All posts from: June 2012
It would be easy to criticise the ideas in David Cameron’s speech on welfare reform as half-baked and impractical. They are both but that is not the main point.
One paragraph is missing from the transcript of the speech he gave in Kent today. This is a reference by Cameron to the way that the last Labour government allegedly ran up ‘a huge income transfer industry that they ran from the Treasury pushing tax credits and benefits around in a bid to try hit the poverty targets they’d set up’. This is marked as ‘political content excised’.
It’s a label that might as well apply to the whole speech, given that it’s a vision of what the welfare system would look like under a Conservative, Liberal Democrat-free government. You don’t have to look very far today to find Lib Dem bloggers calling on Nick Clegg to condemn Cameron’s ideas in the strongest language imaginable’ and Lib Dem think-tanks calling them ‘daft’ and ‘unworkable’. For more on the speech and the reaction, see Inside Housing’s stories here and here.
What Cameron said should not have come as a great surprise to anyone. In April plans leaked of a Downing Street/DWP plan to cut housing benefit for the under-25s (see my blog here) as part of a plan to cut welfare by another £10 billion and in May the Telegraph reported plans for lower regional caps and a crackdown on part-time workers as elements of a programme to save £25 billion (here). That’s all in the context of the downgrading of legally-binding targets to eradicate child poverty (here).
However, while those reports were based on off-the-record briefings from advisors and sources, here is the prime minister and Conservative leader saying the same things in a speech that was not just on the record but widely trailed over the weekend.
The speech makes clear that working-age benefits are the main targets for cuts and is littered with comparisons between ‘hard-working families’ and feckless claimants. There’s the working couple taking home £24,000 and the claimant family with four children claiming £27,000 a year. Never mind that the working couple would receive thousands in child benefit and tax credits if they had children and might well get housing benefit too.
Then there’s the woman who’s just left college and forced to live at home contrasted with the 19-year-old who does not have a job but is sharing with friends and claiming housing benefit. No mention again that housing benefit is also an in-work benefit or that most under-25s have a shortfall between their benefit and their rent.
Then there are the commuters travelling long hours each day because they cannot afford to live in central London who are contrasted with high-earning council tenants paying sub-market rent. The government has of course already published plans to make tenants earning more than £60,000 pay to stay, but Cameron criticises ‘people on salaries of £40, 60, £80,000 paying sub-market rents and living in council houses’. Even so this has apparently ‘sent out some incredibly damaging signals. That it pays not to work. That you are owed something for nothing’.
All of which, says someone who moved effortlessly from Eton to Brasenose College, Oxford to the Conservative Research Department, has created a ‘culture of entitlement’.
The most widely trailed idea is to cut housing benefit for the under-25s, which is said to cost £2 billion a year for 210,000 people. Cameron contrasts that with the plight of three million people aged 20-34 who are forced to live at home because they cannot afford their own place. However, he uses a personal example to back this up that either reveals breathtaking ignorance of the benefits system or breathtaking cynicism:
‘Perversely, the benefits system encourages this process from one generation to the next.
‘If a family living on benefits wants their adult child to stay living at home they are actually penalised – as soon as that child does the right thing and goes out to work.
‘You get what’s called a non-dependent deduction, removing up to £74 off your housing benefit each week.
‘I had a heartrending letter from a lady in my constituency a few weeks ago who said that when her son leaves college next month, her housing benefit will drop significantly, meaning her family may have to split up.
This doesn’t seem right.’
Indeed – until you consider who is responsible for the heartrending letter. The man to blame for penalising the child that ‘does the right thing and goes out to work’ is of course his work and pensions secretary, Iain Duncan Smith, who has just increased the non-dependent deduction and will from next April leave thousands of social housing tenants with a choice between that and the bedroom tax.
Cameron does not spell out exactly how he would cut housing benefit for the under-25s, or mention that it is already restricted to the shared accommodation rate in the private sector or that it goes to people in work as well as out of work, or that eliminating it would amount to telling young people not to get on their bikes and look for work. Nicola Hughes of Shelter has five reasons why she thinks it won’t work here while Tim Leunig of Centre Forum has an intriguing argument that the real losers will be the middle aged here.
However, in addition to all that, there are hints of even more radical reform including:
- Uprating benefits in line with inflation or wages, whichever is lower
- Cutting benefit entitlement for long-term claimants (a less harsh version of Clinton-era welfare reforms in the US that saw caseloads fall by over 50 per cent but also saw the number of people with no safety net at all soar).
- Capping benefit entitlement by region.
- Reducing both the overall benefit cap and the bedroom caps for housing benefit. Cameron quotes the maximum housing benefit figure of £20,000 a year and compares it to being on a salary of £80,000.
- Cutting benefits for large families (‘isn’t it right that we ask whether those in the welfare system are faced with the same kinds of decisions that working people have to wrestle with when they have a child?’)
- Applying any cuts to existing as well as new claimants (‘for now, both stock and flow options should be there on the table’.
At one point he even seems to question the principle behind the universal credit:
‘The argument goes that if you give more welfare money to those who are higher up the income scale as well as those at the bottom then you iron out the perverse incentives that encouraged people not to work, not to save, not to do the right thing.
‘Indeed, that’s part of the thinking behind Universal Credit – it’s about helping more people to escape the poverty trap and get on in life.
‘But anyone thinking we can just keep endlessly pumping money in is wrong.’
The point of course is that without tackling the underlying problems of low wages and high housing costs any policy designed to ‘make work pay’ is doomed to lurch from soaring costs to swingeing cuts.
Cameron says he is not making policy prescriptions, just starting a debate, but he is also setting an agenda. This is about a political calculation of the gains that can be made from pitching pensioners against young people, home owners against tenants, commuter towns against the inner cities and ‘hard-working families’ against benefit claimants. And playing to the Conservative backbenches.
A radical new report out today challenges almost 40 years of orthodoxy about how we subsidise housing - and much more besides.
The think-tank Institute for Public Policy Research (IPPR) says it’s time to reverse the shift from bricks and mortar to personal subsidies that began in the 1970s and get back to building homes rather than subsidising rents.
It’s far from the only big idea in the report, which is part of the IPPR’s fundamental review of housing policy, but it is the most eye-catching. In the current spending review period we are spending £94 billon on housing benefit but only £4.5 billion on building new affordable homes. Is there a better way?
The report argues that after 30 years of ‘pessimism and division’ the housing system is no longer fit for purpose and is getting worse rather than better. Home ownership is out of reach for too many, social housing is being residualised and private renting is unprofessional and insecure.
So far, so uncontroversial but if one measure of being radical is how many vested interests you manage to upset then this report is most definitely radical. If you are a housebuilder, a landowner, a National Trust member or a social housing traditionalist prepare for a few shocks. If you are anyone else prepare to be challenged.
The proposals come under three main headings:
Spreading opportunities for sustainable home ownership
The report argues that the housing system should go with the grain of people’s aspirations. It puts a ‘social case’ for increasing home ownership and argues that any attempts to restrict it ‘would effectively encourage the segregation of our society into those for whom home ownership is deemed appropriate and those for whom it is not’.
However, that’s put in a context of identifying new sources of finance for housing as a whole by creating a national investment bank, encouraging local authority pension funds to invest in housing, imposing new taxes on overseas buyers of homes worth over £2 million and using the proceeds to boost housing investment and changing the borrowing rules for councils.
The report says output of new homes should be boosted by shaking up the development industry and a planning system that gives people ‘in need of new housing effectively no say in the process’. The government should allow failing developers to go to the wall and take over their land banks and insist on rapid build-out and lower profit margins on schemes on public land.
Development should be allowed on low-grade green belt land and landowners would face a land value tax on all undeveloped developable land worth more than £2 million.
At the same time a ‘parallel strategic planning system’ would help deliver a new wave of new towns with land compulsorily purchased at a low multiple of its agricultural value.
Among a range of other proposals on home ownership, the report also endorses the extension of the right to buy to all housing association homes – an idea put forward by David Davis and Frank Field in a paper for the IPPR earlier this year.
Ensuring a better, more balanced deal for those who rent
The aim here is decent and affordable housing for everyone, regardless of tenure. The report argues that private tenants need greater control and increased security but that a combination of a sharp drop in supply and needs-based allocations ‘has led to social housing becoming a force for segregation in our society’.
Recommendations on this include:
- creating a new five-year tenancy for private renting families with children with a five-month notice period
- encouraging new ‘something for something’ deals between private landlords and local government with mandatory licensing schemes and rent stabilisation boards for the mid-market
- giving social landlords more control over allocations to give access to social housing to more people while making greater use of private renting to meet housing needs
- making fixed-term tenancies the norm in social housing with the opportunity to pay higher rent or purchase the property for tenants whose circumstances improve.
Shifting from subsidising rents to building homes
The report argues that localism needs to go much further than the coalition managed in the Localism Act and that public spending needs to be rebalanced from subsidising rents to building homes.
The key proposal here is to give local authorities control of a single ‘affordable housing grant’ combining housing benefit and capital investment. This would obviously involve major changes to the universal credit, with housing costs devolved in total or in part to local level, although the report points out the government is already doing this with council tax benefit.
The grant would last three years and be based on a combination of local population, housing costs and relative deprivation and local authorities would have a statutory duty to improve access to decent, secure and affordable housing on their area. They might start by agreeing deals with private landlords to prevent excessive rent rises to begin the process of shifting resources from benefits to building but would also be able to leverage their enhanced resources with wider borrowing powers.
That’s just a flavour of what has to be one of the most far-reaching reports on housing published in recent years. Much of it is controversial. Is there an over-emphasis on home ownership? Does reducing the segregation between private and social renting have to mean accepting most of the coalition’s social housing reforms or should there be more intervention in private renting? Will a move to greater localism really deliver or will it reduce still further the national safety net for the most vulnerable? Is the big idea about housing benefit really deliverable given the fiendish complexities the report acknowledges?
However, it’s also a rare attempt to look at the housing system as a whole and the way that it relates to the rest of society. While it would be easy to criticise some of the proposals in isolation this is about the system as a whole and the politics of how to change it. It’s impossible to argue with the conclusion that: ‘If, as a country, we are to solve the worsening housing crisis we face, we will have to engage a much wider coalition of support for the change that is needed. Housing must be seen as a matter of broad public concern, not just private interest. We need everyone who is interested in the health of English society to be interested in housing. And we need a candid public conversation about all of its dimensions.’
Everywhere I’ve been in Manchester this week it’s hard to avoid falling into the gap between good intentions and cold reality.
It’s there in the underlying theme of the CIH conference (a decade of sector-led solutions) and attempts to find ways forward under continuing austerity as outside the conference chamber the underlying problems just keep getting worse.
It was there in the differing reactions to the affordable housing figures published as the conference opened. As I forecast yesterday, for Grant Shapps they showed a ‘rapid and dramatic increase’ while for Jack Dromey they were ‘disastrous’. In a sense they were both right: they were an improvement on the numbers six months ago but only because they were so catastrophic. Listen again to this morning’s Today programme for more (at about 8.10).
It was there in the call from Louise Casey for the housing sector to take a lead in the troubled families programme even as she dismissed objections to its dubious origins (more detail on that on my other blog here).
As if all that were not enough, Peter Schofield, the new director-general of the DCLG, was on hand to make it clear that the reality gap is going to be here for some time to come. He candidly admitted that housing had barely been considered in last year’s plan for growth, when he was at the Treasury. Now at least it is on the agenda, but he warned that the next spending review would see even less money and that the sector had to ask itself some hard questions.
His hope, with a bit of help from institutional investors, is that the 2010s could come to be seen as a decade of housebuilding in the same way as the 1930s and 1950s. However, given that we are already 25 per cent into the decade and building is still stuck at the lowest level since the war, the reality gap on this is starting to turn into a chasm.
None of which is to argue against the need for sector-led solutions. After two years of relentless cuts and new legislation, there is now some precious time to think, try to get ahead of the curve and map out how the future might look. The government at least looks open to new ideas (provided they don’t involve spending any money and provided they fit within its political framework). Local authorities and housing associations do at least have more freedom to work with (even though they need more). Institutional investors may at last be taking housing seriously again (though I wish I had £10 for every time I have written that).
However, that still leaves the reality gap. All of this would be daunting enough in a stable environment but all the evidence suggests that the underlying housing crisis is getting worse all the time.
A report out today from the Joseph Rowntree Foundation on the housing crisis facing young people that makes the point only too clearly.
A team from Cardiff University forecasts that the number of home owners aged under 30 will halve to just 1.3 million by 2020. An extra 1.8 million 18 to 30-year olds will be forced into private renting and another 500,000 will have to stay with their parents well into their 30s.
All of which is bad enough, and further confirmation of the depressing situation facing Generation Rent (also revealed in a study by the National Centre for Social Research yesterday).
The really bad news though lies in the knock-on effects of that. Private renting will be taking all of the pressure from declining home ownership and austerity-bound social housing. The influx of young people will mean even fiercer competition for a limited number of tenancies and the report warns of a three-tier market developing between young professionals who can afford the rent at the top, young families struggling to afford it in the middle and a bottom run of 400,000 people who could be excluded completely. As Kathleen Kelly of the JRF points out, ‘we need to avoid turning a housing crisis into a homelessness disaster’.
Sector-led solutions can lead to innovation on the ground and slow the pace at which things get worse. Making things better requires government-led solutions too.
As if on cue Lord Freud is in Manchester today and Grant Shapps tomorrow. Time to enter their reality distortion fields.
Affordable rent may have kicked in at last but affordable housing starts are still down 57 per cent on a year ago. Get set for another row about stats.
It is of course pure coincidence but 24 hours after Jack Dromey and Labour went to the blankets in the housing stats war with Grant Shapps (well, ok, referred him to the UK Statistics Authority) perhaps the most politically sensitive of all figures were published this morning.
Six months ago the Homes and Communities Agency (HCA) published its affordable housing figures, they showed a calamitous 97 per cent fall in starts on the previous year to just 429 between April and September. They were released with no fanfare within 48 hours of the launch of the government’s housing strategy and led to extensive recriminations.
There was no such news background for this morning’s publication of the full year stats – just the opening of the biggest housing conference of the year.
So, at the risk of sparking off another stats row, here are the two very different sides to the story.
In the Grant Shapps corner, affordable housing starts are more than 30 times what were six months ago, up from 429 in April-September 2011 to 15,269 in October to March. That’s mainly thanks to the first 11,130 starts under the affordable rent scheme but starts of social rented homes trebled to 789 and starts for affordable home ownership were almost 20 times higher at 3,278.
In the Jack Dromey corner, total affordable starts for 2011/12 are down by 68 per cent on 2010/11 and social rented starts are down by 97 per cent (yes, that figure again, from 35,690 to 1,048).
The midpoint comparison between October to March 2012 with the same period a year ago leaves total affordable starts down 57 per cent from 35,737 to 15,269. Starts for affordable home ownership are also down by more than half and social rented starts are down, yes, 97 per cent from 26,330 to 789.
All of these figures exclude open market starts delivered under the HCA programme (4,269 in 2011/12 against 8,265 in 2010/11). These are ‘delivered under the Property and Regeneration Programme include some starts and completions which are made available at below market price or rents but do not meet the definition for affordable housing’.
So there’s some support there for the government’s argument that the calamitous fall six months ago was down to a hiatus in the programme as affordable rent got going but not much. Just as the point when investment in housebuilding could be generating the homes and jobs we need it is falling.
The HCA concentrated on the fact that it had met its target for completions. Here rhe figures do not oscillate as wildly but show a similar patter to starts. Total affordable completions were three times higher in October to March than April-September last year at 38,877. There were the first 1,685 affordable rent completions, about four times more for affordable home ownership and more than twice as many for social rent.
Compared with the same period a year ago, total affordable completions were up 7 per cent at 38,877, with social rented starts down slightly.
Taking 2011/12 as a whole, affordable completions were down 7.5 per cent from 55,860 to 51,665 and were down slightly for both social rent and affordable home ownership. Taking total completions under the HCA programme (including open market) were down from 64,277 to 59,451, which was comfortably ahead of its target of 41,000.
So plenty of ammunition there for another stats war there and for the Labour and Conservative news lines. However, whatever, the underlying trend, and whether there is a further recovery in the total numbers this year, the balance of what constitutes ‘affordable’ has shifted decisively away from social renting.
Have we really learned our lessons from our post-war housing mistakes or are we still making some of the same ones?
That was the question running through my mind after watching the brilliant and sometimes heart-rending first episode of The Secret History of Our Streets last night. At the risk of sounding like a broken record, you really should make time to catch it on iPlayer if you missed it.
The series looks at the history of six different areas starting from the moment that Charles Booth produced his famous poverty maps of London in the late 19th century (the LSE has more information on them here). The first episode looked at changes in the streets around Deptford High Street in south London in the first half of the 20th century followed by the grand schemes of the post-war era.
We heard how the London Plan earmarked the working class streets of south and east London for slum clearance, with many people moved to the new towns and estates around and outside the capital and most of the terraces replaced by new estates. For more on Sir Patrick Abercrombie, the man with the plan, and the connection with David Cameron, see my other blog here.
We felt the impact on the close-knit Price family, who had lived in the area for several generations but saw their homes wrongly condemned as ‘slums’ (the programme even produced environmental health reports from the time admitting as much). We saw how most of them were dispersed to the new estates while the tower blocks that sprang up on the sites of their homes rapidly became hard to let.
And we heard from a Lewisham councillor who admitted he was powerless to stop the process and had to try and choose which street to save.
Just to rub it all in, on one of the few streets that survived the bulldozers we saw an estate agent with a cut-glass accent pointing out the period features of a home on the market at £750,000.
It was a brilliant opener to a series co-produced by BBC2 and the Open University (which has much more information on its website) that made great use of the Booth maps and archive photos but like all TV it left me wondering a few things.
Were things really quite as clear-cut as the programme made out? Stories rarely are in my experience and I wonder if the nuances of this one got left on the cutting room floor. For example, the former councillor was rather ambushed when he went back to Deptford High Street. He was critical of what had happened but not really given the chance to explain what he’d done at the time.
Nevertheless The Secret History was a powerful reminder of housing’s (or more accurately planning’s and environmental health’s) original sin: wholesale clearances of districts of London and the replacement of ‘slums’ with ‘modern’ estates on the assumption that the professionals knew better than the people who lived there.
And have we really learned our lesson? For all that community consultation and empowerment there are some who would beg to differ.
Just ask residents of the Welsh Streets in Liverpool or the other housing market renewal areas. Or talk to campaigners fighting to stop the redevelopment of the West Kensington and Gibbs Green estates in west London. Or read Martin Hilditch’s feature for Inside Housing last month on the residents of the Q blocks that are facing demolition in Nottingham.