Steve and I have touched on this one frequently, but it’s worth a reminder for our newer Red Brick readers.
When you hear ministers saying they will build ‘up to 150,000’ new affordable homes over the next four years, they actually mean up to 85,000.
Of those 150,000 they promise around 65,000 have already been started or were in the pipeline from the previous Labour government.
Also, when they talk about £4bn being invested into affordable housing, remember that around £2bn of that is the money already committed to build out the remaining 65,000 homes from Labour’s National Affordable Housing Programme. So the real figure is about half.
The Tory government is planning to build up to 85,000 additional affordable homes in the next four years. That’s not many and that’s the key point.
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"The gloves are off"
On the same theme as my post yesterday, Inside Housing reports on housing professionals beginning to fight back against the government’s proposals:
“It would be wrong to call it a phoney war – tensions between housing professionals and the government have occasionally risen to the surface in the past 10 months. But this week the gloves are well and truly off.”
A useful reminder too of a few of the bodies that are speaking out against the government’s proposals: The Local Government Association, the National Housing Federation, northern RSLs, Homebuilders’ Federation. The list goes on…
Challenge to readers – can we find a respected housing body that backs the government’s reform package?
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Does anyone agree with them?
On Tuesday, I was chairing a mini-conference with about 40 people in the audience from London based RSLs, London boroughs and private developers. I did a similar one back in January on the theme of the new housing system, both of these under the Future of London banner.
It’s led me into greater fascination with CLG ministers’ current decision making. At none of these conferences has anyone spoken in favour of the government’s reforms.
No-one.
Admittedly, the representatives of the HCA have explained well the government’s policies and the government’s thinking behind them. But even Policy Exchange would only go as far as to say they were ‘critical friends’ of the government on housing.
Normally, making policy means alienating some people but pleasing others. Opposition is always inevitable and it’s true that normally opposition to any change outweighs the supporters. As Machiavelli says:
“… there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new.”
What amazes me is why ministers are not at all concerned by the fact they have no defenders at all, not even lukewarm ones. Despite the overwhelming opposition to the nature and implementation of these reforms, there is no tempering of the tone, no recognition that these are unpopular and that an entire sector thinks they probably won’t work.
Is this simply ideological zeal? The department not advising them of the reactions out there, or being too scared to do so? Is it the hope or assumption of creative destruction – if you lay waste to the old system, it’s impossible to go back and so something else better must emerge?
Or am I just niave and captured by me sector? Could this be how real political change happens and from the ground it always looks like destruction?
Alternatively, the housing minister could just believe he’ll only there for a short time and will have got away from the scene of the crime before anyone spots the bodies. While I fear for the NHS, I secretly hope the Housing Minister gets promoted to Health, to reap for himself the ‘rewards’ of another set of radical reforms.
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Releasing the grip of state control?
Following my post yesterday on David Cameron’s new compulsory competitive tendering proposals, our guest blogger Monimbo, who also lived through the CCT regime of the 1980s and 1990s, penned these reflections.
Given this government’s restless urge to upend public services, arguing that the ‘grip of state control’ needs to be lessened still further was always likely to lead to more contracting out and privatisation. Of course, as David Cameron does in the Daily Telegraph of 20 February, this can always be presented as moving away from top-down targets, encouraging diversity, delivering at the lowest possible level and, once again, providing opportunities for the voluntary sector.
Yet it is pretty clear that the reality of his promised white paper on public service reform will be something remarkably similar to compulsory competitive tendering. CCT is of course the discredited policy from the 1980s, whose only enduring effect has been to privatise a large swathe of low-paid jobs, such as the very bin collection contracts which on other occasions exercise the mind of the Secretary of State for the Environment.
Cameron now claims that, by reviving CCT:
‘…power will be placed in people’s hands. Professionals will see their discretion restored. There will be more freedom, more choice and more local control.’
To which one can only ask, was he around at the time when this was done before? Does he really believe that contracting out created more diversity of providers, and more choice? As far as I recall, the outcome was either that, after an expensive and time-consuming process, the in-house teams won – or, in a few cases, that a big provider like Serco or Capita won instead. Whatever the virtues of a Serco or a Capita, do they really meet up to the starry-eyed descriptions of services brought closer to the people that Cameron enunciates in the Telegraph?
There are three fundamentals of contracting out of which he seems unaware. First, there needs to be a contract. As those involved in Housing PFI contracts know only too well, a service specified in mind-boggling detail in a contract is not a flexible service. Yet miss out the detail and what you will get is not a flexible service but a poor one. Once contracts are signed, the only flexibility they give is whatever terms can be varied that are already in the contract, at whatever price is specified. Anything beyond this is likely to be prohibitively expensive.
Second, contracts need to comply with EU procurement rules if they are above the minimum size. These rules are strict. The opportunities for including ‘social clauses’ exist, but they are carefully policed by lawyers. Does Cameron’s view of ‘diversity’ include international firms operating British public services? It may well do, but it’s probably not what his Telegraph readers have in mind.
And finally, of course, this does not reduce bureaucracy, it increases it. Cameron talks about ‘bureaucracy over-ruling common sense, targets and regulations over-ruling professional discretion.’ As CCT showed, you need more staff to run a service because to administer a complex contract you need a ‘client side’ to ensure that the contractor is doing their job. Can those on the client side dispense with bureaucracy, targets and regulations? No, they are the essence of any contract. Do they largely have to give up exercising their professional discretion? Yes, because using discretion will cost money that will no longer be available.
Cameron’s vision for public services isn’t a new one. It’s a recycled policy from the 1980s that didn’t work then and won’t work now. It may, however, succeed in what many will think is its covert aim: to get people so disenchanted with public services that they opt out, vote for tax cuts and lose all sympathy with public servants. Taken together with the effects of the spending cuts, that really does look like an objective that he might achieve.
‘The louder he talked of his honour, the faster we counted our spoons.’
I was reminded of this old idiom when I read David Cameron’s latest outburst on public service reform. In his Daily Telegraph article, Cameron said:
“We will create a new presumption – backed up by new rights for public service users and a new system of independent adjudication – that public services should be open to a range of providers competing to offer a better service…… This is a transformation: instead of having to justify why it makes sense to introduce competition in some public services – as we are now doing with schools and in the NHS – the state will have to justify why it should ever operate a monopoly.”
There is an obvious contradiction between the localist agenda and Cameron’s new doctrine of ‘compulsory competition’. Cameron appears to be saying ‘you can do what you like as long as it is what I like, and not otherwise’. There is to be a White Paper called ‘Open Public Services’. I assume that means making public services open to anyone to make a few bucks – hence the need to count the spoons.
Competition has been an important element in providing housing services for a long time, especially to deliver hard projects like capital investment, repairs and grounds maintenance, or to deliver IT-based services like some elements of housing benefit. In many circumstances it is the sensible thing to do. But not in all, and much less so in the services that are highly focused on people.
The previous attempt to bring Compulsory Competitive Tendering (CCT) into housing management – under the last Tory government – was an unmitigated disaster and a huge waste of time and money. CCT was an extraordinarily bureaucratic exercise requiring councils to write hugely detailed specifications of the services they wanted to deliver, and in-house teams to write hugely detailed proposals about how they would go about performing the specification. Both sides required teams of people including lawyers and accountants (and humble housing consultants) – I know because I did both on behalf of various councils. The fact that very few housing associations, faced with the same issues but not subject to the regime, chose to put their housing management services out to competition told its own story – they would have done so if it made any sense.
It was – still is – a fledgling market and a few private firms also wasted their time putting in hopeless bids. Where other providers did win contracts it was invariably where the existing service was failing and the council, often with tenant support, concluded that new providers might help bring about improvements. Some providers have done well, but that’s not my point.
A lot was written about HM CCT at the time, why compulsory tendering was an ideologically-driven waste of time and money that also held back real service improvement by diverting resources into pointless activities. Most sensible people think these decisions should be made by landlords and tenants who know their local services. If Cameron chooses to go down the road of centrally-directed compulsion again it will prove that the Tories don’t learn from history or from their previous mistakes.
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Auf Wiedersehen, Pet
A Parliamentary Question from Caroline Flint last week elicited the curious information that not one of the Ministerial team at Communities and Local Government department – responsible for housing and local government across the land – had visited the north east of England since their appointments last May. It’s hard to know whether the north east should moan about being ignored or celebrate this as an achievement.
The Secretary of State, Mr Pickles, as a man of the north, did manage a visit to Bradford, where he formerly led the Council. He also made it to Liverpool, presumably before the cuts when it still wanted to be a ‘vanguard community’ for the Big Society. But is it indolence or unpopularity that leads the man responsible for all things delivered locally to make only 6 visits in his official capacity in the 8 months he has been in charge?
His Minister for Housing and Local Government, Grant Shapps, perhaps has more excuse as a professional southerner. He seems to get a nosebleed by travelling north of the Wash, but did brave it by venturing into Manchester and Leeds, and no further. It’s no surprise that his first trip was to Wandsworth, the borough with the highest council rents in the land. The Minister for Decentralisation, Greg Clark, stunningly has made only 4 visits anywhere at all, and none since July, to the places he is inflicting his policies on.
One other curiosity is that none of the Ministerial team has been to Hammersmith and Fulham, allegedly Mr Cameron’s favourite borough, despite the fact that it is the incubator for many of the Tories’ most unpleasant policies. This might be due to embarrassment because they denied vehemently that they would support H&F’s line on ending security of tenure and increasing social rents towards market levels, only to adopt the policies after the Election. Or it may be that the local people fighting the sell-off of their estates wouldn’t like it and might mount large demonstrations of welcome.
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Not so fast Mr Clegg…
Nick Clegg has been credited with convincing the Tories to U-turn over their plans to cut housing benefit for those on Job Seekers’ Allowance – as Steve points out.
Presumably this is one of the (few) examples of how the Lib Dems would like the public to see them: moderators of otherwise more brutal and right-wing policies. I’m sure they will champion this as policy they have changed. This is the point of having Lib Dems in government, they will say.
A potentially compelling argument. But, let’s not forget that their decision to support and maintain in power a Tory government means they have made possible all of the policies that are being pursued. They are the enablers of the right-wing policies that they now want to claim they are moderating. It’s not an argument we should allow them to get away with.
Critics might say that the Lib Dems had a responsibility to help provide Britain with a stable government after the election. Perhaps. But they could have offered a supply and confidence deal, in the way many junior coalition partners do across Europe. This would keep the government in place, stable, and with the budget it needs (bad enough), but allow other measures to succeed on their merits or fail for the lack of them.
Today’s news that the government is dropping the proposed housing benefit rule that people on jobseekers allowance (JSA) would lose 10% of their HB after a year is very welcome.
The spin is that Nick Clegg intervened to have this proposal dropped – evidently he needs a boost – but it shows that pressure and campaigning can work, even with this government. With David Cameron wobbling on his policy of selling off the forests and woodlands as well, this should inspire everyone to get organised and to redouble campaigning efforts.
The JSA rule was just one of the welfare reform policies that is giving back to the Tories their reputation as ‘the nasty party’. It was indeed a very nasty proposal, which has been defended on the airwaves by Tories and Liberal Democrats since it was announced in the George Osborne’s June Budget.
Only last week it was denounced in the strongest terms by the National Housing Federation, who published research by the University of York showing that 130,000 households would lose an average of £475 a year which they would have to meet out of their JSA (currently £65 a week for single people over 25). In some areas the number of people on JSA is many times more than the number of vacancies, and the research highlighted constituencies like Hull North (45 claimants per vacancy) and Birmingham Hodge Hill (35 per vacancy). The NHF was right to call it a policy that was “punishing people for failing to find a job in a very difficult job market. The proposal is unfair, unjust …….. people should be encouraged into work, but threatening the homes of those who are unemployed isn’t the right way to go about it.”
The Welfare Reform Bill, to be launched by Cameron and Iain Duncan Smith, contains some proposals with potential that are worth debate – like moving to the Universal Credit – but will also have plenty of other nasties in it. Taken together, the remaining housing benefit changes and the total benefits cap will make it harder and harder each year for people on low incomes to afford decent housing, in all areas of the country, whether they are private or social tenants.
Campaigners should be encouraged that they might win more U turns as the Bill goes through Parliament.
The affordable rent prospectus came out yesterday – there’s a lot in it and housing associations and councils will be hanging on every word to see what the new regime actually means for them.
One of the things they’ll be grappling with is how the new benefits system interacts with the new higher rents.
I blogged here that I doubted that the benefits system would allow people to pay 80% of market rent in London and other more expensive cities. Steve touches on it in his previous post. That is increasingly clear for those housing associations and councils that are doing the sums.
But it’s interesting how a new logic is entering the system.
There will be a new benefits cap of £500 on the Universal Credit when it comes in after 2013. This will apply to workless families only. For many families and those living in more expensive areas of the country they will have to move out to cheaper areas to still be able to afford their housing.
However, this cap will be lifted for those families entering work. For an individual this will be someone working more than 16 hours a week. For a couple, this will be more than 24 hours a week.
So those in work will potentially be able to claim more benefit than those out of work. Rather than working 16 hours a week being a cut off point for some benefits, it is the way to claim more benefit and potentially allow people to live in ‘affordable’ housing in more expensive areas.
Work, not need, then is the route to state help and in this case being able to afford the new ‘affordable’ rents.
This is a move consistent with the cross-party consensus that people should be better off in work than in out.
However, in an economy which has 2.5million unemployed and isn’t growing or creating jobs, the principle of compelling people into work falls flat. Where is the work for them to be compelled into?
Secondly, there are a myriad of problems with how this will operate in practice. One example: if you are in work and you lose your job, when does the benefits cap kick-in? How long will you have to find cheaper alternative accommodation within the limited social and ‘affordable’ stock? How will it help those who lose their job find an alternative as they rack up rent arrears and may be forced to move home, just at the time when they need to concentrate most on finding employment?
It’s another example of where IDS’s welfare agenda is crashing unpredictably against Shapps’ housing agenda. For either agenda to work, they must work together. And that too is a lesson for Labour as we formulate our future plans.
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Passing the buck for new homes
The proposals for the new ‘Affordable Rent’ regime published today by Communities and Local Government department and the Homes and Communities Agency are in the classic style of this government.
Make huge cuts. Change a few rules. Devolve responsibility. Then wash your hands, it’s nothing to do with us.
Passing the buck developed as an art form. Pontius Pilate has nothing on these guys. Nothing could be clearer than the one underlined and emphasised sentence in Grant Shapps’ introduction:
“So Government is getting out of the way where it needs to, and is supporting you where it can. Ultimately, though, delivery depends on the initiative of providers, and the support of local authorities and local communities. It is now up to you to deliver the homes we need.”
The mis-named ‘Affordable Rent’ (AR) product will be the main form of provision in future. Providers will be able to get some grant from the Homes and Communities Agency, but the pot is about half what it used to be. They will have to show how they can generate resources by borrowing (I thought the government didn’t like borrowing?) against the increased rental stream from letting new homes and a proportion of re-let homes at AR levels (up to 80% of market rents), together with other resources such as existing surpluses, s106 planning gain, free or cheap public land, recycled grant from previous developments and so on.
But there are no numbers – no specific expectations, not even a regional distribution of the HCA’s funding (although London is expected to get the same share of outputs as now, around 27%), no expected or even hoped-for split between city town and country. The outcome will depend on the bids, what providers think they can do and where they think they can do it. From housing strategy to housing chaos in one easy step.
The HCA paper does include some detail about AR. The product (and therefore the rental income) will only be available to Registered Providers who achieve an HCA contract for delivery, so that will exclude virtually all councils and all non-developing housing associations and any existing developing HAs who do not win a contract. So that will keep the numbers of AR lettings down and ensure that most re-lets across the stock will be under a continuation of the existing ‘rent restructuring’ rules. Under AR or social rent, the terms of tenancy will be up to the landlord to decide within a policy framework set by local authorities – subject to a 2 year minimum term for AR tenancies. So all future tenancies could be short or long term at the landlords’ whim.
The relationship between AR and housing benefit is going to be crucial. The HCA paper implies that HB will be payable on an AR letting even if the 80% market rent takes it above the local LHA limit. That might offer some protection to tenants who will be on benefits for a long time. However the overall benefits cap of £26,000 will still apply, irrespective of the rent being covered: in high rent areas, that will be the worst of all the new rules in practice. If the aim of building 150,000 new affordable homes is achieved, and say 90% of them are AR and say 60% of those are let to HB tenants, then the cost to the government will run to several hundred millions of pounds, proving yet again that cuts in one place often pop up as extra costs somewhere else.
Providers have to submit their ‘offers’ by 3 May and initial contracts are expected to be sign in July.