Red Brick

Summary:
Following FoI requests, the price of the ‘Affordable Rent’ programme is becoming clear.  

• The average ‘affordable rent’ per unit will be £6,909 a year, ranging from  £5,195 in the North East and Yorkshire to £9,487 in London (over £182 a week).
• More than 82,000 social rented homes will be hijacked – ie ‘converted’ to ‘affordable rent’ in England – to inject an estimated £90 million a year into the scheme to help pay for it.
  

The Government’s ‘Affordable Rent’ programme has been a mysterious affair.  Never has a programme been invented, promoted, negotiated and implemented with such little information being available to anyone wanting to scrutinise whether it might meet housing objectives and achieve reasonable value for money.
‘Affordable Rent’ is hugely controversial, for several reasons.  First it means the virtual abandonment of the social rented programme as we have known it for decades.  Secondly, it moves rent levels towards market rents – officially, ‘up to 80% of market rent’ – levels that are by common consent not ‘affordable’ in high rent areas by people on low or modest incomes.  Thirdly, it is linked to the ending of security of tenure and the introduction of insecure fixed term tenancies.  And fourthly, the programme is part funded by taking a large number of existing social rented homes that become available to let and ‘converting’ them into ‘affordable rent’ lettings at much higher rents.
The Government has boasted about the number of new AR homes that will be provided as evidence of their commitment to ’affordable homes’.   But simple questions about the programme, like the range of rents to be charged, the average rents in each local authority area, the bedroom size of the accommodation being built, and the number of existing social homes to be ‘converted’ have not been answered.
Freedom of Information requests that I have put in to the Mayor of London (see here) and to the Communities department have begun to elicit some of the missing information about the planned programme as a whole.  The recent ‘CORE’ statistics also revealed some information about lettings to the first homes produced, but that is inevitably an early and small sample (around 4,600 lets).
The response from CLG – rather less tardy and grudging with the information than the Mayor, I have to say in passing – is based on the original bids made by providers last year, which may have changed before the final contract was signed and may change again as the programme is implemented.  It is extraordinary that more up to date and detailed monitoring is not taking place.  However, the FoI reveals:

• The average ‘affordable rent’ per unit will be £6,909 a year (£133 a week) across England.  This is 72.6% of the assessed market rent for these properties (which averages £9,513 a year).

The average figures for each of the operational regions are as follows:
Region                                  Affordable Rent            Market Rent       % of market rent
East/South East                                   7,050                        9,099                        77.5%
London                                                  9,487                       14,584                        65.1%
Midlands                                              5,684                         7,208                        78.9%
North East/Yorks & H                       5,195                          6,684                        77.7%
North West                                          5,411                           6,810                        79.5%
South/South West                             6,511                           8,345                        78.0%
ENGLAND                                          6,909                          9,513                         72.6%

• More than 82,000 social rented homes will be hijacked – ie ‘converted’ to ‘affordable rent’ in England –  to help pay for the programme.

In terms of operational regions, this means that the number of social rented homes that will now not be available for letting at social rents will be:
16,504 – East/South East;
14,632 – London;
11,801 – Midlands;
11,810 – North East/Yorkshire/Humber;
17,092 – North West;
10,542 – South/South West.
Total 82,381 – England.
On conversion, the average rent for these homes will increase from £4,625 to £5,724, an uplift of £1,099 on average across the country.  The uplift will range from £625 in NE/Y/H to £2,142 in London.  These conversions will therefore subsidise the Affordable Rent programme by around £90m a year.
Information was NOT COLLECTED on bedroom size categories and the rents that would be charged for each, despite the fact that this was one of the controversial areas of the policy – and maximising the number of family units was an explicit objective of the policy, at least in London.  It was also widely reported that some housing associations were so worried about the high rents they would have to charge for family accommodation that they were raising rents on small units to cross-subsidise larger ones.  It is surely right that information should be in the public arena to determine whether the outcome was fair and reasonable.
CLG point to the guidance that has been published previously about the programme notably the Affordable Homes Framework and the procedure for assessing market rents.
The AR programme causes different problems in different parts of the country.  In high value areas the relationship with market rents leads to rents that are way above what is normally regarded as ‘affordable’.  Yet in low value areas a rent of 80% of market might be lower than the local ‘target rent’ for social rented homes, which is then used as a floor in the calculation of an AR rent.  That helps explain why rents are closer to market levels in the cheaper parts of the country.
In London the average rent in some providers’ contracts is as high as £305 a week.  We do not know how this varies according to the bedroom size of the property, but it is a large sum of money in anyone’s terms.  In their desperation to make the scheme work the Government is letting housing benefit take the strain in the first instance, but no-one believes that this will be sustained in the medium term and when the new Universal Credit system is introduced.
The loss of more than 82,000 socially rented homes is a huge blow to the supply of genuinely affordable homes.  The programme itself is back-loaded, so most homes will be produced in the third year, but it is not known when the impact of ‘conversions’ will be felt.  But it will be soon and it will be severe.
These homes were built on the basis that they would be let to tenants at social rents and they have been hijacked to support the new programme financially.

Report by Secretary of Labour Housing Group, Paul Eastwood
Housing was top of the agenda at the Labour Party Conference in Manchester this week, with the announcement from Ed Balls to commit to building 100k new homes a year warmly welcomed. At several workshops, Jack Dromey also reinforced the message for housing to be a main campaigning priority between now and the General Election, and for us to aim to revive the construction industry and build our way out of recession. Jack made clear that Right To Buy under a future Labour Government would be conditional on a new home being built for every home that was sold.
Labour Housing Group submitted a ‘contemporary motion’, which was included in a composite that was discussed at the sustainable communities debate. In the contemporary issues ballot, housing received the highest number of overall votes (2.6 million votes from CLPs and Affiliates ), ahead of Banking, Growth, and Jobs; Economic Alternative; and Employment Rights.
Within its motion, LHG asked Conference to note the following key points:

• we are facing a housing crisis. The social and personal impacts of this are with us now

• the proposals in August from the Policy Exchange recommending the sale of Councils’ most “valuable” properties as a way to fund new house building should be condemned. We must protect the social housing stock, and add to it wherever possible.

• in the last quarter only 21,540 new homes were completed, with a 97% collapse in provision of affordable homes, and a 68% reduction in provision of social homes in 2011/12.  This year capital funding has been slashed by 63%

• by cutting investment in housing this Government is making the crisis worse not better. Investing in housing will help us build our way out of recession

LHG asked for:

• an emergency tax on bankers’ bonuses, to provide new homes, create new jobs, and reduce payments of welfare benefits

• a condemnation of the recent relaxation of planning requirements to provide affordable housing, and asks the Party to commit to a programme of building homes let on properly affordable rents, and with long term security of tenure.

In addition to LHG’s proposals, the composite motion on housing called for:

• better regulation of private lettings, to protect tenants and responsible landlords

• reforms of the Right To Buy ensuring that all receipts are retained locally and  ring fenced for reinvestment in housing

The motion urged Conference to:

• make addressing the housing crisis a top priority

• ensure “affordable housing” was affordable to those on modest wages

• prioritise the social house building programme

• invest in green technologies, sustainable materials, and carbon neutral housing

• introduce rules to ensure that companies building social housing employ and train apprentices

• reaffirm Nye Bevan’s vision of mixed communities living side by side, in homes of high quality at an affordable price.

TV is an incredibly powerful medium and last night’s Newsnight investigation into the use of bed and breakfast accommodation for homeless families got the point across more effectively than a hundred reports.  If you missed it, make sure to check it out on BBC i-player.
Tim Whewell has an understated style and gave clear explanations both of the policies that have led to a new explosion in the use of B&Bs and of the laws that are being broken by councils.  The families that featured were articulate and were given an opportunity to explain their circumstances and the issues they faced.
Essentially, a number of councils, mainly in London, have faced a surge in homelessness and they have a duty to secure accommodation at least whilst enquiries are undertaken.  Having kept the use of B&B under firm control for many years now, the lack of available accommodation at an acceptable price – the Government were warned! – has once again led to families being kept in B&B longer than the statutory maximum of 6 weeks and at huge cost to local taxpayers.  Conditions, as we saw in the programme, which featured Croydon, are often scandalous: we saw examples of dangerous overcrowding, with families virtually living on a bed in a room with no circulation space, wholly inadequate bathing, toileting and cooking facilities, fire hazards and infestation.  Owners are making money hand over fist.
The numbers have risen alarmingly over the last two years and the programme revealed a significant amount of denial and buck passing.  Jon Rouse, ironically the former chief executive of the Housing Corporation and now of Croydon Council, tried to pretend all was well and under control when the evidence of the film was the complete opposite.  How he can claim the properties were regularly inspected is beyond me and was clearly beyond the evidence gathered by the indpependent environmental health officer used in the investigation.
Buck passing was clearly central to the briefing given to new Lib Dem Minister for defending the indefensible, Don Foster – who was almost as embarrassing on his first Newsnight interview as his boss Nick Boles when he appeared last month after the reshuffle to talk about planning.  Foster was fresh from the Lib Dem Conference where a new policy was agreed which completely contradicts everything he will now be doing in Government.  But his main line of defence – we give these councils money to manage homelessness, so it’s their fault not ours – reminded me of the great Michael Green, sorry Grant Shapps, when he was Housing Minister.  At least Shapps didn’t hide like his replacement, Mark Prisk, who should have fronted this rather than leaving it the rather lost and hopeless Foster.  Shapps also tried to blame the councils, last year writing cheekily to the worst offenders expressing his shock at the use of B&B, but it is a localist con.  The fault for lack of supply and the increasingly harsh attitude to the homeless lies firmly with central Government.
Whewell’s report gave me a strong sense of deja vu.  It was so reminiscent of the 1980s when a range of councils reached a sudden tipping point and couldn’t keep up with the numbers of families becoming homeless.  Low emergency use of B&Bs turned into frequent use and then before anyone knew where they were it was out of control.  Hundreds, thousands of people in hotels across the whole country.  It took years to get it back under effective management, at huge cost to the people involved.  We are now looking over the same precipice.
The most depressing echoes of the 1980s were the conditions the families were living in, the rooms, the hallways, the bathrooms, the kitchens, and their desperation.  Not even Nick Knowles could take that on.  No doubt next week we will get flowery language from Cameron Gove and Pickles about their commitment to children getting a good start in life.  But the true impact of their policies can be found in the hotels of Croydon.

Ed Balls’ commitment to using funding from the sale of 4G telephone licenses to support an extra 100,000 affordable homes and to enable the suspension of stamp duty on homes costing less than £250,000 was creative and very welcome.
It is welcome because it would be a genuine Keynesian stimulus which would help the economy in the most effective way possible – unlike many other infrastructure projects, new homes can be brought forward more quickly and housebuilding is an efficient way to create jobs and additional demand in the materials and support industries, cutting the deficit by putting people back to work, off benefits and paying tax.
It is also welcome because it shows that the arguments made in the Labour Party that housing should get higher priority are at last being listened to, and that Hilary Benn and Jack Dromey are proving to be an effective front-bench team.
The plan is that the 100,000 additional homes should comprise 50% shared ownership, 35% sub-market rent and 15% social rent.  Added to the 25,000 social rented homes already promised, which would be funded from the Bankers’ Bonus Tax, this brings the commitment to social rent up to 40,000.  This is vitally important as a signal to the sector that social rent is not dead as some like to claim. Added to the potential output of social rented homes from other sources – section 106 and homes on public land – we are seeing the start of a significant and desperately needed new programme.
Although getting the number of new homes up is important, there is a growing debate that it is not numbers alone that matter.  Not only are there issues around quality and the reinstatement of a commitment to mixed communities, there are doubts about the affordability of shared ownership in high value areas, and the purpose of sub-market rented homes needs to be clarified.
There is an important place  for ‘intermediate housing’ but rents of up to 80% of market rents cannot be seen as an answer to the housing needs of people on low incomes in high rent areas.  The idea for intermediate homes – normally shared ownership and sub-market rent – was to fill the gap between social rent and market homes, to meet the needs of people who would not qualify for the former and could not afford the latter, often key workers.  It was also a mechanism for delivering mixed communities.
We need a policy that gets a suitable mix between private. intermediate and social housing but it is in my view vital to maximise the latter wherever possible because these are the homes that will have the most direct impact on the most extreme forms of housing need.  I would be willing to trade more social rented homes (which need more initial subsidy) for fewer homes overall, and I think this needs to be debated over the coming months.
The Coalition’s concept of ‘affordable rent’ is an abomination.  It pretends that these homes are for the same people as would previously qualify for social rent, but the costs are vast for people on low incomes and the level of rents will not be supported by housing benefits in the longer term.
‘Affordable Rent’ is not about meeting need.  It has been devised to change the structure of social housing in the country – to make a permanent shift away from a norm of social rents at around 40% of market rates to a norm of ‘affordable rents’ at up to 80% of market rates, allied to the removal of security of tenure.  By holding down pay and benefits whilst increasing rents, the Government will increase the share of income taken by housing costs and gets us used to the idea of market rents for social homes.  It is a short intellectual step from ‘affordable rent’ to saying that the market might as well be left to provide all rented housing.
So far Jack Dromey has avoided the trap of being seen to endorse ‘Affordable Rent’ but we are undoubtably in a period where the numbers game is being played, driven by the broader economic need to promote growth.  So there is a focus on who can build the most homes, irrespective of what they are.  The housing question is more complex than that.  Despite the huge housing shortage, it is not always the case that getting the maximum number of new homes built is the right answer.  Just as thousands of apartments with river views being sold to foreign millionaires does little to help the overall balance of supply and demand, so building homes at ‘affordable rents’ without security of tenure will prove to be of little help to most people on housing waiting lists.

This opinion article was published in Inside Housing today.

Steve Hilditch
The Liberal Democrats’ new housing plans contradict everything the party is doing in government.
The housing policies being implemented by the coalition government bear almost no relation to manifestos offered by the Liberal Democrat or Conservative parties at the 2010 general election.
The nearest thing to a real agenda for the coalition was written by a think tank, Localis, which set out a long list of policies including reduced security of tenure for social tenants, the move towards market rents, and deregulation, all of which have been followed.
In terms of backtracking on manifesto promises, housing is another area where deputy prime minister Nick Clegg might consider an apology. At the Lib Dems’ autumn conference in Brighton, the party started again, debating a detailed new housing policy. It highlights growing unaffordability in all tenures, the instability of private renting, and the health and educational impacts of bad housing. It also features the economic benefits of building homes.
Specific commitments include building 300,000 homes a year, tackling land supply and land banking, providing greater ‘protection’ for private tenants, a stronger social housing regulator, including reinstating inspections, and localising the right to buy. Further work is to be done on the thorny issue of housing benefit.
It is extraordinary to read a document from a coalition partner that contradicts almost everything that the self-same party is pursuing in government. Lib Dem spokespeople defend the 60 per cent cut in housing investment while the party makes clear that housing investment is an excellent way to boost the economy. They defend the ending of support for new social rented homes while the party is advocating more. The party argues for more consumer regulation while it is also ending it. They support a change in the borrowing rules, thereby ‘potentially releasing some £50 billion investment in affordable housing’, and using quantitative easing to buy housing bonds, without explaining why they have not pursued these options in government.
What is perhaps most extraordinary is that, by replacing the words ‘Lib Dem’ with the word ‘Labour’, the document would be applauded to the heavens at Labour’s conference in Manchester next week. Oppositions are notoriously reluctant at this stage of a parliament to come forward with spending commitments and Labour has been cautious to say the least. Ed Balls proposes another bankers bonus tax to fund new social housing while Hilary Benn and Jack Dromey have developed detailed new policies for the private rented sector – very welcome but with no new spending.
If Labour adopted the new Lib Dem policy statement I would be content. One thing is certain – doing a deal with Labour is the only way Mr Clegg’s party will actually see its policies pursued in government.
Steve Hilditch co-edits Red Brick blog

The original version of this post was based on information supplied by the GLA under Freedom of Information, some of which proved to be wrong.  The post has therefore been revised to take account of the correct information since supplied by the GLA.  Our apologies if any confusion has been caused.
Despite all the talk of transparency, it has taken several Freedom of Information requests to get information about the rents that are likely to be charged for homes in Boris Johnson’s ‘affordable rent’ programme in London.
Arguments deployed by the mayor have included that the information is commercially sensitive and that it would be too expensive to collect.  The mayor, who runs the investment programme in London, is still saying that information cannot be provided which shows how the rents vary according to different bedroom sizes, and has not yet provided information about how many previously socially rented homes have been converted to ‘affordable rent’ to help pay for the programme.
The information requested would seem to me to be the basic requirements of a monitoring system.  Without it, it would be impossible for a responsible public authority to demonstrate value for money and that the scheme as a whole is meting housing objectives, for example the mayor’s commitment to provide more family homes.  It is also a basic requirement that the information should be made public so that there can be scrutiny of the programme.  And of course the delivery agents, predominantly housing associations, are notoriously secretive about their development programmes and are not themselves subject to Freedom of Information.  ‘Affordable Rent’ is certainly not a transparent programme, indeed it is fair to say it remains shrouded in secrecy.
So what does the information that has been released tell us?
Data are provided for 60 providers delivering 23,872 homes (affordable rent and affordable home ownership together, this number is not broken down), presumably over the next three years.  It is likely that some contracts have not yet been signed and so are not included at this stage.  The average annual gross affordable rent including service charge per unit is £9,454.  The average market rent for the homes is assessed to be £14,598 meaning that the average ‘affordable rent’ is 64.8% of the market rent.
The lowest charging provider has set rents at 35.1% of the market rent, which is within the range of normal social rents.  It would be fascinating to know how this was achieved or what particular features of this scheme made it possible.
The highest charging provider quotes average rent of £15,841 per unit per year, 70.8% of assessed market rent of £22,360.  That’s £305 a week – on average, so some rents from this provider will be even higher.
There is no explanation of the variation in rents and charges, but it is likely that pressure from some London boroughs and the determination of some providers to keep rents reasonable has had some effect.  Some of the variation will also be explained by the number of larger units in the scheme.
Provider contracts also vary in size, with the smallest being for a mere 14 homes and the largest 2,310 (at an average charge of £10,881 per annum).
The Government has maintained its position that ‘affordable rent’ homes will be let to the same pool of people as existing social rented homes.
But at an average charge of £182 a week, and some rising into the £300s, it is hard to see who many of these homes will be let to.

Headlines everywhere today (see Guardian and BBC for starters) for a report written for the Confederation of British Industry (CBI) by an outfit called Oxford Economics on the great benefits to be gained from a comprehensive extension of the outsourcing of public services.  Huge figures are bandied about, including claimed savings of over £23 billion a year across the public sector.  And of course there are claims that this would also lead to major improvements in the quality of services as well.
My attention was drawn to the fact that social housing management was top of the list.  Their ‘research’ showed that:

• the ‘cost of managing the UK’s 5.3 million social housing units’ is £4.6 billion.
• 98% of social housing management by value is still managed by the public sector.
• there are £675m of ‘potential productivity savings’ from opening up social housing management to competition – getting on for 15%.

It really is hard to know where to start with the economic illiteracy of their report insofar as it applies to housing.
But let us start with the fact that to get to 5.3 million social housing units they would have to include the entire stock of housing owned by housing associations, which are already ‘private sector’ organisations.  The always dependable UK Housing Review puts the figure for the England Scotland and Wales at 4.7 million dwellings.  Of these, 2.6 million are owned by housing associations.  Quite how 98% of housing association stock is managed by ‘the public sector’ is unexplained.  And do they know why most housing associations, with an eye to the bottom line, still do not outsource their housing management?
The authors make big claims for the veracity of their data but the whole edifice is undermined by such a basic error.  We are in the era of apologies so they could start by apologising for bad research, ignorance of their subject, and totally misleading conclusions.
Secondly, they do not define housing management.  As they measure it by value, they should explain what is included – for example repairs, maintenance and contracted swervices such as security and rubbish clearance – services that are critical to the cost and quality of housing management budgets which are alredy mainly delivered by the private sector.
Thirdly, the authors appear to know nothing about history and in particular the complete failure of the 1990s policy of Housing Management Compulsory Competitive Tendering.  The experience then was that you cannot create a market out of nothing overnight.  There were virtually no firms capable of putting together a coherent bid let alone provide the service.  Today, there are a few competent firms but they have hardly set the market alight.  To make the kind of savings the CBI claims, virtually all housing management would have to be outsourced (including that which is already in the private sector!) within 3 years.  That would be an impossible task even if everyone was in favour of doing it.
Fourthly, they do not produce evidence to support their claims about the efficiency savings made by existing outsourcing arrangments (which they use as the basis for extrapolation to the whole sector).
Fifthly, they do not show how they deal with other factors that make cost comparisons unreliable.  The experience of HMCCT and other market testing of housing services shows that the process of writing specifications, in consultation with tenants, leads to the service being redefined and reframed, so that what is tendered is often markedly different from what was previously provided.  (Indeed, developing service specifications was the only significant achievement of the whole HM CCT debacle).  They do not make clear what assumptions have been made in relation to the calculation of overheads or the provision of support services (a significant part of local authority housing management is provided by other parts of the council under service agreements or contracts).  In short, I wouldn’t place any reliance at all on their cost calculations.
Finally, they don’t appear to have heard of tenants or that they might want an input into the decision as to who should manage their homes.
Dave Prentis, general secretary of Unison, the largest public sector workers’ union, is quoted as being ‘sceptical’ about the report.  He said its figures had been ‘plucked from thin air’ and are ‘fundamentally flawed’.  Quite.

Grant Shapps was born to entertain us.
Today the Guardian told us the story of Shapps posing as a ‘web guru at $3,000-a-head Las Vegas conference’ in his double life as ‘Michael Green’.  They claim that Shapps said he was a ‘web marketer’ named Michael Green and ran a company charging callers £183 an hour for internet advice.
On Wednesday, the Telegraph revealed the latest chapter in the story of 9 Madryn Street, Dingle.  Back in 2010, when the house – in which Ringo Starr lived for four years – was lined up for demolition, the great localiser stepped in and ‘saved’ it with a fanfare.
Quite what 9 Madryn Street had to do with the Housing Minister for the whole country is not clear.  Forgive the thought but he may have been trying to court some popularity – at one stage he travelled to Liverpool to have his picture taken outside – the house was ‘a significant beacon of Beatlemania’ he said.
When the original story broke there was a rush of blood to the head in the CLG Press Office.  Well it was that time of year, between Christmas and New Year, when anyone working is suffering a little and needs some light relief.  So they quoted our star performer saying ‘Let It Be’ and he must have been delighted by the widespread and friendly coverage he got, a Minister so modern he has heard of the Beatles!   But the challenge had been thrown down and a retaliatory Red Brick post, March of the Meanies, squeezed 8 Beatles song titles into 2 short paragraphs in amongst a couple of serious points about the contradictions of localism and the Minister’s willingness to say anything to get a headline.
This week the Telegraph alleged that the self-same Mr Shapps later ‘accidentally signed off’ approval for the house to be demolished as part of a wider decision to demolish houses in Pathfinder areas, which the Government opposed but then approved and funded.  To be fair, as we scrupulously are, Shapps has since rubbished this on Twitter.  The Telegraph  – normally we wouldn’t dream of doubting them – says there will now be a full judicial review where no doubt more evidence will emerge.
Picking a headline for this post was really difficult.  Beatles song titles offer so much scope for satire.  Fixing a Hole?  I should have known better?  The Fool on the Hill?  Bad Boy? Nowhere Man?  But in the end, it had to be Everybody’s Got Something to Hide Except Me and My Monkey.

In the early 1970s I went to Berlin for a European conference of community activists. At the time I was doing community work in north Paddington, working mainly with tenants living in private rented accommodation subject to the pressures of gentrification and with council tenants on poorly-managed Westminster and GLC estates.
Berlin was an extraordinary contrast, the close juxtaposition of a capitalist city and a communist city, separated only by a wall.  In West Berlin, we saw much high quality housing but also large areas of appalling slums where local community activists worked with working class tenants and squatters to argue for improvements.  One day we went from the American sector through Checkpoint Charlie, across no-man’s land under the scrutiny of machine gun towers, and into the East.  Wandering about randomly we found rows and rows of concrete apartment blocks, workers’ housing that met a certain standard but could only be described as drab and uniform. 

Today saw the launch of the report – ‘To have or Have Not?’ – of the Housing Voice Inquiry , the progress of which we have covered on Red Brick before. As an independent report produced with the involvement of people from all the major political parties and all the major housing interest groups, it will hopefully carry some weight and increase the pressure for action.