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London Housing Budget in a Pickle

By Nicky Gavron AM, Labour’s Housing and Planning Spokesperson on the London Assembly.
The coalition government has slashed London’s housing budget by 60 per cent, although you wouldn’t know it from the press release. Under the cover of giving new powers to City Hall, a budget of £3 billion has been spun to mask the huge cutsLondon faces.
Boris Johnson described Eric Pickles’ £3 billion settlement as “excellent”. But it is nothing of the sort.
Not a penny of Pickles’ money is new. It was all previously within existing London budgets, including:

  • Money the government pledged to the Olympic Park Legacy Company (which soon becomes the new Mayoral Development Corporation); and
  • £1.4 million of the now axed London Development Agency’s staffing budget.

The budget trumpeted most by the Mayor – £1.9 billion for housing – is a 60 per cent cut on the amount given to London in 2008 by the previous Labour government.
The Labour settlement gave London more money over three years than the Tories are now giving the whole country over four.
Could anyone take this spin as anything other than an attempt to mask the huge cuts to housing and regeneration inLondon?
With this reduced budget settlement for London come a host of new powers and responsibilities. The Mayor accurately describes the new powers as a “landmark” for the city. We agree. Labour has always supported more housing and regeneration powers for City Hall, especially when we are in the grip of a housing crisis.
Rents are rocketing and supply is plummeting across all sectors. But, faced with these challenges, what is the Mayor doing with his new powers?
He does not have a single policy to deal with extortionate private sector rents – believing it should be left completely to the market. And on the supply of affordable homes even he admits his policy is completely unsustainable. Housing associations will be forced to make up the shortfall left by government cuts by borrowing excessively – a policy that threatens their long-term viability.
When seeking election the Mayor said there was capacity to build 40,000 homes on land under City Hall’s control. In typical Johnson style he promised to “put his land where his mouth is”.
But this pledge has gone unmet. Housing completions on land he controls have plummeted to less than half the number Ken Livingstone delivered.
Under Boris Johnson London has more powers but things are going backwards. We urgently need a Mayor with a real plan who can use all the levers now at City Hall’s disposal to tackleLondon’s housing crisis.
Nicky Gavron can be followed on twitter @nickygavron and at nickygavron.wordpress.com
London Labour Housing Group can be followed on twitter @fairdealldnhsg and on the Fair Deal for London Housing Facebook page http://www.facebook.com/#!/groups/FairDealforLondonHousing/ 

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Lurking danger in red tape review

Once upon a time Governments cared about the neutrality and independence of people that were appointed to undertake public tasks.  But the announcement that the Cabinet Office’s ‘Red Tape Challenge’ review of housing regulation is to be championed by Simon Randall and Stephen Greenhalgh puts two of the country’s most dedicated Conservatives in charge of a dangerous exercise that could have major ramifications for the social, private rented and construction sectors.
Simon Randall CBE has a string of Tory appointments and Cllr Stephen Greenhalgh – described by Conservative Home as ‘a successful entrepreneur and landlord’ (no conflict there then) is of course the Tory Leader of Hammersmith and Fulham.  Greenhalgh notoriously co-wrote the Localis pamphlet on social housing which, despite denials by Grant Shapps and others at the time, became the template for the destruction of the social rented sector which the Government is now pursuing.  He is also behind the policy of redeveloping social housing estates in his borough against the wishes of the residents.
We have previously warned on Red Brick that the Red Tape Challenge holds serious dangers for the sector and the standards it operates to, and is mainly a device to bring in deregulation whilst no-one is looking.
As an example of the lurking danger in this exercise, most people in the sector believe that there is a need for stronger regulation of standards in private renting and in particular in houses in multiple occupation.  Yet a series of regulations to do with private renting and HMOs are on the Red Tape list for review and possibly for abolition.  Indeed, the Cabinet Office trumpets as beacons what has already been done by the Government to deregulate short-term holiday lets and HMOs.
The need for greater not less vigilance in housing is amply demonstrated by the publication of a shocking report by a group of housing associations in Staffordshire warning that the housing benefit cuts could see private landlords ‘subdivide’ properties to provide homes for those displaced from social housing.  The report shows the extreme danger posed by de-regulation when it is driven by the supposed need to provide ‘choice’ for tenants and reduce the ‘burden’ on landlords.  Unlike the Red Tape Challenge, the report concludes that councils should increase regulation of the private rented sector and give higher priority to the ‘enforcement of minimum standards’ as the number of low quality but more affordable houses in mutliple occupation increase.
The Staffordshire case is the reality of what is happening in the sector, with benefits increasingly cut well below even reasonable social rents and many more desperate people seeking solutions on the private market.
Messrs Randall and Greenhalgh claim they wish to hear the sector’s views and, always willing to help, here is the reply email: [email protected]  I hope points like those contained in the Staffordshire report are made loud and clear.  But I fear that the Red Tape champions will hear only that which fits their world view.  Deregulation is set to become the next in a long line of battlegrounds.

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The Daily Mail does the minister's dirty work – again

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?

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Tenants don’t count says Shapps

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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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’?

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LONDON ELECTION NEWS ‘Fair Deal for London Housing’ campaign now on FB and Twitter!

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

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Goodbye ‘Sir’ Fred the Shred but 'Dame' Shirley Porter should be next

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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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.