Sunday, 28 May 2017

Inside edge

All posts from: January 2013

Changing the culture

Thu, 31 Jan 2013

As a new report from Shelter shows that private rents continue to rise, politicians are starting to accept the need for reform.

The charity published figures this morning showing that rents rose by an average of 2.8 per cent in the last 12 months. That’s faster than the 1.7 per cent increase in house prices in 2012 revealed by the Land Registry this week and comes at a time when wages are at a standstill.

The picture varies considerably around the country. At one extreme, London tenants seeing a 4.8 per cent increase in their rents while their wages fell by 4.9 per cent. At the other rents in the North East fell 0.4 per cent but wages rose 1.7 per cent. The two biggest increases in the country (14.1 per cent) came in Surrey Heath and nearby Elmbridge, while the eigth largest (10.8 per cent) was in the area around David Cameron’s Witney constituency.

Shelter has an interactive map here and, as it argues, the rent increases in 83 per cent of local authority districts further trap people in renting and leave them even less able to raise a deposit to buy. In the light of the government’s plan to uprate the local housing allowance by just 1% from next April they also raise the prospect of ever-increasing rent shortfalls for private tenants on housing benefit (even with some extra protection for areas seeing the biggest increases).

The conventional wisdom of the last 30 years says that private renting must remain deregulated to ensure a continued flow of investment into the sector. However, what is different about private renting and privatised industries like rail, water, gas and electricity. Prices in all of those are escalating rapidly too but at least control of them is seen as a matter for debate and politicians feel the heat when they go up.

In the meantime, as I argued on my other blog last week, record low interest rates continue to subsidise landlords’ mortgages with few signs that the savings are being passed on to tenants. What was a temporary policy designed to prevent a housing market crash has become a semi-permanent part of austerity.

The private rented sector is now an essential industry with a turnover of £29 billion a year in rents alone. Some £9.2 billion of that comes from the taxpayer in housing benefit. As, a report from the Building and Social Housing Federation showed last week, the sector is no longer just home to the young and mobile. It has grown from 1.5 million to 4 million households in the last ten years and is now home to one in six families with children.

Numbers like that demand action and the politicians are at last realising that. A Commons debate called by Labour last week of course produced the predictable contrast between opposition enthusiasts for regulation and Conservatives ones for the free market but it also showed some interesting shades between the two as well.

Under shadow housing minister Jack Dromey, Labour is developing some interesting policies on private renting. I’ve been rather unkind about them in the past on the basis that the party did not implement reforms when it had the chance when it was in government and which Labour-run Wales is now taking forward. However,  at least the issue has moved up its list of priorities in England too. Two issues dominate the immediate agenda: regulation of letting agents; and greater security and predictability of rents.

On the first, Labour called on the government to ‘regulate letting and management agents to ensure that tenants, landlords and the reputations of reputable agents are protected’. Dromey streesed this had the support of the entire industry – and even at one point of housing minister Mark Prisk. Prisk did say in 2007 that ‘I know we need to put lettings on the same regulatory footing as sales’ but now says rather obliquely this was him tabling a probing amendment.

On the second, Dromey admitted that the issue was how to achieve it and Labour called on the government to ‘take action’ without specifying how. He envisages a move to longer-term tenancies linked to indexed rents, though it’s unclear whether this would be achieved by legislation or encouragement.

However, there was an interesting intervention from Conservative MP Jake Berry, parliamentary private secretary to Shapps, who argued last week in The Spectator that ‘the private rented sector is blocking aspiration and isolating families’ and called for longer-term tenancies as are common in commercial property.

Berry argues that a ‘change in the culture of letting’ is required rather than a change in the law. ‘My personal view of the solution to the problems of the assured shorthold tenancy failing families is that we should look towards a six-year term with rent reviews, which would give landlords certainty of funding and would give tenants certainty,’ he said in the debate. ‘It would fit quite well with the number of years that young people spend in school. Those rent reviews could be retail prices index-related.’ The key to this was ‘to change people’s hearts and minds’ but there was a role for the government in pressing banks to allow landlords to grant longer tenancies.

The idea of longer-term tenancies also drew support from two other Conservatives, Mark Pawsey and Damian Collins. Collins urged the government to consider using direct payment of housing benefit as an incentive to landlords to improve their properties while Pawsey is a member of the Communities and Local Government committee that on inquiry on the issue next week.

Those hints of new thinking do not mean that cross-party consensus on private renting is about to break out any time soon. Labour is still vague about its plans and most Tories are resolutely opposed to regulation. Apart from anything else, a third of the MPs who spoke in the debate (including Don Foster, the minister who responded) are private landlords themselves and had to declare a financial interest. That’s part of a broader culture of landlordism in the country as a whole that far too often sees renting merely as a way to make money regardless of the interests of renters.

Challenging that culture will take time and changing it will take even longer. However, at least the debate has begun and it has dawned on the politicians that renters have votes.

Changing the culture

Thu, 31 Jan 2013

As a new report from Shelter shows that private rents continue to rise, politicians are starting to accept the need for reform.

The charity published figures this morning showing that rents rose by an average of 2.8 per cent in the last 12 months. That’s faster than the 1.7 per cent increase in house prices in 2012 revealed by the Land Registry this week and comes at a time when wages are at a standstill.

The picture varies considerably around the country. At one extreme, London tenants seeing a 4.8 per cent increase in their rents while their wages fell by 4.9 per cent. At the other rents in the North East fell 0.4 per cent but wages rose 1.7 per cent. The two biggest increases in the country (14.1 per cent) came in Surrey Heath and nearby Elmbridge, while the eigth largest (10.8 per cent) was in the area around David Cameron’s Witney constituency.

Shelter has an interactive map here and, as it argues, the rent increases in 83 per cent of local authority districts further trap people in renting and leave them even less able to raise a deposit to buy. In the light of the government’s plan to uprate the local housing allowance by just 1% from next April they also raise the prospect of ever-increasing rent shortfalls for private tenants on housing benefit (even with some extra protection for areas seeing the biggest increases).

The conventional wisdom of the last 30 years says that private renting must remain deregulated to ensure a continued flow of investment into the sector. However, what is different about private renting and privatised industries like rail, water, gas and electricity. Prices in all of those are escalating rapidly too but at least control of them is seen as a matter for debate and politicians feel the heat when they go up.

In the meantime, as I argued on my other blog last week, record low interest rates continue to subsidise landlords’ mortgages with few signs that the savings are being passed on to tenants. What was a temporary policy designed to prevent a housing market crash has become a semi-permanent part of austerity.

The private rented sector is now an essential industry with a turnover of £29 billion a year in rents alone. Some £9.2 billion of that comes from the taxpayer in housing benefit. As, a report from the Building and Social Housing Federation showed last week, the sector is no longer just home to the young and mobile. It has grown from 1.5 million to 4 million households in the last ten years and is now home to one in six families with children.

Numbers like that demand action and the politicians are at last realising that. A Commons debate called by Labour last week of course produced the predictable contrast between opposition enthusiasts for regulation and Conservatives ones for the free market but it also showed some interesting shades between the two as well.

Under shadow housing minister Jack Dromey, Labour is developing some interesting policies on private renting. I’ve been rather unkind about them in the past on the basis that the party did not implement reforms when it had the chance when it was in government and which Labour-run Wales is now taking forward. However,  at least the issue has moved up its list of priorities in England too. Two issues dominate the immediate agenda: regulation of letting agents; and greater security and predictability of rents.

On the first, Labour called on the government to ‘regulate letting and management agents to ensure that tenants, landlords and the reputations of reputable agents are protected’. Dromey streesed this had the support of the entire industry – and even at one point of housing minister Mark Prisk. Prisk did say in 2007 that ‘I know we need to put lettings on the same regulatory footing as sales’ but now says rather obliquely this was him tabling a probing amendment.

On the second, Dromey admitted that the issue was how to achieve it and Labour called on the government to ‘take action’ without specifying how. He envisages a move to longer-term tenancies linked to indexed rents, though it’s unclear whether this would be achieved by legislation or encouragement.

However, there was an interesting intervention from Conservative MP Jake Berry, parliamentary private secretary to Shapps, who argued last week in The Spectator that ‘the private rented sector is blocking aspiration and isolating families’ and called for longer-term tenancies as are common in commercial property.

Berry argues that a ‘change in the culture of letting’ is required rather than a change in the law. ‘My personal view of the solution to the problems of the assured shorthold tenancy failing families is that we should look towards a six-year term with rent reviews, which would give landlords certainty of funding and would give tenants certainty,’ he said in the debate. ‘It would fit quite well with the number of years that young people spend in school. Those rent reviews could be retail prices index-related.’ The key to this was ‘to change people’s hearts and minds’ but there was a role for the government in pressing banks to allow landlords to grant longer tenancies.

The idea of longer-term tenancies also drew support from two other Conservatives, Mark Pawsey and Damian Collins. Collins urged the government to consider using direct payment of housing benefit as an incentive to landlords to improve their properties while Pawsey is a member of the Communities and Local Government committee that on inquiry on the issue next week.

Those hints of new thinking do not mean that cross-party consensus on private renting is about to break out any time soon. Labour is still vague about its plans and most Tories are resolutely opposed to regulation. Apart from anything else, a third of the MPs who spoke in the debate (including Don Foster, the minister who responded) are private landlords themselves and had to declare a financial interest. That’s part of a broader culture of landlordism in the country as a whole that far too often sees renting merely as a way to make money regardless of the interests of renters.

Challenging that culture will take time and changing it will take even longer. However, at least the debate has begun and it has dawned on the politicians that renters have votes.

Going spare

Tue, 29 Jan 2013

With just 62 days left the bedroom tax has gone mainstream in parliament and the national press.

The last week alone has seen three different debates in the Commons, a DWP questions in which it was the main issue, and stories in the Sun and Mail as well as, more predictably, the Guardian, Daily Record and Mirror.

Meanwhile virtually every local paper in the UK seems to be finding families affected by the tax that few of their readers would consider to have a ‘spare room’. From Bute to Torfaen and from King’s Lynn to Northampton to Hartlepool the bedroom tax is big news. In Hull, a family of seven in a four-bed house say they face losing £20 a week because of the rules on how old children have to be to get their own room.

But will any of it make any difference to what happens from April 1? A barrage of questions in parliament yesterday was met with a range of stock answers from DWP ministers. It was, alternatively, all Labour’s fault, only fair to private renters, only fair to overcrowded families or all covered by discretionary housing payments (perm any one or two from four).

All of the points raised by MPs and the media were raised again and again as the Welfare Reform Act made its way through parliament in 2011 and early 2012. The impact of welfare reform as a whole on housing associations was well summarised by the National Housing Federation last week.

The difference now is the arguments come with human stories attached. It’s one thing for ministers like Lord Freud to defend the changes in the abstract but quite another when they are confronted by the people they affect on live radio or face tabloid exposure of their own spare bedrooms (11 since you ask).

Meanwhile, as Penny Anderson notes, there is a growing mood of resistance among tenants to the bedroom tax and other cuts. Tenants in Liverpool have organised a Defend Your Home Against the Bedroom Tax campaign while both Shelter Scotland and the STUC are backing a No Eviction for Bedroom Tax campaign organised by Govan Law Centre. Could there yet be legal challenges (as Joe Halewood is arguing forcefully on his blog)?

In terms of public awareness alone all this must make a difference on top of all the publicity campaigns, door knocking, social media initiatives, tenant incentive schemes and phone calls by individual landlords. The attention paid to the issue by MPs from all parties is evidence that it is reaching their surgeries and postbags.

However, the same could be said for any number of the other welfare changes that directly affect housing, from the benefit cap to the direct payment of housing benefit, and for many more that do not. Last night’s Panorama, for example, exposed the failure of the work programme for disabled people.

At DWP questions in the Commons yesterday, ministers faced question after question about the shortage of smaller homes for downsizers and the impact of the under-occupation penalty on particular groups.

Labour’s Liam Byrne made the bedroom tax the subject of his main attack on the government but  work and pensions minister Steve Webb responded to human stories with predictable reassurances about discretionary housing payments and to arguments about the shortage of one-bed homes with a list of options like taking a lodger and working more hours.

Before that, Labour MP Tom Greatrex had raised the case of a foster parent with four foster children who lived on the border between two local authorities and and was facing considerable confusion about discretionary payments. Webb responded that the government had set aside £5 million ‘so that o that local authorities can respond on a case-by-case basis to the needs of foster carers. We believe that that is a more flexible approach than a blanket exemption.’

Labour’s Stephen Doughty asked what the impact of rent arrears from all the benefit changes would be on housing association finances and was told bluntly by Iain Duncan Smith: ‘I don’t believe there will be an impact.’ IDS continued with an attack on Labour’s record before adding: ‘We are trying to ensure that those who are paying this money are not allowed to slip into debt for any great length of time. That matter is being discussed with housing associations and we are making good progress on it. I believe that this approach will help people who are trying to get back into work enormously, rather than their being treated as though they are children who have to have all their bills paid for them.’

Newport East Labour MP Jessica Morden did not even get an answer when she pressed him about ‘the chronic shortage of smaller houses in Wales’. IDS instead attacked the opposition’s record in government and its MPs for shouting ‘like a bunch of discombobulated monkeys bouncing up and down’

The (non) answers kept coming. Webb dismissed arguments about fairness with the point that Labour had been happy with an under-occupation penalty for private renters. And he answered a question on the shortage of smaller accommodation by saying: ‘There is a danger that this is viewed in a very static way. Many of the best housing associations are looking at groups of constituents, some of whom are over-occupying and are overcrowded, and are moving people around to create space.’

However, the questions were not just coming from Labour members. Lib Dem John Leech asked how many families the DWP thought would end up downsizing into more expensive homes in the private rented sector. ‘It is worth stressing that moving is one option, but only one option, for those in work’ said Webb.. ‘Just two or three extra hours on the minimum wage would cover this deduction. There are a range of options—going into work, taking in a lodger or sub-letting—and good housing associations are working with their tenants to achieve best outcomes.’

And Lib Dem deputy leader Simon Hughes pressed for an assurance that foster carers would not lose out financially. IDS responded: ‘We have laid aside £5 million specifically to help with foster carers in the situation he described. However, we are in discussions with local authorities, county councils and the Department for Education about how best the money can be used to ensure that it specifically helps foster carers in this area, so that they suffer no hardship whatever, but can continue, and we can encourage more people to become foster carers.’

That sounds to me as though the education department is arguing that discretionary payments will not be enough and carries just a hint of movement on that particular issue. How about on other aspects of the bedroom tax?

The DWP seems certain to resist any concessions. However, as Steve Hilditch argues at Red Brick, the government may just be politically vulnerable. In 61 days time, the non-answers from ministers about discretionary payments and the ‘other options’ open to tenants will start to be put to the test in the real world. 

Going spare

Tue, 29 Jan 2013

With just 62 days left the bedroom tax has gone mainstream in parliament and the national press.

The last week alone has seen three different debates in the Commons, a DWP questions in which it was the main issue, and stories in the Sun and Mail as well as, more predictably, the Guardian, Daily Record and Mirror.

Meanwhile virtually every local paper in the UK seems to be finding families affected by the tax that few of their readers would consider to have a ‘spare room’. From Bute to Torfaen and from King’s Lynn to Northampton to Hartlepool the bedroom tax is big news. In Hull, a family of seven in a four-bed house say they face losing £20 a week because of the rules on how old children have to be to get their own room.

But will any of it make any difference to what happens from April 1? A barrage of questions in parliament yesterday was met with a range of stock answers from DWP ministers. It was, alternatively, all Labour’s fault, only fair to private renters, only fair to overcrowded families or all covered by discretionary housing payments (perm any one or two from four).

All of the points raised by MPs and the media were raised again and again as the Welfare Reform Act made its way through parliament in 2011 and early 2012. The impact of welfare reform as a whole on housing associations was well summarised by the National Housing Federation last week.

The difference now is the arguments come with human stories attached. It’s one thing for ministers like Lord Freud to defend the changes in the abstract but quite another when they are confronted by the people they affect on live radio or face tabloid exposure of their own spare bedrooms (11 since you ask).

Meanwhile, as Penny Anderson notes, there is a growing mood of resistance among tenants to the bedroom tax and other cuts. Tenants in Liverpool have organised a Defend Your Home Against the Bedroom Tax campaign while both Shelter Scotland and the STUC are backing a No Eviction for Bedroom Tax campaign organised by Govan Law Centre. Could there yet be legal challenges (as Joe Halewood is arguing forcefully on his blog)?

In terms of public awareness alone all this must make a difference on top of all the publicity campaigns, door knocking, social media initiatives, tenant incentive schemes and phone calls by individual landlords. The attention paid to the issue by MPs from all parties is evidence that it is reaching their surgeries and postbags.

However, the same could be said for any number of the other welfare changes that directly affect housing, from the benefit cap to the direct payment of housing benefit, and for many more that do not. Last night’s Panorama, for example, exposed the failure of the work programme for disabled people.

At DWP questions in the Commons yesterday, ministers faced question after question about the shortage of smaller homes for downsizers and the impact of the under-occupation penalty on particular groups.

Labour’s Liam Byrne made the bedroom tax the subject of his main attack on the government but  work and pensions minister Steve Webb responded to human stories with predictable reassurances about discretionary housing payments and to arguments about the shortage of one-bed homes with a list of options like taking a lodger and working more hours.

Before that, Labour MP Tom Greatrex had raised the case of a foster parent with four foster children who lived on the border between two local authorities and and was facing considerable confusion about discretionary payments. Webb responded that the government had set aside £5 million ‘so that o that local authorities can respond on a case-by-case basis to the needs of foster carers. We believe that that is a more flexible approach than a blanket exemption.’

Labour’s Stephen Doughty asked what the impact of rent arrears from all the benefit changes would be on housing association finances and was told bluntly by Iain Duncan Smith: ‘I don’t believe there will be an impact.’ IDS continued with an attack on Labour’s record before adding: ‘We are trying to ensure that those who are paying this money are not allowed to slip into debt for any great length of time. That matter is being discussed with housing associations and we are making good progress on it. I believe that this approach will help people who are trying to get back into work enormously, rather than their being treated as though they are children who have to have all their bills paid for them.’

Newport East Labour MP Jessica Morden did not even get an answer when she pressed him about ‘the chronic shortage of smaller houses in Wales’. IDS instead attacked the opposition’s record in government and its MPs for shouting ‘like a bunch of discombobulated monkeys bouncing up and down’

The (non) answers kept coming. Webb dismissed arguments about fairness with the point that Labour had been happy with an under-occupation penalty for private renters. And he answered a question on the shortage of smaller accommodation by saying: ‘There is a danger that this is viewed in a very static way. Many of the best housing associations are looking at groups of constituents, some of whom are over-occupying and are overcrowded, and are moving people around to create space.’

However, the questions were not just coming from Labour members. Lib Dem John Leech asked how many families the DWP thought would end up downsizing into more expensive homes in the private rented sector. ‘It is worth stressing that moving is one option, but only one option, for those in work’ said Webb.. ‘Just two or three extra hours on the minimum wage would cover this deduction. There are a range of options—going into work, taking in a lodger or sub-letting—and good housing associations are working with their tenants to achieve best outcomes.’

And Lib Dem deputy leader Simon Hughes pressed for an assurance that foster carers would not lose out financially. IDS responded: ‘We have laid aside £5 million specifically to help with foster carers in the situation he described. However, we are in discussions with local authorities, county councils and the Department for Education about how best the money can be used to ensure that it specifically helps foster carers in this area, so that they suffer no hardship whatever, but can continue, and we can encourage more people to become foster carers.’

That sounds to me as though the education department is arguing that discretionary payments will not be enough and carries just a hint of movement on that particular issue. How about on other aspects of the bedroom tax?

The DWP seems certain to resist any concessions. However, as Steve Hilditch argues at Red Brick, the government may just be politically vulnerable. In 61 days time, the non-answers from ministers about discretionary payments and the ‘other options’ open to tenants will start to be put to the test in the real world. 

Tall story

Thu, 24 Jan 2013

You don’t have to look very hard for the hidden agenda in a report from the Conservatives’ favourite think-tank calling for the demolition of high-rise social housing in London.

Create Streets is a joint report from Policy Exchange and a company of the same name which campaigns for low-rise development in streets and against multi-storey developments. As usual in a Policy Exchange report it starts with a grain of truth and then adds a range of questionable assertions to advance a political agenda.

It’s true that many tower blocks were a disaster, although the blame lies as much with Conservative and Labour governments obsessed with the numbers game as it does with municipal empire builders. As The Secret History of Our Streets demonstrated last year, whole communities were bulldozed to make way for tower blocks that quickly became symbols for everything that was wrong with council housing.

However, there is another side to the story too. Many tower blocks across Britain have already been demolished and redeveloped. Many of those that remain make good homes when they are properly managed and maintained.

The report claims there are 360,000 homes in London on post-war multi-storey estates and argues that these could be replaced and another 260,000 homes built if the estates were replaced with low-rise developments in streets built on the redundant space around them.

Like many of the assertions in the report, those figures sound questionable to me – but even if we accept them one key thing is missing from the recommendations: any idea of where the money is going to come from for the regeneration. Implicitly that means it must come from private sector developers keen to cash in on valuable London sites inconveniently occupied by tower blocks. Whatever breezy assurances are offered to existing residents the net result will be less social housing.

In the meantime it is simply not true to argue, as the report does, that: ‘With very few exceptions, usually lived in by the wealthy and childless, such as the Barbican Centre, large multi-storey estates are nearly universally shunned by those who can afford to choose.’

My immediate reaction to that was that it seemed a bit harsh to tell the developers of the Shard – the tallest building in Europe - that it should be demolished. More seriously though you have to wonder why property developers are currently building 25 schemes with a tower of over 20 storeys and planning another 78 with at least one tower if high-rise living is so unpopular that nobody will buy the apartments. The figures come from a report published by Knight Frank last year that concluded that London is growing taller that residential towers are viable in areas that can command high sales prices.

So Policy Exchange and Create Streets are calling for tower blocks to be demolished in the middle of the biggest boom in building them since the 1960s. They are calling for council estates to be regenerated when many of them already are, amid huge controversy in Hammersmith & Fulham, Southwark and Newham.

The report blames the London Plan’s density targets for the boom in development of new towers but it concentrates mainly on the legacy of the past. For Policy Exchange, if social housing is not expensive enough to be sold off in the manner it advocated last year, then it should be demolished. It seems to be all about releasing the historic value of the stock and the land – but for whose benefit?

Create Streets was a new organisation to me until I saw this report. It includes a range of architects and urban design and regeneration specialists and it’s hard to argue with its stated principles about streets that are capable of lasting generations, homes that are environmentally friendly, aesthetically beautiful and tailored to how people want to live and communities that are mixtures of social housing and owner-occupation. However, is that just a small ‘c’ conservative harking back to the past that ignores examples of successful high-density multi-storey development in London and elsewhere around the world? Listen again here to the Today programme discussion on this point between Alex Morton and architect Maxwell Hutchinson.

And how much of a big ‘C’ Conservative element is there here too? Quite apart from Policy Exchange’s close links to the party, the founder of Create Streets (and co-author of the report) is Nicholas Boys Smith, a former political advisor to Conservative social security secretary Peter ‘I’ve got a little list’ Lilley in the 1990s. As well as being a board member of the Swan Foundation, he is a consultant director of the think tank Reform and a strong advocate of welfare reform and opponent of housing benefit. Other members include John Moss, the regeneration specialist and co-author of the influential Localis report that set out the blueprint for the government’s social housing reforms, and Edward Staite, a communcations and campaign consultant who has worked for George Osborne, David Cameron and Boris Johnson.

As ever with anything involving Policy Exchange, the report is a thought-provoking read that provides welcome backing for the case for new homes. However, by focussing on the tower blocks built in the past by social landlords rather than the ones being built and planned in the future by private developers, and ignoring the question of how new social housing can be financed on regenerated estates, is it concealing a rather different agenda?

You have to wonder how much social housing will be left by the time the most expensive homes have been sold and thousands of tower block homes demolished. But that, I suspect, is the point.

Tall story

Thu, 24 Jan 2013

You don’t have to look very hard for the hidden agenda in a report from the Conservatives’ favourite think-tank calling for the demolition of high-rise social housing in London.

Create Streets is a joint report from Policy Exchange and a company of the same name which campaigns for low-rise development in streets and against multi-storey developments. As usual in a Policy Exchange report it starts with a grain of truth and then adds a range of questionable assertions to advance a political agenda.

It’s true that many tower blocks were a disaster, although the blame lies as much with Conservative and Labour governments obsessed with the numbers game as it does with municipal empire builders. As The Secret History of Our Streets demonstrated last year, whole communities were bulldozed to make way for tower blocks that quickly became symbols for everything that was wrong with council housing.

However, there is another side to the story too. Many tower blocks across Britain have already been demolished and redeveloped. Many of those that remain make good homes when they are properly managed and maintained.

The report claims there are 360,000 homes in London on post-war multi-storey estates and argues that these could be replaced and another 260,000 homes built if the estates were replaced with low-rise developments in streets built on the redundant space around them.

Like many of the assertions in the report, those figures sound questionable to me – but even if we accept them one key thing is missing from the recommendations: any idea of where the money is going to come from for the regeneration. Implicitly that means it must come from private sector developers keen to cash in on valuable London sites inconveniently occupied by tower blocks. Whatever breezy assurances are offered to existing residents the net result will be less social housing.

In the meantime it is simply not true to argue, as the report does, that: ‘With very few exceptions, usually lived in by the wealthy and childless, such as the Barbican Centre, large multi-storey estates are nearly universally shunned by those who can afford to choose.’

My immediate reaction to that was that it seemed a bit harsh to tell the developers of the Shard – the tallest building in Europe - that it should be demolished. More seriously though you have to wonder why property developers are currently building 25 schemes with a tower of over 20 storeys and planning another 78 with at least one tower if high-rise living is so unpopular that nobody will buy the apartments. The figures come from a report published by Knight Frank last year that concluded that London is growing taller that residential towers are viable in areas that can command high sales prices.

So Policy Exchange and Create Streets are calling for tower blocks to be demolished in the middle of the biggest boom in building them since the 1960s. They are calling for council estates to be regenerated when many of them already are, amid huge controversy in Hammersmith & Fulham, Southwark and Newham.

The report blames the London Plan’s density targets for the boom in development of new towers but it concentrates mainly on the legacy of the past. For Policy Exchange, if social housing is not expensive enough to be sold off in the manner it advocated last year, then it should be demolished. It seems to be all about releasing the historic value of the stock and the land – but for whose benefit?

Create Streets was a new organisation to me until I saw this report. It includes a range of architects and urban design and regeneration specialists and it’s hard to argue with its stated principles about streets that are capable of lasting generations, homes that are environmentally friendly, aesthetically beautiful and tailored to how people want to live and communities that are mixtures of social housing and owner-occupation. However, is that just a small ‘c’ conservative harking back to the past that ignores examples of successful high-density multi-storey development in London and elsewhere around the world? Listen again here to the Today programme discussion on this point between Alex Morton and architect Maxwell Hutchinson.

And how much of a big ‘C’ Conservative element is there here too? Quite apart from Policy Exchange’s close links to the party, the founder of Create Streets (and co-author of the report) is Nicholas Boys Smith, a former political advisor to Conservative social security secretary Peter ‘I’ve got a little list’ Lilley in the 1990s. As well as being a board member of the Swan Foundation, he is a consultant director of the think tank Reform and a strong advocate of welfare reform and opponent of housing benefit. Other members include John Moss, the regeneration specialist and co-author of the influential Localis report that set out the blueprint for the government’s social housing reforms, and Edward Staite, a communcations and campaign consultant who has worked for George Osborne, David Cameron and Boris Johnson.

As ever with anything involving Policy Exchange, the report is a thought-provoking read that provides welcome backing for the case for new homes. However, by focussing on the tower blocks built in the past by social landlords rather than the ones being built and planned in the future by private developers, and ignoring the question of how new social housing can be financed on regenerated estates, is it concealing a rather different agenda?

You have to wonder how much social housing will be left by the time the most expensive homes have been sold and thousands of tower block homes demolished. But that, I suspect, is the point.

Lack of support

Tue, 22 Jan 2013

After a u-turn by the Welsh government, England is the only UK nation still planning to cut council tax benefit in April – and not all of England either.

As tenants and landlords gear up for the bedroom tax and household benefit cap in April and the start of the universal credit in October, it’s all too easy to forget the cut that will see affected households lose another £2 to £3 a week.

The cut will see administration of council tax benefit transferred from the UK government to devolved administrations and English local authorities but with a 10 per cent cut in funding that will save the Treasury £470 million.

Wales had been planning to implement a national scheme but late on Thursday the devolved administration revealed that it had found an extra £22 million to help with bills in 2013/14.

The Scottish Government had already done the same and Northern Ireland does not have the council tax so that leaves England on its own, with councils able to decide their own scheme provided they protectPefLack pensioners and vulnerable households.

An impact assessment by the DCLG updated in June 2012 says that the cut in England will save £410 million, with 3.1 million claimants of working age affected. Because pensioners are protected, they will lose 16 per cent of their council tax benefit or an average of £2.64 a week. 

English councils have until the end of this month to put a council tax support scheme in place. The New Policy Institute last week on 160 authorities (out of 326) that have agreed a scheme so far. Of those, 124 (77 per cent) will pass on the cut while 36 (23 per cent) will keep the existing arrangements and absorb the funding cut into their overall budget.

The NPI estimates that 830,000 claimants in those areas will be adversely affected, with another 50,000 affected by secondary changes such as the reduction or removal of the second adult rebate. Some 200,000 working people on low incomes will see a council tax increase. Those claimants will lose an average of £146 a year but as much as £213 a year in outer London.

However, there are significant local variations even within the areas passing on the cut. Some councils plan to reduce support to working age claimants by £50 a year and some by £275 a year.

Two-thirds of them will introduce a minimum payment so that everyone pays something regardless of their income, with figures ranging from 8.5 per cent to over 20 per cent.

Other measures include removal of the second adult rebate that people get when they share their home with someone on a low income, changes to non-dependent deductions, counting other benefits like child benefit and child maintenance as income and changing income tapers. There will be £100 million of transitional funding from the government.

Judging from all that, it’s hard to see how even those people who know a cut is on the way will know exactly how much they will have to pay until a bill comes through the letter box. The NPI says there will be a postcode lottery, with people in one London borough having to find 20 per cent of their council tax but those in the borough next door continuing to get support in full.

For tenants, perhaps facing a council tax bill for the first time, that will mean having to find the extra money at a time when many of their other benefits are being squeezed too.

This was exactly the point made by Welsh local government minister Carl Sergeant last week when he explained why the Cabinet had decided to drop the scheme it originally published before Christmas. He said: ‘Since December, the cumulative impact of the UK Government’s raft of changes to welfare benefits has started to become clearer, and we have seen some very disturbing analysis of the cuts by organisations including the Institute for Fiscal Studies, the Joseph Rowntree Foundation and Citizens Advice.’

He said that the government could now safely use some of its reserves held back for contingencies to give extra support for those eligible for help with the council tax.

For landlords worried about the impact of the bedroom tax, the council tax change will mean yet another call on their tenants’ income, backed potentially by court summonses and the bailiffs moving in to seize property but varying by local area.

The prospects become even bleaker come the start of the universal credit and changes to direct payment of housing costs in October.

Meanwhile later today – appropriately enough on ‘blue Monday’ or officially the most depressing day of the year – MPs debate the third reading of the Bill that will uprate many benefits by just 1 per cent from April 2014. 

Lack of support

Tue, 22 Jan 2013

After a u-turn by the Welsh government, England is the only UK nation still planning to cut council tax benefit in April – and not all of England either.

As tenants and landlords gear up for the bedroom tax and household benefit cap in April and the start of the universal credit in October, it’s all too easy to forget the cut that will see affected households lose another £2 to £3 a week.

The cut will see administration of council tax benefit transferred from the UK government to devolved administrations and English local authorities but with a 10 per cent cut in funding that will save the Treasury £470 million.

Wales had been planning to implement a national scheme but late on Thursday the devolved administration revealed that it had found an extra £22 million to help with bills in 2013/14.

The Scottish Government had already done the same and Northern Ireland does not have the council tax so that leaves England on its own, with councils able to decide their own scheme provided they protectPefLack pensioners and vulnerable households.

An impact assessment by the DCLG updated in June 2012 says that the cut in England will save £410 million, with 3.1 million claimants of working age affected. Because pensioners are protected, they will lose 16 per cent of their council tax benefit or an average of £2.64 a week. 

English councils have until the end of this month to put a council tax support scheme in place. The New Policy Institute last week on 160 authorities (out of 326) that have agreed a scheme so far. Of those, 124 (77 per cent) will pass on the cut while 36 (23 per cent) will keep the existing arrangements and absorb the funding cut into their overall budget.

The NPI estimates that 830,000 claimants in those areas will be adversely affected, with another 50,000 affected by secondary changes such as the reduction or removal of the second adult rebate. Some 200,000 working people on low incomes will see a council tax increase. Those claimants will lose an average of £146 a year but as much as £213 a year in outer London.

However, there are significant local variations even within the areas passing on the cut. Some councils plan to reduce support to working age claimants by £50 a year and some by £275 a year.

Two-thirds of them will introduce a minimum payment so that everyone pays something regardless of their income, with figures ranging from 8.5 per cent to over 20 per cent.

Other measures include removal of the second adult rebate that people get when they share their home with someone on a low income, changes to non-dependent deductions, counting other benefits like child benefit and child maintenance as income and changing income tapers. There will be £100 million of transitional funding from the government.

Judging from all that, it’s hard to see how even those people who know a cut is on the way will know exactly how much they will have to pay until a bill comes through the letter box. The NPI says there will be a postcode lottery, with people in one London borough having to find 20 per cent of their council tax but those in the borough next door continuing to get support in full.

For tenants, perhaps facing a council tax bill for the first time, that will mean having to find the extra money at a time when many of their other benefits are being squeezed too.

This was exactly the point made by Welsh local government minister Carl Sergeant last week when he explained why the Cabinet had decided to drop the scheme it originally published before Christmas. He said: ‘Since December, the cumulative impact of the UK Government’s raft of changes to welfare benefits has started to become clearer, and we have seen some very disturbing analysis of the cuts by organisations including the Institute for Fiscal Studies, the Joseph Rowntree Foundation and Citizens Advice.’

He said that the government could now safely use some of its reserves held back for contingencies to give extra support for those eligible for help with the council tax.

For landlords worried about the impact of the bedroom tax, the council tax change will mean yet another call on their tenants’ income, backed potentially by court summonses and the bailiffs moving in to seize property but varying by local area.

The prospects become even bleaker come the start of the universal credit and changes to direct payment of housing costs in October.

Meanwhile later today – appropriately enough on ‘blue Monday’ or officially the most depressing day of the year – MPs debate the third reading of the Bill that will uprate many benefits by just 1 per cent from April 2014. 

Ignoring the obvious

Tue, 15 Jan 2013

Without local authorities, England has only seen more than 200,000 housing starts three times since the war. So why is council housing being ignored now?

As John Perry argues in Inside Housing, councils are currently building around 3,000 homes a year but they could build 15,000 if they were given more freedom to borrow. ‘A government that is desperate for house building shouldn’t look a gift horse in the mouth,’ he says.

Desperate is exactly the right word for our current performance on housebuilding: just 105,000 starts in England in 2011/12, down from a miserable 112,000 in 2010/11 and less than half the level needed to meet demand and prevent an ever-increasing spiral of rising prices and rents.

Looked at in the context of history, the refusal to free councils to build is even more curious. The last year in which we built anything like the number of homes needed was 1979 (209,000), which was precisely the year that the rapid decline of council housing began.

Only three times since the war have we seen more than 200,000 housing starts without taking account of the contribution from local authorities: 1964, 1965 and 1968. The total of 176,000 starts by the private sector and housing associations in 2007 was the highest for 35 years but that is when the current slump began.

With housing association investment slashed and build to rent slow to get off the ground, that leaves housebuilding and all its associated benefits for economic growth completely reliant on private housebuilders. They have only started more than 200,000 homes twice since the war and since the late 1960s they have only started more than 175,000 once.

So why the refusal to turn to local authorities? The argument within government I’ve heard advanced most recently is borrowing: under current financial arrangements any by councils and almos would count as public borrowing and increase the deficit; but changing the borrowing rules for councils (as already applies in other countries) would raise the spectre of the disastrous borrowing by regional governments in Spain in the financial markets. Both options would conflict with the coalition’s key priority of deficit reduction.

But there is a deeper prejudice against council housing too. In part this is political, since building more of it would conflict with the logic of the rest of the government’s social housing policy, which is clearly to promote a residualised social housing sector for the most vulnerable and near market rents with fixed-term tenancies for everyone else.

And it’s not just the politics of the coalition either. We have spent the last 35 years under governments of both parties moving from bricks and mortar to personal subsidies. It was not just the Conservatives and Sir George Young who believed that ‘housing benefit will take the strain’.

There also seems to be hostility in Whitehall to local government in general and investment by local government in housing in particular. The institutional memory of the mistakes of mass council housing runs deep even though tower blocks and system building were mostly the result of central government diktat. Even as memories of Ronan Pont fade, the inquest into the 2009 Lakanal House fire provides a grim reminder.

Put all of those arguments together and the resistance to council housing is more understandable. Yet each of them is steadily crumbling.

On the economics, the evidence is mounting by the day that the government’s failure to deliver economic growth is increasing the deficit rather than reducing it. Right at the top of the government there is a recognition that housebuilding is one of the best ways of delivering growth because it generates more jobs and fewer imports than the alternatives. Borrowing to invest in new homes makes just as much economic sense as it makes social sense.

On the politics, many of the leading advocates of more freedom for council housing and a change in the public borrowing rules are Conservative local authorities, notably Westminster City Council under its leader and former Cabinet member for housing Philippa Roe. It may be aiming at affordable rent homes for key workers rather than traditional council housing but the point is the same.

On the subsidies, the key argument is that directing them into housing benefit is more economic because all of the money goes to people in housing need. In contrast, subsidising the construction of a home only meets need for so long as the people in it are in need. This argument is shaky enough already since it implies an ever-increasing housing benefit bill and in any case depends on allocation policies. However, there are also some powerful new arguments against it, which ironically come from coalition policy.

In an interesting session of evidence to the public accounts committee last year, MPs asked David Orr of the NHF and David Montague of L&Q and the G15 about the trade-off between bricks and mortar and personal subsidies. David Orr quoted work showing that if you expected subsidy to be used for more than seven to eight years, capital subsidy was more cost-effective for the public purse. Below that revenue subsidy was better.

David Montague added that: ‘We are in the process of modelling the scenarios that David has also modelled, and now our conclusions are that if you take a seven-to-10-year view, revenue funding is more effective, but if you take a longer term view, capital funding is more effective. It depends very much on whether you believe that the homes that we are building should permanently be for people who will need support.’

On that basis, bricks and mortar subsidies for the sort of fixed-term tenancies introduced under the Localism Act and adopted by mostly Conservative authorities are definitely more cost-effective than housing benefit. If the coalition eventually legislates on pay to stay, with higher rents for higher earners who no longer need subsidy, the arguments will become even stronger. Fixed terms and pay to stay are not to many people’s tastes (including mine) but there are plenty of better alternatives out there and any number of options for rents, tenancies and mixtures of investment and they could improve investment for housing associations as well as councils. The point is that 35 years of orthodoxy saying housing benefit good, bricks and mortar subsidies bad no longer makes any sense.

All of which leaves blind prejudice as the only reason for continuing to ignore council housing.  Even that has partially broken down with the introduction of HRA reform. It’s way past time to go further: lift the borrowing caps, consider changing the borrowing rules for homes as well as roads and rail and allow councils and almos to build again. Let prejudice give way to common sense.

Ignoring the obvious

Tue, 15 Jan 2013

Without local authorities, England has only seen more than 200,000 housing starts three times since the war. So why is council housing being ignored now?

As John Perry argues in Inside Housing, councils are currently building around 3,000 homes a year but they could build 15,000 if they were given more freedom to borrow. ‘A government that is desperate for house building shouldn’t look a gift horse in the mouth,’ he says.

Desperate is exactly the right word for our current performance on housebuilding: just 105,000 starts in England in 2011/12, down from a miserable 112,000 in 2010/11 and less than half the level needed to meet demand and prevent an ever-increasing spiral of rising prices and rents.

Looked at in the context of history, the refusal to free councils to build is even more curious. The last year in which we built anything like the number of homes needed was 1979 (209,000), which was precisely the year that the rapid decline of council housing began.

Only three times since the war have we seen more than 200,000 housing starts without taking account of the contribution from local authorities: 1964, 1965 and 1968. The total of 176,000 starts by the private sector and housing associations in 2007 was the highest for 35 years but that is when the current slump began.

With housing association investment slashed and build to rent slow to get off the ground, that leaves housebuilding and all its associated benefits for economic growth completely reliant on private housebuilders. They have only started more than 200,000 homes twice since the war and since the late 1960s they have only started more than 175,000 once.

So why the refusal to turn to local authorities? The argument within government I’ve heard advanced most recently is borrowing: under current financial arrangements any by councils and almos would count as public borrowing and increase the deficit; but changing the borrowing rules for councils (as already applies in other countries) would raise the spectre of the disastrous borrowing by regional governments in Spain in the financial markets. Both options would conflict with the coalition’s key priority of deficit reduction.

But there is a deeper prejudice against council housing too. In part this is political, since building more of it would conflict with the logic of the rest of the government’s social housing policy, which is clearly to promote a residualised social housing sector for the most vulnerable and near market rents with fixed-term tenancies for everyone else.

And it’s not just the politics of the coalition either. We have spent the last 35 years under governments of both parties moving from bricks and mortar to personal subsidies. It was not just the Conservatives and Sir George Young who believed that ‘housing benefit will take the strain’.

There also seems to be hostility in Whitehall to local government in general and investment by local government in housing in particular. The institutional memory of the mistakes of mass council housing runs deep even though tower blocks and system building were mostly the result of central government diktat. Even as memories of Ronan Pont fade, the inquest into the 2009 Lakanal House fire provides a grim reminder.

Put all of those arguments together and the resistance to council housing is more understandable. Yet each of them is steadily crumbling.

On the economics, the evidence is mounting by the day that the government’s failure to deliver economic growth is increasing the deficit rather than reducing it. Right at the top of the government there is a recognition that housebuilding is one of the best ways of delivering growth because it generates more jobs and fewer imports than the alternatives. Borrowing to invest in new homes makes just as much economic sense as it makes social sense.

On the politics, many of the leading advocates of more freedom for council housing and a change in the public borrowing rules are Conservative local authorities, notably Westminster City Council under its leader and former Cabinet member for housing Philippa Roe. It may be aiming at affordable rent homes for key workers rather than traditional council housing but the point is the same.

On the subsidies, the key argument is that directing them into housing benefit is more economic because all of the money goes to people in housing need. In contrast, subsidising the construction of a home only meets need for so long as the people in it are in need. This argument is shaky enough already since it implies an ever-increasing housing benefit bill and in any case depends on allocation policies. However, there are also some powerful new arguments against it, which ironically come from coalition policy.

In an interesting session of evidence to the public accounts committee last year, MPs asked David Orr of the NHF and David Montague of L&Q and the G15 about the trade-off between bricks and mortar and personal subsidies. David Orr quoted work showing that if you expected subsidy to be used for more than seven to eight years, capital subsidy was more cost-effective for the public purse. Below that revenue subsidy was better.

David Montague added that: ‘We are in the process of modelling the scenarios that David has also modelled, and now our conclusions are that if you take a seven-to-10-year view, revenue funding is more effective, but if you take a longer term view, capital funding is more effective. It depends very much on whether you believe that the homes that we are building should permanently be for people who will need support.’

On that basis, bricks and mortar subsidies for the sort of fixed-term tenancies introduced under the Localism Act and adopted by mostly Conservative authorities are definitely more cost-effective than housing benefit. If the coalition eventually legislates on pay to stay, with higher rents for higher earners who no longer need subsidy, the arguments will become even stronger. Fixed terms and pay to stay are not to many people’s tastes (including mine) but there are plenty of better alternatives out there and any number of options for rents, tenancies and mixtures of investment and they could improve investment for housing associations as well as councils. The point is that 35 years of orthodoxy saying housing benefit good, bricks and mortar subsidies bad no longer makes any sense.

All of which leaves blind prejudice as the only reason for continuing to ignore council housing.  Even that has partially broken down with the introduction of HRA reform. It’s way past time to go further: lift the borrowing caps, consider changing the borrowing rules for homes as well as roads and rail and allow councils and almos to build again. Let prejudice give way to common sense.

Direct impact

Wed, 9 Jan 2013

Housing is barely mentioned in the DWP impact assessment of the Welfare Benefits Uprating Bill but there is little doubt that the impact will be huge.

The technical reason for the omission appears to be that the Bill only covers benefits and tax credits for which primary legislation is needed to change the uprating method. The 1 per cent increase also applies to the local housing allowance but this can be done by regulation and so is not included in the assessment.

The obvious direct impact will be on private tenants. The 1 per cent uprating in LHA effectively amounts to a cut within a cut within a cut within a cut. More on this aspect below.

However, the impacts do not stop there. Tenants and landlords in the social rented sector could be forgiven for concentrating on the bedroom tax and other cuts due from April 2013. As things stand, housing benefit for social tenants will still be uprated in line with actual rents but how long can that be guaranteed when the link has now been broken for private tenants?

On top of that long-term worry, even if the link survives, tenants will come under even greater pressure as a result of the 1 per cent uprating of their other benefits. The impact assessment puts the average loss at £3 a week per households. However, the biggest impact will be felt by the poorest in the bottom three income deciles, who will lose £4-£5 a week.

This would be worrying enough but this impact will be compounded by the introduction of direct payment under the universal credit from October 2013. Once the housing element is paid to the tenant, any cut in any part of their income will be much more likely to turn into rent arrears. Direct payment and 1 per cent uprating will be a toxic combination even if the housing element remains unaffected.

Next consider the impact of this round of cuts on top of the recession and all the other cuts since 2010 on social housing communities. Research by the Human City Institute estimates that real incomes will fall by a combined £8.5 billion between 2008 and 2015. 

On the uprating itself, I don’t have space to go into the detail here but it is clear that the change will affect working as well as workless households. In the language of the coalition, it is also clear that many of the so-called shirkers and strivers are in fact the same people moving between insecure jobs and unemployment. With 9.6 million households affected overall, it’s likely that most social tenants of working age will be affected in one way or another. For an impartial analysis of the Bill and uprating as a whole, this briefing by the House of Commons Library is a good place to start (although as I’m writing this the link seems to be down).

As for private tenants, 1 per cent uprating is only the latest in a long line of cuts in the local housing allowance. So far, increases in LHA rates have been set to the 30th percentile, frozen for 2012/13 and increased in line with CPI rather than RPI inflation from April 2013. The final cut was meant to be temporary but will now be trumped by 1 per cent uprating in 2014/2015 and 2015/16. That is on top of extending the shared accommodation rate (SAR) to the under 35s.

As a briefing by Crisis points out, over the last decade rents have risen faster than even RPI inflation and in areas like London the disparity is even greater. The DWP impact assessment of CPI inflation assumed that rents would rise at 4 per cent a year.

With the link between the LHA and actual rents already broken, properties in many areas are already unaffordable and over the long term swathes of the country will be inaccessible to people on benefit. Although the highest rent areas will be exempt from the 1 per cent cap, the effects will be dramatic even before we get to April 2014.  A mystery shopping exercise by Crisis found that in a number of areas less than 2 per cent of shared accommodation is available to the under-35s.

Even this may under-estimate the cuts. As Joe Halewood has pointed out on his blog, the published rates for the LHA from April 2013 suggest an increase of just 0.6 per cent rather than the 2.2 per cent rate of CPI. The maximum increase anywhere in the country is 2.2 per cent and the rate is actually being cut in some areas.

The DWP impact assessment of the Bill says that the average household will be £3 a week worse off as a result of 1 per cent uprating. However, this does not include housing costs.

As Kate Webb points out on Shelter’s blog, the losses faced by private renters will be more than double that. Calculations by Shelter suggest that by April 2015 more than half of LHA rates for two-bed properties will be £3.45 a week or more below CPI indexation and £7.45 or more below actual rents.

These cuts will be happening at the same time as local authorities discharge their duty to homeless people with private rented homes – and will only add to fears that this will generate revolving door homelessness as they fall into rent arrears.

In last night’s debate, Conservative MPs accused the opposition of failing to include the impact of the government’s increase in the personal tax allowance. However, a briefing by Citizens Advice points out that anyone on housing and council tax benefit will immediately lose 85p in the £1 from anything they gain on tax. It argues that the cumulative impact of all the tax and benefit changes for a couple with two children with one of them on a full-time wage just above the minimum wage and paying rent of £130 a week will be that they will be £3.50 a week worse off from April 2013, £8 a week from April 2014 and £13 a week from April 2015. The loss for a family with the same rent earning £26,000 a year – the classic ‘hard-working family’ in whose name benefits are supposedly being cut – will see their weekly loss rise from £2.30 in April 2013 to over £12 from April 2015.

If you thought that 2013 might be the worst it was going to get for housing and welfare reform, think again. 

Direct impact

Wed, 9 Jan 2013

Housing is barely mentioned in the DWP impact assessment of the Welfare Benefits Uprating Bill but there is little doubt that the impact will be huge.

The technical reason for the omission appears to be that the Bill only covers benefits and tax credits for which primary legislation is needed to change the uprating method. The 1 per cent increase also applies to the local housing allowance but this can be done by regulation and so is not included in the assessment.

The obvious direct impact will be on private tenants. The 1 per cent uprating in LHA effectively amounts to a cut within a cut within a cut within a cut. More on this aspect below.

However, the impacts do not stop there. Tenants and landlords in the social rented sector could be forgiven for concentrating on the bedroom tax and other cuts due from April 2013. As things stand, housing benefit for social tenants will still be uprated in line with actual rents but how long can that be guaranteed when the link has now been broken for private tenants?

On top of that long-term worry, even if the link survives, tenants will come under even greater pressure as a result of the 1 per cent uprating of their other benefits. The impact assessment puts the average loss at £3 a week per households. However, the biggest impact will be felt by the poorest in the bottom three income deciles, who will lose £4-£5 a week.

This would be worrying enough but this impact will be compounded by the introduction of direct payment under the universal credit from October 2013. Once the housing element is paid to the tenant, any cut in any part of their income will be much more likely to turn into rent arrears. Direct payment and 1 per cent uprating will be a toxic combination even if the housing element remains unaffected.

Next consider the impact of this round of cuts on top of the recession and all the other cuts since 2010 on social housing communities. Research by the Human City Institute estimates that real incomes will fall by a combined £8.5 billion between 2008 and 2015. 

On the uprating itself, I don’t have space to go into the detail here but it is clear that the change will affect working as well as workless households. In the language of the coalition, it is also clear that many of the so-called shirkers and strivers are in fact the same people moving between insecure jobs and unemployment. With 9.6 million households affected overall, it’s likely that most social tenants of working age will be affected in one way or another. For an impartial analysis of the Bill and uprating as a whole, this briefing by the House of Commons Library is a good place to start (although as I’m writing this the link seems to be down).

As for private tenants, 1 per cent uprating is only the latest in a long line of cuts in the local housing allowance. So far, increases in LHA rates have been set to the 30th percentile, frozen for 2012/13 and increased in line with CPI rather than RPI inflation from April 2013. The final cut was meant to be temporary but will now be trumped by 1 per cent uprating in 2014/2015 and 2015/16. That is on top of extending the shared accommodation rate (SAR) to the under 35s.

As a briefing by Crisis points out, over the last decade rents have risen faster than even RPI inflation and in areas like London the disparity is even greater. The DWP impact assessment of CPI inflation assumed that rents would rise at 4 per cent a year.

With the link between the LHA and actual rents already broken, properties in many areas are already unaffordable and over the long term swathes of the country will be inaccessible to people on benefit. Although the highest rent areas will be exempt from the 1 per cent cap, the effects will be dramatic even before we get to April 2014.  A mystery shopping exercise by Crisis found that in a number of areas less than 2 per cent of shared accommodation is available to the under-35s.

Even this may under-estimate the cuts. As Joe Halewood has pointed out on his blog, the published rates for the LHA from April 2013 suggest an increase of just 0.6 per cent rather than the 2.2 per cent rate of CPI. The maximum increase anywhere in the country is 2.2 per cent and the rate is actually being cut in some areas.

The DWP impact assessment of the Bill says that the average household will be £3 a week worse off as a result of 1 per cent uprating. However, this does not include housing costs.

As Kate Webb points out on Shelter’s blog, the losses faced by private renters will be more than double that. Calculations by Shelter suggest that by April 2015 more than half of LHA rates for two-bed properties will be £3.45 a week or more below CPI indexation and £7.45 or more below actual rents.

These cuts will be happening at the same time as local authorities discharge their duty to homeless people with private rented homes – and will only add to fears that this will generate revolving door homelessness as they fall into rent arrears.

In last night’s debate, Conservative MPs accused the opposition of failing to include the impact of the government’s increase in the personal tax allowance. However, a briefing by Citizens Advice points out that anyone on housing and council tax benefit will immediately lose 85p in the £1 from anything they gain on tax. It argues that the cumulative impact of all the tax and benefit changes for a couple with two children with one of them on a full-time wage just above the minimum wage and paying rent of £130 a week will be that they will be £3.50 a week worse off from April 2013, £8 a week from April 2014 and £13 a week from April 2015. The loss for a family with the same rent earning £26,000 a year – the classic ‘hard-working family’ in whose name benefits are supposedly being cut – will see their weekly loss rise from £2.30 in April 2013 to over £12 from April 2015.

If you thought that 2013 might be the worst it was going to get for housing and welfare reform, think again. 

Second half

Tue, 8 Jan 2013

The coalition’s Mid-Term Review is as coy about what was billed as ‘the most radical reform of social housing in a generation’ as it is about what else will be done to tackle the biggest shortage of new homes in four generations.

The section of The Coalition: together in the national interest on Communities and Local Government is one of the shortest in the whole document. The five claims on what’s been done in the first half of the coalition may be many things but none of them involve housing.

Thus the coalition has ‘introduced sweeping reforms to increase local authority freedom’ but not come close to giving councils the freedom to borrow to invest in new homes that is being demanded by local politicians from all parties. It has ‘given neighbourhoods greater power to do things for themselves’ and ‘abolished regional government and reduced the size and cost of central government’ but even Policy Exchange has warned of the plans for new homes lost in the process. It has established mayors in three cities (but seen them rejected in most places). Finally, showing a true sense of priorities, it has restored weekly black bin collections to six million households.

The government’s record on investment in housing is hived off into a separate section with boasts about: introducing NewBuy and FirstBuy; creating Affordable Rent to deliver more affordable homes for less grant; introducing the New Homes Bonus; increasing the maximum Right to Buy discount and ensuring that ‘additional receipts’ are used to build more homes for affordable rent; and introducing the Get Britain Building Fund to unlock stalled sites.

On the Right to Buy the phrasing is interesting. The pledge is merely to ensure that additional receipts are used and there is no mention of the boast frequently made by Grant Shapps that there will be one-for-one replacement.

Put all that together though and there is no mention whatsoever of reforming the homelessness legislation to allow the duty to be discharged into the private sector or allowing landlords to use fixed-term tenancies.

Likewise, on welfare and jobs, the Mid-Term Report has plenty to say about the universal credit and the work programme but does not mention housing benefit beyond a reference to the household benefit cap.

The first two changes were fundamental parts of the Localism Act. All three were identified as key changes to the housing safety net in the Homelessness Monitor published by Crisis last month. Are they not worth boasting about, not worth highlighting, politically inconvenient or just filed under completed business? Or was it just, as I blogged this morning, that none of them were mentioned in the Programme for Government in 2010 either?

Looking to the future the government will ‘increase the rate of housebuilding’ by:

  • Creating a debt guarantee scheme for up to £10 billion of support for new affordable and private rent homes
  • Supporting first-time buyers by extending FirstBuy and continuing to champion NewBuy
  • Allowing developers who can prove that affordable housing requirements make a project unviable to have them reduced or removed
  • Brining more empty homes back into use, releasing public land and reducing planning delays.

The ambitions for the future in Communities and Local Government seem surprisingly modest too. There are only two of them: to continue to devolve responsibility for local government with single funding pots for local areas; and to back proposals by local authorities to share services. It’s noticeable that there is no mention of pay to stay - the big housing reform that has yet to be implemented. Is it now on the backburner, perhaps because of concerns about the practicalities - or is housing apart from housebuilding now so low down the list of priorities that it is not worth highlighting?

Unless I’m missing something (and I’ll add more later if I have), there is nothing new here. The Mid-Term Report is actually being publushed two months late by my reckoning but nothing much seems set to change as the coalition kicks off its second half.

In this afternoon’s press conference David Cameron did promise more help for people who cannot raise a deposit for a mortgage, with more details to be announced before the Budget. Whether this will amount to more than a token scheme remains to be seen but that might be preferable to one big enough to prop up house prices still further.

However, taking the plans for the future as a whole, the strategy seems to be to rely on what has already been announced to fix the broken mortgage and housing markets and encourage new investment in private renting. Plus yet more welfare reform of course – starting with tomorrow’s uprating Bill.

Second half

Tue, 8 Jan 2013

The coalition’s Mid-Term Review is as coy about what was billed as ‘the most radical reform of social housing in a generation’ as it is about what else will be done to tackle the biggest shortage of new homes in four generations.

The section of The Coalition: together in the national interest on Communities and Local Government is one of the shortest in the whole document. The five claims on what’s been done in the first half of the coalition may be many things but none of them involve housing.

Thus the coalition has ‘introduced sweeping reforms to increase local authority freedom’ but not come close to giving councils the freedom to borrow to invest in new homes that is being demanded by local politicians from all parties. It has ‘given neighbourhoods greater power to do things for themselves’ and ‘abolished regional government and reduced the size and cost of central government’ but even Policy Exchange has warned of the plans for new homes lost in the process. It has established mayors in three cities (but seen them rejected in most places). Finally, showing a true sense of priorities, it has restored weekly black bin collections to six million households.

The government’s record on investment in housing is hived off into a separate section with boasts about: introducing NewBuy and FirstBuy; creating Affordable Rent to deliver more affordable homes for less grant; introducing the New Homes Bonus; increasing the maximum Right to Buy discount and ensuring that ‘additional receipts’ are used to build more homes for affordable rent; and introducing the Get Britain Building Fund to unlock stalled sites.

On the Right to Buy the phrasing is interesting. The pledge is merely to ensure that additional receipts are used and there is no mention of the boast frequently made by Grant Shapps that there will be one-for-one replacement.

Put all that together though and there is no mention whatsoever of reforming the homelessness legislation to allow the duty to be discharged into the private sector or allowing landlords to use fixed-term tenancies.

Likewise, on welfare and jobs, the Mid-Term Report has plenty to say about the universal credit and the work programme but does not mention housing benefit beyond a reference to the household benefit cap.

The first two changes were fundamental parts of the Localism Act. All three were identified as key changes to the housing safety net in the Homelessness Monitor published by Crisis last month. Are they not worth boasting about, not worth highlighting, politically inconvenient or just filed under completed business? Or was it just, as I blogged this morning, that none of them were mentioned in the Programme for Government in 2010 either?

Looking to the future the government will ‘increase the rate of housebuilding’ by:

  • Creating a debt guarantee scheme for up to £10 billion of support for new affordable and private rent homes
  • Supporting first-time buyers by extending FirstBuy and continuing to champion NewBuy
  • Allowing developers who can prove that affordable housing requirements make a project unviable to have them reduced or removed
  • Brining more empty homes back into use, releasing public land and reducing planning delays.

The ambitions for the future in Communities and Local Government seem surprisingly modest too. There are only two of them: to continue to devolve responsibility for local government with single funding pots for local areas; and to back proposals by local authorities to share services. It’s noticeable that there is no mention of pay to stay - the big housing reform that has yet to be implemented. Is it now on the backburner, perhaps because of concerns about the practicalities - or is housing apart from housebuilding now so low down the list of priorities that it is not worth highlighting?

Unless I’m missing something (and I’ll add more later if I have), there is nothing new here. The Mid-Term Report is actually being publushed two months late by my reckoning but nothing much seems set to change as the coalition kicks off its second half.

In this afternoon’s press conference David Cameron did promise more help for people who cannot raise a deposit for a mortgage, with more details to be announced before the Budget. Whether this will amount to more than a token scheme remains to be seen but that might be preferable to one big enough to prop up house prices still further.

However, taking the plans for the future as a whole, the strategy seems to be to rely on what has already been announced to fix the broken mortgage and housing markets and encourage new investment in private renting. Plus yet more welfare reform of course – starting with tomorrow’s uprating Bill.

Best-laid plans

Mon, 7 Jan 2013

The launch of the coalition’s mid-term report later today got me thinking back to its original Programme for Government - and how much it did not say about what followed.

According to reports this morning, David Cameron and Nick Clegg, mortgages and housebulding will feature in a package of policies including a new flat rate state pension and help with long-term care. They will say in their foreword: ‘We will build more houses and make the dream of home ownership a reality for more people’

Back in May 2010, fresh from the general election and their walk in the rose garden, the Conservatives and Liberal Democrats agreed a 36-page document setting out their priorities in every department and every area of policy.

At the time I highlighted what had been dropped from the two parties manifestos. Reading it now, almost three years on, the really striking thing is how many key coalition policies were not even mentioned.

Take the section on Communities and Local Government. All the mood music of localism is there in the opening statement that: ‘The government believes that it is time for a fundamental shift of power from Westminster to people. We will promote decentralisation and democratic engagement, and we will end the era of top-down government by giving new powers to local councils, communities, neighbourhoods and individuals.’

There was rapid progress on most of the dozen or so specific pledges relevant to housing, including abolishing regional spatial strategies, reviewing the housing revenue account and exploring ways to bring empty homes back into use.

The pledges illustrated the extent to which localism was the glue that held the coalition together. However, there was no hint that the government would be launching what it described as ‘the most radical reform of social housing in a generation’ within just six months and no mention of fixed-term tenancies, affordable rent, reform of the right to buy, pay to stay or discharging the homelessness duty into the private rented sector.

On jobs and welfare, the emphasis was all on welfare to work. The work programme, payment by results, greater conditionality, reform of incapacity benefit and finding ways to improve incentives to work all featured heavily. However, there was no mention at all of housing benefit or the local housing allowance.

The most significant statement in the whole document was actually on the final page: ‘The deficit reduction programme takes precedence over any of the other measures in this agreement, and the speed of implementation of any measures that have a cost to the public finances will depend on decisions to be made in the Spending Review.’

That obvious financial imperative involved Lib Dem acceptance of the Conservative argument on the target for reducing the deficit (‘We will significantly accelerate the reduction of the structural deficit over the course of a Parliament, with the main burden of deficit reduction borne by reduced spending rather than increased taxes.’) dictated everything that followed.

Each of the unmentioned reforms was subsequently justified in terms of doing more with less money: affordable rent would maintain supply with reduced funding; fixed-term tenancies and the bedroom tax would enable more efficient use of scarce social housing; the right to buy would fund more new build. However, there was also a deeper conviction that social housing was a problem that needed ‘reform’. The thought that a greater reliance on higher and market rents might actually increase the deficit over the longer term went unmentioned.

The glue of ‘localism’ would be accompanied by an appeal to ‘fairness’ with Cameron and Clegg saying that: ‘Difficult decisions will have to be taken in the months and years ahead, but we will ensure that fairness is at the heart of those decisions so that all those most in need are protected.’ However, just as localism came to mean allowing Conservative councils to do more of what they wanted, so fairness was turned on its head to favour ‘hard-working families’ over claimants and justify policies like the benefit cap and the 1 per cent benefit uprating that parliament will debate tomorrow.

It will be fascinating to see what the coalition can come up with in the mid-term report later and it is perfectly possible that there will be something new on housing in addition to window dressing on mortgages and housebuilding. For example, one piece of unfinished business from the original programme was a pledge to ‘review the effectiveness of the raising of the stamp duty threshold for first-time buyers’.

However, just as with the Programme for Government, the financial and ideological parameters for the run-up to May 2015 have already been set.

Best-laid plans

Mon, 7 Jan 2013

The launch of the coalition’s mid-term report later today got me thinking back to its original Programme for Government - and how much it did not say about what followed.

According to reports this morning, David Cameron and Nick Clegg, mortgages and housebulding will feature in a package of policies including a new flat rate state pension and help with long-term care. They will say in their foreword: ‘We will build more houses and make the dream of home ownership a reality for more people’

Back in May 2010, fresh from the general election and their walk in the rose garden, the Conservatives and Liberal Democrats agreed a 36-page document setting out their priorities in every department and every area of policy.

At the time I highlighted what had been dropped from the two parties manifestos. Reading it now, almost three years on, the really striking thing is how many key coalition policies were not even mentioned.

Take the section on Communities and Local Government. All the mood music of localism is there in the opening statement that: ‘The government believes that it is time for a fundamental shift of power from Westminster to people. We will promote decentralisation and democratic engagement, and we will end the era of top-down government by giving new powers to local councils, communities, neighbourhoods and individuals.’

There was rapid progress on most of the dozen or so specific pledges relevant to housing, including abolishing regional spatial strategies, reviewing the housing revenue account and exploring ways to bring empty homes back into use.

The pledges illustrated the extent to which localism was the glue that held the coalition together. However, there was no hint that the government would be launching what it described as ‘the most radical reform of social housing in a generation’ within just six months and no mention of fixed-term tenancies, affordable rent, reform of the right to buy, pay to stay or discharging the homelessness duty into the private rented sector.

On jobs and welfare, the emphasis was all on welfare to work. The work programme, payment by results, greater conditionality, reform of incapacity benefit and finding ways to improve incentives to work all featured heavily. However, there was no mention at all of housing benefit or the local housing allowance.

The most significant statement in the whole document was actually on the final page: ‘The deficit reduction programme takes precedence over any of the other measures in this agreement, and the speed of implementation of any measures that have a cost to the public finances will depend on decisions to be made in the Spending Review.’

That obvious financial imperative involved Lib Dem acceptance of the Conservative argument on the target for reducing the deficit (‘We will significantly accelerate the reduction of the structural deficit over the course of a Parliament, with the main burden of deficit reduction borne by reduced spending rather than increased taxes.’) dictated everything that followed.

Each of the unmentioned reforms was subsequently justified in terms of doing more with less money: affordable rent would maintain supply with reduced funding; fixed-term tenancies and the bedroom tax would enable more efficient use of scarce social housing; the right to buy would fund more new build. However, there was also a deeper conviction that social housing was a problem that needed ‘reform’. The thought that a greater reliance on higher and market rents might actually increase the deficit over the longer term went unmentioned.

The glue of ‘localism’ would be accompanied by an appeal to ‘fairness’ with Cameron and Clegg saying that: ‘Difficult decisions will have to be taken in the months and years ahead, but we will ensure that fairness is at the heart of those decisions so that all those most in need are protected.’ However, just as localism came to mean allowing Conservative councils to do more of what they wanted, so fairness was turned on its head to favour ‘hard-working families’ over claimants and justify policies like the benefit cap and the 1 per cent benefit uprating that parliament will debate tomorrow.

It will be fascinating to see what the coalition can come up with in the mid-term report later and it is perfectly possible that there will be something new on housing in addition to window dressing on mortgages and housebuilding. For example, one piece of unfinished business from the original programme was a pledge to ‘review the effectiveness of the raising of the stamp duty threshold for first-time buyers’.

However, just as with the Programme for Government, the financial and ideological parameters for the run-up to May 2015 have already been set.

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