Friday, 28 November 2014

Inside edge

While you were away

Thu, 2 Jan 2014

Here’s a few things you may have missed over Christmas and the New Year.

1) Homes for locals

It’s New Year’s Eve. Everyone has their mind on what to do tonight (or how to avoid the whole thing). Just the time to publish the guidance on providing social housing for local people.

The timing probably had more to do with the opening of the UK labour market to Bulgarians and Romanians on January 1, as the guidance was published at the same time as the DWP press released its ‘tough new migrant benefit rules’. The policy has everything to do with Conservative v UKIP politics.

At first glance the guidance seems to follow quite closely the draft published in October. It ‘strongly encourages’ all housing authorities to include a residency requirement as part of their qualification criteria and ‘believes that a reasonable period of residency would be at least two years’.

The Housing Law Practitioners Association had warned in its response to the consultation that ‘we fear it will be impossible to craft a lawful policy’ given statutory duties to former asylum seekers, the homeless (especially with out of area placements), people with nomadic lifestyles and EU nationals. It said that the DCLG would have to come up with sufficient exceptions to the residency test, not just different ways of satisfying the test.

The guidance does seem more nuanced than the press release from Eric Pickles (though that would not be hard). It does include a more explicit section on ‘providing for exceptions’ so that housing authorities can ‘retain the flexibility to take proper account of special circumstances’ such as people fleeing domestic violence, homeless families housed outside their district and people needing support to rehabiliate back into the community. It also specifically mentions people downsizing to smaller homes and hard to let stock.

And it also mentions two government priorities that would otherwise be stymied by the residency test: the right to move for social tenants seeking to move to take up a job or be closer to work; and members of the armed forces.

No impact assessment has yet been published. 

2) ‘No progress’ on housing supply

Government measures aimed at stimulating housing supply came under scrutiny from possibly the best source of non-partisan analysis around: the House of Commons Library. A standard note looks at the demand implied by household projections and the measures taken since the housing stimulus package of September 2012 up to and including the Autumn Statement in December. The sobering verdict is that:

‘The recent stimulus package, reflecting the importance the Government is placing on increasing supply, has the potential to help improve the housing market. The increase in new affordable homes completed is a welcome sign that the Affordable Homes Programme, led by housing associations, may be beginning to bear fruit. However, the disappointing overall starts and completions figures suggest that significant progress on boosting supply is still some way off. With the number of households projected to grow by almost five million in the next two decades the Government will have to do much more even to come close to meeting demand. After two-and-a-half-years, it is extremely worrying that house building remains so low and that the Government’s record warrants no better verdict than “no progress” towards improving the dire state of housing supply.’

In a busy period between Christmas and New Year, the Commons Library also published notes on everything from David Cameron’s proposal to withdraw housing benefit entitlement from the under-25s to HMOs and the local housing allowance.

3)   For ‘green crap’ read garden cities?

The Financial Times reported on David Cameron’s wilting interest in garden cities. The prime minister has been an enthusiast and in a speech in 2012 promised a consultation on ‘how to apply the principles of garden cities to areas with high potential growth, in places people want to live’.

That was then. Now, according to the FT, he fears a backlash from nimby voters in the run-up to the next election. The story has this quote from a Downing Street official: ‘He has said that he doesn’t want any garden cities named unless they are in Buckingham or Mid Bedfordshire.’ This is a joking reference to the constituencies of Tory MP outcasts John Bercow and Nadine Dorries.

The Conservative Party denies Cameron said this but the phrasing of the denial (‘we do not recognise any of this’) recalls another furore about a quote from Dave, that he had ordered aides to ‘get rid of all the green crap’. We know what happened in the Autumn Statement. 

4) The housing market in 2014

A special edition of 5 Live Wake Up to Money on New Year’s Eve looked at prospects for the housing market in 2014 . The 50-minute programme featured some interesting responses from chancellor George Osborne, who was much more comfortable talking about Help to Buy and hard-working families (more on this from David Cameron this morning) than he was defending the government’s record on housing supply and affordable housing.

Asked whether the government can ever deliver 232,000 homes a year, Osborne noticeably ducked the chance to commit himself, merely saying that: ‘We need to be building tens of thousands more homes. I don’t put a precise number on it. I just want to see a big increase in housing available to people in this country.’

Osborne was also asked how worried he is that affordable home building is going to decline. His response featured yet another stage in the government’s conflation of ‘affordable’ and ‘social’ but (more optimistically) an endorsement of the need for social/affordable housing:

‘It’s actually going to increase. We’ve got the largest programme for building social housing for a generation. It is true that the number of social homes in this country shrank a lot over the last 15 years, a lot of it before this government came to office, there were around 400,000 fewer social homes at the end of the previous government. But what we’ve committed to is a big expansion over the next three or four years in the social home programme and also reforms to that social housing programme …Look I think that’s an important part of the housing sector and aspiration is not just about wanting to own your own home it’s also wanting to have your own home as a social tenant. We are putting money into that programme alongside the other things we’re doing.’

The full programme is worth a listen. It also featured interviews with Affinity Sutton chief executive Keith Exford and Barratt chief executive Mark Clare (who offered welcome support for more borrowing freedom for council housing).

5) Where will we live?

The current issue of London Review of Books features an essential (but very long) read on housing by James Meek. It focuses particularly on Tower Hamlets and the long-term consequences of the biggest privatisation of all: the right to buy.

Here’s a flavour of the argument:

‘Right to Buy thus created an astonishing leak of state money – taxpayers’ money, if you like to think of it that way – into the hands of a rentier class. First, the government sold people homes it owned at a huge discount. Then it allowed the original buyers to keep the profit when they sold those homes to a private landlord at market price. Then the government artificially raised market rents by choking off supply – by making it impossible for councils to replace the sold-off houses. Then it paid those artificially high rents to the same private landlords in the form of housing benefit – many times higher than the housing benefit it would have paid had the houses remained in council hands. In other words, since Thatcher, the British government has done the exact opposite of what it has encouraged households to do: to buy their own homes, rather than renting.’

The full piece looks at planning, architecture and stock transfer too and concludes with a warning that ‘the advent of the age of gentrification doesn’t preclude the advent of slumification’.

Alex Marsh has a response to the article on his blog here arguing that the whole issue of social housing needs to be reframed before significant policy change can happen. Stay with his blog too for post-Christmas posts on new towns and household debt and Help to Buy.

6) And the bedroom tax stories just kept coming.

The Mirror reported on the case of Dawn Lennon, who says she is having to cut back on food to pay the £570 a year charge on the room that has been converted into a sensory area for her severely disabled daughter Kelly Marie.  The Independent reported on the 60,000 families with carers who are affected. Blogger Joe Halewood had some good news about a possible loophole for people who have continuously received housing benefit for the same property since before 1996 and a summary of what he sees as the issues for 2014.

10 things about 2013: part 2

Thu, 2 Jan 2014

Here’s the second part of my look back at the key themes I’ve been blogging about this year.

6) Help to Buy

If the bedroom tax was the subject I blogged about most in 2013 (see Part 1 of this blog), Help to Buy was certainly the best (or worst) of the rest.

The first hints of the scheme came in January as the coalition published its Mid-Term Review. Perhaps conscious of the gap between rhetoric and reality when it came to the government’s record on housing, David Cameron promised more help for people who cannot raise a deposit for a mortgage, with details to come in the Budget. By March Cameron and Clegg were promising what sounded to me like the coalition’s fourth housing strategy in three years. And in the Budget George Osborne duly announced what I called a huge gamble, loosening the targeting of previous schemes at first-time buyers and new homes and extending the help available much further up the income scale.

Help to Buy 2, the mortgage guarantee element, attracted criticism from just about all sides, including the all-party Treasury committee, Sir Mervyn King and the Institute of Directors. It seemed that only the National Trust’s nimby-in-chief Sir Simon Jenkins and London estate agent Foxtons had a good word to say about the scheme. I concluded that the strongest arguments in favour were the ones that ministers could not mention.

Osborne showed what he thought of all that by bringing forward the launch of Help to Buy 2 from January 2014 to the week after the Conservative conference in October. The following month Cameron was boasting that Help to Buy was ‘helping hardworking people realise their home-owning aspirations’ and making a series of statistically dubious claims about the benefits.

7) Help to Build

Half time for the coalition government was a chance to reflect on an administration that had promised to make us ‘a nation of homebuilders’. As the housebuilidng numbers flatlined, I blogged that it was clearer than ever that a complete change of tactics was required in the second half. An important report from Shelter looked at what would be needed to get to the magic number of 250,000 homes a year.

Not that any of this made any difference to government rhetoric. In July Eric Pickles quoted every statistic you could shake a stick at to show that supply was on the up – except the housebuilding ones produced by his own department. Thanks in part to the expectations generated by Help to Buy, the second half of the year did see a rising trend but completions still finished the year on half the level needed to meet demand. The government continued to claim that cutting red tape on housebuilders was the answer. The truth, as ever, was more complex. I again questioned the government’s strategy of giving housebuilders what they wanted without asking for more homes in return.

Housebuilding came to have increasing political significance too. In September George Osborne claimed that the economy was ‘turning a corner’ in a speech made at a London housing development where work that stalled during the credit crunch had just restarted. With 40 per cent of private sales to overseas buyers and separate entrances for rich and poor, the One Commercial Street scheme turned out to be a symbol of far more than the recovery he had in mind. In October Ed Miliband said that a future Labour government would aim for 200,000 homes a year by 2020 and briefings revealed the first hints of new policies. I blogged about the seductive but simplistic argument that if you fix planning you fix supply and if you fix supply you solve the housing crisis. In the wake of Alex Morton’s move to the No 10 Policy Unit (see the first part of this blog) and the formal launch of Labour’s housing commission, I debated the chances of a political arms race on housing ahead of the next election.

8) Help to Rent

The reality for those ubiquitous hardworking people was that they were becoming ever more likely to be renters rather than owners. Low interest rates and austerity effectively meant that renters were paying to keep mortgages low while the astonishing rise of self-employment was one illustration of a labour market that was no longer creating enough jobs with regular incomes to get on to the housing ladder.

In March the CIH’s UK Housing Review showed that the scale of the decline of home ownership, especially among the young, and I posed the question of whether we should be accepting this as an inevitable trend. David Cameron gave a speech pledging the Conservatives’ continued faith in the property-owning democracy of Eden, Macmillan and Thatcher, but I argued we are actually moving towards a property-owning plutocracy. When the Baroness died in April, the second of two blogs about her legacy looked at her role in turning tenants into owners. 

As buy to let continued to rise, and Help to Buy started to boost prices, many of the under-45s were giving up on ever owning and millions of people were caught between stagnating wages and rising costs. Reports from Shelter and the Resolution Foundation proposed a reformed shared ownership as one solution but Savills forecast in November that private renting will grow by another million households in the next five years. Help to Buy may be the claim but Help to Rent is the reality.

9) Waking up to renting

The year began with definite signs that politicians were accepting the need for reform and engaging in genuine debate about what to do about the growth of the private rented sector. Things were changing within the sector too: April brought a symbolic move by the Prudential back into private renting, a modest move on consumer redress against letting and management agents and new signs of renter activism. The urgent need for reform was demonstrated only too clearly in a report from Shelter on the plight of private renter families with children.

Lack of action in England was all too clearly illustrated by the Welsh Government’s moves to regulate landlords and agents and implement tenancy reform. The Labour Party in England continued a policy review hinting at similar action and flirting with rent stabilisation. The all-party Communities and Local Governemnt committee attempted to find some common ground. And finally there was some movement from a government that had sets its face firmly against what it saw as ‘red tape’. The package announced by Eric Pickles in October may have been minimalist and voluntary but it also showed that the Conservatives were waking up to the issue at last. 

10) Taking the strain: past, present and future

My blogs on the housing legacy of Margaret Thatcher reflected on the thing that has underpinned housing policy for the last 30 years or so: the assumption that housing benefit will ‘take the strain’ of higher rents. It seemed unlikely even at the time and even more unlikely in the wake of coalition ‘reforms’ of housing benefit (see Part 1 of this blog) and 2013 brought some new thinking about whether it was really such a good idea to subsidise rents rather than homes.

I blogged about three things in June that illustrated the growing debate about the future.  A speech by Ed Miliband showed that Labour was thinking seriously about a system that only invested £5 in bricks and mortar of every £100 spent on housing. However, the outcome of the spending round seemed to point in the opposite direction: there was 10 years of certainty for rents for social housing and five years on grant but confirmation of another round of affordable rent and of yet more ‘welfare reform’. An independent commission set up by the RICS diagnosed ‘clear signs of market failure’ and proposed a series of reforms across all tenures.

The impact of all this could be seen most clearly in London, where Londoners and their leaders were waking up to the scale of the housing crisis facing the city. The furore over developers treating new developments as an export market eventually led to housebuilders proposing a voluntary pact not to market properties to overseas investors before offering them in the UK. In November Boris Johnson proposed what I call the boldest attempt yet seen from a Conservative administration to get to grips with the housing crisis. The launch of his housing strategy was a significant development with some good ideas even though I blogged that it did not go remotely far enough.

 

For anyone interested, I have more detailed explorations of where we are coming from and where we are going on housing in two policy essays for the CIH here. In the meantime, happy New Year. 

10 things about 2013: part 1

Mon, 23 Dec 2013

The first of a two-part look back about the issues and people that I’ve been blogging about this year.

1) The year of the bedroom tax

Thinking back to the beginning of January it was obvious that the under-occupation penalty would be a huge issue for housing in 2013. What soon became clear was that it would go mainstream in the national media and parliament too. The closer we got to implementation in April, the more scrutiny it received, and the more that happened the clearer the unfairness and the contradictions at the heart of the policy came into focus. All the attention seemed at first to take the government by surprise too. It wasn’t until February that Grant Shapps came up with the government’s preferred term: the spare room subsidy. That prompted me to blog about the battle of language on the issue and in the wider debate about welfare/social security.

The first cracks in the bedroom ceiling began to appear even before implementation. The Northern Ireland government used its greater control over welfare policy to delay implementation and currently seems set to apply it only to existing tenants. By the end of the year the Labour Party was pledging repeal in England and the SNP government in Scotland was making repeal a key part of its case for independence in the 2014 referendum. For all that though, all attempts to change the policy at Westminster failed as most Lib Dems supported the government.

The unfairness issue would continue to dog the government, not helped by the fact that it was introducing the bedroom tax at the same time as it was cutting the top rate of income tax. In Manchester the combination amounted to a £9 million transfer between social housing tenants and the footballers of United and City. The bedroom tax even sparked an international diplomatic row, with Shapps complaining to the United Nations after its special rapporteur Raquel Rolnik called for the policy to be suspended

As the evidence of the human impact began to mount up, responses from the government usually followed one of three paths: dubious arguments (such as it only being fair to private tenants); outright denial of the facts (such as David Cameron’s repeated claims that disabled people are exempt); and bluster (if research questions your policy, attack the researchers)..

A series of legal challenges made their way through the system too. The government lost on the issue of disabled children who could not share a bedroom in the High Court in July but managed to convince the judges that discretionary housing payments were enough for disabled adults. That case goes to appeal in January with evidence mounting that DHPs are not up to the job. In the meantime, the number of First Tier Tribunals ruling in favour of tenants is beginning to mount.

2) Food banks, IT problems and sanctions

The bedroom tax was only the most visible welfare reform in a year that also saw the introduction of the benefit cap, reductions in council tax benefit and a series of cuts in disability benefits.

According to the original plan, 2013 should also have been the year of universal credit, the reform that is meant to make all the other cuts worthwhile. The launch in one job centre in April was so low key that nobody turned up for help on the first day. However, behind the scenes there were furious rows within Whitehall about delays to the IT system. According to one report, things got so bad that Iain Duncan Smith told a startled member of the Treasury: ‘If you ever speak to my officials like that again I’ll bite your balls off and send them to you in a box.’ How he felt about later scathing criticism from the National Audit Office and Public Accounts Committee is sadly not recorded. IDS spent most of the year claiming that his pet project was ‘on time and on budget’ before announcing on the day of the Autumn Statement that actually it wasn’t.

In the meantime, despite his denials, the impact of welfare reform was being felt in soaring numbers of people relying on food banks and losing their benefits because of tough new sanctions and in rising homelessness.

3) The past, present and future of council housing

The role of council housing and its relationship to the welfare state got the Channel Four treatment in two prime time documentaries. The results were revealing, with the first episode of How to Get a Council House showing housing staff doing their best in impossible circumstances or scroungers and immigrants jumping the queue, depending on who was watching. The second episode broke free of the Reality TV format to show the impact of the bedroom tax on tenants and staff in Manchester.

However, other debates about council housing were happening too. Southwark’s decision to sell what was dubbed Britain’s most expensive council house prompted a blog from me about where you draw the line between regeneration and social cleansing. The long-running campaign for a change in the public borrowing rules to allow councils to build new homes was beginning to make headway at last as all parties began to challenge the Treasury orthodoxy. December’s Autumn Statement finally some tangible progress as George Osborne agreed to raise the self-financing borrowing caps by £300 million. However, this was the Lib Dem part of a deal that saw the Conservatives invest £100 million in boosting right to buy sales and it also came with strings attached: any new homes would be for affordable rent and they would be part financed by the sale of high-value social housing as it became vacant.

4) The Policy Exchange agenda

That sounded very much like the agenda promoted by the influential right-of-centre think tank Policy Exchange, which had first advocated the sale of expensive council housing in 2012. The year began with a report calling for the demolition of high-rise social housing in London, continued with a call for large-scale construction of bungalows and ended with the appointment of its head of housing Alex Morton to the policy unit as 10 Downing Street. As I blogged in December, the appointment could be seen in several different ways. On one level, it was a sign that housing will move up the agenda within government: the combination of Morton plus former Policy Exchange director Nick Boles could put a housing ‘dream team’ in place. On another, it could be housing’s worst nightmare and herald an acceleration of the marketisation and slow death of social housing.

5) How are we doing so far?

It was also perhaps represented an indication that all the housing strategies so far have failed and of a determination to prevent Labour from monopolising housing as a political issue. January saw the launch of the coalition’s mid-term report, prompting an evaluation from me of its record so far. March brought the first news of yet another new strategy and then Help to Buy (which features in Part 2 of this blog) but it also saw a centrepiece of the original one, New Homes Bonus, lambasted by the National Audit Office.

All of this was forgotten in the government’s wider narrative about an economy that George Osborne claimed in September was ‘turning the corner’. With neat symbolism, he gave his speech against the backdrop of a housing development in London where work that had stalled during the recession had just restarted. However, there was another kind of symbolism too: over 40 per cent of the private apartments in the scheme had been pre-sold to foreign investors and they would be saved from mixing with any ordinary Londoners by the fact the social housing would have a separate entrance around the back.

October saw the departure of Mark Prisk as housing minister and the downgrading of the job to junior minister level. At the same time, Emma Reynolds replaced Jack Dromey as Labour’s shadow housing minister with ‘attending Cabinet’ status. Prisk had made progress behind the scenes, especially on private rented sector investment, but was supposedly a victim of his low media profile as housing became more politically important.  However, his replacement, self-styled ‘gobby Northerner’ Kris Hopkins, left me unimpressed after a first TV interview in which he attempted to deny there is a housing crisis

I’ll be posting Part 2 of this blog next week. In the meantime have a great Christmas. 

Mark their words

Thu, 19 Dec 2013

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. 

Taking the pledge

Tue, 17 Dec 2013

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. 

Pressure cooker

Mon, 16 Dec 2013

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. 

Free exchange

Wed, 11 Dec 2013

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.

Gloomy forecast

Tue, 10 Dec 2013

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.

AS2013-live blog

Thu, 5 Dec 2013

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?

15:35: The AS2013 document offered no definition of what is meant by ‘high-value’ social housing. However, the inspiration clearly comes from a 2012 report by Policy Exchange called Ending Expensive Social Tenancies. It defined ‘expensive’ as meaning valued above the regional median adjusted by bedroom size.

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?

Dubious Dave

Wed, 27 Nov 2013

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?’

Cameron replied:

‘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’. 

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