All posts from: November 2010
The government has made possibly the most obvious concessions it could make on cuts in housing benefit but today’s announcement begs some questions too.
As trailed over the weekend, under pressure from the Lib Dems and London Conservatives the Department for Work and Pensions (DWP) has introduced transitional protection for existing local housing allowance claimants in the regulations laid before parliament.
They will be exempt from the bedroom caps that and reduction in the allowance to the 30th percentile for nine months from the date their claim is reviewed by their local authority. The DWP says that in practice that means many existing claimants will not be affected until after January 2012.
Local authorities will also get discretionary powers to pay rent direct to landlords in return for reducing their rents. And there will be an extra £50m for the discretionary payments scheme.
So far, so good, and London Councils welcomed the package as ‘a step in the right direction’, except that it is not quite as generous as it seems. It will be paid for by bringing forward the cut to the 30th percentile from October to April 2011, meaning that it will affect new claimants six months earlier than before.
Based on the DWP’s impact assessment in July that also means new claimants in London will face a double hit in April and the impact will also be felt outside the capital sooner than before. Most of the 21,000 claims affected by the caps are in the capital whereas the 775,000 claims affected by the 30th percentile are spread around the country.
Ministers have spent the last few weeks dismissing warnings about the disruptive effects on families of the cuts in general and the caps in particular as ‘scaremongering’. The DWP press release maintains that tone by saying that ‘ministers today reaffirmed their determination to drive down private sector rents for housing benefit recipients’.
However, if it was just scaremongering why does it justify bringing forward the cut to the 30th percentile by saying it will ‘avoid families being disrupted twice’?
The restoration of direct payment to negotiate rents down also seems a sensible move since a local authority clearly has far more negotiating power than an individual claimant.
As welfare reform minister Lord Freud put it: ‘We are looking to private landlords to respond to the need for lower rents and in return we are prepared to permit direct payments from the state.’
But if that’s the case why have he and other minister spent the last few weeks resisting an idea that he now says ‘will bring an overall downward pressure on rents in the private sector. As these rents come down, more properties will become available to claimants and landlords will have certainty that their income will be protected.’
The answer is that the government still does not think that direct payment has a place in a welfare agenda based on personalised services and the universal credit.
The final paragraph of the DWP press release goes out of its way to stress that this is not a permanent concession. ‘Ministers are clear this is likely to be a temporary agreement to provide an incentive to landlords to lower their rents and is by no means a return to direct payments being made to landlords as a matter of course,’ it says.
So is the social housing reform paper part of a deliberate attack on the poorest and most vulnerable or a chance to work with the government to ensure that any changes are fair and sustainable?
The sharply divergent reactions from Shelter and the Chartered Institute of Housing (CIH) show how it’s possible to look at the plan through different ends of the telescope - either as providing useful new options for landlords where they need them or as a framework for the end of social housing and the homelessness safety net as we know it.
The CIH reaction is not surprising since it has long advocated more flexibility in the housing ‘offer’. The reaction from Sarah Webb was carefully balanced. ‘We have long called for a more flexible approach to social tenancies that give people a choice according to their changing needs at different times of their lives,’ she said, ‘but we have always insisted that security and stability should be the starting point.’
Crucially for the CIH, that means people being able to stay in their own home as their circumstances change, even if the terms of their tenancy change.
In contrast, Shelter’s Campbell Robb said that the poorest had been penalised again and again through cuts in housing benefit, investment and legal and now through the reform plan. ‘From Shelter’s 40 years of experience in dealing with those in housing need we know that very few people go from homeless to self-sufficient within two years,’ he said, although it was noticeable that he didn’t express outright opposition to the idea of fixed terms as such. ‘The proposal for a minimum of this period shows the government’s naivety in how quickly people are able to get back on their feet, and we urge them to reconsider this in favour of at least a five-year minimum.’
David Orr of the National Housing Federation also gave a cautious welcome to some of the proposals but added that housing associations wanted to be free to offer fixed terms of longer than two years and lifetime tenancies where appropriate.
What’s clear from those reactions (apart from an obvious recognition that they have to engage with the government) is a willingness to admit that the current system is far from perfect.
What’s less clear (to me at least) is the chances of them succeeding in securing something better at the end of the process. There are some obvious concessions the government could make - for example, over the minimum length of the fixed-term tenancy - but there are also some fundamental problems.
First, as I blogged on Tuesday, there is the timing: the ‘most radical reform of social housing in a generation’ has an effective seven-week consultation when the government’s own code of practice says it should be 12 weeks.
That might not matter so much if the paper wasn’t so under-prepared and full of contradictions. You can look in vain for much in the way of evidence to back up any of its assertions or for any estimates of how many people will benefit from the reforms - and you won’t find any mention at all of John Hills or his report, despite the fact that the LSE academic produced the most in-depth study of the issues it’s addressing less than four years ago.
To take one glaring example, the paper cites the fact that ‘around 60 per cent of social rented households report that they are in receipt of housing beneﬁt, compared to around 20 per cent in the PRS’ as evidence that social housing encourages worklessness. Those figures from the Department for Communities and Local Government may come as a surprise to the Department for Work and Pensions, which has spent the last month arguing that housing benefit funds 40% of the private rented market (the discrepancy seems to be down to the DCLG using self-declared figures on housing benefit that even the DWP has rejected as too inaccurate).
And even if we accept all of the assertions about how unfair the current system is, the paper doesn’t actually propose doing anything about them, since nothing will change for existing tenants.
Then there’s cost. The new ‘affordable rents’ will generate badly needed resources for new homes but they will also increase the housing benefit bill. So will discharging the duty for homeless families into the private rented sector. So will the incentive to stay on benefit rather than get a job and lose your home. There is no estimate of the likely impact but it will be happening during a spending review period in which cuts in housing benefit are a major government priority.
And then there’s localism. Will local authorities and housing associations only use the new flexibilities where they need them or will there simply be a postcode lottery?
We don’t know. But we do know that they will not be allowed to change the main thing that localised administrations in Scotland and Wales have chosen to change in housing: the right to buy.
And I also remember one example of a sort of localism in action in England: housing options. Some local authorities used advice on accommodation available in the private rented sector to prevent homelessness. Others used it to prevent homelessness applications.
That’s just a selection of the potential problems. Combine them with the drastic cuts facing the civil service and local government and pressure from in-boxes groaning with a whole range of other reforms and the prospects do not look good from either end of the telescope.
In August we were told that David Cameron was just floating an idea about security of tenure.
Little more than three months later ‘the most radical reform of social housing in a generation’ includes even shorter fixed-term tenancies than he had in mind and the abolition of significant parts of the homelessness legislation.
None of this was in the Conservative or Liberal Democrat manifesto. The Tories promised in theirs to ‘respect the tenures and rents of social housing tenants’ - although shadow ministers were careful only to make pledges about current tenants, during the election campaign party spokespeople stressed that this covered future tenants too.
None of it was in the coalition programme for government either - hardly surprising since more than half of current Lib Dem MPs signed early day motions in the last parliament opposing fixed-term tenancies when Labour flirted with the idea.
The consultation period runs for eight weeks from November 22 to January 17 - take away a week for Christmas and New Year and effectively that will be seven weeks at the most.
Turn to the back of the consultation paper and you’ll find the code of practice on consultations issued by the Department for Business, Enterprise and Regulatory Reform. The second of these is: ‘Consultations should normally last for at least 12 weeks with consideration given to longer timescales where feasible and sensible.’
That is seemingly being ignored because of the government’s legislative timetable. ‘The consultation period has been set at eight weeks to provide the greatest possible opportunities for comment [sic] and allow for a draft Direction on a new Tenancy Standard to be considered alongside the Localism Bill,’ says the paper.
There is no official impact assessment of the changes either - although one considering the impact of the proposed legislative changes will be published alongside the Localism Bill shortly.
This for a consultation paper that covers some of the most contentious and complex issues in housing: tenure; rent levels; empty homes; allocations; mobility; homelessness; overcrowding; regulation; and council housing finance.
To take just one of those, the last time a Conservative government proposed a substantial weakening of the homelessness legislation in 1994 there were 10,000 responses from organisations and individuals.
And this for a set of proposals that seem long on assertion and short on evidence about the current system and sprinkled with contradictory signals about the new one.
More on all that another time, but for the moment consider this statement summing up the proposals. ‘The answer to the problem is fundamentally a local one: more choice for existing and prospective tenants; and local discretion that will enable social landlords to promote greater fairness between people seeking social housing and those who are in social housing, and provide the right sort of support to those who need it, for as long as they need it.’
More choice? Except where you are a homeless applicant who chooses not to go into the private rented sector of course.
Greater fairness between people social housing and those who are in social housing? Except that it doesn’t apply to existing tenants - the source of all the stats about how unfair the current system is.
Support to those who need it, for as long as they need it? Get a job and lose your home at the end of your tenancy - except if you can afford the right to buy.
One of the fundamental questions will be about the effect of localism. Will local authorities and landlords decide mostly to stick with something like we have now but use the new flexibilities as an option where they need it - ‘the norm is likely to be 10, 20 years, lifetime tenancies’ Shapps said yesterday - or will the whole thing turn into a postcode lottery and a race to the bottom?
Happy though I am to have played a part in getting Iain Duncan Smith to clarify what he said about rents and housing benefit, the whole affair raises more important issues than the fact that he told parliament that something found on the internet was an official statistic.
The work and pensions secretary said in a debate that last week that ‘according to the Office for National Statistics’ private rents fell by around 5% between November 2008 and February 2010 whereas the local housing allowance went up 3%. In fact, as I blogged on Tuesday, the ONS produces no such stats and the source was the property website findaproperty.com.
Now he has written to the parliamentary authorities with a ‘clarification’. The BBC quotes sources close to Duncan Smith as saying that he made a minor error and actually meant to say ‘according to national statistics’.
The sources ‘say the website’s figures are “robust” and its statistics have been used in submissions to parliamentary committees without complaint and argue that statistics from local authorities show a similar trend.’
Hmm. Let’s give IDS the benefit of the doubt for getting his sources mixed up while he was speaking without notes in a parliamentary debate but why not just admit it rather than come up with such a weasly form of words? And what exactly are these statistics from local authorities about private rents?
Moving on, the BBC quotes a DWP spokesman as saying that the row over the origin of the statistics is ‘a distraction from the important point the secretary of state was making’.
However, as I argued on Tuesday, the source of the 5% stat is not the only problem with the comparison he drew. Remember that it has been one of the key soundbites used by the coalition to justify the cuts. I’ve also heard it used by DWP ministers Steve Webb and Lord Freud. Housing minister Grant Shapps used it to argue the cuts would simply bring LHA rates back to the market norm on the Today programme on Thursday. It was a key part of a DWP briefing to journalists two weeks ago and it’s subsequently been repeated in just about every broadsheet newspaper and even in last week’s Economist.
However, it does not compare like with like. The average findaproperty rent is double the average local housing allowance payment so they are looking at very different markets. And findaproperty measures asking rents for new lettings not the actual rents of all tenancies.
And it is out of date. If ministers had bothered to look at findaproperty.com recently, they would have found a rather different picture. The latest survey in September showed rents had risen 3.8% since February, the rather arbitrary cut-off point they chose - whereas the DWP’s own figures show that LHA payments rose just 0.05% between February and July.
They also might have noticed that its property analyst Nigel Lewis was saying that: ‘Average rental prices are back up to where they were two years ago and I can only see them going up even more.’
And that he went on: ‘Stock levels in both the home buyer and rental markets are dwindling, and would-be buyers are still having a hard time getting mortgages. This is all putting increased pressure on the available rental stock which pretty much makes it a landlord’s market at the moment as they can effectively name their price.’
The implication behind the 5%-3% comparison is that landlords hiked up their rents when the LHA was introduced and that the cuts will result in rent reductions rather than shortfalls for tenants.
But here is the very website that sources close to Duncan Smith say is ‘robust’ pointing out that rents are going to rise even more at the same time as the cuts in the local housing allowance kick in.
And it’s not just findaproperty. Another survey reported on Friday that rents are up 4.5% since October last year (although its average rent of £691 a month is significantly less than findaproperty’s £850).
Meanwhile, the Rightmove consumer rental forecast published today says that 42% of renters expect rents to be higher a year from now, against 45% who expect them to be the same and just 7% who expect them to be lower (6% don’t know).
I’ll finish by going back to the supposed source, the Office for National Statistics. Here is its description of why it does what it does. For once it’s something I found on the internet that is definitely true: ‘Reliable and impartial statistics are vital for planning the proper allocation of resources, policy-making and decision-making to ensure a fair society.’
The good news: housing starts are back above 100,000 a year for the first time in two years. The bad news: that could be as good as it gets.
Today’s housebuilding figures from the DCLG show a recovery since the dark days of late 2008 and early 2009, when the 12-month rolling total of starts hit a low of just 68,000.
However, the June-September 2010 quarter also saw the first significant fall in starts since the start of 2009. The total of 25,870 starts was down 9% on the April-June quarter though still up 13% on a year ago.
So is this just a blip or is there worse to come? Unfortunately, starts fell both for private housebuilders and housing associations.
No matter what the government says about 155,000 new affordable homes, it’s hard to see that a 60% cut in the new homes budget can lead to anything other than a fall in starts by associations over the next few years.
In the coalition’s dreams, the public spending cuts will lead to a recovery in the economy and in private housebuilding. However, the cuts seem to be having the opposite effect so far.
Among other builders reporting results this week, Barratt Developments said the Autumn selling season had been weaker than expected. It blamed falling confidence in the run-up to the spending review in October and continuing constraints on mortgage lending (today’s CML figures show the lowest total for gross mortgage lending in 10 years).
Meanwhile, the planning system for new homes was is in chaos following the government’s High Court defeat over scrapping regional strategies and the new system and new homes bonus are still some way off.
Completions of new homes are still rising but they are based on decisions that housebuilders made several months ago. The signs do not look good further back in the chain.
Is the only solution to all the problems caused by reckless mortgage lenders and borrowers really to allow them to carry on being reckless?
You’d think so reading through the hostile responses to what seem at first glance like sensible proposals by the Financial Services Authority (FSA) to make sure that all borrowers with a new mortgage can afford it.
A joint letter today from eight housing organisations calls on chancellor George Osborne and the FSA to ‘take account the broader impacts of its proposals and to make proportionate changes to regulation that reflect the importance of the housing sector to the UK economy and more importantly the families that live in them’.
They were adding their weight to a vociferous campaign against the proposals by the Council of Mortgage Lenders and a 500-page response that it describes as ‘the most comprehensive submission in response to an external intervention into the market’ in its history.
So what’s all the fuss about? In its CP 10/16 consultation, the FSA says all it wants to ensure is responsible lending with proposals including:
- Imposing affordability tests for all mortgages and making lenders ultimately responsible for assessing a consumer’s ability to pay
- Requiring borrowers’ income to be verified in all cases to prevent over-inflation of income and mortgage fraud
- Extra protection for vulnerable customers with a credit-impaired history.
Its opponents say the plans are far too restrictive. The eight housing organisations say that if they were applied to the 11m current mortgage holders, 5.6m of them would not have got a loan at their current level of borrowing and 2.2m might not have got one at all.
The CML has responded with some similarly frightening stats over the last few weeks. It argues that the FSA proposals ‘do not take into account the self-correction in the market since 2007’ and do not take account of ‘how markets work’ and the impact of the new prudential requirements on lenders capital and liquidity levels.
The arguments seem hard to resist until you think back to what actually happened when during the credit crunch. No matter how much lenders argue that the crisis was caused by sub-prime lending in America, it’s worth remembering that self-certified mortgages (or liar loans) accounted for half of all home loans here in 2007 and that the boom also gave us buy to let, Northern Rock, HBOS and all the rest of it.
I seem to remember remember lenders in the early 2000s arguing that they had learned the lessons of the crash in the 1990s and that their sophisticated credit scoring technques made old-fashioned restrictions such as only lending someone three times their income unnecessary.
And I notice that several housebuilders are already arguing that the solution is a return to the old days of 95% mortgages and some of the sub-prime lenders that quietly exited the market are beginning to return. So I’m not convinced by the argument about self-correction in the market.
In an interview in the Financial Times today FSA chairman Lord Turner seems determined to press ahead with what he says is a system designed to prevent future problems rather than further restricting current borrowing.
Except that, as the CML points out, his plans do not just affect the mortgage industry and mortgage borrowers.
‘We need a public debate, led by the government, on how the regulation of housing finance (mortgages for home ownership, private rental, intermediate tenure and social housing) should support the government’s central and local government housing policies. CP 10/16 does not address the question of where consumers will live if they are unable to become homeowners in the future.’
Nothing else seem to be addressing that question let alone answering it. Which must add to the temptation for the government to blank out what happened in late 2007, let lenders and borrowers carry on as before and allow the market to ‘return to normal’. Until next time.
The key statistical comparison that the government has been using to justify its cuts in the local housing allowance is now looking even shakier.
In last week’s parliamentary debate, ministers repeatedly cited the fact that LHA rates rose while private sector rents were falling between November 2008 and February 2010 as evidence that the market was distorted by housing benefit.
Work and pensions secretary Iain Duncan Smith told MPs: ‘We now know that, according to the Office for National Statistics, the private marketplace in housing - Labour Members are completely wrong about this - fell by around 5% last year. At the same time, LHA rates, which the previous Government had set and left to us, had risen by 3%. There is thus a 7% gap with what is going on in the marketplace.’
As I blogged last week, the same figures were used in a briefing to journalists ahead of the debate that ‘landlords from the private sector are taking advantage of the housing benefit regime’ and ‘cashing in by pushing up rents’.
‘What we want to do, by working with councils, is to drive those rents back down,’ Duncan Smith went on in parliament. ‘The purpose of these changes is to give a real impetus to getting the rents down to make affordable housing more available in some areas.’
His reference to the ONS puzzled many people as they were unaware that it produced any statistics on private sector rents. And the Department for Work and Pensions has now confirmed to me that the source of the 5% figure was in fact the rental index set up by find-a-property.co.uk (now findaproperty.com), a website owned by Daily Mail publisher Associated Newspapers.
However, the problem with the figures goes way beyond the issue of what I am sure was IDS inadvertently misleading parliament about their source.
First off, rents for advertised new lettings are not a guide to rents in the market as a whole and especially to the rents of tenants who remain in the same property.
Second, findaproperty records asking rents rather than actual rents in its quarterly survey. Although its methodology adjusts for weightings by region, property type and number of bedrooms, that needs to be borne in mind because asking rents (just like asking prices in the for sale market) tend to be more volatile go up more in booms and down more in busts.
Third, findaproperty appears to cover a different part of the market to the local housing allowance. The average findaproperty rent in March 2010 was £820 a month - almost double the average amount of LHA paid.
Fourth, the comparison fails to consider what’s happened since February 2010. Between March and September 2010, findaproperty’s index rose 3.8% from £820 a month to £851 a month. In June the website’s property analyst Nigel Lewis said: ‘Rents have gone from strength to strength during the first half of 2010. The resurgence of the sales market has left tenants short of options and the result has been increasing rental prices.’
And in September he said: ‘Average rental prices are back up to where they were two years ago and I can only see them going up even more.
‘Stock levels in both the home buyer and rental markets are dwindling, and would-be buyers are still having a hard time getting mortgages. This is all putting increased pressure on the available rental stock which pretty much makes it a landlord’s market at the moment as they can effectively name their price.’
However, if it’s a landlord’s market and landlords are taking advantage of housing benefit, why did the average weekly award for LHA tenants only rise by 0.05% (from £112.85 to £113.43) between February and July 2010?
Fifth, as I blogged on Friday, the DWP’s own stats do not seem to support the view that the LHA somehow distorted the market. LHA awards only rose by a little more than non-LHA private rents in the period quoted by ministers and awards paid to private regulated tenants and housing association tenants both rose by more.
What are the dodgiest of the dodgy statistics being bandied around about housing benefit?
Are they campaigners’ estimates of the number of people who will be made homeless or forced to move as a result of the cuts? Or the number of councils block booking seaside bed and breakfasts? Or the Tory MP who discovered he’d been homeless as a child without realising it?
One of the most noticeable features of Wednesday’s Commons debate was the way that ministers sought to use attack as the best form of defence with repeated claims that their opponents were scaremongering and using ‘dog whistle’ tactics to alarm tenants who will not be affected.
Or could they be ministers’ own claims of what’s happening to rents? One in particular has been trotted out by just about every Conservative and Lib Dem MP and minister who’s said anything about housing benefit in the last week.
‘Let me remind the House how distorted the private rental market is,’ MPs were told. ‘As I said, between November 2008 and February 2010 private rents fell by 5% and local housing allowance rates rose by 3%.’
That was work and pensions secretary Iain Duncan Smith on Wednesday but his ministers Steve Webb and Lord Freud have said pretty much the same thing word for word over the last week.
I was surprised when I heard that since as far as I am aware there are no reliable statistics on private rents. There are lots of different surveys and indices but it’s not clear whether any of them are truly comprehensive.
A dip in rents at the height of the credit crisis seems to make sense though and the RICS rental survey shows that more surveyors were reporting rents falling than rising in most of that period. However, a fall in the rents on new lettings is not the same as a fall in rents in general and most of the surveys are currently reporting strong tenant demand and rising rents.
I’ve asked the DWP what the source of the figures is and been sent a briefing headlined ‘inflated rents must end now’. It repeats the same claim but again with no source - and nobody else I’ve spoken to has found one either.
However , as far as I can tell, even the LHA figure based on the DWP stats is questionable.
They show that the average LHA award actually increased by 5.4% between November 2008 and February 2010 from £107.08 to £112.85.
On the face of that supports the DWP’s claim that the introduction of the LHA allowed landlords to inflate their rents more strongly than its own claim of 3% (perhaps that should have read 3% per year?).
Except that the rest of the housing benefit stats say something rather different. If the LHA was to blame why did the rate for private regulated tenants increase by 6.1% over the same 15-month period? Why did the rate for non-LHA deregulated private tenants increase by 5.2% - only just less than for LHA?
And why did the biggest increase in housing benefit actually go to housing association tenants at 7.1%?
Even when you include the far more modest 3.3% increase in the rate paid to local authority tenants, the increase in the social sector as a whole (5.6%) was actually more than for LHA tenants.
Landlords are hopping mad over the implication that they are ripping off the system. The British Property Federation published a detailed rebuttal last week that used the DWP’s own figures to show that almost 70% of the increase in the housing benefit bill is down to an increase in the number of claimants rather than rents.
Of the rest, 17.7% is due to the increase in social sector rents (not just actual increases but the effect of stock transfer too) and only 13.2% is down to increased private rents.
The BPF also accused the DWP of misrepresenting the results of an independent study it commissioned on Low Income Working Households in the Private Rented Sector.
As for the other stats, I’m awaiting a response from the DWP.
Enjoyable though it may be to imagine the egg running down the face of Eric Pickles, where does today’s High Court ruling that his move to revoke regional strategies was unlawful leave planning for new homes?
In one of his first acts as communities secretary, he told planners in May that they should treat the government’s intention to abolish the strategies and their associated housebuilding targets as a ‘material planning consideration’ ahead of legislation to abolish them in the Autumn.
Amid warnings that simply discarding them might not be strictly legal, he issued guidance revoking them in July. A letter to chief planning officers set out more details of what they should do in the meantime.
Now it turns out the lawyers were right all along: Cala Homes successfully argued that he acted outside of his powers and that the revocation was unlawful and premature.
Pickles insists in a written ministerial statement today that the decision ‘changes very little’. The Localism Bill published later this month will sweep the strategies away and the advice to treat this as a material consideration still applies.
The problem is that local planning authorities seem to have interpreted that in very different ways. Over the last few months, some have stuck to the old targets, some adopted new ones and some done nothing. In the process plans for several thousand homes have been scrapped.
Housebuilders told the Communities and Local Government committee that they had been ‘treading water to see what happens next’ for the last three months and that the uncertainty would continue for another four years.
The positive impact of today’s ruling may be to make the government more willing to listen to calls from housebuilders and the National Housing Federation for detailed transitional guidance about what planning authorities should do in the meantime.
And just maybe (though I’m not holding my breath on this one) it will make them a little less blithely confident about the new system and a little more prepared to consult on the details.
As one housebuilder told the committee last week: ‘It’s quite a high-risk strategy because nothing like that has ever been tried before. There’s got to be a Plan B.’
What’s the difference between needs and aspirations?
Yesterday’s new business plan from the Department for Communities and Local Government got me wondering that when I read that its ‘structural reform priority’ for housing is to ‘meet people’s housing aspirations, including by providing local authorities with strong and transparent incentives to facilitate housing growth, as well as making the provision of social housing more flexible.’
That got me searching for the equivalent statement under the Labour government and the closest I could come up with was the departmental strategic objective in its 2009 annual report to ‘improve the supply, environmental performance and quality of housing that is more responsive to the needs of individuals, communities and the economy’.
What a difference two words can make. I’m not of course pretending that either government concentrates just on one and totally ignores the other but it’s the change of emphasis that’s significant.
Before the election, Grant Shapps accused John Healey of an attack on aspiration when the former housing minister mused that the fall in homeownership might not be a bad thing. ‘Housing minister confirms that if you work hard, save hard & have aspirations for your family - Labour no longer for you,’ he tweeted.
In power, Shapps has proclaimed a new ‘age of aspiration’ and that ‘homeownership is a very good thing’.
For coalition localists, ‘need’ smacks of top-down targets and central government dictating to local communities. It’s probably no coincidence that the only references to it in the new business plan are to the ‘need’ of local people for more transparent data about what the government is doing and to freeing local authorities to meet the ‘needs’ of local communities.
‘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,’ Shapps said in that same speech. ‘Certainty that will replace the conflict caused by imposing housing numbers from right here in Whitehall. Certainty that will give investors confidence to invest.’
But will the new planning system really ‘meet people’s aspirations’? Builders giving evidence to the Communities and Local Government committee yesterday didn’t think so and they are warning that a lack of transitional guidance risks creating a four-year void where nothing happens in some areas.
Because the irony is that the old system of regional strategies and housebuilding numbers was actually based on aspriations (or demand) rather than need. Local authorities were forced to plan for economic and population growth and for the homes to cater for it and the numbers assumed a huge expansion in the number of single-person households.
Left to themselves, local communities tend to settle for a different kind of aspiration - no new homes. They will allow numbers based on need - housing for the immediate local community and their children - but not for outsiders with aspirations moving to the area.
Planning incentives will have to count for a lot more than they seem to at the moment to over-ride that instinct, let alone satisfy the needs of people whose housing aspirations are for a secure roof over their head at an affordable rent and have just seen the funding for it disappear in the name of making social housing more flexible.
Can you really meet people’s housing aspirations when you are failing to meet their needs?
Listening to Lord Freud’s evidence to the work and pensions committee yesterday made me realise just how much of the housing benefit crisis is down to his department making up for its own failings.
This was about more than just one government criticising its predecessor. After all, the welfare reform minister was supported by officials who drew up the previous policy and Freud himself was an advisor to the Labour government before he became a minister in the Conservative-Liberal Democrat one.
And almost all of the justifications he gave for housing benefit cuts were based on criticism of what his own department did when it set up the local housing allowance (LHA).
The minister said that the government was funding 40% of the private rented sector, with 1.5m tenants on housing benefit including more than 1m on LHA.
But ‘the rents we are paying are rising faster than the market in real terms, considerably more,’ he said.
Rents had tended to gravitate to the LHA rate, which had been set at the comparatively high rate of the 50th percentile. And any hope tenants had of negotiating their rent down had been undermined by the fact that landlords knew what the LHA rate was.
‘It doesn’t take very much to get very concerned about the feedback loop that we created.’
The LHA is up for a two-year review with a report due to be published later this month but it was clear from Freud’s evidence that the department has already decided what was wrong. The bedroom caps and the cut to the 30th percentile will save money but they are also its response to that.
Both measures, along with confirmation of the end of the £15 a week shopping incentive, will be the subject of a statutory instrument to be laid by the government later this month.
Effectively, the incentive to tenants to shop around for a lower rent is being replaced by a penalty for not shopping around.
But the same department that admits that it got the old policy so badly wrong airily dismisses criticism of the new one.
‘We are not expecting any significant increase in homelessness,’ said Freud. A large number of people would be able to renegotiate their rents down and their landlords would move to the new LHA rate. Landlords would not pull out of renting to claimants. And the government was not expecting a significant increase in the use of temporary accommodation.
At the same time he dismissed claims by campaigners about the effects as ‘exaggerated’ and ‘disappointing’.
‘It’s immensely unhelpful when people stir up fears using arbitrary figures about homelessness because it frightens people,’ he said.
And he was equally dismissive of the prospects of any move back to direct payment to landlords – something the Conservatives favoured in opposition.
On the one hand, Freud was arguing that the government had failed to exploit the buying power it should get from funding 40% of the market. On the other he was saying that the negotiations with landlords had to stay in the hands of individual claimants because moving back to direct payment would undermine the workings of the department’s flagship universal credit.
The comprehensive spending review good news for social housing? Welcome to the world according to outsourcing contractor Mears.
Far from bemoaing the cuts, the supplier of construction, repair and maintenance services since the demise of Connuaught believes that ‘the outlook for our business has never been better’.
In an interim management statement yesterday, the company says it believes that its social housing operations ‘will continue to benefit from increased outsourcing opportunities in the sector as local authorities look to achieve further efficiency gains, particularly in the supply of essential repair and maintenance services. The significant majority of our social housing revenues are non-discretionary spend for services which our clients have a legal obligation to provide.’
The good news doesn’t stop there. ‘The proposed changes to the system for housing benefit will, in our opinion, promote the migration away from private dwellings towards social housing.’
Meanwhile: ‘The changes to the housing finance system will provide local authorities opportunities to invest further in their housing stock which can only be positive for the leading service providers.
And: ‘In addition commitments have been made to build 150,000 new social homes and to meet funding commitments on the decent homes programme.’
Although Mears has diversified, social housing still dominates its business and it has won significant new long-term work for Family Mosaic, Homes for Islington, Lambeth on Islington on top of acquiring contracts from Connaught. And the strategy certainly seems to be working based on the 48% increase in profits it reported in August.
True, letting new social homes on unaffordable rents should mean the same money generates more starts, but questions remain about HRA reform and decent homes funding. True, social housing will look a lot more attractive when the local housing allowance cuts kick in, but there is already a huge waiting list.
And how can a 60% cut in funding for new social housing and 25% cuts in funding to local authorities be good news for anyone else?
For anyone still working for a local authority, almo or housing association in a job that can be outsourced? For anyone working for or subcontracting to the contractors who fears for their terms and conditions or their job (look what Serco tried but failed to get away with this week)?
Or even for the people that outsourcing is meant to benefit? For tenants waiting for repairs financed from a shrinking budget? Or for landlords facing up to a future of continuing responsibilities, squeezed funding and a limited selection of out-sourcing partners to pick from?
A Tory-Liberal coalition government makes huge cuts in public spending and the minister expresses the hope that ‘future state intervention in any form will not be required’ in housing. Sound familiar?
In the wake of the spending review, this week’s Inside Housing announced the end of social housing. But I am talking about 1922 - the last time that public spending was cut on anything like the scale inflicted by George Osborne last month.
The Geddes Axe - named after the Tory industrialist Sir Eric Geddes, who chaired a committee on national expenditure - meant the end of the government subsidies for council housing introduced under the 1919 Housing Act. That had been the first legislation to require local authorities to survey the housing needs of their districts and to make and carry out plans for the provisions of the houses needed.
Asked what newly-married couples with no home were supposed to do, the minister went on: ‘They should be happy that they can enjoy living in even one room…Isn’t the demand of the newly-married for a separate house a comparatively modern development?’
So in a way we’ve been here before - though thankfully not quite that far yet.
Last time around though, the end of government subsidy only lasted for two years before a minority Labour government introduced the 1924 Housing Act and a subsidy regime that led to the construction of half a million council houses.
I am not of course pretending that we will see a return to anything like that and still less the post-1945 era that saw the two main parties competing with each other to build 300,000 council houses a year.
However, the point of the historical diversion is to highlight the way that housing has a habit of coming back to haunt governments that believe they can leave things up to the market.
The government in power once this spending review period ends in 2015 will still face the fundamental problem that the price of housing has soared beyond the reach of the wages that employers are willing to pay their workers.
And the solution to the problem of how to provide housing allowances for rents that vary hugely between different areas defeated even the great social reformer William Beveridge, who graces the cover of this week’s issue.
So what will take the strain of that contradiction? Housing benefit? The pockets of unemployed and low-paid households? Or might that future government decide that what’s needed as well is a system of subsidy for new homes with genuinely affordable rents that pays for itself over the long term?
The spending review may have dug the grave - and in Canada the government ended federal support for housing in the 1990s and there have only been time-limited initiatives since then - but I don’t think social housing is quite dead yet.