Monday, 27 February 2017

Inside edge

All posts from: October 2011

Thinking again

Tue, 25 Oct 2011

How do you get the genie back in the bottle? How do you reverse the shift from bricks and mortar to personal subsidies that’s happened over the last 35 years?

For me that’s the most interesting question posed by the IPPR in a new report out today on how to fund new housing supply.

The think-tank assesses all the options at a time when there seems little option of a straightforward increase in public investment but focuses in on three main areas:

  • Institutional investment - by domestic pension and insurance funds in general and local authority pension schemes in particular
  • A more active role for local authorities - freeing up their land for developers in return for an equity stake, pressuring others to develop private land in a ‘use it or lose it’ approach and piloting land auctions
  • A long-term reversal of the shift to a demand-side subsidy system.

The IPPR sees those, plus further work on the idea of a National Investment Bank and reform of the development industry, as the ideas with the most potential for generating new supply.

Some of it is familiar stuff (as I’ve blogged before waiting for institutional investment in private renting is much like waiting for godot) but the proposals on shifting back to bricks and mortar subsidy are much less so.

The shift to personal subsidy has been the orthodoxy under both Conservative and Labour governments ever since the big cuts to the local authority building programme began in the wake of the financial crisis in 1976. Some 35 years later, and in the middle of another financial crisis, could it be time at last to consider whether this was such a good idea?

Yes, says a quick look at the numbers on supply. We’ve rarely come close to achieving the IPPR’s estimate that of the 250,000 new homes a year we need in the 35 years since the council house building programme was cut.

No, says recent government policy. Affordable rent is a shift even further towards personal subsidy and even if higher rents mean extra borrowing capacity the programme also requires the conversion of existing tenancies to higher rents. Money saved from cuts in housing benefit could have been ploughed back into new supply at higher rents but is instead being used to pay down the deficit.

And yet the policy has left us with a massive and politically contentious housing benefit bill and has also reduced new supply. The IPPR investigates six options for resetting government spending:

  • Setting a single housing strategy and budget across government. Tax breaks, capital investment and benefit spending should all be drawn together to let informed decisions be made across government.
  • Regulating rents. A nationally agreed framework for the social sector and a system that goes further than the LHA caps in the private sector.
  • Reducing housing benefit expenditure. The idea is to release money to finance new supply but ideas such as not paying full benefit for the more expensive properties and setting a fixed envelope for housing benefit spending would still be contentious to say the least.
  • Dealing with private landlords. Could the government leverage a greater impact from what it spends in the private rented sector? Private sector leasing schemes could be expanded to guarantee income streams for landlords in return for lower rents and the savings ploughed back into new supply. Perhaps bricks and mortar subsidies could even go to private landlords, as in Germany where ‘social housing’ includes homes with subsidised rents provided by social landlords for a period before they revert back to full rent.
  • Giving social landlords more freedom to use their rental income. Could the government take a tougher line on what it gets in return for its housing benefit spending?
  • Localising spending on housing, starting in London. Local councils or consortiums of councils and landlords could be given responsibility for spending on housing benefit and investment and the power to make decisions about whether to subsidise rents or new supply.

Just that brief overview reveals the size of the obstacles in the way, especially during the transition. Even if the proceeds would be ploughed back into new supply, many people will feel that further cuts in housing benefit and fixed budgets are steps too far.

And yet as the IPPR argues: ‘We are currently stuck in a negative cycle, delivering poor value for money for the taxpayer: not enough housing supply, rising house prices and rents, poor work incentives, unemployment and an ever-rising HB bill. We need to aim for a positive cycle, delivering better value for money: higher house-building, stable rents, better work incentives, higher employment and a lower HB bill.’

Rival think-tanks on the right have been making the running with their arguments that all social housing is ‘subsidised’ and that the solution to the crisis is an even greater shift to personal subsidy. It’s good to see the left begin to articulate a response.

Thinking again

Tue, 25 Oct 2011

How do you get the genie back in the bottle? How do you reverse the shift from bricks and mortar to personal subsidies that’s happened over the last 35 years?

For me that’s the most interesting question posed by the IPPR in a new report out today on how to fund new housing supply.

The think-tank assesses all the options at a time when there seems little option of a straightforward increase in public investment but focuses in on three main areas:

  • Institutional investment - by domestic pension and insurance funds in general and local authority pension schemes in particular
  • A more active role for local authorities - freeing up their land for developers in return for an equity stake, pressuring others to develop private land in a ‘use it or lose it’ approach and piloting land auctions
  • A long-term reversal of the shift to a demand-side subsidy system.

The IPPR sees those, plus further work on the idea of a National Investment Bank and reform of the development industry, as the ideas with the most potential for generating new supply.

Some of it is familiar stuff (as I’ve blogged before waiting for institutional investment in private renting is much like waiting for godot) but the proposals on shifting back to bricks and mortar subsidy are much less so.

The shift to personal subsidy has been the orthodoxy under both Conservative and Labour governments ever since the big cuts to the local authority building programme began in the wake of the financial crisis in 1976. Some 35 years later, and in the middle of another financial crisis, could it be time at last to consider whether this was such a good idea?

Yes, says a quick look at the numbers on supply. We’ve rarely come close to achieving the IPPR’s estimate that of the 250,000 new homes a year we need in the 35 years since the council house building programme was cut.

No, says recent government policy. Affordable rent is a shift even further towards personal subsidy and even if higher rents mean extra borrowing capacity the programme also requires the conversion of existing tenancies to higher rents. Money saved from cuts in housing benefit could have been ploughed back into new supply at higher rents but is instead being used to pay down the deficit.

And yet the policy has left us with a massive and politically contentious housing benefit bill and has also reduced new supply. The IPPR investigates six options for resetting government spending:

  • Setting a single housing strategy and budget across government. Tax breaks, capital investment and benefit spending should all be drawn together to let informed decisions be made across government.
  • Regulating rents. A nationally agreed framework for the social sector and a system that goes further than the LHA caps in the private sector.
  • Reducing housing benefit expenditure. The idea is to release money to finance new supply but ideas such as not paying full benefit for the more expensive properties and setting a fixed envelope for housing benefit spending would still be contentious to say the least.
  • Dealing with private landlords. Could the government leverage a greater impact from what it spends in the private rented sector? Private sector leasing schemes could be expanded to guarantee income streams for landlords in return for lower rents and the savings ploughed back into new supply. Perhaps bricks and mortar subsidies could even go to private landlords, as in Germany where ‘social housing’ includes homes with subsidised rents provided by social landlords for a period before they revert back to full rent.
  • Giving social landlords more freedom to use their rental income. Could the government take a tougher line on what it gets in return for its housing benefit spending?
  • Localising spending on housing, starting in London. Local councils or consortiums of councils and landlords could be given responsibility for spending on housing benefit and investment and the power to make decisions about whether to subsidise rents or new supply.

Just that brief overview reveals the size of the obstacles in the way, especially during the transition. Even if the proceeds would be ploughed back into new supply, many people will feel that further cuts in housing benefit and fixed budgets are steps too far.

And yet as the IPPR argues: ‘We are currently stuck in a negative cycle, delivering poor value for money for the taxpayer: not enough housing supply, rising house prices and rents, poor work incentives, unemployment and an ever-rising HB bill. We need to aim for a positive cycle, delivering better value for money: higher house-building, stable rents, better work incentives, higher employment and a lower HB bill.’

Rival think-tanks on the right have been making the running with their arguments that all social housing is ‘subsidised’ and that the solution to the crisis is an even greater shift to personal subsidy. It’s good to see the left begin to articulate a response.

Viable questions

Tue, 18 Oct 2011

Much of the debate about the National Planning Policy Framework (NPPF) so far been about the choice between homes or no homes. Not enough of it has been about what kind of homes.

Yesterday saw both the end of the consultation on the document that will underpin planning policy and a confrontation between the pros and the antis at the Communities and Local Government select committee.

In the event, the committee hearing didn’t tell us much we didn’t already now and the debate still seems polarised between housebuilders and developers and the National Trust and Campaign to Protect Rural England. One key question now seems to be whether the government can find a compromise involving a return to the previous ‘brownfield first’ policy (as favoured by the environmentalists) without causing the ‘house building ice age’ feared by the Home Builders Federation.

For anyone who believes in the need for more affordable housing, the choice seems clear: homes are better than no homes. But what about affordable homes?

As the joint response from the National Housing Federation, Chartered Institute of Housing, Crisis, Shelter, the Northern Housing Consortium and Homeless Link to the NPPF makes clear, over half of all affordable homes are currently delivered on planning gain sites. Even if that figure dipped during the downturn (from 62 per cent in 2008/09 to 56 per cent in 2009/10) the planning system is still supporting new affordable housing to the tune of £2 billion a year.

That makes what the NPPF says about affordable housing absolutely crucial. As currently drafted, the document has 21 references to ‘affordable’ or ‘affordability’ but 11 of those are in the glossary.

And one of those references says this: ‘To ensure viability, the costs of any requirements likely to be applied to development, such as requirements for affordable housing, local standards, infrastructure contributions or other requirements should, when taking account of the normal cost of development and on-site mitigation, provide acceptable returns to a willing land owner and willing developer to enable the development to be deliverable.’

The viability issue is crucial. For developers, it’s all about removing barriers to development and making sensible decisions about risk and margins.

And it’s clear that the government has been listening, not just on the NPPF but in a range of other decisions on issues such as local building standards, the code for sustainable homes, the definition of ‘affordable’ and the renegotiation of section 106 deals on existing sites.

With that kind of dilution going on, what the NPPF says about affordable homes and viability is vital. For the housing and homelessness organisations it does not say nearly enough and they want a series of changes including:

  • a statement about the importance of mixed and balanced communities - and the need for affordable, specialist and supported housing - as part of the core principles
  • a statutory obligation on local authorities to carry out proper assessments of the full range of housing needs
  • the inclusion of affordable housing targets in local plans
  • stronger emphasis that affordable housing should be provided on site
  • more balance between viability and proper planning judgement.

The groups argue: ‘Although viability is a significant factor in planning determinations, there should be no general assumption that planning requirements, including affordable housing, should be waived if they cannot immediately be afforded. In some cases it will be better to redesign or re-phase a development rather than to permit an inadequate development, allowing other sites to come forward instead.”

The NPPF currently says that local authorities should ‘where they have identified affordable housing is required, set policies for meeting this need on site, unless off-site provision or a financial contribution of broadly equivalent value can be robustly justified’.

However, the six groups say the idea of ‘equivalent value’ is wrong. If a local planning policy requires 40 per cent affordable housing then on a 60-unit scheme provision should be 24 affordable homes on-site or 40 off-site (40 per cent of the combined total of 100 homes).

These are vital points which have been not been much heard in a debate dominated by the clash between developers and countryside campaigners.

But it’s worth noting that the calls for more clarity on affordable housing do not just come from the usual suspects. Even the National Trust is calling for ‘strengthening the policy of provision of affordable homes in the NPPF’ and criticising the withdrawal of the minimum site size threshold of 15 homes.

Viable questions

Tue, 18 Oct 2011

Much of the debate about the National Planning Policy Framework (NPPF) so far been about the choice between homes or no homes. Not enough of it has been about what kind of homes.

Yesterday saw both the end of the consultation on the document that will underpin planning policy and a confrontation between the pros and the antis at the Communities and Local Government select committee.

In the event, the committee hearing didn’t tell us much we didn’t already now and the debate still seems polarised between housebuilders and developers and the National Trust and Campaign to Protect Rural England. One key question now seems to be whether the government can find a compromise involving a return to the previous ‘brownfield first’ policy (as favoured by the environmentalists) without causing the ‘house building ice age’ feared by the Home Builders Federation.

For anyone who believes in the need for more affordable housing, the choice seems clear: homes are better than no homes. But what about affordable homes?

As the joint response from the National Housing Federation, Chartered Institute of Housing, Crisis, Shelter, the Northern Housing Consortium and Homeless Link to the NPPF makes clear, over half of all affordable homes are currently delivered on planning gain sites. Even if that figure dipped during the downturn (from 62 per cent in 2008/09 to 56 per cent in 2009/10) the planning system is still supporting new affordable housing to the tune of £2 billion a year.

That makes what the NPPF says about affordable housing absolutely crucial. As currently drafted, the document has 21 references to ‘affordable’ or ‘affordability’ but 11 of those are in the glossary.

And one of those references says this: ‘To ensure viability, the costs of any requirements likely to be applied to development, such as requirements for affordable housing, local standards, infrastructure contributions or other requirements should, when taking account of the normal cost of development and on-site mitigation, provide acceptable returns to a willing land owner and willing developer to enable the development to be deliverable.’

The viability issue is crucial. For developers, it’s all about removing barriers to development and making sensible decisions about risk and margins.

And it’s clear that the government has been listening, not just on the NPPF but in a range of other decisions on issues such as local building standards, the code for sustainable homes, the definition of ‘affordable’ and the renegotiation of section 106 deals on existing sites.

With that kind of dilution going on, what the NPPF says about affordable homes and viability is vital. For the housing and homelessness organisations it does not say nearly enough and they want a series of changes including:

  • a statement about the importance of mixed and balanced communities - and the need for affordable, specialist and supported housing - as part of the core principles
  • a statutory obligation on local authorities to carry out proper assessments of the full range of housing needs
  • the inclusion of affordable housing targets in local plans
  • stronger emphasis that affordable housing should be provided on site
  • more balance between viability and proper planning judgement.

The groups argue: ‘Although viability is a significant factor in planning determinations, there should be no general assumption that planning requirements, including affordable housing, should be waived if they cannot immediately be afforded. In some cases it will be better to redesign or re-phase a development rather than to permit an inadequate development, allowing other sites to come forward instead.”

The NPPF currently says that local authorities should ‘where they have identified affordable housing is required, set policies for meeting this need on site, unless off-site provision or a financial contribution of broadly equivalent value can be robustly justified’.

However, the six groups say the idea of ‘equivalent value’ is wrong. If a local planning policy requires 40 per cent affordable housing then on a 60-unit scheme provision should be 24 affordable homes on-site or 40 off-site (40 per cent of the combined total of 100 homes).

These are vital points which have been not been much heard in a debate dominated by the clash between developers and countryside campaigners.

But it’s worth noting that the calls for more clarity on affordable housing do not just come from the usual suspects. Even the National Trust is calling for ‘strengthening the policy of provision of affordable homes in the NPPF’ and criticising the withdrawal of the minimum site size threshold of 15 homes.

Underlying agenda

Mon, 17 Oct 2011

Three very different verdicts on coalition housing policy provide an interesting perspective on what’s happened so far under this government and maybe on where we’re heading.

The first came from the Guardian social affairs commentator Polly Toynbee over the weekend. In a piece inspired by re-watching Cathy Come Home, she contrasts the escalating private sector rents exposed by Shelter last week with the coalition’s housing benefit cuts.

The government points to the soaring cost of housing benefit without acknowledging the cost only rises because rents rise,’ she says. ‘To cut it without offering any other social option is shocking. Before long, they will re-learn the Cathy Come Home lesson. There is no cheap answer, only a decision about how far the poorest must pay the price for property booms and housing shortages: the growing squalor of overcrowding by rogue landlords will not go unseen for long. Now the children of the middle classes feel it too, watch housing become a hot political issue.’

The second comes in the first Housing Report from the National Housing Federation (NHF), Shelter and Chartered Institute of Housing. It’s an attempt to measure the coalition’s performance in 10 key areas according to a traffic light system: with red lights for housing supply, homelessness, help with housing costs and affordability in the private rented sector, green for empty homes and social housing mobility, amber for planning, evictions and arrears and home ownership and a don’t know on overcrowding (because the data is not available yet).

It’s a pretty fair summary from organisations with their own agenda who still want to work with the government, although as they acknowledge it’s hard to judge policies that may have a big time lag before they take effect.

The third comes from John Moss on the Conservativehome website and is more about the underlying agenda. Moss is a Conservative candidate in the Greater London Assembly elections next year but his views carry more weight than that alone might imply.

Far more significantly, he was one of the authors (with Hammersmith & Fulham council leader Stephen Greenhalgh) of one of the key think-tank reports published in the run-up to the last election.

Principles for Social Housing Reform was published by Localis in April 2009. My summary written at the time said that it called for the complete deregulation of social housing, with the end of security of tenure and national allocations policy. Most tenants would pay near-market rents with housing benefit paying up to 85 per cent of housing costs after tax and benefits. Subsidies for capital investment would be scrapped to pay the increased housing benefit bill and social landlords would be allowed to borrow against the increased asset value of their homes to build new ones. Sound familiar?

For Moss, the policy announcements at the Conservative conference are welcome steps in the right direction. The revived right to buy, the ‘pay to stay’ plan for high-earning council tenants, and the clampdown on unlawful sub-letters and tenants who own a second home are part of a bigger reform agenda that sees ‘subsidised’ social tenancies as the problem.

And he credits Grant Shapps with ‘doing it without the sort of furore which has accompanied health reform and changes to higher education funding’.

But the reforms do not go far enough. The right to buy should be extended to all social tenants, the government should write off the grant on housing association balance sheets to free up borrowing power, social landlords should be allowed to set rents at any level they like up to market levels and vary them according to tenants’ income and councils should seek out the 60,000 tenants who allegedly have second homes and put their rents up.

You may agree or disagree. From Moss’s perspective, all that would start the break-up of the culture of dependency, let landlords manage their stock more effectively and allow the construction of thousands of new homes.

It’s one thing to bemoan the impact of the cuts, another to attempt an impartial judgement of the details of the coalition’s record so far, but there is a radical market ideology behind the government’s reforms that is going unchallenged and that is winning the argument.

Underlying agenda

Mon, 17 Oct 2011

Three very different verdicts on coalition housing policy provide an interesting perspective on what’s happened so far under this government and maybe on where we’re heading.

The first came from the Guardian social affairs commentator Polly Toynbee over the weekend. In a piece inspired by re-watching Cathy Come Home, she contrasts the escalating private sector rents exposed by Shelter last week with the coalition’s housing benefit cuts.

The government points to the soaring cost of housing benefit without acknowledging the cost only rises because rents rise,’ she says. ‘To cut it without offering any other social option is shocking. Before long, they will re-learn the Cathy Come Home lesson. There is no cheap answer, only a decision about how far the poorest must pay the price for property booms and housing shortages: the growing squalor of overcrowding by rogue landlords will not go unseen for long. Now the children of the middle classes feel it too, watch housing become a hot political issue.’

The second comes in the first Housing Report from the National Housing Federation (NHF), Shelter and Chartered Institute of Housing. It’s an attempt to measure the coalition’s performance in 10 key areas according to a traffic light system: with red lights for housing supply, homelessness, help with housing costs and affordability in the private rented sector, green for empty homes and social housing mobility, amber for planning, evictions and arrears and home ownership and a don’t know on overcrowding (because the data is not available yet).

It’s a pretty fair summary from organisations with their own agenda who still want to work with the government, although as they acknowledge it’s hard to judge policies that may have a big time lag before they take effect.

The third comes from John Moss on the Conservativehome website and is more about the underlying agenda. Moss is a Conservative candidate in the Greater London Assembly elections next year but his views carry more weight than that alone might imply.

Far more significantly, he was one of the authors (with Hammersmith & Fulham council leader Stephen Greenhalgh) of one of the key think-tank reports published in the run-up to the last election.

Principles for Social Housing Reform was published by Localis in April 2009. My summary written at the time said that it called for the complete deregulation of social housing, with the end of security of tenure and national allocations policy. Most tenants would pay near-market rents with housing benefit paying up to 85 per cent of housing costs after tax and benefits. Subsidies for capital investment would be scrapped to pay the increased housing benefit bill and social landlords would be allowed to borrow against the increased asset value of their homes to build new ones. Sound familiar?

For Moss, the policy announcements at the Conservative conference are welcome steps in the right direction. The revived right to buy, the ‘pay to stay’ plan for high-earning council tenants, and the clampdown on unlawful sub-letters and tenants who own a second home are part of a bigger reform agenda that sees ‘subsidised’ social tenancies as the problem.

And he credits Grant Shapps with ‘doing it without the sort of furore which has accompanied health reform and changes to higher education funding’.

But the reforms do not go far enough. The right to buy should be extended to all social tenants, the government should write off the grant on housing association balance sheets to free up borrowing power, social landlords should be allowed to set rents at any level they like up to market levels and vary them according to tenants’ income and councils should seek out the 60,000 tenants who allegedly have second homes and put their rents up.

You may agree or disagree. From Moss’s perspective, all that would start the break-up of the culture of dependency, let landlords manage their stock more effectively and allow the construction of thousands of new homes.

It’s one thing to bemoan the impact of the cuts, another to attempt an impartial judgement of the details of the coalition’s record so far, but there is a radical market ideology behind the government’s reforms that is going unchallenged and that is winning the argument.

Here's hoping

Mon, 10 Oct 2011

What are the chances of last-minute concessions on the Welfare Reform Bill?

The omens do not look great as the committee stage of the Bill continues in the House of Lords, but the National Housing Federation (NHF) is looking to make the weather with a Welfare Action Week.

As chief executive David Orr argues in his blog, housing associations ‘get the point’ on deficit reduction and the turmoil in the Eurozone but fundamentally challenge the government’s argument that the cuts are somehow ‘fair’.

The campaign is targeting three changes in particular: the household benefit cap, the cut for under-occupying social tenants and the right for tenants to have their housing benefit paid direct to their landlord.  

‘They will be bad for families, bad for disabled people, bad for communities, bad for children,’ says Orr. ‘We’ve heard a lot from the government about the ways in which some welfare benefits are ‘not fair’. 

If ever there were changes that are really not fair, these are they.  We can’t afford to allow them.’Can it make any difference?

The Lords ought to be the best place to make the powerful case against the changes since peers cannot be as easily whipped into submission as MPs and tend to listen to rational arguments. 

The government’s strongest argument - that it is doing all of this reluctantly but has to act because of the financial situation - looks that bit weaker after a Conservative conference week that saw Eric Pickles find £250m down the back of the sofa for weekly bin collections.

David Cameron promised a ‘family test’ for all policies in the wake of the riots and it’s hard to see how these cuts could pass it. 

Even the Centre for Social Justice, the think-tank founded by Iain Duncan Smith that invented the centrepiece of the Bill, the universal credit, has criticised the level of the household benefit cap as likely to be ‘devastating’ to families.  

Yet the arguments about the cap and the under-occupation cut were just as powerful in the committee stage of the Bill in the Commons and it made no difference. 

There have been some concessions on direct payment and Lord Freud signalled a willingness to listen more in the second reading in the Lords last month, but there were few signs of movement elsewhere. 

And if opposition and campaigning really counts in the Lords, then opponents of the Health Bill ought to stand more chance. 

But enough Lib Dem and Crossbench peers have already spoken out on the Welfare Reform Bill to suggest that the campaign has at least a fighting chance. Here’s hoping. 

Here's hoping

Mon, 10 Oct 2011

What are the chances of last-minute concessions on the Welfare Reform Bill?

The omens do not look great as the committee stage of the Bill continues in the House of Lords, but the National Housing Federation (NHF) is looking to make the weather with a Welfare Action Week.

As chief executive David Orr argues in his blog, housing associations ‘get the point’ on deficit reduction and the turmoil in the Eurozone but fundamentally challenge the government’s argument that the cuts are somehow ‘fair’.

The campaign is targeting three changes in particular: the household benefit cap, the cut for under-occupying social tenants and the right for tenants to have their housing benefit paid direct to their landlord.  

‘They will be bad for families, bad for disabled people, bad for communities, bad for children,’ says Orr. ‘We’ve heard a lot from the government about the ways in which some welfare benefits are ‘not fair’. 

If ever there were changes that are really not fair, these are they.  We can’t afford to allow them.’Can it make any difference?

The Lords ought to be the best place to make the powerful case against the changes since peers cannot be as easily whipped into submission as MPs and tend to listen to rational arguments. 

The government’s strongest argument - that it is doing all of this reluctantly but has to act because of the financial situation - looks that bit weaker after a Conservative conference week that saw Eric Pickles find £250m down the back of the sofa for weekly bin collections.

David Cameron promised a ‘family test’ for all policies in the wake of the riots and it’s hard to see how these cuts could pass it. 

Even the Centre for Social Justice, the think-tank founded by Iain Duncan Smith that invented the centrepiece of the Bill, the universal credit, has criticised the level of the household benefit cap as likely to be ‘devastating’ to families.  

Yet the arguments about the cap and the under-occupation cut were just as powerful in the committee stage of the Bill in the Commons and it made no difference. 

There have been some concessions on direct payment and Lord Freud signalled a willingness to listen more in the second reading in the Lords last month, but there were few signs of movement elsewhere. 

And if opposition and campaigning really counts in the Lords, then opponents of the Health Bill ought to stand more chance. 

But enough Lib Dem and Crossbench peers have already spoken out on the Welfare Reform Bill to suggest that the campaign has at least a fighting chance. Here’s hoping. 

Beyond the grave

Thu, 6 Oct 2011

By a supreme irony Labour has finally built more affordable homes than the Conservatives - only to have the news welcomed by a Tory housing minister.

Figures released yesterday by the DCLG show that the supply of affordable new homes grew by 5 per cent to 60,630 in 2010/11 - the highest level for 15 years.

Grant Shapps duly welcomed them: ‘Reviving a housebuilding market that was brought to its knees takes time, so I am encouraged by today’s figures which show the highest number of additional affordable homes being delivered over the past year since the mid-1990s.

‘Our efforts to get Britain building again are continuing, with a £4.5 billion Affordable Homes programme set to exceed expectations and deliver up to 170,000 new homes over the next four years.’

Except of course that the increase had little to do with anything done by this government and everything to do with decisions taken by Labour in its final spending review and its subsequent initiatives to boost the economy in the wake of the credit crunch.

The graph below shows total output of affordable homes in England since 1991/92. This year - from beyond the grave - Labour finally produced more affordable homes than the level it inherited from John Major’s Conservatives (56,540 in 1996/97).

Graph

Though this was still short of the level achieved by the Tories in the four years before that after output was doubled in the wake of the housing market crash of the early 1990s.

In terms of socially rented homes, the 39,170 social rented homes achieved in 2010/11 represented an 18 per cent increase on the previous year - though still short of the 42,460 achieved under Major in 1996/97.

The initial cause of the slump in affordable homes under Labour was its decision to stick to draconian Conservative spending plans in its first two years in office (total output fell to 33,000 by 1999/2000). 

As the party now admits, it was blind to the scale of the problem throughout its early years in office. Output only started to rise from the mid-2000s and only threatened to match the levels of the mid-1990s under Gordon Brown. 

So what next? Grant Shapps was quick to boast of those 170,000 new homes over the next four years but total output still seems set to fall away even though the definition of affordable is being stretched to the limit. Within that, output of social rented homes will shrink rapidly as affordable (intermediate) rent takes over. 

Will it be another 15 years before last year’s total is matched - or never?

 

Beyond the grave

Thu, 6 Oct 2011

By a supreme irony Labour has finally built more affordable homes than the Conservatives - only to have the news welcomed by a Tory housing minister.

Figures released yesterday by the DCLG show that the supply of affordable new homes grew by 5 per cent to 60,630 in 2010/11 - the highest level for 15 years.

Grant Shapps duly welcomed them: ‘Reviving a housebuilding market that was brought to its knees takes time, so I am encouraged by today’s figures which show the highest number of additional affordable homes being delivered over the past year since the mid-1990s.

‘Our efforts to get Britain building again are continuing, with a £4.5 billion Affordable Homes programme set to exceed expectations and deliver up to 170,000 new homes over the next four years.’

Except of course that the increase had little to do with anything done by this government and everything to do with decisions taken by Labour in its final spending review and its subsequent initiatives to boost the economy in the wake of the credit crunch.

The graph below shows total output of affordable homes in England since 1991/92. This year - from beyond the grave - Labour finally produced more affordable homes than the level it inherited from John Major’s Conservatives (56,540 in 1996/97).

Graph

Though this was still short of the level achieved by the Tories in the four years before that after output was doubled in the wake of the housing market crash of the early 1990s.

In terms of socially rented homes, the 39,170 social rented homes achieved in 2010/11 represented an 18 per cent increase on the previous year - though still short of the 42,460 achieved under Major in 1996/97.

The initial cause of the slump in affordable homes under Labour was its decision to stick to draconian Conservative spending plans in its first two years in office (total output fell to 33,000 by 1999/2000). 

As the party now admits, it was blind to the scale of the problem throughout its early years in office. Output only started to rise from the mid-2000s and only threatened to match the levels of the mid-1990s under Gordon Brown. 

So what next? Grant Shapps was quick to boast of those 170,000 new homes over the next four years but total output still seems set to fall away even though the definition of affordable is being stretched to the limit. Within that, output of social rented homes will shrink rapidly as affordable (intermediate) rent takes over. 

Will it be another 15 years before last year’s total is matched - or never?

 

Received wisdom

Tue, 4 Oct 2011

The revival of the right to buy turns so many assumptions on their head it’s hard to know where to begin.

Just as I had grown used to the idea that well-off council tenants like Frank Dobson and Bob Crow (even though he isn’t actually a tenant) are subsidy hogs who are unfairly reaping the benefits of low social rents in front of more deserving cases, it seems I must learn to see them as aspirational throwbacks to the 1980s who will selflessly exercise the right to buy so that more homes can be built.

Grant Shapps has briefed this morning’s papers that they will have to ‘pay to stay’ for their subsidy by paying full market rents but not it seems for their right to buy discounts if they choose to buy.

Just as I was beginning to accept that all other council tenants are workshy and that council tenancies themselves are responsible for worklessness, it seems that they are actually hard-working families who can afford to exercise the right to buy. 

The DCLG’s briefing tells us that: “38 per cent of social tenants are well-off enough not to need housing benefit and over 800,000 tenants are in full-time work. Nearly 60 per cent of social housing tenants who are couples with children do not claim housing benefit. Therefore many social tenants will be able to meet the cost of the mortgage after allowing for the discount.” 

Just as I was thinking that even Conservatives considered the original right to buy to have been a mistake that shrank the social sector, there they go reviving it as a way providing more homes.

Just as I was accepting the Treasury’s decision in last year’s Budget  to retain 75 per cent of capital receipts under the new self-financing regime for council housing, it seems to have done a second u-turn in three weeks (following the reversal of the increase in the Public Sector Loans Board interest rate at the Lib Dem conference). As my fellow IH blogger Colin Wiles points out, we don’t know yet if the Treasury really has changed its mind but if it hasn’t the initiative makes no sense. 

Which means that just as local government had accepted the ground rules for self-financing and with only six months to go until implementation the rules may have changed completely.  

Just as I had accepted the government’s determination to control a housing benefit budget that is ‘out of control’, housing minister Grant Shapps is saying that housing benefit will ‘take the strain’ of increased rents from the deal.

The list goes on. We won’t know most of the detail behind the plan until the government publishes its housing strategy next month but the bare bones revealed so far beg all sorts of questions (Tom Lloyd has more here - there are other blogs on the issue well worth reading from Steve Hilditch and Kevin Gulliver).

We know that the government hopes that more generous right to buy discounts will generate an extra 100,000 sales and that the receipts from those will be enough to finance the construction of 100,000 new homes under the affordable rent programme.

We don’t really know yet if enough of the remaining council tenants can afford to buy given the proportion who are in full-time employment or will want to buy given that most of the best stock has already been sold. 

We also don’t know how willing the banks will be to give mortgages. There seems to be an assumption that the discount will enable right to buyers to avoid the need for a large deposit but that is not necessarily the case with shared owners and even before the credit crunch banks would, for example, refuse to lend on blocks more than six storeys high. 

It’s also difficult to see how councils could be the providers of the affordable rent homes. That would mean the receipts from the sale of assets financed by local taxpayers being controversially handed over to housing associations or possibly even housebuilders. 

The second government announcement (one that has received much less attention so far) is a plan to release enough public sector land to developers on a ‘build now, pay later’ basis to generate another 100,000 homes.

It seems there will be some kind of mechanism that will enable the public sector to benefit from any increase in house prices. What we don’t know is whether there will be any mechanism for ploughing the proceeds back into new homes. 

However, we don’t know how much demand there will be from housebuilders and developers. The reason they are not building more homes at the moment is not (in the short term) to do with the planning system. It’s because they know they can’t sell them at current prices. The demand from buyers is not there because the mortgages are not there. 

And even if developers were to take up the government’s offer, what’s to stop them simply building on cheap public sector land and sitting on the land they already own?

One possible solution to that conundrum might be that developers like Bellway, Bovis and Persimmon have already bid successfully for affordable rent funding. Put these two initiatives together and juggling cheap land and grant might enable them to bring forward schemes that would otherwise be unviable. Did Jake Berry let the cat out of the parliamentary bag he carries for Grant Shapps when he talked about this at a conference fringe meeting he chaired on Sunday?

My last question is a fundamental one: is this the best way to use precious public sector assets like land and right to buy receipts? The pragmatic case says, yes, some homes are better than no homes. The deeper concern is that the assets are being stripped to pay for an affordable rent programme that will either house people in need who can’t afford rents at up to 80 per cent of market levels and therefore can’t afford to work - or people who can afford the rents at the expense of people in need who will be stuck in an even more unaffordable private sector. 

Answers to come in next month’s housing strategy? We shall see. 

Received wisdom

Tue, 4 Oct 2011

The revival of the right to buy turns so many assumptions on their head it’s hard to know where to begin.

Just as I had grown used to the idea that well-off council tenants like Frank Dobson and Bob Crow (even though he isn’t actually a tenant) are subsidy hogs who are unfairly reaping the benefits of low social rents in front of more deserving cases, it seems I must learn to see them as aspirational throwbacks to the 1980s who will selflessly exercise the right to buy so that more homes can be built.

Grant Shapps has briefed this morning’s papers that they will have to ‘pay to stay’ for their subsidy by paying full market rents but not it seems for their right to buy discounts if they choose to buy.

Just as I was beginning to accept that all other council tenants are workshy and that council tenancies themselves are responsible for worklessness, it seems that they are actually hard-working families who can afford to exercise the right to buy. 

The DCLG’s briefing tells us that: “38 per cent of social tenants are well-off enough not to need housing benefit and over 800,000 tenants are in full-time work. Nearly 60 per cent of social housing tenants who are couples with children do not claim housing benefit. Therefore many social tenants will be able to meet the cost of the mortgage after allowing for the discount.” 

Just as I was thinking that even Conservatives considered the original right to buy to have been a mistake that shrank the social sector, there they go reviving it as a way providing more homes.

Just as I was accepting the Treasury’s decision in last year’s Budget  to retain 75 per cent of capital receipts under the new self-financing regime for council housing, it seems to have done a second u-turn in three weeks (following the reversal of the increase in the Public Sector Loans Board interest rate at the Lib Dem conference). As my fellow IH blogger Colin Wiles points out, we don’t know yet if the Treasury really has changed its mind but if it hasn’t the initiative makes no sense. 

Which means that just as local government had accepted the ground rules for self-financing and with only six months to go until implementation the rules may have changed completely.  

Just as I had accepted the government’s determination to control a housing benefit budget that is ‘out of control’, housing minister Grant Shapps is saying that housing benefit will ‘take the strain’ of increased rents from the deal.

The list goes on. We won’t know most of the detail behind the plan until the government publishes its housing strategy next month but the bare bones revealed so far beg all sorts of questions (Tom Lloyd has more here - there are other blogs on the issue well worth reading from Steve Hilditch and Kevin Gulliver).

We know that the government hopes that more generous right to buy discounts will generate an extra 100,000 sales and that the receipts from those will be enough to finance the construction of 100,000 new homes under the affordable rent programme.

We don’t really know yet if enough of the remaining council tenants can afford to buy given the proportion who are in full-time employment or will want to buy given that most of the best stock has already been sold. 

We also don’t know how willing the banks will be to give mortgages. There seems to be an assumption that the discount will enable right to buyers to avoid the need for a large deposit but that is not necessarily the case with shared owners and even before the credit crunch banks would, for example, refuse to lend on blocks more than six storeys high. 

It’s also difficult to see how councils could be the providers of the affordable rent homes. That would mean the receipts from the sale of assets financed by local taxpayers being controversially handed over to housing associations or possibly even housebuilders. 

The second government announcement (one that has received much less attention so far) is a plan to release enough public sector land to developers on a ‘build now, pay later’ basis to generate another 100,000 homes.

It seems there will be some kind of mechanism that will enable the public sector to benefit from any increase in house prices. What we don’t know is whether there will be any mechanism for ploughing the proceeds back into new homes. 

However, we don’t know how much demand there will be from housebuilders and developers. The reason they are not building more homes at the moment is not (in the short term) to do with the planning system. It’s because they know they can’t sell them at current prices. The demand from buyers is not there because the mortgages are not there. 

And even if developers were to take up the government’s offer, what’s to stop them simply building on cheap public sector land and sitting on the land they already own?

One possible solution to that conundrum might be that developers like Bellway, Bovis and Persimmon have already bid successfully for affordable rent funding. Put these two initiatives together and juggling cheap land and grant might enable them to bring forward schemes that would otherwise be unviable. Did Jake Berry let the cat out of the parliamentary bag he carries for Grant Shapps when he talked about this at a conference fringe meeting he chaired on Sunday?

My last question is a fundamental one: is this the best way to use precious public sector assets like land and right to buy receipts? The pragmatic case says, yes, some homes are better than no homes. The deeper concern is that the assets are being stripped to pay for an affordable rent programme that will either house people in need who can’t afford rents at up to 80 per cent of market levels and therefore can’t afford to work - or people who can afford the rents at the expense of people in need who will be stuck in an even more unaffordable private sector. 

Answers to come in next month’s housing strategy? We shall see. 

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