Red Brick

We should rejoice that today marks the point at which the Coalition is half over.  From now on there will be fewer days of suffering ahead of us than there are behind us.  As Cameron and Clegg do another relaunch, it is salutary for a housing blog to look back at the Coalition Agreement and see how what they have done compares to what they promised.
This is easier said than done, because the Agreement had little to say about housing and nothing to say about many of the more controversial policies they have pursued in power.  And that is the root of my central criticism of the LibDems – if the Agreement is what they signed up to, with no obligation to support other policies not contained therein, why did they subsequently embrace enthusiastically so many Tory policies that were not in the Agreement and diametrically the opposite of what was in their own Manifesto?  Were they weak or stupid?  It must be one of those.  More than in most areas, housing policy has been developed according to a private agenda within the Conservative Party and the LibDems have chosen to go along with it when they could have taken a much more oppositional stance without breaching the Coalition Agreement.
Some of the policies included in the Coalition Agreement have been pursued, such as: scrapping regional spatial strategies; reform of the housing revenue account; bringing empty homes into use; increasing the right to buy.  And there are others where progress is more debatable: continuous improvement of energy efficiency; creating new community trusts to provide homes for local people; ‘maintain the green belt’ (remind Planning Minister Nick Boles about that one).
What is astonishing is the lack of mention of a long list of policies the Coalition has since pursued: the ending of new homes for social rent; the creation of the ‘affordable rent’ tenure at up to 80% of market rents; the 60% cut in public housing investment; flexible tenure; the bedroom tax; reducing the homelessness safety net; cancelling Labour’s plans to regulate the private rented sector – to name but a few.  It is also worth mentioning that the Agreement does not even mention the phrases ‘housing benefit’ and ‘local housing allowance’ and the word ‘cap’.  Nowhere is there any reference to the overall benefit cap.
There is no doubt that the LibDems would have been well within their Coalition rights to oppose or to refuse to support these policies but were too feeble to do so.  Indeed, LibDem Minister after Minister – in CLG and DWP – stood up to defend them and to support policies that are wholly contradictory to historic LibDem policies or even the new and excellent LIbDem housing policy adopted at their last conference.
The reason for being so disappointed with the LibDems is that it was well known before the Election that a private housing agenda was being developed by the Tories with the help of leading figures in the housing world: in particular, the infamous Localis pamphlet set out clearly the direction the Tories would take towards market rents and the denial of rights to social tenants.  The LibDems should have known what was coming and had a clearer strategy for resisting it.
There is a general belief that the Coalition will be brought to an end before the General Election so that the Conservative and LibDem parties can develop distinctive policies during the campaign.  No doubt at that point the LIbDems will revert to their previous and current policies, which on paper are excellent and attractive.  But the real measure will be ‘what did you do in Government?’.  The Coalition has been disastrous for housing policy and the LibDems have been fully complicit.  Whatever the paper policies, they should not be trusted again.

Becoming a Minister is a funny business. You have to forget everything you have ever previously said on the topic you take responsibility for and become the mouthpiece of the Government.  You then have to parrot all the stuff that has previously been said by your predecessors, even if it means defending policies with which you have previously disagreed.
For the LibDens in coalition with the Tories this must be an excruciating business.  Some of those who have been sacked from Government have revealed exactly how awful the Government is looking from the inside, notably Sarah Teather’s denunciation of the Government’s deliberate strategy to demonise benefit recipients.
Poor old Don Foster is the latest to make the transition onto the dark side, picking up the housing junior brief from dumped fellow LibDem Andrew Stunnell in the last reshuffle. It is now poor Don’s turn, as a previously decent human being, to defend the increasingly indefensible record of the Coalition on housing and homelessness.
But I was still surprised when Foster had the opportunity of an article in the Telegraph that he chose to go for an old favourite: red tape.  This is normally the last refuge of people who have nothing of any importance to say on anything serious.  Evidently he has been entrusted with slashing the Building Regulations and he is, he says, going about it with zeal. He was ‘shocked to find out about the layers of additional standards and red tape, slapped on top of each other by the last government’ as if the regs were only invented in 1997.  But he cites an alarming precedent for the approach he is going to take: ‘Just as this government turned over 1,300 pages of technical planning rules into a 50 page, sensible and intelligible framework I’m determined to do the same with buildings standards.’  And he believes he can do this without compromising safety.
Well, we’ll wait and see but, as the Government’s planning policy unravels before our eyes, it would be bad news to see building regs reduced to 50 meaningless and contradictory pages like planning guidance was.  And it is serious stuff: detailed rules on fire safety, electrical and gas safety, contaminants, insulation, ventilation, hygiene, drainage and refuse disposal are not to sneezed at.  Areas where a bit of red tape is justified by appalling practice in the past.
On New Years Day I was ruminating on how hard it would be for Labour to enter a coalition with the LibDems after the next Election given how hostile some LibDems have been to Labour over the last 2 years.  One friend said that if Labour didn’t win outright ‘it would have to kiss a lot of frogs’ to form a Government.  I hadn’t quite seen the likes of Don Foster like that before.  However, it appears that there are two very different forms of the fairytale.
In one version (Wikipedia says the ‘Americanised’ version) the frog is indeed turned into a charming Prince by a kiss.  However, the original Grimm Brothers story has the frog’s spell being broken when the princess throws it against a wall in disgust.  Speaking personally, when I watch some of the LibDems in Government, I prefer the latter option.
Happy New Year!

Not even the New Year yet and there is another dire warning about the housebuilding collapse – this time from one of the Government closest thinktank friends, Policy Exchange.  In between Xmas and the New Year is an unusual time to publish a report, but I guess they know what they’re doing.
Their report is exactly what it says on the tin.  It’s called ‘Planning For Less’ and it concludes that the abolition of Regional Spatial Strategies (and therefore regional targets for housebuilding) has resulted in local authorities planning for 270,000 fewer homes than before.  PEx say that the Government’s expectation that abolishing the RSSs would lead to more homes being planned has proved profoundly wrong.
Well over half of all councils have used their new powers  to scale back previous plans.  And worse – the report shows that the cuts in planned housing figures are highest where the need to build is greatest.  Targets have been cut by over 8% in the south east and by more than 18% in the south west.
In response to the report, DCLG made the obvious point that the targets set under the RSS system were not being met anyway, inferring that it doesn’t matter that the targets have been slashed.  PEx say emphatically that it does matter: ‘the lower figures chosen by local authorities are important in political terms. They are seen by many local people, councillors and MPs as more legitimate than regional planning figures, or other figures imposed by the centre.’   The new figures, they argue, will act as a ceiling and will  give succour to those who wish to resist development.  The development process will be the same – just with smaller numbers in it.
The abolition of the regional structure is the disastrous result of political dogma, and was done just as the RSSs were beginning to have an impact (any system would have been overwhelmed by the financial collapse in 2008).  The maintenance of the regional system in London – where the mayor has the powers – illustrates a contradiction in the Government’s approach.
Regional targets were only ever one part of the answer but they reflected detailed assessments of need and demand and set the benchmark and expectations for what should happen in each area.  Of course targets in themselves do not improve the economic circumstances within which builders are operating, nor do they impact on developers’ decisions on whether to use or sit on their land bank.  These are the areas where the Government should now be focusing its attention.  Instead they pursue failed policies like the New Homes Bonus – which seems to be being used by most councils to fill holes in their budgets rather than helping with housing development.
The RSS system may not have been very popular but it was based on a rational assessment of evidence.  What we are left with now is a system that is dependent on local political pressures and increasingly hysterical exhortations to build from Ministers.
There is a crumb of comfort for the Countryside Alliance wing of the Conservative Party, as the report concludes that ‘The widespread fear that the Coalition is set to concrete over the countryside with new housing is, in the light of (the) report, not borne out.’
The Government is floundering about, trying to talk up housebuilding whilst adopting policies that will reduce it further and failing to act on the real barriers to development.  It is one of the Coalition’s greatest failures.

Just like O Level French is enough to buy a pastry in Paris so an economics degree occasionally makes it possible to read a fairly dense economic text that opens the eyes.  So it is with an excellent essay on the London Review of Books called ‘Let’s Call It Failure’ by John Lanchester that focuses on austerity and the economic multiplier.
Lanchester’s conclusion – ‘the scale and speed and completeness with which things are going wrong are numbing’ – is probably of little surprise, anyone having a quick look round Britain today could probably conclude that.  But it’s the way he traces the Government pursuit of its objective to cut spending to bring the deficit down that is so enlightening.
Osborne’s aim was to cut the structural deficit from 4.8% to 1.9% after 3 years.  Despite nearly £60bn of tax rises/spending cuts, the figure is set to be 4.3% and that is only achieved by a lot of what in local government we used to call ‘creative accounting’ – counting the windfall from 4G telecom licences (not yet sold), transferring Royal Mail pensions assets and liabilities (assets counted short, liabilities counted long) and the transfer of interest on quantitative easing from the Bank of England.  Without these it would have been, guess what?  4.9%.
All that pain and no gain.  And a triple dip recession on the horizon.
Lanchester pins much of the blame on a misunderstanding of the economic multiplier and that GDP is a measure not only of the amount of money people spend but the velocity with which successive people spend it.  He traces a £10 note around the economy, being spent by one person then by the second person, then by the third.  When it has been through six pairs of hands the initial tenner has added £60 to GDP.  If instead the first person had put it in the bank, it would have remained £10.    Our economy is sitting on the tenner – and the multiplier was the core of Keynes’ economic analysis of what to do in a recession.
Our Government, backed until now by the IMF, has put a value on the effect of austerity of 0.5% – that is, for every £1billion of public spending cuts GDP would contract by £500m.  Good old IMF, having got it wrong in every poor economy they have ‘rescued’ over the last few decades – swingeing cuts, privatisation, one solution for every problem – now suggest the multiplier for cuts is twice as high and possibly 3 times as high.   In short, austerity is exactly the wrong thing to do because cutting public spending disproportionally depresses GDP.  And cutting the poor is the worst of all – more than anyone else, they spend their tenner and keep the velocity of circulation going.
And if you’d like more evidence of the deficit disaster, try this from a Conservative economic  commentator, Ramesh Patel, on Huffington Post.  Pulling no punches, he concluded: ‘The deficit myth is the grossest lie ever enforced upon the people and it has been sold by exploiting people’s economic illiteracy….. Cameron is playing the blame game to depress confidence and growth to justify austerity. Secondly, to use austerity as justification for a smaller state to gain lower taxes. Thirdly, to paint Labour as a party that can not be trusted with the country’s finances again. Therefore, we Conservatives will win a second term because people vote out of fear.’ 
Sounds like being in ‘deficit denial’ was the right thing after all.

A month ago, in the week that the new homelessness regulations came into force, I did a Red Brick piece on homelessness that I called ‘Hypocrisy and Doublespeak’.  The aim was to highlight the absurdity of the Government trying to take the moral high ground on homelessness – both Mark Prisk and his predecessor, Grant Shapps, having written stroppy letters to or about various councils and made pronouncements about their responsibilities – whilst adopting a raft of policies that they know will make it much worse.
The Government is fully aware that homelessness will rise rapidly as a result of its housing and benefits policies and is making a concerted pre-emptive effort to lay off the blame – even accusing its best friends of ‘unacceptable and unlawful’ practices.  But both central and local government (at least in London) know that dispersal – councils discharging their homelessness duty by offering private rented accommodation in cheaper parts of the country – is inevitable and that the damage to families and especially children and vulnerable people will be immense.  Not quite the Xmas message the government wants to send out.
In the post I referred to the advice being given to local authorities by a consultant, Andy Gale, who was billed as being a speaker for the DCLG.  My view was that his advice was repugnant and that it revealed the real direction of Government policy on homelessness – deliberately removing the safety net and reducing homelessness acceptances through tougher application rules and processes (gatekeeping).
Patrick Butler of the Guardian had broken the story about Andy Gale but then became embroiled in a row with DCLG, who denied that Gale was anything to do with them.  Butler’s subsequent investigations revealed that Gale was ‘hosted’ by Newham council at DCLG’s request and with their funding to advise other councils on managing homelessness, raising questions over the veracity of an answer given by Mark Prisk to a Parliamentary Question by Karen Buck MP.  Butler tells more of the tale in his fascinating follow-up piece.
The story reinforces the impression that DCLG wants to encourage authorities to use gatekeeping methods to reduce the number of successful homeless applications but they don’t want to be seen to be doing so.  And their rather bullying tone reveals some anxiety to avoid being labelled as the real villains (which of course they are).
Interesting spats aside, the back story to this is the complete turnabout in homelessness policy over the last decade, since the high point of the 2002 Homelessness Act when it looked as if Government had finally put together a package of strategies, policies and duties that would tackle the roots of the problem.  Labour had made a number of important strides in its approach to homelessness: rough sleeping was being brought down, the long term use of bed and breakfast accommodation for families was being ended, and the number of new homeless households presenting to local authorities was falling.  But in the decade since, the failure of affordable housing supply has shifted us step-by-step from a liberal and progressive stance to a reactionary blame-the-victim position.  The Tories have even shifted people who become homeless from the deserving to the undeserving poor.
There was no single turning point but it is interesting to observe that the requirement to adopt a strategic approach to homelessness had a downside: it spurred creative minds into devising a range of new practices for dealing with homelessness, from genuinely important preventative work, such as family conciliation, to devices the purpose of which was to ‘discourage’ applications and to ‘divert’ people into courses of action other than presenting as homeless.  This was given a big push by the introduction of a well-meaning but muddled policy to cut in half the number of households in temporary accommodation over a five year period to 2010. Its in the math: if supply did not increase, the only way to meet the target was to cut demand and stop people coming through with a right to social rented housing.  Even though the target was backed by funding and lots of ideas for reinventing TA, in practice it put too much pressure on the system to achieve the unachievable.
Some of us at the time could sense a change in attitude to homelessness and saw dangers in the then Government’s proposals to achieve the target ‘by offering a wider range of preventative measures and increasing access to settled homes’.  This subtle use of language opened the door for those authorities that moved seamlessly from ‘prevention’ to ‘gatekeeping’: a number of authorities were already more hostile to homeless households and wanted to be able to allocate more of their limited number of social rented homes to other priorities.  The homeless also started getting blamed for concentrations of poverty and even anti-social behaviour on social housing estates.  The description ‘settled homes’ really meant the first national endorsement for greater use of the private rented sector.
In the years since, homeless households have faced more and more barriers to the simple process of presenting as homeless or being threatened with homelessness and being recorded as such.  The fact that numbers are going up again is testament to how hard the housing market is.  Progress into a social tenancy has become harder and harder and diversion into private renting is now becoming the norm.  And that’s where Mr Gale’s advice comes, because people like him make money from showing councils how to manage demand without breaking the law and deal with the politics as well.  The excellent Nearly Legal website has published Mr Gale’s briefing so you can judge for yourself.
Homelessness is a touchstone issue for many of us who cut our teeth in the campaign for effective homelessness legislation in the 1970s to end the era of ‘Cathy Come Home’.  If the way you treat the homeless is a measure of our civilization, the Barbarians are back in control.

It is to their credit that Labour’s frontbench housing team, Hilary Benn and Jack Dromey, have invested a lot of energy in seeking to understand the workings of the private rented sector and to develop a distinctive new policy.
Their latest document sets out the policy directions they wish to move in and they have addressed the two thorniest issues: rents and security of tenure.
They trace the huge changes that have taken place in the sector in the last two decades, as the failure of supply, first in social renting then for affordable home ownership, together with the emergence of buy to let mortgages, created a whole new market for private renting.  The emergence of ‘generation rent’ has been spectacular, even if it has not been led by consumer preference – there is still a strong preference for home ownership or social tenancies.
One of the biggest changes has been the reinvention of private renting for families – now 1.1 million families with children are private renters and the number is growing fast.  It is for these families that the toxic mix of high and unpredictable rents and insecurity of tenure is most damaging.  Benn and Dromey point out that private renting families are eleven times more likely to have moved house in the last year than those with a mortgage.  Frequent moves raise costs for both landlords and tenants and only benefit agents and help drive rent increases.  They are extremely destabilising for families and even the Government accepts that there is an impact on children’s attainment.  Private renting is increasingly the destination of homeless families but the end of private tenancies is also now the biggest cause of homelessness – the revolving door.
Benn and Dromey are developing policies that reflect the practical realities of the current housing market and strengthen the business model for most private landlords.  The interests of tenants and landlords could be better aligned than many recognise – both could benefit from longer term tenancies and more predictable indexed rents, although agents would lose out.  They also challenge the practice that buy-to-let mortgages often insist on tenancy lengths of one year or less.
Most calls for change or regulation in private renting are met with howls of outrage about bringing back ‘old-style rent controls’ that stopped landlords making a return.  Benn and Dromey are clear that that is not where they are heading and that the viability of the sector is crucial.  They intend to look at the tax treatment of private renting to see if arrangements could be made for depreciation and the treatment of rent rather than profit as income.  Lessons from other countries, and especially Germany and France, with more successful private rented sectors and a less short-term culture, need to be learned.
Launching the document, Labour’s Shadow Housing Minister, Jack Dromey MP, said:
‘Families need stability to plan where they send their kids to school and certainty to manage their household budgets.
‘That’s why Labour is committed to reforming the private rented sector so it works for Britain’s families. With longer term tenancies and predictable rents, the private rented sector will offer the affordable and stable homes that renters need.
‘Families will feel that their rented house is a home and it will help strengthen communities as people put down roots and get to know their neighbours.
‘Labour’s One Nation housing policy offers stability for families, certainty for landlords and strengthened communities.’
More quotable quotes
Stuart Law, Chief Executive of Assetz plc, ‘one of the top property investment specialists in the UK’ told Moneyweek magazine (7 Dec 2012): ‘Short term contracts are really destabilising. They really upset tenants. I’ve turfed some out to do renovations or just to up the rent, and they get really upset’.  And his investment advice? ‘I keep saying, year after year – sell your retail shares. In the end, this is all going to come home to roost on the high street. Because I will keep putting rents up, and will find tenants who will pay the rent, and they will stop buying handbags, and stop going out for expensive meals. I will have that money. I will decimate the high street. So sell the retails shares.’
One Nation?

It’s rare to be able to say that a weekend with no major political events is of great significance, but this weekend may well have been one such. The story in the Observer that Ed Miliband is going to ‘wage war’ on George Osborne over benefit cuts following the Autumn Statement was backed by a number of interviews by leading Labour figures such as Ed Balls and a series of important articles challenging the myths and stereotypes of ‘benefit recipients’ and ‘welfare scroungers’, including by Will Hutton and Owen Jones.
There was also an important letter to the Observer from 60 charities and organisations pointing out the risks of the latest ‘punitive’ and ‘unfair’ cuts to children and other vulnerable people, arguing that ‘The truth is that the vast majority of those who rely on benefits and tax credits are either in work, have worked, or will be in work in the near future. They and their families are making their contribution to society and are entitled to genuine security, as Beveridge intended.’
It feels like Labour might just be shaking off the craven attitude to welfare that has dogged it for many years. Of course it’s possible to see the dilemma involved in speaking out against the dominant narrative of the deserving and the undeserving poor, more recently described as the ‘strivers’ versus the ‘shirkers’. But some elements of Labour have been complicit in creating the narrative and it is time for a new approach.
It is nothing new for the Tories to seek to victimise, stigmatise and blame certain groups for the ills of society but recently it has been raised to an art form, notably by Iain Duncan Smith. People on welfare benefits, council tenants, disabled people, homeless people are subject to endless propaganda and anecdotal insults: scroungers, subsidised by the state, swinging the lead, queue jumpers, reinforced every day by the majority of newspapers.
Lib Dem MP Sarah Teather recently revealed how deliberate this strategy is within Government. The purpose is twofold: to divert blame from those responsible for unemployment, poverty and homelessness onto the victims themselves, and to set a political trap for Labour which will identify it as the Party of welfare. But as always, there is more than one political trap available: the more Labour is seen to support welfare cuts the bigger the hole it has to scramble out of, and the divisions in the Coalition are becoming more open. Vince Cable this weekend said that Ministers should not insult and demonise people on benefits, most of who are out of work for no fault of their own.
Ed Miliband has been most successful when he has been politically courageous and he should seek to get this debate on to positive ground, enabling Labour to defend vital social programmes with greater legitimacy. This approach was well summed up by Rachel Reeves when she said ‘George Osborne is even cutting maternity pay for mums who take time off work to be with their newborn baby. We need to get the benefits bill down, but the way to do that is to get the economy moving and get people back to work.’
There is also endless mileage in alternative arguments: the constant revelations that the super-rich and big corporations don’t pay much tax; the huge subsidies flowing to landlords instead of building more homes; the fact that much of the welfare bill goes to support people in work; and the increasingly muddy dividing line between work and unemployment as growing millions of people are underemployed, in and out of casual and part-time work and facing constant uncertainty. It is entirely possible to defend the working poor whilst refusing to join in the attack on those who are not able to work or have no jobs to go to – an attack being led by those that Owen Jones, with his usual flourish, calls the ‘ideologically crazed cabal’.
If Labour needs to be brave, the real fault line remains in the Coalition. We know the Tories will defend the rich and attack the poor.  But are the Lib Dems at last willing to stand up for the decent society they say they believe in?

Monimbo
Contrary to the impression often given by government, social landlords are far from complacent about tenants who are out of work. In fact, four out of five London social landlords offer into-work services.
Family Mosaic and Home housing associations are to be congratulated on commissioning a very topical piece of research, Home-work: Helping London’s social tenants into employment, carried out by the Centre for London, which reviews what social landlords do and how they could do more. It’s hardly necessary to explain its topicality at a time when benefit cuts and welfare reform, rising rents, a housing crisis and stagnant incomes for those in low-paid jobs combine into a perfect storm affecting London’s poor.
It’s worth bearing in mind how unequal London is: some of the richest people in the world live in the same city as many of Britain’s poorest. London has above average proportions of both unemployment and poverty (a poverty rate of 28% compared with the UK average of 22%). It also has a quarter of its population in social housing compared with a national average of one-fifth. While London’s social tenants are no more likely to be unemployed than those elsewhere, those without jobs tend to be somewhat different. Older and ethnic minority tenants do better in London, but lone parents do worse. It so happens that there are more lone parent tenants in London too, so that a significant proportion of jobless social tenants are single mothers with children, and this group also does worse in terms of getting part-time work.
The researchers review the explanations for these differences. They find no evidence that ‘lifetime tenancies’ have any detrimental effect. They are less sure whether there may be neighbourhood effects, e.g. concentrated poverty within social housing estates. But they think the main barriers are poor qualifications among many tenants, the unclear gains from working compared with benefits, the uncertainty linked with moving off benefits into low-paid jobs and possibly back again, and the costs of childcare.
Some remedies like the Living Wage could make a big impact in overcoming these barriers, but the report concentrates on action that can be taken by landlords themselves. They welcome the fact that most already have into-work services of different kinds, but suggest they are often not evidence-based, are poorly co-ordinated and often not evaluated. The implication is that these services should move into the mainstream and not be add-ons, and there is guidance from the London Development Agency (pdf) on how to do this. They are keen too that more landlords provide childcare facilities for tenants as this cost is another significant barrier.
They also look at the implications for rents. While dismissing the government’s ‘pay-to-stay’ scheme as creating a disincentive to work, they come up with some controversial proposals of their own. They suggest that while social landlords shouldn’t impose higher rents in a single step as pay-to-stay envisages, they might progressively increase rents with earnings, charging higher increments of rent not big enough to be a work disincentive.

The scheme is shown in the diagram. The green columns show tenants’ income bands (based on UK figures, in £1000s). The blue line shows what tenants pay on average at the moment: zero if on full housing benefit, with a sharp taper leading to whatever the full social rent is for their home. Pay-to-stay would add a vertical step (red dots) for tenants earning more than £60k. The Centre for London suggests a less steep taper, starting at the median wage and reaching to just below market rent levels for tenants earning about £32k.
The extra rental income, which would be more than the small sums that would result from pay-to-stay, could finance more into-work services. Interestingly, they also suggest that part is reserved to create a fund for those who lose their jobs and have difficult paying their rent, and suggest ways that this could be done. The money might also be used to reduce rents for tenants who go on training courses.
These ideas need a lot more thought and would be demanding to implement. Nevertheless, there are some straws in the wind here. The Chartered Institute of Housing (CIH) has published a report with L&Q housing association looking at similar issues and promising more research. Furthermore, the recent Let’s Get Building report showed that many local authorities are contemplating higher rents to fund new build.
The Chancellor insisted in the Autumn Statement that pay-to-stay would be introduced, despite the very real objections and the obvious problems of imposing it on an unwilling sector. It seems most unlikely that the government will get its way. Nevertheless, we might have to accept that the old model of highly affordable rents based on substantial grants, which is still producing attractive new developments like the mixed community created by Hyde in the Packington estate, is unlikely to be fully restored by a future government. So might ideas like those put forward by the Centre for London be worth debating?