All posts from: February 2011
Some time this year a remarkable thing will happen: private tenants will outnumber social tenants in England for the first time since the 1960s.
The headline results from the English Housing Survey published today show that private renting surged to within touching distance of the social sector in 2009/10.
There were 3.67m social tenants (down 167,000 on 2008/09) and 3.35m private tenants (up 288,000) in 2009/10. Social tenants accounted for 17.0% of all households (down from 17.8%) while private tenants accounted for 15.6% (up from 14.2%).
If that trend is repeated on anything like that scale this year, private renting will overtake social renting for the first time in almost 50 years at some time in 2011. It may already have happened.
That reverses what happened in the 60s. In 1961 there were 3.2m social and 4.7m private tenants but a surge in new social housing and widespread disinvestment by private landlords meant there were 4.6m social and 3.2m private tenants by 1971.
Private renting continued to decline to reach a low point of just 1.7m tenants in 1992 or just 6.2% of households.
Now, thanks to a combination of deregulation and buy to let creating more landlords, and cuts in social housing construction and unaffordable house prices leading to falls in social renting and homeownership, it’s back with a vengeance.
In 2005 Gordon Brown pledged to create 1m new homeowners. By the time he left office in 2010 there were 265,000 fewer - and 1m new private tenants.
Where is the localism in plans for centralised controls over council borrowing and capital receipts?
The Localism Bill is part way through its committee stage, the local government finance review is due to be published shortly, and yet there is a disconnect between rhetoric and reality.
And it’s one that the Local Government Association says could jeopardise plans for 100,000 new council homes over the next four years plus investment in the existing stock thanks to Treasury interference.
In a memorandum submitted to the Localism Bill Committee, the Local Government Group (the LGA plus five other groups) welcomes plans to dismantle the ‘complex bureaucratic and inefficient housing finance system’ in the proposed deal on self-financing.
But it argues that: ‘Powers for Whitehall to impose arbitrary limits on councils’ housing borrowing, when the prudential code provides a well understood, flexible and effective mechanism for the self-policing of council borrowing, threaten to render the concept of self financing meaningless.’
Under the Bill as currently drafted the secretary of state has the power to adjust the settlement in future and potentially increase the amount councils have to pay to buy out of the scheme. The LGG describes that as ‘dangerous’ and argues: ‘The reform of housing finance is designed to give councils independence and financial certainty, but as drafted the Bill gives them neither.
The disconnect first became clear in the spending review last year when the Treasury went back on previous pledges by ministers to allow councils to keep capital receipts from right to buy sales and insisted that they would still have to hand over 75% of the money.
There’s nothing especially new about the Treasury wanting to retain control - just ask John Prescott, whose plans to change the public borrowing rules for council housing were vetoed when Labour took power in 1997.
But this time there appears to be a new element too: tension between deputy prime minister Nick Clegg and communities secretary Eric Pickles over how far the local government finance review should go.
In a leaked letter in January Clegg called for a root and branch review that would look at options including local taxes and greater freedom to borrow. However, more recent reports suggest that Pickles has got his way with a review that will be much more limited.
The LGA says the government should deliver on its pledge to introduce true self-financing by:
- allowing councils to reinvest 100% of capital receipts
- removing the provision in the Bill to allow the secretary of state to make councils pay more in future. ‘What is being proposed would be like buying a house on the condition the seller could demand more money at some point in the future,’ it argues.
- scrapping government-imposed limits on the amount councils can borrow for housing by relying on the established approach in the Prudential Code.
So will the Treasury finally let go? On past form, Colonel Gaddafi seems more likely to relinquish power voluntarily.
But is it missing a trick? Housing finance guru John Perry argued in a blog earlier this month that it could be using self-financing as a way to get council housing and its debt off the books of central government completely. Council housing is already classified as outside government by the Office for National Statistics.
‘This could be the moment for the Treasury to take the small but brave step of reclassifying it in the national accounts,’ he argues. ‘This would remove the need for the caps on borrowing. And it would mean that council housing really would be self-financing in April 2012, as the government promises.’
Could that one small step really turn into a giant leap? Or is it just a step too far?
Grant Shapps is slipping badly behind the required rate in his pledge to build more homes than Labour.
With apologies to anyone who hates cricket, as the one-day World Cup gets under way the housing minister has got off to a shaky start in the first overs of his innings.
The good news is that he will certainly beat the miserable total recorded in Labour’s final year in office. On the latest official CLG figures, there were just 88,020 housing starts in England in 2009/10. The first three quarters of 2010/11 have already seen 77,240 starts, which implies a total of somewhere around 100,000 in the coalition’s first year.
However, 2009/10 was the worst year for housebuilding since 1923 so beating that total is a bit like England beating Holland in the first game of the World Cup.
Tougher challenges await both England and Shapps. In the next round, the minister will have to beat the record of the Blair/Brown government between 2005 and 2010. That saw 137,000 starts a year - or 34,250 per quarter - despite including two of the worst years for housebuilding on record.
Shapps is currently averaging just 25,746 starts per quarter and is already 25,000 homes behind the required rate. He now needs to see 35,750 starts per quarter for the rest of a five-year coalition government to beat the Blair/Brown total.
That sounds a tall order, even with the New Homes Bonus, the housing equivalent of one-day cricket’s batting powerplay, still to come.
The minister will be even more up against it in the final, a comparison with the whole period of Labour government from 1997 to 2010.
Over those 13 years, starts averaged 147,440 a year or 36,860 per quarter. Shapps is already 33,000 homes behind the required rate and he needs to see 38,820 starts per quarter for the rest of this government to beat it.
That’s a 50% increase on what he is currently achieving so the omens are not looking great. Shapps needs the New Homes Bonus to work quickly, or a flurry of sixes, or maybe both.
Don’t celebrate the u-turn on the housing benefit reduction for the unemployed for too long or you’ll get knocked down by all the other cuts speeding down the road towards you.
Whether it was pressure from Nick Clegg and the Lib Dems (as spun to today’s papers) or a rethink of how it worked in conjunction with other policies (as Iain Duncan Smith claimed in interviews this morning), the decision has to be welcomed.
As research for the National Housing Federation found last week, it would have affected far more people than just the 133,000 people who have currently been claiming job seeker’s allowance (JSA) for more than 12 months. The real total could have been far higher as 220,000 lone parents with children between five and 10 and many of the 1.5m people on incapacity benefit face being moved on to JSA too.
Numbers like that made it the most controversial cut, especially with Lib Dems like Simon Hughes. However, a quick look at the impact assessments published alongside the Welfare Reform Bill this morning shows just how much is still to come.
First up is the cap on the total benefits anyone can receive at £500 a week for a couple and £350 for a single person. The effect on housing is obvious once all other benefits have been taken into account and the impact assessment even refers to it as the housing benefit cap.
An estimated 50,000 households will lose an average of £93 a week each as a result of the policy - 40% losing more than £50 a week, 25% between £50 and £100, 20% between £100 and £150 and 15% more than £150 a week.
Families with children will be hardest hit: 40% of those affected will have five or more children and 80% will have three or more children.
The DWP clearly sees it as a massive incentive to taking up work, since the cap does not apply to households that include anyone on working tax credit. ‘This will increase the incentive for people to find employment because once they are in receipt of WTC their benefits will no longer be subject to the cap, further more they will also gain from earning once they enter work.’
However, it’s not hard to see that the impact could be much greater than the DWP assumes. The assessment does not mention families who are currently in work with a high rent who then lose their job - or the impact on people in supported housing or on the new affordable rents.
In contrast, the next cut affects smaller families, especially those with no children, in the social rented sector. From April 2013 all social housing tenants of working age making a housing benefit claim will have it restricted by the same size criteria as in the private rented sector. About 700,000 families could lost an average of £13 a week each.
The government clearly sees it as not just a cut but as part of wider social housing reform plans designed to tackle under-occupation and reduce waiting lists. ‘The high proportion of tenants in receipt of Housing Benefit means that it has the potential to influence the behaviour and actions of many tenants and landlords,’ says the assessment. ‘It is this role that the introduction of the size criteria intends to capitalise on, providing support where accommodation is suitable for the needs of the tenant; and providing an economic incentive for tenants to move to smaller properties where their accommodation is considered larger than necessary to meet their needs and those of their household.’
However, though it argues that the cut only brings social tenants into line with private tenants, the impact assessment reveals a major problem with the policy. There are 600,000 families who would be assessed as needing one bedroom but not enough one-bed homes to accommodate them.
What happens to them? ‘In these circumstances individuals may have to look further afield for appropriately sized accommodation or move to the private sector, otherwise they shall need to meet the shortfall through other means such as employment, using savings or by taking in a lodger or sub-tenant.’
And the impact could be greatest in rural areas and areas with lower concentrations of social housing where alternative accommodation of the right size is just not available. Families there will face a grim choice between losing money, moving miles away or moving into the private sector.
The last juggernaut speeding towards us is the plan to uprate the local housing allowance by CPI rather than RPI from 2013. Over the short term, the impact assessment estimates a £300m a year saving with claimants losing an average of £5.50 a week. It does not mention the obvious long-term impact of continually uprating the allowance by less than rent increases - although there have been hints that the government may rethink the measure in the next spending review.
The JSA u-turn is evidence that good campaigning can work. However, nobody should be under any illusions about the scale of the cuts that are still down the road but getting closer all the time.
The first aims to produce more affordable homes by making the ones that already exist less affordable. The second aims to help some people get on to the housing ladder by suggesting initiatives that will pull the ladder further out of reach of the rest.
But both of them ignore the fundamental problem: that homes cost too much.
It’s a point that’s not lost on the group of people who were not invited to today’s summit: potential first-time buyers themselves. A succession of callers to today’s BBC You and Yours appealed for prices to be allowed to drift down to their natural level without any more government intervention.
As Matt Griffith of the PricedOut campaign puts it on a Guardian blog today: ‘Lending isn’t going to return until house prices start looking sensible again. Letting prices fall is also the easiest way to make houses affordable – the stated objective of the government – for people who can’t get on the ladder. But give a minister a chance to include first-time buyers in a press release and it’s an open invitation to do something dumbfoundingly stupid.’
The two issues are intimately connected. Potential first-time buyers find themselves locked out of the housing market, having to rent for far more than they would be paying in a mortgage on the same property. That pushes up rents which tempts investor-landlords to buy more stock, sending house prices even further out of their reach.
The splurge in lending that generated the wildest excesses of the boom up to 2007 seems unlikely to be repeated however many summits are held by ministers. Only the buyers with a big deposit are able to get mortgages - because banks know they are insulated against falls in prices.
The Council of Mortgage Lenders said after the summit that there was no simple quick fix for a market that had changed fundamentally since the credit crunch. And housing minister Grant Shapps sounded less self-confident than usual with no magic solutions to put forward - but maybe that’s no bad thing.
He told You and Yours (about 54 minutes in) that the upshot of the summit was two workstreams, one looking at how mortgage indemnities and insurance could play a role, the other at whether shared equity and shared ownership could be making a contribution.
As lenders and housebuilders met to discuss mortgages today, social landlords were digesting yesterday’s detail on the new regime that will allow them to charge ‘affordable’ rents based on up to 80% of inflated market rates on their new stock and a proportion of their existing homes.
That makes up for spending cuts by generating extra financial capacity to build more homes but only at the cost of an increased housing benefit bill and reduced work incentives for the tenants who have to live in them.
Whether you look at owner-occupation, private renting or affordable renting, homes cost too much. Calling for ‘stable’ house prices (as the minister did in January) was a good start but until we admit that we seem doomed to know the price of everything and the value of nothing.
Sometimes things can be so transparent that they are pretty much impossible to see through. What about spending over £500?
Home Group’s decision to publish information on all its spending over that level has sparked quite a debate - just take a look at the comments generated by Inside Housing’s story.
It will certainly be welcomed by ministers, who’ve imposed the same stipulation on central government departments and local authorities, tried to persuade housing associations to follow suit and turned up the pressure by considering forcing them to publish data if they want grant. It also looks like a very good piece of corporate PR - one worth a hell of a lot more than £500.
But many other associations will not be so pleased. It will increase the pressure on them to sign up to what many regard as yet another useless box-ticking exercise and it may even be a £40bn headache for the government if it helps tip the balance on the reclassification of their debt as public rather than private.
Many the same issues are raised in the NHF’s campaign against EU procurement rules (which do classify them as public bodies). The NHF argues that associations are neither ‘financed for the most part by the state, regional or local authorities’ nor ‘subject to management supervision by public bodies’ and that the £30m compliance cost could be spent on new homes.
And that public/private dichotomy rears its head yet again in the apparent push by Nick Clegg to bring associations within the scope of freedom of information legislation.
Housing associations have a point in all three cases. ‘Push us too far and our borrowing will be reclassified as public sector,’ is a compelling argument if it’s not over-played. ‘Trust us, we’re sort of charities, sort of businesses and we really care,’ may be true in some cases but it’s wearing a bit thin in others.
Put it all together and you have some very different ideas about transparency and accountability - the Tory one that it’s all about spending (with exemptions for bankers and party donors), the EU one that it’s all about the single market, the NHF one that its about delivering what you say and the Lib Dem one that it’s about free information. (The Labour/Martin Cave one that it might also be about giving tenants more consumer power has been dropped).
Each one has its limits but the dominant Tory one has more than the others. Data about spending over £500 is completely meaningless without context as the continuing and utterly pointless spat between DCLG ministers and the Audit Commission demonstrates only too well (If you missed it, Round 27 had the beancounters spending (or not spending) £5,000 on a string quartet.)
Just how meaningless was demonstrated in a press release from the DCLG last week.
Local Government Chronicle had published a story that apparently hoisted Eric Pickles by his own petard, accusing him of spending millions on consultants, legal costs, office chairs and excess fares on the basis of its analysis of the department’s own data on spending over £500.
The whole thing was factually inaccurate, hit back the DCLG. ‘Several of the figures quoted are incorrect, refer to spending under the previous administration or have been incorrectly entered as consultancy.’
In its response LGC admits it got one figure wrong on human resources consultancy but argues the new regime still spent more than its predecessor.
Some of the extra spending was a hangover from the previous regime but, embarrassingly for Pickles, much of the rest of it was down to ‘incorrect coding’ by the DCLG itself: £700,000 was coded as financial consultancy when it was in fact a payment to the Treasury; £1.5m was paid to the TSA but coded as IT consultancy.
Mr Transparency lectured local authorities that the whole thing was easy to do with a simple spreadsheet. But if his own department can get it so wrong what hope is there for hard-pressed local authorities and maybe housing associations? And what hope for the rest of us in trying to make sense out of it all?
Repossessions down, mortgage arrears down, buy to let up. Housing market crisis? What crisis?
That’s the obvious conclusion to draw from the stats out today from the Council of Mortgage Lenders that show what happened in 2010. Will it still be true by the end of 2011?
Repossessions were down 24% at 36,300 for the year - far less than feared by doom-mongers (including me) in the wake of the credit crunch in 2007 and house price falls in 2008.
The last three years have seen 128,500 families lose their homes, a worrying total but far less than in the early 1990s. The worst three years then (1991-1993) saw more than 200,000 repossessions and even the next three saw 140,000.
Arrears showed a more modest fall, with the number of people 2.5% or more behind with the mortgage down 13% on 2009. The total has now fallen seven quarters in succession.
Buy to let is back too - if not quite with a bang. The number of loans was up 10% by volume and 22% by value on 2010.
With the recent fall in prices showing signs of slowing down in this week’s RICS survey, things are looking good for landlords and existing home owners.
So crisis over? Not quite. The nightmare continues for frustrated first-time buyers who can’t get a mortgage and tenants stuck with high rents. Transactions are so low that effectively there is no true housing market - just trading on a limited amount of stock.
The Bank of England has just held interest rates at 0.5% again. The lowest rates for 300 years been a shot in the arm for owners and landlords, cutting their mortgage costs by billions, cutting arrears and repossessions and stopping forced sales and deeper falls in house prices.
But that’s come at the expense of savers and anyone who can’t get a mortgage or afford a home at current prices.
And what will happen if and when rates rise? As Jeremy Warner argues in today’s Telegraph, even relatively modest increases in rates could trigger problems for many ‘zombie’ homeowners stuck with too much debt - and this in a year when unemployment will rise and real incomes will fall.
Housing benefit cuts that are still in the pipeline could affect more than a million social housing tenants and have a deeper impact than anyone has yet realised.
Attention so far has focussed understandably on the first wave of cuts in the private rented sector - the bedroom caps and the 30th percentile restriction on the local housing allowance that kick in this year. They will be followed by shared room rent restrictions for the under 35s in 2012.
But research just published by the National Housing Federation looks at three cuts that will have a huge impact on social tenants and landlords too: increased deductions for non-dependents in the private and social sectors from April 2011; limiting the claims of under-occupying social tenants from April 2013; and the 10% reduction in housing benefit in both sectors for anyone on job seeker’s allowance for more than 12 months.
The University of York study provides the first estimates I’ve seen of the number of tenants who will be affected - for example, MPs asking parliamentary questions about how many tenants will be affected by the JSA cut have been told that the figures are not available. Here are the highlights:
Non-dependant deductions: the study estimates 160,000 council tenants and 170,000 housing association tenants will be affected by the plan to restore them in real terms to the level they were at in 2001.
However, it also points out the reasons why the deductions were frozen in the first place. Many claimants did not understand the rules and many non-dependants were unaware that the system assumed they were paying part of the rent. A study in 1994 concluded that the system conflicted with family values and parents’ sense of responsibility for their children and led to hardship for claimants and a high incidence of rent arrears.
Under-occupation: the cut will apply to all social tenants below retirement age with at least one more room than the bedroom standard. The York study concludes it will affect 372,000 housing association tenants - and by implication 350,000 council tenants. No rules have been published yet but one option might be to penalise families £8 per room for each room above the bedroom standard.
JSA for more than 12 months: as the NHF revealed on Monday, the raw numbers suggest that 133,000 claimants will be affected - 38,000 housing association tenants, 44,000 private rented tenants and 51,000 council tenants - and that they will lose an average of £475 a year.
But the real total could be far higher because of the effect of two other benefit changes that will substantially increase the number of JSA claimants by 2013.
The first is the switch from incapacity benefit to employment and support allowance. The York study highlights that as at October 2010 there were still 1.5m incapacity benefit claimants of whom 98% had been receiving it for more than a year. Between October 2009 and February 2010 only 23% of the 816,000 claimants assessed were judged to be not immediately fit for work.
The second affects an estimated 220,000 lone parents: from October all those with a youngest child aged between seven and ten have been required to seek work; later this year that will be tightened to all those with a youngest child aged five or more.
Even if their 12 months only starts from the time they start claiming JSA, that could dramatically increase the numbers affected by the housing benefit cut by 2013.
Taken together, the three cuts could hit up to 600,000 housing association tenants and a similar number of council tenants. The total is unclear because some could be affected more than one of them.
The implications of all that for the tenants are only too obvious - and there are already signs of fierce opposition to the 10% JSA cut in particular. As NHF chief executive David Orr puts it: ‘The proposal is unfair, unjust and will heap further misery onto households already under huge financial pressure. People should be encouraged into work, but threatening the homes of those who are unemployed isn’t the right way to go about it.’
However, the York study argues that the cuts will also pose major problems for social landlords too, with rising rent arrears leading to an increased workload to deal with them. The one small crumb of comfort for them is that it judges that ‘the sums of money involved should not have a significant impact on the overall robustness of housing associations’ financial standing’.
Also lurking in the pipeline though is the plan for a £500 a week cap on the total benefits anyone can receive from 2013. That is effectively a cap on housing benefit - and it could have a major impact on associations planning to offer affordable rent.
Can flexible tenancies really deliver the huge benefits at minimal costs envisaged by the government?
As Inside Housing reports this week, landlords are concerned that the policy could cost them £123m. The central scenario in a DCLG impact assessment estimates that over 30 years the policy will cost housing associations £63m, local authority landlords £56m and local housing authorities £4m.
The estimate is based on 26,000 households a year moving out of the social sector following a tenancy review. Costs would include £54m for reviewing tenancies, £27m for providing support and advice, £24m for void costs, £13m for developing and maintaining tenancy policies and £5m for court proceedings.
A higher scenario based on 61,000 households a year moving out of the social sector would cost local authorities and housing associations an estimated £262m.
But will that be the end of it? A close reading of the thinking behind the estimates suggests perhaps not.
Take those tenancy review, for example. The assessment assumes that each review will take two hours to conduct - costing £47 in staff time - but that the true costs will only be half of that because ‘keeping tenancies under review is already part of good tenancy management’.
So one additional hour of staff time to assess how much a tenant is earning? How much any other people in the household are earning? Whether their home is too big for them?
Will that be enough time to produce enough evidence of all that to withstand a possible legal challenge - even if the tenant will only be able to challenge the decision on the basis that the landlord has made an error of law or a material challenge of fact?
Or somehow to use tenancy renewals as a reward for ‘individuals that enter employment or positively contribute to their neighbourhoods’?
If the costs of the policy look uncertain, what about the benefits?
The impact assessment argues that they will ‘facilitate a change in the public perception of social housing so that it provides a springboard into work and self-sufficiency for households in need, rather than encouraging welfare dependency’.
As I noted last week, the assessment makes the remarkable argument that the loss of security of tenure ‘will only have a slight adverse impact’ on social tenants because private tenants do not choose to pay more for longer tenancies.
It also argues that: ‘There is little evidence to show that, in practice, the below-market rents and comparative stability provided by the social sector are providing effective incentives for social tenants to move into employment.’
Little evidence? The assessment references research for Shelter in 2008 without mentioning one its key arguments: that security of tenure improves work incentives for tenants.
The authors of the assessment might also have asked colleagues at the DWP about research it published in 2008 which concluded that: ‘The vast majority of respondents reported that living in the social rented did not present a barrier or disincentive to work. In addition, there was no evidence that levels of labour market attachment shifted when respondents moved between tenures. Some respondents explicitly referred to social housing bringing them closer to the labour market or making work a more viable option.’
And how many new tenancies will the policy really free up? On the central scenario used, the assessment estimates that 49% of new social tenancies will be flexible with an average term of five years - and 80% of them will be renewed.
Eventually, says the assessment, that would create an additional 18,000 lettings per year - an increase of about 10%. Over the first 10 years of the policy, though, there would only be an extra 2,000 lettings a year.
It sounds like Eric and Sir Bob have a job on their hands convincing their own staff - let alone the rest of us - about their vision for the future.
A survey just published by the independent think-tank Institute for Government found that the Department for Communities and Local Government (DCLG) has seen some of the biggest falls in Whitehall in staff perception about management and vision at the top.
Civil servants in 17 major Whitehall departments were questioned for the 2010 Civil Service People Survey and the DCLG came third from bottom in an index of ‘employee engagement’. Only the Department for Work and Pensions and HM Revenue and Customs scored lower.
Staff perceptions have also fallen faster than elsewhere since the 2009 survey.
The DCLG saw the biggest fall in staff feeling that ‘the organisation as a whole is managed well’ - 27% said yes, down from 38% in 2009.
It had the biggest fall too in staff saying that ‘the Board/Executive management group has a clear vision for the future of my organisation’ - a miserable 19%, compared with 31% in 2009.
It had the worst score in Whitehall for ‘I have a clear understanding of my organisation’s purpose’, with only 63% of staff saying they did.
Just 13% of DCLG staff felt that ‘when changes are made in my department they are usually for the better’ - down from 21%.
And what do they tell strangers they do when they meet them at parties? Just 31% were ‘proud when I tell others I am part of my organisation’, down from 38%.
The Institute for Government blames the Spending Review for the results, noting that the DCLG faces the toughest settlement and that ‘turning this around will be a challenge for the new Permanent Secretary who started in December’.
In fairness, the DCLG was never noted for being one of the happiest workplaces even in the good times before the spending review - a select committee report last year revealed that civil servants stayed in the same job for an average of just nine months.
They seemed happier about their individual teams and direct management - and Sir Bob is only a few weeks into his new job.
However, I wonder what staff are making of the board’s vision for the future after this week’s announcement that they have a new non-executive director: the CEO of corporate banking at that shining example of British business success, Lloyds Banking Group.
Join me for a walk into the future, one with shiny happy tenants and shiny caring landlords. One where all is for the best in the best of all possible worlds.
I was obviously mistaken in my initial assessment of the social housing reforms. Because either the team behind the impact assessments just published by the DCLG have a Panglossian faith in what they will achieve. Or they’ve overdone it on the Prozac.
According to the summary of the main impact assessment: ‘Our preferred proposals should: reduce the size of waiting lists; increase the flow of new tenants into social housing; improve tenants ability to move to another social home both within the local area and beyond; reduce over-crowding within the social sector; reduce the number of households in temporary accommodation; and, alongside recently announced proposals for reforming housing benefit, provide better incentives for tenants to move into and be able to sustain employment.’
It’s quite a list and some of it may be true. Nobody would claim the current system is perfect and it’s perfectly possible that some of the reforms may achieve some of those objectives. But all of them?
And what about those left behind? The summary goes on: ‘Changes to waiting list qualification criteria and tenancy contracts might conceivably have some adverse impacts for households that will no longer be able to register for, or to remain in, social housing (since private rents are higher than those for social housing and there is typically less security of tenure). Similar impacts could occur if local authorities make more offers of suitable private rented accommodation to households accepted as owed the main homelessness duty. Low income households in the private rented sector could face stiffer competition for affordable dwellings to rent.’
Might conceivably? Could? Call me cynical, but I’d put it a little stronger than that for the losers from these reforms, the people forced into the private rented sector who cannot afford home ownership. And all of those adverse impacts will be magnified by the cuts in housing benefit that are barely mentioned in the assessment.
Two sections of the assessment rather give the game away.
First, there is the impact of the end of security of tenure. ‘It is common for private tenancies to be provided with minimum terms of 6-12 months though, which suggests that many existing private renters are not willing to pay a rental premium in order to secure the benefits of longer contracts. This implies that reducing security of tenure might only have a slight adverse impact on households.’
Second, the assessment of the plan to allow local authorities to discharge the homelessness duty into the private rented sector also considers the alternative of strengthening the offer by requiring that private rented accommodation be offered with longer minimum tenancy terms and greater protection from eviction.
‘This option was rejected because it is likely to be impractical and unlikely to be effective. It would be impractical because the stronger the offer required before the duty could be ended, the less likely private landlords would be prepared to offer accommodation on those terms. It is unlikely to be effective because, given a choice, most applicants are still likely to choose the potential lifetime tenancy offered by social housing over the more limited period of tenure offered by an assured shorthold tenancy in the private sector.’
So on the one hand private tenants are failing to opt for longer tenancy terms - as if any of them apart from tenants at the top end of the market actually have any real choice. On the other landlords would refuse to offer them in any case - and potential social tenants would understandably choose to stick where they are.
The solution? Force them into the private rented sector. Cut housing benefit to corral them into the cheapest accommodation. Block any moves to introduce greater consumer rights or regulation.
And then argue that it ‘might conceivably’ have some adverse impacts.
The written response of Lib Dem deputy leader Simon Hughes to the social housing reform consultation gives a fascinating insight into the debate within the coalition.
What Hughes says matters not just because of the balance of power between the Conservatives and the Lib Dems and his position as the most senior Lib Dem who is not in government. They also matter because the reforms will affect his constituents more than anywhere else since Southwark & Bermondsey seat has the highest percentage of constituents living in social housing in England.
In a covering letter to housing minister Grant Shapps, Hughes reveals that he saw a draft of the consultation paper before it was finalised and had the chance to suggest changes.
‘I am grateful for those that have been taken on board,’ he says, without going into specifics. ‘I am pleased that the consultation document acknowledges the value of security of tenure in supporting individuals and building successful communities. I am also pleased that you have reinforced the link between the consultation process and the Localism Bill.’
At first glance it’s hard not to see his response as a climbdown. In August, when David Cameron first floated the idea, he said ‘our party would need a lot of persuading that it has merit or could work’. In September he put forward a motion to the Lib Dem conference calling on the government to rule out removing security of tenure for social tenants but it failed to get debated.
By January, in his response to the consultation, he was telling Shapps: ‘I have argued publicly that the presumption should be that all general need social tenancies should be secure (i.e. not time limited) but accept the good localist argument that local authorities should, after complying with certain safeguards, have the right to change this and introduce fixed term tenancies (less than for life) with a minimum fixed term.’
But he adds: ‘It is very important that the benefits of stable communities are balanced against the benefits of flexibility, and that the two circumstances in which there is a strong argument for a traditional secure tenancy to be revised do not become arguments against the principle of secure tenancies as a whole.’
Social tenants who move should keep their existing rights, he says, and tenants should be able to choose to stay and pay a higher rent if their circumstances have improved. However, if there is to be a minimum fixed term, he says it should be five years rather than two.
So far, so much ammunition for critics of the Lib Dems and for those who see localism as a device for undermining hard-won national rights.
However, Hughes also expresses specific concerns about the proposals on the homelessness duty and increased use of the private rented sector.
‘My reading of the consultation document is that renting privately is being viewed as a solution to many of the problems facing the social housing sector,’ he says. ‘The consultation document does not acknowledge that that a private rental offers a vastly different solution to people’s housing difficulties than social housing.’
He has particular concerns about the proposal to let local authorities discharge their homelessness duty into the private sector without the consent of the individual - arguing that some of his constituencies have suffered even under the current system after being encouraged into private lets.
‘What a local authority may consider as suitable accommodation may be questionable and, as such, I believe that the consent of the individual being housed must be safeguarded,’ he says. ‘Any change which allows local authorities to discharge their duty to homeless people by the offer of private sector accommodation must have very clear conditions attached and the opportunity for the individual to have independent advice on the suitability of the offer.’
And he denies the consultation paper’s claim that the current system encourages people to claim homelessness to get social housing. ‘The rules on “unintentional” homelessness are, and are applied, strictly. As far as I am aware, tenants who freely give up appropriate accommodation and claim homelessness in order to secure social housing are not offered social housing.’
The consultation proposes that once the duty has been discharged into the private sector it would recur if the applicant becomes homeless again within two years. ‘It is not clear whether this would cover someone who falls into rent arrears with the private landlord,’ says Hughes. ‘I suggest that any changes in the rules do not treat such individuals as intentionally homeless.’
As Hughes points out, ‘my great former Liberal colleague Steve Ross MP’ who was responsible for the homelessness legislation being on the statute book in the first place. As committee stage debates on the Bill continue, will the present day Lib Dems make their voices heard or will it and much else besides disappear in the name of localism?
And will Hughes himself find the changes any easier to explain than the U-turn on tuition fees?