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A decent result for council housing

It has been a long time coming, but the end of the national HRA (housing revenue account) subsidy system for council housing is now in sight.  A new government paper Self financing: Planning the transition clarifies some of the detail, updates the figures that will be used, and crucially sets the timetable for implementation – 28 March 2012 will be the day on which many billions of pounds will move around between CLG, the Public Works Loans Board and individual local authorities to implement the scheme.
Although the technicality of the new paper will give anyone except a public finance accountant and a few experts a headache, the core proposals are still much the same as
proposed by the Labour Government. Radical change has been made possible due to the fact that the council housing system as a whole has moved into significant surplus, surpluses that are projected to grow in future.
The current system involves central government notionally collecting all rents and
redistributing the income between councils with housing stock according to
increasingly complex formulae.  The system has become unsustainable, with some councils losing 50% of their rent income to the national pool, and volatile, with annual determinations making longer term planning very difficult.  The central problem was the bad distribution of historic debt – councils that have built most in the past had large debts they couldn’t sustain from local rent income.  The new system redistributes the debt permanently between councils, according to their ability to support it within 30 year business plans, removing the need for annual redistribution.
‘Self-financing’, as it is called in the jargon, is a genuinely localist move, supported by all
of the political parties and by the vast majority of councils with stock. It is a major success for the housing lobby, and especially CIH, who have argued for this change for many years to give council housing a sustainable future and to bring key decisions over finance and services closer to tenants.
Of course there are still risks and there are elements of the package that could be improved.  There may be dangers in the detail of the redistribution formula that I wouldn’t be able to spot with binoculars, but some others will.  One change made by the current government has been to retain the rule that 75% of capital receipts from the right to buy will go to central government rather than stay locally as Labour had decided.  They also imposed a cap on borrowing, limiting the scope for councils to use their surpluses to build new homes, and spiking the ambitions of some councils to become major builders again.
The funding arrangements to complete the decent homes programme also do not seem to be adequate for the job.
It must be said that there are dangers as well as opportunities arising from local control of the housing revenue account. The ring fence is retained but, given that the general fund at most councils is under severe strain, some Directors of Finance and politicians will look avariciously at the HRA and seek to move funds across.
Tenants will need to be vigilant and alert to the many tricks of the trade, and scrutinise carefully all arrangements such as recharging of overheads and central council costs and service level agreements.   If council housing is to be a self-financing business in future, the core principle must be that rent income is used for the benefit of tenants and not
council taxpayers generally.
The long-predicted total demise of council housing has been averted. Campaigning tenants and a few councils who were determined to hold on to their stock can take much of the credit for that.  Councils with stock should now be able to adopt a sustainable business plan for the future, making decisions locally, with their tenants, to improve their management and performance.  Some councils are building again, admittedly in small numbers, and more have the potential to do so.
Given the politics of council housing over the last 30 years, this is a good result.

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‘Bleeding stump’ charge adds insult to injury

<strong><span class="has-inline-color has-accent-color">Steve Hilditch</span></strong>
Steve Hilditch

Editor and Founder of Red Brick. Former Head of Policy for Shelter. Select Committee Advisor for Housing and Homelessness. Drafted the first London Mayor’s Housing Strategy under Ken Livingstone.

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

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

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

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

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

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

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

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Auf Wiedersehen, Pet

<strong><span class="has-inline-color has-accent-color">Steve Hilditch</span></strong>
Steve Hilditch

Editor and Founder of Red Brick. Former Head of Policy for Shelter. Select Committee Advisor for Housing and Homelessness. Drafted the first London Mayor’s Housing Strategy under Ken Livingstone.

A Parliamentary Question from Caroline Flint last week elicited the curious information that not one of the Ministerial team at Communities and Local Government department – responsible for housing and local government across the land – had visited the north east of England since their appointments last May. It’s hard to know whether the north east should moan about being ignored or celebrate this as an achievement.

The Secretary of State, Mr Pickles, as a man of the north, did manage a visit to Bradford, where he formerly led the Council.  He also made it to Liverpool, presumably before the cuts when it still wanted to be a ‘vanguard community’ for the Big Society.  But is it indolence or unpopularity that leads the man responsible for all things delivered locally to make only 6 visits in his official capacity in the 8 months he has been in charge?

His Minister for Housing and Local Government, Grant Shapps, perhaps has more excuse as a professional southerner.  He seems to get a nosebleed by travelling north of the Wash, but did brave it by venturing into Manchester and Leeds, and no further.  It’s no surprise that his first trip was to Wandsworth, the borough with the highest council rents in the land.  The Minister for Decentralisation, Greg Clark, stunningly has made only 4 visits anywhere at all, and none since July, to the places he is inflicting his policies on.

One other curiosity is that none of the Ministerial team has been to Hammersmith and Fulham, allegedly Mr Cameron’s favourite borough, despite the fact that it is the incubator for many of the Tories’ most unpleasant policies.  This might be due to embarrassment because they denied vehemently that they would support H&F’s line on ending security of tenure and increasing social rents towards market levels, only to adopt the policies after the Election.  Or it may be that the local people fighting the sell-off of their estates wouldn’t like it and might mount large demonstrations of welcome.

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Welwyn-Hatfield Syndrome

<strong><span class="has-inline-color has-accent-color">Steve Hilditch</span></strong>
Steve Hilditch

Editor and Founder of Red Brick. Former Head of Policy for Shelter. Select Committee Advisor for Housing and Homelessness. Drafted the first London Mayor’s Housing Strategy under Ken Livingstone.

Always one for the grand gesture and photo-opportunity, Grant Shapps is on TV yesterday cutting some ‘real red tape’ and complaining that local authorities suffer from ‘Stockholm Syndrome’.  Well, the point missed me for one and possibly most of the rest of the population as well.  Wikipedia came to the rescue as usual, letting me know that in psychology Stockholm Syndrome describes the paradox where captives express positive feelings towards their captors.    

I don’t know if Shapps is a student of psychology but evidentally in Spooks the syndrome was crucial to the storyline involving agent Lucas North.  More likely that was the inspiration.

Shapps was describing the ‘bonfire of the regulations’ that are to free local government from the ‘apron strings of the nanny state’.  But, just as this week’s social housing consultation talked of freeing landlords and not tenants, this announcement is about freeing government and councils and not residents.  Both are about removing scrutiny of performance and achievement.  At the core, they are about obscuring and hiding the real impact of the cuts.

One of the casualties is inspection by the Audit Commission of local authorities’ strategic housing function.  Under the government’s plan to remove regional planning and targets and to place all key housebuilding decisions at local authority level, councils’ understanding of their local housing markets and housing supply and demand will be critical. 

Over the last couple of years, the Audit Commission has completed over 30 inspections and re-inspections of councils’ strategic function.  Not one was found to be excellent.  Only 4 were found to be good, 18 fair and 11 poor.  Picking one at random, West Somerset was described as follows: “The service lacks a clear understanding of community need and because strategic plans are weak, the Council has yet to effectively target the relatively poor private sector housing conditions. The delivery of new homes is not meeting needs and there has been little success in addressing empty homes. Strong outcomes for vulnerable people, such as those living in temporary accommodation, are limited.”

Some districts are very small, many now have no housing stock of their own, and many have little capacity to undertake the strategic work that is necessary.  It is not surprising that they do not perform strategic housing tasks well and it would be even more surprising given budget reductions if they were to suddenly discover the talent to do so.  This is one reason why so many local housing development decisions will be decided by the loudest voices rather than careful deliberation.  It is also why the regional perspective was so important to housebuilding delivery.

So, we identify the new Welwyn-Hatfield Syndrome, unfortunately not yet in Wikipedia, but named in honour of Shapps’ constituency.  This is where someone passes the buck down the line having made damn sure the recipient will fail to deliver, removing all scrutiny of the process, at the expense of everyone who needs a home to buy or to rent.  Then you shout from the rooftops:

“Nothing to do with me guv, I’m only the Minister.”