All posts from: September 2009
How the world has changed. Two years ago the Labour Party moved to stop conference delegates debating a fourth option for council housing. Last year housing minister Caroline Flint was promising that councils would take centre stage but on the defensive over her flirtation with ending security of tenure.
This week John Healey, Flint’s successor but one as housing minister, not only announced a new wave of funding for council housebuilding but also alleged a secret Conservative plan to end security of tenure, double of even triple rents for social tenants and ”put their homes on the line with two months notice’.
In a fringe speech earlier in the week he opened up a further gap between the two parties by rejecting claims that investment in housing will plummet after the next election - unless the Tories win.
Healey’s speech was part of a general Labour attack on the record of Tory councils like Hammersmith & Fulham, Westminster and Barnet. He did not name Hammersmith & Fulham but
he was almost certainly referring to minutes of discussions about the Localis report on social housing reform that were attended by senior Tories. The report was co-authored by council leader Stephen Greenhalgh and the minutes were obtained by local Labour MP Andy Slaughter under the Freedom of Information Act. Heavily redacted copies are on his website.
After several years of broad consensus between the parties on housing, politics is certainly back. Sarah Teather also made a big pitch for housing votes at the Lib Dem conference two weeks ago.
Next week it’s the Tories’ turn. Attacks on Labour’s housing record seem and nods to the nimbies look more of a certainty than any specific commitments on the welter of ideas coming out of right-wing think tanks.
You can almost hear the stable door banging shut as the Financial Services Authority (FSA) launches its consultation on regulating sale and rent back.
The proposals include a cooling-off period, a ban on cold calling, prohibiting the use of terms like ‘mortgage rescue’ and ‘fast sale’ in adverts and making firms check that consumers can afford the deal and that it is right for them and, perhaps most significantly, more security of tenure. Anyone who sells and rents back their home would be on an assured tenancy rather than an assured shorthold.
So far, so good, but what took so long? It’s been clear for well over two years that some sale and rentback firms were exploiting vulnerable consumers by paying them less than their home was worth or denying them the security they promised. Shelter, Citizens Advice and the Council of Mortgage Lenders wrote to the Treasury in October 2007 calling for action. The Treasury asked the Office of Fair Trading to investigate in March 2008
It took until October 2008 for the OFT to conclude that, yes, there was a problem that needed regulating. It estimated that more than 50,000 families had entered into sale and rent back agreements in the previous two years.
Four months after that, the Treasury announced that the FSA would regulate. Interim measures came into force in July but the proposals announced yesterday now go out to consultation until the end of November. Assuming everything goes to plan the new system will finally come into effect at the end of June 2010.
Welcome though the proposals are, it’s hard to escape the conclusion that they will come too late for thousands of sale and rent back victims. Or that the Treasury, OFT and FSA really ought to be having another consultation - about how to regulate the next scam that comes along in less than three years after it first appears.
How long before economic reality reasserts itself in the housing market? Perhaps not too long, according to some of the indicators in the latest survey from Hometrack.
Prices rose by 0.2% in September and the annual rate of decline fell to -5.6%, according to the market information company. The percentage of the asking price being achieved rose again to 92.4% and the percentage of postcode districts with a price increase rose again to 15.2%.
But that still leaves 85% of the country where prices are unchanged and the survey also showed a slowdown in some other lead indicators. While the number of new buyers registering with agents is still rising, the rate of increase has slowed significantly in the last two months.
Hometrack director of research Richard Donnell said the national growth was largely the result of prices in London and the South East being propped up by a shortage of quality homes for sale - a situation set to continue for the rest of the year.
Backing for that view comes in the latest survey of prime London house prices by Knight Frank. Prices rose 1.3% in September and are up almost 9% in the last six months in areas like Kensington and Chelsea. That’s put down to strong demand from cash-rich UK and foreign buyers and a supply that is still 50% down on two years ago.
‘Outside southern England the lack of supply is less pronounced and it is a modest pick up in sales and improved market sentiment that is supporting prices to the point where they have been tracking sideways,’ says Donnell.
He argues that a sustainable housing market recovery cannot be built on the back of price rises driven by a short term imbalance between supply and demand. ‘Question marks remain as to how long this situation can last and how resilient the market will be to changes in both levels of demand and sentiment.’
Rising unemployment and a continuing shortage of mortgages will act as a drag on demand, he says, while tax increases will reduce disposable incomes. Any increase in supply from sellers in response to the recovery so far will also put the brakes on.
First boom, then bust, then false dawn, then stagnation?
If housing association bosses want any more reasons to step up their fight against being classified as public bodies they should find a copy of today’s Daily Mail.
The paper picks up on Inside Housing’s chief executive pay survey to feature John Belcher and the nine other ‘fat cat’ chief executives that earn more than the prime minister. The Mail styles them as ‘public sector housing bosses’ and explains: ‘Housing associations are usually registered charities and are largely funded by taxpayer money. Many like to style themselves as businesses but a High Court judgment last year ruled that they were public bodies.’
As if the implications of that judgment were not already serious enough, the pay scandal is enough to put associations in the sights of the influential right-wing tabloid alongside the rest of the public sector and its ‘gold-plated’ pensions. And the Mail reports criticism from the Tories over their pay and Labour over their record on the mortgage rescue scheme.
As things stand in the convenient grey area between public and private sector, I’m not sure what the government can do about the pay of housing association chief executives. Grant Shapps described the pay rises as ‘immoral’ but he said in his speech to the National Housing Federation Conference that the Conservatives were unlikely to legislate to stop them in future.
Indirect or financial pressure is another option. But both the Homes and Communities Agency and Tenant Services Authority appear to be sticking to the line that pay is a matter for individual associations and in any case there seems unlikely to be much grant around to give them any leverage.
Restraint by individual associations is another. But with some very honourable exceptions, the movement as a whole seems incapable of it.
Can chief executives hold the line that they are really independent and private sector? They had better hope so because the pressure on public sector pay is building by the day.
Earlier this month two Tory think-tanks proposed a public sector pay freeze for one or two years plus possible 5% pay cuts for the highest-earning 10%. The Lib Dems went even further with plans for a pay freeze, the end of bonuses in the civil service and a 25% reduction in the salary bill of all public servants earning more than £100,000. And Labour has already announced a new 50% rate of tax from next April on any earnings above £150,000.
The mixed signals continue for the housing market today with a huge rise in lending for house purchase and two big rights issues by housebuilders not stopping longer-term worries.
The British Bankers Association (BBA) said 38,095 mortgages were approved for house purchase in August, an increase of 81% on a year ago. Meanwhile, Barratt and Redrow revealed plans to raise a total of £870m from the stock market.
On the face of it, that indicates the market is recovering rapidly and that the two companies believe this is the right time to start buying land again. Barratt’s annual results today showed stable prices and rising reservation rates and chief executive Mark Clare said the rights issue would ‘enable the Group to develop a number of its existing sites and to take advantage of land purchasing opportunities as they arise’.
However, the BBA argued that the 81% rise was an exaggeration based on an exceptionally low number last August and that low levels of customer demand and the limited number of properties coming on to the market would constrain lending. Backing for that view seemed to come from HM Revenue and Customs yesterday with stats showing that the number of home sales fell between July and August.
It’s also worth noting that on a seasonally-adjusted basis approvals were down slightly on July and that the 38,095 total was the lowest seen since 1997 with the exception of last year.
All but one of the major housebuilders have now announced plans for rights issues, prompting suggestions of a dash for cash to exploit the recovery. However, some analysts also pointed out that housebuilders will also need cash if they are unable to rely on house price inflation.
And Barratt’s announcement suggests that it for one is hedging its bets - not surprisingly since its £720m rights issue compares with the near £680m it lost last year.
It notes in its announcement today: ‘The amended financing arrangements are expected to allow the Group to take advantage of opportunities that may arise in a recovering market, as well as to provide an appropriate alternative framework, should a further downturn arise.’
Just how much have housing associations, local authorities and private developers overpaid contractors who rigged the tendering process? The depressing truth is that the Office of Fair Trading (OFT) investigation that ended today with 103 construction companies being fined £129.5m is only the tip of the iceberg.
The investigation reveals that a particular form of rigging known as cover pricing was rife in the industry throughout the noughties. This involved successful bidders for contracts obtaining artificially high prices from competitors. These are then submitted as genuine bids to give the client a false impression of the extent of competition for the work. In some cases there was only one genuine bid, in others the successful bidder paid the others compensation.
It’s clear from the list of 199 infringements [download here] between 2000 and 2006 published by the OFT that many of these cases involved new housing and housing refurbishment work - but they are just a sample of what went on.
As for the rest of the iceberg, the OFT says that it ‘uncovered evidence of cover pricing in over 4,000 tenders involving over 1,000 companies but had to focus its investigation on a limited number of companies and instances where the available evidence was strongest, in order to make best use of its resources and conclude its investigation within a reasonable timeframe. The OFT could not, therefore, pursue every firm suspected of involvement in cover pricing. Moreover, the endemic nature of the practice within the industry suggests that many other companies are likely to have been involved in bid rigging, even though such activity remained undetected.’
In other words, virtually any contract let by any housing organisation in the early noughties could have been been affected.
The response from contractors is the one they always give in the wake of price rigging and blacklisting scandals: that the charges relate to historic offences that do not relate to current practices. This time though they add a cheeky plea to clients not to inflict further punishment on the firms that were fined by blocking them from bidding in future.
According to Julia Evans, chief executive of the National Federation of Builders: ‘It is acknowledged that at one time cover pricing was a common practice in the construction industry. It does therefore seem unfair that a small, random sample of companies has been selected by the OFT to be punished as an example to the wider industry. As the construction economy continues to deteriorate, the fines will hit the businesses involved particularly hard. They should not now face additional financial hardship by losing access to public sector work.’
That’s the advice from the OFT and Office of Government Commerce too. They point out that the guilty parties have already suffered significant financial penalties and will be particularly aware of competition rules and that it would be wrong to assume that companies that were not fined were not also involved.
It may be true that bid rigging is just the flipside of competitive contracting and will therefore always be with us, but can you imagine that advice being given about any other group of offenders?
Housing emerged as a key Lib Dem weapon against the Conservatives and Labour at the party conference today.
First up was shadow chancellor Vince Cable’s plan for a 0.5% levy on all homes worth more than £1m - a complete contrast with the continuing Tory commitment to cut inheritance tax on all estates below £1m. ‘The Tories top priority is to cut taxes on millionaires,’ he said. ‘Our top priority is fairer taxes for those on lower and middle incomes.’
The 0.5% levy could raise a lot of money: £1.1bn is almost half the expected take from the new 50% rate on earnings above £150,000. According to the Lib Dems, that would be enough to take 300,000 low paid workers and pensioners out of the tax system.
Some of the details have yet to be worked out - not least how to value a £1m house - but it’s good to see at least one senior politician tackle taxation of housing.
Cable said the deficit had to be cut - not least because of the slump in the tax take from the housing and financial markets that were ‘temporary windfalls that were treated as permanent’. But he warned: ‘If public spending is cut in the usual way – slash and burn – there will be great damage to local and national services. Good will be cut with bad. Front line services will be butchered and lower paid workers will bear the brunt of cuts. There will be particular damage to public investment in areas like social housing which we need desperately to rebuild houses to rent.’
He named alternatives including cuts in civil service bonuses, scrapping grandiose database schemes and cutting tax breaks for high earners. He said the levy would put an end to the situation where the super-rich pay the same council tax on their £30m mansions as people in Band H family homes.
Next up was shadow housing minister Sarah Teather with a speech that centred on the plight of thousands of people she said Labour had taken for granted and let down. ‘The people who live in chronic housing hell are the people who time after time, election after election, Labour take as a given. We’ve all seen the arrogance of the Labour party on election day. They go straight to the poorest areas, bang on every door and herd them out to vote. And yet they have failed the very people who elected them.’
While she had strong words for the Tories too, her main attack was on a Labour party she said had failed. ‘Building the new homes we need is not going to happen overnight,’ she said. ‘I can’t tell the people who come to my surgery that a Liberal Democrat Government will wave a magic wand and fix everything. But I can tell them, that step by step, brick by brick, we will rebuild this country’s housing stock. I can say, that if we are asked to choose between hiking up taxes on billionaires or on tenants, we will not choose tenants.’
So can the Lib Dems turn housing into an issue that can take votes from both Labour and the Tories? Teather’s message certainly seems in tune with the way the Lib Dems have conducted grassroots campaigns to take Labour seats. It remains to be seen whether the popular Cable can make headway against George Osborne on tax.
Housing’s fattest cat is such an easy target for abuse that it’s almost tempting to give him a break.
After all, John Belcher was already paid a mind-boggling £338,000 as chief executive of the not-for-profit Anchor Trust. What’s a few grand more between friends even if his pay increase alone was four times the amount that Anchor pays its care assistants?
And it’s not as though he’s the only one with a bumper pay increase. I’ll await the details of next week’s Inside Housing salary survey with interest but an average pay increase of 7% (only just less than last year’s 7.3%) comes after a year that was probably the worst that many housing associations have ever experienced.
As I argued last year, I think managers earn their money more in bad times than good. But the pay hikes they enjoyed while the sun was shining were justified in the name of the market. And just like for bankers and company chief executives, it seems that the market only works in one direction.
Still trying to give Mr Belcher a break, it’s also worth pointing out that he was not the only director of Anchor celebrating a bumper pay rise. According to the annual financial statement, executive directors earned total emoluments of £1.249 million in 2008/09, an increase of 19% on the previous year. The average Anchor employee saw their pay rise by just 2%
Belcher’s own £391,000 salary including bonus was up 20% on last year and Anchor paid another £35,000 into his pension plan.
The remuneration and nomination committee justified that on the basis that it was competing with other private developers and health companies as well as housing associations and said it had used an average of date from private companies, large charities and social care companies.
Remuneration committees everywhere say that. It’s the reason why executive pay started soaring in the private sector and the reason why the disease has spread to the public and voluntary sectors.
But how does Belcher’s salary relate to Anchor’s financial performance during the year? Turnover rose just 0.8% in 2008/09. Operating costs rose by 1.8% - in line with the pay increase for staff - and the basic operating surplus fell 31% to £5.7m.
But the accounts also include an impairment charge of £12.4m ‘to write down the carrying value of land following the cancellation and deferment of development projects due to the economic climate and the decision to close six care homes’ plus exceptional charges of £2.9m ‘arising from business reorganisation and closure costs for six care homes’.
The combined effect of that was to turn an operating surplus of £9.0m in 2007/08 into a deficit of £13.3m in 2008/09. Add in an actuarial loss on pension fund assets of £21.7m (2008: £7.2m) and the total recognised deficit for the year was £35.0m (2008: surplus of £470,000).
That certainly seems to give a whole new meaning to performance-related pay.
Just when you thought it couldn’t get any worse it does. An independent analysis suggests that Communities and Local Government will be one the departments hardest hit by Labour plans to cut public spending after the next election that amount to the biggest squeeze since the 1970s.
The Institute for Fiscal Studies (IFS) says that most central government departments will see significant real cuts as overall departmental expenditure limits (DELs) ares cut by 8.6% or £32.9bn over the next spending review period between 2011-12 to 2013-14. And it says capital intensive departments are likely to be hardest hit as investment spending is cut sharply while current spending grows modestly.
‘Capital-intensive departments such as Transport and Communities and Local Government (who are involved with local housing) are likely to be particularly concerned,’ adds the IFS.
Transport accounted for 22% of total gross public sector investment in 2008/09 and housing for 19%. ‘With public sector net investment being cut so sharply over 2011/12 to 2013/14 these departments will almost certainly be among the hardest hit.’
The IFS says the only way to avoid the squeeze is tax increases or welfare cuts. But with the spending position even worse than it envisaged in January, when it forecast the CLG would see cuts of 4% a year in real terms in the next three years, none of the options look good.
Two Tory think-tanks proposed even bigger cuts but with apparent protection for the new homes budget.
Housing benefit reform may be too complex for this government but its likely Conservative successors will have no shortage of options if they take power next year.
And proposals launched today by former Tory leader Iain Duncan-Smith’s Centre for Social Justice (CSJ) are even more ambitious. Dynamic Benefits calls for the scrapping of 51 different forms of benefit and tax credit and their replacement with just two.
Universal work credit would go to people out of work or on very low wages and take in benefits like job seeker’s allowance and income support while universal life credit would cover additional living expenses for everyone on low incomes and combine things like housing benefit, council tax benefit and working tax and child tax credits.
In the process, says the CSJ, work incentives would be dramatically improved by reducing the marginal rate of benefit deductions that can be up to 85% at the moment and child poverty would be cut.
And scrapping the current system would reduce what it sees as penalties in the current system faced by people getting married, saving or moving into home ownership - an estimated 1.9m low-earning households with a mortgage would get help with their housing costs.
The report gets an enthusiastic welcome by Tory commentators like Simon Heffer, who says that David Cameron should put IDS in his first Cabinet with a brief to tackle worklessness and the undeserving poor. Housing reformers may also see it as backing for their ideas for a housing tax credit that is paid regardless of tenure.
The big problem is the cost: £3.6bn. Even though some of that would be clawed back through increased tax and the CSJ says that in the long term the plan would save money, it’s hard to see a government intent on cutting public spending swallowing that one. The long-term problem could be that benefit reform always seems to produce more losers than its architects intend.
And the CSJ plan is competing for attention with ones coming from other think-tanks. Localis called for a move to near-market rents for social housing with housing benefit paying up to 85% of housing costs after tax and benefits and the scrapping of capital investment subsidies to pay for it. The Progressive Conservatism project at Demos called for social tenants to be able to capitalise their housing benefit to buy a stake in their home.
The safer bet would have to be on a future Tory government finding housing benefit reform just as difficult as all its predecessors but one thing it will not be able to say is that it lacks ideas.
Going up: a general increase in house prices and mortgage lending for the first time in two years. Going down: one of the most respected economic forecasters says it’s all a false dawn. Where do the mixed signals leave ‘affordable’ housing?
The signals from the surveys from the Royal Institution of Chartered Surveyors (RICS) this morning and Council of Mortgage Lenders (CML) yesterday suggest it could soon be business as usual. The net balance of RICS members reporting higher rather than lower prices was in positive territory for the first time since May 2007 while the CML reported the ‘first material annual growth’ in lending for house purchase since early 2007.
On the anniversary of the collapse of Lehman Brothers and the bottom of the crisis in the financial system that seems like solid evidence that the housing market has bounced back. The RICS said on lead indicator of future prices - the ratio of stock to sales was for the average surveyor was up for the eighth month in a row - and the balance of members expecting prices to rise in future was positive for the third month in a row.
And yet all that is a false dawn, according to forecasters at the Ernst & Young ITEM Club yesterday. It said the recent increase in prices largely reflected the acute shortage of property for sale and was being driven by a small number of cash-rich buyers while many homeowners remained trapped in negative equity and reluctant to sell.
Mortgage lending would remain restricted as the banks look to rebuild their balance sheets while rising unemployment and weak earnings growth would also hold back house prices, it said. The net result is that prices could fall again in 2010 and still be stagnant in 2011 and take five years to recover to 2007 levels.
It’s a contradictory picture but one that might just be supported by other indicators in the RICS survey that suggest the pace of improvement in the market may be slowing. The rise in prices is tempting more sellers back into the market and July saw an increase in the number of unsold properties on surveyors’ book - if that continues it will put a brake on price rises.
So what does that mean for affordable housing. Will the recovery feed through to housebuilders and section 106? Can housing associations expect a return to the days of churning out shared ownership units to grateful punters and a steady flow of staircasing receipts or will they continue to face an uphill struggle in a dysfunctional market?
A thoughtful report yesterday by property consultant Knight Frank is in no doubt. ‘The affordable housing world will be changed for good by the current recession,’ says head of residential research Liam Bailey. ‘There is simply not enough money – from the public purse or the private sector, to subsidise new development for a long time. The sector needs to do more with less and affordable housing providers are going to have to work their assets harder to support more affordable development.’
Lower prices have not meant improved affordability, says its Affordable Housing Review 2009. All this at a time when up to 90% of households are now eligible for state aid to cover their housing costs - thanks to the £60,000 limit for eligibility on shard ownership schemes that could be raised to cover all basic rate taxpayers in London.
As if that weren’t contradiction enough, the policy of the likely next Conservative government is long on what they will scrap but short on the detail of how they will fund development.
The way forward, according to Knight Frank, is to blur the boundaries between private, intermediate and affordable housing even more with ‘a real opportunity for developers, housing associations and investors to make money’. More flexibility on subsidy allocation from the Homes and Communities Agency would help, it says, to build more housing and tackle under-supply.
Cuts are coming under a Tory government - but where will the axe fall? A plan for £50bn worth of savings published by two Conservative pressure groups today offers the biggest clues yet on the options being considered.
The good news is that the Taxpayers’ Alliance (TPA) and Institute of Directors (IoD) argue that the housing budget should be protected from any cuts. ‘Demand for social housing has been increasing across the UK in recent years,’ they say ‘and therefore central government spending on housing should be maintained’.
But even that begs a few questions. Does ‘spending on housing’ mean new homes or maintenance of existing ones too? Will spending be ‘maintained’ at the level seen in the current three-year review period or at the amount left in the final year after spending was brought forward.
Elsewhere, although housing-related programmes would escape the worst of the cuts planned for things like child benefit and surestart, there is grim news for anyone working in the public sector. They will face both a one-year pay freeze and an increase of a third in their pension contributions - saving a combined £8.7bn. Agencies including the design watchdog CABE and the Commission for Sustainable Development would be abolished in a cull of quangos and spending on consultants would be halved.
And the Communities and Local Government (CLG) department would be slimmed down as part of an agenda to ‘cut out the middle men’. The report identifies that CLG plans to spend £37.4bn in 2010/11, of which £32.2bn is earmarked for housing and support for local authorities. The remainder of the budget would be cut by 25% to save £1.3bn.
But that’s not all. There would also be a one-year freeze in CLG grants to local and regional government, saving almost £700m. ‘The recession has already put pressure on council budgets, with falling income and rising demand,’ they argue. ‘But freezing central government funding for local authorities at 2009-10 levels for one year will help focus minds across town halls further.’
And if these initial cuts of £42.5bn for 2010 are not enough to reduce debt, the TPA and IoD propose another one-year pay freeze across the public sector from 2011/12 and 5% pay cuts for the richest 10% in the public sector to save another £7.5bn.
None of that is party policy and this is only a report by two pressure groups but the debate on what and how much to cut has only just begun.
So, is that it, housing market crisis over? Are the green shoots really blossoming into abundant life?
The house price index published by the Halifax this morning certainly seems to be the latest indication that it is. Prices rose 0.8% in August and are now up 4% since they bottomed out in April.
Housebuilder Galliford Try certainly seems to think so based on its plans revealed today for a rights issue to raise £119m and its judgement that the time is now right to ‘recommence our growth strategy in housebuilding’.
And the latest repossession stats seem to agree, with the total number of families losing their homes well down on the gloomy predictions made at the end of last year.
The house price index produced by the Nationwide showed an even stronger recovery than the Halifax. The average price rose 1.6% in August and are up 8.4% so far this year. That goes beyond any of the mini recoveries seen in the early 1990s and sounds more like a boom than a bust.
Not even the most gung-ho of housing market cheerleaders would have predicted that at the start of the year. But everyone was reckoning without the combined effect of all the stimulus measures in general and record low interest rates in particular.
Rates were cut to 0.5% in March and the effects on mortgage costs have been dramatic. According to the Halifax, typical mortgage payments for a new borrower have fallen from 48% of average disposable earnings in the third quarter of 2007 to just 29% now.
The Nationwide says the average interest and principal payment per mortgage holder has fallen from 38% of average post-tax income to 28%.
The other main reason for the recovery is lack of supply. Activity is still half the level seen in mid 2007 and the Nationwide says low interest rates have also reduced sales because fewer homeowners are under pressure to sell. Even though mortgages remain hard to get without a big deposit that shortage is driving up prices.
So does the recovery mean we will soon be back to talking about the affordability crisis? Record low housing starts - again confirmed in figures on orders for new construction today - certainly seem to suggest as much.
However, as Richard Donnell pointed out in Hometrack’s August survey, the national house price figures are being skewed by price rises in London and the South East, where the shortage of homes for sale is most acute. Prices were still static across 89% of the country.
The big questions remain what happens when the stimulus measures are withdrawn and what happens when rising prices tempt more sellers back into the market. Above all, how long can interest rates, again held at 0.5% today, stay this low?
With neat irony, today sees local authorities both get back some of their old council housing role and receive a distinctly underwhelming verdict on their performance of the strategic role that was meant to replace it.
The good news came with a Communities and Local Government announcement of the details of £127m worth of allocations for 47 councils to provide 2,000 new homes.
As housing minister John Healey put it, that means the biggest council housebuilding programme in 20 years will start before the end of the year. More details of the individual allocations are on the Homes and Communities Agency (HCA) website here.
The bad news comes in an Audit Commission report on their strategic housing role - exactly what they have been meant to be focussing on in the years when they were told that their job as providers of homes was over.
The commission’s press release highlighted the fact that councils are focussing too much on building new homes and not enough on making the most of existing ones - a message that will chime especially with the almos that lost funding to pay for the new homes programme.
But the report itself has an even starker message. In 85 strategic housing inspections conducted between 2000 and 2006, just one was rated as excellent. Three quarters were rated fair or poor and a third had uncertain or poor prospects for improvement, mainly due to lack of skills and capacity in the strategic housing function.
The commission found few examples of partnership working and few councils with an understanding of local needs or priorities or of their housing market. And ‘effective performance management in the strategic housing function is rare’
The commission argues that councils’ strategic housing role is crucial for improving their areas and their citizens’ lives - even where they no longer have any stock of their own. Some imaginative councils had improved their local housing but most were still struggling to grasp all the opportunities.
One urgent recommendation for the government is that it should ‘rationalise the initiatives that have been introduced in response to the credit crunch, and clarify objectives, eligibility and scope’.
Another is that it should work with local authorities and professional bodies to address ‘the shortage of resources and skills among council housing strategists’.
And the commission says that ‘central government action has yet to catch up with rhetoric’ - as illustrated by the six households helped by the mortgage rescue scheme.
As local authorities prepare for their new/old job of providing homes and struggle with their old/new job of strategic management, it’s a point that the government might want to bear in mind.
First Labour backbenchers, now landlords. Government plans for reform of local housing allowance (LHA) are facing a rocky ride.
The National Landlords Association (NLA) complains today that millions are being wasted because many tenants who get paid their LHA are not passing it on to their landlord to pay their rent.
So much, so obvious, you might think. Landlords always preferred the way that housing benefit was paid direct to them. And they have repeatedly threatened to boycott the new scheme without providing much evidence that this would ever happen - tenants on benefit are too lucrative a market for many of them.
Except that this latest attack follows complaints from Labour backbenchers and the Liberal Democrats about another government reform to the scheme - the scrapping of shopping incentives that allow families to keep up to £15 a week of their LHA if they can find cheaper accommodation.
The fact that Frank Field was prominently involved will have given ministers bad memories of the 10p tax debacle, where it ignored complaints put forward by the former minister and ended up paying the political price by looking hopelessly out of touch with the concerns of poorer families.
As Field complained last week: ‘At one stroke, they get rid of a reform aimed at getting flexibility into a fairly inflexible market by giving people incentives to shop around. The timing for this could have been decided in Conservative headquarters.’
But another thing the twin attacks confirm yet again is just how hard it is to reform housing subsidies. Field should know - he was the minister charged by Tony Blair with ‘thinking the unthinkable’ on housing benefit in 1997 who never quite managed it.
Another Labour backbencher, Karen Buck, has a thoughtful piece on the issue on her website. As she points out, housing allowances proved too complex even for the greatest of social reformers, William Beveridge.
LHA was a brave attempt to change that by introducing shopping incentives into the system. Quite apart from the effects on poorer families the government is junking the intellectual basis of those reforms to save money. Scrap paying it direct to tenants too and you end up with a system that sounds remarkably like the old housing benefit.