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.
When the Homes and Communities Agency launched its discussion paper in April, its regulation committee chair Julian Ashby said he looked forward to ‘an intensive dialogue’ about the proposals.
It is now becoming clear that housing associations are very much up for talking about the regulator’s plans, and not all of it is complimentary.
Over the last fortnight both the National Housing Federation, and now Placeshapers have voiced concerns over the regulator’s approach, with the harshest criticism reserved for its ring-fencing ideas.
Under ‘ring-fencing’ providers will be expected to carry out social housing activity in a specific body with its non-social housing activity limited to a percentage of turnover. There would also be limits placed on using social housing assets as loan security.
The NHF has raised concerns that the ring-fencing measures could be unduly restrictive, while Placeshapers this week called on the regulator to scrap them entirely.
Placeshapers argues the need to comply will be costly and could lead to re-pricing of loans by lender. It also says the real threat to organisations assets comes from social housing activity itself.
With this, they definitely have a point. Welfare reforms are likely to weaken organisations’ income streams, which could damage businesses if not managed correctly.
More importantly though is the simple fact that reduced grant funding is pushing organisations to borrow more and more money to fund development, which could in itself lead to risks further down the line. Inside Housing’s revelation this week that the Treasury could look to limit rental income for non-developing landlords would also send a message that the government expects landlords to take risks.
With all this uncertainty relating to social housing itself, it is difficult to see how ring-fencing would help, and I suspect the measures are intended to help regulate for-profit providers and providers with unregistered parents as opposed to ‘traditional’ associations.
Placeshapers suggests the ring-fencing should be scrapped in favour of tougher recovery planning requirements, and perhaps a support fund. Under the fund idea, landlords would be required to put some money (perhaps £1 per property) into a HCA-run fund. This would then be used to ensure stricken landlords can cover their revenue costs until they can be rescued. It is an idea worth looking at.
A better idea though, could be to simply charge for regulation. Fees for regulation, assuming the money is spent on resources, could enable the regulator to increase its staffing, thereby helping it cope with the new operating environment and complex structures made possible by previous Labour government’s reforms.
The HCA will now look at the responses and spend the next few months working out what proposals to consult on later in the year – providers will be waiting interestedly to see what form of ‘ring-fencing’, if any, makes it to the final document.
Tenants affected by the bedroom tax have been given a fair amount of advice of ways to avoid or cope with the average £14-a-week penalty.
Take a job (if you can find one), take in a lodger (if you can stomach a stranger in your house), downsize (if your landlord happens to have a spare, smaller property) or alternatively apply for money from the hopelessly oversubscribed discretionary housing payment pot. The other option is to move into private renting and pay higher rent.
None of these options are particularly attractive and in some cases won’t be viable for those affected.
So instead, landlords are looking at what they can do in terms of helping tenants into work and budgeting advice.
One option floated initially and then dismissed was the reclassification of properties. Under the bedroom tax regulations, it is left to landlords to describe the number of rooms a property has in line with the rent charged. This means landlords can re-designate properties as having fewer bedrooms to avoid the charge.
The downside of this is that it hits rental income and could give landlords problems with their lenders where properties are used as security on loans. For this reason, most landlords have until now shunned this idea. A National Housing Federation survey of 220 landlords published earlier this year showed just 10 per cent are considering it.
However, comments from Professor Steve Wilcox last week may just make landlords think again. The respected academic believes the hit on rental income will be ‘very limited’ and would be worth taking, given the hassle and hardship caused by the bedroom tax. He said the rental income hit could be as small as 0.2 per cent if a landlord has one in 10 properties affected by the under-occupation penalty.
Professor Wilcox’s used a complicated formula to come to this conclusion, and in truth the viability of reclassification depends on loan agreements.
After months of debate and speculation the first real impacts of the policy widely known as the bedroom tax are beginning to be felt.
As Inside Housing has revealed over the last fortnight, two widely predicted impacts of the policy appear to be already happening.
Applications for the government’s £150 million discretionary housing payment pot have gone through the roof as affected households find they can no longer cover their rent
And the first indications from large housing associations about arrears show that those affected have struggled to pay their rent since the under-occupation charge came into effect on 1 April. Most worrying is the high numbers of people who have not paid anything at all to cover the shortfall (up to half of affected tenants in some cases).
So what does this all mean?
Many of the landlords I spoke to this week stressed that it is early days to draw any firm conclusions. There are inevitably some tenants, despite all the media attention on the policy and attempts by landlords to raise awareness, who were taken by surprise by the deduction in their benefit.
Others will have been slow setting up direct debits. The consensus seems to be that the numbers of non-payers will reduce as the policy settles down and therefore the appropriate time to judge the impact will be in a few months time.
Nevertheless, the figures are worrying and suggest landlords have some difficult choices to make in future about how to best protect their income stream. How much extra resources should they devote to income collection? Should they take a firmer line on arrears and use the ‘nuclear’ option of a ground 8 possession order?
The fact that the Department for Work and Pensions this week announced an extension of direct payment demonstration projects suggests that it too is concerned. Although the DWP’s press statement did not mention the bedroom tax, Lee Sugden, executive director of resources at Wakefield and District Housing, said the impact of the bedroom tax and other welfare reforms was the reason for the extension.
We are a long way from knowing whether ‘can’t pay, won’t pay’, the slogan of anti-bedroom tax protestors, will come to fruition – but the bedroom tax has undoubtedly had a rocky start.
It is now more than a week since the Homes and Communities Agency published its proposals for regulating a diverse sector.
Housing leaders up and down the country are looking at the array of proposals and trying to work out whether the plans will make it more difficult for them to fund affordable housing.
The proposals seek to protect social housing assets being threatened by risky or unregulated activity.
I’ve tried to summarise the proposals and give a flavour of the early reaction to the regulator’s new approach here.
The regulator’s ideas are not sketched out in any detail - the HCA document is a merely a discussion paper asking for feedback on its broad approach.
However, one aspect is very clear, and has not really been talked about at length so far and that concerns the role of housing association boards.
The HCA makes it clear there will be no hiding place for boards under the new regime. Boards will be required to take responsibility for signing off financial forecast returns, this follows ‘deficiencies in data’ the regulator has received from landlords. The regulator will also introduce measures to ensure boards are independent and strong enough to enforce intra-group agreements to protect social housing assets. The HCA will look for ‘significantly more assurance’ that boards understand exposures from non-social housing activity.
This focus on boards has been broadly welcomed, although there is a strong argument that boards of well-run organisations should be doing all of this anyway.
But the fact the HCA clearly feels the need to bring in extra requirements to strengthen boards suggests that not all of them are as effective or as strong as they should be.
This therefore could mean we see a move towards more professionalised boards and could even in the long term re-open debates about levels of pay for board members. Bedfordshire Pilgrims Housing Association’s decision to bump up pay for its board by 40 per cent, in contravention of National Housing Federation guidelines, caused outrage in February.
BPHA cited the changes to associations’ operating environment, including deregulation and cuts to government grant, as the reason for increasing board pay. It might just be that BPHA’s decision to increase board pay, presumably as an incentive to force its board to be more professional and effective, might not look quite as outrageous when the regulator’s final plans come into effect.
It feels a bit late to be writing a piece about Margaret Thatcher, given the huge amount of column inches dedicated to her this week (and rightly so).
When it comes to housing, the rights and wrongs of the right to buy have been much discussed.
More overlooked however was the Housing Act 1988, which allowed associations to more easily raise private finance.
Since then successive governments have overseen a massive drop in grant funding. Before1988, around 90 per cent of the cost of building new affordable homes was met by the public purse. Over time this has been diminished and the government has required associations to meet more of the costs itself through bank debt, bonds or cross-subsidy from commercial activity.
Many in the sector are expecting little if any grant funding next time around and the government is likely to be more reliant than ever before on associations’ using their own balance sheets to fund new sub-market homes.
Labour’s 2008 Housing and Regeneration Act, which allows for-profit providers and unregistered parent companies, in this context can be seen as an extension of Baroness Thatcher’s policy.
The government is giving providers more tools than ever before to enable them to be more innovative and attract private finance with an understanding that there is little grant around.
This has left the social housing regulator scrabbling around working out how on earth it can protect social housing assets in a sector growing increasingly complex without stifling innovation.
It is ironic that Baroness Thatcher has died in the week when the HCA published its discussion document outlining ideas for a new approach. The big questions and dilemmas raised in the paper have emerged as a direct consequence of Thatcherite policy.
Well it is almost here.
After months of debate, protests and reports of heart-wrenching case studies, the government’s policy of cutting housing benefit for social tenants with spare rooms is due to come into effect on Monday.
The policy is known by many different terms; ‘size criteria in the social housing sector’, if you are the DWP, ‘the spare room subsidy’ if you are David Cameron, or ’under-occupation penalty’ if you are Lord David Freud. The term ‘bedroom tax’ is still, to my mind, the best term to use because it is effective shorthand to convey the idea that this is in unavoidable charge on existing bedrooms, although I concede that technically it is not a tax.
The government’s welfare reforms are varied and far-reaching and history will judge whether they will bring fairness into the welfare system or will have been simply an attack on the poor.When it comes to major changes aside from the bedroom tax, I have a certain amount of sympathy with what the government is trying to do. The move to simplify benefits through a single universal credit feels like an idea whose time has come, indeed Labour was planning to do it before it was shelved by Gordon Brown.
Making the benefit system more simple to understand and attempting to smooth off the tapers so claimants can see more clearly that it pays to work are commendable aims. Removing the choice from tenants to have their benefit paid direct to landlords also has to be the right policy, regardless of the inconvenience it will cause to the social housing sector. It cannot be right that people do not have to think about their rent. It cannot be right that some people are not even aware of how much their rent is or how much they receive in benefit.
Yes, there will be some who struggle to manage their money, and there needs to be support to help them, but do we really think so little of social housing tenants that we don’t trust them to manage their money like we do everyone else in society? That to me is nothing short of demonization and stereotyping based on tenure. Or is the sector saying that social landlords are so incompetent at collecting rent they need the money to be paid to them directly?
In any case, until the early 1980s, tenants did receive benefit direct and social landlords managed to collect their rent. The overall benefit cap is a little trickier to assess – there probably is a case for a cap, although whether it has been calculated fairly I’m not convinced. Local housing allowance caps however will simply force large numbers of the poor from our cities and are a consequence of a shortage of housing supply more than anything else.
When it comes to the bedroom tax - there can be absolutely no justification for it. The government says it will lead to people downsizing, but in the same breath says it is needed to save money. The government will only get the savings it says it needs if the poor cough up. The government is telling some of the poorest people in the country, two-thirds of which are disabled, that they have to pay extra money if they have a spare room. This is regardless of whether they are able to move .
More important perhaps, is the fact people don’t want to move. Many of the people affected are older people whose children have moved out. These are people’s homes and many would do anything rather than move from places with memories. The case of Margaret Lewis, who is being taxed on a bedroom which once belonged to her son who died at Hillsborough, is just one example of this.
The bedroom tax is simply an attack on poor, disabled people, many of whom will have no choice but to pay. Most will forego other things, such as food or heating to cover the shortfall in their benefits. The danger for the government is that this immoral and unfair policy will overshadow any good its wider welfare reform agenda will do for the nation.
‘Can’t pay won’t pay!’ is the cry coming from many of the anti-bedroom tax protestors in Merseyside.
Summoning up the spirit of the mass non-payment of the poll tax in the late 1980s, campaign groups and tenants say they will refuse to pay. The similarities with the poll tax do not end there.
The Thatcher government’s policy, which replaced the system of rates with a flat tax on every adult, was dubbed the ‘poll tax’, even though its official name was the ‘community charge.’ The name stuck, partly because it is pithy, brutal sounding and descriptive – people get their idea it is a tax ‘per person’.
Similarly, ministers hate the term ‘bedroom tax’, preferring the bureaucratic ‘social housing size criteria.’ Everyone now knows it as the ‘bedroom tax’ however, and the phrase again is simple and descriptive.
So protestors of a certain age believe there are similarities with Thatcher’s most hated policy.
There are crucial differences as well.
The poll tax was genuinely a tax rather than a reduction in benefit. This means it is technically not possible to refuse to pay the bedroom tax as it will come out of entitlement automatically.
What tenants really mean is they will underpay their rent to make up for the equivalent loss through the bedroom tax.
This is making landlords, who are already fearful for their rental income because of direct payment, even more nervous.
One Vision Housing has gone as far as asking tenants to sign disclaimers accepting they will be hit with legal action if they don’t pay their rent. Most landlords I spoke to at the Chartered Institute of Housing south east conference in Brighton this week said they would considering using ‘fast-track’ evictions under ground 8 of the Housing Act 1988 for tenants not paying their rent in extreme circumstances.
It is too early to tell whether there really will be mass non-payment of rent as a result of the bedroom tax. But landlords are clearly nervous, and the government, which is looking to landlords to use their revenue streams to build much needed housing, should be nervous too.
This week’s comments by Moody’s on the creditworthiness of housing associations were momentarily striking but in reality not that important. They certainly should be seen as a comment on the effectiveness of the regulator – and here’s why.
Moody’s downgraded the sector’s credit ratings, along with all other sub-sovereigns, as an inevitable response to the downgrading of the United Kingdom’s rating.
It also threatened to downgrade the sector by ‘multiple notches’ and murmured about a ‘weaker regulatory framework.’
On a superficial level this seems important, but it should not be seen as significant or unexpected.
Moody’s approach to date has been to assume the government, via the regulator, will bail out an association if it gets into trouble. This has never happened, but the implicit assumption that this will happen has always been there.
However, the then Labour government’s Housing and Regeneration Act 2008, which allows for-profit providers and associations to have unregistered parent companies has changed thing somewhat. This legislation was aimed at ultimately getting more innovation into the sector and making it more closely resemble the commercial world.
The upshot of this means that the regulator, cannot necessarily regulate whole groups. The situation would have been the same even if the regulator was still well-resourced and the Tenant Services Authority not been scrapped.
This is why the regulator is now focusing on mechanisms to protect social housing assets, as opposed to protecting the landlords themselves.
Seen in this context it is perfectly understandable that Moody’s is changing its approach. The only puzzling thing is that it has taken so long. The potential downgrade is a result of Moody’s belatedly realising the sector has changed, it is not because of recent developments in the sector or the new regulator’s approach. It may have taken the Cosmopolitan saga to make Moody’s realise this, but they have nevertheless been slow to cotton on.
Many of the housing figures I’ve spoken to this week seemed pleased Moody’s is doing this. It means it will base ratings more on individual organisations’ governance rather than on a lazy outdated assumption that the government will bail organisations’ out. As Steve Douglas, partner at Altair, said, this is a more ‘mature’ approach by Moody’s.
In broad terms housing associations are becoming more like commercial entities and so will be rated more like commercial entities. In the commercial world there is much more fluidity around ratings so we can expect much more of that in the social housing sector too.
Will a downgrade have much of an impact in any event? None of the several housing figures I spoke to this week seemed concerned by it, and the subject was not even mentioned at the National Housing Federation leaders’ forum. ‘Nobody cares about it,’ one leading consultant said.
That may be going slightly too far. But if credit rating agencies are basing ratings more on the individual landlords’ abilities rather than lazy assumptions that should be a good thing overall.
‘Social housing is the only sector that does not enable… movement across local authority boundaries,’ according to a paper discussing the possibility of a new national mobility scheme which emerged this week.
The document, published by landlords looking at launching a new home-swap scheme, suggests the restrictive nature of social housing prevents tenants from easily moving to find work or to find cheaper accommodation.
The landlords, which include Circle and Islington Council, believe benefit caps could also create demand as tenants seek cheaper housing. The landlords insist that the scheme is not merely to solve welfare problems, and could help people who want to live in London for work purposes.
The danger nevertheless remains that the scheme is seen as an attempt by London councils to solve their housing problems by persuading tenants to move to other areas of the country.
A number of other stories this week illustrate the strain on some London boroughs. Westminster Council, which increasingly has to place people in bed and breakfast accommodation due to a lack of affordable temporary accommodation, is now looking to build in other boroughs. Its plan to build homes for its homeless households in Tower Hamlets has already incurred the wrath of other landlords. Similarly, the BBC reported this week that Kensington and Chelsea is in talks about building homes for people in Peterborough.
Boroughs are faced with instructions from the Communities and Local Government department not to house people too far away from their boroughs and not to place families in B&Bs. Yet benefit caps are reducing the already dwindling supply of homes for people to be placed in to.
Ultimately the problem is one of an unbalanced economy. The economy, as Nick Clegg rightly said this week, is too focused on London. People flock to London for work, which drives up demand and rents. Wages have not kept pace with the increase in living costs, so the housing benefit bill has increased. The government then caps benefit in the name of fairness, but has effectively removed whole chunks of housing which could have been used by councils to house people.
The National Mobility Scheme is an idea worth looking at –although I suspect it might be too one-sided. Several landlords in lower demand areas have already said they don’t think their tenants will be interested in moving. However the NMS will only paper over the cracks, we need to rebalance the economy and take some of the heat out of London’s overheated housing market.
‘The landlords will be asked to be the tax collectors,’ warned the prophetic Lord Richard Best in parliament last year.
The crossbench peer, as part of his unsuccessful attempts to halt the bedroom tax last February, stressed the difficulties housing associations and councils would face when they go about the business of getting rent off tenants facing cuts to their benefit.
Nobody likes tax collectors. And many landlords must be worried that angry residents will shoot the messenger rather than targeting the government.
What few people could have predicted is that landlords would be targeted even before the policy came into effect.
The mood against the bedroom tax is particularly strong in the north west, which was always going to be one of the regions hardest hit. The government estimates a sixth of people affected by the measure overall, 110,000, will be in the north west. This is because the area has large numbers of family-sized houses and relatively few smaller homes for people to downsize into. Liverpool Mutual Homes estimates even if all its affected tenants agree to downsize it will take seven years for them to re-house them.
It is not surprising that anger is rising in the region and a series of protests are scheduled over the next few weeks.
Instead of targeting the government which implemented the policy, or the offices of MPs who may have voted for it, protests are taking place outside the offices of housing associations and councils. LMH has already seen a protest at its offices, while One Vision and West Lancashire Council are also being targeted.
Activists accuse associations of not doing enough to help their tenants cope with the average £14 per week reduction, while others accuse them of being ‘complicit’ in the introduction of the penalty by stressing the need of tenants to pay the rent. The Combat Bedroom Tax blogspot accuses associations of coming ‘knocking for this grubby government.’ The response of north west landlords to all this has been interesting. LMH has put out a number of press releases stressing the impact of the bedroom tax on its tenants while Knowsley Housing Trust has decided to reclassify properties – although KHT dubiously claims it would have done this anyway.
Housing associations are now caught between a rock and a hard place. As businesses they need to collect their income, and the shift from capital grant funding has made rent revenue more important than ever for funding the building of homes.
Wide-scale reclassification of properties as smaller homes to help people escape the bedroom tax is not possible. The resulting drop in rental income, and the impact on existing agreements, means this is not really a viable solution. And expecting landlords to simply cover the cost is also not a realistic option financially.
That leads associations and councils in a position where they do indeed have to be the ‘tax collector’.
It is not a position they want to be in – and I can’t help but feel people’s anger should be directed more towards the government.
The issue of housing association executive pay crops up from time to time, usually as a result of Inside Housing’s annual salary survey.
The details of six-figure salaries and any inflation-busting increases in executive pay prompt fury from the popular press and the government.
However, this week it seems those seeking to constrain housing association expenditure may have a new target – board member pay.
The issue of whether to pay association board members at all is still controversial. After all, associations are not-for profit, mostly charitable organisations receiving large amounts of revenue and capital subsidy from the taxpayer. Board members are part-time – should they be paid for what should be a voluntary position?
Conversely, it can be argued that associations need the best people on their boards, and payment can help as an incentive. Certainly there is a strong argument that tenants should not be discouraged from sitting on boards and payment can help give them the extra encouragement they need.
There is a difficulty balancing act to be had then in other words, and this is recognised across the sector.
This makes Bedfordshire Pilgrims Housing Association’s decision to increase the pay of its non-executive board members by 40 per cent all the more curious. The decision means its chair and five board members are on an average of £26,500 each – dwarfing the amount BPHA should be paying according to NHF guidelines.
BPHA’s justification for this annual £132,000 expenditure is that it now benchmarks against board pay of other organisations, not just housing associations. Its argument is that the change is necessary as a result of operating in a more risky, commercial operating environment.
If this is true we can expect to see many more housing associations bumping up board pay over the coming years. However, not one sector expert I’ve spoken to in the last week on this matter thinks this is the direction of travel.
At the moment BPHA is on its own in hiking up the amount of money it pays to board members by this much. Whether it is a trailblazer, or simply making a contentious and odd decision, remains to be seen.
Of all the coalition government’s reforms to welfare, the localisation of council tax support has perhaps been the least publicised, until this week at least.
An excellent piece of research by the Resolution Foundation think tank has revealed that councils are overwhelmingly passing on the 10 per cent cut in benefit to their poorest households.
This is not surprising as councils’ budgets are being squeezed.
The national media are now waking up to the fact that the changes will require councils to chase large numbers of poor people, most of whom who have never paid council tax before, for sums of money.
For social landlords the council tax changes do not appear to be of immediate concern.
The problem is that council tax bills are one more thing for hard-pressed tenants to think about. The bedroom tax, overall benefits cap and direct payment of universal credit housing costs will come into effect for some tenants over the next few months.
A household in social housing could technically have to find £14 extra a week if they have a spare room and an extra £4.90 a week for council tax. This equates to nearly £1,000 extra a year. And that’s before the total household benefits cap and the 1 per cent cap on welfare uprating is taken into account.
And there could be more on the horizon.
The Independent today reports that Conservative ministers are looking for more welfare cuts in order to protect their own departments’ budgets. The Liberal Democrats reportedly want any further cuts to come from benefits available to all pensioners (including wealthy pensioners), such as the winter fuel allowance and free bus passes, rather than another raid on the working-age poor.
However the protection of pensioners’ benefits was a key Conservative manifesto pledge and the party is unlikely to go down this route.
Direct payment of benefit to households has the laudable aim of encouraging financial responsibility, however at this rate households will not have enough income left to be responsible with.
With little more than two months to go until it takes effect, the reality of the likely impact of the government’s bedroom tax policy is hitting home.
Landlords are knocking on doors, leafleting those affected and trying to work out how people are likely to react.
As ever, adversity is bringing out some innovative ideas, and some landlords are looking at ways of incentivising tenants to move to smaller properties.
Perhaps the most interesting example of this is an idea by south-west Aster Group to effectively pay the amount deducted in bedroom tax to downsizing tenants for three years.
This idea is eye-catching but has not been costed.
It is not clear how many of the 1,557 Aster Group households affected are in a position to downsize, and the group certainly does not have enough vacant small properties to re-home them all. There is also a question mark over whether the incentive would count as income for benefit purposes.
Aster group services director Jo Savage insists the policy will not be expensive, as the group will save money through not having to chase as many people for their rent, or pursuing them through the courts.
There is also, presumably, the possibility of converting some of the properties that social rented tenants have downsized from into homes let at up to 80 per cent of market rent, thereby boosting the income from the properties.
Aster Group’s idea is too sketchy to be properly scrutinised, and may come to nothing. However, it is possibly the best example so far of innovative thinking in response to the controversial underoccupancy policy.
Amid all the uncertainty around how direct payment of benefit will work and how universal credit will be phased in, landlords at least thought they knew where they stood with the £26,000 a year benefits cap.
That was until just before Christmas that is when the Department for Work and Pensions announced the measure will now only apply to four boroughs initially, rather than everywhere at once. The DWP will instead phase in the cap over six months.
This decision was presumably to make the transition to the cap easier to handle, but as we report this week, it risks causing more problems than it will solve.
The four boroughs, at least one of which is furious that it only found out about the early roll-out through the media, have been working on the assumption that everywhere will be capped from 1 April.
They now fear that their already difficult task of finding suitable private accommodation to house people will be made much harder. Other boroughs not subject to the cap will effectively be able to outbid them because their tenants’ will be able to pay more rent.
The boroughs now want extra money from the DWP to mitigate against this.
What is not clear is when the rest of the councils are moved across. If there is a phased transition more and more boroughs could find themselves disadvantaged in the same way.
Many London boroughs are struggling to find suitable accommodation to house people as it is. They have been told by government not to move people too far away or place people in bed and breakfast accommodation for too long.
The early roll-out of the cap risks creating a complete mess and is the last things councils need.
Christmas is almost here and things are quietening down a bit in the Inside Housing offices after a busy year for the sector. The phones are now ringing less frequently and the email inbox is not filling up as quickly.
However before we say goodbye to 2012, there was still time for the Department for Work and Pensions to sneak out an announcement about the benefits cap.
Instead of being implemented in one go from April, the £26,000-a-year cap will now only apply in four London boroughs initially before being rolled out over the summer.
Although the DWP has always said it will be ‘introduced from April’, the assumption across the housing sector has been that it would apply everywhere from 1 April. Yesterday’s announcement has therefore come as a bit of a surprise to the councils across the country which have been preparing for the impact of the cap based on an assumption of a 1 April start date.
The decision to delay the full roll-out of cap is sensible and will allow the DWP and councils to assess how it is likely to work in the most affected boroughs, allowing working practices to be tweaked if necessary.
However, there may also be a political advantage for the Conservative-led coalition in delaying the cap.
The government’s cut in the top rate of income tax will also come into effect in April.
The measure, which Labour leader Ed Miliband has branded a ‘tax cut for millionaires’, would have come into force at the exact same time as the benefit cap, which will reduce the income of up to 88,000 households. That’s not to mention the bedroom tax and cuts to council tax benefit, which will also come in from April.
The government is perhaps wary of the political dangers of bringing in a tax cut for the most well off at the precise same time as a squeeze on the incomes of benefit claimants. Ministers will therefore be hoping that delaying the full roll out of the cap could take some of the sting out of Labour’s drawing of parallels between the tax cut and benefit squeeze.
There was something grimly inevitable about the autumn statement announcement that the coalition government will be further squeezing the incomes of the poorest through fresh benefit cuts.
The government’s plan to cap increases in many working age benefits to 1 per cent breaks the link between benefit levels and inflation. Although the impact won’t be as instantly dramatic as other measures, the latest policy will mean claimants gradually find it more and more difficult to pay their living costs as benefits fail to keep pace with the cost of living.
The only surprise was the government did not go further. A complete freeze in benefit levels and the removal of housing benefit for under 25-year-olds were both resisted, for the time being.
As ever, the coalition government believes it is on the side of fairness and public opinion. George Osborne’s argument is that public sector worker’s pay will rise at 1 per cent, so it is only fair that benefits should too.
This is a powerful argument, and mirrors the populist strategy used for the £26,000 a year welfare cap.
The problem is it ignores the real social consequences this is likely to cause on the ground, which will, apart from anything else, cost the taxpayer in the long run.
As people find it harder and harder to pay to keep a roof over their head, many will fall into debt or face eviction. Rough sleeping and homelessness are both likely to increase, charities warn. Local authorities and charities will face increased demand for their services.
Although the government says higher rent areas will be exempt from the new rules it is not clear exactly what this means – and it seems unlikely there won’t be some parts of London particularly which will become impossible for people on benefits to live in.
The rhetoric from the government, which seems to resonate with the public, is to draw a contrast between welfare claimants and people who work.
However, the vast majority of new housing benefit claimants in the last two years have been in work. Earnings have been falling behind rent levels to the extent that employed people increasingly have to claim housing benefit to make ends meet. The latest welfare cut will only accelerate this trend. Similarly, the decision to cap increases in the universal credit earnings disregard, (the amount you can earn before your benefit is reduced), will not do anything for work incentives.
It is therefore the working poor, in addition to those who are unemployed, who are being squeezed by the coalition.
The newly announced changes will be contained in a Welfare Uprating Bill, which will be debated in parliament in the new year.
This sets up an intriguing dilemma for Labour. Does it support the latest welfare reduction? Or will it seek to oppose it?
Voting against the measure risks being unpopular with public opinion and will lead to pressure from the Conservatives on Labour to spell out whether it would instead seek to make up the £3.7 billion of savings from elsewhere.
Labour’s position on the £26,000 welfare cap was not ideal to say the least. It said it supported an overall cap in principle but wanted a system of regional caps to take into account the variety in living costs across the country. The problem was the party would not say if it supported the overall amount of benefit cuts under the policy. If it did, a higher cap in London would have to be balanced by a lower cap elsewhere. The party looked as if it was opposing the cap for opportunistic reasons, without having the courage to oppose it outright.
The Welfare Uprating Bill should force Labour to finally reveal the direction of its welfare policy. The party needs to come up with an alternative to simply squeezing the incomes of the poorest but must also convince people it is on the side of fairness. All this will have to be done with a recognition of the need to repair the government’s finances. It is no easy task.
A visit to a Wandsworth housing scheme by Eric Pickles this week gave Inside Housing the perfect opportunity to ask about the disappointing latest affordable housing figures.
Homes and Communities Agency figures published this week show there were just 3,310 starts in the first six months of the current financial year. This may have been an increase on the pitiful 424 recorded for the same period last year but is well down on the 8,823 recorded in the first half of 2010/11. And before people say the slowdown is due to the transfer of a new funding programme, completions (many of which were funded under the previous funding regime) have also fallen by a third over two years. In London development has come to a virtual standstill, with just 425 affordable homes started.
Mr Pickles response? Blame the bankers.
The secretary of state said he believes there have been signs of things improving but said ‘it all comes down to bank lending’.
This is likely to come as a surprise to housing associations, who are expected to deliver the bulk of the £1.8 billion affordable homes programme.
Chief executives of large developing landlords in London are reporting that the slump is due to difficulties finding available land at the right price and the rent and tenure policies of certain councils.
I haven’t heard of any housing associations blaming a lack of bank finance for the lack of activity. After all, associations are well placed to raise money on the bond markets should the need arise.
In all likelihood, Mr Pickles, although asked about affordable housing specifically, was probably referring more to the housing market more widely.
Mr Pickles promised more initiatives to stimulate the construction market later this year (possibly alongside the autumn statement next month) and would not rule out tweaks to the AHP.
One change that could help would be to relax the 31 March 2015 deadline for completing homes under the scheme.
Several associations have reported that savvy companies, aware that associations have to meet the deadline or lose their grant funding, are hiking up prices for land, thus making schemes unviable. If this is the case, and it is not yet apparent how widespread this is, a relaxing of the AHP deadline could be an important tool for boosting the supply of affordable housing.
The long drawn-out saga of Walthamstow Stadium is now in its endgame.
Boris Johnson’s decision to allow a housing scheme on the site of the iconic former greyhound racing stadium has caused uproar in one corner of London at least and incurred the wrath of local MP Iain Duncan Smith. Although Eric Pickles can intervene, and the campaigners still have the option of going to the High Court, it is now looking extremely unlikely that the scheme won’t go ahead.
Rarely does one planning application generate so much debate. So it is worth reflecting on why L&Q’s plans have caused so much anger.
I think it’s fair to say I know more about this site than many of the journalists writing on the topic this week. I worked for local newspaper the Waltham Forest Guardian for a number of years and covered the closure of the dog racing stadium in 2008.
The closure of ‘the Stow’ caused an understandable outpouring of sentiment among the local community. Although attendances at the venue were pitifully small, people felt the dog stadium, with its famous façade, put Walthamstow on the map.
The campaign to ‘save’ the stadium started to grow. However London & Quadrant moved quickly and did a deal for the site with previous owners the Chandler family.
It was around this time that campaign group Save Our Stow began its campaign to vilify L&Q. It hinted at corruption, suggesting the housing association had sought covert encouragement from the council to buy the site in return for granting planning favours.
That a housing association would want to have a discussion with a authority’s planning department about permissions attached to the site before buying it is hardly surprising, or in any way wrong.
Just months after the closure, Lehman Brothers collapsed, which hit land values and devastated the construction industry. It became obvious very quickly that L&Q would find it difficult to quickly develop the site, and this was not helped by development partner Yoo Capital pulling out in 2010.
The site therefore lay undeveloped for quite a while.
SOS started to claim L&Q had no interest in developing the site and was merely ‘landbanking’, although I have never seen any evidence that L&Q is deliberate sitting on large amounts of undeveloped land.
Campaigners have more recently focused on the viability of the scheme, and said L&Q paid over the odds for the site – meaning it will now make a loss on the scheme. It is true L&Q bought at the top of the market, and viability concerns were reflected by the council’s downgrading of affordable housing requirements for the site.
However, and this is something SOS and the local MPs either have not grasped or are ignoring, housing associations are long term businesses. Land prices rise and fall, but L&Q is looking at the rental income from the site over 20 or 30 years. The revenue from the homes, the majority of which are let market rent, will be used to lever in private funding and re-invested to provide affordable homes elsewhere. The site also needs to be looked at in the context of a 10,000-home pipeline. L&Q will certainly benefit financially from the site in the long term, particularly if land prices begin to rise substantially again.
In any case, if the land value has plummeted since L&Q bought the site, how on earth is that an argument to sell the land now?
IDS and others have slammed L&Q for not including social housing in the scheme. This ignores the fact that the coalition government ended all new grant subsidies for social housing in the spending review in 2010. Government policy has been to encourage associations to charge higher rents in order to boost their capacity to access private finance.
It is now virtually impossible for housing associations to build large numbers of new homes at the old social rent level in London. The average ‘affordable rent’ for new homes in the capital is around 65 per cent of market rent. That aside, there is nothing wrong with a housing association developing homes for market rent or sale on a scheme as long as the proceeds are re-invested in the organisation’s charitable aims.
Campaigners have also called on L&Q to sell the scheme to millionaire Bob Morton, who claims to be able to build a scheme with a dog track and a smaller number of homes. Mr Morton’s plans have not been given anywhere near the same level of scrutiny as L&Q’s.
There is no obligation on L&Q to sell the land to anyone, however.
Where SOS and others have gone wrong is to constantly look for scandal and corruption that I don’t honestly think exists (believe me I would love to find some).
I think the campaign would have been much more effective if it had been simply about persuading L&Q to sell up, instead of accusing them of everything under the sun. The campaigners’ attitude has often merely served to annoy L&Q and has hampered SOS’s ability to work with the association constructively.
The saga is now coming to an end. I would hope SOS and others will, when they finally do admit defeat, in their heart of hearts admit that L&Q is benefiting the community through the provision of 294 new desperately needed homes.
Details of the shape of the Homes and Communities Agency’s approach to regulation are now beginning to emerge.
The regulator is faced with the daunting prospect of regulating a wide range of different group structures made possible under the Housing and Regeneration Act 2008. The emergence of for-profit housing associations and unregistered parent companies are just two scenarios leaving the regulation committee scratching its collective head. An entirely new approach to regulation is needed.
Whereas in the past the regulator could assume that monies recouped from properties sold would be reinvested in housing, in the for-profit world this is no longer the case. The regulator is keen to ensure for-profit providers don’t simply asset-strip by selling off social homes and pocketing the difference between the lower social housing value of the property and the open market value.
Similarly the HCA is looking at ways of ring-fencing non-core commercial activity to ensure this does not threaten the social housing assets in the event of default. Cross-default clauses, which allow a subsidiary’s assets to be used as loan security by the parent, are likely to be prohibited.
The regulatory framework will need to be changed, and there are likely to be two public consultations before new rules are finalised. This means it could be next April before providers know the rules of the game they are playing.
The challenge for the regulator is to protect social housing assets without inhibiting innovation. The HCA is keen to encourage new entrants (and new finance) into the sector and needs to ensure it gets the balance right.
It is an unenviable job –the regulator needs to crack on and sort the framework out but also make sure it strikes the right balance between being robust and allowing companies to innovate.
I’m finally doing it. After four years of running on and off, doing the occasional 10k race or eight mile mud run, I have now decided to bite the bullet and attempt my first marathon.
After missing out in the London marathon ballot, I tentatively enquired about charity places and was offered the chance to run for the housing and homelessness charity Shelter.
My first reaction was utter delight. Not only have I succeeded in getting a place on the London marathon, but I am also raising money for a fantastic cause. Everybody has the right to a decent home and Shelter has over the years been instrumental in campaigning for better housing as well as bringing the issue of homelessness to wider public attention.
After my initial elation wore off however, I became a bit terrified. I recently ran the Leicester half marathon (in a time of 1hr 50 mins), and was aching for days afterwards. The thought of running twice that distance is daunting. I have already suffered blackened toes, bleeding nipples and aching joints just preparing for the half, so what the full marathon will do to my body is anybody’s guess.
However, I am determined to do the marathon and over the next few months I will be using this blog to provide updates on my training and fundraising progress.
I have, along with my girlfriend Lucy -who is also running for Shelter- today set up our joint fundraising page, see here: http://www.justgiving.com/Carl-and-Lucy Wish us luck!
Party conference season is now over, parliament has returned and with it (yet more) debates around fairness and welfare reform.
The House of Lords has this week been debating legislation to force local authorities to devise their own council tax support schemes. The government wants to scrap council tax benefit and replace it with a grant covering only 90 per cent of the cost. Local authorities will face tough decisions as to how to make up the 10 per cent cut, but cannot cut benefits for pensioners, meaning working-age claimants are likely to be hit hard.
This will lead to councils having to chase large numbers of poor people, some of whom will never have paid council tax before, for relatively small amounts of money. A number of peers, most notably 1980s cabinet minister Lord Patrick Jenkin, warned the policy could lead to the same sort of unrest as the poll tax.
The debate has not focused on whether the £500 million the treasury wants will be cut but about how councils should make up the shortfall.
Lord Richard Best came up with the solution of allowing councils to raise tax across the board for single person households, through a reduction in the 25 per cent council tax discount. This he argues, would spread the cut more thinly across a wider range of people, including millionaires, thereby preventing the poorest from being clobbered.
The government has rejected this, arguing it will be a tax rise on 8 million people, while Labour peers are nervous that there is no limit under Lord Best’s plan to the amount the single person’s discount could be cut by.
Lord Best has pledged to tweak his amendment in time for the third reading of the bill on Monday, but there is no evidence it is likely to receive the support of peers.
For social landlords the real significance of the council tax benefit cut lies in the way it will be an extra hit on those affected, which will come into effect at the same time as the bedroom tax. Tenants with spare rooms who will have reduced housing benefit from April could also find they will have to pay an amount towards council tax for the first time.
Although the sums won’t be huge, the council tax benefit cut could hit tenants by surprise. It is another call on the finances of the poorest.
As landlords begin to inform their tenants about the bedroom tax and universal credit, they need to also make sure they are on top of the changes to council tax benefit and have explained them to tenants.
Boris-mania, pleb-gate and anger at Ed Miliband’s ‘one nation’ speech dominated Tory activists’ conversation at the party’s conference this week.
However, housing and welfare also featured much more prominently at the conference than in recent years.
The good news is that the government appears to be finally waking up to the fact we are in the midst of a housing crisis. David Cameron told delegates that Britain ‘needs to accept we need to build more houses.’
It was refreshing to hear a prime minister say this. Mr Cameron is desperate for the Tories to be seen as ‘the party of home ownership’ and wants to get more people on the housing ladder. On top of this, the government is desperate to boost the economy and realises construction has strong economic benefits. Perhaps he is now regretting the deep cuts to capital spending for social housing announced in the 2010 spending review.
More worrying though was the rhetoric on welfare. Mr Cameron, Eric Pickles and George Osborne all laid into welfare claimants. The prime minister confirmed the government will look to end automatic housing benefit for younger people.
In his speech Mr Cameron said young people today have a choice between ‘working hard’ or ‘getting housing benefit.’
This contrast between honest workers toiling for a living and those living on benefit as a ‘lifestyle choice’ was a theme of the conference. Nobody could deny that there are some people who do live on benefits as a lifestyle choice, but to imply all housing benefit claimants are guilty of this is simply wrong.
This Tory position, and Mr Cameron’s pledge to crack down on benefit claimants was roundly applauded in the conference hall, completely ignores the ever-increasing ranks of the working poor.
Between May 2010 and May 2012 the number of people claiming housing benefit increased by 280,216. Of these the vast majority – 252,890 – were in work. In May 2010 13.7 per cent of housing benefit claimants were employed, this has now increased to 17.9 per cent, more than 900,000 people.
It is clear that more and more people in work, ‘hard-working people’ – the very people the Conservatives claim to be supporting – are having to claim benefits to cover their ever-increasing living costs.
Mr Cameron’s solution, to restrict housing benefits for under 25-year-olds, so they have to live with their parents instead, is fraught with difficulties.
What happens if parents, particularly if they have downsized to avoid the bedroom tax, do not have space for their children?
What happens if a young person fears they will be assaulted or sexually abused by their family? Lord David Freud said cases will be ‘assessed’ and some groups will be excluded. These are sensitive issues though, and victims may not fancy telling benefits officers of their experiences.
The assumption from government is that under-25s are single. But in the real world, there are parents, including single parents, under 25. Will the government really force families to move in with older relatives?
The proposal also does nothing for people looking to move to find work.
This assumption that ‘benefit claimant’ entails someone who is lazy and work-shy, may play well with sections of middle England, but it is fundamentally dishonest and has to end.
The motto of the scout movement is apt for the social housing sector as the spectre of welfare reform comes ever closer.
Despite the bedroom tax and the total benefits cap being less than six months away, some landlords have still not worked out which of their tenants will be affected, let alone decided what measures to put in place. As one senior housing figure said this week, it is as though some landlords are ‘politically naive’ and think the government will simply backtrack if problems arise. This is unlikely.
The lack of preparedness is also concerning Julian Ashby. The Homes and Communities Agency regulation chair used a large chunk of a speech last month to express his surprise that some landlords do not appear to have grasped the potential impact of the reforms.
The news this week that some councils are reluctant to share benefit information with landlords because of misplaced data protection act fears is likely to dismay the regulator further. A small number of authorities seem to believe they have to get claimants’ permission before sharing their data. Sector experts and lawyers have pointed to government guidance stating this is not the case.
It is in everyone’s interest to share the data as soon as possible and I can only believe that some councils are not doing so through a misunderstanding of the situation, rather than as a policy position.
In addition to data protection worries, some councils are waiting for new computer software before sharing data. This will enable them to match benefit data with information about property sizes more quickly and with fewer resources. This is understandable, particularly as local authorities budgets are being squeezed, but again this is frustrating for housing associations.
Any issues causing delays to welfare reform preparation need to be resolved as soon as possible as a priority. If they are not, both tenants and landlords will suffer come next April.
Housing association bosses salaries are a favourite topic for sections of the press.
Quite often the media jumps on the latest pay hikes, often citing Inside Housing’s annual salary survey, as examples of bosses using social assets and taxpayer funding to enrich themselves.
In reality of course, pay is set by a remuneration committee – but there is a valid debate around how much it is reasonable to pay housing association bosses, particularly as associations, unlike councils, are not accountable to the electorate through the ballot box.
Pay bosses ’too much’ and it is seen as a misuse of public money, but them too little and there is a real risk associations find it more difficult to find leaders of the right calibre.
My own take on this is that associations, particularly large associations, do need to get the best possible people to run them and much of the criticism is over the top.
Former housing minister Grant Shapps’ obsession with using the prime minister’s salary as some kind of benchmark never made much sense to me. The prime minister’s salary is purposely lower than other public officials, as the PM can make millions after his/her premiership from memoirs and public speaking (not to mention having two houses provided by the taxpayer).
However the revelation this week that Metropolitan paid former chief executive Bill Payne £412,897 last year, include a whopping £200,000 compensation package, is worrying. This £200,000 was paid not to enable better delivery of vital public services to tenants, but for Mr Payne to walk away -and to walk away from an organisation in trouble with the regulator at that.
At a time when housing associations are under regulatory and political pressure to demonstrate they are using assets wisely, the controversy over Mr Payne’s salary is the last thing the sector needs.
Much of the focus of this week’s annual National Housing Federation conference was on how to boost the supply of new homes.
Delegates in the bars and restaurants in Birmingham were full of ideas of how to boost supply and whether the coalition’s £10 billion guarantee scheme can make a difference.
As David Orr, NHF chief executive, said in his speech to delegates this week, the mood is oddly one of optimism, as housing bosses think of innovative ways of delivering homes and explore new group structures to make this easier.
However there was one voice in Birmingham urging caution, that of Julian Ashby, chair of the social housing regulator.
Mr Ashby delivered a tough message to the conference telling landlords they need a stronger grip on their finances. He bemoaned the fact that a number of associations have already got in trouble by mismanaging the process of getting the cash they need for their development programmes.
The regulator is thinking about how it is going to regulate for-profit housing associations and is especially concerned about associations which have unregistered for-profit arms, which it can’t by definition regulate. The big fear is that the value of social housing assets will be used to generate profits, rather than to help organisations fulfil their social and charitable purpose.
A main focus of the regulator over the next few months will therefore be to work out how to measure this ‘value’ and how to ensure it does not leak out of the sector, while at the same time ensuring the ability of social landlords to innovate is not unnecessarily restricted. It is an unenviable job.
One of the difficulties of understanding rows between residents’ groups and landlords is working out whether the tenants’ group is really representative of the community’s views.
This week Inside Housing has reported on the latest in two long-running disputes between groups of tenants and social landlords. Tenants and residents associations in Hammersmith continue their fight against Hammersmith & Fulham’s plans to knock down their estates, and this week even made a complaint to the police about the authority. Elsewhere, One Housing Group has faced criticism over its plans to merge subsidiary Island Homes. Former board members of its subsidiary Island Homes are sore about being removed by OHG four years ago.
In both cases the landlords say the tenants’ involved do not represent the views of the majority of tenants. OHG removed the tenant-led Island Homes board, while Hammersmith & Fulham established a rival residents’ ‘steering group’ which it believes better reflects the views of the majority.
Establishing whether a tenant representative is really representative of views of the wider public is tricky. As a one-time local newspaper journalist I was quite often confronted by people who had formed campaign groups or residents’ associations and claimed to speak for the majority. In some cases, I later found that these people were merely shouting the loudest, and their views, although they were often the only views heard, were not representative of wider public feeling. People furiously opposed to something, for instance, tend to shout louder than those who are in favour, or indifferent.
On the other hand of course, stating that a tenants’ group is not representative is exactly what you would expect a landlord to say when it is finding the stance of a group difficult.
Under the new regulatory framework, the social housing regulator no longer deals with consumer complaints. Instead, complaints will be heard by tenant panels or local politicians.
It remains to be seen what will happen if landlords begin to question the legitimacy of tenant panels in the same way as some of them raise questions about the extent to which tenants’ groups are representative of their community.
New governments notoriously like to blame the previous administrations when things go wrong – but this week it was the social housing regulator’s turn to blame its predecessor.
The Homes and Communities Agency has been told by a watchdog to apologise to a tenant management organisation in Lancashire. The details of the long running complaint are complicated, but the upshot of the problem was that the Tenant Services Authority did not communicate with the TMO clearly enough. It incorrectly directed it to the housing ombudsman, which does not deal with complaints from organisations.
The HCA was adamant that it operates differently to the TSA and said it ‘places great importance on complaint handling’, implying the TSA did not. It is currently reviewing the way it deals with complaints and has pledged to write to frontline staff within four weeks to remind them of how they should ‘signpost’ enquiries.
How the HCA directs enquiries to other bodies is going to be crucial in the years ahead.
The regulator is no longer responsible for consumer regulation, except in cases involving the mysterious and undefined ‘serious detriment’.
However, as Ralph Smale, senior risk and assurance manager at the HCA, said in April, the regulator will still receive lots of complaints and enquiries from tenants, many of whom will be unaware of the regulator’s changed role.
The HCA needs to ensure it has the resources in place to adequately and accurately direct tenants to the best organisations or bodies to handle their complaint, be it the social landlord, tenant panels, MPs or the housing ombudsman.
The parliamentary and health service ombudsman’s report last week may only represent a rap on the knuckles for the HCA, which seems happy to blame its predecessor. However it is crucial the agency takes on board the recommendation to prevent complainants receiving incorrect information.
Inside Housing last week reported the first, albeit sketchy, findings from the Department for Work and Pensions demonstrator projects aimed at testing payment of benefit direct to tenants.
Initial findings from the projects are positive, but perhaps more interesting is what is happening away from the official DWP-supported pilots, where landlords are beginning to develop their own mechanisms to protect their rental income.
Incommunities housing association in Bradford is looking to pay tenants to set up a ‘jam jar account’ with a local credit union.
Similarly, Walsall Housing Group is covering the cost of tenants setting up similar credit union accounts and Sunderland giant Gentoo is also exploring the idea.
Jam Jar accounts were cited early on as a potential solution to the problem but until now it has not been clear who would provide them, or whether banks would look to charge for providing the financial ‘product’ .
The use of credit unions, which exist specifically to help people on low incomes, with landlords covering the costs of setting up the accounts, is a model that could help to provide a solution to the direct payment headache.
It remains to be seen whether the plans will work but the landlords mentioned above deserve credit for coming up with this imaginative solution.
What are you doing to help your tenants cope with welfare reform? Contact me at email@example.com or call 020 7772 8429..
‘They won’t be able to handle all that cash, they are not used to budgeting’, it is a refrain uttered by many a housing professional ever since the government first announced that its new universal credit payment would be paid monthly direct to tenants.
Concerns have grown that landlords’ arrears will mount as tenants, used to not having to think about their rent payments, find budgeting difficult. These worries persuaded welfare minister Lord David Freud to commission pilot projects to determine the circumstances under which a direct payment is appropriate.
As Inside Housing reports this week we are now beginning to get an early picture from the pilots as landlords begin to take their first payments from tenants.
It is far, far too early to make any firm conclusions, but the early signs are good.
Staff at Family Mosaic were surprised that the vast majority of tenants already have bank accounts, meaning one hurdle to making direct payment work has already been cleared, while Wakefield and District Housing said only a ‘small’ number of their first batch of payments were not made on time.
A total of 14 landlords are involved in the project and most have been scared off talking publicly about the first direct payments by the Department for Work and Pensions, which is anxious to control how any findings from the project are presented. Many landlords have yet to obtain or assess the results from the initial payments while others are wary of jumping to early conclusions, particularly as some of them are beginning with the tenants who need the least support in paying their rent.
So there are many reasons to be cautious about the findings that are emerging. However the majority of tenants, so far, appear to be paying their rent on time.
Perhaps this shows, as Lord Freud said a few weeks ago, that landlords do not know as much about their tenants as they thought they did.
And perhaps it also shows that landlords need to have more faith in their tenants and their ability to manage their finances.
It may only be August but the clock is ticking for councils preparing to deal with the barrage of welfare reforms from the coalition government.
Next April will see councils have to grapple with an overall benefits cap and a 10 per cent cut to council tax benefit at the same time as the controversial bedroom tax begins slashing support from hundreds of thousands of social housing tenants. If all this isn’t enough, six months later universal credit will start to be phased in, bringing in challenges around direct payment of benefits and the provision of budgeting and access to IT for tenants.
Throughout the fiery Welfare Reform Bill debates in parliament the government conceded very little of substance to those seeking to make the bill fairer. It did however massively increase discretionary housing payments from £60 million to £165 million a year. Administered by councils, DHPs are intended to help claimants who cannot pay their rent or council tax. The extra cash in the DHP pot is being ring-fenced specifically to help those hit by the benefits cap and certain groups of people affected by the bedroom tax.
Lord David Freud promised parliament he would keep the DHP pot under review and that is undoubtedly what was behind an announcement from the Department for Work and Pensions last week that DHPs will be monitored. This has been interpreted by some in the sector to mean the department is concerned about the impact of its reforms and welcomed by Lord Richard Best, who is hoping DHPs will be increased if the reforms lead to homelessness.
In addition to increasing DHPs and ringfencing the bulk of them for welfare reforms, the DWP also allowed councils to stockpile last year’s funds in order to use them this year when the full impact of LHA caps are starting to be felt.
The purpose of DHPs is therefore changing drastically, from payments intended to provide help for tenants suffering unexpected ‘income shocks’ to a fund designed to alleviate the impacts of far-reaching welfare reform. As one senior housing figure put it this week, perhaps DHP should now be renamed as a ‘welfare reform hardship fund.’
The DWP is even calling on councils to publicise DHPs more widely, through, for example, leaflets and posters.
The problem with all of this is that it risks creating unrealistic expectations among affected claimants that they may be able to claim extra money to lessen their pain. We need to remember the DHP is still only £165 million. This is minuscule when compared to the estimated £500 million that is being taken from tenants’ income through the bedroom tax, the £740 million of cuts through LHA changes and £305 million of expected government savings from the benefits cap.
DHPs are welcome and any concession is better than none, but claimants and social landlords should be wary of assuming an over-reliance on them when planning how to cope with welfare reform.
The future of Walthamstow dog track has been in the news again this week.
Rarely has one development been the focus of so much media coverage - not just in Inside Housing, but in the local and national press as well.
However, the saga is important, not least because it pits a coalition government heavyweight figure, Iain Duncan Smith, against one of the largest housing associations in the country.
In the latest twist, IDS, pandering to a group of campaigners called Save Our Stow, is now threatening to contact Eric Pickles and ‘question L&Q’s ‘right to be a social housing provider’, if they don’t discuss the sale of their land to a millionaire.
Aside from the fact that Mr Pickles has absolutely no say in the de-registering of housing associations, Mr Duncan Smith’s ‘threat’ is ludicrous.
The only possible criteria for de-registration that could be relevant is a contravention of a requirement to ‘provide or intend to provide’ housing for below market rent.
Waltham Forest Council has allowed L&Q to only offer 60 homes for affordable rent on the 294-home Walthamstow site due to viability concerns. There is a case for arguing the council should have done more to insist on more lower-cost housing.
However the idea that L&Q is not providing affordable housing doesn’t stack up. The organisation plans to build 1,980 new homes through the government’s affordable homes programme of which 1,196 - or 60 per cent - is for affordable rent. Yes, affordable rent is not social rent, but the association, like every other, is having to look at engaging in more risky behaviour to cross-subsidise low-cost housing.
But that is the world we now live in, and the world that Iain Duncan Smith’s government has created.
Mr Duncan Smith’s government has slashed capital grant, ended all grant support for new social homes and made it very clear it expects associations to take on more risk and generate more cross-subsidy themselves. If L&Q and others are building schemes with no social rented homes and more homes for sale it is doing what the government expects them to. It is now very difficult, particularly in London, for organisations to provide social rented homes as they will receive no grant for doing so.
Mr Duncan Smith, in an attempt to make it look like he is doing something for those who want dog racing back, has again made himself look a hypocrite - and on this occasion a bit of a misguided bully.
Whisper it quietly but Grant Shapps looks to be winning a battle, which in his mind at least, is very significant.
Three housing associations this week, Adactus, Hyde and Sanctuary, became the latest to agree to the housing minister’s request to publish details of all expenditure over £500. In a move likely to earn it extra brownie points from the minister, Adactus is going a step further and publishing details of spend over £100 or more.
We now know of eight housing providers to agree to Mr Shapps’ request, and there is a fair chance there are others out there in search of a quiet life which are now complying but don’t wish to publicise it.
Towards the end of this year, providers and the National Housing Federation were adamant the move would not drive efficiency and would increase bureaucracy.
So what has changed?
A recent meeting, where Mr Shapps called housing association bosses into Whitehall and raised the spectre of an extension of the Freedom of Information Act to associations certainly seems to have helped.
Associations building homes under the coalition government’s £1.8 billion affordable homes programme have also been required to publish details of spend over £500 relating to their bid. Therefore many organisations are doing a good deal of this already and it may not be too much effort to go that little bit further.
The sense that I have is that the arguments against the idea relating to cost and bureaucracy are essentially a smokescreen. Housing providers can easily ‘dump’ the data into a spreadsheet and put it on their websites for little cost.
The real reason for the initial reluctance to comply is two-fold. Firstly, housing bosses are quiet reasonably scratching their heads and wondering how simply publishing all data could be of value to tenants.
Secondly, and perhaps more importantly, is the issue of principle. Housing associations may receive public funds, but they are not public bodies.
If housing associations have to do this, then why not other, profit-making companies, which receive large amounts of public funds?
Mr Shapps needs to explain why his transparency agenda should not apply to any organisation that receives substantial public funding.
‘The regulations will be amended, nothing will change’ - it’s a phrase that we’ve heard repeatedly from the Department for Work and Pensions press office over the last fortnight.
The Welfare Reform Act has long passed into law but the DWP is now consulting on the nuts and bolts of the detailed regulations that sit under the act’s framework.
This week Inside Housing has reported on two cases where sloppily-worded phrases have left the DWP acknowledging it needs to re-draft parts of the regulations.
First, it realised its draft bedroom tax regulations will exempt housing association tenants whose tenancies date from before 1989. The department admitted this was an ‘error’ and will change the regulations to prevent tenants exploiting the loophole. Judging by reader comments on Inside Housing’s website, this has had the cruel consequence of giving some affected tenants false hope that they won’t be hit by the penalty.
Then, as we report today, sector experts realised that the universal credit regulations would no longer allow victims of violence by non-partners or family members to claim benefit for temporary accommodation costs. The DWP, in an attempt presumably to simplify rules, appears to have used the term ‘domestic violence’ as a catch all term for all violence in the home, when its meaning for the purposes of the legislation is restricted to violence between partners or family members. This would have meant that people who cannot live at home because of the threat of racist violence by strangers, or by housemates in shared accommodation, would be unable to claim benefit for temporary accommodation.
Again, the DWP says it will change the regulations.
The department also says it does not intend to reduce the number of service charges which will be eligible for housing benefit – despite many sector experts warning that the new rules do just that. The DWP is in discussions with landlords around this issue and it is understood changes to those regulations may also be on the cards.
The draft regulations are in their early phase, and are subject to informal consultation and discussions in parliament. However, the fact that so many u-turns have already taken place poses serious questions about the robustness of the work carried out by DWP officials.
Now the dust has settled on the prime minister’s controversial welfare speech on Monday it is worth reflecting on what signals have been sent and what it means.
David Cameron’s suggestion that housing benefit could be removed for under 25 year olds has been dismissed by many as unworkable and as an example of the prime minister serving up ‘red meat’ to his party’s right wing. Cutting welfare plays well with sections of middle England and the mainstream press, and allows the Conservatives to draw a distinction between them and the Liberal Democrats.
The speech has drawn a sharp response from the social housing sector, and rightly so. The idea of removing housing benefits for under 25s is light on detail and is not at this stage government policy, but to my mind this is the perfect time to start opposing it.
The idea, and the rhetoric behind it, has a number of obvious flaws, not least of which the idea that housing benefit claimants are out of work. As official government figures show, one in four claimants are employed, meaning housing benefit for many is a way of topping up income and helping hard-working claimants keep a roof over their head. Stagnating wages are leading to more and more employed people having to claim housing benefit. More than 90 per cent of new claimants in the last couple of years are working people, so Cameron’s neat distinction between claimants who don’t work and non-claimants has no relevance in the real world.
The other more bizarre thing about Mr Cameron’s speech is the idea that, instead of claiming housing benefit, people should move back in with their families.
Aside from the simple fact there are thousands of people for whom this is not an option, the idea seems to conflict with the central thrust of the government’s welfare policy.
The government’s universal credit idea is based on persuading people that it always pays more to work rather than claim benefit. The government presumably wants people to actively seek work, moving to other parts of the country if necessary to do this.
Removing housing benefit for young people living independently would force many to live at home and could restrict their ability to find work by moving.
On top of this the DWP’s loathed bedroom tax policy will penalise tenants for having a spare room. What happens if a young person living independently sees his or her circumstances change, meaning they can no longer cover their rent?
They may be unable to follow Mr Cameron’s advice by moving back to the family home, because the family has got rid of its spare room to avoid the bedroom tax.
Most importantly though is the fact that Mr Cameron’s idea differs from other welfare reform in a significant way.
While the coalition’s benefit caps and restrictions are contentious, they do not remove the principle that housing is a right. They simply narrow the range of circumstances under which help can be given.
But removing housing benefit for a whole section of the community would abolish the principle that housing is a right, and that those who can’t afford to pay housing costs themselves are entitled to state help.
This is, I believe, why Mr Cameron’s words have caused so much anger this week - one would hope that the idea he’s suggested would struggle to gain the support of the Liberal Democrats and more moderate Conservatives.
The Inside Housing news team is back in London today recovering from a hectic time at the Chartered Institute of Housing annual conference.
Apart from the change of venue, from Harrogate to Manchester, what was different about this year’s event?
Delegates this year seemed much focused on ways to mitigate the coalition government’s welfare reforms, including plans to restrict housing benefit for under-occupiers and the implementation of universal credit paid direct to tenants.
Whereas in the last couple of years delegates have been more content to simply complain about the radical changes, the focus this year has been on practical ways tenants and landlords can cope.
Manchester’s conference hotels were buzzing with discussions around pooling properties to alleviate the bedroom tax, ideas around how to inform tenants and help them budget and methods landlords can adopt to protect their income.
The realisation that the reforms are now just months away appears to be focusing minds.
This pragmatism, characteristic of the sector, was recognised by Lord David Freud in his speech to conference.
Clearly pleased at the response of the sector so far, the welfare reform minister said the sector ‘clearly’ backs the move to universal credit. He was quite rightly put in his place by Julia Unwin, chief executive of the Joseph Rowntree Foundation, who pointed out that the sector’s pragmatism and search for solutions does not mean it agrees with the reforms.
The sector has got its thinking cap on regarding welfare reform, but policymakers should not forget the disruption, upheaval and hardship the measures will cause for thousands of tenants and their landlords.
As should be obvious by now, the coalition government does not like social housing – at least in the old sense of secure, genuinely affordable housing.
Fixed-term tenancies and restrictions on benefit are designed to force insecurity on tenants. Lord David Freud has made it clear he wants social tenants to move home more often, as private renters tend to do.
The new right to buy policy will see social rented homes sold off and, if we are lucky, replaced by homes under the new ‘affordable’ rent policy. Homes will be let at higher rents, with no guarantee of security of tenure in all cases.
The bedroom tax, which will cut benefits for social tenants who have spare rooms, and moves to charge higher rents for tenants earning over a threshold, are further erosions of the idea that social housing is about providing a secure home for life.
This government is sending out a message that social housing is a privilege and should be used more efficiently as a short term measure to provide a springboard to those in need.
By implication, the government believes social housing currently is not seen by tenants as a privilege, is not used efficiently and is not a springboard.
A report published on Wednesday called Social mobility and social housing, published by Inside Housing and the Chartered Institute of Housing, does its best to debunk this assumption.
The report, drawing on evidence from politicians, academics and social housing providers, finds there is no evidence that social housing itself prevents social mobility. Yes, social housing has a higher proportion of disadvantaged people than other tenures, but there is no evidence that ‘a’ causes ‘b’.
In fact, as contributors to the SMASH report have pointed, out a secure home can provide the foundation for people to thrive.
There are lessons for housing providers however. Landlords need to protect against single tenure communities, as these can lead to people living on certain estates being labelled and stigmatised, which can lead to less mobility.
Social housing itself is not the problem when it comes to the prevention of social mobility, but the way it is portrayed can lead to stigmatisation and that is the real issue.
Ministers need to be careful they do not add to this stigmatisation through their policies and rhetoric.
There may be 10 months to go until the dreaded bedroom tax comes into effect, but landlords have already ruled out one way of dealing with the added cost to tenants.
As Inside Housing reports this week the majority of large social landlords say they have no plans to re-classify properties to help their tenants escape the under-occupation penalty. The possibility of re-classification, (for example, saying a three bedroom property is now a two-bedroom property), reared its head after Lord David Freud announced it would be up to landlords to define property sizes.
The Chartered Institute of Housing was approached by a number of landlords querying the feasibility of re-classification. The move would reduce rental income but could help tenants sustain their tenancies and prevent arrears in some circumstances.
The response from our snap survey this week however is emphatic –reclassification is now not in most landlords’ minds.
This has removed doubt that the weight of the bedroom tax will in almost all cases have to be borne by tenants.
This, as Riverside points out this week, is extremely unfair for those tenants who do not have a spare room but are judged to be under-occupying because of the dimensions of their properties.
Landlords have a tricky 10 months working out how the tax will hit their tenants, and whether it will affect their bottom line through increased arrears. They will need to communicate with tenants, in some cases apply for discretionary housing payments and begin the process of helping tenants move if necessary and possible.
They have a lot of work to do and it is by no means clear what approach landlords will take. However the ruling out of reclassification by so many large landlords is the closest we have seen so far to a collective sector response to the bedroom tax.
Pay to stay proposals were in the limelight again this week.
Under the plans, social housing tenants earning over a certain threshold (mooted to be £60,000) a year, will have to pay market rents if they want to stay in their social home.
This is another example, along with the £26,000 benefit cap, of a populist coalition government policy. The principle that it is not fair for high-earning tenants to pay a social rent, while low earners pay high rents in the private rented sector, is difficult to argue with. The debate is likely to focus on what a reasonable threshold is.
Regardless of the rights and wrongs of the policy there are signs this week that housing figures are beginning to think about the potential practical implications.
It is unclear how the scheme would be administered. Would HM Revenue & Customs take the equivalent rental difference off the tenant in tax? Or would it be left to social landlords to monitor who has crossed the threshold?
It is also unclear what happens if a household earns more than the threshold, starts paying market rent, and then for whatever reason has a fall in income so they are below the threshold again. Will their rent be reduced back down to social?
The proposals, first announced last year, throw up more questions than answers, but landlords, who are already facing extra administration and bureaucracy in dealing with the ‘bedroom tax’, cannot be blamed for asking questions.
A few weeks ago an image on Inside Housing’s front page proclaimed that right to buy properties were selling ‘like hotcakes’.
Councils in London are reporting a surge in applications under the new version of the scheme, which offers discounts of up to £75,000 for council tenants wanting to buy their homes.
Housing minister Grant Shapps has tweeted that the revived scheme is ‘set to be a big success’ and just this week one London council, Wandsworth reported it has received more than 1,000 enquiries since April.
Regardless of the rights and wrongs of the policy, there is undeniably a high level of demand for the revamped product.
This makes it all the more curious that the Communities and Local Government department has sent out template letters to councils in order to more aggressively promote the scheme.
The letters, as reported by Inside Housing this week, suggest councils flag up how much a right to buy mortgage costs per week and urges ‘don’t delay’.
Lenders and landlords have both accused the council of promoting the policy in an irresponsible manner, as the letter does not stress the risks and responsibilities involved in home buying.
So why has the CLG done this?
The important thing to remember about the new right to buy is that it will lead to social rented homes being sold off – and they certainly will not be replaced by social rented homes.
Mr Shapps has promised they will be replaced on a one for one basis, but they won’t be social rented homes – they will be homes let under the ‘affordable’ homes programme at up to 80 per cent of market rates, with security of tenure not necessarily guaranteed.
The government, which has already ended capital funding for new social homes, is intent on running down the nation’s stock of social rented homes in favour of the ‘affordable’ homes model and encouraging more home owners. This is aimed at encouraging aspiration and taps into a fairly widely held view that sees social housing as part of a dependency culture that traps people.
It is perhaps this driver that explains the CLG’s desire to aggressively promote the right to buy. Let’s just hope that the CLG will be just as keen to help councils if a few years down the line right to buy homeowners get into trouble with their mortgage payments.
A difficult funding environment and changes to welfare rules are just two of the things keeping senior housing professionals awake at night.
Two stories reported this week illustrate some of these challenges – and what has been the response of ministers?- to criticise the landlords themselves.
London & Quadrant is not including social rented homes in its controversial Walthamstow scheme due to viability issues. Waltham Forest Council has accepted that L&Q’s paltry offer of 24 affordable homes and no social rented homes (in a 294-home scheme) is the most it can provide.
L&Q, like many landlords in London, now finds it almost impossible to provide social rented homes. This is a direct consequence of the coalition government’s decision to end grant funding for new social homes.
Work and pensions secretary Iain Duncan Smith, with his Chingford constituency hat on, has slammed L&Q for the lack of social rented homes in the scheme. His office refused to explain how he thinks L&Q can deliver social rented homes in the current environment without government grant.
To my mind, Iain Duncan Smith’s comments are nothing short of hypocritical given his own government’s position.
Housing minister Grant Shapps has also warned councils not to break rules restricting B&B use, it emerged this week.
Again, it could be argued very strongly, as many councils have, that the spike in B&B use is in part due to the coalition’s welfare reforms. Benefit caps and rising private rent levels are depleting the pool of available affordable properties in the private rented sector, leading to pressure on council homelessness services.
To his credit, Mr Shapps at least recognises the problems councils face and has offered help and support.
But the fact that two government ministers this week have turned around and blamed social landlords for problems which were arguably created in Whitehall is unlikely to go down well in the sector.