The postcode lottery facing disabled applicants for discretionary housing payments (DHPs) revealed today may be shocking but is it so surprising?
A survey by the National Housing Federation found that 29 per cent of disabled victims of the bedroom tax were denied DHPs by councils around the country.
But freedom of information requests revealed huge variation around the country, with the proportion of disabled people making successful applications as low as one in seven in parts of Kent and less than three in ten in North East Derbyshire, Basildon, Rotherham and parts of Lancashire. The figures are based on information supplied by 98 local authorities so are by no means complete.
In a slightly different question answered by 174 councils, the average success rate for DHP applications for all bedroom tax victims was 71 per cent. However, there was also huge variation, with only 23 per cent of applications approved in Redcar & Cleveland and 30 per cent in Wandsworth.
These figures also fit with increasing anecdotal evidence that some disabled people are being denied discretionary help because their local authority is treating their disability benefits as income. In the most shocking case I’ve come across, a Shelter Cymru client had his DHP cancelled when he was diagnosed with cancer and his disability living allowance (DLA) was increased.
Even though benefits like DLA are designed to help people cope with the extra costs of being disabled, DWP guidance implies that councils can insist that people use them to pay the rent unless they can provide evidence that they need the money for something else.
It seems that not all councils are doing this and some are changing their mind. In Dumfries and Galloway, for example, 800 tenants who were denied DHPs because they received disability allowance are in line for backdated payments of up to £600 each after the council changed its policy.
However, the clue to decisions that vary by area is in that word discretionary. Through the bedroom tax, the government has replaced a national entitlement with cash-limited local discretionary help and unfair and perverse local decisions will follow. If you live in North Lincolnshire, for example, you will be denied a DHP for ‘life choices’ such as smoking.
Nationally, the money was never going to go remotely far enough and the funding is not assured year on year. In November last year, the National Audit Office put the total amount set aside for DHPs to cover all the cuts in housing benefit (not just the bedroom tax) at £390 million over this spending review period. Extra funding has been allocated by some individual local authorities but this seems to be the exception rather than the rule.
The NAO commented:
‘It is not clear how the overall level of funding has been determined or whether it is likely to be sufficient to tackle the effects of reforms. The total amount represents six per cent of the total savings expected from the Housing Benefit reforms over the Spending Review period, or around £200 per household affected.’
According to a parliamentary answer in March, the DHP funding specifically for the bedroom tax represents just 6 per cent of the total loss to under-occupying households for 2013/14. See this updated House of Commons Library briefing for all of this and more.
None of what’s happening should come as much surprise to the DWP, which has repeatedly argued that DHPs rather than exemptions should be used to help disabled people because it would be too difficult to define the group that should be exempted.
The High Court agreed at a judicial review hearing in July. While judges ruled that some children who cannot share a room because of their disability should be exempted, they said there was no such ‘discrete group’ of adults and accepted that the DWP’s strategy of relying on DHPs had shown sufficient regard to discrimination considerations. In the wake of the decision, the DWP announced an extra £35 million in DHPs.
However, as I blogged at the time, even a cursory glance at the circumstances of the 10 families involved left you wondering how discretionary help could possibly resolve their problems. The case is due to go the Court of Appeal in January. Will this new evidence about the arbitrary way in which DHPs are being applied around the country make any difference to the result?
In the meantime the impact of the bedroom tax continues to play out around the country and, if you think about it, it’s not just the DHPs that are discretionary. To take just one example, the whole issue of what counts as a bedroom has been left to local decisions, in some cases local authorities, in others First Tier Tribunals.
The one thing that it seems may soon not be discretionary is what you call the under-occupation penalty. As several papers report this morning, the Local Audit and Accountability Bill will give Eric Pickles the power to ban local authorities from using politically contentious language like ‘bedroom tax’.
‘Removal of the spare room subsidy’ will presumably be the acceptable term.
The optimist in me hopes that Ed Miliband’s launch of Labour’s independent housing commission marks the start of a political arms race on housing ahead of the next election.
In this scenario, his target of 200,000 homes a year by 2020 and eye-catching policies to achieve it will strengthen the hand of the pro-development wing of the Conservative Party and mean that whoever wins the next election will have a serious crack at tackling the supply crisis.
The pessimist in me worries that I’ve seen little so far that suggests the target is achievable (see Colin Wiles on this last week) and that the two policies that have made the headlines won’t work except in the sense of strengthening the hand of the Tory nimbys.
It’s not quite the start, of course. The Labour leader’s speech in Stevenage yesterday was of foreshadowed in his party conference speech in September. But this one was devoted to housing and, taken together, they look like a major bid to raise the stakes and make the issue part of his dominant ‘cost of living’ narrative. For ‘greedy’ energy companies read ‘land hoarding’ developers.
He attacked Britain’s four biggest housebuilders for boosting their profits by 557 per cent while building homes at the slowest rate in peacetime for almost a century and repeated his pledge that hoarders of sites with planning permission will be told to ‘use it or lose it’. Why the four biggest? Could it have been because the obligatory photo op with hard hat took place on a building site run Bellway (the fifth biggest by turnover)?
The case for, and the criticisms of, this policy both seem to me to be overdone. Housebuilders cannot operate without land banks (as Miliband’s speech acknowledges) but there is not that much evidence that they are deliberately hoarding land. Three reports for the government in the last 10 years (Barker, Callcutt and the OFT) have concluded otherwise. There are land hoarders out there but they are called landowners.
On the other hand, to compare Miliband to Mugabe (as the Telegraph ludicrously does again this morning) rather ignores the fact that Boris Johnson also supports the ‘use it or lose it’ idea.
A clue as to the actual position was provided by Pete Redfern of Taylor Wimpey in a Telegraph response to Miliband’s conference speech. ‘Major housing developers do not delay developable, viable sites with implementable planning permission,’ he said. Which is true, except that it is them that determine what is developable and viable: developers require a certain profit margin before they will start work and they have been steadily increasing this; and ‘implementable planning permission’ means among other things shorn of pesky planning conditions such as affordable housing.
As I’ve argued before, the issue that needs to be addressed is not whether housebuilders are land banking but why the government has asked for so little in return for the billions of pounds worth of direct and indirect subsidy they have directed at the industry since 2008. Help to Buy is only the latest example.
The new bit of Miliband’s speech (to me) was the announcement that four Labour-controlled councils – Stevenage, Oxford, Luton and York – will become ‘right to grow’ authorities with the right to expand into neighbouring areas. In the case of Stevenage, the ‘home blocking’ council is naturally enough Tory-controlled North Hertfordshire. ‘Of course it is right that local communities have a say about where housing goes,’ says Miliband. ‘But councils cannot be allowed to frustrate continually the efforts of others councils to get homes built.’
On one level this makes perfect sense: hemming in cities like Oxford with green belt and obstructive rural councils is a recipe for a housing shortage and high rents and house prices. But this is also the bit that I fear could strengthen the hand of the Tory nimbys. This piece by Eric Pickles would seem to suggest as much.
And isn’t there a danger that Miliband’s first policy contradicts the second and strengthens the nimby argument too? After all, if it is really true that there is lots of land out there being hoarded by developers, why should Tory councils allow development on any new sites?
Aside from those two ideas, Miliband is also asking the Lyons commission to draw up detailed proposals on three other priorities for a Labour government: deliver new towns, which may be underwritten by state guarantees modelled on those used for Help to Buy; ensure communities get a greater share of the windfall gains from development; and ‘simplify rules surrounding the Housing Revenue Account to give local authorities to give local authorities more flexibility in how existing public funding is spent’. The debate on that last one could be interesting.
Sir Michael Lyons says in a Guardian interview yesterday that he is not interested in ‘building castles in the air’ but wants a realistic blueprint. A ‘post-war spirit’ will be required to tackle the housing crisis and Miliband realises that ‘some rather muscular action’ will be required. However, he also offers a more nuanced view of the proposals so far.
The make-up of the expert panel advising him is interesting too, with a voice for developers and environmentalists, planners and investors, local authorities and investors as well as the CIH and NHF. Despite that gibe about the profits being made by the big housebuilders, Mark Clare of Barratt is a member. Submissions are invited by the end of February.
Away from the populist rhetoric, perhaps the Lyons Commission really can come up with a way to get to 200,000 homes year by 2020. Labour will then go into the next election with a new housebuilding drive a central part of its campaign and a willingness to use the power of government to implement it, especially in the land market. In the wake of Alex Morton’s move to the No 10 Policy Unit, perhaps the Conservatives will respond with their own housebuilding pledge, though with faith placed in liberalisation and markets rather than intervention and the state. There would be agreement on the ends with genuine political debate about the means.
But that’s the optimist in me talking again. The pessimist looks at the electoral strategy behind Help to Buy and is ready with a response.
So what is really happening to homelessness in the wake of the financial crisis, housing shortage and cuts in benefits?
Where the Homelessness Monitor 2013, published on Friday by Crisis and the Joseph Rowntree Foundation, paints a picture of a grim situation that is bad and getting worse, the DWP and DCLG seem to see only sunshine and happy smiling faces.
Among the key points from the report that leapt out at me:
- The housing system has helped to mitigate against poverty because of the safety net of housing benefit, social housing and the homelessness legislation. All three have now been cut.
- The shift away from national norms to local discretion is already having an impact: local allocations policies risk marginalising the vulnerable; organizations working with women fleeing domestic violence say they are losing priority; and discretionary housing payments are ‘difficult to administer, their application is patchy and their budgets are typically underspent’.
- The private rented sector is supposed to be a big part of the solution to homelessness. It is now also the fastest rising cause of homelessness across England – and the biggest single cause in London. Between 2009/10 and 2012/13 the capital saw a 316 per cent rise in homes lost due to the end of an assured shorthold tenancy.
- Homelessness fell in the 1990s housing market recession because affordability improved in the owner occupied sector, which in turn freed up additional social and private lets. This time around, says the report ‘there is no such benign impact of this recent housing market recession as levels of lettings available in the social rented sector are now much lower, and continuing constraints on mortgage availability (notwithstanding Help to Buy) are placing acute pressures on both of the rental sectors’.
- The report identifies a ‘housing pressure cooker’ of lack of supply, rising housing costs, cuts to benefits and cuts to services for the most vulnerable. The pressure is most acute in London: rates of overcrowding as measured by the Census were around 4 per cent in most regions but 11.6 per cent in the capital, where hotspots were Newham (25 per cent), Brent (18 per cent) and Tower Hamlets (17 per cent). Overcrowding is just part of a much bigger problem of hidden homelessness. Overall, the report estimates that 9 per cent of adults will experience some kind of homelessness in their adult life.
Leslie Morphy of Crisis and Julia Unwin of JRF argue in their introduction that ‘rising homelssness is a story not just of economic pressure but of political choices’ about housing benefit, the welfare system and the homelessness safety net. The report argues that ‘welfare benefit cuts, as well as constraints on housing access and supply, are critical to overall levels of homelessness’.
However, the researchers are ‘still only beginning to identify the impacts of changes to the social security system on individuals and households and ultimately the numbers facing or experiencing homelessness’.
Away from this gloomy vision of the future, back in the sunlit world of Whitehall, things look very different of course. The DWP told The Independent:
‘Our reforms are fixing the benefits system. There is no evidence that people will be made homeless as a result of the benefit cap, the removal of the spare room subsidy or any of our welfare reforms. We have ensured councils have £190m of extra funds this year to help claimants and we are monitoring how councils are spending this money closely.’
It is certainly hard to have evidence of something that hasn’t happened yet – as the report says there will be a time lag before long-term responses by landlords and tenants to the local housing allowance cuts of 2011 and 2012 (let alone this year’s cuts) are seen. However, figures showing falls in LHA claims in inner London and among the 25-34s even as they were rising nationally are certainly one indication. Similarly it’s still too early to say how many tenants will be evicted and become homeless as a result of the bedroom tax but Inside Housing’s survey showing a 26 per cent increase in notices seeking possession might be just be a clue.
From the DCLG, the message is slightly different. Housing minister Kris Hopkins said:
‘I am determined to ensure that we don’t return to a time when homelessness was more than double what it is today. This Government has maintained strong measures to protect families against the threat of homelessness and acted decisively to introduce a more accurate assessment of previously hidden rough sleeping. We have supported the national roll out of No Second Night Out to prevent persistent rough sleeping, and given councils greater freedoms to house people in private rented homes.
‘On top this we have provided nearly £1bn for councils to reduce homelessness and support those affected, while delivering 170,000 more affordable homes since 2010. All this has meant statutory homelessness remains at a lower level than it was in 27 of the last 30 years.’
On the first bit, he has a good point. The rough sleeping count did rise after a new methodology was introduced in 2010. It’s also true that central funding for specific schemes like homelessness prevention was protected from the worst of the cuts in the 2010 spending review – but that ignores what happened elsewhere, in particular to Supporting People and locally-determined funding. Key informants told the researchers that ‘one probable explanation for this upward trend in rough sleeping was a weakening in the support available to the most vulnerable single homeless people as a result of SP cuts, which may be undermining their capacity to sustain accommodation’.
And that line about 27 of the last 30 years is an old favourite of the DCLG that now looks past its sell-by date. It has always been a pretty meaningless stat because it ignores the big shift to prevention after 2003 that led to six successive falls in homelessness acceptances until 2009. They have risen every year since the election. Those watching closely will also have spotted that the line used to be ‘28 of the last 30 years’.
As these examples reveal, your perception of ‘homelessness’ depends on how you define and measure it. Just as the number of rough sleepers depends on how you count them, so the main measure of homelessness (acceptances) depends on how the law is framed and implemented. Equally, housing is a complex system and the impact of austerity on it will be equally complex.
Which is why it’s just as well that the Homelessness Monitor project runs right through to 2015.
Alex Morton’s move from Policy Exchange to the No 10 Policy Unit is a powerful symbol of something – but what exactly?
For some it’s a signal of a ‘housing dream team’, with Morton joining Nick Boles in a push to take the Yes to Homes message to the heart of government. Boles is of course planning minister but he was also the first director of the organisation dubbed ‘David Cameron’s favourite think tank’.
And it’s not just them either. Boles was succeeded as director by Anthony Browne, now Boris Johnson’s adviser for economic development, and Browne was succeeded by Neil O’Brien, who is now a special adviser to George Osborne. Three other alumni became Conservative MPs in 2010.
For others it will seem more like housing’s worst nightmare. Morton has developed some controversial as well as influential ideas and now the Exchangers are now well placed in No 10, the Treasury, the DCLG and the main city with a housing problem.
Or is it a sign of housing’s growing importance as a political issue? As Paul Goodman said on Conservative Home it’s an indication that Downing Street is following George Osborne’s lead:
‘The chancellor has rightly identified housing as strategic electoral ground on which Labour wants to park its bandwagon – and vital in its own right, especially for younger people, who don’t have the same access to home ownership that earlier generations enjoyed.’
Or of policy shifts to come? Boles already has far more license way than you might expect in a supposedly junior minister to make the case for more homes and planning reform, even if it means upsetting traditional Tory supporters like the Daily Telegraph (which gets its own back on Morton this morning). So presumably we can expect more of that from Morton at Downing Street, where he will reportedly be responsible for writing the housing bits of the next Conservative manifesto.
So how influential have Alex Morton and Policy Exchange been on housing? Here’s a quick reminder of some of his proposals over the last three years:
- Ending expensive social tenancies? See last week’s Autumn Statement with Osborne calling on councils to sell off high-value properties as they become vacant?
- Making it easier to convert redundant offices into homes? See numerous cuts in red tape over the last two years.
- New garden cities led by the private sector? See endorsement of the idea by David Cameron.
- More official encouragement for self-build? This has proved to be much more than just a Grant Shapps enthusiasm, with resources and public land set aside for it.
- Building more homes? He’s already trumped Labour’s pledge of 200,000 homes a year by 2020 with a call for 1.5 million homes over the same period.
There’s been plenty more besides. In 2010, Making Housing Affordable set out a blueprint for nationalising the existing stock of social housing, selling the vast majority of it to tenants and leaving only the most vulnerable living in what’s left. Social housing essentially creates social exclusion and poverty, he argued.
Earlier this year he co-authored a report calling for the demolition of all high-rise social housing and replacing it with terraced homes. I argued at the time that you didn’t have to look very hard to find the hidden agenda there.
The influence of this agenda is undeniable: just look at last week’s Autumn Statement. However, there are limits: what were sweeping radical ideas when first proposed became more tentative proposals by the time they’d been through the Whitehall sausage machine. Garden cities seem to be going nowhere under the coalition thanks to opposition from Eric Pickles, self-build initiatives remain piecemeal and the high-value properties announcement does not go nearly as far as ending expensive social tenancies. His penultimate report for Policy Exchange was a polemic against property taxes but Osborne imposed two more in the Autumn Statement.
Morton has also been critical of government policies like affordable rent and Help to Buy. Policy Exchange thinking and government policy often coincide but they do not always agree: its liberal, free market views are at odds with those of more small ‘c’ conservatives whose instinct is to oppose new development and protect the privileges of those who already own a home. His appointment may be a symbol of housing’s significance on the political agenda ahead of the next election and of the Tory leadership’s determination to neutralise it as an issue for Labour.
So does that mean it’s a victory for Yes to Homes? Morton’s arguments for new supply certainly seem to reinforce the message within Downing Street, but it would be a mistake to assume too much of a consensus between his views and those expressed by the National Housing Federation in its Home Truths report yesterday. The real housing debate to come could now be more about means than ends.
It’s the time of year for predictions and the prospects do not look good for anyone struggling to get on to the housing ladder or afford their rent.
The latest Home Truths report from the National Housing Federation predicts that house prices in England will rise by 35 per cent by 2020. However, the bad news does not stop there for the ‘huge swathe of the population locked out of home ownership for life’ because rents will rise by 39 per cent over the same period.
The latest RICS housing market survey, also out this morning, shows that prices again rose sharply while expectations for future growth have risen to their highest level since 1999.
The key message from both the NHF and the RICS is that we have to increase supply. David Orr spells out only too clearly the consequences of failing to build enough homes to meet demand on his blog: prices and rents rising out of reach; people struggling to pay for heating and food; economic growth held back; a soaring housing benefit bill for people in work.
To be fair, ministers from David Cameron down are all beating the drum for supply but that long-term message is contradicted by short-term policies like Help to Buy seem designed to boost demand and prices ahead of the election.
As a result the government seems confused about whether those rising house prices should be seen as good or bad news. Housing minister Kris Hopkins seemed to be thinking the first when he tweeted this morning about the BBC report of the RICS survey that the housing market is ‘surging ahead’. However, his ministerial colleague Nick Boles told the Communities and Local Government committee yesterday that his plans to boost planning and supply were ‘consistent with a desire…on the part of Government not to have real house price inflation as a constant theme as it has been for the last 30 years’.
That’s a telling confusion, I think, which gets to the heart of the problem. That problem is that rising house prices are good news for the 65 per cent of the population (and landlords) who already own a home (though as I was rightly reminded on Twitter just now, that ‘good news’ is an illusion for many). As George Osborne has worked out, engineering a short-term boom could also be good news for the electoral prospects of the Conservatives.
But rising prices (and rents) are obviously very bad news for the people who don’t own a home and who are seeing their prospects of ever doing so receding far into the distance. They are also, as the NHF’s report reveals only too clearly, bad news for the long-term prospects of the economy. A surging housing market may generate soaring receipts from stamp duty but that’s not much use if it all disappears into an ever-rising housing benefit bill for people in work. If it turns into the boom that the critics fear then the dangers of a post-election bust are obvious.
The Council of Mortgage Lenders (CML) has an interesting perspective on this in forecasts also published this morning. It admits it had ‘not anticipated such a strong revival’ when published its forecasts a year ago but that ‘this largely reflects the unexpectedly sharp improvement in the economic mood’. However it adds:
‘While housing market revival over the short-term seems assured, it is likely to happen alongside stronger house prices and intensifying affordability pressures. This leads us to conclude that the upwards leg of the housing cycle may be relatively short-lived and that property transactions and house price growth may peak over our 2014-15 forecast period.’
A key part of its thinking that there will be ‘an orderly unwinding of emerging housing market pressures’ is the different regulatory environment for lenders, brokers and borrowers. More conservative lending policies and new affordability rules should ‘help prevent a full-blown housing market boom developing over time’ while the Financial Policy Committee can now step in with macro-prudential regulation.
The CML also argues that the Help to Buy mortgage guarantee will not have as big an impact as critics fear:
‘While the majority of commentaries seem to factor in several hundred thousand transactions over the next three years, this is by no means a given, especially as we are beginning to see competitive offers from firms remaining outside of Help to Buy. Our instincts are that sustainable volumes may be much lower, given that the overall financial position of households is unclear, and that CML market research earlier this year illustrated that the scheme would not represent a panacea for borrowers.’
That’s something at least. It remains to be seen of course whether Mark Carney and the Bank of England can really succeed in managing a market that has so often run out of control in the past – but he does at least seem aware of the potential problem.
However, the deeper problem with our dysfunctional housing system remains even if forecasts are only forecasts. The 35 per cent increase in the six years to 2020 forecast in the NHF report may have grim consequences but it woudl not be a boom to compare with the 2000s: prices more than doubled between 2001 and the peak of the market in 2007.
As ministers constantly remind us, prices remain below 2007 levels in real terms. However, the underlying economic conditions in those two decades are very different. Looking at house prices (or rents) in real terms may make sense as a way of looking at things in normal times but it becomes pretty meaningless in a lost decade when the earnings available to people to pay for them are falling in real terms.
With supply stuck at less than half the level needed to meet demand, and even the 240,000 homes a year that will stop things getting worse a distant prospect, the divide between housing haves and have-nots is only set to widen.
17:00 The independent Office for Budget Responsibility has issued yet another update to its estimate of the size of the housing benefit bill. It says housing benefit will cost £6 billion more over the next five years than it estimated at the time of the Budget in March. It puts the cost at £600 million more in 2013/14, rising to £1.8 billion more by 2017/18. According to the OBR’s Economic and Fiscal Outlook:
‘About half of this is explained by an increase in the proportion of employed people who receive housing benefit, based on recent data and detailed modelling, which suggests that growth in renting for this part of the working age population is likely to continue to increase further over the forecast period. Changes in the caseloads for other benefits, particularly ESA, explain the majority of the remaining increase.’
This is the third time in a year that the OBR has increased its estimate of the cost of housing benefit. The March estimate was itself £3.7 billion higher over five years than the one it gave in last year’s autumn statement, and that one was £2.8 billion higher than the one at the March 2012 Budget.
What happens next? Though the OBR’s updated cost estimates seem to grow bigger every six months, the Treasury is determined to cap ‘the vast majority’ of housing benefit spending as part of its overall welfare cap. Those rising in-work claims are the result of low wages and high rents, yet only ‘cyclical’ spending like JSA-related housing benefit will be exempted from the cap. Yet more housing benefit cuts to come?
It estimated that 818,600 social tenancies worth £159 billion are ‘expensive’ when judged on this basis: 21.8 per cent of England’s council and housing association stock. Of those 339,000 are council (18.7 per cent) and 479,000 housing association (24.3 per cent).
If you’re assuming this is mainly to do with London, you’re wrong: almost one in three social homes in London are ‘expensive’ but so too are 26 per cent in the East of England, 22 per cent in the south east and 20 per cent in the south west. The least affected region, the north east, still had 15 per cent of properties classed as ‘expensive’.
14:01: Reactions to AS2014 are starting to come in – though not all with weblinks available.
Grainia Long, chief executive of the Chartered Institute of Housing, welcomed George Osborne’s acknowledgment of the principle that councils should be able to borrow more to build homes:
‘But the steps announced today are far too modest and there is a risk that any gains could be offset by the requirement to sell high-value social housing and the expansion of right to buy. The finer details will be crucial – it is critical that the overall package results in a net increase in housing investment and new homes. As George Osborne acknowledged, we need to build more homes – we are in the grip of a housing crisis, with millions of people being denied access to a decent home at a price they can afford. Increasing local authority borrowing caps by £7 billion, rather than £300 million, would allow councils to build 75,000 new homes over five years, creating 23,500 jobs and creating £5.6 billion of economic activity.
‘Local authorities already have powers to sell off council housing and it is unclear whether selling off valuable homes is always the best way of doing business – councils may also want to borrow against the value of these properties so they can fund more homes.’
Simon Rubinsohn, chief economist at the Royal Institute of Chartered Surveyors, said:
‘If help to buy is to remain, right to buy extended, and expensive social housing sold off then the Government’s commitment to building houses simply must be extended. The £1bn of loans to unblock housing development across the country will contribute towards housing need and will drive construction jobs. However, we still believe housing is not at the centre of a coordinated property-led growth that supports a balanced regional recovery where all can access the market. The increase in the HRA borrowing cap will only make a very minor dent in the housing deficit.’
He added that it was disappointing that Osborne had ignored calls for reform of stamp duty.
Good point from Rob Beiley of Trowers & Hamlins that I missed. He says that ‘the prospect of tax relief on investment in social enterprises and charities could unlock a significant source of new funding for housing associations’. (Not to mention social enterprises and charities of course).
Liam Bailey of Knight Frank reckons that the move to levy CGT on overseas buyers ‘will have only a marginal impact on demand and pricing’.
Sir Merrick Cockell of the Local Government Association welcomed the move on the borrowing cap. ‘The easing of restrictions on housing investment announced today does not go as far as we would like, but it does show that our call for more local flexibility to drive economic growth has been recognised.’
He also welcomed the change of heart on New Homes Bonus funding. ‘Our concerns about potentially costly changes to the New Homes Bonus have been taken on board in the revised proposals announced today. This is good news for local services which otherwise would have taken an additional £400 million cut.’
In other news, he warned of ‘an upturn in the economy coinciding with a collapse in public services’.
That’s it from me for now. Time for some lunch.
13:44: More detail from those AS2013 background documents:
Housing and planning: This is framed very much in terms of removing barriers to supply. Action includes:
• consulting on measures to improve plan making, including introducing a statutory requirement to put a local plan in place
• legislating to treat planning conditions as approved where a planning authority has failed to discharge a condition on time, and using legislative measures to strengthen the requirement for planning authorities to justify conditions that must be discharged before building can start
• consulting on proposals to reduce the number of applications where unnecessary statutory consultations occur and piloting a single point of contact for cases where conflicting advice is provided
• allowing developers to apply directly to the Communities and Local Government department where a planning authority makes fewer than 40 per cent of its decisions on time
• carrying out an evaluation of the new homes bonus, which will complete at easter 2014. The government will consult on measures to further improve the incentive provided by the new homes bonus, in particular through mechanisms to withhold payments where planning approvals are made on appeal
• consulting on a new 10-unit threshold for section 106 affordable housing contributions. (This is seen as a way to reduce costs for smaller builders).
Unblocking stalled sites: A £1 billion, six-year programme will fund infrastructure ‘to support the delivery of 250,000 homes’. It will begin in 2014/15 with ‘investment decisions on nine specific sites, capable of unlocking 27,000 houses’. (Mr Osborne mentioned Manchester and Leeds in his statement).
Land auctions: Remember them? The government will report on the findings of a feasibility study by Budget 2014.
Right to buy: ‘The government will further support right to buy by introducing right to buy agents to help buyers complete their home purchase, and provide £100 million to establish a fund to increase right to buy sales, by improving applicants’ access to mortgage finance.’ So that’s £100 million to sell off public assets at a discounted price. Who will the right to buy agents be?
Estate regeneration: The government will explore options for repayable loans to kickstart ‘the regeneration of some of the worst housing estates’.
Right to move: This idea was in the Conservative manifesto and has now emerged as a consultation on ‘options for a right to move for local authority tenants who want to move home for reasons related to employment’. How will it work in practice and will it ever get beyond consultation?
New homes bonus: £70 million of it will be pooled within the London Local Enterprise Partnership chaired by the mayor. It won’t be pooled outside London.
Private rented sector guarantee: Extended until December 2016.
Local authority housing: In addition to the moves on borrowing caps and high-value homes, ‘the government will launch a review into the role local authorities play in supporting overall housing supply’.
Discretionary housing payments: The budget has been boosted by £40 million in both 2014/15 and 2015/16. The statement says: ‘This will ensure the pot of DHPs available to support those affected by under-occupancy deductions will not be reduced for the next two years, giving councils discretion to make longer term awards.’
Boles Bungs: ‘The government will work with industry, local authorities and other interested parties to develop a pilot for passing a share of the benefits of development directly to individual households.’
Tax: Capital gains tax on future gains made by non-residents disposing of UK residential property will apply from April 2015 with a consultation on how best to implement it published early next year.Problems with implementation are presumably the reason this has not been done before but note that it is only ‘future gains’.
The government will also from April 2014 ‘reduce the capital gains tax private residence relief final period exemption from 36 months to 18 months to reduce the incentive for those with multiple homes to exploit the rules’. Presumably that is to stop people flipping their relief from one home to another.
The definition of ‘high-value social housing’ is not explained anywhere in the documents that I can find. I also cannot find any reference to increased right to buy discounts.
13:16: Here are details that I’ve gleaned so far from the AS2013 background documents:
Welfare cap: We heard earlier that cyclical benefits will not be included but the vast majority of housing benefit will. That seems to mean JSA-passported housing benefit (ie the bit attributable to rising unemployment?) will not be capped but the rest (attributable to rising rents?) will? Still not sure how that fits with the English social rent formula of CPI plus 1 per cent.
HRA borrowing limit increase: This will not be until 2015/16 (£150 million) and 2016/17 (£150 million). The extra borrowing will be allocated on a competitive basis and be part of the Local Growth Fund run by Local Enterprise Partnerships. Bids will be prioritised based on value for money and the government will expect partnership working with housing associations or through joint ventures. There also seems a clear expectation they will be backed by asset sales and public land. The AS2013 says the borrowing cap increase plus sales of vacant high-value social housing will support 10,000 additional new homes. However, ‘this additional investment will maintain the Local Growth Fund at £2 billion in 2015/16’ so is something else being cut?
A separate policy costings document includes these assumptions:
• ‘the full additional headroom of £150 million in 2015/16 and £150 million in 2016/17 is taken up and is spent on new affordable housing in these years
• due to a lag between asset sales and new affordable house-building, there is a loss of rental income from the sale of high value vacant stock in early years, but that there is additional rental income, as a result of a net increase in affordable housing in the later years
• new affordable housing is let at affordable rent levels.’
Note there that the sale of vacant high-value housing is part and parcel of the borrowing limit deal and also the expectation of affordable rent. In answer to my own question earlier then, what seems like a major concession to council housing is actually an acceleration of the conversion of social housing to affordable rent.
More to follow shortly
11.56: A few housing highlights so far from Mr Osborne’s speech:
- Cap on overall welfare spending will include ‘vast majority’ of housing benefit. How does that fit with social rents rising by CPI plus 1 per cent?
- Tax avoidance clampdown targets include capital gains tax on primary residence relief
- CGT on non-UK residents who sell UK property from 2015
- HRA borrowing limit raised by £300 million
- Sell-off of expensive social housing
- ‘Priority right to move’ for social tenants
- £1 billion guarantees for stalled housing developments in Manchester and Leeds
- Unemployed under-21s who refuse training or don’t turn up will lose benefits
- More to expand right to buy
- Big emphasis on supply
- Importance of ‘stable housing market’
More detail to come.
10:40 So what else should we be looking out for? Here are a few more things receiving some advance attention:
Cuts: We already know that Mr Osborne will announce reductions in departmental budgets of £1 billion a year for the next three years. With health, schools, foreign aid, local government, revenue and customs and the security services all protected, the DWP is said to be one of the departments in the firing line (and perhaps the C bit of the CLG too?).
Property taxes: We know that Mr Osborne has been considering imposing capital gains tax on overseas property investors, something that would bring the UK into line with the tax regime in many of their home countries. Will he also look at tax on buy to let landlords, who the Intergenerational Foundation estimates are benefitting from tax write-offs worth £5 billion a year? Depending on the detail, there could be a big impact of new private housing development. Might that put Osborne off the idea?
Benefits: We are expecting more detail on Osborne’s cap on welfare spending that will apply after the next election. The Telegraph reported earlier in the week that he will say we can no longer afford a ‘welfare state’ and will have to make do with an ‘affordable state’ instead. The DWP announced details of the housing benefit cut before this one (the 1 per cent cap on LHA except in high rent areas) so will we learn more about the next later?
Stamp duty: A hardy perennial this one but the usual suspects are pressing for cuts to and reform of stamp duty, with most of the lobbying concerning first-time buyers and homes priced between £250,000 and £300,000.
Infrastructure and planning: Inside Housing reports that details are expected to be revealed of those ‘Boles Bungs’ to buy off opponents of new development. Will there be more besides and will Mr Osborne agree with Boris Johnson that housing should count as ‘essential infrastructure’.
Meanwhile – while everyone is paying attention to the autumn statement – Iain Duncan Smith has announced ‘the continued safe and secure roll out’ of the universal credit. Translation: the crawl-out’s been delayed again.
09.47: The initial answer to my initial question – will housing be a winner or loser? – seems to be a bit of both.
Pete Apps reported for Inside Housing last night on a deal being negotiated within the coalition that would see the chancellor increase English council housing borrowing limits (the Lib Dem bit) in return for another increase in right to buy discounts (surprisingly enough, the Conservative bit).
An increase in the borrowing caps has backing not just from Labour and the Lib Dems and the Local Government Association but also from London mayor Boris Johnson and Tory authorities like Westminster. So far the Treasury has firmly resisted any such thing so if it happens (and that was still an if last night) it would be a major change of policy and would look like a big win for council housing. However, as Pete reports, any deal would come with strings attached: councils would have to commit to build new homes or improve estates (presumably to stop the money leaking out of housing) and the additional debt capacity would be administered by local enterprise partnerships or the GLA (how will individual authorities react to having to share their capacity?). Could there be other, more unpalatable strings too: perhaps a requirement to build at and convert relets to affordable rent?
Any increase in the right to buy discount would be the third in 18 months. It was raised to £75,000 in 2012 and to £100,000 in London this year, when the qualifying period was also reduced from five years to three. Any further increase will have serious implications for the business plans of local authorities and housing associations – potentially reducing the capacity that the other part of the deal is meant to increase. It would also make the government’s ‘one for one replacement’ promise look even emptier than it already does.
Would the overall effect of any deal be a rebirth of council housing or an acceleration of the slow death of social housing? Or perhaps both?
Is it too much to imagine David Cameron telling his aides in Downing Street to ‘get rid of all this facts crap’?
The question is prompted by an answer he gave earlier at Prime Minister’s Questions. This was the question from Labour MP Andy McDonald:
‘The Disability Benefits Consortium of over 50 charities has signed a letter to the Secretary of State for Work and Pensions calling for immediate action to exempt disabled people from the bedroom tax. Why on earth do the Prime Minister and his Government refuse to listen?’
‘Obviously, what we have done is to exempt disabled people who need an extra room. This does, I think, come back to a basic issue of fairness, which is this: people in private sector rented accommodation who get housing benefit do not get a subsidy for spare rooms, whereas people in council houses do get a subsidy for spare rooms. That is why it was right to end it, and it is right to end it thinking of the 1.8 million people in our country on housing waiting lists.’
I highlight this not because I am naïve enough to expect ministers in general or the prime minister in particular to answer the questions they are asked (that would clearly be too much). Nor do I necessarily expect the answers to be the whole truth. But is it too much to expect a passing resemblance to the truth? Cameron’s answer in this instance offered two examples of misleading the House of Commons for the price of one.
The question was prompted by a letter to Iain Duncan Smith from the Disability Benefits Consortium (DBC), a coalition of over 50 different charities and other organisations that describes itself as ‘working towards a fair benefits system’.
The letter pointed out that two thirds of households affected by the under-occupation penalty include someone with a disability, 230,000 claim Disability Living Allowance and 100,000 live in specially adapted properties. It went on:
‘We have been deeply frustrated at reports that disabled people and their families are protected from this policy. The stark evidence since the policy was implemented in April clearly shows they are not. It is hitting disabled people who need an extra room for essential home adaptations or equipment which enable them to live independently; seriously or terminally ill people who sleep on hospital beds and cannot share a room with a partner who cares for them and parents caring 24/7 for disabled children who need a room for a care worker to stay in to give them a night off from caring.
‘None of these groups are exempt and our organisations are seeing the devastating impact it is having on those who now face a shortfall in their rent as a result of the changes.’
The DBC argues that discretionary payments are not working, with only a minority of disabled people and carers receiving support, and concluded ‘the government must act now to exempt disabled people and carers from this policy’.
This will not come as news to most people reading this. The impact on disabled people has been a central part of the campaign against the bedroom tax from the beginning and was extensively illustrated in the opposition day debate earlier this month.
But my point is that it should not be news to Cameron and his private office either. This is not just because extensive earlier coverage of the DBC letter on broadcast media will have given them ample time to prepare.
It’s also because Team Cameron has previous form for (in parliamentary parlance) misleading the House over the bedroom tax and disability.
For example one, look to the PMQs of 6 March, 2013. In his first answer, he told Labour’s Derek Twigg that ‘people with severely disabled children are exempt and people who need round-the-clock care are exempt’. Both of those statements were untrue, as this Channel 4 News Factcheck revealed at the time.
Cameron was at it again on 10 July, 2013, when he told Labour’s Alison Seabeck that ‘when it comes to the spare room subsidy, anyone who needs to have a carer sleeping in another bedroom is exempt from it’. As Factcheck again pointed out, there is an exemption for people who need round-the-clock care whose ‘spare’ bedroom is used by carer who lives in or stays overnight. However, it does not apply to people who care for their own partner or spouse who find it impossible to share a room.
Disabled children who are unable to share a room because of their disabilities are now exempt, but that has only just been grudgingly conceded by the DWP after defeat in the courts.
It is very hard to believe that Team Cameron is unaware of these previous examples of miseleading statements from the prime minister about exempting disabled people. It’s almost as though something does not compute, the policy is fair and so they have to be exempt even if they are not.
However, the misleadng answer does not end there. Cameron also stated that ‘people in private sector rented accommodation who get housing benefit do not get a subsidy for spare rooms, whereas people in council houses do get a subsidy for spare rooms’.
As I have blogged before, this comparison with the private rented sector is one of the ‘fairness’ arguments that ministers use most often but it is also wrong. The size criteria work differently under the local housing allowance because of the nature of the stock and the way rents are charged. And, crucially, it did not apply to existing tenants: the exemption question would not have arisen for any of the 420,000 disabled people affected by the bedroom tax because they would not have been penalised in the first place.
Downing Street does say of course that it ‘does not recognise’ the ‘get rid of all the green crap’ quote from earlier in the month. As others have noted, we live in an era of ‘post-truth politics’ so perhaps this is only to be expected. After one of the most brazen examples yet from a serial offender, that really is quite enough of all this ‘facts crap’.
Today’s Draft London Housing Strategy is the boldest attempt yet seen from a Conservative administration to get to grips with the housing crisis. It still does not go remotely far enough.
In his foreword, mayor Boris Johnson says London is facing an ‘epic challenge’ of building more than 42,000 new homes a year, every year, for 25 years. Of these, 15,000 would be affordable and 5,000 for market rent.
That is no exaggeration. As he goes on to say, that is ‘a level of housebuilding unseen in our great city since the 1930s’. To put it in perspective, the average over the last 20 years, at a time when the population was growing rapidly, was 18,000 per year. London has not come close to 42,000 completions a year since the war, even at the peak of the council housing boom in the late 1960s.
In any case, says the strategy:
‘The government has not proposed to reverse greenbelt policy and it seems unlikely that earlier levels of public investment can return any time soon. A new approach to harnessing the investment and effort necessary to increase house building is therefore required.’
Confronting a problem on this scale means the strategy includes some radical and sometimes (for a Conservative administration) surprising solutions. To give three examples, it calls for:
- Reform of the public borrowing rules for council housing – preferably as a separate capital investment activity as applies in the rest of Europe and for housing associations; at a minimum to give English local authorities the same freedom as Scottish ones.
- A London Housing Bank – a discussion paper is due on this next year but funding could come from the public sector and institutional investors for measures such as purchasing market homes off-plan and underwriting Build for Rent activities.
- Shifting from personal to bricks and mortar subsidies – ‘investment in new homes with low rents for those who need them represents better long-term value for tax payers than meeting the high costs of market housing through housing benefit’. The strategy discusses the challenge of coping with the transitional consequences for tenants on benefit with high rents and says this will require ‘an appropriate future capital settlement from central government, alongside appropriate revenue funding to mitigate these transitional costs’.
That is on top of Johnson’s longstanding call for more financial autonomy for London, with the devolution of all property tax including stamp duty. The Treasury has recently agreed this for Wales – so why not London? Part of the argument is that the capital has raised more in stamp duty than the Treasury has put back in affordable housing investment (£17 billion over the last 10 years) but that rather ignores the £50 billion spent on housing benefit in the capital over the same period.
There are some radical ideas on land too, with proposals for new garden suburbs and, within 33 Opportunity Areas, new Housing Zones offering targeted tax incentives, lighter-touch planning and help with land assembly.
Most, if not all, of these ideas would draw support from across the political spectrum, as will the draft strategy’s conception of ‘housing as essential infrastructure’ and the argument that building too few homes is as much of a barrier to growth as inadequate public transport, roads and utilities.
An idea of the scale of the current problem is given by two more stats: the average first-time buyer is now in the top 20 per cent of London’s household income distribution; and there could be a shortfall of 50,000 to 90,000 homes for professionals over the next ten years, which could result in a potential loss of economic output of £15 billion to £35 billion.
However, the draft strategy also has some more contentious proposals when it comes to affordable housing. The net effect – despite an apparent ‘initial new funding of £1 billion’ - seems to be to increase the size of the inverted commas around that word affordable:
- While 60 per cent of the next Affordable Housing Programme will be reserved for Affordable Rent, half of this will be ‘capped at low affordable rents’ prioritised for those in greatest need and low income employment and half will be at ‘discounted rents, set at the lower of up to 80 per cent of market rent or the local housing allowance’. That might seem at first glance like a hint of a return to social rent. In fact, few current Affordable Rent homes come in at 80 per cent of market rent in London (the median for London in the last round was 59 per cent, according to one report) so will this mean higher rents and fewer homes for those in the greatest need? The strategy also says that ‘investment partners should use fixed-term renewable tenancies’ for the capped rents and does not specify their level.
- The Mayor will encourage boroughs to give greater priority to working households in allocations. That is qualified by stressing this ‘should also be balanced with the need to ensure the most vulnerable are looked after’ but that does not sound like a watertight assurance.
- The strategy argues that there are 115,000 of the 786,000 London households who live in affordable housing ‘who could afford to pay more towards their rent’. While it says the Pay to Stay threshold should be increased to the First Steps income limits of £66,000 for smaller and £80,000 for larger households, the DCLG estimates that there are only 34,000 households in social housing in the whole country earning more than £60,000. Does this herald a wider ambition for higher rents lower down the income scale, perhaps through conversion to Affordable Rent?
- Prepare for your assets to be sweated to the max if you are a housing association. Smaller, non-developing associations ‘will be expected to utilise their borrowing capacity’ and the GLA will explore with the social housing regulator how associations in general ‘can be incentivised to fully utilise’ their surpluses. That much is perhaps inevitable but, in addition, ‘all providers will be expected to provide market housing for rent and/or sale alongside their affordable housing offer’ and they will also be ‘strongly encouraged’ to consider targeted disposals or lettings at market rent of ‘selective high-value stock’. Conversions to Affordable Rent will be ‘recalibrated’ to increase the income range on ‘mono-tenure estates’.
- The strategy also talks of the ‘vast development potential of London’s existing affordable housing estates’. There’s nothing wrong with that in theory but is that a signal to prepare for yet more Earl’s Court and Heygate style regeneration rows about gentrification and the displacement of existing residents?
Overall then, the strategy seems to combine some of the best thinking on the role of government in promoting new homes with a continued faith in the marketisation of ‘affordable’ housing.
However, critics argue that even 42,000 homes a year is not enough. Labour’s Tom Copley says independent experts say London needs 60,000 a year and that the strategy’s ‘lack of ambition commits us to a future of unaffordable housing’. London Councils says we need 800,000 homes to be built by 2021. The Green Party’s Darren Johnson says that his namesake ‘boasts about his track record on affordable housing, but he will leave office 50,000 homes short of the number he needed to build’. The Mayor’s strategy will deliver homes for property investors, not Londoners, he says.
For me, all this begs the question of what happens if the Mayor fails to deliver 42,000 homes a year for 25 years and, even if he does, what happens until the new supply comes on stream. Given the history of the last century, and the fact that he is prevented from looking outside London for solutions to the capital’s housing shortage (as happened in the 30s and after the war), that is much more likely to mean when he fails to deliver.
On the demand side of the equation, the strategy denies that overseas and buy-to-let investors are crowding out Londoners from ownership. Failure on supply will merely price even more people out of either owning or renting in the capital and a continued housing shortage will put even more pressure on housing system in general and the private rented sector in particular. The strategy says that the mayor is ‘keen’ to see landlords testing longer tenancies in the private rented sector and that it’s ‘important that there is greater transparency about letting agent fees’. But is the self-regulation of Johnson’s Housing Covenant remotely up to the job?
Legislation published today marks a historic moment for housing in Wales but it has wider significance for the rest of the UK too.
It makes history by becoming Wales’s first Housing Bill since it acquired greater devolved powers. The Housing (Wales) Bill aims to ‘ensure that everyone in Wales is able to access a decent home’ (though ministers behind all Housing Bills everywhere say that). The details are what count and the timing and the context are what create the wider significance. As Carl Sargeant, the Welsh minister for housing and regeneration, puts it: ‘Despite the impact of austerity measures and budget decisions taken by the UK Government, the Welsh Government is determined to improve the supply, quality and standards of housing and the proposals in this Housing Bill are crucial in achieving this.’
Decisions in Westminster on austerity and welfare reform apply to Wales, Scotland and (with some differences) to Northern Ireland as well as England. As the SNP government in Edinburgh prepares to set out its plans for independence next week and the coalition in Belfast considers how to implement welfare reform, here the Labour administration in Cardiff is saying that it can do things differently under devolution. And many of its proposals could well find their way into the housing legislation of a future Labour government in England.
Back with the detail of the Bill, it comes in seven different parts and the first two are probably the ones that will received the most scrutiny: Part 1 sets out requirements for the registration and licensing of landlords and agents operating in the private rented sector; while Part 2 sets out a new approach to homelessness, with a greater emphasis on prevention and a more inclusive approach including greater protection for households with children who are homeless or threatened with homelessness.
The next five parts cover:
- a new statutory duty on local authorities to provide gypsy and traveller sites where need has been identified
- standards for local authority rents, service charges and quality of accommodation. This puts achievement of the Welsh Housing Quality Standard by 2020 by the 11 Welsh councils that retain their housing on a statutory footing
- implementation of self-financing for council housing (already implemented in England but now agreed with the Treasury for Wales)
- measures to boost co-operative housing by allowing fully mutual housing co-operatives to grant assured and assured shorthold tenancies, creating more security for tenants and helping co-operatives obtain finance from lenders.
- allowing local authorities to charge a flat 150 per cent of the standard council tax charge on properties that have been empty for more than 12 months.
All of these measures are designed to contribute to the two main aims of the Bill, ensuring that: people have access to a decent home; and that people at risk of becoming homeless receive the help they need.
Most of the proposals are based on a white paper published in 2012 but there have been some changes following consultation on the detail.
On the private rented sector, the Welsh Government is pressing ahead with plans for mandatory registration and accreditation of both landlords and agents. This will be based on the current voluntary scheme, Landlord Accreditation Wales. However, the license will be valid for five years rather than the three proposed in the white paper (and as applies in Scotland).
This section of the Bill could be a major focus of attention as it makes its way through the Welsh Assembly. Private landlord organisations argue that agents should be licensed first and the spokespeople for all three major opposition parties (Plaid Cymru, Conservatives and Liberal Democrats) have signalled that they are considering their position on the licensing of landlords. As Inside Housing is reporting, with the Assembly split 30-30 between Labour and the other parties, so if all opposition AMs vote against the casting vote will go to the speaker, who has a duty to preserve the status quo.
What happens here could have a bearing on the rest of the Bill, since the homelessness proposals in particular are based on an assumption that the private rented sector will be properly regulated.
On homelessness, the Bill includes a new strengthened duty on local authorities to take reasonable steps to prevent and relieve homelessness. They will also be able to discharge their main homelessness duty into the private rented sector.
The white paper set out ambitious plans for a ‘housing solutions’ approach to homelessness with a much greater emphasis on prevention. In effect the interim duty would be extended beyond priority need groups to cover groups like the single homeless. It also set a target of ending family homelessness by 2019 by removing intentionality within the term of the government.
However, the Welsh Government appears to have rowed back on some of the white paper proposals on prevention and intentionality amid concern from local government about the cost of implementation.
An explanatory memorandum published alongside the Bill says that the main changes compared to the white paper are:
- When someone who is homeless first applies for assistance the local authority will be able to choose whether to carry out an intentionality test in all cases or not at all
- Applicants who are not in priority need will not be entitled to temporary accommodation
- Local authorities will be able to refer people who are unintentionally homeless and in priority need to another authority under the current ‘local connection’ provisions
- The discharge of the full homelessness duty can be through the offer of a social tenancy or a six-month assured shorthold in the private sector (rather than the 12 months without consent and six months with consent proposed in the white paper).
On family homelessness, the white paper had proposed that households with children found to be intentionally homeless should still have the right to the full homelessness duty. The Bill retains this provided it is the first time they have been found to be intentionally homeless within the last five years. In addition, where a household with children is found to be intentionally homeless but is owed a re-housing duty, the local authority will have a duty to co-ordinate a plan to help prevent them becoming homeless in future.
The Welsh Government has decided as a result of consultation to amend the priority need of all former prisoners who are homeless on release from custody. Priority need will now apply where they can demonstrate vulnerability as a result of having been in custody and they have a local connection.
The Bill will be formally introduced in the Assembly tomorrow (Tuesday). Royal Assent could be by summer 2014 if it passes its four legislative stages.
As the bedroom tax celebrates its debut in the Oxford English Dictionary, there is new evidence today that it is creating empty homes rather than removing ‘spare’ bedrooms.
A survey published by Community Housing Cymru (CHC) today suggests that the first six months of the under-occupation penalty have cost more than 1,000 affordable homes in Wales.
Welsh housing associations say they have 727 homes standing empty as a result the policy. Meanwhile 78 per cent have seen an increase in their rent arrears, with over £1 million attributed to the bedroom tax. Some 51 per cent of tenants are paying the shortfall, 37 per cent are part-paying and 12 per cent are not paying at all.
At this rate arrears will reach £2 million by April 2014, which CHC calculates would be enough to service around £40 million of debt that could be used to build 400 new affordable homes. That means that a total loss of more than 1,100 affordable homes at a time when there are 90,000 people on the waiting list.
A survey published yesterday by the Chartered Institute of Housing hints at the scale of the voids problem in England too. Responses from social landlords and strategic housing authorities suggest that a new breed of difficult to let homes is emerging, it says.
Almost two thirds reported falling demand for two and three bedroom flats and three bedroom houses because people who would normally have been allocated them cannot afford to make up the housing benefit shortfall. A similar proportion reported a shortage of smaller homes for downsizers. Half said they were experiencing longer void periods and lost rental income.
With some landlords already allocating larger homes to households who are not affected by the bedroom tax, and that rising number of voids, 44 per cent of applicants said that a lack of capacity to meet demand from the highest priority applicants, including homeless households, was a key concern.
CIH chief executive Grainia Long says the government is missing the point with a consultation on housing allocations that closes on Friday that focuses on prioritising local connections. ‘It is more about inaccurate perceptions of who gets access to social housing than it is about the real issues councils and social landlords are facing,’ she says.
None of this will perhaps come as much of a surprise to those grappling with the problems thrown up by the bedroom tax but it highlights the serious efficiency problems with the policy to go with the concerns about equity that were the main focus of last week’s Commons debate.
Back in Wales, CHC says that just 3 per cent of the 22,000 housing association tenants have managed to downsize so far. While welcoming an extra £20 million of investment in smaller homes by the Welsh Government, it says the policy risks turning tenant against tenant and tenant against landlord.
Chief executive Nick Bennett says the only solution is to ‘take power closer to the people’ by devolving the same control over welfare policy to Wales that Northern Ireland already has. The Silk Commission is due to report to the Welsh Assembly on further devolved powers in the New Year.
That message will strike a chord in Scotland too, with abolition of the bedroom tax a key part of the SNP government’s case for independence.
England has no such options of course. The CIH survey highlights growing tension between welfare reform and allocations policy, with tighter schemes excluding people with no or low housing need from housing registers, precisely the groups who may have accepted hard-to-let homes in the past. Some strategic authorities also worried that housing associations are refusing their nominations, creating particular problems for those with no retained stock but statutory homelessness duties to discharge.
The bedroom tax and its knock-on effects on the housing system look like issues that will not go away. Optimists among landlords believe that neither of the coalition parties will want to go into the next election without defusing it as a political issue and symbol of unfairness. Pessimists are not so sure and predict the impact will only get worse.
The Department for Work and Pensions is still doing its best to claim what it calls the removal of the spare room subsidy is a success. Its spin on statistics published last week showing that the number of households affected fell from 547,000 in May to 523,000 in August is that it is ‘bringing fairness back into the system’.
However, ‘spare room subsidy’ seems unlikely to make it into the dictionary any time soon. ‘Bedroom tax’, on the other hand, was one of the runners-up in the Oxford Dictionaries Word of the Year 2013 alongside ‘twerk’ and ‘binge-watch’. It was only beaten by ‘selfie’. In case anyone starts saying ‘it’s not a tax’, it is now.
Analysis of those stats by the National Housing Federation highlights the North West as the worst hit region of England with 83,000 families affected losing an average of £748 per year. It points out that the figures understate the true scale of the impact since they exclude working families who would have got partial housing benefit before but have now lost their entitlement.