All posts from: June 2010
If London is on the front line of the housing benefit cuts then Westminster is the place where the opening salvo will fall, so it was intriguing to see its two MPs debate the issues yesterday.
Mark Field (Con, Cities of London and Westminster) and Karen Buck (Lab, Westminster North) were just two of the speakers in a Westminster Hall debate on housing need in London initiated by Labour’s Jeremy Corbyn but dominated by housing benefit and the issues in high-rent areas like theirs.
Field said that housing was the most important single issue in his postbag alongside immigration, with London’s global status putting enormous pressure on the housing stock and forcing up rental values and housing benefit costs.
He said his constituency had produced some of the most shocking stories about excessive payments, including the £104,000 a year home in Mayfair cited by George Osborne in his Budget speech. ‘There is a risk that some of the proposed changes will drive some of the most vulnerable people out of London and that will need to happen to some extent,’ he said.
His speech mixed concern from the vulnerable - he quoted a letter from an 80-year-old constituent worried he would be forced to leave his home and said the impact of any changes needed to made clear - with support for the City of Westminster council’s campaign for housing benefit reform that goes beyond the policies announced already.
‘Many would welcome the government’s implementing the new caps, and mitigating the associated risks. In particular, places such as Westminster need the guidelines around local connection to be changed,’ he said. ‘Under the existing guidelines, local authorities affected by the caps are required to try to house people in their vicinity. I think that Westminster city council is particularly concerned that the courts will find against it if it tries to house families out of the borough, leading to additional costs, and more uncertainty and family disruption.’
On the one hand ‘we need to ensure that local authorities can, to an extent, house out of borough when it has not proven possible to find temporary accommodation in the area at the new capped rates’. On the other, ‘the measures should primarily be about fairness, with the hard-working being rewarded and the truly vulnerable being properly and fully protected’.
For Karen Buck, though, London had always been a city of mixed communities and ‘we are in danger of engineering a set of solutions that fly in the face of the centuries-old history of London by making London, particularly central London, safe for millionaires to live in’. The problems that were being blamed on housing benefit claimants were caused by reductions in the social housing stock and it was high rents not housing benefit that caused the employment trap.
She warned that about a retreat to the ‘absolutely insane’ policy of the 1980s that shifted large numbers of people not just to outer London but to bed and breakfasts in Margate and social housing in Birmingham. ‘We are still dealing with some of the consequences of cramming people into bed-and-breakfast accommodation and shattering their local connections in order to implement a harsh homelessness policy.’
All the work on homelessness prevention had relied on diverting people into the private rented sector. ‘Now we are saying to those people that we can no longer put them in the private rented sector in most places, so what will happen? They will be homeless. They will make an application and, under present law, there is a duty to accept them as homeless, so what is the answer?’
Field had already come up with it, she said. ‘The coalition government will change the law. I predict that they will change the law so that local authorities no longer have a duty to house homeless applicants; Westminster council has made it clear that it supports that position, as has Hammersmith council. Local authorities could not house those people because if they did, the entire policy on housing benefit reduction would be shattered. Therefore, the Government will change the law to allow all homeless households to be housed only in the private rented sector. They will remove all forms of local connection.’
She said the consequences would be disorder, catastrophic overcrowding, people living in the streets and people shipped away to the north of England.
‘What is the sense in a policy in which, on the one hand, the Secretary of State for the Department of Work and Pensions says, “Let the workless come to London to find jobs”, but on the other hand, the workless are driven out of London to where the housing is? Such a policy is intellectually incoherent and, above all, morally indefensible. ‘
Just how many people will be affected by the housing benefit cuts?
The impact of the cuts as a whole will eventually be felt by most if not all claimants but the immediate focus is on new caps in the private rented sector. Welfare minister Steve Webb gave the official figures on local housing allowance caps in a written answer yesterday. He said there were:
- 3,340 recipients with a one-bedroom entitlement receiving over £250 per week
- 6,970 with a two-bedroom entitlement receiving over £290 per week
- 2,710 with a three-bedroom entitlement receiving over £340 per week
- 1,010 with a four-bedroom entitlement receiving over £400 per week.
So that makes 14,030 families receiving more than the new limits - almost half of them in two-bedroom homes. Webb said that no information was available on the number of families paid more than £100,000 per year (which would equate to almost £2,000 a week).
Westminster obviously tops the list of high-rent areas and Labour councillors there estimate that 84% of the 5,430 housing benefit claims in the borough would be over the limits. That’s 4,592 families or roughly a third of the cases in England as a whole.
Average rents in most of inner London are higher than that - by the time you include parts of Islington, Camden, Kensington & Chelsea, Hammersmith & Fulham, Richmond, Wandsworth, Southwark, Lambeth and Tower Hamlets it’s not hard to see how the total would get up to 14,000.
But will that be all? In the Budget debate yesterday Webb’s boss Iain Duncan Smith said that there were 750,000 people getting more than £10,000 a year - roughly £200 per week - and that this was happening ‘far too often’.
‘Today, a tenant in a five-bedroom house in an expensive area such as Westminster could feasibly get more than £100,000 a year. Although that example applies to a small number of people, some 750,000 get more than £10,000 a year. Those cases are still in the minority, but they happen far too often. It is unacceptable and unaffordable that people on benefits are living in homes that our hard-working families cannot afford, so we have capped local housing allowance levels at the rate for four-bedroom properties.’
How big will the backlash be? The 2012 contest to become London mayor will provide one big test. Ken Livingstone announced yesterday that Westminster North MP Karen Buck will head up the campaign against the cuts and has made the housing benefit cuts a key part of his campaign to win the Labour nomination.
Buck argues: ‘These measures would lead to social cleansing on a huge scale, forcing people out of their homes to other parts of London, transforming communities for the worse and creating massive social dislocation. It is as if Dame Shirley Porter had been put in charge of housing policy for the whole country.’
In return, ministers see this as far more than just cuts. They argue that it’s unfair that anyone on benefit should get more housing benefit than someone working can afford in rent - as Grant Shapps puts it the principle is that ‘if you can work you should always be in a better position than if you don’t work’. And think-tanks on the right are not being slow about coming forward with new ideas for cuts.
With a range of other cuts to the local housing allowance and to housing benefit for social tenants on the way too this issue is going to run and run.
The impact of the public sector cuts on the private sector has been thrown dramatically into focus after housing contractor Connaught saw its share price plunge by more than half.
In a trading update put out just 25 minutes before the stock market closed on Friday, the company said that it had identified 31 contracts in its social housing division where clients were deferring spending. That would reduce revenue by £80m this year and a possible £120m next year if the deferral continued.
Connaught said that the medium-term outlook ‘remains strong’ thanks to a cost reduction programme and a move by customers to longer-term contracts but the impact on its share price was dramatic. The company lost a third of its value on Friday, with shares falling from 320p to 215p and they lost another 80p in early trading this morning to stand at 134.4p.
That’s quite something coming only a few days after the emergency Budget and apparently with public sector cuts only at an early stage. Rival firm Mears issued a statement this morning saying that it was ‘not experiencing any downward pressure on spend in its social housing business’.
However, the potential impact of the cuts was also shown in a half-year trading statement by leading housebuilder Taylor Wimpey today. Housebuilders are not nearly as dependent on public spending as repairs contractors but the company says it remains ‘concerned regarding future spending reviews that could impact on housing initiatives, particularly the level of social housing grant’.
Housebuilders have relied on public funding not just for housing association development but also for Kickstart and Homebuy Direct schemes for homes for sale but much of that has been frozen as a result of the £780m housing ‘black hole’ claimed by the government. Housing minister Grant Shapps said last week that the Treasury would cover £140m of that and an announcement on the rest was due in the next two weeks while Inside Housing revealed that the 50 biggest developing housing associations would build 6,000 fewer homes this year.
The cuts may be in the public sector but the pain is being privatised too.
Thursday 11.15 am It's not all doom and gloom for everyone in housing. Property investors, landlords, letting agents and estate agents breathed out a sigh of relief that the coalition did not follow through on the Lib Dem policy of increasing capital gains tax (CGT) to the same rate as for earned income (currently 40% or 50% for higher-rate taxpayers) and reducing annual exemptions. Alongside Conservative backbenchers and thinktanks and the Mail and Telegraph they found a range of arguments against - that the increase could reduce the tax take, that it could lead to a wave of sell-offs of buy-to-let flats and destabilise the housing market, that it would unfairly penalise enterpreneurs - to go alongside the obvious one that they would pay more tax.
In the event, the rate was only increased from 18% to 28%, prompting perhaps the understatement of all Budget reactions from the National Landlords Association: 'It could have been worse.'
As Liam Bailey of Knight Frank points out, the change broadly restores the position to what it was before the 2008 Budget, when Labour scrapped the 40% CGT rate and the taper relief that reduced the effective rate to 24%. His judgement: 'In reality the rise to 28% for higher-rate tax payers is a non-issue for the housing market.'
The Association of Residential Letting Agents (ARLA) conceded that the increase was 'not as extreme as anticipated' but argued that 'it still comes with little consideration for the needs of landlords'. It said the failure to include rollover relief when landlords sell one property and buy another was a 'big gamble' that may 'further decentivise some landlords from remaining in the private rented sector and negatively impact the overall supply of rental property'.
However, accountants, estate agents and housebuilders told the Financial Times that the change was about as good as it could have been, arguing that the decision to introduce the change immediately rather than delay a few months would avoid triggering a mass sell-off to avoid the increase.
In the longer term, cuts in the local housing allowance will be a bigger issue for landlords. The British Property Federation argues in its budget analysis that cuts including restricting the local housing allowance rate to the 30th percentile for the area amount to 'a massive reduction', one that 'unless landlords reduce their rents, will result in a shortfall that LHA tenants will have to make up themselves'.
Wednesday 2.10 pm Could things get even worse? The Institute for Fiscal Studies has just released a briefing that says the squeeze will be the deepest since at least World War Two.
Health and overseas aid are already protected and the signs are that defence and education will not be cut as much as anything else. The IFS says that means the cut in departmental expenditure limits in ‘areas such as higher education, home office, justice, transport and housing’ could be not 25% but 33%.
1.30 pm The housing benefit cuts led off today’s World at One coverage of the aftermath of the Budget - and there are definite signs that there will be further reform.
Extended interviews with Conservative MP Bob Blackman on the reforms he tried as leader of Brent. He says the key issues are the cost of administration, the poverty trap and resentment among people working who see their neighbours getting something for nothing. He admits the target of cutting the total bill by 7% is ‘extremely ambitious’ and says administration has to be simplified to cut red tape and make it easier to understand. ‘Why on earth do we need every local authority to be doing it?’
Labour leadership contender Diane Abbott concedes the need for reform but argues that only one in eight housing benefit claimants are unemployed and that many already pay something towards their housing. ‘We’re going to see thousands of people in London evicted,’ she says.
Housing minister Grant Shapps represents the government in a roundtable debate with Labour’s Pat MacFadden and the Lib Dems’ Simon Hughes. He admits the challenge but says something has to be done about a benefit costing £21bn.
The key principle for Shapps is that ‘if you can work you should always be in a better position than if you don’t work’. He adds that the issue of people choosing not to work ‘as a lifestyle thing’ was raised repeatedly on the doorstep in the election campaign. MacFadden challenges him to say how many people are getting the £2,000 a week highlighted by the chancellor and he concedes it’s not many.
Hughes says there’s a consensus for reform and that something has to be done about the work trap - one of his constituents could not afford to keep her flat if her working boyfriend moved in. ‘We have to make sure we find a way to make it possible for people to stay in the same home if possible and work.’
10.40 am Here’s the reaction so far:
The National Housing Federation was first off the blocks with a claim that up to build up to 250,000 affordable homes could be axed as a direct result of the cuts. As for ‘a significant economic return to the country’ (see 9.10) chief executive David Orr said ‘that’s exactly what affordable house builders deliver’.
He also attacked the housing benefit restrictions on over-occupation in the social sector: ‘Whilst it is good that these restrictions do not apply to retired people, they should not mean that people of working age feel forced to move to give up a spare room if their children have grown up and left home. Having a spare room where children can come and stay is an important part of family life and the ongoing support that parents like to be able to give their children.’
Shelter said the housing benefit cuts could push many households into debt, eviction and homelessness. Chief executive Campbell Robb said the debate must not be muddled with examples taken just from Central London. ‘We are really concerned that even at current levels, nearly half of local housing allowance claimants are already making up a shortfall of almost £100 a month to meet their rent.’
The charity also warned that the change to support for mortgage interest would create additional uncertainty for thousands of people. Robb said: ‘The reality is that most people on SMI are on higher than average interest rates, so there is a real danger it will no longer help the people who need it most and could trigger a surge in repossessions.
Citizens Advice said the housing benefit changes would mean people on benefit will not be able to live in some parts of the country or in certain areas of a city. Policy director Teresa Perchard said: ‘We predict more debt and homelessness, as people try to make up the difference between the rent they must pay and the benefit they receive. Larger families in particular may be forced into poorer quality or overcrowded housing.’
The Chartered Institute of Housing welcomed the prospect of housing benefit reform but warned that the changes could force claimants out of affluent areas, increase pressure on social housing registers and risk landlords refusing to let to people on benefit. ‘We also need to remember that today’s announcements only look at cutting costs, and that we can expect more fundamental reforms to come in future,’ said its president Howard Farrand.
9.10 am So what do we know so far? Here’s a quick summary:
Department expenditure limits outside of health and international development will be cut by at least 25% in real terms over the next four years. The final total for Communities and Local Government could be more than that if departments like defence and education are not hit as hard. The detail will come in the spending review on October 20.
Capital investment will be protected to some extent but it’s not yet clear whether new affordable homes would be included in that or whether ‘projects that offer a significant return to this country’ only include transport infrastructure.
A raft of housing benefit cuts will save £1.8bn a year by the end of the parliament. In the social sector, they include penalising tenants of working age who are over-occupying. In the private rented sector, there will be caps by bedroom size with a maximum of £400 a week for a four-bed home and the local housing allowance will be set at the 30th percentile of local rents. In both, anyone on jobseekers allowance for more than 12 months faces a 10% cut in their housing benefit and non-dependent deductions will be unfrozen.
Support for mortgage interest will be reduced to the Bank of England’s average mortgage rate - potentially hitting borrowers with sub-prime lenders who pay much more.
Capital gains tax will be increased from 18% to 28% for higher rate tax payers. That will affect buy-to-let landlords and second home owners but much less than they had feared. The Budget also reversed Labour plans to end tax breaks on furnished holiday lettings - a common way for second home owners to evade tax.
VAT goes up to 20% in January. That will increase the gap still further between the rate paid on refurbishment work and on zero-rated new build.
Council tax incentives for new homes will be considered in a white paper to be published later in the summer.
Public sector pay will be frozen for the next two years for anyone earning more than £21,000 - the previous Conservative plan had been a one-year freeze for anyone earning more than £18,000.
5.25 More on those council tax incentives for new homes - and it will worry those warning about the dangers of the gap between scrapping the old planning system and the new.
A white paper ‘later in the summer’ will set out plans to replace regional development agencies with local enterprise partnerships in areas around major cities and other natural economic areas. Their role will be ‘to enable improved coordination of public and private investment in transport, housing, skills, regeneration and other areas of economic development’.
It will also ‘consider the most appropriate framework of incentives for local authorities to support growth, including options for business rate and council tax incentives, which would allow local authorities to reinvest the benefits of growth into local communities’.
Meanwhile, local development orders could be used in areas ‘where there is potential or need for business growth’ to simplify the planning consents process’.
3.05 The housing benefit reforms are forecast to save £220m next year, £600m in 2012/13, £1.6bn in 2013/14 and £1.8bn in 2014/15.
The detail seems to make it clear that this is not really about those bumper pay-outs that take all the headlines. The caps on maximum local housing allowance rates for each property size will only save a maximum of £70m a year.
From April 2011, the caps will be £250 a week for a one-bed property, £290 for a two-bed, £340 for a three-bed and £400 for four bedrooms or more.
The biggest saving (£490m) will come from restricting working age entitlements in the social sector to reflect the size of the family from 2013/14.
Setting the local housing allowance at the 30th percentile of local rents from 2011/12 will save £65m in that year rising to £425m in 2014/15.
Other annual savings by 2014/15 include £340m from unfreezing deductions for non-dependents and £390m from switching to CPI indexation for the local housing allowance.
Jobseekers allowance claimants who fail to find work after 12 months will have their housing benefit award reduced to 90% from 2013/14 to save £100m.
2.55 Unemployed homeowners will feel the pain too. The rate at which support for mortgage interest is paid will fall from the current 6.08% (where it’s been frozen since late 2008) to the Bank of England’s average mortgage rate from October 2010. It’s true that interest rates have fallen considerably since then - but the borrowers in most trouble (especially those with sub-prime mortgages) tend to pay much more than the average.
2.40The Budget red book has a bit more detail on those housing benefit cuts: ‘The Government will remove payments that trap benefit claimants in poverty instead of providing incentives to work as well as being unfair to the millions of families on low income who do not depend on welfare,’ it says.
The package of reforms to be introduced in April 2011 is going to affect far more than just the highest claims:
- Full housing benefit will be time-limited for ‘ciaimants who can be expected to look for work’.
- Social tenants of working age will have their housing benefit restricted where they ‘are occupying a larger property than their household size warrants’.
- The maximum local housing allowance will be capped for each property size
- the percentile of market rents used to calculate local housing allowance rates will be changed.
1.39 Housing benefit was singled out as a prime target for cuts after a 50% increase in the total cost to £21bn over the last ten years. ‘Costs are completely out of control,’ said the chancellor. ‘We now spend more on housing benefit than we do on the police and on universities combined.’ Some families (er…their landlords?) were receiving £104,000 a year.
It only took him about 10 seconds to detail the measures to save £1.8bn a year by the end of the parliament:
- Re-setting and restricting Local Housing Allowances;
- Up-rating deductions;
- Reducing certain awards;
- Re-adjusting Support for Mortgage Interest payments;
- Limiting social tenants’ entitlement to appropriately sized homes;
- And, lastly, we will for the first time introduce maximum limits on housing benefit – from £280 a week for a one-bedroom property to £400 a week for a four-bedroom or larger.
1.30 The big question on capital investment is whether new homes qualify as ‘projects that offer a significant economic return to this country’ or does the coalition think that only applies to business-friendly transport schemes?
Osborne said:’Well-judged capital spending by government can help provide the new infrastructure our economy needs to compete in the modern world. It supports the transport links we need to trade our goods, the equipment we need to defend our country, and the facilities we need to provide quality public services. I think an error was made in the early 1990s when the then Government cut capital spending too much – perhaps because it is easier to stop new things being built than to cut the budgets of existing programmes.
‘We have faced many tough choices about the areas in which we should make additional savings, but I have decided that capital spending should not be one of them. There will be no further reductions in capital spending totals in this Budget.But we will still make careful choices about how that capital is spent. The absolute priority will be projects with a significant economic return to the country. Assessing what those projects are will be an important part of the autumn spending review.’
1.20 Capital gains tax for higher rate taxpayers will go up to 28% from 18% in a move that will hit buy-to-let investors and second home owners. The Lib Dems wanted it to go up to the same 40% (or 50%) rate as for income.
1.10 A range of cuts to housing benefit will save £1.8bn a year by the end of the parliament. Osborne says the £21bn budget has to be cut and payments of up to £104,000 have to go. Detail to include maximum limits.
1.00 Osborne has confirmed plans to protect capital investment. He says cuts made in the early 1990s - by the Conservatives - were a mistake. That resulted in big cuts in the new homes programme that continued under Labour in 1997. But departmental expenditure limits in non-protected departments will be cut by 25% over four years.
11.45: There’s good news and bad news for housing in the media speculation ahead of the Budget.
The good news is that several papers (including the FT and The Guardian) have clearly been briefed that George Osborne will stick to Labour’s plans for capital investment. That sounds like a positive sign for the spending review in the Autumn.
The bad news (in case anyone’s forgotten) is that those plans already implied massive cuts. Independent analysis by the Institute for Fiscal Studies (IFS) last year showed that capital-intensive departments like Communities and Local Government and Transport faced the biggest cuts.
It’s not at all clear whether sticking to Labour plans would include filling in any black holes the Conservatives have discovered along the way either. And even bigger cuts would presumably have to be found in non-capital programmes to contribute to the government’s aim of bringing the deficit down faster.
More immediately the big Budget questions for housing include what happens to:
- the funding that was frozen at the end of May including kickstart and local authority new build
- housing benefit
- capital gains tax - what exemptions and allowances will there be for buy-to-let landlords and second home owners?
- tax breaks for institutional investment in the private rented sector
- VAT - if it does rise to 20% that will make refurbishment even more expensive relative to new build.
One day to go and the predictions for the Budget are getting gloomier by the hour. Better hope that we don’t follow the much-heralded Canadian model for cuts too closely.
The National Housing Federation (NHF) warns this morning that the housing budget could be cut by a third, putting at risk 140,000 homes and 200,000 jobs and adding 350,000 families to waiting lists.
This week’s Inside Housing has a survey showing that a fifth of senior housing professionals believe the cuts could be more than 30% and Caroline Thorpe has an interesting take on three different Budget scenarios. At this rate her imagined £1m bet on New Zealand to win the World Cup is looking like the best option.
Meanwhile a poll commissioned by the Chartered Institute of Housing (CIH) says that the housing shortage is already so acute that 63% of adults believe their children will not be able to afford a home in the community where they live.
But it’s still unclear how much we’ll really know tomorrow. The emergency budget covers this financial year although it will also set the tone for the rest of this parliament. However, the detail for the years ahead may only come in the spending review in the Autumn.
In the meantime, departments will have to justify all their programmes in front of a star chamber of senior ministers and outside experts.
That was the technique adopted by the Liberal government in Canada to cut public spending in the early 1990s. That turned a big budget deficit into a healthy surplus within a few years and is now widely held up as a model for Britain to follow.
The Canadian system is very different from ours, not least in having a federal system, but there are some uncanny parallels too.
The cuts there included ending the federal government’s national affordable housing program (sound familiar?) and devolving responsibility for housing to provincial governments. Associated funding for repairs and subsidised rents was cut year on year after that. There was no more federal funding for housing for another 15 years and even then it was a time-limited two-year initiative.
The results of the cuts in housing and other social programmes such as health and education were a big increase in inequality and a surge in homelessness. According to social policy expert Michael Shapcott of the Wellesley Institute: ‘Before the 1990s homelessness was mostly seen as a involving single, transient men. After the cuts we saw homeless families and young children for the first time and seniors [people 65 and older] began turning up at shelters for the first time.’
Homeless shelters were overwhelmed by demand and tent cities grew up in major cities. Churches, synagogues and mosques responded by opening their basements as shelters and the government was eventually forced to provide emergency funding. In Toronto, even now 4,000 people a night including 700 seniors sleep in shelters.
‘Canada provides an excellent example of exactly what not to do,’ Shapcott told me for what is sadly the last-ever issue of ROOF magazine. ‘We have a very clear record of how housing cuts and cuts to other social programmes led to devastating consequences for disadvantaged communities and individuals.’
Perhaps most tellingly, what is seen here as an ideal way to cut the deficit is now seen there as an over-reaction. Michael Ignatieff, the current leader of the Canadian Liberal Party, has several times apologised publicly for the excesses of the cuts in general and the housing cuts in particular.
Working in one of housing’s quangos at the moment must be a bit like being in a soap opera - except when it’s more like Dr Who or a play by Samuel Beckett.
The story so far: two new characters have appeared on the square and they want revenge. Grant and Eric (who really ought to be called Phil) reckon that John and Gordon took some right liberties when they were top dogs and now it’s time to make things right.
In previous episodes Boris has been scheming to grab power from Sir Bob, Peter knows there’s a contract out on him and Steve’s disappeared with nobody to take over.
Things got a little clearer this week with Grant Shapps confirming to Inside Housing that Peter Marsh’s Tenant Services Authority (TSA) will indeed be scrapped and its functions transferred to the Sir Bob Kerslake’s Homes and Communities Agency (HCA) and Mike Biles’s Housing Ombudsman.
That leaves the HCA looking an awful lot like the Housing Corporation. Except that if London mayor Boris Johnson gets his way it will lose its London region, which accounts for half its funding - unless it is about to lose all its funding anyway, of course.
Over at the Audit Commission, the inspectors are running out of things to inspect. Their boss Steve Bundred has left and Eric Pickles won’t sanction the salary it wants to pay his successor. Comprehensive area assessment has been scrapped and housing inspection work comes from the TSA, which itself doesn’t know what’s happening.
Meanwhile, the lenders are waiting in the wings. Since they’ll be putting up most of the cash for the soap to continue, Grant and Eric have be sure to keep them sweet.
All of which leaves hundreds of people responsible for funding, regulation, inspection, tenant empowerment and complaints, regeneration and land assembly wondering what on earth will happen next. Even more uncertainty looms as they find out where they’ll be working and how many of them will still have jobs.
Which brings me back to Dr Who and Samuel Beckett.
Fans of the last of the Timelords in general and the Cybermen in particular may find the way that the TSA is being ‘deleted’ slightly suspicious. Do the new masters at Communities and Local Government all wear mobile phone earpieces by any chance?
And fans of the Irish writer may find parallels in his best-known work. In Waiting for Godot, the title character never actually appears but a similar sense of limbo ensues. In this new version, there won’t be much more Waiting for George - he’ll be here on Tuesday - but things may still be in limbo even after the Budget.
Just about nobody believes that only 464 people are sleeping rough in England so it’s good to see that the counting method is to be overhauled.
If anyone needs any more convincing take a look at a report published today by the Red Cross on the estimated 20,000 failed asylum seekers living in destitution in Britain - 28% of those surveyed had slept rough.
Housing minister Grant Shapps was set to announce the move at the first government meeting on homelessness this afternoon but it was one of his top priorities in opposition. In particular he’d identified the practice of doing the count in bands (0-10 and 11-20) and then rounding down, often to zero.
Other problems with counts in the past have included a failure to find rough sleepers, not counting people sleeping in cars and - I’m not sure if this is apocryphal or not - deciding that people who are awake at the time the counters come calling are not sleeping rough.
Shapps is keen on treating rough sleeping as more than just a housing problem. As he put it ahead of today’s meeting: ‘For the first time, ministers from across government are coming together to ensure that the needs of the homeless are being met, not just in terms of housing, but in employment, training, rehabilitation and healthcare.’
So far, so good, and it certainly makes a refreshing change to see a politician setting up a situation that he will almost certainly be blamed for later. As Harry Phibbs puts it on the Conservative Home website: ‘What is the betting that when the true figure for rough sleeping come out we will have Labour press releases saying: “Sharp increase in rough sleeping since the Tories took over….’
And yet the new approach raises some big questions too. Not least the obvious one that rough sleeping may not just be a housing problem but it is still linked to a lack of housing - and funding for affordable homes is about to cut.
Cuts in local government spending and a removal of ringfencing do not bode well either. How many hostels and homelessness projects will face cutbacks or closure over the next few years?
And reform of housing benefit and the wider welfare system will soon be on the way. The main objectives are to cut the overall bill and make work pay but welfare reforms always create losers and well as winners - how many of those will end up homeless?
The new age of aspiration proclaimed by Grant Shapps last week has got off to a bit of a shaky start. New figures out today from the Council of Mortgage Lenders (CML) show that first-time buyers accounted for the lowest proportion of home loans since the start of the credit crunch in September 2007.
Lending for first-time buyers had been going through a slow recovery thanks to the availability of more mortgages that do not require a hefty deposit but the 35% share in April was down from 39% in March. The number of first-time buyer loans was down 17% on March, though up 8% on April 2009. The post-Easter period often sees a slowdown in lending and these are only the figures for one month but there are worrying indications that lending is not about to return to pre-crash levels any time soon.
Coming out of the last housing market crash and recession, first-time buyers accounted for more than half of loans as they took advantage of falling house prices. Between 1997 and 2002, the number of first-time buyer loans was running at more than 500,000 a year. However, a rising market over the next five years priced thousands out of a first-time home and between 2003 and 2007 the annual average fell to 370,000.
First-time buyer loans then halved in the wake of the credit crunch - to 194,000 in 2008 and 199,000 in 2009. For an age of aspiration to dawn, those figures have to improve significantly. However, while loans in the first four months of 2010 are up on last year they are actually down on early 2008.
CML director general Michael Coogan said the figures could have been affected by alterations to stamp duty and by economic and political uncertainty and that the general outlook for 2010 was ‘modestly positive’. ‘But there remain a number of significant risks to this – in particular the potential for increased public sector unemployment arising from the government’s debt reduction programme, and higher taxation feeding into levels of disposable income.’
Even if those risks do not emerge, first-time buyers are still facing an uphill struggle to get on the housing ladder. Lending remains constrained and prices remain out of their reach thanks to the recovery sparked by record low interest rates (see today’s report from Shelter Scotland for more on that).
That has major implications for the government’s aspirations on home ownership. As Grant Shapps admitted in his speech last week, it’s quite possible that ownership will continue to fall in the short to medium term. The best hope for frustrated first-time buyers is another fall in house prices - but it would take a brave housing minister to greet that as good news.
So an independent review of the private rented sector ends with the rejection of almost all its recommendations and the adoption of the one thing it specifically recommended against.
It’s not the first time an independent review has been shelved- after all, this one was commissioned by a Labour government - and it’s not exactly a surprise that a Conservative government would reject any further regulation of private landlords.
But the long delay in implementation by Labour and the predictable response by housing minister Grant Shapps will come to be seen as a major missed opportunity for the sector.
The issue as always is how to balance greater protection for tenants and action against bad landlords against freedom for good landlords to operate and encouragement for them to invest. That’s a major consideration since investment in housing seems unlikely to come from anywhere else for the rest of this decade.
The original report by Julie Rugg and David Rhodes struck that balance with a call for light-touch regulation, arguing that ‘any scheme that is put in place must not stifle commercial activity or place an undue burden on statutory authorities with regard to implementation’.
Their package included a national licensing system for landlords, mandatory regulation of letting agents and the creation of new social lettings agencies. However, they rejected extra protection for tenants against retaliatory eviction and any change to the current system of assured shorthold tenancies.
A green paper by the Labour government accepted most of the recommendation and added a new one. To tackle the problems caused by large concentrations of students in areas of university towns a new use class order would be created so that any new house in multiple occupation would need planning permission.
Rugg and Rhodes had specifically rejected this proposal, arguing that it was ‘an extreme response given the limited nature of the problem. Change to the use classes order introduces the need for additional activity that local authorities are ill-equipped to handle’.
However, the government delayed legislating for so long that most of the recommendations had not been implemented by the time it left office.
At Communities and Local Government questions on Thursday Grant Shapps confirmed that ‘we…have no plans to take forward the previous Government’s ideas about further regulatory measures on this subject’.
However, pressed about the use class order for HMOs by Southampton Test MP Alan Whitehead, Shapps said ‘we will ensure that councils in areas such as Southampton maintain those powers. My only concern is to ensure that we do not have a system in place for homes in multiple occupation that is so overarching that it applies to areas where HMO students are not a problem’.
Reaction so far ranges from the predictable (welcomed by the National Landlords Association, disappointment from Citizens Advice) to the more nuanced. The British Property Federation was ‘glad to see the back of’ the landlord register but attacked the HMO restrictions and said it would be a pity to lose regulation of letting agents.
And so yet another attempt to find consensus about private rented sector reform ends in failure.
Do you want to reserve council housing for the over-30s? Stop mosque building? Cap local authority pay at £50,000 a year?
If you have other ideas, and you haven’t already commented on the coalition’s programme for government, you’re too late. The deadline passed at midnight and you’ve left the field open to people who want to cut public sector pensions, make Christian teaching compulsory and curb the power of the homosexual lobby.
Any public consulation in general - and any online consultation in particular - is bound to attract its fair share of people who are certain they are right and it’s easy to dismiss them as meaningless.
But the coalition has made consultation such a key part not just of its programme but also its approach to public spending cuts. It wants to recruit an army of ‘armchair auditors’ to scrutinise the information on all council spending over £500.
Genuine or not, that makes who responds to consultations like this one very important.
The 320 responses to the Communities and Local Government section of the programme unsurprisingly started with enthusiasts for coalition policies like scrapping regional spatial strategies and banning garden grabbing. There was lots of support too for giving more power to local communities and more transparency in local spending and some genuine optimism about some of the new policies.
‘Neighbourhoods having the power to determine housing poilcy will be a bonus, especially for those rural areas where there are huge issues surrounding affordable housing and families are split becasue they can find no suitable housing in their area,’ hopes one respondent.
Mixed in with that are some sensible pleas for support for social housing, shared ownership and self-build.
‘Build more social housing and stop leaving the decision about what type of housing to build to the market,’ says one response. ‘Let’s not cut off our intermediate housing nose to spite our face.’
And ‘why is affofdable social Housing not a major priority and area for investment’ and ‘I do appreciate that cuts have to be made and am really pleased that this government is taking the debt very seriously indeed, but please do keep offering affordable housing products’.
There’s even some opposition to coalition policies. ‘Abolishing RSS is madness – that is a case of throwing out the baby with the bathwater – local councils need guidance on a range of planning subjects that cut across council boundaries,’ pleads one respondent.
There’s a plea from ASB Professional ‘not to restrict the use of covert surveillance by LAs - the ability to tackle issues that can destroy communities and severely impact on residents’ quality of life will be compromised’.
And there’s opposition to the government’s decision to drop regulation of the private landlords and agents. ‘It is time that tenants within the private rental sector had some protections in place against negligent, greedy and temporary landlords.’
But the final few stages of the consultation look like an organised attempt by Christian groups to hijack the agenda.
‘Congatulations to the LIB-CON alliance, I believe God has allowed this for a purpose as HE enthrones and dethrones,’ is the message from one respondent. Eric Pickles as God’s Messenger? Hmmm.
Much of the responses are pleas for more funding for faith-based groups. ‘In this time of cut-backs, is the government aware the extent of Christian voluntary works that undergird the social systems of the towns? In our town over 100,000 man hours are spent annually, providing care to addicts, the elderly, the unemployed, the debt-ridden, etc,’ asks one respondent.
But mixed in with that are some moral messages such as ‘council houses SHOULD NOT BE GIVEN to people less than 30 years old, so to encourage teenagers to study instead of getting pregnant’ and ‘the homosexual lobby is far too powerful and influencial. Stop being scared of them and letting them manipulate!’
The most sensible combination of the lot comes from Sharon, who pleads: ‘When you do your consultation, please remember that only certain areas of the population will respond, you can’t just use the comments you have here and think this represents all of the UK. The people who respond are the people who know about these sort of consultations, who have the ability and the know how to respond and are willing to put their head above the firing line.’
But is anyone listening? And will anyone different be responding to the even more important consultation on spending cuts.
John Prescott and Zach Goldsmith made for entertaining radio this morning over a deadly serious issue.
The former deputy prime minister and new Conservative MP for Richmond clashed on the Today programme [listen again here] over plans that will be announced later today to stop garden grabbing and scrap density targets.
Prescott made a passionate defence of his policies. ‘You have got to look at how many homes we need and where they will be built,’ he said. ‘We are desperately short of land.
‘We are talking about the few people who may object to the house in their street that’s going to be used for social housing. I’m talking about families who haven’t got a ruddy home…we desperately need houses. Prices are far too high.’
But Goldsmith defended the ban on environmental grounds, arguing that counting gardens on brownfield land just made them targets for developers. ‘If you lump gardens and wasteland in the same category, developers will always go for gardens because it’s easier and cheaper.
‘We are not saying there shouldn’t be development, there are other alternatives. There are a lot of empty homes. We want to protect gardens so that instead of being top of the list for developers, they are at the bottom.’
Reports say Communities and Local Government statistics show that the proportion of new homes built on gardens rose from one in ten in 1997 to one in four in 2008.
That figure was almost certainly distorted by the collapse in housebuilding in 2008 but it does illustrate the way that planning policies have had unintended consequences. Brownfield targets led to building on gardens just as the density targets led to the construction thousands of flats aimed at buy-to-let investors.
The trouble is that changing policy can have unintended (or, for nimbys, totally intended) consequences too.
Garden grabbing implies that developers are somehow stealing the land from unsuspecting owners, whereas the reality is that many owners are desperate to sell.
And the moves on gardens and density targets raise an obvious question. Refurbishment of empty homes and development on genuine brownfield sites can only go so far.
Where will the homes go then? On the greenbelt? Crammed into poorer areas where anti-development residents are not as organised as places like Richmond? Or nowhere?
So the age of aspiration is back. What with all the grim news out there a little hope can go a long way.
In his first speech as housing minister today Grant Shapps adopted an upbeat tone against a decidedly downbeat backdrop.
He told an audience at the Royal Institution of Chartered Surveyors that HIPs were history and ‘home ownership is a very good thing’. This was a direct reference to John Healey’s musings that the recent fall in ownership might not be a bad thing.
Up to 1.4m people wanted to buy but could not do so because of house prices and lack of mortgage availability. They would be given the opportunity.
Top-down targets would be scrapped too. ‘By unleashing the aspirations of communities as well as individuals to build homes where and when they are needed, we will bring about greater certainty,’ he said. ‘Certainty that will replace the conflict caused by imposing housing numbers from right here in Whitehall. Certainty that will give investors confidence to invest.’
So far, so good. But the speech was rather longer on hope and aspiration than it was on real expectation.
‘The more power we give away - the more people will act to generate real change,’ he told the audience. ‘For the first time incentives will create direct benefits for local communities. Bringing jobs, investment and yes - more homes for local people.’
That leaves a lot riding on an untested new system that critics fear will mean fewer new homes and housebuilders are warning could be a ‘recipe for disaster’ without transitional arrangements in place.
On home ownership, Shapps said the government was not in the business of pouring cold water on people’s aspirations.
But realising them seems to be more about hope than expectation. He said many analysts were predicting short or medium term falls in ownership ‘and given the appalling financial legacy left to us – they could be right’.
In a question and answer session afterwards the minister said that ‘the cash for affordable housing had run out’.
It seems that housing black hole is growing by the day. He said that the £780m of cash from other departments that was meant to fund Labour’s affordable housing pledge had never been transferred.
And while he signalled support for shared ownership, the emphasis seemed to be on schemes promoted by the private sector, with social homebuy and rent to homebuy named as social sector schemes that were not delivering.
He also said he would ditch plans for a national register of landlords, according to The Guardian. That was part of a package of private rented sector reforms proposed by Labour in the wake of the Rugg Review.
But not even that has saved him from being criticised by the National Landlords Association for swallowing the ‘own your own home’ myth.
Housing minister is never going to be an easy job – especially in the current economic situation. But a little hope can go a long way. At least I hope it can.
How do you measure the success or failure of a government intent on scrapping targets and assessment? By setting a new target, of course.
It’s one that housing minister Grant Shapps set himself one in successive interviews and articles in the run-up to the election: building more homes than Labour. Nobody would claim that housebuilding numbers should be the only way to measure success in housing but it’s a start.
That got me wondering what building more homes actually means. The fairest way seems to be to take the figures for England only and to use housing starts rather than completions as there is less of a time lag involved.
Even then there are a number of different targets that could be set. Each uses the latest housebuilding statistics published by Communities and Local Government just after the coalition government took office.
So Target No 1 is more starts this year than the 87,360 achieved in 2009/10. That should be well within reach given that that last year’s total was only just higher than the year before. Starts have been rising steadily and the 24,570 in the first quarter of 2010 was up 24% on the previous three months and 60% on a year ago. Target No 2 is for the coalition government to beat the total achieved by the Blair/Brown government between 2005 and 2010. In theory that ought to be easy too given that two of those five years saw the lowest number of starts since 1946. However, the first three years of the Blair/Brown administration actually saw some of the highest starts figures for years. To achieve Target No 2, the Conservatives would have to preside over 685,000 starts over the next five years - or 137,000 a year. That’s almost 50,000 or 57% up on last year’s total.
Target No 3 is to beat the 147,440 starts a year average achieved by Labour between 1997 and 2010. As Shapps is fond of pointing out, the last Conservative government easily built more than that. So no problem?
Not quite. The 1979-97 Tory total was distorted by high public sector starts in the early years of the Thatcher government (local authorities and new towns started 34,000 in 1980, for example). Between 1990 and 1997, under John Major, there were just short of a million starts, an average of 142,000 per year.
The situation will get even more complicated if cuts and the global economic situation prompt a double dip recession and another crash in house prices. The natural response from housebuilders would be to sit on their land and cut back their building (especially with Kickstart 2 already a casualty of the cuts) until the market picks up again.
And what happens if housebuilders are right that scrapping Labour’s top-down targets in favour of local incentives without transitional arrangements between the two is a ‘recipe for disaster’?
Even if you ignore Targets No 4 and 5 - the now derided Labour aims of 2m net additional homes by 2016 and 3m by 2020 – success cannot be taken for granted.
New figures from the Halifax showing a 0.4% fall in house prices in May will add to the sense that the housing market is at a turning point.
The survey from the Lloyds Bank subsidiary presents a much more sober picture than the one on offer from the rival Nationwide yesterday.
On the Halifax measure, prices have declined slightly in 2010 after two monthly rises and three falls. In contrast, the Nationwide index is up 4.3%, putting prices less than 10% below their 2007 peak.A gap between the two is not unprecedented but the Halifax index has been consistently lower than the Nationwide’s over the last year.
Low levels of turnover and the fact that the Nationwide lends proportionately more in the buoyant London market probably explain the disparity.The price surveys followed Bank of England figures on Wednesday that showed house purchase loans in April were up 2% on March and 10% on last year.
That may seem like a modest improvement but lending levels are actually down significantly on the last six months of 2009.And that was enough to prompt the Council of Mortgage Lenders (CML) that it may have to downgrade its forecast for lending in 2010.
Given that its existing forecast of £150bn of gross lending and £15bn of net lending (new loans minus redemptions) represented only a modest improvement on 2009, that would signal a slowdown to come. All eyes are now on the emergency Budget on June 22. They will look first to see what the government does about capital gains tax (CGT) on second homes and buy-to-let property.
The Nationwide warned that any gap between an announcement and implementation could trigger a sell-off with big implications for the wider housing market. The abolition of home information packs (HIPs) will also increase the number of sellers in the market - but will a tough Budget and the prospect of spending cuts and job losses to come put off buyers?But lenders will also be looking for signals about what the government plans to do about the £300bn of Bank of England funding that is currently propping up the mortgage market.
On current plans, that will be withdrawn in four years’ time, potentially kickstarting a new credit crunch.Despite the long-term shortage of new homes, the Halifax’s prediction that prices will be flat in 2010 is starting to look over-optimistic.
The effects of the government’s abolition of regional spatial strategies are rippling out around the country and the prospects do not look good for new homes.
Communities secretary Eric Pickles outlined the decision in a letter to planning authorities last week that said he expected them ‘to have regard to this letter as a material planning consideration in any decisions they are currently taking’.
And the popularity of the move among Conservative MPs was seen in a Queen’s Speech debate last week in which they queued up to congratulate the government.
But will the bold move to give control back to local communities result in more homes once the carrot of incentives through the council tax replaces the stick of the unrealistic strategies?
Or, as the Homes Builders Federation is arguing, is it a ‘recipe for disaster’? ‘Whilst expecting a new planning system, the industry has long argued the desperate need for a clear and robust transition plan to ensure the radical change from the ‘top down’ approach of the past government to the ‘localism’ based approach of the new regime can be effected without damage to the supply of much needed homes across the country,’ it said.
The hard evidence on that will not be available for several months but the early indications are that councils are not just reverting back to the lower targets they proposed for themselves in the regiojnal spatial strategy (RSS) process but in some cases going even lower.
Meanwhile, housing schemes around the country are being refused or scaled back on the basis of the letter.
In the West Midlands, local authorities were meant to approve almost 400,000 homes by 2026 under the RSS. At the time 365,600 was the maximum they said they could provide but the Birmingham Post reports that there are indications that could be scaled back to 300,000 as a result of the recession.
Critics include Chris Crean of West Midlands Friends of the Earth, who said: ‘While the regional spatial strategy had its critics, it was a way of creating a long-term strategy for housing. Ripping it up without anything to replace it will lead to chaos. If these homes are needed, where are they going to go?’
In the growth area of Peterborough, Stewart Jackson, the local MP who was shadow planning minister in opposition, is calling on the council to scrap existing plans for thousands of homes and go back to the drawing board. The council insists the change in policy does not change the need for sustainable growth for the city.
In Oxfordshire, two district councils have withdrawn plans for their core strategies - the key documents that set out their plans for the area over the next 20 years. In the Cotswolds plans for a 300-home development in Moreton-in-Marsh were thrown out by planners on the basis of the Pickles letter.
In Essex, campaigners hope that the new policy will kill off plans for thousands of homes that are an advanced stage.
In parliament last week, Andrew Selous (South West Bedfordshire) said the previous government had wanted to impose 43,000 additional homes on his constituency. ‘I speak as someone who always supported the previous district council’s plans to build about 9,000 extra houses in my constituency to meet local housing need and make a small contribution towards the greater housing needs of London and the south-east,’ he said. ‘That need is real and we should not deny it.'
And that rather sums up the problem. Support is there for ‘local homes for local people’. Getting support for anything beyond that looks like it’s going to be an uphill struggle - yet no provision for new households from outside the area will mean a rapidly escalating housing shortage. Those council tax incentives will have their work cut out.
So 50 housing association bosses are being named and shamed for earning more than the prime minister.
What happens next?The league table led by former Anchor chief executive (£391,000) will be completely familiar to anyone working in housing.
The list is pretty much the same as the one that appeared in Inside Housing last September so it’s hardly removing a ‘cloak of secrecy’.
But the point of the list published by housing minister Grant Shapps today is that ‘chief executives need to be subject to the same scrutiny as other public figures whose salaries come out of the public purse’.
Publication came a day after the government revealed the names of 170 civil servants (including four at Communities and Local Government) who earn more than David Cameron’s £142,500. ‘It is important that we shine a light,’ said Shapps.
‘Everyone in the public sector should be subject to the same levels of scrutiny and transparency.’
But what happens next? Establishing a right to data and scrutiny of all organisations that receive public money is one thing. Going beyond that is quite another.
The coalition’s programme for government pledged: ‘We will undertake a fair pay review in the public sector to implement our proposed ‘20 times’ pay multiple.’
The idea is that nobody in an organisation should earn more than 20 times the pay of the lowest paid member of staff.
The minimum wage for anyone working 40 hours a week works out at £12,000 (or £10,000 for those under 22). So that implies the maximum pay should be £240,000 - perhaps more if all the lowest paid jobs have been contracted out.
Only four of the 150 civil servants named yesterday and only four of the chief executives shamed today earn more than £240,000.
So if that is where the bar is being set, it’s being set pretty low. Including pension payments too would make it more rigorous. And will the government apply it to housing associations anyway?
They can (and do) argue that they are private sector organisations (though not that many of them are also charities).
Even though that argument has been used in the past in a self-serving way to justify fat cat salaries, applying a public sector top pay policy would risk undermining their independence and open up a whole can of worms about public borrowing.
Equally well, much of their development and rental income comes from the public purse. So shouldn’t we have a say that goes beyond just publishing details of the salaries we could already have found out about without too much effort? One option might be to threaten to withhold grant or housing benefit from any organisation that pays too much.
But that could run up against the same public borrowing arguments and associations could legitimately ask why the same did not apply to other organisations that get public money and yet pay their bosses lots more.
Housebuilders? Banks?What about politicians and ministers who complain about public sector pay and civil servants getting more than them and yet know that once they leave office they will be able to cash in with directorships and book deals?
So unless the government is prepared to look at excessive pay across all sectors, it’s hard to see how it can control what’s in the trough for housing associations.
Naming and shaming only works if the people involved actually feel shame. Which is why it will be even more interesting than usual to see what happened to salaries this year when Inside Housing publishes its next survey.
To their credit, the credit crunch and impairment charges had already led some to pledge to freeze their top pay. The rest will be prepared for greater scrutiny than ever. But what if some still ignore it and award bumper pay increases?
David Laws may have fallen into a black hole of his own but the row he ignited about the housing one does not look like it’s going away.
As I blogged last week, the former chief secretary to the Treasury made the serious charge in a Commons debateon the coalition government’s spending cuts.
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,’ he told MPs.
Before Laws was forced to resign over his expenses claims, former housing minister John Healey wrote to him demanding an apology.
‘If this money is not now available to build new affordable housing it is because you and the chancellor have pulled the plug on the arrangements and agreements in place,’ he said.
But Healey’s successor Grant Shapps tweeted this on Sunday: ‘Weekend reviewing spending decisions by CLG Ministers from Jan to election - Some just shockingly wasteful.
Others look like election bribes.’It was Shapps who first raised the issue back in March. He claimed to have identified a £25m black hole in the housing programme and dismissed Healey’s claims that efficiencies would be found to plug the gap at a later stage.Black holes are not exactly new in housing.
In the last two years alone they’ve been identified in the Scottish parliament and Welsh assembly budget and in Glasgow, Southwark, Lambeth and the entire council housing finance system.
And what about the coalition government’s own plans? Laws had boasted of an extra £170m for housing before it became clear that last week’s cuts package had axed or frozen £610m of Homes and Communities Agency funding - prompting Healey to describe it as ‘either a serious mistake or serious deception’.
Black holes swallow any kind of matter. And the next event horizon - the emergency budget - is just three weeks away.