Monday, 27 March 2017

Inside edge

All posts from: May 2012

Easing does it?

Wed, 30 May 2012

There’s been a real change in the way the government is talking about housing investment over the last week. Is it just talk or more than that?

Several days out of news and twitter contact have left me catching up with what seems a noticeable change in tone from the Lib Dem side of the government.

Deputy prime minister Nick Clegg kicked things off a week ago in an FT interview in which he put housing and schemes to reduce youth unemployment alongside infrastructure as potential beneficiaries of a ‘massive amplification’ of credit easing schemes.

Another report in the FT yesterday revealed that chief secretary to the Treasury Danny Alexander is looking at ways to make it cheaper for housing associations to borrow more money in the capital markets. The credit easing scheme would apparently involve allowing the Bank of England buy social housing bonds as part of its quantitative easing programme. Gavriel Hollander has some more details for Inside Housing here.

The scheme appears to be as much about forestalling a problem with bank lending (a separate report quotes a senior executive at one of the big lenders as saying that the industry as a whole is losing £500m to £1bn each year on its social housing portfolios) as about new investment but it does open up some intriguing possibilities.

First, the Treasury is expected to launch some proposals on social housing REITs soon. As Nick Duxbury revealed in IH earlier this month, a consortium of 10 housing associations is looking to list a company made up of 10,000 homes on the Alternative Investment Market in September. Whatever you think of mixing social housing and the stock market, this looks like a significant move.

Second, while the credit easing plan may not represent the sort of full-blown quantitative easing for housing that I’ve advocated in the past, it is a nod in the right direction. Until now the assumption has been that Mervyn King, the head of the Bank of England, will not countenance the use of QE outside the financial sector. However, if the Treasury instructs him to buy social housing bonds in a limited programme, the precedent is there to buy bonds for something altogether bigger.

So far, so good but is this just talk? I seem to remember hints about housing investment from Danny Alexander ahead of last year’s party conferences that came to nothing. Is it just the Lib Dems? On Saturday’s Today programme (listen about I:40 in) Conservative backbencher Damian Collins welcomed the idea of more government borrowing to build infrastructure but went out of his way to be dismissive about calls for housing investment.

And isn’t there already an example of government credit easing for housing? Under NewBuy, the government and housebuilders each offer guarantees against mortgages on new-build homes in a bid to make the market less risky for the banks and encourage them to lend. Arguments continue about whether the scheme is working but the banks are still pricing the risk with interest rates of up to 6 per cent. Not much evidence of easing there.

Today sees yet another report warning about the dire state of the housebuilding market. Let’s hope that this really is more than just talk and that the government is finally listening to the overwhelming case for investment in constructon in general and housing in particular. 

Easing does it?

Wed, 30 May 2012

There’s been a real change in the way the government is talking about housing investment over the last week. Is it just talk or more than that?

Several days out of news and twitter contact have left me catching up with what seems a noticeable change in tone from the Lib Dem side of the government.

Deputy prime minister Nick Clegg kicked things off a week ago in an FT interview in which he put housing and schemes to reduce youth unemployment alongside infrastructure as potential beneficiaries of a ‘massive amplification’ of credit easing schemes.

Another report in the FT yesterday revealed that chief secretary to the Treasury Danny Alexander is looking at ways to make it cheaper for housing associations to borrow more money in the capital markets. The credit easing scheme would apparently involve allowing the Bank of England buy social housing bonds as part of its quantitative easing programme. Gavriel Hollander has some more details for Inside Housing here.

The scheme appears to be as much about forestalling a problem with bank lending (a separate report quotes a senior executive at one of the big lenders as saying that the industry as a whole is losing £500m to £1bn each year on its social housing portfolios) as about new investment but it does open up some intriguing possibilities.

First, the Treasury is expected to launch some proposals on social housing REITs soon. As Nick Duxbury revealed in IH earlier this month, a consortium of 10 housing associations is looking to list a company made up of 10,000 homes on the Alternative Investment Market in September. Whatever you think of mixing social housing and the stock market, this looks like a significant move.

Second, while the credit easing plan may not represent the sort of full-blown quantitative easing for housing that I’ve advocated in the past, it is a nod in the right direction. Until now the assumption has been that Mervyn King, the head of the Bank of England, will not countenance the use of QE outside the financial sector. However, if the Treasury instructs him to buy social housing bonds in a limited programme, the precedent is there to buy bonds for something altogether bigger.

So far, so good but is this just talk? I seem to remember hints about housing investment from Danny Alexander ahead of last year’s party conferences that came to nothing. Is it just the Lib Dems? On Saturday’s Today programme (listen about I:40 in) Conservative backbencher Damian Collins welcomed the idea of more government borrowing to build infrastructure but went out of his way to be dismissive about calls for housing investment.

And isn’t there already an example of government credit easing for housing? Under NewBuy, the government and housebuilders each offer guarantees against mortgages on new-build homes in a bid to make the market less risky for the banks and encourage them to lend. Arguments continue about whether the scheme is working but the banks are still pricing the risk with interest rates of up to 6 per cent. Not much evidence of easing there.

Today sees yet another report warning about the dire state of the housebuilding market. Let’s hope that this really is more than just talk and that the government is finally listening to the overwhelming case for investment in constructon in general and housing in particular. 

Hidden reality

Tue, 29 May 2012

If you missed Britain’s Hidden Homeless last night it’s well worth making time to catch on iPlayer.

The BBC documentary was presented by Speech Debelle, the Mercury-prize winning rapper with personal experience of what she was talking about. She spent three years sofa surfing and in hostels after falling out with her mum at 19 and wrote the opening song of what went on to be her prize-winning first album while in a hostel.

So this was far more than the standard celeb-fronted BBC3 documentary. You believed her when she said that hidden homelessness is three times bigger than the official figures suggest and that things are worse now than they were for her ten years ago.

http://www.bbc.co.uk/iplayer/episode/b01jhxpg/Britains_Hidden_Homeless/

Scheduling it against 56Up, the latest incarnation of the original reality TV programme, did not do it any favours but Britain’s Hidden Homeless more than justified itself in that kind of company as it presented four interwoven personal stories on the huge continuum from first staying on a friend’s sofa to sleeping in the park.

Sam, 25, was an unemployed graduate whose mother had to downsize who was running out of sofas. Stephen, 26, had been in and out of homelessness since his mum fell out with his stepdad and had spent seven months sleeping rough. Jordan, 20, had been sofa-surfing and sleeping rough (or as he put it, walking around) for four years after falling out with his family. Nikita, 18, left home at 16 after her recovering alcoholic mother moved in with a new boyfriend and was sleeping on her sister’s sofa.

So there were four personal stories that are probably repeated tens of thousands of times around the country. By definition nobody knows how many hidden homeless there really are but instinct suggests that with every other form of housing problem, from sharing and overcrowding to official homelessness and families in bed and breakfast, on the increase it must be too.

The programme avoided sensationalism and showed the grinding monotony of what it’s like to go from place to place and never having one to call home. It showed the good side of housing too, with the organisations and people prepared to help, and a genuinely moving final scene where Stephen finds a six-month tenancy and the luxury of his own backdoor. And it hinted at the way that cuts in housing benefit and support to those organisations are making things worse.

Above all though it left me wondering what will happen if the welfare-cutting ultras get their way on even more cuts in benefits for the under-25s.

Hidden reality

Tue, 29 May 2012

If you missed Britain’s Hidden Homeless last night it’s well worth making time to catch on iPlayer.

The BBC documentary was presented by Speech Debelle, the Mercury-prize winning rapper with personal experience of what she was talking about. She spent three years sofa surfing and in hostels after falling out with her mum at 19 and wrote the opening song of what went on to be her prize-winning first album while in a hostel.

So this was far more than the standard celeb-fronted BBC3 documentary. You believed her when she said that hidden homelessness is three times bigger than the official figures suggest and that things are worse now than they were for her ten years ago.

http://www.bbc.co.uk/iplayer/episode/b01jhxpg/Britains_Hidden_Homeless/

Scheduling it against 56Up, the latest incarnation of the original reality TV programme, did not do it any favours but Britain’s Hidden Homeless more than justified itself in that kind of company as it presented four interwoven personal stories on the huge continuum from first staying on a friend’s sofa to sleeping in the park.

Sam, 25, was an unemployed graduate whose mother had to downsize who was running out of sofas. Stephen, 26, had been in and out of homelessness since his mum fell out with his stepdad and had spent seven months sleeping rough. Jordan, 20, had been sofa-surfing and sleeping rough (or as he put it, walking around) for four years after falling out with his family. Nikita, 18, left home at 16 after her recovering alcoholic mother moved in with a new boyfriend and was sleeping on her sister’s sofa.

So there were four personal stories that are probably repeated tens of thousands of times around the country. By definition nobody knows how many hidden homeless there really are but instinct suggests that with every other form of housing problem, from sharing and overcrowding to official homelessness and families in bed and breakfast, on the increase it must be too.

The programme avoided sensationalism and showed the grinding monotony of what it’s like to go from place to place and never having one to call home. It showed the good side of housing too, with the organisations and people prepared to help, and a genuinely moving final scene where Stephen finds a six-month tenancy and the luxury of his own backdoor. And it hinted at the way that cuts in housing benefit and support to those organisations are making things worse.

Above all though it left me wondering what will happen if the welfare-cutting ultras get their way on even more cuts in benefits for the under-25s.

Fair rent?

Mon, 21 May 2012

The proposed reduction of the ‘pay to stay’ cap to £60,000 raises introduces yet more contradictions into a policy that was already riddled with them.

Reports on Saturday (most comprehensively by Patrick Wintour in The Guardian) said a consultation paper will be published next month on the idea of charging social housing tenants a market rent once their income rises above a certain level. When the policy was first floated last year, the proposed household income was £100,000 but now Grant Shapps, with the backing of David Cameron, is apparently suggesting £60,000.

There are all kinds of problems and contradictions inherent in the idea (of which more later) but the immediate thing to notice is that this is the government mounting another deployment of what it sees as its most popular policy to date: the household benefit cap. Just as capping benefits to the level of someone on an average income (£26,000 a year) will make the welfare system fairer, so capping household income will make social housing fairer.

Why £60,000? The reports say the consultation paper will propose a range of figures with that being the lowest. According to the FT, No 10 likes this figure because it is the maximum income limit for other support schemes like shared ownership. The papers were briefed a £60,000 threshold would affect 34,000 households and mean their rent could rise by £70 a week or more. A cap set at the previously reported £100,000 is claimed to affect only 6,000 households. Presumably then this would not affect enough people or save enough (the ‘subsidy’ is put at £21.6 million at £100,000 but £122.4 million at £60,000).

So what are the problems with the idea?

First, it’s not at all clear where these figures come from. How many social landlords out there really know how much their tenants earn? Or how their circumstances have changed over time? Or how many people live in a particular property and are working at a particular time. At best this sounds like a guesstimate based on surveys but household income can change rapidly over time as children go out to work or people lose their jobs or people retire.

Second, someone should tell Downing Street about Boris Johnson’s First Steps scheme in London, for which the maximum income limit has just increased to £74,000.

Third, policing this will be a bureaucratic nightmare that threatens to change fundamentally the relationship between tenants and social landlords. Where landlords are not busy checking how many bedrooms their tenants are occupying they will become the income police, obliged to check the earnings of all their tenants at regular intervals.  

Fourth, it’s not so long ago that a certain housing minister rejected the ‘pay to stay’ idea when it was put forward as an alternative to removing security of tenure from new tenants with fixed-term tenancies.

Fifth, it almost goes without saying that this would represent yet another breach of the Conservative manifesto promise to ‘respect’ the tenures and rents of social housing tenants and subsequent promises by Shapps that ‘we still have no plans to change the existing or future tenancies for people in social housing today’.

Sixth, the Guardian story includes the frankly incredible claim that ‘social housing has been increasingly taken up as an option by young professionals unable to afford to own their own home’.

Seventh, since this would apply to all social landlords, what does it say about the supposedly independent, non-public status of housing associations? If taxpayer ‘subsidy’ is going to their tenants then surely they are public bodies whose spending and borrowing should count against public totals? The FT report talks more narrowly about ‘council housing’ but if is restricted just to local authority tenants how it is ‘fair’?

I could go on but the list continues down to the most fundamental issue of all for me: who really has their housing subsidised?

Social housing tenants? It’s true that there is an initial subsidy in the form of grant or land or both but council housing nationally is now running at a profit, with tenants’ rents more than repaying the initial costs. None of the cost is paid by council taxpayers. Their rents are only ‘subsidised’ by comparison with market house prices and rents to which social housing is an alternative. On the same argument anyone who bought their home years ago for a fraction of today’s prices is also ‘subsidised’.

Tenants who use the right to buy? The logical response for a family with a household income of £60,000 a year facing a rent increase of £74 a week will be to take a look at Right to Buy 2. The mortgage may well be cheaper than the increased rent and the government has just doubled the maximum discount to £75,000. This is, of course, not a subsidy in any sense and there is no upper income limit.

Home owners? They are surely the ‘strivers’ who are paying for all that ‘subsidy’ – until you stop to think about it. First homes are exempt from capital gains tax and since the 1960s have been free of tax on the imputed rental value. What’s another word for a tax that the government chooses not to impose?

People with a mortgage? In addition to the taxes not imposed on first homes, anyone with a mortgage has benefitted from much lower mortgage rates ever since the Bank of England cut interest rates to a record low 0.5 per cent. If a cut of two percentage points does not sound like much, it amounts to a combined reduction of around £20 billion a year. Effectively it’s a mortgage subsidy that is coming out of the pockets of savers and pensioners who are receiving much lower interest on their money.

First-time buyers? Without a sizeable deposit they will not get the same low rates as existing borrowers and they may not get a mortgage at all, but many get help from the Bank of Mum and Dad. The subsidy advantage of home ownership is transmitting down through the generations.

Buyers of new build homes? No £60,000 income limit here. The government’s NewBuy scheme guarantees 95 per cent mortgages on homes worth up to £500,000, implying that a household with an income of more than £160,000 could benefit. 

Buy to let landlords? Unlike home owners, they do pay capital gains tax. However, they can also offset costs like the interest on their mortgage, rental insurance, maintenance, letting agency fees and depreciation against the tax they pay on their rental income.

‘Pay to stay’ was contradictory and problematic enough when the proposed income threshold was £100,000. Reducing it to £60,000 just makes it even more contradictory. On one level, it’s a nakedly political move to capitalise on the popularity of the benefit cap and its supposed ‘fairness’. But on a deeper level it’s hard to avoid the conclusion that this is really about accelerating the Conservative end-game for social housing: reducing it to a residualised rump reserved for the very poorest while leaving everything else to the market.

And, judging by an article over at LibDemVoice that confuses social and affordable rent and the discussion that follows, their coalition partners seem too divided on the policy to stop it.

Fair rent?

Mon, 21 May 2012

The proposed reduction of the ‘pay to stay’ cap to £60,000 raises introduces yet more contradictions into a policy that was already riddled with them.

Reports on Saturday (most comprehensively by Patrick Wintour in The Guardian) said a consultation paper will be published next month on the idea of charging social housing tenants a market rent once their income rises above a certain level. When the policy was first floated last year, the proposed household income was £100,000 but now Grant Shapps, with the backing of David Cameron, is apparently suggesting £60,000.

There are all kinds of problems and contradictions inherent in the idea (of which more later) but the immediate thing to notice is that this is the government mounting another deployment of what it sees as its most popular policy to date: the household benefit cap. Just as capping benefits to the level of someone on an average income (£26,000 a year) will make the welfare system fairer, so capping household income will make social housing fairer.

Why £60,000? The reports say the consultation paper will propose a range of figures with that being the lowest. According to the FT, No 10 likes this figure because it is the maximum income limit for other support schemes like shared ownership. The papers were briefed a £60,000 threshold would affect 34,000 households and mean their rent could rise by £70 a week or more. A cap set at the previously reported £100,000 is claimed to affect only 6,000 households. Presumably then this would not affect enough people or save enough (the ‘subsidy’ is put at £21.6 million at £100,000 but £122.4 million at £60,000).

So what are the problems with the idea?

First, it’s not at all clear where these figures come from. How many social landlords out there really know how much their tenants earn? Or how their circumstances have changed over time? Or how many people live in a particular property and are working at a particular time. At best this sounds like a guesstimate based on surveys but household income can change rapidly over time as children go out to work or people lose their jobs or people retire.

Second, someone should tell Downing Street about Boris Johnson’s First Steps scheme in London, for which the maximum income limit has just increased to £74,000.

Third, policing this will be a bureaucratic nightmare that threatens to change fundamentally the relationship between tenants and social landlords. Where landlords are not busy checking how many bedrooms their tenants are occupying they will become the income police, obliged to check the earnings of all their tenants at regular intervals.  

Fourth, it’s not so long ago that a certain housing minister rejected the ‘pay to stay’ idea when it was put forward as an alternative to removing security of tenure from new tenants with fixed-term tenancies.

Fifth, it almost goes without saying that this would represent yet another breach of the Conservative manifesto promise to ‘respect’ the tenures and rents of social housing tenants and subsequent promises by Shapps that ‘we still have no plans to change the existing or future tenancies for people in social housing today’.

Sixth, the Guardian story includes the frankly incredible claim that ‘social housing has been increasingly taken up as an option by young professionals unable to afford to own their own home’.

Seventh, since this would apply to all social landlords, what does it say about the supposedly independent, non-public status of housing associations? If taxpayer ‘subsidy’ is going to their tenants then surely they are public bodies whose spending and borrowing should count against public totals? The FT report talks more narrowly about ‘council housing’ but if is restricted just to local authority tenants how it is ‘fair’?

I could go on but the list continues down to the most fundamental issue of all for me: who really has their housing subsidised?

Social housing tenants? It’s true that there is an initial subsidy in the form of grant or land or both but council housing nationally is now running at a profit, with tenants’ rents more than repaying the initial costs. None of the cost is paid by council taxpayers. Their rents are only ‘subsidised’ by comparison with market house prices and rents to which social housing is an alternative. On the same argument anyone who bought their home years ago for a fraction of today’s prices is also ‘subsidised’.

Tenants who use the right to buy? The logical response for a family with a household income of £60,000 a year facing a rent increase of £74 a week will be to take a look at Right to Buy 2. The mortgage may well be cheaper than the increased rent and the government has just doubled the maximum discount to £75,000. This is, of course, not a subsidy in any sense and there is no upper income limit.

Home owners? They are surely the ‘strivers’ who are paying for all that ‘subsidy’ – until you stop to think about it. First homes are exempt from capital gains tax and since the 1960s have been free of tax on the imputed rental value. What’s another word for a tax that the government chooses not to impose?

People with a mortgage? In addition to the taxes not imposed on first homes, anyone with a mortgage has benefitted from much lower mortgage rates ever since the Bank of England cut interest rates to a record low 0.5 per cent. If a cut of two percentage points does not sound like much, it amounts to a combined reduction of around £20 billion a year. Effectively it’s a mortgage subsidy that is coming out of the pockets of savers and pensioners who are receiving much lower interest on their money.

First-time buyers? Without a sizeable deposit they will not get the same low rates as existing borrowers and they may not get a mortgage at all, but many get help from the Bank of Mum and Dad. The subsidy advantage of home ownership is transmitting down through the generations.

Buyers of new build homes? No £60,000 income limit here. The government’s NewBuy scheme guarantees 95 per cent mortgages on homes worth up to £500,000, implying that a household with an income of more than £160,000 could benefit. 

Buy to let landlords? Unlike home owners, they do pay capital gains tax. However, they can also offset costs like the interest on their mortgage, rental insurance, maintenance, letting agency fees and depreciation against the tax they pay on their rental income.

‘Pay to stay’ was contradictory and problematic enough when the proposed income threshold was £100,000. Reducing it to £60,000 just makes it even more contradictory. On one level, it’s a nakedly political move to capitalise on the popularity of the benefit cap and its supposed ‘fairness’. But on a deeper level it’s hard to avoid the conclusion that this is really about accelerating the Conservative end-game for social housing: reducing it to a residualised rump reserved for the very poorest while leaving everything else to the market.

And, judging by an article over at LibDemVoice that confuses social and affordable rent and the discussion that follows, their coalition partners seem too divided on the policy to stop it.

Starter’s orders

Thu, 17 May 2012

Grant Shapps has predictably had a go but it’s hard to see the housebuilding figures out today as anything other than awful.

The housing minister tweeted that housing starts in 2011 were up 29 per cent on 2009. Curiously, though, he did not mention the figures that had just been published for the first quarter of 2012.

These showed that total starts were down 11 per cent on the previous three months and 15 per cent on a year ago. Starts by private housebuilders were down 8 per cent and 7 per cent on the same basis.

And starts by housing associations collapsed by 21 per cent compared with October to December 2011 and 40 per cent compared with January to March 2011.

To be charitable, these are only the figures for one quarter and the previous one did show an improvement.

However, they also make it possible for the first time to compare what’s happened in the second year of the coalition compared to the first. By now, surely, all those policies like the new homes bonus and the scrapping of regional strategies ought to be working.

In fact, starts totalled 104,970, a fall of 6 per cent on 2010/11. Again the picture was much worse for housing associations (down 24 per cent) than for private enterprise (down 1 per cent).

It’s true that the starts total is well up on both 2008/09 and 2009/10 and that completions are up this year as a consequence but things do not look good for Shapps or his ‘gold standard’ of building more homes than Labour. He now needs almost 500,000 starts over the next three years to achieve that.

And the figures only reinforce the message in the Housing Report from the Chartered Institute of Housing, National Housing Federation and Shelter this morning that the government is failing on the housing crisis in general and supply in particular.

At best, housebuilding is flat-lining as the effects of Labour’s stimulus run out. Total starts are stuck at around 65 per cent of the level seen before the credit crunch and less than half the level needed to meet demand. Shapps writes on ConservativeHome this morning that ‘the vital phase III of this government is now underway – turning legislation into action’.

If so, the pressure is really on now for the new homes bonus, the NPPF, the right to buy, the public land initiative and all his other initiatives to deliver. And initial reports on the flagship NewBuy programme do not exactly look promising

Starter’s orders

Thu, 17 May 2012

Grant Shapps has predictably had a go but it’s hard to see the housebuilding figures out today as anything other than awful.

The housing minister tweeted that housing starts in 2011 were up 29 per cent on 2009. Curiously, though, he did not mention the figures that had just been published for the first quarter of 2012.

These showed that total starts were down 11 per cent on the previous three months and 15 per cent on a year ago. Starts by private housebuilders were down 8 per cent and 7 per cent on the same basis.

And starts by housing associations collapsed by 21 per cent compared with October to December 2011 and 40 per cent compared with January to March 2011.

To be charitable, these are only the figures for one quarter and the previous one did show an improvement.

However, they also make it possible for the first time to compare what’s happened in the second year of the coalition compared to the first. By now, surely, all those policies like the new homes bonus and the scrapping of regional strategies ought to be working.

In fact, starts totalled 104,970, a fall of 6 per cent on 2010/11. Again the picture was much worse for housing associations (down 24 per cent) than for private enterprise (down 1 per cent).

It’s true that the starts total is well up on both 2008/09 and 2009/10 and that completions are up this year as a consequence but things do not look good for Shapps or his ‘gold standard’ of building more homes than Labour. He now needs almost 500,000 starts over the next three years to achieve that.

And the figures only reinforce the message in the Housing Report from the Chartered Institute of Housing, National Housing Federation and Shelter this morning that the government is failing on the housing crisis in general and supply in particular.

At best, housebuilding is flat-lining as the effects of Labour’s stimulus run out. Total starts are stuck at around 65 per cent of the level seen before the credit crunch and less than half the level needed to meet demand. Shapps writes on ConservativeHome this morning that ‘the vital phase III of this government is now underway – turning legislation into action’.

If so, the pressure is really on now for the new homes bonus, the NPPF, the right to buy, the public land initiative and all his other initiatives to deliver. And initial reports on the flagship NewBuy programme do not exactly look promising

Going Dutch

Tue, 15 May 2012

Here’s hoping that Grant Shapps found a bit more to do in the Netherlands on Monday than enthuse about self-build and get Kevin McCloud’s autograph.

The housing minister and the Grand Designs presenter were part of a UK housing delegation visiting Europe’s largest self-build project at Almere. There was also an event at the British Embassy aimed at boosting trade and business links.

They were clearly impressed by what’s happening and with good reason. There are more than 800 homes at Almere that people have built for around €50,000 less than the same property would cost in the commercial sector. Imagine something similar in Britain backed with planning reforms and help with finance and what Shapps is saying about the sector doubling in size starts to make sense (even if I wish he wouldn’t keep repeating the same announcements). If, as the minister told us two weeks ago, the future’s bright, it seems the future is orange too. 

MPs on the communities and local government committee also became self-build converts after a visit to Almere last year. In their report last week, they recommended that the government should also work with local authorities to pilot volume self-build schemes by allocating sites and taking a flexible approach to planning.

It’s a rare example of all parties enthusiastically backing a housing idea and also one of those times when Shapps deserves some credit but (there’s always a but) my rather unkind opening paragraph was about more than just grabbing your attention and I’m hoping that he found time to talk to the Dutch about a few other things too. Here’s a selection (feel free to correct my less than perfect knowledge of Dutch housing):

First, the self-build site at Almere is just part of a new city that’s been under construction since the 1970s. As far as I can tell, the self-build experiment was in part the result of the credit crunch slowing down conventional development. In between a statistical spat with shadow communities secretary Hilary Benn yesterday, Shapps himself tweeted yesterday that the Almere presentation featured pictures of Ebenezer Howard, the creator of Welwyn Garden City in his constituency. But did he get the point that the Dutch have continued with an idea that we invented and then abandoned after 1979?

As housebuilding in England fails to keep up with demand from new households it’s not hard to see why support for new towns and urban extensions is coming from across a spectrum ranging from the TCPA to Policy Exchange. Almere may seem uniquely Dutch in that is built on land reclaimed from the sea but the wider lesson is that publicly owned land is the key to large-scale development. Are we capable over here of looking beyond the finite stock of land currently owned by the public sector and compulsorily purchasing tracts of land as we did for new towns in the past or trusting local authorities to form joint development companies like the Dutch?

The National Self Build Association put it this way in its evidence to the CLG committee: ‘The biggest challenge with a project like Almere is finding a local authority with the vision and enterprise to give it a go. The other key to the success is the initial land cost; it has to be acquired at something like agricultural values initially. The council then has to invest in the infrastructure—roads, utilities etc—and this usually adds at least £10,000 per plot provided.’

In contrast, it said that over here the HCA was about to release ‘five large sites for group self-build opportunities that should deliver around 70 homes’.

Second, the CLG committee MPs were impressed by BNG, the Dutch municipal bank that is the fourth largest in the country and jointly owned by the Ministry of Finance and municipalities. Lending is restricted to public and semi-public organisations and 52 per cent goes to housing associations. The MPs supported calls for the creation of a national housing investment bank here but Shapps told them he was ‘not convinced by that argument at all. I think the banking system in this country needs to work for all industries and sectors’.

Third, as a report published by the Joseph Rowntree Foundation published in February makes clear, there’s plenty to learn from the Dutch experience of managing the development of new settlements. Maybe they have discovered a thing or two along the way about making them sustainable and successful? At Vathorst in Amersfoort basic principles were set out in one large masterplan but individual blocks have their own character and opposition was overcome by agreeing community benefits like infrastructure before work started. It was BNG, incidentially, that lent €750 million to the joint development company formed by the Amersfoort municipality and five private companies to develop the Vathorst.

Fourth, there’s the Dutch experience of granting financial independence to housing associations in 1995. The MPs heard that Dutch associations now get no government subsidy and fund all new development through a revolving fund generated by the sale of existing and new build properties at market rate. That’s maybe not a million miles away from where we are heading after 2015 but the committee noted a mix of positive points about associations as ‘financially independent and strong performers in a tight housing market’ and negative ones about them straying too far from their core role and taking too many risks (with the largest Dutch association losing £2 billion in a derivatives deal). According to the CLG committee, the Dutch have set up a full parliamentary inquiry into the social housing sector and the outcome needs watching closely.

The lessons to be learned from the Netherlands go way beyond what I have space for here and my limited knowledge. The Almere visit and the enthusiasm for self-build are a good start but even doubling the size of the sector will not solve our housing crisis on its own. Here’s hoping the message about public sector involvement, trusting local authorities, alternative sources of finance, masterplanning, sustainable development and the rest has been heard too.

Going Dutch

Tue, 15 May 2012

Here’s hoping that Grant Shapps found a bit more to do in the Netherlands on Monday than enthuse about self-build and get Kevin McCloud’s autograph.

The housing minister and the Grand Designs presenter were part of a UK housing delegation visiting Europe’s largest self-build project at Almere. There was also an event at the British Embassy aimed at boosting trade and business links.

They were clearly impressed by what’s happening and with good reason. There are more than 800 homes at Almere that people have built for around €50,000 less than the same property would cost in the commercial sector. Imagine something similar in Britain backed with planning reforms and help with finance and what Shapps is saying about the sector doubling in size starts to make sense (even if I wish he wouldn’t keep repeating the same announcements). If, as the minister told us two weeks ago, the future’s bright, it seems the future is orange too. 

MPs on the communities and local government committee also became self-build converts after a visit to Almere last year. In their report last week, they recommended that the government should also work with local authorities to pilot volume self-build schemes by allocating sites and taking a flexible approach to planning.

It’s a rare example of all parties enthusiastically backing a housing idea and also one of those times when Shapps deserves some credit but (there’s always a but) my rather unkind opening paragraph was about more than just grabbing your attention and I’m hoping that he found time to talk to the Dutch about a few other things too. Here’s a selection (feel free to correct my less than perfect knowledge of Dutch housing):

First, the self-build site at Almere is just part of a new city that’s been under construction since the 1970s. As far as I can tell, the self-build experiment was in part the result of the credit crunch slowing down conventional development. In between a statistical spat with shadow communities secretary Hilary Benn yesterday, Shapps himself tweeted yesterday that the Almere presentation featured pictures of Ebenezer Howard, the creator of Welwyn Garden City in his constituency. But did he get the point that the Dutch have continued with an idea that we invented and then abandoned after 1979?

As housebuilding in England fails to keep up with demand from new households it’s not hard to see why support for new towns and urban extensions is coming from across a spectrum ranging from the TCPA to Policy Exchange. Almere may seem uniquely Dutch in that is built on land reclaimed from the sea but the wider lesson is that publicly owned land is the key to large-scale development. Are we capable over here of looking beyond the finite stock of land currently owned by the public sector and compulsorily purchasing tracts of land as we did for new towns in the past or trusting local authorities to form joint development companies like the Dutch?

The National Self Build Association put it this way in its evidence to the CLG committee: ‘The biggest challenge with a project like Almere is finding a local authority with the vision and enterprise to give it a go. The other key to the success is the initial land cost; it has to be acquired at something like agricultural values initially. The council then has to invest in the infrastructure—roads, utilities etc—and this usually adds at least £10,000 per plot provided.’

In contrast, it said that over here the HCA was about to release ‘five large sites for group self-build opportunities that should deliver around 70 homes’.

Second, the CLG committee MPs were impressed by BNG, the Dutch municipal bank that is the fourth largest in the country and jointly owned by the Ministry of Finance and municipalities. Lending is restricted to public and semi-public organisations and 52 per cent goes to housing associations. The MPs supported calls for the creation of a national housing investment bank here but Shapps told them he was ‘not convinced by that argument at all. I think the banking system in this country needs to work for all industries and sectors’.

Third, as a report published by the Joseph Rowntree Foundation published in February makes clear, there’s plenty to learn from the Dutch experience of managing the development of new settlements. Maybe they have discovered a thing or two along the way about making them sustainable and successful? At Vathorst in Amersfoort basic principles were set out in one large masterplan but individual blocks have their own character and opposition was overcome by agreeing community benefits like infrastructure before work started. It was BNG, incidentially, that lent €750 million to the joint development company formed by the Amersfoort municipality and five private companies to develop the Vathorst.

Fourth, there’s the Dutch experience of granting financial independence to housing associations in 1995. The MPs heard that Dutch associations now get no government subsidy and fund all new development through a revolving fund generated by the sale of existing and new build properties at market rate. That’s maybe not a million miles away from where we are heading after 2015 but the committee noted a mix of positive points about associations as ‘financially independent and strong performers in a tight housing market’ and negative ones about them straying too far from their core role and taking too many risks (with the largest Dutch association losing £2 billion in a derivatives deal). According to the CLG committee, the Dutch have set up a full parliamentary inquiry into the social housing sector and the outcome needs watching closely.

The lessons to be learned from the Netherlands go way beyond what I have space for here and my limited knowledge. The Almere visit and the enthusiasm for self-build are a good start but even doubling the size of the sector will not solve our housing crisis on its own. Here’s hoping the message about public sector involvement, trusting local authorities, alternative sources of finance, masterplanning, sustainable development and the rest has been heard too.

Silent speech

Wed, 9 May 2012

It’s hard to know whether it’s good news or bad news that there is so little legislation affecting housing in the new parliamentary session.

The Care and Support Bill will have implications for the sector but it’s effectively another delay to the government’s response to the Dilnot Commission’s funding proposals because it’s only a draft bill. See this from Rachael Byrne of Home Group and this from Simon Parker of the New Local Government Network for a flavour of the reaction to that.   

Apart from that the Queen’s Speech had nothing on housing. The only piece of legislation from the Communities and Local Government (CLG) department is another draft Bill dealing with the consequences of abolishing the Audit Commission while the Department for Work and Pensions (DWP) will have its hands full with pensions.

All of which is bad news for anyone who expected further action to tackle the housing crisis (reform of the private rented sector anyone?) but probably good news for people still struggling to cope with the consequences of all that legislation in the previous two-year session of parliament.

Grant Shapps yet again hailed ‘some of the biggest social housing reforms for a generation’ in his column for Inside Housing last week and they went way beyond his own departmental responsibilities.

So perhaps a pause in the ‘reforms’ is to be welcomed. Maybe housing organisations already have enough on their plate with affordable rent, changing allocations and the homelessness duty, the law on squatting, cuts to legal aid and the rest. As Kate Hughes put it on her blog last week, just one of the welfare reforms – the bedroom tax – is likely to be the biggest challenge that social housing communications practitioners have ever faced.

If anyone needs a reminder of how much has changed with the Welfare Reform Act, the Localism Act and the Legal Aid and Punishment of Offenders Act, here are two indications of just how much work they will cause on just one of the measures they introduced.

Like the bedroom tax, the household benefit cap is going to be (to put it mildly) a major and growing communications headache as tenants struggle to work out if and how they will be affected. But the portents do not look at all good as the DWP starts sending out a warning letter to those who may be affected.

First, according to a story in today’s Guardian, the letter has already gone out wrongly to 2,000 families with children who will not be affected and councils are reporting that up to one in five of the 67,000 affected households have been wrongly identified.

Second, to make matters even worse, as noticed by Joe Halewood on twitter, the BBC is still reporting – wrongly – on its website that the cap has exemptions for housing benefit, child benefit and child tax credit. In fact all three count towards the cap. Meanwhile, even before the cap has been introduced, there are already calls for the Conservative right for it to be reduced still further.

That’s just one example of the problems to come in the implementation phase of the welfare and housing reforms. However, I’ll still be watching the big picture for signs of movement on the 2013 spending review, preparations for the universal credit and the continuing debate about the role and purpose of social housing.

On the first, the challenge will be to harness the growing consensus among economists about the need for measures to boost growth to make the case that housing is one of the best ways to do it. Is the second a welcome simplification of the system or a computerised disaster in the making or both? And on the third, as I argue on my other blog this week, the challenge is to find new ways to frame the political case for housing at a time when the rhetoric from the Conservatives about ‘strivers’ is becoming ever more hostile towards benefit claimants and people in ‘subsidised’ homes.

Finally, there remains the question of what will happen to the architect of the housing reforms. Will Grant Shapps really stick around and go on and on with initiative after initiative and excuse after excuse for the lack of new homes? Or, with rumours continuing about a government reshuffle, will someone else be there to take the credit (or the blame)? 

Silent speech

Wed, 9 May 2012

It’s hard to know whether it’s good news or bad news that there is so little legislation affecting housing in the new parliamentary session.

The Care and Support Bill will have implications for the sector but it’s effectively another delay to the government’s response to the Dilnot Commission’s funding proposals because it’s only a draft bill. See this from Rachael Byrne of Home Group and this from Simon Parker of the New Local Government Network for a flavour of the reaction to that.   

Apart from that the Queen’s Speech had nothing on housing. The only piece of legislation from the Communities and Local Government (CLG) department is another draft Bill dealing with the consequences of abolishing the Audit Commission while the Department for Work and Pensions (DWP) will have its hands full with pensions.

All of which is bad news for anyone who expected further action to tackle the housing crisis (reform of the private rented sector anyone?) but probably good news for people still struggling to cope with the consequences of all that legislation in the previous two-year session of parliament.

Grant Shapps yet again hailed ‘some of the biggest social housing reforms for a generation’ in his column for Inside Housing last week and they went way beyond his own departmental responsibilities.

So perhaps a pause in the ‘reforms’ is to be welcomed. Maybe housing organisations already have enough on their plate with affordable rent, changing allocations and the homelessness duty, the law on squatting, cuts to legal aid and the rest. As Kate Hughes put it on her blog last week, just one of the welfare reforms – the bedroom tax – is likely to be the biggest challenge that social housing communications practitioners have ever faced.

If anyone needs a reminder of how much has changed with the Welfare Reform Act, the Localism Act and the Legal Aid and Punishment of Offenders Act, here are two indications of just how much work they will cause on just one of the measures they introduced.

Like the bedroom tax, the household benefit cap is going to be (to put it mildly) a major and growing communications headache as tenants struggle to work out if and how they will be affected. But the portents do not look at all good as the DWP starts sending out a warning letter to those who may be affected.

First, according to a story in today’s Guardian, the letter has already gone out wrongly to 2,000 families with children who will not be affected and councils are reporting that up to one in five of the 67,000 affected households have been wrongly identified.

Second, to make matters even worse, as noticed by Joe Halewood on twitter, the BBC is still reporting – wrongly – on its website that the cap has exemptions for housing benefit, child benefit and child tax credit. In fact all three count towards the cap. Meanwhile, even before the cap has been introduced, there are already calls for the Conservative right for it to be reduced still further.

That’s just one example of the problems to come in the implementation phase of the welfare and housing reforms. However, I’ll still be watching the big picture for signs of movement on the 2013 spending review, preparations for the universal credit and the continuing debate about the role and purpose of social housing.

On the first, the challenge will be to harness the growing consensus among economists about the need for measures to boost growth to make the case that housing is one of the best ways to do it. Is the second a welcome simplification of the system or a computerised disaster in the making or both? And on the third, as I argue on my other blog this week, the challenge is to find new ways to frame the political case for housing at a time when the rhetoric from the Conservatives about ‘strivers’ is becoming ever more hostile towards benefit claimants and people in ‘subsidised’ homes.

Finally, there remains the question of what will happen to the architect of the housing reforms. Will Grant Shapps really stick around and go on and on with initiative after initiative and excuse after excuse for the lack of new homes? Or, with rumours continuing about a government reshuffle, will someone else be there to take the credit (or the blame)? 

Vampire diaries

Tue, 8 May 2012

The maths involved in the CLG committee’s new report on the financing of new housing supply is depressingly simple.

Add newly arising need to cope with population growth (232,000 homes a year on the latest estimate) to the backlog of existing need (1.99 million households in 2009), then take away the completions in 2011 (109,000) and you are left with a huge gap in provision. Even if private housebuilders succeed in increasing their output from last year’s miserable 82,000 to the maximum they managed over the last 20 years of 150,000 (a very big if) the gap will still be huge and the backlog will still be growing.

So it’s little wonder that the committee admits there is ‘no silver bullet’ in its report, that it ‘suggests that potentially radical changes of policy and alternative sources of finance will be needed if housing supply is ever to reach levels of demand’ and that while it welcomes the housing strategy as a start it is sceptical about many of the glib solutions offered by Grant Shapps.

The report follows extensive hearings with witnesses from across the UK housing world and beyond, including a visit to the Netherlands to see if there are lessons to be learned from the Dutch approach to housing. The idea is that bridging the gap will require an increased contribution from all of the familiar sources and some that are unfamiliar too.

On private investment, the government already has a review of the barriers to housing’s version of Waiting for Godot: institutional investment in built to let. Yet while there was backing for the idea from a wide range of witnesses, there was still doubt about what Nick Jopling of Grainger called the three main barriers of ‘scale, suitability of stock and yield’. For all the innovation, for example by Manchester and its pension fund, and all the talk of using public land and waiving section 106 requirements, the yield problem remains. In other words, house prices are too high in relation to achievable rents.

Other options for private investment include institutions backing moves by housing associations into private renting (or even social renting too) and further exploration of ideas for a Housing Investment Fund for housing associations and co-operative housing. Despite scepticism from Shapps, the committee also likes the idea of a Housing Investment Bank.

However, on the private rented sector, the committee heard warnings of ‘large scale disinvestment by landlords’ because returns are too low without capital appreciation (those house prices again). One possible solution might be tax simplification linked to professionalisation of the sector, another might be the British Property Federation’s idea of Housing Zones designated by local authorities with local tax reliefs.

On affordable housing delivery, there’s plenty of scepticism from the committee about whether affordable rent can be sustained beyond 2015 and whether (as Shapps claims) it will really have no impact on the housing benefit bill. Significantly, the committee calls for ‘a rebalancing of subsidy arrangements away from housing benefit can back to bricks and mortar’, which would put the priorities of the last 30 years into reverse.

However, the committee also expresses concern about two other government policies that could threaten affordable housing investment.  Plans to give developers the power to force local authorities to reopen section 106 agreements are ‘contrary to the government’s professed commitment to localism’. And as for plans to introduce direct payment of housing benefit to tenants ‘there is a clear risk that these arrangements will have a detrimental effect on providers’ capacity to invest in new housing supply’ and the committee says the government should only proceed ‘when any issues identified by the pilots have been fully resolved’.

On housing associations, the committee is enthusiastic about retail bonds but more sceptical about proposals on historic grant. It notes warnings that writing off the grant could increase borrowing costs and converting it into equity would create a for-profit sector. There is also the Dutch experience of giving associations financial independence from government:  a mix of positive points about financial performance and more negative ones about associations straying too far from their core role and the risk taking that resulted in the largest Dutch association losing £2 billion in a derivatives deal.

The committee welcomes housing revenue account (HRA) reform for local authorities but says the government should lift the cap on borrowing and allow the trading of headroom between authorities. Both of these ideas have been rejected by Shapps so far. More radically the committee says the government should look again at reform of the public sector borrowing rules (supported by Conservative Westminster City Council) and at easing restrictions on councils’ use of bond finance (supported by Birmingham City Council, which was Conservative-led until last week).

And the MPs are also highly sceptical about claims by Shapps about the right to buy. ‘We are not convinced that the government will deliver on its plans for “one-for-one” replacement of additional properties sold under the new proposals, especially if the discount cap is set as high as £75,000,’ it says. ‘We are also concerned that the proposals will lead to a reduction in the country’s social housing stock, with social housing being replaced by homes for Affordable Rent.’ Instead it wants ‘like for like’ replacement of social rented homes, with extra government funding if necessary, and says individual local authorities should be able to apply for an exemption from the right to buy where they can demonstrate that housing is limited an d cannot easily be replaced.

On owner-occupation, the committee notes a number of concerns about NewBuy: that it will simply reduce the mortgage finance available elsewhere; that it could lead to negative equity for buyers; and that it excludes smaller builders. There is support for Shapps’s plans for self-build, with the committee noting that something on the scale of the programme it saw in the Netherlands could result in up to 150,000 homes over five years, but that there are still barriers to overcome with lenders and local authorities.

As that quick survey hopefully shows, the committee’s report ranges far and wide over every conceivable way of financing new housing supply (with the exception of quantitative easing for housing). It should be essential reading for anyone involved in all sectors of housing because we are going to need a contribution from all of them to stand even a chance of bridging that supply gap.

The committee argues, probably rightly, that there is no ‘silver bullet’. However, what it does not identify, after collecting together all the ordinary bullets, wooden stakes and strings of garlic on offer is the identity of the vampire. To my mind, the big problem wearing fangs and a black cape is that house prices (and rents) are too high. Financing new housing supply would be an awful lot simpler – and cheaper – if it happened alongside measures to put that creature of the night back in its coffin. 

Vampire diaries

Tue, 8 May 2012

The maths involved in the CLG committee’s new report on the financing of new housing supply is depressingly simple.

Add newly arising need to cope with population growth (232,000 homes a year on the latest estimate) to the backlog of existing need (1.99 million households in 2009), then take away the completions in 2011 (109,000) and you are left with a huge gap in provision. Even if private housebuilders succeed in increasing their output from last year’s miserable 82,000 to the maximum they managed over the last 20 years of 150,000 (a very big if) the gap will still be huge and the backlog will still be growing.

So it’s little wonder that the committee admits there is ‘no silver bullet’ in its report, that it ‘suggests that potentially radical changes of policy and alternative sources of finance will be needed if housing supply is ever to reach levels of demand’ and that while it welcomes the housing strategy as a start it is sceptical about many of the glib solutions offered by Grant Shapps.

The report follows extensive hearings with witnesses from across the UK housing world and beyond, including a visit to the Netherlands to see if there are lessons to be learned from the Dutch approach to housing. The idea is that bridging the gap will require an increased contribution from all of the familiar sources and some that are unfamiliar too.

On private investment, the government already has a review of the barriers to housing’s version of Waiting for Godot: institutional investment in built to let. Yet while there was backing for the idea from a wide range of witnesses, there was still doubt about what Nick Jopling of Grainger called the three main barriers of ‘scale, suitability of stock and yield’. For all the innovation, for example by Manchester and its pension fund, and all the talk of using public land and waiving section 106 requirements, the yield problem remains. In other words, house prices are too high in relation to achievable rents.

Other options for private investment include institutions backing moves by housing associations into private renting (or even social renting too) and further exploration of ideas for a Housing Investment Fund for housing associations and co-operative housing. Despite scepticism from Shapps, the committee also likes the idea of a Housing Investment Bank.

However, on the private rented sector, the committee heard warnings of ‘large scale disinvestment by landlords’ because returns are too low without capital appreciation (those house prices again). One possible solution might be tax simplification linked to professionalisation of the sector, another might be the British Property Federation’s idea of Housing Zones designated by local authorities with local tax reliefs.

On affordable housing delivery, there’s plenty of scepticism from the committee about whether affordable rent can be sustained beyond 2015 and whether (as Shapps claims) it will really have no impact on the housing benefit bill. Significantly, the committee calls for ‘a rebalancing of subsidy arrangements away from housing benefit can back to bricks and mortar’, which would put the priorities of the last 30 years into reverse.

However, the committee also expresses concern about two other government policies that could threaten affordable housing investment.  Plans to give developers the power to force local authorities to reopen section 106 agreements are ‘contrary to the government’s professed commitment to localism’. And as for plans to introduce direct payment of housing benefit to tenants ‘there is a clear risk that these arrangements will have a detrimental effect on providers’ capacity to invest in new housing supply’ and the committee says the government should only proceed ‘when any issues identified by the pilots have been fully resolved’.

On housing associations, the committee is enthusiastic about retail bonds but more sceptical about proposals on historic grant. It notes warnings that writing off the grant could increase borrowing costs and converting it into equity would create a for-profit sector. There is also the Dutch experience of giving associations financial independence from government:  a mix of positive points about financial performance and more negative ones about associations straying too far from their core role and the risk taking that resulted in the largest Dutch association losing £2 billion in a derivatives deal.

The committee welcomes housing revenue account (HRA) reform for local authorities but says the government should lift the cap on borrowing and allow the trading of headroom between authorities. Both of these ideas have been rejected by Shapps so far. More radically the committee says the government should look again at reform of the public sector borrowing rules (supported by Conservative Westminster City Council) and at easing restrictions on councils’ use of bond finance (supported by Birmingham City Council, which was Conservative-led until last week).

And the MPs are also highly sceptical about claims by Shapps about the right to buy. ‘We are not convinced that the government will deliver on its plans for “one-for-one” replacement of additional properties sold under the new proposals, especially if the discount cap is set as high as £75,000,’ it says. ‘We are also concerned that the proposals will lead to a reduction in the country’s social housing stock, with social housing being replaced by homes for Affordable Rent.’ Instead it wants ‘like for like’ replacement of social rented homes, with extra government funding if necessary, and says individual local authorities should be able to apply for an exemption from the right to buy where they can demonstrate that housing is limited an d cannot easily be replaced.

On owner-occupation, the committee notes a number of concerns about NewBuy: that it will simply reduce the mortgage finance available elsewhere; that it could lead to negative equity for buyers; and that it excludes smaller builders. There is support for Shapps’s plans for self-build, with the committee noting that something on the scale of the programme it saw in the Netherlands could result in up to 150,000 homes over five years, but that there are still barriers to overcome with lenders and local authorities.

As that quick survey hopefully shows, the committee’s report ranges far and wide over every conceivable way of financing new housing supply (with the exception of quantitative easing for housing). It should be essential reading for anyone involved in all sectors of housing because we are going to need a contribution from all of them to stand even a chance of bridging that supply gap.

The committee argues, probably rightly, that there is no ‘silver bullet’. However, what it does not identify, after collecting together all the ordinary bullets, wooden stakes and strings of garlic on offer is the identity of the vampire. To my mind, the big problem wearing fangs and a black cape is that house prices (and rents) are too high. Financing new housing supply would be an awful lot simpler – and cheaper – if it happened alongside measures to put that creature of the night back in its coffin. 

Stat attack

Tue, 1 May 2012

It’s Communities and Local Government questions – so it must time for a barrage of contradictory statistics.

I’ve grown used to the trading of numerical insults every few weeks between coalition and opposition over the last year or so. But would a week in which politics has been dominated by a stat (the 0.2 per cent fall in GDP that means the UK is in a double dip recession) make any difference?

No chance. Not in an election week. The tone was summed up in an exchange about council tax between shadow communities secretary Hilary Benn (‘Labour councils £81 cheaper than Conservative ones for Band D’) and Eric Pickles (‘Tory ones £62 cheaper’) and was repeated over and over again. 

First up, was housebuilding, a subject on which both parties pride themselves on the ability to find the most flattering and unflattering comparisons between each other. Faced with 2011’s dismal total of 98,000 housing starts, Grant Shapps simply paired it with the even more dismal figure from the depths of the credit crunch in 2009 to show that they were actually 25 per cent up.

Labour’s Jack Dromey hit back with a reference to the Shapps gold standard. ‘We know from figures released today that house building is down 26 per cent on average compared with what was achieved under a Labour government,’ he said. This is of course a comparison flattering to Labour since it smooths out the effect of the credit crunch. The ‘figures released today’ turned out to be a Labour press release quoting CLG housebuilding stats which Dromey said ‘show the government’s policies are making the housing crisis worse not better’. If that sounds familiar, that’s because he said exactly the same in February.

Shapps hit back with a repetition of the ’25 per cent up on 2009’ stat backed up with some figures that will be of consolation to a construction industry that has just gone into a triple-dip recession: ‘In the same period the value of new housing construction was up 33 per cent and construction orders were up 35 per cent,’ he said.

Will there ever be an end to Shapps and Dromey slapping each other around the head with wet statistics? Perhaps, if the housing minister gets promoted in a mooted reshuffle after the local elections (more on that on my blog here). If not, we seem set to face a never-ending wait for a clear winner to emerge.

Here’s a quick attempt to resolve it. The comparison in the CLG stats between housing starts in the six complete quarters since the election and the six before that currently favours the coalition. However, we are only six quarters into the 20 that would make up a five-year parliament. If the trend of the last six quarters is repeated over the next 14, the coalition will see around 500,000 starts in those five years. Labour managed 672,000 between 2005 and 2010. So, even if the coalition increases output, it will need another 525,000 starts in the next 14 quarters. That’s an average of 37,500 per quarter: 50 per cent more than it has managed in any quarter so far.

However, that was not the end of the statistical battles in the Commons. Attacked by a Labour backbencher over the housing market renewal programme, Shapps claimed that the coalition would build 170,000 affordable rent homes in the next three years and ‘that will be more than were built in 13 years when affordable housing numbers declined under Labour’. Invited by a Tory backbencher to condemn plans for thousands of homes in his constituency imposed by the old regional strategies, he maintained that scrapping the strategies and introducing the new homes bonus would mean ‘more building in the long run’. Invited by another Conservative to praise Boris Johnson’s record in London he argued: ‘It seems very likely that he will have delivered 50,000 homes for affordable rent. It is worth bearing in mind that fewer than that were delivered throughout the entire country under 13 years of Labour.’ Never mind, of course, that the Johnson total relies on homes funded by the last Labour government or that the 13-year total is calculated after right to buy sales that Shapps has pledged to increase.

Finally, no CLG questions would be complete without private rents. Former Labour housing minister John Healey had asked why the million families with children who are renting privately are denied ‘even the basic security of a legal right to a written tenancy agreement’ but that did not prevent Shapps quoting yet more stats (though oddly not what Inside Housing or Shelter or Hometrack say).

‘Pressure in the system caused by more than a decade of building far fewer homes than are required, which has led to rents rising very quickly,’ he said. ‘There are now some signs that rents have started to moderate. The English housing survey shows that rents rose at a slower pace than inflation; LSL Property Services shows falls for the third month in a row; and Professor Michael Ball reports that they fell by a tenth in real terms between 2008 and 2011.’

And Shapps was at it again in his response to a question from Labour’s Stephen Timms about Newham. ‘Immediately that the Newham story was flagged up, we went on just one website to search for properties and we could find within the Newham cap of £15,000 rent a year—not the £21,000 maximum cap—1,000 properties available in Newham or within five miles of it. That is why it is a disgrace that the council was considering sending people halfway across the country.’

Never mind that ‘available’ on the website is not the same as ‘available for let to local housing allowance claimants’. Things would be so much simpler if all you had to do to solve the housing crisis was look on Rightmove.

Stat attack

Tue, 1 May 2012

It’s Communities and Local Government questions – so it must time for a barrage of contradictory statistics.

I’ve grown used to the trading of numerical insults every few weeks between coalition and opposition over the last year or so. But would a week in which politics has been dominated by a stat (the 0.2 per cent fall in GDP that means the UK is in a double dip recession) make any difference?

No chance. Not in an election week. The tone was summed up in an exchange about council tax between shadow communities secretary Hilary Benn (‘Labour councils £81 cheaper than Conservative ones for Band D’) and Eric Pickles (‘Tory ones £62 cheaper’) and was repeated over and over again. 

First up, was housebuilding, a subject on which both parties pride themselves on the ability to find the most flattering and unflattering comparisons between each other. Faced with 2011’s dismal total of 98,000 housing starts, Grant Shapps simply paired it with the even more dismal figure from the depths of the credit crunch in 2009 to show that they were actually 25 per cent up.

Labour’s Jack Dromey hit back with a reference to the Shapps gold standard. ‘We know from figures released today that house building is down 26 per cent on average compared with what was achieved under a Labour government,’ he said. This is of course a comparison flattering to Labour since it smooths out the effect of the credit crunch. The ‘figures released today’ turned out to be a Labour press release quoting CLG housebuilding stats which Dromey said ‘show the government’s policies are making the housing crisis worse not better’. If that sounds familiar, that’s because he said exactly the same in February.

Shapps hit back with a repetition of the ’25 per cent up on 2009’ stat backed up with some figures that will be of consolation to a construction industry that has just gone into a triple-dip recession: ‘In the same period the value of new housing construction was up 33 per cent and construction orders were up 35 per cent,’ he said.

Will there ever be an end to Shapps and Dromey slapping each other around the head with wet statistics? Perhaps, if the housing minister gets promoted in a mooted reshuffle after the local elections (more on that on my blog here). If not, we seem set to face a never-ending wait for a clear winner to emerge.

Here’s a quick attempt to resolve it. The comparison in the CLG stats between housing starts in the six complete quarters since the election and the six before that currently favours the coalition. However, we are only six quarters into the 20 that would make up a five-year parliament. If the trend of the last six quarters is repeated over the next 14, the coalition will see around 500,000 starts in those five years. Labour managed 672,000 between 2005 and 2010. So, even if the coalition increases output, it will need another 525,000 starts in the next 14 quarters. That’s an average of 37,500 per quarter: 50 per cent more than it has managed in any quarter so far.

However, that was not the end of the statistical battles in the Commons. Attacked by a Labour backbencher over the housing market renewal programme, Shapps claimed that the coalition would build 170,000 affordable rent homes in the next three years and ‘that will be more than were built in 13 years when affordable housing numbers declined under Labour’. Invited by a Tory backbencher to condemn plans for thousands of homes in his constituency imposed by the old regional strategies, he maintained that scrapping the strategies and introducing the new homes bonus would mean ‘more building in the long run’. Invited by another Conservative to praise Boris Johnson’s record in London he argued: ‘It seems very likely that he will have delivered 50,000 homes for affordable rent. It is worth bearing in mind that fewer than that were delivered throughout the entire country under 13 years of Labour.’ Never mind, of course, that the Johnson total relies on homes funded by the last Labour government or that the 13-year total is calculated after right to buy sales that Shapps has pledged to increase.

Finally, no CLG questions would be complete without private rents. Former Labour housing minister John Healey had asked why the million families with children who are renting privately are denied ‘even the basic security of a legal right to a written tenancy agreement’ but that did not prevent Shapps quoting yet more stats (though oddly not what Inside Housing or Shelter or Hometrack say).

‘Pressure in the system caused by more than a decade of building far fewer homes than are required, which has led to rents rising very quickly,’ he said. ‘There are now some signs that rents have started to moderate. The English housing survey shows that rents rose at a slower pace than inflation; LSL Property Services shows falls for the third month in a row; and Professor Michael Ball reports that they fell by a tenth in real terms between 2008 and 2011.’

And Shapps was at it again in his response to a question from Labour’s Stephen Timms about Newham. ‘Immediately that the Newham story was flagged up, we went on just one website to search for properties and we could find within the Newham cap of £15,000 rent a year—not the £21,000 maximum cap—1,000 properties available in Newham or within five miles of it. That is why it is a disgrace that the council was considering sending people halfway across the country.’

Never mind that ‘available’ on the website is not the same as ‘available for let to local housing allowance claimants’. Things would be so much simpler if all you had to do to solve the housing crisis was look on Rightmove.

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