By regular guest blogger Monimbo
Once again the Daily Mail is the favoured news outlet for a government minister, and once again it fails to check if he’s actually right. This time the story is about 6,000 council tenants who allegedly earn more than £100,000 per year, and how Mr Shapps wants to make sure they either leave their homes or pay a market rent, because they are costing the taxpayer more than £100 million. Poor Frank Dobson is rolled out once more as the prime example.
Let’s take a look at some of the facts. First, the article says that not only do 6,000 council tenants earn more than £100k but that 720,000 earn more than the national average wage. What we know is that 18,000 council tenants were identified as earning more than £50k annually in the English Housing Survey, so it’s perfectly possible that Grant Shapps has got his staff to break these figures down further and has found that one third of this group earn over £100k. Let’s give him the benefit of the doubt. What is implausible is that 720,000 households earn above the average wage: the true figure of council tenants earning more than £20k annually is 405,000, and earning more than £30k is much smaller at 154,000. The Mail is confusing council tenants with all social tenants.
Now it’s important to remember that citing these figures does not mean that anyone knows where these 6,000 high earners actually are. The figures are based on sample surveys, grossed up to apply to all English households. Apart from a few celebrity cases like Frank, neither Mr Shapps or anyone else could identify the culprits.
Mr Shapps wants to introduce an upper income level above which tenants will have to pay full market rents. But the obstacles he faces are formidable: first, it needs legislation with some careful wording, then it needs a way of rewriting existing tenancy agreements to change the tenancy terms of households who have probably enjoyed them for many years, and then it needs to impose a means test on people who almost certainly have never had to reveal their incomes to the council (e.g. to claim housing benefit).
Finally, given that rent-setting is and for many years has been a power that rests with councils and not with government, he needs a way of telling Camden council to raise Frank’s rent. The irony, of course, is that he’s floating these plans at the very time when he’s giving councils even more freedom over their council housing finances.
The other part of the Mail’s story is, of course, that it’s the taxpayer who is subsidising these high earning tenants, and who will therefore get the benefit if they pay their full whack. Wrong on both counts. It might suit Mr Shapps in peddling the story to the Mail to woo their tax-paying readers, but as he well knows they don’t subsidise council housing. If high earners pay more, it’s councils and other tenants who will benefit. If high earners move out, which is what he and the Mail seem to want, there will be no savings at all, simply a new tenant paying the same rent. Of course it would free up a council house, but that isn’t a direct saving to the taxpayer.
There is sufficient confusion in the financial aspects of this story that I haven’t even touched on the arguments for having a number of better-off people in council housing, and I’m sure Red Brick readers are well aware of the case that can be made. The next time the Daily Mail links council estates with the riots or the chronically work-shy, it might pause to ask what the opposite might be. Having a few more people living in those estates who have good jobs and earn above the average wage, perhaps?
Last week the Metro carried a sensible article about the rise in the number of people being forced out of their homes by mortgage lenders or landlords. 16,600 properties were repossessed in the third quarter of 2011, a rise of 20%.
The article clearly pointed out, in the second paragraph, that ‘nearly half of the repossessions were carried out on behalf of mortgage lenders, while 5,140 tenants were evicted for social landlords and another 1,627 on behalf of private landlords.’ They quoted an expert claiming that the numbers would continue to rise as unemployment continued to bite.
So far no surprise, but the article provoked a little tantrum from our housing minister. It was ‘Inaccurate and misleading’ he said. And why? Well, it was because the article was ‘lumping together statistics of homeowners, social tenants and private tenants’. He then went on to say that the number of home owner repossessions was expected to be below the initial forecast made by the Council of Mortgage Lenders (good) and he set out the help the Government is offering to mortgage holders.
Now the original article was not about tenure but about people losing their homes, whatever their tenure and whatever their circumstances. Each of those is a tragedy and, as the article said, it will get worse before it gets better. From a human point of view, the loss of your home under forced circumstances has huge implications for any individual or family. But there isn’t a hierarchy that says that repossession of a home owner is somehow more important than that of a social or a private tenant. The whole feel of Shapps’ response is that the latter two don’t matter much, but look how much we care about home owners. After all, the tenants probably deserved it.
So my advice to the Metro, well done on the article and carry on ‘lumping together’ people who are victims of the recession . Counting people is always more important. And getting up Grant’s nose proves that this time you got it right.
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In Praise of Mr Osborne
No, not that Mr Osborne, but Patrick Osborne, the former Buy-to-Let landlord featured in today’s Guardian.
Mr Osborne has quit being a landlord because:
“It’s not nice to profit from someone else’s need to sleep somewhere. I think it’s wrong some landlords have strings of properties. It restricts supply, and tenants have very few rights, or aren’t aware of rights they do have.”
Unlike many landlords and their representatives, Mr Osborne is honest about:
- The conditions some tenants face :
“You hear all kinds of horror stories, such as three months’ rent in advance, or houses let out that aren’t safe but if tenants say anything they’re evicted.”
- The favourable tax treatment he received:
“I was quite surprised by how much I could set against tax and that was without hiring a flashy accountant, so I probably could’ve claimed more. The tax rules were, believe me, very generous.”
He took his responsibilities seriously and when he asked his tenants to move on gave them six months notice, when two would have done.
It’s a shame he’s quit being a landlord. Who knows who lets out the home he once owned and on what terms.
Most renters have had a range of experiences with landlords – many have had dreadful experiences; unsafe homes, nicked deposits, last minute evictions. Most have had good experiences with trustworthy landlords.
The problem is that you just don’t know what you’ll get when you sign the tenancy, and that’s why we need better regulation and better enforcement of the rules we have.
Such regulation wouldn’t impose any extra costs and duties on landlords like Patrick Osborne, who provide a safe and secure home for the longer term anyway. It would force the others out of the market or get them to up their game.
Even The Economist agrees that:
When demand outstrips supply against a background of profound housing need, tough action is required.
If that bastion of the free-market thinks state action is needed, then Grant Shapps’ charge that regulation is red tape can hardly stick. His views on the situation for private renters are increasingly divorced from reality:
“I am satisfied that the current system strikes the right balance between the rights and responsibilities of tenants and landlords … the Government has no plans to create any burdensome red tape and bureaucracy.”
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Ending the ‘tenants tax’?
By Monimbo
We’ve got used to the housing minister trying to have his cake and eat it, but even he doesn’t usually manage to do it with several cakes in the same mouthful. This week though, he announced the end of the ‘tenants tax’ and ‘gave councils the freedom they need to build homes in their area’. Both of these would be good moves, but is this actually what he’s doing?
First of all, his ‘freedom’ is of course circumscribed: when self-financing of council housing starts on 1st April, all councils will be subject to a cap on their borrowing. So they won’t have the freedom to borrow to the levels that the prudential borrowing rules – that apply to all council finances – would allow. Some councils will still have enough ‘headroom’ to borrow and build more, but by no means as much as they could do if they were simply allowed to follow the normal rules.
Regular readers of Red Brick will know that this is because council housing is still included in the government’s main public sector borrowing measure, when it doesn’t need to be. Real ‘freedom’ would mean removing the caps – and council borrowing would still be limited to what they could repay from their income under prudential rules.
The ‘tax on tenants’ is Mr Shapps’ recognition of arguments long put by Defend Council Housing and many others, that when council housing makes a surplus (as it has since 2008) tenants are effectively paying a tax, because their rents are higher than they need to be and money is being skimmed off by the Treasury. Working tenants who don’t get housing benefit, in particular, really have been paying a tax.
Now it’s true that under self-financing any spare rental income will no longer go to the Exchequer and will be kept by councils, but that’s because the very same Exchequer has loaded councils with extra debt, which will go across to government on 1st April, as the price for self-financing. This is to compensate the government for the massive revenue the ‘tenants tax’ would have produced had it remained in place.
To be fair to Mr Shapps (as Red Brick always is), this was going to happen under Labour’s plans too. Rents are assumed to grow with RPI, with rents set every April based on inflation in the previous September plus an extra amount to bring them closer to HA rents. It just so happens that last September inflation was exceptionally high. This has enabled the Treasury to jack up the extra debt to a whopping £8bn, and has created headlines about massive rent increases, especially inLondon.
Given that the government is determined to reduce the deficit, it’s perhaps not surprising that it has grabbed the money. Because while on Treasury definitions this debt is only moving within the public sector, on international measures the £8bn will reduce the ratio of General Government Debt to GDP, which is a key measure in determining things like the UK’s credit rating (for a more detailed explanation, see the UK Housing Review).
There is of course an alternative, if the government had really wanted councils to have more freedom. Instead of taking the money, it could have increased the headroom given to councils. This would have had two advantages for beleaguered councils. One is that they could plan to borrow and invest more. The other is that they could have reduced their rent increases. Or indeed a mix of the two. Either way the benefits would have stayed at local level. Instead, rather than abolish the ‘tenants tax’, Mr Shapps has actually increased it.
Back to those cakes. If the minister agrees that tenants have been paying a ‘long-standing’ tenants tax, how come that at the same time he can argue that councils tenants are ‘fantastically subsidised’?
London Labour Housing Group’s ‘Fair Deal for London Housing’ campaign is getting under way with the launch of a new Facebook Group and a new Twitter feed.
The Fair Deal for London Housing Facebook Group aims to connect people with an interest in progressive housing policies for London who are also interested in campaigning for change.
The Twitter feed @FairDealLdnHsg aims to provide a flow of information and ideas to support housing campaigns in London.
London Labour Housing Group strongly supports Ken Livingstone’s campaign to become Mayor and Labour’s candidates for the London Assembly. LLHG has helped develop houisng policies for the campaign and welcomes Ken’s early announcements on planning for London housing, the campaign for a London Living Rent, and plans for a London-wide not-for-profit lettings agency.
More information on Ken’s policies and housing campaigning in London can be found as follows:
On the web:
Ken Livingstone’s website: http://www.kenlivingstone.com/
Labour Housing Group webpage: http://www.labourhousing.co.uk/
Labour London spokesperson on housing Nicky Gavron: http://nickygavron.wordpress.com/
Red Brick blog: http://redbrickblog.wordpress.com/
On Facebook
Ken Livingstone http://www.facebook.com/ken4london
Labour Housing Group http://www.facebook.com/#!/pages/Labour-Housing-Group/247469867388
London LHG Fair Deal for London Housing http://www.facebook.com/#!/groups/FairDealforLondonHousing/
On Twitter:
Ken Livingstone @ken4london
Labour Housing Group @LabourHousing
London Labour Housing Group @FairDealLdnHsg
Red Brick Twitterers: @SteveHilditch @tonyclements1
Other Labour Housing Group Twitterers @RossSHouston @Scarletstand @JackDromeyMP
It appears there is universal agreement that ‘Sir’ Fred Goodwin should lose his knighthood ‘for services to banking’ given that his principle service was to destroy the Royal Bank of Scotland and help precipitate the banking crisis that in turn led to the deficit crisis that in turn led to the huge cuts we are all faced with now. I agree with this consensus.
But Fred is to banking what Shirley Porter is to local government. Lest we forget, for her ‘services to local government’ John Major made her a Dame Commander of the British Empire. Her principle service was to deliver a Tory victory in Westminster in 1990 after Labour nearly grabbed control of the Tory flagship in 1986.
Imagine socialists lording it over Buckingham Palace, Porter is said to have warned as she embarked on the worst case of political corruption in modern local government history. Eventually she was condemned by the Law Lords for ‘gerrymandering’ by seeking to sell off council homes to people more likely to vote Tory – the infamous ‘Homes for Votes’ case – and ordered to pay back £42 million to the electors of Westminster for the losses sustained. Eventually she settled – with the Tory Council of course – and paid £12.3 million back.
The now deputy mayor of London, fellow Tory Kit Malthouse, said “The highest court in the land found her guilty of gerrymandering. There isn’t a much worse offence than that in politics. It is definitely up there in the hall of infamy.”
The proposition that she should be stripped of her Damehood has been put forward many times. It is said that Deputy Prime Minister John Prescott instructed that the procedure should be set in motion in 2003 but nothing came of it. Labour MPs and the Labour Group on Westminster have called for it many times, as has Ken Livingstone, who also called for her to be prosecuted for perjury during the various Court hearings for the Homes for Votes case. Nothing has happened on either count.
Although local Tories have apologised for her actions, so far as I know no national Tory Leader has ever addressed the issue since John Major promised he would apologise on behalf of the Tory Party if the case was found against her when all the court hearings and appeals were finished. They were and he didn’t, nor did any of his successors.
So, David Cameron, now that you have dusted off the procedure for a disgraced banker, lets use it again for a disgraced Tory. Or could it be that it would be too embarrassing to do so given the uncomfortable fact that the central policy that she was condemned for – driving the poor out of inner London – is now the mainstream policy of the Government?
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Out and About
I may have been quiet on the blog recently (thanks Steve as ever for holding the fort), but I’ve been out and about speaking on housing at Labour meetings.
I thought I’d report back on a few of the themes and interests.
Housing is as close to the hearts of Labour members as ever and the debates and discussions have been energetic and very well informed.
I was especially pleased to find some people advocating wealth and property taxes. I’m a fan of reducing taxation on working people’s income by increasing it on unearned wealth – and Britain’s top-end house prices are a good place to start.
The generational divide is clearly on display. Younger Labour members, especially in London, know their chances of owning a home are slim unless they’ve got parents to help them out. Those of us under a certain age have a litany of dodgy landlord stories – nicked deposits, sudden ending of leases and shoddy repairs (when you could get them done). Increasingly, poor quality housing is an issue that younger people higher up the income chain are experiencing. It’s further proof that Ken’s campaign is onto something – uniting the interests of those on low and middle incomes.
Labour members also haven’t forgotten the difference a Labour government made. Many were pleased to see their councils building some council housing for the first-time and there’s always been someone speaking up for the decent homes programme. The latter is one of those things that isn’t headline worthy, but was one of those programmes that has a big impact on the lives of those who benefitted.
The toughest question I’ve had is how to turn £25bn of housing benefit paid every year into investment in new homes, without borrowing more upfront (answers on a postcard). Though the person who posed this question I’m sure had some ideas himself.
It’s been good to hear members’ housing stories, good and bad. Here’s an excerpt of a story someone sent to us at the meeting:
“I am a local Labour member. I had wished to attend the general meeting but I am working. I just wanted to share my view on housing. I am 20 years old and live in a two bedroom council house with 5 other family members. From personal experience I can’t stress enough the importance of housing, especially those with a poorer income. Often it is education that is key to getting people out of poverty but poor housing has a bad effect on children’s education. Housing can also play a huge role in determining someone’s quality of life. In my case it has put a huge strain on family relations and often with housing being the main cause of arguments between my parents. For me my housing situation has added to pressures that teenagers face. I have no space of my own and it has made me easily irritable”.
Our correspondent also had a suggestion:
“People in houses like mine have empty space in there attics. Perhaps if they were developed via loft conversions it would ease some of the housing pains? I know if the space in my attic was converted it would ease the tension in my house”
An exceptionally reasonable request given the circumstances – no ‘culture of entitlement’ here, we’ll leave that to this bloke.
If you’d like a speaker on housing for your local meeting, just drop us a line and we can normally send someone along. [email protected]
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Howay The Lads
I really never thought the opportunity would arise to write a single blog post about both my passions at the same time – that’s housing and Newcastle United. You have to admit it’s an unlikely combination, but writing it has cheered me up after last week’s defeat at Fulham.
The slightly tortuous link is that current Newcastle Manager Alan Pardew has opened Four Housing Group’s new £2.7m Sports and Social Integration Academy in Gateshead.
The Academy has been developed in conjunction with Gateshead Council and Gateshead Redheugh junior football club, which has 18 teams from age 6 to 19 playing in leagues or friendlies. It is well known for producing top talent, including Paul Gascoigne.
The Academy will house 16-25 year old young people who are currently homeless, with 24-hour support provided by the Cyrenians, and will provide sporting facilities for residents and the local community.
Pardew said: “It’s a real honour to open the Academy. I genuinely believe the project will not only help improve the lives of people in the city but also provide opportunities for developing home-grown talent. That’s something we’re really passionate about at Newcastle United so it’s great to see initiatives like this. You never know, the next Steven Taylor could result from this project.”
The Redheugh Club will provide high quality sporting facilities including four full fixed football pitches and changing rooms. Eventually an all weather 3G pitch will be available for use, as well as badminton courts, boxing and table tennis facilities which will be open to all members of Gateshead’s communities.
So this story provides a unique opportunity to include a photo of Pardew opening the Centre with some fine gentlemen of a similar stature to my own.
And as a gratuitous extra, here’s a photo of NewcastleGateshead’s very fine bridges.
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Health and safety gone mad
Like benefit recipients and council tenants, Health and Safety gets a very bad press. But the call from the London Fire Brigade to the Mayor to respond to the growing problem of ‘back garden developments’ or ‘beds in sheds’ as part of his revised housing strategy brings home the reality.
Their evidence should be compulsory reading for all those who knock health and safety regulations or believe that it is wrong to interfere in the market. And it’s not just London – examples similar to theirs can be found in many cities and towns in the country.
The Brigade is issuing an increasing number of prohibition notices to prevent properties being used as housing. Rita Dexter of LFB identified a range of ‘potentially lethal fire traps’ such as converted sheds, industrial units and garages being used as accommodation, with residents relying on highly risky methods of heating lighting and cooking. ‘They are also being exploited by unscrupulous landlords who are happy to take their money without any regard for their safety’ she said.
Examples quoted include a death in a fire in a garage, a group of commercial buildings where 150 people were living, and an office block with 17 rooms with over 50 people living in them with no fire safety features at all.
The need to tackle dangerous housing was the central feature of the LFB’s response to the Mayor’s Housing Strategy and their lobbying of Government for stronger building regulations. They identified a series of major risks, including the need for better compliance by housing authorities with their Housing Act duties, especially in relation to tall residential buildings and buildings with timber frames, fire setting in empty residential buildings, beds in sheds, and both overcrowding and under-occupation.
On under-occupation, they cite the problem of an increasing number of mainly elderly people retreating into living in one room and switching from traditional to ‘intrinsically more unsafe’ forms of heating. On overcrowding, they called for the housing strategy to ’say more about the consequences of overcrowding’ because of the risk from overuse of electric appliances and blocked escape routes.
On the day when the ludicrous former Archbishop Lord Carey said the major moral dilemma facing the country was the deficit and tackling ‘welfare dependency’, one glance at the real evidence from the fire authorities of people who are so poor they have to put themselves at risk of serious harm makes you wonder what planet people like him inhabit.
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Pinocchio hits the airwaves
On the day that the Lords’ debate on the Welfare Reform Bill reaches the total benefit cap, which has huge implications for housing and homelessness, Red Brick favourite Iain Duncan Smith has hit the airwaves big time. Unfortunately interviewed mainly by people who don’t know their arsenal from their elbow, his extraordinary statements are largely unchallenged.
As readers will be aware, Pinocchio was prone to fabricating stories and creating tall tales, but his nose grew longer and longer as he did so. After his interview on the Today programme, I’ll be surprised if Mr Duncan Smith managed to get out of the studio without serious rhinoplasty.
His first major claim was that the total benefit cap will lead to ‘no increase in child poverty’, despite all the evidence to the contrary. It seemed that the main reason he could claim this was that the Department of Work and Pensions had not even modeled the change in poverty because ‘you can’t directly apportion poverty to this measure’ and they don’t believe it will increase because they ‘will work with families to find a way out’. Evan Davies has plainly never heard a whackier claim for a product since Dragons Den.
The second claim was that the poor deluded Bishops – he really doesn’t think much of Bishops – were wrong to say that families would be losing child benefit (they argue that CB is not a means tested welfare benefit therefore should be excluded from the cap). Ludicrously, he said this is because the total benefit cap applies to all benefits therefore you can’t actually say that they will be losing CB when they reach the cap.
Thirdly, IDS said there will be no increase in homelessness ‘as the public understand it’ – whatever that means. He accused opponents – again including the unfortunate Bishops – of ‘bandying about’ a definition of homelessness that included counting anyone as homeless whose children shared a room. Personally I have never heard anyone say such a thing. Nobody he said would be made homeless without a home to go to but nor would the Government ‘trap people… in homes they can’t afford to go to work from’.
It would seem to me that the definition of homelessness that should be used is the one set out by the Government itself in considerable pieces of legislation. By their own definition, and in the admission of one Eric Pickles, welfare reform will increase homelessness by at least 40,000 and that excludes people who will fall outside the definition of priority groups.
There are vital amendments down today, including the exclusion from the total benefit cap of child benefit and the exclusion of homeless households in temporary accommodation being promoted by Labour front bench spokesperson Lord Bill McKenzie.
I hope Labour Peers will turn up in force to stand up for the tens of thousands of children who will be driven into poverty and the tens of thousands who will be made homeless by these measures, whatever Pinocchio claims.
Update 24 January: The Lords passsed the amendment moved by the Bishop of Rippon to exclude Child Benefit from the total benefit cap. The Government has said they will seek to reverse their Lords defeats when the Bill returns to the Commons. The amendment to exclude homeless households in temporary accommodation was defeated. Many good points were made in the Lords debate and all of the speeches can be found here.