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Steve mentioned in the IPPR work in his last post. I made it along to the launch seminar, where Caroline Flint and Grant Shapps’ Parliamentary Private Secretary Jake Berry were speaking.
Jake Berry is a rare thing in the Conservative Party – someone interested in housing and someone with a background in it. He was also clearly well up to speed on government policy. Something that not all PPS’s focus on. Unfortunately, it also meant that he shared the same fallacies as his boss.
Pressed on the boom and house price rises, he echoed John Healey (oh and Grant Shapps) in saying that a house is a home, not an investment and referred to the need to keep prices in control.
When pushed on what ‘levers’ the government had to do that he mentioned three things:

• Liberalising planning laws,
• Abolishing housing targets and Regional Spatial Strategies, and
• The New Homes Bonus

He clearly assumed that a flood of new supply would keep prices down (and indeed that these measures would deliver it). He can only hope that the restrictions on mortgage lending stay in place long enough for this new supply to flood the market. Otherwise, as soon as lending loosens again, prices are back on their way up.
The idea that we can get enough new supply built quick enough to affect house prices is clearly non-sense.
So in the short-term prices will remain high and mortgage lending tight, meaning bad news for first-time buyers.
Caroline Flint made a big point of the importance of improving the private rented sector and went beyond Labour in government, arguing we should consider longer-term tenancies in the private rented sector and greater security for tenants.
Caroline of course would support the principle that people who want to own their own home should be able to and should be supported to. However, I wonder if she isn’t more realistic than the government and is looking at what will really improve the lives of younger people in the housing market.
Private renting is commonly seen as for the young and the poor, but it will increasingly be the option for those on middle incomes for longer periods and their rented property may be where they look to start a family. With aspirational voters finding themselves priced more and more out of homeownership, it’s a good time to win support for measures to improve the private rented sector for them and everyone else.

There are at least nine housing reviews and commissions running at the moment:
Institute for Public Policy Research
The Fabian Society
ResPublica
Oliver Letwin/Cabinet Office
RICS
The Labour Party
The Mayor of London
The London Borough of Ealing
The London Borough of Lambeth
I’m sure there are more, especially from local authorities trying to work out how to respond to the government’s changes.
It’s definitely an important time to consider where we go with housing next and what new ideas can be practically brought to bear on the intractable issues we all know about.
Many of these reviews and commission have excellent memberships from within and beyond the housing world and there will be a lot of ‘cross-fertilisation’ of ideas and approaches. The interactions between what comes out of these bodies will be interesting: I doubt the Fabians and ResPublica will agree and what difference will we see between bodies that actually have to deliver (councils, the Mayor, the Cabinet Office) and those that are just tasked with the thinking?
I doubt there are this many reviews and commissions going on in other sectors and policy areas. It does beg the question whether the housing sector as a whole really has the faintest ideas what to do and how to win over support for some actions many agree on.

Old fashioned social housing was originally to support the majority of working people with decent homes at a low rent, for the long term, in stable communities. Indeed, right at the beginning social housing was reserved for those working and often working on better incomes than the average.
It became a tenure in which we housed the poorest and most vulnerable who could not afford the housing they needed in the market. It provided for them a long-term home and the chance to build a life in a community.
In both cases, there was a clear rationale for what social housing was for, even if the latter did not succeed always in creating the prosperous or sustainable communities.
‘Affordable Rent’ is at an intermediate rent level, but the government still say it is for the poorest and those in need on council waiting lists. It can only do this job however once combined with housing benefit to make up for the higher rents which the poorest can’t afford.
But even then, housing benefit will not cover the new higher rents in many places. So housing associations want to pitch the homes higher up the income chain, to those working on low to medium incomes.
So is it more accurate to say that this is a sub-market rent for working families in stable communities, as traditional social housing was? That is, it is not the option for the poorest.  
Well, not really. It will force many working people on to housing benefit when in the past, the low rents of social housing kept them out of benefit dependency. And the government’s tenure reforms (fixed-term and when your ‘need’ ends you move out) makes affordable rent more like a safety net only for the most vulnerable in certain circumstances.
I can only see that the purpose of this ‘affordable rent’ product is to help the government keep up affordable housing stats. Who in the real world is it designed to help? It’ll help some people depending how housing associations use it and any new homes are needed, but it hasn’t been designed with any family, household or ‘end user’ in mind.

In the details of the government’s affordable housing plans there was a section on the allocation of funding to London. There was no fixed quota, but the paper suggested that it would be in line with past allocations of grant, i.e. London would get 27% of what was available.
 “Under the 2008-11 Programme, London received funding estimated to deliver around 27% of national outputs. The HCA will seek to deliver a similar percentage of outputs from the new programme in London. The final figure will depend on the relative value for money of offers in London and elsewhere”
 If we assume that affordable housing starts will be proportionate to the amount of funding available that means of the (up to) 85,000 new homes being built over the next 4 years, London will build 23,000.
That’s not going to redress the projected collapse of affordable housing in London that Alison Seabeck and Ken Livingstone recently warned of using the HCA’s own figures.
It may be worse than this. Affordable housing is more expensive to build in London, especially larger family homes that Boris Johnson has said will be his priority. They may need more grant per unit to make the finances of new development stack up.
Alternatively, the new affordable rent model does allow housing associations to make far more revenue by increasing rents in London, Increasing ‘affordable’ rents to 80% of market rents represents a very large increase in their income.
But there’s no guarantee that they’ll use that extra revenue to build more new homes in London – many housing associations may choose to build outside of London, where they get more bang for their buck and building is easier.
The future for affordable housing in London looks ever grimmer.

Steve and I have touched on this one frequently, but it’s worth a reminder for our newer Red Brick readers.
When you hear ministers saying they will build ‘up to 150,000’ new affordable homes over the next four years, they actually mean up to 85,000.
Of those 150,000 they promise around 65,000 have already been started or were in the pipeline from the previous Labour government.
Also, when they talk about £4bn being invested into affordable housing, remember that around £2bn of that is the money already committed to build out the remaining 65,000 homes from Labour’s National Affordable Housing Programme. So the real figure is about half.
The Tory government is planning to build up to 85,000 additional affordable homes in the next four years. That’s not many and that’s the key point.

On the same theme as my post yesterday, Inside Housing reports on housing professionals beginning to fight back against the government’s proposals:

“It would be wrong to call it a phoney war – tensions between housing professionals and the government have occasionally risen to the surface in the past 10 months. But this week the gloves are well and truly off.”

A useful reminder too of a few of the bodies that are speaking out against the government’s proposals: The Local Government Association, the National Housing Federation, northern RSLs, Homebuilders’ Federation. The list goes on…
Challenge to readers – can we find a respected housing body that backs the government’s reform package?

On Tuesday, I was chairing a mini-conference with about 40 people in the audience from London based RSLs, London boroughs and private developers. I did a similar one back in January on the theme of the new housing system, both of these under the Future of London banner.

It’s led me into greater fascination with CLG ministers’ current decision making. At none of these conferences has anyone spoken in favour of the government’s reforms.

No-one.

Admittedly, the representatives of the HCA have explained well the government’s policies and the government’s thinking behind them. But even Policy Exchange would only go as far as to say they were ‘critical friends’ of the government on housing.

Normally, making policy means alienating some people but pleasing others. Opposition is always inevitable and it’s true that normally opposition to any change outweighs the supporters. As Machiavelli says:

“… there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new.”

What amazes me is why ministers are not at all concerned by the fact they have no defenders at all, not even lukewarm ones. Despite the overwhelming opposition to the nature and implementation of these reforms, there is no tempering of the tone, no recognition that these are unpopular and that an entire sector thinks they probably won’t work.  

 Is this simply ideological zeal? The department not advising them of the reactions out there, or being too scared to do so? Is it the hope or assumption of creative destruction – if you lay waste to the old system, it’s impossible to go back and so something else better must emerge?

Or am I just niave and captured by me sector? Could this be how real political change happens and from the ground it always looks like destruction?

Alternatively, the housing minister could just believe he’ll only there for a short time and will have got away from the scene of the crime before anyone spots the bodies. While I fear for the NHS, I secretly hope the Housing Minister gets promoted to Health, to reap for himself the ‘rewards’ of another set of radical reforms.

Nick Clegg has been credited with convincing the Tories to U-turn over their plans to cut housing benefit for those on Job Seekers’ Allowance – as Steve points out.
Presumably this is one of the (few) examples of how the Lib Dems would like the public to see them: moderators of otherwise more brutal and right-wing policies. I’m sure they will champion this as policy they have changed. This is the point of having Lib Dems in government, they will say. 
A potentially compelling argument. But, let’s not forget that their decision to support and maintain in power a Tory government means they have made possible all of the policies that are being pursued. They are the enablers of the right-wing policies that they now want to claim they are moderating. It’s not an argument we should allow them to get away with.  
Critics might say that the Lib Dems had a responsibility to help provide Britain with a stable government after the election. Perhaps. But they could have offered a supply and confidence deal, in the way many junior coalition partners do across Europe. This would keep the government in place, stable, and with the budget it needs (bad enough), but allow other measures to succeed on their merits or fail for the lack of them.

The affordable rent prospectus came out yesterday – there’s a lot in it and housing associations and councils will be hanging on every word to see what the new regime actually means for them.
One of the things they’ll be grappling with is how the new benefits system interacts with the new higher rents.
I blogged here that I doubted that the benefits system would allow people to pay 80% of market rent in London and other more expensive cities. Steve touches on it in his previous post. That is increasingly clear for those housing associations and councils that are doing the sums.
But it’s interesting how a new logic is entering the system.
There will be a new benefits cap of £500 on the Universal Credit when it comes in after 2013. This will apply to workless families only. For many families and those living in more expensive areas of the country they will have to move out to cheaper areas to still be able to afford their housing.
However, this cap will be lifted for those families entering work. For an individual this will be someone working more than 16 hours a week. For a couple, this will be more than 24 hours a week.
So those in work will potentially be able to claim more benefit than those out of work. Rather than working 16 hours a week being a cut off point for some benefits, it is the way to claim  more benefit and potentially allow people to live in ‘affordable’ housing in more expensive areas.
Work, not need, then is the route to state help and in this case being able to afford the new ‘affordable’ rents.
This is a move consistent with the cross-party consensus that people should be better off in work than in out.
However, in an economy which has 2.5million unemployed and isn’t growing or creating jobs, the principle of compelling people into work falls flat. Where is the work for them to be compelled into?
Secondly, there are a myriad of problems with how this will operate in practice. One example: if you are in work and you lose your job, when does the benefits cap kick-in? How long will you have to find cheaper alternative accommodation within the limited social and ‘affordable’ stock? How will it help those who lose their job find an alternative as they rack up rent arrears and may be forced to move home, just at the time when they need to concentrate most on finding employment?
It’s another example of where IDS’s welfare agenda is crashing unpredictably against Shapps’ housing agenda. For either agenda to work, they must work together. And that too is a lesson for Labour as we formulate our future plans.

I’ve always thought that housing never gets as much attention as an element of economic policy as it should. It gets plenty of coverage as part of social policy, but that reflects the undue emphasis on social housing.
I’m not an economist and so hardly the perfect advocate for this kind of approach, but here’s a bash at some things I think should be covered in a Labour economics of housing:
1)      Unbalanced market as a risk to the wider economy
This is in essence, the lesson of the credit crunch. When people are dependent on the value of their home for their savings, their pension and the vast bulk of their wealth, then falls in house price fundamentally undermine people’s economic security. More than that, it poses a fundamental risk to the whole economy: when prices fall, people feel quickly poorer, begin to worry about their future, stop spending and suck demand out of the economy. Such crises of consumer confidence put a lot of firms out of business.
2)       Lack of labour mobility.
The coalition have gone on a lot about the lack of mobility in social housing, but overall we have a housing system in which it is difficult to move for the majority of people. It’s not a quick and easy task to move if you own your home, especially when it’s an investment decision as well as a location decision. That doesn’t make for a flexible and mobile labour market when people can easily move to take up jobs, confident that they can easily find secure and affordable housing.  
3)      Employment in housing and construction
As I’ve covered in previous posts, during the recession the Labour government invested heavily in housing to keep firms in business and maintain employment. Although construction and residential construction is not a large sector of the economy, it is labour intensive and these aren’t jobs that can be moved off-shore to developing countries.