According to the newspapers this morning, there is disharmony in the Tory ranks over George Osborne’s speech on cuts yesterday. ‘Sources close to’ Iain Duncan Smith have accused the Chancellor of ‘hacking at the same people’. Nick Clegg also came close to bursting a blood vessel with his condemnation of the idea of further welfare cuts as ‘lopsided and unbalanced’ and a ‘monumental mistake’.
It reminds me of the old adage:  ‘When rogues fall out, truth is revealed, and honest men get justice.’  We can but hope.
Osborne’s speech was extraordinary. It was a long way from the pre-Xmas ‘we’ve turned the corner’ rhetoric. He brought us back to austerity with a bang. Now the job ‘is not even half done’ and 2014 would be the ‘year of hard truths’.
His big message was that the extra £25 billion cuts in the two years after the Election – already agreed by the Coalition – would include at least £12 billion from ‘welfare’. But he offered few examples of where the cuts might come from: in fact he mentioned only two possibilities: cutting housing benefit for the under-25s and charging more rent to higher earners who live in social housing.
On the latter, we have rehearsed before (here and here) the arguments about means-testing social tenants in a great bureaucratic effort to discover the few who earn above £60,000. Oddly, it is not even a welfare cut: people on higher incomes are unlikely to be benefit recipients and, if they decide to move because of their higher rent, they are likely to be replaced by a new tenant who is a benefit recipient (whether in or out of work). So it would have the opposite effect to that he wishes for.
Removing housing benefit from the under 25s would be a punitive and controversial move. Half of the under 25s in receipt of HB have dependent children so it’s not just a matter of believing that a young person should go back home as a consequence. Most graduates begin their working careers in low paid jobs, often in the city they were educated in not their home city. What a dreadful situation they would face: stay in a low paid job without HB or try to get a better paid job, which would trigger having to pay back student loans. It seems particularly cruel.
It is interesting that this announcement about under 25s, together with the strong statement from both Osborne and Cameron that they will retain the ‘triple lock’ for pension payments and all other pensioner benefits – which are hugely expensive commitments – has reignited the debate about inter-generational fairness.
Meanwhile, Bozo himself, the London Mayor, confused everyone by condemning all sides. He said Osborne has got it wrong because he should cut health, schools and international aid instead, but also condemned Clegg as performing ‘a very important ceremonial function as David Cameron’s lapdog-cum phophylactic protection device for all the difficult things Cameron has to do… a kind of lapdog’. Funny but completely meaningless as usual.

Happy New Year and all the best for 2014.

It’s quite a long time, around 40 years, since I picked up an economics textbook. But the basic laws of supply and demand get lodged in your brain and help in the daily struggle to interpret what is happening in the world.
However foggy and distant these memories are, I seem to be better informed about the interaction of supply and demand than our Prime Minister. As the New Year breaks, David Cameron has been keen to make a big noise about his ‘Help to Buy’ scheme, which has now supported 750 households to buy a property. Yesterday he dismissed fears, expressed by almost every economic commentator, that it would create a new property market bubble. His argument was that property prices outside London and the South East are ‘still way below the peak they reached in 2007′. There is, he said, ‘no evidence of a problem’. He dismissed criticism of Help to Buy as ‘London-centric’ (no hint of irony!), pointing out that prices in other regions have been relatively stable, failing to mention that one-quarter of the purchases so far have been in the London and South East.
Better versed in economics than Cameron, Business Secretary Vince Cable takes a diametrically opposing view from his boss. Cable has attacked the Help to Buy policy consistently, repeating his complaints at least twice over the holiday period, warning about ‘a raging housing boom’ in London and the South East on the Marr Show and ‘a recovery based on property inflation’ yesterday in the Evening Standard.
Cable argues that help should be targeted at areas where the property market is flat. ‘Help to Buy is a good idea if prices are collapsing and development is stalled’, he said, ‘I’m sure it has a very useful role to play in Northern Ireland and parts of the North of England’. He attacked the central economic policy of the Government: ‘What I want to see is a real economic recovery based on British industry and exports of goods and services, not an artificial and temporary recovery based on property inflation.’
So what does economic theory tell us about subsidies and how they might impact on the housing market? As a subsidy, Help to Buy works on the demand side, enabling people to borrow more to buy their property. Theory says that subsidy on the demand side puts prices up, which in turn leads to a responsive increase in supply. However, housing is an unusual product because the supply of it is inelastic. Price rises might encourage more existing owners to put their homes on the market but the speed at which the market can respond by building additional houses at the new higher price is extremely slow. The policy will potentially have a big effect on prices before it has any impact on supply. This is simply not what is needed.
The alternative policy of introducing subsidy on the supply side would have very different effects. It would reduce the market price at any level of demand, but also increase supply. Supply would still be inelastic, but the effect of the subsidy would be more direct and predictable for builders. (For anyone interested in reading more, a useful summary explanation of supply and demand for housing can be found here.)
Currently we have no mechanism for introducing Help to Buy in some regions and not in others, so the impact on the housing market in London and South East, which is already drastically overheating, is inevitable and cannot be dismissed in the superficial way that Cameron has done. A further increase in house prices in London will have a wide range of economic effects and will push homes further out of reach of people on even good incomes.
Help to Buy is the wrong policy at the wrong time and acts on the wrong side of the supply/demand equation. In the words of the Institute of Directors, ‘The world must have gone mad – the housing market needs help to supply, not help to buy’.
This policy is not about housing affordability, housing supply, or pursuing the home ownership dream as Cameron would put it. It is a desperate attempt to boost the Tories’ chances at the 2015 Election by creating the appearance of economic good times whilst the truth is less rosy. Nothing is more damning, or more accurate, than Vince Cable’s description of it as ‘an artificial and temporary recovery based on property inflation’.

    ‘Get stuffed’ – what Boris Johnson said to GLA Member Andrew Dismore during questioning about fire service cuts. 

Yesterday the Mayor of London produced his latest ‘prospectus’ for bids to provide ‘affordable’ housing in London. It sets out the terms under which the Mayor’s budget of £1.25 billion will be spent in the years 2015-2018, for which he claims he will provide 15,000 ‘affordable’ homes a year. (My apologies for always putting the word ‘affordable’ in inverted commas; I do that because that’s what they call it – it’s not an accurate description).
What is astonishing about the document is that it contains not one word of evaluation of the current ‘affordable rent’ programme. This has now been around for some time but it is the most secretive and least scrutinised housing programme I have ever known. Information has had to be dragged out of the Mayor and when it does come it tends to be unintelligible.
We did finally last week get some outturn data. It is important to remember that it takes several years to plan and build homes, so the ‘completion’ figures for 2008-09 and 2009-10 result from Ken Livingstone’s programme that Johnson inherited, and the figures for 2010-11 and 2011-12 result from the Labour Government-funded National Affordable Homes Programme – underway before the Osborne cuts had their impact.
Counting all types of ‘affordable’ homes, in 2008-09 a total of 11,537 were completed in London funded by the Mayor; in 2009-10 it was 12,602 and in 2010-11 it was 12,869. In 2011-12 it peaked at 16,173. Then, in the first year that the Johnson/Osborne policies became effective, it plummeted to a mere 8,114. In the first six months of 2013-14 (to October) the figure was a mere 1,490.
It is still the case that the majority of homes for which Johnson claims credit were either programmed by Ken Livingstone before his 2008 defeat or funded by the Labour Government before its defeat in 2010. In short the Johnson era has been a complete and unmitigated disaster with huge rent hikes but still very few new homes.
Why on earth should we believe that his strategy for 2015-18, with a lot less money, will be any more successful? There is no reasoned argument in the prospectus for Johnson’s decision to split the new the ‘affordable rent’ programme into two halves – ‘discounted’ at 80% of market rent and the new ‘capped’ at 50% of market rent. It may be a little victory – an acceptance that rents in the first programme were far too high (they averaged around 65% of market rents). But then again half the new programme will be stuck even more firmly to the 80% ceiling.
Johnson requires providers to sell high-value existing stock or to re-let existing social housing at ‘affordable rents’, or even market rents, in order to cross-subsidise the programme, but there is no information on the assumptions that have been built into the programme – how many are needed to make the sums work? When it comes to contract negotiations, held in secret, how many sales and conversions will the GLA be pressing for?
There are so many unanswered questions, and the failure is so dire, surely it is time for providers and boroughs to make a stand. Some boroughs are already taking a judicial review on rent levels, and good luck to them. If the G15 of biggest housing associations came together and said no, we won’t work through this framework – rents are too high and the financial implications too severe – the Mayor would eventually have to back down. Boroughs should make it clear to the GLA and providers that such high rents are unacceptable in their boroughs.
Former Housing Minister John Healey makes a similar plea in the Guardian today for the sector to stand up for social housing. There is, he says, little by way of sustained opposition. It is irritating the way in which providers and even some campaigning charities get lost in technocratic arguments about the best way to borrow money and how to structure shared ownership arrangements. John hits the nail on the head when he says ‘Much of the housing sector seems reluctant to pick a fight with a hostile government’. He argues: ‘The policies betray a deep hostility to council and housing association homes at the heart of this government. As a senior civil servant confided to me: “David Cameron thinks social housing means sink estates; George Osborne just sees Labour voters.” ‘
John quotes a leading housing association saying that there will soon come a time when even those providers with a strong sense of social purpose (regrettably a diminishing number) are just not able to provide genuinely affordable housing in the capital.
Surely the time has come for a more trenchant defence of the values that underpin the social housing movement? Johnson is failing to build new homes despite having hiked rents up to unforgiving levels. It is madness to remove subsidy from the building of new homes in the knowledge that the cost will either be borne by tenants themselves, by housing benefit, or by selling stuff off.
The failure to provide genuinely affordable housing is the ultimate ‘cost of living’ issue.
It’s time to speak up!

The Institute for Fiscal Studies says the government will put the clock back to 1948. Does this mean we aspire to be a developing country?
The question has been intriguingly asked by Aditya Chakrabortty in The Guardian. We already know from that remarkable book The Spirit Level that Britain is one of the most unequal of the ‘developed’ countries, and that UK levels of inequality are more characteristic of the global south. But Chakrabortty gives us many more examples. For instance, what advanced country would champion the widening of the A14 as a major piece of infrastructure investment, as Osborne did last week? And as he says, Britain now falls behind such third-world models (and I don’t mean that ironically) as Vietnam and Nicaragua in (respectively) maths skills and gender equality.
But this set me thinking about housing-related issues. First, as the media have also been making clear, we have become a nation of extreme debtors. UK credit card debt is not only the highest in Europe, it dwarfs that of the rest of Europe. As anyone who has lived in a developing country knows, inadequate wages mean that people survive by borrowing. And of course we aspire to inadequate wages too – as we know from the news that a new working person signs up for welfare benefits every five minutes. Don’t let’s rely too much on the welfare system though, as Osborne clearly wants to extinguish it. While developing countries like Brazil have created welfare systems where no adequate ones existed before, we’re busy destroying ours.
Of course, our over-reliance on homeownership is much more typical of a developing country than it is of an advanced west European one, and goes hand-in-hand with our propensity to borrow. Many southern countries would love to have a social housing system, especially one like ours where half the sector (the council half) no longer needs state subsidy. We’re eroding that too. In private renting, you could say that the ending of rent controls and the weak enforcement of standards already places us among developing countries, which tend to lack standards or else can’t enforce them. I remember once collecting money to help earthquake victims. I rattled my tin at one man who berated me for supporting countries which have no proper control of building standards. How soon before we reach this state ourselves?
Visiting London Boroughs coping with the ‘beds in sheds’ problem a year ago, it struck me how like dwellings in shanty towns they look. Many don’t even have toilets: they could be equally at home in a Mumbai slum. Unfortunately we’ve given up the common custom of ‘less developed’ countries of looking after older people within the family. However, as the Supporting People system collapses, we might need to relearn quickly the habits still practised in poorer parts of the world.
Another unfortunate feature of many developing countries is the absence of effective town planning systems. Cities tend to grow incrementally and look like down-trodden versions of Miami (not that Miami looks that great). If Osborne and Co return us to 1948 or thereabouts, will they wind the clock back far enough to repeal all the successors to the Town and Country Planning Act 1947 and the system it created, which used to be the envy of other developed countries, let alone developing ones.
There must be many more examples: I invite Red Brick readers to supply their own. Somewhere there must be a seasonal game in this. Except that this is no joke.
Chakrabortty uses a brilliant quote by Indian writer Shashi Tharoor, who says that India isn’t a developing country, in historical terms it’s a highly developed one in an advanced state of decay. Perhaps Britain’s decay isn’t yet as well advanced, but at the current pace it will catch up soon.

Like Budgets and Comprehensive Spending Review announcements, Autumn Statements (AS) tend to spin well on the day – when no-one else has seen the documents or looked at the detail or reworked the figures – but then begin to unravel as the work of scrutiny gets done.
George Osborne’s Statement this year was drowned out by the huge coverage given to the death of Nelson Mandela and by the storm-induced tidal surge, but the criticisms that are gradually emerging have also been relegated to the less-read pages. As always with Osborne, the Statement was highly political and an exercise in smoke and mirrors. His arrogant smirking grin just adds to the feeling that he is up to no good. Given how much stick he has received about his performance, it turns out that what Ed Balls said in response was pretty much spot on.
The key message was made strongly by the Guardian’s Larry Elliot – that Osborne’s austerity plan has delayed the recovery and made sure it is weaker than it would otherwise have been. To make growth look good he has ‘repeated the sins of the past’ by easing credit for house purchase through ‘incentives for banks to lend for property purchase and state-backed incentives for people to take out home loans’. In the subsequent commentary, Osborne has failed to allay fears that he is encouraging a house price bubble to help create a ‘feel good’ factor in the run up to 2015. The increase in stamp duty from more sales at higher prices (but not more production) is also a helpful boost to the Treasury. The bubble is not evident in large parts of the country, and is being led once again by London and the south east. Even so, the Halifax national index shows that house prices are rising at nearly ten times the pace of average earnings. Even the AS revised the Government’s estimate of house price growth substantially upwards.
As the full effect of Help to Buy has yet to be felt, Colin Wiles made the interesting observation that it has already changed the psychology of the housing market, with people rushing to buy in case they are priced out further down the line by the new bubble. So, the fear of the bubble helps create the bubble.  Help to Buy is therefore, Colin says, ’no friend of the priced out generation’.
On council housebuilding, Osborne probably got the headlines he wanted although his initiative may not be what it seems. He gave the appearance of responding to calls from the housing world to ‘lift the cap’ that prevents councils from making the most of the ‘headroom’ in their Housing Revenue Accounts to borrow to build more homes. In the documents the increase in borrowing seems less than he announced, and is small beer anyway.
Councils have called it ‘a small win’ – they wanted the cap abolished – and the Chartered Institute of Housing has said it is ‘far too modest’.
With Osborne, nothing is ever what it seems: to get access to the modest additional loans, Councils will be ‘encouraged’ (I think that means it is a requirement) to sell ‘expensive properties’ to enable them to build on cheaper sites. Each council will have to do this individually and they will be required to demonstrate that they are making best use of their assets. This is code not only for having plans to sell off more valuable property as it becomes vacant but also to convert many more social rented homes to the much higher ‘affordable rent’. As Jules Birch commented: ‘what seems like a major concession to council housing is actually an acceleration of the conversion of social housing to affordable rent.’
Surely it is good to do anything to build more affordable homes? Yes and not necessarily. There are two important measures of affordable housing provision. The first is the number of new homes that are built, the second is the flow of lettings, from existing as well as new homes, to people in housing need. By selling off expensive property, ‘converting’ social rents to affordable rents when homes become vacant, and increasing the right to buy, the Government and especially the Mayor of London are putting all the emphasis on the former, to get the numbers up to save face, and none on the latter. They are aided and abetted by some of the development-obsessed housing associations, and some councils, that get excited about being good ‘asset managers’.
The affordable homes programme is proceeding at the expense of the existing stock of social rented housing. High rents will also put further pressure on housing benefit at a time when the Government’s new cap on total benefit spending can only be delivered by making large further cuts in housing benefit.  The policy might just limp through until 2015 but there will be a terrible crunch shortly afterwards.
The Autumn Statement contains no definition of the ‘expensive housing’ that councils will be expected to sell. In his blog, Jules Birch sources this policy and warns people not to believe it only affects London:

‘the inspiration clearly comes from a 2012 report by Policy Exchange called Ending Expensive Social Tenancies. It defined ‘expensive’ as meaning valued above the regional median adjusted by bedroom size.
It estimated that 818,600 social tenancies worth £159 billion are ‘expensive’ when judged on this basis: 21.8 per cent of England’s council and housing association stock. Of those 339,000 are council (18.7 per cent) and 479,000 housing association (24.3 per cent).
If you’re assuming this is mainly to do with London, you’re wrong: almost one in three social homes in London are ‘expensive’ but so too are 26 per cent in the East of England, 22 per cent in the South East and 20 per cent in the South West. The least affected region, the North East, still had 15 per cent of properties classed as ‘expensive’.”

The AS also announced a new initiative to increase the right to buy through the introduction of agents to help people negotiate their purchase. Trotters Independent Traders come to mind. The Tory promise that council sales would be replaced ‘one for one’ is looking increasingly sick as the latest figures show that only one council home is being built for every seven sold. Not just smoke and mirrors. Deception as well.
 

By Ed Turner
Last week Red Brick reported on the housing elements of the grand coalition deal in Germany and in particular the agreement to make further efforts to bring rent increases under control.
In this post, Ed Turner reports from Munich. Many of the issues being discussed are familiar to the UK; the issues of supply and affordability seem to be increasingly common across much of the EU.
Ed is Deputy Leader of Oxford City Council and leads on Planning for the LGA Labour Group.  He is also a Lecturer in Politics at Aston University (specialising in German politics). The views expressed are his own.
Earlier this week there was a round-table discussion hosted by the Friedrich Ebert Foundation’s “Bavaria Forum” on housing challenges in Munich.  Speakers were Dieter Reiter, the SPD’s candidate for mayor next year, Jutta Blankau, Hamburg’s minister for city development, and Maximilian Heisler, who founded an initiative against tenants being priced out of their areas of the city.  These thoughts are based on my scrawled notes – so should not be taken as an accurate minute.  But there were some rather interesting points which threw up interesting parallels with the UK in the challenges faced, but also contrasts in solutions being sought.

1. Major urban areas face a huge housing need – but probably have more fiscal tools to respond themselves.  In Munich, for example, where the city is growing by some 15,000 people a year, Reiter set a target of 7,000 new flats a year to be built, including a decent proportion with public support.  The city also has first refusal on some social flats sold off by the Bavarian state government (due to concerns about European law which in the end proved unfounded), and is seriously considering buying some of these.  In Hamburg, meanwhile, the city owns 130,000 flats, and hopes to build 6,000 a year more, of which 2,000 would be publicly-supported in one way or another.

2. Rent restrictions are to be slightly tightened by the grand coalition government, but this is not going to solve the problem of high rents.  Currently, in areas declared by the relevant state (Land) government to have a problem with spiralling rents, increases for sitting tenants can be restricted to 20% over three years.  This is to be amended to 15% over three years.  Moreover, rents for sitting tenants cannot exceed those of average new lettings for similar properties.  However, as Jutta Blankau pointed out, these measures still see rents spiralling – as they have done in Munich, in particular, with the “pricing out” of long-standing residents likely to be a top local election issue.  This won’t be solved until supply matches demand. There is a particular issue with modernisation of flats, which allows rises to proceed more quickly.  Here, there is also to be a new restriction – only 10% of the modernisation costs can be passed on per year (currently 11%), with a new restriction that only the total cost of modernisation can be charged this way.  Still, forced “luxury modernisation” of flats remains an important method of “gentrification”.  So too does the forced conversion of rented flats to owner occupation (which is banned by Hamburg’s state government but not by the state of Bavaria, where Munich is located).  An interesting idea is that, where finance for energy efficiency improvements comes from the state investment bank KfW, there could be further restrictions on the impact on rents.

3. Disposals of public land pose a dilemma for policy-makers in Germany.  In Hamburg, the Social Democratic state government has introduced new criteria to judge bids for public land, whereby the price offered comprises only one third of the evaluation.  There is an obvious tension between state governments needing to raise capital receipts, and seeing social housing maximised.

4. Lettings agents’ fees pose a problem – and a familiar solution is being offered.  The coalition agreement states that in future fees will have to be paid by the person who engages the agent (normally – but not necessarily – the landlord).  This is similar to the Scottish model of letting agent fees.

5. Intensification of existing residential areas is hugely contentious.  Here, the discussion took a turn which will be entirely familiar to anyone involved in local politics (probably the world over).  At a general level, there was a desire to see far more flats built.  But when it came to intensified use of land in existing urban areas, all of a sudden the mood changed.  Dieter Reiter expressed some frustration that, in all of his campaign trips around the city with local SPD candidates, not one had identified an area ripe for intensification.  Such schemes were usually highly contentious and resisted by existing locals.

6. Cross-boundary issues pose a real problem.  Reiter sees the expansion of Munich (which has a tightly drawn urban boundary – a familiar situation to those who know about Oxford, Stevenage, or York!) as an alternative to intensification, and rightly points out that, given spiralling land values for residential use in Munich, there is a real risk that new housing within the urban boundary will take away much of what is really valued by local people.   But some neighbouring local authorities are resistant to development, there appear to be few legal tools to force them to co-operate, and where they do agree development it is sometimes at an inappropriately low density.  Hamburg is in a different position as it offers much more in the way of brownfield land for development.

7. Existing, well-housed communities sometimes avail themselves of legal and involvement processes to oppose more housing.  In Hamburg, citizens have the ability to promote local referendums on issues of concern, these are used to block developments, and the housing minister has had quite some flak for using her powers to over-rule these decisions.  She’s also set up fiscal incentives for the city’s districts to agree to development.  Citizens additionally deploy legal processes to prevent new housing development.  Dieter Reiter pointed to the need for politicians to “lead from the front” on these issues, and take into account all possible interests in the community, not just the loudest voices.

So all in all, these challenges are familiar (and perhaps a riposte to those who suggest that the German model of housing provision would offer a panacea to problems in Britain – at least in high-demand areas).  At the same time, the position of housing on the political agenda, the appetite for state action, and the willingness of some politicians to stand up and suffer some short-term political pain for long-term gain was encouraging, and well worth replicating.

We haven’t seen the detail yet, but the Chancellor’s announcement on easing council borrowing caps seems to be much more about keeping the Lib Dems happy than about making any significant difference to numbers of affordable homes.

The plan is to increase borrowing caps by £300 million in total over 2015/16 and 2016/17, which means they will increase from a current £2.8 billion to £3.1 billion. In theory, this would be enough to build about 2,500 extra homes. Councils will have to bid for the extra borrowing capacity via their Local Enterprise Board. Under the plan, councils will make proposals to build new homes using the borrowing facility as part of their LEP when bidding to agree a Local Growth Deal with the Treasury. Ministers will then decide who gets the extra borrowing capacity, based on a value-for-money assessment. The government expects councils to put in public sector land, sell expensive housing assets and do deals with housing associations as part of their bids.

While this is good news, it’s pretty small beer for a sector that’s lost nearly 9,500 homes in the last 12 months through right to buy.  Right to buy is being pushed further – Osborne announced there will be ‘right to buy agents’ to help buyers complete their home purchase and he’ll provide £100 million to increase sales by improving access to mortgage finance. So we could easily see another 10,000 sales per year as a result. And this happens to be precisely his rather optimistic assessment for how many new homes his relaxed borrowing caps could produce.

The chances are that the Treasury has ensured that its forecasts of right to buy receipts balance out the additions to the borrowing caps, and the whole exercise is fiscally neutral. For some reason the Office of Budget Responsibility hasn’t been rolled out to validate (or otherwise) the Autumn Statement, so we can’t know for sure.

What is certain is that deals involving land, asset sales and partnerships with associations will all take time to put in place. A 2015/16 start date may be optimistic. The number of easy pickings for sales of ‘high-value vacant stock’ will be limited. Not many councils have potentially valuable empty properties hanging around like those recently sold in Lambeth, despite tabloid stories along the lines of ‘Is this Britain’s most expensive council house?’ The danger is that it will encourage ever more dubious schemes like the notorious Earls Court project which involve knocking down occupied homes in places with high land values.

The LGA’s response that the announcement ‘does not go as far as we would like’ seems tame given that they had just repeated their call for borrowing caps to be abolished.  CIPFA described the Chancellor’s move as ‘massively disappointing’ and the CIH said it was ‘far too modest and there is a risk that any gains could be offset by the requirement to sell high-value social housing and the expansion of right to buy’. Perhaps there is some good news in that borrowing caps are no longer sacrosanct, but a serious step is still needed either to abolish them or change the borrowing rules, or both, which could enable 60,000 more homes to be built over five years.

Which brings us back to the starting point. Unless the details when they appear offer something new, this looks like a bit of window dressing to give the impression of action when nothing much will happen and it won’t cost the Chancellor anything.  Above all, it was no doubt part of some quid pro quo for Nick Clegg, which will enable him to claim to his party that he’s delivered on a conference pledge, while at the same time he’s probably signed up to something much more disastrous elsewhere in Osborne’s autumn package.

Donations to the Disasters Emergency Committee Philippines Emergency Appeal can be made here: http://www.dec.org.uk/

In the aftermath of two major disasters in the Philippines, Homeless International’s local partner organisation in the country is supporting relief efforts and working on longer-term recovery for those affected.

In early November, Typhoon Haiyan – known as Yolanda in the Philippines – killed thousands of people and caused widespread devastation across the country. Only a few weeks earlier, a 7.2 magnitude earthquake hit Bohol and Cebu islands in the Central Visayas region. People living on these islands had hardly recovered from the destruction, displacement and loss of lives caused by the earthquake when Haiyan hit, affecting the same Central Visayas provinces as well as the Eastern and Western Visayas.

Housing doesn’t appear in the media headlines about the deal but there has been a significant agreement on controlling rents. Germany has the highest proportion of renters in the EU, and there is a tradition of long-term investment in property ownership for renting as well as a history of controls over the rate of rent increases (including strong laws against ‘usury’). Major strains have appeared in the housing market in recent years, with growing shortages especially in the main cities leading to strong pressure on rents. In Berlin, where there have been rapid rent increases, the Senate has recently agreed a law – The Law on the Prohibition of Misuse of Housing (now there’s an idea!) – banning the renting out of apartments to short-term visitors to protect local people from growing tourist demand.
The new Coalition’s package for affordable housing includes tax incentives for residential development and new legislation to allow local senates to cap rents in areas facing large increases. Rents on new homes will not be allowed to be more than 10% higher than the local average and local government will be able to cap increases on existing homes to 15% over 4 years. Designed to protect low and middle income tenants from exploitation, critics have argued that it will do little to stop the escalating gentrification of more desirable neighbourhoods – which is now similar to that which we have experienced in London and some other UK cities.
It is intriguing to think how the CDU/SPD policy could be applied in the UK, where there is a presumption that rent control of any kind will choke off investment. There is a strong collective memory that rent control led to the withering away of the private rented sector. Of course it was more complex than that, and high levels of subsidy to the other main tenures – home ownership and social renting – also had a lot to do with it. But the truth is that no-one really knows what would happen in the current UK housing market if rents were controlled. There is certainly some usury involved at present, but most landlords with heavy mortgages are not making an excessive rate of return on their investment even though rents are incredibly high – because the high value of property is the underpinning problem. Arguing for an entirely new system of rent setting across the whole sector could well scare the horses, so new policies to restrict the rate of rent increases seems to have more potential.
The debate has therefore settled on different forms of ‘rent stabilisation’, as in the recent reports from the London Assembly and Shelter, and as advocated by Jack Dromey when he was Housing shadow minister. Allied to longer tenancies plus licensing and greater enforcement, plus tough regulation of agents, it means there is a workable package.
Any form of rent regulation is likely to be opposed by the Tories, as happened on the London Assembly, unless David Cameron makes another major U turn. If Labour goes into the Election with rent regulation as a central feature of a comprehensive package to control the cost of living it would help to put the Tories on the back foot.
And Labour could claim it is just following the policy of Europe’s most successful Conservative, Mrs Angela Merkel.

In the week that the Scottish Government issues its white paper on independence it’s good to reflect on what they are already doing differently in housing, given that’s it been devolved to the Scottish Parliament for more than a decade.

First of all, while Whitehall cut housing investment by almost two-thirds after the 2010 spending review, Holyrood made rather smaller cuts. Initially housing suffered more than other capital spending, but the SG has been putting money back into the housing pot. The original three-year affordable housing budget for 2012/13-2014/15 was £630m, but it now totals just over £972m.  For the final year of the current programme, 2015/16, a total spend of £391m has been allocated, an increase of about 21 per cent on the average for the previous three years.

Scotland built over 8,000 affordable homes in 2009/10 but the figure slipped downwards to just over 6,000 in 2012/13.  The fall was less steep than England’s, though: from its peak in 2010/11 English affordable output fell by almost a third in only two years.  And Scotland has been meeting its target of building at least 6,000 affordable units annually.

Most remarkable is the continued emphasis on council building, which reached a recent record of 1,116 completions last year. This not only exceeded the programme’s target but was the highest level of council completions since the mid-1990s.  It also brings Scotland’s total very close to England’s – a country ten times as big. One reason is of course that Scottish councils suffer no restrictions on their borrowing, and prudential loans are a major source of funding (alongside grants and contributions from revenue).

The issue of cuts in grant rates has been a contentious one in Scotland, but the response has been very different. The SG set up a joint working party with social landlords to advise on grant rates, which recommended in July that they be raised across the board by £16,000 per unit. Remarkably, the Scottish Government accepted the recommendations in full. Grants have been raised, and some extra money put into the programme to keep it on target.

Of course, there is plenty still to criticise in Scotland: for example, housing association output has fallen steadily and Scottish associations are more vulnerable to welfare cuts and changes in the funding environment.  The Scottish Housing Regulator had to rescue three from near-insolvency in the past year.  Nevertheless, the minimum grant rate for associations is now higher at £58,000, or nearly three times English levels.  This reflects much greater government concern in Scotland about keeping rents at affordable levels.

What else is progressive about Scotland? Well, the housing bill which will end right to buy in three years time is now before the Scottish Parliament. Critics have said this is the wrong way to do it, that the delay will only encourage sales in the interim. But of course in Scotland the right to buy has already been ended for new tenants, and by 2017 at the latest it should be gone completely.  The SG says it is doing this to ‘safeguard social housing stock for future generations’, a wholly admirable motive.

Finally, of course, Scotland abolished the ‘priority need’ categories for homeless households at the end of last year.  Even so, homelessness has been going down in Scotland, albeit slowly, but the trend is opposite to that in England.

What more is promised if Scotland becomes independent? The white paper says that the bedroom tax will be scrapped and the roll out of universal credit will be halted. Benefits will rise in line with inflation. It says that ‘social housing remains an essential part of our system’.  It makes rather vague promises of ‘greater integration between our policies on housing supply and housing benefit support’.  There’s not much detail, but I must admit that if I lived in Scotland I know which way I’d be tempted to vote.