Monday, 27 February 2017

Inside edge

All posts from: September 2014

Visions and promises

Mon, 29 Sep 2014

As the parties hold their final conferences before the 2015 general election, housing has a high political profile. Here are five themes I’ve noticed so far.

1) Priorities, priorities

‘Building as many homes as we need’ is the fifth of Ed Miliband’s six national goals by 2025. The big questions remain how we achieve that and whether it will be possible without substantial extra investment in new affordable homes. So it was definitely good news that the Labour leader had this to say too: ‘We will also make housing the top priority for additional capital investment in the next parliament.’ However, that can taken at face value or as an indication that it will not be top priority in its initial investment plans.

A 2015 Labour government will be taking power amid continuing austerity and housing will be competing with a range of other Policy areas that may have more priority. The speech by Ed Balls was a case in point. He has previously made clear that Labour will retain the freedom to borrow to invest. However, his job as shadow chancellor is to convince voters that Labour will be financially responsible with ‘tough fiscal rules’:

‘So in our manifesto there will be no proposals for any new spending paid for by additional borrowing. No spending commitments without saying where the money is coming from. Because we will not make promises we cannot keep and cannot afford.’

Balls also said that: ‘The next Labour government will raise the minimum wage, build more homes to get the housing benefit bill down and cap overall spending on social security.’ He will keep the benefit cap ‘but we will make sure it properly reflects local housing costs’.

Lower rents and more social housing can reduce the housing benefit bill, then release money for more investment to bring it down still further. But we still don’t know how far Labour will go in following through on previous signals that it will look to make a radical shift from personal to bricks and mortar subsidies. And the extra money that is being raised from housing – the estimated £1.2 billion a year from the mansion tax – will instead pay for spending commitments on the NHS.

2) The caps still fit

Where does that leave housing? And in particular where does it leave the longstanding campaign for greater borrowing freedom for council housing?  

A succession of comments by shadow ministers at fringe meetings this week makes it pretty clear that Labour will not raise the borrowing caps. As bloggers for Red Brick have been pointing out all week, that will come as a big disappointment to those hoping the party would be more radical.

Shadow chief secretary Chris Leslie said that extra capital funding for housing would make a difference in an ideal world but added:

‘What I can’t do is raise your expectations and promise you that straight after the election there’s will be this splurge in borrowing. That’s not going to happen – we’ve said very clearly that the proposals that we have in our manifesto will not involve additional borrowing.’

And when shadow housing minister Emma Reynolds was urged to lift the borrowing caps by local council leaders she seemed to come up with another reason why not. According to Local Government Chronicle she said: ‘We have to be aware of what the opposition will say and how they will frame that at the next general election.’

And a third reason featured in Inside Housing’s story that the housing review by Sir Michael Lyons will recommend the sharing of borrowing capacity rather than the lifting of the caps. Carl Brown’s report quotes Emma Reynolds as saying:

‘I don’t think that lifting the HRA cap is going to suddenly unleash lots of new homes because frankly there are lots of councils in the country that are nowhere near the cap. Lifting the cap in its entirety is difficult and the borrowing would be on the government balance sheet. Michael is considering what to do within the cap in terms of sharing the headroom.’

3) Waiting for Lyons

Speaking of which, the general expectation was that the Lyons report would be published before or during the conference and provide some real substance on how to get to Labour’s target of 200,000 new homes a year by 2020. Now it is expected later this year. Pessimists see the delay as a worrying sign that Labour will play a cautious hand on housing. Optimists argue that it may just reflect a desire to avoid distracting attention from the party’s key messages for the week. The comment by Emma Reynolds above indicates that work on at least one part of the report is not finished yet.

Policy Exchange is asking whether Britain can ever build 300,000 new homes a year at fringe events at all three main party conferences. That 300,000 figure is Lib Dem policy but we’ve very little so far about how it would be achieved.

4) Two new pledges

The delay on Lyons deprived the conference of much in the way of new policy on housing. However, there were two exceptions to that.

First, Ed Miliband said over the pre-conference weekend that Labour would let councils set up new homes corporations in areas prioritised for development. They would receive government funding and work with housing associations and the private sector. It sounds a good idea that could build on the home zones already planned in London. It’s also good news that Labour wants councils to work with the wider private sector, not just existing housebuilders. However, it left me wondering about how far they will really be council-led. The whole point of previous versions of the development corporation model – the London Docklands Development Corporation and the Olympic Delivery Authority – was that they bypassed local authorities.

Second, one of the national goals promised by Miliband in his leader’s speech directly concerned housing: ‘Our fifth national goal is that by 2025, for the first time in fifty years, this country will be building as many homes as we need. Doubling the number of first time buyers in our country.’

It’s not quite clear from that whether the goal here is to build as many homes as we need or (as was trailed in advance) to double the number of first-time buyers – but neither is as ambitious at it sounds. The existing target of 200,000 homes a year by 2020 is of course still well short of the magic number of 250,000 but even so it will be challenging. Doubling the number of first-time buyers sounds much bolder on the surface but appears to mean 400,000 a year rather than the average of 200,000 seen between 2008 and 2012. However, the number of first-time buyer loans is already on the increase: there were 269,000 in 2013 and we are on course for around 300,000 this year.

5) That were trumped by the Tories

If Labour largely trod water on housing at its conference, the same cannot be said for the Conservatives. All the Saturday headlines (before they changed to defections and sex scandals) were made by David Cameron’s pledge to build 100,000 starter homes for sale to first-time buyers under 40 at a 20 per cent discount. The extension to Help to Buy would work by using cheap brownfield land and by exempting the developments from requirements on affordable housing, community infrastructure and zero carbon.

It all sounds to me like yet another nice little earner for housebuilders and it begs all sorts of questions that I’ll blog about another time. In response, Emma Reynolds pointed to the coalition’s miserable record on housebuilding and cutting investment in affordable homes. She went on: ‘Labour will make the fundamental changes to the market which are urgently needed and will double the number of first-time buyers in the next ten years.’

Whatever the merits of Dave’s Dream Homes, the point here is that the pledge forms part of a clear but divisive Conservative narrative about aspiration and enterprise. Yesterday’s carrot for the inevitable ‘people who work hard, who do the right thing’ is matched by today’s stick of withdrawing benefits for the 18 to 21-year-olds and cutting the benefit cap to £23,000. It’s the same ‘strivers and scroungers’ theme that I blogged about ahead of the Tory conference two years ago.

In contrast, despite some good ideas and hints of more to come, despite all the talk of ‘together’, I still can’t see the vision or the narrative behind Labour’s ‘fundamental changes’ on housing. 

 

Visions and promises

Mon, 29 Sep 2014

As the parties hold their final conferences before the 2015 general election, housing has a high political profile. Here are five themes I’ve noticed so far.

1) Priorities, priorities

‘Building as many homes as we need’ is the fifth of Ed Miliband’s six national goals by 2025. The big questions remain how we achieve that and whether it will be possible without substantial extra investment in new affordable homes. So it was definitely good news that the Labour leader had this to say too: ‘We will also make housing the top priority for additional capital investment in the next parliament.’ However, that can taken at face value or as an indication that it will not be top priority in its initial investment plans.

A 2015 Labour government will be taking power amid continuing austerity and housing will be competing with a range of other Policy areas that may have more priority. The speech by Ed Balls was a case in point. He has previously made clear that Labour will retain the freedom to borrow to invest. However, his job as shadow chancellor is to convince voters that Labour will be financially responsible with ‘tough fiscal rules’:

‘So in our manifesto there will be no proposals for any new spending paid for by additional borrowing. No spending commitments without saying where the money is coming from. Because we will not make promises we cannot keep and cannot afford.’

Balls also said that: ‘The next Labour government will raise the minimum wage, build more homes to get the housing benefit bill down and cap overall spending on social security.’ He will keep the benefit cap ‘but we will make sure it properly reflects local housing costs’.

Lower rents and more social housing can reduce the housing benefit bill, then release money for more investment to bring it down still further. But we still don’t know how far Labour will go in following through on previous signals that it will look to make a radical shift from personal to bricks and mortar subsidies. And the extra money that is being raised from housing – the estimated £1.2 billion a year from the mansion tax – will instead pay for spending commitments on the NHS.

2) The caps still fit

Where does that leave housing? And in particular where does it leave the longstanding campaign for greater borrowing freedom for council housing?  

A succession of comments by shadow ministers at fringe meetings this week makes it pretty clear that Labour will not raise the borrowing caps. As bloggers for Red Brick have been pointing out all week, that will come as a big disappointment to those hoping the party would be more radical.

Shadow chief secretary Chris Leslie said that extra capital funding for housing would make a difference in an ideal world but added:

‘What I can’t do is raise your expectations and promise you that straight after the election there’s will be this splurge in borrowing. That’s not going to happen – we’ve said very clearly that the proposals that we have in our manifesto will not involve additional borrowing.’

And when shadow housing minister Emma Reynolds was urged to lift the borrowing caps by local council leaders she seemed to come up with another reason why not. According to Local Government Chronicle she said: ‘We have to be aware of what the opposition will say and how they will frame that at the next general election.’

And a third reason featured in Inside Housing’s story that the housing review by Sir Michael Lyons will recommend the sharing of borrowing capacity rather than the lifting of the caps. Carl Brown’s report quotes Emma Reynolds as saying:

‘I don’t think that lifting the HRA cap is going to suddenly unleash lots of new homes because frankly there are lots of councils in the country that are nowhere near the cap. Lifting the cap in its entirety is difficult and the borrowing would be on the government balance sheet. Michael is considering what to do within the cap in terms of sharing the headroom.’

3) Waiting for Lyons

Speaking of which, the general expectation was that the Lyons report would be published before or during the conference and provide some real substance on how to get to Labour’s target of 200,000 new homes a year by 2020. Now it is expected later this year. Pessimists see the delay as a worrying sign that Labour will play a cautious hand on housing. Optimists argue that it may just reflect a desire to avoid distracting attention from the party’s key messages for the week. The comment by Emma Reynolds above indicates that work on at least one part of the report is not finished yet.

Policy Exchange is asking whether Britain can ever build 300,000 new homes a year at fringe events at all three main party conferences. That 300,000 figure is Lib Dem policy but we’ve very little so far about how it would be achieved.

4) Two new pledges

The delay on Lyons deprived the conference of much in the way of new policy on housing. However, there were two exceptions to that.

First, Ed Miliband said over the pre-conference weekend that Labour would let councils set up new homes corporations in areas prioritised for development. They would receive government funding and work with housing associations and the private sector. It sounds a good idea that could build on the home zones already planned in London. It’s also good news that Labour wants councils to work with the wider private sector, not just existing housebuilders. However, it left me wondering about how far they will really be council-led. The whole point of previous versions of the development corporation model – the London Docklands Development Corporation and the Olympic Delivery Authority – was that they bypassed local authorities.

Second, one of the national goals promised by Miliband in his leader’s speech directly concerned housing: ‘Our fifth national goal is that by 2025, for the first time in fifty years, this country will be building as many homes as we need. Doubling the number of first time buyers in our country.’

It’s not quite clear from that whether the goal here is to build as many homes as we need or (as was trailed in advance) to double the number of first-time buyers – but neither is as ambitious at it sounds. The existing target of 200,000 homes a year by 2020 is of course still well short of the magic number of 250,000 but even so it will be challenging. Doubling the number of first-time buyers sounds much bolder on the surface but appears to mean 400,000 a year rather than the average of 200,000 seen between 2008 and 2012. However, the number of first-time buyer loans is already on the increase: there were 269,000 in 2013 and we are on course for around 300,000 this year.

5) That were trumped by the Tories

If Labour largely trod water on housing at its conference, the same cannot be said for the Conservatives. All the Saturday headlines (before they changed to defections and sex scandals) were made by David Cameron’s pledge to build 100,000 starter homes for sale to first-time buyers under 40 at a 20 per cent discount. The extension to Help to Buy would work by using cheap brownfield land and by exempting the developments from requirements on affordable housing, community infrastructure and zero carbon.

It all sounds to me like yet another nice little earner for housebuilders and it begs all sorts of questions that I’ll blog about another time. In response, Emma Reynolds pointed to the coalition’s miserable record on housebuilding and cutting investment in affordable homes. She went on: ‘Labour will make the fundamental changes to the market which are urgently needed and will double the number of first-time buyers in the next ten years.’

Whatever the merits of Dave’s Dream Homes, the point here is that the pledge forms part of a clear but divisive Conservative narrative about aspiration and enterprise. Yesterday’s carrot for the inevitable ‘people who work hard, who do the right thing’ is matched by today’s stick of withdrawing benefits for the 18 to 21-year-olds and cutting the benefit cap to £23,000. It’s the same ‘strivers and scroungers’ theme that I blogged about ahead of the Tory conference two years ago.

In contrast, despite some good ideas and hints of more to come, despite all the talk of ‘together’, I still can’t see the vision or the narrative behind Labour’s ‘fundamental changes’ on housing. 

 

Home nations

Tue, 23 Sep 2014

How do the different nations of the UK compare when it comes to housebuilding and the wider housing market?

An official report out this week reveals a fascinating snapshot of housing across the union that survived last week’s referendum. The housing stock, tenure, housebuilding, house prices and rents are all broken down in a report from the Office for National Statistics (ONS) that is much more comprehensive than its title (Trends in the UK housing market, 2014) implies.

Most of the trends will be familiar to regular readers of Inside Housing but what really struck me is the comparison between the different regions of England, Wales, Scotland and Northern Ireland.

On some measures it’s particularly stark. House prices, for example, are up by 11.4 per cent across the UK as a whole since the peak of the market before the financial crisis. However, that UK average masks huge variations between different nations and regions: prices are down 46.7 per in Northern Ireland, little changed in Scotland and Wales but up 13 per cent in England and 39.7 per cent in London.

Or take housebuilding. This ONS graph for the whole of the UK shows the familiar depressing pattern of slump in the 1970s, brief recoveries in the last 1980s and mid 2000s and then another fall to post-war record lows after the financial crisis. It’s largely the story of private housebuilding’s failure to fill the gap left by the demise of council housing. 

Completions

Breaking that down by UK nation, in 2012/13 completions in England were 63 per cent of the peak rate before the financial crisis, 58 per cent in Wales, 55 per cent in Scotland and just 45 per cent in Northern Ireland.

However, the ONS also compares the UK nations in terms of housing completions per thousand of population. As this graph shows, despite showing the biggest fall in house prices and completions since the crash, Northern Ireland still had more than twice as much housebuilding per head as England and Wales and was also way ahead of Scotland.

UK

Wales comes out worst on this comparison (and the Welsh Government’s Housing Supply Task Force acknowledged that the country has a long-term problem and the lowest building rate over the last 30 years in a report published earlier this year). However, here’s where the figures become political. English housing minister Brandon Lewis tweeted this yesterday:

BL

Why could that be? Another Twitter user came up with a theory about international property speculators. Here’s how Lewis responded:

BL2

So there we have it: the housing minister thinks it costs more to build in Wales than England. It’s true that housebuilders have complained about regulation in Wales, and that English ministers have bent over backwards to remove so-called red tape but even if you take out the cost of land building costs are about more than just regulation. It’s also true that housing policy is devolved to Wales but housebuilding is driven more by policies on the economy and taxation that are controlled from Westminster.  However, is it possible that it costs more to build in Wales than it should do and that this is what triggers the lower building rate?

Well, not quite. For a true comparison you’d also need to know the rate of household growth compared to the housing stock in each UK nation and take account of factors such as unmet existing need and second and empty homes. However, for this blog I’ll use the same comparison with population as in the ONS graph above but look at the change over time. On this basis, Northern Ireland saw 1.3 completions for every person added to its population in 2012/13 and Scotland saw 1. Wales lagged behind that with 0.66 completions per person added but England languished in last place with a miserable 0.29. For London the rate was just 0.17.

Taking a snapshot of a single year may not offer a true comparison. So here’s a graph based on the same comparison between housebuilding and population growth but over the last 10 years, a period in which the population grew by 7.9 per cent in Englnad, 7.3 per cent in Northern Ireland, 5.1 per cent in Scotland and 4.9 per cent in Wales:


Northern Ireland again does best with very nearly one new home per person added to the population. Scotland is close behind with a rate of 0.81.

Next comes Wales: its 73,000 completions in the last ten years is significantly less than in Northern Ireland despite a much larger population. Overall Wales has only managed 0.5 new homes per person added it its population.

But compare that to England’s rate of just 0.36. The English population has increased by 3.9 million in the last 10 years but just under 1.4 million new homes have been completed. True, that period covers the last government as well as this one but the ratio in 2012/13 was even lower. 

Those 10 years included roughly five of healthy building and five of stagnation. Building rates per person added to the population are significantly worse in all of the UK nations now. As I blogged a few weeks ago, France thinks it has a housebulding crisis when it is still building twice as many homes as the UK.

However, England has done significantly worse than the rest of the UK over the last decade and it is still languishing behind under the coalition. 

If it had built at the same rate in relation to the rise in population over the last 10 years as Northern Ireland, England would now have an extra 2.4 million homes. If it had done as well as Scotland it would have built an extra 1.8 million. Even by matching ‘red tape’ Wales, England would have had an extra 600,000 homes. 

Home nations

Tue, 23 Sep 2014

How do the different nations of the UK compare when it comes to housebuilding and the wider housing market?

An official report out this week reveals a fascinating snapshot of housing across the union that survived last week’s referendum. The housing stock, tenure, housebuilding, house prices and rents are all broken down in a report from the Office for National Statistics (ONS) that is much more comprehensive than its title (Trends in the UK housing market, 2014) implies.

Most of the trends will be familiar to regular readers of Inside Housing but what really struck me is the comparison between the different regions of England, Wales, Scotland and Northern Ireland.

On some measures it’s particularly stark. House prices, for example, are up by 11.4 per cent across the UK as a whole since the peak of the market before the financial crisis. However, that UK average masks huge variations between different nations and regions: prices are down 46.7 per in Northern Ireland, little changed in Scotland and Wales but up 13 per cent in England and 39.7 per cent in London.

Or take housebuilding. This ONS graph for the whole of the UK shows the familiar depressing pattern of slump in the 1970s, brief recoveries in the last 1980s and mid 2000s and then another fall to post-war record lows after the financial crisis. It’s largely the story of private housebuilding’s failure to fill the gap left by the demise of council housing. 

Completions

Breaking that down by UK nation, in 2012/13 completions in England were 63 per cent of the peak rate before the financial crisis, 58 per cent in Wales, 55 per cent in Scotland and just 45 per cent in Northern Ireland.

However, the ONS also compares the UK nations in terms of housing completions per thousand of population. As this graph shows, despite showing the biggest fall in house prices and completions since the crash, Northern Ireland still had more than twice as much housebuilding per head as England and Wales and was also way ahead of Scotland.

UK

Wales comes out worst on this comparison (and the Welsh Government’s Housing Supply Task Force acknowledged that the country has a long-term problem and the lowest building rate over the last 30 years in a report published earlier this year). However, here’s where the figures become political. English housing minister Brandon Lewis tweeted this yesterday:

BL

Why could that be? Another Twitter user came up with a theory about international property speculators. Here’s how Lewis responded:

BL2

So there we have it: the housing minister thinks it costs more to build in Wales than England. It’s true that housebuilders have complained about regulation in Wales, and that English ministers have bent over backwards to remove so-called red tape but even if you take out the cost of land building costs are about more than just regulation. It’s also true that housing policy is devolved to Wales but housebuilding is driven more by policies on the economy and taxation that are controlled from Westminster.  However, is it possible that it costs more to build in Wales than it should do and that this is what triggers the lower building rate?

Well, not quite. For a true comparison you’d also need to know the rate of household growth compared to the housing stock in each UK nation and take account of factors such as unmet existing need and second and empty homes. However, for this blog I’ll use the same comparison with population as in the ONS graph above but look at the change over time. On this basis, Northern Ireland saw 1.3 completions for every person added to its population in 2012/13 and Scotland saw 1. Wales lagged behind that with 0.66 completions per person added but England languished in last place with a miserable 0.29. For London the rate was just 0.17.

Taking a snapshot of a single year may not offer a true comparison. So here’s a graph based on the same comparison between housebuilding and population growth but over the last 10 years, a period in which the population grew by 7.9 per cent in Englnad, 7.3 per cent in Northern Ireland, 5.1 per cent in Scotland and 4.9 per cent in Wales:


Northern Ireland again does best with very nearly one new home per person added to the population. Scotland is close behind with a rate of 0.81.

Next comes Wales: its 73,000 completions in the last ten years is significantly less than in Northern Ireland despite a much larger population. Overall Wales has only managed 0.5 new homes per person added it its population.

But compare that to England’s rate of just 0.36. The English population has increased by 3.9 million in the last 10 years but just under 1.4 million new homes have been completed. True, that period covers the last government as well as this one but the ratio in 2012/13 was even lower. 

Those 10 years included roughly five of healthy building and five of stagnation. Building rates per person added to the population are significantly worse in all of the UK nations now. As I blogged a few weeks ago, France thinks it has a housebulding crisis when it is still building twice as many homes as the UK.

However, England has done significantly worse than the rest of the UK over the last decade and it is still languishing behind under the coalition. 

If it had built at the same rate in relation to the rise in population over the last 10 years as Northern Ireland, England would now have an extra 2.4 million homes. If it had done as well as Scotland it would have built an extra 1.8 million. Even by matching ‘red tape’ Wales, England would have had an extra 600,000 homes. 

The Indyref and housing

Wed, 17 Sep 2014

What are the implications for housing of the independence referendum in Scotland?

Heather Spurr has already covered what a Yes vote might mean for Scotland itself , in particular on social security and the bedroom tax, grant funding and borrowing, private finance and sustainability. Beyond that though, I wanted to look at what might happen with a No vote too – and also at what either result might mean for England, Wales and Northern Ireland.

In some senses it’s an odd question to be asking at all. Scotland has already decided to abolish the right to buy, made radical changes on homelessness and mitigated the bedroom tax in full. The contrast with housing policy in England could hardly be starker.

But housing is of course about much more than just housing policy. The parameters are set by welfare, tax and economic policy, all of which are controlled from Westminster. The bedroom tax has played a big part in the Yes campaign as a symbol of unfair measures imposed from London and the SNP has also promised to halt the introduction of the universal credit and other welfare reforms. Housing has also played a part in the No campaign, with dire warnings about the prospects of higher mortgage payments and economic woes if Scots vote for independence.

However, all three main UK parties have now promised more devolution to Scotland if it votes No. Enhanced powers over income tax and more control over some aspects of welfare, including housing benefit, look likely.

With all of these issues the detail of the negotiations that follow the vote will be vital. That’s obvious with mortgages and the pound after a Yes vote but the detail will be just as important when it comes to welfare and housing benefit after a No. As Ken Gibb pointed out last month, how do you decide how much money to transfer and how do you cope with the fact that housing benefit is demand-led and the costs could go up or down? Could the universal credit continue in Scotland if there was local control of housing benefit?

And what about the rest of the UK? If Thursday’s vote is Yes, the most obvious impact will be political: Scotland elected 41 Labour MPs and just one Conservative in 2010. Without Scotland, there would have been a Conservative majority government and potentially even greater austerity in 2010 and there are obviously more likely to be Conservative governments in future too. That in turn raises the prospect of a referendum and exit from the EU plus an attempt to get out of obligations on human rights that could have huge implications for housing and homelessness. The political environment for housing could feel very different.

However, even if Scotland votes No on Thursday, there could also be big changes. The prospect of more devolution for Holyrood is already sparking demands from some Conservatives for less Scottish influence at Westminster. Would Scottish MPs lose the right to vote on English-only legislation, which could include both housing and parts of welfare? The UK parties’ promise to maintain the Barnett formula and its perceived generosity towards Scotland is already causing controversy.

And whether the result is Yes or No, there seems widespread agreement that the union cannot stay as it is. Will Wales demand the same powers as Scotland? Will responsibility for housing be transferred to the English regions? Will Northern English cities and their city regions win more power? Will London succeed in its bid for more power and money, including the billions of pounds worth of receipts from stamp duty in the capital? Will housing benefit be devolved to Wales and the English regions and how do we decide who gets how much?

Think tanks have already mapped out some of this territory.  Within the last week Respublica’s Devo Max – Devo Manc has called for new powers for Manchester and IPPR’s Decentralisation Decade for a ten year programme of English decentralisation. I was at an event organised by the Institute of Welsh Affairs on Thursday that showed just how far-reaching the implications for the Indyref could be not just for Wales but for the whole of the UK. What the calls for devolution and decentralisation have in common with the SNP’s call for independence is a feeling that the UK is too dominated by London, Westminster and Whitehall. I wrote a more general piece on the referendum on my other blog here.

One final thing that we could all learn from the referendum is the level of participation: voter registration in Scotland is 97 per cent and the turnout is expected to be over 80 per cent. Everyone can see that the result matters but it’s also thanks to a registration drive to find Scotland’s ‘missing million’ voters and the awareness that every vote counts.

There is a clear housing angle to this for the rest of the UK. As I’ve blogged before, low voter registration means that around 3.8 million private renters were disenfranchised at the last election. Social renters are more likely to be registered because they have more stable homes. However, voter turnout is higher at the top of the class system than at the bottom and among the old than the young. How much more powerful would housing’s voice be if tenants and the badly housed used their vote and the parties knew that their votes mattered?

We will find out the answer to the question ‘should Scotland be an independent country?’ on Friday morning. That’s just the start of many more questions to come.

The Indyref and housing

Wed, 17 Sep 2014

What are the implications for housing of the independence referendum in Scotland?

Heather Spurr has already covered what a Yes vote might mean for Scotland itself , in particular on social security and the bedroom tax, grant funding and borrowing, private finance and sustainability. Beyond that though, I wanted to look at what might happen with a No vote too – and also at what either result might mean for England, Wales and Northern Ireland.

In some senses it’s an odd question to be asking at all. Scotland has already decided to abolish the right to buy, made radical changes on homelessness and mitigated the bedroom tax in full. The contrast with housing policy in England could hardly be starker.

But housing is of course about much more than just housing policy. The parameters are set by welfare, tax and economic policy, all of which are controlled from Westminster. The bedroom tax has played a big part in the Yes campaign as a symbol of unfair measures imposed from London and the SNP has also promised to halt the introduction of the universal credit and other welfare reforms. Housing has also played a part in the No campaign, with dire warnings about the prospects of higher mortgage payments and economic woes if Scots vote for independence.

However, all three main UK parties have now promised more devolution to Scotland if it votes No. Enhanced powers over income tax and more control over some aspects of welfare, including housing benefit, look likely.

With all of these issues the detail of the negotiations that follow the vote will be vital. That’s obvious with mortgages and the pound after a Yes vote but the detail will be just as important when it comes to welfare and housing benefit after a No. As Ken Gibb pointed out last month, how do you decide how much money to transfer and how do you cope with the fact that housing benefit is demand-led and the costs could go up or down? Could the universal credit continue in Scotland if there was local control of housing benefit?

And what about the rest of the UK? If Thursday’s vote is Yes, the most obvious impact will be political: Scotland elected 41 Labour MPs and just one Conservative in 2010. Without Scotland, there would have been a Conservative majority government and potentially even greater austerity in 2010 and there are obviously more likely to be Conservative governments in future too. That in turn raises the prospect of a referendum and exit from the EU plus an attempt to get out of obligations on human rights that could have huge implications for housing and homelessness. The political environment for housing could feel very different.

However, even if Scotland votes No on Thursday, there could also be big changes. The prospect of more devolution for Holyrood is already sparking demands from some Conservatives for less Scottish influence at Westminster. Would Scottish MPs lose the right to vote on English-only legislation, which could include both housing and parts of welfare? The UK parties’ promise to maintain the Barnett formula and its perceived generosity towards Scotland is already causing controversy.

And whether the result is Yes or No, there seems widespread agreement that the union cannot stay as it is. Will Wales demand the same powers as Scotland? Will responsibility for housing be transferred to the English regions? Will Northern English cities and their city regions win more power? Will London succeed in its bid for more power and money, including the billions of pounds worth of receipts from stamp duty in the capital? Will housing benefit be devolved to Wales and the English regions and how do we decide who gets how much?

Think tanks have already mapped out some of this territory.  Within the last week Respublica’s Devo Max – Devo Manc has called for new powers for Manchester and IPPR’s Decentralisation Decade for a ten year programme of English decentralisation. I was at an event organised by the Institute of Welsh Affairs on Thursday that showed just how far-reaching the implications for the Indyref could be not just for Wales but for the whole of the UK. What the calls for devolution and decentralisation have in common with the SNP’s call for independence is a feeling that the UK is too dominated by London, Westminster and Whitehall. I wrote a more general piece on the referendum on my other blog here.

One final thing that we could all learn from the referendum is the level of participation: voter registration in Scotland is 97 per cent and the turnout is expected to be over 80 per cent. Everyone can see that the result matters but it’s also thanks to a registration drive to find Scotland’s ‘missing million’ voters and the awareness that every vote counts.

There is a clear housing angle to this for the rest of the UK. As I’ve blogged before, low voter registration means that around 3.8 million private renters were disenfranchised at the last election. Social renters are more likely to be registered because they have more stable homes. However, voter turnout is higher at the top of the class system than at the bottom and among the old than the young. How much more powerful would housing’s voice be if tenants and the badly housed used their vote and the parties knew that their votes mattered?

We will find out the answer to the question ‘should Scotland be an independent country?’ on Friday morning. That’s just the start of many more questions to come.

Mirror image

Tue, 16 Sep 2014

Nobody pretends that reform of housing benefit will be easy but a report out today underlines the scale of the task.

The report by the Chartered Institute of Housing (CIH) does a great job of making the links between policies on housing, welfare and the labour market. The sobering conclusion for the government is that everything it has done so far has only succeeded in reducing the rate of growth of the housing benefit bill rather than reducing it.

So as fast as the government introduces cuts like the bedroom tax the bill keeps rising faster because of inflationary factors built into the system. Between 1997/98 and 2012/13 the total bill rose by 48 per cent in real terms.

The biggest factor in that was rising rents, which not only cost more in themselves but mean more claims including from people in work. The increases have come in the private sector in the wake of deregulation and the decline of home ownership but also in the social sector as a result of stock transfer, private finance and reliance on rents to finance new development.

However, developments in the labour market also mean more people need help with their rent. Zero hours contracts, insecure employment and falling real earnings all mean that housing benefit is subsidising low pay as the number of in-work claims rises.

These trends are nothing new but, as I blogged last month, they have intensified under the coalition. And the conclusion is a stark one for anyone who believes that the solutions lie in welfare reform as such:

‘Overall the rise in HB spending is largely due to housing and labour market restructuring and therefore the policy solutions that will most effectively bring it under control lie in policy areas outside welfare itself (for example, housing and employment). Further restrictions on entitlement may slow the rise in spending in the short-term but do nothing to tackle the causes of welfare dependency and are unlikely to have any significant impact in reversing it.’

Iain Duncan Smith will, of course, beg to disagree. As I blogged a couple of weeks ago, he see the rise of in-work housing benefit claims as evidence of success rather than failure, a reflection of the way his policies are getting people back to work. And he will point to the way the universal credit is designed to ensure that work always pays by reducing the penal rate at which benefits are withdrawn as someone earns extra money. However, the report shows how the inevitable result of reducing the withdrawal rate is to extend the range of incomes over which the withdrawal applies.

So the flagship reform of a government that says it wants to reduce welfare dependency ends up with private renters who are in the top 15 to 20 per cent of earners still on benefit.  A one-earner couple with a child paying the average private rent for a two-bed flat would need a salary in excess of the higher rate tax band to come off universal credit altogether.

In contrast Labour is making the right noises about shifting the balance of investment from benefits to bricks and mortar and has shown some interest in proposals by the IPPR to devolve control of housing benefit to local authorities so that savings can be reinvested in new homes. 

The CIH argues that reforms to tackle the underlying causes of the growth of housing benefit mean reversing long-term trends in tenure and what it calls ‘the creeping conversion of low-cost rented housing into more expensive homes at market and near-market rents’.

Reforms would include a substantial increase in the supply of social rented homes with rents low enough to give tenants a realistic chance of escaping welfare. ‘Affordable’ rent homes would be restricted to people in work and non on the lowest earnings. Landlords would get more flexibility to use the proceeds from market rents and sales to reinvest in social homes but grant would be conditional on rents being genuinely affordable. And the bedroom tax would be scrapped.

However, there would also need to be changes at the heart of government too: a formal tie-in between welfare and housing policy, with the DCLG able to draw on savings made by the reforms agreed with the DWP; and the removal of Treasury restrictions on the use of capital receipts to build replacements for homes sold under the right to buy.

And wider economic reforms would be needed too: a shift away from subsidies for low pay to employer incentives to pay the living wage; social landlords taking a lead by paying the living wage themselves and ensuring their contractors do the same; and greater investment in infrastructure and skills outside London and the South East.

Pretty much the opposite of current policy, in other words. However, the CIH also has a more controversial suggestion: government should consider basing universal credit for private tenants on a proportion of the rent rather than the whole rent. The idea is that if this was accompanied by higher basic allowances for living costs the cost would be the same overall but tenants would have an incentive to move of downsize without being punished as they are under the bedroom tax or benefit cap.   

Many CIH members who helped to draw up the report in workshops around the country feared that this idea could be hijacked as a justification for yet more cuts. Arguably of course, many private tenants already get less than housing benefit than their rent and the proportion will grow as policies like 1 per cent uprating take effect. The CIH warns that future governments should not use the proposal as a Trojan horse to reduce entitlements and would oppose it unless there was a substantial uplift in standard allowances.  

The recommendations amounts to a reversal of more than 20 years of letting housing benefit ‘take the strain’. That will be far from easy but shows how the total bill is being driven upwards by a range of different government policies. For all the rhetoric about welfare reform and ‘making work pay’ that blames claimants for becoming ‘benefit dependent’, future governments need to start by looking in the mirror.

Mirror image

Tue, 16 Sep 2014

Nobody pretends that reform of housing benefit will be easy but a report out today underlines the scale of the task.

The report by the Chartered Institute of Housing (CIH) does a great job of making the links between policies on housing, welfare and the labour market. The sobering conclusion for the government is that everything it has done so far has only succeeded in reducing the rate of growth of the housing benefit bill rather than reducing it.

So as fast as the government introduces cuts like the bedroom tax the bill keeps rising faster because of inflationary factors built into the system. Between 1997/98 and 2012/13 the total bill rose by 48 per cent in real terms.

The biggest factor in that was rising rents, which not only cost more in themselves but mean more claims including from people in work. The increases have come in the private sector in the wake of deregulation and the decline of home ownership but also in the social sector as a result of stock transfer, private finance and reliance on rents to finance new development.

However, developments in the labour market also mean more people need help with their rent. Zero hours contracts, insecure employment and falling real earnings all mean that housing benefit is subsidising low pay as the number of in-work claims rises.

These trends are nothing new but, as I blogged last month, they have intensified under the coalition. And the conclusion is a stark one for anyone who believes that the solutions lie in welfare reform as such:

‘Overall the rise in HB spending is largely due to housing and labour market restructuring and therefore the policy solutions that will most effectively bring it under control lie in policy areas outside welfare itself (for example, housing and employment). Further restrictions on entitlement may slow the rise in spending in the short-term but do nothing to tackle the causes of welfare dependency and are unlikely to have any significant impact in reversing it.’

Iain Duncan Smith will, of course, beg to disagree. As I blogged a couple of weeks ago, he see the rise of in-work housing benefit claims as evidence of success rather than failure, a reflection of the way his policies are getting people back to work. And he will point to the way the universal credit is designed to ensure that work always pays by reducing the penal rate at which benefits are withdrawn as someone earns extra money. However, the report shows how the inevitable result of reducing the withdrawal rate is to extend the range of incomes over which the withdrawal applies.

So the flagship reform of a government that says it wants to reduce welfare dependency ends up with private renters who are in the top 15 to 20 per cent of earners still on benefit.  A one-earner couple with a child paying the average private rent for a two-bed flat would need a salary in excess of the higher rate tax band to come off universal credit altogether.

In contrast Labour is making the right noises about shifting the balance of investment from benefits to bricks and mortar and has shown some interest in proposals by the IPPR to devolve control of housing benefit to local authorities so that savings can be reinvested in new homes. 

The CIH argues that reforms to tackle the underlying causes of the growth of housing benefit mean reversing long-term trends in tenure and what it calls ‘the creeping conversion of low-cost rented housing into more expensive homes at market and near-market rents’.

Reforms would include a substantial increase in the supply of social rented homes with rents low enough to give tenants a realistic chance of escaping welfare. ‘Affordable’ rent homes would be restricted to people in work and non on the lowest earnings. Landlords would get more flexibility to use the proceeds from market rents and sales to reinvest in social homes but grant would be conditional on rents being genuinely affordable. And the bedroom tax would be scrapped.

However, there would also need to be changes at the heart of government too: a formal tie-in between welfare and housing policy, with the DCLG able to draw on savings made by the reforms agreed with the DWP; and the removal of Treasury restrictions on the use of capital receipts to build replacements for homes sold under the right to buy.

And wider economic reforms would be needed too: a shift away from subsidies for low pay to employer incentives to pay the living wage; social landlords taking a lead by paying the living wage themselves and ensuring their contractors do the same; and greater investment in infrastructure and skills outside London and the South East.

Pretty much the opposite of current policy, in other words. However, the CIH also has a more controversial suggestion: government should consider basing universal credit for private tenants on a proportion of the rent rather than the whole rent. The idea is that if this was accompanied by higher basic allowances for living costs the cost would be the same overall but tenants would have an incentive to move of downsize without being punished as they are under the bedroom tax or benefit cap.   

Many CIH members who helped to draw up the report in workshops around the country feared that this idea could be hijacked as a justification for yet more cuts. Arguably of course, many private tenants already get less than housing benefit than their rent and the proportion will grow as policies like 1 per cent uprating take effect. The CIH warns that future governments should not use the proposal as a Trojan horse to reduce entitlements and would oppose it unless there was a substantial uplift in standard allowances.  

The recommendations amounts to a reversal of more than 20 years of letting housing benefit ‘take the strain’. That will be far from easy but shows how the total bill is being driven upwards by a range of different government policies. For all the rhetoric about welfare reform and ‘making work pay’ that blames claimants for becoming ‘benefit dependent’, future governments need to start by looking in the mirror.

Home front

Thu, 11 Sep 2014

With eight months to go until the general election the battle to influence the manifestos has begun in earnest.

Party conference season begins with Labour on September 21 but organisations from across the housing spectrum have been publishing manifestos of their own in a bid to reach the politicians.

Conservative Home (see my blog here) was early out of the blocks but the influential Tory website has been followed by the Council of Mortgage Lenders (CML) and Confederation of British Industry (CBI) in the last week. The Fabian Society has just published a report last week on the ‘silent majority’ in favour of more social housing. The National Housing Federation (NHF) is set to reveal its election plans at its conference next week.

The Lib Dems have already launched a ‘pre-manifesto’ for 2015 featuring a target of 300,000 new homes, a long-term plan on how to achieve it within a year of the election, ten new garden cities and reform of what they still insist on calling ‘the removal of the spare room subsidy’. Labour has already made commitments on 200,000 homes and garden cities, reform of private renting and abolition of the bedroom tax but all eyes are on the Lyons Review and the leadership’s response.

What seems much less clear (beyond yet more austerity and cuts in welfare) is what the Conservatives will do, with two very different visions on offer for new homes. 

The small ‘l’ liberal, free market vision represented by Nick Boles, Policy Exchange, Conservative Home and perhaps George Osborne sees the economic damage that the housing shortage is causing, especially in London and the South East, and believes that the solution is to sweep away ‘socialist’ planning restrictions. However, there are still considerable differences of opinion on this wing of the party, as this review of Conservative Home’s manifesto by Policy Exchange’s Chris Walker shows. 

ballot box

The small ‘c’ conservative, ‘war on the countryside’ one represented by Eric Pickles, Brandon Lewis and the Daily Telegraph wants to preserve the privileges of existing home owners, especially in London and the South East, under the guise of devolving planning decisions to local communities. There is also a battle over tax, with Tory MPs from the South East calling for the scrapping of stamp duty under £500,000 and a surge in donations to the party from developers opposed to Labour and Lib Dem plans for a mansion tax.

The divisions with the Conservative Party can blur, with different conceptions of localism, for example. However, the tensions between the two have run right through this parliament and especially in the struggle over the National Planning Policy Framework (NPPF) and the battle over the green belt.

The last week has seen some powerful backing for the liberal side of the argument. The CBI argues that ‘housing is not just a social priority – it is a key business issue’. It argues that the last ten years of above-inflation house price increases have cost consumers £4 billion in higher housing and transport costs and it makes the case for 240,000 new homes a year, ten new towns and garden cities by 2025 and reform of planning:

‘Our policies on where we build have changed little since the 1940s and are no longer fit for purpose. many areas within the green belt are not green and pleasant fields but former industrial sites and waste land. we need to question why we are protecting these areas at the expense of meeting our housing needs.’

It argues that their manifestos should contain ‘no red line commitments about land use that would tie the hands of a future government’. The new government itself should ‘give local authorities greater incentive to review the extent and environmental quality of their green belts, with a focus on releasing low environmental quality land, alongside brownfield sites for new homes.’

Last week, the Wolfson Economics Prize on garden cities was won by a proposal for urban extensions to double the size of 40 existing towns and cities over the next 30 years with 86,000 new homes. As David Rudlin of Urbed put it: ‘We propose taking a confident, well-planned bite out of the green belt – rather than nibbling around its edges and annoying every town and village.’

The prize attracted a broad range of entries and it is not political but it is funded by the Conservative peer Lord Wolfson and administered by Policy Exchange. So the speedy response from housing minister Brandon Lewis was interesting. He told the Architects Journal:

‘We do not intend to follow the failed example of top-down eco-towns from the last administration. We are committed to protecting the green belt from development as an important protection against urban sprawl - yesterday’s proposal from Lord Wolfson’s competition is not Government policy and will not be taken up. Instead, we stand ready to work with communities across the country who have ideas for a new generation of garden cities and we have offered support to areas with locally-supported plans that come forward.’

There was some speculation that Lewis may have missed the fact that the urban extensions are meant to be locally led. In fairness, However, there are few greater insults a Conservative could have found than to compare them to Labour’s eco-towns. The LSE’s Professor Henry Overman found the statement by Lewis ‘deeply depressing’ while the New Statesman’s Jonn Elledge asked: ‘What use is a housing minister who doesn’t want to build housing?’

The issue came up again in a different form at Communities and Local Government questions on Monday, the first for Lewis since he was appointed housing minister in July. Tory MP Charlie Elphicke asked him to confirm that the NPPF ‘has provisions that protect the green belt from developers and people…who would like the build all over it. Lewis replied:

‘My hon. Friend is right, and I intend soon to issue additional guidance to reiterate the protection that the national planning policy framework provides to the green belt and other designated areas. That will make it clear that local planners should seek to meet their objectively assessed needs, unless there are specific environmental and other policies in the framework—such as those on the green belt—which indicate that development should be restricted.’

Sadly he was not asked about the Wolfson Prize or the CBI report. However, the message to voters in the mostly Conservative seats that surround London and the cities earmarked to have a bite taken out of their green belt seems pretty clear. Judging from the rest of the session, it seems that the DCLG is now in full election mode. From Eric Pickles on Help to Buy and parking to Lewis on the green belt and the right to buy to Kris Hopkins on the council tax and business rates to Penny Mordaunt on helping coastal communities, you could almost see the clock counting down to May 2015.

What happens in the longer term remains to be seen. Divisions over new housing and planning are not exclusive to the Conservatives. The CBI wants the parties to look to long-term solutions to the housing crisis and avoid manifesto commitments that would tie the hands of a future government. The CML has put forward a set of proposals designed to tackle housing across tenures and age groups. But with just eight months to go until what seems set to be yet another close election the debate continues – between and within the political parties.

Home front

Thu, 11 Sep 2014

With eight months to go until the general election the battle to influence the manifestos has begun in earnest.

Party conference season begins with Labour on September 21 but organisations from across the housing spectrum have been publishing manifestos of their own in a bid to reach the politicians.

Conservative Home (see my blog here) was early out of the blocks but the influential Tory website has been followed by the Council of Mortgage Lenders (CML) and Confederation of British Industry (CBI) in the last week. The Fabian Society has just published a report last week on the ‘silent majority’ in favour of more social housing. The National Housing Federation (NHF) is set to reveal its election plans at its conference next week.

The Lib Dems have already launched a ‘pre-manifesto’ for 2015 featuring a target of 300,000 new homes, a long-term plan on how to achieve it within a year of the election, ten new garden cities and reform of what they still insist on calling ‘the removal of the spare room subsidy’. Labour has already made commitments on 200,000 homes and garden cities, reform of private renting and abolition of the bedroom tax but all eyes are on the Lyons Review and the leadership’s response.

What seems much less clear (beyond yet more austerity and cuts in welfare) is what the Conservatives will do, with two very different visions on offer for new homes. 

The small ‘l’ liberal, free market vision represented by Nick Boles, Policy Exchange, Conservative Home and perhaps George Osborne sees the economic damage that the housing shortage is causing, especially in London and the South East, and believes that the solution is to sweep away ‘socialist’ planning restrictions. However, there are still considerable differences of opinion on this wing of the party, as this review of Conservative Home’s manifesto by Policy Exchange’s Chris Walker shows. 

ballot box

The small ‘c’ conservative, ‘war on the countryside’ one represented by Eric Pickles, Brandon Lewis and the Daily Telegraph wants to preserve the privileges of existing home owners, especially in London and the South East, under the guise of devolving planning decisions to local communities. There is also a battle over tax, with Tory MPs from the South East calling for the scrapping of stamp duty under £500,000 and a surge in donations to the party from developers opposed to Labour and Lib Dem plans for a mansion tax.

The divisions with the Conservative Party can blur, with different conceptions of localism, for example. However, the tensions between the two have run right through this parliament and especially in the struggle over the National Planning Policy Framework (NPPF) and the battle over the green belt.

The last week has seen some powerful backing for the liberal side of the argument. The CBI argues that ‘housing is not just a social priority – it is a key business issue’. It argues that the last ten years of above-inflation house price increases have cost consumers £4 billion in higher housing and transport costs and it makes the case for 240,000 new homes a year, ten new towns and garden cities by 2025 and reform of planning:

‘Our policies on where we build have changed little since the 1940s and are no longer fit for purpose. many areas within the green belt are not green and pleasant fields but former industrial sites and waste land. we need to question why we are protecting these areas at the expense of meeting our housing needs.’

It argues that their manifestos should contain ‘no red line commitments about land use that would tie the hands of a future government’. The new government itself should ‘give local authorities greater incentive to review the extent and environmental quality of their green belts, with a focus on releasing low environmental quality land, alongside brownfield sites for new homes.’

Last week, the Wolfson Economics Prize on garden cities was won by a proposal for urban extensions to double the size of 40 existing towns and cities over the next 30 years with 86,000 new homes. As David Rudlin of Urbed put it: ‘We propose taking a confident, well-planned bite out of the green belt – rather than nibbling around its edges and annoying every town and village.’

The prize attracted a broad range of entries and it is not political but it is funded by the Conservative peer Lord Wolfson and administered by Policy Exchange. So the speedy response from housing minister Brandon Lewis was interesting. He told the Architects Journal:

‘We do not intend to follow the failed example of top-down eco-towns from the last administration. We are committed to protecting the green belt from development as an important protection against urban sprawl - yesterday’s proposal from Lord Wolfson’s competition is not Government policy and will not be taken up. Instead, we stand ready to work with communities across the country who have ideas for a new generation of garden cities and we have offered support to areas with locally-supported plans that come forward.’

There was some speculation that Lewis may have missed the fact that the urban extensions are meant to be locally led. In fairness, However, there are few greater insults a Conservative could have found than to compare them to Labour’s eco-towns. The LSE’s Professor Henry Overman found the statement by Lewis ‘deeply depressing’ while the New Statesman’s Jonn Elledge asked: ‘What use is a housing minister who doesn’t want to build housing?’

The issue came up again in a different form at Communities and Local Government questions on Monday, the first for Lewis since he was appointed housing minister in July. Tory MP Charlie Elphicke asked him to confirm that the NPPF ‘has provisions that protect the green belt from developers and people…who would like the build all over it. Lewis replied:

‘My hon. Friend is right, and I intend soon to issue additional guidance to reiterate the protection that the national planning policy framework provides to the green belt and other designated areas. That will make it clear that local planners should seek to meet their objectively assessed needs, unless there are specific environmental and other policies in the framework—such as those on the green belt—which indicate that development should be restricted.’

Sadly he was not asked about the Wolfson Prize or the CBI report. However, the message to voters in the mostly Conservative seats that surround London and the cities earmarked to have a bite taken out of their green belt seems pretty clear. Judging from the rest of the session, it seems that the DCLG is now in full election mode. From Eric Pickles on Help to Buy and parking to Lewis on the green belt and the right to buy to Kris Hopkins on the council tax and business rates to Penny Mordaunt on helping coastal communities, you could almost see the clock counting down to May 2015.

What happens in the longer term remains to be seen. Divisions over new housing and planning are not exclusive to the Conservatives. The CBI wants the parties to look to long-term solutions to the housing crisis and avoid manifesto commitments that would tie the hands of a future government. The CML has put forward a set of proposals designed to tackle housing across tenures and age groups. But with just eight months to go until what seems set to be yet another close election the debate continues – between and within the political parties.

The long goodbye

Mon, 8 Sep 2014

Three images spring to mind in the aftermath of Friday’s momentous vote to amend the bedroom tax.

The first is of a bunker deep in the bowels of DWP headquarters Caxton House. Iain Duncan Smith sits at a desk surrounded by a dwindling band of loyalists who still believe in the policy: his ministers Mark Harper and Lord Freud plus a loyal special adviser and perhaps a press officer.

AS IDS raves that nothing has changed (and that the universal credit is on time and on budget) I imagine the others exchanging nervous looks between themselves as they assure him that the removal of the spare room subsidy really is saving £1 million a day and making housing fairer.

It’s not just the defection of the Lib Dems, nor even that of his own minister of state Steve Webb, that counts. The absence of up to 70 backbench Conservatives despite a three-line whip to vote with the government is what will really hurt. One, Angie Bray, even voted for the Affordable Homes Bill. They were clearly not prepared to give up Friday in their constituency for a policy they know is a political liability.

The DWP’s desperation was evident during the debate itself, when Harper informed the House that it estimates the Bill would ‘cost about £1 billion of public expenditure’. He later broke this down into £500 million ‘to repeal the removal of the spare room subsidy plus another £500 million because ‘it fundamentally changes the way housing benefit is calculated, for example it removes deductions from other people in the household’.

No further detail was on offer but the Bill (see the House of Commons Library briefing) does not seek to repeal the bedroom tax or remove extra deductions but to introduce significant exemptions for disabled people and tenants who have no downsizing options (see below). The DWP’s own current estimate of the ‘savings’ from the policy is £373 million (this was repeated in press statements on Friday putting them at ‘£1 million a day). However, this takes no account of the cost of discretionary housing payments let alone the wider costs to the public purse. Is the DWP seriously claiming that amending the bedroom tax will cost at least three times more than it saves? If so, that must mean that not introducing the policy in the first place would have saved around £650 million.

The second image (readers with a sensitive disposition may want to look away now) is of Joe Halewood yodelling naked on top of Nelson’s Column. That’s what the consultant and bedroom tax campaigner says he will do if the Bill makes any difference whatsoever to victims of the policy before the next election.

There are two main reasons why he is so confident he will never have to shed everything apart from an Alpine hat: the length of time it will take the Bill to make it through its remaining parliamentary stages with the election just eight months away; and the fact that it leaves so much of the detail down to secondary legislation to be determined by the secretary of state.

It’s one thing to propose exemptions for disabled people living in properties with adaptations, for people on DLA or PIP who cannot reasonably share a bedroom because of their disability and for people who have not been made ‘a reasonable offer of alternative accommodation’. It is quite another to determine what words like ‘reasonable’, ‘alternative’ and even an ‘offer’ mean. I suspect similar points could be made about any other exemption, which is why it would be far better to repeal the whole policy. George recognises this himself but has to work with what is within the scope of a private member’s bill. As he put it on Friday: ‘The mere fact that someone is poor does not mean they are any less entitled to a stable family home than if they are better-off.’

The bedroom tax is also just part of a much broader programme of welfare reform, much of it just as controversial but still seen by the Conservatives as a vote winner. As more than one Tory pointed out in Friday’s debate, all three main parties are now signed up to the welfare cap, which means they would have to cut something else to pay for the amendments to or repeal of the policy.  

However, the vote does mean that there is a fighting chance that the election will take place with substantial exemptions already in place. Andrew George has succeeded against all the odds (and even, as I blogged in June, his own expectations) in mustering enough support to stop backbench Tories from talking out his Bill and then clearing the first parliamentary hurdle. It may be too late for tenants who have already gone through financial hardship, or been forced to lave their home, but this could (and should) give landlords and local authorities pause for thought when they consider how to treat victims of a policy that parliament now considers manifestly unjust and whose days are clearly numbered.

The third image is one of déjà vu. The exemptions proposed by Andrew George remind me strongly of the ones approved by the House of Lords in January 2012 before the coalition (including the Lib Dems, of course) overturned them by claiming financial privilege. That is no coincidence: it was clear from the outset that the bedroom tax was manifestly unfair.

That’s why the Liberal Democrats cannot get away with claiming that they have changed their minds as a result of new evidence. A few of the party’s MPs (including George himself) have consistently voted against it but the rest have trooped dutifully into the coalition lobby. Even on Friday, the impression of Lib Dem contrition was undermined by the way that party president Tim Farron continued to talk about ‘the spare room subsidy’.

Whatever happens to the policy now, the deeper impact of Friday’s vote will surely be political. This is not just about the two coalition partners voting against each other or the wider battle over welfare reform. Most immediately, the bedroom tax is a huge issue in the Scottish independence referendum, with the Yes campaign using it as a symbol of pernicious policies imposed from Westminster and the No campaign attacking the SNP because only two of its MPs turned up on Friday.

Looking to next year, Labour goes into the general election pledged to repeal what’s become a powerful symbol of coalition heartlessness. The Lib Dems will suffer from coming to their senses too late but have shown they can work with Labour as well as the Conservatives. And the Tories will have to work out whether they really want to join IDS in his bunker.

The long goodbye

Mon, 8 Sep 2014

Three images spring to mind in the aftermath of Friday’s momentous vote to amend the bedroom tax.

The first is of a bunker deep in the bowels of DWP headquarters Caxton House. Iain Duncan Smith sits at a desk surrounded by a dwindling band of loyalists who still believe in the policy: his ministers Mark Harper and Lord Freud plus a loyal special adviser and perhaps a press officer.

AS IDS raves that nothing has changed (and that the universal credit is on time and on budget) I imagine the others exchanging nervous looks between themselves as they assure him that the removal of the spare room subsidy really is saving £1 million a day and making housing fairer.

It’s not just the defection of the Lib Dems, nor even that of his own minister of state Steve Webb, that counts. The absence of up to 70 backbench Conservatives despite a three-line whip to vote with the government is what will really hurt. One, Angie Bray, even voted for the Affordable Homes Bill. They were clearly not prepared to give up Friday in their constituency for a policy they know is a political liability.

The DWP’s desperation was evident during the debate itself, when Harper informed the House that it estimates the Bill would ‘cost about £1 billion of public expenditure’. He later broke this down into £500 million ‘to repeal the removal of the spare room subsidy plus another £500 million because ‘it fundamentally changes the way housing benefit is calculated, for example it removes deductions from other people in the household’.

No further detail was on offer but the Bill (see the House of Commons Library briefing) does not seek to repeal the bedroom tax or remove extra deductions but to introduce significant exemptions for disabled people and tenants who have no downsizing options (see below). The DWP’s own current estimate of the ‘savings’ from the policy is £373 million (this was repeated in press statements on Friday putting them at ‘£1 million a day). However, this takes no account of the cost of discretionary housing payments let alone the wider costs to the public purse. Is the DWP seriously claiming that amending the bedroom tax will cost at least three times more than it saves? If so, that must mean that not introducing the policy in the first place would have saved around £650 million.

The second image (readers with a sensitive disposition may want to look away now) is of Joe Halewood yodelling naked on top of Nelson’s Column. That’s what the consultant and bedroom tax campaigner says he will do if the Bill makes any difference whatsoever to victims of the policy before the next election.

There are two main reasons why he is so confident he will never have to shed everything apart from an Alpine hat: the length of time it will take the Bill to make it through its remaining parliamentary stages with the election just eight months away; and the fact that it leaves so much of the detail down to secondary legislation to be determined by the secretary of state.

It’s one thing to propose exemptions for disabled people living in properties with adaptations, for people on DLA or PIP who cannot reasonably share a bedroom because of their disability and for people who have not been made ‘a reasonable offer of alternative accommodation’. It is quite another to determine what words like ‘reasonable’, ‘alternative’ and even an ‘offer’ mean. I suspect similar points could be made about any other exemption, which is why it would be far better to repeal the whole policy. George recognises this himself but has to work with what is within the scope of a private member’s bill. As he put it on Friday: ‘The mere fact that someone is poor does not mean they are any less entitled to a stable family home than if they are better-off.’

The bedroom tax is also just part of a much broader programme of welfare reform, much of it just as controversial but still seen by the Conservatives as a vote winner. As more than one Tory pointed out in Friday’s debate, all three main parties are now signed up to the welfare cap, which means they would have to cut something else to pay for the amendments to or repeal of the policy.  

However, the vote does mean that there is a fighting chance that the election will take place with substantial exemptions already in place. Andrew George has succeeded against all the odds (and even, as I blogged in June, his own expectations) in mustering enough support to stop backbench Tories from talking out his Bill and then clearing the first parliamentary hurdle. It may be too late for tenants who have already gone through financial hardship, or been forced to lave their home, but this could (and should) give landlords and local authorities pause for thought when they consider how to treat victims of a policy that parliament now considers manifestly unjust and whose days are clearly numbered.

The third image is one of déjà vu. The exemptions proposed by Andrew George remind me strongly of the ones approved by the House of Lords in January 2012 before the coalition (including the Lib Dems, of course) overturned them by claiming financial privilege. That is no coincidence: it was clear from the outset that the bedroom tax was manifestly unfair.

That’s why the Liberal Democrats cannot get away with claiming that they have changed their minds as a result of new evidence. A few of the party’s MPs (including George himself) have consistently voted against it but the rest have trooped dutifully into the coalition lobby. Even on Friday, the impression of Lib Dem contrition was undermined by the way that party president Tim Farron continued to talk about ‘the spare room subsidy’.

Whatever happens to the policy now, the deeper impact of Friday’s vote will surely be political. This is not just about the two coalition partners voting against each other or the wider battle over welfare reform. Most immediately, the bedroom tax is a huge issue in the Scottish independence referendum, with the Yes campaign using it as a symbol of pernicious policies imposed from Westminster and the No campaign attacking the SNP because only two of its MPs turned up on Friday.

Looking to next year, Labour goes into the general election pledged to repeal what’s become a powerful symbol of coalition heartlessness. The Lib Dems will suffer from coming to their senses too late but have shown they can work with Labour as well as the Conservatives. And the Tories will have to work out whether they really want to join IDS in his bunker.

Beyond belief

Tue, 2 Sep 2014

So is it time to celebrate the rise in housing benefit claims by people in work as a reflection of the government’s success in getting people off benefits?

That was the claim made by Iain Duncan Smith at work and pensions questions yesterday as he answered Labour jibes about the soaring numbers of working households now dependent on state help with their rent.

The work and pensions secretary told Labour’s Emma Lewell-Buck:

‘The figure the hon. Lady did not give is that out-of-work housing benefit claims are falling, and that is because people who were claiming it are now going into work. That means that they are earning more money, which means that the likelihood of their being in poverty is far less. I wonder whether the hon. Lady would like to get up sometime and congratulate us on getting more people back to work and spending less on housing benefit as a result.’

And when his Labour shadow Rachel Reeves challenged him about the rise of in-work poverty he told her she should have been listening to that answer:

‘The reality is that the number of people who are out of work and on housing benefit is falling. The number of those who are in work is rising. Under the last Government, we saw a rise in the number of people who were out of work and having to claim housing benefit.’

IDS has previous when it comes to claims that sound vaguely plausible at first only to evaporate under greater scrutiny. How about the way the benefit cap had made people return to work or the way that falling private sector rents showed that the local housing allowance had distorted the market?

And he had plenty more to worry about yesterday, not least the universal credit and when the Treasury will ever sign off on the business case for it. However, this latest claim fits with the narrative of a major speech he made last month in which he argued that a dysfunctional welfare system and social breakdown have been replaced by welfare reform and the dignity of work. As Alex Marsh blogged at the time, the miraculous power of welfare reform seemed to leave no room for under-employed, low pay Britain.

So what do the DWP’s own statistics have to say? As I blogged last month, the first four years of the coalition saw a 63 per cent rise in housing benefit claims by people in employment, from 651,000 in May 2010 to 1.1 million in May 2014. The housing benefit bill for people in employment has risen from £2.9 billion (14 per cent of the total) to £5.1 billion (21 per cent).

The case made by IDS is that this should be seen as good news. As unemployment falls and the number of people in work reaches new records, the system is helping people to move off benefits and into employment by helping them with their housing costs.

However, has there really been a fall in housing benefit claims by people who are not working? The stats show that the number of passported claims by people on the main three out-of-work benefits (income support and income-based job seekers allowance and employment support allowance) has remained steady over the last four years at around 2.2 million.

Far from supporting IDS’s claim that ‘out-of-work housing benefit claims are falling’, they actually show a slight increase of 13,000 since May 2010. The only significant fall (148,000) over the last four years has been in the number of claims from people on pension credit (guaranteed credit).

The overall number of housing benefit claims has fallen slightly in the last year to just under five million but is still higher than the 4.8 million recorded when the coalition took power. Far from spending less on housing benefit, the total bill is still rising, just not by as much as previous forecasts.

However, those are only the headline numbers and the statistics have significant limitations when it comes to determining who is in employment and who is not. The DWP is well aware of these, as this written answer from Steve Webb in June demonstrates.

The figure for in-work housing benefit claims is only for non-passported claims (people who are not on a means-tested benefit) and the numbers refer to benefit units rather than people. An unknown number of couples may both be working so the total number of people in employment is almost certainly higher than the current 1.1 million.

Meanwhile, an unknown number of people with passported claims may also be working or have a partner who is working. The rules for all three of the main out-of-work benefits allow claimants to do some work. For example, to be eligible for JSA you must be available for work, actively seeking work and working on average less than 16 hours a week. And ESA has rules on ‘permitted work’ of up to a certain number of hours or amount per week.

The numbers involved are ‘small’ and ‘insignificant’, according to the DWP, but the point is that it is impossible to say definitively from these statistics how many people on housing benefit are working and how many are not. See this fact check by Full Fact from 2012 for more detail.

It follows that it’s not possible to say categorically that IDS is wrong. He is right, for example, that ‘under Labour, in-work and out-of-work housing benefit claimant numbers increased’. Equally well, he has no definitive basis for his claim either.

However, if the surge in claims by people in employment since 2010 has come from people who were not working before why has the number of housing benefit claims from people on out-of-work benefits remained so stable over the last four years?

When you look at the combination of stagnant and falling earnings and rising rents, it seems far more likely that the stats reflect the growth of ‘poor work’ and pressure on claimants to take anything that is on offer. The lines between unemployment, employment schemes, under-employment and employment are blurring all the time. And housing benefit is taking the strain over the longer term of the rise of the private rented sector and slow decline of social renting.

Don’t take my word for it. Here’s what the independent Office for Budget Responsibility had to say at the time of the Budget in March:

‘The rising proportion of the renting population claiming housing benefit may be related to the weakness of average wage growth relative to rent inflation. This explanation is supported by DWP data, which suggest that almost all the recent rise in the private-rented sector housing benefit caseload has been accounted for by people in employment.’

This latest IDS welfare miracle looks like yet another mirage but that almost certainly won’t stop the man himself believing in it. 

Beyond belief

Tue, 2 Sep 2014

So is it time to celebrate the rise in housing benefit claims by people in work as a reflection of the government’s success in getting people off benefits?

That was the claim made by Iain Duncan Smith at work and pensions questions yesterday as he answered Labour jibes about the soaring numbers of working households now dependent on state help with their rent.

The work and pensions secretary told Labour’s Emma Lewell-Buck:

‘The figure the hon. Lady did not give is that out-of-work housing benefit claims are falling, and that is because people who were claiming it are now going into work. That means that they are earning more money, which means that the likelihood of their being in poverty is far less. I wonder whether the hon. Lady would like to get up sometime and congratulate us on getting more people back to work and spending less on housing benefit as a result.’

And when his Labour shadow Rachel Reeves challenged him about the rise of in-work poverty he told her she should have been listening to that answer:

‘The reality is that the number of people who are out of work and on housing benefit is falling. The number of those who are in work is rising. Under the last Government, we saw a rise in the number of people who were out of work and having to claim housing benefit.’

IDS has previous when it comes to claims that sound vaguely plausible at first only to evaporate under greater scrutiny. How about the way the benefit cap had made people return to work or the way that falling private sector rents showed that the local housing allowance had distorted the market?

And he had plenty more to worry about yesterday, not least the universal credit and when the Treasury will ever sign off on the business case for it. However, this latest claim fits with the narrative of a major speech he made last month in which he argued that a dysfunctional welfare system and social breakdown have been replaced by welfare reform and the dignity of work. As Alex Marsh blogged at the time, the miraculous power of welfare reform seemed to leave no room for under-employed, low pay Britain.

So what do the DWP’s own statistics have to say? As I blogged last month, the first four years of the coalition saw a 63 per cent rise in housing benefit claims by people in employment, from 651,000 in May 2010 to 1.1 million in May 2014. The housing benefit bill for people in employment has risen from £2.9 billion (14 per cent of the total) to £5.1 billion (21 per cent).

The case made by IDS is that this should be seen as good news. As unemployment falls and the number of people in work reaches new records, the system is helping people to move off benefits and into employment by helping them with their housing costs.

However, has there really been a fall in housing benefit claims by people who are not working? The stats show that the number of passported claims by people on the main three out-of-work benefits (income support and income-based job seekers allowance and employment support allowance) has remained steady over the last four years at around 2.2 million.

Far from supporting IDS’s claim that ‘out-of-work housing benefit claims are falling’, they actually show a slight increase of 13,000 since May 2010. The only significant fall (148,000) over the last four years has been in the number of claims from people on pension credit (guaranteed credit).

The overall number of housing benefit claims has fallen slightly in the last year to just under five million but is still higher than the 4.8 million recorded when the coalition took power. Far from spending less on housing benefit, the total bill is still rising, just not by as much as previous forecasts.

However, those are only the headline numbers and the statistics have significant limitations when it comes to determining who is in employment and who is not. The DWP is well aware of these, as this written answer from Steve Webb in June demonstrates.

The figure for in-work housing benefit claims is only for non-passported claims (people who are not on a means-tested benefit) and the numbers refer to benefit units rather than people. An unknown number of couples may both be working so the total number of people in employment is almost certainly higher than the current 1.1 million.

Meanwhile, an unknown number of people with passported claims may also be working or have a partner who is working. The rules for all three of the main out-of-work benefits allow claimants to do some work. For example, to be eligible for JSA you must be available for work, actively seeking work and working on average less than 16 hours a week. And ESA has rules on ‘permitted work’ of up to a certain number of hours or amount per week.

The numbers involved are ‘small’ and ‘insignificant’, according to the DWP, but the point is that it is impossible to say definitively from these statistics how many people on housing benefit are working and how many are not. See this fact check by Full Fact from 2012 for more detail.

It follows that it’s not possible to say categorically that IDS is wrong. He is right, for example, that ‘under Labour, in-work and out-of-work housing benefit claimant numbers increased’. Equally well, he has no definitive basis for his claim either.

However, if the surge in claims by people in employment since 2010 has come from people who were not working before why has the number of housing benefit claims from people on out-of-work benefits remained so stable over the last four years?

When you look at the combination of stagnant and falling earnings and rising rents, it seems far more likely that the stats reflect the growth of ‘poor work’ and pressure on claimants to take anything that is on offer. The lines between unemployment, employment schemes, under-employment and employment are blurring all the time. And housing benefit is taking the strain over the longer term of the rise of the private rented sector and slow decline of social renting.

Don’t take my word for it. Here’s what the independent Office for Budget Responsibility had to say at the time of the Budget in March:

‘The rising proportion of the renting population claiming housing benefit may be related to the weakness of average wage growth relative to rent inflation. This explanation is supported by DWP data, which suggest that almost all the recent rise in the private-rented sector housing benefit caseload has been accounted for by people in employment.’

This latest IDS welfare miracle looks like yet another mirage but that almost certainly won’t stop the man himself believing in it. 

Hard sell

Tue, 2 Sep 2014

As sales pass 20,000, what’s been the impact of England’s ‘reinviograted’ right to buy so far?

Figures released by the DCLG last week show 20,027 sales since April 2012, when the maximum discount was increased to £75,000. This followed David Cameron’s Conservative Party conference speech in October 2011, when he said the proceeds would be reinvested in new affordable homes.

The government continues to introduce extra sales incentives. These include a new maximum discount for London of £100,000 from April 2013, £100 million to improve access to mortgage finance plus right to buy sales agents, annual inflation uprating of discounts and an increase in the maximum percentage discount on a house. Finally, the Deregulation Bill will reduce the qualifying period from five years as a tenant to three once it completes remaining stages in the Lords and gets Royal Assent.

That’s the context. But what are the numbers? And what about the wider impacts warned about by critics? Here’s an assessment so far:

Sales: Unsurprisingly, given all those incentives, many more tenants have bought their homes. The 2,845 sales in the first quarter was up 31 per cent on a year ago and six times the level seen in April to June 2012/13. However, it was down 16 per cent on the final quarter of 2013/14. Last year saw 11,238 sales, four times higher than in 2011/12 but still well down on pre-recession totals.

London accounted for one in three sales in the first quarter, the highest total since the publication of quarterly stats began in 2006/07, and local authorities in the capital dominated the list of those seeing the highest sales per 1,000 homes.

New homes: The Buy One Build One Free promise turned out to apply only to additional receipts on top of forecast levels once the Treasury has taken its cut and to mean ‘affordable’ rather than social homes. Local authorities have three years to spend the money, and construction takes time, so it’s still relatively early days, but the results so far do not look that encouraging.

The 675 starts on site of new affordable homes in the first quarter of 2014/15 was up more than 10 times on a year ago (though down 25 per cent on the fourth quarter). However, that still means there were 4.2 sales for every new home started. Since the start of the new policy in April 2012, we’ve seen one replacement for every 5.5 sold. The one-for-one pledge looks more like window dressing for the real aim of selling more stock. That impression hardened in June when the government defeated an attempt by Green MP Caroline Lucas to force it to publish a plan to replace homes sold and review the effectiveness of the reduced qualifying period. .

Housing finance: Unsurprisingly, the increased sales and weighting towards London fed through into higher receipts. The £210.8 million in the first quarter was up 61 per cent on a year ago though down on the previous quarter. Since April 2012 receipts total £1.3 billion.

However, local authorities can only spend part of that and there are additional problems with the debt cap, HRA business plans that did not take account of the new policy and a new cap on leaseholder repair bills.  As seen from Islington, most of the £10.2 million receipts over the last quarter (and £22 million over the last year) will disappear into a ‘black hole’.  As seen from Cambridge, the result is a cash crisis, according to executive councillor for housing Kevin Price:

‘Right to Buy receipts retained by the council are now averaging £1 million a quarter. But for every £1 million we get, the council must come up with another £2 million from its own housing budget to replace the homes lost, within three years - or face returning the money to Westminster at a punitive interest rate. This is quite simply unsustainable and puts at risk our other house-building programmes.’

Homelessness: High levels of demand and rising bills for homelessness compound the finance problem. Harrow says it is in the ‘utterly ludicrous’ position of spending £500,000 a year leasing 35 former council homes on rents of up to £350 a week as temporary accommodation for vulnerable tenants. Glen Hearnden, portfolio holder for housing at Harrow Council, says:

‘We lose twice with the government scheme, we lose the property from our stock and then we pay to rent it back. It all adds up to our residents suffering. It feels like we are fighting the fires caused by an overheating housing market whilst the government is stood on our hose pipe.’

However, the knock-on effect is felt by people like Cecilia Bruce-Annan. The mother of three is £2,000 in arrears on her housing association home in Harrow after being hit by the benefit cap. She faces eviction next week but says the council told her that her only option is to move to Stoke-on-Trent because it no longer has enough homes to house its residents. This seems to be the result of a controversial new policy on out-of-borough placements

Fraud: A 2012 study by the Audit Commission found that right to buy fraud was up by 52 per cent on three years before. While most purchases are genuine, the reinvigorated discounts prompted the CIH to issue a guide on how to prevent fraud from tenants who misrepresent their circumstances or tenancy history or who already have another home.

Last week two fraudsters from Sandwell had their appeal against a jail sentence turned down. The two women made two applications to buy a council home claiming they were sisters. In fact they were friends and one had links to several other homes in the Midlands and Scotland. They were jailed for 20 months in June but were trying to get the sentence suspended.

In July, Inside Housing reported that Sandwell had tightened its procedures due to fears of fraud and money laundering. Deputy leader Steve Eling said:

‘Most sales are genuine but there is a growing number which are raising concerns, not just in Sandwell but nationally. The massive discount has made the whole area of right to buy a minefield for councils. Nationally, it has become a golden opportunity for criminals to make easy money as well as laundering dirty money.’

Assisted purchases: The increased discount is not just interesting tenants. The Sunday Times (paywall) reported on the case of one property firm boasting about the ‘easy profits’ to be made from encouraging tenants to buy because ex-council homes are so ‘massively undervalued’. It’s sent leaflets to 60,000 homes including many in Westminster boasting that ‘right to buy tenant moves and scoops £100,000’.

Housing minister Brandon Lewis responded by dubbing critics of the policy ‘enemies of home ownership’ and with a form of words that is at best misleading:

‘The reinvigorated right-to-buy is both increasing housing supply and reducing waiting lists, as every additional home sold is now being replaced with a new affordable home for a new social tenant.’

Housing benefit: Labour councillors in Westminster called for an inquiry after the Sunday Times story, highlighting figures that almost 20 per cent of right to buy sales since 2012 have been to tenants on housing benefit. The council says that the correct figure is that 22 per cent of sales (20 homes) have been to people on housing benefit at the time of application and 11 pent (10) at time of completion.

There is nothing in the legislation to stop people on housing benefit exercising their right to buy and nothing to make them say how they are going to fund the purchase or afford the mortgage payments. The money could have come from a genuine inheritance, for example. As I’ve blogged before, estimates of cost savings in the DCLG’s own impact assessment assumed that 10 per cent of purchasers would be on housing benefit (cut from 15 per cent in a previous draft after discussions with the DWP). Money laundering regulations mean that the source of cash payments has to be verified. Wesminster now refers all right to buy applications from tenants on housing benefit to fraud for checking.

However, given that anyone with savings of more than £16,000 is not eligible for housing benefit, and that housing benefit stops the minute you stop being a tenant, the figures beg all sorts of questions.

Much the same goes for the policy as a whole. Yes, sales are rising and more tenants are becoming home owners. Yes, some new replacement homes are being built. Beyond that the evidence of negative impacts continues to mount.

Hard sell

Tue, 2 Sep 2014

As sales pass 20,000, what’s been the impact of England’s ‘reinviograted’ right to buy so far?

Figures released by the DCLG last week show 20,027 sales since April 2012, when the maximum discount was increased to £75,000. This followed David Cameron’s Conservative Party conference speech in October 2011, when he said the proceeds would be reinvested in new affordable homes.

The government continues to introduce extra sales incentives. These include a new maximum discount for London of £100,000 from April 2013, £100 million to improve access to mortgage finance plus right to buy sales agents, annual inflation uprating of discounts and an increase in the maximum percentage discount on a house. Finally, the Deregulation Bill will reduce the qualifying period from five years as a tenant to three once it completes remaining stages in the Lords and gets Royal Assent.

That’s the context. But what are the numbers? And what about the wider impacts warned about by critics? Here’s an assessment so far:

Sales: Unsurprisingly, given all those incentives, many more tenants have bought their homes. The 2,845 sales in the first quarter was up 31 per cent on a year ago and six times the level seen in April to June 2012/13. However, it was down 16 per cent on the final quarter of 2013/14. Last year saw 11,238 sales, four times higher than in 2011/12 but still well down on pre-recession totals.

London accounted for one in three sales in the first quarter, the highest total since the publication of quarterly stats began in 2006/07, and local authorities in the capital dominated the list of those seeing the highest sales per 1,000 homes.

New homes: The Buy One Build One Free promise turned out to apply only to additional receipts on top of forecast levels once the Treasury has taken its cut and to mean ‘affordable’ rather than social homes. Local authorities have three years to spend the money, and construction takes time, so it’s still relatively early days, but the results so far do not look that encouraging.

The 675 starts on site of new affordable homes in the first quarter of 2014/15 was up more than 10 times on a year ago (though down 25 per cent on the fourth quarter). However, that still means there were 4.2 sales for every new home started. Since the start of the new policy in April 2012, we’ve seen one replacement for every 5.5 sold. The one-for-one pledge looks more like window dressing for the real aim of selling more stock. That impression hardened in June when the government defeated an attempt by Green MP Caroline Lucas to force it to publish a plan to replace homes sold and review the effectiveness of the reduced qualifying period. .

Housing finance: Unsurprisingly, the increased sales and weighting towards London fed through into higher receipts. The £210.8 million in the first quarter was up 61 per cent on a year ago though down on the previous quarter. Since April 2012 receipts total £1.3 billion.

However, local authorities can only spend part of that and there are additional problems with the debt cap, HRA business plans that did not take account of the new policy and a new cap on leaseholder repair bills.  As seen from Islington, most of the £10.2 million receipts over the last quarter (and £22 million over the last year) will disappear into a ‘black hole’.  As seen from Cambridge, the result is a cash crisis, according to executive councillor for housing Kevin Price:

‘Right to Buy receipts retained by the council are now averaging £1 million a quarter. But for every £1 million we get, the council must come up with another £2 million from its own housing budget to replace the homes lost, within three years - or face returning the money to Westminster at a punitive interest rate. This is quite simply unsustainable and puts at risk our other house-building programmes.’

Homelessness: High levels of demand and rising bills for homelessness compound the finance problem. Harrow says it is in the ‘utterly ludicrous’ position of spending £500,000 a year leasing 35 former council homes on rents of up to £350 a week as temporary accommodation for vulnerable tenants. Glen Hearnden, portfolio holder for housing at Harrow Council, says:

‘We lose twice with the government scheme, we lose the property from our stock and then we pay to rent it back. It all adds up to our residents suffering. It feels like we are fighting the fires caused by an overheating housing market whilst the government is stood on our hose pipe.’

However, the knock-on effect is felt by people like Cecilia Bruce-Annan. The mother of three is £2,000 in arrears on her housing association home in Harrow after being hit by the benefit cap. She faces eviction next week but says the council told her that her only option is to move to Stoke-on-Trent because it no longer has enough homes to house its residents. This seems to be the result of a controversial new policy on out-of-borough placements

Fraud: A 2012 study by the Audit Commission found that right to buy fraud was up by 52 per cent on three years before. While most purchases are genuine, the reinvigorated discounts prompted the CIH to issue a guide on how to prevent fraud from tenants who misrepresent their circumstances or tenancy history or who already have another home.

Last week two fraudsters from Sandwell had their appeal against a jail sentence turned down. The two women made two applications to buy a council home claiming they were sisters. In fact they were friends and one had links to several other homes in the Midlands and Scotland. They were jailed for 20 months in June but were trying to get the sentence suspended.

In July, Inside Housing reported that Sandwell had tightened its procedures due to fears of fraud and money laundering. Deputy leader Steve Eling said:

‘Most sales are genuine but there is a growing number which are raising concerns, not just in Sandwell but nationally. The massive discount has made the whole area of right to buy a minefield for councils. Nationally, it has become a golden opportunity for criminals to make easy money as well as laundering dirty money.’

Assisted purchases: The increased discount is not just interesting tenants. The Sunday Times (paywall) reported on the case of one property firm boasting about the ‘easy profits’ to be made from encouraging tenants to buy because ex-council homes are so ‘massively undervalued’. It’s sent leaflets to 60,000 homes including many in Westminster boasting that ‘right to buy tenant moves and scoops £100,000’.

Housing minister Brandon Lewis responded by dubbing critics of the policy ‘enemies of home ownership’ and with a form of words that is at best misleading:

‘The reinvigorated right-to-buy is both increasing housing supply and reducing waiting lists, as every additional home sold is now being replaced with a new affordable home for a new social tenant.’

Housing benefit: Labour councillors in Westminster called for an inquiry after the Sunday Times story, highlighting figures that almost 20 per cent of right to buy sales since 2012 have been to tenants on housing benefit. The council says that the correct figure is that 22 per cent of sales (20 homes) have been to people on housing benefit at the time of application and 11 pent (10) at time of completion.

There is nothing in the legislation to stop people on housing benefit exercising their right to buy and nothing to make them say how they are going to fund the purchase or afford the mortgage payments. The money could have come from a genuine inheritance, for example. As I’ve blogged before, estimates of cost savings in the DCLG’s own impact assessment assumed that 10 per cent of purchasers would be on housing benefit (cut from 15 per cent in a previous draft after discussions with the DWP). Money laundering regulations mean that the source of cash payments has to be verified. Wesminster now refers all right to buy applications from tenants on housing benefit to fraud for checking.

However, given that anyone with savings of more than £16,000 is not eligible for housing benefit, and that housing benefit stops the minute you stop being a tenant, the figures beg all sorts of questions.

Much the same goes for the policy as a whole. Yes, sales are rising and more tenants are becoming home owners. Yes, some new replacement homes are being built. Beyond that the evidence of negative impacts continues to mount.

About time

Mon, 1 Sep 2014

Sellafield. Parental help. Mortgages lasting 40 years. Welcome to housing affordability in the 21st century.

Exhibit one is a survey by the TUC comparing median house prices and earnings in local authority areas across England. It finds that Copeland in Cumbria, home of the Sellafield nuclear reprocessing facility, is the only one that is easily affordable on less than three times earnings. Nowhere in southern England is affordable at less than five times earnings.

Exhibit two is an opinion poll of parents conducted by the National Housing Federation. It finds that 81 per cent of parents are worried about the impact of rising house prices on the next generation, 69 per cent think their children will not be able to buy without their financial support and 25 per cent are already saving for their children’s first home.

Exhibit three is a report in the Independent on Sunday that more first-time buyers are being tempted by mortgages lasting 35 and even 40 years. The good news is that they offer lower monthly repayments than a traditional 25-year mortgage. The bad is that you will pay back far more in total (£403,000 for a £200,000 mortgage over 40 years) and could end up still in debt in retirement.

On one level, these trends are nothing new. The TUC comparison offers a useful affordability yardstick but it is really a false comparison since for many years most people have bought their first home as a couple who are both working. Help from the Bank of Mum and has been around for a while as a result of rising prices and the need for a much higher deposit since 2007. And plenty of owners have mortgaged themselves beyond 65.

All three, like longer mortgage terms and chopping up houses into rabbit-hutch rentals, can be seen as the market reacting to higher prices and finding a way for people to afford them.

However, the ways the market finds will not necessarily be benign: just think of what happened when the banks relaxed their lending criteria before 2007 and packaged up low and high risk loans into securities to sell to each other.

What the TUC survey shows is the impact not just of rising prices but also of earnings that have been stagnant since the start of the financial crisis. That, plus new Mortgage Market Review criteria that mean lenders are (rightly) checking affordability much more carefully, mean it will be even more difficult for average earners to buy. And it has wider economic effects too since those forced to rent and those who manage to scrape enough together to buy will have less to spend on other things.

And what about the long-term implications of the parental help suggested by the NHF poll? Through most of the 20th century rising home ownership was an engine for greater equality of wealth. That has already gone into reverse and it becoming an engine for greater inequality in the 21st century, with ownership increasingly become the preserve of those with family already on the ladder.

There are wider social impacts too. There is already a house price premium in the catchment areas of the best state secondary schools and a report from the Social Mobility and Child Poverty Commission last week showed the extent of Elitist Britain, with top jobs reserved for those who’ve been to public schools and top universities.

The NHF quotes Joseph Rowntree Foundation research from 2012 into housing options for young people in 2020. It forecast that the number of owners aged 18 to 30 would fall from 2.4 million to 1.3 million, with private renters rising from 2.4 million to 3.7 million and those living with their parents rising from 3.2 million to 3.7 million.

I’ve blogged many times before about the decline of home ownership. What looks like a slow death when you look at the headline numbers seems much faster when you look at the fall in the number of households buying with a mortgage and at ownership rates among different age groups. This has huge implications for future policy that we have not even begun to address.

We now have a housing crisis that expresses itself not just in homelessness and a desperate need for social housing but in an anxiety about affordability that stretches right up the income scale. As David Orr of the NHF puts it: ‘We need the government to take action to end the housing crisis within a generation, for the next generation.’

Yet 80 per cent of the parents in the NHF poll do not think that any of the mainstream parties will effectively deal with housing. Will they hear anything better in this year’s party conference season?

There is one piece of good news today. A manifesto launched today by the influential website Conservative Home website puts Homes, Jobs and Savings as its three priorities. The section on ‘Homes for All’ highlights many of the issues I’ve raised above. If the solution is to build more homes at lower prices, it’s interesting that ConHome argues that the problem is not so much planning as speculation:

‘To provide both affordability and quality, we need to freeze out the speculators. In an advanced society there is no such thing as a completely free market in land for development – central and local government will always be involved in its allocation through the planning system.
 We believe that the state should use this power to actively favour home ownership over professional property investment.’

Here’s a flavour of the proposals:

  • A new option for planning authorities to require that homes in a new development only be sold to people intending to live in them
  • New tax policies to favour ownership (phasing out of stamp duty) over property investment (a tax on land banking)
  • An end to all mortgage subsidies such as Help to Buy with government support switched to councils and social landlords to build new homes for sale
  • A long-term switch of housing benefit money from the private rented sector to ‘ownership-enabling social housing’
  • A community-led planning system with local referenda
  • A right to build on suitable publicly owned land for self-builders and housing associations
  • More development at the scale of a street or whole neighbourhood facilitated by enhanced land assembly powers for local authorities plus an auctioning system to allow landowners to sell purchase options on their land
  • New garden city corporations modelled on the London Docklands Development Corporation – again subject to a local referendum but with powers over planning, land purchase and infrastructure.

You can agree or disagree with that. For me, the recognition of the importance of housing and the diagnosis that speculation rather than planning is the problem are both welcome but ‘homes for all’ do not seem to include ones for those locked out of any form of ownership.

However, what’s interesting is that the manifesto is covering much of the same territory as Labour’s Lyons Review. The policy prescriptions will be different (especially on social housing and housing benefit) but at least the major parties are taking the housing crisis seriously at last.

Before all of us have to move to Sellafield, it’s about time. 

About time

Mon, 1 Sep 2014

Sellafield. Parental help. Mortgages lasting 40 years. Welcome to housing affordability in the 21st century.

Exhibit one is a survey by the TUC comparing median house prices and earnings in local authority areas across England. It finds that Copeland in Cumbria, home of the Sellafield nuclear reprocessing facility, is the only one that is easily affordable on less than three times earnings. Nowhere in southern England is affordable at less than five times earnings.

Exhibit two is an opinion poll of parents conducted by the National Housing Federation. It finds that 81 per cent of parents are worried about the impact of rising house prices on the next generation, 69 per cent think their children will not be able to buy without their financial support and 25 per cent are already saving for their children’s first home.

Exhibit three is a report in the Independent on Sunday that more first-time buyers are being tempted by mortgages lasting 35 and even 40 years. The good news is that they offer lower monthly repayments than a traditional 25-year mortgage. The bad is that you will pay back far more in total (£403,000 for a £200,000 mortgage over 40 years) and could end up still in debt in retirement.

On one level, these trends are nothing new. The TUC comparison offers a useful affordability yardstick but it is really a false comparison since for many years most people have bought their first home as a couple who are both working. Help from the Bank of Mum and has been around for a while as a result of rising prices and the need for a much higher deposit since 2007. And plenty of owners have mortgaged themselves beyond 65.

All three, like longer mortgage terms and chopping up houses into rabbit-hutch rentals, can be seen as the market reacting to higher prices and finding a way for people to afford them.

However, the ways the market finds will not necessarily be benign: just think of what happened when the banks relaxed their lending criteria before 2007 and packaged up low and high risk loans into securities to sell to each other.

What the TUC survey shows is the impact not just of rising prices but also of earnings that have been stagnant since the start of the financial crisis. That, plus new Mortgage Market Review criteria that mean lenders are (rightly) checking affordability much more carefully, mean it will be even more difficult for average earners to buy. And it has wider economic effects too since those forced to rent and those who manage to scrape enough together to buy will have less to spend on other things.

And what about the long-term implications of the parental help suggested by the NHF poll? Through most of the 20th century rising home ownership was an engine for greater equality of wealth. That has already gone into reverse and it becoming an engine for greater inequality in the 21st century, with ownership increasingly become the preserve of those with family already on the ladder.

There are wider social impacts too. There is already a house price premium in the catchment areas of the best state secondary schools and a report from the Social Mobility and Child Poverty Commission last week showed the extent of Elitist Britain, with top jobs reserved for those who’ve been to public schools and top universities.

The NHF quotes Joseph Rowntree Foundation research from 2012 into housing options for young people in 2020. It forecast that the number of owners aged 18 to 30 would fall from 2.4 million to 1.3 million, with private renters rising from 2.4 million to 3.7 million and those living with their parents rising from 3.2 million to 3.7 million.

I’ve blogged many times before about the decline of home ownership. What looks like a slow death when you look at the headline numbers seems much faster when you look at the fall in the number of households buying with a mortgage and at ownership rates among different age groups. This has huge implications for future policy that we have not even begun to address.

We now have a housing crisis that expresses itself not just in homelessness and a desperate need for social housing but in an anxiety about affordability that stretches right up the income scale. As David Orr of the NHF puts it: ‘We need the government to take action to end the housing crisis within a generation, for the next generation.’

Yet 80 per cent of the parents in the NHF poll do not think that any of the mainstream parties will effectively deal with housing. Will they hear anything better in this year’s party conference season?

There is one piece of good news today. A manifesto launched today by the influential website Conservative Home website puts Homes, Jobs and Savings as its three priorities. The section on ‘Homes for All’ highlights many of the issues I’ve raised above. If the solution is to build more homes at lower prices, it’s interesting that ConHome argues that the problem is not so much planning as speculation:

‘To provide both affordability and quality, we need to freeze out the speculators. In an advanced society there is no such thing as a completely free market in land for development – central and local government will always be involved in its allocation through the planning system.
 We believe that the state should use this power to actively favour home ownership over professional property investment.’

Here’s a flavour of the proposals:

  • A new option for planning authorities to require that homes in a new development only be sold to people intending to live in them
  • New tax policies to favour ownership (phasing out of stamp duty) over property investment (a tax on land banking)
  • An end to all mortgage subsidies such as Help to Buy with government support switched to councils and social landlords to build new homes for sale
  • A long-term switch of housing benefit money from the private rented sector to ‘ownership-enabling social housing’
  • A community-led planning system with local referenda
  • A right to build on suitable publicly owned land for self-builders and housing associations
  • More development at the scale of a street or whole neighbourhood facilitated by enhanced land assembly powers for local authorities plus an auctioning system to allow landowners to sell purchase options on their land
  • New garden city corporations modelled on the London Docklands Development Corporation – again subject to a local referendum but with powers over planning, land purchase and infrastructure.

You can agree or disagree with that. For me, the recognition of the importance of housing and the diagnosis that speculation rather than planning is the problem are both welcome but ‘homes for all’ do not seem to include ones for those locked out of any form of ownership.

However, what’s interesting is that the manifesto is covering much of the same territory as Labour’s Lyons Review. The policy prescriptions will be different (especially on social housing and housing benefit) but at least the major parties are taking the housing crisis seriously at last.

Before all of us have to move to Sellafield, it’s about time. 

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