Monday, 27 February 2017

Inside edge

All posts from: January 2014

More is less

Wed, 29 Jan 2014

There are at least three contrasting and sometimes conflicting imperatives at the heart of the prospectus for the Affordable Homes Programme published this week.

The first (let’s call it the HCA one) is a pragmatic desire to do more with less in difficult circumstances. The second (the political one) is the imperative of big numbers to be able to quote in press releases and in parliament. The third (the ideological one) is a determination to exploit these circumstances to accelerate the slow death of social housing. Amid the tensions between these three aims several vital issues are barely addressed or else ducked completely. 

A quick read of the introduction by housing minister Kris Hopkins illustrates all of these points and more. He boasts that £3.3 billion plus £20 billion in private investment will ‘support the delivery of 165,000 additional affordable homes’. That’s on top of ‘the already strong track record of this Government, with over 170,000 affordable homes built over the last three years’. Leaving aside the fact that there will – probably – be 170,000 but they won’t be finished till 2015, these are nice big numbers to deploy at every opportunity along with the one about the biggest housing programme for 20 years.

But his next statement really made me think:

‘Every penny of public money must be spent wisely, to deliver the most benefit for our citizens. That is why we overhauled the model for funding affordable housing in the current programme. As a result, we now get more than twice as many homes from each pound of public money we spend on grant, compared to the 2008-2011 programme.’

The last bit may be true but is ‘every penny of public money’ really being spent wisely when everyone knows that there is a long-term price to be paid for Affordable Rent that will get higher the more it is used? Money saved on grant now by the DCLG will have to be paid out by the DWP in future to cover the housing benefit bill on the higher rents.

It was far from clear even in the DCLG’s own impact assessment of Affordable Rent 1 that it offered the best value for money over the long term. Questions were also raised by both the National Audit Office and the Public Accounts Committee about the 2011-15 programme, even though less than half of it consists of Affordable Rent homes and only a limited number of conversions of re-lets were envisaged. They have still not been answered before the 2015-18 programme of 165,000 homes mostly for Affordable Rent plus accelerated conversions and disposals. The detail has no doubt been discussed with the DWP but, given that the programme only starts after the next election and the bill will only be paid over the long term, you wonder how hard the point was pressed.

‘Value for money’ is mentioned 44 times in the document but not defined anywhere. ‘Housing benefit’ gets only five mentions and three of those are in an annexed letter from 2011. The only consideration that I can find of the long-term costs and benefits comes in a paragraph on ‘meeting local needs’. Local authorities will be able to give their views on the programme but:

‘For the purposes of this programme, it is not expected that local authority priorities will include a preference for social rent over Affordable Rent the intention of the programme is to provide new Affordable Rent homes (and, where appropriate, affordable home ownership homes). In general, Government policy does not support the argument that only rents at or close to social rent levels are capable of meeting local needs, particularly when support for housing costs through Housing Benefit and Universal Credit is taken into account.’

Housing benefit will, in other words, continue to ‘take the strain’ even though, as DWP ministers never cease to remind us, it is also ‘out of control’.

Then there is the whole issue of what counts as ‘affordable’. The word is mentioned more than 200 times but is not defined anywhere except by the assumption that anything that is up to 80 per cent of market levels must therefore be ‘affordable’. But affordable for who? For the DCLG in terms of minimising the capital grant required up front for the maximum number of homes? Tick. For the tenants? Nobody seems very interested. For the DWP’s housing benefit budget? Who cares?

Affordable Rent 2 is quantifiably different to what went before. What in 2010 was a short-term fix has become a wholesale shift from social to ‘affordable’ without any public debate about the rents that tenants can actually afford. The requirement on conversions of re-lets seems to have been fairly easy to ignore in the first round but social landlords wanting grant funding in the 2015-18 programme will have to demonstrate ‘value for money’ not just in their bids to build new homes but also in their conversion of re-lets to Affordable Rent and their plans to sell off high-value stock.

The Greater London Authority’s version of the programme published before Christmas recognised some of these tensions by allowing for some ‘capped rent’ homes in areas where Affordable Rent would be too expensive. The HCA prospectus covers the rest of the country and does not have to deal with the same extremes as in the capital but it offers little alternative to Affordable Rent or affordable home ownership. There are additional measures to prevent local authorities from blocking Affordable Rent in their areas. Even on the smaller homes intended for bedroom tax downsizers ‘providers, supported by the relevant local authorities, will have to make a strong case to demonstrate why Affordable Rent would not be a viable alternative’, leaving open the possibility that a new smaller home could actually be more expensive. And localities where there is little difference between social rents and 80 per cent of market rents will not escape either: they will be expected to convert re-lets to shared ownership.

In an excellent blog this week Colin Wiles urges housing providers to ‘just say no’ to the new regime and refuse to bid. I hope many of them will do just that: in some ways, the prospectus points in this direction by saying that it expects a proportion of the homes to be delivered without grant. That being the case, why not act independently without the strings?

However, recent history shows that each time housing associations have been presented with a chance to say ‘no’ to new conditions for grant funding enough have said ‘yes please, where do we sign?’ to allow it to go ahead. That was what happened with the introduction of private finance in the first place, with each successive reduction in the grant rate and with the first round of affordable rent, which ended up being over-subscribed despite quite widespread doubts expressed in advance by anonymous chief executives.

Which brings me back to those three contrasting and conflicting aims. From a pragmatic point of view, the best associations have become more business-like and efficient, delivering more for less, so why not make the rest of the sector follow suit? Why shouldn’t organisations that receive public money have a duty to manage their assets as efficiently as possible? Shorn of the newspeak title of ‘Affordable Rent’, there is a pragmatic case to be made for delivering new homes at higher rents to maximise output. This seems to a trend across the developed world and SNP Scotland and Labour Wales both have schemes that include homes at closer to market rents.

But these are additions to, not replacements for, a social housing programme and they do not involve converting or selling off what already exists. In England politics and ideology have trumped pragmatism and policy in the rush to implement Affordable Rent for new homes and for whole swathes of the existing stock. Using the assets created in the past to invest wisely for the future is one thing. Cashing in the ‘value for money’ generated in the past to create a future that will not be ‘affordable’ is quite another. When it comes to Affordable Rent 2, more is less. 

More is less

Wed, 29 Jan 2014

There are at least three contrasting and sometimes conflicting imperatives at the heart of the prospectus for the Affordable Homes Programme published this week.

The first (let’s call it the HCA one) is a pragmatic desire to do more with less in difficult circumstances. The second (the political one) is the imperative of big numbers to be able to quote in press releases and in parliament. The third (the ideological one) is a determination to exploit these circumstances to accelerate the slow death of social housing. Amid the tensions between these three aims several vital issues are barely addressed or else ducked completely. 

A quick read of the introduction by housing minister Kris Hopkins illustrates all of these points and more. He boasts that £3.3 billion plus £20 billion in private investment will ‘support the delivery of 165,000 additional affordable homes’. That’s on top of ‘the already strong track record of this Government, with over 170,000 affordable homes built over the last three years’. Leaving aside the fact that there will – probably – be 170,000 but they won’t be finished till 2015, these are nice big numbers to deploy at every opportunity along with the one about the biggest housing programme for 20 years.

But his next statement really made me think:

‘Every penny of public money must be spent wisely, to deliver the most benefit for our citizens. That is why we overhauled the model for funding affordable housing in the current programme. As a result, we now get more than twice as many homes from each pound of public money we spend on grant, compared to the 2008-2011 programme.’

The last bit may be true but is ‘every penny of public money’ really being spent wisely when everyone knows that there is a long-term price to be paid for Affordable Rent that will get higher the more it is used? Money saved on grant now by the DCLG will have to be paid out by the DWP in future to cover the housing benefit bill on the higher rents.

It was far from clear even in the DCLG’s own impact assessment of Affordable Rent 1 that it offered the best value for money over the long term. Questions were also raised by both the National Audit Office and the Public Accounts Committee about the 2011-15 programme, even though less than half of it consists of Affordable Rent homes and only a limited number of conversions of re-lets were envisaged. They have still not been answered before the 2015-18 programme of 165,000 homes mostly for Affordable Rent plus accelerated conversions and disposals. The detail has no doubt been discussed with the DWP but, given that the programme only starts after the next election and the bill will only be paid over the long term, you wonder how hard the point was pressed.

‘Value for money’ is mentioned 44 times in the document but not defined anywhere. ‘Housing benefit’ gets only five mentions and three of those are in an annexed letter from 2011. The only consideration that I can find of the long-term costs and benefits comes in a paragraph on ‘meeting local needs’. Local authorities will be able to give their views on the programme but:

‘For the purposes of this programme, it is not expected that local authority priorities will include a preference for social rent over Affordable Rent the intention of the programme is to provide new Affordable Rent homes (and, where appropriate, affordable home ownership homes). In general, Government policy does not support the argument that only rents at or close to social rent levels are capable of meeting local needs, particularly when support for housing costs through Housing Benefit and Universal Credit is taken into account.’

Housing benefit will, in other words, continue to ‘take the strain’ even though, as DWP ministers never cease to remind us, it is also ‘out of control’.

Then there is the whole issue of what counts as ‘affordable’. The word is mentioned more than 200 times but is not defined anywhere except by the assumption that anything that is up to 80 per cent of market levels must therefore be ‘affordable’. But affordable for who? For the DCLG in terms of minimising the capital grant required up front for the maximum number of homes? Tick. For the tenants? Nobody seems very interested. For the DWP’s housing benefit budget? Who cares?

Affordable Rent 2 is quantifiably different to what went before. What in 2010 was a short-term fix has become a wholesale shift from social to ‘affordable’ without any public debate about the rents that tenants can actually afford. The requirement on conversions of re-lets seems to have been fairly easy to ignore in the first round but social landlords wanting grant funding in the 2015-18 programme will have to demonstrate ‘value for money’ not just in their bids to build new homes but also in their conversion of re-lets to Affordable Rent and their plans to sell off high-value stock.

The Greater London Authority’s version of the programme published before Christmas recognised some of these tensions by allowing for some ‘capped rent’ homes in areas where Affordable Rent would be too expensive. The HCA prospectus covers the rest of the country and does not have to deal with the same extremes as in the capital but it offers little alternative to Affordable Rent or affordable home ownership. There are additional measures to prevent local authorities from blocking Affordable Rent in their areas. Even on the smaller homes intended for bedroom tax downsizers ‘providers, supported by the relevant local authorities, will have to make a strong case to demonstrate why Affordable Rent would not be a viable alternative’, leaving open the possibility that a new smaller home could actually be more expensive. And localities where there is little difference between social rents and 80 per cent of market rents will not escape either: they will be expected to convert re-lets to shared ownership.

In an excellent blog this week Colin Wiles urges housing providers to ‘just say no’ to the new regime and refuse to bid. I hope many of them will do just that: in some ways, the prospectus points in this direction by saying that it expects a proportion of the homes to be delivered without grant. That being the case, why not act independently without the strings?

However, recent history shows that each time housing associations have been presented with a chance to say ‘no’ to new conditions for grant funding enough have said ‘yes please, where do we sign?’ to allow it to go ahead. That was what happened with the introduction of private finance in the first place, with each successive reduction in the grant rate and with the first round of affordable rent, which ended up being over-subscribed despite quite widespread doubts expressed in advance by anonymous chief executives.

Which brings me back to those three contrasting and conflicting aims. From a pragmatic point of view, the best associations have become more business-like and efficient, delivering more for less, so why not make the rest of the sector follow suit? Why shouldn’t organisations that receive public money have a duty to manage their assets as efficiently as possible? Shorn of the newspeak title of ‘Affordable Rent’, there is a pragmatic case to be made for delivering new homes at higher rents to maximise output. This seems to a trend across the developed world and SNP Scotland and Labour Wales both have schemes that include homes at closer to market rents.

But these are additions to, not replacements for, a social housing programme and they do not involve converting or selling off what already exists. In England politics and ideology have trumped pragmatism and policy in the rush to implement Affordable Rent for new homes and for whole swathes of the existing stock. Using the assets created in the past to invest wisely for the future is one thing. Cashing in the ‘value for money’ generated in the past to create a future that will not be ‘affordable’ is quite another. When it comes to Affordable Rent 2, more is less. 

Taking the pledge

Mon, 27 Jan 2014

The weekend’s big speech by Ed Balls looks like significant news for housing under a future Labour government – and not just for the obvious reasons.

The national headlines from the shadow chancellor’s speech to the Fabian conference were taken by his pledge to restore the 50p rate of tax and subsequent accusations that Labour is therefore anti-business. The undoubtedly good news for housing was that it will be ‘a central priority’ if Labour wins power in 2015.

But it was Balls’s message about ‘fiscal discipline’ that was more interesting to me:

‘We won’t be able to reverse all the spending cuts and tax rises that the Tories have pushed through. We will have to govern with less money, which means the next Labour government will have to make cuts too. No responsible Opposition can make detailed commitments and difficult judgments about what will happen in two or three years time without knowing the state of the economy and public finances that we will inherit.

‘But we know we will face difficult choices. The government’s day-to-day spending totals for 2015/16 will be our starting point. There will be no more borrowing for day-to-day spending. Any changes to the current spending plans for that year will be fully-funded and set out in advance in our manifesto.’

On the fact of it, that sounds horribly reminiscent of Tony Blair and Gordon Brown’s pledge to stick to Conservative spending plans for the first two years of the Labour government after the 1997 general election. While that was effective politically in signalling New Labour’s determination to break with the party’s tax and spend image, the results were disastrous for housing investment because the Tories had already penciled in deep cuts for 1997/98 and 1998/99. Never mind two years, investment in new homes did not match the level Labour had inherited for another seven in real terms. This was the root cause of the failure to invest enough in new homes that the party now acknowledges.

However, the crucial difference this time around is that the pledge by Balls applies to current spending, leaving room for capital investment and for borrowing to finance it.

This was the context for the passage on housing:

‘We need Help to Build, not just Help to Buy. This would help people aspiring to own their own home, create thousands of jobs and apprenticeships and ensure we have a recovery that is built to last. And it is why housing investment will be a central priority for the next Labour government.’

That was immediately followed by:

‘Of course, there is a careful fiscal judgement to be made. I have said that there will be no more borrowing for day to day spending in 2015-16. But consistent with our tough fiscal rules, we will assess the case for extra capital spending to boost growth and jobs and make our economy stronger for the long-term.’

Housing is particularly strongly placed within this financial framework since it is arguably the only sort of capital spending that simultaneously reduces current spending: more new homes at lower rents means a lower housing benefit bill.

Exactly this point was made by Ed Miliband in an article for the Sun on Sunday yesterday in which he said there will be tough controls on social security: ‘But to deal with welfare spending properly, we will need to make big reforms to cut the costs of failure in the system. We will build more homes to get the costs of housing benefit down.’

In effect, the rule on current spending will necessitate a reversal of the trend seen over the last 35 years of subsidising rents rather than bricks and mortar and letting housing benefit take the strain. The prospectus for the latest Affordable Homes Programme published this morning, with its heavy emphasis on conversions to affordable rent and disposals of high-value stock, moves even further in this direction. 

If Labour’s pledge and a reversal in this trend sound like very good news for housing, there’s just the small matter of winning the election first after a campaign in which the other parties will argue that the financial framework will leave the back door open to more Labour borrowing.

And, even if Labour does win in 2015, new homes will take time to build and to start to bring down the housing benefit bill. If 100,000 additional new social rented homes were built with rents £70 a week lower for 100,000 families moving from the private rented sector the saving would be £364 million a year. That would continue year after year but it compares to a total housing benefit bill of £24 billion.

However, that ignores the short-term fiscal benefits from the construction programme. On a fairly conservative assumption that each home built could save the Treasury £20,000 in higher tax revenue and lower benefit payments (each home generates 1.5 construction jobs), those 100,000 homes could deliver a gain of £2 billion.

Elsewhere at the Fabian conference, rent capping emerged as by far the most popular policy at a Dragon’s Den-style session. The idea was also endorsed by frontbencher Sadiq Khan, according to Mark Ferguson of Labour List. However, shadow housing minister Emma Reynolds promptly tweeted that ‘it is not Labour party policy to introduce rent controls’. 

Taking the pledge

Mon, 27 Jan 2014

The weekend’s big speech by Ed Balls looks like significant news for housing under a future Labour government – and not just for the obvious reasons.

The national headlines from the shadow chancellor’s speech to the Fabian conference were taken by his pledge to restore the 50p rate of tax and subsequent accusations that Labour is therefore anti-business. The undoubtedly good news for housing was that it will be ‘a central priority’ if Labour wins power in 2015.

But it was Balls’s message about ‘fiscal discipline’ that was more interesting to me:

‘We won’t be able to reverse all the spending cuts and tax rises that the Tories have pushed through. We will have to govern with less money, which means the next Labour government will have to make cuts too. No responsible Opposition can make detailed commitments and difficult judgments about what will happen in two or three years time without knowing the state of the economy and public finances that we will inherit.

‘But we know we will face difficult choices. The government’s day-to-day spending totals for 2015/16 will be our starting point. There will be no more borrowing for day-to-day spending. Any changes to the current spending plans for that year will be fully-funded and set out in advance in our manifesto.’

On the fact of it, that sounds horribly reminiscent of Tony Blair and Gordon Brown’s pledge to stick to Conservative spending plans for the first two years of the Labour government after the 1997 general election. While that was effective politically in signalling New Labour’s determination to break with the party’s tax and spend image, the results were disastrous for housing investment because the Tories had already penciled in deep cuts for 1997/98 and 1998/99. Never mind two years, investment in new homes did not match the level Labour had inherited for another seven in real terms. This was the root cause of the failure to invest enough in new homes that the party now acknowledges.

However, the crucial difference this time around is that the pledge by Balls applies to current spending, leaving room for capital investment and for borrowing to finance it.

This was the context for the passage on housing:

‘We need Help to Build, not just Help to Buy. This would help people aspiring to own their own home, create thousands of jobs and apprenticeships and ensure we have a recovery that is built to last. And it is why housing investment will be a central priority for the next Labour government.’

That was immediately followed by:

‘Of course, there is a careful fiscal judgement to be made. I have said that there will be no more borrowing for day to day spending in 2015-16. But consistent with our tough fiscal rules, we will assess the case for extra capital spending to boost growth and jobs and make our economy stronger for the long-term.’

Housing is particularly strongly placed within this financial framework since it is arguably the only sort of capital spending that simultaneously reduces current spending: more new homes at lower rents means a lower housing benefit bill.

Exactly this point was made by Ed Miliband in an article for the Sun on Sunday yesterday in which he said there will be tough controls on social security: ‘But to deal with welfare spending properly, we will need to make big reforms to cut the costs of failure in the system. We will build more homes to get the costs of housing benefit down.’

In effect, the rule on current spending will necessitate a reversal of the trend seen over the last 35 years of subsidising rents rather than bricks and mortar and letting housing benefit take the strain. The prospectus for the latest Affordable Homes Programme published this morning, with its heavy emphasis on conversions to affordable rent and disposals of high-value stock, moves even further in this direction. 

If Labour’s pledge and a reversal in this trend sound like very good news for housing, there’s just the small matter of winning the election first after a campaign in which the other parties will argue that the financial framework will leave the back door open to more Labour borrowing.

And, even if Labour does win in 2015, new homes will take time to build and to start to bring down the housing benefit bill. If 100,000 additional new social rented homes were built with rents £70 a week lower for 100,000 families moving from the private rented sector the saving would be £364 million a year. That would continue year after year but it compares to a total housing benefit bill of £24 billion.

However, that ignores the short-term fiscal benefits from the construction programme. On a fairly conservative assumption that each home built could save the Treasury £20,000 in higher tax revenue and lower benefit payments (each home generates 1.5 construction jobs), those 100,000 homes could deliver a gain of £2 billion.

Elsewhere at the Fabian conference, rent capping emerged as by far the most popular policy at a Dragon’s Den-style session. The idea was also endorsed by frontbencher Sadiq Khan, according to Mark Ferguson of Labour List. However, shadow housing minister Emma Reynolds promptly tweeted that ‘it is not Labour party policy to introduce rent controls’. 

Mixed messages

Thu, 23 Jan 2014

So are private landlords about to pull out of the housing benefit market or not? 

It’s one of the most crucial questions for the future of the housing system but the answer may be more complex than recent publicity suggests.

The alarm was raised when Fergus and Judith Wilson, the King and Queen of buy to let, revealed that they were evicting all of their tenants on benefit. A poll yesterday by the website spareroom.co.uk found that only 18 per cent of landlords currently rent to claimants, down from a third two years ago.

A combination of different factors seems to be at work here, starting with the April 2011 cuts in the local housing allowance, continuing with further cuts such as the overall benefit and culminating in concern about the impact of universal credit and the presumption that the housing element will be paid direct to the tenant rather than the landlord.  The most worrying finding from the poll was that half of those currently letting to claimants said they wouldn’t after the introduction of universal credit.

However, a survey in London by the Residential Landlords Association (RLA) presents a more mixed picture despite the fact that the capital is where many of the housing benefit cuts are having the biggest impact. In contrast to the poll, 36 per cent of landlords say they continue to let to benefit claimants and 63 per cent say their tenants have not fallen into arrears because of the cuts.

In terms of specific changes, 59 per cent say they have not stopped renting to claimants under 35 because of the change to the single room rent but 74 per cent say they are more reluctant to let to claimants because of the benefit cap.

So far, so good for the DWP and its hopes that the private rented sector will absorb the changes but only 9 per cent of RLA members say they have reduced their rents because of the LHA changes and only 6 per cent say they would be willing to drop the rent so their tenants could stay in London. Meanwhile 46 per cent have concern that working age claimants whose benefits are restricted will be driven out of the capital altogether.

This is at odds with the hardline stance taken by the Wilsons across their 1,000-home portfolio in Kent. They say they will refuse to take tenants on housing benefit and have ended the tenancies of 200 existing claimants who should ‘get a job’.

In a series of media interviews over the last month, they have cited many reasons for this decision: principally the non-availability of rent guarantee insurance for claimants but also rising levels of rent arrears, the shortfall between LHA rates and rents, the prospect of direct payment under the universal credit and the availability of alternative Eastern European tenants who are working.

If you haven’t seen them yet, watch Fergus Wilson’s ‘If I’m heartless then all landlords are’ interview with Channel Four News and read his bizarre ‘Fergus calling Dave’ statement to The Guardian. Discussion forums reveal some frustration from other landlords with ‘the story that refuses to die’.

The extensive coverage has certainly raised the media profile of the housing benefit issue but are the Wilsons representative of private landlords as a whole? If the London survey perhaps suggests not, are the more professional landlords who tend to be members of national organisations taking a different attitude to the small buy-to-let investors in the website poll?

Richard Lambert, chief executive officer of the National Landlords Association, says its research shows ‘more and more landlords moving away from renting to tenants claiming benefits’. However, he says it also knows of many landlords who have never had a problem and specialise in the claimant market. ‘They tend to be the more experienced landlords with larger portfolios, who understand how to manage tenancies to ensure stability and minimise the risk of arrears.’

RLA consultant Bill Irvine argues that there is no need for landlords to follow the Wilsons’ lead: demand is high, margins are good and the threat posed by the universal credit is exaggerated. He says the government has already made concessions on direct payment and in any case the national introduction of universal credit will not happen until after the 2015 general election.

In the Commons this week, ministers played down fears of a private renting crisis. Housing minister Kris Hopkins said that ONS showed that rents were rising by 1.1 per cent in England and 1.9 per cent in London, which were both below inflation, and boasted about £2 billion of bids for phase 2 of Build to Rent. Asked by Labour’s John Healey how he would ensure that claimants were able to access the market, he said:

‘The key to making the private rented sector accessible to all is to build more homes for rent. That is why we are investing in the private rented sector through the £1 billion Build to Rent fund and giving £3.5 billion in guarantees to get builders building—and we will deliver 170,000 new affordable homes by 2015 through this process.’

Labour’s Sheila Gilmore tackled communities secretary Eric Pickles over his denial in an earlier debate that landlords were refusing to rent to people on housing benefit. Given the reports about the Wilsons, she asked, would he carry out a proper inquiry? Pickles replied that ‘there are a lot more private landlords than just that particular gentleman, and I do not think he represents anything that speaks of the sector as a whole. The short answer is no.’

Only time will tell if that complacency from Pickles is justified but Hopkins’s response of using stats about affordable homes that are not privately rented does not fill me with great confidence. Neither does his comparison between rents and inflation. At a time when rents are still rising faster than both earnings and the 1 per cent cap on increases in the local housing allowance it is completely irrelevant.

If the action taken by the Wilsons is unrepresentative of the sector as a whole, the caps and cuts are undoubtedly having an impact on landlords as well as tenants. It’s one that will vary around the country according to local market conditions but as demand continues to rise the pressure grows. Housing benefit may have taken the strain for more than 20 years but for how much longer?

Mixed messages

Thu, 23 Jan 2014

So are private landlords about to pull out of the housing benefit market or not? 

It’s one of the most crucial questions for the future of the housing system but the answer may be more complex than recent publicity suggests.

The alarm was raised when Fergus and Judith Wilson, the King and Queen of buy to let, revealed that they were evicting all of their tenants on benefit. A poll yesterday by the website spareroom.co.uk found that only 18 per cent of landlords currently rent to claimants, down from a third two years ago.

A combination of different factors seems to be at work here, starting with the April 2011 cuts in the local housing allowance, continuing with further cuts such as the overall benefit and culminating in concern about the impact of universal credit and the presumption that the housing element will be paid direct to the tenant rather than the landlord.  The most worrying finding from the poll was that half of those currently letting to claimants said they wouldn’t after the introduction of universal credit.

However, a survey in London by the Residential Landlords Association (RLA) presents a more mixed picture despite the fact that the capital is where many of the housing benefit cuts are having the biggest impact. In contrast to the poll, 36 per cent of landlords say they continue to let to benefit claimants and 63 per cent say their tenants have not fallen into arrears because of the cuts.

In terms of specific changes, 59 per cent say they have not stopped renting to claimants under 35 because of the change to the single room rent but 74 per cent say they are more reluctant to let to claimants because of the benefit cap.

So far, so good for the DWP and its hopes that the private rented sector will absorb the changes but only 9 per cent of RLA members say they have reduced their rents because of the LHA changes and only 6 per cent say they would be willing to drop the rent so their tenants could stay in London. Meanwhile 46 per cent have concern that working age claimants whose benefits are restricted will be driven out of the capital altogether.

This is at odds with the hardline stance taken by the Wilsons across their 1,000-home portfolio in Kent. They say they will refuse to take tenants on housing benefit and have ended the tenancies of 200 existing claimants who should ‘get a job’.

In a series of media interviews over the last month, they have cited many reasons for this decision: principally the non-availability of rent guarantee insurance for claimants but also rising levels of rent arrears, the shortfall between LHA rates and rents, the prospect of direct payment under the universal credit and the availability of alternative Eastern European tenants who are working.

If you haven’t seen them yet, watch Fergus Wilson’s ‘If I’m heartless then all landlords are’ interview with Channel Four News and read his bizarre ‘Fergus calling Dave’ statement to The Guardian. Discussion forums reveal some frustration from other landlords with ‘the story that refuses to die’.

The extensive coverage has certainly raised the media profile of the housing benefit issue but are the Wilsons representative of private landlords as a whole? If the London survey perhaps suggests not, are the more professional landlords who tend to be members of national organisations taking a different attitude to the small buy-to-let investors in the website poll?

Richard Lambert, chief executive officer of the National Landlords Association, says its research shows ‘more and more landlords moving away from renting to tenants claiming benefits’. However, he says it also knows of many landlords who have never had a problem and specialise in the claimant market. ‘They tend to be the more experienced landlords with larger portfolios, who understand how to manage tenancies to ensure stability and minimise the risk of arrears.’

RLA consultant Bill Irvine argues that there is no need for landlords to follow the Wilsons’ lead: demand is high, margins are good and the threat posed by the universal credit is exaggerated. He says the government has already made concessions on direct payment and in any case the national introduction of universal credit will not happen until after the 2015 general election.

In the Commons this week, ministers played down fears of a private renting crisis. Housing minister Kris Hopkins said that ONS showed that rents were rising by 1.1 per cent in England and 1.9 per cent in London, which were both below inflation, and boasted about £2 billion of bids for phase 2 of Build to Rent. Asked by Labour’s John Healey how he would ensure that claimants were able to access the market, he said:

‘The key to making the private rented sector accessible to all is to build more homes for rent. That is why we are investing in the private rented sector through the £1 billion Build to Rent fund and giving £3.5 billion in guarantees to get builders building—and we will deliver 170,000 new affordable homes by 2015 through this process.’

Labour’s Sheila Gilmore tackled communities secretary Eric Pickles over his denial in an earlier debate that landlords were refusing to rent to people on housing benefit. Given the reports about the Wilsons, she asked, would he carry out a proper inquiry? Pickles replied that ‘there are a lot more private landlords than just that particular gentleman, and I do not think he represents anything that speaks of the sector as a whole. The short answer is no.’

Only time will tell if that complacency from Pickles is justified but Hopkins’s response of using stats about affordable homes that are not privately rented does not fill me with great confidence. Neither does his comparison between rents and inflation. At a time when rents are still rising faster than both earnings and the 1 per cent cap on increases in the local housing allowance it is completely irrelevant.

If the action taken by the Wilsons is unrepresentative of the sector as a whole, the caps and cuts are undoubtedly having an impact on landlords as well as tenants. It’s one that will vary around the country according to local market conditions but as demand continues to rise the pressure grows. Housing benefit may have taken the strain for more than 20 years but for how much longer?

Garden griping

Mon, 20 Jan 2014

So Nick would like two, Eric (through clenched teeth) one or two, Emma five and Boris none. It’s time to play the garden cities game.

A quick look at the electoral map of constituencies around London tells you most of what you need to know about the politics involved. You’ll find a sea of Tory blue in the swathe of seats closest to the capital with only Labour Slough, Luton and Oxford and Lib Dem Lewes and Colchester anywhere near to being affected.

It also explains why David Cameron’s interest has waned and a government-commissioned study on new towns has allegedly been blocked. According to the FT, a Downing Street official has even joked that the only possible sites should be Buckingham and Mid Bedfordshire, the seats of Tory outcasts John Bercow and Nadine Dorries.

Add to that mix the curious leak to the Telegraph of the names of two sites supposedly identified that seem almost guaranteed (and maybe intended) to inflame further Conservative opposition. Gerrards Cross is one of the most exclusive and expensive parts of Buckinghamshire, while much of Yalding in Kent was last seen underwater as its residents confronted Dave.

That was part of a story on Saturday that led on a call from Nick Clegg for Cameron to be ‘honest and upfront’ about where the garden cities will be. He says:

‘We cannot make the mistakes of past governments and sit on our hands while a whole generation of people are squeezed out of the housing market. It is our duty to change the story. We must bring decades of indecision and stagnant political will to an end. That is why I am a strong advocate of garden cities, where there is clear local support and private sector appetite. In 2011, our housing strategy committed us to publishing a prospectus for new garden cities and that is exactly what we’ll do.’

All of which was clearly too much for London mayor Boris Johnson, who uses his Telegraph column this morning to accuse the deputy prime minister of planning to ‘plonk colossal new Cleggograds and Cleggopolises’ in Buckinghamshire, Oxfordshire and Berkshire. This of course has nothing to do with his political ambitions beyond the capital.

Away from the coaliton infighting, Labour’s Emma Reynolds continues to quietly and effectively make the case for starting work on five new towns in the next parliament as the Lyons Commission prepares to get down to work on the detail.

Johnson says Clegg has clearly not read his London Plan, ‘a 1,000-page vision for addressing the London housing shortage’. The only garden city needed is the one he wants to build on the site of the closed down Heathrow airport once approval is given for his Boris Island airport hub in the Thames Estuary.

He is right to point out that London’s population was bigger in 1939 than it is now, even though it is growing rapidly. He boasts that making better use of brownfield sites could deliver 47,000 homes a year.

However, the alterations to the London Plan published last week only come up with 42,389 a year against a minimum annual need of 49,000 and a long-term requirement of 60,000. Any of those figures are a massive increase on the miserable average of 18,000 a year achieved over the last 20 years. And, even if he could achieve everything in his plan, much would depend on decisions being made on future airport capacity that are out of his control.

Someone starting from scratch might well build a hub airport east of London, assuming they could solve the technical issues that derailed similar previous plans. However, the Airports Commission made it clear before Christmas that the shortlist is Heathrow and Gatwick plus face-saving ‘further studies’ of the Thames estuary idea

And even if Heathrow could be closed and the £65 billion or so found to build the new airport, how many homes could the site really take? Last year Johnson was saying 100,000 homes and 250,000 people. That has fallen to 200,000 people in this morning’s article.

A future-gazing paper by Graeme Bell for the Town and Country Planning Association imagines the closure of Heathrow and the design of a garden city with a much more modest 14,000 homes for 30,000 people in four garden suburbs and two urban villages.

So whichever way you look at it, London’s housing crisis needs a solution that looks outside as well as inside the capital. It will require building on brownfield land but it seems useless to pretend that it will not also require more controversial policies such as reviewing green belt boundaries, densifying the suburbs and new towns/garden cities.

And whichever way you look at it, the politics look poisonous and the plans look vulnerable to sabotage. However, this is nothing new. When Lewis Silkin, the town and country planning minister in the 1945 Labour government, arrived in Stevenage for a meeting about the first proposed post-war new town he found that the train station signs had been changed to read Silkingrad. According to David Kynaston’s Austerity Britain, he told a hostile public meeting: ‘It’s no good your jeering, it’s going to be done.’ And it was.

Far more vociferous opposition can be expected 70 years on and Silkin’s successors will need a thicker skin and even more determination to build Reynoldsgrad, Cleggopolis and Picklesville while Boris Johnson plays Fantasy Island. 

Garden griping

Mon, 20 Jan 2014

So Nick would like two, Eric (through clenched teeth) one or two, Emma five and Boris none. It’s time to play the garden cities game.

A quick look at the electoral map of constituencies around London tells you most of what you need to know about the politics involved. You’ll find a sea of Tory blue in the swathe of seats closest to the capital with only Labour Slough, Luton and Oxford and Lib Dem Lewes and Colchester anywhere near to being affected.

It also explains why David Cameron’s interest has waned and a government-commissioned study on new towns has allegedly been blocked. According to the FT, a Downing Street official has even joked that the only possible sites should be Buckingham and Mid Bedfordshire, the seats of Tory outcasts John Bercow and Nadine Dorries.

Add to that mix the curious leak to the Telegraph of the names of two sites supposedly identified that seem almost guaranteed (and maybe intended) to inflame further Conservative opposition. Gerrards Cross is one of the most exclusive and expensive parts of Buckinghamshire, while much of Yalding in Kent was last seen underwater as its residents confronted Dave.

That was part of a story on Saturday that led on a call from Nick Clegg for Cameron to be ‘honest and upfront’ about where the garden cities will be. He says:

‘We cannot make the mistakes of past governments and sit on our hands while a whole generation of people are squeezed out of the housing market. It is our duty to change the story. We must bring decades of indecision and stagnant political will to an end. That is why I am a strong advocate of garden cities, where there is clear local support and private sector appetite. In 2011, our housing strategy committed us to publishing a prospectus for new garden cities and that is exactly what we’ll do.’

All of which was clearly too much for London mayor Boris Johnson, who uses his Telegraph column this morning to accuse the deputy prime minister of planning to ‘plonk colossal new Cleggograds and Cleggopolises’ in Buckinghamshire, Oxfordshire and Berkshire. This of course has nothing to do with his political ambitions beyond the capital.

Away from the coaliton infighting, Labour’s Emma Reynolds continues to quietly and effectively make the case for starting work on five new towns in the next parliament as the Lyons Commission prepares to get down to work on the detail.

Johnson says Clegg has clearly not read his London Plan, ‘a 1,000-page vision for addressing the London housing shortage’. The only garden city needed is the one he wants to build on the site of the closed down Heathrow airport once approval is given for his Boris Island airport hub in the Thames Estuary.

He is right to point out that London’s population was bigger in 1939 than it is now, even though it is growing rapidly. He boasts that making better use of brownfield sites could deliver 47,000 homes a year.

However, the alterations to the London Plan published last week only come up with 42,389 a year against a minimum annual need of 49,000 and a long-term requirement of 60,000. Any of those figures are a massive increase on the miserable average of 18,000 a year achieved over the last 20 years. And, even if he could achieve everything in his plan, much would depend on decisions being made on future airport capacity that are out of his control.

Someone starting from scratch might well build a hub airport east of London, assuming they could solve the technical issues that derailed similar previous plans. However, the Airports Commission made it clear before Christmas that the shortlist is Heathrow and Gatwick plus face-saving ‘further studies’ of the Thames estuary idea

And even if Heathrow could be closed and the £65 billion or so found to build the new airport, how many homes could the site really take? Last year Johnson was saying 100,000 homes and 250,000 people. That has fallen to 200,000 people in this morning’s article.

A future-gazing paper by Graeme Bell for the Town and Country Planning Association imagines the closure of Heathrow and the design of a garden city with a much more modest 14,000 homes for 30,000 people in four garden suburbs and two urban villages.

So whichever way you look at it, London’s housing crisis needs a solution that looks outside as well as inside the capital. It will require building on brownfield land but it seems useless to pretend that it will not also require more controversial policies such as reviewing green belt boundaries, densifying the suburbs and new towns/garden cities.

And whichever way you look at it, the politics look poisonous and the plans look vulnerable to sabotage. However, this is nothing new. When Lewis Silkin, the town and country planning minister in the 1945 Labour government, arrived in Stevenage for a meeting about the first proposed post-war new town he found that the train station signs had been changed to read Silkingrad. According to David Kynaston’s Austerity Britain, he told a hostile public meeting: ‘It’s no good your jeering, it’s going to be done.’ And it was.

Far more vociferous opposition can be expected 70 years on and Silkin’s successors will need a thicker skin and even more determination to build Reynoldsgrad, Cleggopolis and Picklesville while Boris Johnson plays Fantasy Island. 

Hardest word

Tue, 14 Jan 2014

A remarkable thing happened yesterday: Iain Duncan Smith used a five-letter word beginning with S.

Apologising for a mistake is just about the last thing any minister wants to do, but IDS got his chance when Labour’s John Healey asked him at work and pensions questions about the DWP’s bulletin admitting the pre-1996 under-occupation penalty error. Healey quoted the latest survey from the Northern Housing Consortium that ‘nearly half of all frontline housing workers have dealt with someone who has threatened to commit suicide’ largely because of the government’s welfare changes. ‘Will he apologise this afternoon to those people for the concern and chaos that he is causing?’

Duncan Smith replied: ‘I said it all right, and I say it again: the Department is, and I am, absolutely sorry that anybody may have been caught up in this who should not have been.’ So not just an apology but a double ‘sorry’ from both the secretary of state and his department. But before anyone gets too excited, he went on:

‘However, what we were left by the last Government was this: 1,000 pages of complex housing benefit regulations. Under universal credit, they will be reduced to 300 pages and we will simplify them. The reality is that this is a problem of the massive complexity of housing benefit that the last Government left us, with a housing benefit bill that has been rising and that doubled in 10 years on the right hon. Gentleman’s watch.’

So it turns out this was a conditional apology: we’re sorry we didn’t spot the loophole in the regulations but it was actually the last lot’s fault for making them too complicated. That will come as some compensation to the thousands of tenants who’ve been wrongly paying the bedroom tax since April for the stress they’ve been through, to the thousands of other tenants who may have missed out on discretionary housing payments, and to the landlords and local authorities all over Britain for the time and cost involved in rectifying the DWP’s mistake.

Duncan Smith used the same argument earlier when Tory backbencher Bill Wiggin put forward what Healey called a planted question asking him to explain what had happened:

‘Yes, this is a narrow but complicated area dating back to 1996 with the introduction of local reference rent rules. They were intended to offer transitional protection at that time for existing claimants, but they were not in any way time limited. There was another opportunity, in 2008, to change the regulations when the previous Government brought in local housing allowance. They were not adjusted then. This protection had been dormant for 17 years and not used. This is a complex area that we are now resolving, but I have to say that in three different Governments it has missed the attention of Ministers.’

However, that ‘all the others missed it too’ rather ignores the point that previous reforms intentionally gave transitional protection to existing tenants whereas the bedroom tax did not. And the conditional apology is still more than appears on the DWP’s website. Almost a week after it admitted to the error in the HB U1/2014 circular to housing benefit staff, there is still no statement from a minister or user-friendly information for tenants or landlords.

Duncan Smith had a more robust answer later when his Labour shadow Rachel Reeves asked him ‘how many long-term residents have been wrongly paying the bedroom tax since April’ because the government failed to spot the loophole:

‘We have already made it clear that the number is likely to be between 3,000 and 5,000, but we will be clearer about that when the local authorities, which are responsible for collecting the data, come forward with the final facts.’

Reeves said it was a ‘total shambles’ and he did not have a clue whether the number was 5,000 or 40,000. ‘Will the Secretary of State now guarantee that everybody who has been wrongly paying the bedroom tax will be reimbursed, and instead of closing the loophole, will the Government now do the right thing and scrap the bedroom tax?’

IDS: ‘Yet again, what we have from the honourable Lady is a moan about a policy that helps people in difficult circumstances. I said earlier that not once has she come to the Dispatch Box and said that she was concerned about those her party left behind living in overcrowded accommodation. Not once has she mentioned the 1 million on the waiting list or apologised for the fact that building levels for social housing fell to their lowest point since the 20s. Of course we will look after those affected by the policy, but she must make it clear that she supports one of these policies; otherwise, there will be a total cost to the Exchequer. The shambles is on the Opposition’s part.’

Duncan Smith was mixing up two different coalition housing attack lines there with that gibe about social housing falling to its lowest level since the 1920s but his point was clear: if anyone should be saying sorry it’s Labour.

There was still time for one more question from Labour’s Andrew Gwynne about what he called ‘this latest bedroom tax shambles’: ‘Can the Secretary of State clarify whether he will write off, or seek repayment for, discretionary housing payments that have been made to those people who will now receive back payment of housing benefit?’

And Duncan Smith’s answer was worryingly unclear for the tenants affected: ‘I made it clear in my previous answer that I will be coming forward with full details about that, including the number of people affected.’

It was left to junior minister Esther McVey to answer the scheduled questions on the under-occupancy penalty that covered the impact on 60,000 carers in particular. McVey repeated her claim from last year that ‘we have got to have more smaller buildings’ and the familiar line about discretionary housing payments: ‘We have allowed discretion for those people who might need it the most, hence it is called “discretionary”, hence it has been trebled and hence we are supporting these people.’

Elsewhere at work and pensions questions, ministers were asked about problems with a range of other policies including work capability assessments, personal independence payments and, of course, the universal credit.

Asked whether there will be further delays, Duncan Smith insisted that it ‘is set to roll out according the timetable I laid out the other day’ (presumably the one before Christmas that revealed further delays). He also denied reports of a split with the Cabinet Office over his ‘lamentable’ implementation of the policy as ‘farming in and around old e-mails’.

He hit back with some stats of his own in response to a series of friendly questions from Tory MPs. He said local authorities had only spent 40 per cent of their discretionary housing payment budgets in the first half of the year and argued that Labour authorities should get on and spend the money if there was a problem.

And he strongly hinted that the government was considering a further reduction in the benefit cap when Conservative Andrew Bridgen said that £26,000 was higher than the average post-tax income in their constituency:

‘We will keep the policy under review, but the one thing we should celebrate is that we are reforming welfare to ensure that those who need the money get it, and those who do not get back to work.’

The bedroom tax may have a loophole and the roll out of the universal credit may be more of a crawl-out, but IDS remains as unapologetically certain as ever about his historic mission. 

Hardest word

Tue, 14 Jan 2014

A remarkable thing happened yesterday: Iain Duncan Smith used a five-letter word beginning with S.

Apologising for a mistake is just about the last thing any minister wants to do, but IDS got his chance when Labour’s John Healey asked him at work and pensions questions about the DWP’s bulletin admitting the pre-1996 under-occupation penalty error. Healey quoted the latest survey from the Northern Housing Consortium that ‘nearly half of all frontline housing workers have dealt with someone who has threatened to commit suicide’ largely because of the government’s welfare changes. ‘Will he apologise this afternoon to those people for the concern and chaos that he is causing?’

Duncan Smith replied: ‘I said it all right, and I say it again: the Department is, and I am, absolutely sorry that anybody may have been caught up in this who should not have been.’ So not just an apology but a double ‘sorry’ from both the secretary of state and his department. But before anyone gets too excited, he went on:

‘However, what we were left by the last Government was this: 1,000 pages of complex housing benefit regulations. Under universal credit, they will be reduced to 300 pages and we will simplify them. The reality is that this is a problem of the massive complexity of housing benefit that the last Government left us, with a housing benefit bill that has been rising and that doubled in 10 years on the right hon. Gentleman’s watch.’

So it turns out this was a conditional apology: we’re sorry we didn’t spot the loophole in the regulations but it was actually the last lot’s fault for making them too complicated. That will come as some compensation to the thousands of tenants who’ve been wrongly paying the bedroom tax since April for the stress they’ve been through, to the thousands of other tenants who may have missed out on discretionary housing payments, and to the landlords and local authorities all over Britain for the time and cost involved in rectifying the DWP’s mistake.

Duncan Smith used the same argument earlier when Tory backbencher Bill Wiggin put forward what Healey called a planted question asking him to explain what had happened:

‘Yes, this is a narrow but complicated area dating back to 1996 with the introduction of local reference rent rules. They were intended to offer transitional protection at that time for existing claimants, but they were not in any way time limited. There was another opportunity, in 2008, to change the regulations when the previous Government brought in local housing allowance. They were not adjusted then. This protection had been dormant for 17 years and not used. This is a complex area that we are now resolving, but I have to say that in three different Governments it has missed the attention of Ministers.’

However, that ‘all the others missed it too’ rather ignores the point that previous reforms intentionally gave transitional protection to existing tenants whereas the bedroom tax did not. And the conditional apology is still more than appears on the DWP’s website. Almost a week after it admitted to the error in the HB U1/2014 circular to housing benefit staff, there is still no statement from a minister or user-friendly information for tenants or landlords.

Duncan Smith had a more robust answer later when his Labour shadow Rachel Reeves asked him ‘how many long-term residents have been wrongly paying the bedroom tax since April’ because the government failed to spot the loophole:

‘We have already made it clear that the number is likely to be between 3,000 and 5,000, but we will be clearer about that when the local authorities, which are responsible for collecting the data, come forward with the final facts.’

Reeves said it was a ‘total shambles’ and he did not have a clue whether the number was 5,000 or 40,000. ‘Will the Secretary of State now guarantee that everybody who has been wrongly paying the bedroom tax will be reimbursed, and instead of closing the loophole, will the Government now do the right thing and scrap the bedroom tax?’

IDS: ‘Yet again, what we have from the honourable Lady is a moan about a policy that helps people in difficult circumstances. I said earlier that not once has she come to the Dispatch Box and said that she was concerned about those her party left behind living in overcrowded accommodation. Not once has she mentioned the 1 million on the waiting list or apologised for the fact that building levels for social housing fell to their lowest point since the 20s. Of course we will look after those affected by the policy, but she must make it clear that she supports one of these policies; otherwise, there will be a total cost to the Exchequer. The shambles is on the Opposition’s part.’

Duncan Smith was mixing up two different coalition housing attack lines there with that gibe about social housing falling to its lowest level since the 1920s but his point was clear: if anyone should be saying sorry it’s Labour.

There was still time for one more question from Labour’s Andrew Gwynne about what he called ‘this latest bedroom tax shambles’: ‘Can the Secretary of State clarify whether he will write off, or seek repayment for, discretionary housing payments that have been made to those people who will now receive back payment of housing benefit?’

And Duncan Smith’s answer was worryingly unclear for the tenants affected: ‘I made it clear in my previous answer that I will be coming forward with full details about that, including the number of people affected.’

It was left to junior minister Esther McVey to answer the scheduled questions on the under-occupancy penalty that covered the impact on 60,000 carers in particular. McVey repeated her claim from last year that ‘we have got to have more smaller buildings’ and the familiar line about discretionary housing payments: ‘We have allowed discretion for those people who might need it the most, hence it is called “discretionary”, hence it has been trebled and hence we are supporting these people.’

Elsewhere at work and pensions questions, ministers were asked about problems with a range of other policies including work capability assessments, personal independence payments and, of course, the universal credit.

Asked whether there will be further delays, Duncan Smith insisted that it ‘is set to roll out according the timetable I laid out the other day’ (presumably the one before Christmas that revealed further delays). He also denied reports of a split with the Cabinet Office over his ‘lamentable’ implementation of the policy as ‘farming in and around old e-mails’.

He hit back with some stats of his own in response to a series of friendly questions from Tory MPs. He said local authorities had only spent 40 per cent of their discretionary housing payment budgets in the first half of the year and argued that Labour authorities should get on and spend the money if there was a problem.

And he strongly hinted that the government was considering a further reduction in the benefit cap when Conservative Andrew Bridgen said that £26,000 was higher than the average post-tax income in their constituency:

‘We will keep the policy under review, but the one thing we should celebrate is that we are reforming welfare to ensure that those who need the money get it, and those who do not get back to work.’

The bedroom tax may have a loophole and the roll out of the universal credit may be more of a crawl-out, but IDS remains as unapologetically certain as ever about his historic mission. 

Bald truths

Thu, 9 Jan 2014

Like bald men with a comb, the politicians squabbled yesterday over who has the worst record on housebuilding.

The ghost of Stanley Baldwin occupied the green benches once again as Hilary Benn and Eric Pickles traded stats to show that each other’s governments had built the fewest new homes (in England) since the 1920s.

So where Benn opened the opposition debate with the accusation that ‘in the three years for which he has been in charge, the number of homes completed in England has fallen to its lowest level since Stanley Baldwin was first prime minister’, Pickles countered with ‘when I walked through the door of Eland House the spirit of Stanley Baldwin and those figures met me. That was our baseline—that is what we actually started from.’

And up popped former Lib Dem minister Andrew Stunell with the familiar stat that social housing fell by 421,000 homes under Labour and the more dubious claim (ignoring the affordable/social distinction) that it will rise by 150,000 under the coalition.

As with previous statistical spats involving former housing minister Grant Shapps, there are elements of truth on both sides and enough doubt over time lags and the difference between starts and completions for a comb-over to blur the edges.

For the record, the 13 quarters since the election (taking April-June 2010 as a ‘Labour’ quarter) have seen 354,000 starts in England, compared to 385,000 in the last 13 quarters of the Labour government.

On completions the gap is much bigger (458,000 under Labour to 362,000 under the coalition) but that ignores time lags in construction. Treating 2010 as a Labour year for completions, the comparison is 310,000 in the last 11 quarters of the coalition to 341,000 in the last 11 Labour quarters.

However, both 2010 and the most recent four quarters (to September 2013) saw completions fall to the figure of 107,000 cited in the debate as the lowest since the 1920s.

The figures and responsibility for them can be spun in any number of ways of course. The Labour low was the consequence of the financial crisis but whether you pin the blame for that on the world economy or closer to home depends on your political persuasion. The Tory low is arguably more troubling, since it came after a slow recovery that began in 2009.

Ironically, as Clive Betts pointed out, it’s Shapps himself who comes out worst due to a rash statement he made to the CLG select committee in 2010. Betts asked him whether success for the government would be ‘building more homes per year than were being built prior to the recession, and that failure will be building less’. The former housing minister replied: ‘Yes. Building more homes is the gold standard on which we shall be judged.’ Given that there were 177,000 completions in 2007, that looks a distant dream.

The coalition’s initial remedy was to replace Labour targets with localism and the new homes bonus. If that has failed, then the phase two solutions of planning reform and deregulation for housebuilders and stimulating demand through Help to Buy do seem to be helping to generate a recovery at last. The big question is how sustainable it will be.

However, the debate also focused on Labour’s emerging alternatives, which include new towns, use it or lose it sanctions on landbanks and the right to grow for constrained local authorities. Benn said Labour would ‘use guarantees - the government are currently using guarantees for Help to Buy - for “help to build” for these new towns’.

Pickles attacked the last Labour one’s failure on eco-towns. ‘Not a single house was built,’ he said. ‘Not one. The only thing that eco-towns built was resentment. Labour has simply dusted off and reheated its old policies under a different name.’

However, shadow housing minister Emma Reynolds raised reports earlier in the month that, after supporting the principle of new garden cities, David Cameron has now forbidden ministers to identify any sites for them during this parliament. ‘Some would say that is pouring cold water on the proposal; others might say it is putting it into a deep freeze. Labour, on the other hand, is committed to new towns, which must form part of the solution to the housing crisis.’

Probably wisely, given that Pickles is seen as a strong influence on that, housing minister Kris Hopkins did not respond to that point and concentrated instead on attacking Labour. ‘Even in the boom years, it failed to deliver the required housing. The total build dropped to the lowest number in 100 years. It promoted eco-towns—10 in total—but not one appeared. New Labour at its finest: all spin and absolutely no delivery.’

Just when you thought the debate had moved beyond who has the worst record since the 1920s and started to focus on what’s needed for the 2020s, we were back with the bald man and the comb. 

Bald truths

Thu, 9 Jan 2014

Like bald men with a comb, the politicians squabbled yesterday over who has the worst record on housebuilding.

The ghost of Stanley Baldwin occupied the green benches once again as Hilary Benn and Eric Pickles traded stats to show that each other’s governments had built the fewest new homes (in England) since the 1920s.

So where Benn opened the opposition debate with the accusation that ‘in the three years for which he has been in charge, the number of homes completed in England has fallen to its lowest level since Stanley Baldwin was first prime minister’, Pickles countered with ‘when I walked through the door of Eland House the spirit of Stanley Baldwin and those figures met me. That was our baseline—that is what we actually started from.’

And up popped former Lib Dem minister Andrew Stunell with the familiar stat that social housing fell by 421,000 homes under Labour and the more dubious claim (ignoring the affordable/social distinction) that it will rise by 150,000 under the coalition.

As with previous statistical spats involving former housing minister Grant Shapps, there are elements of truth on both sides and enough doubt over time lags and the difference between starts and completions for a comb-over to blur the edges.

For the record, the 13 quarters since the election (taking April-June 2010 as a ‘Labour’ quarter) have seen 354,000 starts in England, compared to 385,000 in the last 13 quarters of the Labour government.

On completions the gap is much bigger (458,000 under Labour to 362,000 under the coalition) but that ignores time lags in construction. Treating 2010 as a Labour year for completions, the comparison is 310,000 in the last 11 quarters of the coalition to 341,000 in the last 11 Labour quarters.

However, both 2010 and the most recent four quarters (to September 2013) saw completions fall to the figure of 107,000 cited in the debate as the lowest since the 1920s.

The figures and responsibility for them can be spun in any number of ways of course. The Labour low was the consequence of the financial crisis but whether you pin the blame for that on the world economy or closer to home depends on your political persuasion. The Tory low is arguably more troubling, since it came after a slow recovery that began in 2009.

Ironically, as Clive Betts pointed out, it’s Shapps himself who comes out worst due to a rash statement he made to the CLG select committee in 2010. Betts asked him whether success for the government would be ‘building more homes per year than were being built prior to the recession, and that failure will be building less’. The former housing minister replied: ‘Yes. Building more homes is the gold standard on which we shall be judged.’ Given that there were 177,000 completions in 2007, that looks a distant dream.

The coalition’s initial remedy was to replace Labour targets with localism and the new homes bonus. If that has failed, then the phase two solutions of planning reform and deregulation for housebuilders and stimulating demand through Help to Buy do seem to be helping to generate a recovery at last. The big question is how sustainable it will be.

However, the debate also focused on Labour’s emerging alternatives, which include new towns, use it or lose it sanctions on landbanks and the right to grow for constrained local authorities. Benn said Labour would ‘use guarantees - the government are currently using guarantees for Help to Buy - for “help to build” for these new towns’.

Pickles attacked the last Labour one’s failure on eco-towns. ‘Not a single house was built,’ he said. ‘Not one. The only thing that eco-towns built was resentment. Labour has simply dusted off and reheated its old policies under a different name.’

However, shadow housing minister Emma Reynolds raised reports earlier in the month that, after supporting the principle of new garden cities, David Cameron has now forbidden ministers to identify any sites for them during this parliament. ‘Some would say that is pouring cold water on the proposal; others might say it is putting it into a deep freeze. Labour, on the other hand, is committed to new towns, which must form part of the solution to the housing crisis.’

Probably wisely, given that Pickles is seen as a strong influence on that, housing minister Kris Hopkins did not respond to that point and concentrated instead on attacking Labour. ‘Even in the boom years, it failed to deliver the required housing. The total build dropped to the lowest number in 100 years. It promoted eco-towns—10 in total—but not one appeared. New Labour at its finest: all spin and absolutely no delivery.’

Just when you thought the debate had moved beyond who has the worst record since the 1920s and started to focus on what’s needed for the 2020s, we were back with the bald man and the comb. 

Benefit baseline

Tue, 7 Jan 2014

The ‘hard truths’ about welfare outlined by George Osborne beg far more questions than answers when it comes to housing.

In a speech yesterday the chancellor set out plans for £12 billion worth of cuts in welfare and £13 billion cuts in departmental budgets in 2016/17 and 2017/18 if the Conservatives win the next election.

And he singled out housing as the target of two specific cuts: housing benefit for the under-25s; and council housing for people earning more than £60,000 a year.

However, a quick look at the detail of those proposals raises real doubt about how much they would really save and what else might be on the Tory agenda.

The first idea has been raised repeatedly by David Cameron and rejected repeatedly by his Liberal Democrat coalition partners. As I’ve blogged before, it brings back memories what happened when another Conservative government cut benefits for young people in 1988.

The Conservative logic is that most young people have to live at home with their parents so it is unfair that some get housing benefit for a place of their own. However, the logic starts to unravel when you look at the detail.

First, more than half of the almost 400,0000 under-25s on housing benefit have children of their own. Should they live with their grandparents?

Second, many people may not have parents to live with, or there may be very good reasons why they left home. That’s why the 1988 changes led to an explosion in the numbers of young people sleeping rough. What would happen to people fleeing domestic violence, or homeless people, or people in supported accommodation or people leaving care?

For those reasons, it is very hard to see how the cut could be implemented without significant exemptions that would dramatically reduce estimated savings of £1.8 billion.

It was interesting that Osborne himself, when asked about the plan after his speech in Birmingham yesterday, talked about the under-21s: ‘Many people cannot afford when aged 19 or 20 to have their own flat - they have to live with their parents.’

Meanwhile, after David Cameron referred to the under-25s in his Conservative conference speech in 2012, the DWP told Inside Housing that it would only apply to future claimants not existing ones:

‘We’re looking at a range of options for future reforms to the welfare system - changing the eligibility criteria for housing benefit is one of these. Any changes would affect future claimants only and we would still ensure that vulnerable people remain protected.’

If the savings from the first measure start to evaporate, those from the second will be minuscule. The pay to stay plan for high-earning households has already been out to consultation and the government has responded to the results. At every stage, its estimate of high earners has dwindled: according to the latest one there are between 11,000 and 21,000 earning more than £60,000. Even that covers all social housing tenants, not just council tenants.

No figure for savings has ever been provided, just an unsourced estimate that ‘on average across England the economic subsidy provided by sub-market rents on social housing is worth an estimated £3,600 per annum’. Even taking this at face value, the maximum amount involved is 21,000 x £3,600 or £76 million a year. But this would not be a saving in housing benefit. It would presumably go to landlords and in theory could support new homes but there would be considerable costs administering the income checks for the system and considerable incentives for people to declare an income below the threshold.

And the ‘savings’ here are such that any remaining high earning households would face a choice between paying a higher rent or doing the right to buy with newly increased discounts by a government which is spending £100 million to publicise them.

So to get to anything like £12 billion the government must have other cuts in mind. Since the Conservatives have ruled out cuts for pensioners, housing benefit is the next biggest budget. The most likely options for people of working age might include yet more uprating at below the level of inflation to follow the 1 per cent for next year and the year after or a reduction in the current overall benefit cap of £26,000.

However, as Kate Webb blogs for Shelter, Osborne has already done the easy cuts and more could mean a complete withdrawal of the safety net for some groups:

‘He says there are no easy options; but does the lack of detail mean there are no realistic cuts left that won’t push the system to breaking point, or that the chancellor doesn’t think the public are ready to be fully confronted with the reality of a broken safety net?’

Little wonder that today’s papers are reporting a split between Osborne and an alarmed work and pensions secretary Iain Duncan Smith.

As for the £13 billion savings in the departmental budgets, it’s hard not to detect a grim message for public housing investment. David Montague of London and Quadrant blogs about the options, including better use of public land and government guarantees, here.

However, the main purpose of Osborne’s speech is political, to set a baseline for public spending and challenge the opposition parties to say whether they agree and, if not, what else they would cut or what taxes they would increase or how much they would borrow.

Nick Clegg has already rejected his ideas as a ‘monumental mistake’ and the Liberal Democrats seem set to go into the election with an alternative proposal on housing: a mansion tax to raise £2 billion.

Labour is refusing to fall into what it sees as an obvious political trap. However, in terms of housing, it must increase the temptation to look for alternative ways of saving money that would fit in with what it is already doing in terms of predistribution and intervention in the private market elsewhere.

An increase in the minimum wage, or introduction of the living wage, would be one way of cutting the housing benefit bill. And if ‘rent stabliisation’ for the private sector was already under discussion it must surely be on the agenda now.

Benefit baseline

Tue, 7 Jan 2014

The ‘hard truths’ about welfare outlined by George Osborne beg far more questions than answers when it comes to housing.

In a speech yesterday the chancellor set out plans for £12 billion worth of cuts in welfare and £13 billion cuts in departmental budgets in 2016/17 and 2017/18 if the Conservatives win the next election.

And he singled out housing as the target of two specific cuts: housing benefit for the under-25s; and council housing for people earning more than £60,000 a year.

However, a quick look at the detail of those proposals raises real doubt about how much they would really save and what else might be on the Tory agenda.

The first idea has been raised repeatedly by David Cameron and rejected repeatedly by his Liberal Democrat coalition partners. As I’ve blogged before, it brings back memories what happened when another Conservative government cut benefits for young people in 1988.

The Conservative logic is that most young people have to live at home with their parents so it is unfair that some get housing benefit for a place of their own. However, the logic starts to unravel when you look at the detail.

First, more than half of the almost 400,0000 under-25s on housing benefit have children of their own. Should they live with their grandparents?

Second, many people may not have parents to live with, or there may be very good reasons why they left home. That’s why the 1988 changes led to an explosion in the numbers of young people sleeping rough. What would happen to people fleeing domestic violence, or homeless people, or people in supported accommodation or people leaving care?

For those reasons, it is very hard to see how the cut could be implemented without significant exemptions that would dramatically reduce estimated savings of £1.8 billion.

It was interesting that Osborne himself, when asked about the plan after his speech in Birmingham yesterday, talked about the under-21s: ‘Many people cannot afford when aged 19 or 20 to have their own flat - they have to live with their parents.’

Meanwhile, after David Cameron referred to the under-25s in his Conservative conference speech in 2012, the DWP told Inside Housing that it would only apply to future claimants not existing ones:

‘We’re looking at a range of options for future reforms to the welfare system - changing the eligibility criteria for housing benefit is one of these. Any changes would affect future claimants only and we would still ensure that vulnerable people remain protected.’

If the savings from the first measure start to evaporate, those from the second will be minuscule. The pay to stay plan for high-earning households has already been out to consultation and the government has responded to the results. At every stage, its estimate of high earners has dwindled: according to the latest one there are between 11,000 and 21,000 earning more than £60,000. Even that covers all social housing tenants, not just council tenants.

No figure for savings has ever been provided, just an unsourced estimate that ‘on average across England the economic subsidy provided by sub-market rents on social housing is worth an estimated £3,600 per annum’. Even taking this at face value, the maximum amount involved is 21,000 x £3,600 or £76 million a year. But this would not be a saving in housing benefit. It would presumably go to landlords and in theory could support new homes but there would be considerable costs administering the income checks for the system and considerable incentives for people to declare an income below the threshold.

And the ‘savings’ here are such that any remaining high earning households would face a choice between paying a higher rent or doing the right to buy with newly increased discounts by a government which is spending £100 million to publicise them.

So to get to anything like £12 billion the government must have other cuts in mind. Since the Conservatives have ruled out cuts for pensioners, housing benefit is the next biggest budget. The most likely options for people of working age might include yet more uprating at below the level of inflation to follow the 1 per cent for next year and the year after or a reduction in the current overall benefit cap of £26,000.

However, as Kate Webb blogs for Shelter, Osborne has already done the easy cuts and more could mean a complete withdrawal of the safety net for some groups:

‘He says there are no easy options; but does the lack of detail mean there are no realistic cuts left that won’t push the system to breaking point, or that the chancellor doesn’t think the public are ready to be fully confronted with the reality of a broken safety net?’

Little wonder that today’s papers are reporting a split between Osborne and an alarmed work and pensions secretary Iain Duncan Smith.

As for the £13 billion savings in the departmental budgets, it’s hard not to detect a grim message for public housing investment. David Montague of London and Quadrant blogs about the options, including better use of public land and government guarantees, here.

However, the main purpose of Osborne’s speech is political, to set a baseline for public spending and challenge the opposition parties to say whether they agree and, if not, what else they would cut or what taxes they would increase or how much they would borrow.

Nick Clegg has already rejected his ideas as a ‘monumental mistake’ and the Liberal Democrats seem set to go into the election with an alternative proposal on housing: a mansion tax to raise £2 billion.

Labour is refusing to fall into what it sees as an obvious political trap. However, in terms of housing, it must increase the temptation to look for alternative ways of saving money that would fit in with what it is already doing in terms of predistribution and intervention in the private market elsewhere.

An increase in the minimum wage, or introduction of the living wage, would be one way of cutting the housing benefit bill. And if ‘rent stabliisation’ for the private sector was already under discussion it must surely be on the agenda now.

While you were away

Thu, 2 Jan 2014

Here’s a few things you may have missed over Christmas and the New Year.

1) Homes for locals

It’s New Year’s Eve. Everyone has their mind on what to do tonight (or how to avoid the whole thing). Just the time to publish the guidance on providing social housing for local people.

The timing probably had more to do with the opening of the UK labour market to Bulgarians and Romanians on January 1, as the guidance was published at the same time as the DWP press released its ‘tough new migrant benefit rules’. The policy has everything to do with Conservative v UKIP politics.

At first glance the guidance seems to follow quite closely the draft published in October. It ‘strongly encourages’ all housing authorities to include a residency requirement as part of their qualification criteria and ‘believes that a reasonable period of residency would be at least two years’.

The Housing Law Practitioners Association had warned in its response to the consultation that ‘we fear it will be impossible to craft a lawful policy’ given statutory duties to former asylum seekers, the homeless (especially with out of area placements), people with nomadic lifestyles and EU nationals. It said that the DCLG would have to come up with sufficient exceptions to the residency test, not just different ways of satisfying the test.

The guidance does seem more nuanced than the press release from Eric Pickles (though that would not be hard). It does include a more explicit section on ‘providing for exceptions’ so that housing authorities can ‘retain the flexibility to take proper account of special circumstances’ such as people fleeing domestic violence, homeless families housed outside their district and people needing support to rehabiliate back into the community. It also specifically mentions people downsizing to smaller homes and hard to let stock.

And it also mentions two government priorities that would otherwise be stymied by the residency test: the right to move for social tenants seeking to move to take up a job or be closer to work; and members of the armed forces.

No impact assessment has yet been published. 

2) ‘No progress’ on housing supply

Government measures aimed at stimulating housing supply came under scrutiny from possibly the best source of non-partisan analysis around: the House of Commons Library. A standard note looks at the demand implied by household projections and the measures taken since the housing stimulus package of September 2012 up to and including the Autumn Statement in December. The sobering verdict is that:

‘The recent stimulus package, reflecting the importance the Government is placing on increasing supply, has the potential to help improve the housing market. The increase in new affordable homes completed is a welcome sign that the Affordable Homes Programme, led by housing associations, may be beginning to bear fruit. However, the disappointing overall starts and completions figures suggest that significant progress on boosting supply is still some way off. With the number of households projected to grow by almost five million in the next two decades the Government will have to do much more even to come close to meeting demand. After two-and-a-half-years, it is extremely worrying that house building remains so low and that the Government’s record warrants no better verdict than “no progress” towards improving the dire state of housing supply.’

In a busy period between Christmas and New Year, the Commons Library also published notes on everything from David Cameron’s proposal to withdraw housing benefit entitlement from the under-25s to HMOs and the local housing allowance.

3)   For ‘green crap’ read garden cities?

The Financial Times reported on David Cameron’s wilting interest in garden cities. The prime minister has been an enthusiast and in a speech in 2012 promised a consultation on ‘how to apply the principles of garden cities to areas with high potential growth, in places people want to live’.

That was then. Now, according to the FT, he fears a backlash from nimby voters in the run-up to the next election. The story has this quote from a Downing Street official: ‘He has said that he doesn’t want any garden cities named unless they are in Buckingham or Mid Bedfordshire.’ This is a joking reference to the constituencies of Tory MP outcasts John Bercow and Nadine Dorries.

The Conservative Party denies Cameron said this but the phrasing of the denial (‘we do not recognise any of this’) recalls another furore about a quote from Dave, that he had ordered aides to ‘get rid of all the green crap’. We know what happened in the Autumn Statement. 

4) The housing market in 2014

A special edition of 5 Live Wake Up to Money on New Year’s Eve looked at prospects for the housing market in 2014 . The 50-minute programme featured some interesting responses from chancellor George Osborne, who was much more comfortable talking about Help to Buy and hard-working families (more on this from David Cameron this morning) than he was defending the government’s record on housing supply and affordable housing.

Asked whether the government can ever deliver 232,000 homes a year, Osborne noticeably ducked the chance to commit himself, merely saying that: ‘We need to be building tens of thousands more homes. I don’t put a precise number on it. I just want to see a big increase in housing available to people in this country.’

Osborne was also asked how worried he is that affordable home building is going to decline. His response featured yet another stage in the government’s conflation of ‘affordable’ and ‘social’ but (more optimistically) an endorsement of the need for social/affordable housing:

‘It’s actually going to increase. We’ve got the largest programme for building social housing for a generation. It is true that the number of social homes in this country shrank a lot over the last 15 years, a lot of it before this government came to office, there were around 400,000 fewer social homes at the end of the previous government. But what we’ve committed to is a big expansion over the next three or four years in the social home programme and also reforms to that social housing programme …Look I think that’s an important part of the housing sector and aspiration is not just about wanting to own your own home it’s also wanting to have your own home as a social tenant. We are putting money into that programme alongside the other things we’re doing.’

The full programme is worth a listen. It also featured interviews with Affinity Sutton chief executive Keith Exford and Barratt chief executive Mark Clare (who offered welcome support for more borrowing freedom for council housing).

5) Where will we live?

The current issue of London Review of Books features an essential (but very long) read on housing by James Meek. It focuses particularly on Tower Hamlets and the long-term consequences of the biggest privatisation of all: the right to buy.

Here’s a flavour of the argument:

‘Right to Buy thus created an astonishing leak of state money – taxpayers’ money, if you like to think of it that way – into the hands of a rentier class. First, the government sold people homes it owned at a huge discount. Then it allowed the original buyers to keep the profit when they sold those homes to a private landlord at market price. Then the government artificially raised market rents by choking off supply – by making it impossible for councils to replace the sold-off houses. Then it paid those artificially high rents to the same private landlords in the form of housing benefit – many times higher than the housing benefit it would have paid had the houses remained in council hands. In other words, since Thatcher, the British government has done the exact opposite of what it has encouraged households to do: to buy their own homes, rather than renting.’

The full piece looks at planning, architecture and stock transfer too and concludes with a warning that ‘the advent of the age of gentrification doesn’t preclude the advent of slumification’.

Alex Marsh has a response to the article on his blog here arguing that the whole issue of social housing needs to be reframed before significant policy change can happen. Stay with his blog too for post-Christmas posts on new towns and household debt and Help to Buy.

6) And the bedroom tax stories just kept coming.

The Mirror reported on the case of Dawn Lennon, who says she is having to cut back on food to pay the £570 a year charge on the room that has been converted into a sensory area for her severely disabled daughter Kelly Marie.  The Independent reported on the 60,000 families with carers who are affected. Blogger Joe Halewood had some good news about a possible loophole for people who have continuously received housing benefit for the same property since before 1996 and a summary of what he sees as the issues for 2014.

While you were away

Thu, 2 Jan 2014

Here’s a few things you may have missed over Christmas and the New Year.

1) Homes for locals

It’s New Year’s Eve. Everyone has their mind on what to do tonight (or how to avoid the whole thing). Just the time to publish the guidance on providing social housing for local people.

The timing probably had more to do with the opening of the UK labour market to Bulgarians and Romanians on January 1, as the guidance was published at the same time as the DWP press released its ‘tough new migrant benefit rules’. The policy has everything to do with Conservative v UKIP politics.

At first glance the guidance seems to follow quite closely the draft published in October. It ‘strongly encourages’ all housing authorities to include a residency requirement as part of their qualification criteria and ‘believes that a reasonable period of residency would be at least two years’.

The Housing Law Practitioners Association had warned in its response to the consultation that ‘we fear it will be impossible to craft a lawful policy’ given statutory duties to former asylum seekers, the homeless (especially with out of area placements), people with nomadic lifestyles and EU nationals. It said that the DCLG would have to come up with sufficient exceptions to the residency test, not just different ways of satisfying the test.

The guidance does seem more nuanced than the press release from Eric Pickles (though that would not be hard). It does include a more explicit section on ‘providing for exceptions’ so that housing authorities can ‘retain the flexibility to take proper account of special circumstances’ such as people fleeing domestic violence, homeless families housed outside their district and people needing support to rehabiliate back into the community. It also specifically mentions people downsizing to smaller homes and hard to let stock.

And it also mentions two government priorities that would otherwise be stymied by the residency test: the right to move for social tenants seeking to move to take up a job or be closer to work; and members of the armed forces.

No impact assessment has yet been published. 

2) ‘No progress’ on housing supply

Government measures aimed at stimulating housing supply came under scrutiny from possibly the best source of non-partisan analysis around: the House of Commons Library. A standard note looks at the demand implied by household projections and the measures taken since the housing stimulus package of September 2012 up to and including the Autumn Statement in December. The sobering verdict is that:

‘The recent stimulus package, reflecting the importance the Government is placing on increasing supply, has the potential to help improve the housing market. The increase in new affordable homes completed is a welcome sign that the Affordable Homes Programme, led by housing associations, may be beginning to bear fruit. However, the disappointing overall starts and completions figures suggest that significant progress on boosting supply is still some way off. With the number of households projected to grow by almost five million in the next two decades the Government will have to do much more even to come close to meeting demand. After two-and-a-half-years, it is extremely worrying that house building remains so low and that the Government’s record warrants no better verdict than “no progress” towards improving the dire state of housing supply.’

In a busy period between Christmas and New Year, the Commons Library also published notes on everything from David Cameron’s proposal to withdraw housing benefit entitlement from the under-25s to HMOs and the local housing allowance.

3)   For ‘green crap’ read garden cities?

The Financial Times reported on David Cameron’s wilting interest in garden cities. The prime minister has been an enthusiast and in a speech in 2012 promised a consultation on ‘how to apply the principles of garden cities to areas with high potential growth, in places people want to live’.

That was then. Now, according to the FT, he fears a backlash from nimby voters in the run-up to the next election. The story has this quote from a Downing Street official: ‘He has said that he doesn’t want any garden cities named unless they are in Buckingham or Mid Bedfordshire.’ This is a joking reference to the constituencies of Tory MP outcasts John Bercow and Nadine Dorries.

The Conservative Party denies Cameron said this but the phrasing of the denial (‘we do not recognise any of this’) recalls another furore about a quote from Dave, that he had ordered aides to ‘get rid of all the green crap’. We know what happened in the Autumn Statement. 

4) The housing market in 2014

A special edition of 5 Live Wake Up to Money on New Year’s Eve looked at prospects for the housing market in 2014 . The 50-minute programme featured some interesting responses from chancellor George Osborne, who was much more comfortable talking about Help to Buy and hard-working families (more on this from David Cameron this morning) than he was defending the government’s record on housing supply and affordable housing.

Asked whether the government can ever deliver 232,000 homes a year, Osborne noticeably ducked the chance to commit himself, merely saying that: ‘We need to be building tens of thousands more homes. I don’t put a precise number on it. I just want to see a big increase in housing available to people in this country.’

Osborne was also asked how worried he is that affordable home building is going to decline. His response featured yet another stage in the government’s conflation of ‘affordable’ and ‘social’ but (more optimistically) an endorsement of the need for social/affordable housing:

‘It’s actually going to increase. We’ve got the largest programme for building social housing for a generation. It is true that the number of social homes in this country shrank a lot over the last 15 years, a lot of it before this government came to office, there were around 400,000 fewer social homes at the end of the previous government. But what we’ve committed to is a big expansion over the next three or four years in the social home programme and also reforms to that social housing programme …Look I think that’s an important part of the housing sector and aspiration is not just about wanting to own your own home it’s also wanting to have your own home as a social tenant. We are putting money into that programme alongside the other things we’re doing.’

The full programme is worth a listen. It also featured interviews with Affinity Sutton chief executive Keith Exford and Barratt chief executive Mark Clare (who offered welcome support for more borrowing freedom for council housing).

5) Where will we live?

The current issue of London Review of Books features an essential (but very long) read on housing by James Meek. It focuses particularly on Tower Hamlets and the long-term consequences of the biggest privatisation of all: the right to buy.

Here’s a flavour of the argument:

‘Right to Buy thus created an astonishing leak of state money – taxpayers’ money, if you like to think of it that way – into the hands of a rentier class. First, the government sold people homes it owned at a huge discount. Then it allowed the original buyers to keep the profit when they sold those homes to a private landlord at market price. Then the government artificially raised market rents by choking off supply – by making it impossible for councils to replace the sold-off houses. Then it paid those artificially high rents to the same private landlords in the form of housing benefit – many times higher than the housing benefit it would have paid had the houses remained in council hands. In other words, since Thatcher, the British government has done the exact opposite of what it has encouraged households to do: to buy their own homes, rather than renting.’

The full piece looks at planning, architecture and stock transfer too and concludes with a warning that ‘the advent of the age of gentrification doesn’t preclude the advent of slumification’.

Alex Marsh has a response to the article on his blog here arguing that the whole issue of social housing needs to be reframed before significant policy change can happen. Stay with his blog too for post-Christmas posts on new towns and household debt and Help to Buy.

6) And the bedroom tax stories just kept coming.

The Mirror reported on the case of Dawn Lennon, who says she is having to cut back on food to pay the £570 a year charge on the room that has been converted into a sensory area for her severely disabled daughter Kelly Marie.  The Independent reported on the 60,000 families with carers who are affected. Blogger Joe Halewood had some good news about a possible loophole for people who have continuously received housing benefit for the same property since before 1996 and a summary of what he sees as the issues for 2014.

10 things about 2013: part 2

Thu, 2 Jan 2014

Here’s the second part of my look back at the key themes I’ve been blogging about this year.

6) Help to Buy

If the bedroom tax was the subject I blogged about most in 2013 (see Part 1 of this blog), Help to Buy was certainly the best (or worst) of the rest.

The first hints of the scheme came in January as the coalition published its Mid-Term Review. Perhaps conscious of the gap between rhetoric and reality when it came to the government’s record on housing, David Cameron promised more help for people who cannot raise a deposit for a mortgage, with details to come in the Budget. By March Cameron and Clegg were promising what sounded to me like the coalition’s fourth housing strategy in three years. And in the Budget George Osborne duly announced what I called a huge gamble, loosening the targeting of previous schemes at first-time buyers and new homes and extending the help available much further up the income scale.

Help to Buy 2, the mortgage guarantee element, attracted criticism from just about all sides, including the all-party Treasury committee, Sir Mervyn King and the Institute of Directors. It seemed that only the National Trust’s nimby-in-chief Sir Simon Jenkins and London estate agent Foxtons had a good word to say about the scheme. I concluded that the strongest arguments in favour were the ones that ministers could not mention.

Osborne showed what he thought of all that by bringing forward the launch of Help to Buy 2 from January 2014 to the week after the Conservative conference in October. The following month Cameron was boasting that Help to Buy was ‘helping hardworking people realise their home-owning aspirations’ and making a series of statistically dubious claims about the benefits.

7) Help to Build

Half time for the coalition government was a chance to reflect on an administration that had promised to make us ‘a nation of homebuilders’. As the housebuilidng numbers flatlined, I blogged that it was clearer than ever that a complete change of tactics was required in the second half. An important report from Shelter looked at what would be needed to get to the magic number of 250,000 homes a year.

Not that any of this made any difference to government rhetoric. In July Eric Pickles quoted every statistic you could shake a stick at to show that supply was on the up – except the housebuilding ones produced by his own department. Thanks in part to the expectations generated by Help to Buy, the second half of the year did see a rising trend but completions still finished the year on half the level needed to meet demand. The government continued to claim that cutting red tape on housebuilders was the answer. The truth, as ever, was more complex. I again questioned the government’s strategy of giving housebuilders what they wanted without asking for more homes in return.

Housebuilding came to have increasing political significance too. In September George Osborne claimed that the economy was ‘turning a corner’ in a speech made at a London housing development where work that stalled during the credit crunch had just restarted. With 40 per cent of private sales to overseas buyers and separate entrances for rich and poor, the One Commercial Street scheme turned out to be a symbol of far more than the recovery he had in mind. In October Ed Miliband said that a future Labour government would aim for 200,000 homes a year by 2020 and briefings revealed the first hints of new policies. I blogged about the seductive but simplistic argument that if you fix planning you fix supply and if you fix supply you solve the housing crisis. In the wake of Alex Morton’s move to the No 10 Policy Unit (see the first part of this blog) and the formal launch of Labour’s housing commission, I debated the chances of a political arms race on housing ahead of the next election.

8) Help to Rent

The reality for those ubiquitous hardworking people was that they were becoming ever more likely to be renters rather than owners. Low interest rates and austerity effectively meant that renters were paying to keep mortgages low while the astonishing rise of self-employment was one illustration of a labour market that was no longer creating enough jobs with regular incomes to get on to the housing ladder.

In March the CIH’s UK Housing Review showed that the scale of the decline of home ownership, especially among the young, and I posed the question of whether we should be accepting this as an inevitable trend. David Cameron gave a speech pledging the Conservatives’ continued faith in the property-owning democracy of Eden, Macmillan and Thatcher, but I argued we are actually moving towards a property-owning plutocracy. When the Baroness died in April, the second of two blogs about her legacy looked at her role in turning tenants into owners. 

As buy to let continued to rise, and Help to Buy started to boost prices, many of the under-45s were giving up on ever owning and millions of people were caught between stagnating wages and rising costs. Reports from Shelter and the Resolution Foundation proposed a reformed shared ownership as one solution but Savills forecast in November that private renting will grow by another million households in the next five years. Help to Buy may be the claim but Help to Rent is the reality.

9) Waking up to renting

The year began with definite signs that politicians were accepting the need for reform and engaging in genuine debate about what to do about the growth of the private rented sector. Things were changing within the sector too: April brought a symbolic move by the Prudential back into private renting, a modest move on consumer redress against letting and management agents and new signs of renter activism. The urgent need for reform was demonstrated only too clearly in a report from Shelter on the plight of private renter families with children.

Lack of action in England was all too clearly illustrated by the Welsh Government’s moves to regulate landlords and agents and implement tenancy reform. The Labour Party in England continued a policy review hinting at similar action and flirting with rent stabilisation. The all-party Communities and Local Governemnt committee attempted to find some common ground. And finally there was some movement from a government that had sets its face firmly against what it saw as ‘red tape’. The package announced by Eric Pickles in October may have been minimalist and voluntary but it also showed that the Conservatives were waking up to the issue at last. 

10) Taking the strain: past, present and future

My blogs on the housing legacy of Margaret Thatcher reflected on the thing that has underpinned housing policy for the last 30 years or so: the assumption that housing benefit will ‘take the strain’ of higher rents. It seemed unlikely even at the time and even more unlikely in the wake of coalition ‘reforms’ of housing benefit (see Part 1 of this blog) and 2013 brought some new thinking about whether it was really such a good idea to subsidise rents rather than homes.

I blogged about three things in June that illustrated the growing debate about the future.  A speech by Ed Miliband showed that Labour was thinking seriously about a system that only invested £5 in bricks and mortar of every £100 spent on housing. However, the outcome of the spending round seemed to point in the opposite direction: there was 10 years of certainty for rents for social housing and five years on grant but confirmation of another round of affordable rent and of yet more ‘welfare reform’. An independent commission set up by the RICS diagnosed ‘clear signs of market failure’ and proposed a series of reforms across all tenures.

The impact of all this could be seen most clearly in London, where Londoners and their leaders were waking up to the scale of the housing crisis facing the city. The furore over developers treating new developments as an export market eventually led to housebuilders proposing a voluntary pact not to market properties to overseas investors before offering them in the UK. In November Boris Johnson proposed what I call the boldest attempt yet seen from a Conservative administration to get to grips with the housing crisis. The launch of his housing strategy was a significant development with some good ideas even though I blogged that it did not go remotely far enough.

 

For anyone interested, I have more detailed explorations of where we are coming from and where we are going on housing in two policy essays for the CIH here. In the meantime, happy New Year. 

10 things about 2013: part 2

Thu, 2 Jan 2014

Here’s the second part of my look back at the key themes I’ve been blogging about this year.

6) Help to Buy

If the bedroom tax was the subject I blogged about most in 2013 (see Part 1 of this blog), Help to Buy was certainly the best (or worst) of the rest.

The first hints of the scheme came in January as the coalition published its Mid-Term Review. Perhaps conscious of the gap between rhetoric and reality when it came to the government’s record on housing, David Cameron promised more help for people who cannot raise a deposit for a mortgage, with details to come in the Budget. By March Cameron and Clegg were promising what sounded to me like the coalition’s fourth housing strategy in three years. And in the Budget George Osborne duly announced what I called a huge gamble, loosening the targeting of previous schemes at first-time buyers and new homes and extending the help available much further up the income scale.

Help to Buy 2, the mortgage guarantee element, attracted criticism from just about all sides, including the all-party Treasury committee, Sir Mervyn King and the Institute of Directors. It seemed that only the National Trust’s nimby-in-chief Sir Simon Jenkins and London estate agent Foxtons had a good word to say about the scheme. I concluded that the strongest arguments in favour were the ones that ministers could not mention.

Osborne showed what he thought of all that by bringing forward the launch of Help to Buy 2 from January 2014 to the week after the Conservative conference in October. The following month Cameron was boasting that Help to Buy was ‘helping hardworking people realise their home-owning aspirations’ and making a series of statistically dubious claims about the benefits.

7) Help to Build

Half time for the coalition government was a chance to reflect on an administration that had promised to make us ‘a nation of homebuilders’. As the housebuilidng numbers flatlined, I blogged that it was clearer than ever that a complete change of tactics was required in the second half. An important report from Shelter looked at what would be needed to get to the magic number of 250,000 homes a year.

Not that any of this made any difference to government rhetoric. In July Eric Pickles quoted every statistic you could shake a stick at to show that supply was on the up – except the housebuilding ones produced by his own department. Thanks in part to the expectations generated by Help to Buy, the second half of the year did see a rising trend but completions still finished the year on half the level needed to meet demand. The government continued to claim that cutting red tape on housebuilders was the answer. The truth, as ever, was more complex. I again questioned the government’s strategy of giving housebuilders what they wanted without asking for more homes in return.

Housebuilding came to have increasing political significance too. In September George Osborne claimed that the economy was ‘turning a corner’ in a speech made at a London housing development where work that stalled during the credit crunch had just restarted. With 40 per cent of private sales to overseas buyers and separate entrances for rich and poor, the One Commercial Street scheme turned out to be a symbol of far more than the recovery he had in mind. In October Ed Miliband said that a future Labour government would aim for 200,000 homes a year by 2020 and briefings revealed the first hints of new policies. I blogged about the seductive but simplistic argument that if you fix planning you fix supply and if you fix supply you solve the housing crisis. In the wake of Alex Morton’s move to the No 10 Policy Unit (see the first part of this blog) and the formal launch of Labour’s housing commission, I debated the chances of a political arms race on housing ahead of the next election.

8) Help to Rent

The reality for those ubiquitous hardworking people was that they were becoming ever more likely to be renters rather than owners. Low interest rates and austerity effectively meant that renters were paying to keep mortgages low while the astonishing rise of self-employment was one illustration of a labour market that was no longer creating enough jobs with regular incomes to get on to the housing ladder.

In March the CIH’s UK Housing Review showed that the scale of the decline of home ownership, especially among the young, and I posed the question of whether we should be accepting this as an inevitable trend. David Cameron gave a speech pledging the Conservatives’ continued faith in the property-owning democracy of Eden, Macmillan and Thatcher, but I argued we are actually moving towards a property-owning plutocracy. When the Baroness died in April, the second of two blogs about her legacy looked at her role in turning tenants into owners. 

As buy to let continued to rise, and Help to Buy started to boost prices, many of the under-45s were giving up on ever owning and millions of people were caught between stagnating wages and rising costs. Reports from Shelter and the Resolution Foundation proposed a reformed shared ownership as one solution but Savills forecast in November that private renting will grow by another million households in the next five years. Help to Buy may be the claim but Help to Rent is the reality.

9) Waking up to renting

The year began with definite signs that politicians were accepting the need for reform and engaging in genuine debate about what to do about the growth of the private rented sector. Things were changing within the sector too: April brought a symbolic move by the Prudential back into private renting, a modest move on consumer redress against letting and management agents and new signs of renter activism. The urgent need for reform was demonstrated only too clearly in a report from Shelter on the plight of private renter families with children.

Lack of action in England was all too clearly illustrated by the Welsh Government’s moves to regulate landlords and agents and implement tenancy reform. The Labour Party in England continued a policy review hinting at similar action and flirting with rent stabilisation. The all-party Communities and Local Governemnt committee attempted to find some common ground. And finally there was some movement from a government that had sets its face firmly against what it saw as ‘red tape’. The package announced by Eric Pickles in October may have been minimalist and voluntary but it also showed that the Conservatives were waking up to the issue at last. 

10) Taking the strain: past, present and future

My blogs on the housing legacy of Margaret Thatcher reflected on the thing that has underpinned housing policy for the last 30 years or so: the assumption that housing benefit will ‘take the strain’ of higher rents. It seemed unlikely even at the time and even more unlikely in the wake of coalition ‘reforms’ of housing benefit (see Part 1 of this blog) and 2013 brought some new thinking about whether it was really such a good idea to subsidise rents rather than homes.

I blogged about three things in June that illustrated the growing debate about the future.  A speech by Ed Miliband showed that Labour was thinking seriously about a system that only invested £5 in bricks and mortar of every £100 spent on housing. However, the outcome of the spending round seemed to point in the opposite direction: there was 10 years of certainty for rents for social housing and five years on grant but confirmation of another round of affordable rent and of yet more ‘welfare reform’. An independent commission set up by the RICS diagnosed ‘clear signs of market failure’ and proposed a series of reforms across all tenures.

The impact of all this could be seen most clearly in London, where Londoners and their leaders were waking up to the scale of the housing crisis facing the city. The furore over developers treating new developments as an export market eventually led to housebuilders proposing a voluntary pact not to market properties to overseas investors before offering them in the UK. In November Boris Johnson proposed what I call the boldest attempt yet seen from a Conservative administration to get to grips with the housing crisis. The launch of his housing strategy was a significant development with some good ideas even though I blogged that it did not go remotely far enough.

 

For anyone interested, I have more detailed explorations of where we are coming from and where we are going on housing in two policy essays for the CIH here. In the meantime, happy New Year. 

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