Red Brick’s first ever post was on security of tenure. And we have argued consistently since that reducing security of tenure would be bad for individuals, bad for communities and bad for social housing.
The government has now relented and moderated some of its worst proposals. Grant Shapps, in a letter to consultees, has ‘caved in’ and accepted a significant amendment to his draft ‘direction’ on tenure. Blogger Jules Birch has reported on the slalom that has been Grant Shapps’ opinion on this in recent times, wavering about under pressure from both sides. In his letter, Shapps puts the change down to ‘concerns expressed during debate on the tenure reform provisions of the Localism Bill at Lords committee’. Step forward those Lords, if this goes on I might have to amend my unicameral views. And well done to the Labour opposition and to those elements of the housing lobby who have fought for the interests of tenants rather than landlords on this one. No accolades seem to be deserved by the Liberals, who have been particularly supine on security despite their long-term party policies.
It is important however to put Shapps’ retreat into perspective. A skirmish has been won but not a battle let alone a war. Instead of a minimum term of 2 years for general needs housing, the policy will in future be that a normal tenancy term will be 5 years, but landlords will still be able to offer a 2 year tenancy ‘in exceptional circumstances’ as long as they set out what that means in their tenancy policy. Some landlords will no doubt try to adopt an elastic definition of ‘exceptional’.
It should be said clearly that the policy is still wrong, just less wrong than it was. At the end of 5 years, tenants will still be at the mercy of a landlord assessment of whether they should keep their home, without being able to make their case to a court. That is where the immorality lies. It gives arbitrary bureaucratic power to people who are often unaccountable, some of whom are very judgemental about tenants and which ones they like (deserving) and don’t like (undeserving). And if virtually all tenancies are renewed, as some argue, what a waste of time and effort it will be. Linked to Shapps wanting to means test all tenants to find out which ones have a high salary so he can charge them more rent, an army of people will be needed to go round checking everyone’s
income and resources and assessing everyone’s suitability to continue as a tenant. Shapps will still need his Snoopers.
This victory should encourage more campaigning over the summer. In particular, the government looks wobbly on the total benefit cap aspect of the welfare reform bill.
Their Lordships have more good work to do.
George Osborne would do well to read more of John Maynard Keynes, and in particular his General Theory of Employment Interest and Money published in 1935. Unlike Osborne and Cameron, Keynes (a capitalist economist and a Liberal) learned lessons from the Great Depression and was determined never to see it repeated.
One of JMK’s well-known sayings – ‘When the facts change, I change my mind. What do you do, sir?’ – was uttered after he was criticised for changing his position on monetary policy during the Great Depression. It applies well now to Osborne’s repetition of the Great Depression mistake (and indeed Japan’s more recently) of cutting demand in a recession.
But it might equally be applied to private rented sector rents and the policy of slashing the Local Housing Allowance for private tenants. Minister after minister, from Cameron down, trotted out the line that cutting benefits would reduce rents, that the HB sector was holding rents up high, and that the free market would respond to HB cuts, effectively lowering demand, by lowering price. Iain Duncan Smith frequently said that the fact that his department was responsible for 40 per cent of the private rental market was ‘staggering’ and that the aim of the reforms was ‘to drive down market rents’.
Logical thinkers came to different conclusions. With current levels of excessive demand, tenants forced to move by cuts in their HB payments would be easily replaced by new tenants able to pay market rents. There would be no price reduction in more costly areas. However, the displaced tenants would be looking for homes in lower rent areas, boosting demand and competition for the cheaper homes that come on the market. Rents in those areas would be likely to rise. The problem would be compounded by a proportion of landlords taking family homes off the market to make them available instead to the growing number of single people who would only receive the shared accommodation HB rate in future. Letting to 4 or 5 singles was likely to be more lucrative than letting to a single family.
The anecdotal evidence is that sharing and overcrowding are increasing as people, and especially larger families, try to find cheaper – which often means smaller – accommodation. Harder evidence, from agents and landlords, shows that rents continue to rise above inflation.
Nor are there any signs of rents turning down in the future. The head of research at Savills recently concluded “High rent rises are not confined to the prime market and, as more aspiring buyers are frozen out of home ownership, demand for private rented stock in the country as a whole can only grow. Our prognosis for the private rented sector as a whole remains extremely bullish.”
Even if the government believed its little bit of idiot economics when it started the policy, surely the evidence is accumulating that they are just wrong, rents will not fall and people will be put through endless misery because of it.
The facts have changed. But does Iain Duncan Smith have the bottle to change his mind as JMK suggests he should?
By guest blogger Monimbo.
Inside Housing carries a story about a new guide to Making the Most of Community Led Planning, promoted by the DCLG and created by two pressure groups working in rural areas and in market towns. Without disparaging the work of ACRE and Action for Market Towns, with their rural focus it is perhaps not surprising that the groups involved in this exercise seem to be solely from County Council areas. There is no representation from inner city areas or, indeed, outer ones. The guide carries the endorsement of the minister for decentralisation, Greg Clark, with no mention of its rural bias, and yet it was part financed from the DCLG’s empowerment fund.
The minister hails the guide as helping ‘local people’ exercise the right to prepare a ‘neighbourhood plan’ under the Localism Bill. It strikes me that the guide is an unintentional reminder of how vacuous such plans may turn out to be. There is only the
vaguest discussion of resources, delicate issues like building more local housing are touched on only briefly, and there appear to be very few examples of what neighbourhood plans can actually achieve – surprising given that more than 4,000 community led plans are apparently already in existence.
One gets the impression that neighbourhood plans are intended to be about minor issues that can be readily tackled by parish councils. I looked eagerly, but in vain, for an example of a community that championed the need for more rural housing, overcame local opposition and built some affordable homes using a local housing association. Perhaps they exist – but they are not mentioned here.
You will also look in vain in the guide for any mention of ethnic minorities. There are several references to community plans being ‘inclusive’, but no examples of what this means. As we know, in many rural areas there are marginalised communities who might well miss out on this sort of ‘community led’ planning if it fails to involve them. For example, many of the issues about the housing of migrant workers have cropped up in rural authorities like Breckland in Norfolk and Kerrier in Cornwall, where migrants provide the labour for the ‘pick, pack and pluck’ trades. Is their housing an issue which might be examined in community led plans, or is it better brushed under the carpet?
Community led planning is a good idea, and I would be surprised if many of the projects championed by ACRE and AMT aren’t good examples of rural communities getting things done. But there are dangers if this becomes the exclusive vision for neighbourhood planning, and more widely for the government’s ambition (repeated by Greg Clark) of replacing ‘big state’ with the ‘big society’. There are some advantages to the state: it is open to lobbying, it is governed by equality laws, it has elected councillors and – even in troubled times – it has real resources and statutory powers to use them. If neighbourhood plans are to work properly, they must be about delivering real change in real communities where all groups are involved. And this must include challenging inner city areas, neglected outer estates, and hard-to-reach groups in both.
Neighbourhood plans that merely sustain a comforting image of rural and small-town life will not fit the bill.
It’s always a mistake to buy a Murdoch newspaper. But yesterday I couldn’t get an Observer so I bought the Sunday Times. My defence is that it was an impulse buy. Given that I normally read newspapers online I am now really pleased his papers are behind a
paywall that I will never breach.
My ire was stirred by an article by columnist Minette Marrin called ‘Crisis solved: ship the poor out of their costly homes and sell them’. Seriously. It must be a cosy number writing a column like that, you take a report from a right wing think tank (in this case Policy Exchange’s ‘Making Housing Affordable’ ), add a couple of anecdotes and a bit of prejudice, and off you go. It’s a bit like writing a blog but you get paid for it.
Anyway, her central thesis rests on 2 facts. First that some social tenants live in valuable houses that could be sold and other housing provided ‘elsewhere’ with the money. And secondly that old canard that social housing somehow causes poverty and unemployment. So, the thesis emerges: “to put it crudely, if people in social housing are not working and not thriving in one place, they might as well do the same thing somewhere much less expensive.” At least it’s honest.
Now, we’ve spent a lot of time on this blog trying to tackle the myths in housing, and in particular in social housing, so I don’t intend to repeat all the points. Suffice to say that the fact that there is an association between 2 factors (in this case social housing and worklessness) tells us nothing about the causal relationship (ie social housing tends to house people who do not work, because they are in housing need, rather than causing them to be workless). And most of the tenants who do not work are not unemployed but economically inactive – the biggest group are retired (how shocking is that) and many others do not work because of disability, ill health or vulnerability and are unable to compete in the housing market. In other words, social housing is doing its job.
What adds unpleasantness to inaccuracy is the line that ‘mixed communities do not work’ therefore it is a better use of money to ‘ship people out’ (the London example is used but all cities have social housing in their more valuable areas, and the arguments apply equally to unaffordable small towns and villages). So the ground is prepared for social segregation, the concentration of poorer people in some areas and richer people in others, and the forced removal of people from communities where they might have spent their whole lives.
The concept of ‘elsewhere’ is central to the NIMBY’s cry – we need housing but somewhere else, not here. But ‘elsewhere’ is already a poorer part of town with a higher proportion of social housing. No doubt next week Marrin will condemning social housing ghettoes for breeding criminality and calling for more home ownership as the solution not more social housing.
The poor should not live here next to the rich, they can live elsewhere, this attitude was the
driving force behind Shirley Porter’s gerrymandering in the 1980s. She may be disgraced, but she might also be quietly satisfied that her approach is now mainstream on the Tory right and increasingly central to government housing policy.
The Government’s announcement of the new ‘Affordable Rent’ programme gets more and more curious.
We commented last week that although they and the HCA listed the 146 organisations that would receive money for the high rent initiative, both had failed to say who would build how many homes and failed to provide any information at all about the two key criticisms of the scheme – the rent levels that would be charged for the properties (they could be ‘up to 80%’ of market rents) – and the number of re-lets of existing social rent homes that will instead be let at so-called ‘affordable rents’ to pay for the programme – ie taken out of the existing pool of genuinely affordable homes. Nor, when we think about it, is there any
information about how many will be let on flexible (ie possibly short term) rather than permanent tenancies.
The information is clearly available, as London mayor ‘Codswallop’ Johnson tried to make political capital by saying the average rent in London would be ‘65%’ – ie much higher than social rents now but not as disastrous as it could be, reflecting a big effort by housing providers in London to make sense out of the whole thing. Johnson continues to obscure the real truth about the housing programme in London and still has the cheek to claim credit for the continuing completions of social rented homes from the programme inherited from Ken Livingstone.
Today, Inside Housing claims that housing providers have been ‘told to keep quiet’ about their allocations – ‘HCA tries to silence landlords’. Keith Exford, chief executive of Affinity Sutton, is quoted as saying that Ministers got ‘carried away’ in their announcements.
The ‘affordable rent’ programme is intermediate housing masquerading as social rent. As Johnson already has, the government will make great claims about their achievements in
producing affordable homes. But ‘affordable rent’ is not affordable in many parts of the country, however hard providers try to let it to people who would previously have been offered social rented homes, and in many cases it will not be secure.
With key information withheld and providers apparently silenced by the paymaster, the government are taking the public for fools.
Boris ‘codswallop’ Johnson’s failures in housing are becoming clearer as the London mayoral Election campaign hots up. It may be that his calamities in other areas achieve bigger headlines – dismissing the importance of the hacking scandal was a very big misjudgement, and losing so many senior police officers seems slightly careless – and he has begun to show a grumpy side to his character that belies his carefully crafted jovial upper class twit image.
London was starting to do well in housing when Johnson took over in 2008. Ken Livingstone’s London Plan and Housing Strategy policies were beginning to bite and have real effect, policies such as the 50% affordable target across London were well known and understood by developers, and, despite the global financial crisis, Ken had secured the largest housing budget for decades from the Labour Government. The Homes and Communities Agency outturn statement confirms that expenditure between 2008 and 2011 (ie the period covering Ken’s planned programme) in London was £3,753m, £1,251m a year over three years.
The newly announced programme of £157m a year for four years represents a cut of 87% and the gap will have to be made up by much greater housing association borrowing. In April Stephen Howlett, then Chair of the G15 Group of major Housing Associations, told the London Assembly Planning and Housing Committee: “I think one calculation is that, to deliver the Mayor’s programme, will take as much private money over the next four years as associations have borrowed since 1988 to deliver the homes in London. Those exact figures are open to comment but I have to emphasise that housing associations in London will be taking on enormously increased debt and risk as a result of this.”
Commenting on the announcement by the Mayor and the Homes and Communities Agency on the allocation of funding for affordable house building to London, Nicky Gavron AM, Labour Group Spokesperson for Planning and Housing on the London Assembly, said:
Despite the Mayor putting a brave face on it, London is getting less for less.
The new information is that the Mayor has been given only £627 million to spend on affordable housing between 2011 and 2015. This is a cut to London of 87% compared with the previous funding round.
From 2008 the last Government gave London £5bn† to spend on affordable housing, of which £3.7bn was used to deliver 50,000 affordable homes by 2011. Johnson missed this deadline and £1.1bn of this new package is to finish the job and is committed to homes already in the pipeline.
To make up for the Government’s cuts, the private sector contributions of £2.5bn announced in his press release will come from borrowing by housing associations. This is more in four years than they have collectively borrowed since the late 80s. This model of funding is not sustainable.
The settlement also confirms that 1,500 homes in the pipeline and funded under the previous Government’s programme as social housing – the lowest-cost housing for rent, which is so desperately needed – have been lost in London because they will now be converted to the so called ‘Affordable Rent’* model. In many cases this will double rents for low-income households in London and price many families out of the housing market.
In the context of housing benefit caps, welfare reforms and rising homelessness, the growing need in London is for low rent family housing. But this deal is particularly damaging for families. We understand that only around 30% of the homes will be family sized. This seriously undermines Boris Johnson’s pledge that 42% of new homes should be for families, a fact omitted from his announcement.
*The London Assembly Planning and Housing Committee recently published a report on the impact of the Affordable Rent model on London, the findings of which are summarised here.
The Office for Budget Responsibility’s Fiscal Sustainability report, published this month, makes very depressing reading for anyone taking a longer look at the future of the public finances. The Report, by the independent OBR (do we really believe that?) has forecast that public sector net borrowing would fall from 11.1% of GDP in 2009-10 to 1.5% in 2015-16 as government ‘fiscal consolidation’ (mainly cuts) is implemented, and that public sector net debt would peak at 70.9% of GDP in 2013-14 before falling back to 69.1% in 2015-16.
The new report looks to a much longer timescale, predicting greater pressures on the public finances in future decades. Primarily as a result of an ageing population (the proportion of the population aged 65 and over is projected to rise from 17% in 2011 to 26% in 2061) and cost pressures on health and pensions, they say that unchanged policies would lead to debt continuously rising on an unsustainable upward path. At the same
time, unchanged policies would lead to broadly stable revenues.
OBR say that additional fiscal tightening will therefore be necessary well beyond this Parliament. On their central projections, government would need to implement permanent tax rises or spending cuts of 1.5% of GDP (£22Bn) from 2016-17. They quote the same conclusion being made by the International Monetary Fund for western economies in their April Fiscal Monitor: “Although substantial fiscal consolidation remains in the pipeline, adjustment will need to be stepped up in most advanced economies, especially to offset the impact of age-related spending… From an even longer-term perspective, spending on pensions – and especially, health care – constitutes a
key challenge to fiscal sustainability.”
Tony Travers’ informative blog on the OBR report in Public Finance can be read here.
The crucial aspect of OBR’s analysis is the phrase ‘on unchanged policies’. As David Blanchflower regularly and convincingly argues (for example here), if we want a better future we shouldn’t be starting here. The ConDems austerity policies have led to a collapse in consumer confidence and rapid fiscal tightening has severely reduced the prospects for future economic growth, which would bring with it better revenues and reduced costs in unemployment. He thinks double dip recession is still a possibility, depending largely on what happens in the USA. Without Obama’s monetary and fiscal stimulus unemployment in the USA could already have been 25% rather than 10%, and similar, if smaller, impacts could be projected here.
The OBR report does not seem to assess the impact that fiscal tightening has on demand in the wider economy, appearing to believe public sector spending is only a cost burden, and that cuts in the public sector provide the room for increases in the private sector. Blanchflower is particularly strong in showing that this is not the case.
It is interesting to note that in the OBR report the words housing and investment do not appear (at least not on my search). Blanchflower has particular concerns about the potential increase in negative equity amongst homeowners if interest rates rise, but it seems a weakness that OBR never distinguish between different types of spending, and especially between capital and revenue. To OBR, borrowing is borrowing and no
distinctions are made. Gordon Brown’s first fiscal rule, that borrowing over the cycle should equal investment, with government income covering government revenue spending, aways seemed like a correct approach, and is a good place to get back to. But it doesn’t tell you exactly how much investment there should be. Construction has always been a sound purpose for public borrowing and the benefits have been described many times: reducing pressure on government revenue deficits, strong social outcomes and better underpinning of other public objectives (especially in health), and, crucially, a high multiplier in the private sector as the initial investment leads to increased spending in the wider economy.
We know it will take a generation of increased housebuilding to bring housing demand and supply closer to equilibrium. There is no prospect of that whatsoever under current policies. But it would be interesting to see what impact a major housing investment and construction-led economic stimulus, lasting for 20 years, would have on OBR’s dire long term projections for the 2020s and 2030s and beyond. The economic future is not yet outside our control.
Categories
Donkey con
It doesn’t matter how many times you call a donkey a horse, it’s still a donkey.
Grant Shapps announcement of the so-called ‘affordable homes’ programme boasts that the programme will spend around £1.8billion on producing 80,000 ‘affordable homes’ of which 63,000 will be for ‘affordable rent’ and 17,000 for ‘affordable home ownership’. Shapps says that “The new Affordable Rent model, which will be the principal element of the Programme, will make public subsidy go further while enabling local authorities and providers to target support where it is most needed.”
The implication from the announcement is that there are NO homes for social rent (ie at target rents) in the programme. Social rented housing and targets rents are not even mentioned.
Shapps’ announcement, and the listing of the 146 organisations who will receive funding from the Homes and Communities Agency (including 26 councils), is more remarkable for what it fails to say than what it does say.
There is NO information about the rent levels that the ‘affordable rent’ homes will be let at. This could be up to 80% of market rents although we know that many bidders have gone for a mix of rents to try to keep the rent of larger family homes down, but this crucial information has not seen the light of day. Housing website 24 Dash claims that the average rent will be 72-73% of market rent and that Mr Shapps is claiming that the average in London will be 65%, but the figures are not published. These averages represent enormous rent increases for tenants of new homes compared to the previous regime. They will intensify the poverty and employment traps and increase the housing benefit bill.
There is NO information about how many re-lets of existing stock will be let at ‘affordable rent’ levels instead of social rent or target rent levels to pay for the programme – the key policy that will lead to a large net reduction in the number of homes being made available from the exisiting stock for rent at genuinely affordable rents.
There is NO information about which bids were refused and why.
Classically, the information is stage managed to look good, to resemble a thoroughbred policy, building a good-sounding number of ‘affordable homes’. But new subsidy is now only available for what is really ‘intermediate rent’ and low cost home ownership. I have been an advocate for intermediate housing over the years as a parallel programme to social rent, but make no mistake: this policy is about ending social rent new build and gradually chipping away at the existing stock of homes for social rent. It has a few enthusiasts but they are the usual suspects in the housing association and local authority worlds who have wanted to stop providing housing for the poorest for some time.
There is no doubt: the policy is not a horse, nor even a mule. It is an ass.
In the middle of the phone hacking scandal David Cameron found time to launch his White Paper on ‘Open Public Services’ (see the Cabinet Office website).
This document contains more warm words than you can count about the benefits it will bring to individuals and communities, but it is remarkably reminiscent of the proposals
for the NHS: when you strip away the verbiage, it is about putting most public services out to tender to any willing provider, extending the purchaser/provider split, and reducing the role of public bodies to that of commissioners. As the paper says: “the principles of open
public services will switch the default from one where the state provides the service itself to one where the state commissions the service from a range of diverse providers.” In the real world, it means more private companies running more public services, the process otherwise known as privatisation.
The implications for housing are not entirely clear. ‘Housing management’ is identified as one of the services where the government will consult about how to open up the service to more local commissioning. There is no specific mention of councils who still directly manage their housing stock but there may be serious implications for them further down the line as the plans develop.
There is a specific reference to arms length management organisations (ALMOs). They are given as a good example of how public sector providers could be given ‘autonomous status’ and become like housing associations. We covered some of the options available for ALMOs recently on Red Brick, but although the White Paper talks a lot about improving accountability and empowerment, more importantly it raises the spectre of ALMOs being forced to become ‘autonomous’ even when this is against the express wishes of the tenants.
One other reference to a housing-related service concerns Supporting People, a service
which is already largely commissioned but where the future emphasis is planned to be on the development of personalised budgets.
There are three principle fears about the White paper and none are addressed in it.
First, that this will follow the same route as Thatcher’s Compulsory Competitive
Tendering regime but with more soft soap – it is bound to involve compulsion but the likely mechanisms for achieving compliance are not made clear. Classic Cameron.
Secondly, there is no reference to the need to undertake an EU procurement for services, which is a major issue when considering the future direction of ALMOs.
And thirdly, there is no linkage to the size of future budgets and the cuts – new rights for individuals and communities will only be worth the paper they are written on if there is the money to back them up.
On Friday the chief executives of the National Housing Federation, TPAS and Shelter had a letter published in the Independent (go here and scroll down) concerning an aspect of the Localism Bill that has not so far attracted much attention: tenants’ complaints.
Specifically, the Bill’s new arrangements for making complaints to the Housing Ombudsman will prevent tenants from being able to complain directly: in future they will have to get a referral from an MP, councillor or a ‘designated tenant panel’. The authors of the letter say this will be disempowering, costly and bureaucratic, causing delays and ‘red tape’.
Under current arrangements, tenants can only take a complaint to the Ombudsman if they have exhausted the landlords’ own complaints process, which can often take many months in itself. They then have to go through the Ombudsman’s own filtering process (they decline requests to investigate complaints in many cases) and then wait for an investigation and report. Many MPs and councillors are highly accessible to their constituents and no doubt would do the job as quickly and conscientiously as they can:
others are not, do not deal with correspondence effectively and sometimes do not even have ‘surgeries’ for tenants to attend. We do not know what processes a ‘designated
tenant panel’ might adopt and there is a danger that they will not be very independent of the landlord.
Either a councillor or MP will just pass the complaint on, which is a complete waste of everyone’s time, or they will act as a filter of some kind, either refusing to pass it on for their own reasons or making their own enquiries, which will require the tenant to explain the matter all over again, including revealing their personal details. Tenants may well feel that MPs and councillors are not always neutral when dealing with such matters, especially a complaint against the council as landlord*.
There can only be one motivation behind this process: to reduce the volume of complaints going through to the Ombudsman because it will be under-resourced for the job it should be doing. But the procedure will put additional burdens on MPs and councillors that they are often not geared up to handle, and will undoubtedly act as a disincentive to tenants to take their complaint forward.
An effective complaints process is one mechanism for ensuring the accountability of landlords. It is therefore encouraging that the NHF, as the landlords’ trade body, is opposing this change. Good landlords welcome complaints, pursue them properly and seek to learn lessons from them. There has already been a damaging reduction in regulation and independent inspection of service quality in the housing sector. Making it harder for tenants to complain to the Ombudsman will make it easier for poor landlords to ignore their tenants.
*The Bill creates a unified service for investigating housing complaints, transferring
responsibility for council housing from the Local Government Ombudsman.