miliband is doing well on that score.
It’s perhaps cruel to recall John Prescott’s ten-year transport plan that faded into oblivion almost as soon as it was announced. But if the Blair government had too many plans and strategies, the coalition seems to have drawn the lesson that it’s better to have none at all – or at least as few as possible.
Nevertheless, it can’t completely wean itself off setting targets. As Shelter’s John Bibby points out for example, there is one to double the number of self-build homes constructed over the next decade. The only problem is that no one knows what the ‘decade’ is and therefore what the actual target might be. As he says, ministers seem to have chosen various figures, as high as 30,000 homes and as low as 14,000, so that their most recent versions of the target are in fact lower, not higher, than the output when the ambition to double the figures was first announced.
It’s curious, however, that the government can set a target for self-build but eschews one for non-self-build, i.e. for the rest of housing output. Or does it? There was certainly no new build target in its 2011 ‘housing strategy’ Laying the Foundations. Yet how can we judge whether the strategy is working unless it contains some measure of performance? Since then, the planning minister has said we should get back to building ‘220,000, 250,000 or 290,000 homes a year’. So now we have the opposite of a proper target – an aspiration so huge and so vague that it looks more like a pipedream.
The coalition could learn lessons from both the successful and unsuccessful use of targets by the previous government. OK, we all know that Gordon Brown was also pipe dreaming when he said he wanted homeownership to reach 75 per cent, and that almost immediately it started to move backwards. We also know that Labour set a fuel poverty target which it failed to meet, but it was at least a statutory yardstick that clearly revealed whether or not policy was working. At the same time, Labour set an ambitious target to halve the use of temporary accommodation for homeless people in England, and by the year it left office the target was met.
Perhaps Labour’s most successful target of all was the aim to meet the Decent Homes Standard in the social sector within a decade. It wasn’t quite achieved, but it is a case study in how government can set a realistic, long-term programme and maintain commitment to it. What did it involve? First, the definition of a standard and of a timeframe (with input from those in the sector lobbying for the programme). Second, an assessment of the resources required and a commitment to provide them. Third, delivery mechanisms, accompanied by enthusiastic promotion of the programme and getting buy-in from those on whom its success depended. And finally, proper measurement and monitoring, with adjustment to the programme as experience was gained.
Now I know that the decent homes programme was exceptional and Labour’s overall track record, as noted above, was mixed. But decent homes proved that government, at all levels, could deliver: in this case, a total investment of £37 billion across all social landlords over ten years.
Another area replete with targets is tackling climate change. Here both past and present governments are guilty of setting targets without proper plans for how they will be delivered. The main one is in Labour’s Climate Change Act 2008: it requires the UK to reduce carbon dioxide emissions by 80%, relative to 1990 levels, by 2050. The interim target is a 34% reduction by 2020. In addition, the government is obliged to set and meet five-year ‘carbon budgets’ as stepping stones.
The problem is that, while the mechanisms are in place, they don’t tie in with government budgeting and, as we know, the government’s energy efficiency programmes are now regarded as dispensable ‘green crap’. So although we have an Energy Efficiency Strategy, which has just been updated, it doesn’t spell out what is needed and how we are doing. For example, to meet the carbon targets we need to improve, every minute, one additional existing home to the high standards required. Needless to say we are not doing so, in part because the Green Deal has been such a flop. Does this failure get assessed in the updated strategy, with action to tackle the slow progress? No.
What lessons should Labour draw for its housing policies, from the experience of this and the previous governments? First, I think it has done the right thing in setting a 200,000 target for housing output. Yes, it’s less than what’s ideally required, but at the same time it’s realistic. Labour set a target of 240,000 annual completions in 2007, but the last time English housebuilding briefly topped 200,000 was in 1988. It has already established the Lyons Review, which should give it a firm basis for planning how to achieve the target. The commitment will need to be underwritten by the next Chancellor, and there’ll need to be a detailed implementation programme and an ongoing review mechanism to ensure that it is being met and can be adjusted as required.
If it takes the 200,000 target seriously, Labour could again give a lesson in how to construct and deliver a housing investment programme, as Nick Raynsford and subsequent ministers did with decent homes. There’s never been a more important time to learn from what Labour has achieved in the past.