Category: Blog Post

HRA ring fence: the need for scrutiny

Post author By Steve Hilditch
Post date March 8, 2011

Steve Hilditch

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. Steve sits on the Editorial Panel of Red Brick.

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In previous posts we welcomed the Government’s decision to implement John Healey’s proposals to reform council housing finance through ‘self-financing’. We expressed a couple of doubts about the new proposals, notably that the Government had abandoned Labour’s plan to allow councils to retain all of their capital receipts from council house sales.

One other noteworthy distinction between the two sets of plans concerns the operation of the Housing Revenue Account ‘ring fence’ – ie the rules governing transfers between the HRA, which records income and expenditure on council housing, and the General Fund, which covers the rest of council spending.

John Healey’s ‘Prospectus’ published a year ago showed the need for gradual reform of the way the ring fence operates to make the system fairer for tenants. It showed that at least 40% of general management costs are incurred on what it defined as ‘non-core’ services, services that arguably should not be met from rents but from the general income of the council. This one statistic makes a mockery of any accusation that tenants are ‘subsidised’. Therefore, over time, it was proposed that non-core services should be regarded as services provided by the landlord but funded from sources other than rent. The consultation showed virtually unanimous support for the continuation of the ring fence and the Prospectus proposed that new updated guidance should be issued.

In the Tory proposals ‘Implementing self-financing for council housing’ published in February 2011 the ring fence merits a single paragraph. On the principle it accepts that the system should ensure that ‘council taxpayers do not subsidise services specifically for the benefit of tenants and that rent is not used to subsidise functions which are for the benefit of the wider local community’ – although that statement is open to several interpretations. My concern is that it states ‘In line with our emphasis on localism we do not intend to issue new guidance on the operation of the ring-fence. We expect local authorities to take their own decisions, rooted in the principle that ‘who benefits pays’.’ The last guidance was issued in 1995 when council housing finance was very different from today.

Although the legal position will not change, the lack of guidance, the dilution of Labour’s plans for independent regulation of council housing, and the message the government is sending out that the operation of the ring fence is down to local discretion, combine to create a real danger for tenants. Council Finance Directors and local politicians of all hues will look enviously at a fairly well-funded HRA and see opportunities to shift resources to help their beleaguered General Funds.

The ring fence is easily breached and open to manipulation. In one council I worked with, there were more than 60 types of transaction between the HRA and the General Fund. These ranged from recharges for council overheads and democratic costs, to dozens of service level agreements with charges for items like central accountancy and HR, to procurement of office furniture, to rent for council premises. Then there are age-old practices where council tenants are charged twice, as rent payers and as council tax payers, for a single service – for example paying towards general street lighting but also paying extra for lighting on estate roads.

These charges have often been set historically with little challenge. One of the many benefits of ALMOs was that the process of setting up the management agreement required recharges and SLAs to be identified and renegotiated, a process sharpened by the need to obtain 2 stars in the inspection, which led to better services and significant cost reductions. My fear is that local discretion will reverse this progress and cost tenants dear over time. The temptation will be just too great – and it will undermine the move towards council housing being run as a self-financed business within the council, with services paid for out of rents in a very transparent way. The case for central guidance is strong.

Tenants have been vigilant on this in the past – witness the ‘Daylight Robbery’ campaign a few years back. In future, detailed tenant scrutiny of the local arrangements will be essential, and well-informed campaigning tenants groups could make a real difference.

Tags Council house, Housing revenue account

Blog Post

‘Bleeding stump’ charge adds insult to injury

Post author By Steve Hilditch
Post date March 7, 2011

Steve Hilditch

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On top of the policies that have come out of Communities and Local Government department since the Election, which are bad enough, many people in the housing and local government world have been infuriated by the style of political argument adopted by Eric Pickles and Grant Shapps. It all seems so unpleasant.

Anybody with a contrary view is rubbished and serious debate about the huge and sweeping cuts to frontline services is reduced to a few soundbites about the salaries of some senior officers or a couple of funny-sounding job titles. The fact that Tory and Liberal councils are making huge cuts to frontline services is brushed aside as Labour councils are denounced for making supposedly politically-inspired cuts.

Shapps raised the political temperature by accusing Liverpool of a ‘disgraceful attack on the vulnerable’ when it made cuts to its supporting people programme. This was believed to be not entirely unconnected to the fact that the council pulled out as one of the vanguard communities for the Big Society – because of the scale of the cuts enforced by the Government. Last weekend Pickles accused Labour councils of adopting a “bleeding stump” strategy.

According to the BBC, Pickles said that Labour councils are making bigger than necessary cuts for ‘politically motivated reasons’ and that he ‘is angry about councils publicising spending cuts and blaming them on ministers.’ Even his own coalition partners have had enough: last month a large group of Lib Dems complained about his approach and said he was engaged in ‘gunboat diplomacy’ with local government.

It is therefore good to hear that the Cabinet Secretary has officially rebuked the Prime Minister over the ‘unacceptable’ behaviour of Pickles’ special advisers and the way in which they brief the media. Cameron has been told to ‘restrain his aides’. Politics is a rough old trade, as they say, but this action appears to be unprecedented. The Cabinet Secretary Gus O’Donnell’s letter, according to PR Week, read: ‘This behaviour is unacceptable. I trust you will agree with me and take necessary action to make sure that people understand this will not be tolerated.’

All over the country Labour councils have been struggling with huge front-loaded cuts to their budgets. There have been large demonstrations at many council budget-making meetings by community organisations seeking to save their services, and Labour councillors dedicated to serving their communities have faced impossible decisions. Pickles ‘bleeding stump’ comment adds insult to injury and will cause enormous resentment.

It is probably unconnected, but last week I signed up to Twitter for the first time, only to receive an email within minutes which read “you are being followed by the Conservatives”. It’s an alarming thought.

Tags Department for Communities and Local Government, Labour councils, Local government

Blog Post

Localism Bill Committee debates social housing clauses

Post author By Steve Hilditch
Post date March 4, 2011

Steve Hilditch

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This week the House of Commons Committee examining the Localism Bill moved on to Part 6 of the Bill, the part dealing with social housing. Over the coming few sessions, the Committee will look at the various government proposals for homelessness and allocations, social housing tenancies, mobility, regulation, HRA reform, complaints and the Ombudsmen function. It is a huge agenda of change, much of it controversial.

In the first debate on this part, Shadow Housing Minister Alison Seabeck set out some general comments on the government’s approach and that of the Labour opposition, extracts are included below.

Readers interested in the detail of the Bill and the Parties’ stances on the issues coming up can follow the full debate clause by clause through the ‘They Work for You’ website. Start the housing section of the Localism Bill here.

The Committee has a coalition majority and its members (all parties) currently are:

Jack Dromey, David Ward, Bob Neill, Fiona Bruce, Henry Smith, Gavin Barwell, Ian Mearns, Brandon Lewis, Nick Raynsford, James Morris, Andrew Stunell, John Howell, Eric Ollerenshaw, Heidi Alexander, Iain Stewart, Siobhain McDonagh, Bill Wiggin, Alison Seabeck, Nicholas Dakin, Stephen Gilbert, Jonathan Reynolds, Julie Elliott, Greg Clark, David Simpson, Alun Cairns, Barbara Keeley

Extracts from speech of Alison Seabeck MP on 1 March 2011

“Social housing is an integral part of the housing mix in this country. It provides secure and affordable accommodation for low-income families, for pensioners and for people who are unable to work or who cannot find a job and are vulnerable. Historically, it has been a safety net ensuring that the most disadvantaged in our community, as well as those in housing need for a very broad range of reasons, retained the human right to a roof over their head. Housing is a human right that was upheld by the Supreme Court in a ruling on Manchester City Council v. Pinnock, and more recently in the case of Hounslow LBC v. Powell, in which the judges who heard the appeal talked about “respecting a person’s home”.

“Most importantly, social housing—I would prefer not to label it in that way—forms an essential part of many communities. They are homes, sometimes occupied by successive generations of the same family, which make up communities. Communities come in all shapes and sizes, but even those that may be seen by the outside world as difficult areas have a sense of strong community.

“The most recent statistics from the Department for Communities and Local Government show that 17% of households in England live in social rented housing; for pensioner households, the figure rises to more than a fifth. About a quarter of ethnic minority households live in social housing. The median household income in 2007-08 in social housing was just £10,900 a year. Those living in social housing are not in a land of milk and honey, as is sometimes suggested. Many are vulnerable, many are poor and any changes to the social housing system need to be approached carefully and with sensitivity. If only the Government had taken such an approach.

“We know that the proposals in the Bill did not feature in manifestos; they were either opposed or denied by the Conservatives and Liberal Democrats. The Miniuster (Andrew Stunell) repeatedly put his name to early-day motions in the previous Parliament on matters which now fall within his portfolio. We want to understand at which point he changed his mind on the importance of security of tenure and affordability. Was it before or after he was appointed to a position within a Government led by a Tory Prime Minister?

“We seek to amend the Government’s proposals in order to increase protections, defend the long-held rights of those in social housing and those who expect to move into social housing, and provide safeguards for homeless families within the framework of the Bill.”

Tags Alison Seabeck, Localism Bill, Social housing

Blog Post

Godzilla versus King Kong: the new Affordable Rent model versus the new Housing Benefit regime

Post author By Steve Hilditch
Post date March 2, 2011

Steve Hilditch

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On 28 February, in answer to a Parliamentary Question, the Minister of State at Work and Pensions, Steve Webb, admitted that his department “has not estimated the proportion of tenants in social housing likely to claim housing benefit if rents for new tenants are let at 80% of market rates”.

This would seem a crucial piece of information and illustrates how much prejudice and how little evidence was used to determine the many changes to Housing Benefit the government is committed to introducing.

Fortunately others in the real world have been doing some background. At pretty much the same time as Mr Webb was making his admission, Family Mosaic Housing Association was publishing research based on real life calculations for a sample of their properties and tenants. This showed, in their words, that “setting rents at 80% of market rent would increase our clients’ requirement for housing benefit by 151%”.

Like a lot of housing associations, Family Mosaic does not seem to be hostile to the government’s proposals to introduce flexible tenancies or to put rents up to some extent to fund new development. It appears that quite a lot of landlords think that they should have more ‘freedoms’ and that their tenants should enjoy fewer rights (this is the long-term character flaw in my view). But at least FM deserve a little credit for digging into the issue and publishing the results.

The report states that “the impact on tenants will vary by location, with those living in inner London the hardest hit: for most of those in Essex, social rents are already at 60-80% market rates” and concludes that “for those tenants receiving benefits, the proposed new affordable housing model creates, or worsens, the poverty trap, acting as an additional disincentive to gain employment.” Rents for their properties in London would increase by over £100 per week and in some cases by over £200 per week. The worst affected people will be those on benefits facing large increases in rent but who are also likely to be caught by the overall benefits cap of £26,000, as Tony has pointed out in previous Red Brick posts.

If (when) the new rent regime comes in, income to FM to support their development programme would indeed increase, but this would be significant only in London. The cost would be shared by the new tenants paying higher rents and by Housing Benefit. If the increased cost in HB terms is anything like the figures published by FM, there will be a head-on collision between Godzilla – Eric Pickles’ policy of moving towards market rents as a way of funding development – and King Kong – Iain Duncan-Smith’s policy of cutting housing benefit to the bone.

Tags Affordable housing, Housing Benefit

Blog Post

Let them drink soup

Post author By Steve Hilditch
Post date March 1, 2011

Steve Hilditch

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As I lived in Westminster for nearly forty years, readers will forgive me if I have a sharper focus on what goes on there. There is normally plenty to report. Mostly over the forty years it has been bad news. Always run by the Tories, they sank from being a paternalist council that built an astonishingly high number of council houses in the late 60s and early 70s to the depredations of Lady Porter and the post-Porter policy of shipping as many homeless people as far away from the borough as possible.

But it is their policy on street homelessness that demonstrates that they have been, and remain, fully paid-up members of the nasty party. The latest event in a long history is their plan, through a new bye-law, to ban soup runs and make sleeping on the streets illegal in a defined zone of the city, around Westminster Cathedral in Victoria. (It was in the Daily Mail, under a headline containing the word ‘callous’, so it must be true).

There is a contradiction in the stance taken by Tory Cabinet member for Housing, Angela Harvey. She complains that, of the people attending the soup kitchens, “The majority will not be rough sleepers… you see them going off with large carrier bags stuffed full of food which is for them and their house mates.” Now if that is the case, logically you might ban the soup runs. Or you might exercise your mind and wonder why it is that people need to come out on a freezing night to find free food. But why would you ban street sleeping if the people attending the soup runs are already housed?

Old Etonian and millionaire Cabinet member Sir George Young once said (or ‘quipped’ if you prefer the softer version in Wikipedia): “The homeless? Aren’t they the people you step over when you are coming out of the opera?” Quip or not, it reveals an attitude which many long-term observers of Westminster Council think also reflects the council’s real motivations: keep the place tidy and get the poor out from under our feet.

There is a genuine debate about the effect of soup runs, and whether they save lives daily or encourage people to stay out of hostels and on the streets. Westminster knows it is a balanced argument because it sponsored research from LSE which produced a sensible assessment of the pros and cons in a report less than 2 years ago. The research identified the downsides of soup runs but concluded that they “provide a safety net by making available food and social contact to those who are unable or unwilling to access other services.”

But even if you think soup runs should be banned, the first article of the Bye-law is not about that. It bans street sleeping itself. “No person shall lie down or sleep in or on any public place.” And “No person shall at any time deposit any materials used or intended to be used as bedding in or on any public place”.

As Ken Livingstone put it:

“The idea with all the other problems we’ve got, with crime, that we should have police diverted to seizing their soup is just bizarre. I think this is just another: ‘Can we move the poor on from Westminister?’”

Tags Homelessness, Soup kitchen, Westminster Council

Blog Post

Releasing the grip of state control?

Post author By Steve Hilditch
Post date February 23, 2011

by Monimbo

Senior housing policy expert writing under a pseudonym.

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.

Tags Competition, Public services

Blog Post

Cameron’s reforms: quick, count the spoons

Post author By Steve Hilditch
Post date February 22, 2011

Steve Hilditch

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‘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.

Tags Competition, Public services

Blog Post

Auf Wiedersehen, Pet

Post author By Steve Hilditch
Post date February 20, 2011

Steve Hilditch

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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.

Tags Communities and Local Government, Local government

Blog Post

Todays HB U-turn should encourage campaigners

Post author By Steve Hilditch
Post date February 17, 2011

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.

Blog Post

Passing the buck for new homes

Post author By Steve Hilditch
Post date February 14, 2011

Steve Hilditch

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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.

Tags Affordable housing, Housing association, Housing Benefit