Red Brick

No doubt readers aren’t interested in my general views about Margaret Thatcher. You can assume that they aren’t as rose-coloured and sycophantic as everything that’s been on TV this evening (thank goodness for Kevin Maguire providing a smidgen of balance). So what did her 11 years as Prime Minister mean to housing?
The only housing reference made so far in the media’s extraordinary obituary-fest has been to the right to buy, as if it was the only housing policy at the time. The policy was wrong on so many levels and has been a long-term disaster, but it is hard to think of a political phenomenon like it (possibly until Boris Johnson came along). It steamrollered over Labour and touched an aspirational nerve in working class Britain that no-one at the time was prepared for or could explain. It became the iconic Thatcherite domestic policy (alongside destroying the trades unions) despite the fact that it was barely mentioned in the 1979 Tory Manifesto, where it was hedged around with caveats about sheltered housing and re-sale restrictions.
It always feels as if the Tories stumbled across this rich seam of political gold quite by accident, without realising what they’d done until they’d done it.
Thatcher’s impact on housing came in other ways as well. Her support for rapid deregulation and unfettered financial markets – notably the ‘Big Bang’ in 1986 – led inexorable to the banking boom, the easy money culture, and the crisis 20 years later. It is hard to remember the days when banks did not provide mortgages and building societies provided mortgages but not other financial products, and everyone operated under strict rules. Deregulation has bedevilled the housing market since.
For those of us at the sharp end of housing in the 1980s, we watched as housing investment by councils plummeted as councils were effectively prohibited from building and buying property on anything like the scale of the 1970s. We were told that council housebuilding would be replaced by the new ‘third arm’ of housing associations, but it was a lie: despite their success, they never filled the vacuum left by the councils. And attempts to revive the free market in housing led to the introduction of shorthold tenancies and a new generation of insecure tenants.
Rising housing demand, boom conditions in home ownership, and the ending of council housebuilding had an inevitable outcome: the galloping homelessness crisis of the 1980s. Areas like Bayswater in London changed in a few years from a residential district with quite a few budget hotels into the homelessness capital of Britain. Sticking homeless families into B&B for years became the new scandal.
It wasn’t all bad. Nearly, but not quite all. The 1980 Act gave us the right to buy, but it was added into a Bill inherited from Labour that also gave council tenants security of tenure, and a whole ‘tenants charter’ of rights, for the first time after years of campaigning. These are the same rights that Cameron is now busy removing. And I suppose the first steps on the shared ownership road were taken during her decade.
There is a straight line from Thatcher’s legacy – right to buy, end of council housebuilding, letting housing benefit take the strain of rising rents, rising homelessness, encouraging sub-prime lending for property purchase – to the housing crisis we are experiencing today.
And, before our very eyes, we see Cameron making the same mistakes all over again.

After Frederick West was convicted of despicable murders, no-one wrote a headline saying he was the ‘Vile Product of Home Ownership’.
After Harold Shipman was convicted of mass murders, no-one wrote a headline saying he was the ‘Vile Product of Full Time Employment’.
It is disgusting therefore that the Daily Mail produced the headline ‘Vile Product of Welfare UK’ after the conviction of the child killer Mick Philpott.
This was not the hyperbole of a headline writer who has drunk too much coffee and got carried away. Exploiting extreme cases is a key tactic in the Mail’s mission to demonise the poor. And they are not alone: as Owen Jones in particular has argued many times, it is a theme of many papers and is picked up slavishly by the radio and TV. That’s why people like Philpott are so attractive to the media, and why he was invited on shows like the despicable Jeremy Kyle Show and starred in a documentary by Ann Widdecombe: to illustrate to the world how monstrous and degenerate welfare recipients are.
This is deliberate politics. The best way to defend benefit cuts is to attack benefit recipients, and Philpott offered a perfect opportunity. Holding a sick bucket just in case, I read the Mail columnist AN Wilson’s piece. He says Philpott ‘is a perfect parable for our age. His story shows the pervasiveness of evil born of welfare dependency.’  ‘The trial….. lifted the lid on the bleak and often grotesque world of the welfare benefit scroungers’. ‘Those six children, burnt to a cinder for nothing, were, in a way, the children of those benevolent human beings who, all those years ago, created our state benefits system.’ ‘Whole blocks of flats, whole tenement buildings are filled with drug-taking benefit fraudsters, scroungers and people on the make.’
In this way the case is made. The Duncan Smith narrative that our problems as a society arise from ‘welfare dependency’ is justified by example. Focus shifts from the swingeing and punitive cuts that he is implementing: after all, he is only trying to save benefit recipients  from becoming Mick Philpotts. Unemployment is not a systemic failure; look, these people chose to be unemployed to get the benefits. And typical council tenant: having more children just to get a bigger house.
When former Children’s Minister Sarah Teather was sacked she blew the whistle on what was happening inside Government. As Toby Helm wrote in the Guardian: ‘She accuses parts of government and the press of a deliberate campaign to ‘demonise’ those on benefits….. With vivid outrage she describes the language and caricatures that have been peddled. ‘I think deliberately to stoke up envy and division between people in order to gain popularity at the expense of children’s lives is immoral. It has no good intent.’ ’
The Mail and the Government are in this together, and it is shameful.

The Easter weekend not only saw the commencement of many of the Government’s hated welfare reforms, and an attack on them by a coalition of churches, it also saw the return of Grant Shapps to his old housing stamping ground and the wheeling out of Iain Duncan Smith, both desperately trying to justify their increasingly disastrous and oppressive housing policies.
The four churches had excellent impact with their Easter message accusing politicians and the media of promoting six myths about the poor: that they are lazy; are addicted to drink or drugs; are not really poor; cheat the system; have an easy life; and that they caused the deficit.
“The systematic misrepresentation of the poorest in society is a matter of injustice which all Christians have a responsibility to challenge,” they say.  Shapps and Duncan Smith set out to prove just how right the churches are.
Shapps/Michael Green has clearly been working on a few new lines to peddle on the media. One concerns housebuilding, carefully worked out to be this side of a lie and the other side of misleading. I suspect we will hear it again. First he tweeted it then he repeated it twice on the World This Weekend during an interview with Shaun Ley. His two tweets (31 March) were:

Some house building facts. We’re building 170k affordable & social homes. Under Lab there was a net reduction of 430k social homes!
In under 3 years we’ve built more affordable & social homes than Labour added to the total in 13 years. No wonder a housing crisis built up!

This is little more than a straightforward deception, because houses built and the net change in the stock are entirely different things, the main difference being that the former does not take account of right to buy and other sales and the latter does. Any like for like comparison would show that his claim that somehow they have done more in 3 years than Labour did in 13 is complete baloney.  I have asked Full Fact to check it out.
Shapps’ second piece of statistical trickery concerned disabled people and incapacity benefit. Again on 31 March he tweeted:

878,300 people on incapacity benefit removed themselves BEFORE taking test, knowing they’ll now be better off in work

In a series of tweets, Declan Gaffney @djmgaffneyw4 set out the source of this statistic and then showed that Shapps is factually inaccurate. He observed that the Government’s response to being accused by the churches of spreading dishonest myths about benefit claimants is ‘to blatantly misrepresent official statistics’ – ie to do more of the same.  Declan then challenged Shapps to correct the record. We will see what happens next.
Meanwhile, the man that personifies skin-deep sincerity and faux concern for the poor, Iain Duncan Smith, told a disbelieving world that he could live on benefits of £53 a week, an estimated 97% reduction in his current income of £1,581.02 a week. A petition has been launched asking him to do just that for a year: you can add to the 20,000 signatures it has already gained. Will he/won’t he take up the challenge?
The fact that the Government is coming under increasing challenge, ranging from the Archbishop of Canterbury to dozens of demonstrations against the bedroom tax over the weekend, is very welcome. But the knockabout cannot disguise the serious damage being done to the poorest in the name of austerity.

Nothing feeds my belief that the super-rich should pay more tax than to read the opinions of the super-rich themselves and their advisers.
Through my letter box in north-west London drops a very glossy and expensively produced magazine called London Property. As you can imagine, any property magazine circulated in north-west London is going to be full of pricey property. But this magazine is something else. Many are so expensive they are POA (price on application, or ‘if you need to ask the price, you can’t afford it’. But as random examples there is an ‘elegant penthouse apartment’ at Fulham Reach for £8.95m; a 5 bed house in Golders Green for £2.65m; a Belsize Park apartment for £2.9m; a detached house in NW6 for £3.8m. And on and on.
None of this is a surprise. But the magazine contains ‘opinion’ columns by people who are apparently agents in the luxury market. One complains about ‘politically motivated’ politicians (what else would they be?). I quite liked his starting point: ‘we have a bunch of incompetent sixth formers from Eton running the country’. But then it sinks. ‘It is extraordinarily disingenuous that Karl Marx/Ed Miliband is advocating a Mansion Tax’. Evidently this is because Ed would have to pay it himself because he lives in Primrose Hill (personally I tend to trust people on higher incomes who advocate higher taxes for themselves). Our hero is full of insightful views, such as: ‘Few realise that if the rich get poorer the poor get poorer as a consequence’ and the Mansion Tax will ‘suffocate the ethos of working hard and getting the rewards we deserve’. But Karl Marx forgodssake? I think he knows not what he is talking about.
Another correspondent also reverts to Marx. Perhaps it’s a trend? He says: ‘Karl Marx made valiant attempts in his socialistic models and teachings to try to make everyone equal’ and berates ‘this insatiable obsession with the politics of envy’. And the Mansion Tax again, which would ‘drive a coach and horse through this vital income sector that we require as part of the wealth of the nation…. the housing market above £2m will collapse’. I think he’s confused Karl and Groucho.
As the evidence grows that the London housing market for ordinary people has been severly damaged by the capital becoming the property safe haven for the world’s super-rich, and as people on low incomes are punished for daring to live in former working class communities like Pimlico and Covent Garden or for having a spare bedroom, the views of these gentlemen should inspire us to redouble our efforts to get social justice.
One of them has to stretch back to Denis Healey’s remark about squeezing the rich until the pips squeak ‘and other left-wing nutters’ to make his point. But, to quote the bard, he should realise that the times they are a-changing. It is no longer left wing to say: the global super-rich caused this crisis, and they should pay for it.

The notion that the main aim of the Budget is to create a mini-house price boom before the Election seems to be gaining credence.
Yesterday Red Brick argued that that the Government’s additional support for mortgages and deposits, especially the ‘help to buy’ scheme, was engineered to promote such a boom. Amid their endless and cynical rhetoric about helping people onto the housing ladder, their real aim is to get a ‘feel-good’ boost that comes with a rise in house prices.
However Planning Minister Nick Boles seems to have given the game away in an apparently private meeting with big property developers at a reception in Mayfair, which has been reported in the Telegraph. At almost the same time as the Government was busy refuting Ed Balls’ claim that the scheme will be used by the rich and people wanting to buy second homes and buy-to-lets, Boles couldn’t be clearer when he said he ‘couldn’t care who owns the bloody things’.
According to the Telegraph, Boles ‘indicates that the main purpose of a £15.5 billion government package to support homebuyers is to create a building boom.’  The next steps, he said, would be further deregulation of the planning system.
In a linked article, the Telegraph reports on one immediate response to the Budget: ‘Affluent house hunters have been contacting estate agents in some of Britain’s most expensive postcodes to ask how they can benefit from the new state mortgage assistance scheme unveiled in this week’s Budget…… there is nothing to stop high earners from using the multi-billion pound scheme and early anecdotal evidence suggests that it is likely to benefit large numbers of relatively wealthy people.’  
They quote one up-market estate agent as saying: ‘Given the limit at £600,000 and lack of salary cap surely this is going to appeal to those wanting really quite nice property – for example three-bedroom flats and houses in Battersea and Wandsworth [in South-West London]. If I was being cynical I’d call those Tory voters.’
There is of course a difference between a hike in house prices and a building boom. Liberalising and subsidising mortgages and deposits without a corresponding increase in supply is likely to feed through into price rises. The Government clearly hopes that a further liberalisation of the planning system and the prospect of bigger profits will bring about the supply response they are desperate to see.
But from the flavour of the right wing press over the past couple of days, the new policy will intensify the struggle between the property developer wing of the Tory Party, backed by Boles, and the nimby/defend the countryside wing. Both wings are capable of being equally unpleasant, and they deserve each other.
The best commentary on the new policies that I have seen came from Faisal Islam, Channel 4 News’ economics editor. It is worth reading his whole blog post – it is very balanced, being critical of Labour’s approach as well as Osborne’s.
Islam makes a number of inportant points:

• Britain is devaluing and inflating housing at the same time. Overpriced housing is not growth.
• Buyers dependent on low interest rates will be taking on a ‘mortgage of the living dead’ if interest rates go up. This is the Freddie Mac/Fannie May ‘sub-prime’ error being repeated here.
• Putting money into mortgages when there is a long list of business demands and unfunded infrastructure projects ‘beggars belief’. ‘If our sovereign balance sheet is to be lent to the private sector, it should be to industry, entrepreneurs, and infrastructure.’
• ‘To critique the notion of a “magic money tree”, and then immediately
  create a magic money forest of mortgage guarantees that don’t count as public
  spending, is baffling.’

No rational person wanting to splash the cash in the field of housing would do what the Government has done in the Budget. But there is a silver lining: no longer will we have to accept the line that ‘there is no money left’. There is plenty of money left, it’s just that Osborne chooses to use it in a wholly ideological way.
If Labour didn’t do enough to avert a housing crisis, we now have a Government that is actively making it worse and sowing the seeds of more problems in future. Jules Birch characterises it as ‘blowing bubbles’: looking to make people feel better by increasing house values. As Jules wrote: ‘It seems that any attempt at targeting new supply or first-time buyers has been abandoned in a desperate attempt to get the housing market moving before the next election.’ No lessons have been learned: the thing about bubbles, which we should know very well from experience over the last five years, is ‘just like our dreams they fade and die’.
If there is no money left, how can billions be found to support additional home purchases? The policy is indiscriminate: it is not targeted at first time buyers of new homes, but is also open to people who already have a home and want to upgrade (up to £600,000), open to people wanting to buy a second home, and open to buy to let landlords. You can guess which groups will move in on the scheme first, and it won’t be the trapped ‘generation rent’.
Tory MP Kwarsi Kwateng summed it up well, telling the BBC: ‘My worry with this is that having a system where you are giving mortgages without increasing the supply will lead to asset price inflation, because obviously if the amount of supply remains the same and you are making credit easier, the tendency would be for the prices to go up. I think we could have announced something bolder that actually increased the supply of homes.’
And the normally reliable BBC business editor Robert Peston said the new scheme came with risks as ‘growth sparked by a housing-linked consumer boom might not be altogether healthy’ for the economy, adding that the Chancellor’s strategy ‘may reflect a set of cultural and financial prejudices – houses deemed to be a better investment than proper wealth-creating entrepreneurs – that has been the UK’s curse.’
You have to worry about the Treasury and whether they have any economists there any more. It would be a good thing to provide targeted help with deposits to first time buyers looking to buy new homes, but only in the context of a broad policy that avoids general house price inflation. There is no new mechanism for ensuring that the additional mortgage finance will lead through into additional demand for new homes rather than additional money to buy homes that already exist. Every standard economics textbook will tell you that increasing general effective demand in the housing market when supply is inelastic leads to an increase in price.
It may be that the economists are overruled by the most ideological Chancellor in modern memory. Or it may be that an increase in prices is exactly what he wants, providing the appearance of growth, false confidence that things are getting better, and gaining the benefit of some ancillary increase in consumer spending in time for the Election. Osborne and Cameron are hard-wired to shout their mantra about increasing home ownership, driving blindly down a cul-de-sac ranting about aspiration. Because they know they will get positive headlines from the media – ‘good news, house prices have risen’ – when the opposite is the case.
By contrast Osborne offered nothing of significance for schemes that would actually get growth by building more homes, meeting housing need, and bringing down the benefit bill along the way. We will have to wait until June to see any announcement on the future of affordable housing. The Budget papers say that then ‘the Government will set out a social rental policy that gives social landlords certainty until 2025.’  Pull the other one.
There was no response to the calls from across the political spectrum to lift the cap on councils borrowing to build new homes. There will be yet more reliance on private renting but an ominous warning that the cash for whole programmes may be capped in future – the money will stay the same even if there are more cases. That means more cuts in basic entitlements, which in turn means more people unable to afford their homes.

What’s this about and what’s the point of all these initials?

The main measure of Government debt used in the UK is the PSND (Public Sector Net Debt) which is similar to the more well known PSBR (Public Sector Borrowing Requirement) used in the past. Other countries use GGGD (General Government Gross Debt) and all international comparisons are done on this basis.

The main difference between the two measures is that GGGD excludes the public corporate sector, whereas the PSND includes it. So in the UK public corporations (which include council housing) are controlled together with the rest of general government debt, whereas in other countries they are controlled separately and their borrowing is regulated by their own business plans and their own prudential borrowing rules.

More information can be found in the recently-published UK Housing Review  and in a report by a number of housing organisations called Let’s Get Building published late last year.

There was a period in the 1990s when no tenant conference would be complete without demands for a change in the ‘PSBR rules’ that made it hard for councils to borrow to invest in council housing.
Before the 1997 Election there was a head of steam behind making changes to the definition, changes that many people believed could lead to a major increase in housing investment and a renaissance in council house building, with particularly influential reports from the Chartered Institute of Housing gaining widespread support.
The fact that, in the event, the rules didn’t change tells us something about the Labour Government (council housing wasn’t very New Labour) but also about the power of Treasury Conventions. The PSBR had been invented as a measure of public indebtedness during the 1976 IMF crisis when the scale of the public corporate sector was huge (due to the size of the nationalised industry sector) compared to 1997 and now. But it had become a firm part of the Treasury mindset.
This little foray into history is of relevance because ‘the rules’ are again becoming a major topic of conversation, especially in housing but also in other affected sectors like transport.
There are two parallel arguments running. First, that an increase in borrowing for housing investment is justified even under the current rules because the economy needs a boost and because it would virtually pay for itself as the effects multiply through the economy. And secondly that a permanent switch in the debt measure would enable the council housing sector to borrow to build and use the freedoms of the new self-financing housing revenue account regime to the full.
Changing the rules has a measure of support across the political spectrum. Broad support amongst Lib Dems and Labour is well known, but there have also been Conservative voices, especially in local government, calling for the greater freedoms that the change would bring – which also chimes with the localist philosophy.
The Lib Dems have recently picked up the argument, presumably encouraged by Vince Cable. In a debate in the House of Lords last week (Column 158) Lib Dem Peer Lord Shipley (former leader of Newcastle) set out the case:

Councils have the capacity to build more homes, given that council housing is now self-financing. They could raise £7 billion. This could be done if the Government removed the borrowing cap on housing revenue accounts, relying instead on a prudential borrowing code to guarantee that only sustainable investment gets the go ahead. Many councils have successfully used prudential borrowing and have shown that they can manage such borrowing without risk. The Local Government Act 2003 already empowers the Secretary of State to cap any local authority which undertakes risky borrowing.
I understand the need for the Government to be careful about public borrowing levels. However, relaxing the housing borrowing cap need not be counted as public sector borrowing any longer. The UK uses a much wider measure of public debt than other countries. Council housing is a trading activity and international regulations already permit this to be discounted from government borrowing levels, although unfortunately the UK does not currently adopt such an approach and I remain puzzled as to why it does not.

The arguments against the change look increasingly weak. The Treasury maintains the line that PSND is the right measure because it enables the government to be aware of all its contingent liabilities. But, as John Perry has pointed out on his Two Worlds blog, in the last 2 decades there have been few failures by public corporations and many by private corporations where the government has had to step in (notably the Banks) and pick up the liabilities. In practice, the government’s contingent liabilities are not restricted to the public sector.
The debate has been joined again within the Labour Party, with the Labour Housing Group taking a lead role in promoting the need for rule changes to enable a new generation of council houses to be built, adding to the success of the self-financing HRA regime.
It’s an argument that won’t go away.

Poor old Dot Branning is facing the loss of her council house in EastEnders.
Having left the property for several months in the hands of more than one lodger, none of whom paid the rent, she has returned to find herself in arrears (more than £4,000, which seems a lot for six months away). In one slightly bizarre scene she was interviewed under caution by Council Fraud Officers about her lodgers. She has not made an arrangement to pay off the arrears so the Council is taking her to Court for possession.
The storyline isn’t about housing management procedures, but about the devastating emotional consequences of Dot potentially losing her long-term family home. There are some minor deficiencies in the story (she appears not to have a housing officer, so her first contact is with the Fraud Officers, and I can’t recall a notice of seeking possession being served or her), but my main observation is that Walford Council can only end the tenancy by going to a Court to obtain possession. That is the real meaning of security of tenure.
(As an aside for EastEnders aficionados, Dot’s supposed long occupation of the house seems a bit odd because she hasn’t always lived there and I’m sure the property was once owned by another character, but let’s not get picky about continuity).
It appears that the good burghers of Hammersmith and Fulham have not been moved by Dot’s story because they have scrapped security of tenure for future social housing tenants. New tenants will get a two or five year tenancy depending on their age and behaviour. Under their policy Dot Branning presumably would have been moved on years ago as her fixed tenancy came to an end.
The Council’s cabinet member for housing says the ‘tenancy for life’ is unfair and antiquated, that it creates ‘disadvantaged communities’, and he described council housing as ‘a welfare benefit in the form of a heavily subsidised house’. He said ‘we want to create neighbourhoods where a broad mix of social households all live side-by-side.’
We will excuse the cabinet member for his ignorance in not knowing that council housing is no longer subsidised, indeed makes a profit. But anyone with experience of some of London’s Tory councils will be sceptical that they want to create broadly mixed neighbourhoods. Since the days of Lady Porter phrases like that have come to mean selling off homes and estates, gentrification, and getting rid of the poor in favour of higher income groups who might, coincidentally, be more likely to vote Tory. H&F certainly likes selling off estates.
Language and imagery is important in politics. The term ‘bedroom tax’, which so annoys Cameron, is a recent example of winning an argument via a brilliant slogan. ‘Lifetime tenancies’ is an earlier example, invented as an adjunct to the campaign to demonise the poor as undeserving scroungers.
There is of course no such thing as a ‘tenancy for life’, but it has gained such currency that it has entered common usage, even in the Guardian Housing Network. Tenancies with security of tenure are an entirely different concept. A tenant can only stay if they continue to qualify, if they do not breach a wide range of tenancy conditions, if they have not been awarded an introductory or a temporary tenancy in the first place, and if the landlord does not otherwise have a ground for possession.
People opposed to the whole concept of social rented housing used the term to make it seem unreasonable that a tenant should have security, and to give the impression that no-one ever got removed, no matter what they did. Far from it: tenants can be removed for arrears, domestic violence, neglect, misrepresentation, overcrowding, major works, and under-occupation on succession. It is the existence of such wide grounds for possession that made the argument for removing security such a sham. Identified issues can be tackled by amending the grounds for possession rather than ending security – for example where there is under-occupation but subject to a test of reasonableness and the availability of suitable alternative accommodation.
We should watch the development of the Dot Branning eviction story with interest. They don’t usually get housing-related stories right on EastEnders. Maybe they will this time. One thing is for certain: as the Government’s policies force more and more tenants into arrears, Dot will not be alone.

Monimbo
Three years of ad hoc changes to social sector rents have left them in chaos. What do we do now to restore a sensible rents policy?
A new report from CIH and London & Quadrant, We need to talk about rents, is an attempt to begin a much-needed debate. Much needed because rents are not only crucial to the sector’s affordability, but also because they drive investment and are a key element in defining the purpose of social housing.
Why is policy a mess? Although the rents policy which Grant Shapps inherited from Labour had in its time been controversial, at least it embodied affordability and consistency, and was known and accepted by lenders. Shapps didn’t so much dismantle the policy as ignore it, sticking on new bits without any regard to the overall outcome.
Furthermore, while the remnants of the policy still embrace the crucial link to average regional incomes, most of Shapps’ initiatives have pulled in the opposite direction, eroding affordability and – surprise, surprise – helping push up the housing benefit bill.  So as pointed out in the latest UK Housing Review, not only will we eventually have 67,000 new houses let at rents that are far much less affordable, but we have so far sacrificed lower rents on over 70,000 properties that have been switched to ‘Affordable Rent’ to support the borrowing needed to build the others.  The ratio of homes removed from the social rent portfolio to pay for AR homes is likely to be 3:2, i.e. three are lost from social rent for every two gained for AR.  This confirms the result of a Freedom of Information request done by Red Brick last year.
As everyone suspected would happen, and as the Review also points out, the limited experience of the new AR lettings at higher rents shows that they are nevertheless going to the same target group as social lettings, i.e. 79% of lettings are to tenants partly or wholly dependant on HB in both cases: there is no sign of more AR lettings going to better-off tenants.  In other words, housing benefit will again ‘take the strain’ and tenants trapped in benefit dependency will face higher barriers to escape it.  Duncan-Smith must have been looking the other way when this policy change was slipped through.
As the CIH and L&Q discussion paper points out, even more important than the immediate practical effects are the longer-term consequences.  One of course concerns the sustainability of an investment model which reduces the average grant input to only 14% of the cost of a new dwelling (from a previous average of 39%), relying for the rest to be loaded onto rents or to come from asset sales or free land.
But arguably even more important is the role that rents policy plays in any vision for what the aims of social housing are.  Here, Shapps and now Prisk have vacillated between aiming the sector at higher earners through AR rents, penalising higher earners through the still-threatened pay-to-stay policy, pushing more benefit dependent families into the sector through LHA changes, pushing them back again through the bedroom tax, and encouraging local authorities to give the impression they can reward long-term, working residents through their allocations policies – even though in practice landlords are struggling with the chaos caused by the combination of rising homelessness and the tenant transfers now needed because of the bedroom tax.
The only comfort to be drawn is that it is not only in England that policy is in confusion. The report makes clear that policy changes in Australia, Canada, France and Sweden have also had unintended consequences. In Canada for example, a programme very like our Affordable Homes Programme and with almost the same name now caters for new, better-off tenants previously excluded from Canada’s small social sector, but adds nothing to the much needed supply of lettings at ‘rents geared to incomes’, leaving providers unable to cope with demand.
The report doesn’t reach conclusions, as it’s a call for debate, but it does ask if rents could support a redistributive element so that richer tenants help keep rents down for poorer ones.  Something similar has just been proposed in a report by Demos for Family Mosaic and Home Group.  While this may be a desirable objective, it seems unlikely that it can squared with rents being relied on as a source of investment, unless grant rates can be restored to something much more generous than 14%.
The lesson for Labour’s housing policy is that it can’t put rents policy into the ‘too difficult’ box, it is too important for that.  The risks of ignoring the issue are evident from the way the Tories’ half-baked policies have pulled in conflicting directions. A debate is needed about social rents and the wider issue that lies behind them of what the sector is for.  The Tories have ducked it; Labour shouldn’t.

My main criticism of the LibDems is not that they went into Coalition with these appalling Tories, nor even that they are implementing the Coalition Agreement. It is that they have backed so many housing policies that were not in the Tory manifesto, the LibDem manifesto or the Coalition Agreement.
Many of the Tories worst policies are drawn from an agenda that was developed in opposition through the think tank Localis, published in the form of a pamphlet that was written with the help of some leading figures in the housing world, to their shame. Thus policies such as privatising social housing estates, pushing social rents towards market levels, removing security of tenure, and further shifting from capital to revenue subsidies were an undeclared plan in the minds of Tory politicians, and primarily Grant Shapps, before the election was called.
These policies, and others developed since the Election, like the bedroom tax and the ending of the homelessness safety net, have been ruthlessly pursued despite there being no democratic mandate for them. It is no surprise that Eric Pickles and Iain Duncan Smith promote these policies with unbridled enthusiasm. But the LibDems would have been well within their Coalition rights to have refused to back them. At the very least they could have won some amendments or even distanced themselves from them and shown more reluctance. But the LibDems have rolled over every time with Ministers like Andrew Stunnell, Don Foster and Steve Webb promoting this Tory agenda with great conviction.
One worm has seemed more likely to turn than the rest. Dr Vince Cable has recently shown some semi-detachment from the Coalition’s investment policies. In the New Statesman  this week Cable calls for ‘greatly expanded’ capital spending to be funded through greater borrowing not cuts elsewhere. It is an axiom of Red Brick that we should be borrowing more to invest in housing; because of the multipliers involved the Treasury would get most of the money back in greater receipts and reduced benefits. Injecting more demand into housing would bolster one of the weakest areas of the economy, construction, and would create few inflationary pressures. Cable’s specific focus is to remove the cap on council borrowing for investment: borrowing that could be funded through the reformed housing revenue account and would be entirely prudential.
Even in the context of Coalition policies Cable says the argument is strong. The IMF has warned that the public finances may deteriorate as a consequence of continued lack of growth, and Cable argues that borrowing for growth would not undermine the central objective of reducing the structural deficit.
Cable goes about as far as collective cabinet responsibility allows. He also repeats an argument that has appeared on Red Brick that any further quantitative easing should be used more creatively; instead of just bolstering bank balance sheets the Bank of England should be acquiring assets like infrastructure bonds.
Whether George Osborne is listening to Cable’s message will not be clear until the Budget, but with Cameron and Osborne increasingly under pressure from their right wing for tax cuts, it seems unlikely that there will be a strong shift in Cable’s direction. The ball will then be back in the LibDem court. The budget and forthcoming votes like the one on Mansion Tax will test their intentions. Mired in problems themselves, will they at last flex their muscles within the Coalition?