Monday, 27 February 2017

Inside edge

All posts from: February 2013

Looking again

Thu, 28 Feb 2013

With even the Monster Raving Loonies calling it a crazy policy, is there still time for changes to the bedroom tax?

It’s a measure of how big a political issue it’s become that it was one of only three nominated by voters in Eastleigh for the BBC to put to the 15 candidates in today’s by-election. Ten came out against the bedroom tax, with Howling Laud Hope of the Monster Raving Loony William Hill Party making the far too sensible point that ‘this is like going back to the pre-Victorian window tax.’ The coalition parties could only rely on the backing of the Beer, Baccy and Crumpet Party, the Christian Party (Proclaiming Christ’s Lordship) and an independent.

The by-election winner will enter a House of Commons that is at last giving the bedroom tax the sort of scrutiny it deserves. The Welfare Reform Act packed so many changes in to one piece of legislation that there was little time for detailed debate on each of them. Even when contradictions and unintended consequences were picked up in the Lords, the amendments were reversed in the Commons.

However, the closer we get to April 1, the more bedroom tax victims are appearing in MPs’ surgeries, in the newspapers and on TV and the harder it becomes for ministers to defend. That’s transmitted into questions and debates in the Commons as MPs take the chance to express the anger and fear of their constituents.

Yesterday saw the bedroom tax feature in eight exchanges at Welsh questions and another four at prime minister’s questions. David Cameron was presented with the plight of foster carers, armed service families, a man near pension age who had lived in the same house for his whole life, a wheelchair-bound sufferer with brittle bones who needs a spare room on health grounds and a blind couple who rely on their family and neighbours. Cameron stuck to his formula about case-by-case assistance with discretionary help and the need to act on the deficit and the housing benefit bill while attacking Labour profligacy.

That was followed by an opposition debate led by the SNP, Plaid Cymru and the Green Party that saw MP after MP get to their feet to quote cases from their own constituencies. The debate took over six hours so I’ve only got space for a selection but this should give a flavour:

  • A homeless woman from Corby who was offered a two-bedroom property and was told that if she refused it she would be told she had not accepted re-housing
  • A woman from Glasgow who is a full-time carer for her father who lives nearby but now faces having to downsize to the other side of the city
  • A couple from Newport where the husband’s had his ESA wrongly cut after an Atos assessment, successfully appealed only for his wife to be diagnosed with myleopathy, and then received a bedroom tax letter
  • The man from Carmathernshire who has turned his spare bedroom into a sterile room for his dialysis treatment but now faces the penalty
  • A woman from Rutherglen who has fostered more than 50 children over the last 30 years who’s been told she has three spare bedrooms
  • A disabled man from Bolton who lives in a specially adapted house and lives close to his family and needs their support, who says he’s contemplating suicide if he is forced to downsize.

MPs also queued up to expose the contradictions in the policy. Jim Shannon (DUP) said he had spent 20 years as a councillor upgrading one-bed bungalows to two bedrooms only to find that the very thing he pushed for has to be turned back. Angus Bredan MacNeil (SNP) pointed out that people from rural areas have nowhere else to go. Karen Buck (Labour) argued that if the policy worked and encouraged people to downsize if would not save any money and Dr Eilidh Whiteford (SNP) that ‘the great irony of the bedroom tax is that it will not save any money’. Julie Hilling (Lab) pointed out that when size criteria were introduced by Labour for private tenants (one of minsters’ key arguments for introducing it for social tenants) they did not affect existing tenancies.

MP after MP argued that discretionary housing payments will only cover a fraction of those affected: Labour’s John Healey quoted NHF figures that £50 million of help would only cover 73,000 disabled people, leaving more than half of those on disability living allowance with no help at all.

However, some of the most interesting exchanges for me came between Lib Dem work and pensions minister Steve Webb and MPs including his own backbenchers. The government eventually won the vote by 41 votes and was never in any real danger of losing but is was notable that all of the Lib Dem backbenchers abstained and all of them were pressing for concessions.

Webb began by using the Grant Shapps rebranding of the under-occupation penalty – the spare room subsidy – and making all the usual noises about the deficit, fairness for private tenants and discretionary help. However, challenged directly by Labour’s Liam Byrne on whether he was 100 per cent sure that the policy would deliver the savings set out by the Chancellor he seemed a little less than convincing: ‘Our impact assessment is out best estimate based on what we expect the impact of the policy to be.’

He argued that the government could address ‘the issue of the shortfall’ in two ways, through blanket exemptions and through DHPs. On foster carers, he said that the government saw local discretionary help as the best way forward but both he and Iain Duncan Smith were ‘entirely open to discussing whether that is the most effective way of delivering that support’. Simon Hughes (LD) asked if that meant they ‘would be willing to look at the categories defining which people need a bedroom’. Webb replied that: ‘I can see the attraction of that approach… We could say that a bedroom used for a foster child is a bedroom, so no deduction applies.’

Webb also clarified his position on whether people evicted for bedroom tax arrears would be counted as intentionally homeless. ‘If the only reason for the person’s homelessness is a reduction in benefit that is outside their control they should not be considered intentionally homeless by the local authority. I can put that on the record and hope that is helpful.’

There are no firm commitments here even if the tone suggests a willingness to make concessions. In many ways it was a repeat of comments by Iain Duncan Smith that he had asked DWP officials to ‘look again’ at how the bedroom tax applies to disabled people. The BBC reported that as a small u-turn following a letter from seven charities but the DWP press office tweeted that there was ’no change in spare bedroom policy, as with all reforms we will monitor closely as it comes in this April’. The promise of discretionary help and reviews to follow offers plenty of wriggle room for ministers.

However, another Lib Dem backbencher, Greg Mulholland, put his finger on the problem with the government’s approach. ‘I do not think that the government has got it right, and I ask them to address the issue compassionately and with common sense, not only through the application of discretionary housing payments… but through the provision of further exemptions for certain categories.’ He nominated partners who need separate rooms for medical reasons, disabled children who need a separate bedroom (an issue before the Supreme Court), foster carers and separated parents who have their kids to stay for part of the week. ‘If the exemptions that should be in place are there, the question of where local discretion should be used becomes discretionary rather than a set of difficult choices,’ he said.

It was all a belated attempt to inject some sense into a policy that even the Monster Raving Loonies recognise is crazy. With just 32 days left until April 1, MPs and campaigners need to keep up the pressure to convert the vague assurances and promises to look again at aspects of the bedroom tax into firm commitments.

Looking again

Thu, 28 Feb 2013

With even the Monster Raving Loonies calling it a crazy policy, is there still time for changes to the bedroom tax?

It’s a measure of how big a political issue it’s become that it was one of only three nominated by voters in Eastleigh for the BBC to put to the 15 candidates in today’s by-election. Ten came out against the bedroom tax, with Howling Laud Hope of the Monster Raving Loony William Hill Party making the far too sensible point that ‘this is like going back to the pre-Victorian window tax.’ The coalition parties could only rely on the backing of the Beer, Baccy and Crumpet Party, the Christian Party (Proclaiming Christ’s Lordship) and an independent.

The by-election winner will enter a House of Commons that is at last giving the bedroom tax the sort of scrutiny it deserves. The Welfare Reform Act packed so many changes in to one piece of legislation that there was little time for detailed debate on each of them. Even when contradictions and unintended consequences were picked up in the Lords, the amendments were reversed in the Commons.

However, the closer we get to April 1, the more bedroom tax victims are appearing in MPs’ surgeries, in the newspapers and on TV and the harder it becomes for ministers to defend. That’s transmitted into questions and debates in the Commons as MPs take the chance to express the anger and fear of their constituents.

Yesterday saw the bedroom tax feature in eight exchanges at Welsh questions and another four at prime minister’s questions. David Cameron was presented with the plight of foster carers, armed service families, a man near pension age who had lived in the same house for his whole life, a wheelchair-bound sufferer with brittle bones who needs a spare room on health grounds and a blind couple who rely on their family and neighbours. Cameron stuck to his formula about case-by-case assistance with discretionary help and the need to act on the deficit and the housing benefit bill while attacking Labour profligacy.

That was followed by an opposition debate led by the SNP, Plaid Cymru and the Green Party that saw MP after MP get to their feet to quote cases from their own constituencies. The debate took over six hours so I’ve only got space for a selection but this should give a flavour:

  • A homeless woman from Corby who was offered a two-bedroom property and was told that if she refused it she would be told she had not accepted re-housing
  • A woman from Glasgow who is a full-time carer for her father who lives nearby but now faces having to downsize to the other side of the city
  • A couple from Newport where the husband’s had his ESA wrongly cut after an Atos assessment, successfully appealed only for his wife to be diagnosed with myleopathy, and then received a bedroom tax letter
  • The man from Carmathernshire who has turned his spare bedroom into a sterile room for his dialysis treatment but now faces the penalty
  • A woman from Rutherglen who has fostered more than 50 children over the last 30 years who’s been told she has three spare bedrooms
  • A disabled man from Bolton who lives in a specially adapted house and lives close to his family and needs their support, who says he’s contemplating suicide if he is forced to downsize.

MPs also queued up to expose the contradictions in the policy. Jim Shannon (DUP) said he had spent 20 years as a councillor upgrading one-bed bungalows to two bedrooms only to find that the very thing he pushed for has to be turned back. Angus Bredan MacNeil (SNP) pointed out that people from rural areas have nowhere else to go. Karen Buck (Labour) argued that if the policy worked and encouraged people to downsize if would not save any money and Dr Eilidh Whiteford (SNP) that ‘the great irony of the bedroom tax is that it will not save any money’. Julie Hilling (Lab) pointed out that when size criteria were introduced by Labour for private tenants (one of minsters’ key arguments for introducing it for social tenants) they did not affect existing tenancies.

MP after MP argued that discretionary housing payments will only cover a fraction of those affected: Labour’s John Healey quoted NHF figures that £50 million of help would only cover 73,000 disabled people, leaving more than half of those on disability living allowance with no help at all.

However, some of the most interesting exchanges for me came between Lib Dem work and pensions minister Steve Webb and MPs including his own backbenchers. The government eventually won the vote by 41 votes and was never in any real danger of losing but is was notable that all of the Lib Dem backbenchers abstained and all of them were pressing for concessions.

Webb began by using the Grant Shapps rebranding of the under-occupation penalty – the spare room subsidy – and making all the usual noises about the deficit, fairness for private tenants and discretionary help. However, challenged directly by Labour’s Liam Byrne on whether he was 100 per cent sure that the policy would deliver the savings set out by the Chancellor he seemed a little less than convincing: ‘Our impact assessment is out best estimate based on what we expect the impact of the policy to be.’

He argued that the government could address ‘the issue of the shortfall’ in two ways, through blanket exemptions and through DHPs. On foster carers, he said that the government saw local discretionary help as the best way forward but both he and Iain Duncan Smith were ‘entirely open to discussing whether that is the most effective way of delivering that support’. Simon Hughes (LD) asked if that meant they ‘would be willing to look at the categories defining which people need a bedroom’. Webb replied that: ‘I can see the attraction of that approach… We could say that a bedroom used for a foster child is a bedroom, so no deduction applies.’

Webb also clarified his position on whether people evicted for bedroom tax arrears would be counted as intentionally homeless. ‘If the only reason for the person’s homelessness is a reduction in benefit that is outside their control they should not be considered intentionally homeless by the local authority. I can put that on the record and hope that is helpful.’

There are no firm commitments here even if the tone suggests a willingness to make concessions. In many ways it was a repeat of comments by Iain Duncan Smith that he had asked DWP officials to ‘look again’ at how the bedroom tax applies to disabled people. The BBC reported that as a small u-turn following a letter from seven charities but the DWP press office tweeted that there was ’no change in spare bedroom policy, as with all reforms we will monitor closely as it comes in this April’. The promise of discretionary help and reviews to follow offers plenty of wriggle room for ministers.

However, another Lib Dem backbencher, Greg Mulholland, put his finger on the problem with the government’s approach. ‘I do not think that the government has got it right, and I ask them to address the issue compassionately and with common sense, not only through the application of discretionary housing payments… but through the provision of further exemptions for certain categories.’ He nominated partners who need separate rooms for medical reasons, disabled children who need a separate bedroom (an issue before the Supreme Court), foster carers and separated parents who have their kids to stay for part of the week. ‘If the exemptions that should be in place are there, the question of where local discretion should be used becomes discretionary rather than a set of difficult choices,’ he said.

It was all a belated attempt to inject some sense into a policy that even the Monster Raving Loonies recognise is crazy. With just 32 days left until April 1, MPs and campaigners need to keep up the pressure to convert the vague assurances and promises to look again at aspects of the bedroom tax into firm commitments.

Sales pitch

Tue, 26 Feb 2013

So how is it going so far for two ‘ambitious schemes’ that we were told would ‘unlock the aspirations of a new generation of home buyers’?

It was March 2012 when David Cameron and Grant Shapps launched NewBuy and the ‘reinvigorated’ Right to Buy 2. ‘This government doesn’t just talk about expanding home ownership: we’re making it happen,’ said the prime minister.

Even as he was speaking it all seemed a tad ambitious. No wonder, when the English Housing Survey has just shown that home ownership fell again in 2011/12.

Flash forward almost a year and Mark Prisk, the successor to Shapps as housing minister, is hailing a doubling in right to buy sales and the highest number of sales since 2007. He said: ‘The reinvigorated right to buy has opened the door to home ownership for thousands of tenants across the country and I’m delighted to see so many taking up this opportunity.’

So far, so good for the government. Figures from the Council of Mortgage Lenders also show a rise in the number of first-time buyers. However, a quick look at today’s figures suggests it may not be time to break out the champagne just yet.

It’s true that right to buy sales have doubled but that’s only if you compare sales between July to September 2012 (1,041) and October to December 2012 (2,100). Might the summer holidays and the Olympics just possibly have had something to do with those figures?

In the nine months since the reinvigoration (with an increase in the right to buy cap to £75,000) sales total 3,495. That is indeed more than in any full year since 2007/08 but on current trends the total for 2012/13 will still be less than half the 12,250 sales achieved five years ago and around 10 per cent of the total seen before the Labour government introduced caps on discounts in the late 2000s.

Despite ‘200,000 hits’ on the DCLG website, that does not seem much of a return on all that initial hype, a discount that is three times what it was in some areas, and a marketing campaign costing close to £1 million. The impact assessment had estimated that 300,000 tenants both have the right to buy and can afford to exercise it.

The housing minister has even less to boast about with NewBuy. Figures released today show that there were just 1,522 sales in the first nine months of the scheme between March and December 2012.

It’s true that the Home Builders Federation said last month that NewBuy reservations now total 3,000 but even that does not come close to matching the hype generated a year ago when Shapps and Cameron boasted that the scheme would enable ‘100,000 prospective and existing homeowners to buy their dream home with much smaller deposits than currently required’.

If sales continue at the current rate, that target will be achieved some time in 2063 – but the scheme ends in March 2015. The only way that sales could get even close to the March 2012 aspiration would be if they continue to double quarter on quarter for the next two years (as they did between the second and third quarters of 2012/13).

However, as with Right to Buy 2, much of the initial enthusiasm was based on pent-up demand that would supposedly be unlocked by the new schemes. It seems just as likely to expect a flood of initial sales followed by a leveling off later as it does to expect such continuing growth.

Little wonder then that the government moved last month to boost sales with the launch of NewBuy Part Exchange. This will make people looking to trade in their existing home for a new one eligible for a mortgage with a 5 per cent deposit. That may be a useful option for second steppers stuck in their first home because they do not have enough equity to move but it will do little for the ‘new generations of home buyers’ that the scheme was meant to help.

One year on from their launch, Right to Buy 2 and NewBuy are still good news for some buyers: council tenants who can afford to buy (and perhaps do not want to pay to stay); first-time buyers who cannot raise a deposit; and now second steppers who cannot otherwise move.

However, sales are already looking much more modest than Shapps and Cameron made out and the results in terms of new homes look like being even more modest.

Even if NewBuy sales continue to rise thanks to the new part-exchange option, it remains to be seen how many of them will truly be additional and how many will simply replace transactions that would have been made anyway under housebuilders’ existing incentive schemes. This week’s results from the major firms are again showing bumper increases in margins and profits on much lower rises in completions.

As for Right to Buy 2, one thing is missing from today’s announcement. As I blogged last year, the idea that each home sold would be replaced on a one-for-one basis by a new affordable home stretched credulity even at the time.

Shapps boasted in March 2012 that ‘we are determined to maintain the number of affordable homes for rent - so for the first time, homes that are sold will be replaced by new affordable homes, helping councils meet housing need and getting the nation building again’.

A year on, the DCLG says that the receipts from Right to Buy 2 sales will be ‘recycled back into new affordable homes for rent’ but any notion of one-for-one replacement seems to have been quietly dropped. 

Sales pitch

Tue, 26 Feb 2013

So how is it going so far for two ‘ambitious schemes’ that we were told would ‘unlock the aspirations of a new generation of home buyers’?

It was March 2012 when David Cameron and Grant Shapps launched NewBuy and the ‘reinvigorated’ Right to Buy 2. ‘This government doesn’t just talk about expanding home ownership: we’re making it happen,’ said the prime minister.

Even as he was speaking it all seemed a tad ambitious. No wonder, when the English Housing Survey has just shown that home ownership fell again in 2011/12.

Flash forward almost a year and Mark Prisk, the successor to Shapps as housing minister, is hailing a doubling in right to buy sales and the highest number of sales since 2007. He said: ‘The reinvigorated right to buy has opened the door to home ownership for thousands of tenants across the country and I’m delighted to see so many taking up this opportunity.’

So far, so good for the government. Figures from the Council of Mortgage Lenders also show a rise in the number of first-time buyers. However, a quick look at today’s figures suggests it may not be time to break out the champagne just yet.

It’s true that right to buy sales have doubled but that’s only if you compare sales between July to September 2012 (1,041) and October to December 2012 (2,100). Might the summer holidays and the Olympics just possibly have had something to do with those figures?

In the nine months since the reinvigoration (with an increase in the right to buy cap to £75,000) sales total 3,495. That is indeed more than in any full year since 2007/08 but on current trends the total for 2012/13 will still be less than half the 12,250 sales achieved five years ago and around 10 per cent of the total seen before the Labour government introduced caps on discounts in the late 2000s.

Despite ‘200,000 hits’ on the DCLG website, that does not seem much of a return on all that initial hype, a discount that is three times what it was in some areas, and a marketing campaign costing close to £1 million. The impact assessment had estimated that 300,000 tenants both have the right to buy and can afford to exercise it.

The housing minister has even less to boast about with NewBuy. Figures released today show that there were just 1,522 sales in the first nine months of the scheme between March and December 2012.

It’s true that the Home Builders Federation said last month that NewBuy reservations now total 3,000 but even that does not come close to matching the hype generated a year ago when Shapps and Cameron boasted that the scheme would enable ‘100,000 prospective and existing homeowners to buy their dream home with much smaller deposits than currently required’.

If sales continue at the current rate, that target will be achieved some time in 2063 – but the scheme ends in March 2015. The only way that sales could get even close to the March 2012 aspiration would be if they continue to double quarter on quarter for the next two years (as they did between the second and third quarters of 2012/13).

However, as with Right to Buy 2, much of the initial enthusiasm was based on pent-up demand that would supposedly be unlocked by the new schemes. It seems just as likely to expect a flood of initial sales followed by a leveling off later as it does to expect such continuing growth.

Little wonder then that the government moved last month to boost sales with the launch of NewBuy Part Exchange. This will make people looking to trade in their existing home for a new one eligible for a mortgage with a 5 per cent deposit. That may be a useful option for second steppers stuck in their first home because they do not have enough equity to move but it will do little for the ‘new generations of home buyers’ that the scheme was meant to help.

One year on from their launch, Right to Buy 2 and NewBuy are still good news for some buyers: council tenants who can afford to buy (and perhaps do not want to pay to stay); first-time buyers who cannot raise a deposit; and now second steppers who cannot otherwise move.

However, sales are already looking much more modest than Shapps and Cameron made out and the results in terms of new homes look like being even more modest.

Even if NewBuy sales continue to rise thanks to the new part-exchange option, it remains to be seen how many of them will truly be additional and how many will simply replace transactions that would have been made anyway under housebuilders’ existing incentive schemes. This week’s results from the major firms are again showing bumper increases in margins and profits on much lower rises in completions.

As for Right to Buy 2, one thing is missing from today’s announcement. As I blogged last year, the idea that each home sold would be replaced on a one-for-one basis by a new affordable home stretched credulity even at the time.

Shapps boasted in March 2012 that ‘we are determined to maintain the number of affordable homes for rent - so for the first time, homes that are sold will be replaced by new affordable homes, helping councils meet housing need and getting the nation building again’.

A year on, the DCLG says that the receipts from Right to Buy 2 sales will be ‘recycled back into new affordable homes for rent’ but any notion of one-for-one replacement seems to have been quietly dropped. 

False start

Fri, 22 Feb 2013

It’s half time for a government that promised to make us ‘a nation of homebuilders’. The crowd are – to put it mildly - not happy.

Figures released yesterday show the performance of the coalition in the first two and a half years of its five-year term. By now its abolition of ‘Stalinist’ top-down regional strategies and creation of the ‘powerful new incentive’ of the new homes bonus and the National Planning Policy Framework should be working.

Instead housebuilding in England is flat-lining at less than half of the level required. The 26,830 housing starts in the fourth quarter of 2012 were up by 180 on the previous three months but down by 400 on a year ago.

Just 98,280 homes were started in the whole of 2012. That is the third quarter in a row when starts have fallen below six figures and is even 11 per cent below the miserable total for 2011, when David Cameron and Nick Clegg proposed their ‘radical and unashamedly ambitious’ housing strategy.

The yardstick for judging the coalition’s performance on housebuilding was set by former housing minister Grant Shapps with his ‘gold standard’ of building more homes than Labour.

The first half of the coalition has seen 261,940 housing starts, a little more than the 253,500 in the second half of the last government. However, that included the worst period of the global financial crisis when mortgage lending seized up and several major housebuilders were on the brink of collapse.

The gold standard was – or should have been – quite a modest ambition but the coalition is slipping behind the required rate all the time.

Looking forward, to match the 695,000 starts seen over the whole of the last Labour government, the coalition needs to see something like 43,000 starts a quarter between now and 2015. That’s an increase of 65 per cent on current levels.  To match the average rate seen between 1997 and 2010 (147,000 a year or 37,000 a quarter) the coalition needs 47,000 starts a quarter or an increase of 80 per cent.

The figures would once have sparked a battle of statistics between Labour and the government. Ex-housing minister Grant Shapps would surely have found a way to spin some good news.

Instead, while Labour’s Jack Dromey accused the government of ‘making the biggest housing crisis in a generation worse, not better’, the reaction from Mark Prisk and the DCLG was silence.

Do they prefer to let actions speak louder than words? Would they rather work on solutions rather than make rash promises? Or do they not have a clue? .

All of the coalition’s policies and housing strategies so far have been based on four things: reforming the planning system to encourage local communities to see the advantages of new homes rather than fight plans imposed from above; reducing the burdens on housebuilders; coming up with ways to tempt institutional investors in to private renting; and, above all, austerity to get the public finances under control and mortgage rates low.

The jury is still out on the first with some tentative signs of post-NPPF growth in permissions matched by the sort of continuing nimbyism that is only too evident in the Eastleigh by-election.

The second has worked spectacularly well – but only if you measure success on the profit margins and share prices of the major housebuilders. If they have found a way to make money out of building 80,000 or so homes a year, why should they build any more if there is no quid pro quo for the government’s help?

It’s too early to tell with the third. Again there are promising signs and the appointment of Andy Rose as the new chief executive of the HCA suggests that it remains a big priority but we’ve heard it all before about institutional investment.

On the fourth, austerity continues with few signs that is succeeding in tackling the deficit. Mortgages remain at a record low but the benefits are going to existing home owners and buy-to-let landlords rather than first-time buyers.

It is clearer than ever that a complete change of tactics is required. There is no shortage of new ideas out there - freedom for council housing; new garden cities; new flexibilities for housing associations; quantitative easing for new housing - and ministers have even talked about some of them.  

The whistle has already blown for the second half.

False start

Fri, 22 Feb 2013

It’s half time for a government that promised to make us ‘a nation of homebuilders’. The crowd are – to put it mildly - not happy.

Figures released yesterday show the performance of the coalition in the first two and a half years of its five-year term. By now its abolition of ‘Stalinist’ top-down regional strategies and creation of the ‘powerful new incentive’ of the new homes bonus and the National Planning Policy Framework should be working.

Instead housebuilding in England is flat-lining at less than half of the level required. The 26,830 housing starts in the fourth quarter of 2012 were up by 180 on the previous three months but down by 400 on a year ago.

Just 98,280 homes were started in the whole of 2012. That is the third quarter in a row when starts have fallen below six figures and is even 11 per cent below the miserable total for 2011, when David Cameron and Nick Clegg proposed their ‘radical and unashamedly ambitious’ housing strategy.

The yardstick for judging the coalition’s performance on housebuilding was set by former housing minister Grant Shapps with his ‘gold standard’ of building more homes than Labour.

The first half of the coalition has seen 261,940 housing starts, a little more than the 253,500 in the second half of the last government. However, that included the worst period of the global financial crisis when mortgage lending seized up and several major housebuilders were on the brink of collapse.

The gold standard was – or should have been – quite a modest ambition but the coalition is slipping behind the required rate all the time.

Looking forward, to match the 695,000 starts seen over the whole of the last Labour government, the coalition needs to see something like 43,000 starts a quarter between now and 2015. That’s an increase of 65 per cent on current levels.  To match the average rate seen between 1997 and 2010 (147,000 a year or 37,000 a quarter) the coalition needs 47,000 starts a quarter or an increase of 80 per cent.

The figures would once have sparked a battle of statistics between Labour and the government. Ex-housing minister Grant Shapps would surely have found a way to spin some good news.

Instead, while Labour’s Jack Dromey accused the government of ‘making the biggest housing crisis in a generation worse, not better’, the reaction from Mark Prisk and the DCLG was silence.

Do they prefer to let actions speak louder than words? Would they rather work on solutions rather than make rash promises? Or do they not have a clue? .

All of the coalition’s policies and housing strategies so far have been based on four things: reforming the planning system to encourage local communities to see the advantages of new homes rather than fight plans imposed from above; reducing the burdens on housebuilders; coming up with ways to tempt institutional investors in to private renting; and, above all, austerity to get the public finances under control and mortgage rates low.

The jury is still out on the first with some tentative signs of post-NPPF growth in permissions matched by the sort of continuing nimbyism that is only too evident in the Eastleigh by-election.

The second has worked spectacularly well – but only if you measure success on the profit margins and share prices of the major housebuilders. If they have found a way to make money out of building 80,000 or so homes a year, why should they build any more if there is no quid pro quo for the government’s help?

It’s too early to tell with the third. Again there are promising signs and the appointment of Andy Rose as the new chief executive of the HCA suggests that it remains a big priority but we’ve heard it all before about institutional investment.

On the fourth, austerity continues with few signs that is succeeding in tackling the deficit. Mortgages remain at a record low but the benefits are going to existing home owners and buy-to-let landlords rather than first-time buyers.

It is clearer than ever that a complete change of tactics is required. There is no shortage of new ideas out there - freedom for council housing; new garden cities; new flexibilities for housing associations; quantitative easing for new housing - and ministers have even talked about some of them.  

The whistle has already blown for the second half.

Bedtime stories

Thu, 21 Feb 2013

It seems remarkable that with less than 40 days to go until we start taxing them we still don’t really know for certain what a bedroom is.

So it’s not surprising that the move by Knowsley Housing Trust to reclassify 566 of its two- and three-bed homes as one- and two-bed has attracted so much attention. Chief executive Bob Taylor told Inside Housing that a stock review showed some homes are currently classified as having more bedrooms than they actually have, because tenants are not using the extra rooms as bedrooms and were therefore paying too much rent.

As I understand it, reclassification affects only some of KHT’s tenants who are facing by the bedroom tax. KHT also seems to be in a minority of landlords intending to reclassify: those I have spoken to have said that they will consider it in extremis but that their hands are effectively tied because of the impact on their rental income and therefore their loan agreements.

Complex issues are involved here that are covered in much more detail elsewhere. Joe Halewood has blogged extensively about landlords and the bedroom definition issue, including a post about KHT here. A recent post on the Nearly Legal blog sums up the murky legal position here.

However, the wider significance of KHT’s move may lie in the fact that is based on how tenants actually use their home. That is exactly in line with a legal opinion from senior counsel obtained by Glasgow Advice Agency (GAA). A headline in the Herald over the weekend that this meant ‘100,000 Scots could cash in on bedroom tax loophole’ has met with some scepticism. However, Mike Dailly of Govan Law Centre and the GAA says the legal opinion could offer a lifeline for many Scots and especially for disabled tenants. If that’s correct, the same applies to the rest of the UK.

The opinion by Jonathan Mitchell QC covers both what counts as a bedroom and who should decide. He says that under the Housing Benefit (Amendment) Regulations 2012: ‘It is for local authorities, who administer housing benefit and are accordingly the relevant authorities for the purposes of regulation b13, to determine “the number of bedrooms” in a dwelling; so, to do so, they must determine whether a particular room is or is not a bedroom.’

While that might seem obvious, there are obvious grey areas when it comes to box rooms and rooms used for something else. Yet the regulations do not define what counts as a bedroom. According to the opinion, what counts is not the design of the home but how it is actually used: ‘It cannot be conclusive to ask simply, “is this room being used as a bedroom” or “is this room being slept in”.’

Jonathan Mitchell could only find one government publication that addresses the definition of a bedroom: the Rent Officer Handbook produced by the Valuation Office Agency of HMRC. In a section on ‘deciding what constitutes a room/bedroom’ it says that ‘at least a small single bed will fit into it, and in most cases it will have a window’ and that anything smaller than 2m by 2m is ‘probably’ not a bedroom. That contrasts with the space standard in the Housing Act 1985 (and Scottish equivalent) that excludes anything under 50 square feet (4.65 sq m) and counts anything under 70 square feet (6.5 sq m) as half a bedroom.

The size question is clearly a very grey area indeed (as one landlord told me recently, ‘if a bedroom has to be big enough for two 15-year-old boys, then we have lots of zero-bed houses’). However, the legal opinion goes on to address ‘the fitting out and use of the room’. If it contains a bed and somebody regularly sleeps there, it is almost certainly a bedroom. But what about one used as a child’s playroom or study or one that is full of therapeutic equipment with no room for a bed? It concludes that:

Ultimately… this is a matter of judgment for the authority. It would be going wrong in law if it determined that it would reach its decisions with the aim of minimising the number of bedrooms calculated so as to defeat the regulation; the consequences of the determination are a matter of law and cannot be for the local authority to take into account. But, equally, it would be going wrong in law if it determined that every room which could possibly be slept in would be classified as a bedroom, whatever its characteristics or actual use. I emphasise that this is a matter of judgment, rather than discretion, because the ultimate question in every case is “do we regard this room as a bedroom”, it is not “do we want to regard this room as a bedroom”.’

Jonathan Mitchell is also very clear that:

‘I cannot see at present how a social landlord which is not the relevant authority for the purposes of the regulations could sensibly develop policies in this regard. It is not the decision maker. Nor would a lease which asserted that a property had a particular number of rooms free the relevant authority from its statutory duty to make up its own mind.’

All of which creates uncertainties for landlords, local authorities and tenants alike that I have not seen addressed anywhere else. The opinion points out that a family whose disabled child sleeps in the living room could be counted as having an extra bedroom whereas one that has turned a bedroom into a therapy or care room could be counted as having one less. ‘For this reason, it might well be helpful if local authorities could develop and publish guidance as to how they will make decisions in such circumstances.’

Glasgow Advice Association is calling for exactly that sort of formal guidance in Scotland, with the Scottish Government taking a lead to ensure a consistent approach by local authorities. It argues that there is an obvious application for disabled tenants who use a ‘spare’ room for therapy, storing wheelchairs or medical equipment or undertaking medical procedures but that other tenants may be able to avoid the bedroom tax too. Mike Dailly explains:

‘Essentially, GAA understand that it is a matter for each local authority as “the relevant authority” under the regulations to determine what is and is not a “bedroom”, and that the actual use of a room by a particular household will be critical in deciding whether that room is a bedroom or not. Accordingly, GAA believes it is possible for tenants to change the use of what might be regarded as a “spare bedroom” in terms of the regulations into something that need not be counted as such, and not be subject to the housing benefit under-occupancy deductions (bedroom tax). In that regard, the guidance and approach of individual local authorities will be critical.’

In the meantime, Govan Law Centre is also coordinating a ‘No evictions for bedroom tax’ petition to the Scottish parliament calling for an amendment to the Housing (Scotland) Act 2001 that would mean landlords would be unable to use rent arrears caused by the under-occupation penalty in eviction actions but would have to pursue them as ordinary debt instead. The petition already has the backing of Shelter Scotland, the Scottish TUC and Oxfam Scotland.

That point would apply in Scotland only. However, the wider considerations apply across the UK. According to the Herald, the Convention of Scottish Local Authorities said it would have to examine the legal opinion before commenting, while the DWP insisted that the decision was up to the landlord: ‘If a social landlord says it is a two-bedroomed house, regardless what happens to it subsequently, it is a two-bedroomed house and that is what housing benefit will be judged on.’

However, if the legal opinion from senior counsel is correct that the decision is up to local authorities rather than landlords, what should they be doing now?

After all, the bedroom tax will hit tenants first but it is local authorities that will have to pick up the knock-on costs so it is in their own interests to do as much to mitigate the impact as they can. While it would be unlawful to set out to evade the tax, the more families that could be classified as having one less bedroom, the fewer will end up being evicted and applying as homeless to that same authority. And the more vulnerable and disabled tenants that can be helped to stay in their adapted homes, the further meagre discretionary housing payments will go in helping everyone else.

Bedtime stories

Thu, 21 Feb 2013

It seems remarkable that with less than 40 days to go until we start taxing them we still don’t really know for certain what a bedroom is.

So it’s not surprising that the move by Knowsley Housing Trust to reclassify 566 of its two- and three-bed homes as one- and two-bed has attracted so much attention. Chief executive Bob Taylor told Inside Housing that a stock review showed some homes are currently classified as having more bedrooms than they actually have, because tenants are not using the extra rooms as bedrooms and were therefore paying too much rent.

As I understand it, reclassification affects only some of KHT’s tenants who are facing by the bedroom tax. KHT also seems to be in a minority of landlords intending to reclassify: those I have spoken to have said that they will consider it in extremis but that their hands are effectively tied because of the impact on their rental income and therefore their loan agreements.

Complex issues are involved here that are covered in much more detail elsewhere. Joe Halewood has blogged extensively about landlords and the bedroom definition issue, including a post about KHT here. A recent post on the Nearly Legal blog sums up the murky legal position here.

However, the wider significance of KHT’s move may lie in the fact that is based on how tenants actually use their home. That is exactly in line with a legal opinion from senior counsel obtained by Glasgow Advice Agency (GAA). A headline in the Herald over the weekend that this meant ‘100,000 Scots could cash in on bedroom tax loophole’ has met with some scepticism. However, Mike Dailly of Govan Law Centre and the GAA says the legal opinion could offer a lifeline for many Scots and especially for disabled tenants. If that’s correct, the same applies to the rest of the UK.

The opinion by Jonathan Mitchell QC covers both what counts as a bedroom and who should decide. He says that under the Housing Benefit (Amendment) Regulations 2012: ‘It is for local authorities, who administer housing benefit and are accordingly the relevant authorities for the purposes of regulation b13, to determine “the number of bedrooms” in a dwelling; so, to do so, they must determine whether a particular room is or is not a bedroom.’

While that might seem obvious, there are obvious grey areas when it comes to box rooms and rooms used for something else. Yet the regulations do not define what counts as a bedroom. According to the opinion, what counts is not the design of the home but how it is actually used: ‘It cannot be conclusive to ask simply, “is this room being used as a bedroom” or “is this room being slept in”.’

Jonathan Mitchell could only find one government publication that addresses the definition of a bedroom: the Rent Officer Handbook produced by the Valuation Office Agency of HMRC. In a section on ‘deciding what constitutes a room/bedroom’ it says that ‘at least a small single bed will fit into it, and in most cases it will have a window’ and that anything smaller than 2m by 2m is ‘probably’ not a bedroom. That contrasts with the space standard in the Housing Act 1985 (and Scottish equivalent) that excludes anything under 50 square feet (4.65 sq m) and counts anything under 70 square feet (6.5 sq m) as half a bedroom.

The size question is clearly a very grey area indeed (as one landlord told me recently, ‘if a bedroom has to be big enough for two 15-year-old boys, then we have lots of zero-bed houses’). However, the legal opinion goes on to address ‘the fitting out and use of the room’. If it contains a bed and somebody regularly sleeps there, it is almost certainly a bedroom. But what about one used as a child’s playroom or study or one that is full of therapeutic equipment with no room for a bed? It concludes that:

Ultimately… this is a matter of judgment for the authority. It would be going wrong in law if it determined that it would reach its decisions with the aim of minimising the number of bedrooms calculated so as to defeat the regulation; the consequences of the determination are a matter of law and cannot be for the local authority to take into account. But, equally, it would be going wrong in law if it determined that every room which could possibly be slept in would be classified as a bedroom, whatever its characteristics or actual use. I emphasise that this is a matter of judgment, rather than discretion, because the ultimate question in every case is “do we regard this room as a bedroom”, it is not “do we want to regard this room as a bedroom”.’

Jonathan Mitchell is also very clear that:

‘I cannot see at present how a social landlord which is not the relevant authority for the purposes of the regulations could sensibly develop policies in this regard. It is not the decision maker. Nor would a lease which asserted that a property had a particular number of rooms free the relevant authority from its statutory duty to make up its own mind.’

All of which creates uncertainties for landlords, local authorities and tenants alike that I have not seen addressed anywhere else. The opinion points out that a family whose disabled child sleeps in the living room could be counted as having an extra bedroom whereas one that has turned a bedroom into a therapy or care room could be counted as having one less. ‘For this reason, it might well be helpful if local authorities could develop and publish guidance as to how they will make decisions in such circumstances.’

Glasgow Advice Association is calling for exactly that sort of formal guidance in Scotland, with the Scottish Government taking a lead to ensure a consistent approach by local authorities. It argues that there is an obvious application for disabled tenants who use a ‘spare’ room for therapy, storing wheelchairs or medical equipment or undertaking medical procedures but that other tenants may be able to avoid the bedroom tax too. Mike Dailly explains:

‘Essentially, GAA understand that it is a matter for each local authority as “the relevant authority” under the regulations to determine what is and is not a “bedroom”, and that the actual use of a room by a particular household will be critical in deciding whether that room is a bedroom or not. Accordingly, GAA believes it is possible for tenants to change the use of what might be regarded as a “spare bedroom” in terms of the regulations into something that need not be counted as such, and not be subject to the housing benefit under-occupancy deductions (bedroom tax). In that regard, the guidance and approach of individual local authorities will be critical.’

In the meantime, Govan Law Centre is also coordinating a ‘No evictions for bedroom tax’ petition to the Scottish parliament calling for an amendment to the Housing (Scotland) Act 2001 that would mean landlords would be unable to use rent arrears caused by the under-occupation penalty in eviction actions but would have to pursue them as ordinary debt instead. The petition already has the backing of Shelter Scotland, the Scottish TUC and Oxfam Scotland.

That point would apply in Scotland only. However, the wider considerations apply across the UK. According to the Herald, the Convention of Scottish Local Authorities said it would have to examine the legal opinion before commenting, while the DWP insisted that the decision was up to the landlord: ‘If a social landlord says it is a two-bedroomed house, regardless what happens to it subsequently, it is a two-bedroomed house and that is what housing benefit will be judged on.’

However, if the legal opinion from senior counsel is correct that the decision is up to local authorities rather than landlords, what should they be doing now?

After all, the bedroom tax will hit tenants first but it is local authorities that will have to pick up the knock-on costs so it is in their own interests to do as much to mitigate the impact as they can. While it would be unlawful to set out to evade the tax, the more families that could be classified as having one less bedroom, the fewer will end up being evicted and applying as homeless to that same authority. And the more vulnerable and disabled tenants that can be helped to stay in their adapted homes, the further meagre discretionary housing payments will go in helping everyone else.

Worst fears

Tue, 19 Feb 2013

So the government has finally admitted the potentially devastating consequences of welfare reform in a cumulative impact assessment.

Before anyone starts to think that Iain Duncan Smith has undergone a dramatic change of heart, I should add that I am of course taking about the Welsh Government, not the UK one.

The second stage review of the impact of welfare reform in Wales is accompanied by an analysis by the Institute for Fiscal Studies (IFS) of the effects of welfare reform on labour supply in Wales.

Hard numbers about the impacts are difficult to come by because of uncertainties about behavioural change and the interplay of different factors on each other. And with the UK government adding more cuts with each autumn statement and budget, the analysis does not have definitive answers. 

However, the IFS study estimates that the aggregate impact of welfare reform excluding the universal credit and the additional cuts announced by George Osborne in December will reduce household incomes in Wales by around £590 million in 2014/15. Introduction of the universal credit will reduce that to £525 million but further cuts are already in the pipeline.

Welsh education and skills minister Leighton Andrews said welfare reform would have ‘a huge and damaging effect on Wales as a whole’ and the analysis confirmed the devolved administration’s ‘worst fears about the changes’. He added: ‘From the most vulnerable in our society, through to low-middle income families, these cuts from the UK government are devastating.’

It’s a predictable reaction from what is after all a Labour government responding to cuts imposed by the Conservatives and Liberal Democrats in London. However, it is based on work by the scrupulously independent IFS and by rigorous analysis by neutral civil servants that is all the more striking because of its cautious approach.

In the context of the Westminster debate about ‘strivers’ and ‘scroungers’ and ‘hard-working families’, the IFS analysis is especially interesting when it says:

‘We find that the biggest average losses are experienced not by the very poorest households, but by the lower-middle of the income distribution. This is partly because in-work support (particularly Working Tax Credit) is being cut more sharply than out-of-work support, and partly because universal credit is a giveaway primarily to the lowest-income third of families, partly offsetting the losses those families experience from the wider welfare cuts.’

The Welsh Government’s second stage review is couched in language like ‘could’ and ‘may’. However, it brings together all of the individual welfare reforms and assesses their impact both directly on families and indirectly on other public services and the economy. So far the Westminster government has confined itself to impact assessments of individual measures and not attempted anything so comprehensive.

Seeing everything in one place brings home the full scale of cuts that will total £16 billion across the UK (£18 billion minus £2 billion invested in the universal credit). They also emphasise that some of the reforms that get the most publicity are not the ones that will have the greatest impact.

Of the main housing reforms, the April 2011 changes (including the bedroom caps and 30th percentile) will cost Wales £23 million, the shared accommodation rate £4 million and the household benefit cap £5 million. The bedroom tax (which affects Wales proportionately more than anywhere else) and CPI uprating of the local housing allowance will cost £40 million.

However, the analysis is also a sobering reminder of the much greater impact of cuts in tax credits, reforms affecting disabled people and changes to benefits uprating. To give one example, income losses in Wales from CPI uprating of working age benefits are estimated at £90 million in 2011/12 rising to £600 million in 2015/16. With worse to come under the 1 per cent uprating announced by Osborne in December, these will become even more relevant to housing organisations once direct payment starts under the universal credit.

And then there are the wider economic and social impacts. These are occasionally hinted at in the individual impact assessments produced by the Department for Work and Pensions and referred to directly in the leaked letter from the private office of Eric Pickles to Downing Street.

The Welsh Government analysis highlights impacts including:

  • There could be a potentially direct negative impact on claimants’ health through a reduction or loss of benefit income and increased poverty and the knock-on effects of migration of claimants into ‘cheaper, poorer-quality and possibly overcrowded housing’
  • Social care services could come under increased pressure, especially in the longer term, from factors including claimants forced to migrate away from informal support networks and foster carers hit by the bedroom tax. ‘Families with children are expected to be hardest hit by the benefit changes, which may put particular pressure on children’s services,’ it says. And: ‘If the net cumulative impact of the welfare reforms is poorer health outcomes, this will lead to even greater pressures in the longer term on social services.’
  • Housing could be hit by worsening affordability and increased rent arrears, evictions and homelessness due to benefit cuts, direct and monthly payments and benefit sanctions creating budgeting problems. ‘The squeeze on  household budgets may increase the risk of young people being forced to leave home as parents are unable to support them.’
  • A reduction in private rented supply and shortage of properties available at the shared accommodation rent could force families into cheaper (and already deprived) areas and lead to overcrowding in poorer-quality homes. ‘In some cases, claimants may have to move outside an affordable commute to their current jobs, and to areas with fewer labour market opportunities.’
  • Educational outcomes could be affected by reduced income and increased poverty and by migration effects from the housing benefit reforms. ‘This may lead to an increased concentration of workless, low-income and larger families in less-expensive and already-deprived areas in Wales with reduced access to high-performing schools and their associated positive educational outcomes.’ House moves could also result in the loss of a spare room used as a study area and could ‘in some cases may affect the ability of non-dependant children to stay at home and attend further education’.
  • Economic development will benefit slightly from improved work incentives but the Welsh economy as a whole will suffer as benefits and tax credits are cut by 1 per cent of GDP. According to the Office for Budget Responsibility that will lead to an immediate reduction in GDP of 0.6 per cent in the short run but the report points to international evidence that the multiplier effects may be even larger as ‘a £1 change in the income of a low-income family leads to a bigger change in their spending than a £1 change in the income of a higher-income family’.

That’s just a flavour of a report that does not sensationalise and also presents the potential positive impacts of improved work incentives. It will be followed by a third stage of research analysing the impact of welfare reform by gender, ethnicity, age and disability and at a local authority level plus more detailed work on individual areas such as housing benefit.

All of these points and more of course apply just as much to the rest of the UK as they do to Wales. However, while the Northern Irish and Scottish governments are also doing work of their own, in London the cuts just keep on coming.

Worst fears

Tue, 19 Feb 2013

So the government has finally admitted the potentially devastating consequences of welfare reform in a cumulative impact assessment.

Before anyone starts to think that Iain Duncan Smith has undergone a dramatic change of heart, I should add that I am of course taking about the Welsh Government, not the UK one.

The second stage review of the impact of welfare reform in Wales is accompanied by an analysis by the Institute for Fiscal Studies (IFS) of the effects of welfare reform on labour supply in Wales.

Hard numbers about the impacts are difficult to come by because of uncertainties about behavioural change and the interplay of different factors on each other. And with the UK government adding more cuts with each autumn statement and budget, the analysis does not have definitive answers. 

However, the IFS study estimates that the aggregate impact of welfare reform excluding the universal credit and the additional cuts announced by George Osborne in December will reduce household incomes in Wales by around £590 million in 2014/15. Introduction of the universal credit will reduce that to £525 million but further cuts are already in the pipeline.

Welsh education and skills minister Leighton Andrews said welfare reform would have ‘a huge and damaging effect on Wales as a whole’ and the analysis confirmed the devolved administration’s ‘worst fears about the changes’. He added: ‘From the most vulnerable in our society, through to low-middle income families, these cuts from the UK government are devastating.’

It’s a predictable reaction from what is after all a Labour government responding to cuts imposed by the Conservatives and Liberal Democrats in London. However, it is based on work by the scrupulously independent IFS and by rigorous analysis by neutral civil servants that is all the more striking because of its cautious approach.

In the context of the Westminster debate about ‘strivers’ and ‘scroungers’ and ‘hard-working families’, the IFS analysis is especially interesting when it says:

‘We find that the biggest average losses are experienced not by the very poorest households, but by the lower-middle of the income distribution. This is partly because in-work support (particularly Working Tax Credit) is being cut more sharply than out-of-work support, and partly because universal credit is a giveaway primarily to the lowest-income third of families, partly offsetting the losses those families experience from the wider welfare cuts.’

The Welsh Government’s second stage review is couched in language like ‘could’ and ‘may’. However, it brings together all of the individual welfare reforms and assesses their impact both directly on families and indirectly on other public services and the economy. So far the Westminster government has confined itself to impact assessments of individual measures and not attempted anything so comprehensive.

Seeing everything in one place brings home the full scale of cuts that will total £16 billion across the UK (£18 billion minus £2 billion invested in the universal credit). They also emphasise that some of the reforms that get the most publicity are not the ones that will have the greatest impact.

Of the main housing reforms, the April 2011 changes (including the bedroom caps and 30th percentile) will cost Wales £23 million, the shared accommodation rate £4 million and the household benefit cap £5 million. The bedroom tax (which affects Wales proportionately more than anywhere else) and CPI uprating of the local housing allowance will cost £40 million.

However, the analysis is also a sobering reminder of the much greater impact of cuts in tax credits, reforms affecting disabled people and changes to benefits uprating. To give one example, income losses in Wales from CPI uprating of working age benefits are estimated at £90 million in 2011/12 rising to £600 million in 2015/16. With worse to come under the 1 per cent uprating announced by Osborne in December, these will become even more relevant to housing organisations once direct payment starts under the universal credit.

And then there are the wider economic and social impacts. These are occasionally hinted at in the individual impact assessments produced by the Department for Work and Pensions and referred to directly in the leaked letter from the private office of Eric Pickles to Downing Street.

The Welsh Government analysis highlights impacts including:

  • There could be a potentially direct negative impact on claimants’ health through a reduction or loss of benefit income and increased poverty and the knock-on effects of migration of claimants into ‘cheaper, poorer-quality and possibly overcrowded housing’
  • Social care services could come under increased pressure, especially in the longer term, from factors including claimants forced to migrate away from informal support networks and foster carers hit by the bedroom tax. ‘Families with children are expected to be hardest hit by the benefit changes, which may put particular pressure on children’s services,’ it says. And: ‘If the net cumulative impact of the welfare reforms is poorer health outcomes, this will lead to even greater pressures in the longer term on social services.’
  • Housing could be hit by worsening affordability and increased rent arrears, evictions and homelessness due to benefit cuts, direct and monthly payments and benefit sanctions creating budgeting problems. ‘The squeeze on  household budgets may increase the risk of young people being forced to leave home as parents are unable to support them.’
  • A reduction in private rented supply and shortage of properties available at the shared accommodation rent could force families into cheaper (and already deprived) areas and lead to overcrowding in poorer-quality homes. ‘In some cases, claimants may have to move outside an affordable commute to their current jobs, and to areas with fewer labour market opportunities.’
  • Educational outcomes could be affected by reduced income and increased poverty and by migration effects from the housing benefit reforms. ‘This may lead to an increased concentration of workless, low-income and larger families in less-expensive and already-deprived areas in Wales with reduced access to high-performing schools and their associated positive educational outcomes.’ House moves could also result in the loss of a spare room used as a study area and could ‘in some cases may affect the ability of non-dependant children to stay at home and attend further education’.
  • Economic development will benefit slightly from improved work incentives but the Welsh economy as a whole will suffer as benefits and tax credits are cut by 1 per cent of GDP. According to the Office for Budget Responsibility that will lead to an immediate reduction in GDP of 0.6 per cent in the short run but the report points to international evidence that the multiplier effects may be even larger as ‘a £1 change in the income of a low-income family leads to a bigger change in their spending than a £1 change in the income of a higher-income family’.

That’s just a flavour of a report that does not sensationalise and also presents the potential positive impacts of improved work incentives. It will be followed by a third stage of research analysing the impact of welfare reform by gender, ethnicity, age and disability and at a local authority level plus more detailed work on individual areas such as housing benefit.

All of these points and more of course apply just as much to the rest of the UK as they do to Wales. However, while the Northern Irish and Scottish governments are also doing work of their own, in London the cuts just keep on coming.

One-way street

Thu, 14 Feb 2013

Repossessions are at their lowest and loans to first-time buyers are at their highest since 2007. Has the housing market finally turned the corner?

That’s certainly one interpretation of stats released by the Council of Mortgage Lenders (CML) this week showing big improvements since the year the credit crunch hit.

On Tuesday it revealed that 216,200 first-time buyers became homeowners in 2012. That was a 12 per cent rise on 2011 and it’s the first time since 2007 that the annual total has exceeded 200,000.

The figures even prompted a rare foray on to twitter by housing minister Mark Prisk. He used only his 26th tweet to broadcast the ‘Good news for first-time buyers from @CMLpressoffice. Highest since 2007.’

If he gets a moment this morning, he might want to look at the figures on repossessions too. The number of people losing their homes fell from 37,300 in 2011 to 33,900 in 2012, the third annual fall in a row. And the CML highlighted the 7,700 total for the final three months of the year as the lowest quarterly figure since the final quarter of 2007.

But a few notes of caution before he gets too carried away. First, that 9 per cent fall in annual repossessions leaves the total not just 31 per cent higher than in 2007 but higher than in any of the eight years before that too.

Second, although mortgage arrears also fell slightly, the number of households most seriously behind with their mortgage (with arrears of more than 10 per cent of their balance) rose.

Third, both of those improvements have happened under the benign conditions of the lowest interest rates ever. Any increase back to pre-crisis levels would bring increases in both and this week has also seen a warning about the ‘ticking time bombs’ of a million people on interest-only mortgages.

Fourth, that improvement in the number of first-time buyers has to be put in context. It may be the highest total since 2007 but it is still down by 55 per cent on the 359,900 loans made that year and at the current rate of increase it will take till close to the end of the decade to reach that level again.

Fifth, even that total was well down on what would traditionally be regarded as a healthy total. The years between 1997 and 2002 each saw more than 500,000 first-time buyers but in the final few years of the housing boom the numbers started to plummet.  

Sixth – and linked to that – CML figures also published today show yet another increase in buy-to-let lending. The 136,900 advances made to landlords in 2012 was the highest since 2008 (although it is still well down on the boom years of 2006 and 2007).

There are now over 1.4 million buy to let mortgages outstanding. That’s up 4 per cent on 2011 but 48 per cent since the credit crunch. It is only just over two years since one of its pioneers pronounced the sector ‘absolutely dead and will never return’.

Put all that together and the picture revealed in the English Housing Survey last week is not in the least bit surprising. The survey saw something I’ve predicted for some time: private renting overtook social renting for the first time since the 1960s.

However, there has been another shift of even greater significance: the total number of renters (7.6 million) overtook the number of people buying with a mortgage (7.4 million) for the first time since the mid-1980s, when the right to buy was in full swing. Instead of Margaret Thatcher’s nation of home owners we are becoming a nation of private renters.

This week’s reports from the ONS (saying that real wages have fallen to 2003 levels) and Resolution Foundation (predicting an even longer and deeper squeeze on living standards than it previously forecast) suggest that is not about to change any time soon.

The fall in mortgaged home ownership was happening long before the credit crunch though. It has now fallen as a proportion of housing tenure since 2000 and the boom in mortgage lending in the decade that followed appears to have merely boosted house prices without helping more people on to the housing ladder.

Despite the apparent good news this week, despite funding for lending and all the government’s home ownership wheezes, that trend is set to continue with far-reaching consequences for our dysfunctional housing market and beyond.

One-way street

Thu, 14 Feb 2013

Repossessions are at their lowest and loans to first-time buyers are at their highest since 2007. Has the housing market finally turned the corner?

That’s certainly one interpretation of stats released by the Council of Mortgage Lenders (CML) this week showing big improvements since the year the credit crunch hit.

On Tuesday it revealed that 216,200 first-time buyers became homeowners in 2012. That was a 12 per cent rise on 2011 and it’s the first time since 2007 that the annual total has exceeded 200,000.

The figures even prompted a rare foray on to twitter by housing minister Mark Prisk. He used only his 26th tweet to broadcast the ‘Good news for first-time buyers from @CMLpressoffice. Highest since 2007.’

If he gets a moment this morning, he might want to look at the figures on repossessions too. The number of people losing their homes fell from 37,300 in 2011 to 33,900 in 2012, the third annual fall in a row. And the CML highlighted the 7,700 total for the final three months of the year as the lowest quarterly figure since the final quarter of 2007.

But a few notes of caution before he gets too carried away. First, that 9 per cent fall in annual repossessions leaves the total not just 31 per cent higher than in 2007 but higher than in any of the eight years before that too.

Second, although mortgage arrears also fell slightly, the number of households most seriously behind with their mortgage (with arrears of more than 10 per cent of their balance) rose.

Third, both of those improvements have happened under the benign conditions of the lowest interest rates ever. Any increase back to pre-crisis levels would bring increases in both and this week has also seen a warning about the ‘ticking time bombs’ of a million people on interest-only mortgages.

Fourth, that improvement in the number of first-time buyers has to be put in context. It may be the highest total since 2007 but it is still down by 55 per cent on the 359,900 loans made that year and at the current rate of increase it will take till close to the end of the decade to reach that level again.

Fifth, even that total was well down on what would traditionally be regarded as a healthy total. The years between 1997 and 2002 each saw more than 500,000 first-time buyers but in the final few years of the housing boom the numbers started to plummet.  

Sixth – and linked to that – CML figures also published today show yet another increase in buy-to-let lending. The 136,900 advances made to landlords in 2012 was the highest since 2008 (although it is still well down on the boom years of 2006 and 2007).

There are now over 1.4 million buy to let mortgages outstanding. That’s up 4 per cent on 2011 but 48 per cent since the credit crunch. It is only just over two years since one of its pioneers pronounced the sector ‘absolutely dead and will never return’.

Put all that together and the picture revealed in the English Housing Survey last week is not in the least bit surprising. The survey saw something I’ve predicted for some time: private renting overtook social renting for the first time since the 1960s.

However, there has been another shift of even greater significance: the total number of renters (7.6 million) overtook the number of people buying with a mortgage (7.4 million) for the first time since the mid-1980s, when the right to buy was in full swing. Instead of Margaret Thatcher’s nation of home owners we are becoming a nation of private renters.

This week’s reports from the ONS (saying that real wages have fallen to 2003 levels) and Resolution Foundation (predicting an even longer and deeper squeeze on living standards than it previously forecast) suggest that is not about to change any time soon.

The fall in mortgaged home ownership was happening long before the credit crunch though. It has now fallen as a proportion of housing tenure since 2000 and the boom in mortgage lending in the decade that followed appears to have merely boosted house prices without helping more people on to the housing ladder.

Despite the apparent good news this week, despite funding for lending and all the government’s home ownership wheezes, that trend is set to continue with far-reaching consequences for our dysfunctional housing market and beyond.

Capital crisis

Tue, 12 Feb 2013

The scale of the housing crisis facing London is hitting home with both Londoners and their political leaders.

In an opinion poll in the Evening Standard published today, half of people in the city say they fear being driven out of their neighbourhood by the cost of housing and six out of ten say there is a crisis in their area.

At one end of the housing scale, soaring demand from global investors is threatening to push house prices even further out of reach of ordinary Londoners. According to a report yesterday from the Home Builders Federation, it now takes the average first-time buyer 24 years to raise a deposit in London.

At the other end, homelessness continues to rise. A report on housing homeless people in London that went to the Leaders’ Committee of London Councils earlier warns that on a pretty conservative estimate of supply and demand the city faces a housing deficit of 221,700 homes by 2020 if nothing changes.

Up to now private rented temporary accommodation paid for by housing benefit has been the increasingly threadbare safety net for London’s councils and homeless families. However, boroughs like Newham and Croydon have been at the forefront of those insisting that they will be forced to place their homeless families outside the capital even though this breaches government guidance on suitability.

Meanwhile, Westminster is among those placing more and more families with children in bed and breakfast beyond the six weeks placement rule. A BBC London report last week said that the council is paying hotel bills of up to £12,000 a month for some families. The government claims this is ‘unacceptable’, Westminster says it is facing an ‘unprecedented’ problem, but, according to the report, was paying £350 a night for a hotel for one family who received £700 a week in housing benefit until it was capped.

While the weakening of the homelessness legislation is giving councils more and families fewer options, things will get even worse when the next round of housing benefit cuts hits in just 48 days’ time. The London Councils report says that the supply of temporary accommodation has already fallen by 20 per cent in the last 18 months as landlords withdraw from the market due to caps on local housing allowance and that the decline will accelerate as welfare reform is rolled out over the next 18 months.

The household benefit cap will have more impact in London than anywhere else but will now be piloted first in Croydon, Haringey, Enfield and Bromley in April before being introduced nationally in September. The delay announced before Christmas – ‘without any prior consultation or advice’, according to the London councils report – is already creating problems of its own, with the four boroughs warning they will face additional costs and unfair competition with other councils where there is not yet a cap. As Carl Brown reported two weeks ago, the four are warning that their entire budget for discretionary housing payments will be exhausted by the time the cap is introduced anywhere else.

Representatives from London local government met housing minister Mark Prisk and officials from the CLG before Christmas and put forward a series of proposals to tackle the bed and breakfast and homelessness crisis. Prisk reminded them of both the six-week rule and their obligations to place homeless families as near as possible to their home borough and not out of London. The councils warned of ‘a sustained increase in the level of homeless presentations and acceptances over the next year’ that will be exacerbated by the cap and the shortage of private rented properties available below LHA levels.

In the short term London Councils is pressing for measures to mitigate the impact of the cuts and additional transitional support and flexibility. However, it says a longer-term housing investment strategy covering public land, the powers of the mayor and boroughs and the balance between investment and housing benefit is needed to meet the scale of the challenge. Specifically, it says that the government should lift caps on housing revenue account borrowing to allow the boroughs to deliver 54,000 affordable homes and give tax relief to private landlords coming into the temporary accommodation market.

Those ideas have support not just from boroughs controlled by all parties but from Boris Johnson too. The Conservative mayor is pressing the government to allow him to keep the receipts from stamp duty in the capital as part of a 25-year plan to build a million homes. He wowed guests at the Chartered Institute of Housing’s presidential dinner last week with a speech telling them that: ‘What is needed now is a radically different approach which optimises City Hall’s role, unlocks the potential of the capital’s boroughs, allows developers including housing associations to up their game and creates a stable supply of land for housing. Above all, London needs a stable funding stream which will support and accelerate its housing and infrastructure delivery.’

It all sounds promising. However, all three of those longer-term solutions will require agreement from the Treasury. Lifting the caps and tax relief have both been suggested – and rejected - many times before. The third would require the transfer of stamp duty receipts estimated at £1.3 billion a year by Johnson. However, if the Treasury ever succeeds in generating any growth in the economy and activity in the housing market, the receipts could easily be worth much more than that. Either way, the move would raise all kinds of issues about the tax and spending relationship between the capital and the rest of the country. 

Meanwhile Johnson’s critics point to his ‘dire’ past record of promising much and delivering little. ‘He is building fewer homes and the ones that are being built are more expensive,’ Len Duvall, leader of the Labour group on the London Assembly said in a Guardian article yesterday. ‘London’s housing crisis just gets worse and worse. Johnson is either out of touch with the realities of the crisis or is deliberately seeking to make housing more expensive.’ Labour is calling for more action to help London’s 800,000 private renting households including projects to research a capital-wide lettings agency and London Living Rent.

The political divisions over housing are evident at borough level too, with Labour councils like Islington determined to maintain social housing even as Tory ones like Hammersmith & Fulham, birthplace of Conservative housing reform, target the ‘Bridget Jones’ generation of young professionals.

The first step to tackling a crisis is acknowledging that one exists. On that level, at least London’s politicians are starting to get their act together and do something to alleviate the supply crisis even if they lack the power to do anything about demand. It’s far harder to find a solution that covers the housing needs of more than just the upwardly mobile and the signs are that things are going to continue to get worse for homeless Londoners and people who need genuinely affordable homes.

Capital crisis

Tue, 12 Feb 2013

The scale of the housing crisis facing London is hitting home with both Londoners and their political leaders.

In an opinion poll in the Evening Standard published today, half of people in the city say they fear being driven out of their neighbourhood by the cost of housing and six out of ten say there is a crisis in their area.

At one end of the housing scale, soaring demand from global investors is threatening to push house prices even further out of reach of ordinary Londoners. According to a report yesterday from the Home Builders Federation, it now takes the average first-time buyer 24 years to raise a deposit in London.

At the other end, homelessness continues to rise. A report on housing homeless people in London that went to the Leaders’ Committee of London Councils earlier warns that on a pretty conservative estimate of supply and demand the city faces a housing deficit of 221,700 homes by 2020 if nothing changes.

Up to now private rented temporary accommodation paid for by housing benefit has been the increasingly threadbare safety net for London’s councils and homeless families. However, boroughs like Newham and Croydon have been at the forefront of those insisting that they will be forced to place their homeless families outside the capital even though this breaches government guidance on suitability.

Meanwhile, Westminster is among those placing more and more families with children in bed and breakfast beyond the six weeks placement rule. A BBC London report last week said that the council is paying hotel bills of up to £12,000 a month for some families. The government claims this is ‘unacceptable’, Westminster says it is facing an ‘unprecedented’ problem, but, according to the report, was paying £350 a night for a hotel for one family who received £700 a week in housing benefit until it was capped.

While the weakening of the homelessness legislation is giving councils more and families fewer options, things will get even worse when the next round of housing benefit cuts hits in just 48 days’ time. The London Councils report says that the supply of temporary accommodation has already fallen by 20 per cent in the last 18 months as landlords withdraw from the market due to caps on local housing allowance and that the decline will accelerate as welfare reform is rolled out over the next 18 months.

The household benefit cap will have more impact in London than anywhere else but will now be piloted first in Croydon, Haringey, Enfield and Bromley in April before being introduced nationally in September. The delay announced before Christmas – ‘without any prior consultation or advice’, according to the London councils report – is already creating problems of its own, with the four boroughs warning they will face additional costs and unfair competition with other councils where there is not yet a cap. As Carl Brown reported two weeks ago, the four are warning that their entire budget for discretionary housing payments will be exhausted by the time the cap is introduced anywhere else.

Representatives from London local government met housing minister Mark Prisk and officials from the CLG before Christmas and put forward a series of proposals to tackle the bed and breakfast and homelessness crisis. Prisk reminded them of both the six-week rule and their obligations to place homeless families as near as possible to their home borough and not out of London. The councils warned of ‘a sustained increase in the level of homeless presentations and acceptances over the next year’ that will be exacerbated by the cap and the shortage of private rented properties available below LHA levels.

In the short term London Councils is pressing for measures to mitigate the impact of the cuts and additional transitional support and flexibility. However, it says a longer-term housing investment strategy covering public land, the powers of the mayor and boroughs and the balance between investment and housing benefit is needed to meet the scale of the challenge. Specifically, it says that the government should lift caps on housing revenue account borrowing to allow the boroughs to deliver 54,000 affordable homes and give tax relief to private landlords coming into the temporary accommodation market.

Those ideas have support not just from boroughs controlled by all parties but from Boris Johnson too. The Conservative mayor is pressing the government to allow him to keep the receipts from stamp duty in the capital as part of a 25-year plan to build a million homes. He wowed guests at the Chartered Institute of Housing’s presidential dinner last week with a speech telling them that: ‘What is needed now is a radically different approach which optimises City Hall’s role, unlocks the potential of the capital’s boroughs, allows developers including housing associations to up their game and creates a stable supply of land for housing. Above all, London needs a stable funding stream which will support and accelerate its housing and infrastructure delivery.’

It all sounds promising. However, all three of those longer-term solutions will require agreement from the Treasury. Lifting the caps and tax relief have both been suggested – and rejected - many times before. The third would require the transfer of stamp duty receipts estimated at £1.3 billion a year by Johnson. However, if the Treasury ever succeeds in generating any growth in the economy and activity in the housing market, the receipts could easily be worth much more than that. Either way, the move would raise all kinds of issues about the tax and spending relationship between the capital and the rest of the country. 

Meanwhile Johnson’s critics point to his ‘dire’ past record of promising much and delivering little. ‘He is building fewer homes and the ones that are being built are more expensive,’ Len Duvall, leader of the Labour group on the London Assembly said in a Guardian article yesterday. ‘London’s housing crisis just gets worse and worse. Johnson is either out of touch with the realities of the crisis or is deliberately seeking to make housing more expensive.’ Labour is calling for more action to help London’s 800,000 private renting households including projects to research a capital-wide lettings agency and London Living Rent.

The political divisions over housing are evident at borough level too, with Labour councils like Islington determined to maintain social housing even as Tory ones like Hammersmith & Fulham, birthplace of Conservative housing reform, target the ‘Bridget Jones’ generation of young professionals.

The first step to tackling a crisis is acknowledging that one exists. On that level, at least London’s politicians are starting to get their act together and do something to alleviate the supply crisis even if they lack the power to do anything about demand. It’s far harder to find a solution that covers the housing needs of more than just the upwardly mobile and the signs are that things are going to continue to get worse for homeless Londoners and people who need genuinely affordable homes.

Under pressure

Thu, 7 Feb 2013

The government’s arguments for the bedroom tax are continuing to unravel under intense media and political scrutiny. Will the pressure finally tell?

For the first time in years that I can remember, a social housing issue led prime minister’s questions yesterday as Labour leader Ed Miliband used the plight of people facing the tax to put David Cameron on the spot.

‘This is not a tax; it is a benefit,’ said the prime minister. Strictly speaking, of course, he’s right – the under-occupation penalty is a reduction in benefit. However, that’s not stopped the bedroom tax becoming such common parlance in the media that even ministers and government press offices have begun to use it. Cameron was committing cardinal error number one at PMQs of repeating his opponent’s attack line.

His main argument in favour was that it’s only fair to people in the private rented sector. Cameron repeated this ‘basic argument of fairness’ several times, pointing out that Labour presided over size criteria for private tenants. He said: ‘If someone is in private rented housing and receives no housing benefit, they do not get money for an extra room, and if someone is in private housing and do get housing benefit, they do not get money for an extra room, so there is a basic argument of fairness. Why should we be doing more for people in social housing on housing benefit than for people in private housing on housing benefit?’

It’s true that private tenants have faced a similar bedroom tax before and after the introduction of the local housing allowance in 2008. However, the justification put forward by Labour ministers at the time was that the government had to act because ‘unlike social housing, the deregulated private rented sector is not subject to any internal rent controls’.

As Hilary Burkitt points out, the size criteria may be pretty much the same but the impact on private and social tenants will be very different. Cameron’s ‘fairness’ argument also raises the prospect of what many social landlords fear after the next election: the introduction of an LHA-style allowance for social tenants that becomes increasingly detached from actual rents.

Finally, there is another group of people who are far more likely to under-occupy their homes than either private or social tenants: home owners. However, there are no size criteria in the support for mortgage interest scheme. And, far from cutting it back, the government has just extended a temporary concession that makes mortgages up to £200,0000 eligible for support.

Next Cameron tried the argument that the government is making extra support available on a case by case basis. This was rather undermined by the fact that he put the total of discretionary housing payments at £50 million rather than the actual £30 million.

When he attacked Labour for opposing all the government’s attempts to cut benefits and reduce the deficit, Miliband responded that the bedroom tax could end up costing more if victims are forced into smaller private rented homes with higher rents. ‘How can it possibly make sense to force people into a situation where they cost the state more, not less, by moving into the private rented sector?’

Cameron did not exactly answer the question. ‘What this Government are doing is building more homes,’ he said. ‘If the right hon. Gentleman supports that, will he now support our changes to the planning system and the new homes bonus?

That enabled Miliband to come back with: ‘So today we discover that the Prime Minister has not even got a clue about his own policy, which he is introducing in April.’

There was just time for Cameron to accuse Miliband of coming up with ‘totally pathetic, pre-scripted rubbish’ and respond to some of his own before it was time for other MPs to ask their questions. Happily, there were three more on the bedroom tax and there was still time for Cameron to repeat his cardinal error as he told Labour’s Greg McClymont: ‘I do not accept that the bedroom tax is a tax.’ As Homer Simpson might put it: ‘Doh!’

Later the same day, the bedroom tax and the prospect of it costing more not less featured on Channel 4 News report featuring Wigan & Leigh Housing. Labour showed its determination to maintain the pressure by putting up shadow work and pensions secretary Liam Byrne. His opponent was not Iain Duncan Smith or a DWP minister but Tory work and pensions committee member Nigel Mills, who wriggled uncomfortably when asked why a tenant should be forced to move and cost the taxpayer more.

The government did at least field work and pensions minister Steve Webb on the Today programme this morning (listen from about 8.30). Its report quoted the case of 60 year old John who cares for his wife Diane, who has MS. ‘It looks like govt has it in for people who are disabled through no fault of their own,’ she said. ‘We’re not scroungers.’ They had two spare bedrooms but it sounded like one was taken up with a through-floor lift and Diane said John needs the other ‘for some respite from me’. Webb argued that discretionary housing payments were specifically intended for cases like theirs but it emerged that they had already been turned down by their local authority.

On the bedroom tax in general he said that it was not fair to pay for a million spare rooms while other tenants were overcrowded. However, questioned about the plight of separated fathers who have their kids to stay at weekends, he pointed out that over 100,000 of the people affected are in work. ‘They could, for example, work a bit more and simply pay the shortfall,’ he said. ‘We’re talking an average of £14-£15 a week, so three hours at the minimum wage would pay the shortfall then he can keep the spare bedroom and have someone to stay.’

If only things were so simple as working an extra shift or a bit of overtime. In fact, as Hilary Burkitt (again) points out, the rate at which people’s benefits are withdrawn as they earn more money makes it far harder to make up the shortfall than Webb made out. A divorced father who works full time and has his 10-year old son and 16-year-old daughter to stay at weekends in his three-bed home would actually have to work 76 hours a week – the equivalent of two full-time jobs – to escape the bedroom tax. 

That minister as knowledgeable as Steve Webb can get his own benefits system so completely wrong is a measure of how fast the policy is unravelling. The more that ministers are confronted with the effects of the bedroom tax on real people the harder it is to defend it and resist calls for extra concessions.

However, with just 53 days to go until tenants’ housing benefit is cut, is it unravelling fast enough?

Under pressure

Thu, 7 Feb 2013

The government’s arguments for the bedroom tax are continuing to unravel under intense media and political scrutiny. Will the pressure finally tell?

For the first time in years that I can remember, a social housing issue led prime minister’s questions yesterday as Labour leader Ed Miliband used the plight of people facing the tax to put David Cameron on the spot.

‘This is not a tax; it is a benefit,’ said the prime minister. Strictly speaking, of course, he’s right – the under-occupation penalty is a reduction in benefit. However, that’s not stopped the bedroom tax becoming such common parlance in the media that even ministers and government press offices have begun to use it. Cameron was committing cardinal error number one at PMQs of repeating his opponent’s attack line.

His main argument in favour was that it’s only fair to people in the private rented sector. Cameron repeated this ‘basic argument of fairness’ several times, pointing out that Labour presided over size criteria for private tenants. He said: ‘If someone is in private rented housing and receives no housing benefit, they do not get money for an extra room, and if someone is in private housing and do get housing benefit, they do not get money for an extra room, so there is a basic argument of fairness. Why should we be doing more for people in social housing on housing benefit than for people in private housing on housing benefit?’

It’s true that private tenants have faced a similar bedroom tax before and after the introduction of the local housing allowance in 2008. However, the justification put forward by Labour ministers at the time was that the government had to act because ‘unlike social housing, the deregulated private rented sector is not subject to any internal rent controls’.

As Hilary Burkitt points out, the size criteria may be pretty much the same but the impact on private and social tenants will be very different. Cameron’s ‘fairness’ argument also raises the prospect of what many social landlords fear after the next election: the introduction of an LHA-style allowance for social tenants that becomes increasingly detached from actual rents.

Finally, there is another group of people who are far more likely to under-occupy their homes than either private or social tenants: home owners. However, there are no size criteria in the support for mortgage interest scheme. And, far from cutting it back, the government has just extended a temporary concession that makes mortgages up to £200,0000 eligible for support.

Next Cameron tried the argument that the government is making extra support available on a case by case basis. This was rather undermined by the fact that he put the total of discretionary housing payments at £50 million rather than the actual £30 million.

When he attacked Labour for opposing all the government’s attempts to cut benefits and reduce the deficit, Miliband responded that the bedroom tax could end up costing more if victims are forced into smaller private rented homes with higher rents. ‘How can it possibly make sense to force people into a situation where they cost the state more, not less, by moving into the private rented sector?’

Cameron did not exactly answer the question. ‘What this Government are doing is building more homes,’ he said. ‘If the right hon. Gentleman supports that, will he now support our changes to the planning system and the new homes bonus?

That enabled Miliband to come back with: ‘So today we discover that the Prime Minister has not even got a clue about his own policy, which he is introducing in April.’

There was just time for Cameron to accuse Miliband of coming up with ‘totally pathetic, pre-scripted rubbish’ and respond to some of his own before it was time for other MPs to ask their questions. Happily, there were three more on the bedroom tax and there was still time for Cameron to repeat his cardinal error as he told Labour’s Greg McClymont: ‘I do not accept that the bedroom tax is a tax.’ As Homer Simpson might put it: ‘Doh!’

Later the same day, the bedroom tax and the prospect of it costing more not less featured on Channel 4 News report featuring Wigan & Leigh Housing. Labour showed its determination to maintain the pressure by putting up shadow work and pensions secretary Liam Byrne. His opponent was not Iain Duncan Smith or a DWP minister but Tory work and pensions committee member Nigel Mills, who wriggled uncomfortably when asked why a tenant should be forced to move and cost the taxpayer more.

The government did at least field work and pensions minister Steve Webb on the Today programme this morning (listen from about 8.30). Its report quoted the case of 60 year old John who cares for his wife Diane, who has MS. ‘It looks like govt has it in for people who are disabled through no fault of their own,’ she said. ‘We’re not scroungers.’ They had two spare bedrooms but it sounded like one was taken up with a through-floor lift and Diane said John needs the other ‘for some respite from me’. Webb argued that discretionary housing payments were specifically intended for cases like theirs but it emerged that they had already been turned down by their local authority.

On the bedroom tax in general he said that it was not fair to pay for a million spare rooms while other tenants were overcrowded. However, questioned about the plight of separated fathers who have their kids to stay at weekends, he pointed out that over 100,000 of the people affected are in work. ‘They could, for example, work a bit more and simply pay the shortfall,’ he said. ‘We’re talking an average of £14-£15 a week, so three hours at the minimum wage would pay the shortfall then he can keep the spare bedroom and have someone to stay.’

If only things were so simple as working an extra shift or a bit of overtime. In fact, as Hilary Burkitt (again) points out, the rate at which people’s benefits are withdrawn as they earn more money makes it far harder to make up the shortfall than Webb made out. A divorced father who works full time and has his 10-year old son and 16-year-old daughter to stay at weekends in his three-bed home would actually have to work 76 hours a week – the equivalent of two full-time jobs – to escape the bedroom tax. 

That minister as knowledgeable as Steve Webb can get his own benefits system so completely wrong is a measure of how fast the policy is unravelling. The more that ministers are confronted with the effects of the bedroom tax on real people the harder it is to defend it and resist calls for extra concessions.

However, with just 53 days to go until tenants’ housing benefit is cut, is it unravelling fast enough?

Growing pains

Tue, 5 Feb 2013

If you drive a car, you need a licence, an MOT and insurance. Why should it be any different to rent out a house?

That point – made by Jacky Peacock of the National Private Tenants Organisation at a Communities and Local Government committee hearing yesterday – got me thinking about the whole issue of licensing and the private rented sector.

At the moment in England we have a mishmash of local licensing schemes – in certain areas, for HMOs and even in complete local authority – and voluntary accreditation schemes. Tenants complain that their interests are inadequately protected, good landlords complain they are paying too much for red tape and both say they are being ripped off by letting agents who charge them both for anything and everything.

As if to emphasise the point, the other witnesses included the architects of two previous attempts to reform renting. Martin Partington headed up the Law Commission when it pubished its final report on Renting Homes in May 2006, when there were just under three million private rented homes. Julie Rugg was one of the authors of a review for the government calling for light-touch regulation of landlords in October 2008, when there were 3.4 million.

Both were left to gather dust on Whitehall shelves (‘I was frankly hacked off,’ said Partington) as ministers came and went and civil servants lost interest until the election in May 2010, when there were 3.9 million.

And private renting continues to expand. ‘The sector is growing – it’s growing as we’re talking,’ Rugg told the committee. In the year to 2011, the most recent data available, the private rented sector had grown by another 228,000 homes – or 624 a day. In the time the committee was hearing evidence, it grew by another 26 homes. .

In the meantime house prices remain out of reach, mortgage lenders demand huge deposits, social landlords look to market renting and (as a survey by Rightmove indicated yesterday) interest in buy to let remains strong.

As another witness, Tim Brown of De Montfort University, put it, it’s vital that the committee – and the government – ‘look forward’ and realise that the sector is already home to a million families with children. By 2020, if growth continues at the rate seen over the last five years, there will be six million private rented homes.

Agreement about what to do next will not come easily. For every Labour MP calling for greater regulation and security of tenure, there is at least one Conservative arguing that all that is required is enforcement of the regulation we already have and that longer tenancies should be by agreement between landlord and tenant.

Licensing is an equally complex issue. Designing a system that penalises bad landlords without imposing extra costs and administrative burdens on good ones will not be easy. Landlords complain that some existing schemes are more ways for local authorities to make money than to identify and tackle rogues.  Any scheme needs to be rigorous to protect tenants but it will be meaningless unless cash-strapped local authorities can enforce it. Landlord organisations continue to press for greater self-regulation but that risks being as meaningless as Boris Johnson’s grandiose-sounding but voluntary housing covenant.

And yet, back with Jacky Peacock’s metaphor, what’s so different about renting a house to driving a car? With driving, nobody questions the need to pass a test of competence or a license that can be taken away for breaking the law. Nobody questions the fact that cars over three years old need to be tested for their roadworthiness and their owners forced to pay for repairs to drive and tax them.  Or that all drivers should be forced to insure their cars. Or that certain types of vehicle – HGVs, for example – need a more specialised license. It can be harder to identify the owner of a house than a car but houses themselves stay in one place and are much easier to track.

It’s not just driving a car either. We may no longer need a license to own a dog in Britain but one is required to catch fish, have a market stall, play music or films in public – and even to be a social landlord. We impose safety requirements on private rented accommodation but they can be all too easy for rogue landlords to evade.

In Wales, the devolved government is about to implement most of the recommendations of the Law Commission and the Rugg Review. In England, awareness of the issues and the need for action is growing but the questioning from MPs yesterday – and the divisions evident in last week’s Commons debate – indicate that reaching any sort of agreement on the crucial issues of regulation, tenure and rents will be far from easy.

However, there is one step that parliament could take straight away: regulation of letting agents and the fees they charge. It’s a measure that is supported by tenants, by landlords, by local authorities, by reputable agents and even (though he now says it was merely a probing amendment) by housing minister Mark Prisk.

Action on this it is long overdue but it will not address many of the bigger issues in a private rented sector that has grown by another 30 homes in the time it took me to write this blog.

Growing pains

Tue, 5 Feb 2013

If you drive a car, you need a licence, an MOT and insurance. Why should it be any different to rent out a house?

That point – made by Jacky Peacock of the National Private Tenants Organisation at a Communities and Local Government committee hearing yesterday – got me thinking about the whole issue of licensing and the private rented sector.

At the moment in England we have a mishmash of local licensing schemes – in certain areas, for HMOs and even in complete local authority – and voluntary accreditation schemes. Tenants complain that their interests are inadequately protected, good landlords complain they are paying too much for red tape and both say they are being ripped off by letting agents who charge them both for anything and everything.

As if to emphasise the point, the other witnesses included the architects of two previous attempts to reform renting. Martin Partington headed up the Law Commission when it pubished its final report on Renting Homes in May 2006, when there were just under three million private rented homes. Julie Rugg was one of the authors of a review for the government calling for light-touch regulation of landlords in October 2008, when there were 3.4 million.

Both were left to gather dust on Whitehall shelves (‘I was frankly hacked off,’ said Partington) as ministers came and went and civil servants lost interest until the election in May 2010, when there were 3.9 million.

And private renting continues to expand. ‘The sector is growing – it’s growing as we’re talking,’ Rugg told the committee. In the year to 2011, the most recent data available, the private rented sector had grown by another 228,000 homes – or 624 a day. In the time the committee was hearing evidence, it grew by another 26 homes. .

In the meantime house prices remain out of reach, mortgage lenders demand huge deposits, social landlords look to market renting and (as a survey by Rightmove indicated yesterday) interest in buy to let remains strong.

As another witness, Tim Brown of De Montfort University, put it, it’s vital that the committee – and the government – ‘look forward’ and realise that the sector is already home to a million families with children. By 2020, if growth continues at the rate seen over the last five years, there will be six million private rented homes.

Agreement about what to do next will not come easily. For every Labour MP calling for greater regulation and security of tenure, there is at least one Conservative arguing that all that is required is enforcement of the regulation we already have and that longer tenancies should be by agreement between landlord and tenant.

Licensing is an equally complex issue. Designing a system that penalises bad landlords without imposing extra costs and administrative burdens on good ones will not be easy. Landlords complain that some existing schemes are more ways for local authorities to make money than to identify and tackle rogues.  Any scheme needs to be rigorous to protect tenants but it will be meaningless unless cash-strapped local authorities can enforce it. Landlord organisations continue to press for greater self-regulation but that risks being as meaningless as Boris Johnson’s grandiose-sounding but voluntary housing covenant.

And yet, back with Jacky Peacock’s metaphor, what’s so different about renting a house to driving a car? With driving, nobody questions the need to pass a test of competence or a license that can be taken away for breaking the law. Nobody questions the fact that cars over three years old need to be tested for their roadworthiness and their owners forced to pay for repairs to drive and tax them.  Or that all drivers should be forced to insure their cars. Or that certain types of vehicle – HGVs, for example – need a more specialised license. It can be harder to identify the owner of a house than a car but houses themselves stay in one place and are much easier to track.

It’s not just driving a car either. We may no longer need a license to own a dog in Britain but one is required to catch fish, have a market stall, play music or films in public – and even to be a social landlord. We impose safety requirements on private rented accommodation but they can be all too easy for rogue landlords to evade.

In Wales, the devolved government is about to implement most of the recommendations of the Law Commission and the Rugg Review. In England, awareness of the issues and the need for action is growing but the questioning from MPs yesterday – and the divisions evident in last week’s Commons debate – indicate that reaching any sort of agreement on the crucial issues of regulation, tenure and rents will be far from easy.

However, there is one step that parliament could take straight away: regulation of letting agents and the fees they charge. It’s a measure that is supported by tenants, by landlords, by local authorities, by reputable agents and even (though he now says it was merely a probing amendment) by housing minister Mark Prisk.

Action on this it is long overdue but it will not address many of the bigger issues in a private rented sector that has grown by another 30 homes in the time it took me to write this blog.

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