Monday, 27 February 2017

Inside edge

All posts from: May 2010

Spinning the axe

Thu, 27 May 2010

Ministers in successive governments have spun cuts in housing investment as increases but David Laws did it with real style in parliament yesterday.

If he keeps this up he may even come close to matching John Prescott’s performance in 1997. The former deputy prime minister boasted about billions of pounds extra for housing when Labour took power when the truth was that the new homes programme in particular was actually set for deep cuts.

And the new chief secretary to the Treasury was up to the same thing yesterday in the parliamentary debate on spending cuts

‘We are allocating an additional £170 million to fund investment in social rented housing in 2010-11 to help to deliver 4,000 social housing starts - members on both sides should welcome that,’ he told shadow chancellor Alistair Darling.

‘In the savings that we make, we are seeking to ensure that we cut with care,’ he told Conservative MP and former chair of the public accounts committee Edward Leigh. ‘We have demonstrated this week that we can find efficiency savings and also put money into the areas that many of us in the House are passionate about-protecting education and putting more money than the previous Government did into social housing.’

He was referring to the £170m of savings that will be redistributed back into housing at the insistence of the Lib Dems. But there was no mention of the £150m cut to housing announced on Monday or of the £780m cut to the Communities and Local Government budget to make it the biggest departmental loser. 

No mention either of the briefing document published on Tuesday by the Homes and Communities Agency (HCA) that showed that housing will be cut by £230m - and that  hundreds of millions of pounds worth of kickstart, local authority new build, housing market renewal and growth fund investment has been frozen ahead of the emergency budget on June 22.

Shadow housing minister John Healey has already accused the government of using the extra money as a ‘fig leaf for cuts to come’.

He told Inside Housing this week: ‘Not axeing money that is already funding a programme does not constitute new money, and this is just old fashioned spin rather than the long promised “new politics”.’

But Laws didn’t stop there. Criticised by Labour’s Dennis Skinner for campaigning against cuts and then imposing them, he hit back: ‘The hon. Gentleman talked about the decisions that we have made. Perhaps he could acknowledge two things. First, we have protected the NHS and we have protected schools. We have put money into social housing, which he might have aspired to do if he had had influence on the previous Government.’

And his real triumph came when he was congratulated on his appointment by Lib Dem backbencher Mike Hancock and asked to explain ‘some of the benefits that will accrue, particularly with regard to the amount of money being put into social housing’. 

‘I am grateful to him for drawing attention to the additional investment that we are making in social housing,’ he said. ‘That is a real priority for many members across the House, including those in the Liberal Democrat party and the Conservative party, and, I suspect, for a lot of members on the Labour benches, who have been sad that the previous government were unable to invest more in social housing.’

But that was just preparing MPs for a serious charge against the old Labour administration: ‘Among the many black holes that we are discovering in the public finances left to us by that government, we have already found a very big black hole in the funding of the social housing programme. We are determined to do everything we can to ensure that the vulnerable people who depend on social housing - those who are on the waiting lists that built up under the previous government - will have some hope under this administration.’

The ‘black hole’ is presumably a reference to the amount of money that was brought forward from 2010/11 to pay for extra spending in previous years. It does not bode well for the emergency budget or for the spending review. 

Spinning the axe

Thu, 27 May 2010

Ministers in successive governments have spun cuts in housing investment as increases but David Laws did it with real style in parliament yesterday.

If he keeps this up he may even come close to matching John Prescott’s performance in 1997. The former deputy prime minister boasted about billions of pounds extra for housing when Labour took power when the truth was that the new homes programme in particular was actually set for deep cuts.

And the new chief secretary to the Treasury was up to the same thing yesterday in the parliamentary debate on spending cuts

‘We are allocating an additional £170 million to fund investment in social rented housing in 2010-11 to help to deliver 4,000 social housing starts - members on both sides should welcome that,’ he told shadow chancellor Alistair Darling.

‘In the savings that we make, we are seeking to ensure that we cut with care,’ he told Conservative MP and former chair of the public accounts committee Edward Leigh. ‘We have demonstrated this week that we can find efficiency savings and also put money into the areas that many of us in the House are passionate about-protecting education and putting more money than the previous Government did into social housing.’

He was referring to the £170m of savings that will be redistributed back into housing at the insistence of the Lib Dems. But there was no mention of the £150m cut to housing announced on Monday or of the £780m cut to the Communities and Local Government budget to make it the biggest departmental loser. 

No mention either of the briefing document published on Tuesday by the Homes and Communities Agency (HCA) that showed that housing will be cut by £230m - and that  hundreds of millions of pounds worth of kickstart, local authority new build, housing market renewal and growth fund investment has been frozen ahead of the emergency budget on June 22.

Shadow housing minister John Healey has already accused the government of using the extra money as a ‘fig leaf for cuts to come’.

He told Inside Housing this week: ‘Not axeing money that is already funding a programme does not constitute new money, and this is just old fashioned spin rather than the long promised “new politics”.’

But Laws didn’t stop there. Criticised by Labour’s Dennis Skinner for campaigning against cuts and then imposing them, he hit back: ‘The hon. Gentleman talked about the decisions that we have made. Perhaps he could acknowledge two things. First, we have protected the NHS and we have protected schools. We have put money into social housing, which he might have aspired to do if he had had influence on the previous Government.’

And his real triumph came when he was congratulated on his appointment by Lib Dem backbencher Mike Hancock and asked to explain ‘some of the benefits that will accrue, particularly with regard to the amount of money being put into social housing’. 

‘I am grateful to him for drawing attention to the additional investment that we are making in social housing,’ he said. ‘That is a real priority for many members across the House, including those in the Liberal Democrat party and the Conservative party, and, I suspect, for a lot of members on the Labour benches, who have been sad that the previous government were unable to invest more in social housing.’

But that was just preparing MPs for a serious charge against the old Labour administration: ‘Among the many black holes that we are discovering in the public finances left to us by that government, we have already found a very big black hole in the funding of the social housing programme. We are determined to do everything we can to ensure that the vulnerable people who depend on social housing - those who are on the waiting lists that built up under the previous government - will have some hope under this administration.’

The ‘black hole’ is presumably a reference to the amount of money that was brought forward from 2010/11 to pay for extra spending in previous years. It does not bode well for the emergency budget or for the spending review. 

Buyers beware

Wed, 26 May 2010

A surge in rents and a slowdown in mortgage lending could spell turbulence ahead for a housing market on the turn.

Two surveys out today highlight a shift in the balance between supply and demand that could send recent house price rises into reverse - and that’s before any impact of tax increases, spending cuts and trouble in the financial markets.

The quarterly lettings survey from the Royal Institution of Chartered Surveyors (RICS) today showed a surge in rents in May thanks to a lack of supply. The net balance of surveyors reporting rising rather than falling rents rose from 0% in April  to 30% last May. This time last year the balance was -58%.

A continuing fall in the supply of flats and houses for rent was a key factor in the shift, with 12% more surveyors reporting a fall rather than a rise in new instructions. The RICS said the upturn in the housing market had tempted many accidental landlords to sell up and led to an increase in instructions to sell on agents’ books. 

The new government’s abolition of home information packs could also encourage more owners to sell. 

Meanwhile the latest survey from the British Bankers Association (BBA) showed that little evidence of the traditional Spring bounce in lending. Loans for house purchase in April were up slightly on March but well down on the levels seen at the end of last year let alone pre-credit crunch levels. 

That lack of mortgage finance will put a brake on demand and rising prices have already wiped out the value of the stamp duty concession offered to first-time buyers.

All of which suggests that house price inflation will continue to slow down. Major mortgage lenders like the Halifax and Nationwide expect house prices to be flat this year.

However, as the tax rises and spending cuts to come lead to reductions in real incomes and rising job losses, prices that are still significantly over-valued against incomes will come under increasing pressure. 

Buyers beware

Wed, 26 May 2010

A surge in rents and a slowdown in mortgage lending could spell turbulence ahead for a housing market on the turn.

Two surveys out today highlight a shift in the balance between supply and demand that could send recent house price rises into reverse - and that’s before any impact of tax increases, spending cuts and trouble in the financial markets.

The quarterly lettings survey from the Royal Institution of Chartered Surveyors (RICS) today showed a surge in rents in May thanks to a lack of supply. The net balance of surveyors reporting rising rather than falling rents rose from 0% in April  to 30% last May. This time last year the balance was -58%.

A continuing fall in the supply of flats and houses for rent was a key factor in the shift, with 12% more surveyors reporting a fall rather than a rise in new instructions. The RICS said the upturn in the housing market had tempted many accidental landlords to sell up and led to an increase in instructions to sell on agents’ books. 

The new government’s abolition of home information packs could also encourage more owners to sell. 

Meanwhile the latest survey from the British Bankers Association (BBA) showed that little evidence of the traditional Spring bounce in lending. Loans for house purchase in April were up slightly on March but well down on the levels seen at the end of last year let alone pre-credit crunch levels. 

That lack of mortgage finance will put a brake on demand and rising prices have already wiped out the value of the stamp duty concession offered to first-time buyers.

All of which suggests that house price inflation will continue to slow down. Major mortgage lenders like the Halifax and Nationwide expect house prices to be flat this year.

However, as the tax rises and spending cuts to come lead to reductions in real incomes and rising job losses, prices that are still significantly over-valued against incomes will come under increasing pressure. 

The cuts continue

Tue, 25 May 2010

If the devil is in the details, that’s certainly true of yesterday’s £6.2bn cuts announcement. It began with a surprise announcement of extra money for social housing and ended with Communities and Local Government (CLG) taking the biggest departmental hit. Now for the details.

A briefing document just released by the Homes and Communities Agency says that it will make cuts of £230m as its contribution to the CLG’s target of £780m. However, it is already looking ahead to the emergency budget in June and adds that ‘we have decided to put a complete hold on all uncommitted spending until the position is clarified in June’.

Within the £230m savings, the National Affordable Housing Programme (NAHP) will lose £100m from the budget not yet allocated against any schemes, the gypsy and traveller programme will be cut by £30m, and housing market renewal and Kickstart will be cut by £50m each.

So far, so bad, and that’s already more than the £150m cut to the last government’s housing pledge announced yesterday, but a whole series of commitments on the NAHP, Kickstart and Local Authority New Build Programme could be under threat next month.

The briefing note explains: ‘In addition to the programme savings outlined, further commitments on the remaining uncommitted funds for the National Affordable Housing Programme, Kickstart Round 2 and Local Authority New Build programmes will remain on hold, until Government funding decisions are detailed in the Chancellor’s 50-day budget on 22 June 2010.’

On Kickstart, the briefing note says that the total budget for Round 1 and 2 in 2010/11 is £420.2m and that bids totalling £214m have already gone through the due diligence process. Take off the £50m already cut and that presumably leaves another £156m that’s vulnerable in schemes around the country

The briefing note also lists 912 Local Authority New Build Schemes for which allocations of £58.9m had been agreed but where legal agreements had not been completed before the election.

In addition, housing market renewal and growth fund allocations for 2010/11 will not be confirmed until June.

With the CLG and its arm’s length bodies will be expected to make overall in year efficiencies of 10% in their running costs (on top of the existing target to save 3% on operating costs), little wonder that the HCA announced savings earlier this week.

The announcement has already prompted a strongly worded response from the Home Builders Federation

The cuts continue

Tue, 25 May 2010

If the devil is in the details, that’s certainly true of yesterday’s £6.2bn cuts announcement. It began with a surprise announcement of extra money for social housing and ended with Communities and Local Government (CLG) taking the biggest departmental hit. Now for the details.

A briefing document just released by the Homes and Communities Agency says that it will make cuts of £230m as its contribution to the CLG’s target of £780m. However, it is already looking ahead to the emergency budget in June and adds that ‘we have decided to put a complete hold on all uncommitted spending until the position is clarified in June’.

Within the £230m savings, the National Affordable Housing Programme (NAHP) will lose £100m from the budget not yet allocated against any schemes, the gypsy and traveller programme will be cut by £30m, and housing market renewal and Kickstart will be cut by £50m each.

So far, so bad, and that’s already more than the £150m cut to the last government’s housing pledge announced yesterday, but a whole series of commitments on the NAHP, Kickstart and Local Authority New Build Programme could be under threat next month.

The briefing note explains: ‘In addition to the programme savings outlined, further commitments on the remaining uncommitted funds for the National Affordable Housing Programme, Kickstart Round 2 and Local Authority New Build programmes will remain on hold, until Government funding decisions are detailed in the Chancellor’s 50-day budget on 22 June 2010.’

On Kickstart, the briefing note says that the total budget for Round 1 and 2 in 2010/11 is £420.2m and that bids totalling £214m have already gone through the due diligence process. Take off the £50m already cut and that presumably leaves another £156m that’s vulnerable in schemes around the country

The briefing note also lists 912 Local Authority New Build Schemes for which allocations of £58.9m had been agreed but where legal agreements had not been completed before the election.

In addition, housing market renewal and growth fund allocations for 2010/11 will not be confirmed until June.

With the CLG and its arm’s length bodies will be expected to make overall in year efficiencies of 10% in their running costs (on top of the existing target to save 3% on operating costs), little wonder that the HCA announced savings earlier this week.

The announcement has already prompted a strongly worded response from the Home Builders Federation

Kindest cut?

Mon, 24 May 2010

Sure enough, the apparent good news of extra money for social housing starts to disappear once the detail of today’s cuts package sinks in.

As trailed on the Today programme by George Osborne, social housing, apprenticeships and further education will share in a £500m package of savings redistributed from elsewhere at the insistence of the Lib Dems.

The detailed announcement reveals that housing’s share will be ‘£170m to safeguard delivery of around 4,000 otherwise unfunded social rented homes to start on site this year, protecting 3,500 jobs and prioritising provision for the most vulnerable’.

However, the overall package also includes £150m of cuts to the last government’s housing pledge ‘while seeking to protect social housing’. Communities and Local Government will see £780m cut from this year’s budget - making it the second biggest departmental loser behind Business Innovation and Skills. And local authorities will have to make £1.165bn of savings while seeing £1.7bn of grants de-ringfenced. 

The transcript of a statement by David Laws, the Lib Dem chief secretary to the Treasury, puts that £170m for social rented housing firmly under ‘investing in recovery’.

No details are given of the £150m of cuts but that ‘while seeking to protect social housing’ could be a clue that other parts of the housing pledge such as Kickstart could be under threat. 

Ironically, of course, the housing pledge was itself a mixture of increases and cuts - the growth fund, private sector renewal and decent homes were all victims. 

 

9.00: A £6bn package of cuts with extra money for social housing? That wasn’t meant to be on the agenda today.

But chancellor George Osborne has just revealed on the Today programme that it will be part of a £500m pot of re-investment of the savings demanded by his Lib Dem coalition partners for apprenticeships, further education and social housing.

The surprise announcement goes against the trend of all recent reports, including this week’s Inside Housing lead story that mortgage rescue, decent homes and £380m of new development could all be under threat in the spending review in the autumn. All three are part of a review of spending commitments made since January 1.

A little extra money today may not make up for bigger cuts that are still to come but at least it shows that housing still has a voice in government. More to come later this morning.

Kindest cut?

Mon, 24 May 2010

Sure enough, the apparent good news of extra money for social housing starts to disappear once the detail of today’s cuts package sinks in.

As trailed on the Today programme by George Osborne, social housing, apprenticeships and further education will share in a £500m package of savings redistributed from elsewhere at the insistence of the Lib Dems.

The detailed announcement reveals that housing’s share will be ‘£170m to safeguard delivery of around 4,000 otherwise unfunded social rented homes to start on site this year, protecting 3,500 jobs and prioritising provision for the most vulnerable’.

However, the overall package also includes £150m of cuts to the last government’s housing pledge ‘while seeking to protect social housing’. Communities and Local Government will see £780m cut from this year’s budget - making it the second biggest departmental loser behind Business Innovation and Skills. And local authorities will have to make £1.165bn of savings while seeing £1.7bn of grants de-ringfenced. 

The transcript of a statement by David Laws, the Lib Dem chief secretary to the Treasury, puts that £170m for social rented housing firmly under ‘investing in recovery’.

No details are given of the £150m of cuts but that ‘while seeking to protect social housing’ could be a clue that other parts of the housing pledge such as Kickstart could be under threat. 

Ironically, of course, the housing pledge was itself a mixture of increases and cuts - the growth fund, private sector renewal and decent homes were all victims. 

 

9.00: A £6bn package of cuts with extra money for social housing? That wasn’t meant to be on the agenda today.

But chancellor George Osborne has just revealed on the Today programme that it will be part of a £500m pot of re-investment of the savings demanded by his Lib Dem coalition partners for apprenticeships, further education and social housing.

The surprise announcement goes against the trend of all recent reports, including this week’s Inside Housing lead story that mortgage rescue, decent homes and £380m of new development could all be under threat in the spending review in the autumn. All three are part of a review of spending commitments made since January 1.

A little extra money today may not make up for bigger cuts that are still to come but at least it shows that housing still has a voice in government. More to come later this morning.

Give and take

Thu, 20 May 2010

HIPs may be history but other parts of the Conservative housing revolution appear to be on the backburner.

The detail of the coalition programme for government published today includes several parts of the Tory manifesto that seem to have been downgraded from commitments to options and several others that are not mentioned at all.

True, regional spatial strategies will be rapidly abolished and decision-making powers on housing and planning returned to local councils. True, these will include new powers to stop garden grabbing. 

But that’s followed by: ‘In the longer term, we will radically reform the planning system to give neighbourhoods far more ability to determine the shape of the places in which their inhabitants live, based on the principles set out in the Conservative Party publication ‘Open Source Planning’.

Am I reading too much into that ‘in the longer term’ by making an assumption that this is not going to happen any time soon? Perhaps. 

The Communities and Local Government section of the document does after all commit to a key part of Open Source Planning: ‘We will provide incentives for local authorities to deliver sustainable development, including for new homes and businesses.’

The document also states: ‘We will promote shared ownership schemes and help social tenants and others to own or part-own their home.’ tenants’.

Again, that was in the Conservative manifesto. But there is no mention of the more radical Tory policy of equity stakes for ‘good social tenants’ - or indeed of the right to move. 

And then there is ‘We will review the effectiveness of the raising of the stamp duty threshold for first-time buyers’.  Raising the threshold to £250,000 was the flagship Tory policy on home ownership - the party even accused Labour of stealing it - but now it is only being reviewed.

Elsewhere, there are commitments to create new trusts to make it simpler to build homes for local people, to review the ‘unfair housing revenue account’ (no timetable on that) and cut local government inspection. These were in both the Liberal Democrat and Conservative manifestos.

There are nods to the Lib Dem manifesto with plans for ‘a range of measures to bring empty homes back into use’, for Home on the Farm schemes to encourage farmers to convert existing buildings into homes and for extra protection against bailiffs and repossession.

However, Lib Dem commitments to a specific programme on empty homes, to devote more resources to housing over time and to create a new use class order for second homes do not appear. 

Finally, conspiracy theorists may like to note that the Conservative commitment to ‘respect the tenures and rents of social housing’ does not appear either. Is it simply that a programme for government is a list of what it will change rather than leave unchanged - or is that a third shooter on that grassy knoll I see in the distance?

Give and take

Thu, 20 May 2010

HIPs may be history but other parts of the Conservative housing revolution appear to be on the backburner.

The detail of the coalition programme for government published today includes several parts of the Tory manifesto that seem to have been downgraded from commitments to options and several others that are not mentioned at all.

True, regional spatial strategies will be rapidly abolished and decision-making powers on housing and planning returned to local councils. True, these will include new powers to stop garden grabbing. 

But that’s followed by: ‘In the longer term, we will radically reform the planning system to give neighbourhoods far more ability to determine the shape of the places in which their inhabitants live, based on the principles set out in the Conservative Party publication ‘Open Source Planning’.

Am I reading too much into that ‘in the longer term’ by making an assumption that this is not going to happen any time soon? Perhaps. 

The Communities and Local Government section of the document does after all commit to a key part of Open Source Planning: ‘We will provide incentives for local authorities to deliver sustainable development, including for new homes and businesses.’

The document also states: ‘We will promote shared ownership schemes and help social tenants and others to own or part-own their home.’ tenants’.

Again, that was in the Conservative manifesto. But there is no mention of the more radical Tory policy of equity stakes for ‘good social tenants’ - or indeed of the right to move. 

And then there is ‘We will review the effectiveness of the raising of the stamp duty threshold for first-time buyers’.  Raising the threshold to £250,000 was the flagship Tory policy on home ownership - the party even accused Labour of stealing it - but now it is only being reviewed.

Elsewhere, there are commitments to create new trusts to make it simpler to build homes for local people, to review the ‘unfair housing revenue account’ (no timetable on that) and cut local government inspection. These were in both the Liberal Democrat and Conservative manifestos.

There are nods to the Lib Dem manifesto with plans for ‘a range of measures to bring empty homes back into use’, for Home on the Farm schemes to encourage farmers to convert existing buildings into homes and for extra protection against bailiffs and repossession.

However, Lib Dem commitments to a specific programme on empty homes, to devote more resources to housing over time and to create a new use class order for second homes do not appear. 

Finally, conspiracy theorists may like to note that the Conservative commitment to ‘respect the tenures and rents of social housing’ does not appear either. Is it simply that a programme for government is a list of what it will change rather than leave unchanged - or is that a third shooter on that grassy knoll I see in the distance?

Staying single

Thu, 20 May 2010

Question: what is the single biggest fraud in housing? 

The latest annual report from the Audit Commission’s National Fraud Initiative suggests that the answer is not what you (or at least I) might expect - or at least it is in the sort of fraud investigation covered by its datamatching methods.

The fraud investigators recovered £32.3m in housing benefit overpayments and £7.6m from housing fraud (unlawful subletting and wrongly awarded right to buy applications) in 2008/09. But those figures were dwarfed by the £62.3m recovered from people wrongly claiming the council tax single person discount. 

Detected housing benefit fraud was up 37% on two years ago and housing fraud up 14% but they actually fell as a percentage of total fraud that was up 50%. In contrast, single person discount fraud quintupled. 

In total, councils stopped payment in 22,000 cases - the largest number for any fraud. Salford found one case where a taxpayer had been receiving the discount since 2001 despite having a live-in partner. As a result of that and other cases it now expects to raise £1m in council tax.

As for fraud as a whole, you may find some of the other results surprising as well. 

The single biggest detected fraud (£72m) was in public sector pensions - either through pensioners dying and their relatives not letting on, or through pensioners returning to work and wrongfully avoiding pension deductions. 

And the second and third biggest numbers of people involved were the 21,500 who had their concessionary travel permits cancelled and the 16,500 wrongful holders of blue badges for their cars.

None of this downgrades the importance of detecting housing benefit fraud and unlawful subletting - or of benefit fraud investigation outside of the datamatching methods employed by the initiative. But it does make the point that fraud is not always committed by the obviously undeserving people that get all the headlines.

Among the future priority areas identified are false claims for empty property discounts and using housing waiting list data to prevent people not entitled to a tenancy from getting one. The 2008/09 report also covers a period before the new initiative on social housing fraud introduced last year. 

However, the initiative may still only be scratching the surface of the problem. Part of the reason detected single person discount fraud rose so much was that submission of the required data was only made mandatory in 2008/09 and the number of councils taking part doubled.

It should go without saying that tackling fraud should be a top priority for all organisations - it costs an estimated £30bn a year in the UK at a time when we are preparing for draconian cuts of £6bn in public spending.

Except that it doesn’t seem to be a top priority everywhere. The annual report reveals that the recommendations of a government fraud review in 2006 have not been implemented. No government department, and only one government agency, took part in the initiative in 2008/09 because the government has not exercised its statutory power to require them to do so. The report does not say how many housing associations took part - but the Audit Commission is still trying to persuade more of them to do so. 

And the government should also be asking how housing fraud measures up to housing tax evasion. With capital gains tax about to increase, how many second homes will be flipped to avoid it? And how many will suddenly become holiday lets to qualify for the lower business rate?

Staying single

Thu, 20 May 2010

Question: what is the single biggest fraud in housing? 

The latest annual report from the Audit Commission’s National Fraud Initiative suggests that the answer is not what you (or at least I) might expect - or at least it is in the sort of fraud investigation covered by its datamatching methods.

The fraud investigators recovered £32.3m in housing benefit overpayments and £7.6m from housing fraud (unlawful subletting and wrongly awarded right to buy applications) in 2008/09. But those figures were dwarfed by the £62.3m recovered from people wrongly claiming the council tax single person discount. 

Detected housing benefit fraud was up 37% on two years ago and housing fraud up 14% but they actually fell as a percentage of total fraud that was up 50%. In contrast, single person discount fraud quintupled. 

In total, councils stopped payment in 22,000 cases - the largest number for any fraud. Salford found one case where a taxpayer had been receiving the discount since 2001 despite having a live-in partner. As a result of that and other cases it now expects to raise £1m in council tax.

As for fraud as a whole, you may find some of the other results surprising as well. 

The single biggest detected fraud (£72m) was in public sector pensions - either through pensioners dying and their relatives not letting on, or through pensioners returning to work and wrongfully avoiding pension deductions. 

And the second and third biggest numbers of people involved were the 21,500 who had their concessionary travel permits cancelled and the 16,500 wrongful holders of blue badges for their cars.

None of this downgrades the importance of detecting housing benefit fraud and unlawful subletting - or of benefit fraud investigation outside of the datamatching methods employed by the initiative. But it does make the point that fraud is not always committed by the obviously undeserving people that get all the headlines.

Among the future priority areas identified are false claims for empty property discounts and using housing waiting list data to prevent people not entitled to a tenancy from getting one. The 2008/09 report also covers a period before the new initiative on social housing fraud introduced last year. 

However, the initiative may still only be scratching the surface of the problem. Part of the reason detected single person discount fraud rose so much was that submission of the required data was only made mandatory in 2008/09 and the number of councils taking part doubled.

It should go without saying that tackling fraud should be a top priority for all organisations - it costs an estimated £30bn a year in the UK at a time when we are preparing for draconian cuts of £6bn in public spending.

Except that it doesn’t seem to be a top priority everywhere. The annual report reveals that the recommendations of a government fraud review in 2006 have not been implemented. No government department, and only one government agency, took part in the initiative in 2008/09 because the government has not exercised its statutory power to require them to do so. The report does not say how many housing associations took part - but the Audit Commission is still trying to persuade more of them to do so. 

And the government should also be asking how housing fraud measures up to housing tax evasion. With capital gains tax about to increase, how many second homes will be flipped to avoid it? And how many will suddenly become holiday lets to qualify for the lower business rate?

Gotten gains

Tue, 18 May 2010

The rumblings of discontent are growing louder by the day over what is probably the coalition government’s most surprising new policy.

The plan to increase the rate of capital gains tax on non-business assets could have a big impact on second home owners and buy-to-let investors. And the rumbling is coming not from the opposition but from some of the government’s most natural supporters in the right-wing press and on the Conservative backbenches.

Aside from the expected plan to scrap home information packs (HIPs), the policy is the only one in the joint coalition policy document that will affect housing. 

Although the plan to levy capital gains tax (currently 18%) at the same rate as income tax was in the Liberal Democrat manifesto as part of a fairer tax system, it’s a surprising joint policy since it seems to contradict most Conservative instincts (and will potentially clobber its hedge fund donors).

That probably explains the reaction against it. One Cabinet minister John Redwood describes it today as ‘anathema to most Conservatives’ while another, Lord Forsyth, 

And the chuntering from the Telegraph is getting louder and louder. Clive Anslet, the editor of Country Life, accuses David Cameron of ‘having a go at me and my kind’ and says he should be standing up for the property rights of the middle class. Religion editor George Pitcher asks: ‘What’s the point of being a Conservative if you’ve decided to re-distribute wealth through property taxation?’

The Mail is not happy either - though it at least has the consolation of pointing out the Lib Dem minister Chris Huhne would have to pay the tax on his two homes and five rental properties. 

The effect on the housing market is harder to read. Some commentators are predicting a hiatus and falling house prices as second home owners and buy to letters rush to sell rather than effectively pay twice as much tax. Others say they are in it for the long term and for the rental yield and it will not have much effect. 

The National Landlords Association was quick off the mark with a plea for residential property investors to be given the same ‘generous exemptions’ as entrepreneurs and other businesses. 

That seems unlikely given the amount of tax involved. The Lib Dem manifesto estimated that CGT reform would raise £1.9bn a year and that would have to be found somewhere else. (Mind you, the Lib Dems’ mansion tax was rejected by Conservatives and that would have raised £1.7bn).

New parliamentary rules that ban taxpayer subsidy of mortgages for second homes for MPs also make the policy more politically possible - not that it has stopped plenty of references to flipping, bath plugs and spare rooms.

However, it’s the details of the new policy that will determine how much they hit second home owners and buy to letters - and potentially benefit first-time buyers. In between the two, and with a Treasury consultation still running, ministers will have to consider the effect on supply in the private rented sector of a move that will benefit institutional investors at the expense of individuals. 

There’s still lots of lobbying time between now and the emergency budget on June 22. Can it really be only five weeks since the Conservatives forced the outgoing Labour government to drop a budget change that would have hit, yes, second home owners?

Gotten gains

Tue, 18 May 2010

The rumblings of discontent are growing louder by the day over what is probably the coalition government’s most surprising new policy.

The plan to increase the rate of capital gains tax on non-business assets could have a big impact on second home owners and buy-to-let investors. And the rumbling is coming not from the opposition but from some of the government’s most natural supporters in the right-wing press and on the Conservative backbenches.

Aside from the expected plan to scrap home information packs (HIPs), the policy is the only one in the joint coalition policy document that will affect housing. 

Although the plan to levy capital gains tax (currently 18%) at the same rate as income tax was in the Liberal Democrat manifesto as part of a fairer tax system, it’s a surprising joint policy since it seems to contradict most Conservative instincts (and will potentially clobber its hedge fund donors).

That probably explains the reaction against it. One Cabinet minister John Redwood describes it today as ‘anathema to most Conservatives’ while another, Lord Forsyth, 

And the chuntering from the Telegraph is getting louder and louder. Clive Anslet, the editor of Country Life, accuses David Cameron of ‘having a go at me and my kind’ and says he should be standing up for the property rights of the middle class. Religion editor George Pitcher asks: ‘What’s the point of being a Conservative if you’ve decided to re-distribute wealth through property taxation?’

The Mail is not happy either - though it at least has the consolation of pointing out the Lib Dem minister Chris Huhne would have to pay the tax on his two homes and five rental properties. 

The effect on the housing market is harder to read. Some commentators are predicting a hiatus and falling house prices as second home owners and buy to letters rush to sell rather than effectively pay twice as much tax. Others say they are in it for the long term and for the rental yield and it will not have much effect. 

The National Landlords Association was quick off the mark with a plea for residential property investors to be given the same ‘generous exemptions’ as entrepreneurs and other businesses. 

That seems unlikely given the amount of tax involved. The Lib Dem manifesto estimated that CGT reform would raise £1.9bn a year and that would have to be found somewhere else. (Mind you, the Lib Dems’ mansion tax was rejected by Conservatives and that would have raised £1.7bn).

New parliamentary rules that ban taxpayer subsidy of mortgages for second homes for MPs also make the policy more politically possible - not that it has stopped plenty of references to flipping, bath plugs and spare rooms.

However, it’s the details of the new policy that will determine how much they hit second home owners and buy to letters - and potentially benefit first-time buyers. In between the two, and with a Treasury consultation still running, ministers will have to consider the effect on supply in the private rented sector of a move that will benefit institutional investors at the expense of individuals. 

There’s still lots of lobbying time between now and the emergency budget on June 22. Can it really be only five weeks since the Conservatives forced the outgoing Labour government to drop a budget change that would have hit, yes, second home owners?

Right pickle

Mon, 17 May 2010

Either a civil servant at Communities and Local Government has a secret sense of humour or life at Eland House really is like The Thick of It or Yes Minister. 

Or maybe both. The leaked memo advising their senior officials how to react to incoming Conservative ministers reads like it must have been written by Armando Iannuuci - and which other department could he have had in mind as a model for the Department of Social Affairs and Citizenship?

The memo advises the mandarins to:

  • use ‘hot button’ Tory-friendly words in conversation wherever possible - things like ‘families’, ‘radical’, ‘neighbourhoods’ and ‘progressive’
  • flatter them with phrases like ‘congratulations! I had so much confidence in you’
  • ‘smile’, ‘lean forward’, ‘be interesting’
  • engage in ‘supportive listening’ and make eye contact
  • talk about value for money and efficiencies without prompting
  • expect ‘open, fundamental questions and challenge’ - ‘the Tories are red hot on data’.

The no-nos are to:

  • meet ministers in groups of more than three at a time - that may ‘dilute the rapport’
  • talk about ‘we’ or ‘us’  when they mean the previous government 
  • ask Eric Pickles too many questions.

Anyone who is really slow on the uptake is helpfully informed that ‘the minister’s agenda’ is different from ‘our own agenda’ but adds that ‘the department is willing to flex our own agenda’.

Fortunately for the hapless author of the memo, Pickles and Grant Shapps seem to find it as funny as the rest of us. Pickles has tweeted that he hopes he was played by Brian Blessed in the role play sessions it advises them to hold to work out how to build rapport.

But the civil servants will have to come up with other ways to tame the new minister and get them to do what they want because the memo tips them off to smell a rat whenever they are told ‘how Policy X puts the department and the Secretary of State at the centre of Whitehall’.

The memo also reveals just how deep the department is expecting cuts to be - and how badly a sense of humour will be needed.

Among the questions it tells them to expect from Pickles are: ‘Why are we doing this? How soon can we stop doing it? Can we take 40 per cent of the costs out?’

 

Right pickle

Mon, 17 May 2010

Either a civil servant at Communities and Local Government has a secret sense of humour or life at Eland House really is like The Thick of It or Yes Minister. 

Or maybe both. The leaked memo advising their senior officials how to react to incoming Conservative ministers reads like it must have been written by Armando Iannuuci - and which other department could he have had in mind as a model for the Department of Social Affairs and Citizenship?

The memo advises the mandarins to:

  • use ‘hot button’ Tory-friendly words in conversation wherever possible - things like ‘families’, ‘radical’, ‘neighbourhoods’ and ‘progressive’
  • flatter them with phrases like ‘congratulations! I had so much confidence in you’
  • ‘smile’, ‘lean forward’, ‘be interesting’
  • engage in ‘supportive listening’ and make eye contact
  • talk about value for money and efficiencies without prompting
  • expect ‘open, fundamental questions and challenge’ - ‘the Tories are red hot on data’.

The no-nos are to:

  • meet ministers in groups of more than three at a time - that may ‘dilute the rapport’
  • talk about ‘we’ or ‘us’  when they mean the previous government 
  • ask Eric Pickles too many questions.

Anyone who is really slow on the uptake is helpfully informed that ‘the minister’s agenda’ is different from ‘our own agenda’ but adds that ‘the department is willing to flex our own agenda’.

Fortunately for the hapless author of the memo, Pickles and Grant Shapps seem to find it as funny as the rest of us. Pickles has tweeted that he hopes he was played by Brian Blessed in the role play sessions it advises them to hold to work out how to build rapport.

But the civil servants will have to come up with other ways to tame the new minister and get them to do what they want because the memo tips them off to smell a rat whenever they are told ‘how Policy X puts the department and the Secretary of State at the centre of Whitehall’.

The memo also reveals just how deep the department is expecting cuts to be - and how badly a sense of humour will be needed.

Among the questions it tells them to expect from Pickles are: ‘Why are we doing this? How soon can we stop doing it? Can we take 40 per cent of the costs out?’

 

Fresh look

Fri, 14 May 2010

Another fall in repossessions must be encouraging the Treasury see schemes to help people who risk losing their homes as a tempting target for cuts.

It’s not just the fact that repossessions are a two-year low, or even that the Council of Mortgage Lenders (CML) says that its forecast of 53,000 foreclosures this year looks too pessimistic. It’s also that much of the existing support was time-limited and runs out at the end of this year.

Against that background though both the CML and Shelter warned in a joint letter to George Osborne and Vince Cable about the dangers of complacency. They argue that the better than expected figures are the result of the support measures and record low interest rates and Shelter released a survey showing that 29% of mortgage payers are unprepared for an increase in loan rates.

Figures released by the CML yesterday showed there were 9,600 repossessions in the first quarter of 2009, compared to 10,600 in the previous three months and 13,200 this time last year.  

The number of borrowers in arrears fell too but the CML pointed out that the fall was much more marked among people with lower arrears than those substantially behind with their payments. It said this suggested that low interest rates and lower unemployment were helping to prevent new households getting into difficulty but that those already in trouble were struggling to get out of it.

The CML’s current forecast for this year assumes that 13,000 families will lose their homes per quarter. ‘If current levels of government support continue, if interest rates do not rise, and we have no new economic shocks, the 53,000 repossessions forecast for the year is pessimistic,’ it said.

The Communities and Local Government said the figures showed that ‘the threat of repossession remains very real for homeowners across the country’.

‘That’s why the Secretary of State for Communities and Local Government, Eric Pickles, will be asking the new Housing Minister to take a fresh look at existing Government schemes which help homeowners struggling to pay their mortgage and make sure that they offer the best deal for homeowners, as well as value for money for the taxpayer.’

It was a gnomic response that gave little away but how telling could that ‘fresh look’ and  ‘as well as value for money for the taxpayer’ prove to be?

Fresh look

Fri, 14 May 2010

Another fall in repossessions must be encouraging the Treasury see schemes to help people who risk losing their homes as a tempting target for cuts.

It’s not just the fact that repossessions are a two-year low, or even that the Council of Mortgage Lenders (CML) says that its forecast of 53,000 foreclosures this year looks too pessimistic. It’s also that much of the existing support was time-limited and runs out at the end of this year.

Against that background though both the CML and Shelter warned in a joint letter to George Osborne and Vince Cable about the dangers of complacency. They argue that the better than expected figures are the result of the support measures and record low interest rates and Shelter released a survey showing that 29% of mortgage payers are unprepared for an increase in loan rates.

Figures released by the CML yesterday showed there were 9,600 repossessions in the first quarter of 2009, compared to 10,600 in the previous three months and 13,200 this time last year.  

The number of borrowers in arrears fell too but the CML pointed out that the fall was much more marked among people with lower arrears than those substantially behind with their payments. It said this suggested that low interest rates and lower unemployment were helping to prevent new households getting into difficulty but that those already in trouble were struggling to get out of it.

The CML’s current forecast for this year assumes that 13,000 families will lose their homes per quarter. ‘If current levels of government support continue, if interest rates do not rise, and we have no new economic shocks, the 53,000 repossessions forecast for the year is pessimistic,’ it said.

The Communities and Local Government said the figures showed that ‘the threat of repossession remains very real for homeowners across the country’.

‘That’s why the Secretary of State for Communities and Local Government, Eric Pickles, will be asking the new Housing Minister to take a fresh look at existing Government schemes which help homeowners struggling to pay their mortgage and make sure that they offer the best deal for homeowners, as well as value for money for the taxpayer.’

It was a gnomic response that gave little away but how telling could that ‘fresh look’ and  ‘as well as value for money for the taxpayer’ prove to be?

Watch this space

Thu, 13 May 2010

As the coalition cabinet meets for the first time, what do we know so far?

We know that Eric Pickles is the new communities and local government secretary - returning to a brief he held in opposition before switching to become party chairman.

We know that at least £6bn of cuts this year will be discussed - and we know that housing is not one of the areas that will be protected from them. 

We know that radical welfare changes are on the way after the appointment of Iain Duncan Smith as work and pensions secretary. 

We know from full text of the coalition agreement that it will adopt the Liberal Democrat policy of increasing capital gains tax on non-business assets from 18% to 40%. That will have a big impact on second home owners and buy-to-let investors and there are already warnings about a hiatus in the housing market as they rush to sell before it comes into force.

And what do we think we know? 

The housing minister seems to have been demoted by losing his or her right to attend cabinet meetings. Appointments of ministers who will attend cabinet without being full members were announced last night and the housing minister was not on the list. 

The apparent loss of status is not a surprise but it could hardly come at a worse time. Cuts of more than £6bn could be on the way given the extra spending commitments and tax reductions specified in the joint policy document. 

Speakers at the Council of Mortgage Lenders affordable housing conference yesterday were already gloomy enough before that became clear. While the Lib manifesto seemed the most housing-friendly of the three major parties and featured a big programme of brining empty properties back into use, the coalition deal has ruled out the mansion tax that would have paid for it. 

In any case, the track record of Eric Pickles suggests that the emphasis will be firmly on the local government side of his brief. A Tory hero of the 1980s when he led them to unlikely power in Bradford, he’s been heavily involved in developing the new Conservative policy on localism.

So it should be full steam ahead on Conservative plans to scrap regional spatial strategies, free local authorities from them where they have already been agreed and give them incentives through the council tax to agree to more homes. Nothing was mentioned in the joint policy statement but the Lib Dem manifesto also pledged to abolish government housebuilding targets.

Critics - who include major housebuilders - say that could turn into a charter for nimbys. Supporters say the targets were already failing and local communities will for the first time have a positive reason to agree to new homes.

Pickles should also be well placed to finesse a deal on housing revenue account (HRA) debt. His first chair of housing all those years ago in Bradford was Margaret Eaton - now chairman of the Local Government Association. 

But well-paid local authority (and housing association?) bosses watch out: attacks on town hall ‘fat cats’ were a highlight of his spell shadowing the job he now holds. 

We don’t yet know who the housing minister will be - an appointment is expected shortly. Between 15 and 20 Lib Dem junior ministers are thought likely to be appointed so the new person could come from either party. Watch this space.

Watch this space

Thu, 13 May 2010

As the coalition cabinet meets for the first time, what do we know so far?

We know that Eric Pickles is the new communities and local government secretary - returning to a brief he held in opposition before switching to become party chairman.

We know that at least £6bn of cuts this year will be discussed - and we know that housing is not one of the areas that will be protected from them. 

We know that radical welfare changes are on the way after the appointment of Iain Duncan Smith as work and pensions secretary. 

We know from full text of the coalition agreement that it will adopt the Liberal Democrat policy of increasing capital gains tax on non-business assets from 18% to 40%. That will have a big impact on second home owners and buy-to-let investors and there are already warnings about a hiatus in the housing market as they rush to sell before it comes into force.

And what do we think we know? 

The housing minister seems to have been demoted by losing his or her right to attend cabinet meetings. Appointments of ministers who will attend cabinet without being full members were announced last night and the housing minister was not on the list. 

The apparent loss of status is not a surprise but it could hardly come at a worse time. Cuts of more than £6bn could be on the way given the extra spending commitments and tax reductions specified in the joint policy document. 

Speakers at the Council of Mortgage Lenders affordable housing conference yesterday were already gloomy enough before that became clear. While the Lib manifesto seemed the most housing-friendly of the three major parties and featured a big programme of brining empty properties back into use, the coalition deal has ruled out the mansion tax that would have paid for it. 

In any case, the track record of Eric Pickles suggests that the emphasis will be firmly on the local government side of his brief. A Tory hero of the 1980s when he led them to unlikely power in Bradford, he’s been heavily involved in developing the new Conservative policy on localism.

So it should be full steam ahead on Conservative plans to scrap regional spatial strategies, free local authorities from them where they have already been agreed and give them incentives through the council tax to agree to more homes. Nothing was mentioned in the joint policy statement but the Lib Dem manifesto also pledged to abolish government housebuilding targets.

Critics - who include major housebuilders - say that could turn into a charter for nimbys. Supporters say the targets were already failing and local communities will for the first time have a positive reason to agree to new homes.

Pickles should also be well placed to finesse a deal on housing revenue account (HRA) debt. His first chair of housing all those years ago in Bradford was Margaret Eaton - now chairman of the Local Government Association. 

But well-paid local authority (and housing association?) bosses watch out: attacks on town hall ‘fat cats’ were a highlight of his spell shadowing the job he now holds. 

We don’t yet know who the housing minister will be - an appointment is expected shortly. Between 15 and 20 Lib Dem junior ministers are thought likely to be appointed so the new person could come from either party. Watch this space.

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