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In a series of top class articles in Inside Housing, Keith Cooper has raised the increasingly tricky issue of cash from council housing being used to prop up other council services as the cuts bite ever deeper.
In the latest, Keith poses ‘the moral dilemma’ of using money raised from rents in the ‘relatively spry’ housing revenue account (HRA) to relieve the unprecedented pressure on council budgets. Inside Housing itself takes an unusually strong editorial line: ‘The councils might technically be in the right here – but morally they are most definitely in the wrong.’
Keith’s investigation focuses on four councils where significant sums have been transferred from the HRA to the General Fund despite the existence of a statutory ‘ring fence’. As he rightly points out, the introduction of the ring fence in 1989 was designed by the then Tory Government to end the practice of councils cross-subsidising council housing out of the rates to keep rents down. The four examples that Keith quotes were using a specific loophole relating to cash left over after the transfer of stock to housing associations. They seem to be entirely legal transactions. The sums involved were large, but they raise more general matters of principle and they expose a moral dilemma that Red Brick has highlighted before.
Even without the specific loophole identified in Keith’s cases, clever council finance directors have always known how to work the system and have done so in both directions – normally, to be fair, to help their politicians deliver political priorities. The crossover between the HRA and the GF is huge, with thousands of charges and recharges, all of which may be subject to variation. Important shifts in resources can be achieved in myriad ways, for example by reallocating debt charges between accounts and by charging more or less for services that are provided by the council (eg for democratic services or accountancy or human resources services). Tenants from around the country have often complained about the ‘daylight robbery’ whereby tenants frequently pay twice for some services, through their rent and through their council tax, for example for estate roads, lighting, some refuse collection and services physically located on an estate like libraries or youth facilities.
The moral dilemma is unlikely to be resolved soon, as the worst of the cuts are yet to hit. There is no disgrace and it is not a scandal for councils to be doing this, for example when they are facing major reductions in social care and other critically important services, they are only trying to marshal their resources in the best available way to meet the desperate needs of their communities. Metaphors come to mind: they are in a cleft stick, between a rock and a hard place, between the Devil and the deep blue sea.
BUT, somebody somewhere also has to make the case for housing. The reform of the housing revenue account subsidy system was designed to leave ‘headroom’ within the HRA, surpluses which could then be used to support borrowing for capital investment in a new generation of council house building and improvements to the existing stock. The shortage of housing is now near the top of the political agenda but it is all too easy to postpone or cancel spending on long term capital projects to try to meet a revenue crisis. So the real victims might be the people with no voice: those who will not be able to access a council house because the building programme will be smaller than it otherwise could be.
There is a strong case for greater transparency although councils are all too aware both of the complexity of some of the detailed financial issues involved and also of the threat of legal challenge (not just from tenants, but from lessees facing rapidly rising charges). These factors often lead to decisions being made behind closed doors. Tenants are often outraged by some of the costs that get loaded onto the HRA, but, if consulted, they may understand the council’s dilemma and be willing to support adjustments which effectively free up resources for services from which poor or vulnerable tenants might benefit, including those living in council housing; social care is a good example.
Moving resources from the HRA to the General Fund might be justifiable to protect services from which council tenants themselves directly benefit but it cannot be justified if the effect is to maintain a freeze on council tax to the benefit of much richer residents.
HRA reform has established the principle of a self-financing tenure where services are funded by rents. It is underpinned by a belief that council housing is an excellent housing model especially from a financial point of view: rents are charged and pooled to the benefit of all. It has a great future if it is seen as a ring fenced self-funding public service and it has the ability to provide more desperately needed new homes.
One last point about fairness: the Government is busy increasing subsidies to other tenures but council tenants are constantly stigmatised and demonised for being ‘subsidised’. The evidence tells us that, increasingly, it is they who are doing the subsidising.

Eric Pickles is such a hero to some that they took a cardboard replica of him on their holiday touring America. He has become a super Secretary of State who evidently does not need a Minister of State to support him on the key issues of his department (local government, housing, planning) which are all now dealt with by junior Ministers. He offers up cuts to his department every time George Osborne glances in his direction, causing so much internal disruption that it is hard to imagine how anything gets done.
CLG civil servants at least can be proud of the flurry of announcements that has come out of the department recently on the private rented sector, and the detailed response to the CLG Select Committees report on the PRS.
But there is not much sign of clear political resolve behind these professional pieces of work. They are announcements for their own sake, noise not light. Broadly, they add up to a tacit admission that greater regulation is required and that action needs to be taken across the board, from standards and enforcement to security of tenure and rents. But action is there none.
Charters, codes of practice and guidance have their place and can make a difference, but they are often a cover for timidity of action, being seen to be doing something whilst largely leaving it alone. Everything we know about this Government tells us that they believe in letting the market do its thing, untrammelled by Government interference.
Bundles of new documents will only increase red tape without achieving much in practice for tenants on the ground.
So, there will a new ‘tenants charter’ explaining how tenants can ‘ask for longer tenancies’ and get more information about lettings agents’ fees. Agents will be required to join a redress scheme (that at least is a good step, as 40% of agents are not already in a scheme). There will be a code of practice on standards for the management of the PRS and guidance on the role of public bodies in dealing with illegal eviction. There will also be a new ‘model tenancy agreement’, which will not be enforceable. All these documents will be subject to yet more consultation.
Mr Pickles said: ‘This government is on the side of hardworking people and the last thing we want to do is hurt tenants and kill investment by increasing costs and strangling the sector with red tape’. Red Tape! The man has a nerve.
(It is tangentially noteworthy that the documents continually refer to ‘hardworking tenants’ but as far as I am aware all tenants have the same legal rights whether they are in work or not and hardworking or not.)
Behind his new wall of documents and consultation, Pickles has copped out on all the real issues facing the sector. For example, there will be no regulation of lettings agents, which has been called for by landlords as well as tenants. Despite the existing mountain of reports and recommendations, action on some key issues will be further deferred as the Government carries out yet more ‘reviews’: conditions on mortgage lending, how tenants can complain without retaliatory eviction, repaying rent and recouping housing benefit in hazardous properties.
The core argument about the private rented sector is this: it has grown phenomenally over the last decade so that it now houses 9 million tenants. The composition has changed, with many more families with children and vulnerable people. Most landlords want to provide reasonable homes but there is a significant rogue element that exploits tenants, and very little is done about them. Too many properties contain serious hazards. It is the last unmodernised industry run largely by amateurs where consumers have few rights and little redress. Rogue agents who benefit most from high turnover disrupt the market to the disbenefit of both landlords and tenants. It is a classic case where effective regulation, licensing and enforcement could make a huge difference to the quality of life of millions and help create the kind of modern professional business that we see abroad.
Whilst Mr Pickles drowns private tenants in a sea of red tape, the real challenges facing the sector have not been addressed.  No vision. No strategy. It would have made no difference if those travellers had taken the real thing with them and left the cardboard replica in the Secretary of State’s office in CLG.

People in new jobs frequently make their worst mistakes at the very beginning. I am hoping this is the case with Rachel Reeves and her ‘tougher than the Tories on welfare’ message in the Observer yesterday.
I tried to think why she might have decided to take this line. Perhaps she thought that it was important to stake out this position at the beginning, to create space for more nuanced policies later – but all that does is encourage the Tories to challenge you to go even further. Perhaps she was reacting to the infamous ‘boring snoring’ Newsnight incident and decided to blast herself into a more interesting category. Perhaps she mistakenly thought this was the line having read a couple of Liam Byrne’s earliest speeches.
Reeves has had some support from other commentators, including James Bloodworth on Left Foot Forward, who have argued that she represents the ‘realistic’ position that Labour needs to take to neutralise the Tories huge lead on ‘welfare’. The dominance of the right-wing agenda on welfare and the filtering of information in the mainstream media are such that the public have a seriously distorted view of the facts. Alternatives to the conventional wisdom are hard to come by, one of the reasons being that Labour has been far too supine on the issue over the years. Weakness just emboldens the right – in Reeves’ case to the point of being thanked for endorsing Iain Duncan Smith’s policies – ‘game set and match to IDS’ said Fraser Nelson. Well, I hope one lesson of the last few weeks is that it is time to stop being pushed around by the Daily Mail.
I would like to unpick her arguments a little. First, Reeves is correct to emphasise the importance of Labour’s compulsory jobs guarantee. The devil will be in the detail of delivery but it has to be right that Labour’s central policy should be to do everything possible to get people into jobs. I have no problem with a ‘carrot and stick’ approach but it is the carrot that is missing at present, not the stick.
Secondly, her approval of the Tories’ overall benefit cap, but with regional differences, is a re-interpretation of where Labour has got to on the issue. She puts too much emphasis on accepting the existing £26,000 limit and too little on the differences Labour would introduce. She failed to mention that it is effectively a brutal cap on housing benefit for large families in high rent London.
Thirdly, she is right to say that the charge that Labour Governments have been ‘soft on welfare’ is not right: the last Labour Government removed benefits from people unreasonably refusing to take jobs. And fourthly, she is right to focus on the extraordinary incompetence with which Duncan Smith has pursued his policies.
My main objection is around the use of language and the implied adoption of the Tory ‘narrative’ on ‘welfare’. Saying you will be ‘tougher than the Tories’ when their policies are vicious and punitive is simply unacceptable and challenges my normally acute sense of loyalty. She reverts to using the Tories’ favourite word ‘welfare’ rather than the recent front bench choice of the more neutral phrase ‘social security’. And the word ‘linger’ is straight out of the Tory lexicon. Her statement that ‘we will not allow people to linger on benefits’ ignores all the evidence that, when there are jobs, people take them. Unemployment is primarily a structural economic issue and is not about personal pathology – why else would there be a sudden increase in the number of ‘malingerers’ during a recession?
By validating the Tory narrative Labour fails to challenge the propaganda that the ‘cost of welfare’ is mainly about the lazy unemployed and that unemployment is about personal failure. It ignores the real crises in ‘welfare’ – the ageing population and the growing cost of credits and benefits to ‘hardworking people’ who have very low or irregular earnings.
Finally, conceding the narrative makes it much harder for Labour to communicate a genuine alternative – for example cutting the costs of social security not by punishing the poor but by creating employment, by getting people into jobs, by promoting the Living Wage and by building houses rather than paying huge amounts of housing benefit to subsidise high rents.
That’s the message we should want the public to hear.

Last week’s opinion poll by the BBC on our perception of public services was leaped on by the Government as evidence that services could be improved despite the cuts.
But the thing I noticed was that down at the bottom, next to road maintenance and policing, the public perception of how services for the elderly had changed was highly negative. Mark Easton of the BBC, who wrote about the poll, observed that ‘cuts in spending have had a particularly negative effect on vulnerable groups whose experience many not be represented in the poll’. And Sir Merrick Cockell of the Local Government Association is quoted as saying that ‘A shortage of funding and increasing demand is making it impossible to maintain adult social care services at current levels let alone to try and raise standards.’
Services for the elderly have been brought under the spotlight by Labour’s Andy Burnham at Labour Conference, making the case for a new integrated National Health and Care Service, and recent controversy about the growing practice of offering 15 minute care visits, which are almost pointless and not very caring. The Care Bill (Government summary here ) returns to the House of Lords next week, and there is now intense debate about its provisions and how the rights of elderly people might be strengthened, not only by capping payments but also by improving the poor training of workers and tackling cases of abuse. The current state of play on the Bill was well summarised by David Brindle in the Guardian this week.
The Bill deserves a lot more attention than it has been getting, and there are opportunities for amendments as it goes through the system. But it is unlikely to deal with what seems to be the core problem: that the combination of growing demand, huge cuts in budgets, and the contracting culture, with less and less direct provision on traditional employment terms, is driving the system away from its central objective and putting increasing pressure on the critical relationship between the elderly person and the care worker.
The well-being of a growing number of elderly people depends on the quality of the service that their care workers provide, but they are increasingly subject to bad employment practice: zero hours contracts and unpaid hours (eg for overnight stays and travel) which combine to put wages well below the minimum wage. Many carers spend more time travelling between short visits than they do in face to face contact with their clients. The Equalities Commission recently warned that the strain in the system was putting at risk the rights of both elderly people and the care workers themselves.
The fully integrated health and social care service that Labour is promising seems like the right way forward. But it is increasingly clear that no system has a chance of working unless more money is put into it.

In 2010, before he became Planning Minister, Nick Boles famously declared that he preferred chaos to planning. He said: ‘Do you believe planning works? That clever people sitting in a room can plan how people’s communities should develop, or do you believe it can’t work? I believe it can’t work, David Cameron believes it can’t, Nick Clegg believes it can’t. Chaotic therefore in our vocabulary is a good thing.’
Mr Boles should have been more careful about what he wished for because planning for new housebuilding is now looking more chaotic than ever. The Tory form of localism has unleashed more NIMBYism at the same time as the Government has become more centrally dictatorial with its presumption in favour of development. Which wing of the Tory Party is in the ascendant – the developers’ friends or the environmentalists’ friends? The Tories are looking decidedly confused as to whether their objective is to restore developers profits or to get get more homes built – not necessarily the same thing.
The chaos is nowhere better demonstrated than in the growing confusion about planning gain – the benefits negotiated by local government on behalf of the community when planning permission for new development is sought.
A comprehensive study by the Bureau of Investigative Journalism – ‘Thousands of affordable homes axed’ –  shows how the Government’s relaxation of so-called ‘section 106 agreements’ is being exploited to remove requirements to build affordable homes within new schemes, in contradiction of local planning policies to meet affordable housing targets.
According to BIJ, 60% of the 82 biggest housing developments currently in the planning system fall short of local affordable housing targets, ‘preventing thousands of cheaper homes being built’. They show how financial viability assessments – normally confidential therefore not subject to public scrutiny – are persuading councils to accept much lower affordable housing quotas. There are, say BIJ, increasing anomalies whereby developers are making big profits despite citing viability as the reason for cutting the number of affordable homes in their schemes.  Many councils have adopted the Government’s mantra that it is better to get any development on any terms than to get no development. BIJ report strong concerns that councils often do not have the technical expertise or resources to challenge developers during s.106 reviews.
The Government also seems confused about its strategy, if that isn’t too grand a word, for achieving affordable homes. This was classically illustrated by two stories in Inside Housing. In the first, Housing Minister Mark Prisk criticises housing associations for not ‘converting’ more of their homes, when they are re-let, from social rent to ‘affordable rent’ levels (which are much higher).  Evidently Prisk said that providers must ‘maximise’ conversions to affordable rent if they want to get their hands on a slice of £2.8 billion available in the 2015 to 2018 second round of the affordable homes programme.
Yet IH also reports that the London Mayor is considering increasing funding in the 2015/18 programme to enable more homes for social rent to be provided, having effectively axed social housing from the current programme. IH say this is because of concern over high housing costs. (About time, we say).
So with the one hand the Government is demanding the ending of more social renting and with the other the Mayor is conceding that there is a need for more.
People involved in development often say that the thing they want above everything else is ‘certainty’. On current form, Boles and Prisk are hardly the people who are likely to provide that.

The report of the Fairness Commission in Tower Hamlets, chaired by Dr Giles Fraser and published this week, opens a window on the growing housing stress in London as the capital gentrifies to the growing exclusion of ordinary and poor Londoners.
Every Fairness Commission so far has highlighted housing as a driver of poverty and a growing source of unfairness and inequality. In Tower Hamlets the implications are about as extreme as they can be. On one level Tower Hamlets is a success story: the highest rate of new housebuilding in the country, a huge increase in the number of homes available which is projected to continue, rapid regeneration of large parts of the borough, especially along the river. Yet this has been accompanied by a rapid decline in the proportion of the stock that is social housing – which has halved in 3 decades – and a rapid growth in private renting, now one-third of the stock.
In 1981, my first task as Head of Policy at Shelter was to give evidence to the House of Lords Committee looking at the proposed London Docklands Development Corporation. I got my predictions about the overall likelihood of success completely wrong – the development of a new business district for London on the Isle of Dogs has been stunning. But my other predictions – that the vast fortune being spent in the area would not benefit local people and that the area would be gentrified rather than improved – have been rather more accurate.
As a result, the fastest growing borough now has 23,500 households on the housing register and 1500 households in temporary accommodation, and there continue to be high levels of overcrowding and poverty caused by high housing costs. New homes are completely beyond the reach of local people and the Commission concludes that the impact of the benefit cap and the Affordable Rent model could be ‘particularly devastating’.
The Commission rejects the argument that people on low incomes should be excluded from those parts of London – in fact, most parts of London – that are deemed to be ‘too expensive’. The extreme cases that are constantly quoted by the Tories – and repeated again by Cameron this week – seem to justify the argument that the poor shouldn’t live in Kensington and Chelsea. Other traditionally mixed communities like Pimlico and Covent Garden have been falling to gentrification over many years, but the battle now extends across virtually the whole of Inner London, with prices rising most rapidly in places like Hackney and Lambeth. Nowhere is safe from the property inflation juggernaut as the global rich and super-rich – 60% of new homes in central London are bought by overseas investors – squeeze everyone else out.
The Tower Hamlets Commission make recommendations that will tackle the barriers to increased investment by the council and housing associations, to reduce the growth in buy-to-let especially on council estates, and to better regulate the private rented sector. They argue convincingly for better collaboration between agencies and for more commitment and for measures like additional taxation of empty homes and very high value property. They also support the principle that social rents should be related to local incomes and not to market rents.
The recommendations, if implemented, would make a difference. But it is like rowing against the swell of a high tide surging up the Thames. The London property market is becoming increasingly global, the implications for ordinary Londoners of being ‘a world city’ are becoming clear, and the policies of the key players – the Mayor and the Government – will lead to more gentrification not less.

By Hal Pawson
The Westminster Coalition Government might be fairly accused of turning a Nelsonian eye to Britain’s housing problems. But spare a thought for a country across the globe where, despite troubles aplenty in this realm, housing no longer even rates a ministerial position in the national government. Along with Climate Change, Disability Reform, Mental Health and International Development, Housing and Homelessness got the chop in PM Tony Abbott’s new ministerial line up announced last week.
This isn’t merely a case of housing being relegated through pairing with another portfolio (my favourite being the former Queensland State Government’s designation of ‘Minister for Housing and Racing’). More likely, dumping housing matters into the new Department of Social Security marks a return to the complacent thinking of the 1996-2007 John Howard Federal government. Then, as now, housing was denied a ministerial voice in Canberra.
In part, the Abbott stance reflects a view about the Federal Government’s role under Australia’s constitution where the States are primarily responsible for direct service provision (including public housing) and for planning policy. Especially for a party (named Liberal, for which read Tory) trumpeting a belief in small government, you can see the logic. In reality, though, the vast bulk of effective government housing expenditure and policy leverage in Australia (tax and welfare regimes) is in Federal – not State – hands. And, as recognised by the 2007-13 Labor Government (at least under its initial Kevin Rudd-led incarnation until 2010) any serious housing policy reform will happen only with national leadership.
Another Abbott defence to the housing policy downgrade might be the traditional Liberal line of ‘Not our job – the market will provide’. Locked out of home ownership by high prices and inadequate housing supply, tens of thousands in ‘Generation Rent’ might beg to differ. As in the UK, younger adult home ownership rates have been plummeting. And in the overheated rental market which results, affordability is becoming a bigger and bigger problem in the country’s large and growing private tenancy sector. By 2009/10, 60% of low-income private renters were paying rents equating to more than 30% of gross income. For 25% of this group, rental expenditure was over 50% of incomes. Especially because Australia’s housing allowance (Rent Assistance) is so miserly by comparison with UK Housing Benefit (even in its increasingly emasculated form), high rents are increasingly pushing tenants deeper into poverty.
Also, in a country with over 100,000 homeless people (2011 Census) the claim that ‘the market will provide’ is an evidently wobbly argument. Whether the new government will sign up to the 2008  Rudd pledge to ‘halve homelessness by 2020’ is uncertain. Under Mr Abbott’s ‘policy lite’ approach there were no formal pre-election commitments on any aspect of the housing agenda from Liberal/National Party Coalition. However, when asked about homelessness policy ahead of polling day the then opposition spokesperson (and now DSS junior minister) reportedly said ‘the Coalition’s homelessness plan is to abolish the carbon tax, pay down Labor’s debt, generate one million jobs in the next five years and increase our collective wealth so all of us – individuals and charities – have the capacity to help the homeless and those most in need in areas where government is not always the answer’. Sadly, it seems that this was a straight faced comment.
Then there is the increasingly dire state of Australia’s neglected social housing, where the major constituent – public housing – is locked into an unsustainable financial system in which the books are balanced only by cannibalising the stock through asset sales, and by indefinite deferral of overdue maintenance.
There is a growing industry consensus that public housing salvation can only lie through mass transfers to ‘community housing providers’ as Australia’s housing associations are known. Queensland’s Liberal government has recently announced a planned 90% transfer of that state’s public housing by 2020. But our soon to be published research on the topic shows that success here will be conditional on major policy and financial reforms calling for active commitment from both levels of government. The same could be said for the aspiration – widely shared across the policy community in Australia, just as in Britain – to unlock institutional financing of rental housing. It can only be hoped that such aspirations are not thwarted by the absence of a housing minister in Canberra.

It was a good week for housing at the Labour Party Conference.
There were new commitments on housebuilding, a breakthrough reference to a more assertive land and new settlements policy, and the important – and symbolically vital – promise to repeal the bedroom tax. Hilary Benn and Jack Dromey, and even Liam Byrne, said lots of other interesting things in their more detailed speeches in conference and on the fringe. Jack always says that housing has moved ‘centre stage’ in Labour policy and this time it felt like it might be true.
Labour has been under heavy pressure to make more policy pronouncements but mainly from people who don’t listen to Jack Dromey’s speeches, where the direction of policy has been clear for some time. In terms of formal announcements the Party is right to take its time, to develop policy carefully and to get things right. Ed Miliband’s appointment of Sir Michael Lyons to lead a Commission on achieving more housebuilding is a good sign that the Party intends to do the work necessary to get it right. In fact I can’t remember a time when such a huge amount of detailed work has been going on in the background. Dromey’s incessant discussions with councils, housing associations, finance houses and an array of experts is not the stuff of grand announcements but a clear indication of his very comprehensive approach to housing policy.
Dromey already looks and talks more like a Housing Minister than Mark Prisk ever will. He is thinking things through. I particularly liked his comments to Inside Housing at Conference that Labour’s main emphasis will be on homes for social rent. ‘We want to build homes of all tenure but a new generation of social homes in particular.’ He said the coalition government’s affordable rent model, under which social landlords can charge up to 80 per cent of market rents ‘has had its day’ and is not affordable.
The dangers of doing as the commentariat wanted and making earlier than necessary policy announcements were well illustrated by the hysterical reaction to Miliband’s speech. Although the housebuilding industry didn’t squeal to the same degree as the energy companies, their friends in the media did it for them. ‘Miliband’s ‘Stalinist’ plan to seize land for homes and build on fields’, said the Telegraph. And so Red Ed was reborn and there were plenty more references to Stalin and Castro. Andrew Neil introduced his This Week programme by asking ‘has Ed gone crazy?’ Michael Portillo rather gruffly accused him of being ‘populist’. And LibDem Miranda Green said it all looked ‘very socialist’ to her. Really? Some commentators reported without a touch of sarcasm that the Tories were saying that Miliband was lurching to the left but they would be staying in the centre. The centre must have shifted a very long way for that to be true.
Personally I think the policies were all rather sensible and moderate. A freeze on energy prices after a period of greedy profit-taking, a commitment to build some houses, and getting rid of a punitive tax that even the Tories must be regretting, are all great policies but they hardly add up to the socialist dawn. The argument for building on greenfield as well as brownfield land cuts across the political spectrum, take Planning Minister Nick Boles as an example of this diversity.
For me, the most left-wing speech of the week came from a surprising source: Andy Burnham on health, committing to repeal the Tories’ health privatisation policies and making a strong pitch for the virtues of direct public sector provision and the return of the public sector ethos.
Far from being overtly socialist, many of the policy announcements build on Ed’s previous theme of confronting ‘predatory capitalism’. It took on a new guise in the shape of tackling ‘failed markets’. This is a welcome shift away from New Labour, which often seemed in thrall to markets as if they were the untouchable natural order. All too often the word ‘free’ appears before the word ‘market’, and the pretence begins that state interference causes distortions to something that will be optimal if it is just left to itself.
The real reason for the ‘reds under the beds’ scare stories is that Miliband’s increasingly searching questioning of the nature of markets in modern society threatens the interests of the rich and the big corporations. What should be done when markets are manipulated to meet the greedy ambitions of a few players rather than society as a whole? And what should the state do when markets patently fail? The banking market failed, and devastated the rest of the economy. The energy market has failed to deliver for customers rather than shareholders. Both the housing market and the housebuilding markets have failed. Strong intervention is needed in all these cases. But far from being socialist, these interventions are more to do with saving capitalism from itself.
I am increasingly convinced that Ed Miliband will be the next Prime Minister. But he is not Red Ed. He is Steady Teddy.

Not only have the Lib Dems rejected their own housing policies, they seem confused about what they mean. That’s the conclusion we are bound to draw from the past week’s debates in Glasgow.
It so happens that the Lib Dems had an excellent policy about investment in council housing which they adopted last year.  It’s set out in Decent Homes for All: ‘Liberal Democrats will abolish the “cap” on local authority borrowing for housing investment’. They had a similar unequivocal policy in the run-up to the last election.  The problem seems to be that they are scared to death of the consequences if these policies are actually implemented.
Nick Clegg successfully pulled the wool over delegates’ eyes at the Lib Dem conference, both by misrepresenting the policy and by claiming more for the watered-down version than it can possibly achieve.  Let’s looks at the watered-down one first.  It amounts simply to keeping the current borrowing caps on local authorities but allowing two or more councils to pool their borrowing potential.  The argument is that, given the rather arbitrary nature of the caps and the headroom they give councils, some who have more headroom than they need might be willing to give some of it up to help those who have far less. London Councils called for this last year in their report Meeting Londoners’ Housing Needs. Indeed in London it may help, especially if a borough giving up part of its headroom can get something in return, such as nominations on a proportion of the houses built.
However, to claim as the Lib Dems did in the summer that this could produce an extra 15-25,000 new homes seems highly unlikely for several reasons.  First, councils who are not yet fully using their headroom may simply be waiting to see how strong their finances look next year or the year after. Second, if any do decide to share their headroom, will they be able to reach agreement with adjoining councils on what they get in exchange? And third, since self-financing began in April last year, councils have made a total of just over 2,000 housing starts: would a reform as modest as shared borrowing caps really produce such a dramatic boost in their output?
Even wilder claims were being made about complete removal of the borrowing caps: that it might produce an extra 300,000 homes per year.  The amendment to the conference economy motion, which came from the Social Liberal Forum, was actually more sensible, calling for the ending of the caps and changes in the borrowing rules to facilitate ‘at least 50,000 homes per year for social rent’. This was rejected by Clegg and ultimately defeated, partly because delegates fell for his weaker alternative but also because Clegg said that it wouldn’t have much immediate impact anyway (yet strangely, the approved motion would!).
Roll forward a few days, and the otherwise conformist Communities minister Don Foster was suddenly saying that it is absolutely essential that the borrowing caps are scrapped. Shared borrowing limits should merely be the ‘first step’.  Did Don miss Monday’s economy debate, as Vince Cable was supposed to do? And will he pursue this ‘absolutely essential’ policy when he’s back in his department?
The other part of the Social Liberal Forum motion was about changing borrowing rules to conform with international norms, and this got a half-hearted approval on Monday as ‘party’ policy which evidently commits the coalition to nothing.  Even here, Clegg was confused and confusing.  According to the Guardian, he warned that ‘…if Britain “on a whim” followed EU definitions of public debt, so freeing councils to borrow, debt would then have to include taxpayer-funded liabilities such as in the banking system, meaning “debt would go through the roof”.’
This may have done enough to see off the dangerous lefties in the Social Liberal Forum but it was also nonsense.  For a start, the Treasury already treats its various financial interventions as a separate item in the accounts, not as part of its main measure of public debt.  Similar practices have been followed by other countries that have intervened in the banking crisis.
Banks like RBS and Lloyds are classed as public corporations anyway, so their debt isn’t included in international debt measures. But the truly frightening scale of these liabilities (originally £1.3 trillion) is regularly reported as a separate item in the UK accounts.
The point that Clegg may have been making is that UK debt on the main international debt measure, General Government Gross Debt, is higher at the moment than the Treasury’s figure which is based on Public Sector Net Debt. However, the Treasury is obliged to publish the general government figures and has done so for many years (the latest ones are here). These measures are the ones used in international comparisons by the IMF and other bodies.
Nevertheless, these issues are complex. If a proper study of the implications of moving towards international measures were to take place, it would be very important in clearing the way for a potential change that could benefit council housing (as well as other public corporations, such as those in the transport sector).  What is far from clear is whether this will actually happen as a result of the Lib Dem conference resolution. Will Clegg go back and insist that the coalition actually does such a study?