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New Roofs or Old Ceilings?

Under Corbyn, Labour announced its bid to combat high rents through old-style rent ceilings. If we look back across history we see these have had many unintended consequences. Often we have found the introduction and continuance of rent controls have done more harm than good. So should Labour continue to embrace such a policy?

We know rent legislation cannot cure housing shortages. Rather, regulations such as rent ceilings merely mitigate the effects by giving comfort to sitting tenants – at the expense of prospective tenants. All too often we see false views on rent control spill over from popular misconceptions into apparently learned debates. It is for this reason why Labour must resign rent ceilings to housing history and focus on the real problems at hand.

History shows Rent Controls are Bad

In Britain we have recognised the damage done by rent controls as far back as The Rent Act in 1957. Where at the time we witnessed expensive properties freed from such regulations. Why? Because old-style rent ceilings foster dilapidation of housing stock, encourage immobility, and distort land-use patterns. It simply makes housing worse.

Originally the introduction of rent ceilings sought to protect tenants from rent rises caused by war-time shortages. Often caused by bombing. Yet many places have seen them retained and enforced ever since. Their perception as a temporary measure were often short lived, almost always becoming destructively permanent.

Late Swedish socialist economist Assar Lindbeck once said “rent controls appears to be the most efficient technique presently know to destroy a city – except for bombing”

An unsurprising statement when the average waiting time for a rent-controlled unit in Sweden is 11 years. In Sweden keeping rents low for a small section of renters sees tenants hold onto property they no longer wish to live in. Rent regulation incentivises lucky rent regulated tenants to sublet in the black market, often for a significant profit. One would argue this is hardly a socialist panacea.

Price Signals Allow Markets to Respond

Back in 1906 an earthquake hit San Francisco. Subsequent fires destroyed thousands of acres of buildings in the heart of the city. It resulted in 225,000 people becoming homeless. The city of 400,000 lost more than half its housing in three days. Yet market driven construction of new homes put roofs over many earthquake victims heads. In effect developers were able to respond to market demand through rising price signals.

Nevertheless, each remaining household still had to shelter 40% more people than it did before the quake. So what do you think the first local paper observed following the earthquake – a huge housing shortage surely? No, in fact the first San Francisco chronicle following the earthquake made no mention of housing shortage at all.

The market had responded and there was over three times more homes available to rent than advertised for sale. Just goes to show what can be achieved by the market without rent controls having distorting effects on new supply.

Rent Controls Deter New Construction

Contrast this to 1946, where the San Francisco population had increased from 635,000 by 200,000. All over a six-year period. By comparison, the number of dwellings had only increased by a fifth. While in 1906 the city had to shelter 40% more people than before the earthquake, by 1946 the city only had to accommodate around 10-12% more than before the war. This did not stop the Governor at the time going on record to describe the housing shortage “as the most critical problem facing California”. But what was so different?

In 1906 higher rents could signal to the market to build new construction. However, by 1946 imposing rent ceilings made this method of stimulating supply for rental homes illegal. The result? 730 houses listed for sale for every 10 homes listed for rent. The absence of a ceiling on selling homes, in conjunction with a ceiling on rents, had considerably distorting effects. It meant that prices were to rise as a large and increasing demand encountered a relatively fixed supply.

This meant many landlords ended up selling at inflated market prices, rather than renting to tenants with a price ceiling. Rentals effectively become almost impossible to find. At least at legal rent levels. Rich people with money still found plenty of homes to buy. Ceilings on rent provide the rich an advantage to satisfy their housing needs. Restrictions on rent only make this condition worse. We must also recognise that during this time incomes in San Francisco had doubled in comparison to levels before the war. This allowed people to pay more in rent even though legally they did not have to, exacerbating the proliferation of the black market.

Rent Controls Reduce Mobility and Increase Unemployment

Research by Joseph Schumpeter on unemployment recognises the correlation between lack of labour mobility and structural unemployment. In turn, rent controls artificially create more pressures on cities, notably because inhibiting rent increases puts a brake on the natural drift out to towns. We know more people leave London for the rest of the UK, than move from other places in the country to the capital. This is primarily due to relative affordability.

Studies from San Francisco by Stanford University shows rent control limits renters’ mobility by 20% and lowers displacement, which comes at the expense of a reduction in rental housing supply by 15%. Rent controls lead to a less mobile workforce, more structural unemployment, and less supply. No doubt hampering the economy and increasing state borrowing unnecessarily.

Rent Controls are Denigrated Across the Political Spectrum

Notwithstanding the above, rent control is considered the least contentious area of economics and  is widely denigrated by economists from around the world. The agreement cuts across the political spectrum, from Hayek and Friedman agreeing on the “right”, to architect of the Swedish Labour Part’s welfare state Gunnar Myrdal on the “left”. It has literally been no longer a debate within the profession for a considerable length of time.

Rent Stabilisation is Ineffective

Maureen Corcoran has reflected on Germany’s rent regulation through its local rent index, arguing regulation improves affordability and transparency. But we have seen since Germany has moved to stricter rent control, with a 5-year rent ceiling, finding new rental property has become increasingly difficult. Rent stabilisation typically has more flexibility and freedom around having an ability to change tenant than old style rent ceilings. For example, if you make repairs, you can increase rents. Labour has mooted such types of control in the past, but we know these too still do more harm than good.

In New York rent stabilisation has ‘luxury de-control’, akin to the 1957 Rent Act in the UK. If a rent gets to a particular level, then it can leave the rent stabilisation regime all together. Professor Ingrid Ellen of NYU argues that outside of Manhattan rent stabilisation does not have that big of an effect on the market. She argues apartments can often be as close as $200 a part in terms of median market rental levels, in comparison to rent stabilised rents. This suggests even modern versions of rent ceilings remain ineffective for the most part.

The Evidence is Overwhelming: Rent Ceilings are Bad

Developers essentially end up wanting to build less, which can’t be a good thing. The rules in New York meant you typically did not have rent stabilised levels on new lettings, which was one way the rules tried to avoid such an issue. But still, what you saw in post-war New York was the conversion of a lot of rental apartment blocks into condominiums for home ownership. Once again, resulting in a net loss of rental stock. Lower supply means higher prices.

Thankfully, recent studies continue to put the rent control question to bed. In August 2020 by Thao Le, Edward Coulson, and Lily Shen published ‘Tenant Rights, Eviction, and Rent Affordability’. The paper demonstrated that for every one-unit increase in the toughness of rent control, evictions are reduced by almost 9%. It found rental housing costs becomes 6% more expensive where tenants have more protection against landlords through regulation. While a higher Tenant-Right Index is also negatively associated with a decrease in housing supply and an increase in the homeless rate. When we put ideology before evidence, empirically we see rent controls lead to worse outcomes.

Gauche Caviar?

Hanchen Jiang, Luis Quintero, and Xi Yang recently released their paper ‘Does Rent Regulation Affect Tenant Unemployment? Evidence from New York City’. It found that often the beneficiaries are those who are more well off and such regulation denotes a significant transfer of wealth to those on higher incomes. Rent-stabilised tenants are empirically more likely to be unemployed than private market-rate tenants, particularly if you are white and highly skilled. To what extent this could ever be seen as a progressive outcome still remains to be seen.

If Labour is to continue to encourage the proliferation of rent-controlled property it should achieve this through the construction of new social housing. Not blanket market distorting rent regulation. Rent control is great if you get it. However, it merely comes at the price of greater inequality for future generations.

Rent ceilings offer no cure to the housing shortage, and in combination with a planning system currently disconnecting local housing supply from local demand, demand-side rent regulations merely create more problems than they solve.

<strong><span class="has-inline-color has-accent-color">Christopher Worrall</span></strong>
Christopher Worrall

Editor of Red Brick. He is currently an Investment Manager at Guild Living, a Non-Executive Director of Housing for Women, and is on the Labour Housing Group Executive Committee.

Chris also co-hosts and produces the PricedOut UK Podcast.

He writes in a personal capacity.

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When it comes to building homes – planning isn’t the problem

As we enter 2021 there is no doubt that Britain is facing a housing crisis ─ a crisis of supply, demand, affordability and quality. Sadly, like an unwelcome ghost at the feast, all the Government seemed to be offering us last Christmas is reheated policy ideas, gone-off planning reform, regifted funding and a long hangover after a decade of austerity and welfare cuts.

In Hackney, where I am the Labour & Co-operative directly elected Mayor, house prices have risen by 71% in the last five years. Nationally, homelessness temporary accommodation (TA) placements have risen by 71% since 2010 and 80% of those in TA in Hackney are now estimated to be in work. And ‘permitted development rights’ have allowed landlords to turn former office blocks into homes without planning permission, leading to poor quality, rabbit-hutch homes ─ too often leading to private profit from the homelessness crisis.

It is a multifaceted crisis that the Tories think will be solved very simply ─ by reforming the planning system. Their latest White Paper, entitled Planning for the Future, sets out proposals to supposedly help increase the number of homes built every year, but will end up causing longer-term problems. Recently announced (and welcome) changes to the proposed new planning formula for house building will not undo the damage the rest of the proposals could bring about.

First, the proposals suggest scrapping local planning policies currently co-produced between councils and their communities. Local Plans and policies will be replaced by ‘national guidance’ that often just sets out the bare minimum level of standards that local people have rightly come to expect from developments ─ standards on affordability, sustainability and infrastructure.

Next, the Tories want to create a simpler zoning system, designating areas across England into three new categories: ‘growth’, ‘renewal’ and ‘protection’ areas. Importantly, ‘growth’ areas will give developers automatic planning permission to build, so long as they meet the national standards. Imagine the current permitted development rights on steroids.

These proposals are severely undemocratic ─ they will transfer power and responsibility away from local councils to Ministers and Whitehall Civil Servants, who will be able to set standards and zones in areas they have no knowledge of.

Automatic planning permission will mean local communities and councils will lose the one opportunity they have to assess and comment on developments in their areas. The scrapping of Local Plans will also mean local people will lose the chance to shape policy in their areas. This also risks that policies like Hackney’s new Child Friendly Places SPD or our commitments to green infrastructure and genuinely affordable workspace could be sidelined.

On infrastructure, the Government is suggesting ‘streamlining’ the current developer taxes into a single ‘Infrastructure Levy’. At the same time, the Government will introduce a mandatory 20% target for their new ‘affordable First Homes’, which is really just homes subsidised market-rate homes. This will hamper the already difficult negotiations the councils have to go through to push developers to provide genuinely affordable homes.

The Government also wants to implement the principles of biodiversity net-gain in the planning system, as well as a ‘biodiversity credits’ system to tax developers where they fail to meet net-gain targets. It’s a sound principle, but at the moment the credits will be paid straight to central government, and not the communities which will be impacted by the development.

At the same time, if councils lose the lever of our current planning system ─ being able to set local biodiversity policies and assess developments before they are built ─ it is unclear how the Government expects to achieve their principles. The risk is developers in ‘growth’ areas will use credits as a quick ‘get out of jail free’ card to simply pay a tax without contributing to nature recovery or biodiversity conservation which local people could benefit from. As I recently said in Parliament these conflicting policy objectives hardly feel joined up.

We know how important local green infrastructure is to local communities, particularly to those without a private outdoor space. If we didn’t, the coronavirus pandemic provided a valuable reminder. We also know the current planning system is better at achieving green space than no system at all ─ just 3.5% of new homes created through permitted development rights included access to private outdoor space, compared with 23.1% of homes delivered via planning permission.

And lastly there is the idea that these plans will increase supply; the Tory narrative is that really, it is a cumbersome planning process that is stopping homes being built. Well, in Hackney, 90% of residential planning applications submitted to the Council have been approved since 2010, but 25% of them have not been built. That is over 2,000 approved homes in Hackney that have not been built by developers, who are instead sitting on land in the Borough.

So at every turn, these plans will fail. They will not increase supply; they will reduce the amount of affordable housing; they will water down design and quality standards; and they will not tackle the biggest area of demand ─ social housing. Any planning authority, Labour or Conservative controlled, will tell you that when it comes to building homes, planning isn’t the problem.

Clearly, the private market alone will not meet the Tories ambition to see 300,000 homes built a year by the middle of this decade. This will be compounded by the economic shocks of coronavirus and Brexit. Ideology stops the Tories from seeing the clear practical contribution that large scale countercycle investment in green, social rented homes could bring across the UK and to communities like Hackney.

Building council homes is a pro-industry response. All the lessons from the previous recessions show that without council house-building, we will see a contraction of the construction industry, fewer small businesses, deskilled and unemployed workers and reduced competition ─ all resulting in fewer homes of all tenures being built.

Labour knows that when the market isn’t delivering for people, the Government must step in. Labour councils know that what we really need is a new generation of ‘Homes Fit for Heroes’.

The council-house building agenda in this country started after the First World War to house returning soldiers in affordable and high-quality homes, and we only marked that anniversary last year. Now we need homes fit for our heroes on the frontline of fighting the war against coronavirus.

The planning reforms might yet be another Dominic Cummings pet project that, now he has ungraciously left the building, may be dropped or watered down. But the Labour movement can’t take the chance of these proposals getting rushed through a Tory-majority Parliament.

If we believe in building genuinely affordable homes, with decent standards and built in sustainable communities that get a real say on development in their areas, the Labour movement must unite again to fight against these plans at every step of the way ─ and then fight for a return to mass council house building again.

<img class="wp-block-coblocks-author__avatar-img" src="https://secureservercdn.net/160.153.138.71/pb4.705.myftpupload.com/wp-content/uploads/2021/01/Philip-Glanville.jpg" alt="<strong><span class="has-inline-color has-accent-color">Mayor Philip Glanville</span>
Mayor Philip Glanville

Since 2016 Philip has been the Labour and Cooperative directly elected Mayor of Hackney, the borough’s second directly elected Mayor. He was re-elected in May 2018.

He was previously a councillor in Hoxton for ten years, and spent three years as Cabinet Member for Housing.

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We built the Spitfires. Now we can build the houses.

Seventy-five years ago, Britain was in the midst of a General Election that would transform the country for generations to come. And Clement Attlee’s 1945 landslide General Election victory was built on the foundations of Labour’s housing, construction and town planning policies.

To mark the 75th anniversary of Labour’s 1945 General Election victory, Paul Dimoldenberg introduces his new book:

Cheer Churchill. Vote Labour’ – The story of the 1945 General Election.

In 1945, the British people took a very practical view of the future. They wanted a decent home, a job and not to have to worry when they became ill or fell on hard times. In short, they wanted a better life and saw Labour as the vehicle through which these aspirations could be achieved.

Labour promised ‘bread and butter’ improvements which secured the votes of working-class and middle-class families. With over 2 million houses damaged or destroyed by the blitz, over half of them in London, the scale of destruction throughout Britain explained the desperate need for new homes.  Again, and again, homes and jobs were foremost in the minds of voters.  Labour recognized these as the priorities. And the voters believed Labour would provide them. The Labour Manifesto promised:

“Housing will be one of the greatest and one of the earliest tests of a Government’s real determination to put the nation first. Labour’s pledge is firm and direct – it will proceed with a housing programme with the maximum practical speed until every family in this island has a good standard of accommodation. That may well mean centralising and pooling of building materials and components by the State, together with price control. If that is necessary to get the houses as it was necessary to get the guns and planes, Labour is ready.

And housing ought to be dealt with in relation to good town planning – pleasant surroundings, attractive lay-out, efficient utility services, including the necessary transport facilities.

There should be a Ministry of Housing and Planning combining the housing powers of the Ministry of Health with the planning powers of the Ministry of Town and Country Planning; and there must be a firm and united Government policy to enable the Ministry of Works to function as an efficient instrument in the service of all departments with building needs and of the nation as a whole.”

In Cardiff, James Callaghan recalled:

“Most questions were about demobilisation from the Forces or housing shortages. In my innocence and good faith, I promised rapid action on both and during the campaign my main slogan became: ‘We built the Spitfires. Now we can build the houses’”.  

In Bishop Auckland, Hugh Dalton remembered:

“The big issues were pensions, housing and fear of a return to pre-war unemployment.”

At Ebbw Vale, Aneurin Bevan, picking up on the mood of the times, argued that:

“Low rents, spacious homes fitted with all the labour-saving appliances invented by modern domestic science, can be made available to all only if the task of house-building is organized on a national plan”.

In Preston, the Conservative MP, Julian Amery, described the grim reality for many:

“Much the biggest issue was housing. No new houses had been built since the war and there was fearful overcrowding. It was quite common to find eleven or twelve people sleeping in a single room, and in many of the slum districts there was virtually no sanitation”.

Winston Churchill’s daughter, Sarah, describes the day-to-day impulses that led many to put their trust in Labour. In a letter to her father, she explained that:

“The people I know who are Labour, don’t vote Labour for ideals or belief, but simply because life has been hard for them, often an unequal struggle, and they think that only by voting Labour will their daily struggle become easier. They are all decent people who want an easier and gayer life”.

The historians are in full agreement. A.J.P. Taylor recognized the main concerns of the electorate:

“They cared only for their own future: first housing, and then full employment and social security. Here Labour offered a convincing programme”.

Arthur Marwick concurred:

“Public opinion polls showed that the issue which most concerned people was housing. Labour effectively presented itself as the party most strongly committed to social reform.”

Angus Calder agrees:

“Labour had been elected, above all, on the issue of housing”.

This was ‘retail politics’ at its most potent. As the historian Paul Addison concludes in ‘The Road to 1945’:

“A simple but vital point about the 1945 election is that Labour put the material needs of the average family above all else in its campaign”.

And Labour delivered. Over the next 5 years, Labour built one million new homes.

Of course, the situation in 2020 is radically different to the challenges of 1945. But there are some real parallels.

Recent analysis by Nathaniel Barker for ‘Inside Housing’ has revealed that areas with the most overcrowded housing have been worst hit by COVID-19. The area with the highest COVID-19 death rate (144.3 deaths per 100,00) and the biggest housing overcrowding problem (25.2% of homes are overcrowded) – is Newham in east London. Just as with the wartime blitz, there is a clear London focus to the problems caused by overcrowding. Of the 30 areas with the highest percentages of households living in overcrowded conditions, Barker explains:

“26 are in London. Part of that can likely be explained by the acute affordable housing shortages in the city”

Over the next few years, Labour needs to learn from the 1945 experience, put the needs of the people at the forefront and develop a social housing programme for the 2020s and beyond.

‘Cheer Churchill. Vote Labour’ – The story of the 1945 General Election is available in e-book and paperback format at: https://www.amazon.co.uk/dp/B08975HFS7/ref=cm_sw_r_tw_dp_U_x_4Xc2Eb4B0AVT1 via @AmazonUK

All proceeds from the sale of the book will be donated to Foodbanks in Westminster.

<span class="has-inline-color has-accent-color"><strong>Paul Dimoldenberg</strong></span>
Paul Dimoldenberg

Paul Dimoldenberg was first elected to Westminster City Council in 1982. He was Leader of the Labour Opposition Group from 1987-1990 and from 2004-2015. He is the author of ‘The Westminster Whistleblowers’, published by Politicos in 2006, which tells the story of the Westminster ‘Homes for Votes’ scandal of the 1980s and 1990s.

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When averages don’t have to be so mean

With the Tories on the proverbial housing policy ropes, Labour must continue to focus on progressive policies that result in more support for households at lower parts of the income distribution. To roll with the punches Labour must call for an increase in the Local Housing Allowance (LHA) to the median 50th percentile, scrap the discriminatory age restrictions to the Shared Accommodation Rate (SAR), and put those most in need at the heart of any emergency coronavirus plan and comprehensive vision for the future.

Shelter have announced we have a public health crisis on top of an already existing housing emergency. This is because millions of tenants, whether they be private, social, or intermediate, are presently not working due to the fact society has lost confidence in our ability to move around without catching a killer infection. This has happened in the middle of an existential housing emergency that has been significantly exacerbated by the Tories over the past decade.

Vicky Foxcroft, Lewisham Deptford MP, brutally exposed this in the Commons in Julylast year:

“Local housing allowance is supposed to cover the lowest 30% of market rents, but research by Shelter found that that is not possible in 97% of England. For example, in south-east London, local housing allowance will cover only the bottom 10% of rents. We have a housing crisis across the country and local housing allowance is not fit for purpose. Does the Minister agree that it must be raised to reflect the true cost of renting?”

House of Commons | Hansard | 01 July 2019 | Local Housing Allowance

Virendra Sharma, Ealing Southall MP, also explained how a staggering number of members in his constituency had a very real risk of homelessness as they struggle, month after month, to make up the shortfall between their rent and the level of LHA.  

For example, a single young person under the age of 35 in Ealing Southall would have found just 1% of shared properties affordable with the SAR available in 2018. A family with children looking for a two-bedroom property would find the LHA rate covered just 6% of the private market. This would mean they would have to find an extra £150 per month to afford a property within the cheapest third.

In 2019, 88,330 households in England found themselves living in temporary accommodation, a figure tragically up from 48,010 in 2010. That is equivalent to the size of a town like Grimsby, Guildford, or St Albans often having to live in bed and breakfast accommodation in the first instance, until something more suitable can be found.

Figure 1: Total Number of Households in Temporary Accommodation 31st December 2019
Source: https://www.gov.uk/government/statistical-data-sets/live-tables-on-homelessness

The Tories have at least attempted to unwind the horrendous consequences of their own bad policy through reforming “no fault” evictions, removing Section 21 of the Housing Act 1988, and making changes to the grounds for possession. Yet much of this will be a mere sticking a plaster over what are much deeper structural issues, with pressure on the housing benefit system having been exacerbated from years of weak wage growth and domestic price rises

The severity of the impact on households’ living standards has been to an extent normally associated with a severe recession, which has left the huge shortfalls between LHA and the true cost of renting one borne by the poorest.  The result has left the country ill-prepared to face such a crisis, particularly as it braces itself for the biggest economic slump in over 300 years. This was not what Labour had it mind when it introduced LHA back in 2008 following evidence based research.

After an initial three-year pathfinder Labour set the LHA rate at the median 50th percentile of the local private market. Shared Accommodation Rates were applicable for those under 25, which meant that single claimants under 25 were forced to share with others rather than live on their own. It had an aim to give a flat fair allowance for the local area and enabled people to have choice. LHA was argued to increase incentivisation to work, namely through greater clarity of in-work benefits, and most importantly it was simple.

LHA was slashed in 2011 to the 30th percentile by the Coalition government, with the Liberal Democrats crooning it in, like mice singing in the cats choir. A year later LHA rates were delinked from market rents and increases there forth capped by CPI. An uncaring cap on benefits was further introduced in 2012 following George Osborne’s famous Conservative Party conference speech where he asked “where is the fairness?”.

Three years later George Osborne thought it was still not fair enough and pushed the benefit cap even lower in his Summer Budget of 2015.  He brought this alongside an extension of SAR up to the under 35s, with a 5-year freeze to LHA announced in 2016.

Turns out George’s idea of “fairness” leaves poor families with mounting debt and pushes children into deeper poverty, with many families financial circumstances having worsened following the introduction of the policy. In large part having been left with an average gap between rent and housing benefit of £3,750 per year.

That said, evidence from Crisis identified that investing in LHA rates to cover 30% would prevent 6,000 households from becoming homeless over a three year period. It would also lift 32,000 households out of poverty, which would include 35,000 children. Off the back of this research, and vociferous campaigning by Labour Party politicians the Tories buckled, and ended their very own LHA freeze one year early.

Hurrah!

Announced in January 2020 under The Social Security (Coronavirus) (Further Measures) Regulations 2020 the Government stated it would relink the LHA to the 30th percentile, which was set at the same level seen in the 2019 Labour Party manifesto.

But was this rate high enough?

The Liberal Democrats thought not. Their manifesto included a call to increase LHA in line with average rents in an area. Though fell short on whether this was the mean average, or the more robust to statistical outliers mean average. In any case nobody was going to believe that commitment with the Liberal Democrats having been the hand maiden for such cuts in the first place.

Yet their policymakers did have a point, as a move back to the average rent level for LHA is one backed by credible research. In August 2019 Crisis demonstrated a higher cost benefit could be achieved if LHA was restored to the 50th percentile rate in areas where the rates fall behind rents the most, and to 30th percentile everywhere else. The research also gave a nod to restoring all the rates to the cheapest half, which would bring the highest overall benefit. In effect restoring LHA to the progressive median average, not seen since the last Labour government, would be more equitable and more cost effective.

This begs the question why previously Labour only sought an increase to the 30th percentile when, under the previous Labour Government, the median average left fewer people choosing between eating or paying rent. Shelter have recently joining the ranks call for an increase in housing benefit to cover the cost of average rents and to lift of the benefit cap.

Labour’s recent announcements chime well. Thangam Debbonaire’s emergency five-point plan echoed such calls through laying out increases to LHA rates and an improved provision of Universal Credit. Shadow Secretary of State for Work and Pensions, Jonathan Reynolds, also called for urgent action on social security. Through a suspension of the benefit cap and removing the savings and two-child limit to Universal Credit.

At least now renters can take comfort both Labour and the experts are on their side.

Sadly, the Tories will be difficult to move on from the below average LHA rate and age discriminatory SAR policy, which will remain unfair and incredibly impudent towards those on the breadline. Yet Labour must continue to be bolder than its Tory counterparts on housing. For it to work effectively for a just society, it must call for an increase in LHA to the median 50th percentile rate, not the mean, and in the interest of fairness push for the abolishment of age discriminatory housing benefit criteria.

<strong><span class="has-inline-color has-accent-color">Chris Worrall</span></strong>
Chris Worrall

Co-Editor of Red Brick. Non-Executive Director of Housing for Women. Labour Housing Group, Executive Committee. Exploring innovative new models in housing with care in the for Guild Living. Previously Investment and Finance Manager at Quintain and Thor Equities.

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Raise the dented shield

Labour did stunningly well all over the country and we have many new Labour Councils who I hope will promote a strong housing agenda: more genuinely affordable homes, regulation of the private sector, searching out a humane response to dealing with the ending of the homelessness safety net and the cuts to housing benefit.
Labour Councils will face huge difficulties with little money and a Government which is following rigidly a high rent, no rights housing policy in the desperate hope that the market will respond.  They will have to make appallingly hard choices but, as Neil Kinnock once said, better a dented shield than no shield at all.
The tragedy of London is that it is a Labour city but the Tories walked away with the spoils: the mayor holds all the housing powers and what little money is left.  It bodes ill for Londoners: there will be no shield at all for them.  Housing output will be nowhere near affordable, the proportion of earnings spent on housing will continue to rise, and the private rented sector will continue as the last unreformed and unmodernised great industry.
Andy Slaughter was spot on with his analysis of the real Tory agenda: few if any planning consents for new social rented housing; demolition without affordable replacement of social housing estates in valuable places; selling council properties without like-for-like replacement; and insecure and unaffordable new tenancies becoming commonplace in the social as well as the private rented sector.
Personally I’d rather have H’Angus the monkey as mayor than Boris Johnson.  At least H’Angus campaigned on the policy of giving children free bananas when he won Hartelepool.
We will all have our theories as to why Ken Livingstone lost against such a benign political background.  They say familiarity breeds contempt and there might be a bit of that after 40 years of seeing Ken on the London stage.  There is no doubt that Boris Johnson the personality is a phenomenon unmatched in British politics (even if he makes my skin creep).  His next target is Cameron and I’ll enjoy watching that battle unfold.  But Johnson could have been beaten.
I certainly don’t agree with Peter Kellner and Tony Travers on the BBC (why don’t they have to declare their financial interests before commenting?) that it has nothing to do with the media.  The personal vilification of Livingstone, the anti-Ken propaganda handed out to Londoners every day (called the Evening Standard), the supine broadcast media who just follow the papers wherever they go, and the overwhelmingly negative Johnson campaign, all had their impact.  The media bias sets agendas: Ken’s tax affairs became a huge and genuinely damaging issue (unfairly in my view) whilst Johnson’s extensive contacts with the Murdochs hardly got a mention.  Although at its peak it was excellent, the London Labour campaign machine seemed to take ages to get organised, with several changes of personnel.  Add the damage done by the ‘hold your nose and vote Ken’ brigade, a few genuine backstabbers (Sugar, Clarke and Labour Uncut come to mind), and the result is the narrowest of defeats.  If I can campaign for James Callaghan in 1979 and Tony Blair in 2005 these people can campaign for Ken Livingstone in 2012.  It’s called political discipline and it means, whatever you do, you don’t let the Tories in because they really hurt people.  Ken could have done better but we all could have done better, and we should have won.  Let the lessons be learned.
The one thing that cannot be disputed is Ken’s housing record.  I got annoyed by the Shelter and NHF line that the candidates weren’t talking about housing.  Ken was, from the off and every time he got to his feet.  Almost his first policy statement was about the private rented sector, the lettings agency and the London Living Rent – it was unexpected, innovative, and deserved much more coverage.
For 40 years, from Lambeth to Camden, from the GLC to the GLA, Ken has promoted housebuilding and genuinely affordable housing for Londoners.  He has never been embarrassed to talk about Council housing.  Given no housing powers and no money in 2000 when first elected mayor, Ken transformed housing prospects in London in an extraordinarily creative way, leaving in 2008 with a clear housing strategy for the capital and the biggest affordable housing programme in its history.  It was a strategy for all: he invented the whole business of intermediate housing as a planning tool to help people in the middle as well.  The achievement is nothing short of phenomenal.
This may be Ken’s last election campaign but I doubt if it is his last campaign.  If he and Boris are both one of a kind, give me Ken’s kind every time.

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Is there a progressive majority for property tax reform?

The latest fault line in the Coalition seems to be developing around taxation.
Chancellor George Osborne is ‘reviewing’ the top 50% income tax rate, much to the annoyance of the LibDems, whose priority in income tax terms is to raise thresholds to take the lowest paid out of tax altogether.  The LibDems have the Coalition Agreement on
their side and Danny Alexander is on the record as saying: “The idea that we are going to shift our focus to the wealthiest in the country at a time when everyone is under pressure is just in cloud cuckoo land.”  But Osborne faces a lot of pressure from the Tory right, including Boris Johnson, who has called loudly for the 50% tax rate to go.
The LibDems’ Vince Cable has admitted that the top rate of tax should be removed, because the Coalition are united against high marginal rates of tax, but that it should be
replaced by a tax on wealth or on highly valued property, not a position that will endear him to the Tory right.  Cable was a strong advocate for the LibDems manifesto promise (which didn’t make it into the Coalition Agreement) to introduce a Mansion Tax.
Last weekend Eric Pickles joined the debate (or bitter in-fighting, whichever you prefer),
arguing that the 50% tax band was only a temporary measure to reduce the deficit and lambasting the Mansion Tax idea: “It would be a very big mistake to start imposing
taxation on the back of changes in property values, particularly with big regional variations”….”People will suddenly find themselves in a mansion and they hadn’t realised it was a mansion. If it is only going to be mansions, the kind of thing you and I would regard as a mansion, it ain’t going to raise very much.
”  But he also makes clear he is against any increase in taxes on ‘the middle class’.  As he is also against taxes for the rich, that doesn’t leave many options other than more cuts.
The LibDems’ original proposal for a 0.5% annual Mansion Tax on properties valued at £1 million or more was quickly revised when they realised how many people in LibDem target seats in London and the south east already owned homes that were over the threshold.  Their revised proposal – a 1% annual tax on homes over £2 million – hit far fewer people and attracted more support – including from David Miliband during the Labour leadership election.  The tax was estimated to raise £1.7 bn a year and Miliband claimed it would avoid the need to make savings in the housing benefit budget.
Taxing wealth, property and land has been a shibboleth for many in the Labour Party over
the years.  The Labour Land Campaign has argued long and hard for the introduction of a Land Value Tax saying, in principle, that land is a finite resource, that increases in value are created by the society as a whole not the individual landowner, and that the community as a whole should benefit.
An excellent pamphlet by Toby Lloyd published by Compass in 2009 called ‘Don’t bet the house on it’ looked at the ways major reform of property taxation could help tackle our dysfunctional housing market and the crisis in housing supply.  He detailed the advantages of introducing a LVT, making possible a total reform of the complex array of property-related taxation in this country.
Whether Labour’s housing policy review will venture into this territory will have to be seen.  It would not be good if the LibDems managed to push the Coalition into adopting a Mansion Tax or any other additional property tax as part of a deal over removing the 50% tax band but Labour had not even got round to considering the matter.  The argument about Mansion Tax could raise some fundamental issues about the housing and land markets that all parties have dodged for many years.  Even if the Tories don’t like it, there may even prove to be a progressive majority in favour of a big reform.

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You can’t defeat stereotypes by repeating stereotypes

I think Labour has got into a bad place on welfare reform.  It’s not just since Ed Miliband became Leader, it developed during the Labour years in government.  I think it is driven by the overwhelming dominance of the Daily Mail agenda of wild exaggeration about benefit cheats and scroungers and how this feeds into opinion polls.  We have not found a way to counter the hugely successful tactics of the right in turning public anger about failing economic performance into hostility against the poor and not the rich.  Why is the country not up in arms against the bankers and the mega-rich – the people who run the system, benefit most from the system, who have lined their pockets in the most extraordinary way over the past decade and failed everyone else whilst they were doing it?  
On Monday former political advisor to Tony Blair John McTernan was on Daily Politics.  Commenting on Ed Miliband’s speech, he said that the Leader was ‘missing symbolic policies that indicate which side he’s on’, adding: ‘If he’s serious about saying if you get a job you should be looked at more seriously for council housing rather than simply council housing being for welfare recipients, I think that’s a big signal, it’s a signal that if you get on, if you better yourself, the state will be behind you, I think that’s a much more powerful signal than anything he’s said on policy before.’  
This repeats a myth about council housing, which isn’t and never has been (but will be if Shapps gets his way) allocated according to income or employment status but according to defined housing need, it fails to acknowledge why most people receive benefits (unemployment, illness, disability, retirement) or to explain why they are somehow undeserving of a home.  It accepts the ‘welfare recipient’ stigmatisation in its entirety.  Like the use of the term ‘lifetime tenancy’ when there is no such thing, the term ‘welfare recipient’ carries a package of prejudices and negative images, and has become a classic stereotype.  Even Andrew Neil seemed pleased with this contribution.
Ed Miliband’s speech was more balanced than the spin suggested, as Tony described in his earlier post, but it’s the spin that bothers me.  He accepted that there was a ‘terrible shortage’ of social housing and that ‘it will be a key test of the next Labour government that we address this issue’.  But the sterotype still crept in a roundabout way.  ‘People who give something back to their communities – for example people who volunteer or who work’ should be given higher priority in allocations.  But it seems to me to accept the media presumption about who lives in social housing and that there is something deficient about them compared to those that ‘give something back’. 
More than half of social tenants are retired or economically inactive for reasons other than unemployment.  Of the remainder, the vast majority are actually in work or full time education.  People entering social housing are often enabled to work for the first time because rents are affordable and the transition to in-work housing benefit is managed better.  The level of volunteering on some social housing estates is extraordinary, something we should celebrate, they put Cameron’s prissy big society full of lady bountifuls to shame.  The vast majority of tenants are already ‘responsible’ just like the vast majority of home owners and private tenants are. 
Ed makes the point that he wants to reward contribution and not punish people.  But there is shortage and the people who get punished are those that won’t get a home as a result of a change in priorities – your grannie who needs sheltered housing, your cousin with a severe medical condition who can’t stay in a private bedsit in a shared house, your son or daughter who has had a breakdown and needs supported housing, your sister with 3 kids evicted from her home because she can’t keep up with the mortgage.  None of them working and none of them able to volunteer.  These are not tearjerkers, this is the real life business of allocating social housing. 
John McTernan rightly said that Labour can’t win unless it is seen to represent a wider coalition of people.  I am less sure about his view that we were seen as the party of lone parents and immigrants (lone parents and immigrants won’t agree).  I think Labour came to be despised by a lot of natural supporters because of Iraq and because of Labour’s association with the rich – not the poor.  We no longer looked like the party of ordinary Britain.  The parties on yachts in the Med, the moth-like fascination with the wealthy, our soft line on the bankers and the undeserving rich.  Not forgetting the mad in-fighting which diverted the government from the ordinary issues facing people. 
We fall into the hands of the forces of darkness every time we play the undeserving poor game, every time we add to the negativity around ‘welfare recipients’ without explaining who they are.  Every time we fail to challenge the belief that ‘the housing benefit bill was out of control’ rather than point out that rents have gone up and caseload has increased due to the resurgence of the private rented sector.  If, as John McTernan seemed to me to be saying, you can only get the middle class on board by dumping on the poor, then the game is up for the left and every variety within it.  But if he meant it when he said that we need to have policies attractive to people in the middle as well as at the bottom, then there is enough common ground to unite us all.  Because Labour should be on the side of both.

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Housing policy will lead the way for Labour, says Livingstone

Labour’s housing policy will help lead the country out of the ‘turgid economic trough’ being created by the Tories, Ken Livingstone told a packed London Labour Housing Group conference on Saturday.  ‘Investment to create 100,000 new homes would create three-quarters of a million jobs’ the mayoral candidate told the conference, called to debate housing policies for London to be included in next year’s manifesto. 
Describing the fight for the mayoralty as a ‘mid-term election’ Ken argued that Labour needed to redefine housing policy as a key part of economic policy as well as being important in itself in meeting the housing needs of low and middle income Londoners.  One of the jobs of the new mayor will be to draw up a major programme of housebuilding ready for the return of a Labour government. 
The Tories have abandoned the idea of mixed communities in London, he said, but Labour will always build a mix of homes for a mix of people on a wide range of incomes, just as it had done in the past.  Ken also reminded the conference that effective campaigns on housing had forced major u-turns from both the Heath and Thatcher governments and could do so again with the coalition. 
Karen Buck MP, shadow minister for welfare reform, told the conference that the Tory government’s policies in the Localism and Welfare Reform Bills would have a huge impact on London and could force tens of thousands of people to move – all searching for cheaper areas.  The policies would also be counter-productive – leading to higher rents in all tenures and far greater homelessness – making it impossible for them to make their savings.
Karen said that the policies directly contradicted the Tories’ claim that they wanted to incentivise people to get back to work.  They had almost completely forgotten that housing benefit is also an in-work benefit  – over 40% of people receiving local housing allowance were in work in some boroughs – the losses would make it impossible for many of them to remain in work. 
Setting the context for the conference, Nicky Gavron AM, Labour’s housing and planning lead on the London Assembly, said that more and more people were seeing housing as a key battleground for the mayoral election.  The difference between the two mayors could not be more stark.  Ken’s legacy was strong, Nicky argued.  There was a strong planning framework, the best housing record since the 1970s, the highest level of capital investment ever and a massive land bank ready for development.  Johnson had squandered this inheritance and virtually all his housing claims could be dated back to Ken’s administration.  He was undermining the planning system, scrapping Ken’s targets especially the 50% affordable target and the emphasis on social rented homes.  The government’s own inspector had criticised Johnson’s polices, saying his targets were too low, he should keep the 50% London-wide affordable housing target, and should support social rented housing provision.  Johnson caved in to his Tory friends in the boroughs, allowing them to cut affordable housing.  Only the Labour boroughs are keeping London’s affordable housebuilding going. 
The conference, with representatives from all areas of London, inner and outer, debated a series of detailed policy proposals for the manifesto, including policies to increase housing supply, to meet the needs of the poorest and most socially excluded households, to help the ‘squeezed middle’, and to guarantee the future of social housing in the capital.  The policies will be developed further before the manifesto is published.   
Labour Party members interested in joining the Labour Housing Group should follow this link.  London members interested in the work of London LHG should contact steve@hilditchonline.com