Category: Blog Post

In 1952 the winning goal in the FA Cup Final was scored by a Chilean, George Robledo.  Newcastle United beat Arsenal 1-0.
There’s a bit of a fuss on this weekend.  But 60 years ago, when Queen Liz II was ascending the throne, not only did Newcastle win the cup but my family was busy moving into a new council house in Newcastle.   It was a ‘Bevan House’, built to the standards demanded by Aneurin Bevan when he was Minister of Health (and Housing) in the Attlee Government.  Space and amenity standards were excellent and the estate was a great place to grow up.  (For those that know the city, it was near the Kenton Bar – which has just been demolished – on the fringes of Cowgate.)  The average council rent in 1952 was 18s per week – equivalent to around £25 today.

On more occasions than I can count, we have advocated on Red Brick (for example here and here and here) that the most effective way of boosting growth in the economy is to get some money, public or private, into housing construction.
We have also commented on the extraordinary process of quantitative easing (QE) and how hundreds of billions of pounds have been flushed into the economy without any clear idea of where the money will end up and what benefit it would bring in terms of lending in the productive economy.

After a few days away from blogging on the North Cornwall coast (not, I hasten to add, to follow the Olympic torch) I had some catching up to do with my reading.  So I was struck by the confluence of four different bits of information from the last week.
First, our esteemed Housing Minister Grant Shapps said something that I agreed with!  He pointed out that, with 245,000 additional households being formed each year, we will continue to build well below the number of homes that are needed.  He should of course have gone on to say that his policies mean that the number of starts is falling and he is making things much worse.

Two hours last night in front of the telly, and there couldn’t have been a bigger contrast between the two programmes I watched.
I have praised Nick Knowles’ ‘SOS DIY The Big Build’ before, but last night’s story was as stunning as any.

The double dip recession was driven by cuts in public spending on housing.  That’s the conclusion of Ben Chu in the ‘Eagle Eye’ Econoblog in the Independent.
Commenting on the ONS revised construction figures for the first quarter of 2012, he points out that the construction sector shrank by nearly 5% over the three months.  While private housing construction rose by 1.3%, new public housing construction fell by 10.9%.  General infrastructure investment fell 15.9%: the statistics do not split public/private but the majority of big projects are commissioned by Government.

By Monimbo
Undeterred by Red Brick’s comprehensive explanation of how the right wing think tank Policy Exchange failed to predict the deterioration in the government’s housing performance, and of its very limited success in prescribing policies that the government has been willing to pursue, its communications director Nick Faith is now urging the government to build ‘thousands of new, good quality homes – especially in northern, urban areas’.

IPPR – the Institute for Public Policy Research – releases two important and well-argued reports today as part of their comprehensive review of housing policy.  Some common themes emerge even though there couldn’t be a stronger contrast between the geographical focus of the reports: ‘Alike in Dignity’ looks mainly at Bradford, ‘Affordable Capital’ follows a more well-trodden path in looking at London.
One of the reasons I like the reports is that they do not look at housing in isolation, but develop a narrative that brings together housing, benefits policy, and the needs of the local economy, especially in relation to jobs and incomes.  Housing policy has been bedevilled by the separation between the two Whitehall silos of Communities and Local Government on the one hand and Work and Pensions on the other.  By far the biggest flow of money into housing – housing benefit – has had little to do with delivering strategic housing objectives, and IPPR is making a big contribution to bringing these separate worlds together.
This may or may not lead logically to supporting IPPR’s developing position in favour of the localisation of housing benefits.  The reports both argue the case, showing how different circumstances in each area lead to a clear need for housing benefit policies to be tailored to local requirements – for example enabling the better matching of rates, thresholds and caps.  They point out that localisation would require housing benefit to be taken out of the proposed Universal Credit, and there are other reasons for supporting that.
I must admit to a deep-seated fear that the outcome of localisation might be worse not better, so I need to wrestle with these arguments a bit longer.  It may be just that I have a deep-seated fear of Boris Johnson, because I can see the case for localisation more clearly in London, where the Mayor oversees an entire region, than other parts of the country where accountable regional institutions are weak or non-existent and there is often little relationship between local government boundaries and housing markets or journey to work areas.
A second common theme is the irresistible case IPPR make for a new ‘something for something’ deal with the private rented sector, based on accreditation and a new mechanism for rent stabilisation like the New York model.  Local priorities might vary – for example if the dominant PRS issue is standards or rents – but the sector must become a more important concern for local government as more and more families are accommodated in it, including more vulnerable households.  It is a simple quid pro quo: the amount of money pouring into the sector should also be capable of delivering increasing professionalisation of management, less bad practice and improving standards.
The focus on Bradford is welcome following the recent controversial by-election.  IPPR shows how it is England’s most economically polarised district, with the biggest gap between its most and least deprived areas, including between housing ‘haves’ and ‘have nots’.  Those on the lowest incomes and living in the cheapest areas still face the worst affordability constraints, measured as the proportion of their income taken up by rent.  The areas with high concentrations of low income households are also associated with the poorest quality housing stock, overcrowding on the one hand and empty properties on the other.
There are a couple of points in the London report that are worth highlighting as well.  IPPR says that London is different – although not detached – from the rest of the country and that its uniqueness as a world city requires unique policies.  Despite the mayor’s new powers and control over public housing investment resources, the London housing strategy is largely just a restatement of the dogma of national policy.
IPPR is highly persuasive in arguing for a regional increase (they propose £10 per week) in the local housing allowance caps.  This relatively small adjustment would mean that the majority of claimants would not lose out as a result of the reforms, and that all of the others would see their losses reduced accordingly.
They also support the introduction of new taxes on the foreign buyers of prime London property.  A huge proportion of turnover in London – with inflationary consequences across the housing market – has been based on foreign money, much of it a flight of capital from volatile economies (Russia then Greece and now apparently Italy).  Recycling some of this wealth seems a good idea in principle although finding a regime which has stickability when put up against legions of tax consultants and lawyers may be the real challenge.
Both reports have a wealth of data and analysis and are well worth downloading.

Guest blogger Bill Peters writes
In the latest Inside Housing (4 May 2012) the current Minister Grant Shapps tells us ‘the future is bright’ and particularly in relation to social housing. While accepting that the government has challenged some of the conventions by which social housing has been run, this process was already underway under Labour. Moreover does he really think that his rather glib claim to have put strong foundations in place for a bigger and more viable social housing sector really convince anyone?
Mr Shapps spends a lot of time talking up his modest spending and policy commitments while pretending not to notice the deepening housing crisis which he is presiding over.
By contrast, today’s CLG Select committee report on housing finance and supply is a more considered reflection on where we are and where we need to be. It rather generously suggests Mr Shapps’ Laying the Foundations is a start but then argues the need for more investment to tackle the palpable housing shortage. The Committee recommends large-scale investment from institutions and pension funds, changes to the financing of housing associations, including a new role for the historic grant on their balance sheets, greater financial freedoms for local authorities and new and innovative models, including a massive expansion of self-build housing.
There is much food for thought here and it is important that the report is considered carefully and acted upon rather than batted away as is often the case. The reality is CLG has been lacking any detailed strategy based on an assessment of needs now and into the future – the report takes us in this direction. Housing should be leading the UK out of recession rather than driving it ever further into it through limited vision and leadership and a failure to secure the necessary resources from both the Treasury and the market.
Perhaps sound bites can take a back seat for a while and we can get down to some serious policy work?