Sunday, 28 May 2017

Inside edge

All posts from: September 2011

Ed's choice

Wed, 28 Sep 2011

So Ed Miliband is on the side of aspiration and community (the right to buy and housing allocations for people who put something in) and against people who want something for nothing (welfare cheats and people who make no contribution). 

His speech to the Labour conference yesterday seemed designed to go down well with focus groups of voters in the squeezed middle but none of it even begins to recognise the scale of the housing crisis. Much like saying it was a mistake to oppose the right to buy without saying it was also a mistake to refuse to allow councils to spend the receipts on new homes, it is more likely to make things worse.

The good thing was that the speech did not quite live up to the advance spin. The headlines yesterday morning suggested that the Labour leader would identify ‘bad tenants’ alongside ‘bad businesses’ as targets for reforms. 

In the event, what he actually said was vaguer: ‘When we have a housing shortage, choices have to be made. Do we treat the person who contributes to their community the same as the person who doesn’t? My answer is no. Our first duty should be to help the person who shows responsibility. And I say every council should recognise the contribution that people are making.’

He had another go at explaining it on the Today programme this morning, when presenter Jim Naughtie asked him about two families, both with three kids, where one set of parents had put something into the community and one hadn’t. Why should kids suffer for what their parents had or had not done?

‘I say need is important. But this was why I was very careful in what I said yesterday,’ said Miliband. ‘In a world where there isn’t enough social housing to around councils have a choice. In the case that you talked about, do they reward responsibility because essentially you’re saying that the need is the same but do they reward the more responsible. I say yes, let’s reward responsibility in our society because the way societies operate, the way they are healthy is by responsibility being shown throughout that society. ‘

Naughtie asked whether that meant council officials would be making a moral judgement. ‘I think it’s about saying we reward people who contribute,’ said Miliband. ‘Manchester City Council already is doing this. Too often we give people a sense in our society - and this is about the decent, hard-working majority in Britain who work hard and put in a lot who just want something out for putting something in and that was the foundation of the Beveridge welfare state after all, contribution as well as need - and the danger is whether it’s at the top or the bottom of our society we say look, anything goes and I don’t think people want anything goes.’

On the face of it, there seems nothing wrong with allocating to people in work and people with strong community spirit. Might it not be a way of saying that social housing is for everyone, not just a residualised minority. Where’s the harm in moving beyond the modest rebalancing of allocations that has happened so far?

The case against is put powerfully by Steve Hilditch over at Red Brick, who argues that the Labour leader is opening a ‘can of worms you will regret ever opening’.

He says: ‘Anyone who has ever been involved in the process of housing allocations knows that only people in extreme and acute housing need get anywhere near being allocated a social home.  I would set Ed Miliband a test: go into an allocations department, look through the cases, meet up with the people concerned and then pick the family that will not get a home because you have decided to allocate it to someone who has less housing need but meets some test of their  “contribution”.’

The obvious problem is that this will be happening at a time when there is no new money for new supply. For every person with a job and a contribution to the community who gains, there will be someone in acute housing need who loses - and who will be stuck in accommodation that is too expensive to be able to get a job and too temporary and probably too far away to be able to make a contribution to the community.

And what is a community contribution anyway? Who judges it? Will it be like the system for allocating places in church schools, where parents battle with each other to attend services, hand out hymn books and have the vicar round to tea? Or a throwback to the old system of allocation by councillor?

The deeper problem is that every time a senior Labour politician says ‘decent hard-working majority’ their audience hears ‘feckless, lazy minority’ and it shifts the ground for debate about social housing and welfare to the right. 

Little wonder then that some of the most enthusiastic response to the advance spin of the speech came from Grant Shapps (‘Ed Mili will say council housing to go to people who ‘work hard & contribute’ so perhaps Labour will now support our housing reforms,’ he tweeted), Matthew Oakley of Policy Exchange (‘Is Lab committing to our policy from Making Housing Affordable report; requiring councils abandon needs based social housing allocation?’ he tweeted) and from Jonathan Glanz, Westminster’s cabinet member for housing, who took it as an implicit endorsement of its allocation plans. 

If  the biggest endorsement of your position comes from your opponents, you are probably in the wrong place to begin with. 

 

Ed's choice

Wed, 28 Sep 2011

So Ed Miliband is on the side of aspiration and community (the right to buy and housing allocations for people who put something in) and against people who want something for nothing (welfare cheats and people who make no contribution). 

His speech to the Labour conference yesterday seemed designed to go down well with focus groups of voters in the squeezed middle but none of it even begins to recognise the scale of the housing crisis. Much like saying it was a mistake to oppose the right to buy without saying it was also a mistake to refuse to allow councils to spend the receipts on new homes, it is more likely to make things worse.

The good thing was that the speech did not quite live up to the advance spin. The headlines yesterday morning suggested that the Labour leader would identify ‘bad tenants’ alongside ‘bad businesses’ as targets for reforms. 

In the event, what he actually said was vaguer: ‘When we have a housing shortage, choices have to be made. Do we treat the person who contributes to their community the same as the person who doesn’t? My answer is no. Our first duty should be to help the person who shows responsibility. And I say every council should recognise the contribution that people are making.’

He had another go at explaining it on the Today programme this morning, when presenter Jim Naughtie asked him about two families, both with three kids, where one set of parents had put something into the community and one hadn’t. Why should kids suffer for what their parents had or had not done?

‘I say need is important. But this was why I was very careful in what I said yesterday,’ said Miliband. ‘In a world where there isn’t enough social housing to around councils have a choice. In the case that you talked about, do they reward responsibility because essentially you’re saying that the need is the same but do they reward the more responsible. I say yes, let’s reward responsibility in our society because the way societies operate, the way they are healthy is by responsibility being shown throughout that society. ‘

Naughtie asked whether that meant council officials would be making a moral judgement. ‘I think it’s about saying we reward people who contribute,’ said Miliband. ‘Manchester City Council already is doing this. Too often we give people a sense in our society - and this is about the decent, hard-working majority in Britain who work hard and put in a lot who just want something out for putting something in and that was the foundation of the Beveridge welfare state after all, contribution as well as need - and the danger is whether it’s at the top or the bottom of our society we say look, anything goes and I don’t think people want anything goes.’

On the face of it, there seems nothing wrong with allocating to people in work and people with strong community spirit. Might it not be a way of saying that social housing is for everyone, not just a residualised minority. Where’s the harm in moving beyond the modest rebalancing of allocations that has happened so far?

The case against is put powerfully by Steve Hilditch over at Red Brick, who argues that the Labour leader is opening a ‘can of worms you will regret ever opening’.

He says: ‘Anyone who has ever been involved in the process of housing allocations knows that only people in extreme and acute housing need get anywhere near being allocated a social home.  I would set Ed Miliband a test: go into an allocations department, look through the cases, meet up with the people concerned and then pick the family that will not get a home because you have decided to allocate it to someone who has less housing need but meets some test of their  “contribution”.’

The obvious problem is that this will be happening at a time when there is no new money for new supply. For every person with a job and a contribution to the community who gains, there will be someone in acute housing need who loses - and who will be stuck in accommodation that is too expensive to be able to get a job and too temporary and probably too far away to be able to make a contribution to the community.

And what is a community contribution anyway? Who judges it? Will it be like the system for allocating places in church schools, where parents battle with each other to attend services, hand out hymn books and have the vicar round to tea? Or a throwback to the old system of allocation by councillor?

The deeper problem is that every time a senior Labour politician says ‘decent hard-working majority’ their audience hears ‘feckless, lazy minority’ and it shifts the ground for debate about social housing and welfare to the right. 

Little wonder then that some of the most enthusiastic response to the advance spin of the speech came from Grant Shapps (‘Ed Mili will say council housing to go to people who ‘work hard & contribute’ so perhaps Labour will now support our housing reforms,’ he tweeted), Matthew Oakley of Policy Exchange (‘Is Lab committing to our policy from Making Housing Affordable report; requiring councils abandon needs based social housing allocation?’ he tweeted) and from Jonathan Glanz, Westminster’s cabinet member for housing, who took it as an implicit endorsement of its allocation plans. 

If  the biggest endorsement of your position comes from your opponents, you are probably in the wrong place to begin with. 

 

Many happy returns?

Mon, 26 Sep 2011

Saturday was the 15th birthday of something that will have had some people reaching for the cake and jelly and others hoping they choke on it.

So it’s happy birthday to buy to let, which was officially launched by the Association of Residential Letting Agents (ARLA) on 24 September, 1996.

The timing alone ensured that the idea would quite literally offer many happy returns to early investors who could benefit from plentiful mortgages secured against the rents of properties that would rocket in value over the next 11 years.

The number of buy-to-let loans outstanding soared from just 28,700 in 1998, when the Council of Mortgage Lenders (CML) started recording the figures, to 1.3m last year. By value they increased from £2bn to £151.5bn by 2010. The strongest growth happened between 2000 and 2007.

In the process the private rented sector in England doubled from 2m homes to almost 4m and the proportion of people living in it increased from 10.1% to 15.6%.

The other side of the coin is what happened to first-time buyers. There were 465,000 in 1996, rising to 568,000 in 2001. However, their numbers fell to 370,000 in 2003, 360,000 at the height of the boom in 2007 and just 192,000 as the credit crunch hit in 2008.

Defenders of buy to let claim that the private rented sector might have died without it and that it actually helped to stabilise the market and prevent repossessions by providing an alternative housing option for young people who would otherwise have been over-stretched borrowers with homes at risk in the downturn. 

Opponents claim that buyers of second, third, fourth and nth homes simply inflated house prices beyond the reach of people attempting to buy their first. 

The truth is a bit more complicated. The introduction of assured shortholds in 1988 had already started the private rented revival. The tax system encouraged investors to look at housing as an alternative to pensions and savings. The increase in buy-to-let lending was part of a much bigger boom in mortgage lending that priced people out of the market. 

But the shift in the market is undeniable. Many people thought the credit crunch would kill off buy to let. Fergus and Judith Wilson, the ex-teachers who bought 700 homes, said it was ‘absolutely dead and will never return’ in 2010.

Instead, it appears to have returned from the grave. The number of new buy-to-let mortgages has been rising every quarter since the start of 2010 even though the total is still only a third of boom levels. Three-quarters of buy to let landlords are said to be planning to expand their portfolios. Buy-to-let mortgages are available from everywhere from the Cooperative Bank to the Bank of India. 

In contrast, the number of loans to first-time buyers is actually down on last year and many of those who miss out are stuck paying far more in rent to a buy-to-let landlord than they would be paying in interest on a mortgage (if they could get one). 

And the high house prices generated by the lending boom have in turn put off the one group of investors with enough cash to finance the sort of build to let programme that might change those dynamics. 

Pension funds finance much of the private rented sector in other European countries (and used to here too).  However, as the Financial Times reported over the weekend: ‘Income is what long-term investors such as pension schemes are on the lookout for, particularly during bond market crises, but strong capital appreciation in the UK residential property market in the past has pushed down yields.’

So happy birthday buy to let. Sorry I forgot to send a card. 

Many happy returns?

Mon, 26 Sep 2011

Saturday was the 15th birthday of something that will have had some people reaching for the cake and jelly and others hoping they choke on it.

So it’s happy birthday to buy to let, which was officially launched by the Association of Residential Letting Agents (ARLA) on 24 September, 1996.

The timing alone ensured that the idea would quite literally offer many happy returns to early investors who could benefit from plentiful mortgages secured against the rents of properties that would rocket in value over the next 11 years.

The number of buy-to-let loans outstanding soared from just 28,700 in 1998, when the Council of Mortgage Lenders (CML) started recording the figures, to 1.3m last year. By value they increased from £2bn to £151.5bn by 2010. The strongest growth happened between 2000 and 2007.

In the process the private rented sector in England doubled from 2m homes to almost 4m and the proportion of people living in it increased from 10.1% to 15.6%.

The other side of the coin is what happened to first-time buyers. There were 465,000 in 1996, rising to 568,000 in 2001. However, their numbers fell to 370,000 in 2003, 360,000 at the height of the boom in 2007 and just 192,000 as the credit crunch hit in 2008.

Defenders of buy to let claim that the private rented sector might have died without it and that it actually helped to stabilise the market and prevent repossessions by providing an alternative housing option for young people who would otherwise have been over-stretched borrowers with homes at risk in the downturn. 

Opponents claim that buyers of second, third, fourth and nth homes simply inflated house prices beyond the reach of people attempting to buy their first. 

The truth is a bit more complicated. The introduction of assured shortholds in 1988 had already started the private rented revival. The tax system encouraged investors to look at housing as an alternative to pensions and savings. The increase in buy-to-let lending was part of a much bigger boom in mortgage lending that priced people out of the market. 

But the shift in the market is undeniable. Many people thought the credit crunch would kill off buy to let. Fergus and Judith Wilson, the ex-teachers who bought 700 homes, said it was ‘absolutely dead and will never return’ in 2010.

Instead, it appears to have returned from the grave. The number of new buy-to-let mortgages has been rising every quarter since the start of 2010 even though the total is still only a third of boom levels. Three-quarters of buy to let landlords are said to be planning to expand their portfolios. Buy-to-let mortgages are available from everywhere from the Cooperative Bank to the Bank of India. 

In contrast, the number of loans to first-time buyers is actually down on last year and many of those who miss out are stuck paying far more in rent to a buy-to-let landlord than they would be paying in interest on a mortgage (if they could get one). 

And the high house prices generated by the lending boom have in turn put off the one group of investors with enough cash to finance the sort of build to let programme that might change those dynamics. 

Pension funds finance much of the private rented sector in other European countries (and used to here too).  However, as the Financial Times reported over the weekend: ‘Income is what long-term investors such as pension schemes are on the lookout for, particularly during bond market crises, but strong capital appreciation in the UK residential property market in the past has pushed down yields.’

So happy birthday buy to let. Sorry I forgot to send a card. 

Village voice

Thu, 22 Sep 2011

It all sounds so simple the way Steve Webb tells it. What could be fairer than a housing benefit bill that will be the same at the end of this government’s time in office as it was at the beginning?

The welfare reform minister and self-styled ‘only Lib Dem in the (DWP) village’ told his party’s conference this week that ‘much of what you hear about the DWP is about cuts – and much of it exaggerated’.

He went on: ‘If you listened to Labour you’d think that our policy programme was slaughter of the first born – and that was just in year one! For example, take housing benefit. 
Cash spending on housing benefit at the start of this Parliament was around £22bn. And at the end of this Parliament it will be around £22bn.’

However, like several things in Birmingham this week - the capital spending programme that it seems never was and the cheaper borrowing for council housing that was just a reversal of last year’s increase spring to mind - the statement is not quite all it appears.

It’s true that the housing benefit budget is not being cut in cash terms over the life of this government. It was always a cut against forecast growth - graph £25bn. It’s also true that most of the cuts haven’t started yet.

However, standing still in cash terms over the life a parliament would not be a huge squeeze even if we were talking about the same number of claimants. At the current rate of inflation, it would imply a 5 per cent reduction in support for each of them per year.

The number of claimants is not standing still but rising - by 150,000 to 1.5m since the general election according to the latest DWP stats and steadily rising month on month in the wake of one recession with another possibly still to come. 

And rents are rising much faster than inflation. In the private sector, survey after survey have shown rents soaring to record levels. The DWP’s favourite one, findaproperty.com says rents in London are 14.5% higher than a year ago. 

The DWP’s argument was  that the creation of the local housing allowance had in itself inflated rents and that cutting it would therefore force landlords to reduce them. However, this was fairly comprehensively disproved by research published earlier this month by the CIH and BPF. The feedback loop is created by a dysfunctional housing market - not the local housing allowance. 

In the social sector, rents are rising faster than inflation as a matter of government policy. Not just by the familiar RPI plus 1% formula but to up to 80% of market levels for new and converted affordable rent tenancies.

The housing benefit cuts are not the slaughter of the first born. Exaggerating the effects of them only plays into the hands of DWP ministers. But they have barely started yet and they are going to blight the lives of hundreds of thousands of people outside the DWP village.

Village voice

Thu, 22 Sep 2011

It all sounds so simple the way Steve Webb tells it. What could be fairer than a housing benefit bill that will be the same at the end of this government’s time in office as it was at the beginning?

The welfare reform minister and self-styled ‘only Lib Dem in the (DWP) village’ told his party’s conference this week that ‘much of what you hear about the DWP is about cuts – and much of it exaggerated’.

He went on: ‘If you listened to Labour you’d think that our policy programme was slaughter of the first born – and that was just in year one! For example, take housing benefit. 
Cash spending on housing benefit at the start of this Parliament was around £22bn. And at the end of this Parliament it will be around £22bn.’

However, like several things in Birmingham this week - the capital spending programme that it seems never was and the cheaper borrowing for council housing that was just a reversal of last year’s increase spring to mind - the statement is not quite all it appears.

It’s true that the housing benefit budget is not being cut in cash terms over the life of this government. It was always a cut against forecast growth - graph £25bn. It’s also true that most of the cuts haven’t started yet.

However, standing still in cash terms over the life a parliament would not be a huge squeeze even if we were talking about the same number of claimants. At the current rate of inflation, it would imply a 5 per cent reduction in support for each of them per year.

The number of claimants is not standing still but rising - by 150,000 to 1.5m since the general election according to the latest DWP stats and steadily rising month on month in the wake of one recession with another possibly still to come. 

And rents are rising much faster than inflation. In the private sector, survey after survey have shown rents soaring to record levels. The DWP’s favourite one, findaproperty.com says rents in London are 14.5% higher than a year ago. 

The DWP’s argument was  that the creation of the local housing allowance had in itself inflated rents and that cutting it would therefore force landlords to reduce them. However, this was fairly comprehensively disproved by research published earlier this month by the CIH and BPF. The feedback loop is created by a dysfunctional housing market - not the local housing allowance. 

In the social sector, rents are rising faster than inflation as a matter of government policy. Not just by the familiar RPI plus 1% formula but to up to 80% of market levels for new and converted affordable rent tenancies.

The housing benefit cuts are not the slaughter of the first born. Exaggerating the effects of them only plays into the hands of DWP ministers. But they have barely started yet and they are going to blight the lives of hundreds of thousands of people outside the DWP village.

Struggles ahead

Thu, 15 Sep 2011

There are some big housing battles still to come as the Welfare Reform Bill moves to its committee stage in the House of Lords but few signs yet of the movement the government has shown on direct payment of housing benefit. 

The second reading debate on Tuesday saw Labour, Lib Dem and Crossbench peers raise concerns on issues including the household benefit cap, the cut in housing benefit for under-occupying social tenants and CPI indexation alongside particular worries about changes to benefits for disabled people.

On the household benefit cap, Lib Dem peer Baroness Tyler of Enfield cited this week’s research from the Children’s Society showing that it could affect 200,000 children and make 80,000 of them homeless. She pleaded for measures to mitigate the impact that would fall ‘disproportionately on children, large families, and various black and ethnic minorities’.

Lord Kirkwood, another Lib Dem peer and a former MP who was a party spokesperson on work and pensions until the election, said it was a step too far. ‘I give the minister fair warning that I cannot support the benefit cap as it currently cast and I hope he will look at it very carefully.’

He went on: ‘For me it is actually a question of principle. We have a system of entitlements in our social security system and, if you have the entitlements, you get the benefit. Here is an arbitrary system coming in and overlaying that by saying, “Well, you may well be entitled to it but we think it’s too much”. Parliament should not let that pass without some comment because it cuts straight across everything that we have known in the social security system since I started coming to Parliament.’

And it was too much for party colleague Baroness Falkner too. ‘We cannot find it fair to use a straitjacket to measure household costs, irrespective of where the household is, how large or small it is or what alternatives its members have to substitute income through employment and related means,’ she said. ‘I hope that factors such as actual housing and transport costs will also be taken into account to allow for regional if not local variation in the setting of the cap.’

For crossbencher Lord Best a crucial issue was whether the £2bn a year savings from the housing benefit bill would be met by falls in tenants’ incomes or landlords reducing their rents.  He said that from this week’s research by the CIH and BPF ‘it does not appear that benefit reductions will be lead landlords to reduce their rents. Therefore, the burden and pain of the cuts will fall upon very poor households and may impact on homelessness’. 

On the cut in housing benefit for under-occupiers, the Lib Dem peer Lord German said claimants would either have to pay the extra, or take in a lodger or move to a smaller property. ‘However, housing associations have not geared up for this third choice. They have focused on providing two and three-bedroom properties. If the result of these changes is an increased demand on housing associations for smaller units of accommodation, they will need time to adjust. I would be grateful if the minister would explain what modelling has been done on the changes to our housing stock for the social housing sector that will be needed as a result of the Bill.’ 

Labour peer Lord Morris of Handsworth, who chairs Midland Heart, warned about the impact on disabled people. ‘Many disabled tenants live in adapted, specially designed, supported and sheltered housing. Will they be evicted and, if so, where will they go?’

Crossbench peer the Earl of Listowel wanted reassurances that foster carers will not be penalised for spare rooms they keep for their foster children. 

And Lord Best, pointed out that:  ‘Even if we allocated all the one-bedroom accommodation to people who were downsizing, which we cannot do because we have a lot of other people in priority need, it would take several years before people could move down from their two-bedroom property to a one-bedroom property. In the meantime, to penalise them seems very unfair.’

That’s just a flavour of the debate on the main two housing provisions that does not begin to reflect the anger of peers raising the impact of the housing changes on disabled people or wider concerns about the administration and IT system for the new system or the way that CPI indexation breaks the link between benefit and the actual rent paid. 

Meanwhile Labour peer Baroness Hollis of Heigham raised the contradictions between the DCLG’s affordable rent programme and localising of the council tax and the DWP’s work to bring down the housing benefit bill and centralise its administration. ‘With friends like the DCLG, who needs an opposition? I suggest that the minister explores a useful trade-off—that he drops the benefit cap, which the DCLG and most of us do not want; and the DCLG in return drops the localising of council tax, which the DWP and no one wants. The minister would have the better bargain. 

All of which is an indication of struggles ahead for the government in the committee stage - but then the same could be said in the Commons when concern expressed by Lib Dem MPs did not translate into enough votes against the government to change anything much.

And in his summing up of the debate, welfare reform minister Lord Freud did not seem much inclined to make concessions on anything other than direct payment.  

The new system would not require a large-scale IT system. The government was only committed to CPI indexation for 2013/14 and 2014/15. 

The benefit cap was based on an important principle that ‘people should not expect a life on benefits getting more money from the state than people in similar circumstances could earn in work’. 

There were 5m people on the social housing waiting list and 1m who were overcrowded yet at the same time ‘nearly 1m extra bedrooms are being paid for by housing benefit’. He went on: ‘If people continue to live in a property larger than they need, we will expect them to make a reasonable contribution to its cost through a reduction in housing benefit.’

All of them are familiar arguments from the government. But can the housing elements of the Bill survive another round of detailed scrutiny unchanged?

The government is clearly hoping so if yesterday's move to restrict debate by referring the Bill to Grand Committee is anything to go by. 

Struggles ahead

Thu, 15 Sep 2011

There are some big housing battles still to come as the Welfare Reform Bill moves to its committee stage in the House of Lords but few signs yet of the movement the government has shown on direct payment of housing benefit. 

The second reading debate on Tuesday saw Labour, Lib Dem and Crossbench peers raise concerns on issues including the household benefit cap, the cut in housing benefit for under-occupying social tenants and CPI indexation alongside particular worries about changes to benefits for disabled people.

On the household benefit cap, Lib Dem peer Baroness Tyler of Enfield cited this week’s research from the Children’s Society showing that it could affect 200,000 children and make 80,000 of them homeless. She pleaded for measures to mitigate the impact that would fall ‘disproportionately on children, large families, and various black and ethnic minorities’.

Lord Kirkwood, another Lib Dem peer and a former MP who was a party spokesperson on work and pensions until the election, said it was a step too far. ‘I give the minister fair warning that I cannot support the benefit cap as it currently cast and I hope he will look at it very carefully.’

He went on: ‘For me it is actually a question of principle. We have a system of entitlements in our social security system and, if you have the entitlements, you get the benefit. Here is an arbitrary system coming in and overlaying that by saying, “Well, you may well be entitled to it but we think it’s too much”. Parliament should not let that pass without some comment because it cuts straight across everything that we have known in the social security system since I started coming to Parliament.’

And it was too much for party colleague Baroness Falkner too. ‘We cannot find it fair to use a straitjacket to measure household costs, irrespective of where the household is, how large or small it is or what alternatives its members have to substitute income through employment and related means,’ she said. ‘I hope that factors such as actual housing and transport costs will also be taken into account to allow for regional if not local variation in the setting of the cap.’

For crossbencher Lord Best a crucial issue was whether the £2bn a year savings from the housing benefit bill would be met by falls in tenants’ incomes or landlords reducing their rents.  He said that from this week’s research by the CIH and BPF ‘it does not appear that benefit reductions will be lead landlords to reduce their rents. Therefore, the burden and pain of the cuts will fall upon very poor households and may impact on homelessness’. 

On the cut in housing benefit for under-occupiers, the Lib Dem peer Lord German said claimants would either have to pay the extra, or take in a lodger or move to a smaller property. ‘However, housing associations have not geared up for this third choice. They have focused on providing two and three-bedroom properties. If the result of these changes is an increased demand on housing associations for smaller units of accommodation, they will need time to adjust. I would be grateful if the minister would explain what modelling has been done on the changes to our housing stock for the social housing sector that will be needed as a result of the Bill.’ 

Labour peer Lord Morris of Handsworth, who chairs Midland Heart, warned about the impact on disabled people. ‘Many disabled tenants live in adapted, specially designed, supported and sheltered housing. Will they be evicted and, if so, where will they go?’

Crossbench peer the Earl of Listowel wanted reassurances that foster carers will not be penalised for spare rooms they keep for their foster children. 

And Lord Best, pointed out that:  ‘Even if we allocated all the one-bedroom accommodation to people who were downsizing, which we cannot do because we have a lot of other people in priority need, it would take several years before people could move down from their two-bedroom property to a one-bedroom property. In the meantime, to penalise them seems very unfair.’

That’s just a flavour of the debate on the main two housing provisions that does not begin to reflect the anger of peers raising the impact of the housing changes on disabled people or wider concerns about the administration and IT system for the new system or the way that CPI indexation breaks the link between benefit and the actual rent paid. 

Meanwhile Labour peer Baroness Hollis of Heigham raised the contradictions between the DCLG’s affordable rent programme and localising of the council tax and the DWP’s work to bring down the housing benefit bill and centralise its administration. ‘With friends like the DCLG, who needs an opposition? I suggest that the minister explores a useful trade-off—that he drops the benefit cap, which the DCLG and most of us do not want; and the DCLG in return drops the localising of council tax, which the DWP and no one wants. The minister would have the better bargain. 

All of which is an indication of struggles ahead for the government in the committee stage - but then the same could be said in the Commons when concern expressed by Lib Dem MPs did not translate into enough votes against the government to change anything much.

And in his summing up of the debate, welfare reform minister Lord Freud did not seem much inclined to make concessions on anything other than direct payment.  

The new system would not require a large-scale IT system. The government was only committed to CPI indexation for 2013/14 and 2014/15. 

The benefit cap was based on an important principle that ‘people should not expect a life on benefits getting more money from the state than people in similar circumstances could earn in work’. 

There were 5m people on the social housing waiting list and 1m who were overcrowded yet at the same time ‘nearly 1m extra bedrooms are being paid for by housing benefit’. He went on: ‘If people continue to live in a property larger than they need, we will expect them to make a reasonable contribution to its cost through a reduction in housing benefit.’

All of them are familiar arguments from the government. But can the housing elements of the Bill survive another round of detailed scrutiny unchanged?

The government is clearly hoping so if yesterday's move to restrict debate by referring the Bill to Grand Committee is anything to go by. 

Direct action

Wed, 14 Sep 2011

The concessions on direct payment of housing benefit announced by Lord Freud are welcome news. If only the same could be said for the rest of the Welfare Reform Bill.

The welfare reform minister could hardly go empty-handed to the National Housing Federation (NHF) conference in Birmingham and there was some reassurance at least for social landlords in his speech on the universal credit. 

As Inside Housing reports, he said that housing benefit payments will be switched to landlords if tenants fall into arrears and also announced demonstration projects to test how the new approach will work. 

Both sound sensible moves, although it must be noted that there is no guarantee that demonstration projects will produce the results landlords want and an arrears trigger is not totally new: private landlords already get housing benefit paid to them direct when tenants go more than eight weeks into arrears. (The difference might be, as @vmrampulla just suggested to me on twitter, that it will be a fixed change to direct payment rather than something that can revert back).

As the NHF’s David Orr told Lord Freud in the wake of an opinion poll showing that nine out of ten social tenants want their housing benefit to go direct to their landlord: ‘Why not give people the choice to ask to have their rent paid direct to their landlord.’

The reason of course is that no matter how much landlords and lenders complain, one of the key principles of the universal credit is to make it clear to claimants that work pays by giving them responsibility for their money and for their own choices. 

That, plus the government’s willingness to look for a compromise on direct payment, was clear in yesterday’s second reading debate on the Welfare Reform Bill in the House of Lords

As Lord Freud put it when he opened the debate: ‘We must ensure that as many people as possible are empowered to manage their own finances and make the choices that people in work must make. We must close the gap between being out of work and having a job, so it is not such a major shift for people leaving benefits. Payments to tenants must be the default position under universal credit.’

He added: ‘I am convinced that we can deliver a system that puts the full universal credit payment into a claimant’s hands, empowering them to manage their own budgets and narrowing that gap between the experience of being in and out of work. At the same time, I believe we can build safeguards into the system to minimise the impact on social landlords’ incomes and reassured lenders.’

Later in the debate, Baroness Falkner of Margravine, the Lib Dem peer who is also a non-executive director of Hyde, signalled that the government might go further on tenants in arrears but that this would not be enough to mitigate the risks to landlords. 

She said: ‘I understand that the Minister is contemplating reducing the risks to housing associations by stepping in after four weeks of arrears to revert to direct payments to social landlords. This would be welcome, but would entail greater bureaucracy for both RSLs and the DWP. Its impact would have little effect on the capital markets’ or financial institutions’ assessment of risk, and therefore on borrowing costs.’

However, although speaker after speaker in the debate raised other issues that have the potential to affect tenants, and therefore landlords, as much if not more than direct payment. The criticism came from Labour, Lib Dem and cross-bench peers but for the moment at least Lord Freud appeared in no mood for more concessions. More on this tomorrow.

Direct action

Wed, 14 Sep 2011

The concessions on direct payment of housing benefit announced by Lord Freud are welcome news. If only the same could be said for the rest of the Welfare Reform Bill.

The welfare reform minister could hardly go empty-handed to the National Housing Federation (NHF) conference in Birmingham and there was some reassurance at least for social landlords in his speech on the universal credit. 

As Inside Housing reports, he said that housing benefit payments will be switched to landlords if tenants fall into arrears and also announced demonstration projects to test how the new approach will work. 

Both sound sensible moves, although it must be noted that there is no guarantee that demonstration projects will produce the results landlords want and an arrears trigger is not totally new: private landlords already get housing benefit paid to them direct when tenants go more than eight weeks into arrears. (The difference might be, as @vmrampulla just suggested to me on twitter, that it will be a fixed change to direct payment rather than something that can revert back).

As the NHF’s David Orr told Lord Freud in the wake of an opinion poll showing that nine out of ten social tenants want their housing benefit to go direct to their landlord: ‘Why not give people the choice to ask to have their rent paid direct to their landlord.’

The reason of course is that no matter how much landlords and lenders complain, one of the key principles of the universal credit is to make it clear to claimants that work pays by giving them responsibility for their money and for their own choices. 

That, plus the government’s willingness to look for a compromise on direct payment, was clear in yesterday’s second reading debate on the Welfare Reform Bill in the House of Lords

As Lord Freud put it when he opened the debate: ‘We must ensure that as many people as possible are empowered to manage their own finances and make the choices that people in work must make. We must close the gap between being out of work and having a job, so it is not such a major shift for people leaving benefits. Payments to tenants must be the default position under universal credit.’

He added: ‘I am convinced that we can deliver a system that puts the full universal credit payment into a claimant’s hands, empowering them to manage their own budgets and narrowing that gap between the experience of being in and out of work. At the same time, I believe we can build safeguards into the system to minimise the impact on social landlords’ incomes and reassured lenders.’

Later in the debate, Baroness Falkner of Margravine, the Lib Dem peer who is also a non-executive director of Hyde, signalled that the government might go further on tenants in arrears but that this would not be enough to mitigate the risks to landlords. 

She said: ‘I understand that the Minister is contemplating reducing the risks to housing associations by stepping in after four weeks of arrears to revert to direct payments to social landlords. This would be welcome, but would entail greater bureaucracy for both RSLs and the DWP. Its impact would have little effect on the capital markets’ or financial institutions’ assessment of risk, and therefore on borrowing costs.’

However, although speaker after speaker in the debate raised other issues that have the potential to affect tenants, and therefore landlords, as much if not more than direct payment. The criticism came from Labour, Lib Dem and cross-bench peers but for the moment at least Lord Freud appeared in no mood for more concessions. More on this tomorrow.

Second thoughts?

Tue, 13 Sep 2011

As peers prepare for the second reading debate on the Welfare Reform Bill, there’s some startling new evidence that completely undermines the government’s rationale for cutting the local housing allowance (LHA).

Ministers from Iain Duncan Smith to Lord Freud have consistently argued that the introduction of the LHA fuelled a feedback loop that increased costs because landlords simply introduced their rents to the new LHA levels. And they demonstrated that by pointing out that between November 2008 and February 2010 LHA rates increased by 3 per cent whereas rents in the private sector as a whole fell by 5 per cent.

That apparent disparity has been central to the whole debate on the LHA  since it implied that cuts would force landlords to reduce their rents and that the impact on tenants would not be as great as critics feared. And the government argued it could use its bulk purchasing power to drive down rents.

As I’ve blogged once or twice before, the whole comparison was deeply flawed because it used figures from findaproperty.com that bear little relation to the LHA market. IDS had to apologise in parliament for wrongly claiming they were official statistics but ministers have stuck to their guns on the comparison despite subsequent evidence that findaproperty.com rents have soared to record levels at a time when the LHA rate has barely increased.

But now joint research by the Chartered Institute of Housing (CIH) and British Property Federation (BPF) kills off the government’s case once and for all. It looked at whether other factors could have caused the increase in average LHA rates, such as a change in the composition of the caseload to include more claimants in expensive areas or a shift away from single person households to a higher proportion of families.

For the full report go here, but here is a flavour of the findings:

Between November 2008 and February 2010, LHA rates fell in twice as many areas in England as they rose.That pattern was repeated across the country and was even more marked in London and the South East.The increase in average rent levels in the period was entirely due to a shift in the distribution of the caseload from the North and Midlands to London and Southern England.After adjusting for this caseload effect, average housing benefit rent levels actually fell by 1%.There was no evidence of a relationship between LHA inflation rates and the proportion of the market let to tenants on housing benefit.LHA rates broadly reflect what is happening in the non-LHA market, which is unsurprising because LHA rates are set from data that excludes housing benefit lettings.

As the CIH and BPF argue: ‘Our findings call into question the Government‟s strategy that it can use its power as a bulk purchaser to force landlords to reduce their rents. If LHA rates do not contribute towards rent inflation then conversely they cannot be used as a tool to force rents down.’

In the meantime, as Joe Halewood notes on his blog, the cost of housing benefit continues to escalate.  

And the public accounts committee has called into question government claims about the savings it will make from the universal credit. 

All of which is food for thought for peers as they prepare for this afternoon’s second reading debate but will it make any real difference?

It should if peers live up to their reputation of being more open to rational debate than MPs. In particular, it calls into question the provision in the Bill to allow ministers to uprates housing benefit according to the CPI inflation rate rather than RPI.

This can no longer be dressed up as a cost control measure that will force landlords to reduce their rents or as the government benignly using its buying power more efficiently. The savings will come directly out of the pockets of tenants and the long-term effect (and maybe the intention) will be to break the link between housing costs and benefit levels and leave even more tenants with permanent shortfalls.

As the briefings that have gone out to peers from all the major housing organisations and charities show, the outstanding concerns include general ones such as the direct payment of housing benefit to tenants and its future administration under the universal credit and specific ones about the household benefit cap and the housing benefit cut for under-occupying social tenants. 

Few expect any substantial concessions or significant votes in the second reading debate itself, but all eyes will be on the concerns raised by individual peers and any hints from ministers that changes can still be made at the committee stage. Hopefully this research makes both just a bit more likely. 

Second thoughts?

Tue, 13 Sep 2011

As peers prepare for the second reading debate on the Welfare Reform Bill, there’s some startling new evidence that completely undermines the government’s rationale for cutting the local housing allowance (LHA).

Ministers from Iain Duncan Smith to Lord Freud have consistently argued that the introduction of the LHA fuelled a feedback loop that increased costs because landlords simply introduced their rents to the new LHA levels. And they demonstrated that by pointing out that between November 2008 and February 2010 LHA rates increased by 3 per cent whereas rents in the private sector as a whole fell by 5 per cent.

That apparent disparity has been central to the whole debate on the LHA  since it implied that cuts would force landlords to reduce their rents and that the impact on tenants would not be as great as critics feared. And the government argued it could use its bulk purchasing power to drive down rents.

As I’ve blogged once or twice before, the whole comparison was deeply flawed because it used figures from findaproperty.com that bear little relation to the LHA market. IDS had to apologise in parliament for wrongly claiming they were official statistics but ministers have stuck to their guns on the comparison despite subsequent evidence that findaproperty.com rents have soared to record levels at a time when the LHA rate has barely increased.

But now joint research by the Chartered Institute of Housing (CIH) and British Property Federation (BPF) kills off the government’s case once and for all. It looked at whether other factors could have caused the increase in average LHA rates, such as a change in the composition of the caseload to include more claimants in expensive areas or a shift away from single person households to a higher proportion of families.

For the full report go here, but here is a flavour of the findings:

Between November 2008 and February 2010, LHA rates fell in twice as many areas in England as they rose.That pattern was repeated across the country and was even more marked in London and the South East.The increase in average rent levels in the period was entirely due to a shift in the distribution of the caseload from the North and Midlands to London and Southern England.After adjusting for this caseload effect, average housing benefit rent levels actually fell by 1%.There was no evidence of a relationship between LHA inflation rates and the proportion of the market let to tenants on housing benefit.LHA rates broadly reflect what is happening in the non-LHA market, which is unsurprising because LHA rates are set from data that excludes housing benefit lettings.

As the CIH and BPF argue: ‘Our findings call into question the Government‟s strategy that it can use its power as a bulk purchaser to force landlords to reduce their rents. If LHA rates do not contribute towards rent inflation then conversely they cannot be used as a tool to force rents down.’

In the meantime, as Joe Halewood notes on his blog, the cost of housing benefit continues to escalate.  

And the public accounts committee has called into question government claims about the savings it will make from the universal credit. 

All of which is food for thought for peers as they prepare for this afternoon’s second reading debate but will it make any real difference?

It should if peers live up to their reputation of being more open to rational debate than MPs. In particular, it calls into question the provision in the Bill to allow ministers to uprates housing benefit according to the CPI inflation rate rather than RPI.

This can no longer be dressed up as a cost control measure that will force landlords to reduce their rents or as the government benignly using its buying power more efficiently. The savings will come directly out of the pockets of tenants and the long-term effect (and maybe the intention) will be to break the link between housing costs and benefit levels and leave even more tenants with permanent shortfalls.

As the briefings that have gone out to peers from all the major housing organisations and charities show, the outstanding concerns include general ones such as the direct payment of housing benefit to tenants and its future administration under the universal credit and specific ones about the household benefit cap and the housing benefit cut for under-occupying social tenants. 

Few expect any substantial concessions or significant votes in the second reading debate itself, but all eyes will be on the concerns raised by individual peers and any hints from ministers that changes can still be made at the committee stage. Hopefully this research makes both just a bit more likely. 

Growing pains

Tue, 6 Sep 2011

So a government apparently elected as the champion of the nimbys is now in the back pocket of developers?

The furore over the National Planning Policy Framework (NPPF) would be hilarious - especially the ministerial insinuations about a left-wing enemy within at the National Trust and Campaign to Protect Rural England (CPRE) - if it wasn’t also so serious.

When MPs returned to parliament yesterday it was near the top of the agenda at communities and local government (CLG) questions, with Labour MP Tristram Hunt  claiming that it meant that ‘the Conservatives cannot be trusted with the British countryside’.

Earlier the same day Eric Pickles and George Osborne had penned a joint article for the Financial Times arguing that: ‘This is our opportunity to unlock the new investment and new jobs the country needs. We cannot afford to miss it.

Contrast that with the Queen’s Speech debate last June, when Conservative backbenchers queued up to congratulate the government for scrapping Labour’s housing targets and regional strategies and the Home Builders Federation was warning that the new policy was a ‘recipe for disaster’.

So what on earth is going on? What’s changed so much in 15 short months?

There’s certainly an in-built tension between the anti-development instincts of most backbench Tories and the Treasury’s push for growth through more development. 

But the tension was potentially always there in Conservative planning policy: even as ministers were scrapping targets and regional strategies and trumpeting their conversion to localism, they were also saying there would be a presumption in favour of sustainable development where there were no local plans. It was in the planning green paper the Conservatives published in opposition.

One fundamental problem is that nobody seems able to agree on what the NPPF actually says. As fast as ministers claim the greenbelt will be protected, critics say protection will be weakened. No sooner have ministers said brownfield land will be developed first than opponents say it won’t.

A second is that nobody seems able to agree on what a ‘presumption in favour of sustainable development’ - or even just sustainable - actually means. Does it  mean yes to development with good public transport links and minimal environmental impact - or just yes to development?

A third is that the debate is considerably more complicated than the government v conservationists narrative would have us believe. It’s not simply a case of choosing between Simon Jenkins of the National Trust and planning minister Greg Clark, or George Monbiot and Pickles and Osborne. 

For a flavour of the debate and the protagonists, take a look at the excellent blog by planning consultant Andrew Lainton, who has been tracking it in exhaustive detail. 

For anyone who believes in the need for more homes in general, and more affordable homes in particular, it’s a real problem deciding fact from fiction and claim from counter-claim. 

On the pro-NPPF side of the debate, it’s obvious that a national counterweight is needed to local decision-making that will at best only provide land for homes for local people and at worst will just be nimby. It’s hard not to agree with Greg Clark when he says that ‘what is crucial is that we reform planning policy in order to unlock jobs and create homes for the next generation of young people’.

But you only have to look across the Irish Sea to see the consequences of a planning free-for-all - not just the ghost estates of homes that won’t sell but a countryside littered with tens of thousands of bungalows. The choice is not just between homes and no homes but well-planned homes and badly planned ones.

The real problem, it seems to me, is that planning has become a dirty word. You don’t have to be a countryside campaigner to wonder about the consequences of a national policy under which only ‘obviously poor’ design’ can be refused and which only seems to pay lip service to Britain’s binding commitment to reduce carbon emissions. Or wonder about a system that seems to preclude regional decision-making about what could be a solution to the problem: new towns.

And all that confusion and lack of precision means a severe danger that the people who will really come out of all this smiling are not the developers but the lawyers.

Growing pains

Tue, 6 Sep 2011

So a government apparently elected as the champion of the nimbys is now in the back pocket of developers?

The furore over the National Planning Policy Framework (NPPF) would be hilarious - especially the ministerial insinuations about a left-wing enemy within at the National Trust and Campaign to Protect Rural England (CPRE) - if it wasn’t also so serious.

When MPs returned to parliament yesterday it was near the top of the agenda at communities and local government (CLG) questions, with Labour MP Tristram Hunt  claiming that it meant that ‘the Conservatives cannot be trusted with the British countryside’.

Earlier the same day Eric Pickles and George Osborne had penned a joint article for the Financial Times arguing that: ‘This is our opportunity to unlock the new investment and new jobs the country needs. We cannot afford to miss it.

Contrast that with the Queen’s Speech debate last June, when Conservative backbenchers queued up to congratulate the government for scrapping Labour’s housing targets and regional strategies and the Home Builders Federation was warning that the new policy was a ‘recipe for disaster’.

So what on earth is going on? What’s changed so much in 15 short months?

There’s certainly an in-built tension between the anti-development instincts of most backbench Tories and the Treasury’s push for growth through more development. 

But the tension was potentially always there in Conservative planning policy: even as ministers were scrapping targets and regional strategies and trumpeting their conversion to localism, they were also saying there would be a presumption in favour of sustainable development where there were no local plans. It was in the planning green paper the Conservatives published in opposition.

One fundamental problem is that nobody seems able to agree on what the NPPF actually says. As fast as ministers claim the greenbelt will be protected, critics say protection will be weakened. No sooner have ministers said brownfield land will be developed first than opponents say it won’t.

A second is that nobody seems able to agree on what a ‘presumption in favour of sustainable development’ - or even just sustainable - actually means. Does it  mean yes to development with good public transport links and minimal environmental impact - or just yes to development?

A third is that the debate is considerably more complicated than the government v conservationists narrative would have us believe. It’s not simply a case of choosing between Simon Jenkins of the National Trust and planning minister Greg Clark, or George Monbiot and Pickles and Osborne. 

For a flavour of the debate and the protagonists, take a look at the excellent blog by planning consultant Andrew Lainton, who has been tracking it in exhaustive detail. 

For anyone who believes in the need for more homes in general, and more affordable homes in particular, it’s a real problem deciding fact from fiction and claim from counter-claim. 

On the pro-NPPF side of the debate, it’s obvious that a national counterweight is needed to local decision-making that will at best only provide land for homes for local people and at worst will just be nimby. It’s hard not to agree with Greg Clark when he says that ‘what is crucial is that we reform planning policy in order to unlock jobs and create homes for the next generation of young people’.

But you only have to look across the Irish Sea to see the consequences of a planning free-for-all - not just the ghost estates of homes that won’t sell but a countryside littered with tens of thousands of bungalows. The choice is not just between homes and no homes but well-planned homes and badly planned ones.

The real problem, it seems to me, is that planning has become a dirty word. You don’t have to be a countryside campaigner to wonder about the consequences of a national policy under which only ‘obviously poor’ design’ can be refused and which only seems to pay lip service to Britain’s binding commitment to reduce carbon emissions. Or wonder about a system that seems to preclude regional decision-making about what could be a solution to the problem: new towns.

And all that confusion and lack of precision means a severe danger that the people who will really come out of all this smiling are not the developers but the lawyers.

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