All posts from: April 2012
A small dip in the GDP and suddenly there is an opportunity to put housing back on the agenda.
It was only -0.2 per cent but yesterday’s figures confirm that the economy is in a double dip recession for the first time since the 1970s in a downturn that has already gone on longer than the one in the 1930s.
Even though the figure could easily be revised upwards at some stage, it was mainly due to a 3 per cent contraction in the construction sector. For anyone interested in the detail, Brickonomics points out that it could have been even worse, while the Construction Products Association is forecasting a 22 per cent fall in public housing this year. Yet the grim news seems to have changed the terms of the wider debate about the economy.
In this morning’s newspapers it’s hard to avoid a whole series of calls for change. Here’s Ben Chu in the Independent: ‘It is not just the pace of the deficit reduction that’s worrying some analysts, but the nature of the cuts. While Government current spending (which goes on public-sector wages and welfare) grew last year, Government capital spending (the money used to build new schools, social housing and transport schemes) was slashed by around 13 per cent.’
Jeremy Warner in the Telegraph: ‘When you look at where the axe is falling hardest, it is on government investment – spending on schools, hospitals, roads, bridges, affordable housing, and so on. This is the easiest thing to chop, so that’s where the Coalition has acted first. In fact, this form of state spending should be doubled, tripled or even quadrupled, with the money made up by further cuts in entitlements and bureaucracy.’
Many economists have been making the same points for weeks and months. DeAnne Julius and Vicky Pryce both argued for investment on infrastructure and housing on the Today programme this morning (play clip at 0731) while presenter Evan Davis made the point that he had barely spoken to an economist over the last six months who did not advocate more capital spending and yet that was what exactly had been cut.
Tim Leunig, again in the Telegraph, argues that housebuilding was key to the recovery from the 1930s recession: ‘Every house we build employs the equivalent of 3.5 people for a year. Raising Britain’s house building levels from around 100,000 to (say) 400,000 would create 1 million new jobs in construction.’
Jonathan Portes of the National Institute of Economic and Social Research points out that even the IMF – usually seen as a cheerleader for austerity and structural adjustment - wants us ‘to spend more on infrastructure (and housing) and increase welfare benefits for poor people (who will spend them), and pay with it by taxing the rich (those with a lower “marginal propensity to consume”).’
Even my quick rant about the need for a Plan B based on housebuilding on my other blog last night found me somehow sneaking into New Economist’s list of seven things to read about the double dip alongside luminaries such as Paul Krugman and Stephanie Flanders.
What I take from all that is that people are ready to listen to the case for housing in a way that they haven’t been at any time during the last two years in which the debate has been dominated by austerity and the need to bring down the deficit. Combine that with all the coverage this week about Newham and Stoke and the housing benefit cuts (featured on the Today programme again this morning) and the way that housing is really starting to make waves in the London mayoral race, and a real opportunity has opened up for housing ahead of the 2013 spending review.
That will not be easy. Many people believe that the current affordable housing programme will be the last. And convincing a government wedded to an austerity plan that included cutting housing investment by 60 per cent is just one of the obstacles that need to be overcome.
For months the business lobby headed by the CBI has been arguing for an essentially housing-free programme of investment in infrastructure. A programme published by the Social Market Foundation for a £50 billion programme of capital investment funded by ‘growth-friendly cuts’ only mentions housing once.
Meanwhile, the government remains wedded to the idea that it can boost housebuilding by relying on the big housebuilders and giving them what they want on planning, regulation, affordable housing and anything else. As I’ve argued many times before, this is a fallacy since the big firms are explicitly committed to a strategy of increasing their margins by tight control of costs and careful management of how many homes they build.
To counter those arguments, first the sector could make the case that housing can deliver growth and jobs quicker and more cost-effectively than other forms of investment (only repair and maintenance scores better whereas big road and rail schemes take years and do not employ many people). Second, it could argue that the government needs to look to other players like housing associations and local authorities and reform housebuilding (see this report by the IPPR). Third, it could make a more radical case about the income stream and savings in housing benefit that rented homes deliver and argue for reform of the borrowing rules or even a new form of quantitative easing for housing.
In an age in which the housing minister can boast that he does not read Inside Housing, I would not want to overstate my case, but there is a chink of light nevertheless.
Stoke? Hull? Newham? Croydon? Westminster? Housing benefit cuts are a story in search of a location.
What I mean by that is that the story that dominated this morning’s Today programme could have been about just about any borough in London and any city in the north and midlands. We all know that sooner or later there will be real faces to put to the victims of the housing benefit cuts and real places where the problems will emerge. Up to now, though, and with several of the more draconian cuts still to come, we’ve had largely anecdotal evidence.
So Newham’s letter to a housing association in Stoke was always likely to be big news. Add in the elements that Newham is the Olympic borough and that its mayor Sir Robin Wales has a history of rows with government and controversial statements on affordable housing and you have a story that is irresistible.
That much was clear from the bare bones of the story reported on the BBC website earlier. Newham was asking Brighter Futures Housing Association to take up to 500 families on housing benefit and on its waiting list that it can no longer afford to house and offering to lease homes at a premium to local rents. It was being ‘forced to look further afield for alternative supply’ because rents locally were overheating because of the ‘onset of the Olympic Games and the buoyant young professionals market’.
Gill Brown, chief executive of the housing association, begged to differ (how could she do otherwise as head of an organisation named Brighter Futures?). ‘I think there is a real issue of social cleansing going on,’ she said. ‘We are very anxious about this letter which we believe signals the start of a movement which could see thousands of needy people dumped in Stoke with no proper plan for their support or their welfare.’
More emerged in Today programme appearances by Wales and housing minister Grant Shapps later. According to Wales, Newham sent letters to 1,179 organisations. Recipients include landlords across the North West, North East and Midlands and the largest one in the constituency of chancellor George Osborne (which binned it, or else we might have had the irony of the victims of his cuts turning up in his well-heeled corner of Cheshire).
According to Shapps, rents are ‘actually, at the moment, falling’. Cue a double take from just about everyone and disbelief for anyone in touch with the London market. Most of his responses consisted of the same tired lines: housing benefit being unfair to ‘hardworking’ families (ignoring the fact that 93 per cent of new claimants since the election are working), a ‘huge’ discretionary fund and that the leaked letter from his boss Eric Pickles warning of the effect of the cuts is old and out of date. He also accused Wales of ‘playing politics’ in election season and claimed a search on Rightmove revealed 1,000 homes available at below the housing benefit cap. Initial calls by The Guardian suggest many of these will not take tenants on housing benefit.
What was new to me was his reference to changes on the discharge of the homelessness duty into the private rented sector and guidance on his plans to ‘that they must take into account the welfare of the tenants in doing so, which includes for example not packing up and sending them off to Stoke’. Have I missed it, or has this guidance not been published yet.
As Labour’s Karen Buck said in an earlier interview, the shocking thing is that Newham was meant to be part of the solution to London’s housing problems (as one of the places with cheaper rents) but now it seemed to be another one of the problems. And Robin Wales argued that it was pressure from boroughs like Westminster exporting their own homeless families that was forcing Newham to do the same.
One blog offers barely enough scope to scratch the surface of a story like this and its implications. However, I would point to at least three other factors that are at play here:
- Sir Robin Wales has previous on these issues with controversial views on giving housing priority to people who are working. See, for example, this interview with Nick Duxbury from last year in which he argues ‘don’t come and show us that you’re poor you’re not working and the most needy’.
- Newham is at least attempting to inform people in other areas about what it is doing – as opposed to moving people out by stealth like other London boroughs. It is also attempting to do something about the housing crisis with radical plans on licensing and private sector leasing.
- Over the last few years Newham has also been one of the London authorities with the most homeless families in temporary accommodation waiting for a permanent home. The Localism Act gives it the power to discharge the homelessness duty into the private rented sector. How much of this is about housing benefit cuts and how much about the discharge of the duty and cuts in funding for temporary accommodation specifically? The letter says specifically that: ‘The Localism Act will give local authorities the power to discharge duty into the private sector and as such the council is looking to find affordable accommodation in areas of low demand, for suitable families.’
- Stoke has plenty of problems of its own. A report by Brendan Nevin and Philip Leather for the Northern Area Social Housing Forum in February highlighted a whole series of problems including ‘stark choices for housing benefit claimants’ and a collapse in market activity in disadvantaged areas. This highlights an issue that many have warned about all along: that cuts in housing benefit only encourage people to move (or to be moved) to cheaper areas with fewer jobs. This editorial in The Sentinel makes the point very well:
‘Stoke-on-Trent has a proud history of welcoming outsiders and finding a place for everyone in the city. But as our city seeks to re-build communities ruptured by the decline of traditional industries and create stable neighbourhoods, an unplanned influx of Olympic exiles will do us little good. The 2012 games are bringing huge riches into London. The least those boroughs could do is look after their poor and needy. We look forward to welcoming the flame from Stratford – but not east London’s exiles.’
This story is not going to go away. Newham and Stoke are just the start. For more on this story see my other blog here.
The London mayoral race is throwing up some interesting new ideas on how to tackle the housing crisis in the capital – but will they make any difference?
Thanks to the voting system (the supplementary vote, which gives people two votes in order of preference), the race is not just about Boris Johnson and Ken Livingstone, even if one of them will eventually become the mayor (see part one of my blog here). And, thanks to the mayor’s new powers over investment and land, housing policy features heavily in the manifestos of many of the other candidates too.
For the Lib Dems Brian Paddick is promising not just 360,000 homes of all types over the next decade but also to work to ensure that half of new homes affordable. A bit like Livingstone, he also wants to establish a new ‘living rent’ standard, with ‘the goal that Londoners should pay no more than one-third of their take-home pay on rent costs’. He would set a benchmark guideline that half of homes should be affordable, with the detail left to boroughs. He would create a London Housing Company as a vehicle to assemble public land and match it with private investment and give smaller housing associations the chance to raise loan capital through a London Housing Bond supported by City Hall.
In the private rented sector, he would promote ‘the effective registration of private landlords’ by using existing powers for the selective licensing of all private rented housing in specific areas, as pioneered by Newham. Finally, in an interesting indication of Lib Dem thinking on a national coalition policy, ‘until national laws are changed’ he would encourage landlords to offer longer minimum tenancies, especially those landlords being used to discharge councils’ homeless rehousing duties’.
For the Greens, Jenny Jones signals the importance of housing in the subtitle of her manifesto (‘Our vision for a more equal, healthy and affordable London’). She pledges to build at least 15,000 ‘genuinely affordable’ homes per year, of which 40 per cent would be family-sized. She would calculate an annual London Affordable Rent for the average household while using public land to keep rents at or below that cap. A London Mutual Housing Company would help councils, housing associations and co-operatives to assemble sites for development and there would be a ‘much more concerted’ programme of public compulsory purchase. She would set up a clearing house to offer publicly-owned derelict land to community land trusts. And there are specific green pledges on energy efficiency, fuel poverty and empty homes.
Action in the private rented sector would include lobbying for ‘smart reforms’ to bring down rents and the introduction of a default five-year tenancy. She would create a new ethical lettings agency and work with boroughs on ‘blanket licensing for landlords’. In the longer term she promised to campaign for more radical reforms including land value taxation and a ban on foreign investors.
The independent Siobhan Benita makes housing a to priority with a pledge to create Homes for London as a new department at City Hall (a key part of Shelter’s campaign of the same name). Even more intriguingly she proposes the creation of a new ‘fixed-price housing market’ where Londoners would be able to buy or rent at half of commercial rents. The GLA would gift land for development but on a leasehold basis so that it retains ultimate ownership. Any homes built on it would have to be sold into a regulated, secondary market under the control of Homes for London.
Buyers would have to be London residents with the winners drawn by ballot. Anyone wishing to sell would have to offer it back into the fixed-price market at the original price plus an annual uplift agreed by Homes for London. Anyone wishing to rent would have to charge a regulated rent expressed as a fixed proportion of the fixed price value. Social landlords would also be able to buy the properties on the same basis but the right to buy would be a right in the regulated rather than commercial market. Her target would be 80,000 fixed-price homes by the end her mayoralty.
Put it all together and there is no shortage of ideas about what the new mayor should do on housing. There is also a growing consensus about the need to push to the limit of the mayor’s powers and beyond and to do something radical about affordability and housing supply. If you happen to be a London voter (I’m not) today is the last day to register to vote.
The big question is whether all of that new thinking will make much difference to the result. For one thing, all the attention from the candidates does not seem to be generating much interest in the mainstream media. According to the FT’s Westminster blog, Ken Livingstone complained at a lunch yesterday that only one journalist attended the launch of his housing manifesto.
For another, the one mainstream candidate who seems to be offering nothing more than the current status quo on housing (excluding UKIP and the BNP who don’t have much to offer either) is the one currently leading in the polls: Boris Johnson.
How much of a role will housing play in the election for the politician with the second most say over housing in England?
It’s easy to dismiss the London mayoral election as the Boris v Ken show, a contest between two big personalities and the current and former mayors. That’s understandable in view of media coverage dominated by who paid how much tax, what Boris called Ken in that lift and the people in that election broadcast that made Ken cry. However, that risks obscuring some fascinating ways in which housing is emerging as an issue in the election and some interesting new ideas from the candidates.
For starters, housing organisations are engaging with this election in a way that it’s hard to remember for years. That’s hardly surprising when the new mayor will have significant new powers over London’s housebuilding budget and a significant landbank in addition to their existing powers over planning.
Shelter led the way with homesforlondon.org.uk, a dedicated website aimed at making housing as much of a priority for London as transport already is under Transport for London. The National Housing Federation (NHF) has published a poll today revealing that four out of five London parents are worried that their children will be priced out of living in the capital and its own manifesto. And a coalition of organisations called Family Friendly London has released another poll showing that more affordable housing is the top priority for families with children and that 140,000 of them are still undecided.
Despite all that, housing barely featured as an issue in an Evening Standard mayoral election debate held before Easter until it was raised by hecklers right at the end. It’s hard to find on Boris Johnson’s website until you look more closely at his manifesto on Growing the London Economy.
On housing at least, Johnson seems to be presenting himself almost as the opposition candidate despite being the incumbent. His key claim is that he has delivered and secured new powers where Ken Livingstone was ‘not trusted by his own party to run housing’. That’s a theme hammered home in a Guardian piece by Conservative London Assembly member Andrew Boff today.
Johnson says he persuaded the coalition government to give him control of the HCA’s £3 billion investment programme for London plus control of 530 ha of land and also intervened to ensure that the NewBuy guarantee scheme covers flats as well as houses. He claims he has already delivered 52,000 new affordable homes and is on course to deliver 100,000 by 2015. In contrast, he says Livingstone promised a 50 per cent target for social housing in new planning applications but only delivered 32 per cent.
In social housing, Johnson pledges new higher space and design standards including a ‘significant proportion of family-sized housing’, another round of his First Steps home ownership programme and to explore ‘rent to save’ schemes that enable people to build up a deposit. On the private rented sector, Johnson promises a London Rental Standard and a single acceditation body for the capital. He also says he will ‘campaign against’ the rent control that Livingstone says he will campaign for on the grounds that it has reduced supply in the past – when neither has the power to do anything beyond campaigning at this stage.
In contrast, Ken Livingstone makes the London housing crisis a central feature of his campaign. His two key manifesto pledges are to drive down costs and drive up standards across all tenures and to build more new homes by making maximum use of land controlled by the Mayor and ‘enforcing tough planning regulations so that private developments reflect the needs of all Londoners, not just the very wealthy’. Supporters argue that Johnson’s record on new homes so far is mostly the result of Livingstone’s efforts because of time lags In construction. The key stat for Steve Hilditch of Red Brick is 56: the number of affordable housing starts in the first six months of 2011/12, the first year where development was the result of the policies of Johnson and Grant Shapps rather than Livingstone and Gordon Brown.
On housing supply, Livingstone says he achieved 32,000 new homes in his final year in office but that construction has ‘fallen through the floor’ under Johnson while relaxations in planning rules mean that only half of new homes are affordable to people on average incomes. He will also:
- release GLA land on a shared equity basis to housing associations and other developers ‘so London taxpayers get their money back’.
- work with London boroughs looking to build new council houses, with developers to remove barriers to new schemes and with pension funds to encourage them to invest.
- re-establish affordable home targets for all boroughs and will expect 50 per cent of new homes to be affordable ‘and will move as rapidly as possible towards ensuring that at least one third of new homes are for social rent’ with targets for family homes too.
- use the Mayor’s planning powers to block private development schemes that involve the loss of social rented or affordable housing.
In the private rented sector, he is promising a London Lettings Agency to free landlords and tenants from unregulated private letting agents. Only landlords will that sign up to a new Tenants’ Charter setting out minimum standards of what tenants can expect will be eligible to be listed via the new agency. Livingstone will also push for a London-wide landlord registration scheme, campaign for a London Living Rent and lobby for better regulation of the sector.
So Livingstone too is running as the opposition candidate (which he is), opposed not just to Johnson and his record but to the national coalition government too (with pledges like a campaign against the housing benefit cuts).
The two different stances could well indicate the shape of the next general election campaign too, with Labour bidding to run against the coalition’s record, the Conservatives playing up the problems they inherited from Labour for all they are worth and an argument in between about who really delivered. That is one that has already been rehearsed several times in the debate over the affordable rent programme.
Judging by the opinion polls so far, Johnson’s strategy of turning the election into a choice between ‘Boris’ and ‘Ken’ rather than between two different sets of policies seems to be working (look for that to be repeated in Dave v Ed). He may be far more vulnerable if Livingstone succeeds in using issues like housing against him.
However, unlike the general election, the race for London mayor will use the supplementary vote, which allows voters to vote for someone other than the main two candidates but still give a second preference to Livingstone or Johnson. As I’ll be explaining in part two of this blog, those other candidates have some interesting things to say about housing too.
Twice before governments have attempted to force through improvements to the energy efficiency of existing homes and then backed down. Now the backlash is building again.
In both 2002 and 2006 the plan was to amend Part L of the Building Regulations so that home owners building an extension or replacing the windows or the boiler would also have to address the efficiency of the rest of the house. Both times vested interests and political cowardice killed the idea off.
Six years on and a consultation has just finished on a similar idea – but with three crucial differences. First, it’s being proposed by the coalition, not Labour. Second, the backlash is exposing Conservative and Lib Dem divisions. Third, and perhaps most importantly, a link to the Green Deal provides a way to spread the cost of the work for owners who cannot afford to pay for it up-front.
The relevant part of the consultation launched by the Lib Dem communities minister Andrew Stunell at the end of January (regulations on consequential improvements for domestic extensions) finished on March 27. The government’s preferred timetable is for the change on ‘consequential improvements’ to come into force in October so that it can be linked to the introduction of the Green Deal and give householders a way to invest in energy efficiency and pay for it from the resulting savings as a charge on their energy bill.
The case in favour of the policy is clear. A quarter of the UK’s carbon emissions coming from existing homes, so action is essential if we are to stand any chance of meeting our international obligations to cut them. If the government is correct that ‘the measures will pay for themselves in fuel savings’ through the Green Deal then who has a problem with that?
The papers are against it on a ‘home is your castle’ platform. For Christopher Booker, the EU-hating Mail columnist, the idea amounts to a ‘green tax’ that will mean a ‘red tape nightmare for home owners’. However, he also broadens the attack to include the Green Deal in general and plans to require landlords to improve the energy efficiency of any home they want to rent in particular.
On the Today programme Tim Yeo said he sympathised with the aim but that the way forward was to make people enthusiastic about energy saving. Compulsion might not be the best way to do this.
But other Conservative backbenchers seem to have made a more nakedly political calculation. The Green Deal was all the idea of Lib Dem Chris Huhne, the Part L consultation is piloted by Lib Dem Andrew Stunell. Tory MPs like the one quoted by Sky News think this is not just a ‘daft idea’ but a Lib Dem one to boot.
Even more worrying for defenders of the idea is the criticism of compulsion coming from organisations such as Consumer Focus and Which quoted in the Mail story and signs that the government is struggling to convince people that energy efficiency really will pay for itself from savings in fuel bills.
In speech in February (thanks to @melstarrs on twitter for the link), Andrew Stunell was adamant that the consequential improvements policy will go ahead and that the government will resist the u-turns of the past. ‘It’s the grand old Duke of York of building regulations policy,’ he said. ‘But this time we’re going to do it.
Let’s hope he’s not compelled to get to the top of the hill and march back down again. Let’s hope that Conservative MPs remember that it was not a Lib Dem or a junior minister who promised this would be ‘the greenest government ever’.
First it was a revolution, then a reboot. Now it is a relaunch and a revamp.
The language has shifted considerably since David Cameron made the right to buy a key part of the ‘housing revolution’ he pledged in his Conservative conference speech in October.
Last month the policy was styled as a ‘reboot’. This month it’s so 21st century it’s even got it’s own Facebook page. The good news for the government is that it has 225 likes and news of happy council house buyers Mr and Mrs Watkins from Whitburn, South Tyneside. The bad news is that mixed in with some enthusiastic comments are a series of negative comments questioning the ‘back of a fag packet calculations’ and who is going to lend the money. Oh, and the fact that the Watkinses are actually £1 million lottery winners.
The reception was just as mixed in the national media. Yesterday brought dutiful advance headlines but the news editors’ hearts did not seem in it, possibly because they knew that the announcement had been made three times already (at the Tory conference, in the consultation before Christmas and last month). Those that do cover it today are on the look out for a fresh angle. ‘Mortgage fears cloud right-to-buy relaunch,’ reports the FT, quoting Hometrack calculations that only a small proportion of tenants will be able to get a loan.
On TV, the repeat announcement seemed to be ignored by both the BBC News at Ten and Newsnight last night. Channel 4 News did cover the pictures of Cameron and Shapps having tea with tenants in Wandsworth but rather cruelly juxtaposed with archive footage of Mrs Thatcher having tea with the original right-to-buy family. Not so much 21st century revolution as 1980s rehash.
Even Ravi Govindia, the Conservative leader of Wandsworth Council who has seemed so on-message with other government policies such as evicting the families of rioters, seemed equivocal when questioned by Michael Crick about one-for-one replacement on more expensive rents.
‘The tenants will have to pay more but that is in fact going to be the case for all new social lettings including ones that are existing lettings,’ he attempted to explain, ‘so that when they are recycled into new lettings they will be under the new regime that the government has come up with.’
It was hardly a ringing endorsement and Crick interjected: ‘Sounds like bad news for your tenants.
’Govindia responded: ‘Not necessarily because I think the key issue in London is to find proper and decent housing. For those who can’t afford the rent, housing benefit will be able to support them through that.’
Whether Iain Duncan Smith will agree remains to be seen. Right to Buy 2 is effectively Affordable Rent 2 and despite tortuous attempts in the impact assessment to prove that it offers value for money the calculations on housing benefit were less than convincing.
The government is clearly hoping that a bit of the Thatcher stardust will rub off now. ‘I want many more people to achieve the dream of home ownership,’ said Cameron, donning his gold lamé suit. ‘In the 80s, Right to Buy helped millions of people living in council housing achieve their aspiration of owning their own home. It gave something back to families who worked hard, paid their rent and played by the rules.’
Never knowingly out-clichéd, Shapps added: ‘This country was built on aspiration: men and women who looked to the future and resolved to make a better life for themselves and their families. But years of punitive limitations on the level of discounts under Right to Buy have sabotaged the aspirations of hardworking council tenants who want to take their first step on the property ladder. This government wants to help everyone achieve their aspirations - so I’m delighted to announce that from today these miserly restrictions on discounts are history.’
If it really were a revolution the right to buy would have been extended to the one million housing association tenants who are currently excluded from the scheme (as advocated by David Davis and Frank Field in January and as once promised by the Conservatives). As Shapps and Cameron know that would have caused all kinds of problems, so they have settled for a milder version that still raises doubts about how many tenants will be able to buy without co-purchasers, whether one-for-one replacement is really possible and how much damage it will cause to self-financing.
Whether you call it a revamp, a relaunch, a reinvigoration or even a resurrection, those doubts are not going to go away.