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A long term increase in the benefit bill…

<strong>by Tony Clements</strong>
by Tony Clements

Former policy advisor to Rt Hon John Healey MP during his tenure as Minister of State for Housing and Planning. Executive Director of Place for Ealing Council.

So what would Labour do instead? It’s the standard question to us at the moment and indeed of any opposition.

It’s a difficult one to answer for a lot of reasons. One of those reasons is that whatever you do, you have to graft it on to what the other lot have done during their time in power.

One of the things Labour is likely to face coming into office again in the future is a considerably higher housing benefit bill. Yes, really – despite the caps and restrictions that will do real damage to mixed communities, the CSR paved the way for a rising bill in the long-term. Here’s why:

George Osborne announced two weeks ago that capital funding for ‘social’ or affordable housing would be cut. He says by 50%, in truth it’s more like 75%, but that’s a different issue. So how will the Tories justify their claims that they will build more affordable homes? By increasing ‘social’ rents to 80% of market rents and then allowing housing associations to borrow against these new higher revenue streams to build more homes. OK, well that could stack up. But how will people on the waiting lists be able to afford near market rents? They are often often workers on very low incomes, carers, disabled, workless etc? Well Nick Clegg has the answer here:

“People on low pay on those new rents will be compensated in full through housing benefit.”

So, in a nutshell, it’s a shift in the cost of subsidising housing from up-front capital to build homes to putting more people on higher levels of benefit, so they can afford near-market rents.

They’ve moved the bill from the Department of Communities and Local Government to the Department of Work and Pensions – nifty footwork from Eric Pickles.

That’s great for cutting big capital budgets now in order for the Chancellor to say he’s wiped out the deficit before the next election: it’s rubbish for the taxpayer in the future who has to shoulder the long-term costs. 

It’s like a great big housing PFI: avoid the capital investment up-front, pay more in the long-term.

p.s. I think there’s good reason to think that the benefits system won’t cover these costs ‘in full’ as Nick Clegg says, but that’s for another post.

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Feeling Insecure

<strong><span class="has-inline-color has-accent-color">Steve Hilditch</span></strong>
Steve Hilditch

Editor and Founder of Red Brick. Former Head of Policy for Shelter. Select Committee Advisor for Housing and Homelessness. Drafted the first London Mayor’s Housing Strategy under Ken Livingstone.

30 years ago a political consensus emerged that council tenants should have the protection of security of tenure, leading to the ‘Tenants Charter’ in the 1980 Housing Act. All political parties supported the move – it was a Labour bill then taken up by the Tories after Thatcher won power.

The policy did not however emerge from academia or from Whitehall. It was the outcome of campaigns and pressure from tenants all over the country. It was a campaign for fairness and justice, that landlords should not be able to remove tenants from their homes without going before a court and providing evidence that a term of the tenancy had been breached in such a way as to justify the tenant losing their home. It was a campaign rooted in the bad practice not only of council landlords but also housing associations who sometimes removed tenants in a punitive and capricious way with no rights of complaint or redress.

Losing your home, and probably being declared intentionally homeless as well, is a serious matter. The basic principle is that it should not be decided by the landlord acting alone, but should be based on evidence and a set of rules. That is all security of tenure and the many extensive ‘grounds for possession’ entails: simple consumer protection. Without security of tenure, tenants have fewer rights against eviction than I have to appeal against parking tickets.

Many people become social tenants after major disruption in their lives, especially homelessness and being dumped in temporary accommodation for months or years at a time. Many people who become tenants do so because they are vulnerable in some way, through age or disability or because they have children. A secure home provides them with the platform to rebuild their lives, to put their children in a school for more than a temporary period, for some to register with a doctor for the first time, for many to consider work for the first time. They become part of the community, neighbours, and, because they have a long-term home, feel it is worth making a local contribution. Security is the foundation of the big society. We all say we want to build more stable and mixed communities but a policy of insecure tenancies would move some people on against their will at the point where they are finally settled and likely to be contributing most.

The government has yet to explain how insecure tenure will work in practice except to say that new tenants will be reviewed after a period to see if they still qualify for a home. Insecure tenants will live in fear that their landlord will decide against them and they will be out. It is an extraordinary disincentive for people to take work or to get a better job. In my experience social tenants simply do not fit the media and government stereotype of fecklessness and scrounging: they are aspirational, but their aspirations are realistic. They are not anticipating setting up a business, becoming the next self-made millionaire, and joining the Cabinet. They aspire to getting a low paid job, enough to make ends meet, or to getting a promotion and having a bit more spare cash. They aspire to leading a better life or at least ensuring that their children do.

The government has begged the question of what will trigger eviction. Few if any social tenants will make it to the higher rate tax band so there will have to be some lower point at which a tenant is deemed to have enough to justify being kicked out. It will be a bureaucratic nightmare of means tests and reviews. To be honest, some social landlords have difficulty managing one set of tenancy conditions without taking this on as well.

Nor should we give any time of day to the argument that it is right that tenants should be moved on from ‘subsidised’ housing. Council housing no longer receives subsidy, it pays its own way with rent covering costs including the cost of debt. Housing associations receive grants (well, they did until the CSR) to help meet the capital cost of new homes but there is no revenue subsidy – rents cover costs and over the lifetime of a home will make a significant surplus. Even if social housing had a straightforward revenue subsidy, my response would be ‘so what’. Society subsidises poor people is not a shock headline. The economy is full of subsidies and reliefs.

As a society we have failed to tackle poverty and inequality. That is why social rented housing exists and why it will continue to be essential. Over 30 years, social housing has been given the residual role of housing the poorest and most vulnerable and, by and large, it has done a hellish job well. But it has only done so by learning to respect its customers individually and as a group and by creating a partnership between landlord and tenant. We should not go back to the dark ages.