Monday, 27 March 2017

Inside edge

All posts from: June 2011

Hot air

Thu, 30 Jun 2011

Eco-bling? Hmm. There’s something not quite right in the statement by Grant Shapps about zero carbon homes this week. 

The housing minister was opening the Natural House, a low-carbon home developed by the Prince’s Foundation at the Building Research Establishment (BRE) in Watford. The idea is to show that eco-homes can be low carbon and energy efficient using traditional materials and designs. 

Shapps said: ‘We all know the Scandinavian-style homes that feature on property programmes - wearing their green credentials for all to see. These are popular and display a high quality of design and craftsmanship. But a lack of creativity could mean this eco-bling dominates our neighbourhoods in as little as five years - I am clear that the beginning of zero carbon does not need to mean the end of Great British design.

‘That’s why between now and 2016 when all new homes must be zero carbon, I want developers and designers to go back to their drawing boards and see how they can ‘green up’ our traditional, British properties. People want to buy homes, not causes and just because a home is greener does not mean it can’t reflect the character of the local area.’

He wants local people to have their say, working with the Design Council ‘to shape the future designs to have their say and make them cleaner and greener’.

Shapps is of course making a legitimate point about producing homes that people want to buy rather than see featured on TV.

However, there is also a populist undercurrent that conjures images of us all sitting in our Barratt home sipping warm beer rather than rolling about naked in the sauna attached to a home designed by those dastardly Continentals. Best not to tell him then that the Natural House relies on a German construction system.

And the minister is also associating himself with the particular view of architecture promoted by the patron of the Prince’s Foundation. Prince Charles is a longstanding critic of anything that smacks of modern design but his own Poundbury scheme has in turn been attacked as pastiche. 

Meanwhile, the bit about local people working with the Design Council also strikes a questionable note. The press release tells us that: ’ In February 2011 ministers confirmed that the Design Council would expand to take in many of the activities, skills, knowledge and expertise from the Commission for Architecture and the Built Environment, creating a one-stop shop offering a service to industry, councils and communities.’

Not mentioned is the fact that just 20 staff transferred over from CABE when it was abolished - it certainly sounds like they are going to have their work cut out.

This is also the first statement by Shapps that I can find since he announced the watered down, and still incomplete, definition of zero carbon last month. 

The Natural House combines a thermal and airtight envelope with traditional materials and design. However, the man whose firm has pioneered the use of that German construction system in the UK - Neil May of material supplier and consultant Natural Building Technologies - has questioned the idea of zero carbon and the ‘unrealistically short timescale’ to 2016 in the past. 

As he put it in an article in 2008: ‘There is of course no such thing as a low carbon building. There are only buildings and the way they are built and used by humans. This is not a trivial point, as the promotion of low carbon “this” and zero carbon “that” is actually a way of ignoring human behaviour, the interaction of humans with their environments and the forces that enable people to change how they live.’ 

And of course the new definition of zero carbon only covers the fabric of the building, heating and lighting - and not the emissions caused by human behaviour in stuffing their homes full of air conditioning and plasma TVs. 

So for all those reasons ‘eco-bling’ seems ill-advised. Plus one that’s closer to home for Shapps himself. 

Until he applied it to Scandinavian-style homes, eco-bling meant the sort of ineffective green technology that people fit to their homes to show off their eco-credentials. Gadgets like the famously useless wind turbine fitted by a certain senior Conservative politician to his West London home. 

Hot air

Thu, 30 Jun 2011

Eco-bling? Hmm. There’s something not quite right in the statement by Grant Shapps about zero carbon homes this week. 

The housing minister was opening the Natural House, a low-carbon home developed by the Prince’s Foundation at the Building Research Establishment (BRE) in Watford. The idea is to show that eco-homes can be low carbon and energy efficient using traditional materials and designs. 

Shapps said: ‘We all know the Scandinavian-style homes that feature on property programmes - wearing their green credentials for all to see. These are popular and display a high quality of design and craftsmanship. But a lack of creativity could mean this eco-bling dominates our neighbourhoods in as little as five years - I am clear that the beginning of zero carbon does not need to mean the end of Great British design.

‘That’s why between now and 2016 when all new homes must be zero carbon, I want developers and designers to go back to their drawing boards and see how they can ‘green up’ our traditional, British properties. People want to buy homes, not causes and just because a home is greener does not mean it can’t reflect the character of the local area.’

He wants local people to have their say, working with the Design Council ‘to shape the future designs to have their say and make them cleaner and greener’.

Shapps is of course making a legitimate point about producing homes that people want to buy rather than see featured on TV.

However, there is also a populist undercurrent that conjures images of us all sitting in our Barratt home sipping warm beer rather than rolling about naked in the sauna attached to a home designed by those dastardly Continentals. Best not to tell him then that the Natural House relies on a German construction system.

And the minister is also associating himself with the particular view of architecture promoted by the patron of the Prince’s Foundation. Prince Charles is a longstanding critic of anything that smacks of modern design but his own Poundbury scheme has in turn been attacked as pastiche. 

Meanwhile, the bit about local people working with the Design Council also strikes a questionable note. The press release tells us that: ’ In February 2011 ministers confirmed that the Design Council would expand to take in many of the activities, skills, knowledge and expertise from the Commission for Architecture and the Built Environment, creating a one-stop shop offering a service to industry, councils and communities.’

Not mentioned is the fact that just 20 staff transferred over from CABE when it was abolished - it certainly sounds like they are going to have their work cut out.

This is also the first statement by Shapps that I can find since he announced the watered down, and still incomplete, definition of zero carbon last month. 

The Natural House combines a thermal and airtight envelope with traditional materials and design. However, the man whose firm has pioneered the use of that German construction system in the UK - Neil May of material supplier and consultant Natural Building Technologies - has questioned the idea of zero carbon and the ‘unrealistically short timescale’ to 2016 in the past. 

As he put it in an article in 2008: ‘There is of course no such thing as a low carbon building. There are only buildings and the way they are built and used by humans. This is not a trivial point, as the promotion of low carbon “this” and zero carbon “that” is actually a way of ignoring human behaviour, the interaction of humans with their environments and the forces that enable people to change how they live.’ 

And of course the new definition of zero carbon only covers the fabric of the building, heating and lighting - and not the emissions caused by human behaviour in stuffing their homes full of air conditioning and plasma TVs. 

So for all those reasons ‘eco-bling’ seems ill-advised. Plus one that’s closer to home for Shapps himself. 

Until he applied it to Scandinavian-style homes, eco-bling meant the sort of ineffective green technology that people fit to their homes to show off their eco-credentials. Gadgets like the famously useless wind turbine fitted by a certain senior Conservative politician to his West London home. 

Costs and benefits

Wed, 29 Jun 2011

So who’s right about the housing benefit costs of affordable rent?

The issue was raised by Conservative backbencher Jeremy Lefroy in a Westminster Hall debate yesterday and sparked a new row between housing minister Grant Shapps and his Labour shadow Alison Seabeck. 

Lefroy, the MP for Stafford, explained it like this: ‘Some people have asked whether the result of increased rents for new tenants will be to transfer capital subsidy  to the cost of welfare because much of the increase will  be covered by housing benefit. There is a clear difference of views here, with the Government saying that there is likely to be little or no increase in the cost of housing benefit, and others estimating the annual cost after four years to be up to £1.5bn. This issue cannot be brushed under the carpet as a minor detail, and I ask the Minister to update the House regularly so that we can see the true consequences of the shift in funding new affordable rented housing more out of rental income and less out of capital grants. This is an important policy change, and we need to evaluate it.’

That £1.5bn figure is an estimate of the extra housing benefit cost per year by the end of the spending review period in a Building and Social Housing Foundation (BSHF) in a briefing to MPs on the Localism Bill committee. The government had denied the BSHF access to the modelling that went into the impact assessment published earlier this month.

However, even the impact assessment has not settled the argument. According to Seabeck, it puts the extra housing benefit cost at £1.2bn. According to Shapps, it will be ‘in the region of £25m to £50m’.

The minister went on: ‘We do not recognise the figures running into billions of pounds that have been thrown around, for the simple reason that when somebody moves into affordable rented accommodation, they often come from the private rented sector where 100% of their rent is paid for and supported by housing benefit. They might then move into a property where the average rent is 67% of the market rent…and in such cases, the cost of housing benefit would not rise but fall.’

And: ‘There seems to be a fundamental misunderstanding about the affordable rent programme that I hear mentioned time and again. In fact, the programme will assist with the housing benefit bill.’

That’s true of course - but only if you compare affordable rent with doing nothing and only if you ignore the conversion of social rent homes to higher affordable rents. 

That sent me back to the impact assessment in a bid to find out what’s going on. It compares three options:  the existing policy of social rent plus some low-cost home ownership (option one); putting everything into affordable rent (option two); and affordable rent plus some home ownership (option three). Each also has three different scenarios based on economic criteria but to simplify things I have compared the central scenario in option one with the central scenario in option three. 

According to the impact assessment, option one would deliver 27,000 additional affordable homes. It looks at the cost and benefits in terms of the present value over 30 years. The net government cost would be £749m, consisting of £1.6bn of HCA capital funding, less £625m saved on housing benefit and £212m saved on wider exchequer costs. The net economic benefits (from increases in the value of the land associated with its change of use, employment generated through the construction programme and additional distributional benefits) would be £1.6bn.

In contrast, option three would deliver 56,000 new affordable homes and see 18,000 social rent homes converted to affordable rent. The net government costs are put at £1.8bn: £1.6bn of HCA funding plus £553m more on housing benefit less £358 saved on wider exchequer costs. And the net economic benefits are put at £3.2bn.

Add the £625m housing benefit saving under social rent to the £553m extra housing benefit costs under affordable rent and you come up with Seabeck’s £1.2bn.

After checking with the DCLG, the £25m to £50m range used by Shapps seems to come from taking that £553m figure and spreading it over the four years of the spending review period. In other words, it ignores the housing benefit saving that would have been made from continuing with social rent and the 30-year timescale used in the impact assessment.

And that sleight of hand got me thinking about the figures on a deeper level. 

After all, if the main aim of the government really is to reduce the deficit, it would seem to make sense to go for the option with the lowest net government cost: £749m for social rent as against £1.8bn for affordable rent.

However, the impact assessment concludes: ‘Option 3 delivers the greatest net economic benefits, maximises the delivery of new social housing, provides the most diverse range of products for those accessing social housing and would deliver the largest reduction in housing need.  On this basis, despite higher estimated costs to government in the long term, it is the preferred Option.’

Fair enough: it would be a major surprise of course if government policy did not emerge from a government impact assessment as the preferred option but at least we know the justification.

And that got me thinking again. Is the assessment really comparing like with like? 

This is obviously a massive simplification of a complex process. There are some big ifs in there and some big assumptions too. The Treasury will be looking at the short-term costs over the spending review period rather than the long-term costs over 30 years.

However, option three delivers 56,000 homes and net economic benefits of £3.2bn at a net cost to the government of £1.8bn.

Imagine for a moment if the government invested that £1.8bn in option one (rather than £749m). If output of new homes and the net economic benefits increased by a similar amount, we would get 65,000 social rented homes and £3.8bn of economic benefits. So which is the preferred option now?

Costs and benefits

Wed, 29 Jun 2011

So who’s right about the housing benefit costs of affordable rent?

The issue was raised by Conservative backbencher Jeremy Lefroy in a Westminster Hall debate yesterday and sparked a new row between housing minister Grant Shapps and his Labour shadow Alison Seabeck. 

Lefroy, the MP for Stafford, explained it like this: ‘Some people have asked whether the result of increased rents for new tenants will be to transfer capital subsidy  to the cost of welfare because much of the increase will  be covered by housing benefit. There is a clear difference of views here, with the Government saying that there is likely to be little or no increase in the cost of housing benefit, and others estimating the annual cost after four years to be up to £1.5bn. This issue cannot be brushed under the carpet as a minor detail, and I ask the Minister to update the House regularly so that we can see the true consequences of the shift in funding new affordable rented housing more out of rental income and less out of capital grants. This is an important policy change, and we need to evaluate it.’

That £1.5bn figure is an estimate of the extra housing benefit cost per year by the end of the spending review period in a Building and Social Housing Foundation (BSHF) in a briefing to MPs on the Localism Bill committee. The government had denied the BSHF access to the modelling that went into the impact assessment published earlier this month.

However, even the impact assessment has not settled the argument. According to Seabeck, it puts the extra housing benefit cost at £1.2bn. According to Shapps, it will be ‘in the region of £25m to £50m’.

The minister went on: ‘We do not recognise the figures running into billions of pounds that have been thrown around, for the simple reason that when somebody moves into affordable rented accommodation, they often come from the private rented sector where 100% of their rent is paid for and supported by housing benefit. They might then move into a property where the average rent is 67% of the market rent…and in such cases, the cost of housing benefit would not rise but fall.’

And: ‘There seems to be a fundamental misunderstanding about the affordable rent programme that I hear mentioned time and again. In fact, the programme will assist with the housing benefit bill.’

That’s true of course - but only if you compare affordable rent with doing nothing and only if you ignore the conversion of social rent homes to higher affordable rents. 

That sent me back to the impact assessment in a bid to find out what’s going on. It compares three options:  the existing policy of social rent plus some low-cost home ownership (option one); putting everything into affordable rent (option two); and affordable rent plus some home ownership (option three). Each also has three different scenarios based on economic criteria but to simplify things I have compared the central scenario in option one with the central scenario in option three. 

According to the impact assessment, option one would deliver 27,000 additional affordable homes. It looks at the cost and benefits in terms of the present value over 30 years. The net government cost would be £749m, consisting of £1.6bn of HCA capital funding, less £625m saved on housing benefit and £212m saved on wider exchequer costs. The net economic benefits (from increases in the value of the land associated with its change of use, employment generated through the construction programme and additional distributional benefits) would be £1.6bn.

In contrast, option three would deliver 56,000 new affordable homes and see 18,000 social rent homes converted to affordable rent. The net government costs are put at £1.8bn: £1.6bn of HCA funding plus £553m more on housing benefit less £358 saved on wider exchequer costs. And the net economic benefits are put at £3.2bn.

Add the £625m housing benefit saving under social rent to the £553m extra housing benefit costs under affordable rent and you come up with Seabeck’s £1.2bn.

After checking with the DCLG, the £25m to £50m range used by Shapps seems to come from taking that £553m figure and spreading it over the four years of the spending review period. In other words, it ignores the housing benefit saving that would have been made from continuing with social rent and the 30-year timescale used in the impact assessment.

And that sleight of hand got me thinking about the figures on a deeper level. 

After all, if the main aim of the government really is to reduce the deficit, it would seem to make sense to go for the option with the lowest net government cost: £749m for social rent as against £1.8bn for affordable rent.

However, the impact assessment concludes: ‘Option 3 delivers the greatest net economic benefits, maximises the delivery of new social housing, provides the most diverse range of products for those accessing social housing and would deliver the largest reduction in housing need.  On this basis, despite higher estimated costs to government in the long term, it is the preferred Option.’

Fair enough: it would be a major surprise of course if government policy did not emerge from a government impact assessment as the preferred option but at least we know the justification.

And that got me thinking again. Is the assessment really comparing like with like? 

This is obviously a massive simplification of a complex process. There are some big ifs in there and some big assumptions too. The Treasury will be looking at the short-term costs over the spending review period rather than the long-term costs over 30 years.

However, option three delivers 56,000 homes and net economic benefits of £3.2bn at a net cost to the government of £1.8bn.

Imagine for a moment if the government invested that £1.8bn in option one (rather than £749m). If output of new homes and the net economic benefits increased by a similar amount, we would get 65,000 social rented homes and £3.8bn of economic benefits. So which is the preferred option now?

Top to bottom

Tue, 28 Jun 2011

The impact on private finance has understandably dominated the debate about direct payment of housing benefit so far but it’s just one of the issues facing social landlords and tenants.

In interviews for my feature in this week’s Inside Housing, I was expecting (and got) some dire warnings about the availability and cost of funding from lenders. However, I only had limited space to cover some of the pretty fundamental rethinking that seems to be going on out there.

The campaign continues to convince the government to change its mind but Lord Freud added little at Harrogate last week to previous assurances that it will introduce a system that ‘seeks to protect the financial position of social sector landlords and keeps a facility to pay landlords directly’.

That leaves social landlords with precious little detail about what will happen when housing benefit is integrated with the universal credit. Seen from the top, any switch to paying tenants direct will have a huge impact on business plans and budgets.

Steve Howlett, chief executive of Peabody, explains the impact on his housing association: ‘We’ve got 12,000 direct housing benefit transactions per month, £3.75m a month, £43m a year and these transactions are largely untouched by human hand and go through automatically. If that ends we’ll have to employ more people, it becomes a more complicated business and it’s a waste of money really.’

For local authorities and ALMOs preparing for self-financing, the impact will be just as great. ‘Our rent roll is £86m a year and the amount in benefit paid direct is £60m so suddenly having to collect the extra will put increased pressure on us all,’ says Mark Henderson, director of housing at Wolverhampton Homes.

And Greg Falvey, chief executive of Colchester Homes, explains: ‘Any really quite minor adjustment you have to make in your assumptions for something like bad debt, while it may look relatively small over the course of the 30-year business plan, means areas of expenditure that can’t be made any more.’

But he adds that if the impacts are scary for landlords, they are scarier still for tenants whose household budgets will come under growing pressure from a whole range of spending and benefit cuts.

For the very poorest, the options are already limited. In recent reports, the Human City Institute (HCI) has charted the level of debt among tenants and the extent to which they are relying on high-interest loans from pawnbrokers, mail-order catalogues and legal and illegal lenders. (Labour MP Stella Creasy is due to put forward an amendment to the Finance Bill later in a bid to ‘end legal loan-sharking’).

‘About 80p in the pound goes on heating, fuel, food and debt repayments,’ says HCI director Kevin Gulliver. ‘That leaves 20p in the pound to cover everything else. Rising household debt over the next five years will affect those at the bottom more than the top.’

‘The majority of tenants coping on very small incomes are actually very good at budgeting because they can’t afford not to be. It’s clear from our survey that tenants want landlords to provide some sort of flexible loan facility. If rent is paid direct to them that’s what’s going to happen.’

That in turn raises the prospect of tenants choosing to pay the person knocking on the door for money rather than their rent.

‘People with financial problems turn to loan sharks and they may face threats of violence or come under pressure to allow their homes to be used for cannabis farms.’ says Julie Fadden, chief executive of South Liverpool Housing Group.

The solution she sees is the return of a familiar figure from the past. ‘What landlords need to do is bring back the rent man,’ she says.

That would require far more staff – South Liverpool has 3,500 tenants and most of them would have to be visited once a week – but the alternative is worse: ‘If you’re not there to pick it up, the temptation for them will be to spend it on something else and put their homes at risk.’

Wolverhampton Homes has halted plans to close five offices that collect cash from tenants in direct response to the direct prospect of direct payment.

‘It’s going to cost us more money to collect,’ says Mark Henderson. ‘A lot of effort from social landlords has been put into telling people to claim the right benefit and fill the right forms in and 65 per cent of our income is then guaranteed. Now we’re going to have to physically go and fetch it from people or people are going to have to physically come into the office to pay.’

Greg Falvey of Colchester Homes agrees that direct payment means social landlords will have to employ more people but adds that staff will have to change the emphasis of their work towards welfare intervention too. ‘It’s no good just having things like welfare rights surgeries because they may well just not turn up. It’s about finding new ways of getting to those people who are perhaps least able to bring themselves forward for assistance.’

But yet more cuts – to Supporting People – mean much less funding for that kind of work.

‘It’s almost as if nobody’s sat down and thought about it in the round and what the impact of all those things together is likely to be on our residents,’ he adds.

And that’s a point made even more forcefully by Julie Fadden of South Liverpool Homes. ‘It’s going to put a lot of people under stress who are only getting help too late in the process. We’re seeing that from the cuts already. People are losing jobs, relationships are breaking down and there’s been a flurry of suicides where we are. If you add the threat of their home being taken away there are going to be huge knock-on effects in terms of health, children’s services and the rest.

‘What starts off as a way of saving money doesn’t because there are so many other costs. The implications have not been properly thought through.’

Top to bottom

Tue, 28 Jun 2011

The impact on private finance has understandably dominated the debate about direct payment of housing benefit so far but it’s just one of the issues facing social landlords and tenants.

In interviews for my feature in this week’s Inside Housing, I was expecting (and got) some dire warnings about the availability and cost of funding from lenders. However, I only had limited space to cover some of the pretty fundamental rethinking that seems to be going on out there.

The campaign continues to convince the government to change its mind but Lord Freud added little at Harrogate last week to previous assurances that it will introduce a system that ‘seeks to protect the financial position of social sector landlords and keeps a facility to pay landlords directly’.

That leaves social landlords with precious little detail about what will happen when housing benefit is integrated with the universal credit. Seen from the top, any switch to paying tenants direct will have a huge impact on business plans and budgets.

Steve Howlett, chief executive of Peabody, explains the impact on his housing association: ‘We’ve got 12,000 direct housing benefit transactions per month, £3.75m a month, £43m a year and these transactions are largely untouched by human hand and go through automatically. If that ends we’ll have to employ more people, it becomes a more complicated business and it’s a waste of money really.’

For local authorities and ALMOs preparing for self-financing, the impact will be just as great. ‘Our rent roll is £86m a year and the amount in benefit paid direct is £60m so suddenly having to collect the extra will put increased pressure on us all,’ says Mark Henderson, director of housing at Wolverhampton Homes.

And Greg Falvey, chief executive of Colchester Homes, explains: ‘Any really quite minor adjustment you have to make in your assumptions for something like bad debt, while it may look relatively small over the course of the 30-year business plan, means areas of expenditure that can’t be made any more.’

But he adds that if the impacts are scary for landlords, they are scarier still for tenants whose household budgets will come under growing pressure from a whole range of spending and benefit cuts.

For the very poorest, the options are already limited. In recent reports, the Human City Institute (HCI) has charted the level of debt among tenants and the extent to which they are relying on high-interest loans from pawnbrokers, mail-order catalogues and legal and illegal lenders. (Labour MP Stella Creasy is due to put forward an amendment to the Finance Bill later in a bid to ‘end legal loan-sharking’).

‘About 80p in the pound goes on heating, fuel, food and debt repayments,’ says HCI director Kevin Gulliver. ‘That leaves 20p in the pound to cover everything else. Rising household debt over the next five years will affect those at the bottom more than the top.’

‘The majority of tenants coping on very small incomes are actually very good at budgeting because they can’t afford not to be. It’s clear from our survey that tenants want landlords to provide some sort of flexible loan facility. If rent is paid direct to them that’s what’s going to happen.’

That in turn raises the prospect of tenants choosing to pay the person knocking on the door for money rather than their rent.

‘People with financial problems turn to loan sharks and they may face threats of violence or come under pressure to allow their homes to be used for cannabis farms.’ says Julie Fadden, chief executive of South Liverpool Housing Group.

The solution she sees is the return of a familiar figure from the past. ‘What landlords need to do is bring back the rent man,’ she says.

That would require far more staff – South Liverpool has 3,500 tenants and most of them would have to be visited once a week – but the alternative is worse: ‘If you’re not there to pick it up, the temptation for them will be to spend it on something else and put their homes at risk.’

Wolverhampton Homes has halted plans to close five offices that collect cash from tenants in direct response to the direct prospect of direct payment.

‘It’s going to cost us more money to collect,’ says Mark Henderson. ‘A lot of effort from social landlords has been put into telling people to claim the right benefit and fill the right forms in and 65 per cent of our income is then guaranteed. Now we’re going to have to physically go and fetch it from people or people are going to have to physically come into the office to pay.’

Greg Falvey of Colchester Homes agrees that direct payment means social landlords will have to employ more people but adds that staff will have to change the emphasis of their work towards welfare intervention too. ‘It’s no good just having things like welfare rights surgeries because they may well just not turn up. It’s about finding new ways of getting to those people who are perhaps least able to bring themselves forward for assistance.’

But yet more cuts – to Supporting People – mean much less funding for that kind of work.

‘It’s almost as if nobody’s sat down and thought about it in the round and what the impact of all those things together is likely to be on our residents,’ he adds.

And that’s a point made even more forcefully by Julie Fadden of South Liverpool Homes. ‘It’s going to put a lot of people under stress who are only getting help too late in the process. We’re seeing that from the cuts already. People are losing jobs, relationships are breaking down and there’s been a flurry of suicides where we are. If you add the threat of their home being taken away there are going to be huge knock-on effects in terms of health, children’s services and the rest.

‘What starts off as a way of saving money doesn’t because there are so many other costs. The implications have not been properly thought through.’

Blast from the past

Thu, 23 Jun 2011

Labour’s policy review on housing seems to be starting in the right place: an honest admission of past mistakes. But will it end in the right place?

Monday is the deadline for submissions to the review but the woman leading it, shadow communities secretary Caroline Flint, gave some clues about the ‘direction of travel’ in a speech at en event organised by Progress this week.

Flint listed Labour’s achievements in office:

  • ‘our social housing stock in its best shape for decades’
  • ‘higher levels of home ownership’
  • ‘a proper house building programme’
  • ‘new options of shared and low cost home ownership piloted through various housing associations’.

And then the mistakes:

  • ‘not enough homes were built’
  • ‘waiting lists for social housing rose, sharply in some places’
  • ‘the scarcity of good social homes engendered a sense of unfairness in the way they were allocated’
  • ‘for too long, and in too many places, our housing policy was too divorced from our attempts to create communities that people want to live in and feel proud of’.

Quibble with some of those if you like but Flint had a nice line about the government achieving more than some give it credit for: a letter from a man enclosing two pictures of his estate, one from 1997 when it was ‘so bad that it was difficult to imagine anyone actually living there’, the second from a decade later with the high rises replaces by modern family homes with front gardens.

The ambition for the policy review is not too shabby either: ‘Everyone should be able to access a decent home, in a place they want to live, at a price within their means’.

Except that if you think you’ve heard that before then you’re right. The Labour government’s 2007 green paper Homes for the Future said: ‘We want everyone to have access to a decent home at a price they can afford, in a place where they want to live and work.’

It’s a nice ambition but the cutting and pasting seems to ignore the fact that some pretty fundamental things have changed in the last four years.

The ‘direction of travel’ sketched out by Flint includes an acknowledgment that, despite Labour’s commitment to home ownership, more people will be living in private renting. And there’s a matching commitment to do more for private tenants.

‘The government’s excuses for its failure to regulate the private rented sector cut no ice. Because, as we had begun to show at the end of our time in Government with preparation for a national register of landlords, it is possible to create a light-touch regulation system that’s good for responsible landlords, that’s good for responsible tenants and that avoids unnecessary red-tape and bureaucracy.

There’s an attack on the government’s tenure plans. ‘Simply abolishing secure tenancies and kicking new tenants out of their homes when they get a promotion or a pay rise, as the Government is doing, creates fear and uncertainty, disrupts family life and provides a disincentive to work. No government should aspire to that.’

There’s a hint that Labour will do more to help community land trusts and co-operatives.

And there’s a repeat of Ed Miliband’s pledge to be ‘a party that rewards contribution, not worklessness’.

‘If we are to prove to people that their sense of fairness is the same as ours, we must reform social housing so that it genuinely rewards people who are responsible, who work hard, play by the rules and give something back, as well as protecting those in need.’

That sounds like a blast from the past too. It recalls Flint’s controversial first speech as housing minister in 2008 and has echoes of old debates about the ‘deserving’ and ‘undeserving’ poor.

But does any of it amount to the ‘positive vision for housing in Britain in the twenty first century’ that she promises?

The review is still going on, and it sounds like Alison Seabeck is saying some interesting things at Harrogate as I’m writing this, but not yet it doesn’t. 

Blast from the past

Thu, 23 Jun 2011

Labour’s policy review on housing seems to be starting in the right place: an honest admission of past mistakes. But will it end in the right place?

Monday is the deadline for submissions to the review but the woman leading it, shadow communities secretary Caroline Flint, gave some clues about the ‘direction of travel’ in a speech at en event organised by Progress this week.

Flint listed Labour’s achievements in office:

  • ‘our social housing stock in its best shape for decades’
  • ‘higher levels of home ownership’
  • ‘a proper house building programme’
  • ‘new options of shared and low cost home ownership piloted through various housing associations’.

And then the mistakes:

  • ‘not enough homes were built’
  • ‘waiting lists for social housing rose, sharply in some places’
  • ‘the scarcity of good social homes engendered a sense of unfairness in the way they were allocated’
  • ‘for too long, and in too many places, our housing policy was too divorced from our attempts to create communities that people want to live in and feel proud of’.

Quibble with some of those if you like but Flint had a nice line about the government achieving more than some give it credit for: a letter from a man enclosing two pictures of his estate, one from 1997 when it was ‘so bad that it was difficult to imagine anyone actually living there’, the second from a decade later with the high rises replaces by modern family homes with front gardens.

The ambition for the policy review is not too shabby either: ‘Everyone should be able to access a decent home, in a place they want to live, at a price within their means’.

Except that if you think you’ve heard that before then you’re right. The Labour government’s 2007 green paper Homes for the Future said: ‘We want everyone to have access to a decent home at a price they can afford, in a place where they want to live and work.’

It’s a nice ambition but the cutting and pasting seems to ignore the fact that some pretty fundamental things have changed in the last four years.

The ‘direction of travel’ sketched out by Flint includes an acknowledgment that, despite Labour’s commitment to home ownership, more people will be living in private renting. And there’s a matching commitment to do more for private tenants.

‘The government’s excuses for its failure to regulate the private rented sector cut no ice. Because, as we had begun to show at the end of our time in Government with preparation for a national register of landlords, it is possible to create a light-touch regulation system that’s good for responsible landlords, that’s good for responsible tenants and that avoids unnecessary red-tape and bureaucracy.

There’s an attack on the government’s tenure plans. ‘Simply abolishing secure tenancies and kicking new tenants out of their homes when they get a promotion or a pay rise, as the Government is doing, creates fear and uncertainty, disrupts family life and provides a disincentive to work. No government should aspire to that.’

There’s a hint that Labour will do more to help community land trusts and co-operatives.

And there’s a repeat of Ed Miliband’s pledge to be ‘a party that rewards contribution, not worklessness’.

‘If we are to prove to people that their sense of fairness is the same as ours, we must reform social housing so that it genuinely rewards people who are responsible, who work hard, play by the rules and give something back, as well as protecting those in need.’

That sounds like a blast from the past too. It recalls Flint’s controversial first speech as housing minister in 2008 and has echoes of old debates about the ‘deserving’ and ‘undeserving’ poor.

But does any of it amount to the ‘positive vision for housing in Britain in the twenty first century’ that she promises?

The review is still going on, and it sounds like Alison Seabeck is saying some interesting things at Harrogate as I’m writing this, but not yet it doesn’t. 

Going spare

Tue, 21 Jun 2011

The more the implications of the cut in housing benefit for under-occupying social tenants sink in, the less it makes any kind of sense.

The latest evidence came in a warning yesterday from the National Housing Federation (NHF) about the impact on disabled tenants. Of the 670,000 tenants affected by an average cut of £676 a year - a third of all social tenants - 450,000 are disabled. Of those, up to 200,000 receive disability living allowance (DLA) and 100,000 live in families specially adapted to their needs. 

And yet, the Fed points out, DLA recipients are exempt from another welfare cut, the £500 a week total household benefit cap, on the grounds that they are ‘likely to have less ability to adapt to a reduction in their benefit’.

In the Commons last week MPs debated a Labour amendment to the Welfare Reform Bill that would have exempted specially adapted homes from the cut, not least because the new, smaller home would then have to be adapted at extra expense. Welfare minister Maria Miller rejected that as ‘too broad brush’ but did at least commit to considering the evidence further.

The cut is just as mad from social landlords’ perspective, a point that was really brought home to me last week by one chief executive who had been taking stock of his housing association’s number of under-occupying tenants and supply of smaller accommodation for them to move into.

‘If I look at our numbers, if we could wave a magic wand and put everyone in a home the right size, we’d be 600 single bed homes short,’ he said. ‘How mad’s that? Why on earth would we build more one-bed homes? What a dumb thing to do.’

The same dumb thing is repeated across a country in which a lack of smaller accommodation is simply not available in sufficient numbers to enable claimants to take advantage of what the impact assessment calls ‘the economic incentive’ to move. 

In housing policy terms, the cut might make sense if it made more larger homes available for overcrowded families, but overcrowding is worst in the parts of the country that would have the fewest properties freed up. Even if they could move, they would either have to go into the private rented sector or face the risk of having to accept an ‘affordable’ rent and loss of their security of tenure  

Which is just as well, because the impact assessment makes clear that if large numbers of people could move to smaller homes the cut would cease to make sense in financial terms because it would save far less money.

And, according to the NHF, it could even cost more if under-occupying tenants choose smaller private rented homes that are nevertheless more expensive. 

For some landlords too, the cut goes directly allocations policies drawn up in consultation with local communities and local authorities. They might have decided to favour young and growing families for larger accommodation in harder to let areas or be pursuing a deliberate policy of reducing child density on some estates. 

But their tenants will still be seen as among the 530,000 under-occupying by one bedroom and facing an average cut of £11 a week and the 150,000 under-occupying by two an average cut of £20 a week. 

And if they make the rational choice to challenge that situation, local authorities will be left picking up the tab. The impact assessment estimates that processing 20,000 applications for discretionary housing payments would cost £500,000 while administering 20,000 appeals would cost £4m. 

Welfare reform minister Lord Freud told You and Yours earlier this month that a spare room is a ‘luxury’. This despite the fact that social tenants are actually much less likely to under-occupy their homes than private tenants and owner-occupiers.

And there are still big questions about how many of the rooms caught up the cut really are ‘spare’. A family with a nine-year-old son and eight-year-old daughter each with their own room are still judged to be under-occupying. The spare room might be needed by separated couples with joint custody of the kids. A married couple might be sleeping apart for medical reasons. An adult child moving back home. Foster carers. The list of those who will still be caught by the cut goes on and on.  

Freud’s colleague Steve Webb even suggested in the Commons last week that two problems could be solved for the price of one: with under-occupying social tenants letting out their spare room to private tenants aged 25 to 34 caught out by the shared accommodation rate. 

There are huge practical problems with that idea. The areas most affected by the shared accommodation rate are different from those with the most under-occupiers and in any case how many families with children or someone with a disability will want to rent a room to a stranger? 

But at least it is not completely mad: social tenants would be able to keep the first £20 a week of any rent and potentially cover the cut in their own housing benefit.

That’s a lot more than can be said for the policy as a whole.

Going spare

Tue, 21 Jun 2011

The more the implications of the cut in housing benefit for under-occupying social tenants sink in, the less it makes any kind of sense.

The latest evidence came in a warning yesterday from the National Housing Federation (NHF) about the impact on disabled tenants. Of the 670,000 tenants affected by an average cut of £676 a year - a third of all social tenants - 450,000 are disabled. Of those, up to 200,000 receive disability living allowance (DLA) and 100,000 live in families specially adapted to their needs. 

And yet, the Fed points out, DLA recipients are exempt from another welfare cut, the £500 a week total household benefit cap, on the grounds that they are ‘likely to have less ability to adapt to a reduction in their benefit’.

In the Commons last week MPs debated a Labour amendment to the Welfare Reform Bill that would have exempted specially adapted homes from the cut, not least because the new, smaller home would then have to be adapted at extra expense. Welfare minister Maria Miller rejected that as ‘too broad brush’ but did at least commit to considering the evidence further.

The cut is just as mad from social landlords’ perspective, a point that was really brought home to me last week by one chief executive who had been taking stock of his housing association’s number of under-occupying tenants and supply of smaller accommodation for them to move into.

‘If I look at our numbers, if we could wave a magic wand and put everyone in a home the right size, we’d be 600 single bed homes short,’ he said. ‘How mad’s that? Why on earth would we build more one-bed homes? What a dumb thing to do.’

The same dumb thing is repeated across a country in which a lack of smaller accommodation is simply not available in sufficient numbers to enable claimants to take advantage of what the impact assessment calls ‘the economic incentive’ to move. 

In housing policy terms, the cut might make sense if it made more larger homes available for overcrowded families, but overcrowding is worst in the parts of the country that would have the fewest properties freed up. Even if they could move, they would either have to go into the private rented sector or face the risk of having to accept an ‘affordable’ rent and loss of their security of tenure  

Which is just as well, because the impact assessment makes clear that if large numbers of people could move to smaller homes the cut would cease to make sense in financial terms because it would save far less money.

And, according to the NHF, it could even cost more if under-occupying tenants choose smaller private rented homes that are nevertheless more expensive. 

For some landlords too, the cut goes directly allocations policies drawn up in consultation with local communities and local authorities. They might have decided to favour young and growing families for larger accommodation in harder to let areas or be pursuing a deliberate policy of reducing child density on some estates. 

But their tenants will still be seen as among the 530,000 under-occupying by one bedroom and facing an average cut of £11 a week and the 150,000 under-occupying by two an average cut of £20 a week. 

And if they make the rational choice to challenge that situation, local authorities will be left picking up the tab. The impact assessment estimates that processing 20,000 applications for discretionary housing payments would cost £500,000 while administering 20,000 appeals would cost £4m. 

Welfare reform minister Lord Freud told You and Yours earlier this month that a spare room is a ‘luxury’. This despite the fact that social tenants are actually much less likely to under-occupy their homes than private tenants and owner-occupiers.

And there are still big questions about how many of the rooms caught up the cut really are ‘spare’. A family with a nine-year-old son and eight-year-old daughter each with their own room are still judged to be under-occupying. The spare room might be needed by separated couples with joint custody of the kids. A married couple might be sleeping apart for medical reasons. An adult child moving back home. Foster carers. The list of those who will still be caught by the cut goes on and on.  

Freud’s colleague Steve Webb even suggested in the Commons last week that two problems could be solved for the price of one: with under-occupying social tenants letting out their spare room to private tenants aged 25 to 34 caught out by the shared accommodation rate. 

There are huge practical problems with that idea. The areas most affected by the shared accommodation rate are different from those with the most under-occupiers and in any case how many families with children or someone with a disability will want to rent a room to a stranger? 

But at least it is not completely mad: social tenants would be able to keep the first £20 a week of any rent and potentially cover the cut in their own housing benefit.

That’s a lot more than can be said for the policy as a whole.

First steps

Mon, 20 Jun 2011

It may sound like good news for 10,000 first-time buyers who would otherwise struggle to get on to the housing ladder but the real winners from FirstBuy are still housebuilders.

Allocations for the scheme announced in the Budget were revealed this morning, with housing minister Grant Shapps hailing it as ‘a valuable alternative to the Bank of Mum and Dad’.

Like HomeBuy Direct, the Labour scheme that Shapps dismissed as ‘a very expensive flop’, Firstbuy offers equity loans jointly funded by the government and the housebuilder. The key differences are that the loans available are smaller (20% of the value of the property rather than 30%) and that the first-time buyer must put up a deposit of at least 5%.

Shapps describes it as worth £500m, a figure that is presumably a combination of the £250m announced in the Budget in March and the housebuilder contribution.

However, the detailed allocatiions revealed by the Homes and Communities Agency (HCA) today reveal that it will deliver 10,452 homes for just short of £180m. Take off £40m allocated separately for Scotland and Wales, and that means a saving of £30m on original plans.

The reason for that could well be the regional breakdown of the bids. The two biggest beneficiaries are the Midlands (2,418 homes) and the North East, Yorkshire and Humberside (1,991 homes). 

In contrast, expensive London gets the allocation for the lowest number of Firstbuy homes (939). The HCA said this was in line with the bids received.

Housebuilders signed up include giants like Persimmon, Barratt, and Taylor Wimpey and many smaller firms too. 

Lenders backing the scheme are named as including the Halifax, Nationwide and Barclays plus the Melton Mowbray Building Society, a list that perhaps begs a question about the involvement of Santander, RBS and HSBC. 

Housing associations like Genesis, Notting Hill and Metropolitan will also benefit but according to my calculations social landlords will be allocated a little under £5m, or just 3% of the total.

Housebuilders, with the remaining 97% of the funding, look like the big winners from FirstBuy. They get a powerful new marketing scheme half-funded by the government that will help support the prices of starter homes.

The benefits for the government are less clear. Where HomeBuy Direct played a key role in rescuing the housebuilding industry from the credit crunch, housebuilders have already got rid of most of their unsold stock. It’s true that FirstBuy will, as Grant Shapps argues, provide ‘a much-needed boost to our housebuilding industry, supporting thousands of jobs across the country’ but so would investment in more affordable homes.

The lucky 10,500 first-time buyers look like winners too until you consider what will happen if house prices fall. When the scheme was first announced, the Financial Times called it ‘a small step - in the wrong direction’ while the Social Market Foundation called it ill-advised and dangerous and a ‘leg up to the noose of negative equity’. 

For the market as a whole, it probably won’t make that much difference: even if all those 10,500 buyers are people who would not have entered the market anyway that would only boost the number of first-time buyers by around 5%.

First steps

Mon, 20 Jun 2011

It may sound like good news for 10,000 first-time buyers who would otherwise struggle to get on to the housing ladder but the real winners from FirstBuy are still housebuilders.

Allocations for the scheme announced in the Budget were revealed this morning, with housing minister Grant Shapps hailing it as ‘a valuable alternative to the Bank of Mum and Dad’.

Like HomeBuy Direct, the Labour scheme that Shapps dismissed as ‘a very expensive flop’, Firstbuy offers equity loans jointly funded by the government and the housebuilder. The key differences are that the loans available are smaller (20% of the value of the property rather than 30%) and that the first-time buyer must put up a deposit of at least 5%.

Shapps describes it as worth £500m, a figure that is presumably a combination of the £250m announced in the Budget in March and the housebuilder contribution.

However, the detailed allocatiions revealed by the Homes and Communities Agency (HCA) today reveal that it will deliver 10,452 homes for just short of £180m. Take off £40m allocated separately for Scotland and Wales, and that means a saving of £30m on original plans.

The reason for that could well be the regional breakdown of the bids. The two biggest beneficiaries are the Midlands (2,418 homes) and the North East, Yorkshire and Humberside (1,991 homes). 

In contrast, expensive London gets the allocation for the lowest number of Firstbuy homes (939). The HCA said this was in line with the bids received.

Housebuilders signed up include giants like Persimmon, Barratt, and Taylor Wimpey and many smaller firms too. 

Lenders backing the scheme are named as including the Halifax, Nationwide and Barclays plus the Melton Mowbray Building Society, a list that perhaps begs a question about the involvement of Santander, RBS and HSBC. 

Housing associations like Genesis, Notting Hill and Metropolitan will also benefit but according to my calculations social landlords will be allocated a little under £5m, or just 3% of the total.

Housebuilders, with the remaining 97% of the funding, look like the big winners from FirstBuy. They get a powerful new marketing scheme half-funded by the government that will help support the prices of starter homes.

The benefits for the government are less clear. Where HomeBuy Direct played a key role in rescuing the housebuilding industry from the credit crunch, housebuilders have already got rid of most of their unsold stock. It’s true that FirstBuy will, as Grant Shapps argues, provide ‘a much-needed boost to our housebuilding industry, supporting thousands of jobs across the country’ but so would investment in more affordable homes.

The lucky 10,500 first-time buyers look like winners too until you consider what will happen if house prices fall. When the scheme was first announced, the Financial Times called it ‘a small step - in the wrong direction’ while the Social Market Foundation called it ill-advised and dangerous and a ‘leg up to the noose of negative equity’. 

For the market as a whole, it probably won’t make that much difference: even if all those 10,500 buyers are people who would not have entered the market anyway that would only boost the number of first-time buyers by around 5%.

Blind alley

Wed, 15 Jun 2011

What happens if this is just the start of the fall in home ownership? That’s the sobering question raised in a new report out today that begs huge questions for social landlords, potential investors in private renting and above all the government.

The End of the Affair, a joint report by Andrew Heywood from the Smith Institute and Genesis, concludes that the ‘age of aspiration’ promised by Grant Shapps soon after he became housing minsiter is not going to happen.

‘Most citizens would welcome the opportunity to live in an “age of aspiration”,’ he says. ‘However, few would argue with the assertion that aspiration infinitely deferred is a wearying blind alley.’

Instead, on current trends, there will be 1.9m fewer homeowners in 10 years’ time as owner-occupation’s share of housing falls from the current 67% to more like 60%. And they will end up in a private rented sector that will rise from 16% of the housing stock to more than 24%. As I’ve argued before, private renting has probably already over-taken social renting in England. 

Of course what seems obvious on current trends may not turn out quite like that - just ask Gordon Brown who promised in 2005 that there would be 1m more homeowners by 2010 and instead created 1m private tenants.

But Heywood argues that the decline of home ownership is being driven by fundamental social, economic and market forces including unaffordable house prices, radical change in the mortgage market, rapid formation of single households and rising migration and the erosion of job security. Add soaring personal debt, tax concession for private landlords, an ageing population and declining pension provision and you can see what he means. 

For government, that means recognising that its commitment to extend homeownership is unrealistic unless it is prepared to invest lots of money (for example with relief). ‘In these circumstances, government must find a way to manage down popular aspirations to attain home ownership if widespread disillusion is to be avoided.’ 

It makes it even more urgent to find a way to unlock large-scale institutional investment in private renting and a way to boost housing supply without expanding owner-occupation or major government investment to drive it. 

For housing associations, it may mean moving into private renting rather than relying on the return of the old low-cost home ownership cross-subsidy model. And, in the absence of the political will for large-scale investment in social renting, asking what happens once the current surge in affordable housing completions runs into the buffers.

For all of us it means asking what new social vision will replace the one that has dominated the last 30 or 40 years: rising home ownership and individual prosperity combined with a reduced role for the state and greater individual responsibility.

All of which begs lots of questions he doesn’t really answer. Will things settle down into German-style levels of home ownership and private renting? Or will those millions of new private tenants start to wonder about the fact that previous generations have done very nicely, thankyou, out of rising house prices and then pulled up the ladder behind them?

Blind alley

Wed, 15 Jun 2011

What happens if this is just the start of the fall in home ownership? That’s the sobering question raised in a new report out today that begs huge questions for social landlords, potential investors in private renting and above all the government.

The End of the Affair, a joint report by Andrew Heywood from the Smith Institute and Genesis, concludes that the ‘age of aspiration’ promised by Grant Shapps soon after he became housing minsiter is not going to happen.

‘Most citizens would welcome the opportunity to live in an “age of aspiration”,’ he says. ‘However, few would argue with the assertion that aspiration infinitely deferred is a wearying blind alley.’

Instead, on current trends, there will be 1.9m fewer homeowners in 10 years’ time as owner-occupation’s share of housing falls from the current 67% to more like 60%. And they will end up in a private rented sector that will rise from 16% of the housing stock to more than 24%. As I’ve argued before, private renting has probably already over-taken social renting in England. 

Of course what seems obvious on current trends may not turn out quite like that - just ask Gordon Brown who promised in 2005 that there would be 1m more homeowners by 2010 and instead created 1m private tenants.

But Heywood argues that the decline of home ownership is being driven by fundamental social, economic and market forces including unaffordable house prices, radical change in the mortgage market, rapid formation of single households and rising migration and the erosion of job security. Add soaring personal debt, tax concession for private landlords, an ageing population and declining pension provision and you can see what he means. 

For government, that means recognising that its commitment to extend homeownership is unrealistic unless it is prepared to invest lots of money (for example with relief). ‘In these circumstances, government must find a way to manage down popular aspirations to attain home ownership if widespread disillusion is to be avoided.’ 

It makes it even more urgent to find a way to unlock large-scale institutional investment in private renting and a way to boost housing supply without expanding owner-occupation or major government investment to drive it. 

For housing associations, it may mean moving into private renting rather than relying on the return of the old low-cost home ownership cross-subsidy model. And, in the absence of the political will for large-scale investment in social renting, asking what happens once the current surge in affordable housing completions runs into the buffers.

For all of us it means asking what new social vision will replace the one that has dominated the last 30 or 40 years: rising home ownership and individual prosperity combined with a reduced role for the state and greater individual responsibility.

All of which begs lots of questions he doesn’t really answer. Will things settle down into German-style levels of home ownership and private renting? Or will those millions of new private tenants start to wonder about the fact that previous generations have done very nicely, thankyou, out of rising house prices and then pulled up the ladder behind them?

Speaking out of turn

Wed, 15 Jun 2011

When is a u-turn not a u-turn? As the retreats on the Health Bill and weekly bin collections dominate the headlines, it’s tempting to see evidence of similar climbdowns on welfare reform. I’m not so sure.

On Monday the Daily Mail splashed with news of a u-turn on the £26,000 total benefits cap signalled by welfare reform minister Lord Freud. Yesterday it was saying the cap will stay after Freud was ‘slapped down’ by Downing Street.

In fairness to his lordship I’m not sure he’d actually said anything to justify either story. True, he’d told the BBC on Sunday that there would be exemptions ‘where we think there’s something happening that is undesirable’ but that didn’t seem like much had changed since the promises given by ministers at the committee stage to work up the detail in secondary legislation to follow. 

And Freud’s boss Iain Duncan Smith was on hand at work and pensions questions on Monday to tell his Labour shadow Liam Byrne ‘not to believe everything he reads in the media’.

The work and pensions secretary went on: ‘The reality is that this policy is not changing because it is a good policy. The reality is that nearly half of those of working age who are working earn less than £26,000 a year, and they pay taxes to see some people on benefits earning much more than that amount.’

Irony number one about the u-turn that it seems never was is that Duncan Smith supposedly does not agree with the policy himself. According to a report in the Financial Times last month it is chancellor George Osborne who is pushing the idea he announced at the Conservative conference. That leaves IDS and his ministers defending a policy that Osborne thinks is a political winner but raises all sorts of practical problems and unintended consequences. 

The FT reported on Monday that it was more of a rethink than a u-turn with the DWP working on ways to phase in the cap and help particularly vulnerable families. But will it really be able to find a way to neutralise negative headlines without reducing the £240m a year savings the cap is meant to deliver?

Irony number two is that the policy is based on a complete misconception of the relative positions of people working and people on benefits. 

As Tim Leunig put it on his blog for the Lib Dem think-tank CentreForum on Monday: ‘The Department for Work and Pensions continues to pedal the lie that the £26,000 total cap on benefits is necessary to ensure that people in work don’t “earn less than those who are on benefits”. This is simply not true.’

He quotes the example of someone on the minimum wage with a partner and four children working 36 hours a week and living in London. They receive £27,800 in benefits on top of their £9,950 net earnings. If they lose their job their income will already fall by over £5,000 but under the cap they will lose far more. 

Far from ensuring that people in work don’t earn less than someone on benefits, the cap means that someone who loses their job in a high-cost area is left with benefits that only cover a fraction of their rent. 

CentreForum is not the only coalition-aligned think-tank to criticise the cap. The Social Market Foundation and even IDS’s own Centre for Social Justice have also questioned its value. Hopefully the cap will eventually founder under the weight of its own contradictions and exemptions - but not yet it seems.

Isabel Hardman is reporting on PoliticsHome that neither Labour nor the Lib Dems will attempt to amend the cap when it comes back to the Commons later today but are hoping it will be taken up in the Lords. 

I bore all that in mind when I saw reports of another apparent government change of heart, this time on direct payment of housing benefit to social landlords in Monday’s Welfare Reform Bill debate.

Conservative MP Paul Uppal quoted the assurances given by ministers in committee that ‘in some circumstances, direct payments to landlords may be necessary, and the Bill makes provision for that’.

But that seems to add nothing more than what we already knew about a mechanism to retain direct payment to landlords for vulnerable tenants and people in arrears.

And Uppal seems to have come down against direct payment to landlords himself: ‘I have my concerns about the payment of housing benefit, but having sat on the Committee, looked at the findings of the reports and considered the evidence, I have come to the conclusion that if we are sincere about the aim of this Bill of getting people off benefit and into work, the first step is not only getting people into work, but individuals taking responsibility.’

The DWP line on direct payment is unchanged too: ‘We fully recognise the importance of stable rental income for social landlords to support the delivery of new homes and will develop universal credit in a way that protects their financial position. We will work closely with the devolved administrations, providers and lenders in developing the new system.’

Speaking out of turn

Wed, 15 Jun 2011

When is a u-turn not a u-turn? As the retreats on the Health Bill and weekly bin collections dominate the headlines, it’s tempting to see evidence of similar climbdowns on welfare reform. I’m not so sure.

On Monday the Daily Mail splashed with news of a u-turn on the £26,000 total benefits cap signalled by welfare reform minister Lord Freud. Yesterday it was saying the cap will stay after Freud was ‘slapped down’ by Downing Street.

In fairness to his lordship I’m not sure he’d actually said anything to justify either story. True, he’d told the BBC on Sunday that there would be exemptions ‘where we think there’s something happening that is undesirable’ but that didn’t seem like much had changed since the promises given by ministers at the committee stage to work up the detail in secondary legislation to follow. 

And Freud’s boss Iain Duncan Smith was on hand at work and pensions questions on Monday to tell his Labour shadow Liam Byrne ‘not to believe everything he reads in the media’.

The work and pensions secretary went on: ‘The reality is that this policy is not changing because it is a good policy. The reality is that nearly half of those of working age who are working earn less than £26,000 a year, and they pay taxes to see some people on benefits earning much more than that amount.’

Irony number one about the u-turn that it seems never was is that Duncan Smith supposedly does not agree with the policy himself. According to a report in the Financial Times last month it is chancellor George Osborne who is pushing the idea he announced at the Conservative conference. That leaves IDS and his ministers defending a policy that Osborne thinks is a political winner but raises all sorts of practical problems and unintended consequences. 

The FT reported on Monday that it was more of a rethink than a u-turn with the DWP working on ways to phase in the cap and help particularly vulnerable families. But will it really be able to find a way to neutralise negative headlines without reducing the £240m a year savings the cap is meant to deliver?

Irony number two is that the policy is based on a complete misconception of the relative positions of people working and people on benefits. 

As Tim Leunig put it on his blog for the Lib Dem think-tank CentreForum on Monday: ‘The Department for Work and Pensions continues to pedal the lie that the £26,000 total cap on benefits is necessary to ensure that people in work don’t “earn less than those who are on benefits”. This is simply not true.’

He quotes the example of someone on the minimum wage with a partner and four children working 36 hours a week and living in London. They receive £27,800 in benefits on top of their £9,950 net earnings. If they lose their job their income will already fall by over £5,000 but under the cap they will lose far more. 

Far from ensuring that people in work don’t earn less than someone on benefits, the cap means that someone who loses their job in a high-cost area is left with benefits that only cover a fraction of their rent. 

CentreForum is not the only coalition-aligned think-tank to criticise the cap. The Social Market Foundation and even IDS’s own Centre for Social Justice have also questioned its value. Hopefully the cap will eventually founder under the weight of its own contradictions and exemptions - but not yet it seems.

Isabel Hardman is reporting on PoliticsHome that neither Labour nor the Lib Dems will attempt to amend the cap when it comes back to the Commons later today but are hoping it will be taken up in the Lords. 

I bore all that in mind when I saw reports of another apparent government change of heart, this time on direct payment of housing benefit to social landlords in Monday’s Welfare Reform Bill debate.

Conservative MP Paul Uppal quoted the assurances given by ministers in committee that ‘in some circumstances, direct payments to landlords may be necessary, and the Bill makes provision for that’.

But that seems to add nothing more than what we already knew about a mechanism to retain direct payment to landlords for vulnerable tenants and people in arrears.

And Uppal seems to have come down against direct payment to landlords himself: ‘I have my concerns about the payment of housing benefit, but having sat on the Committee, looked at the findings of the reports and considered the evidence, I have come to the conclusion that if we are sincere about the aim of this Bill of getting people off benefit and into work, the first step is not only getting people into work, but individuals taking responsibility.’

The DWP line on direct payment is unchanged too: ‘We fully recognise the importance of stable rental income for social landlords to support the delivery of new homes and will develop universal credit in a way that protects their financial position. We will work closely with the devolved administrations, providers and lenders in developing the new system.’

Ups and downs

Thu, 9 Jun 2011

The first month of the housing benefit cuts saw private sector rents rising across the country and soaring in London and the South East, according to a survey out today.

It’s still very early days but the evidence from the RICS residential lettings survey for April seems to contradict the case made by work and pensions ministers that the cuts would trigger a fall in rents because housing benefit pays for 40% of the market.

Instead the balance of surveyors saying rents rose rather than fell rose again to +40%. And the most significant increases came in London and the South East, where the RICS says that ‘rents in some areas have now risen so sharply that previously affordable homes are now unattainable to many, as an increasing number of renters are priced out of the market’. 

That was despite an increase in the supply of properties coming on to the market. 

That’s obviously more bad news for people priced out of home ownership by high house prices and a shortage of mortgages and now forced to pay rising rents, which in many cases will be significantly higher than the mortgage payments on the same property.

But it’s very bad news too for anyone relying on the local housing allowance and especially for those in London and the South East - the regions where the bedroom caps introduced in April will bite hardest and where the shortfall caused by rates being set at the 30th percentile is likely to be highest.

An RICS member in expensive Kensington & Chelsea, for example, reports that ‘we are achieving some exceptional rents’. 

Another based in central London says that: ‘With rents still rising in central London we wonder when they will plateau.’

And a third based in Westminster says: ‘Indications are that rents have now risen to a level that tenants are starting to find that they are unable to afford due to lower incomes and higher taxes.’

Any claimants forced to move out of central London and look for homes elsewhere in the capital are also likely to struggle. An RICS member in Finchley says: ‘Rents have continued their inexorable rise - albeit at a slightly slower pace - partly a a result of a shortage of stock although many aspirational first time buyers are still finding it difficult to raise a sufficient deposit or a mortgage on affordable terms. A particular shortage of two-bedroom “affordable” flats in our area has emerged.’

One small hope for trapped renters and claimants alike appears to be come in reports from some surveyors in the South East that the market is stalling because rents are not affordable to anyone. 

The Westminster surveyor I quoted above also said that tenants who had occupied the same flat for three years and only seen a 6% rent increase in that time were having to move because they could no longer afford the rent. ‘The writing is on the wall,’ he said. 

An RICS member in Brighton says that until the end of 2010 it could always increase rents when tenants vacated but cannot do so anymore. And one in Eastbourne reports a surplus of rental properties with applicants able to negotiate rents down. 

However, they still seem to be the exception to the general trend: a positive balance of 33% of RICS members expect rents to continue to rise over the next three months. 

Ups and downs

Thu, 9 Jun 2011

The first month of the housing benefit cuts saw private sector rents rising across the country and soaring in London and the South East, according to a survey out today.

It’s still very early days but the evidence from the RICS residential lettings survey for April seems to contradict the case made by work and pensions ministers that the cuts would trigger a fall in rents because housing benefit pays for 40% of the market.

Instead the balance of surveyors saying rents rose rather than fell rose again to +40%. And the most significant increases came in London and the South East, where the RICS says that ‘rents in some areas have now risen so sharply that previously affordable homes are now unattainable to many, as an increasing number of renters are priced out of the market’. 

That was despite an increase in the supply of properties coming on to the market. 

That’s obviously more bad news for people priced out of home ownership by high house prices and a shortage of mortgages and now forced to pay rising rents, which in many cases will be significantly higher than the mortgage payments on the same property.

But it’s very bad news too for anyone relying on the local housing allowance and especially for those in London and the South East - the regions where the bedroom caps introduced in April will bite hardest and where the shortfall caused by rates being set at the 30th percentile is likely to be highest.

An RICS member in expensive Kensington & Chelsea, for example, reports that ‘we are achieving some exceptional rents’. 

Another based in central London says that: ‘With rents still rising in central London we wonder when they will plateau.’

And a third based in Westminster says: ‘Indications are that rents have now risen to a level that tenants are starting to find that they are unable to afford due to lower incomes and higher taxes.’

Any claimants forced to move out of central London and look for homes elsewhere in the capital are also likely to struggle. An RICS member in Finchley says: ‘Rents have continued their inexorable rise - albeit at a slightly slower pace - partly a a result of a shortage of stock although many aspirational first time buyers are still finding it difficult to raise a sufficient deposit or a mortgage on affordable terms. A particular shortage of two-bedroom “affordable” flats in our area has emerged.’

One small hope for trapped renters and claimants alike appears to be come in reports from some surveyors in the South East that the market is stalling because rents are not affordable to anyone. 

The Westminster surveyor I quoted above also said that tenants who had occupied the same flat for three years and only seen a 6% rent increase in that time were having to move because they could no longer afford the rent. ‘The writing is on the wall,’ he said. 

An RICS member in Brighton says that until the end of 2010 it could always increase rents when tenants vacated but cannot do so anymore. And one in Eastbourne reports a surplus of rental properties with applicants able to negotiate rents down. 

However, they still seem to be the exception to the general trend: a positive balance of 33% of RICS members expect rents to continue to rise over the next three months. 

Seconds out

Wed, 8 Jun 2011

Significant Liberal Democrat and Crossbench concern about reforms to social housing tenure and the homelessness legislation indicates that the government is not going to have things all its own way in the House of Lords.

Yesterday’s Localism Bill second reading debate saw a succession of peers laying down markers for more detailed scrutiny at the committee stage and there were significant reservations not just from opposition members but from Lib Dems and independents too. 

Crossbencher Lord (Victor) Adebowale was concerned about the plan to remove lifetime tenancies at the same time as reforming the homelessness duty. 

‘These reforms are intended to free up the availability of social housing, but they will have the opposite effect,’ he warned. ‘These proposals may have unintended consequences that will oppose what this legislation is setting out to achieve.’

He said the reforms would obstruct mixed communities and make the social housing population more transient and affect the people with the most complex needs the most. And against the intention of the Bill people who excelled in education and employment and people who worked to challenge their substance misuse or address their mental health problems could be penalised by having the security of their home taken away.

Concern was expressed by a range of Labour members but also from within the coalition by several Lib Dem peers. 

Lord Shipley, a former leader of Newcastle council, warned: ‘There is a danger that the Government could be introducing legislation which will cause anguish for some very vulnerable families, while not delivering a great deal. Short-term tenancies run the risk of creating a cycle of repeat homelessness; and rather than create yet more insecurity for people and communities, reform should focus on long-term solutions that deliver the security that vulnerable people need.’

Baroness Doocey, a former chair of housing in Richmond, questioned the government’s case that discharging the homlessness duty into the private rented sector will save money. And she warned that the most vulnerable families ‘are likely to be forced to live in substandard accommodation and, much worse, forced to move at regular intervals even if they have been model tenants who pay their rent on time’. She appealed for proper safeguards with a statutory accreditation scheme for the private rented sector. 

On flexible tenancies she warned that two years would become the norm and the result would be people forced to move continuously, losing touch with family and friends and children’s schools and with less incentive to maintain their homes. ‘As a result we are likely to see a greater concentration of deprivation and worklessness in social housing. Surely that is the last thing anyone wants, but it will almost certainly be the direct consequence of providing such limited security of tenure.’

Lord Palmer of Childs Hill, a Barnet councillor, attacked the homelessness discharge plan as ‘horrifying’ and called for substantial amendments to that section of the Bill. 

He said: ”The idea that local authorities will be able to discharge their duties to the homeless by providing one offer—I repeat, one offer—from a private landlord, without the applicant having any say in being able to reject that offer, is horrifying. For those who have been in local government for many years, it takes us back to the days of two offers. Now we are talking about one offer from a private landlord.’

And Baroness Kramer, the former Richmond Park MP, warned: ‘I have a great fear of there being created within social housing a sort of transitory, transient community, which does no good to families, especially to children, and very little good to the communities in which those people are resident.’

So can Labour opposition with independent and Lib Dem support be more successful in amending the Bill than MPs were in the Commons?

On the surface, the debate did not seem to have much effect on the government judging from the summing up from Baroness Hanham. 

On tenure, she argued: ‘The proposals for flexible housing tenure are just that. Concern was expressed that the flexibility will start at a minimum of two years, but that is a minimum. By and large, it will be much longer than that.’

On homelessness, she said: ‘The provisions are not dismantling the homelessness safety net. We want to be really clear on that. Local authorities will still have a duty to secure suitable accommodation for those who are account at the time. The provisions are not dismantling the homelessness safety net. We want to be really clear on that. Local authorities will still have a duty to secure suitable accommodation for those who are.’

However, I’m not sure arguments as weak as that will stand up to more detailed scrutiny and the government may struggle to steamroller the changes through as it did in the Commons without amendments.

By convention the House of Lords does not make significant amendments to legislation that was in the government’s manifesto. However, that does not apply to the social housing and homelessness reforms: they were not mentioned in the Conservative manifesto, the Lib Dem manifesto or the coalition programme for government. 

Seconds out

Wed, 8 Jun 2011

Significant Liberal Democrat and Crossbench concern about reforms to social housing tenure and the homelessness legislation indicates that the government is not going to have things all its own way in the House of Lords.

Yesterday’s Localism Bill second reading debate saw a succession of peers laying down markers for more detailed scrutiny at the committee stage and there were significant reservations not just from opposition members but from Lib Dems and independents too. 

Crossbencher Lord (Victor) Adebowale was concerned about the plan to remove lifetime tenancies at the same time as reforming the homelessness duty. 

‘These reforms are intended to free up the availability of social housing, but they will have the opposite effect,’ he warned. ‘These proposals may have unintended consequences that will oppose what this legislation is setting out to achieve.’

He said the reforms would obstruct mixed communities and make the social housing population more transient and affect the people with the most complex needs the most. And against the intention of the Bill people who excelled in education and employment and people who worked to challenge their substance misuse or address their mental health problems could be penalised by having the security of their home taken away.

Concern was expressed by a range of Labour members but also from within the coalition by several Lib Dem peers. 

Lord Shipley, a former leader of Newcastle council, warned: ‘There is a danger that the Government could be introducing legislation which will cause anguish for some very vulnerable families, while not delivering a great deal. Short-term tenancies run the risk of creating a cycle of repeat homelessness; and rather than create yet more insecurity for people and communities, reform should focus on long-term solutions that deliver the security that vulnerable people need.’

Baroness Doocey, a former chair of housing in Richmond, questioned the government’s case that discharging the homlessness duty into the private rented sector will save money. And she warned that the most vulnerable families ‘are likely to be forced to live in substandard accommodation and, much worse, forced to move at regular intervals even if they have been model tenants who pay their rent on time’. She appealed for proper safeguards with a statutory accreditation scheme for the private rented sector. 

On flexible tenancies she warned that two years would become the norm and the result would be people forced to move continuously, losing touch with family and friends and children’s schools and with less incentive to maintain their homes. ‘As a result we are likely to see a greater concentration of deprivation and worklessness in social housing. Surely that is the last thing anyone wants, but it will almost certainly be the direct consequence of providing such limited security of tenure.’

Lord Palmer of Childs Hill, a Barnet councillor, attacked the homelessness discharge plan as ‘horrifying’ and called for substantial amendments to that section of the Bill. 

He said: ”The idea that local authorities will be able to discharge their duties to the homeless by providing one offer—I repeat, one offer—from a private landlord, without the applicant having any say in being able to reject that offer, is horrifying. For those who have been in local government for many years, it takes us back to the days of two offers. Now we are talking about one offer from a private landlord.’

And Baroness Kramer, the former Richmond Park MP, warned: ‘I have a great fear of there being created within social housing a sort of transitory, transient community, which does no good to families, especially to children, and very little good to the communities in which those people are resident.’

So can Labour opposition with independent and Lib Dem support be more successful in amending the Bill than MPs were in the Commons?

On the surface, the debate did not seem to have much effect on the government judging from the summing up from Baroness Hanham. 

On tenure, she argued: ‘The proposals for flexible housing tenure are just that. Concern was expressed that the flexibility will start at a minimum of two years, but that is a minimum. By and large, it will be much longer than that.’

On homelessness, she said: ‘The provisions are not dismantling the homelessness safety net. We want to be really clear on that. Local authorities will still have a duty to secure suitable accommodation for those who are account at the time. The provisions are not dismantling the homelessness safety net. We want to be really clear on that. Local authorities will still have a duty to secure suitable accommodation for those who are.’

However, I’m not sure arguments as weak as that will stand up to more detailed scrutiny and the government may struggle to steamroller the changes through as it did in the Commons without amendments.

By convention the House of Lords does not make significant amendments to legislation that was in the government’s manifesto. However, that does not apply to the social housing and homelessness reforms: they were not mentioned in the Conservative manifesto, the Lib Dem manifesto or the coalition programme for government. 

View results 10 per page | 20 per page | 50 per page

Newsletter Sign-up

IH Subscription