What if our real housing problem is not a lack of a new homes but the distribution of the ones we already have?
That’s the key premise of All that is Solid: the Great Housing Disaster, an intriguing new book published this week by Danny Dorling, professor of human geography at Oxford University. In it he attacks not just the ‘yes to homes’ consensus about the solution to the housing crisis but the actions of just about all the key people involved. Politicians, housebuilders, landlords and property journalists are all seen as part of the problem but housing associations, the CIH and the voluntary sector also come under fire for accepting the status quo.
Dorling’s starting point is an analysis of Census returns of the number of bedrooms in the UK. We may have been building fewer homes in the last 30 years but we have been busily extending the ones we have with more rooms. On this measure we have never been better housed: the 2011 Census revealed that we have more bedrooms per person than ever before and that even in London there are more bedrooms than people.
But if you look at the distribution of those rooms something has changed in the last 30 years. Through most of the 20th century, society became more equal in the way that people were housed. The number of bedrooms enjoyed by the richest 10 per cent of the population fell to three times as many as the poorest 10 per cent in the Census of 1981. Then it began to rise again, reaching 3.7 times in 2001 and accelerating to five times in 2011.
Dorling argues that this is a manifestation of rising inequality and that this is the real cause of the housing crisis rather than a shortage of homes. As the super-rich consume more housing the effects cascade through society as the very rich feel they need more, the rich aspire to have more and so on. Location becomes ever more important as the well-off and the well-housed cluster near good schools and in safe neighbourhoods. One place to live is no longer enough as those who can afford it buy second homes or become landlords.
As he sums it up: ‘Fundamentally it is the linking of housing to social status that allows prices and rents to be increased beyond what the cost of providing the dwelling might be, or beyond what the value of the land might be if it were turned to other purposes.’
To my mind, Dorling asserts the link between inequality and housing more than he proves it and the effects may go even deeper than he makes out. Liberalisation of mortgage lending, the decline of organised labour and the removal of protection for private tenants all took place over the same period. Are they manifestations of rising inequality or something bigger? However, if you doubt that there is a link, have a quick read of Saturday’s Financial Times about the middle class ‘cling-ons’ being pushed out of London and the ‘über-middle class’ who are reshaping Oxford. ‘Middle class’ in FT headline terms means those in the top 10 per cent of earners but even these people are being priced out by those above them.
Dorling links housing directly to the global financial crisis, not just in the UK but in the US, Spain and Ireland, and suggests that as our economy become ever more reliant on the housing market it has become ‘the defining issue of our times’. Yet this is a book with a difference that he says supports none of the usual solutions offered:
‘Solutions such as home-building, which look as if they might solve some of our present woes, may not be the panacea many imagine if we continue to allow a few to get richer and richer through exploitation of what the housing system has become. Building more may result in the wealthy owning even more homes, more families renting some of those homes, but more being empty at any one time and in greater future inequality, unless we address rising inequalities in how housing is shared out.’
And so Dorling’s solutions are very different too. ‘We have already built enough homes,’ he argues. ‘We have far more bedrooms than we have ever had before. But a few have been taking more than their fair share, increasingly so ever since 1980; and very recently they have been taking far more again with each year that has passed since the crash.’
He argues those at the top of society harm the rest, by evicting the poorest from their homes, penalising people for their spare bedrooms and impoverishing middle earners through high rents and mortgages. We will need to build more homes if more people come to the UK than leave (as has happened in the last few years) but his other solutions are all focussed on housing inequality. They include:
- Extending current council tax bands to Band Z with a view to transforming it into a national land and property tax
- Giving people with mortgages a ‘right to sell’ and become tenants rather than be repossessed
- The reintroduction of rent controls with local housing allowance rates used as the maximum fair rent in an area
- Decriminalisation of squatting
- Recognition that housing is central to environmental sustainability so that, when we build, we build for the long term.
Dorling argues that it will take another housing market crisis for these sort of solutions to be seriously considered – but that another crisis is what is on the way. ‘The vested interests in British housing are stoking up the embers of the last crash to create a new crisis. But a crisis is as good a time as any to get out house in order.’
This is a book that sometimes shows signs of being written in haste. Housing nerds will spot some errors and questionable assertions, at times I found the structure confusing and repetitive and he is more dismissive of the case for new homes in the book than he was in TV and radio interviews linked to its publication.
A bigger problem for me is that if rising inequality really is at the heart of the housing crisis then surely action on housing alone will not be enough to solve it. Just for starters, we would also need radical reform of the labour market, the financial system and the dominance of London in the UK economy. Dorling discusses all of these points and more in the book yet his conclusions are about housing alone.
However, as his media appearances over the last week show, All that is Solid is being published at a time when more and more of us sense that business as usual will not provide the answers to the housing crisis that are so desperately needed. It’s well worth a read.
All that is Solid: the Great Housing Disaster, by Danny Dorling, is published by Allen Lane, RRP £20
To hear ministers talk, we are in the middle of a housebuilding boom. Official figures released today beg to differ.
According to the DCLG housebuilding statistics for the fourth quarter of 2013, starts and completions in England were both down 1 per cent on the third quarter. These are only the figures for one quarter but they don’t seem to be in the script.
While starts for the year as a whole were up 23 per cent on 2012 at 122,800, completions were down 5 per cent at 109,480. True, those starts will soon turn into new homes but this hardly feels like a giant step towards the promised land of 250,000 additional homes a year.
And it doesn’t exactly tally with upbeat statements from ministers either. Here’s Eric Pickles in hyperbolic mood on today’s figures:
‘This government is fixing the broken housing market we inherited in 2010. Last year, we built the most homes since 2007, and even the appalling weather conditions this winter have not stopped our hardy builders from getting the job done.’
Sorry, Eric, but that’s simply not true. Homes built are completions and both private housebuilders and housing associations completed fewer homes in 2013 than in 2012. Total completions were also down on 2008, 2009 and 2011. As for the appalling weather, most of that has been in the past two months, not the end of last year.
David Cameron was more cautious at prime minister’s questions last week:
‘Housing starts are up from the dreadful situation we were left by the previous Government. We are now investing huge amounts into affordable housing. I make no apology for the fact that it is right to deal with the demand side on housing, as well as the supply side. Programmes such as Help to Buy are helping to get builders building, because builders will not build unless they believe that buyers are able to buy. We are fixing this problem and house building is rising.’
The rise in starts in 2013 provides modest support for Cameron’s case: the year did indeed see the highest level since 2007 and starts are up since the start of this Government. However, six years after the start of the financial crisis in 2007, starts would have to rise by another 50 per cent to match the figure achieved then.
Much of the current optimism seems based on sentiment surveys and anecdotal evidence of shortages of bricks and blocks. Two weeks ago, for example, the Markit/CIPS index showed that ‘housing activity growth was the highest in a decade and remains the fastest improving area of construction’.
However, as Brian Green of Brickonomics points out, there is a big difference between what people think is happening and actual activity on the ground. The surge in activity seen in mid-2013 may be more the result of housebuilders catching up from a slow start and restocking their production pipeline.
To put all of this in perspective, if starts continue to rise at the rate seen in 2013, we will get back to 2007 levels by the end of 2016 and get to around the level needed to hit the magic 250,000 by 2018. Completions would take a bit longer to feed through but we might get there by the end of the decade.
However, a five-year period of such sustained growth would be unprecedented in housebuilding history. Given continuing austerity, most of the growth would have to come from the private sector. But what will happen when the taps of Help to Buy are turned off at the end of 2016, or if interest rates rise after that? Can enough people afford to buy new homes at current prices and who will build them if prices fall?
Today’s figures may show an encouraging revival in housebuilding but it is happening from a very low base. We are still a very long way from the ‘gold standard’ set by Grant Shapps of building more homes than Labour, let alone his dream of making us ‘a nation of homebuilders’.
Why is there so little debate about the fact that social housing rents are set to rise so much faster than prices and earnings?
Figures out this week from the ONS show that CPI inflation rose 1.9 per cent in the year to January and average earnings rose just 1.1 per cent in 2013. Earnings have now been falling in real terms since 2010, the longest period for at least 50 years.
And yet all around the country social landlords are preparing to increase their rents by at least twice the rate of inflation, and many times more than earnings, according to recent surveys by Inside Housing.
Housing associations are planning an average increase of 3.7 per cent, with some using extra flexibility to charge up to 4.8 per cent more. Only one said it was raising rents by less than the maximum.
Among local authorities the average increase will be 5.16 per cent, rising to a peak of 7.22 per cent in Welwyn & Hatfield, constituency of former Conservative Party chairman and former housing minister Grant Shapps.
These increases are partly down to longstanding government policy and partly down to an abrupt change in the rent-setting formula. Until 2015, social rents in England can rise by RPI inflation plus 0.5 per cent plus an extra £2 a week for those landlords who are not yet charging target rents. In a change announced last year, rents can rise at CPI inflation plus 1 per cent from 2015.
Rent increases for this April are set according to the RPI figure for last September of 2.7 per cent. However, 2014/15 is also the last year that landlords can use their extra £2 per week flexibility, which has prompted those much bigger increases to fill holes in their business plans. Some even seem to be ignoring the rent increase limits.
Landlords argue that these increases are vital to maintaining development programmes and community activities and to the viability of their business plans. The sudden change in formula has had a particular impact on those who had not yet achieved target rents.
Since most tenants are on housing benefit that means most (but not all) of the increased bill will be picked up by the Department for Work and Pensions (DWP). That’s one reason for the lack of debate, even if it runs directly against what the DWP claims to be doing about controlling the housing benefit bill and reducing benefit dependency.
However, what about tenants who are working? If the increase in average earnings is only 1.1 per cent, the minimum wage did at least rise by 1.9 per cent last year and even George Osborne says he want to see it rise by more than inflation in future. However, thanks to government pay policy, average earnings of public sector workers rose by just 0.5 per cent last year.
The extra that working tenants will have to find will obviously vary from property to property, region to region and landlord to landlord. As an indication, the average housing association rent in England in 2013 was £88.98, so a 3.7 per cent increase would be £3.29 a week.
Depending on how much they are paid and their circumstances, families with someone in work will also be entitled to tax credits, child benefit and partial housing benefit. However, in-work benefits like tax credits and council tax support have been cut and that rent increase could still eat into a limited budget. Remember too that their rent has been going up by more than inflation for years and more than their earnings since at least 2010 and that the squeeze on low income families is set to continue.
And the rent increase has implications for the bedroom tax too: those deductions of 14 per cent for one ‘spare’ room and 25 per cent come off the eligible rent. The bigger the increase, the more people on partial housing benefit will ‘float off’ any entitlement, and the more people on full housing benefit will lose. The difference between 14 per cent of £88.98 and £92.27 (£46p a week) may not sound like much but only if your budget has not already been squeezed to nothing and your other benefits are not restricted to an increase of just 1 per cent from April. The National Housing Federation revealed last week that two-thirds of tenants affected by the bedroom tax are already in arrears.
At a local level, these sort of issues are being debated. In Cambridge, for example, the Liberal Democrat mayor had to use his casting vote to force through a 5.76 per cent rent increase after tenants and Labour councillors voted for a smaller amount.
Meanwhile Nottingham City Homes says it has no choice but to apply an above-inflation increase but is consulting with tenants on two different options: a 5.47 per cent increase for all tenants; or increases of 4.68 per cent for ‘responsible’ tenants with a £100 credit at Christmas but 7.5 per cent for ‘irresponsible’ tenants. Being ‘irresponsible’ in this context might mean failing to look after your garden, failing to stick to an agreement to pay your rent arrears or committing crime or anti-social behaviour in your neighbourhood. That will clearly generate a debate all of its own.
However, to go back to my original question, the bigger questions about increases in social rents do not often get asked at a national level. Contrast that to the time devoted to talking about a few high-earning tenants. Housing finance requires tenants to pay more and we seem to have become so used to this that we rarely stop to ask why or whether it’s such a good idea.
If austerity and the continuing squeeze on wages and living standards do not give some pause for thought, then what about the prospect of more cuts in housing benefit in future? Increases in the local housing allowance for private tenants are already restricted to just 1 per cent a year (with some relief for high-demand areas). Applying the same to the social sector would play so much havoc with landlords’ finances and run so completely against established government policy that it seems hard to imagine. But would you rule it out?
In a grim few years for housing and homelessness No Second Night Out stands out as a rare bright spot.
The idea behind the scheme, which was extended to 20 areas outside London in 2011, is that the longer someone sleeps rough the greater the risk that they will become trapped on the streets and vulnerable to crime, drug or alcohol issues or mental or physical health problems. No Second Night Out (NSNO) aims to help people off the streets as quickly as possible and ensure that they do not return.
Nobody could hope to be completely successful with that but a report out today from Homeless Link suggests that progress in the 20 areas has still been impressive: 67 per cent of the rough sleepers they worked with were taken off the streets after their first night; and 78 per cent of those did not return once they had been helped.
The 20 areas cover 69 local authorities from Cornwall to Newcastle and between them they account for 38 per cent of rough sleeping outside London. The result is broadly comparable to the one achieved in the capital, where 86 per cent of rough sleepers helped by NSNO services did not sleep rough again.
Finance for the NSNO services outside London comes from the £20 million Homelessness Transition Fund (HTF), provided by the DCLG and administered by Homeless Link, and from local authorities and charities. The 20 areas helped 2,546 rough sleepers over a period of six months plus another 1,498 at risk of rough sleeping. Compared to London, there were more women (17 per cent), under-25s (20 per cent) and UK nationals (75 per cent).
If the results are impressive, the report also identifies some worries. Concern about entrenched rough sleepers emerged across the survey. The biggest obstacle to progress was seen as getting all partners to agree.
And, above all, a big problem is looming in just 13 months’ time: all funding from the Homelessness Transition Fund (HTF) ends in March 2015.
Homeless Link says there is a real risk that all the good work done so far will be undone by lack of funding and is calling on the government and councils across England to protect investment in NSNO services.
And that in turn raises an even bigger issue. As I blogged in December, the government has helped to introduce a better methodology for counting rough sleeping and it has protected central funding for specific services like homelessness prevention.
However, that ignores what has happened elsewhere, especially with cuts to Supporting People and funding direct from local authorities. The Homelessness Monitor 2013 published by Crisis and the Joseph Rowntree Foundation included concern that cuts in Supporting People funding have weakened the support available and led to more rough sleeping.
While housing minister Kris Hopkins can boast in the NSNO press release about the £470 million the government has invested over four years, that has to be put in the context of cuts in local authority and voluntary services that are happening all over the country. Not to mention cuts in housing benefit from which the government still can’t find a way to protect supported housing.
To take just one example, Nottinghamshire County Council was in the forefront of the first wave of cuts in Supporting People funding and now it wants to cut even more. As Patrick Butler reported for The Guardian yesterday, local housing association Framework is warning this will result in almost all homelessness and housing support services in the county closing down.
Among the services that would close, according to Framework, are all emergency accommodation, all specialist supported housing for people with drug and alcohol problems and people leaving prison, all supported move-on accommodation and almost all the support services that assist vulnerable people in their own homes.
No Second Night Out seems to be a genuine bright spot but against a backdrop as bleak as this is that so surprising?
Five things struck me watching the Dispatches documentary on the bedroom tax on Channel 4 last night.
First, it’s impossible for anyone to cover all the issues and angles in half an hour. That’s not a criticism of Channel 4 at all, more a comment on the complexity of the implications of the bedroom tax and the way that the effects vary around the country. I must have written thousands of words on the subject over the last two years and invariably have to cut something important or leave an angle untouched.
It sounds like lots of material ended up on the cutting room floor for last night’s programme too but, within the time allowed, it did a very good job of presenting the issue from the point of view of under-occupying tenants, social landlords and local authorities. We heard from Iain Sim of Coast and Country Housing on its 150 per cent increase in voids since April 2013 and a couple who were both in wheelchairs who face the bedroom tax on the ‘spare’ room in their specially adapted flat yet were denied a discretionary housing payment. The programme was also balanced enough to include two overcrowded families who have benefitted from larger homes being freed up.
Second, the policy is unravelling from the ground up. The programme included the leader of a Labour council openly admitting it is doing the minimum possible within the law when people appeal against benefit decisions. And it also featured Mike Bird, the Conservative leader of Walsall council, warning his party colleagues that the bedroom tax will have a disastrous effect at the ballot box. This may not mean anything when Labour MP Ian Lavery presents his ten-minute rule bill tomorrow, but along with anecdotal evidence that Conservative backbenchers have woken up to the implications of the policy, it still seems significant.
Third, tenants should be appealing wherever they can and landlords should be helping them. Joe Halewood, who has pushed this line consistently, appeared near the end of the programme explaining the pre-1996 mistake to a group of tenants in Liverpool. On his Speye blog over the weekend he argued that the bedroom tax is dead in the wake of tribunal decisions in Bolton and Monmouthshire. Whether or not that’s the case - and Giles Peaker of the Nearly Legal blog has a different interpretation of the same two decisions – remains to be seen but it does seem clear that tribunals are prepared to treat arguments about room size and room use sympathetically in the absence of any government definition of a bedroom.
Fourth, government MPs themselves seem to be losing faith in the policy. If the Tory on Walsall council felt like a lone voice on the programme, I wonder what he made of the interview with one of his national party colleagues at the end. The government could have put up a minister to speak for it but instead we got Harriet Baldwin, a parliamentary private secretary (PPS) at the DWP. By the time the programme appeared, Baldwin had moved from the DWP to become an assistant chief whip.
As a member of the work and pensions select committee from 2010 and 2012, she will have heard the evidence ahead of implementation but last night she seemed almost semi-detached. Asked how many people are affected by the pre-1996 exemption, she said:
‘I have not heard a definitive figure but I believe it is about 1 per cent of the total people affected and I’ve heard a figure of about 5,000.’
Interviewer: How can the government put out a policy with such an obvious loophole still in place?
‘There’s apparently 1,000 pages of guidance and no one had spotted this loophole for many years. What we’re going to try and do is make sure that we clarify that legislation, that we simplify the guidance because it’s just not practical is it for civil servants to have to cope with 1,000 pages of guidance.’
Interviewer: It may not be practical but when you make a policy the public expect you to have gone through all the relevant guidance whether it’s 1,000 pages or not. Why is that not happening?
‘Well of course the policy intention is that everyone be reviewing exactly how much accommodation is needed in a particular social home. So there was never any intention to exempt a particular group of people. But I gather that there are some people who’ve perhaps been continuously in the same property for 17 years and no one had spotted for many years that there was this particular page in this 1,000 pages of guidance.’
Esther McVey would have blustered her way through the interview. Baldwin did at least try to answer the question and she makes a fair point that nobody else had spotted the blunder. I’m also assuming that the interview took place before the DWP made regulations to close the loophole from 3 March. However, for me her use of words and phrases like ‘apparently’, and ‘I have not heard’ and ‘I believe’ spoke volumes about the way that faith in the policy seems to be draining away even within the government.
Which brings me to my fifth and final point. When it wants to, Channel 4 can make programmes that illuminate the real issues about welfare reform rather than stereotype the people affected. Benefits Street, which followed an hour later, may have improved since the opening episode but it represents the second kind. I wrote about that yesterday for my other blog here.
It was the housing shortage rather than the housing crisis that he said would last for 10 years but it was still a surprisingly frank admission from George Osborne.
This was the key quote from the chancellor yesterday that was the basis of the stories in this morning’s papers:
‘I imagine if we were all assembled again in 10 years’ time we’d still be talking about the challenge of making sure that our housing supply kept up with housing demand and we’re all legislators here and we all have a responsibility to the next generation.’
He also made possibly his strongest statement yet on the need for new homes:
‘I don’t pretend this problem is going to be solved in a couple of months or a few years. It is a big challenge for our country – we have got to build more homes and we’ve got to create an acceptable political and social climate where people will want to see homes built so that their children have the prospect of living near where they grew up.’
It’s certainly hard to disagree with a statement that could have been scripted by the Yes to Homes campaign. Perhaps it was the setting that made Osborne think so long term: he was being questioned by members of a House of Lords economic affairs committee whose members include Lord Lawson, the chancellor in charge at the start of the housing crisis in the late 1980s.
But as Isabel Hardman notes on her Spectator blog (which also has audio of the hearing yesterday), that raises political tensions within the government: while Osborne and the Treasury think planning reform has not gone far enough, there is little prospect of anything more happening before the 2015 election.
However, even 10 years may be an under-estimate. The Home Builders Federation, whose members admittedly have a vested interest, argues that England needs to see 250,000 homes a year for 20 years to solve the crisis.
But do ministers yet accept there is a crisis? Osborne didn’t actually use word yesterday: his argument is that there was a failure of the housing system rather than the housing market and that Help to Buy is addressing it. But he also found time to blur the affordable/social distinction to boast that 'we have a large social housing programme underway' [thanks to @Simplicitly for reminding me of this]. And, from his first TV interview on, housing minister Kris Hopkins has denied that there is a housing crisis.
In an opinion poll last week though, 82 per cent of Londoners begged to differ. In a poll commissioned by London Councils 27 per cent said that the affordability of housing was the most important issue facing the capital, compared to 23 per cent saying housing, 14 per cent crime and 10 per cent immigration. It’s hosting a meeting on how to meet London’s housing need tonight.
For me the deeper point is that, desperately needed as they are, new homes can only offer a long-term solution. Things need to happen in the short and medium term too but that does seem to be increasingly recognised by Labour and the Conservatives, who each now have an independent commission looking at future policy.
An indication of a new urgency in the debate on housing came in a report by the think tank Civitas on Monday proposing to ban non-EU citizens from buying residential property unless it adds to the housing stock.
The idea is borrowed from Australia, where overseas purchasers are banned from buying established homes and have to apply to a Foreign Investment Review Board to buy a new one. There are doubts that this works even in Australia but it is still significant to see a free-market think tank calling for state intervention.
Seeing ourselves as others see us can be an uncomfortable experience and so it is proving for ministers responding to United Nations special rapporteur Raquel Rolnik.
Her preliminary report in September called for the abolition of the bedroom tax and prompted a furious row with Conservative party chairman and former housing minister Grant Shapps. Now his ‘woman from Brazil’ is back with a final report that uses the approved Conservative term ‘removal of the spare room subsidy’ but still recommends that it ‘should be suspended immediately and be fully re-evaluated in light of the evidence of its negative impacts on the right to adequate housing and general well-being of many vulnerable individuals and households’. You can read the full report here [downloads Word doc].
The government has had over four months to decide how to respond to the final report so it is perhaps telling that it can’t quite decide how. The official DCLG response from housing minister Kris Hopkins is that Rolnik ‘has failed to correct a number of inaccuracies that have been repeatedly been made clear, meaning her recommendations are of very limited relevance’.
Yet he also pops up to tell The Guardian that it is ‘a misleading Marxist diatribe’. And the DWP demonstrates its ability with pots and kettles by describing the report as ‘based on anecdotal evidence and the conclusion was clearly written before any actual research was completed’.
But the final report is about far more than the bedroom tax. It judges the UK’s record to the right to adequate housing under a succession of UN conventions and covenants on social and human rights that our government has signed since 1951. It analyses the current housing situation and its impact on specific groups including people with low incomes, the homeless, the disabled and sick, young people and Gypsies and Travellers though its recommendations are not binding on the UK government.
However, the crucial point is that the starting point for the analysis is the UK’s previous exemplary image on housing and human rights. The conclusions and recommendations start with these two paragraphs:
‘The Special Rapporteur commends the United Kingdom for its history of ensuring that low- and middle-income households have access to adequate housing and have been protected from insecure tenure forms and poor housing conditions. People in the United Kingdom have a deeply anchored trust in their right to housing, regardless of income or other status.
‘Some of the policies and practices that played a role in ensuring access to affordable and well-located housing, facilitating enjoyment of the benefits of mixed neighborhoods in urban centres, and embedding housing in the social safety net serve as inspiration around the world. The Special Rapporteur praises the priority given to social and affordable housing by various Governments over time, including through public funding for specific housing-related policies.’
The International Covenant on Economic, Cultural and Social Rights, which we ratified in 1976, establishes ‘the principle of progressive realization in the right to adequate housing’. It commits member states to take special care ‘to avoid unjustified retrogressive measures’ and ‘examine themselves against their own legislation and policies’.
This is the context for the recommendations that follow on policies that Raquel Rolnik considers are ‘retrogressive’. These cover the policies of successive governments since 1976, not just this one.
She also recommends that the UK government should:
- Assess and evaluate the impact of welfare reform on the most vulnerable people, including whether the costs of implementation may outweigh the savings and whether there are alternative ways to achieve the same objectives
- Extend and expand grants and subsidies for social housing ‘as these have been essential in responding to the housing need of the most vulnerable’
- Ensure that current measures to release public land favour social and affordable housing
- Consider planning measures for the immediate development of land, ‘build or lose’ safeguards and priority for affordable housing
- Put in place target measures to increase the supply of housing in the private market
- Increase regulation in the private rented sector, including minimum length of contracts, restraints on rent increases and strict limits on eviction.
- Promote measures to reduce discrimination against Gypsies and Travellers and to protect the right to adequate housing for migrants and Roma.
- Address persistent inequalities in housing in North Belfast.
So this report is about far more than just the bedroom tax, or even what you call it: it challenges many of the key changes in UK housing policy made since the late 1970s as well as questioning some current government policies and highlighting areas of discrimination. For anyone looking at housing in terms of social and human rights, these are obvious points. But tor Conservatives suspicious of anything that even mentions human rights, this is clearly enough to make it a Marxist diatribe.
Ironically, on the same day the Special Rapporteur confirmed her call for the immediate suspension of the bedroom tax, one part of the UK revealed that it wants to go as far as it can towards that within its existing powers.
Northern Ireland, of course, has still not implemented the policy and it seems likely that it will not apply to existing tenants when it does. Now Scotland’s deputy first minister Nicola Sturgeon is calling on Lord Freud to lift the cap on discretionary housing payments so that Holyrood can add an extra £15 million. That would bring the total budget to £50 million, which would be enough to cover all of the losses suffered by the 76,000 Scottish households who are having their ‘spare room subsidy’ removed (though I can’t see how it will make up for other housing benefit cuts too).
Which brings me back to the quote at the beginning of this blog. ‘To see ourselves as others see us’ is a quote from the English translation of the ending of ‘To a Louse: On Seeing One on a Lady’s Bonnet at Church’ by Scotland’s national poet Robert Burns. The whole verse seems strangely apt:
‘And would some Power the small gift give us
To see ourselves as others see us!
It would from many a blunder free us,
And foolish notion:
What airs in dress and gait would leave us,
And even devotion!’
There are at least three contrasting and sometimes conflicting imperatives at the heart of the prospectus for the Affordable Homes Programme published this week.
The first (let’s call it the HCA one) is a pragmatic desire to do more with less in difficult circumstances. The second (the political one) is the imperative of big numbers to be able to quote in press releases and in parliament. The third (the ideological one) is a determination to exploit these circumstances to accelerate the slow death of social housing. Amid the tensions between these three aims several vital issues are barely addressed or else ducked completely.
A quick read of the introduction by housing minister Kris Hopkins illustrates all of these points and more. He boasts that £3.3 billion plus £20 billion in private investment will ‘support the delivery of 165,000 additional affordable homes’. That’s on top of ‘the already strong track record of this Government, with over 170,000 affordable homes built over the last three years’. Leaving aside the fact that there will – probably – be 170,000 but they won’t be finished till 2015, these are nice big numbers to deploy at every opportunity along with the one about the biggest housing programme for 20 years.
But his next statement really made me think:
‘Every penny of public money must be spent wisely, to deliver the most benefit for our citizens. That is why we overhauled the model for funding affordable housing in the current programme. As a result, we now get more than twice as many homes from each pound of public money we spend on grant, compared to the 2008-2011 programme.’
The last bit may be true but is ‘every penny of public money’ really being spent wisely when everyone knows that there is a long-term price to be paid for Affordable Rent that will get higher the more it is used? Money saved on grant now by the DCLG will have to be paid out by the DWP in future to cover the housing benefit bill on the higher rents.
It was far from clear even in the DCLG’s own impact assessment of Affordable Rent 1 that it offered the best value for money over the long term. Questions were also raised by both the National Audit Office and the Public Accounts Committee about the 2011-15 programme, even though less than half of it consists of Affordable Rent homes and only a limited number of conversions of re-lets were envisaged. They have still not been answered before the 2015-18 programme of 165,000 homes mostly for Affordable Rent plus accelerated conversions and disposals. The detail has no doubt been discussed with the DWP but, given that the programme only starts after the next election and the bill will only be paid over the long term, you wonder how hard the point was pressed.
‘Value for money’ is mentioned 44 times in the document but not defined anywhere. ‘Housing benefit’ gets only five mentions and three of those are in an annexed letter from 2011. The only consideration that I can find of the long-term costs and benefits comes in a paragraph on ‘meeting local needs’. Local authorities will be able to give their views on the programme but:
‘For the purposes of this programme, it is not expected that local authority priorities will include a preference for social rent over Affordable Rent the intention of the programme is to provide new Affordable Rent homes (and, where appropriate, affordable home ownership homes). In general, Government policy does not support the argument that only rents at or close to social rent levels are capable of meeting local needs, particularly when support for housing costs through Housing Benefit and Universal Credit is taken into account.’
Housing benefit will, in other words, continue to ‘take the strain’ even though, as DWP ministers never cease to remind us, it is also ‘out of control’.
Then there is the whole issue of what counts as ‘affordable’. The word is mentioned more than 200 times but is not defined anywhere except by the assumption that anything that is up to 80 per cent of market levels must therefore be ‘affordable’. But affordable for who? For the DCLG in terms of minimising the capital grant required up front for the maximum number of homes? Tick. For the tenants? Nobody seems very interested. For the DWP’s housing benefit budget? Who cares?
Affordable Rent 2 is quantifiably different to what went before. What in 2010 was a short-term fix has become a wholesale shift from social to ‘affordable’ without any public debate about the rents that tenants can actually afford. The requirement on conversions of re-lets seems to have been fairly easy to ignore in the first round but social landlords wanting grant funding in the 2015-18 programme will have to demonstrate ‘value for money’ not just in their bids to build new homes but also in their conversion of re-lets to Affordable Rent and their plans to sell off high-value stock.
The Greater London Authority’s version of the programme published before Christmas recognised some of these tensions by allowing for some ‘capped rent’ homes in areas where Affordable Rent would be too expensive. The HCA prospectus covers the rest of the country and does not have to deal with the same extremes as in the capital but it offers little alternative to Affordable Rent or affordable home ownership. There are additional measures to prevent local authorities from blocking Affordable Rent in their areas. Even on the smaller homes intended for bedroom tax downsizers ‘providers, supported by the relevant local authorities, will have to make a strong case to demonstrate why Affordable Rent would not be a viable alternative’, leaving open the possibility that a new smaller home could actually be more expensive. And localities where there is little difference between social rents and 80 per cent of market rents will not escape either: they will be expected to convert re-lets to shared ownership.
In an excellent blog this week Colin Wiles urges housing providers to ‘just say no’ to the new regime and refuse to bid. I hope many of them will do just that: in some ways, the prospectus points in this direction by saying that it expects a proportion of the homes to be delivered without grant. That being the case, why not act independently without the strings?
However, recent history shows that each time housing associations have been presented with a chance to say ‘no’ to new conditions for grant funding enough have said ‘yes please, where do we sign?’ to allow it to go ahead. That was what happened with the introduction of private finance in the first place, with each successive reduction in the grant rate and with the first round of affordable rent, which ended up being over-subscribed despite quite widespread doubts expressed in advance by anonymous chief executives.
Which brings me back to those three contrasting and conflicting aims. From a pragmatic point of view, the best associations have become more business-like and efficient, delivering more for less, so why not make the rest of the sector follow suit? Why shouldn’t organisations that receive public money have a duty to manage their assets as efficiently as possible? Shorn of the newspeak title of ‘Affordable Rent’, there is a pragmatic case to be made for delivering new homes at higher rents to maximise output. This seems to a trend across the developed world and SNP Scotland and Labour Wales both have schemes that include homes at closer to market rents.
But these are additions to, not replacements for, a social housing programme and they do not involve converting or selling off what already exists. In England politics and ideology have trumped pragmatism and policy in the rush to implement Affordable Rent for new homes and for whole swathes of the existing stock. Using the assets created in the past to invest wisely for the future is one thing. Cashing in the ‘value for money’ generated in the past to create a future that will not be ‘affordable’ is quite another. When it comes to Affordable Rent 2, more is less.
The weekend’s big speech by Ed Balls looks like significant news for housing under a future Labour government – and not just for the obvious reasons.
The national headlines from the shadow chancellor’s speech to the Fabian conference were taken by his pledge to restore the 50p rate of tax and subsequent accusations that Labour is therefore anti-business. The undoubtedly good news for housing was that it will be ‘a central priority’ if Labour wins power in 2015.
But it was Balls’s message about ‘fiscal discipline’ that was more interesting to me:
‘We won’t be able to reverse all the spending cuts and tax rises that the Tories have pushed through. We will have to govern with less money, which means the next Labour government will have to make cuts too. No responsible Opposition can make detailed commitments and difficult judgments about what will happen in two or three years time without knowing the state of the economy and public finances that we will inherit.
‘But we know we will face difficult choices. The government’s day-to-day spending totals for 2015/16 will be our starting point. There will be no more borrowing for day-to-day spending. Any changes to the current spending plans for that year will be fully-funded and set out in advance in our manifesto.’
On the fact of it, that sounds horribly reminiscent of Tony Blair and Gordon Brown’s pledge to stick to Conservative spending plans for the first two years of the Labour government after the 1997 general election. While that was effective politically in signalling New Labour’s determination to break with the party’s tax and spend image, the results were disastrous for housing investment because the Tories had already penciled in deep cuts for 1997/98 and 1998/99. Never mind two years, investment in new homes did not match the level Labour had inherited for another seven in real terms. This was the root cause of the failure to invest enough in new homes that the party now acknowledges.
However, the crucial difference this time around is that the pledge by Balls applies to current spending, leaving room for capital investment and for borrowing to finance it.
This was the context for the passage on housing:
‘We need Help to Build, not just Help to Buy. This would help people aspiring to own their own home, create thousands of jobs and apprenticeships and ensure we have a recovery that is built to last. And it is why housing investment will be a central priority for the next Labour government.’
That was immediately followed by:
‘Of course, there is a careful fiscal judgement to be made. I have said that there will be no more borrowing for day to day spending in 2015-16. But consistent with our tough fiscal rules, we will assess the case for extra capital spending to boost growth and jobs and make our economy stronger for the long-term.’
Housing is particularly strongly placed within this financial framework since it is arguably the only sort of capital spending that simultaneously reduces current spending: more new homes at lower rents means a lower housing benefit bill.
Exactly this point was made by Ed Miliband in an article for the Sun on Sunday yesterday in which he said there will be tough controls on social security: ‘But to deal with welfare spending properly, we will need to make big reforms to cut the costs of failure in the system. We will build more homes to get the costs of housing benefit down.’
In effect, the rule on current spending will necessitate a reversal of the trend seen over the last 35 years of subsidising rents rather than bricks and mortar and letting housing benefit take the strain. The prospectus for the latest Affordable Homes Programme published this morning, with its heavy emphasis on conversions to affordable rent and disposals of high-value stock, moves even further in this direction.
If Labour’s pledge and a reversal in this trend sound like very good news for housing, there’s just the small matter of winning the election first after a campaign in which the other parties will argue that the financial framework will leave the back door open to more Labour borrowing.
And, even if Labour does win in 2015, new homes will take time to build and to start to bring down the housing benefit bill. If 100,000 additional new social rented homes were built with rents £70 a week lower for 100,000 families moving from the private rented sector the saving would be £364 million a year. That would continue year after year but it compares to a total housing benefit bill of £24 billion.
However, that ignores the short-term fiscal benefits from the construction programme. On a fairly conservative assumption that each home built could save the Treasury £20,000 in higher tax revenue and lower benefit payments (each home generates 1.5 construction jobs), those 100,000 homes could deliver a gain of £2 billion.
Elsewhere at the Fabian conference, rent capping emerged as by far the most popular policy at a Dragon’s Den-style session. The idea was also endorsed by frontbencher Sadiq Khan, according to Mark Ferguson of Labour List. However, shadow housing minister Emma Reynolds promptly tweeted that ‘it is not Labour party policy to introduce rent controls’.
So are private landlords about to pull out of the housing benefit market or not?
It’s one of the most crucial questions for the future of the housing system but the answer may be more complex than recent publicity suggests.
The alarm was raised when Fergus and Judith Wilson, the King and Queen of buy to let, revealed that they were evicting all of their tenants on benefit. A poll yesterday by the website spareroom.co.uk found that only 18 per cent of landlords currently rent to claimants, down from a third two years ago.
A combination of different factors seems to be at work here, starting with the April 2011 cuts in the local housing allowance, continuing with further cuts such as the overall benefit and culminating in concern about the impact of universal credit and the presumption that the housing element will be paid direct to the tenant rather than the landlord. The most worrying finding from the poll was that half of those currently letting to claimants said they wouldn’t after the introduction of universal credit.
However, a survey in London by the Residential Landlords Association (RLA) presents a more mixed picture despite the fact that the capital is where many of the housing benefit cuts are having the biggest impact. In contrast to the poll, 36 per cent of landlords say they continue to let to benefit claimants and 63 per cent say their tenants have not fallen into arrears because of the cuts.
In terms of specific changes, 59 per cent say they have not stopped renting to claimants under 35 because of the change to the single room rent but 74 per cent say they are more reluctant to let to claimants because of the benefit cap.
So far, so good for the DWP and its hopes that the private rented sector will absorb the changes but only 9 per cent of RLA members say they have reduced their rents because of the LHA changes and only 6 per cent say they would be willing to drop the rent so their tenants could stay in London. Meanwhile 46 per cent have concern that working age claimants whose benefits are restricted will be driven out of the capital altogether.
This is at odds with the hardline stance taken by the Wilsons across their 1,000-home portfolio in Kent. They say they will refuse to take tenants on housing benefit and have ended the tenancies of 200 existing claimants who should ‘get a job’.
In a series of media interviews over the last month, they have cited many reasons for this decision: principally the non-availability of rent guarantee insurance for claimants but also rising levels of rent arrears, the shortfall between LHA rates and rents, the prospect of direct payment under the universal credit and the availability of alternative Eastern European tenants who are working.
If you haven’t seen them yet, watch Fergus Wilson’s ‘If I’m heartless then all landlords are’ interview with Channel Four News and read his bizarre ‘Fergus calling Dave’ statement to The Guardian. Discussion forums reveal some frustration from other landlords with ‘the story that refuses to die’.
The extensive coverage has certainly raised the media profile of the housing benefit issue but are the Wilsons representative of private landlords as a whole? If the London survey perhaps suggests not, are the more professional landlords who tend to be members of national organisations taking a different attitude to the small buy-to-let investors in the website poll?
Richard Lambert, chief executive officer of the National Landlords Association, says its research shows ‘more and more landlords moving away from renting to tenants claiming benefits’. However, he says it also knows of many landlords who have never had a problem and specialise in the claimant market. ‘They tend to be the more experienced landlords with larger portfolios, who understand how to manage tenancies to ensure stability and minimise the risk of arrears.’
RLA consultant Bill Irvine argues that there is no need for landlords to follow the Wilsons’ lead: demand is high, margins are good and the threat posed by the universal credit is exaggerated. He says the government has already made concessions on direct payment and in any case the national introduction of universal credit will not happen until after the 2015 general election.
In the Commons this week, ministers played down fears of a private renting crisis. Housing minister Kris Hopkins said that ONS showed that rents were rising by 1.1 per cent in England and 1.9 per cent in London, which were both below inflation, and boasted about £2 billion of bids for phase 2 of Build to Rent. Asked by Labour’s John Healey how he would ensure that claimants were able to access the market, he said:
‘The key to making the private rented sector accessible to all is to build more homes for rent. That is why we are investing in the private rented sector through the £1 billion Build to Rent fund and giving £3.5 billion in guarantees to get builders building—and we will deliver 170,000 new affordable homes by 2015 through this process.’
Labour’s Sheila Gilmore tackled communities secretary Eric Pickles over his denial in an earlier debate that landlords were refusing to rent to people on housing benefit. Given the reports about the Wilsons, she asked, would he carry out a proper inquiry? Pickles replied that ‘there are a lot more private landlords than just that particular gentleman, and I do not think he represents anything that speaks of the sector as a whole. The short answer is no.’
Only time will tell if that complacency from Pickles is justified but Hopkins’s response of using stats about affordable homes that are not privately rented does not fill me with great confidence. Neither does his comparison between rents and inflation. At a time when rents are still rising faster than both earnings and the 1 per cent cap on increases in the local housing allowance it is completely irrelevant.
If the action taken by the Wilsons is unrepresentative of the sector as a whole, the caps and cuts are undoubtedly having an impact on landlords as well as tenants. It’s one that will vary around the country according to local market conditions but as demand continues to rise the pressure grows. Housing benefit may have taken the strain for more than 20 years but for how much longer?
So Nick would like two, Eric (through clenched teeth) one or two, Emma five and Boris none. It’s time to play the garden cities game.
A quick look at the electoral map of constituencies around London tells you most of what you need to know about the politics involved. You’ll find a sea of Tory blue in the swathe of seats closest to the capital with only Labour Slough, Luton and Oxford and Lib Dem Lewes and Colchester anywhere near to being affected.
It also explains why David Cameron’s interest has waned and a government-commissioned study on new towns has allegedly been blocked. According to the FT, a Downing Street official has even joked that the only possible sites should be Buckingham and Mid Bedfordshire, the seats of Tory outcasts John Bercow and Nadine Dorries.
Add to that mix the curious leak to the Telegraph of the names of two sites supposedly identified that seem almost guaranteed (and maybe intended) to inflame further Conservative opposition. Gerrards Cross is one of the most exclusive and expensive parts of Buckinghamshire, while much of Yalding in Kent was last seen underwater as its residents confronted Dave.
That was part of a story on Saturday that led on a call from Nick Clegg for Cameron to be ‘honest and upfront’ about where the garden cities will be. He says:
‘We cannot make the mistakes of past governments and sit on our hands while a whole generation of people are squeezed out of the housing market. It is our duty to change the story. We must bring decades of indecision and stagnant political will to an end. That is why I am a strong advocate of garden cities, where there is clear local support and private sector appetite. In 2011, our housing strategy committed us to publishing a prospectus for new garden cities and that is exactly what we’ll do.’
All of which was clearly too much for London mayor Boris Johnson, who uses his Telegraph column this morning to accuse the deputy prime minister of planning to ‘plonk colossal new Cleggograds and Cleggopolises’ in Buckinghamshire, Oxfordshire and Berkshire. This of course has nothing to do with his political ambitions beyond the capital.
Away from the coaliton infighting, Labour’s Emma Reynolds continues to quietly and effectively make the case for starting work on five new towns in the next parliament as the Lyons Commission prepares to get down to work on the detail.
Johnson says Clegg has clearly not read his London Plan, ‘a 1,000-page vision for addressing the London housing shortage’. The only garden city needed is the one he wants to build on the site of the closed down Heathrow airport once approval is given for his Boris Island airport hub in the Thames Estuary.
He is right to point out that London’s population was bigger in 1939 than it is now, even though it is growing rapidly. He boasts that making better use of brownfield sites could deliver 47,000 homes a year.
However, the alterations to the London Plan published last week only come up with 42,389 a year against a minimum annual need of 49,000 and a long-term requirement of 60,000. Any of those figures are a massive increase on the miserable average of 18,000 a year achieved over the last 20 years. And, even if he could achieve everything in his plan, much would depend on decisions being made on future airport capacity that are out of his control.
Someone starting from scratch might well build a hub airport east of London, assuming they could solve the technical issues that derailed similar previous plans. However, the Airports Commission made it clear before Christmas that the shortlist is Heathrow and Gatwick plus face-saving ‘further studies’ of the Thames estuary idea
And even if Heathrow could be closed and the £65 billion or so found to build the new airport, how many homes could the site really take? Last year Johnson was saying 100,000 homes and 250,000 people. That has fallen to 200,000 people in this morning’s article.
A future-gazing paper by Graeme Bell for the Town and Country Planning Association imagines the closure of Heathrow and the design of a garden city with a much more modest 14,000 homes for 30,000 people in four garden suburbs and two urban villages.
So whichever way you look at it, London’s housing crisis needs a solution that looks outside as well as inside the capital. It will require building on brownfield land but it seems useless to pretend that it will not also require more controversial policies such as reviewing green belt boundaries, densifying the suburbs and new towns/garden cities.
And whichever way you look at it, the politics look poisonous and the plans look vulnerable to sabotage. However, this is nothing new. When Lewis Silkin, the town and country planning minister in the 1945 Labour government, arrived in Stevenage for a meeting about the first proposed post-war new town he found that the train station signs had been changed to read Silkingrad. According to David Kynaston’s Austerity Britain, he told a hostile public meeting: ‘It’s no good your jeering, it’s going to be done.’ And it was.
Far more vociferous opposition can be expected 70 years on and Silkin’s successors will need a thicker skin and even more determination to build Reynoldsgrad, Cleggopolis and Picklesville while Boris Johnson plays Fantasy Island.
A remarkable thing happened yesterday: Iain Duncan Smith used a five-letter word beginning with S.
Apologising for a mistake is just about the last thing any minister wants to do, but IDS got his chance when Labour’s John Healey asked him at work and pensions questions about the DWP’s bulletin admitting the pre-1996 under-occupation penalty error. Healey quoted the latest survey from the Northern Housing Consortium that ‘nearly half of all frontline housing workers have dealt with someone who has threatened to commit suicide’ largely because of the government’s welfare changes. ‘Will he apologise this afternoon to those people for the concern and chaos that he is causing?’
Duncan Smith replied: ‘I said it all right, and I say it again: the Department is, and I am, absolutely sorry that anybody may have been caught up in this who should not have been.’ So not just an apology but a double ‘sorry’ from both the secretary of state and his department. But before anyone gets too excited, he went on:
‘However, what we were left by the last Government was this: 1,000 pages of complex housing benefit regulations. Under universal credit, they will be reduced to 300 pages and we will simplify them. The reality is that this is a problem of the massive complexity of housing benefit that the last Government left us, with a housing benefit bill that has been rising and that doubled in 10 years on the right hon. Gentleman’s watch.’
So it turns out this was a conditional apology: we’re sorry we didn’t spot the loophole in the regulations but it was actually the last lot’s fault for making them too complicated. That will come as some compensation to the thousands of tenants who’ve been wrongly paying the bedroom tax since April for the stress they’ve been through, to the thousands of other tenants who may have missed out on discretionary housing payments, and to the landlords and local authorities all over Britain for the time and cost involved in rectifying the DWP’s mistake.
Duncan Smith used the same argument earlier when Tory backbencher Bill Wiggin put forward what Healey called a planted question asking him to explain what had happened:
‘Yes, this is a narrow but complicated area dating back to 1996 with the introduction of local reference rent rules. They were intended to offer transitional protection at that time for existing claimants, but they were not in any way time limited. There was another opportunity, in 2008, to change the regulations when the previous Government brought in local housing allowance. They were not adjusted then. This protection had been dormant for 17 years and not used. This is a complex area that we are now resolving, but I have to say that in three different Governments it has missed the attention of Ministers.’
However, that ‘all the others missed it too’ rather ignores the point that previous reforms intentionally gave transitional protection to existing tenants whereas the bedroom tax did not. And the conditional apology is still more than appears on the DWP’s website. Almost a week after it admitted to the error in the HB U1/2014 circular to housing benefit staff, there is still no statement from a minister or user-friendly information for tenants or landlords.
Duncan Smith had a more robust answer later when his Labour shadow Rachel Reeves asked him ‘how many long-term residents have been wrongly paying the bedroom tax since April’ because the government failed to spot the loophole:
‘We have already made it clear that the number is likely to be between 3,000 and 5,000, but we will be clearer about that when the local authorities, which are responsible for collecting the data, come forward with the final facts.’
Reeves said it was a ‘total shambles’ and he did not have a clue whether the number was 5,000 or 40,000. ‘Will the Secretary of State now guarantee that everybody who has been wrongly paying the bedroom tax will be reimbursed, and instead of closing the loophole, will the Government now do the right thing and scrap the bedroom tax?’
IDS: ‘Yet again, what we have from the honourable Lady is a moan about a policy that helps people in difficult circumstances. I said earlier that not once has she come to the Dispatch Box and said that she was concerned about those her party left behind living in overcrowded accommodation. Not once has she mentioned the 1 million on the waiting list or apologised for the fact that building levels for social housing fell to their lowest point since the 20s. Of course we will look after those affected by the policy, but she must make it clear that she supports one of these policies; otherwise, there will be a total cost to the Exchequer. The shambles is on the Opposition’s part.’
Duncan Smith was mixing up two different coalition housing attack lines there with that gibe about social housing falling to its lowest level since the 1920s but his point was clear: if anyone should be saying sorry it’s Labour.
There was still time for one more question from Labour’s Andrew Gwynne about what he called ‘this latest bedroom tax shambles’: ‘Can the Secretary of State clarify whether he will write off, or seek repayment for, discretionary housing payments that have been made to those people who will now receive back payment of housing benefit?’
And Duncan Smith’s answer was worryingly unclear for the tenants affected: ‘I made it clear in my previous answer that I will be coming forward with full details about that, including the number of people affected.’
It was left to junior minister Esther McVey to answer the scheduled questions on the under-occupancy penalty that covered the impact on 60,000 carers in particular. McVey repeated her claim from last year that ‘we have got to have more smaller buildings’ and the familiar line about discretionary housing payments: ‘We have allowed discretion for those people who might need it the most, hence it is called “discretionary”, hence it has been trebled and hence we are supporting these people.’
Elsewhere at work and pensions questions, ministers were asked about problems with a range of other policies including work capability assessments, personal independence payments and, of course, the universal credit.
Asked whether there will be further delays, Duncan Smith insisted that it ‘is set to roll out according the timetable I laid out the other day’ (presumably the one before Christmas that revealed further delays). He also denied reports of a split with the Cabinet Office over his ‘lamentable’ implementation of the policy as ‘farming in and around old e-mails’.
He hit back with some stats of his own in response to a series of friendly questions from Tory MPs. He said local authorities had only spent 40 per cent of their discretionary housing payment budgets in the first half of the year and argued that Labour authorities should get on and spend the money if there was a problem.
And he strongly hinted that the government was considering a further reduction in the benefit cap when Conservative Andrew Bridgen said that £26,000 was higher than the average post-tax income in their constituency:
‘We will keep the policy under review, but the one thing we should celebrate is that we are reforming welfare to ensure that those who need the money get it, and those who do not get back to work.’
The bedroom tax may have a loophole and the roll out of the universal credit may be more of a crawl-out, but IDS remains as unapologetically certain as ever about his historic mission.
Like bald men with a comb, the politicians squabbled yesterday over who has the worst record on housebuilding.
The ghost of Stanley Baldwin occupied the green benches once again as Hilary Benn and Eric Pickles traded stats to show that each other’s governments had built the fewest new homes (in England) since the 1920s.
So where Benn opened the opposition debate with the accusation that ‘in the three years for which he has been in charge, the number of homes completed in England has fallen to its lowest level since Stanley Baldwin was first prime minister’, Pickles countered with ‘when I walked through the door of Eland House the spirit of Stanley Baldwin and those figures met me. That was our baseline—that is what we actually started from.’
And up popped former Lib Dem minister Andrew Stunell with the familiar stat that social housing fell by 421,000 homes under Labour and the more dubious claim (ignoring the affordable/social distinction) that it will rise by 150,000 under the coalition.
As with previous statistical spats involving former housing minister Grant Shapps, there are elements of truth on both sides and enough doubt over time lags and the difference between starts and completions for a comb-over to blur the edges.
For the record, the 13 quarters since the election (taking April-June 2010 as a ‘Labour’ quarter) have seen 354,000 starts in England, compared to 385,000 in the last 13 quarters of the Labour government.
On completions the gap is much bigger (458,000 under Labour to 362,000 under the coalition) but that ignores time lags in construction. Treating 2010 as a Labour year for completions, the comparison is 310,000 in the last 11 quarters of the coalition to 341,000 in the last 11 Labour quarters.
However, both 2010 and the most recent four quarters (to September 2013) saw completions fall to the figure of 107,000 cited in the debate as the lowest since the 1920s.
The figures and responsibility for them can be spun in any number of ways of course. The Labour low was the consequence of the financial crisis but whether you pin the blame for that on the world economy or closer to home depends on your political persuasion. The Tory low is arguably more troubling, since it came after a slow recovery that began in 2009.
Ironically, as Clive Betts pointed out, it’s Shapps himself who comes out worst due to a rash statement he made to the CLG select committee in 2010. Betts asked him whether success for the government would be ‘building more homes per year than were being built prior to the recession, and that failure will be building less’. The former housing minister replied: ‘Yes. Building more homes is the gold standard on which we shall be judged.’ Given that there were 177,000 completions in 2007, that looks a distant dream.
The coalition’s initial remedy was to replace Labour targets with localism and the new homes bonus. If that has failed, then the phase two solutions of planning reform and deregulation for housebuilders and stimulating demand through Help to Buy do seem to be helping to generate a recovery at last. The big question is how sustainable it will be.
However, the debate also focused on Labour’s emerging alternatives, which include new towns, use it or lose it sanctions on landbanks and the right to grow for constrained local authorities. Benn said Labour would ‘use guarantees - the government are currently using guarantees for Help to Buy - for “help to build” for these new towns’.
Pickles attacked the last Labour one’s failure on eco-towns. ‘Not a single house was built,’ he said. ‘Not one. The only thing that eco-towns built was resentment. Labour has simply dusted off and reheated its old policies under a different name.’
However, shadow housing minister Emma Reynolds raised reports earlier in the month that, after supporting the principle of new garden cities, David Cameron has now forbidden ministers to identify any sites for them during this parliament. ‘Some would say that is pouring cold water on the proposal; others might say it is putting it into a deep freeze. Labour, on the other hand, is committed to new towns, which must form part of the solution to the housing crisis.’
Probably wisely, given that Pickles is seen as a strong influence on that, housing minister Kris Hopkins did not respond to that point and concentrated instead on attacking Labour. ‘Even in the boom years, it failed to deliver the required housing. The total build dropped to the lowest number in 100 years. It promoted eco-towns—10 in total—but not one appeared. New Labour at its finest: all spin and absolutely no delivery.’
Just when you thought the debate had moved beyond who has the worst record since the 1920s and started to focus on what’s needed for the 2020s, we were back with the bald man and the comb.
The ‘hard truths’ about welfare outlined by George Osborne beg far more questions than answers when it comes to housing.
In a speech yesterday the chancellor set out plans for £12 billion worth of cuts in welfare and £13 billion cuts in departmental budgets in 2016/17 and 2017/18 if the Conservatives win the next election.
And he singled out housing as the target of two specific cuts: housing benefit for the under-25s; and council housing for people earning more than £60,000 a year.
However, a quick look at the detail of those proposals raises real doubt about how much they would really save and what else might be on the Tory agenda.
The first idea has been raised repeatedly by David Cameron and rejected repeatedly by his Liberal Democrat coalition partners. As I’ve blogged before, it brings back memories what happened when another Conservative government cut benefits for young people in 1988.
The Conservative logic is that most young people have to live at home with their parents so it is unfair that some get housing benefit for a place of their own. However, the logic starts to unravel when you look at the detail.
First, more than half of the almost 400,0000 under-25s on housing benefit have children of their own. Should they live with their grandparents?
Second, many people may not have parents to live with, or there may be very good reasons why they left home. That’s why the 1988 changes led to an explosion in the numbers of young people sleeping rough. What would happen to people fleeing domestic violence, or homeless people, or people in supported accommodation or people leaving care?
For those reasons, it is very hard to see how the cut could be implemented without significant exemptions that would dramatically reduce estimated savings of £1.8 billion.
It was interesting that Osborne himself, when asked about the plan after his speech in Birmingham yesterday, talked about the under-21s: ‘Many people cannot afford when aged 19 or 20 to have their own flat - they have to live with their parents.’
Meanwhile, after David Cameron referred to the under-25s in his Conservative conference speech in 2012, the DWP told Inside Housing that it would only apply to future claimants not existing ones:
‘We’re looking at a range of options for future reforms to the welfare system - changing the eligibility criteria for housing benefit is one of these. Any changes would affect future claimants only and we would still ensure that vulnerable people remain protected.’
If the savings from the first measure start to evaporate, those from the second will be minuscule. The pay to stay plan for high-earning households has already been out to consultation and the government has responded to the results. At every stage, its estimate of high earners has dwindled: according to the latest one there are between 11,000 and 21,000 earning more than £60,000. Even that covers all social housing tenants, not just council tenants.
No figure for savings has ever been provided, just an unsourced estimate that ‘on average across England the economic subsidy provided by sub-market rents on social housing is worth an estimated £3,600 per annum’. Even taking this at face value, the maximum amount involved is 21,000 x £3,600 or £76 million a year. But this would not be a saving in housing benefit. It would presumably go to landlords and in theory could support new homes but there would be considerable costs administering the income checks for the system and considerable incentives for people to declare an income below the threshold.
And the ‘savings’ here are such that any remaining high earning households would face a choice between paying a higher rent or doing the right to buy with newly increased discounts by a government which is spending £100 million to publicise them.
So to get to anything like £12 billion the government must have other cuts in mind. Since the Conservatives have ruled out cuts for pensioners, housing benefit is the next biggest budget. The most likely options for people of working age might include yet more uprating at below the level of inflation to follow the 1 per cent for next year and the year after or a reduction in the current overall benefit cap of £26,000.
However, as Kate Webb blogs for Shelter, Osborne has already done the easy cuts and more could mean a complete withdrawal of the safety net for some groups:
‘He says there are no easy options; but does the lack of detail mean there are no realistic cuts left that won’t push the system to breaking point, or that the chancellor doesn’t think the public are ready to be fully confronted with the reality of a broken safety net?’
Little wonder that today’s papers are reporting a split between Osborne and an alarmed work and pensions secretary Iain Duncan Smith.
As for the £13 billion savings in the departmental budgets, it’s hard not to detect a grim message for public housing investment. David Montague of London and Quadrant blogs about the options, including better use of public land and government guarantees, here.
However, the main purpose of Osborne’s speech is political, to set a baseline for public spending and challenge the opposition parties to say whether they agree and, if not, what else they would cut or what taxes they would increase or how much they would borrow.
Nick Clegg has already rejected his ideas as a ‘monumental mistake’ and the Liberal Democrats seem set to go into the election with an alternative proposal on housing: a mansion tax to raise £2 billion.
Labour is refusing to fall into what it sees as an obvious political trap. However, in terms of housing, it must increase the temptation to look for alternative ways of saving money that would fit in with what it is already doing in terms of predistribution and intervention in the private market elsewhere.
An increase in the minimum wage, or introduction of the living wage, would be one way of cutting the housing benefit bill. And if ‘rent stabliisation’ for the private sector was already under discussion it must surely be on the agenda now.
Here’s a few things you may have missed over Christmas and the New Year.
1) Homes for locals
It’s New Year’s Eve. Everyone has their mind on what to do tonight (or how to avoid the whole thing). Just the time to publish the guidance on providing social housing for local people.
The timing probably had more to do with the opening of the UK labour market to Bulgarians and Romanians on January 1, as the guidance was published at the same time as the DWP press released its ‘tough new migrant benefit rules’. The policy has everything to do with Conservative v UKIP politics.
At first glance the guidance seems to follow quite closely the draft published in October. It ‘strongly encourages’ all housing authorities to include a residency requirement as part of their qualification criteria and ‘believes that a reasonable period of residency would be at least two years’.
The Housing Law Practitioners Association had warned in its response to the consultation that ‘we fear it will be impossible to craft a lawful policy’ given statutory duties to former asylum seekers, the homeless (especially with out of area placements), people with nomadic lifestyles and EU nationals. It said that the DCLG would have to come up with sufficient exceptions to the residency test, not just different ways of satisfying the test.
The guidance does seem more nuanced than the press release from Eric Pickles (though that would not be hard). It does include a more explicit section on ‘providing for exceptions’ so that housing authorities can ‘retain the flexibility to take proper account of special circumstances’ such as people fleeing domestic violence, homeless families housed outside their district and people needing support to rehabiliate back into the community. It also specifically mentions people downsizing to smaller homes and hard to let stock.
And it also mentions two government priorities that would otherwise be stymied by the residency test: the right to move for social tenants seeking to move to take up a job or be closer to work; and members of the armed forces.
No impact assessment has yet been published.
2) ‘No progress’ on housing supply
Government measures aimed at stimulating housing supply came under scrutiny from possibly the best source of non-partisan analysis around: the House of Commons Library. A standard note looks at the demand implied by household projections and the measures taken since the housing stimulus package of September 2012 up to and including the Autumn Statement in December. The sobering verdict is that:
‘The recent stimulus package, reflecting the importance the Government is placing on increasing supply, has the potential to help improve the housing market. The increase in new affordable homes completed is a welcome sign that the Affordable Homes Programme, led by housing associations, may be beginning to bear fruit. However, the disappointing overall starts and completions figures suggest that significant progress on boosting supply is still some way off. With the number of households projected to grow by almost five million in the next two decades the Government will have to do much more even to come close to meeting demand. After two-and-a-half-years, it is extremely worrying that house building remains so low and that the Government’s record warrants no better verdict than “no progress” towards improving the dire state of housing supply.’
In a busy period between Christmas and New Year, the Commons Library also published notes on everything from David Cameron’s proposal to withdraw housing benefit entitlement from the under-25s to HMOs and the local housing allowance.
3) For ‘green crap’ read garden cities?
The Financial Times reported on David Cameron’s wilting interest in garden cities. The prime minister has been an enthusiast and in a speech in 2012 promised a consultation on ‘how to apply the principles of garden cities to areas with high potential growth, in places people want to live’.
That was then. Now, according to the FT, he fears a backlash from nimby voters in the run-up to the next election. The story has this quote from a Downing Street official: ‘He has said that he doesn’t want any garden cities named unless they are in Buckingham or Mid Bedfordshire.’ This is a joking reference to the constituencies of Tory MP outcasts John Bercow and Nadine Dorries.
The Conservative Party denies Cameron said this but the phrasing of the denial (‘we do not recognise any of this’) recalls another furore about a quote from Dave, that he had ordered aides to ‘get rid of all the green crap’. We know what happened in the Autumn Statement.
4) The housing market in 2014
A special edition of 5 Live Wake Up to Money on New Year’s Eve looked at prospects for the housing market in 2014 . The 50-minute programme featured some interesting responses from chancellor George Osborne, who was much more comfortable talking about Help to Buy and hard-working families (more on this from David Cameron this morning) than he was defending the government’s record on housing supply and affordable housing.
Asked whether the government can ever deliver 232,000 homes a year, Osborne noticeably ducked the chance to commit himself, merely saying that: ‘We need to be building tens of thousands more homes. I don’t put a precise number on it. I just want to see a big increase in housing available to people in this country.’
Osborne was also asked how worried he is that affordable home building is going to decline. His response featured yet another stage in the government’s conflation of ‘affordable’ and ‘social’ but (more optimistically) an endorsement of the need for social/affordable housing:
‘It’s actually going to increase. We’ve got the largest programme for building social housing for a generation. It is true that the number of social homes in this country shrank a lot over the last 15 years, a lot of it before this government came to office, there were around 400,000 fewer social homes at the end of the previous government. But what we’ve committed to is a big expansion over the next three or four years in the social home programme and also reforms to that social housing programme …Look I think that’s an important part of the housing sector and aspiration is not just about wanting to own your own home it’s also wanting to have your own home as a social tenant. We are putting money into that programme alongside the other things we’re doing.’
The full programme is worth a listen. It also featured interviews with Affinity Sutton chief executive Keith Exford and Barratt chief executive Mark Clare (who offered welcome support for more borrowing freedom for council housing).
5) Where will we live?
The current issue of London Review of Books features an essential (but very long) read on housing by James Meek. It focuses particularly on Tower Hamlets and the long-term consequences of the biggest privatisation of all: the right to buy.
Here’s a flavour of the argument:
‘Right to Buy thus created an astonishing leak of state money – taxpayers’ money, if you like to think of it that way – into the hands of a rentier class. First, the government sold people homes it owned at a huge discount. Then it allowed the original buyers to keep the profit when they sold those homes to a private landlord at market price. Then the government artificially raised market rents by choking off supply – by making it impossible for councils to replace the sold-off houses. Then it paid those artificially high rents to the same private landlords in the form of housing benefit – many times higher than the housing benefit it would have paid had the houses remained in council hands. In other words, since Thatcher, the British government has done the exact opposite of what it has encouraged households to do: to buy their own homes, rather than renting.’
The full piece looks at planning, architecture and stock transfer too and concludes with a warning that ‘the advent of the age of gentrification doesn’t preclude the advent of slumification’.
Alex Marsh has a response to the article on his blog here arguing that the whole issue of social housing needs to be reframed before significant policy change can happen. Stay with his blog too for post-Christmas posts on new towns and household debt and Help to Buy.
6) And the bedroom tax stories just kept coming.
The Mirror reported on the case of Dawn Lennon, who says she is having to cut back on food to pay the £570 a year charge on the room that has been converted into a sensory area for her severely disabled daughter Kelly Marie. The Independent reported on the 60,000 families with carers who are affected. Blogger Joe Halewood had some good news about a possible loophole for people who have continuously received housing benefit for the same property since before 1996 and a summary of what he sees as the issues for 2014.
Here’s the second part of my look back at the key themes I’ve been blogging about this year.
6) Help to Buy
If the bedroom tax was the subject I blogged about most in 2013 (see Part 1 of this blog), Help to Buy was certainly the best (or worst) of the rest.
The first hints of the scheme came in January as the coalition published its Mid-Term Review. Perhaps conscious of the gap between rhetoric and reality when it came to the government’s record on housing, David Cameron promised more help for people who cannot raise a deposit for a mortgage, with details to come in the Budget. By March Cameron and Clegg were promising what sounded to me like the coalition’s fourth housing strategy in three years. And in the Budget George Osborne duly announced what I called a huge gamble, loosening the targeting of previous schemes at first-time buyers and new homes and extending the help available much further up the income scale.
Help to Buy 2, the mortgage guarantee element, attracted criticism from just about all sides, including the all-party Treasury committee, Sir Mervyn King and the Institute of Directors. It seemed that only the National Trust’s nimby-in-chief Sir Simon Jenkins and London estate agent Foxtons had a good word to say about the scheme. I concluded that the strongest arguments in favour were the ones that ministers could not mention.
Osborne showed what he thought of all that by bringing forward the launch of Help to Buy 2 from January 2014 to the week after the Conservative conference in October. The following month Cameron was boasting that Help to Buy was ‘helping hardworking people realise their home-owning aspirations’ and making a series of statistically dubious claims about the benefits.
7) Help to Build
Half time for the coalition government was a chance to reflect on an administration that had promised to make us ‘a nation of homebuilders’. As the housebuilidng numbers flatlined, I blogged that it was clearer than ever that a complete change of tactics was required in the second half. An important report from Shelter looked at what would be needed to get to the magic number of 250,000 homes a year.
Not that any of this made any difference to government rhetoric. In July Eric Pickles quoted every statistic you could shake a stick at to show that supply was on the up – except the housebuilding ones produced by his own department. Thanks in part to the expectations generated by Help to Buy, the second half of the year did see a rising trend but completions still finished the year on half the level needed to meet demand. The government continued to claim that cutting red tape on housebuilders was the answer. The truth, as ever, was more complex. I again questioned the government’s strategy of giving housebuilders what they wanted without asking for more homes in return.
Housebuilding came to have increasing political significance too. In September George Osborne claimed that the economy was ‘turning a corner’ in a speech made at a London housing development where work that stalled during the credit crunch had just restarted. With 40 per cent of private sales to overseas buyers and separate entrances for rich and poor, the One Commercial Street scheme turned out to be a symbol of far more than the recovery he had in mind. In October Ed Miliband said that a future Labour government would aim for 200,000 homes a year by 2020 and briefings revealed the first hints of new policies. I blogged about the seductive but simplistic argument that if you fix planning you fix supply and if you fix supply you solve the housing crisis. In the wake of Alex Morton’s move to the No 10 Policy Unit (see the first part of this blog) and the formal launch of Labour’s housing commission, I debated the chances of a political arms race on housing ahead of the next election.
8) Help to Rent
The reality for those ubiquitous hardworking people was that they were becoming ever more likely to be renters rather than owners. Low interest rates and austerity effectively meant that renters were paying to keep mortgages low while the astonishing rise of self-employment was one illustration of a labour market that was no longer creating enough jobs with regular incomes to get on to the housing ladder.
In March the CIH’s UK Housing Review showed that the scale of the decline of home ownership, especially among the young, and I posed the question of whether we should be accepting this as an inevitable trend. David Cameron gave a speech pledging the Conservatives’ continued faith in the property-owning democracy of Eden, Macmillan and Thatcher, but I argued we are actually moving towards a property-owning plutocracy. When the Baroness died in April, the second of two blogs about her legacy looked at her role in turning tenants into owners.
As buy to let continued to rise, and Help to Buy started to boost prices, many of the under-45s were giving up on ever owning and millions of people were caught between stagnating wages and rising costs. Reports from Shelter and the Resolution Foundation proposed a reformed shared ownership as one solution but Savills forecast in November that private renting will grow by another million households in the next five years. Help to Buy may be the claim but Help to Rent is the reality.
9) Waking up to renting
The year began with definite signs that politicians were accepting the need for reform and engaging in genuine debate about what to do about the growth of the private rented sector. Things were changing within the sector too: April brought a symbolic move by the Prudential back into private renting, a modest move on consumer redress against letting and management agents and new signs of renter activism. The urgent need for reform was demonstrated only too clearly in a report from Shelter on the plight of private renter families with children.
Lack of action in England was all too clearly illustrated by the Welsh Government’s moves to regulate landlords and agents and implement tenancy reform. The Labour Party in England continued a policy review hinting at similar action and flirting with rent stabilisation. The all-party Communities and Local Governemnt committee attempted to find some common ground. And finally there was some movement from a government that had sets its face firmly against what it saw as ‘red tape’. The package announced by Eric Pickles in October may have been minimalist and voluntary but it also showed that the Conservatives were waking up to the issue at last.
10) Taking the strain: past, present and future
My blogs on the housing legacy of Margaret Thatcher reflected on the thing that has underpinned housing policy for the last 30 years or so: the assumption that housing benefit will ‘take the strain’ of higher rents. It seemed unlikely even at the time and even more unlikely in the wake of coalition ‘reforms’ of housing benefit (see Part 1 of this blog) and 2013 brought some new thinking about whether it was really such a good idea to subsidise rents rather than homes.
I blogged about three things in June that illustrated the growing debate about the future. A speech by Ed Miliband showed that Labour was thinking seriously about a system that only invested £5 in bricks and mortar of every £100 spent on housing. However, the outcome of the spending round seemed to point in the opposite direction: there was 10 years of certainty for rents for social housing and five years on grant but confirmation of another round of affordable rent and of yet more ‘welfare reform’. An independent commission set up by the RICS diagnosed ‘clear signs of market failure’ and proposed a series of reforms across all tenures.
The impact of all this could be seen most clearly in London, where Londoners and their leaders were waking up to the scale of the housing crisis facing the city. The furore over developers treating new developments as an export market eventually led to housebuilders proposing a voluntary pact not to market properties to overseas investors before offering them in the UK. In November Boris Johnson proposed what I call the boldest attempt yet seen from a Conservative administration to get to grips with the housing crisis. The launch of his housing strategy was a significant development with some good ideas even though I blogged that it did not go remotely far enough.
For anyone interested, I have more detailed explorations of where we are coming from and where we are going on housing in two policy essays for the CIH here. In the meantime, happy New Year.
The first of a two-part look back about the issues and people that I’ve been blogging about this year.
1) The year of the bedroom tax
Thinking back to the beginning of January it was obvious that the under-occupation penalty would be a huge issue for housing in 2013. What soon became clear was that it would go mainstream in the national media and parliament too. The closer we got to implementation in April, the more scrutiny it received, and the more that happened the clearer the unfairness and the contradictions at the heart of the policy came into focus. All the attention seemed at first to take the government by surprise too. It wasn’t until February that Grant Shapps came up with the government’s preferred term: the spare room subsidy. That prompted me to blog about the battle of language on the issue and in the wider debate about welfare/social security.
The first cracks in the bedroom ceiling began to appear even before implementation. The Northern Ireland government used its greater control over welfare policy to delay implementation and currently seems set to apply it only to existing tenants. By the end of the year the Labour Party was pledging repeal in England and the SNP government in Scotland was making repeal a key part of its case for independence in the 2014 referendum. For all that though, all attempts to change the policy at Westminster failed as most Lib Dems supported the government.
The unfairness issue would continue to dog the government, not helped by the fact that it was introducing the bedroom tax at the same time as it was cutting the top rate of income tax. In Manchester the combination amounted to a £9 million transfer between social housing tenants and the footballers of United and City. The bedroom tax even sparked an international diplomatic row, with Shapps complaining to the United Nations after its special rapporteur Raquel Rolnik called for the policy to be suspended
As the evidence of the human impact began to mount up, responses from the government usually followed one of three paths: dubious arguments (such as it only being fair to private tenants); outright denial of the facts (such as David Cameron’s repeated claims that disabled people are exempt); and bluster (if research questions your policy, attack the researchers)..
A series of legal challenges made their way through the system too. The government lost on the issue of disabled children who could not share a bedroom in the High Court in July but managed to convince the judges that discretionary housing payments were enough for disabled adults. That case goes to appeal in January with evidence mounting that DHPs are not up to the job. In the meantime, the number of First Tier Tribunals ruling in favour of tenants is beginning to mount.
2) Food banks, IT problems and sanctions
The bedroom tax was only the most visible welfare reform in a year that also saw the introduction of the benefit cap, reductions in council tax benefit and a series of cuts in disability benefits.
According to the original plan, 2013 should also have been the year of universal credit, the reform that is meant to make all the other cuts worthwhile. The launch in one job centre in April was so low key that nobody turned up for help on the first day. However, behind the scenes there were furious rows within Whitehall about delays to the IT system. According to one report, things got so bad that Iain Duncan Smith told a startled member of the Treasury: ‘If you ever speak to my officials like that again I’ll bite your balls off and send them to you in a box.’ How he felt about later scathing criticism from the National Audit Office and Public Accounts Committee is sadly not recorded. IDS spent most of the year claiming that his pet project was ‘on time and on budget’ before announcing on the day of the Autumn Statement that actually it wasn’t.
In the meantime, despite his denials, the impact of welfare reform was being felt in soaring numbers of people relying on food banks and losing their benefits because of tough new sanctions and in rising homelessness.
3) The past, present and future of council housing
The role of council housing and its relationship to the welfare state got the Channel Four treatment in two prime time documentaries. The results were revealing, with the first episode of How to Get a Council House showing housing staff doing their best in impossible circumstances or scroungers and immigrants jumping the queue, depending on who was watching. The second episode broke free of the Reality TV format to show the impact of the bedroom tax on tenants and staff in Manchester.
However, other debates about council housing were happening too. Southwark’s decision to sell what was dubbed Britain’s most expensive council house prompted a blog from me about where you draw the line between regeneration and social cleansing. The long-running campaign for a change in the public borrowing rules to allow councils to build new homes was beginning to make headway at last as all parties began to challenge the Treasury orthodoxy. December’s Autumn Statement finally some tangible progress as George Osborne agreed to raise the self-financing borrowing caps by £300 million. However, this was the Lib Dem part of a deal that saw the Conservatives invest £100 million in boosting right to buy sales and it also came with strings attached: any new homes would be for affordable rent and they would be part financed by the sale of high-value social housing as it became vacant.
4) The Policy Exchange agenda
That sounded very much like the agenda promoted by the influential right-of-centre think tank Policy Exchange, which had first advocated the sale of expensive council housing in 2012. The year began with a report calling for the demolition of high-rise social housing in London, continued with a call for large-scale construction of bungalows and ended with the appointment of its head of housing Alex Morton to the policy unit as 10 Downing Street. As I blogged in December, the appointment could be seen in several different ways. On one level, it was a sign that housing will move up the agenda within government: the combination of Morton plus former Policy Exchange director Nick Boles could put a housing ‘dream team’ in place. On another, it could be housing’s worst nightmare and herald an acceleration of the marketisation and slow death of social housing.
5) How are we doing so far?
It was also perhaps represented an indication that all the housing strategies so far have failed and of a determination to prevent Labour from monopolising housing as a political issue. January saw the launch of the coalition’s mid-term report, prompting an evaluation from me of its record so far. March brought the first news of yet another new strategy and then Help to Buy (which features in Part 2 of this blog) but it also saw a centrepiece of the original one, New Homes Bonus, lambasted by the National Audit Office.
All of this was forgotten in the government’s wider narrative about an economy that George Osborne claimed in September was ‘turning the corner’. With neat symbolism, he gave his speech against the backdrop of a housing development in London where work that had stalled during the recession had just restarted. However, there was another kind of symbolism too: over 40 per cent of the private apartments in the scheme had been pre-sold to foreign investors and they would be saved from mixing with any ordinary Londoners by the fact the social housing would have a separate entrance around the back.
October saw the departure of Mark Prisk as housing minister and the downgrading of the job to junior minister level. At the same time, Emma Reynolds replaced Jack Dromey as Labour’s shadow housing minister with ‘attending Cabinet’ status. Prisk had made progress behind the scenes, especially on private rented sector investment, but was supposedly a victim of his low media profile as housing became more politically important. However, his replacement, self-styled ‘gobby Northerner’ Kris Hopkins, left me unimpressed after a first TV interview in which he attempted to deny there is a housing crisis.
I’ll be posting Part 2 of this blog next week. In the meantime have a great Christmas.
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.