Red Brick

If you have ever wondered what an ‘ad hominem’ attack is, then the Tory and right-wing media broadside against the UN special investigator on housing, Raquel Rolnik, is a very good example of it. (Ad hominem means rejecting an argument by referring to some irrelevant fact about the person presenting the argument).
In Ms Rolnik’s case, her gender, her nationality, her religion, and some gross assumptions about her personal politics have all been used to undermine the fact that she has written an exceptionally good report on housing in the UK.
Raquel Rolnik is the United Nations’ special rapporteur on housing. She operates under a UN treaty that the UK has signed up to. She is one of 30 rapporteurs who visit UN member states and comment on various aspects of policy. Adequate housing is an element of the ‘right to an adequate standard of living’ and the ‘right to non-discrimination.’ Rolnik’s record is impeccable: she has commented on many countries around the world without fear or favour, including Serbia, Cambodia, Israel, Italy, Panama, Portugal, Nigeria, Colombia, Egypt, France, Brazil, Turkey, Spain, Russia, India and Nepal. Her reports are all available on her excellent website. She has also produced a number of thematic reports, including one on security of tenure across the world. It is her duty to report when she finds that a country is not compliant with the international human rights standards that it has voluntarily signed up to.
Ms Rolnik visited the UK in August/September last year at the invitation of the British Government, and spoke to many people, ranging from community organisations to Government Ministers, about housing conditions in the UK.
Both her initial report and her final report are extremely critical of housing policy in Britain, recording decades of underinvestment but highlighting the ‘despair’ created by welfare reform and the bedroom tax.
Rather than try to deal with the content of her report, the Tories have gone into full attack mode about Ms Rolnik’s background and lifestyle. When her initial report was published, Grant Shapps dismissed her as a ‘a woman from Brazil’. Tory MP Stewart Jackson called her ‘a loopy Brazilian Leftie’.  The Daily Mail managed the headline ‘Raquel Rolnik: A dabbler in witchcraft who offered an animal sacrifice to Marx’. On her final report, Housing Minister Kris Hopkins called it a ‘misleading Marxist diatribe’. This time the Daily Mail surpassed itself by describing her as a ‘Brazil nut’. Why we should want to be so offensive about Brazil is beyond me.
Her final report on the UK is a wide-ranging document. No-one in their right mind would consider it to be anything other than a well-researched and evidenced document that looks into the history of housing policy as well as current policy. As Patrick Butler on the Guardian put it: ‘Sometimes you just have to sigh and lower your eyes in embarrassment. There is nothing in this well-mannered report that would be out of place in any mainstream political, policy and academic discussion of housing in the UK. Of course it is uncomfortable for ministers: the truth hurts.’
You can read her full report here. Below are her key conclusions and recommendations, so you can make your own judgement as to their relevance. I defy anyone to find a trace of ‘Marxism’ or even of eccentricity. It is close to the mainstream of opinion across the political spectrum in the UK. Is it a fair and objective assessment or ‘partisan’ according to Kris Hopkins or based merely on ‘anecdotal evidence’ according to that reliable user of statistics, Iain Duncan Smith?

The Special Rapporteur regrets that some policies and practices which have resulted in the progressive realization of the right to adequate housing are being eroded, and that the structural shape of the housing sector has changed to the detriment of the most vulnerable. She expresses her concern that recent measures are contributing also to an increased vulnerability of those who, until a few years ago, were protected.
In light of these conclusions, the Special Rapporteur wishes to make the following recommendations to the central Government and devolved administrations, as applicable:
(a) Assess and evaluate the impact of the welfare reform in relation to the right to adequate housing of the most vulnerable individuals and groups, in light of existing data and evidence; consider whether particular measures are having a disproportionate impact on specific groups; assess whether the overall costs of the implementation of some reforms might outweigh the savings intended, thereby violating the State’s obligation to use the maximum of available resources; and consider alternative avenues to achieve similar objectives without affecting the poorest or most vulnerable;
(b) In particular, the removal of the spare-room subsidy should be suspended immediately and be fully re-evaluated in light of the evidence of its negative impacts on the right to adequate housing and general well-being of many vulnerable individuals and households;
(c) Extend and expand grants and subsidies for social housing (for local councils and housing associations), as these have been essential in responding to the housing need of the most vulnerable. More resources and allocations are needed in this area to ensure that new developments address the specific needs of those individuals and households, and that a variety of tenure forms are encouraged, promoted and protected. Special attention must be given to the situation of low- income people and households, especially children;
(d) Ensure that current measures to release public land to tackle lack of availability of housing favour social and affordable housing, including through local councils, housing associations, cooperatives and community land trusts;
(e) Consider the inclusion in planning and land management systems of strict conditions for immediate development of land with planning permits, “build-or- lose” safeguards and priority for affordable housing;
(f) Put in place targeted measures to increase the supply of housing in the private market for those individuals and households who face unaffordable alternatives, especially the young and those in the middle and lower ends of the spectrum;
(g) Increase regulation and enhance information and accountability in relation to the private rented sector; adopt regulatory tenancy protections, including minimum length of contracts, restraints on rent increases and strict limits on eviction; encourage the use of standardized human rights-compliant rental contracts; enhance mechanisms of registration of landlords and letting agents, and establish clear accountability mechanisms to eliminate discrimination in the private rented sector;
(h) Strengthen efforts to address stigma and discrimination for the Gypsy and Traveller communities in relation to the wider spectrum of rights, starting with the recognition that cultural adequacy in housing is a pillar for inclusion, and that legislation and policy are not enough to overcome local obstacles;
(i) Put in place additional efforts to address challenges to overcome persistent inequalities in housing in North Belfast. For this purpose, active, free and meaningful participation of all in decisions made about housing should be promoted, including in relation to the collection of official data, that should be disaggregated, open and accessible to all;
(j) Promote and protect the right to adequate housing without discrimination on any grounds; in particular, refrain from establishing mechanisms that can result in indirect discrimination against migrants or Roma in access to adequate housing.

How have the Tories done it? They have made council housing waiting lists decline Just Like That (with apologies to Tommy Cooper) whilst, as David Cameron frequently reminds us, they doubled under Labour.
                                   
Kris Hopkins                                                              Tommy Cooper
The answer of course lies in who is allowed to apply. In this great era of localism, the Government decides who is definitely not eligible to join a waiting list (and therefore become a candidate for the ever shrinking supply of social housing). Contrary to popular myth and Daily Mail headlines, you can’t usually apply if you are from abroad or even if you are a British Citizen but have been ‘habitually resident’ abroad.
As Housing Minister Kris Hopkins (pictured) explains: ‘In December 2013 we published statutory guidance for local authorities to ensure that only those with a well-established residence and local associations qualify for tax-payer subsidised social housing’.
Even if you are eligible, the local council might still decide that you cannot register on the waiting list. In a fascinating piece in today’s Guardian, Hilary Osborne shows how councils have slashed their waiting lists – which will be celebrated by David Cameron in due course. Havering council has hacked  its waiting list by three-quarters ‘in a bureaucratic sweep of the pen’, down from 12,000 to less than 3,000. Hammersmith and Fulham have magiced away – Tommy would be proud – most of their list – down from over 8,000 to a mere 768 in a single year. Their method is to apply a rule restricting eligibility (to join the waiting list, not to be allocated a home) to people who have lived in the area for a period of time – 5 years in H&F’s case.
The doubling of waiting lists under Labour – a clever but meaningless jibe – is also explained by eligibility rules and not by anything real taking place in the housing market. Labour took the view that waiting lists should be open to pretty much anyone who wanted to apply. They therefore became not just a measure of council-defined need but of people-defined demand. They became a measure of how many people wanted to live in a social rented home in a particular area. The fact that they soared shows that social housing is not just for the desperate but is a tenure that is attractive to an enormous range of people. If supply existed, it would be the tenure of choice for millions of people.
There were arguments for and against what Labour did. It was a worthy move against the kind of bureaucratic restrictions that the Tories seem to enjoy applying. It had the potential to boost geographical mobility – despite everything the Tories say about people moving to find work, their restrictions make this harder for people on low incomes. Against this is the fair argument that there is no point in registering people who have no hope of getting a house or flat because demand and supply are so out of kilter. Of course this argument is even stronger if the Tories get their way and squeeze social rented housing out of the system altogether.
Waiting lists remind us that there is a huge gulf between supply and demand. But in the next Election campaign, we will hear  a lot about how they doubled under Labour and halved under the Tories. Regrettably, there will be no Tommy Cooper around to remind us how it was done.

‘Sell expensive council houses’ says the Telegraph headline. The HCA’s Prospectus for its 2015-18 programme, also published yesterday, couldn’t be more blunt. They ‘expect bidders to explain how many properties they are planning to sell… and why they have chosen not to dispose of more’.
The ostensible reason for flogging off even more of the family silver is to enable providers to build more homes with less grant. But I think there are two other reasons. One is that it feeds the myth that councils are irresponsibly sitting on properties that the average punter can only dream of buying. The Telegraph story was illustrated by yet another picture of what is claimed as Britain’s most expensive council home. At the moment it’s a pair of houses recently sold by Southwark. Not long ago it was a gatekeeper’s lodge in Kentish Town. Either way, readers will have their prejudices confirmed, that ‘subsidised’ tenants are living in palatial homes, and that council housing is run by people who couldn’t get a receptionist job in an estate agents.
The other underlying reason is that this is all part of the war on social mix. There are now so many examples of policy acting against mixed communities and – specifically – of the rights of people on low incomes to live near jobs in central London, that it is pretty obviously intentional. Bedroom tax, the benefits cap, shipping homeless families out of London, the Mayor’s indifference to his own affordable housing requirements, the redevelopment of big chunks of social housing to create expensive new flats – all these are grist to the mill. If, at the age of 83, Dame Shirley Porter still keeps up with politics, she must be delighted that her ‘homes for votes’ scam has now been adopted as official government policy.
Even taken at face value, the policy can be seen as endorsement of the Policy Exchange idea of selling off as much valuable stock as possible. Their 2012 report Ending Expensive Social Tenancies was analysed in Red Brick by Tony Clements, and his argument that it represented both bad economics and bad social policy still holds. But it now presumably has the backing of PE’s former housing specialist Alex Morton, described (with no apparent irony) as one of the jewels in the think-tank’s crown, who has just been recruited to the Downing Street policy unit.
Just to prove that the No.10 policy unit is a hot-bed of housing policy ideas, its former head Paul Kirby popped up last month with the suggestion that selling the family silver should not only underpin the HCA programme but could sort out the whole housing market. In his version, councils would sell off every house that fell vacant, and part of the proceeds would be turned into grant for replacement homes. In the process, he seems to ignore both the debt on the house that’s sold and the new borrowing on the one that’s built, which would both become a charge to the rents of the remaining tenants.
When, at the age of 91, Harold Macmillan inveigled against selling the family silver he didn’t mention council homes. But since his governments built so many of them he would certainly have been entitled to do so. He was making the point that selling off valuable assets in times of financial trouble may well be a mistake. It’s one that I discussed in Red Brick when looking at arguments made two years ago in Stuart Lowe’s book The Housing Debate. Social housing is a very valuable commodity, and while we might want to (and indeed should) use its value creatively, there are always plenty of people who simply want to run it down and at the same time strip it of its best assets. Right to buy did this in spades; now that it’s a policy that has largely run its course, new ways of disposing of the family silver are evidently required.
Red Brick readers have a better idea: keep as much social housing as we can, let at its current rents, because demand is high from large parts of the population who simply can’t afford anything more expensive. Furthermore, as well as being valuable in themselves, council homes in particular have very low debt levels (only £17,000 per unit). Let’s use this asset value to build more of them at similar rents. This will need subsidy, but this is much better value than hiking rents up to ‘affordable’ levels and having to pick up the tab through housing benefit.
If anyone in the No.10 policy unit doubts that this case stacks up, let them look at the calculations by accountants PwC in their 2011 report The Numbers Game. They clearly show the long-term value of using capital grant to build new houses for letting at social rents, as against using less grant, letting them at higher rents and allowing housing benefit to take the strain. Given their subtitle, ‘increasing housing supply and funding in hard times’, it’s a conclusion that might even have been endorsed by that nice Mr Macmillan.

It was a bit of a surprise when Andrew Neil on Sunday Politics announced that Labour was ‘split’ on the issue of rent controls. His view was endorsed by his panel of journalists. A ‘big split’ and a ‘50/50 chance’ that Labour would adopt rent controls was the view of Helen Lewis of the New Statesman.
There doesn’t seem to be a lot of evidence for the split story apart from the happenings at Saturday’s Fabian Conference. According to LabourList, a ‘Dragons Den’ style debate led to rent capping being voted by far the most popular policy, and Shadow London Minister Sadiq Khan reportedly praised plans for a rent cap and suggested that it’s something he’d support Labour doing. LabourList comment: ‘Rent controls aren’t currently Labour policy – but it’s unlikely Khan would have endorsed this without speaking to Miliband first.’ Instant rebuttal often feeds the initial story, so it may not have been wise for shadow Housing Minister Emma Reynolds to tweet immediately and emphatically: ‘To be clear.. it is not Labour party policy to introduce rent controls’.
From little acorns big media stories damaging to the Labour Party grow. Of course, no-one ever defines the terms they are using. To the right, ‘rent control’ means a bureaucratic monster with the state setting all rents thereby destroying the market. To the left, ‘rent control’ often means preventing landlords from exploiting shortage by charging rip-off rents that destroy household budgets and push up the housing benefit budget.
The future of the private rented sector was carefully addressed and researched for over 2 years by Jack Dromey MP as shadow Housing Minister (until the last reshuffle). There was a lot of consultation with the sector, several papers were published, and an intelligent, workable and balanced policy to modernise the sector was emerging. No horses were being frightened (although donkeys were inevitably braying). On rents, Dromey always said that he was looking at alternatives based on European models of longer-term tenancies and  indexed rent increases. He always made clear that he was not talking about traditional rent controls, but a new model that works for both landlords and tenants based on making rents more predictable.
This was an important development and good evidence-led policy making. For many years Labour put the private rent free-for-all firmly in the box marked ‘too difficult to tackle’,  despite the basic idea being very popular in the Party. It was hard to challenge the  conventional wisdom that the last rent control regime caused huge disinvestment and that it was a good thing when the Tories deregulated in the 1980s.
There is a common understanding across the political parties that the only real way to bring market rents under control in the long term is to moderate house values in relation to incomes, which can only be done by building many more homes. However, even with a fair wind it will take a decade or possibly a generation of building at more than twice the current rate to have the desired effect. So the issue remains: what should happen to rents in a period of great shortage, when exploitation is rife?
We have shown before on Red Brick (for example here and here) how the countries with the most successful private rented sectors, like Germany, have a culture of long-term investment in residential property and have accepted the reasonableness of state influence over rent increases and stronger consumer protection through longer tenancies and security of tenure. Germany has strong rules against ‘usury’ which it might be useful to replicate in the UK.
It is vital that Labour continues its policy development in this area. Just like the 50p tax rate and the energy price freeze, ‘doing something’ about rents would be hugely popular amongst voters even if it would be bitterly resisted by some vested interests.
For Ed Miliband, the challenge is that high rents are a big contributor to the cost of living crisis. A London Assembly report last year showed that in two-thirds of London boroughs the cost of private renting exceeded half of average wages. Moderating rents should be seen in parallel with policies to tackle low pay and utility bills.
Like it or not, we will be dependent on private landlordism for the foreseeable future. But private renting has to be modernized, professionalized, and properly regulated. And, just like utilities or transport, rents should be subject to fair rules of consumer protection.

90 years ago today the first Labour Government was formed. It was a minority government, formed when the biggest party after the December 1923 Election, the Tories, could not gather a majority in the House. The first Labour government lasted a mere 266 days before losing the next Election (despite increasing its share of the vote, a Liberal collapse letting the Tories back in).
Often regarded as little more than a footnote in history, the importance of the 1924 Government was that it was the key milestone in the transition from the old Tory/Liberal order to the new two party era of Labour and Tories.
Ramsay MacDonald’s Government is often regarded as having few achievements in Office. But it established the National Grid and passed one of the most progressive Housing Acts ever seen. In their book, Britain’s First Labour Government, John Shepherd and Keith Laybourn say that the Housing Act was the Government’s ‘singular success’. With some justice, the Labour Manifesto for the 1924 Election called it ‘The Great Housing Charter’.
The Act was also the greatest achievement of John Wheatley, the Labour Minister of Health. He was determined to rectify the housing shortage caused by the disruption of the First World War and the subsequent difficulty faced by working class families in obtaining decent housing that could be afforded from their wages. Wheatley’s plan was simple: to greatly increase subsidies to build council houses and the extend the period of loans taken to build the homes. The Act was credited with achieving the construction of more than half a million rented homes at controlled rents over the next decade.
You can read a great article on the visionary pioneer John Wheatley, his origins and his contribution to the development of council housing, by Steve Schifferes posted on Red Brick in 2011.

Which is the first housing body to have its ‘housing manifesto’ ready for the coming election campaign? Hats off to the National Federation of ALMOs, which published its manifesto this week, making the case for investment in council housing and specifically for the added value given by arms length management companies.

ALMOs have had a rough time under the coalition government, both because it ended their preferential treatment for decent homes finance, and because it cut the amounts available to tackle existing backlogs. Some ALMO authorities lost out on money they hoped to receive, while non-ALMO councils were helped (to some extent) when they no longer expected it. All lost though from the fizzling out of any real target to get all social housing up to the full standard, and even more so because Labour’s plan for a higher ‘Warm Homes’ standard was ignored.

Even so, despite some councils like Sheffield taking housing management back in-house, and others like Bolton and Rochdale effectively transferring their stock to their ALMOs and losing their control over it, ALMOs are now enjoying a minor resurgence. In November, Northampton Council announced that it would set up an ALMO to manage its stock, which if it goes ahead will mean it joins a handful of others to have created new ALMOs, despite there no longer being any link to decent homes funding. One of the main attractions is that, as standalone companies, ALMOs have more freedom to make efficiency savings, and indeed where councils have entered new, long-term contracts with their ALMOs (like Derby), it has usually been because their efficiency saves more than the extra costs of having a separate company.

The NFA manifesto plugs this case, of course, but also argues that ALMOs can do much more.  They have branched out into managing private rented properties on behalf of landlords (thus helping to guarantee minimum standards), created training schemes and apprenticeships to tackle worklessness, addressed financial exclusion among tenants, as well as a host of other added-value activities.

ALMOs have not been resting on their laurels with the existing stock, in many cases improving it beyond the Decent Homes Standard, especially in terms of energy efficiency. The manifesto calls for something not unlike Labour’s Warm Homes standard, arguing for all council stock to have an energy-efficiency (‘SAP’) rating of at least 70 by 2020, with no stock falling below a rating of 40. This could only be done with financial support beyond the current ECO programme, which has in any case recently been cut back.

But the strongest case comes in contributing to new build. ALMOs have already added over 2,000 homes to their councils’ stock, and have plans to build 3,000 more over the next five years. They’ve often done this by taking advantage of small sites, old garage schemes and other opportunities within their estates, where effectively only the landlord can build new homes. It goes without saying that to do so requires detailed negotiation with tenants so that newly built houses meet local needs.

Which leads to the manifesto’s key recommendation, of no surprise to Red Brick readers, that the borrowing caps that hold back council housing investment must be raised.  The manifesto leaves open whether this should be done by raising the caps and relying on prudential borrowing rules alone, or whether there should be a rule change to make the caps unnecessary. Needless to say, either would be very welcome. Presumably, the Lib-Dems may well adopt it as policy as they have in the past. But will we have a party in power in 2015 that is actually willing to make this critical reform?

As the Lyons Commission starts its work, plenty of ‘solutions’ to the housing crisis will be put forward, especially ones that purport to allow more investment in social housing at little extra cost in subsidy or borrowing.  While we ought to welcome new ideas, we also have to be wary of easy fixes that won’t work on the scale required. Already several are emerging.

Most recent is Nicolas Boys Smith and the organisation Create Streets. They want to replace high-rise estates in London with high-density, low-rise housing. They claim this can increase housebuilding at no cost to the taxpayer.  Unfortunately there are so many holes in their plans for how to go about it that the basic notion, which might not be a bad one, is more likely to cause problems than solve them. They want to finance the schemes by extra borrowing, to be paid for using a mixture of surpluses of rent over running costs, private market sales and recycled right to buy receipts. But more borrowing does – oddly enough – add to government debt, even though costs could be met from rents and other sources. More importantly, though, the idea can easily be seized on to justify the sort of project that Andy Slaughter MP wrote about in Red Brick recently: redeveloping existing estates in ways that marginalise the existing residents, because the best way of paying for the extra borrowing is to replace their homes with high-cost units for sale or market rent. This could easily mean more of the social cleansing already favoured by Hammersmith and Fulham.

Some of the plans on offer purport to solve the borrowing problem more directly, by taking it off balance sheet. Again, of course, new ideas are welcome, but in this field so many solutions have been offered in the past that it seems unlikely that anyone will find a genuine new one, other than changing the borrowing rules. Last year David Orr said we should scrap ALMOs and replace them with municipal housing companies. More recently, Richard Parker made what sounds like the same suggestion, albeit applied to parts of a council’s stock not to the whole stock. 

Now these proposals need to be taken seriously, as both their proponents are members of the Lyons group. However, the obvious disadvantage in both cases is that they involve stock transfer and, unlike with an ALMO, the new body can’t be controlled by its parent council if the new borrowing is not to count towards public sector debt.  This is exactly the conundrum which the National Federation of ALMOs tried to get to grips with in its 2011 report Building on the potential of ALMOs to invest in local communities. And it has to be admitted that the report wasn’t successful, as only one ALMO and its council have pursued any of the options the NFA put forward.

This is why the NFA have returned to campaigning for a change in the borrowing rules as the most effective way of releasing councils’ potential to build more homes. Simply stated, the problem is that municipal companies in which councils only have a minority stake are stock transfers on the lines of those in Bolton and Rochdale (both former ALMOs where the councils gave up their majority control). If the councils retain a controlling stake, then there is no change in their borrowing status. And it’s a pretty safe bet that almost all the places where councillors and tenants are willing to give up council control have already done so.

Finally (for the moment), we have Mick McAteer of the Financial Inclusion Centre, calling for the issue of social housing government bonds. These would ‘fund a housing programme on the necessary scale’. But they would of course again be public borrowing, and in any case would be unlikely to compete with the terms offered by the Public Works Loan Board. A much better option is the LGA’s idea of a Municipal Bonds Agency, but if this goes ahead it is vital that it is set up in a way which helps councils avoid any new debt being counted as public borrowing, as John Perry argues in Public Finance. Here, for sure, is a model worth pursuing, but one which would only achieve its full potential if linked to a change in the borrowing rules.

A big test of the Lyons review will be whether it can steer its way through these proposals, successfully sorting the wheat from the chaff. But this observer, for one, will be disappointed if Lyons doesn’t conclude that – while new ideas may help in some circumstances – there’s no getting away from two fundamentals. One is the need for ongoing subsidy for new building, so that rents can be kept down to genuinely affordable levels. The other is a change in the borrowing rules or the lifting of the borrowing caps, so that councils can build on a similar basis to housing associations. The Lyons Review will be a let down if it doesn’t give these the prominence they deserve.

If pride comes before a fall, then these Tories are in for a hell of a tumble. David Cameron at PMQs last week had the nerve to boast about big increases in housing starts and completions as if they had cracked the problem. And Grant Shapps had the effrontery to brag about the Government’s affordable housing record, placing it at the top of his list of Tory achievements in a piece on Conservative Home, bizarrely entitled ‘a blast on the trumpet for full orchestra conservatism’. In it he claimed that they are building 170,000 affordable homes, bringing about ‘the first net increase in social housing for the last three decades’.
As PMQs and the recent House of Commons housing debate show, the dispute about the relative housebuilding records of the last two Governments is becoming increasingly sterile. The public would be forgiven for ignoring it altogether – arguments about who has built least since which year in the 1920s do not get the juices flowing. I can’t do better than agree with Jules Birch that the debate resembles bald men fighting over a comb.
As far as I can see from the reams of housebuilding statistics – feel free to root around in the CLG’s Live Tables – housebuilding was going along at a gradually rising and reasonably solid rate until the global banking failure, ironically triggered by the USA’s housing finance sector. However, output continued to be hopelessly insufficient in relation to the requirement, as it had been for 3 decades, and there was long-term upward pressure on prices, especially in high demand areas. Unsurprisingly, the credit crunch led to private housebuilding confidence collapsing as developers found it hard to borrow and households were unable to get mortgages. Gordon Brown, bless his cotton socks, put his foot on the affordable housing accelerator in a compensatory Keynesian move. Given the inevitable lags involved, this inheritance made the Coalition Government’s record (and in particular Boris Johnson’s) look much better than their policies deserved.
After the 2010 Election, housebuilding, like the rest of the economy, experienced 3 wasted years of austerity, kept in the doldrums by huge cuts to public investment. It is now beginning to recover, as it always would – that’s how capitalism works. There are two considerations: could Government have done more to get recovery going faster? – to which the answer is undoubtedly yes; and are the Parties’ policies for the future going to get us back to pre-credit crunch days – and much more? This is the debate we should be concentrating on.
The modest housebuilding recovery seems largely cyclical and would have happened anyway, but the danger is that the cycle has moved permanently to a lower level. There is no sign of a policy that will make a difference on the scale that is required. Coalition initiatives – New Homes Bonus, fiddling with Planning, and a contradictory mix of localism and centralism – have been largely ineffectual. Their biggest move – Help to Buy – by common consent may have a supply effect but will have a bigger price effect and is therefore more dangerous than beneficial.
Under Jack Dromey, Labour quietly built a sound policy platform but housing’s key decisions are made in the Treasury Team not the Housing Team. The promise by the two Eds to produce 200,000 homes a year by the end of the next Parliament is an important step although it is not entirely clear how a virtual doubling of output will be achieved. There is the Lyons Commission to come, on which a lot rests, but a start has been made with a clear national target, action on land and property values (use it or lose it, right to grow, Mansion Tax), raising the cap on council HRA borrowing, modest but specific commitments on affordable housing grant, and additional New Towns.
We are all aware of the hubris of Grant Shapps but he should not crow about affordable housing. His greatest achievement has been to sow such confusion about the meaning of the words ‘affordable’ and ‘social’ that it is almost impossible to discuss the topic at all without endless caveats and explanations of terms. He created the ‘affordable rent’ (AR) product which is not affordable. He set policies (virtually all new grant-assisted homes at AR, conversions of existing social rent to AR, enhanced right to buy, encouraging open market sales of existing homes to fund the programme) which are designed to remove social rented housing step by step. Now they have a new ploy: they have started calling ‘affordable rent’ social housing and hope to get away a further statistical manipulation.
The big difference between Labour and Coalition policies has been the huge reduction in grant per new dwelling since 2010. Providers have to borrow considerably more to finance each dwelling, additional borrowing which can only be financed by increased rental income and cross-subsidy from sales. Raising rents rapidly makes many more people eligible for housing benefit, a budget they are trying to increase and squeeze at the same time.
So what are the figures on affordable homes?
Labour’s National Affordable Housing Programme covered the years 2008-09 to 2010-11, although completions continued into 2011-12 and 2012-13. It produced 93,200 homes for social rent and 80,700 homes for low cost home ownership, a total of 173,900 starts over 3 years, over 57,000 a year. Completions from Labour’s programme that occurred during Boris Johnson’s first term in London and after the Coalition came to power nationally in 2010 enable them to make claims that they have provided some social rented housing.
The Coalition’s first Affordable Housing Programme for 2011-12 to 2014-15 claimed (at September 2013) to be producing 69,694 homes for rent plus 18,853 LCHO, a total of 88,547 or over 22,000 a year. Virtually all the rented homes were ‘affordable rent’ not social rent.
The Coalition’s second Affordable Housing Programme, for 2015-16 to 2017-18, promises to produce 55,000 affordable homes of all kinds each year, around 165,000 in total over 3 years. Around 60% of the homes will be for rent, but these will all be at ‘affordable rent’.
Grant per dwelling has fallen from over £51,000 in Labour’s programme to £17,400 in the Coalition’s second wave. Total spend on grant has dropped from an average of £2.97 billion a year under Labour’s programme to £0.96 billion in the Tory/LibDem second wave. (All figures thanks to the excellent UK Housing Review).
Shapps’ talk about an increase in ‘social housing’ when they are only building homes for unaffordable ‘affordable rent’ is another cynical semantic trick by the artful dodger. ‘Social housing’ means homes that are provided by registered providers at ‘target rents’ set under the rent convergence formula established more than ten years ago by Labour. These rents have been rising faster than inflation but are broadly around 40-45% of the local market rate. The Coalition’s ‘Affordable rent’ homes can go up to 80% of market rates and average around 70%. There is no way on earth these can be counted together as if they are the same thing.

It’s not well known that it was Labour that first promised council tenants the Right to Buy. For example, the 1959 Manifesto said that Labour would take over many of the private tenanted properties that were in appalling condition, repair and modernise them and then let them at fair rents. Labour then said that every tenant ‘will have a chance first to buy from the Council the house he lives in’. Labour’s twin housing aims were remarkably balanced and are still fit for 2015: ‘to help people buy their own homes and to ensure an adequate supply of decent houses to let at a fair rent.’
I can’t imagine that High Gaitskell in his worst nightmares would imagine the disaster that the Right to Buy has become 50-odd years later.
Tom Copley AM, Labour’s housing spokesperson on the London Assembly and chair of the London Labour Housing Group, has compiled an astonishing report on the disaster of the right to buy in London. Tom concludes:

‘As a policy, Right to Buy is possibly unrivalled in representing such poor value for money to both taxpayers and local authorities. For taxpayers, they not only funded the initial building of the council home, they then subsidised the substantial discounts offered to tenants and then – once the homes were sold – missed out on the rental income that would have covered the build costs.’

Tom focuses on the evidence he has collected that shows that a minimum of 36% of all homes sold by councils across London are now let by private landlords. Many are let at extremely high market rents to tenants who need support from housing benefit. Tax payers have to pay again. To add insult to injury, some of the homes are let back to councils or housing associations to house homeless households for which the councils have statutory responsibility.
Thatcher’s decision to take most of the money from RTB sales back to the Treasury and to refuse to allow councils to build replacements with the cash received has been a significant contributory factor to the housing shortage. Over 270,000 council houses and flats have been sold in London since 1980.
The boroughs where the highest percentage of the sold stock has ended up being privately rented are: Tower Hamlets (51%), Enfield (50%), Kingston upon Thames (46%), Ealing (41%), Barnet (41%), Barking and Dagenham (41%), and Kensington and Chelsea (40%). The lowest is Brent with 24%.
To bring this disastrous policy outcome under control, Tom suggests a few policy reforms, including:

• Mandatory covenants on all RTB sales to stipulate that the home cannot be privately let.
• Abolition of the current system of discounts.
• Councils should retain an equity stake in all homes sold.
• Councils should have a right not to sell if it is in the community’s interest not to do so.
• Councils should have the right of first refusal when a RTB property comes on the market.
• The Government’s commitment to replace homes sold should be a genuine one-for-one, like-for-like replacement.

You can follow Tom @tomcopley and London Labour Housing Group @lhglondon on Twitter.

As the Lyons Commission gets underway, there’ll be plenty of people arguing there is no housing problem at all, or we’re looking at it wrongly, or there’s an obvious solution that no one has yet thought of. More on the topic of easy fixes in due course, but in the meantime we have the blog Left Outside offering Four charts that prove you know nothing about the housing market.

 

The main point made is that numerous articles have pointed to the housing output achieved in the 1960s and 1970s – for example the recent one by James Meek, which reproduces the graph above. But these articles show they ‘know nothing’ about the housing market, because they ignore the effects of slum clearance. If you take the loss of houses into account as well as the gain from new building, you get a chart like the one below.

As Left Outside says, the post-war years still look good, but a lot less ‘stellar’. It goes on to point out that output during the Blair/Brown governments now looks pretty good by comparison. The blog goes on to discuss the changing composition of the stock (houses being subdivided into flats) and the influence of planning legislation.
However, the main point seems to be to rubbish the argument that, if we built so many houses after the war, why can’t we do so now? But of course serious commentators (like those who write for Red Brick) are simply making the point that the building industry was able to gear up and deliver on a massive scale in those post-war years, but seems incapable of doing so since the 1990s. The fact that it was also engaged in slum clearance does, if anything, make the point even stronger. We might add that, in the 1980s, while social housing output fell sharply, private housebuilding was sustained and increased to around 200,000 per year towards the end of the decade. To give a more comprehensive picture, as Left Outside claims to do, we might also point to the massive investment being made in housing renewal in the 1980s, which also fell off rapidly in the 1990s. So the fallback in public construction in the 1980s appears not to have led to a loss of capacity – it got diverted into private housebuilding and renovation.
Left Outside makes a reasonable but different point, that if someone needs a house, it’s the total stock available that matters, not the numbers of newly built ones. If you need social housing, then it’s the number of new lettings. These issues are important too. But they don’t detract from the fact that we had massive capacity to build and repair houses until the 1980s.  If we could achieve similar private output now, while also building enough social dwellings, we could add around 240,000 units to the stock each year. Instead, we are struggling to produce even half that number. As house prices have boomed, aside from the mini-peak just before the crunch in 2008, the private sector has largely failed to respond.  Despite Left Outside’s four charts that prove housing commentators ‘know nothing’, we do know one thing: that the housebuilding sector is under-delivering.