In recent weeks I’ve been involved in writing, publishing and launching a new report on shared ownership housing for Gateway Housing Association. “Moving On Up” looks at the sector as a whole with a focus on staircasing. It includes a study of Gateway’s shared owners (9 in 10 of them are satisfied) and members of the London Home Ownership Group. The report includes 15 practical recommendations that could apply to all housing providers.
The main focus of the report is on staircasing. Given its origins as a leg-up onto the housing ladder you would expect mobility in shared ownership to be high. In fact it has just about the lowest mobility of any sector. For many housing providers selling a shared ownership property seems to be the end of the process rather than the beginning. Staircasing is a key element of mobility – the more you own the greater your chances of moving on – so the report looks at the barriers that stand in the way. Obviously income is a key barrier, but the fees involved in buying extra shares were also identified as a significant obstacle, and providers need to find ways to lessen their impact, perhaps by offering to pay them up-front and offsetting them against future receipts.
You can read “Moving On Up” here.
At the report’s launch, Gateway’s Chief Executve Sheron Carter introduced the keynote speaker, David Orr, who described shared ownership as “the tenure that refuses to die”. It’s true that shared ownership has been hamstrung by complexity, restrictions and constant change and yet it keeps struggling on, primarily because it is actually a brilliant concept. The notion of a tenure that bridges the widening gap between renting and owning has to be sound and if it didn’t exist someone would have to invent it. (Incidentally, there was some discussion at the launch about who did invent shared ownership. The late Chief Executive of Notting Hill, John Coward, is a strong contender and you can see an interview with him here.)
There are around 170,000 shared owners in England, so it represents a relatively small slice of our overall stock, but it has huge potential to provide more homes. A report from Shelter last year (“Homes for Forgotten Families”) suggested that nearly eight in ten low to middle income families would be unable to afford to buy outright, even with Help to Buy, but 95 percent of them could afford a shared ownership home. Shelter says shared ownership needs a big shake up if it is to play a significant role in the future – there are too many schemes and it has been messed around with too often by government. That certainly confirms my experience from trawling though dozens of websites. A Rightmove for the shared ownership sector would be a step in the right direction, as would a firm dose of simplification and re-branding. Some providers, like Thames Vallley Housing Association, have taken up this challenge by devising a scheme called Shared Ownership plus that allows owners to buy 1 percent extra each year with minimum fuss.
The fundamental problem is that shared ownership has an identity crisis. Is it social housing, designed to meet genuine housing needs, or is it a product that is there to meet housing demand? A report from the JRF in 2008 highlighted this tension and described shared ownership as “a permanent hybrid tenure between ownership and renting.” Some local authorities reflect this tension when they express concerns about whether people in shared ownership are in genuine housing need.
Perhaps we just need to recognise that anyone who buys a home to live in has some level of housing need, and get on with it. There is masssive untapped demand out there and shared ownership has the potential to add to the overall supply and house thousands of extra people, if only we realised it.
The Planners, (now re-branded as Permission Impossible) is good, formulaic TV. Each episode covers four or five planning battles, culminating in a site visit by councillors and the final decision at planning committee. Cue disgust/delight on the part of developers/objectors, run titles. It may not appeal to everyone, but it should be compulsory viewing for anyone who works in housing. The latest episode even featured an appearance by Sir Steve Redgrave pressing the case for a sports’ village on green belt land in Chester (he lost).
The programme showcases hard-pressed planning officers and councillors trying to do their best and, in the finest traditions of English muddling-through, they usually reach the right decision in the end. But I can’t help thinking that there has to be a better way to plan for the homes and places that we need.
Apparently, the second series was going to be called “Not in My Back Yard”, which reminded me that I wrote about the psychology of “nimbyism” last May and promised to return to the topic. This prompted me to look at a new toolkit from Shelter that aims to promote a better understanding of how different groups of people feel about development proposals, and allows developers to tailor their proposals accordingly. Not surprisingly it is “wealthy executives”, “affluent greys” and “flourishing families” who are most likely to object to new developments in their area, and they make up a quarter of the UK population. These are precisely the people who appear most frequently in Permission Impossible and it proves the point that protests by these groups are likely to push development into areas where people are less likely to object - i.e. areas populated by “educated urbanites”, “aspiring singles” and “those affected by Inner city adversity”.
A good example of this is happening on my doorstep in Cambridge where I am involved in a local residents’ group. The City Council has just submitted a draft local plan that proposes new homes on a tiny slice of green belt land close to Addenbrooke’s hospital. This amounts to just 14.6 hectares out of a total green belt of 26,340 hectares, but inevitably an aggressive “Save the Cambridge Green Belt” campaign has been launched. You can get a flavour of their methods here, (some of the comments are mine). Crying “Save the Green Belt” In such circumstances is like campaigning to “Save Hyde Park” when a block of toilets on a landscaped plot measuring 26 by 30 metres is proposed for one corner of the 142 hectare park, (I’ve done the maths). It’s pure scaremongering, but what can you do?
The consequence of this “nimby” campaign is that the area where I live is being forced to accept higher housing densities because the Council is struggling to meet its housing targets within the urban footprint. A large brownfield site near me has had its density more than doubled to 75 dwellings per hectare, even though local schools and services are over-stretched. A petition against the proposal raised a few hundred signatures, whereas the green belt lobby managed over 2,000 signatures, so they are more vocal and, I would argue, more selfish than we are. The difference between my group and theirs is that we want housing but they want none at all.
As urban densities increase I believe this kind of conflict between urban and edge-of-town groups will increase. It’s not just ruralites who want to keep the towns hemmed in - those who who live on the urban fringe and stand to lose ther views or their access to open fields are equally opposed to growth, even though the homes they live in were built on green fields fairly recently.
Much of the argument between anti and pro-gowth campaigners is conducted at arms’ length or through on-line forums, and although people often complain that the planning system is too adversarial I can’t help thinking that a little more face-to-face confrontation could be a good thing and possibly cathartic in the long run. For example, when the councillors on Permission Impossible carry out their site visits, local objectors and developers are forbidden to approach them. This leaves both sides feeling frustrated and complaining about a lack of openness and transparency. Instead, why not allow more argument and debate at each stage of the process? Let’s hear the voices of those who would benefit from development, perhaps at the pre-application stage, in a kind of truth and reconciliation session. Let nimbys come to face to face on site with single parents living in damp and overcrowded homes, or young people who are forced to spend half their salaries on renting a grotty flat, so that they can see the personal consequences of their campaigns against new homes. In our society ugly things are often hidden from sight, and the well off and well-housed rarely see the ugly side of the housing crisis. If “nimbys” were persuaded to see the bigger picture and “check their privilege” perhaps it would help to temper their views, or am I being naïve?
Perhaps, perhaps not. But the planning system needs to find a bettter way of hearing a wider range of voices when important planning decisions are being made, and not just listening to those who make the most noise.
In October 2010, Inside Housing published an iconic front page – The End of Social Housing 1945 - 2010. It’s taken three and a half years but a group of housing people has finally responded to that message and decided that enough is enough. SHOUT – Social Housing Under Threat - aka The Campaign for Social Housing has now been formed.
SHOUT was established in response to the challenge laid down by John Healey in this article. He wrote, ‘The government displays a deep hostility towards social housing and its defenders are nowhere to be found’. Since then, a small group of ‘defenders’ has met with John and his advisers, and a formal launch of the campaign is due to take place soon.
Those of us who responded to John’s challenge believe that social rented housing is worth defending. Over the past 40 years it has been attacked, denigrated and dismantled by a succession of governments, relegated to a tenure of last resort, its occupants stigmatised by parts of the media and some politicians as scroungers and workshy layabouts. Instead of investing in bricks and mortar, governments have increasingly subsidised rising rents rather than affordable homes. Meanwhile, home ownership has been promoted as the “natural” tenure of choice. We believe that social rented housing has a proud and noble history and that it deserves to play an important role in any sensible housing policy.
A re-invigorated right to buy,“voluntary sales” in accordance with the HCA prospectus and conversions to affordable rents are all adding to the decline of the social rented sector. The “Affordable Rent” programme is not the answer to the country’s housing needs. The housing benefit bill is £24 billion and rising. We say it makes no economic, social or moral sense to trap pooor people in poverty, forcing them into so-called “affordable” properties where they are forced to rely upon benefits.
I never tire of using this graph from Shelter because it tells the story of post-war housing policy in a single image and proves the point that the private sector and housing associations have never been able to plug the gap left by the demise of local authority house-building. It was local authorities, building social rented housing, that made the difference.
So what does SHOUT stand for? You can read our key demands here, but they include a call for an adequate level of investment in new social rented homes, (with rents that are truly affordable), an end to sales under the right to buy unless there is like for like replacement, and an end to the affordable rent programme, including conversions, in those areas of the country where out-turn rents are unaffordable. We are deluding ourselves if we think that truly affordable homes can be built without adequate levels of subsidy.
Social rented housing is not the sole answer to the country’s housing plight, but it should be a significant element of a balanced housing policy. The campaign is cross party - we want to see a return to the political consensus that existed in the 30 years after 1945 when Conservatives and Labour competed with each other to to build as many homes as possible. We have made a submission to the Lyons Review and argue that half of Ed Miliband’s target of 200,000 new homes a year should be social rented homes. You can read it here.
Our twitter feed is active and we have almost 650 followers. A Facebook page is up and a website is coming soon. We urge you to follow and support the campaign and to watch out for further details. We need suporters and funds but most of all we need people to spread the message.
As John Healey said, “it will be a wider swell of pressure from those who believe in the economic and social case for public housing that really matters.” I urge you to follow and support the campaign, contact your councillor, your MP and anyone else who will listen and tell them that social rented housing housing is a public good that deserves to be at the core of a sane and decent housing policy. It’s time to say enough is enough.
I was in Amsterdam last week and noticed that where the roads had been dug up the sub-strata was pure sand. In fact, Amsterdam is mostly built on sand, excavated over centuries from the canals and swamps and made into new land. Many of the buildings in the centre of Amsterdam were built in the 17th century and each one sits on dozens of tree trunks driven end-on into the soft subsoil. That’s why so many of them look as if they are about to topple over. Below the basements, cow hides were sewn together to make an impermeable membrane, and many still exist.
Over a third of Holland is below water level and the Dutch are the world’s experts at water management. During the recent storms, Holland was largely untouched, even though other parts of northern Europe were bady affected.
Dutch engineers are now being brought in to assist in the Somerset Levels, but there is another part of England where Dutch expertise has left an indelible mark: the Cambridgeshire Fens. In the 17th century, Cornelius Vermuyden was asked to create agricultural land out of the swampy marshland that extended from Cambridge to The Wash. His solution was to create the Bedford rivers, two 20-mile long parallel drains which have higher banks on the outside than on the inside. The area in between – which is up to 900 metres wide and called the Washes – becomes a vast man-made lake in times of heavy rainfall. If you have a chance, take a look at this on Google Earth or Google maps. It’s an astonishing piece of engineering.
Of course, flooding is not just a result of what does or does not happen on the flood plain – such as dredging or housebuilding – it is also determined by what happens upstream. We are simply not very good at storing water during times of plenty to use during times of drought, something I wrote about here almost two years ago. Six months from now, when we are in the middle of another drought, we will probably look with envy at all the water currently sloshing around on the Somerset Levels and the Thames valley.
So if places like the Somerset Levels are to flood every year and become useless for man, beast or crops, what are the options for their future use? Well, thinking aloud, I can think of several: we could bring back the Dutch to teach us the methods we should never have forgotten; we could grow rice; we could create vast new reservoirs or water parks; or, we could turn disaster into opportunity by creating new settlements. After all, if this is marginal land, what better use is there than housing? If that sounds counterintuitive, look again at Amsterdam. It was created out of a similar landscape and sits at or below sea level and yet flooding is rare. Imagine a vast New Amsterdam arising alongside the M5 between Bristol and Bridgwater. Lakes and canals could be dug and the spoil could make new land, creating a baseline ground level that is well above the worst predictions for future rises in sea levels. The new homes would be safe from flooding for centuries to come. The excavated lakes and canals then act as water storage areas that can be managed to take excess water during periods of heavy rainfall. If it seems far fetched to imagine a new town based around canals and lakes, there are settlements all over the world that are built around water. Amsterdam is a city built on canals and lakes but many of its residents rarely venture onto the water. Most of its canals are lined by roads and cycle tracks, but the waterways add to its amenity and create interest and space between the buildings. Effective development and management of flooded landscapes in England could create highly sustainable new communities.
The process of creating new land and new settlements out of swampy landscapes has been happening in Holland for centuries. Why not here?
The HCA prospectus for the 2015/18 bidding round has just been published and the thumbscrews are tightening.
The first things to say is that this is the end of the road for new social rented housing. Para 204 states “Social rent provision will only be supported in very limited circumstances. For example, social rent could be considered where decanting existing social tenants into new homes is necessary” Para 92 states “…Government policy does not support the argument that only rents at or close to social rent levels are capable of meeting local needs – particularly when support for housing costs through Housing Benefit and Universal Credit is taken into account”
What’s more, local authorities will not be allowed to use high “Affordable” rents as a valid reason to oppose a scheme on their patch. “…a view that Affordable Rent prevents an authority from meeting local need would not be considered a robust reason not to support a bid.“ So this prospectus more or less accepts that, for the sake of a few more units, the “Affordable Rent” programme will condemn many people to a life on benefits. Housing benefit will take the strain. Shameful.
Secondly, ex-Policy Exchange guru Alex Morton (now in Number 10) has his fingerprints all over this prospectus, because not only are providers required to maximise the number of conversions of voids to the “Affordable Rent” model but they are also required to show that they are selling off expensive properties to fund new homes in poorer areas. This is something that Policy Exchange first floated in 2012 and I wrote about it here. If carried out on any major scale it is profoundly wrong, because it damages diversity and is socially divisive. The entire thrust of the prospectus is about building the greatest number of homes for the lowest level of grant, by selling assets, diversification, pumping up the level of debt and converting social housing to unaffordable “Affordable Rents”. This is not sweating assets, it’s sticking them in the oven until they are dessicated.
To prove the point about unaffordable rents, just take a look at average 2-bed market rents published by the VOA At October 2013. If you convert these to the 80 percent “Affordable Rent” you achieve the following weekly rents for selected districts in London and the south east.
- Westminster £460
- Camden £377
- Hammersmith £324
- Redbridge £190
- Oxford £189
- Cambridge £177
- Broxbourne £154
- St Albans £153
On a minimum wage, no one could possibly afford these rents without recourse to benefits (and no poor person would be able to afford to live iin the first three boroughs under any circulmstances). This programme forces people into welfare dependency. It is only when you move out to somewhere like Thanet (£103 per week) that the “Affordable Rent” model starts to become affordable. This model simply does not work for much of southern England.
Finally, the prospectus includes all kinds of nonsense about driving down procurement and construction costs and driving up quality. It’s Alice in Wonderland. You cannot provide decent, affordable housing without a decent level of subsidy.
The question is, how many housing providers will co-operate with this latest programme? Are they prepared to sell their souls and their assets for a few more homes? How many will take a long-term view of their role and say, “Sorry, this is not for us. We want to provide homes that people can afford. We will bide our time until a more favourable grant settlement comes along”? How many will have the courage and the decency to say no to a programme that will load them with debt, force the sale of their most valuable assets and tie their tenants into the benefits’ system for years to come?
You know it makes sense. Just Say No.
(Note: I amended this blog on the 30th January to remove a reference to the definition of "social housing" because theire is some confusion between the defiintion set out on the CLG website and within section 68 of the 2008 Housing and Regeneration Act.)
The decision by Fergus and Judith Wilson to evict tenants on housing benefit from their portfolio of 1,000 properties in Kent was one of the more interesting stories of the past ten days. Fergus had an extraordinary interview on Channel 4 news and then sent a bizarre statement to the Guardian.
This was followed by another story in The Guardian quoting a major landlord in Wales who claimed that 90 per cent of private landlords were ‘considering’ shunning HB tenants in the future, and a statement from the National Landlords’ Association confirming that many landlords are pulling out of this market. According to this report, the number of landlords prepared to accept HB tenants has dropped from 46 percent in 2010 to 22 percent now. David Lawrenson, a private rented sector consultants from the respected LettingFocus.com told me that he is also aware that many landlords are withdrawing from the HB market.
Some people have reacted with fury to the Wilson’s decision, but I think this is misplaced. From their perspective it’s a rational business decision - it’s what private landlords do - and it proves the point that people like the Wilsons can and will do private sector stuff more effectively and more ruthlessly than we ever can.
If the vast majority of landlords do pull the plug on benefit-dependent tenants what will be the consequences?
Firstly, it’s important to note that the PRS has grown like topsy over the past 30 years - an increase in Great Britain from 2.8 million homes in 1981 to around 4.6 million now. (That has the feel of a bubble to me, although David Lawrenson assures me that demand is still strong.)
Last August there were just over 5 million housing benefit recipients in Great Britain of which 67 percent were in the social housing sector and 33 percent in the private rented sector. That means one in every three (1.6 million) PRS tenants receives some level of housing benefit. Of these, 84 percent received the Local Housing Allowance, being post-2008 claimants. Due to shrinking wages and rising rents the number of PRS tenants on benefits has increased rapidly, and they represent the largest proportion of the recent growth in the HB bill, which now stands at £24 billion. In fact, this latest release from the DWP suggests that 39 percent of the HB bill is now spent in the private rented sector.
If every third PRS tenant is on benefits and landlords really do stop taking them on the scale mentioned above it could lead to more than a million poor tenants losing their home. What will be the consequences? Firstly, landlords will be chasing a shrinking pool of “hard working” tenants, who can pay the full whack and not fall into arrears. On the face of it, the simple laws of supply and demand suggest that this will lead to a significant fall in rents. It will become a buyers’ market for tenants. But the picture may not be so simple. Canny landlords are likely to offload some of their stock, particularly their low-end stock. This could lead to a glut of properties on the market which could have the effect of suppressing house prices in some areas.
But what will happen to the HB tenants who are turfed out by landlords? For many, their first port of call will be their local authority and some will end up in hostels and bed and breakfast. The pressures on local authorities will intensify. Others will move into the very worst PRS properties, and there will undoubtedly be some less scrupulous landlords who will come on board to cater for this growing group of desperate tenants, managing their benefit claims for them in some cases. Exploitation, fraud and personation are likely to increase. Others will be forced into cheaper areas, far from work and families. There is likely to be a growth of HMOs, shared rooms, sub-divison of rooms and beds in sheds. We saw some of this in Benefits Steet this week, where 14 Romanian men were sharing a small terraced house. Polly Toynbee covers some of these issues in her latest article. Demands for rent control and licensing will grow. The real issue is supply and affordability.
All in all the outlook is poor.
More bad news for housing. George Osborne is proposing a further £25 billion of cuts during the next Parliament, with £12 billion of this coming from the welfare budget.
But when he was pressed on Radio 4 on the 6th January to say exactly where these welfare cuts would fall the best he could come up with was this statement:
“I would look at housing benefit for the under-25s, when there are many people listening to this programme who can’t afford to move out of their home but if you’re on benefits you can get housing benefit under the age of 25. There are people, for example, on incomes of £60,000 or £70,000 living in council homes – I’d look at that.”
On Newsnight on the 6th January, the Treasury Secretary, Sajid Javid, also focussed on Housing Benefit cuts for the under 25s, and well-off tenants in social housing, but he could not give any figures.
When asked why he would not look at universal benefits for older people George Osborne said:
“Pensioner benefts is not the place I would first turn to…it saves a few tens of millions of pounds, it is not where you need to make the substantial savings required to make sure that this country continues with the plan it has.”
This is utter nonsense.
To begin with, look at the latest breakdown of DWP spending on the spreadsheets here (tables 1b and 2a are relevant). The forecast outturn for welfare spending in 2013/14 is £163.6 billion. Some of the main headings of spending are as follows. (I have rounded up the numbers)
|State pension||£83 bn||(50.7 %)|
|Housing Benefit||£24 bn||(14.7 %)|
|Disability Living Allowance||£13.7 bn||(8.4 %)|
|Pension credit||£7.1bn||(4.3 %)|
|Family Credit||£6.7 bn||(4.1 %)|
|Attendance Allowance||£5.4 bn||(3.3 %)|
|JSA||£4.5 bn||(2.7 %)|
|Income Support||£3.6 bn||(2.2 %)|
|Winter fuel allowance||£2.1 bn||(1.3 %)|
Some of these headings go across all age groups – housing benefit for example. In fact, 66 percent of ALL welfare spending goes to pension-age people as the second table shows (£110 billion in 2012/13 against a spend of £166 billion). To pretend that you can make significant cuts in welfare spending without looking at the elderly is nonsense.
Turning to housing benefit for young people, the best estimate of current spend for under 25s is £2.4 bn for 384,000 applicants (see this House of Commons briefing ) of whom nearly half (165,000) have dependent children. Many of the others will be people with histories of care and personal vulnerabilities for whom a cut in HB is likely to lead to an INCREASE in public spend in the long term, exactly the impact that the bedroom tax is having, as Joe Halewood has repeatedly pointed out. The Telegraph’s political editor suggests that the measure could save £100 million at best, which is nowhere near the “substantial savings” that Osborne referred to.
As for wealthy social housing tenants, it is hardly worth engaging with the argument. The government has already made pay to stay voluntary. They can either make it compulsory or require eviction for high earners, but in either case the numbers and the potential savings are minuscule.
By contrast, the figures for universal benefits for pension-age people are massively larger. According to table 2a the government will spend £606 million on free TV licences this year, £2.1 billion on the winter fuel allowance and, according to this FT report, £1.1 bn a year on the free bus pass. Many of these discretionary benefits go to relatively well-off pensioners (I have several in my own family!) and could achieve huge savings.
In fact, Osborne’s claim of “tens of millions” in savings would be better applied to cuts in HB for young people whereas his “substantial savings” are to be found in the elderly budget. His statement on Radio 4 is the very reverse of the truth.
This week Osborne also announced that pensions will be protected during the next Pariament with a “triple lock” that would see them rise annually by the higher of inflation, average earnings or 2.5 per cent. Add this to his deterrmination to protect universal benefits for pensioners and my only conclusion is that this is a blatant and cynical political bribe, desgned to address the fact that, at the last election only 44 percent of 18-24 year-olds voted compared to 76 percent in the 65-plus age group.
I don’t think this kind of politics is fair, reasonable or prudent. Not only does it reveal an astonishing level of ignorance on the part of senior ministers, but it is also storing up problems for the future, increasing the level of inequality and heightening tensions between young and old and between rich and poor.
Iain Duncan Smith has spent the past three years busily cutting subsidies to some of the poorest people in the land, yet over the past ten years members of his family have received over 1.5 million Euros in subsidy from EU farm payments and Natural England. You can read about it here, (although there is no suggestion that IDS received any personal benefit from this largesse). I've written in the past about sheep, horses and golf courses and the way that they are greedy of land, but the system of EU subsidies for rich landowners represents an even greater misuse of land. George Monbiot has described it as the greatest transfer of wealth from the poor to the rich, although it goes largely unreported in the media.
The 90 percent of us who live in towns and cities know little about the way our countryside is managed and subsidised, even though it defines and confines the way we live and does as much to limit our housing options as any other national policy.
The Common Agricultural Policy accounts for 43 percent of the EU budget and supports a farming system that uses over 70 percent of the UK’s land, but which accounts for a mere 0.6 percent of our Gross Domestic Product. By contrast, housebuilding contributes 3 percent to GDP and uses a tiny fraction of land. Landowners receive £3.3 billion each year and can pocket up to £300 of annual farm subsidy for every hectare of land they own (the more you own the more you get) and they don’t even have to grow stuff, they just need to keep it in “good condition”. They are also exempt from capital gains and inheritance tax. The CAP damages farmers in Africa and other poorer countries by unfairly subsidising UK producers and by imposing tariffs of between 18 and 28 percent on imported foodstuffs (compared to 3 percent on manufactured goods). Some campaigners say that reform or abolition of CAP would do more to help poverty in Africa than any other measure. What's more, as George Monbiot shows in this article, subsidies encourage farmers to remove vegetation on their land and this has been a major cause of excessive run-off and flooding in lowland areas. Across much of England, it is not the construction of homes in floodplains that is causing flooding but the actions of farmers on higher land.
The former chief economist of the National Farmers' Union, Sean Rickard, is a fierce critic of the CAP. He said, "I would like to see an unsubsidised farming industry operating in the market the same as any other sector. Agriculture is one of the most efficient industries and could be one of the world’s best if it were not hamstrung by CAP.” New Zealand scrapped subsidies in 1984 but it revolutionised their industry and made it far more efficient.
The net result of the CAP is that our food costs more than it should and every household pays up to £400 a year to keep it going. It’s also bad for our health because it encourages the production of fatty foods and sugar. The largest landowners are the main beneficiaries and, as with housebuilders, it is the small and medium-sized outfits that are disappearing. According to DEFRA the overall number of farm holdings in the UK has decreased by 11 percent since 2005 with the greatest rate of decline (14.2 percent) seen in farms of 20-50 hectares. A study by the EU Commission in 2007 also found that without subsidies the percentage of “profitable” farms would fall from 35 percent to under 20 percent.
CAP also leads to a wasteful use of land and inflates the price of agricultural land, which has risen much faster than general inflation. Not surprisingly, landlowners want to hold on to land at all costs in order to maximise their subsidies. This is evidenced by the fact that last year only 61,000 hecatres of farmland was put up for sale - that's just over half of one percent of all farmland. Compare this to the fact that around 5 percent of all homes are bought and sold in England each year. CAP distorts the land market and its reform could make land cheaper and more readily available. This would not be a straightforward process, because it could mean bigger farms and a squeeze on smaller and medium-sized operations, although there would be more opportunities for self-funded smallholders at the lower end - people who want to live the good life. But a cap on the total payments made to a single landlowner could help to moderate this impact.
An improvement in farming efficiency could allow the same amount of food to be produced from less land, and enable some land to become available for other uses, not least housing.
In the 1840s there was widespread popular agitiation for a repeal of the Corn Laws - a system of tariffs that kept bread prices high for the beneft of the landed estates. Opponents argued that repeal would lead to a fall in wages and a loss of agricultural jobs. In fact, when repeal finally came, cheaper foood flooded into the country, allowing workers to spend more of their wages on manufactured goods. The economy boomed. CAP is like a modern version of the Corn Laws and its abolition or reform could have the same impact.
As a sector, we need to achieve a better understanding of the constraints upon housebuilding. CAP is a significant part of the problem because it distorts land prices and wastes land. We need to address widespread "lazy assumptions" about the countryside, but this cannot be done without solid facts and strong arguments that can successfully challenge the vested interests that are causing immense harm to millions of urban dwellers.
“Most people are poor at numbers of all kinds” says Ben Page in his introduction to IPSOS MORI’s review of the year. It’s well worth reading and includes an interesting chapter on the worrying gap between public perceptions and reality.
Earlier this year IPSOS MORI asked a representative sample of people for their opinion on some key facts and figures about the country they inhabit. Some of the mean responses, with the true figure in brackets, were as follows:
- 25 percent of the population is Muslim (true figure 5 percent)
- 31 percent of the population are immigrants (true figure 13 percent)
- 15 percent of teenage girls under 16 fall pregnant (0.6 percent in reality)
- £24 out every £100 of benefit spending is claimed fraudulently (it’s actually 70p)
- Crime is rising (it’s been falling for years).
- 22 percent of people are unemployed (true figure 8 percent)
- 30 percent are black or Asian (true figure is 11 percent)
The report highlights the problem of “emotional innumeracy” – many of us worry about things like immigration or crime so overestimate their numbers. All housing staff must have come across elderly people who are desperately worried about crime and yet statistics show that young men are much more likely to be the victims of crime.
The media has a key role in widening this chasm of misunderstanding. I’ve no doubt that many housing folk read The Guardian, The Independent, and possibly The Mirror and are therefore reasonably clued up about some of these key facts and figures, but the combined circulation of these organs is 1.3 million, whereas The Daily Mail, Telegraph, Sun and Express between them sell over 5 million. Constant stories about welfare cheats like this and this, or about the dangers of immigration like this leave an impression, and confirmation bias often drives the way people read stories - we actively seek out articles that confirm our existing opinions and prejudices and ignore those that refute them.
This disconnect between perception and reality is something that the government has capitalised on in its welfare reforms. They believe the public is on its side (it is by and large) and that their reforms are popular. But much of the government and media focus has been on the workless or “workshy” even though only 3 percent of the welfare bill goes to workless claimants. The same IPSOS MORI survey found that 29 percent of people think we spend more on JSA than pensions, when in fact the ratio is one to fifteen. The survey also found that the public have little idea about the scale of welfare spending. Over twice as many people believe that the benefit cap of £26,000 per household will save more money than raising the pension age to 66 for men and women or stopping child benefit for households earning more than £50,000. In fact, the benefit cap will save around £290 million compared to £1.7 billion for a stop on child benefit for wealthier households and £5 billion for raising the pension age – a huge gap between perception and reality.
The fact that 55 percent of the welfare budget is spent on pensioners (more if you include housing benefit) and that thousands of wealthy older people receive universal benefits such as state pensions, bus passes and winter fuel allowance is rarely mentioned in the press. Nor is the fact that most of the rising housing benefit bill is down to soaring private rents. No significant savings to the welfare bill can be achieved without looking at these areas of current spending, yet this topic is almost never touched upon in much of the media.
IPSOS MORI says that the answer lies in improving statistical literacy, starting in schools, but we also have to do more to challenge dodgy statistics, something that outfits like FullFact are doing effectively. Housing providers and local authorities also have an important role to play in presenting a picture of the true shape of their communities and the money that comes in and out. Little by little, the effective use of newsletters, social media, meetings, personal contacts etc can help to bridge the gap between perception and reality on these key issues.
Wishing you all a Merry Christmas.
You may recall Ed Miliband’s conference pledge that “…by the end of the parliament Britain will be building 200,000 homes a year, more than at any time in a generation.” I wrote about it here.
This pledge created some puzzlement among housing commentators because 205,050 home were built in Britain just 5 years ago, in 2007/08 (218,530 if you include Northern Ireland). The last time more than 200,000 were built in England was in 1988/89 when we built 202,930, which is more than a generation ago. Did Miliband mean England, Britain or the UK? Given that housing is the responsibility of the devolved governments could he make such a pledge for the whole of the UK in any case? The muddle highlighted the ease with which it is possible to confuse the public about housing numbers in an era of devolved government.
The Labour Party has now confirmed to me that the pledge relates to England alone. In an email they told me: “One Nation Labour is committed to tackling the housing crisis, by building more than 200,000 new homes a year in England by the end of the next Parliament, and reforming the private rented sector to work for tenants.”
It’s a heartwarming commitment, although it’s stilll 50,000 short of the total that most experts agree is required - 250,000 a year (and of this total, 50,000 a year will need to be in London).
The question then arises, how will Labour almost double production over a six-year period? Last year, 107,820 homes were built in England, of which 84,420 were built by the private sector for sale or intermediate rent or sale, and 23,400 social and affordable rented homes were built by housing associations and councils. Housebuilders have admitted that they can only increase their level of output by between 5 and 10 percent annually. A 5 percent uplift takes us to 113,000 homes by 2020 and 10 percent to 149,555 homes. (If you take intermediate tenures out of the equation, then the uplift they will be required to achieve is even greater). If housebuilders really can achieve a 10 percent increase year on year I will be very surprised, but, either way, it shows that our sector would need to plug a gap of between 50,000 and 87,000 homes a year to meet Miliband’s pledge - in other words an increase that is between 2.1 and 3.7 times the current rate of output. I’d be interested to hear from development teams whether they can realistically quadruple their newbuild programmes over a six year period. My view is that the only long-term way to boost supply on this scale is a new town programme, but this is unlikely to achieve results within six years.
In my earlier blog I also commented that, “the fundamental point that the Labour Party have missed is that the “cost of living crisis” is fundamentally a housing crisis’. In theIr email to me they say, “This housing shortage is central to the cost of living crisis, leaving millions of working people unable to afford the homes they deserve. Home ownership has moved out of reach for many people, putting more demand on the private rented sector and leading to big rent increases.”
Both statements are a step in the right direction for Labour, but they now need to explain in greater detail how they will put in place a huge boost in housing supply.
There is much to digest in the autumn statement but the revised forecasts for house prices caught my eye.
Between March and December this year the Office for Budget Responsibility has significantly increased its forecasts for house price rises. Back in March they forecast that prices in 2013/14 would rise by 0.9 percent – they now estimate the increase will be 3.7 percent. For next year the forecast rise has increased from 1.9 percent to 5.8 percent and for 2015/16 they have upped their forecast from 3.6 to 7 percent. You can see a graph from Knight Frank that clearly sets out these figures here.
On the face of it, these revised forecasts must be down to the impact of help to buy, yet the numbers of applications are relatively low. Yesterday, George Osborne said that over 18,000 reservations had been made for new homes under the equity loan scheme since its launch in April 2013, and that more than 2,000 people have put in applications under the mortgage guarantee scheme in the month since its launch - so perhaps 30,000 applications a year once the scheme is up and running. This report suggests that up to half of all applications could be refused, so when you set Help to Buy against the total number of transactions in the UK housing market – currently touching one million a year and set to increase to 1.3 million next year – it represents a relatively small proportion of total transactions.
There is little doubt that help to buy is having both a direct and indirect impact on rising prices. It has clearly raised the psychological temperature in the housing market, to the extent that thousands of people with a 5 percent deposit are now desperate to jump on the ladder to avoid missing out, whether they choose to go down the help to buy route or not.
In fact, Help to Buy mortgages are being outgunned by new products coming onto the market. The most competitive help to buy mortgages are around 4.8 percent for a two-year fix or 5 percent for a five-year fix, yet I have found several lenders offering non- help to buy mortgages at 4 percent with a two year fix.
So help to buy may have accelerated a ball that was already rolling, stimulating a certain level of panic buying in the process. The uplift in the housing market is undoubtedly making a major contribution to economic growth, and unemployment is set to fall perilously close to the 7 percent limit at which the Bank of England will consider raising interest rates. When this happens, many of those people who have stretched their finances in order to jump on the ladder of spiralling house prices may find themselves in financial trouble.
Help to buy is no friend of the priced out generation.
Do you recall the Abbey Habit? If you were born before 1990 you may remember a time when our High Streets were littered with building society branches. A century ago there were over 2,000 building societies. Only 45 remain and, apart from the Nationwide, most are small regional outfits. Does the disappearance of building societies hold any lessons for the affordable housing sector? I believe so.
The first building societies appeared in the late eighteenth century and tended to be “terminating” bodies – their members bought land to build homes and then liquidated the society once this had been achieved. But these were slowly replaced by “permanent societies”, taking deposits and lending to homebuyers over the long term. Their core values were based on mutuality and self help, and their rules limited what they could do as corporate bodies. Each member had a single vote and there were restrictions on mergers and takeovers. They were also prudent lenders, which helped to limit house price inflation. All slightly dull perhaps, but building societies were the main providers of mortgages for most of the twentieth century and responsible for a huge increase in home ownership – from 23 percent in 1918 to 70 percent by the end of the century. They did more to change the social fabric of the UK than any other financial institutions.
But all this changed with the 1986 Building Societies Act, which allowed them to offer retail banking services and to de-mutualise if 75 percent of their members voted for it. Banks were also allowed to offer mortgages. The distinction between banks and building societies became blurred. Does this sound familiar?
Over the next decade most of the largest societies voted to de-mutualise. Borrowers and depositors opted for a fast buck (I was one of them) without any real understanding of the wider consequences of demutualisation. Boards and executives were keen to privatise because their salaries soared and it offered opportunities for mergers and takeovers – the empire builders had arrived. Does this sound familiar?
The largest societies - Bradford & Bingley, Abbey National, Halifax, Alliance & Leicester, Northern Rock and The Woolwich – all became banks. Yet not one of them now exists as a separate legal entity – all of them have been swallowed up by Santander, Lloyds, Barclays and the other big banks. This agglomeration created banking behemoths that were “too big to fail” and paved the way for the credit crisis and the hit on the taxpayer when the whole structure collapsed.
So over a twenty-year period an entire sector virtually disappeared, and the vast majority of the British public is worse off as a result. In 2006 an all party Parliamentary report concluded that the demutualised societies offered less choice, were providing more expensive products and that the main beneficiaries of de-mutualisation had been executives and non-executives. Between 1993 and 2000 the total remuneration of chief executives in demutualised societies increased by 293 percent, compared to only 65 percent in mutual societies. And on top of this, the advisers, lawyers and bankers in the City picked up over £1 billion in fees. But the reckless lending following the 1986 Act also contributed to house price inflation.
If you believe it is far-fetched to think that this could happen to the affordable housing sector, think again. According to the HCA’s global accounts our sector has assets of £71 billion and annual turnover of £14 billion. These are big figures and an attractive meal ticket for the money men in the City. Our sector is being increasingly squeezed by reduced levels of grant and an increasing reliance upon private finance and market products. Not only will the City exert a growing influence but, it seems to me increasingly likely that some Boards and Executives, ever anxious to expand their empires, will be tempted to morph into private sector companies.
The recent heated debate about “that” Bromford open letter has highlighted a division within the sector between “traditionalists” and those who increasingly seek to ape the memes and mantras of the private sector. For the latter group, “old fashioned” social housing seems to be trailing somewhere in the background but, like Building Societies discarding mutuality, prudence and stability, if we discard social housing what are we for exactly? What then sets us apart form other private sector providers, who in most cases can do the private sector stuff much more efficiently and ruthlessly than we can?
So if I had a message for those who want to go down the private sector route it would be this. Don’t be seduced by the whizz and bang of the private sector. Stick to your core principles of social housing and a social purpose. Your equivalents in the building society movement forged ahead with the same degree of optmism and bravado as you, but they were defenceless against the big beasts of finance and they ended up leading their organisations over a cliff, albeit with a fat pension in their back pockets.
The example of the Nationwide should be an example to us all. They stuck to their principles, refused to demutualise and have just posted record profits. Being “dull” has its merits.
Note: With thanks to Tom Murtha who prompted the original idea for this blog.
Half a century ago, many keen borough engineers re-shaped their towns and cities by building inner ring roads and urban motorways. Their aim was to speed the progress of the motor car. Their watchwords were ‘innovation’ and ‘progress’. In the process, many close-knit communities were razed.
Today, many of those places rank among the least pleasant urban centres in England. If you have ever tried to navigate the inner parts of Coventry, Bristol, Huntingdon, Birmingham or Leicester by foot, bike or car you will know what I mean. By contrast, those places that resisted the temptation of urban motorways – Cambridge, Winchester, Sheffield – are better for it. By doing nothing, whether by design or tardiness, these cities were saved from harm, their assets were protected. In his book ‘God is Not Great’, Christopher Hitchens writes about the attitude of the church in occupied Europe towards the Nazis, and says, ‘to decide to do nothing is itself a policy and decision’.
Perhaps our housing sector would now have a different shape and reputation had it collectively decided to ‘do nothing’ at critical points in the past, instead of repeatedly jumping through hoops at the behest of the government of the day, in the name of ‘progress’ or ‘innovation’ or ‘growth at all costs’.
Take the Oxbridge colleges – they are some of the most influential and long-lived institutions in Britain. (Peterhouse in Cambridge, where I live, was founded in 1284). For all their perceived elitism they are registered charities and they profess a social purpose. Like housing providers, they have grown step by step and brick by brick, but they take a long-term view. They grow when they can and they wait when they can’t: but they are not prepared to compromise on their founding principles or to sell or devalue their assets. They rarely sell freehold land. Trinity College is reputedly the fourth largest landowner in the UK.
Which brings me to Mick Kent’s open letter to our sector. Two minor gripes about his language to begin with. His headline is, ‘Saying the unsayable’. Well, it’s not unsayable if it’s been said. Then he claims that ‘being different’ is in Bromford’s DNA. Will non-medical people please stop telling us what is in their DNA! As a metaphor it is lazy and factually wrong. DNA is in your DNA and nothing else.
I think Mr Kent is right to open a debate on this topic and he is partly right about dependency within social housing but he is wrong in his analysis of how this has come about. He claims that our current system of welfare has ‘produced very damaging long-term consequences – for individuals, families, society and the economy which will take generations, not just the life of one parliament, to turn around’. But this confuses causation with correlation – a schoolboy error.
The welfare system does not cause or produce dependency, it is the offspring of dependency. Dependency is caused by lack of work, by unaffordable rents and house prices, by low wages and high living costs. In 1968, for example, we built 352,000 homes in England – over three times our current level, unemployment was 2.5 per cent (it’s now 7.6 per cent) and an average house cost 2.6 times an average income – it’s now double that. Social housing rents then were far more affordable than they are now. Yet in 1968 the welfare bill was around 6 per cent of GDP, it’s double that now, and wages are shrinking. Back in 1968 many more people could afford to live a decent life without recourse to benefits. So these are the causes of dependency – the welfare system merely props up the consequences of dependency.
The people who rely on benefits are showing precisely the ‘enterprise, self-reliance, perseverance and skill’ that Mr Kent claims the welfare system has deprived them of. They are responding rationally to an irrational world. To suggest that more than a minority of social housing tenants do not want to work and instead want to live a life on benefits is patronising and wrong.
What’s more, Mr Kent and his colleagues, and those who preceded him, share a significant responsibility for this state of dependency. They are like the borough engineers I mentioned at the outset.
First, rents and house prices are high, and unaffordable, because we have failed to build enough homes. Our sector has failed to make an effective case for a boost in housing supply. But this is partly because we have colluded with other ‘reforms’ that have tarnished the brand and reputation of social housing (going back 40 years or more and not just the 20 years Mr Kent refers to), which has led to our message not being taken seriously.
Second, we colluded with allocations based on personal need rather than the wider needs of the community. We colluded with the notion of putting homeless people at the top of the housing queue, regardless of whether their homelessness was genuine. We colluded with the right to buy, allowing the best homes to be sold off at massive discounts and not replaced. We colluded with the introduction of private finance, piling debt on tenants and raising their rents. We colluded with stock transfer and mergers, creating a highly inefficient and illogical pattern of stock ownership. We colluded with a rent policy that increased rents above inflation year after year. And now we are colluding with the ‘affordable’ homes programme, which will condemn thousands of people to perpetual poverty. Admittedly, some of these ‘reforms’ would have been difficult to resist without legal sanctions, but others could have been resisted. (And to be fair, some providers have ‘done nothing’, for example by declining to take part in the ‘affordable homes’ programme, and all credit to them).
Bromford, and most other large providers, went along with all these changes and now they complain that tenants are dependent. It’s like the teenager who kills his parents and then seeks sympathy as an orphan. The definition of chutzpah.
What it comes down to is this. Do people like Mick Kent believe in the core principles of social housing, or not? Do they believe it is right and just that the state (and past generations of tenants, lest we forget) should continue to fund good quality housing at rents that are significantly below market rents in order to provide for those who cannot cope with, or choose to withdraw from, the vicissitudes of the market? Or do they believe that the sector should head towards a private sector model of provision, where we simply grow at all costs regardless of the affordability of the product we provide? If so, we may as well shut up shop, float ourselves off and become private companies - John Lewis-lite, open to all, just like The Ritz - and have done with it.
The problem is that too many people in our sector have been hyperactive in the wrong direction, jumping to the tune of their political and funding masters yet failing to protect the assets they have been entrusted with. Even now they are busy heading up a blind alley lined with irrelevant buzzwords like social media, ‘being different’, mission statements, customer excellence, social return on investment, you name it - when their core product and their core values are collapsing around them, brick by crumbling brick. It is fiddling while Rome burns. Portraying this as a ‘battle to repair deep rooted cultural damage caused by years of dependence on the state’ is disingenuous, at best.
So my message to people like Mr Kent is: policiticans and governments come and go. You could choose to follow the 800-year old example of Peterhouse College and take the long view. Calm down, relax, take your time, size isn’t everything. If you really believe in the value of social housing then please do nothing to compromise the assets that you hold in trust for past and future generations.
Because doing nothing is as viable an option as doing something. ‘They also serve who only stand and wait’.
A report out this week from Deloitte shows that London dominates more economic sectors than any other world capital. It leads the world in insurance, retail and investment banking, fund management, digital media, non-internet publishing, legal services, accounting, tax and payroll, architecture, engineering services, and management, scientific and technical consulting. London really is the world’s capital.
Yet the number of families being exported out of London has more than doubled over the past year, numberless thousands of poor people are living in beds in sheds, London house prices have soared by 9 percent over the past 12 months, the average private sector rent is £269 a week and the average London house costs £476,000. Millions of Londoners are spending up to half of their incomes on housing costs. The largely unregulated private rented sector has grown massively in recent years and a million people are on London’s waiting lists. London may be booming but the disparity between its economic wealth and its dysfunctional housing sector is stark, and it is going to get worse.
Meanwhile 75 percent of all newbuild properties and 49 percent of all properties in the £1 million plus bracket are being bought by foreigners. There is some debate about the impact this is having on London house prices, but developers, in attempting to capture this market, are providing too many upmarket properties at the expense of affordable homes. This latest report from Savils shows that the shortfall is greatest at the bottom end of the market with a glut of properties at the luxury end.
London’s new Community Infrastructure Levy, which will sit on top of the CIL set by the London boroughs (six boroughs have fixed their own CIL so far) is likely to squeeze the future provision of affordable housing even further. And even when affordable homes are provided can they truly be described as “affordable” when the average rent is £182 per week?
So the future for Londoners on low and middle incomes looks bleak. The big issue is, of course, supply. Only 18,000 homes were built in London last year (see Table 253) and a third were built by registered housing providers and councils. The Mayor has set a target of 400,000 homes over the next ten years, although Savils say that this needs to be upped to 50,000 homes a year - the equivalent of 18 Olympic villages every year. By 2030 there will be another 1.7 million people in London - and at an average current household size of 2.5 that means a need for an additional 680,000 homes. Spread this over 16 years and add in past deficits and the Savils’ estimate of 50,000 a year looks about right.
But London has fewer than 4,000 hectares of brownfield land and even if all of it was developed at relatively high densities (which would be a mistake) it would still leave a shortfall of up to 400,000 homes.
So what’s the answer? Assuming public funding stays where it is there are three structural solutions. One is to build upwards and achieve higher values. One hundred new tower blocks are already in the pipeline for London, mostly private schemes, but this only adds to the pressure on roads, tranpsort, schools and hospitals. Stories like this show that London’s infrastructure is creaking already. Another is to expand London’s footprint and build outwards, something I have advoctaed here and here. A third solution is a new generation of new towns to cream off some of London’s surplus population. The post-War Abercrombie plan of 1944 achieved this but it also caused considerable damage to London’s economy by exporting skilled workers. A subtle combination of all three options seems to me to be the best way forward.
As London’s housing withers its leaders dither. The Mayor produced a draft housing strategy nearly three years ago but it’s still not been published in its final form. Boris Johnson has to invest a great deal more energy into housing than he has of late because there is no bigger crisis facing London. When Harold Macmillan was appointed housing minister in 1951 he said the pledge to build 300,000 homes a year had to be treated as a “war job” and tackled “in the spirit of 1940″. If Boris wants to be become a future Prime Minister he could do well to follow the example of a former Premier and treat London’s housing crisis as if it was a “war job”.
In two previous blogs I have explored some of the uses to which land in England is put. I’ve written about horses and sheep, and highlighted, for example, the fact that horse-grazing takes up as much land as half of the built up area of England – enough for millions of new homes.
Why am I turning my attention to golf? I admit that I approach the subject with some trepidation because I know that many senior figures in our sector like their golf! But the fact is that this minority sport is an extremely greedy consumer of land. Per head of participants it takes up more land than any other sport.
This was brought home to me by reading reports of a recent High Court case about a proposed development in Surrey. In brief, last year Mole Valley District Council gave planning permission for the development of an 18-hole golf course and country club on the 150 hectare Cherkley estate in the Surrey Hills, the former home of Lord Beaverbrook. They made this decision against officer advice and the written planning consent made reference to the “need” for additional recreational facilities in the distirict. A group of local residents launched a legal challenge and High Court judge Mr Justice Haddon Cave has now found in their favour - and against the Council and the developer. Much of his judgement turned on the definition of the “need” for additional facilities in the area, as opposed to “demand”, an argument that will be familiar to many in our sector. Christopher Katkowski QC, for the developer, tried to argue that demand and need were one and the same but the judge rejected this. You can read his full judgement here but the followng extract is worth repeating:
“The developers argued that proof of private “demand” for exclusive golf facilities equated to “need”. This proposition is fallacious. The golden thread of public interest is woven through the lexicon of planning law, including into the word “need”. Pure private “demand” is antithetical to public “need”, particularly very exclusive private demand. Once this is understood, the case answers itself.” Well said!
(By the way, I have seen Mr Katkowski QC in action at a planning appeal in Cambridge. He is a fearsome advocate but on this occasion his arguments were comprehensively demolished by the judge. That is very pleasing).
The judge stated that Mole Valley District already has 11 golf courses and Surrey has 141 full-sized courses. It was also revealed that there are 192 golf courses within 20 miles of Cherkley and 627 courses within a 50 mile radius!
These figures astonished me, so I did some more digging and discovered that there are around 2,000 18-hole golf courses in England as well as hundreds of smaller 9-hole and pitch and putt courses, and at least 600 golf driving ranges. Each 18 hole course requires up to 90 hectares of land (including practice courses, clubhouses, car-parking etc) so my best estimate is that golfing establishments take up around 270,000 hectares in England – that’s 2 percent of England’s total land area of 13.4 million hectares. Accurate figures are hard to come by, so if anyone can contradict my figures I would be pleased to amend them. But by my reckoning English golf courses use an amount of land that is equivalent to one fifth of England’s total built up area (10 percent of England is built upon) and could provide at least 8 million homes.
Yet many golf courses are losing members. Mr Justice Haddon Cave quoted reports showing that 90 percent of golf clubs in the UK had membership vacancies and 80 percent no longer had a waiting list. What’s more, golf has an image problem. Of the 850,000 people who play golf regularly at least 75% are men and only 2% are non-white.
I’m not for a moment suggesting that golf does not give pleasure to many thousands of people, or that millions of new homes should be built across the golf courses of England! If groups of men wish to spoil a good walk by chasing a little white ball they are perfectly at liberty to do so. But it’s also worth bearing in mind that golf courses drink huge amounts of water, are not particularly brimming with wildlife and are generally closed to public access. Yet many countryside campaigners argue that we should not touch any greenfield land whatsoever, either because of its wildlife and amenity value or because we need every scrap of land to provide for our present and future food needs, or both. Well in the case of horses and golf the food argument is spurious, and in the case of golf the wildlife and amenity argument is tenuous, at best. Some golf courses spoil the landscapes they occupy.
At the risk of boring the readers of this blog I repeat: There is no shortage of land in this country. We have more than enough land to build the homes that we need and to stop the awful cramming, overcrowding and shortages of affordable, decent homes now blighting our towns and cities. We just need some facts to enter into the debate in order to counter some of the scaremongering and lies that pervades the subject of land use and development, and to have a grown-up discussion about the way we prioritise our use of land.
For the past two years The Daily Telegraph has been running a spurious ‘Hands off our land’ campaign aimed at developers and government ministers and egged on by the Banana wing of the countryside lobby. This started with the national planning policy framework and has continued intermittently. One of their main targets has been Nick Boles MP, a good planning minister who understands the nature and scale of the housing crisis and knows that we need to build many more homes if we are to become a modern, decent society. He also knows that our future housing needs cannot be met solely from brownfield land and that we will need to build many homes on greenfield land.
This has enraged some Conservative MPs who called for a backbench planning debate at Westminster Hall last week. You can read the transcript here and the Inside Housing story here. Some of these MPs even deny that there is a housing crisis, which does make you wonder.
The Telegraph used the following headline for its report on the debate: ‘Elderly to blame for housing crisis, indicates minister.’ I felt this was inaccurate and misleading. I tweeted to this effect and after an exchange with the Telegraph’s reporter he told me, ‘I just write down what is said in debates in Westminster’.
However, I don’t believe the Telegraph did just ‘write down what was said’.
Here’s the evidence. Mr Boles starts his speech by saying: ‘I need not start by underlining the scale of the housing crisis faced by this country, the extent of the need for housing or the grief and hardship that the crisis is visiting on millions of our fellow citizens.’
He goes on: ‘Our population has grown and we have not built enough houses to keep pace with it.
‘That growth in population has had two main sources. One, which is contentious in the house and elsewhere, is immigration, which was uncontrolled for a long time. We as a party rightly criticised that, and are now doing something to control it. However, it is important to remember that the majority – about two thirds – of the growth in population and in the number of households in the country has resulted not from immigration but from ageing.’
I don’t believe any reasonable person would conclude that Mr Boles had ‘blamed’ the elderly for the housing crisis. He makes it very clear that the ‘blame’ rests with our inability to build enough homes. The fact that the Telegraph chooses to use the flaky words ‘indicates minister’ in its headline rather than ‘says minister’ gives the game away, in my view. I felt this was a violation of the commission’s code, in particular article 1 (1), which you can read here.
However, headlines have consequences. If you have time to read some of the comments below this article you will see, as of today, almost a thousand postings from Telegraph readers, many of them making personal and offensive comments against Mr Boles or against immigrants. This is what we are up against, colleagues. But in my view many of these readers have been misled by the headline to the story.
Because of this, I decided to make a formal complaint to the Press Complaints Commission. It is unlikely to have any effect, but if it helps to tone down some of the intemperate language used by the Telegraph and its use of provocative and misleading headlines in the future all well and good.
There was an interesting article at Conservative Home last week about the 1950 Conservative conference, where (and I find this almost unbelievable) delegates pressured the leadership to adopt a target of building 300,000 homes a year in the UK. The post-war Labour government under Clement Atlee, from a standing start in 1945, was building 205,000 homes a year in the UK by 1950 but both political parties were competing with each other to do more.
The Conservative manifesto for the 1951 election duly carried these stirring words:
“Housing is the first of the social services. It is also one of the keys to increased productivity. Work, family life, health and education are all undermined by overcrowded homes. Therefore a Conservative and Unionist Government will give housing a priority second only to national defence. Our target remains 300,000 houses a year. There should be no reduction in the number of houses and flats built to let but more freedom must be given to the private builder. In a property-owning democracy, the more people who own their homes the better.
Harold Macmillan was made housing minister, even though he claimed to know nothing about the subject. He treated it as a “war job” and ensured that sufficient land and materials were directed towards the manifesto pledge. He also changed the name of the Ministry of Local Government and Planning to the Ministry of Housing and Local Government, to reflect the priority that Housing now took. (Eric Pickles take note!)
By 1954 housing production in the UK peaked at 354,130 of which 239,580 were council houses and only 92,420 were private. But the following Labour government did even better. The Labour manifesto for the 1964 election said this about housing – a pledge of sorts.
“Labour will also increase the building of new houses, both for rent and for sale. While we regard 400,000 houses as a reasonable target, we do not intend to have an election auction on housing figures.”
In fact, Harold Wilson’s government built 425,830 homes in 1968 of which 184,450 were council and a staggering 226,070 private. (Private housebuilders have never since exceeded this 1968 figure. For the whole of the post-war period, despite upturns and downturns in the housing market, they have averaged 154,000 a year in the UK, and this will never be enough on its own to meet our housing needs.)
In 1996 Environment secretary John Selwyn Gummer said we needed to build four million homes by 2016. In 2004, Kate Barker called for 250,000 homes to be built each year in England. In 2007 Gordon Brown promised 3 million new homes by 2020 and announced a programme of eco-towns. None of it has happened, or will happen.
Since 2004 we have averaged only 136,700 homes in England each year, so we have already built up a total backlog of 1.133 million homes against the Kate Barker target, and given recent increases in population even this target looks inadequate.
I have been going to housing conferences for over thirty years. I have seen a succession of ministers spout platitudes about the need for more housing supply but not one of them has ever delivered in the way that Macmillan and Wilson did. On Monday I listened to the latest “housing minister” Kris Hopkins going through the motions about the need for more homes. I’m afraid I don’t believe a word of it now.
Is it any wonder that house prices are shooting up across swathes of the country, that thousands of people are living in beds in sheds, that a whole generation has been priced out of a decent home at a price they can afford, and that almost 2 million households are on waiting lists?
Isn’t it time for some righteous anger about the state of housing in this nation?
On the day of the budget in March I wrote this about George Osborne’s help to buy announcement: ‘The danger is that Osborne’s initiatives, by boosting demand without any corresponding increase in supply, will just create yet another housing bubble.’
It’s now almost impossible to find a commentator who doesn’t believe that help to buy will push up house prices. The second phase starts tomorrow, and allows buyers to put down a 5 per cent deposit on new and existing properties worth up to £600,000, with the Treasury insuring 15 per cent of the price. It has set aside £12 billion of guarantees for up to £130 billion of mortgage lending and the scheme will remain open for three years to January 2017.
According to the Financial Times the average deposit in England will fall from £44,000 to £11,000 as a result of help to buy. So far, only Lloyds and Royal Bank of Scotland (both part-owned by the government) are offering help to buy mortgages.
Not surprisingly, this improvement in affordability has unleashed a huge level of pent up demand from ‘generation rent’. According to Santander 5 million Britons want to buy in the next 12 months and a third of them intend to use help to buy. A quick look at the figures for new supply and transactions shows that this will be a mathematical impossibilty.
For new build, the number of private starts on site in April to June increased by 6,000 on the same quarter last year. But it will take at least 12 months to see if the house builders are ramping up supply. They are notoriously slow to respond to increased demand but quick to stop building as soon as the market shows signs of a downturn.
House builders built 84,000 homes for sale in England in 2012/13 but this makes up a relatively small proportion of the overall level of transactions in the housing market as a whole. Just before the credit crunch in 2006 there were 1.4 million residential transactions a year in England. This has fallen to just over under 800,000 in the last year – sellers have deserted the market as well as buyers.
This is where psychology takes over. Many sellers have kept out of the market due to suppressed prices and low demand. Will they return? Many potential sellers will be looking to buy elsewhere and will be competing against others in the same situation, so they may decide to delay putting up the ‘For sale’ sign if the market is rising. Selling is an art in itself – the dream is to sell at the top of a rising market and buy as the market starts to fall. Yet the housing market may be too volatile for sellers to make sensible decisions. But even if they return to the market in the same volumes as 2006 there will still be an excess of demand stoked by help to buy, so the consequence will be an inevitable surge in house prices.
Mark Carney, governor of the Bank of England, has promised to keep a close eye on the bubble and says he has the tools to deal with it. Presumably one of these tools is the £600,000 cap. Yet in his speech last week George Osborne rather oddly suggested that help to buy was aimed at people in places like Nelson and Colne and Morecambe, rather than the south east. But average prices in these places are a fifth of the £600,000 cap, so why set the figure so high?
One final point. Robert Peston revealed this morning that the Treasury will be charging help to buy lenders up to 0.9 percent fee on the total mortgage, not just the insured element, to comply with EU rules on state aid. This could mean that mortgage rates for help to buyers could be double the rate for other applicants – up to 5.25 per cent.
For financially-stretched first-time buyers this could store up problems for the future. Mr Carney has said that interest rates will rise only when unemployment falls to 7 per cent. This housing boom will inevitably fuel an economic boom that will reduce unemployment. So a year from now we could see young people who bought under help to buy struggling to keep their homes as interest rates rise.
Yet again the housing market is being used to run the economy, the tail wagging the dog, and the consequences could mean misery for thousands of people.
Ed Miliband devoted 212 words to housing in his conference speech in Brighton. That’s about 2.3 percent of a 9,000 word speech. Disappointing perhaps, but he did make three significant pledges. I will use his exact words as posted on the Labour Party website to avoid any ambiguity in what follows.
“So we’ll say to private developers, you can’t just sit on land and refuse to build. We will give them a very clear message - either use the land or lose the land, that is what the next Labour government will do. We’ll say to local authorities that they have a right to grow, and neighbouring authorities can’t just stop them. We’ll identify new towns and garden cities and we’ll have a clear aim that by the end of the parliament Britain will be building 200,000 homes a year, more than at any time in a generation.
I will pass over “use it or lose it” because it is just empty rhetoric, but the pledge on the right to grow is to be welcomed. It’s a firming-up of the duty to co-operate, as set out in the NPPF, and is designed to tackle recalcitrant local authorities who refuse to allow expansion by neighbouring land-locked authorities. The North Hertfordshire and Stevenage case is often given as an example. Whether this will translate into an effective policy remains to be seen.
Despite its rather strange wording, the pledge to “identify new towns and garden cities” is something that I and others have been arguing for for a very long time and is to be welcomed. Whether this can be translated into a realistic policy (eco-towns anyone?) is another matter. It will only work well if land is purchased at sub-residential values and development funded through uplifts in land values.
But the pledge to build 200,000 homes a year is rather misleading. Had he been referring just to England the “more than at any time in a generation” would have been correct. But according to the CLG we built 205,050 homes in Britain in 2007/08 (218,530 if you include Northern Ireland to cover the whole of the UK). That is certainly less than a generation ago by my reckoning. The last time we built more than 200,000 in England was in 1988/89 when we built 202,930, which I guess is more than a generation ago. This is one of the problems with devolution – you can mix and match your countries and cause havoc with accuracy and understanding – a politician’s dream perhaps? Building 200,000 homes a year in Britain is nowhere near enough. We need to build 250,000 in England alone to meet demand and claw back past under-supply.
Miliband also said, “There are 9 million people in this country renting a home, many of whom who would like to buy. 9 million people - we don’t just have a cost of living crisis, we have a housing crisis too”. That seems a curious thing to say. If he is again referring to Britain and not England then I am assuming he just means those living in the private rented sector. Yet many in the social rented sector would also like to buy and many people living in the PRS do not want to buy. Odd.
But the fundamental point that the Labour Party have missed is that the “cost of living crisis” is fundamentally a housing crisis. They are not separate things but inextricably intertwined. Several recent reports have highlighted these issues, and I won’t rehearse them here, but when Londoners are having to find £64,000 to fund a deposit, when so-called “affordable rent” homes are being let at £180 a week and when Generation Rent is paying up to half of their wages in rent it is quite clear that tackling housing supply and afffordability would do more to improve the standard of living of millions of disadvantaged Britons than any other single measure.
The Labour Party has listed a number of steps that it will take to address this “cost of living crisis” including abolition of the bedroom tax, freezing energy prices, extending childcare and rasing the minimum wage. All well and good, but many of these are mere pinpricks in the bigger picture of housing supply and affordability across vast swathes of the country. The bedroom tax may be controversial but it affects relatively few people and, as Joe Halewood has pointed out, Labour has completely missed the point in its pledge to scrap the tax. Too often, our politicians chase public opinion rather than forming it by their vision and leadership.
Our present housing system damages the dreams and aspirations of millions of people, it creates a mighty chasm of inequality between our two housing nations, the haves and the have-nots. Is there any issue that should be a greater priority for One Nation Labour than housing? We need to shout it from the rooftops that the cost of living crisis is fundamentally a housing crisis.
A few weeks ago I wrote a blog about the amount of land in England occupied by horses (“Horse and House”). This week I’m writing about sheep. What has this to do with housing? I hear you cry. Bear with me.
In case you missed it, George Monbiot has been in the news recently over his attack on sheep farming in the UK. He claims sheep are one of the greatest threats to our countryside and describes them as “wooly maggots” and a “white plague”. He says their sharp hooves compact landscapes and cause landslides, and that their relentless nibbling destroys the native fauna that wildlife depends upon, creating sterile “bowling green” deserts in much of upland UK.
George may be flying a kite, because his long-term aim is to see more of upland Britain being “re-wilded”, but his polemic does raise a serious question about the way that we use land in the UK, something that I have been banging on about for years past.
If you look at the latest figures, there are 5.4 million cattle, 3.7 million pigs and 14.6 millon sheep in England. Of course these figures go up and down quite rapidly during the year – about 10 million lambs are slaughtered each year, for example.
Around 8.9 million hectares of England is devoted to agriculture of which 4 million hectares is used for livestock grazing – that’s 66 percent and 30 percent of England’s land mass, respectivley. (By contrast, 53 million of us live on just 10 percent of the land). Given that some of our livestock spends at least part of its life indoors, this amounts to a density population of around 4 to 5 animals to each hectare. Compare this to Islington, where there are 138 people to every hectare.
But just imagine, for a moment, that the land use map of England was reversed, like a negative image, so that towns and cities became countryside and countryside became cities and towns. 90 percent of England, that’s 12 million hectares, would be occupied by 53 million people at just 4.4 people to the hectare. This land would contribute virtually nothing towards GDP or employment and many of us would live alone in grounds of half an acre or more. Meanwhile, 16 million farm animals would be crammed into just 10 percent of the land, which would also produce over 99 percent of our GDP and provide much of our open space and leisure amenity.
It sounds absurd, but this is exactly what we have managed to achieve in reverse with our present land use policy. We, the people, are crammed into our towns and cities at ever-increasng densities, whilst agriculture occupies 66 percent of England’s land mass but contributes less than one percent to our GDP. In terms of sheep farming, in particular, the economics make no sense whatsoever. Around 60 percent of the sheep population comprises breeding ewes whose primary purpose is to produce lambs for slaughter and the odd fleece, which have a value of around £50 apiece. There is little consumer demand for hogget or mutton and my guess is that many of these ewes end up in pet food or are sent abroad. Monbiot points out that every Welsh hill farmer receives £53,000 in subsidy a year, but New Zealand lamb, which is unsubsidised, is still cheaper than UK lamb, because their farms are much larger and benefit from economies of scale. Why do we persist in trying to feed ourselves when we can buy food cheaper from elsewhere?
We do need to have a rational debate about how we use our most precious resource - land. What exactly is the countryside for and to what extent does it add to or detract from the sum of human happiness?
Yet the unfortunate truth is that the countryside lobby has completely hijacked this debate so that the press reacts like Pavlov’s dog at any any mention of building much-needed homes on the countryside. Take this recent story in The Telegraph, which arose as the result of a scaremongering press release put out by the CPRE. When you examine the facts you realise that the land involved represents a minuscule percentage of the green belt.
As I mentioned at the end of my last blog, our sector, and the wider housing industry, is repeatedy outflanked by the countryside lobby on this issue, which means that the space for a rational and meaningful debate about land use is almost impossible. But it’s not a case of choosing between sheep or shelter: just 2 percent of the land we devote to livestock could produce at least 3 million homes. That could mean a big programme of new settlements that would help to meet our housing needs for the next thirty years.