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.
Yesterday’s bedroom tax vote has left me wondering if our political system is capable of righting what is such an obvious wrong.
A Labour motion calling for immediate repeal was defeated by 26 votes – a narrower margin than the government might have expected – while a government amendment effectively saying it is all Labour’s fault passed by 31 votes. Could things have been different?
The debate included some excellent and passionate speeches, some harrowing personal testimony from MPs about their constituents and some outrageous comments from a few Conservatives.
The man responsible for it all – Iain Duncan Smith – was not there, having chosen to attend a European conference on youth unemployment in Paris. An important subject but not the setting you might expect to find one of the cabinet’s most convinced Eurosceptics.
That left it up to Lib Dem work and pensions minister Steve Webb to start the coalition’s defence of the policy. Interestingly, he told local authorities: ‘If they have exhausted, or if they anticipate exhausting, their discretionary housing payments budgets, they can come to the government for a top-up. So far, barely a dozen local authorities have asked for additional funding.’ It remains to be seen of course what that really amounts to, since as with DHPs themselves, there are no guarantees, but it did seem a hint of movement from the government.
But back to that wrong: it becomes more obvious with each passing day that the bedroom tax is resulting in brutal injustices and unintended consequences.Yesterday’s debate had yet more evidence on this and brought up some that were new to me: for example, fathers losing access to their children because they have lost the spare bedroom that is a condition of access.
It is also increasingly obvious that the policy will not achieve its principal aim of saving £480 million, either because tenants move or because costs are transferred from central to local government.
Yet a quick look back to the final Commons debate on the bedroom tax section of the Welfare Reform Bill in February 2012 reveals that there were 14 Liberal Democrat and two Conservative MPs who voted against the government when it reversed Lords amendments that would have softened its impact.
Last night there were only two Lib Dems – Andrew George (my MP, I’m glad to say) and party president Tim Farron – and one Tory – Andrew Percy, who also voted the other way (I think as a means of registering a formal abstention) – who voted against the government.
Why was this? After all, as Farron pointed out on Facebook, he was voting in line with party policy as agreed at its conference in Glasgow only a few weeks ago with virtually no dissent.
Most of the anger from campaigners has been directed at the Lib Dem MPs who abstained rather than voting against. Three of them had even tabled an early day motion earlier in the day calling for substantial changes. I’m not sure it would have been enough to make a difference but why didn’t they join Mr George and Mr Farron?
Here’s where the politics comes in: this was an opposition day debate. As hostile tweets from Labour prospective candidates in Lib Dem seats immediately after the vote indicated all too clearly, one of its main aims was to nail the Lib Dems as responsible for the policy (a point made powerfully by Alex Marsh). Should they have ignored the politics and voted on the policy?
Again, I’m not sure if it would have been enough to make a difference, and it may just be hopelessly naïve, but what would have happened if Labour had tabled a motion calling for substantial concessions instead of immediate repeal?
Say, for example, it had called for exemptions all those who cannot share a bedroom for medical reasons, or for people who cannot move because there is nowhere smaller available. Would more, or even enough, Lib Dems have rebelled on that basis? Perhaps Labour could even have nailed once and for all the government line (and lie) that it is only doing in the social sector what the last government did in the private sector by pressing an amendment that the bedroom tax should only apply to new tenants?
Instead we were left with a failed attempt to repeal the policy that leaves Labour looking pure in its opposition, Lib Dems like Steve Webb clinging to spurious justifications of it and Tories competing to look tougher on welfare than each other. Maybe this is good politics for all concerned but as policy making it looks terrible to me.
The debate had some awful examples of Tory backbenchers claiming wrongly that all disabled people are exempt (they aren’t) and that the policy is exactly the same as for private tenants (it isn’t). We had David Davies calling for ‘feckless fathers’ to be dragged to work ‘in chains if necessary’, Brooks Newmark claiming that finding an extra £14 a week is ‘not a big ask’ and Anne Main arguing that ‘unicorns do not exist, fairies do not exist and…a bedroom tax does not exist’.
There were also some weak Lib Dem contributions. Simon Hughes, for example, asked Mr Webb whether he would look at exempting people waiting for a smaller property to be allocated. He didn’t get an answer on that specific point but still dutifully voted with the government.
Joe Halewood has plenty to say about what he sees as Labour’s failings during the debate on his blog.
However, there were some impressive speeches too from members of all parties that went beyond the predictable point scoring.
From the Labour side, for example, Emily Thornberry raised the wider point of under-occupation. ‘Part of the problem… is empty nesters – elderly people whose families have grown up. If the principle behind the bedroom tax is to free up homes and move people to smaller units, why does it not apply to pensioners?’. She meant that landlords should be speaking to people as they retire and encouraging them to move, not imposing the bedroom tax.
Nick Raynsford raised another unexpected consequence: a 91-year-old constituent in a four-bedroom home who seems unable to downsize because the council has understandably given priority to bedroom tax victims.
Dame Anne Begg pressed the government to extend exemptions to disabled families in specially adapted homes (as she pointed out, Mr Webb is ‘a man who thinks he can change the whole pensions system in Great Britain, yet he is not clever enough to come up with a definition of an adapted home’) and couples who cannot share a bedroom because one or both has a disability. She also made the crucial point about ministers’ assurances on DHPs: ‘the word “discretionary” is the key, because it means that they will not necessarily get the money’.
Karen Buck exposed the weakness of the government’s argument that the bedroom tax will tackle overcrowding, arguing that ‘people are not dry goods that can be put in a container and taken from London to Liverpool or Wales, because that is how the distribution of property suits their needs’.
However, if you have a spare moment, do read Kate Green’s closing speech, which sums up the case against the bedroom tax and its implementation better than anything I’ve heard or read.
From the Lib Dem side, John Hemming was honest enough to concede that Labour’s local housing allowance changes were not retrospective, but argued that the bedroom tax has to be because of the need to save money.
And Andrew George had one of the best descriptions of the policy:
‘The spare room penalty or bedroom tax victimises the most marginalised in our communities, undermines family life, penalises the hard-working low-paid for being prepared to stomach low-paid work, and masks the excessive cost and disruption to the disabled who have to move from expensively adapted homes. It is, in my view, Dickensian in its social divisiveness. It is an immoral policy.’
There were also Conservatives who were prepared to address the policy rather than the politics. Andrew Percy has just told me on Twitter that he thought the Labour motion ‘too political’ and so registered an abstention instead but didn’t agree with all of the government amendment either so didn’t vote on it.
And Jeremy Lefroy agreed with Anne Begg about the need for more flexible exemptions (‘I am sure that the minister is listening’) and argued for a lower rate of deduction than 14 per cent and 25 per cent that could be gradually increased as more appropriate accommodation became available. He went on:
‘This must not result in evictions. Some councils have no-eviction policies, and that is a very commendable approach. I would look for all possible measures to be taken prior to eviction being enforced.’
Uncomfortably for some landlords out there, he also asked the minister to look at how housing associations paying their directors six-figure salaries ‘could themselves contribute to discretionary housing payments’.
The positive thing to come out of all of this is that Labour has pledged to repeal the bedroom tax on its first day in office if it wins the next election. To answer my opening question, that seems the only way the political system can change the policy. In the meantime, there is also that possibility of extra DHPs for councils that apply.
However, for all yesterday’s debate, a policy that a majority of MPs must surely know by now is unjust and unworkable continues today and the day after. That’s politics.
David Cameron’s cheerleading for the successful launch of the Help to Buy mortgage guarantee scheme unwittingly reveals more than he might have intended.
In a statement issued last night, the prime minister said that 2,384 households have put in offers under the controversial scheme and ten have already completed.
The figures come from applications backed by a decision in principle for 95 per cent mortgages by RBS and Lloyds, the semi-state owned banks. The average advance is £155,000 on homes worth £163,000, which Cameron said demonstrated that Help to Buy is supporting responsible lending.
Even better, more than three-quarters of the applicants are first-time buyers and many are in their early 30s, ‘demonstrating that Help to Buy is helping hardworking people realise their home-owning aspirations’.
Cameron is meeting some of them at Downing Street later today (prepare to get heartily sick of pictures of him and other ministers doing the same in the run-up to the next election). He said:
‘The best thing about Help to Buy isn’t the statistics - it’s who is really benefiting. Most Help to Buy applicants are first-time buyers, young and have a roughly average household income. This is all about helping hardworking people get on the first rung of the property ladder - and helping them get on in life.
‘Owning a home is about more than 4 walls to sleep at night. It’s about independence, self-reliance, moving on and moving up. Above all, it’s about aspiration. Help to Buy is helping people realise the dream of home ownership - and it’s a key part of my plan for Britain.’
So far, so good for Cameron and the young buyers that Help to Buy 2 has helped highlighted in the Downing Street press release. Quotes such as ‘a dream come true to us’ and ‘the scheme really does benefit hard working people’ will be music to his ears.
The problem comes with the next bit:
‘Applicants will face average monthly repayments of around £900 and have an annual household income of around £45,000. This means a Help to Buy mortgage represents 24 per cent of borrowers’ gross income, which compares to the historical Council of Mortgage Lenders’ average figure of 24 per cent across the UK.
‘A 2-year fixed rate 95 per cent mortgage for the average house under Help to Buy is also £2,557 cheaper per year, compared to the equivalent mortgage from 2007.’
That sounds good until you look at the actual CML statistics. These do show a time when capital and interest payments took up 24 per cent of first-time buyers’ gross income but this was not the historical average but the peak of unaffordability in 2008.
The figures from before 2005 only show interest payments as a percentage of income but it’s pretty clear that capital and interest has only gone higher than 24 per cent at the peak of the previous housing boom between 1989 and 1991. These figures are also for the UK: those for England are slightly higher.
Neal Hudson of Savills (@resi_analyst on twitter) has a graph on mortgage affordability going back to 1992 here.
That’s important to bear in mind when you come to the Cameron’s second claim: that the two-year fixed rate Help to Buy mortgage for the average house is £2,557 cheaper.
The vast majority of that saving is the result of the Bank of England cutting interest rates to a record low of 0.5 per cent in 2009.
That begs the obvious question of what happens when and if interest rates return to a more normal level. At the end of the two-year fix, that £2,557 or £200 a month saving could easily look like the extra amount that those lucky buyers will have to find.
The Help to Buy feelgood factor is certainly there for Cameron and the Conservatives right now and with a fair wind it may last until May 2015. However, the figures he’s quoting open up three scenarios that look far less rosy:
First, the fact that Help to Buy mortgages seem to be stretching affordability back to the peak of 2007 may mean the scheme has less take-up than they hope once the initial rush slows down. That may be the least bad option because…
Second, any increase in interest rates (as urged by John Major today and promised by the Bank of England if the economy improves) will mean affordability problems for Help to Buyers and anyone who has stretched themselves to get on to the housing ladder. The dangers of rising arrears and repossessions and (if prices fall after the current mini-boom) negative equity will loom large.
Third, any problems like that will make it very difficult for any future government to get out of the business of state-sponsored mortgages, precisely what the critics have warned about all along.
As we wait for the rescue plan, yet more scathing criticism of the universal credit will surprise nobody.
Today’s report from the Public Accounts Committee is a follow-up to September’s critical review by the National Audit Office but the weight of detail only confirms the impression of a project that long ago spun out of control.
Many of the findings from MPs – the lack of management, the fortress mentality, the ‘good news reporting culture – is familiar from the NAO report. But they add more detail and even more criticism on:
- Poor management: in fact, make that ‘extraordinarily poor’ management’ at the top of the DWP with problems only emerging through ad hoc reviews
- Waste: IT ‘write-offs could amount to at least £140 million’ but the precise extent of it is not known because the department has relied so far on ‘supplier self-assessment
- Inadequate financial control: There was a ‘shocking absence of control over suppliers’ with secretaries were signing off multi-million pound invoices
- Inadequate piloting: How much use will the pathfinder really be? It can only cope with the most limited claims, it has limited IT functionality and it lacks identity assurance and anti-fraud components. The MPs say it ‘will provide some useful information, we are sceptical that it will adequately inform the full roll-out of Universal Credit’.
As for the future, the PAC says that:
‘We are not yet convinced that the Department is in a position to present revised plans for approval by ministers, the Cabinet Office and HM Treasury that resolve the problems of developing a secure system that can accommodate large numbers of claimants who have complex and changing circumstances and who will be expected to fulfil certain conditions.’
Publicly at least, the DWP insists that the project is ‘on time and on budget’ for full roll-out by 2017. However, the MPs say that it will not meet its current target of enrolling 184,000 claimants by April 2014 and accelerating the later stages of the programme will create further risks. They conclude:
‘We believe that meeting any specific timetable is less important than delivering the programme successfully. There is still the potential for Universal Credit to deliver significant benefits, but there is no clarity yet on the amount of savings it will achieve.’
That will mean ‘deliverable options’, a ‘clear strategy for IT development’, ‘realistic ambitions on timescales and the amount that can be delivered online’ and a budget for the remainder of the programme and the net benefits it is expected to deliver. All the things, in other words, you might have expected to be in place at start.
The now familiar response from the DWP says that ‘this report doesn’t take into account our new leadership team, or our progress on delivery’. It adds that since it last spoke to the PAC it has launched the universal credit in Hammersmith and that it will expand to further areas this month (without mentioning that this was another delay).
And it concludes: ‘We don’t recognise the write off figure quoted by the committee and expect this to be substantially less. The head of Universal Credit Howard Shiplee has been clear that there is real potential to use much of the existing IT. We will announce our plans for the next phase of UC delivery shortly.’
It’s worth noting that previous responses have insisted that the project is ‘on time’. That ‘we will announce our plans shortly’ sounds like even the DWP has accepted the inevitable.
IDS responded to the NAO’s criticism by appearing to blame senior civil servants including permanent secretary Robert Devereux for the mess. A spokesperson now tells the Financial Times (ominously for anyone familiar with football parlance) that ‘he has every confidence with the team now in place, and that team includes Robert Devereux’.
However, it seems only fair to point to a fresh round of leaks that have emerged since the PAC completed its work. Computer Weekly reported this week that the DWP will decide later this month between two options: scrapping all of the £300 million IT system and starting again; and continuing to use some of the existing IT systems for the pathfinders while developing new systems for the roll-out. ‘Whichever option is chosen, sources suggest it is likely that all the existing IT work will eventually be scrapped,’ it says.
That looks like an amplification of an earlier leak to The Guardian which also said that the government is now considering two options: writing off £119 million of investment so far and starting again with a much more web-based system that would reduce the need for Job Centre staff; and attempting to improve the existing system. A risk assessment criticises both options and says that either way a maximum of 25,000 people (just 0.2 per cent of claimants) will be on the new system by the next election.
All of which will leave not just claimants but anyone with a stake in the new system wondering what on earth is going on and hoping for some clarity, any clarity, as soon as possible. Who knows how much social landlords have invested in extra staff and services on the assumption of a timetable that it now seems the DWP has no chance of meeting? Should the DWP now cover some of their costs? I have not even mentioned direct payment yet.
There is still general support for the project’s aim of delivering a more transparent system for everyone involved. But the longer the mess continues the more it begins to look like a universal debit.
IDS and the DWP must announce a clear and deliverable timetable, with a credible way of achieving the project’s goals, to hope to begin to repay the credit they have wasted.
For all today’s headlines about house prices, the most significant claim in new forecasts out today is that private renting will grow by another million households in the next five years.
That is one of the new forecasts for the housing market issued by Savills today and flows from its assumptions on what will happen to house prices. It comes despite the government’s flagship help to buy policy that aims to create more homeowners.
The property firm forecasts a 25 per cent rise in prices between 2014 to 2018, with the south east and eastern regions seeing the biggest increases. That remains well short of what it sees as ‘bubble’ territory (an increase of more like 40 per cent). So, rather than taking us back to the mid 2000s, it believes the current market is more like 1996 ‘when the last housing market recovery firmly took hold’.
However, if this is 1996, it is not quite as we knew it at the time and this will be a recovery that only benefits some. The legacy of the credit crunch is that high prices have excluded people from owner-occupation and it’s transactions rather than prices that have fallen. ‘The UK housing market is now the preserve only of the wealthiest 50 per cent of households – and only if they have access to sufficient capital to use as a deposit,’ says Yolande Barnes of Savills Research in her introduction.
This is exactly the problem that the government is hoping to tackle with its controversial help to buy 2 mortgage guarantee policy, which produced its first lucky buyer last week. As financial secretary to the Treasury Sajid David told the commons yesterday: ‘The government [is] committed to making the aspiration of homeownership a reality for as many people as possible. That is why we recently announced that participating lenders will be able to offer high loan-to-value mortgages supported by their help to buy mortgage guarantee schemes three months earlier than planned. I was pleased to hear that Lloyds Banking Group recently announced that the first such mortgage was taken out by a first-time buyer in Dartford, Kent.’
The issue is how much impact help to buy 2 will really have. The controversy surrounding it is based on the fear that it could increase demand and prices without doing much about supply. Savills clearly thinks it will have less impact than the government hopes.
When the policy was first announced in March, it said that if the £12 billion of guarantees translated into £130 billion of mortgage lending the scheme had the capacity to enabled 550,000 extra house sales, a 19 per cent increase in overall transactions.
Now it is expecting around 325,000 transactions over the next three years ‘as those buyers with a strong aspiration to build up their housing wealth and the income to do so take advantage of the scheme’.
However, ‘the major beneficiaries of an increase in net mortgage lending are likely to be existing home owners, particularly those with a pot of existing equity’.
Savills forecasts that housing market transactions across the UK will rise from 960,000 in 2013 to 1.11 million in 2014, 1.18 million in 2015 and 1.25 million in 2016 before levelling down to around 1.2 million in 2017 and 2018.
That would in turn mean that Sajid David’s hope of ‘making the aspiration of home ownership a reality for as many as possible’ is unlikely to be fulfilled. Instead, if Savills is correct, the ranks of generation rent will continue to swell by more than 200,000 a year from 4.8 million in the UK in 2013 to 5.8 million in 2018, perhaps 20 per cent of households.
The implications of that would be profound. The housing system is still adjusting to the extraordinary 2 million household growth of private renting over the last decade but it will need to cope with more of the same over the next five years.
An opinion poll commissioned by Savills suggests that a large majority of renters still see the tenure as an intermediate step to owning. Many of them are going to be disappointed.
From the landlord side of the equation, even though buy to let has bounced back strongly from the credit crunch, it may not be enough to cope. Chris Buckles of Savills Research concludes: ‘Meeting this demand will fall to the cash rich investor and the institutions. They could, if they are brave and receive sufficient government support, be on the cusp of revolutionising the provision of private rented housing. This will be critical in the polarised housing market of the next five years.’
All this pressure will feed through into rent inflation too. Savills forecasts that the average rate of increase across the UK will rise from 2 per cent in 2014 to 2.5 per cent in 2015, 4 per cent in 2016 and 5.5 per cent in 2017 and 2018. Rents in London will rise still faster, starting with 3.5 per cent in both 2014 and 2015 and rising to 6 per cent by 2018.
That may be good news for landlords and investors but it is obviously less good for renters. As this blog by the New Policy Institute shows, the cost of living crisis in housing since the credit crunch is all about renters, as people with mortgages have seen their costs fall.
And it has alarming implications for the growing proportion of private tenants who rely on housing benefit to pay their rent. The local housing allowance is due to be uprated by just 1 per cent in 2014/15 and 2015/16 and it could be a target for continuing austerity measures after the next election. The shortfall between their rents and benefits could continue to escalate.
So has what started out as ‘a Rolls Royce idea’ ended up ‘a Reliant Robin policy in practice’?
That’s not me describing the new homes bonus but the words of Conservative MP Stewart Jackson. Now a member of the public accounts committee, he was speaking at an evidence session in June ahead of its report published this morning. He was also a shadow communities minister at the time the bonus became a Conservative flagship policy.
With scepticism like that on the Conservative side it’s little wonder that the PAC has more scathing criticism of the handling of the policy. It follows an embarrassing verdictfor the department of Communities and Local Government delivered by the National Audit Office in March.
Margaret Hodge, the Labour chair of the PAC, says that with £7.5 billion due to be redistributed between councils by 2018/19 to encourage more homes, it’s ‘vital’ that the bonus works: ‘It is therefore disappointing that after more than two years of the scheme being up and running, no evaluation is in place and no credible data is available to show whether the scheme is working or not.
‘So far the areas which have gained most money tend to be the areas where housing need is lowest. The areas that have lost most tend to be those where needs are greatest,’ she adds.
‘The CLG has yet to demonstrate whether the new homes bonus works. Is it helping to create more new homes than would have been built anyway? Is it the best way for the government to use its limited resources to create more homes where they are needed most?’
Questions like this have been asked from the very beginning. As I blogged when the first allocations were made, the policy is less a bonus for building new homes than a penalty for not building them, and it amounts to a mechanism for transferring resources from deprived areas to affluent ones.
The National Audit Office agreed, branding the CLG’s estimate of the potential increase ‘unreliable’ and based on ‘unrealistic’ assumptions that included a ‘substantial arithmetical error’.
So far, it said, ‘the bonus has mainly rewarded home creation that was not incentivised by the bonus’.
Despite the policy being an attempt to use incentives to change the behavior of local authorities and communities to make them more pro-development, the CLG had not even consulted the cabinet office’s behavioural insight team (the nudge unit).
The message from Amyas Morse, the head of the NAO, was that: ‘The department must now urgently carry out its proposed review of the scheme to ensure that it successfully encourages the construction of much-needed new homes.’
That was in March. Seven months later, the PAC is making the same point about urgency: ‘We would have expected the [CLG] to have planned a systematic evaluation from the outset to track its impact on local authorities’ behaviour towards housing development, and the cumulative impact of the [new homes bonus] alongside the [CLG’s] other policies affecting local authority funding. The department has yet to demonstrate that the new homes it is funding through this scheme are in areas of housing need and the its planned evaluation is now urgent.’
That has prompted Sir Bob Kerslake, permanent secretary at the CLG and head of the civil service, to take the unusual step of issuing a statement publicly disagreeing with the committee: ‘I am disappointed by today’s report and have some significant disagreements with its findings. We have made very clear that our review of the new homes bonus is under way and will be completed by Easter 2014 as we have always promised,’ he said.
‘The whole point of the new homes bonus – which the committee fails to recognise – is to recognise housing growth where it occurs, with money going where those homes are needed most. That’s why we’ve committed £1.2 billion over five years towards this scheme, which the National Audit Office themselves found has the potential to deliver up to 100,000 additional homes over 10 years.’
However, arguments like this did not convince PAC members when he put them forward at a meeting in June and an evaluation published a year after the National Audit Office called for one ‘urgently’ will not meet most people’s definition of the word.
And it seems unlikely that the evaluation will be able to offer much convincing evidence of the impact of the bonus even then. The PAC report points out that ‘the department is committed to establishing if the new homes bonus has changed the behaviour of local authorities as part of its evaluation’.
‘However, the [CLG] told us that disentangling the impact of the bonus from other economic factors and other government initiatives, such as help to buy, would be difficult,’ it added.
Similarly, while there has been a positive trend in the number of empty homes being brought back into use, ‘this began before the Bonus was introduced’. The impact remains unclear - though I have seen evidence that the bonus has had a positive impact on the way my local council looks at empty homes.
In the meantime the PAC suggests adjustments such as offering extra incentives for energy-efficient homes rather than a ‘wholesale shake-up’.
By offering incentives to communities, the new homes bonus did introduce an interesting idea into the debate about how to get more homes built. It was also attractive politically as a bottom-up alternative to Labour’s top-down targets.
However, was it ever really a ‘Rolls Royce idea’? Keep them small and incentives probably will not work, make them more attractive enough and eventually they become a questionable use of public money.
Whether the new homes bonus was badly implemented, or impractical in the first place, or both, the debate has already moved on and in help to buy the coalition has a shiny new flagship. No matter how much Sir Bob and the CLG apply the turtle wax between now and easter 2014, they will still have a used Reliant Robin on their hands.
Where does sensible asset management stop and social cleansing begin?
That’s the issue highlighted for me by the sale of ‘Britain’s most expensive council house’ and the protest that followed.
I put that in inverted commas because I’m not sure the building near Borough Market in Southwark was actually being used as a house but what is clear that it was sold at auction for £2.96 million, 30 per cent more than was expected last week.
The council’s case is that it’s better to sell and use the proceeds building 20 new council homes than keep it when it needs £500,000 worth of repair and refurbishment work. ‘I think that’s a no-brainer and most people do apart from the protestors,’ cabinet member for regeneration Fiona Colley told me yesterday.
Put like that, it’s hard to disagree. Social landlords all over the country have to make decisions about the best use of their assets. But there is a continuum involved here. At one end you might have a tower block that will cost more to maintain than it will to knock down and build replacement homes. At the other, you might have Policy Exchange’s proposal for Ending Expensive Social Tenancies. Grant Shapps, the housing minister at the time, considered it ‘blindingly obvious’ and the influential think tank is pushing the idea on twitter again this morning. I didn’t think so much of the idea when I blogged about it at the time.
But what happens with proposals that fall somewhere between those two extremes? The ‘£3 million council house’ is not the only example in Southwark. At Neo Bankside, a swanky new riverside development near Tate Modern, the original plan was that the ‘affordable’ housing contribution would be on site. But Fiona Colley explains: ‘We found that even at 25 per cent, the smallest share, they were only affordable on a household income of £90,000, which is above the income limit to qualify. So we recognised that and took £10 million to fund 170 council homes which to us makes much more sense.’
Again it seems hard to argue that this is more sensible than, for example, this £720,000 ‘affordable’ home that I was alerted to by a commenter on my blog. A 25 per cent share can be yours for £2,444 a month in rent, mortgage and service charges, half the post-tax income of a household on the maximum qualifying income of £80,000.
Yet the protestors in Southwark beg to disagree. Housing Action Southwark and Lambeth argue on the Guardian’s Comment is Free that there is no justification for selling off council houses during a housing crisis.
The occupation is partly a protest against draconian new laws on squatting but also is also happening in the context of the regeneration/gentrification of the wider area. ‘Southwark council has tried to justify the sale by promising to build 20 new council homes with the profits,’ they say, ‘but after the ongoing Heygate estate scandal, it is difficult to take them at their word.’
That is of course a reference to the controversial regeneration of the Heygate estate near the Elephant. Southwark sees it as part of a wider regeneration plan that will bring homes and jobs to the whole area but, as the final few leaseholders get ready to leave by Monday, that’s not the way campaigners see it at all.
The same issues are cropping up all over London (but not just in London) and pitting residents against local authorities and developers. Think Hammersmith & Fulham’s plans for Earl’s Court and two nearby council estates or Lambeth’s sell-off of short-life housing or Newham’s stalled plan to demolish the Carpenters Estate to make way for a new campus for UCL.
You have to draw the line somewhere - but where exactly? The boundaries between regeneration, gentrification and social cleansing lie somewhere between the tower block that’s falling down and the Policy Exchange sell-off plan. As with previous rounds of regeneration, including those that created the estates in the first place, they involve issues of resident involvement and consent, the use of the proceeds for new housing and the conditions for the offer of new homes. These have to be balanced against the interests of the wider community.
So the issues and the boundaries are not new and perhaps it’s only possible to draw the line on a case by case basis. But bigger social and economic processes are at work now: growing inequalities of income and wealth, globalisation, financial pressure on local authorities, welfare reform and the escalating cost of housing. What would the outcome be if the battle of Coin Street were fought again today?
The routine is familiar by now: researchers question government policy, government rubbishes researchers.
Where McVey embarrassed herself on the World at One, Penning had definitely got out of bed on the wrong side before he arrived in the Today programme studio. That was compounded when presenter Justin Webb introduced him as Mark rather than Mike. ‘Let’s start as we mean to carry on, shall we?’ he harrumphed before attacking ‘the BBC and The Guardian’ for being the only media outlets to report the story.
The interview went downhill from there. ‘Let’s report the facts, not flawed data,’ he said, but seemed unsure quite what the facts were. And he then blundered into an on-air row with Webb in the following exchange:
Penning: ‘It’s a fair policy and it’s much too early for the BBC and the institute to be writing this off.’
Webb: ‘It’s ridiculous to say the BBC is writing this off, we’re merely reporting what they did.’
Penning: ‘Why did you accept what they reported? Because we gave you the information last night that it wasn’t factually correct.’
Webb: ‘We’re not accepting it. We just had an interview with the woman in charge and asked her questions about it. That’s how you report things. We’re not accepting it by reporting it, you know perfectly well we’re not.’
That I think provides a clue to Penning’s initial annoyance. The DWP had obviously been trying – and failing – to kill the story last night. Its line was that 16,500 claimants ‘potentially affected by the cap’ have been helped into work across the country (since April 2012) and so it’s working. The department is of course a paragon of statistical rectitude when it comes to the cap.
Penning’s other point was that: ‘I don’t understand why we are looking at something so early on in one very restricted London area, which just happens to be Labour-controlled, which is said not to be working.’
In fact the CIH research looks in detail at the impact in Haringey, one of the four London boroughs where the cap was first introduced. Among the findings:
- Only 74 of the 747 households affected by the cap were known to have moved into work, while 11 had increased their hours by enough to avoid it
- Half those affected were claiming discretionary housing payments to help pay their rent, shunting the costs from central government to councils (as Haringey leader Claire Kober points out). Around £60,000 has been saved from the benefit bill but expenditure on discretionary housing payments (DHPs) totals £960,000 so far.
- The mass evictions that were feared have not yet materialised – though the report warns ‘they are visible on the horizon’. Claimants have relied on DHPs so far but this will be unsustainable in the long term.
- A small number of households have faced severe consequences. These include women unable to leave abusive partners, children in danger of being taken into care and pre-emptive evictions of some private tenants.
The CIH concludes that the cap is ‘struggling to meet its aims’ of saving money and encouraging people into work. True, 11 per cent of households have moved into work but that does not seem much to show for the resources thrown into Haringey and the other pilot areas.
But all of this assumes of course that work and savings really are the main objectives of a policy that has always been intensely political. Opinion polls show that public support for the policy remains high. A survey for the DWP published earlier this month shows strong public support for the cap on just about every count, even though people believe it is unfair to people in high-rent areas.
I’ve written many times before about the way that the benefit cap’s arbitrary notion of ‘fairness’ breaks down once you look beyond the headline figure of £26,000 a year. This starts of course with the flawed use of earnings rather than income to set the level of the cap but it goes beyond that to the way that the cap operates independently of decisions already taken elsewhere in the system.
And so where there are already caps on the maximum housing benefit payable in each area, the overall cap operates well below that level. It is only DHPs that are making up for the rent shortfalls in Haringey.
Where councils accept a duty to homeless people and house them in temporary accommodation, the cap decides it will not pay the rents for it. This applies to 43 per cent of the capped households in Haringey.
And where the benefits system has rules on in what circumstances lone parents are expected to work that depend on the age of the child and the availability of affordable childcare, the benefit cap cuts the income of all those not working. Six out of ten of the households capped in Haringey had children below school age and the availability and affordability of childcare were major barriers to work.
But the benefit cap is a policy that operates independently of such considerations and in a world that exists beyond the facts. That’s why research and researchers have to be rubbished.
The line-up of the band may change but the ministerial song remains the same at the Communities and Local Government department.
Parliamentary questions yesterday brought the first chance to see new boys Kris Hopkins and Stephen Williams perform alongside Nick Boles, Brandon Lewis and the ageing star Eric Pickles. After poor Mark Prisk was told he had to ‘step aside for a younger generation’ only to find that his replacement was just a year younger, I can’t help thinking of them as a boy band (the two female CLG ministers are both in the Lords).
Hopkins is of course the newly junior housing minister, though he told an Inside Housing reception last night that he does not ‘give a toss’ about this status so long as some homes get built. He also said that the appointment feels like ‘coming home’.
The housing brief certainly seems more of a collective effort now. The real focus of the songs is all about home ownership and Help to Buy and responsibility for that goes right to the top of the record label at 10 and 11 Downing Street.
And yet on key housing announcements on homes for locals, custom build and private renting last week it was Pickles who took the limelight. That left the housing minister to mark new legal powers against social tenancy cheats and help for military families to get on the housing ladder.
The housing spotlight moved between ministers in the Commons yesterday too. First up was Hopkins for some supportive questions about Help to Buy. He revealed that RBS had 10,000 inquiries in the first four working days and made a direct pitch to northern fans by pointing out:
‘I agree that at the moment there is a huge media focus on London and the south-east. As a northern MP, I know that if we remove London and the south-east from the national figure of 3.8% for price rises, we get 2.1% for our part of the country, but several other parts have seen no increase at all, so we need to stick up for the Blackpools, Burnleys and Bradfords as well.’
To more hostile Labour questions he boasted that the government had ‘delivered 334,000 houses so far, 84,000 of which are affordable homes’ and he neatly avoided expressing an opinion on ‘use it or lose it’ powers against landloarding developers (Labour policy but also backed by Boris Johnson in London).
But as the gig moved from advance to topical questions, Hopkins only got to answer one more, applauding ‘as a former soldier’ the sentiment behind a question about boosting home ownership among members of the armed forces.
In contrast, the other new boy, the Lib Dem Stephen Williams, got far more time in the spotlight. Officially his wide-ranging brief includes empty homes and other housing-related issues such as localism and the building regulations and he duly took a solo spot on localism at advance questions on localism.
However, it was more of a surprise to see him rather than Hopkins take the lead on the government’s defence of the bedroom tax. Questioned by Labour’s Cathy Jamieson about adapted homes for older people, Williams sang the old coalition hit ‘Discretionary Housing Payments’. When she followed that up by asking for an assurance that people will not be forced out of their homes when they have a disability, he carefully failed to answer the question.
And it was Williams, not Hopkins, who got the first parliamentary exchange with the new shadow housing minister Emma Reynolds. When more than half of those affected by the bedroom tax are disabled, and nine out of ten of those who are not receiving DHPs are having to ‘choose between heating or eating’, she asked:
‘Does the Minister advise them to put on another jumper, skip a meal, or move to a non-adapted property that then has to be adapted at huge cost to the taxpayer?’
‘I would not presume to advise an individual at all; each individual must make up their own mind about how they will adapt to a change in circumstances. I advise local authorities, housing associations and local advice bureaux to work holistically with each tenant affected by the policy, and to consider what advice and support can be given so that they can transition to the new arrangements.’
Transition to the new arrangements? That sounds like Williams had stolen a line from the DWP songbook and he was also up next to ask another round of hostile bedroom tax questions. When Labour’s Pamela Nash asked whether he would advise people who cannot downsize to move into the private rented sector and send the housing benefit bill up not down, he replied:
‘Clearly, the implementation of this policy will take a while, and each tenant must weigh up their own circumstances and consider how they adapt. As I said previously, I expect local authorities to work with all housing providers in an area, including the private sector—in my constituency more people rent in the private sector than in the public sector—and consider the best use of stock and what assistance is most appropriate for the individual.’
This sounds like a new emphasis to me on addressing under-occupation and over-crowding across both tenures (and perhaps an implicit recognition that redistribution within the social sector is not working). He followed up with similar points to Meg Hillier (‘I expect local authorities, including Hackney, to look across all housing providers in the area and consider best use of the stock’) and Lyn Brown (‘We are spending huge amounts supporting people in overcrowded conditions, and across the private and public sectors we are not making best use of the housing stock available’).
The problem is of course that rents and the housing benefit bill are both higher in the private sector. This was a point made at the end of topical questions when Labour’s Lillian Greenwood said that tenants in Nottingham forced to downsize from a two-bed social home to a one-bed private one can expect to pay £24.83 extra in rent. She was directly addressing Pickles when she asked ‘the bedroom tax is a costly mess; why does he not scrap it?’ but it was Williams who got up to answer:
‘We do not scrap it because we need to save money right across government. One of the major problems of implementing this policy is the lack of house building— [Interruption.] I know that the hon. Lady is from the 2010 intake and that Labour Members of that intake like to think that 2010 is year zero, but during the 13 years when some of her colleagues were in power, not enough affordable housing was built. That is the problem.’
It was an old hit rolled out from the back catalogue as an encore. The line-up may change, and Williams may be the third Lib Dem member of the band in three and a half years, but blaming it all on the last government is still the Best Song Ever.
Government action on private renting looked a distant prospect when it brusquely rejected plans for light-touch regulation as ‘red tape’ in 2010.
So today’s statement by Eric Pickles announcing a package of measures to give private tenants a better deal is evidence that even the Conservatives have woken up to the fact that they are a growing part of the electorate and testament to the efforts of campaigners over the last three-and-a-half years.
Following up an announcement made – significantly – during the Conservative Party conference, the communities secretary says ‘we recognise there is more to do to support a vibrant private rented sector’.
The package is a balancing act between
- Giving tenants the know-how to demand longer-term tenancies, stable rents, better quality accommodation, avoid hidden fees when renting a home and demand better standards
- Proportionate regulation: ‘Excessive red tape – such as compulsory landlord registration fees or rent controls – would reduce investment, restrict choice for tenants and ultimately drive up costs for tenants’
- Supporting ‘law-abiding, decent landlords’ against tenants who intentionally do not pay or damage property
- Taking action against ‘the small number of rogue landlords’ to stop tenants getting ripped off
- Ensuring tenants have the confidence to take action ‘without fear of eviction or harassment’
Mr Pickles does not exactly seem the obvious choice for a balancing act and, before anyone gets too excited, ‘demand’ in this context seems to mean ‘ask’ rather than ‘have a right to’. There is no suggestion that I can find that his plans to outlaw the retaliatory eviction that is too often the fate of tenants who complain or try to enforce their rights.
The package also does not seem to include the one thing demanded by landlords, reputable agents and tenants: licensing of letting agents. The Royal Institue of Chartered Surveyors says today that the redress proposal does not go far enough and is calling for a consistent national regulation scheme for agents.
Instead a code of practice will set out what landlords, letting agents and property managers must do and make clear it is their responsibility to maintain the property to an acceptable standard.
There will be a review of how to ensure that homes are safe and healthy for tenants and the government will consider requiring landlords to repay rent where serious hazards are found and extending local authorities’ powers to recoup housing benefit paid for sub-standard property.
A tenants charter will explain how tenants can ‘ask’ for longer tenancies and promote transparency of letting agents’ fees to help stop unreasonable and unfair charges. A model tenancy agreement will be developed by 2014 to set out the rights and responsibilities of tenants and landlords.
However, there is also a nod to landlords with a pledge to work to identify ‘any improvements that can be made to the eviction process’ if a tenant stops paying the rent and give them more confidence to offer longer tenancies.
Finally, the government will organise a mortgage lenders summit to discuss the restrictions set by most buy-to-let lenders on landlords agreeing to longer tenancies.
Much of the groundwork for today’s statement was done by the all-party communities and local government committee in a report published in July. The government’s response is also published today. Committee chair Clive Betts has welcomed the package but says the failure to clampdown on cowboy agents is ‘regrettable’.
As a package it is not going to satisfy many tenants’ groups and it does not go nearly as far as the policies emerging from Labour’s policy review, which start with licensing of letting agents and could include indexing rents.
I also suspect the detail is going to raise all kinds of questions. Off the top of my head, what are ‘optional but standard’ clauses in tenancy agreements? How will break clauses and rent reviews work in longer tenancies? Is a compulsory redress scheme for agents really going to protect tenancies, even if complaints must be investigated by someone independent? Why, when a quarter of those Pickles (invevitably) describes as ‘hardworking’ private tenants are in work but need housing benefit to pay the rent is there no mention of welfare reform?
Nevertheless it does represent quite a shift from the early days of the coalition. Back in June 2010 Grant Shapps was promising landlords that ‘the government has no plans to introduce any [my emphasis] further regulations’.
There also seems to be more than a nod to the proposal for a stable rental contract developed by Shelter last year. On Shelter’s policy blog, Robbie de Santos calls the Tory conference announcement ‘a small step and yet a big moment’ but suggests that a stronger nudge will be required to shift a market of 9 million renters and 1.5 million landlords. That sounds about right.
And we are now set for a fascinating contrast between the nations of the UK in their approach to regulation of private renting. As England tries to tread a minimalist path, Wales is about to introduce legislation based on the proposals that Shapps rejected in 2010. North of the border, where letting agent fees are already banned, Shelter Scotland is pressing the government to introduce greater security of tenure.
The bedroom tax is turning out to have as many alternate realities as it has names.
Whether you call it that or the under-occupation penalty or the social sector size criteria or even ending the spare room subsidy, the everyday reality is shown very well in a TV documentary on BBC Wales. If you have the time between now and 11 o’clock tonight (when it expires on iplayer) to watch ‘What cost a spare room in Wales?’ it’s well worth the effort.
The uncomfortable reality (uncomfortable for ministers at least) came in a report from the University of York that says the policy may end up saving at least a third less than the government claims.
The hyper-reality came in two extraordinary appearances yesterday by newly promoted work and pensions minister Esther McVey on the World at One and later at parliamentary questions.
And there’s even the unreality of a brief flurry on twitter just now about Nick Clegg’s supposed announcement of an independent review of the policy, which turns out to be just a reference to the evaluation that the government committed itself in the final stages of the Welfare Reform Act. The legal reality is of course still developing through tribunal cases and the Court of Appeal.
The documentary follows three victims of the bedroom tax in Blaenavon and the staff from Bron Afon Community Housing trying to help them. Then it adds an extra twist when David Davies, the Conservative MP for Monmouth and chair of the Welsh Affairs Committee, tells them why he thinks it’s fair.
If Wales has a greater percentage of social tenants affected by the bedroom tax than anywhere else in the UK, then Blaenavon has special problems of its own. The chances of downsizing within the town are slim at best and moving anywhere else means moving miles away from friends and family. Meanwhile voids are increasing on larger homes that nobody wants.
Natalie, whose bedrooms are spare because her three kids live with her mum Molly during the week, only escapes eviction when Molly agrees to pay £47 a week to cover the shortfall on her rent plus her arrears. Amy and Lloyd had to take a two-bed flat because they couldn’t find a one-bed in their home town but the cost is pushing them to the limit. Gail was working until recently but has gone into arrears for the first time because of the penalty on the two bedrooms in her house that have been empty since her children left home.
David Davies tells them face to face why he supports the policy but seems to waver as he hears the story. He bluntly tells Lloyd he should get a job or go to London. He tells Molly he can see that it’s more of a problem in rural areas and Wales than it is in cities.
But he clearly has the most sympathy for Gail. ‘Ministers are maybe a bit reluctant to admit this but there will be unintended consequences and some people will lose out who don’t deserve to lose out,’ he tells her. ‘But they’re not going to reverse the whole thing or change it because there’s a bigger picture.’
The bigger picture, with a brief nod to ‘hardworking people’, is presumably saving money – but what if it doesn’t?
That’s the question posed in my second reality, the one raised by Rebecca Tunstall from York’s Centre for Housing Policy in a report for Riverside, Affinity Sutton, Gentoo and Wigan and Leigh Housing. The press release is on Riverside’s website here.
The report uses real data for the first five months of the policy for 127,000 homes in England and applies it to the model used by the DWP in its impact assessments to estimate that it will deliver £480 million of savings in 2013/14.
Read the full report for the details but the key findings are that flaws in the model mean the DWP underestimated:
- the number of people underoccupying by one bedroom who would move
- the proportion of those affected who would move into the private rented sector
- the proportion of homes vacated that would be relet to existing social tenants.
And that means the DWP could have overestimated the total savings by between £160 million (33 per cent) and £186 million (39 per cent). If you add the £65 million in discretionary housing payments set aside for this year even more of the ‘savings’ disappear.
The report is careful to stress that it does not claim to be a fully representative sample but the implications are clear. Especially when these figures take no account of the extra costs faced by landlords and local authorities for adaptations for disabled tenants who move, rising rent arrears and re-let times, rent collection and tenancy support, lost ability to build new homes and the knock-on effects on homelessness, health, education, advice and social services.
And so to the hyperreality of Esther McVey. For openers, she was involved in one of the most remarkable radio interviews I’ve head this year on yesterday’s World at One.
She claimed the findings were ‘skewed’ and ‘not credible’ because the housing associations involved are ‘net gainers’ with a stake in getting the answers they wanted. That was quite a claim. Quite apart from ignoring the academic rigour behind the report and questioning the good name of those involved, an earlier report involving three of the four landlords who commissioned this one was quoted approvingly in the DWP’s own impact assessment in 2012.
As it seemed increasingly more likely that McVey (and perhaps not her officials either) had not actually read the report, she repeatedly refused to say which conclusions she disagreed with. Putting yourself in the position where your interviewer keeps asking the same question that you don’t answer is never a good idea for politicians. McVey was reduced to spluttering that ‘you’ve got to give credence to our credibility’. It was cringe comedy gold.
But it turned out that this was only the start of the hyper-reality. At yesterday’s work and pensions questions the opening bedroom tax skirmishes involved Iain Duncan Smith and (yet again) the UN special rapporteur Raquel Rolnik. He told Nick Raynsford it was all Labour’s fault: ‘Instead of little gimmicks with people from Brazil, they would be better off apologising for the mess they left us in in the first place.’
Not content with that, he then backed up Lord Freud by blaming ‘housing associations and others’ for ‘continuing to build houses that are not required when there is a demand for single bedroom accommodation.’ Never mind, of course, that they are building what they are committed to under the Affordable Homes Programme and that Affordable Rent will increase the housing benefit bill.
Then it was back to McVey and, just to bring things full circle, she was responding to a question from a Welsh MP. Huw Irranca-Davies said rent arrears were rising for associations in his Ogmore constituency:
‘They have a desperate scarcity of one and two-bedroom properties to rent, and yet they have three-bedroom properties lying empty. Is this just a necessary but painful adjustment to the Secretary of State’s benefit and bedroom tax changes?’
McVey’s answer may surprise a few people:
‘The hon. Gentleman is quite right—we have to get the stock right: the fact that there are three-bedroom houses and why in the last three years they have not been modified into one and two-bedroom houses. Those questions have to be asked. That is what we have to do: get the stock right and support people as best we can.’
So it turns out the solution has been staring us in the face all along: knock down bedroom walls. Ignore for a moment the implications for landlords’ business plans. Forget those DWP warnings about reclassification. Leave aside the fact that any ‘savings’ will simply become reduced rental income and increased costs for conversions. Blank out that it’s meant to be freeing up homes for overcrowded families. It’s all starting to make sense now.