Monday, 27 February 2017

Inside edge

All posts from: April 2014

Adjust your set

Wed, 30 Apr 2014

In case you missed it, How to Get a Council House is back – and so is the controversy about TV stereotypes and the hashtag on Twitter.

The second series of the Channel 4 show focuses on the London borough of Tower Hamlets and people affected by the benefit cap (two weeks ago), applying as homeless (last week) and in temporary accommodation (this week).

As with the first series, it’s provoked some strong reactions and it almost feels like we are in two different countries when I look at Twitter.

Outside my Twitter stream, there is a wave of bigotry waiting to be unleashed on anyone who appears on the show at #howtogetacouncilhouse and seemingly complete ignorance about what the housing and homelessness system is trying to achieve.

Inside my stream there is outrage at the programme’s portrayal of the system and the reaction to it. The show has also inspired a rival hashtag #councilhomeschat (and twitter account @Councilhomechat) that is fighting back with positive stories and videos about social housing and the people who live in it. You can sign up to its Thunderclap campaign to counter media stereotypes here and check out the blogs and videos at councilhomeschat.wordpress.com.

In the wake of Skint, Benefits Street and all the other exploitative programmes on Channel 4 and copycats on Channel 5, it’s hard not to sympathise. How to Get a Council House is a crass title for a programme in which very few people ever do get one, but one that seems designed to provoke social media chatter to generate viewing figures.

Yet, as with the first series, I’d argue that HTGACH includes real documentary as well as a dodgy premise and a genuine point that is not the one being made by the jolly commentator. It’s hard not to admire the frontline housing staff doing a job that I couldn’t do in impossible circumstances and wonder about the point they are making about their work. Different editing of the same footage, plus a different title, would have produced a very different programme.

The message coming across loud and clear from Colin Cormack and his team at Tower Hamlets is that a combination of welfare reform and the social change are making the borough a no-go area for people on benefits and low incomes. Despite all the government’s claims to the contrary, we are seeing social cleansing in action (and those are the words of a letting agent in the first programme, not mine or anyone at the council). You have to be watching closely to pick it up because of the way the programme title dictates the angle but it is still there.

So, as with the first series set in Tower Hamlets and Manchester, I find myself in two minds about How to Get a Council House. The negative side kicks in before the programme even starts: before the first episode the controversial C4 ident of the Aylesbury estate complete with inserted litter, graffiti and Sky dishes set the tone. Channel 4 must be well aware of the campaign against it by residents who have produced their own more positive version, so using it in this context smacks either of lazy complacency or of simply sticking two fingers up to its critics.

Then there’s the way the issues are presented. Channel 4 summed up the programme in a tweet last week like this:

how to

The A&E for housing? That may seem like a good description of the homelessness safety net but if this was a real A&E, what about the rest of the hospital? Patients would be on trolleys out into the car park because all the other wards were packed. The phrase caught my attention because it was also used by Julia Unwin of the Joseph Rowntree Foundation in a speech I blogged about last week. She was warning about the consequences of treating housing as something only to be provided at the point of need. 

Another problem I have with HTGACH is that it never seriously addresses its title. Somewhere in the six episodes there must have been a chance to look at why virtually no new council houses have been built in the last 30 years or at the number of old ones now owned by private landlords. It’s all too easy for viewers to confuse council housing with temporary accommodation and private flats and to think that housing benefit is going to the tenants rather than to the landlords. Lack of context like this means negative stereotyping can gain ground.

That’s a shame because the raw material for a much better documentary about housing keeps breaking through. The first episode, for example, shows that the social cleansing that the government denies and the out-of-area placements discouraged in official guidance are already happening. The welfare reform officer says bluntly: ‘Nobody who’s benefit dependent and not in a permanent property is going to be able to afford to live in Tower Hamlets. This is going to happen in the next six to 12 months.’ A lettings agent says that: ‘The people with money are pushing the poor out of Tower Hamlets. It’s kind of a cleansing of the poor.’

One single parent is told that she will almost certainly be moved out of the borough (‘it will be a big move, not round the corner’) and sums it up as ‘moving 20 miles away from anything I’ve ever known and bringing up my four kids in isolation. I can’t control my future or my children’s and that boils down to making me feel like a bad mum’. At the last minute she gets offered a new housing association flat in the area. ‘We can leave all the stress behind and start being happy,’ she says, a comment that says everything about why social housing is so desperately needed.

Another single parent is being evicted from her private rented flat because of the benefit cap and eventually gets temporary accommodation in another flat. Ironically, when she is trying to ‘get a council house’ both of the flats look like they are ex-right to buy. Her rent will be £338 a week and her housing benefit after the cap is £217, but DHPs will cover the balance for now.

And the last word in the programme goes to Colin Cormack, who sums things up as:

‘What’s happening is people are renting in the private sector, they have some reliance on housing benefit, welfare reforms are coming in that limit the person’s benefit entitlement, landlords are evicting those families, they come to the council, and the public purse has to pay significantly more to assist that family.’

That’s a pretty devastating summary of the impact of welfare reform and our failure to invest in social housing and it’s all the more powerful for being expressed in an almost matter-of-fact tone by someone on the frontline. Despite my problems with it, HTGACH shows that what we all warned about is happening through the stories of real people. But it also left me wondering whether a viewer who knows little of housing and welfare reform would get all that.

So for me How to Get a Council House is much better than Benefits Street but it still shows how firmly established the negative stereotyping of tenants and people on benefits has become. Channel 4 and its programme makers need to be challenged but is that alone enough? The same attitudes about social housing and the welfare state run right down from Iain Duncan Smith to the bile on twitter. The rest of us need to do a much better job of communicating the positive case for both, why they were created in the first place and why we need them now.

Here’s hoping that the positives outweigh the negatives in tonight’s final episode. 

Adjust your set

Wed, 30 Apr 2014

In case you missed it, How to Get a Council House is back – and so is the controversy about TV stereotypes and the hashtag on Twitter.

The second series of the Channel 4 show focuses on the London borough of Tower Hamlets and people affected by the benefit cap (two weeks ago), applying as homeless (last week) and in temporary accommodation (this week).

As with the first series, it’s provoked some strong reactions and it almost feels like we are in two different countries when I look at Twitter.

Outside my Twitter stream, there is a wave of bigotry waiting to be unleashed on anyone who appears on the show at #howtogetacouncilhouse and seemingly complete ignorance about what the housing and homelessness system is trying to achieve.

Inside my stream there is outrage at the programme’s portrayal of the system and the reaction to it. The show has also inspired a rival hashtag #councilhomeschat (and twitter account @Councilhomechat) that is fighting back with positive stories and videos about social housing and the people who live in it. You can sign up to its Thunderclap campaign to counter media stereotypes here and check out the blogs and videos at councilhomeschat.wordpress.com.

In the wake of Skint, Benefits Street and all the other exploitative programmes on Channel 4 and copycats on Channel 5, it’s hard not to sympathise. How to Get a Council House is a crass title for a programme in which very few people ever do get one, but one that seems designed to provoke social media chatter to generate viewing figures.

Yet, as with the first series, I’d argue that HTGACH includes real documentary as well as a dodgy premise and a genuine point that is not the one being made by the jolly commentator. It’s hard not to admire the frontline housing staff doing a job that I couldn’t do in impossible circumstances and wonder about the point they are making about their work. Different editing of the same footage, plus a different title, would have produced a very different programme.

The message coming across loud and clear from Colin Cormack and his team at Tower Hamlets is that a combination of welfare reform and the social change are making the borough a no-go area for people on benefits and low incomes. Despite all the government’s claims to the contrary, we are seeing social cleansing in action (and those are the words of a letting agent in the first programme, not mine or anyone at the council). You have to be watching closely to pick it up because of the way the programme title dictates the angle but it is still there.

So, as with the first series set in Tower Hamlets and Manchester, I find myself in two minds about How to Get a Council House. The negative side kicks in before the programme even starts: before the first episode the controversial C4 ident of the Aylesbury estate complete with inserted litter, graffiti and Sky dishes set the tone. Channel 4 must be well aware of the campaign against it by residents who have produced their own more positive version, so using it in this context smacks either of lazy complacency or of simply sticking two fingers up to its critics.

Then there’s the way the issues are presented. Channel 4 summed up the programme in a tweet last week like this:

how to

The A&E for housing? That may seem like a good description of the homelessness safety net but if this was a real A&E, what about the rest of the hospital? Patients would be on trolleys out into the car park because all the other wards were packed. The phrase caught my attention because it was also used by Julia Unwin of the Joseph Rowntree Foundation in a speech I blogged about last week. She was warning about the consequences of treating housing as something only to be provided at the point of need. 

Another problem I have with HTGACH is that it never seriously addresses its title. Somewhere in the six episodes there must have been a chance to look at why virtually no new council houses have been built in the last 30 years or at the number of old ones now owned by private landlords. It’s all too easy for viewers to confuse council housing with temporary accommodation and private flats and to think that housing benefit is going to the tenants rather than to the landlords. Lack of context like this means negative stereotyping can gain ground.

That’s a shame because the raw material for a much better documentary about housing keeps breaking through. The first episode, for example, shows that the social cleansing that the government denies and the out-of-area placements discouraged in official guidance are already happening. The welfare reform officer says bluntly: ‘Nobody who’s benefit dependent and not in a permanent property is going to be able to afford to live in Tower Hamlets. This is going to happen in the next six to 12 months.’ A lettings agent says that: ‘The people with money are pushing the poor out of Tower Hamlets. It’s kind of a cleansing of the poor.’

One single parent is told that she will almost certainly be moved out of the borough (‘it will be a big move, not round the corner’) and sums it up as ‘moving 20 miles away from anything I’ve ever known and bringing up my four kids in isolation. I can’t control my future or my children’s and that boils down to making me feel like a bad mum’. At the last minute she gets offered a new housing association flat in the area. ‘We can leave all the stress behind and start being happy,’ she says, a comment that says everything about why social housing is so desperately needed.

Another single parent is being evicted from her private rented flat because of the benefit cap and eventually gets temporary accommodation in another flat. Ironically, when she is trying to ‘get a council house’ both of the flats look like they are ex-right to buy. Her rent will be £338 a week and her housing benefit after the cap is £217, but DHPs will cover the balance for now.

And the last word in the programme goes to Colin Cormack, who sums things up as:

‘What’s happening is people are renting in the private sector, they have some reliance on housing benefit, welfare reforms are coming in that limit the person’s benefit entitlement, landlords are evicting those families, they come to the council, and the public purse has to pay significantly more to assist that family.’

That’s a pretty devastating summary of the impact of welfare reform and our failure to invest in social housing and it’s all the more powerful for being expressed in an almost matter-of-fact tone by someone on the frontline. Despite my problems with it, HTGACH shows that what we all warned about is happening through the stories of real people. But it also left me wondering whether a viewer who knows little of housing and welfare reform would get all that.

So for me How to Get a Council House is much better than Benefits Street but it still shows how firmly established the negative stereotyping of tenants and people on benefits has become. Channel 4 and its programme makers need to be challenged but is that alone enough? The same attitudes about social housing and the welfare state run right down from Iain Duncan Smith to the bile on twitter. The rest of us need to do a much better job of communicating the positive case for both, why they were created in the first place and why we need them now.

Here’s hoping that the positives outweigh the negatives in tonight’s final episode. 

New regime for mortgage lending

Mon, 28 Apr 2014

Will the new mortgage rules tilt the playing field even further in favour or the housing haves and against the have-nots?

On the face of it’s hard to argue with the idea that lenders should check whether borrowers can actually afford their mortgage before they make the loan. But is it quite that simple?

After a long consultation, the new Mortgage Market Review (MMR) regime finally came into force on Saturday. The aim is to prevent a repeat of the irresponsible surge in lending seen before 2007. The lax rules then were symbolised by the self-certified mortgage, or liar loan, which is now banned.

However, the change does not herald a return to the old days when lenders would only give mortgages of up to three times earnings for an individual or 2.5 times earnings for a couple. As the BBC’s Andrew Verity showed on Newsnight on Friday (19 minutes in), it could well be possible to borrow more rather than less under the new system: couples can get a loan on a multiple of five or even 5.5 times their joint income.

Instead, borrowers will have to submit to forensic scrutiny of their spending plus a stress test to check that they can afford their repayments if interest rates rise. Again both seem sensible and, if there are fears of a hiatus in the market as a result, a stricter test of affordability ought to help dampen down house price inflation.

But if the MMR could help prevent some of the problems seen before 2007, is it appropriate for the market conditions of 2014? And who will gain and who will lose out as a result?

Affordable for who? The MMR tests affordability in terms of spending as well as income. The logical response for borrowers will be to cut their spending in the three months before they apply (much as they may have to once they start paying the mortgage) but that may not be possible for everyone. Couples with children who are both working cannot suddenly cut their spending on childcare. The impact of that was shown in one bank’s test quoted in The Guardian: a couple with no children each on £35,000 a year would be able to borrow £329,500; the same couple with children would only be able to borrow £205,600 once childcare costs were assessed.

Cash is king. New mortgage rules will have no impact on cash buyers, who now account for over 35 per cent of home sales compared to just over 10 per cent in 2004 and around 25 per cent at the end of 2007. They could now have an even bigger advantage in the market.

Foreign buyers. The argument continues over whether buyers from overseas have inflated the whole London market or just the top end. However, as Sky’s economics editor Ed Conway blogged last week, it could be a mistake to assume that all of them are Russian oligarchs and Saudi princes buying property outright. It’s unclear how many overseas buyers are using overseas mortgages to buy homes in the UK but it is clear that these are not covered by the MMR.

First-time buyers. Existing home owners with a deposit of 25 per cent or more already enjoy far cheaper interest rates than, for example, first-time buyers able to put up 5 or 10 per cent. It’s not hard to predict whose spending lenders will scrutinise more closely. One result could be longer mortgage terms for first-timers, which cut the monthly repayments but obviously cost more over the life of the loan. The MMR does not ban interest-only mortgages but they will be much harder to come by without proof of a means of repaying them.

Changing employment. The self-employed and people on short-term contracts could suffer most from lack of access to home loans. They will not only be unable to get a self-certified mortgage but they will also face far greater scrutiny of their income and expenditure, with lenders likely to demand three years of accounts and HMRC certificates to go with them. There are now 600,000 more self-employed people than there were before the recession and if they are not already on the housing ladder they are going to find it much, much harder to get a mortgage.

More private renting. All of this will reinforce existing trends in housing tenure, with home ownership continuing to fall while the number of private tenants rises. Savills argued over the weekend that the MMR will further erode mortgaged ownership and predicts that another million households will become private renters in the next five years.

More buy to let. What’s bad news for frustrated buyers looks like yet more good news for the landlords whose tenants they will become. As Steve Wilcox pointed out in this year’s UK Housing Review, buy-to-let landlords already enjoy major advantages over first-time buyers: their mortgage costs are cheaper because they use interest-only loans; and they can offset those costs against their tax bill. Housing benefit also guarantees a significant proportion of their rents.

By coincidence, buy to let was 18 years old over the weekend. A report released over the weekend by Paragon Mortgages estimated that landlords have enjoyed an average return of 16.3 per cent a year since 1996. Past returns are of course not necessarily a guide to the future, and Paragon has an interest as a leading lender to landlords, but that is more than double the return available from shares or any other asset class.

There are no prizes for guessing which key part of the mortgage market will not be covered by the MMR or by the forthcoming European mortgage directive. It’s an issue I blogged about when earlier drafts of the MMR were published. It has already led to concern in the industry that people could attempt to evade the new rules by applying for a buy-to-let loan on somewhere they intend to live themselves. There are also predictions that buy-to-let lending will rise as banks look to make up a shortfall against their lending targets caused by the MMR.

However, the more fundamental impact could be felt by the housing system as a whole rather than just the mortgage market. The new rules make it even less likely that young renters, especially those with children, will be able to borrow enough against their income to get on to the housing ladder. Buy to let effectively transfers that borrowing capacity to someone else: the rent they will be forced to pay will become the income stream to repay the mortgage of a buy to let investor. And, as I blogged earlier in the month, the rise in house prices since the launch of Help to Buy means that far more would-be owners have been priced out than have been priced in through the government scheme.

Proper regulation of the mortgage market is essential to avoid a repeat of the crisis of 2008 or even that of 1992. The launch of the new system follows a long consultation aimed at striking the right balance between protecting borrowers and allowing the market to function effectively. However, partial regulation risks merely triggering yet more gains for the housing haves at the expense of the have-nots.  

New regime for mortgage lending

Mon, 28 Apr 2014

Will the new mortgage rules tilt the playing field even further in favour or the housing haves and against the have-nots?

On the face of it’s hard to argue with the idea that lenders should check whether borrowers can actually afford their mortgage before they make the loan. But is it quite that simple?

After a long consultation, the new Mortgage Market Review (MMR) regime finally came into force on Saturday. The aim is to prevent a repeat of the irresponsible surge in lending seen before 2007. The lax rules then were symbolised by the self-certified mortgage, or liar loan, which is now banned.

However, the change does not herald a return to the old days when lenders would only give mortgages of up to three times earnings for an individual or 2.5 times earnings for a couple. As the BBC’s Andrew Verity showed on Newsnight on Friday (19 minutes in), it could well be possible to borrow more rather than less under the new system: couples can get a loan on a multiple of five or even 5.5 times their joint income.

Instead, borrowers will have to submit to forensic scrutiny of their spending plus a stress test to check that they can afford their repayments if interest rates rise. Again both seem sensible and, if there are fears of a hiatus in the market as a result, a stricter test of affordability ought to help dampen down house price inflation.

But if the MMR could help prevent some of the problems seen before 2007, is it appropriate for the market conditions of 2014? And who will gain and who will lose out as a result?

Affordable for who? The MMR tests affordability in terms of spending as well as income. The logical response for borrowers will be to cut their spending in the three months before they apply (much as they may have to once they start paying the mortgage) but that may not be possible for everyone. Couples with children who are both working cannot suddenly cut their spending on childcare. The impact of that was shown in one bank’s test quoted in The Guardian: a couple with no children each on £35,000 a year would be able to borrow £329,500; the same couple with children would only be able to borrow £205,600 once childcare costs were assessed.

Cash is king. New mortgage rules will have no impact on cash buyers, who now account for over 35 per cent of home sales compared to just over 10 per cent in 2004 and around 25 per cent at the end of 2007. They could now have an even bigger advantage in the market.

Foreign buyers. The argument continues over whether buyers from overseas have inflated the whole London market or just the top end. However, as Sky’s economics editor Ed Conway blogged last week, it could be a mistake to assume that all of them are Russian oligarchs and Saudi princes buying property outright. It’s unclear how many overseas buyers are using overseas mortgages to buy homes in the UK but it is clear that these are not covered by the MMR.

First-time buyers. Existing home owners with a deposit of 25 per cent or more already enjoy far cheaper interest rates than, for example, first-time buyers able to put up 5 or 10 per cent. It’s not hard to predict whose spending lenders will scrutinise more closely. One result could be longer mortgage terms for first-timers, which cut the monthly repayments but obviously cost more over the life of the loan. The MMR does not ban interest-only mortgages but they will be much harder to come by without proof of a means of repaying them.

Changing employment. The self-employed and people on short-term contracts could suffer most from lack of access to home loans. They will not only be unable to get a self-certified mortgage but they will also face far greater scrutiny of their income and expenditure, with lenders likely to demand three years of accounts and HMRC certificates to go with them. There are now 600,000 more self-employed people than there were before the recession and if they are not already on the housing ladder they are going to find it much, much harder to get a mortgage.

More private renting. All of this will reinforce existing trends in housing tenure, with home ownership continuing to fall while the number of private tenants rises. Savills argued over the weekend that the MMR will further erode mortgaged ownership and predicts that another million households will become private renters in the next five years.

More buy to let. What’s bad news for frustrated buyers looks like yet more good news for the landlords whose tenants they will become. As Steve Wilcox pointed out in this year’s UK Housing Review, buy-to-let landlords already enjoy major advantages over first-time buyers: their mortgage costs are cheaper because they use interest-only loans; and they can offset those costs against their tax bill. Housing benefit also guarantees a significant proportion of their rents.

By coincidence, buy to let was 18 years old over the weekend. A report released over the weekend by Paragon Mortgages estimated that landlords have enjoyed an average return of 16.3 per cent a year since 1996. Past returns are of course not necessarily a guide to the future, and Paragon has an interest as a leading lender to landlords, but that is more than double the return available from shares or any other asset class.

There are no prizes for guessing which key part of the mortgage market will not be covered by the MMR or by the forthcoming European mortgage directive. It’s an issue I blogged about when earlier drafts of the MMR were published. It has already led to concern in the industry that people could attempt to evade the new rules by applying for a buy-to-let loan on somewhere they intend to live themselves. There are also predictions that buy-to-let lending will rise as banks look to make up a shortfall against their lending targets caused by the MMR.

However, the more fundamental impact could be felt by the housing system as a whole rather than just the mortgage market. The new rules make it even less likely that young renters, especially those with children, will be able to borrow enough against their income to get on to the housing ladder. Buy to let effectively transfers that borrowing capacity to someone else: the rent they will be forced to pay will become the income stream to repay the mortgage of a buy to let investor. And, as I blogged earlier in the month, the rise in house prices since the launch of Help to Buy means that far more would-be owners have been priced out than have been priced in through the government scheme.

Proper regulation of the mortgage market is essential to avoid a repeat of the crisis of 2008 or even that of 1992. The launch of the new system follows a long consultation aimed at striking the right balance between protecting borrowers and allowing the market to function effectively. However, partial regulation risks merely triggering yet more gains for the housing haves at the expense of the have-nots.  

Full value

Tue, 22 Apr 2014

With 13 months left until the general election, how can housing demonstrate its economic, social and political value?

Ruth Davison of the National Housing Federation was in no doubt speaking to the annual conference of the Housing Studies Association in York last week. ‘It’s time to stop researching and start broadcasting,’ she told the assembled academics.

I’m not sure anyone in the audience was ready to go quite that far, but her underlying point was well made. The evidence about the beneficial impact that housing can have across a vast range of fields is out there and the political parties seem at least for the moment prepared to listen. So why not shout about it?

The evidence and the politics both emerged in a debate chaired at the conference on ‘who is best placed to judge the value of housing – the state or the consumer’. It produced some expected and some very unexpected results.

The event brought together Bristol University professor Alex Marsh, Vidhya Alakeson of the Resolution Foundation, CIH president Paul Tennant and Conservative councillor John Moss. To add a bit of context, Alex also writes a must-read housing blog, Vidhya leads the RF’s work on housing which includes recent reports on build to rent and shared ownership, John is a regeneration consultant who co-authored an influential report for Localis that foreshadowed many of the coalition’s housing reforms and Paul is of course also group chief executive of Orbit.

The debate inevitably produced as many questions raised as answers. Value is a slippery word that can mean many different things and the basic question raises others about the role of markets and governments, whether we should subsidise homes or people and the future of social and affordable housing.

Alex Marsh analysed the different ways of looking at value and the conditions under which the state or the consumer is better placed to judge it. With growing evidence that supply subsidies are more efficient over the long term, can we come up with new ways of targeting them such as revolving funds? You can read his contribution on his blog here.

Vidhya Alakeson used the bedroom tax as a particular example of how leaving things to the market doesn’t work and economic incentives for people to move have failed. In the wider market people on low and middle incomes are left with no housing choices in today’s market.

John Moss put the pro-market, pro-welfare reform case. He conceded that the under-occupation penalty was ‘a little crude perhaps’ but had most of the audience wincing as he implied that 30 per cent of under-occupiers are unlawfully subletting and London council flats were full of bankers.

And Paul Tennant put the case for value that goes beyond money alone. ‘Value is how I feel about where I live,’ he said. Government had to recognise how much housing associations were generating from their own resources and the dangers of driving down grant so that people were either priced out of homes or priced in to a poverty trap.

The desperate need for new supply was the common ground between them even though there was disagreement about the means. For Paul Tennant, it’s land rather than planning per se that is the problem, where John Moss sees the post-war planning system as the villain of the piece and put a thoughtful case in favour of the coalition’s reforms and estate regeneration. However, he also spoke strongly in favour not just of new towns and community land trusts but of using compulsory purchase to buy agricultural land at agricultural prices.

Disagreements may continue about many things but when a Conservative makes that argument you begin to think that radical solutions really can be found.

Which is just as well, because the conference also heard a grim warning from Julia Unwin about the dangers of allowing housing to crumble as the fourth pillar of the welfare state.

The chief executive of the Joseph Rowntree Foundation argued that providing housing only at the point of need – using housing as a form of A&E – would not deliver thriving communities let alone help tackle the complex problems of an ageing society.

One of the proudest achievements of the welfare state had been to break the link between squalor and poverty but now we were in danger of reverting back, she argued. The changing nature of work meant that it was no longer a route out of poverty, in contrast to government rhetoric on welfare reform.

And she warned that the 2015 comprehensive spending review could turn out to be even more important than the general election: unless it came up with the right policies all the conditions were there for housing associations to start vacating the territory of housing the poorest.

If that was a sombre closing message, the conference itself showed that housing research seems to be in pretty good health. This blog covers only a couple of the plenary sessions with no space for workshops that featured contributions from across the academic spectrum and around the world and some talented young researchers coming through to join the veterans of the scene.

As Ken Gibb points out, all that attention may in part reflect the scale of the current housing crisis but his blog gives a flavour of the breadth of the research that is going on. The conference programme shows the many different ways of looking at value. 

It’s clear that the electorate and therefore the politicians sense there are questions that need to be answered urgently. The temptation to offer simplistic solutions to problems that are complex and inter-related is equally clear: the latest #howtogetacouncilhouse twitterstorm shows how many people think housing is part of the problem.

The continuing challenge – for everyone, not just researchers – is to show the value of housing in providing the answers.

Full value

Tue, 22 Apr 2014

With 13 months left until the general election, how can housing demonstrate its economic, social and political value?

Ruth Davison of the National Housing Federation was in no doubt speaking to the annual conference of the Housing Studies Association in York last week. ‘It’s time to stop researching and start broadcasting,’ she told the assembled academics.

I’m not sure anyone in the audience was ready to go quite that far, but her underlying point was well made. The evidence about the beneficial impact that housing can have across a vast range of fields is out there and the political parties seem at least for the moment prepared to listen. So why not shout about it?

The evidence and the politics both emerged in a debate chaired at the conference on ‘who is best placed to judge the value of housing – the state or the consumer’. It produced some expected and some very unexpected results.

The event brought together Bristol University professor Alex Marsh, Vidhya Alakeson of the Resolution Foundation, CIH president Paul Tennant and Conservative councillor John Moss. To add a bit of context, Alex also writes a must-read housing blog, Vidhya leads the RF’s work on housing which includes recent reports on build to rent and shared ownership, John is a regeneration consultant who co-authored an influential report for Localis that foreshadowed many of the coalition’s housing reforms and Paul is of course also group chief executive of Orbit.

The debate inevitably produced as many questions raised as answers. Value is a slippery word that can mean many different things and the basic question raises others about the role of markets and governments, whether we should subsidise homes or people and the future of social and affordable housing.

Alex Marsh analysed the different ways of looking at value and the conditions under which the state or the consumer is better placed to judge it. With growing evidence that supply subsidies are more efficient over the long term, can we come up with new ways of targeting them such as revolving funds? You can read his contribution on his blog here.

Vidhya Alakeson used the bedroom tax as a particular example of how leaving things to the market doesn’t work and economic incentives for people to move have failed. In the wider market people on low and middle incomes are left with no housing choices in today’s market.

John Moss put the pro-market, pro-welfare reform case. He conceded that the under-occupation penalty was ‘a little crude perhaps’ but had most of the audience wincing as he implied that 30 per cent of under-occupiers are unlawfully subletting and London council flats were full of bankers.

And Paul Tennant put the case for value that goes beyond money alone. ‘Value is how I feel about where I live,’ he said. Government had to recognise how much housing associations were generating from their own resources and the dangers of driving down grant so that people were either priced out of homes or priced in to a poverty trap.

The desperate need for new supply was the common ground between them even though there was disagreement about the means. For Paul Tennant, it’s land rather than planning per se that is the problem, where John Moss sees the post-war planning system as the villain of the piece and put a thoughtful case in favour of the coalition’s reforms and estate regeneration. However, he also spoke strongly in favour not just of new towns and community land trusts but of using compulsory purchase to buy agricultural land at agricultural prices.

Disagreements may continue about many things but when a Conservative makes that argument you begin to think that radical solutions really can be found.

Which is just as well, because the conference also heard a grim warning from Julia Unwin about the dangers of allowing housing to crumble as the fourth pillar of the welfare state.

The chief executive of the Joseph Rowntree Foundation argued that providing housing only at the point of need – using housing as a form of A&E – would not deliver thriving communities let alone help tackle the complex problems of an ageing society.

One of the proudest achievements of the welfare state had been to break the link between squalor and poverty but now we were in danger of reverting back, she argued. The changing nature of work meant that it was no longer a route out of poverty, in contrast to government rhetoric on welfare reform.

And she warned that the 2015 comprehensive spending review could turn out to be even more important than the general election: unless it came up with the right policies all the conditions were there for housing associations to start vacating the territory of housing the poorest.

If that was a sombre closing message, the conference itself showed that housing research seems to be in pretty good health. This blog covers only a couple of the plenary sessions with no space for workshops that featured contributions from across the academic spectrum and around the world and some talented young researchers coming through to join the veterans of the scene.

As Ken Gibb points out, all that attention may in part reflect the scale of the current housing crisis but his blog gives a flavour of the breadth of the research that is going on. The conference programme shows the many different ways of looking at value. 

It’s clear that the electorate and therefore the politicians sense there are questions that need to be answered urgently. The temptation to offer simplistic solutions to problems that are complex and inter-related is equally clear: the latest #howtogetacouncilhouse twitterstorm shows how many people think housing is part of the problem.

The continuing challenge – for everyone, not just researchers – is to show the value of housing in providing the answers.

Housing review offers complete picture

Tue, 15 Apr 2014

As ever the new UK Housing Review offers a mix of authoritative statistics and some fascinating new insights on housing across all tenures.

Published this week, the 2014 edition of the bible for housing types edited by Steve Wilcox and John Perry mixes a compendium of statistics plus several chapters of expert commentary. It’s also one of the few publications to compare housing in the different nations of the UK. All that’s missing is an index.

Reports elsewhere have highlighted the bias in the mortgage market towards landlords and the threat to the affordable homes programme after 2015 but I’ve picked out three more themes to illustrate the breadth of what’s on offer in the review.

1) If you think we’ve got problems…

This year’s UK Housing Review includes a detailed chapter on the housing situation in Ireland, which author Eddie Lewis likens to ‘the last reel of a disaster movie’.

To UK eyes there are some familiar trends and some very unfamiliar ones and the comparison says much about housing in both countries. Consider, for example, this graph on housebuilding.

building

Housebuilding in Ireland peaked at 93,000 in 2006 and slumped to just 7,500 last year. But Ireland’s population is 4.5 million against England’s 53 million: if we had built the same number of homes per head completions would have peaked at an incredible 1.1 million. The equivalent of the Irish slump would have been 90,000, which is only a little short of what we are currently building.

That says much about the speculative building boom in Ireland, with completions far outstripping demand, and it also helps explain the 50 per cent slump in house prices there following the boom. However, it also shows just how unresponsive the English housebuilding model is to market conditions.

2) The income gulf between tenures

Once upon a time there was little difference between the incomes of council tenants, private renters and outright owners and even people buying with a mortgage earned less than twice as much. This graph from the review shows how that has changed over the last 40 years.

Gulf

It shows the incomes of people in other tenures relative to those of council tenants. The introduction of the right to buy explains the growing gap in the 1980s as the proportion of working households declined in the social rented sector.

However, as the review points out, this proportion has not declined any further since 1991 but the gap with private tenants and outright owners continued to grow until 2004 and the gap with homebuyers is still rising.

The graph illustrates not just the rising inequality highlighted by Danny Dorling in his recent book but just how far we are running to stand still or go backwards with ‘affordable’ housing.

3) When is a bubble not a bubble?

The third and final graph taken from the review shows house prices and mortgage costs in relation to individual earnings.

HPI

Note how the two were broadly similar in the boom of the late 1980s but have since grown apart thanks to lower interest rates. Mortgage costs were getting close to the peak of the late 1980s during the latest boom but have since fallen back again thanks to record low rates and schemes such as Funding for Lending. In contrast, house prices are back at their 2007 peak.

For Steve Wilcox this is clear evidence that any talk of a housing bubble outside London is nonsense. However, does the gap between the two measures also show the potential problems stored up when interest rates eventually rise again?

The full version of the UK Housing Review is available to order from the CIH. Previous editions are online here.

Housing review offers complete picture

Tue, 15 Apr 2014

As ever the new UK Housing Review offers a mix of authoritative statistics and some fascinating new insights on housing across all tenures.

Published this week, the 2014 edition of the bible for housing types edited by Steve Wilcox and John Perry mixes a compendium of statistics plus several chapters of expert commentary. It’s also one of the few publications to compare housing in the different nations of the UK. All that’s missing is an index.

Reports elsewhere have highlighted the bias in the mortgage market towards landlords and the threat to the affordable homes programme after 2015 but I’ve picked out three more themes to illustrate the breadth of what’s on offer in the review.

1) If you think we’ve got problems…

This year’s UK Housing Review includes a detailed chapter on the housing situation in Ireland, which author Eddie Lewis likens to ‘the last reel of a disaster movie’.

To UK eyes there are some familiar trends and some very unfamiliar ones and the comparison says much about housing in both countries. Consider, for example, this graph on housebuilding.

building

Housebuilding in Ireland peaked at 93,000 in 2006 and slumped to just 7,500 last year. But Ireland’s population is 4.5 million against England’s 53 million: if we had built the same number of homes per head completions would have peaked at an incredible 1.1 million. The equivalent of the Irish slump would have been 90,000, which is only a little short of what we are currently building.

That says much about the speculative building boom in Ireland, with completions far outstripping demand, and it also helps explain the 50 per cent slump in house prices there following the boom. However, it also shows just how unresponsive the English housebuilding model is to market conditions.

2) The income gulf between tenures

Once upon a time there was little difference between the incomes of council tenants, private renters and outright owners and even people buying with a mortgage earned less than twice as much. This graph from the review shows how that has changed over the last 40 years.

Gulf

It shows the incomes of people in other tenures relative to those of council tenants. The introduction of the right to buy explains the growing gap in the 1980s as the proportion of working households declined in the social rented sector.

However, as the review points out, this proportion has not declined any further since 1991 but the gap with private tenants and outright owners continued to grow until 2004 and the gap with homebuyers is still rising.

The graph illustrates not just the rising inequality highlighted by Danny Dorling in his recent book but just how far we are running to stand still or go backwards with ‘affordable’ housing.

3) When is a bubble not a bubble?

The third and final graph taken from the review shows house prices and mortgage costs in relation to individual earnings.

HPI

Note how the two were broadly similar in the boom of the late 1980s but have since grown apart thanks to lower interest rates. Mortgage costs were getting close to the peak of the late 1980s during the latest boom but have since fallen back again thanks to record low rates and schemes such as Funding for Lending. In contrast, house prices are back at their 2007 peak.

For Steve Wilcox this is clear evidence that any talk of a housing bubble outside London is nonsense. However, does the gap between the two measures also show the potential problems stored up when interest rates eventually rise again?

The full version of the UK Housing Review is available to order from the CIH. Previous editions are online here.

Help or hindrance?

Fri, 11 Apr 2014

So a year in to Help to Buy, who has it helped and what has the impact been so far?

Those are the questions I set out to answer in my feature in this week’s Inside Housing. It concludes that the limited number of Help to Buy transactions seen so far cannot have been enough on their own to account for what’s happened in the market in its first year. What’s been far more significant is the impact on the behaviour of buyers, sellers and housebuilders of a signal from the government that it will do everything it can to generate a housing market recovery. That, combined with a range of other government policies (and non-policies) and the favourable environment of record low interest rates, has duly produced one.

Culture secretary Sajid Javid did not seem to convince many people in the Question Time audience last night that there is no housing bubble. As financial secretary to the Treasury until Wednesday he was intimately involved with Help to Buy so he should be in a position to know. But his ‘inconvenient facts’ about low inflation and prices still being below their 2007 peak prompted incredulity from the rest of the panel. You might expect that from Billy Bragg and Harriet Harman, but the most telling put-down came from advertising boss Sir Martin Sorrell, who pointed out that the fact that prices are rising so quickly at a time of low inflation is more rather than less evidence of a bubble.

However, there is new evidence today the CIH’s annual UK Housing Review that the problems in the housing market go a lot deeper than Help to Buy and have been brewing for much longer than the last year. The average first-time buyer house price has risen by 120 per cent since 2001 while the cost of their average mortgage has risen by 110 per cent. While mortgage payments are more affordable than at the peak of the market in 2007, that is only thanks to record low interest rates: the ratio of the average mortgage advance to incomes is now almost back at peak levels. And remember that 2007 was the peak of one of the biggest bubbles in housing market history (one that did not fully deflate) rather than the benchmark of normality implied by Sajid Javid.

Add the long-term under-provision of new homes, a broken model of housebuilding, a tax system that encourages investment and speculation in housing, the rise of buy to let and London’s global status and you have the much larger backdrop for Help to Buy.

There was much that I had to leave out of my piece in the print version of Inside Housing and lots more that I did not have space to examine in any detail. This blog is an attempt to fill some of those gaps and bring the story up to date with some of the stats published since the article went to press:

  • The numbers so far. The first 11 months of Help to Buy 1 (equity loans) saw 16,465 properties bought in England (schemes in Scotland and Wales started later). The first four months of Help to Buy 2 (mortgage guarantees) saw 2,572 completions. Those 19,037 transactions supported by Help to Buy compare to 1.1 million in the market as a whole so they cannot be enough on their own to explain the rise in house prices. In addition, more than three-quarters of them were outside London and the South East, the regions that have seen the strongest price growth. However, house prices are fuelled by expectations for the future as well as current supply and demand and the impact of Help to Buy is about the signals it sends out as well as the deals completed.
  • First-time buyers. Around 88 per cent of households who’ve benefitted from Help to Buy have been first-time buyers. Assuming two buyers per household, that’s just over 30,000 people. However, calculations by the Priced Out campaign suggest that the increase in prices since March 2013 had put home ownership beyond the reach of more than 250,000 renters by the end of January. Based on the Office for Budget Responsibility’s forecast for prices and earnings, that figure will be 450,000 by the end of this year. These are national figures that do not take account of huge variation between prices in different regions but even so they beg a very big question about the ‘help’ in Help to Buy.
  • Help to Buy 1. The saving grace of the equity loan scheme is that it only applies to new homes. The government has been quick to claim credit for the 23 per cent increase in housing starts seen over the last year even though completions are still flatlining. Help to Buy has supported a much greater proportion of sales of new homes than in the market as a whole. However, the big unanswered questions are how many of them would have been built anyway and how far housebuilders have simply used Help to Buy to scale back their own discounts and sales incentives. The rise in the share prices of the major housebuilders over the last year suggests that the City thinks they will do pretty well put of it.
  • The land market. Housebuilders hailed the unexpected extension of Help to Buy 1 from 2016 to the end of the decade as ‘providing certainty for the industry’. The danger is that the only certainty will be rising land prices. The Knight Frank Residential Development Land Index shows that land prices fell slightly in 2012 but rose 7.1 per cent in 2013. We now know that the taxpayer will back new home sales until 2020, giving landowners every reason to hold out for as much as they can get for their sites.
  • Help to Buy 2. The mortgage guarantee element of Help to Buy is bigger and far more controversial than Help to Buy 1. It’s been decried for stoking up demand while doing little about supply and for potentially leaving taxpayers on a £12.5 billion hook if it stimulates a boom and then a bust. However, the evidence so far suggests that the impact may be less than feared. Even taking account of the time it took for mortgage lenders to get up and running following the accelerated launch in October, 2,572 sales in four months is a long way from initial estimates of up to 190,000 a year. One reason for that, highlighted by figures from Hometrack, could be that Help to Buy 2 mortgage rates look very expensive by comparison with renting and other ways of buying. Another is that 90 and 95 per cent mortgages are now available outside of Help to Buy.

However, all of this assumes that Help to Buy actually is a housing policy and that the real aims are to help first-time buyers and boost housebuilding rather than existing home owners and the government’s electoral prospects. As Sir Martin Sorrell put it on last night’s Question Time: ‘Help to Buy was a political move. It was done in order to stimulate electoral support because it will be extremely popular. The problem is be careful what you wish for.’

Help or hindrance?

Fri, 11 Apr 2014

So a year in to Help to Buy, who has it helped and what has the impact been so far?

Those are the questions I set out to answer in my feature in this week’s Inside Housing. It concludes that the limited number of Help to Buy transactions seen so far cannot have been enough on their own to account for what’s happened in the market in its first year. What’s been far more significant is the impact on the behaviour of buyers, sellers and housebuilders of a signal from the government that it will do everything it can to generate a housing market recovery. That, combined with a range of other government policies (and non-policies) and the favourable environment of record low interest rates, has duly produced one.

Culture secretary Sajid Javid did not seem to convince many people in the Question Time audience last night that there is no housing bubble. As financial secretary to the Treasury until Wednesday he was intimately involved with Help to Buy so he should be in a position to know. But his ‘inconvenient facts’ about low inflation and prices still being below their 2007 peak prompted incredulity from the rest of the panel. You might expect that from Billy Bragg and Harriet Harman, but the most telling put-down came from advertising boss Sir Martin Sorrell, who pointed out that the fact that prices are rising so quickly at a time of low inflation is more rather than less evidence of a bubble.

However, there is new evidence today the CIH’s annual UK Housing Review that the problems in the housing market go a lot deeper than Help to Buy and have been brewing for much longer than the last year. The average first-time buyer house price has risen by 120 per cent since 2001 while the cost of their average mortgage has risen by 110 per cent. While mortgage payments are more affordable than at the peak of the market in 2007, that is only thanks to record low interest rates: the ratio of the average mortgage advance to incomes is now almost back at peak levels. And remember that 2007 was the peak of one of the biggest bubbles in housing market history (one that did not fully deflate) rather than the benchmark of normality implied by Sajid Javid.

Add the long-term under-provision of new homes, a broken model of housebuilding, a tax system that encourages investment and speculation in housing, the rise of buy to let and London’s global status and you have the much larger backdrop for Help to Buy.

There was much that I had to leave out of my piece in the print version of Inside Housing and lots more that I did not have space to examine in any detail. This blog is an attempt to fill some of those gaps and bring the story up to date with some of the stats published since the article went to press:

  • The numbers so far. The first 11 months of Help to Buy 1 (equity loans) saw 16,465 properties bought in England (schemes in Scotland and Wales started later). The first four months of Help to Buy 2 (mortgage guarantees) saw 2,572 completions. Those 19,037 transactions supported by Help to Buy compare to 1.1 million in the market as a whole so they cannot be enough on their own to explain the rise in house prices. In addition, more than three-quarters of them were outside London and the South East, the regions that have seen the strongest price growth. However, house prices are fuelled by expectations for the future as well as current supply and demand and the impact of Help to Buy is about the signals it sends out as well as the deals completed.
  • First-time buyers. Around 88 per cent of households who’ve benefitted from Help to Buy have been first-time buyers. Assuming two buyers per household, that’s just over 30,000 people. However, calculations by the Priced Out campaign suggest that the increase in prices since March 2013 had put home ownership beyond the reach of more than 250,000 renters by the end of January. Based on the Office for Budget Responsibility’s forecast for prices and earnings, that figure will be 450,000 by the end of this year. These are national figures that do not take account of huge variation between prices in different regions but even so they beg a very big question about the ‘help’ in Help to Buy.
  • Help to Buy 1. The saving grace of the equity loan scheme is that it only applies to new homes. The government has been quick to claim credit for the 23 per cent increase in housing starts seen over the last year even though completions are still flatlining. Help to Buy has supported a much greater proportion of sales of new homes than in the market as a whole. However, the big unanswered questions are how many of them would have been built anyway and how far housebuilders have simply used Help to Buy to scale back their own discounts and sales incentives. The rise in the share prices of the major housebuilders over the last year suggests that the City thinks they will do pretty well put of it.
  • The land market. Housebuilders hailed the unexpected extension of Help to Buy 1 from 2016 to the end of the decade as ‘providing certainty for the industry’. The danger is that the only certainty will be rising land prices. The Knight Frank Residential Development Land Index shows that land prices fell slightly in 2012 but rose 7.1 per cent in 2013. We now know that the taxpayer will back new home sales until 2020, giving landowners every reason to hold out for as much as they can get for their sites.
  • Help to Buy 2. The mortgage guarantee element of Help to Buy is bigger and far more controversial than Help to Buy 1. It’s been decried for stoking up demand while doing little about supply and for potentially leaving taxpayers on a £12.5 billion hook if it stimulates a boom and then a bust. However, the evidence so far suggests that the impact may be less than feared. Even taking account of the time it took for mortgage lenders to get up and running following the accelerated launch in October, 2,572 sales in four months is a long way from initial estimates of up to 190,000 a year. One reason for that, highlighted by figures from Hometrack, could be that Help to Buy 2 mortgage rates look very expensive by comparison with renting and other ways of buying. Another is that 90 and 95 per cent mortgages are now available outside of Help to Buy.

However, all of this assumes that Help to Buy actually is a housing policy and that the real aims are to help first-time buyers and boost housebuilding rather than existing home owners and the government’s electoral prospects. As Sir Martin Sorrell put it on last night’s Question Time: ‘Help to Buy was a political move. It was done in order to stimulate electoral support because it will be extremely popular. The problem is be careful what you wish for.’

Frank words

Wed, 9 Apr 2014

Getting the same criticism from different people is usually a sign you’ve got something wrong. How about for IDS and the DWP?

Three different reports published this morning amplify earlier warnings about the implementation of the bedroom tax, the wider impact of welfare reform on tenants and landlords and the prospects for universal credit. But it would surprise nobody if the work and pensions secretary saw them as yet more evidence that his reforms are a success.

Two of them come from the Joseph Rowntree Foundation (JRF). Steve Wilcox finds that what he neutrally calls the ‘housing benefit size criteria’ has affected fewer people than expected but that half of those are in arrears and 100,000 who want to downsize are trapped and unable to move. Anne Power concludes that welfare reforms may end up making tenants more, rather than less, dependent and are making them more vulnerable.

The third is from the work and pensions committee and warns that it is still not clear that universal credit will work. The MPs on the all-party committee think that implementation will be delayed even further and have some strong words about Iain Duncan Smith’s attitude towards their scrutiny.

It is of course less than a week since the work and pensions committee published its highly critical report on the bedroom tax. The JRF report identifies many of the same weaknesses in the policy and options for reform.

On top of concerns about the operation for discretionary housing payments (DHPs), the shortage of smaller homes for downsizers and the extra costs imposed on landlords, it also identifies concerns about the size criteria, including a failure to specify minimum sizes for single or shared bedrooms.

It also puts the bedroom tax into perspective by pointing out almost three-quarters of households in Britain under-occupy their homes based on the size criteria. Of these, just 3 per cent are the working age social housing tenants on housing benefit.

Thanks to a fall in the numbers affected, the report concludes that DWP may make direct savings of around £330 million in 2013/14 net of DHP costs, £115 million less than originally expected. It adds: ‘Those savings will decline over time, but they have been achieved at considerable costs for tenants and landlords.’

Options for reform include:

  • allowing an extra bedroom for households with someone on higher rate DLA
  • clearer provision for households with carers and shared responsibility for children
  • stronger guidance abut the treatment of DLA awards in income assessment for DHPs
  • reforming the DHP system to allow longer-term awards
  • introducing minimum sizes for single and double bedrooms based on the statutory overcrowding provisions
  • increasing the bedroom standard to one bedroom above the current standard
  • requiring landlords to offer suitable alternative accommodation before applying the size criteria.

Many of these changes were also recommended by the work and pensions committee last week and some were in the ultimately unsuccessful House of Lords amendments to the Welfare Reform Act. The agenda for bedroom tax mitigation is now pretty clear if anyone wants to implement it.

The second JRF report is based on interviews with tenants and landlords about the combined impact of all the different welfare reforms affecting social housing. There are obvious and alarming financial impacts – tenants cutting back on food and heating, relying on food banks and extra costs undermining landlords’ ability to build new homes – but non-financial ones too.    

For tenants, the whole system harder to navigate, the private contractors running larger parts of it are distrusted and the ‘digital by default’ approach to accessing benefits is causing anxiety.

For landlords: ‘To ensure viability, housing associations are intensifying scrutiny of new tenants’ finances. Some of the poorest applicants (whether in work or not) are being rejected and told to apply elsewhere.’

And for the DWP: ‘It is possible that welfare reform will cost the government more as reliance on private renting grows due to social housing shortages, leading to higher housing benefit costs. Costs for extra support also go up for housing associations, councils, and tenants.’

The work and pensions committee report shifts the focus from reforms that have already been implemented to the biggest of all, which famously has not been. Universal credit was meant to begin for all new claims from October last year but as of March 20 this year only applied to 4,280 people with the simplest sort of claims.

Much of the report covers the same ground as the National Audit Office on the delays and IT problems that have dogged the project. The DWP changed the timetable significantly in July 2013 and again in December 2013 and the whole process will not be completed until after 2017. However, the committee concludes:

‘Whilst it is essential to ensure that the system works effectively for claimants before it is extended, DWP needs to be clear about all the implications of the delays. Due to the very slow pace of the roll-out to date, it is difficult to envisage how the volumes required to meet the most recent timetable can be achieved.’

The MPs also take the DWP to task over ‘regrettable’ waste in the two parallel IT systems for universal credit and urge it to detail financial support to local authorities to cover the additional costs of the administration of housing benefit up to 2017. Lack of clarity on the Local Support Services Framework for vulnerable claimants is also ‘regrettable’.

However, for me the most remarkable section of the report is about Iain Duncan Smith personally. At a hearing in February when members challenged his lack of disclosure of key information about the problems the DWP was encountering, he told them:

‘I do not have to tell the committee everything that is happening in the department until we have reached a conclusion about what is actually happening. I will take those decisions myself and account for the decisions that were taken, and I have done that.’

He added that ‘I do not think this committee can run the department’.

The all too obvious tension arose after a series of delays in IDS’s appearances before the committee and a number of occasions when major changes to universal credit implementation were announced just before he did. The MPs say ‘effective scrutiny by select committees relies on government departments providing them with accurate, timely and detailed information’ and ‘this has not always happened to date’.

Coming on the day that Maria Miller had to resign in part over her high-handed response to scrutiny, this is powerful stuff. Remember too that this report comes from a committee that supports the general principles of universal credit and on which coalition MPs are in the majority. In that context these are very strong words indeed:

‘It is not acceptable for ministers to provide information about changes to major policy implementation to this committee, and indeed to parliament and the public more broadly, only when forced to do so by the imminent prospect of being held to account in a public oral evidence session. We recommend that, in response to this report, DWP sets out how it will improve the frankness, accuracy and timeliness of the information it provides to us, to ensure that it meets the required levels of transparency between the government and select committees, and that we are not hampered in trying to carry out our role effectively.’

Landlords and tenants coping with the disaster of the bedroom tax and uncertainty about what could yet prove to be the disaster of the universal credit deserve nothing less.

But frankness, accuracy and timeliness are not often evident in the approach taken so far by a minister who responds to inconvenient facts with ‘I believe I am right’ and a department that polishes its discredited responses with each new setback. Reports are ‘simply wrong’ while policies are ‘very clearly working well’. 

 

Frank words

Wed, 9 Apr 2014

Getting the same criticism from different people is usually a sign you’ve got something wrong. How about for IDS and the DWP?

Three different reports published this morning amplify earlier warnings about the implementation of the bedroom tax, the wider impact of welfare reform on tenants and landlords and the prospects for universal credit. But it would surprise nobody if the work and pensions secretary saw them as yet more evidence that his reforms are a success.

Two of them come from the Joseph Rowntree Foundation (JRF). Steve Wilcox finds that what he neutrally calls the ‘housing benefit size criteria’ has affected fewer people than expected but that half of those are in arrears and 100,000 who want to downsize are trapped and unable to move. Anne Power concludes that welfare reforms may end up making tenants more, rather than less, dependent and are making them more vulnerable.

The third is from the work and pensions committee and warns that it is still not clear that universal credit will work. The MPs on the all-party committee think that implementation will be delayed even further and have some strong words about Iain Duncan Smith’s attitude towards their scrutiny.

It is of course less than a week since the work and pensions committee published its highly critical report on the bedroom tax. The JRF report identifies many of the same weaknesses in the policy and options for reform.

On top of concerns about the operation for discretionary housing payments (DHPs), the shortage of smaller homes for downsizers and the extra costs imposed on landlords, it also identifies concerns about the size criteria, including a failure to specify minimum sizes for single or shared bedrooms.

It also puts the bedroom tax into perspective by pointing out almost three-quarters of households in Britain under-occupy their homes based on the size criteria. Of these, just 3 per cent are the working age social housing tenants on housing benefit.

Thanks to a fall in the numbers affected, the report concludes that DWP may make direct savings of around £330 million in 2013/14 net of DHP costs, £115 million less than originally expected. It adds: ‘Those savings will decline over time, but they have been achieved at considerable costs for tenants and landlords.’

Options for reform include:

  • allowing an extra bedroom for households with someone on higher rate DLA
  • clearer provision for households with carers and shared responsibility for children
  • stronger guidance abut the treatment of DLA awards in income assessment for DHPs
  • reforming the DHP system to allow longer-term awards
  • introducing minimum sizes for single and double bedrooms based on the statutory overcrowding provisions
  • increasing the bedroom standard to one bedroom above the current standard
  • requiring landlords to offer suitable alternative accommodation before applying the size criteria.

Many of these changes were also recommended by the work and pensions committee last week and some were in the ultimately unsuccessful House of Lords amendments to the Welfare Reform Act. The agenda for bedroom tax mitigation is now pretty clear if anyone wants to implement it.

The second JRF report is based on interviews with tenants and landlords about the combined impact of all the different welfare reforms affecting social housing. There are obvious and alarming financial impacts – tenants cutting back on food and heating, relying on food banks and extra costs undermining landlords’ ability to build new homes – but non-financial ones too.    

For tenants, the whole system harder to navigate, the private contractors running larger parts of it are distrusted and the ‘digital by default’ approach to accessing benefits is causing anxiety.

For landlords: ‘To ensure viability, housing associations are intensifying scrutiny of new tenants’ finances. Some of the poorest applicants (whether in work or not) are being rejected and told to apply elsewhere.’

And for the DWP: ‘It is possible that welfare reform will cost the government more as reliance on private renting grows due to social housing shortages, leading to higher housing benefit costs. Costs for extra support also go up for housing associations, councils, and tenants.’

The work and pensions committee report shifts the focus from reforms that have already been implemented to the biggest of all, which famously has not been. Universal credit was meant to begin for all new claims from October last year but as of March 20 this year only applied to 4,280 people with the simplest sort of claims.

Much of the report covers the same ground as the National Audit Office on the delays and IT problems that have dogged the project. The DWP changed the timetable significantly in July 2013 and again in December 2013 and the whole process will not be completed until after 2017. However, the committee concludes:

‘Whilst it is essential to ensure that the system works effectively for claimants before it is extended, DWP needs to be clear about all the implications of the delays. Due to the very slow pace of the roll-out to date, it is difficult to envisage how the volumes required to meet the most recent timetable can be achieved.’

The MPs also take the DWP to task over ‘regrettable’ waste in the two parallel IT systems for universal credit and urge it to detail financial support to local authorities to cover the additional costs of the administration of housing benefit up to 2017. Lack of clarity on the Local Support Services Framework for vulnerable claimants is also ‘regrettable’.

However, for me the most remarkable section of the report is about Iain Duncan Smith personally. At a hearing in February when members challenged his lack of disclosure of key information about the problems the DWP was encountering, he told them:

‘I do not have to tell the committee everything that is happening in the department until we have reached a conclusion about what is actually happening. I will take those decisions myself and account for the decisions that were taken, and I have done that.’

He added that ‘I do not think this committee can run the department’.

The all too obvious tension arose after a series of delays in IDS’s appearances before the committee and a number of occasions when major changes to universal credit implementation were announced just before he did. The MPs say ‘effective scrutiny by select committees relies on government departments providing them with accurate, timely and detailed information’ and ‘this has not always happened to date’.

Coming on the day that Maria Miller had to resign in part over her high-handed response to scrutiny, this is powerful stuff. Remember too that this report comes from a committee that supports the general principles of universal credit and on which coalition MPs are in the majority. In that context these are very strong words indeed:

‘It is not acceptable for ministers to provide information about changes to major policy implementation to this committee, and indeed to parliament and the public more broadly, only when forced to do so by the imminent prospect of being held to account in a public oral evidence session. We recommend that, in response to this report, DWP sets out how it will improve the frankness, accuracy and timeliness of the information it provides to us, to ensure that it meets the required levels of transparency between the government and select committees, and that we are not hampered in trying to carry out our role effectively.’

Landlords and tenants coping with the disaster of the bedroom tax and uncertainty about what could yet prove to be the disaster of the universal credit deserve nothing less.

But frankness, accuracy and timeliness are not often evident in the approach taken so far by a minister who responds to inconvenient facts with ‘I believe I am right’ and a department that polishes its discredited responses with each new setback. Reports are ‘simply wrong’ while policies are ‘very clearly working well’. 

 

Paying the rent

Tue, 8 Apr 2014

The affordable v social debate took centre stage in the Commons yesterday and also emerged as an issue in the prospectus for new borrowing for council housing.

Communities and Local Government questions initially saw the usual routine in which a Labour MP asks a question about social rented housing and coalition ministers boast about the affordable homes programme.

Yesterday was different. Perhaps it was because Labour’s Heidi Alexander challenged the obfuscation directly:

‘I asked the Minister about social rented housing, not just affordable housing. The truth is that this Government do not want to build social housing; they want to decimate it. Will he tell me why the number of social rented homes being built in London last year was roughly one tenth of the number being built in the capital in 2009?’

And perhaps it was because the minister answering the question was not the housing minister Kris Hopkins but his fellow junior communities minister Stephen Williams. Hopkins seemed to be confined to questions about private renting and self build and, disappointingly, was not asked about his contention on Newsnight that rising house prices are ‘a good thing’.

As a Lib Dem, the affordable/social distinction is perhaps more sensitive for Williams than it would be for a Conservative.

He boasted that: ‘We will be the first Government to leave office at the end of a Parliament with a greater stock of affordable homes, including council houses.’ Not only that but the DCLG and Treasury had just published the prospectus for £300 million of extra borrowing to allow councils to build new homes.

His reply to the next question – ‘I stress yet again that this Government are committed to building new affordable homes, including social homes’ – prompted Alexander to shake her head and Williams to add:

‘I remind her that the latest statement on housing policy from her own party says that it wants 100,000 new affordable homes, of which half would be shared ownership, 35 per cent would be affordable and only 15 per cent would be social rented homes. She should have a word with those on her own Front Bench.’

This was indeed the breakdown specified by Labour after Ed Balls’s conference speech in 2012 but it also misses out an extra 25,000 social rented homes on top of that financed by a tax on bankers’ bonuses. The balance between affordable and social in the final programme may depend on the outcome of the Lyons Review. 

Shadow housing minister Emma Reynolds challenged Williams on the coalition’s 60 per cent cut in the affordable homes programme and the watering down of section 106 agreements. ‘Was it a surprise to the Minister that last year they built the lowest number of homes for social rent for more than 20 years, or was that in fact the Government’s plan?’

Williams replied that ‘I do not recognise those figures’ and said the coalition was delivering ‘the fastest rate of building in 20 years’. And he evaded the question about section 106 by saying it was all a matter for local government.

Reynolds hit back that: ‘The truth is that this Government are not building social homes: Labour councils across the country are out-building Tory and Lib Dem councils.’

Former Lib Dem communities minister Sir Andrew Stunell brought up the issue again later, asking what steps he was taking to increase the supply of social housing. ‘The Government have one of the most ambitions programmes of delivery for affordable and social homes of any Government,’ boasted Williams. 

And Stunell raised what the Lib Dems see as the real point when he followed up by asking: ‘Will he join me in congratulating Stockport Homes on opening its 4 millionth social and affordable home for rent? Does he see that as a really stark contrast with the performance of the Labour Government in reducing the housing stock by more than 400,000?

I was puzzled by that ‘4 millionth home’ reference as there are only 120,000 homes in the whole of Stockport. However, it seems to be a reference to what Stunell and Williams have claimed was ‘the historic moment’ when England’s affordable housing stock went back above four million when they opened one in the town. For all that he is correct about Labour’s record, it seemed pretty desperate stuff but it produced this pledge from Williams:

‘It is certainly the case that this Government, at the end of this Parliament in 2015, will be the first for generations to leave more social and affordable homes in stock than we found five years ago in 2010.’

If that does prove to be the case, it will be because because right to buy sales will not have had chance to recover following the increase in discounts and above all because of the controversial switch from social to affordable rent.

As Colin Wiles blogged last week, the result is that we are building affordable housing that in the most expensive parts of the country isn’t affordable at all. His FOI requests revealed that the average ‘affordable’ rent for a three-bed home is £191 per week when even the Living Wage assumes a rent of £115. Disturbingly, neither the HCA or GLA could provide any information about the number of existing social rent homes converted to affordable rent.

Yesterday also saw the publication of the prospectus for the extra £300 million of local authority borrowing announced in last year’s Autumn Statement. At the time this was seen as a Lib Dem gain in return for allowing the Conservatives to increase right to buy discounts. However, it soon became clear that not only did the extra borrowing only apply in the next parliament (£150 million in 2015/16 and 2016/17) but also that there were strings attached, especially on the sale of ‘high-value’ existing stock.

The prospectus confirms all this. The government expects the £300 million to deliver 10,000 new affordable homes and a cost of £30,000 per home implies a high proportion of ‘affordable’ rent. And in the introduction Kris Hopkins says that:

‘The Government wants to see active asset management and the disposals of high value vacant stock forming part of any bid as well as public sector land being brought forward – councils should be using their land proactively and not just mowing it.’

The prospectus continues:

‘As part of a local authority’s wider approach to asset management, local authorities are required to consider the contribution that disposal of some vacant properties (both within and outside the social housing sector) can make to support the delivery of new homes. This could include homes that are uneconomic as social housing properties and homes with particularly high market values where greater value to the business could be achieved if they were sold and the receipts reinvested in new housing.

‘Already some councils are taking a positive approach to asset management. Others are not. We believe asset management is a necessary part of social housing for all providers. All bids must show how they have considered the contribution of land and receipts from the disposal of stock, including, in particular, high value vacant stock. If contributions from land and asset disposal are not part of the bids local authorities must explain how they have arrived at this conclusion.’

There are limits on conversions. Borrowing caps will remain in place and the prospectus says that the government does not receive bids funded ‘on the back of additional borrowing capacity provided by conversions to affordable rent’. However, they only apply to local authorities. Where councils are working with a housing association on the proposed scheme, the association ‘is encouraged to consider conversions to affordable rent to generate additional financial capacity

In addition the prospectus sets out the process to allow local authorities to claim housing benefit subsidy above the limit rent for affordable rent properties.

And ‘a primary metric for assessment of value for money will be the level of additional Housing Revenue Account borrowing requested to deliver the scheme as a whole and per new affordable housing unit’.

In summary, it seems that an apparent concession to council housing could in fact see an even greater shift from social to affordable rent.

As the argument between the parties about social and affordable housing continues ahead of the election, that makes it all the more vital that we don’t allow the distinction to be forgotten.  

Paying the rent

Tue, 8 Apr 2014

The affordable v social debate took centre stage in the Commons yesterday and also emerged as an issue in the prospectus for new borrowing for council housing.

Communities and Local Government questions initially saw the usual routine in which a Labour MP asks a question about social rented housing and coalition ministers boast about the affordable homes programme.

Yesterday was different. Perhaps it was because Labour’s Heidi Alexander challenged the obfuscation directly:

‘I asked the Minister about social rented housing, not just affordable housing. The truth is that this Government do not want to build social housing; they want to decimate it. Will he tell me why the number of social rented homes being built in London last year was roughly one tenth of the number being built in the capital in 2009?’

And perhaps it was because the minister answering the question was not the housing minister Kris Hopkins but his fellow junior communities minister Stephen Williams. Hopkins seemed to be confined to questions about private renting and self build and, disappointingly, was not asked about his contention on Newsnight that rising house prices are ‘a good thing’.

As a Lib Dem, the affordable/social distinction is perhaps more sensitive for Williams than it would be for a Conservative.

He boasted that: ‘We will be the first Government to leave office at the end of a Parliament with a greater stock of affordable homes, including council houses.’ Not only that but the DCLG and Treasury had just published the prospectus for £300 million of extra borrowing to allow councils to build new homes.

His reply to the next question – ‘I stress yet again that this Government are committed to building new affordable homes, including social homes’ – prompted Alexander to shake her head and Williams to add:

‘I remind her that the latest statement on housing policy from her own party says that it wants 100,000 new affordable homes, of which half would be shared ownership, 35 per cent would be affordable and only 15 per cent would be social rented homes. She should have a word with those on her own Front Bench.’

This was indeed the breakdown specified by Labour after Ed Balls’s conference speech in 2012 but it also misses out an extra 25,000 social rented homes on top of that financed by a tax on bankers’ bonuses. The balance between affordable and social in the final programme may depend on the outcome of the Lyons Review. 

Shadow housing minister Emma Reynolds challenged Williams on the coalition’s 60 per cent cut in the affordable homes programme and the watering down of section 106 agreements. ‘Was it a surprise to the Minister that last year they built the lowest number of homes for social rent for more than 20 years, or was that in fact the Government’s plan?’

Williams replied that ‘I do not recognise those figures’ and said the coalition was delivering ‘the fastest rate of building in 20 years’. And he evaded the question about section 106 by saying it was all a matter for local government.

Reynolds hit back that: ‘The truth is that this Government are not building social homes: Labour councils across the country are out-building Tory and Lib Dem councils.’

Former Lib Dem communities minister Sir Andrew Stunell brought up the issue again later, asking what steps he was taking to increase the supply of social housing. ‘The Government have one of the most ambitions programmes of delivery for affordable and social homes of any Government,’ boasted Williams. 

And Stunell raised what the Lib Dems see as the real point when he followed up by asking: ‘Will he join me in congratulating Stockport Homes on opening its 4 millionth social and affordable home for rent? Does he see that as a really stark contrast with the performance of the Labour Government in reducing the housing stock by more than 400,000?

I was puzzled by that ‘4 millionth home’ reference as there are only 120,000 homes in the whole of Stockport. However, it seems to be a reference to what Stunell and Williams have claimed was ‘the historic moment’ when England’s affordable housing stock went back above four million when they opened one in the town. For all that he is correct about Labour’s record, it seemed pretty desperate stuff but it produced this pledge from Williams:

‘It is certainly the case that this Government, at the end of this Parliament in 2015, will be the first for generations to leave more social and affordable homes in stock than we found five years ago in 2010.’

If that does prove to be the case, it will be because because right to buy sales will not have had chance to recover following the increase in discounts and above all because of the controversial switch from social to affordable rent.

As Colin Wiles blogged last week, the result is that we are building affordable housing that in the most expensive parts of the country isn’t affordable at all. His FOI requests revealed that the average ‘affordable’ rent for a three-bed home is £191 per week when even the Living Wage assumes a rent of £115. Disturbingly, neither the HCA or GLA could provide any information about the number of existing social rent homes converted to affordable rent.

Yesterday also saw the publication of the prospectus for the extra £300 million of local authority borrowing announced in last year’s Autumn Statement. At the time this was seen as a Lib Dem gain in return for allowing the Conservatives to increase right to buy discounts. However, it soon became clear that not only did the extra borrowing only apply in the next parliament (£150 million in 2015/16 and 2016/17) but also that there were strings attached, especially on the sale of ‘high-value’ existing stock.

The prospectus confirms all this. The government expects the £300 million to deliver 10,000 new affordable homes and a cost of £30,000 per home implies a high proportion of ‘affordable’ rent. And in the introduction Kris Hopkins says that:

‘The Government wants to see active asset management and the disposals of high value vacant stock forming part of any bid as well as public sector land being brought forward – councils should be using their land proactively and not just mowing it.’

The prospectus continues:

‘As part of a local authority’s wider approach to asset management, local authorities are required to consider the contribution that disposal of some vacant properties (both within and outside the social housing sector) can make to support the delivery of new homes. This could include homes that are uneconomic as social housing properties and homes with particularly high market values where greater value to the business could be achieved if they were sold and the receipts reinvested in new housing.

‘Already some councils are taking a positive approach to asset management. Others are not. We believe asset management is a necessary part of social housing for all providers. All bids must show how they have considered the contribution of land and receipts from the disposal of stock, including, in particular, high value vacant stock. If contributions from land and asset disposal are not part of the bids local authorities must explain how they have arrived at this conclusion.’

There are limits on conversions. Borrowing caps will remain in place and the prospectus says that the government does not receive bids funded ‘on the back of additional borrowing capacity provided by conversions to affordable rent’. However, they only apply to local authorities. Where councils are working with a housing association on the proposed scheme, the association ‘is encouraged to consider conversions to affordable rent to generate additional financial capacity

In addition the prospectus sets out the process to allow local authorities to claim housing benefit subsidy above the limit rent for affordable rent properties.

And ‘a primary metric for assessment of value for money will be the level of additional Housing Revenue Account borrowing requested to deliver the scheme as a whole and per new affordable housing unit’.

In summary, it seems that an apparent concession to council housing could in fact see an even greater shift from social to affordable rent.

As the argument between the parties about social and affordable housing continues ahead of the election, that makes it all the more vital that we don’t allow the distinction to be forgotten.  

One size does not fit all

Wed, 2 Apr 2014

Today’s report from the work and pensions committee is an all-party challenge to the fundamental principles of the government’s reforms of housing benefit.

To my mind it is the most serious attack on the bedroom tax, the benefit cap and a swathe of other reforms since the government was forced to overturn House of Lords amendments to the Welfare Reform Act on the grounds of financial privilege.

But you would not guess it from reports in the national media this morning. On Radio 4’s Today programme it was only judged the third most important select committee report of the day and the second most important housing story behind the Nationwide house price index. It’s also downplayed elsewhere with headlines about ‘distress’ and ‘hardship’ or even stolen by Tim Farron rather than about the committee’s call for wholesale changes that could benefit hundreds of thousands of people.

That could be because most outlets have already run bedroom tax stories connected to yesterday’s first birthday (Today’s was last week). It could also be because there is no single eye-catching recommendation in the report that makes for a big headline.

Instead the MPs make a series of smaller recommendations. Their combined impact may be harder to grasp but, taken together, they undermine both the policies themselves and the government’s reliance on discretionary housing payments (DHPs) as its main line of defence against any criticism of them.

Take the social sector size criteria (the neutral name the MPs agreed to use for the bedroom tax). The committee split on party lines to reject a Labour attempt to recommend that it should be scrapped. However, the report highlights the impact on people ‘who are unlikely to be able to move house or enter work’ and recommends:

  • An exemption for disabled people living in homes that have been significantly adapted for them
  • An exemption for all households that contain somebody who is in receipt of the higher level mobility or care component of disability living allowance (DLA) and personal independence payment (PIP). If the government is unwilling to do this, it should exempt adults unable to share a bedroom because of their severe disabilities or who need a room for medical equipment or for a carer, including a partner who is a carer.

The Chartered Institute of Housing is still calling for the bedroom tax to be scrapped but it estimates that these measures would exempt around a third of households currently affected. Some people put the figure even higher.

However, the recommendations on the social sector size criteria do not stop there. They also include:

  • A detailed assessment of the available social housing stock in each local authority area. Where there is clear evidence there is insufficient smaller stock, the government should consider allowing affected households more time to adjust before the reduction in benefit is applied. Where a household is under-occupying but there is no suitable, reasonable accommodation available, the reduction should not be applied.
  • The government should use the DCLG standard of bed spaces rather than the number of bedrooms to determine whether a household is under-occupying. This will address cases where two children are being expected to share a room that was designed for one child.
  • The government should produce a full cost-effectiveness review of the policy by March 2015, including DHPs and costs incurred by local authorities and social landlords to assess the overall impact on the public purse.
  • The government should consider allocating extra funding to social housing providers in areas where significant extra costs are identified to mitigate the impact and ensure that capacity to build new homes is not compromised.

On the benefit cap, the MPs warn that it is ‘having a negative impact on some vulnerable households who were not the intended targets’. They recommend:

  • An exemption for full-time carers living with a disabled adult who is not their partner
  • An exemption for households in temporary accommodation ‘because these claimants have no choice about where they are housed and few options for reducing their housing costs’.

In both these cases, they explicitly reject the government’s argument that DHPs are a better way of helping people than exemptions. In the first case, they say that: ‘DHPs cannot act as an effective long-term mitigation because they are intended to be temporary and not all carers in this situation are considered to be eligible.’ In the second, ‘local authorities often then have to fund the difference between the capped benefit paid and the rent due, and so there is likely to be no overall saving in public funds from the inclusion of these claimants in temporary accommodation within the scope of the cap’.

The MPs broaden the attack on DHPs in a section of the report on transitional protection and warn that the discretion allowed to local authorities ‘is resulting in access to DHP funding depending heavily on where a claimant lives’. They are ‘especially concerned’ about councils means testing disability benefits when they determine eligibility and recommend new government guidance that they should be disregarded.

They say discretionary help is inappropriate for people including those with disabilities who have ‘little expectation of finding work or moving house’.  Responses other than DHPs, preferably the exemptions recommended in the report, should be used to support claimants facing long-term hardship because of the reforms. If the government does not accept the exemptions, then it should increase funding to prevent hardship.

All of these recommendations are a fundamental challenge to government policy. All along ministers have resisted any idea of exemptions from the policies beyond those agreed at the start (people of pension age for the bedroom tax, people receiving working tax credit and a limited range of other benefits from the benefit cap). Just about the only exception to this, an exemption from the bedroom tax for severely disabled children who are unable to share a bedroom, had to be dragged out of them after defeat in the High Court.

DHPs have been not just their chosen alternative but their main line of defence against criticism of individual cuts. They are also one of the major reasons why first the High Court and then the Appeal Court rejected legal challenges against the bedroom tax and benefit cap and decided that discrimination against disabled people and women was lawful.

A DWP statement after the hearing demonstrated only too clearly how DHPs have become their main line of defence for their housing benefit reforms: ‘Reform of housing benefit in the social sector is essential to ensure the long-term sustainability of the benefit. But we have ensured extra discretionary housing support is available for vulnerable people.’

The work and pensions committee has now said loud and clear that discretionary help is inadequate. Reading the report under embargo yesterday, I wondered what the DWP’s response would be. It can hardly fall back on its second line of defence – the accusation of partiality it used against housing associations and University of York researchers – when the committee has a coalition majority (five Labour MPs, five Conservatives and one Lib Dem).

Judging from the Today programme’s scant coverage of the report this morning, it seems to be continuing to rely on the line about discretionary help and hoping that nobody will notice it no longer has any clothes. Another option might be to use the lack of media coverage and simply ignore the report and its recommendations.

It would be a tragedy if that happened. This is a major report that goes well beyond what I have room for here, with major recommendations on the local housing allowance, council tax support and the universal credit as well as the points I’ve highlighted. The housing organisations that contributed to the report have convinced an all-party group of MPs that major changes are needed. The pressure on the DWP needs to be intensified. 

One size does not fit all

Wed, 2 Apr 2014

Today’s report from the work and pensions committee is an all-party challenge to the fundamental principles of the government’s reforms of housing benefit.

To my mind it is the most serious attack on the bedroom tax, the benefit cap and a swathe of other reforms since the government was forced to overturn House of Lords amendments to the Welfare Reform Act on the grounds of financial privilege.

But you would not guess it from reports in the national media this morning. On Radio 4’s Today programme it was only judged the third most important select committee report of the day and the second most important housing story behind the Nationwide house price index. It’s also downplayed elsewhere with headlines about ‘distress’ and ‘hardship’ or even stolen by Tim Farron rather than about the committee’s call for wholesale changes that could benefit hundreds of thousands of people.

That could be because most outlets have already run bedroom tax stories connected to yesterday’s first birthday (Today’s was last week). It could also be because there is no single eye-catching recommendation in the report that makes for a big headline.

Instead the MPs make a series of smaller recommendations. Their combined impact may be harder to grasp but, taken together, they undermine both the policies themselves and the government’s reliance on discretionary housing payments (DHPs) as its main line of defence against any criticism of them.

Take the social sector size criteria (the neutral name the MPs agreed to use for the bedroom tax). The committee split on party lines to reject a Labour attempt to recommend that it should be scrapped. However, the report highlights the impact on people ‘who are unlikely to be able to move house or enter work’ and recommends:

  • An exemption for disabled people living in homes that have been significantly adapted for them
  • An exemption for all households that contain somebody who is in receipt of the higher level mobility or care component of disability living allowance (DLA) and personal independence payment (PIP). If the government is unwilling to do this, it should exempt adults unable to share a bedroom because of their severe disabilities or who need a room for medical equipment or for a carer, including a partner who is a carer.

The Chartered Institute of Housing is still calling for the bedroom tax to be scrapped but it estimates that these measures would exempt around a third of households currently affected. Some people put the figure even higher.

However, the recommendations on the social sector size criteria do not stop there. They also include:

  • A detailed assessment of the available social housing stock in each local authority area. Where there is clear evidence there is insufficient smaller stock, the government should consider allowing affected households more time to adjust before the reduction in benefit is applied. Where a household is under-occupying but there is no suitable, reasonable accommodation available, the reduction should not be applied.
  • The government should use the DCLG standard of bed spaces rather than the number of bedrooms to determine whether a household is under-occupying. This will address cases where two children are being expected to share a room that was designed for one child.
  • The government should produce a full cost-effectiveness review of the policy by March 2015, including DHPs and costs incurred by local authorities and social landlords to assess the overall impact on the public purse.
  • The government should consider allocating extra funding to social housing providers in areas where significant extra costs are identified to mitigate the impact and ensure that capacity to build new homes is not compromised.

On the benefit cap, the MPs warn that it is ‘having a negative impact on some vulnerable households who were not the intended targets’. They recommend:

  • An exemption for full-time carers living with a disabled adult who is not their partner
  • An exemption for households in temporary accommodation ‘because these claimants have no choice about where they are housed and few options for reducing their housing costs’.

In both these cases, they explicitly reject the government’s argument that DHPs are a better way of helping people than exemptions. In the first case, they say that: ‘DHPs cannot act as an effective long-term mitigation because they are intended to be temporary and not all carers in this situation are considered to be eligible.’ In the second, ‘local authorities often then have to fund the difference between the capped benefit paid and the rent due, and so there is likely to be no overall saving in public funds from the inclusion of these claimants in temporary accommodation within the scope of the cap’.

The MPs broaden the attack on DHPs in a section of the report on transitional protection and warn that the discretion allowed to local authorities ‘is resulting in access to DHP funding depending heavily on where a claimant lives’. They are ‘especially concerned’ about councils means testing disability benefits when they determine eligibility and recommend new government guidance that they should be disregarded.

They say discretionary help is inappropriate for people including those with disabilities who have ‘little expectation of finding work or moving house’.  Responses other than DHPs, preferably the exemptions recommended in the report, should be used to support claimants facing long-term hardship because of the reforms. If the government does not accept the exemptions, then it should increase funding to prevent hardship.

All of these recommendations are a fundamental challenge to government policy. All along ministers have resisted any idea of exemptions from the policies beyond those agreed at the start (people of pension age for the bedroom tax, people receiving working tax credit and a limited range of other benefits from the benefit cap). Just about the only exception to this, an exemption from the bedroom tax for severely disabled children who are unable to share a bedroom, had to be dragged out of them after defeat in the High Court.

DHPs have been not just their chosen alternative but their main line of defence against criticism of individual cuts. They are also one of the major reasons why first the High Court and then the Appeal Court rejected legal challenges against the bedroom tax and benefit cap and decided that discrimination against disabled people and women was lawful.

A DWP statement after the hearing demonstrated only too clearly how DHPs have become their main line of defence for their housing benefit reforms: ‘Reform of housing benefit in the social sector is essential to ensure the long-term sustainability of the benefit. But we have ensured extra discretionary housing support is available for vulnerable people.’

The work and pensions committee has now said loud and clear that discretionary help is inadequate. Reading the report under embargo yesterday, I wondered what the DWP’s response would be. It can hardly fall back on its second line of defence – the accusation of partiality it used against housing associations and University of York researchers – when the committee has a coalition majority (five Labour MPs, five Conservatives and one Lib Dem).

Judging from the Today programme’s scant coverage of the report this morning, it seems to be continuing to rely on the line about discretionary help and hoping that nobody will notice it no longer has any clothes. Another option might be to use the lack of media coverage and simply ignore the report and its recommendations.

It would be a tragedy if that happened. This is a major report that goes well beyond what I have room for here, with major recommendations on the local housing allowance, council tax support and the universal credit as well as the points I’ve highlighted. The housing organisations that contributed to the report have convinced an all-party group of MPs that major changes are needed. The pressure on the DWP needs to be intensified. 

Many unhappy returns

Tue, 1 Apr 2014

Stop carping, you lot. The removal of the spare room subsidy is a success.

Today is of course the first of the month as well as the first anniversary of the introduction of the bedroom tax and a wave of other welfare reforms. But I am paraphrasing Iain Duncan Smith and Esther McVey rather than making a token effort at an April Fool.

Yesterday’s work and pensions questions brought inevitable attacks on the policy that has caused so much controversy since its introduction a year ago.

Labour’s Kate Green quoted last week’s reports from the BBC that just 6 per cent of households affected by the bedroom tax have managed to move and from Real Life Reform that eight out of ten are in debt and their borrowing is increasing by £52 a week. ‘Rather than preaching about careful budgeting, why do Ministers not just scrap this hated and unworkable tax, which is sending people spiralling into debt?

IDS’s reply is worth quoting in full:

‘It is interesting that the Opposition and the hon. Lady take the view that people moving is a bad thing. Let me just tell her—[Interruption.] It is interesting that they say that, but 30,000-plus people—I will repeat that: 30,000 people—who were in overcrowded accommodation have now had the opportunity for the first time to move into houses where they are not overcrowded. The hon. Lady and the Opposition left us with a quarter of a million people in that position— 250,000—so in 10 months over 10% have had the opportunity to move and we are saving over £1 million a day. I call that a success.’

That £1 million a day savings is one of those DWP statistics that it gives to the press without ever publishing on its own website so there is no way of checking it. Presumably it simply reflects the saving to the DWP housing benefit budget for social tenants without including any of the other costs that will eventually fall on taxpayers.

The 30,000 figure is 6 per cent of the 498,000 households currently affected by the bedroom tax. Note first that there is no attempt to repeat McVey’s claim on the Today programme last week that the real figure is 8 per cent or acknowledge that the more people that move the less money the DWP will save. But more importantly note the careful phrasing of the answer. The matching 30,000 people in overcrowded accommodation ‘have had the opportunity to move’. He can hardly say more than that given the regional mismatch between overcrowding and under-occupation and all those newly empty three-bed homes in the North. ‘I call that a success.’

But IDS seemed so pleased with his success that the careful phrasing went out of the window when he was asked a friendlier question later on. Conservative MP Philip Davies asked if he had noticed that the ‘Labour BBC’ had at first complained that too many people would be removed from their homes yet was now complaining that too few had moved. ‘In the interests of fairness, surely taxpayers not on housing benefit who cannot afford a spare bedroom should not be expected to pay for a spare bedroom for people on housing benefit,’ he said.

IDS’s reply is again worth quoting in full:

‘The first and principal point is that this programme is saving over £1 million a day for hard-pressed taxpayers, many of whom, as my hon. Friend said, cannot afford a spare room themselves but were paying taxes to subsidise those who had spare rooms. The second point is that over 30,000 people who were once in overcrowded accommodation, left behind by Labour in terrible conditions, are now moving into better houses. This programme is a success. The Opposition did nothing about those people the whole time they were in government. ‘

More importantly, note how in the time between the two questions those 30,000 overcrowded families have gone from having ‘the opportunity to move’ to ‘moving into better houses’. As far as I am aware there is absolutely no evidence for this – and lots of evidence of bedroom tax victims who want to move but can’t because no smaller homes are available - but ‘this programme is a success.’

The bedroom tax is of course only one of a wave of welfare reforms introduced under the coalition. It probably won’t surprise you to learn that most of these have also been successes.

Take the Work programme and its record on helping disabled people find a job. According to IDS, ‘it has been successful for those who are furthest from the labour market’. According to shadow work and pensions secretary Rachel Reeves: ‘The truth is that just 5 per cent of disabled people on the Work programme end up in work. If that is a success, I would like to know what failure is.’

Take Universal Jobsmatch, the programme on which it emerged recently that 60 per cent of jobs are bogus (MI6 was not really seeking a ‘target elimination specialist’). That ‘revolutionises the way jobseekers look for work’, said Esther McVey. ‘Shame on you!’ she told the Labour MP who questioned it.

Or take Universal Credit. Labour’s Chi Onwurah asked whether the government would ‘continue the development of the existing, discredited universal credit IT system while building a new system in parallel’. How much would the double development costs and how it was going to recruit the skills it needs ‘given the current shambles’? IDS’s answer will not surprise you. Recruitment has been ‘a big success’ and the system is ‘not ‘discredited’.

Labour’s Chris Bryant pointed out that the government originally promised that a million people would be on universal credit from today. The actual figure is less than 4,000.

Instead of moaning, said IDS, he should get out and ‘see how successful its rolling out has been’. 

After all that success, it was some relief to hear Mike Penning, the minister for disabled people, admit to problems with the work capability assessment and personal independence payment and failures by Atos and Capita as a succession of MPs complained about delays.

As we uncelebrate the bedroom tax’s first birthday, it’s vital to remember that it is just one of a whole range of welfare reforms and that, as the FT reported yesterday, 60 per cent of coalition spending cuts are yet to come. 

Many unhappy returns

Tue, 1 Apr 2014

Stop carping, you lot. The removal of the spare room subsidy is a success.

Today is of course the first of the month as well as the first anniversary of the introduction of the bedroom tax and a wave of other welfare reforms. But I am paraphrasing Iain Duncan Smith and Esther McVey rather than making a token effort at an April Fool.

Yesterday’s work and pensions questions brought inevitable attacks on the policy that has caused so much controversy since its introduction a year ago.

Labour’s Kate Green quoted last week’s reports from the BBC that just 6 per cent of households affected by the bedroom tax have managed to move and from Real Life Reform that eight out of ten are in debt and their borrowing is increasing by £52 a week. ‘Rather than preaching about careful budgeting, why do Ministers not just scrap this hated and unworkable tax, which is sending people spiralling into debt?

IDS’s reply is worth quoting in full:

‘It is interesting that the Opposition and the hon. Lady take the view that people moving is a bad thing. Let me just tell her—[Interruption.] It is interesting that they say that, but 30,000-plus people—I will repeat that: 30,000 people—who were in overcrowded accommodation have now had the opportunity for the first time to move into houses where they are not overcrowded. The hon. Lady and the Opposition left us with a quarter of a million people in that position— 250,000—so in 10 months over 10% have had the opportunity to move and we are saving over £1 million a day. I call that a success.’

That £1 million a day savings is one of those DWP statistics that it gives to the press without ever publishing on its own website so there is no way of checking it. Presumably it simply reflects the saving to the DWP housing benefit budget for social tenants without including any of the other costs that will eventually fall on taxpayers.

The 30,000 figure is 6 per cent of the 498,000 households currently affected by the bedroom tax. Note first that there is no attempt to repeat McVey’s claim on the Today programme last week that the real figure is 8 per cent or acknowledge that the more people that move the less money the DWP will save. But more importantly note the careful phrasing of the answer. The matching 30,000 people in overcrowded accommodation ‘have had the opportunity to move’. He can hardly say more than that given the regional mismatch between overcrowding and under-occupation and all those newly empty three-bed homes in the North. ‘I call that a success.’

But IDS seemed so pleased with his success that the careful phrasing went out of the window when he was asked a friendlier question later on. Conservative MP Philip Davies asked if he had noticed that the ‘Labour BBC’ had at first complained that too many people would be removed from their homes yet was now complaining that too few had moved. ‘In the interests of fairness, surely taxpayers not on housing benefit who cannot afford a spare bedroom should not be expected to pay for a spare bedroom for people on housing benefit,’ he said.

IDS’s reply is again worth quoting in full:

‘The first and principal point is that this programme is saving over £1 million a day for hard-pressed taxpayers, many of whom, as my hon. Friend said, cannot afford a spare room themselves but were paying taxes to subsidise those who had spare rooms. The second point is that over 30,000 people who were once in overcrowded accommodation, left behind by Labour in terrible conditions, are now moving into better houses. This programme is a success. The Opposition did nothing about those people the whole time they were in government. ‘

More importantly, note how in the time between the two questions those 30,000 overcrowded families have gone from having ‘the opportunity to move’ to ‘moving into better houses’. As far as I am aware there is absolutely no evidence for this – and lots of evidence of bedroom tax victims who want to move but can’t because no smaller homes are available - but ‘this programme is a success.’

The bedroom tax is of course only one of a wave of welfare reforms introduced under the coalition. It probably won’t surprise you to learn that most of these have also been successes.

Take the Work programme and its record on helping disabled people find a job. According to IDS, ‘it has been successful for those who are furthest from the labour market’. According to shadow work and pensions secretary Rachel Reeves: ‘The truth is that just 5 per cent of disabled people on the Work programme end up in work. If that is a success, I would like to know what failure is.’

Take Universal Jobsmatch, the programme on which it emerged recently that 60 per cent of jobs are bogus (MI6 was not really seeking a ‘target elimination specialist’). That ‘revolutionises the way jobseekers look for work’, said Esther McVey. ‘Shame on you!’ she told the Labour MP who questioned it.

Or take Universal Credit. Labour’s Chi Onwurah asked whether the government would ‘continue the development of the existing, discredited universal credit IT system while building a new system in parallel’. How much would the double development costs and how it was going to recruit the skills it needs ‘given the current shambles’? IDS’s answer will not surprise you. Recruitment has been ‘a big success’ and the system is ‘not ‘discredited’.

Labour’s Chris Bryant pointed out that the government originally promised that a million people would be on universal credit from today. The actual figure is less than 4,000.

Instead of moaning, said IDS, he should get out and ‘see how successful its rolling out has been’. 

After all that success, it was some relief to hear Mike Penning, the minister for disabled people, admit to problems with the work capability assessment and personal independence payment and failures by Atos and Capita as a succession of MPs complained about delays.

As we uncelebrate the bedroom tax’s first birthday, it’s vital to remember that it is just one of a whole range of welfare reforms and that, as the FT reported yesterday, 60 per cent of coalition spending cuts are yet to come. 

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