The ‘cleansing’ of central London of poorer people due to rising living costs, welfare caps and stagnating wages has long been feared by many.
Research published exclusively by Inside Housing today will fuel fears this process is underway with regards to homeless people at least. The findings of the report, compiled by umbrella group London Councils, show London boroughs have more than doubled the number of homeless families they place outside the capital.
London Councils placed more than 15,000 families outside their home boroughs in the 12 months to 31 June 2013, while 259 were placed out of London entirely – an increase of 129 per cent. But what does this show and should we be concerned?
Many councils have been placing homeless families in neighbouring London boroughs for years. This is understandable where there is a shortage of reasonably priced available accommodation in the home borough. Most people do not think of London in terms of borough boundaries and a move down the road in most cases should not cause a problem – as long as the person agrees of course. I don’t think it is fair to expect a council to have to house everyone that is homeless in its home borough, as some councils end up with larger numbers of rough sleepers than others.
The more recent phenomenon of housing people much further away is slightly more problematic. However most councils I’ve spoken to insist they only offer these moves to people who have no connections with the home borough. If a person is happy to move, and has no friends or family connections in the borough, why not? I find it difficult to blame councils, faced with depleting amounts of stock that can be used to house people, for any of this.
But housing large numbers of people outside the capital is problematic because of the message it sends. That London is a place only for the better off and the poorest only fit to be exported to other towns to be someone else’s problem. This is obviously overstating things somewhat and the numbers are small at the moment.
However – if Boris Johnson is serious about preventing ‘Kosovo-style social cleansing’ this needs to be addressed, if not by him then by central government.
Simply warning councils not do this, as Grant Shapps did, is not enough – the government needs to think of measures to ensure there is enough available affordable accommodation to house people as close to the home borough as possible.
Whether that involves government subsidy to reduce the cost of homeless accommodation, rent controls or other interventions I’m not sure – but there needs to at the very least be a willingness from politicians to have a look at the problem.
‘Never air your dirty laundry in public,’ the old saying goes, usually directed towards feuding couples in danger of revealing things better kept private.
The same line of thinking has so far governed the new social housing regulator’s relationships with housing associations – or at least MPs on the communities and local government committee seem to think so.
To date, the Homes and Communities Agency has not – with the exception of the extreme case of Cosmopolitan - found a single housing association non-compliant with its viability standards, despite issuing 134 judgements.
The reason for this is that regulatory staff prefer to work with organisations informally to nip problems in the bud before they affect viability. The thinking seems to be that viability issues start with governance failures. The HCA intervenes when governance issues become apparent and works with the provider to try and prevent a viability rating downgrade. This, reasons the regulator, is why there have been several governance rating downgrades but no significant viability downgrades.
The MPs do not see it quite like this. They think the regulator’s approach is too informal and opaque. They accuse the regulator of misleadingly using governance ratings to reflect viability concerns for fear of triggering back book re-pricing of loans.
HCA insiders reject this accusation, and insist the viability ratings are accurate and that the regulator will not hesitate to downgrade viability ratings if it is warranted.
However, the HCA has nevertheless been stung into a response. It is now likely to publish a ‘watch list’ of struggling organisations on its website in a bid to improve transparency.
Organisations deemed at risk of becoming non-compliant with the governance or viability ratings will appear on the list. We do not know the precise criteria, ie, how close to a significant downgrade associations have to be in order to be named and shamed in this way.
One thing that is clear is that the HCA is now facing a dilemma. It is under pressure to be transparent but has to be careful about spooking investors and rating agencies and making the situation even worse for organisations in trouble.
The MPs clearly believe taxpayers have a right to know when a housing association is in trouble and what is being done to resolve difficulties.
And there’s the rub.
This is yet another instance of tensions around housing associations’ public/private status. On the one hand they are not public bodies, so many associations feel they should not be treated to the intense level of public inspection that schools are, for example. Airing the dirty laundry in public risks damaging associations as private businesses as it could affect their relationship with lenders, investors and rating agencies.
But on the other hand, they are not the same as large private profit-making companies either. They do not have shareholder accountability. This, coupled with the fact they receive large levels of public subsidy, leads MPs to conclude there is a lack of accountability among housing associations and it is difficulty to disagree.
Resolving this dilemma is going to be a tricky task for the HCA. In the meantime, many in the sector will be waiting for a glimpse of the first ‘watch list’.
It is fair to say social housing regulation supremos Matthew Bailes and Julian Ashby have had a lot on their plates over the last few months. The social housing regulator has been working on plans for a new regulatory framework (and has hastily dropped ringfencing plans due to sector concerns) has been involved in battles with the communities and local government department over resources, has had to deal with the fallout from the near collapse of Cosmopolitan and has been working through a whole raft of regulatory judgements.
For this reason, it is probably not surprising that something has had to give. This week Inside Housing revealed that Sir Bob Kerslake, the head of the civil service, urged the Homes and Communities Agency last December to agree a ‘financial protocol’ with the Communities and Local Government to enable swift responses to organisations in deep trouble. This was very much in the context of the Cosmopolitan crisis, but Sir Bob makes it clear a protocol would help financial decisions in other cases ‘be taken with the minimum of delay.’
The idea is civil servants and HCA regulatory staff would have a codified set of rules ‘off the shelf’ that they could refer to when faced with a case of serious financial failure. This means that if finance is needed to be put in place quickly, there is as little bureaucratic delay as possible.
This protocol will be developed towards the end of a wider project by the regulator to assess how it deals with ‘serious financial failure’, including what happens if a large housing association which is ‘too big to fail’ gets into extreme financial difficulty. The HCA had hoped to have made much more progress on this scheme, but its past resource problems have contributed to the project being slowed down.
Mr Bailes says that the regulator has statutory powers to intervene in problem cases and these are ‘well understood’ by both the regulator and the department. He insists the regulator can act swiftly even without a protocol in place. This obviously raises the question of why the HCA is drawing up a protocol. Either one is needed or it isn’t.
It is perhaps the case a protocol is needed so that future, new teams of civil servants and regulatory staff, who won’t necessarily have had the experience of dealing with a Cosmopolitan-style debacle, understand what is needed in order to respond quickly. The regulator can be forgiven for not completing the work yet given its huge workload, but it is important a protocol is agreed sooner rather than later.
Another set of welfare data was published last week and yet again the numbers of people claiming housing benefit have increased.
An extra 40,000 people were claiming the benefit in May compared to the same month the previous year, the Department for Work and Pensions release shows.
The Conservatives repeatedly accuse Labour of being ‘the welfare party’, yet the numbers of people claiming housing benefit is soaring under a Tory-led coalition government.
Too often the welfare debate is framed around the notion of ‘strivers vs skivers’ or ‘lazy scroungers v hard-working taxpayers’, but an analysis of the data shows it is the increasing numbers of employed people, and particularly employed people who privately rent, who are driving up the claimant count.
Since May 2010, an extra 320,738 people in total have claimed housing benefit. Interestingly, the numbers of employed claimants over the same period is even higher, at 337,056 – suggesting the number of unemployed claimants has actually fallen.
Nearly one in five housing benefit claimants are now in work, up from 13 per cent three years ago, while the number of employed private renters claiming has increased by 200,000 over the same period.
There’s only one conclusion to be drawn from these statistics, and that is the increase in the number of housing benefit claimants is being driven primarily by greater numbers of claimants who are employed and renting privately.
And I would have thought the reasons for this are evident too. According to the Office for National Statistics, wages have plummeted in real terms since the crash and are now at 2003 levels. Meanwhile, rents, particularly in London, are continuing to increase. A report by London Councils in June said some boroughs have seen rent increases of 20 per cent in the last year, despite local housing allowance caps.
Wages falling in real terms and soaring rents are leading to more working people on lower incomes feeling they need to claim housing benefit to help with their living costs. Hard-working people are finding it difficult to make ends meet. This is not the message that you will read in most mainstream newspapers, many of which prefer to paint a picture of ‘scroungers’ claiming tens of thousands of pounds in social housing.
Pointing all of this out is the easy bit, the more difficult part is what to do about it, beyond simply restricting housing benefit and forcing people into poverty. Ed Miliband is certainly on to something when he talks about building an ‘economy that works for working people.’
Labour has made noises about improving wages by making the living wage a condition of government contracts and has pledged to tackle ‘zero-hour’ contracts and insecure work. However, what a Labour government would do to tackle the other side of the equation- increasing living costs - is less certain.
Rent controls, which incidentally are being introduced by the French government, are one option. Although these would be hugely controversial and prompt fears of reduced investment in stock. Longer term, building more affordable homes and measures to create more jobs outside of London’s overheated rental market are a must.
The solution to the rising numbers of people claiming housing benefit is far from clear.
I would just prefer it in the meantime if there were a lot more honesty about the true nature of the problem.
It’s fair to say the last few years have not been the best time to be a social housing tenant.
The coalition government has launched what many have seen as an all-out assault on the principles of social housing.
Security of tenure has been eroded further, while low rents are becoming a thing of the past for new tenants due to the government’s so-called ‘affordable’ homes programme. The government keeps exalting the virtues of help to buy, right to buy and home ownership, while seeming not to care about traditional social housing.
Similarly social tenants will also be forgiven for thinking the government has little interest in ensuring they can get their voice heard.
The coalition wasted little time in scrapping the short-lived National Tenant Voice and slashing funding for the Tenants’ and Residents’ Organisations of England.
The social housing regulator also now effectively no longer deals with tenant complaints. Indeed, the new threshold for intervention, ‘serious detriment’, is so high that not a single complaint has so far met it out of around 500. Housing associations are under pressure to use their assets more effectively, and some have responded by collapsing their structures. Some landlords, as we reported recently, are in danger of alienating tenants as a result.
With all of this going on, there arguably never has been a greater need for a properly funded, independent national tenant body.
We do not have that.
The closest thing to it is TAROE, which does a sterling work on a shoestring budget.
As Inside Housing reports this week, TAROE is becoming a charity in a bid to raise the money it desperately needs to survive. Around £150,000 a year is needed to enable it to continue its work visiting tenants up and down the country to represent their interests.
Although TAROE is often, by its very nature some might say, critical of social landlords, one would hope councils and associations appreciate the valuable job it carries out in trying to give tenants a voice. I would also hope that housing associations can find money to donate – £150,000 is peanuts to the sector, but could make all the difference. Tenants deserve to have a proper representative body during these tough times.
Eric Pickles was singled out for praise by the chancellor of the exchequer in the spending review announcement in June. Mr Osborne expressed his delight at the communities secretary’s slashing of his department by 60 per cent, including the abolition of 12 quangos.
A ‘model of lean government’ said Mr Osborne, treading the obvious path of making puns about Mr Pickles weight.’ Mr Pickles was also one of the first ministers to agree funding cuts to his department in 2010, joining the ‘star chamber’ which ruled on departments who cannot agree cut.
So Mr Pickles, at least when it comes to spending, is the chancellor’s pet. At times it seems as though he loves cutting, and being seen to be the enemy of unnecessary waste.
This mind-set was evident this week in his department’s refusal to sign off a request from the social housing regulator to spend a small amount of money, believed to be little more than £10,000, on an independent review of the Cosmopolitan saga.
Inside Housing understands the only reason for the refusal provided by the CLG was that it would cost too much.
This will strike many in the sector as bizarre. The Cosmopolitan saga very nearly led to the collapse of a housing association, which would have had huge ramifications for lending across the sector.
In a riskier operating environment, with low grant and pressure to diversify, landlords need to learn the lessons of what went wrong at Cosmopolitan.
The Homes and Communities Agency has now gone back to the drawing board and is looking at whether it is possible to procure the work in another way. Maybe housing associations themselves can fund the work? It should only take around £10 from each of England’s 1,500 housing associations to cover it.
An almost laughable ‘whip round’ of this nature though should not be necessary. Mr Pickles is taking his penny-pinching to new extremes. He should realise the importance of the Cosmopolitan review to the sector. If lessons are not learned and an association collapses, it will cost the taxpayer far, far more than £10,000 in the long run.
‘Transparency and accountability is central,’ according to the Homes and Communities Agency’s principles of co-regulation.
The social housing regulator makes it very clear that it expects openness from organisations, yet it has come under fire in recent weeks for its own lack of transparency.
Julian Ashby, the chair of the HCA regulation committee, had a torrid time in front of a select committee last week over the regulator’s approach to viability ratings. MPs, led by Clive Betts, criticised the regulator for not downgrading associations’ viability ratings when it has concerns.
The HCA’s approach is to work with the provider first and only downgrade if problems persist. MPs felt this is not transparent as it means there could be landlords in serious difficulty that the public are not made aware of.
The HCA has a tricky balancing act in this respect. The last thing it wants is to put out a public rating or statement that could spark re-pricing of debt, or damage the perceived creditworthiness of the sector more widely. I am not sure providing a running commentary on every problem a provider has is in the best interests of the sector.
The comments do however, raise a wider point about the transparency of the regulator, particularly when compared to its predecessor the Tenant Services Authority.
The new regulator, unlike the TSA, does not hold board meetings in public. Whereas the public, could attend part of TSA board meetings and hear broad debates about strategy, the new regulation committee meets behind closed doors. Julian Ashby told Inside Housing this is because the committee does not run an entire organisation in the same way the TSA board did.
He did however promise the HCA would regularly publish minutes and agendas from its regulation committee meetings.
This promise has not quite been fulfilled in the way one would expect. The HCA is not regularly publishing minutes, and when it does, they are certainly not up to date.
The most recent minutes, heavily redacted, are from March, and it usually takes a few phone calls from Inside Housing to prompt them to publish minutes which then turn out to be several months old. On top of this, since January the HCA no longer even publishes the dates of committee meetings.
The regulator deserves some sympathy over its attempts to protect landlords from re-pricing and reputational damage, but its policy of meeting behind closed doors and being reluctant to reveal what is going on, is not making it easy on itself to resist accusations of non-transparency.
It has been a hectic week to say the least for housing journalists. The annual Chartered Institute of Housing shindig and the spending review have kept us all very busy.
Now, we are back in the office and have had time to catch our breath and reflect a bit on the government’s announcements.
So, how positive were chancellor George Osborne’s announcements this week?
A lot depends on whether you are a glass half full or glass half empty kind of person.
Many housing figures over the last couple of weeks have been gloomily predicting little if any grant post 2015, while most associations have been modelling their business plans on an assumption that rents will not be able to be increase above inflation.
Therefore on one level £3.3 billion and a CPI plus 1 per cent increase is a lot, lot better than many predicted and the immediate reaction from many of the conference delegates was relief and surprise.
Now though, sector figures are beginning to think about some of the potential pitfalls and some of the initial optimism has begun to fade.
Although CPI plus 1 per cent sounds very similar to RPI plus 0.5 per cent, the spending review document shows a saving to the Treasury through the measure of £540 million a year by 2017/18 - suggesting landlords’ incomes will be cut. The implementation of a cap on the amount of government welfare spending could also have an impact on landlords’ incomes, particularly as more and more properties are let at ‘affordable’ rent.
Beyond the total amount of funding and the rent settlement though, more worrying is the government’s overall direction of travel and what it means for social housing.
Housing minister Mark Prisk has made it clear he expects landlords to in future consider all relets for conversion to the affordable rent tenure. This is the clearest indication yet that the government is trying to accelerate the demise of social rented housing, pushing tenants into less affordable properties, while on the other hand seeking to restrict the welfare which will underpin the rental income on many of these properties.
The settlement was better than many expected, but it also signifies there are huge challenges for landlords in the years ahead.
We are now 14 months into the reign of the new social housing regulator and it has had a frantic time.
The near collapse of Cosmopolitan and the changes to its regulatory framework have taken up most of the new regulator’s time and resources.
What is clear from figures obtained by Inside Housing this week though is that the regulator is not so far putting significant resources into intervening on tenant complaints.
Out of nearly 500 complaints to date, none have met the new higher threshold for regulatory intervention, the vaguely defined ‘serious detriment’ test.
It is becoming clear that the regulator no longer has any serious role to play in consumer regulation, apart from in exceptional circumstances.
One of the interesting things about the latest Homes and Communities Agency figures is that they come at a time when the regulator is considering charging fees for regulation.
A number of landlords have already pointed out to me that any fees would ultimately be paid for out of tenants’ rent money.
Therefore, they argue, tenants would be paying for a regulatory service that will no longer help them when they have a complaint.
Of course, better resourced regulation will ultimately help tenants if it ensures organisations are running their businesses more effectively.
But the risk is that many tenants, when they hear how their money is being used for a service which is no use to them when they have a complaint, will understandably not see it that way.
Friends of mine who work in universities tell me there has been a noticeable change in the relationship between students and their tutors since the coalition government allowed fees of up to £9,000 from last year.
When I was at university in 2000, nobody paid more than £1,000 a year. And those of us from lower-income families didn’t pay anything at all. The result of this was many of us were not always too concerned if the quality of tuition was a bit ropey, or if the lecturer was a bit worse for wear in afternoon seminars after having a liquid lunch.
However, students are now forking out up to £27,000 for their degree tuition – a serious investment. Because of that, I am told, they expect a lot more quality for their money and are more ready to complain if they feel the service is not up to scratch.
I was reminded of all this earlier in the week when it emerged that the issue of regulatory fees for housing associations is back on the agenda.
The cash-strapped Homes and Communities Agency regulation committee is scratching its head and working out how on earth it can regulate a rapidly changing sector with scant resources. As Inside Housing reveals today, the committee is now drawing up proposals for a system of fees. This is to enable it to regulate more effectively with more independence from the Communities and Local Government department.
Early indications are that most housing associations would welcome this if the fee system is fair on smaller providers and if there is a guarantee the income will be genuinely an extra resource for the regulator.
However, a number have said they would expect higher quality in return. Under a fee system, associations would be more likely to seek assurance they are getting their money’s worth, a bit like today’s students and their university courses.
An additional consequence of the fees idea is that the regulator itself could come under more scrutiny from associations – and that can only be a good thing.