Sunday, 23 November 2014

Inside out

Policy Wonky

Wed, 19 Nov 2014

Policy Exchange is a very influential think tank, so their output is worth taking seriously. But their latest report, which proposes that housing associations should be able to opt for “Free Housing Association” status as a way of boosting housing supply, is confused, confusing and dangerous.

It sets out its stall from the outset. Apparently a “byzantine system of regulatory rules and financial constraints” is preventing housing associations from building 100,000 homes a year. Grant levels are too low, although the government’s annual housing investment of £1.1 billion is too high in a time of austerity, (the fact that we can somehow afford to spend almost £25 billion a year on housing benefits is skimmed over). What’s more, 100 percent nomination rights offer no incentives to local authorities to provide free land. Also, “Local authorities can nominate difficult and antisocial tenants for housing association homes and this is a source of complaint for many associations affected.” (Cue violins).

The solution offered by Policy Exchange is simple. Housing associations should be able to opt out of most regulatory control by buying their grant at a discount. They would then be free to sell properties without consent, to set their own rents, to pick and choose which tenants they take, and to end, or re-negotiate, local authority nomination agreements.

It’s hard to know where to start with this, but before going on, let’s just check some facts. In 2012 Housing associations in England built 27,460 homes. Last year they built just 21,770, and most of these were so-called “affordable” homes which received a much lower level of grant, and which create a bigger burden on the housing benefit bill because the rents are generally much higher. Is this reduction in supply due to a sudden surge in “byzantine” regulation? No, it came about because the coalition government reduced housing investment by 60 percent in 2010, a fact barely mentioned in the report,

On disposals the report states, “The regulatory requirement for the consent to dispose and local authority nomination rights, are impeding housing associations’ ability to strategically asset manage”. Notice how this conflates two discrete issues. I have seen no evidence that the requirement to seek consent before selling a property stops housing associations managing their assets effectively. As part of the current bidding arrangements providers have to propose the sale of high value properties. As for nomination rights, the suggestion that councils would suddenly offer up lots of free land if housing associations stopped taking their nominations is nonsensical. Any sensible local authority would simply work with another, more co-operative housing provider.

Grant reform is at the centre of this report. At present, Housing Associations have £45 billion of historic grant sitting on their balance sheets and £52 billion of debt, but their stock is worth at least £300 billion. I call that a pretty good taxpayer investment, particularly as our low-rent social housing stock is saving £3 billion a year in housing benefits, a fact that is admitted in the report. Policy Exchange proposes that housing providers should be able to buy their historic grant, at a discount, and become grant free. After a lot of evasive throat clearing, the report finally settles on a discount rate of 50 percent. In other words, our historic investment of  £45 billion would be flogged off to housing associations for £22.5 billion. It would then sit on their balance sheets as debt rather than grant. So tenants would be saddled with this additional debt and the capital receipt would go to a grateful Treasury, presumably to be spent elsewhere, with no benefit to housing whatsoever. In the future, grant would be replaced by time-limited government equity, which would have to be paid back.

On gearing, the report says, “Some housing associations are already running at close to their gearing constraints, so that current levels of output of 45,000 affordable homes built a year may be unsustainable.” Another section of the report states, “In order for housing associations to repay the government grant, they would either have to borrow the money or use the cash from their surplus positions. This would inevitably use some of their financial capacity.” Not half! It’s not made clear how housing associations would deal with this gearing problem if they were suddenly lumbered with massive new debts. Gearing in the sector currently stands at 87%. How could associations convert their grant to debt and avoid breaching their loan covenants?

Take Genesis, the sponsor of this report, as an example. On its balance sheet, the historic cost of its properties is £2.84 billion, partly paid for with £1.2 billion of historic grant. Its net debt is £1.3 billion. If they bought their grant at a 50 percent discount their net debt would rise by nearly 50 percent, from £1.3 billion to £1.9 billion, which would presumably smash its gearing ratios.

The report ignores the fact that lenders like the security and stability that regulation provides, and the guaranteed income streams that come with social housing rents. Take it away and they would no doubt require more security and higher interest rates because of the greater risks involved. And if only a few housing associations became “free” it could impact upon the reputation of the sector more widely. Housing associations are already viewed with suspicion across the political spectrum due to transparency and accountability issues and this could make matters much worse.

Clearly, rents would have to rise in order to make all this work, but the impact on the rising housing benefit bill is not set out in any detail, although the report helpfully states, “Detailed modelling, beyond the scope of this report, would have to be conducted to fully understand the housing benefit impacts”. Yes indeed.

It’s hard to understand what public interest argument there could be for selling off public assets at a knockdown price, when the recipients of that largesse are then free to sell off all their best stock, to put up their rents and to stop taking tenants who need homes, other than a vague notion that these free housing associations could somehow build many more homes. I don’t believe it. It’s also worth noting that the report also ignores any mention of tenant involvement in these momentous decisions.

This Policy Exchange report proposes a massive privatisation of hard-won public assets. It would transfer billions of pounds of taxpayer money into the hands of unaccountable and secretive bodies without any guarantees that taxpayers would receive any worthwhile return on their investment. I do not believe they would be able to retain any level of charitable status as “Free Housing Associations” and the inevitable outcome for these organisations would be eventual flotation and PLC status, leaving them at the mercy of predatory shareholders. Then we would have scores of New Era Estates on our hands.

It is disappointing that a few very large housing associations have put their name to this report. The alternative approach is to support and fight for the position put forward by the SHOUT campaign - a major investment in social rented housing and a long term commitment to switch housing benefit to bricks and mortar. 

The thin end of the wedge

Fri, 14 Nov 2014

Seven years ago I wrote a report for the CIH Eastern Region’s annual conference called “The Future is Unwritten”. It was a game attempt at crystal ball-gazing, covering issues like climate change, changing technology and the possible shape of the housing sector fifty years hence. The Hills Report had recently been published, which had floated the idea of time-limited housing support for people in need and the use of fixed-term tenancies in certain cases. This is what I wrote:

“..there will always be a strong political lobby to defend social housing in its purest form and some critics argue that Hills represents the thin end of the wedge towards the breakup of the sector. You start by saying that permanent tenancies will not be offered to 16 and 17 year olds and divorcing couples, and it ends up being applied to everyone. Some argue that this means an inevitable shift towards the US model of social housing – a sector that is stigmatiised and seen as the last resort of the homeless, the feckless, the old and the sick.”

Four years later the Localism Act introduced fixed-term tenancies and today they are the norm. Now I don’t claim to be any kind of soothsayer, but what happened with fixed term tenancies is happening right now with the so-called “affordable rent” model. You start by saying that rents on a few new homes will be set at “up to 80 percent of market rents” and that a few relets will also be affected, and you end up with 80 percent being the default figure for all new homes, and for relets, AND, if the London Borough of Barnet had their way, existing tenants too.

That is the vision set out in this report to Barnet’s Housing Committee (I am grateful to Nearly Legal for spotting it) about future rent policy. I have to say, it is a terribly muddled report and it if it is representative of the level of thinking on housing policy across local government then heaven help us. But the three key proposals are on page 10, and they are: to charge the Local Housing Allowance rate or 80 percent of market rent (whichever is lower) for all new council homes and for all relets and, in respect of existing tenants, to“ consult on proposals for increasing rents to LHA levels or 80 percent of average market rents whichever is lower.”

The third proposal is probably illegal, as existing rents are covered by the government’s formula, but you never know what the future might hold! However, most of Barnet sits within the Outer London North broad market area and the LHA rates are shown below. In brackets I have put the equivalent market rent level, discounted to 80 percent, based on the latest market rent data.

1-bed £192 per week (£182)

2-bed £245 per week (£252)

3-bed £300 per week (£436)

So the default position for all new social housing tenants in Barnet (newbuild and relets) is that they would pay a weekly rent of £182 for a one-bed, £245 for a two-bed and £300 for a three-bed. That means an annual rent of  £9,464, £12,740 and £15,600 respectively. Such rents are clearly unaffordable to anyone on modest incomes and the default position is therefore that virtually every new tenant in Barnet will be forever stuck on benefits paying an exorbitant rent with no chance of remission.

Laughably, the report almost admits this to be the case, “The Council believes that, for most people, including working households on modest incomes, ‘affordable’ means rent at Local Housing Allowance (LHA) level – meaning that residents will qualify for Housing Benefit if their income is low enough to qualify.” As Nearly Legal point out, beacause of Barnet’s income limits for social housing, even people on a relatively high income would still struggle with these rents.

Many people, including those involved in the SHOUT campaign, have argued that the “affordable rent” programme is misguided and immoral, but if you want a vision of how the future could look for social housing just read the Barnet report. As I said in my 2007 report, foot-in-the-door policies like “affordable rents” often sound innocuous enough when they are first floated, but if you fail to oppose them, and if you sign up for them without thinking about the long-term consequences, you end up going down a road that has no u-turns.

A housing history

Wed, 12 Nov 2014

As it’s Housing Day and a day for housing stories Inside Housing has asked me to write about my own housing history.

As my father was in the army my first four years were spent in a series of rented homes in Scarborough, Cyprus, Germany and Ashington (Northumberland). He’d spent most of the war in Burma and was a Regimental Sergeant Major. After the war he served in the King’s African Rifles, where one of his sergeants was a tall Ugandan named Idi Amin. He taught him to box. He seldom spoke about his wartime experiences fighting the Japanese. When he left the army our first proper house was a small end of terrace Victorian in Ramsgate, on the Kent coast, which my parents bought (on a mortgage). The front bedroom had been partitioned into two and, as there were five siblings it meant my big sister had one room, my two middle sisters shared a double bed in the middle bedroom and I shared a bedroom with my older brother who was away at boarding school for two thirds of the year. The house had no central heating and the only ways to produce hot water were by boiling a kettle or lighting the coal fire in the middle room, which was connected to a cast iron cistern in an adjoining cupboard. We all shared a bath once a week. My mother also relied upon paraffin heaters, which created moisture and damp. Coal was delivered down a hole in the side passage into a crude cellar that had been cut from the chalk.

We had no fridge, washing machine, TV, car or any of the other luxuries that are today seen as normal. We would visit the the public library every week and evenings in winter were spent reading, playing board games or listening to the radio, which meant the Clitheroe Kid, Round the Horne and the BBC News. It was a happy childhood in many ways and although we never went away on holiday it was like a permanent holiday because the beach was just a short walk away.

My mother was a “housewife” and did part-time cleaning work, and she shopped every weekday at the local butcher and grocer. The Sunday roast would last for three days, with cold cuts on Monday and rissoles or stew on Tuesdays. Monday was washing day and the kitchen would be steaming with pans of hot water and the mangle would be fixed to the sink. Food packaging was rare, and we had a single metal dustbin for seven people. My mother saved paper and string, composted food waste, and fed potato peelings to the guinea pigs.

I went off to boarding school at the age of eleven And lived in an eighteen-bed dormitory for seven years. After that, I could cope with most things! When I came home in the winter holidays I would often fall ill with influenza. The house had a large north-facing flank wall, and I believe my bedroom became damp from lack of use. 

My father was disparaging of people who lived in council housing, but my best friend, the son of  a Geordie miner who worked in the East Kent coalfield, had a sister who lived in a council house and we often used to visit. Then my big sister found herself a single mother at a young age and was saved by the offer of a council house.

After University I moved to London and lived in a succession of HMOs in north London, including two years in a short-life property in Wood Green, with a rent of £5 per week. it enabled us to save for a deposit for our first flat, in Hackney Wick, bought for £27,000 in 1983, which was probably less than twice our combined salary. We sold it for £85,000 in 1988 (Danny Boyle made an offer) and bought a house for £79,000 in Cambridge, which, after a loft extension and various improvements is probably worth £500,000 or more. I have two daughters in their twenties and for them home ownership is becoming increasingly difficult unless we downsize or die! So in many ways we have been very fortunate but I know full well that millions are not so lucky, which is why I have been involved in the SHOUT campaign.

I think my early experiences made me realise the link between decent housing and health. Unlike most people I made housing a conscious career choice, after going on a university field trip to some Brixton slums. I’ve worked in housing for 36 years, a life sentence, so there’s no escape now!

 

A war job

Thu, 30 Oct 2014

The output of social rented homes has fallen to its lowest level since the end of the Second World War in 1945. That is the key fact emerging from the latest, troubling, statistics on affordable housing supply in England.

The overall supply of affordable housing (social rent, “affordable rent” intermediate rent and affordable home ownership) is down from a peak of 60,480 in 2011 to 42,710 last year, that’s a reduction of 30 percent. 

So-called “affordable rent” has increased from a standing start in 2010 to just under 20,000 homes a year in 2013/14.  As numerous commentators have pointed out, across much of the country, “affordable” rent is not really affordable at all, and is trapping growing numbers of people in a poverty trap that is not of their own making. (Steve Hilditch, in his latest  Red Brick blog, says that it is now “Time to abandon the debased language of affordability”.) 

But most worrying of all, the supply of social rented homes has dwindled to its lowest level since 1945.

Social rent has dropped by almost three quarters, down from 38,950 in 2011 to 10,840 in 2014, and is set to fall further over the next few years as “affordable” rent becomes the default target for funding. This means that the stock of social rented homes is set to be eroded at a growing pace. Last year 15,682 homes were sold under the preserved right to buy and councils and housing associations sold a further 10,694 properties through “voluntary” sales (an increase of almost 100 percent over the 2010 figures), something they are being “encouraged” to do as part of their approach to asset management and value for money. That means a total of  26,376 properties were sold last year,  and the vast majority would have been social rented properties. My guess is that next year we will see st least three times as many social rented homes being sold as built. This is why it is becoming ever more important to support the SHOUT campaign.

Back in 1968 352,000 homes were built in England and 149,000 of them were built by councils and housing associations, nearly all let at the equivalent of “social rents” (actually, much lower than their modern counterparts in real terms, given that rent rises have exceeded inflation for the past 12 years). How far we have fallen since then. When Harold Mcmillan was appointed Housing Minister in 1951 he described his task as a “war job”. Within three years, the output of homes in England leapt to almost 300,000 a year.

Will we ever again find a Chancellor, a Housing Minister or a political party that will dare to take the same approach to housebuilding?

 

 

A House Divided?

Wed, 29 Oct 2014

Having written 157 blogs for Inside Housing over the past four years you might have noticed that I’ve been silent since mid-August. This is because, for the past seven weeks I have been travelling across North America. I started in Vancouver on the 4th September, travelled by car, boat and train down the west coast to San Francisco, and then, between the 19th September and the 20th October I drove with a friend from San Francisco to Manhattan, via New Orleans. I’ve been through 19 states and dozens of cities. Along the way, we managed to sit in on a murder trial in Texas, to stand on the rostrum where Martin Luther King made his last speech on the night before his assassination, and experience a near-fatal car crash south of Memphis. It was my sixth visit to the USA.

My conclusions? The USA is a vast, wonderful, awful country. It has some of the best roads, museums and national parks in the world. All of the Americans we met were exceptionally courteous and friendly, (although, for some reason, when they drive on the pavement (the road) and walk on the sidewalk (the pavement) they can suddenly become discourteous and unfriendly.) Yet the USA is also a very unequal society and its systems for housing and town planning often appear shoddy and half-baked. Every large and medium-sized city we passed through was surrounded by mile after mile of ugly un-walkable, sprawl - shopping malls, business malls, petrol garages, motels – without any sense that this development had been planned. Land is plentiful. Without a motor vehicle it would be almost impossible to survive across much of the US. Every city we passed through had many (often very young) beggars carrying a piece of cardboard with a variation of the “hungry and homeless” message. 

In a recent speech, the influential chairwoman of the Federal Reserve, Janet Yellen, decried the increasing level of inequality in American society. This is what she said:

“The extent of and continuing increase in inequality in the United States greatly concerns me. … It is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority. I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.”

She pointed out that, in 1989, the wealthiest five per cent owned fifty-four per cent of all wealth, but by 2013 this had increased to sixty-three per cent. Shockingly, the net worth of the poorest fifty percent of Americans is just under £7,000 - that means their total assets minus their total liabilities. The preamble to the US constitution talks of promoting the “general welfare” of the people” but the liberties enshrined in the constitution mean that you are as free to get rich as to get poor, and US citizens appear to have little sympathy for those who fail to live out the American dream.

I intend to blog about some US housing and planning issues over the next few weeks, but to begin with I was struck by these two items about the scale of homelessness in the USA. Firstly, a story about the thousands of people who are living in tunnels beneath Las Vegas, New York, Kansas City and other American cities. Secondly, the growth of tent cities in communities across the USA.

On average, Americans are more comfortably housed than most of the rest of the world, but the fact that one of the richest countries on earth is unable to provide homes for some its poorest and most vulnerable citizens is troublesome. It confirms in my own mind the need to embrace the European social democratic model rather than the US free market model, which we seem to have been intent on pursuing since about 1981. American public housing accounts for only 2 percent of their total stock, compared to about 17 percent in England. For me, it reinforces the absolute imperative of protecting and growing our valuable stock of social housing, which is why I am proud to be involved in the SHOUT campaign. 

More to follow.

Bungalow Brandon Lewis

Tue, 19 Aug 2014

Marxist theory describes ‘false consciousness’ as a way of thinking that prevents someone from understanding the true nature of the world. It has parallels with George Orwell’s ‘doublethink’, which he described as ‘The power of holding two contradictory beliefs in one’s mind simultaneously, and accepting both of them’.

Both of these notions came to mind when I read about Brandon Lewis’s penchant for bungalows, because the truth is that you cannot support the mass construction of bungalows and yet simultaneously favour tight planning controls on the release of land. The two notions contradict each other because bungalows are a very inefficient form of development.

Bungalow in a Globe Town housing estate, Tower Hamlets, east London

Source: Alamy

Last year, only 1,700 bungalows were built according to the NHBC, just 2 percent of total registrations. The housing minister’s comments seem to build upon a 2013 Policy Exchange report, which stated that the bungalow was the preferred choice of home for 30 per cent of the population.

Anyone who works in housing will know that bungalow is the one building type that will usually tempt elderly people out of their large family homes. According to Policy Exchange, there are 25 million spare bedrooms among the older population and this is partly due to the lack of available bungalows. ‘It makes no sense to prevent construction of bungalows if we are interested in increasing the housing supply and a more efficient use of the existing housing stock’,they said. This seems to reflect Danny Dorling’s thesis that we have enough bedrooms to house everyone, they are just not allocated efficiently. But this ignores the fact that real people in the real world under-occupy their properties for all  sorts of reasons, as campaigners against the bedroom tax are only too well aware. Short of a Stalinist allocation of living space, or a land value tax, such notions are surely a diversion from the realities of the housing market.

I have time for some Policy Exchange ideas, but not for the Mail and Telegraph, who both consistently campaign against land release and the construction of new homes. Yet the Telegraph reported the bungalow story uncritically, without any reference to its shouty ‘Hands off our Land’ campaign, while the Daily Mail shouted ‘Bring back bungalows’. You couldn’t make it up.

I have nothing against bungalows, but in the current planning climate they are an extremely wasteful use of land, expensive, more likely to be energy inefficient and unviable for most developers. They take away precious land from alternative forms of supply and what’s more, all over the country bungalows sitting on expensive plots are being demolished to make way for houses. Adverts like this are common. There don’t appear to be any figures on this, but my guess is that more bungalows were demolished last year than built, and under the present planning planning regime it’s pointless to build more bungalows if a higher density form of development is more viable. They are likely to be demolished and rebuilt within a relatively short space of time. That’s not  sustainable development.

By all means let’s build more bungalows, but to do so without reforming the planning system and releasing more land is doublethink in action.

To read more of Colin Wiles’ blogs click here.

 

'We have created a mess'

Tue, 29 Jul 2014

So now it is offical. In 2012/13 England saw a NET loss of 35,000 social rented homes. This is the result of cuts in investment, a revamped right to buy and the switch of funding to the ‘affordable’ rent programme.

I have written previously on the opacity of the affordable rent programme and the struggle to obtain accurate data but, according to the latest UK Housing Review, housing providers have agreed to convert 100,00 social rented homes to affordable rent since 2010. Over this period, the number of new social rented homes built each year in England has fallen from 31,000 in 2009/10 to fewer than 8,000 last year and will probably be half of that figure by next year. Add 100,000 to the 27,000 homes lost through the right to buy since 2010 and subtract the new social rented homes provided over the same period and it leads to a net loss of 35,000 in 2012/13.

It vindicates everything the SHOUT campaign has been saying and makes even more urgent the case for a return to proper levels of invesment and an end to the laughably named “affordable rent” programe. Enough is enough.

Meanwhile, 75 percent of tenants who have taken up ‘affordable rent’ are reliant upon housing benefit, and will probably be stuck on benefits for a long time. Some don’t see this as a problem and accuse critics of affordable rent of being lazy and facile, but this ignores the fact that someone paying a social rent of £115 a week (the GLA average assumed figure for London) is much more likely to be able to get off benefits in the long run than someone who is paying a rent of £190 a week. We should be ashamed of putting in place a new housing product that is trapping people on benefits across large swathes of the country.

This highlights the fact that policies are not abstract notions; they have consequences on the ground. The Financial Times also reports on an L & Q estate in South London where neighbouring tenants in identical properties could be paying four different rents, ranging from £95 to £350 a week, from social rent at the lower end to market rent at the top end. 

David Monague, L&Q’s chief executive summed up the absurdity of the situation:

‘The rent they pay depends on the home that is available on the day they reach the top of the waiting list,” he said. “It has nothing to do with their ability to pay, and we no longer understand what ‘affordable’ means in practice. We have created a mess.

Quite so.

Is social housing a failed brand?

Tue, 22 Jul 2014

I took part in a live discussion on the Guardian website yesterday on the role of social housing, which generated quite a debate. One contributor, the CEO of a large London association, said this:

‘Social housing is now a damaged brand. Housing associations need to return to their roots – yes, housing those without work, but housing the low-to-average-waged, too. We need to reclaim our landlord role and control who we let to. For us we would give greater priority to those who work locally. We could house the local school’s teaching assistant and the local hospital’s health staff.’

I take issue with that first sentence. The notion of social housing being a ‘damaged’ or ‘failed’ brand has been prevalent on the right for decades, but some in our sector are now starting to repeat it. Boris Worrall writes about it here, and here Peter Hall suggests that we should scrap social housing altogether and move towards “affordable housing” where the default rent would be set at market rates, but then discounted according to individual incomes.

A fair argument?

Whiskas

Source: Shutterstock

‘Eight out of ten cats said they preferred Whiskas.’

To be fair to Boris, he supports the concept of social housing but has doubts about the brand. But putting rhetoric to one side for a moment, let’s look at a few facts.

  • The number of households which have taken the trouble of registering on housing waiting lists has risen from 1.03m in 1997 to 1.7m in 2013. Any private brand with 4m potential customers would be pretty delighted, I think. A failed brand?
  • According to recent English Household surveys, 81% of social renters said they were satisfied with their present accommodation and with their local area. Wouldn’t any commercial brand be chuffed with such a positive rating? (Eight out of ten cats said they preferred Whiskas.) A failed brand?
  • The social rented sector also has the highest level of decent homes – 85%, compared to 80% for owner occupiers and 67% for the private rented sector. A failed brand?

Critics will counter this by pointing out that housing satisfaction levels are slightly higher for private renters (83%) and owners (91%). They will also argue that 86% of the population, according to the English Household Survey, would choose to buy ‘if they had a free choice’, although this drops to just 58% for local authority tenants and 61% for housing association tenants.

Who wants to be a millionaire?

But of course, most people, if they had a free choice’ would like to be millionaires. It’s never going to happen for most, and perhaps we need to remind ourselves that the social housing sector deals with many of the poorest and most vulnerable people, whose chances of home ownership are becoming more remote by the day.

Surely our role is not to denigrate our product, but to talk it up?

That is why our role is becoming ever more critical. So the danger of describing your key product as ‘failed or ‘damaged’ is that it becomes self-fulfilling. 

Tom Murtha rightly evokes the memory of Gerald Ratner, who famously described his jewellery as ‘total crap’. Had Ratner kept quiet, he could still be in business, but instead he was soon bankrupt.

Surely our role is not to denigrate our product, but to talk it up? Social housing has a proud record, going all the way back to almshouses in the 12th century. Better space standards, higher levels of decent homes, lower rents, good quality management (in most cases). Millions want to buy into it, if they could only get the chance.

Of course there have been mistakes along the way, but this is the same for most brands. Many have had their ups and downs over the years. Social housing has a proud past and it can have a bright future, but we need to criticise it less and be better at shouting about it.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Patronised and exploited?

Tue, 15 Jul 2014

In the early 1920s, George Orwell was on a liner from England to Burma, (where he worked as a police oficer), when he saw one of the ship’s pilots scurrying along the deck carrying a half-eaten custard pie.  

“At one glance I took in the situation—indeed, the man’s air of guilt made it unmistakable. The pudding was a left-over from one of the passengers’ tables. It had been illicitly given to him by a steward, and he was carrying it off to the seamen’s quarters to devour it at leisure. Across more than twenty years I can still faintly feel the shock of  astonishment that I felt at that moment. It took me some time to see the incident in all its bearings: but do I seem to exaggerate when I say that this sudden revelation of the gap between function and reward — the revelation that a highly-skilled craftsman, who might literally hold all our lives in his hands, was glad to steal scraps of food from our table—taught me more than I could have learned from half a dozen Socialist pamphlets.”

This passage came into my mind as a result of two recent events. A few weeks ago I was the main speaker at an event for tenants’ groups in one of the home counties.  Each of us received a “goody” bag upon arrival, containing some plastic knick knacks, a pen, a notepad. I can’t remember the exact contents, but I took out the one thing that I thought was worth having, an iPhone connector. Later in the day, I was chatting to a chap who had run his own scaffolding company, employing twenty people. He was a proud man, but had fallen on hard times and was now living on JSA of £68 a week, after deduction of council tax benefit. Almost without thinking, I offered him my bag. He was shocked. He couldn’t understand why I didn’t want it. To me this was just a bag of landfill, but to him it had real value. I’m not rich by any means, but it made me realise the gulf that exists between someone like me and someone struggling to survive on £68 a week.

A few days later I was in Manchester for the CIH conference. In the main exhibition hall the stands offered free pens, notepads and trinkets of all kinds. As in previous years, I was struck by the groups of tenants who were hoovering up the free gifts. Some of them were struggling to carry off four or five bags full of booty. Now I confess I have picked up a few pens at past conferences, but this was plunder on a semi-industrial scale. What happens to this stuff? Is it sold on at car boot sales or on ebay? Does it become Christmas presents for friends and relatives? I spoke to one tenant who told me that he collects items like pens and notepads to take back to his fellow tenants to keep them supplied for the year. 

Both of these events unsettled me although I can’t put my finger on the exact reasons. I think partly it comes down to this: if you follow the audit trail, if you follow the money, nearly all of this “stuff” - indeed the whole conference, the alcohol, the meals, the hotel rooms, the expensive delegate passes, the train journeys - is ultimately funded by tenants’ rents, yet here were tenants gratefully hoovering up a few crumbs, so to speak, just like Orwell’s pilot. I wanted to shout, “You paid for it – it’s yours”.

The Manchester conference is a bubble, and outsiders are kept at arms length. Inside the bubble, money is often spent without any real awareness of how it will  look from outside, but if the Manchester crowds could gain access perhaps they too would feel Orwell’s “shock of astonishment” and wonder how we can justify this expenditure. Perhaps some senior executives and well-off board members should experience what it is like to live on £68 a week. 

I also attended the TPAS conference last week, speaking about SHOUT with the wonderful Alison Inman. We heard many  stories of the fantastic achievements arising from resident scrutiny and involvement - millions of pounds in savings and staggering increases in customer satisfaction - nearly all achieved though the efforts of unpaid tenants. Again, Orwell’s comment about the gap between “function and reward” came to mind. Case studies like this one are plentiful. The first study, of a very large housing association, reveals that tenant scrutiny and involvement led to an increase in customer satisfaction from 59 percent to 100 percent within two years, which begs the question: why were unpaid tenants capable of doing something that highly paid executives had failed to do, and why are tenants not being properly remunerated for their achievements?

Some might describe this approach as both patronising and exploitative.

Metaphorically speaking, tenants should, like Orwell’s pilot, be equal partners in steering our ship, and be paid the going rate. That is the basis of co-regulation. They should not be scrabbling around for a few crumbs from the master’s table, crumbs that they paid for in the first place. The sections in the regulatory code about scrutiny and empowerment are quite clear and scrutiny panels are now almost as important as Boards. Their members should be paid accordingly. I’ve always felt that most housing providers pay lip service to genuine participation and that the real power, and the money, remains with executives and, in a very few cases, with boards.

It seems to me that the gap between “function and reward”, between executives and tenants, between the haves and the have-nots, is not much different now than it was on Orwell’s boat to Burma. 

The numbers game of building homes

Wed, 9 Jul 2014

The recent announcement by Kris Hopkins that “nearly 200,000 affordable homes have been delivered since April 2010” left many housing folk exchanging puzzled glances, if you can do such a thing on Twitter. It was a claim repeated by Eric Pickles during his stumbling Manchester speech. To be precise, Hopkins’ statement claimed that 197,792 new affordable homes had been delivered over the past four years.

The CLG’s own housebuilding statistics reveal that output by housing associations and councils over this period had been just 93,950 homes, ranging from 18,480 to 28,780 each year. So why the difference?

Dig deeper, and you find that the CLG also produces another set of statistics on affordable housing supply, (“Affordable housing starts and completions”), provided by the HCA/GLA, which paint a very different picture, as the table below shows.

 Homes provided by housing associations & councils (CLG statistics)Homes built by private enterprise (CLG statistics)Homes provided with HCA/GLA funding (HCA/GLA statistics provided by CLG)Total housing output
2010/1118,48089,17055,909107,650
2011/1228,78088,78051,731117,560
2012/1323,70084,03036,733107,730
2013/1422,99089,78036,352112,770
Total93,950351,760180,725445,710

So the CLG figures show that housing associations and councils produced 21 percent of total output over this four year period whilst the HCA/GLA figures show that “affordable housing” amounted to almost double that - 40.5 percent of total output.

Of the 180,725 homes provided by HCA/GLA funding 51 percent were social rent, 15 percent affordable rent, 3 percent intermediate rent and 31 percent affordable home ownership.

The solution to this mismatch of figures can be found in the small print. The CLG figures classify properties according to the developer (“Tenure reflects the tenure of the developer building the house rather than the intended final tenure”) so properties acquired from private developers under planning deals will be classified as having been built by private enterprise. In addition, the affordable housing statistics include homes provided under a wide range of programmes, including the accelerated Land Disposal programme, mortgage rescue, traveller pitch funding, Kickstart, Empty Homes and and the Economic Assets programme. It is questionable whether some of these represent new supply or just a switch from one tenure to another. What’s more, the HCA/GLA figures provided by the CLG do not match the figures on the HCA website. The affordable housing summary for 2012/13 also states that, “In 2012-13, 86 per cent of total affordable home delivery was reported by the HCA or the GLA, a reduction from 89 per cent in 2011-12” which suggests that the figures are not comprehensive. I’m afraid life is too short to dig any deeper into this, but for me it does indicate an increasing degree of fuzziness between private and social housing provision. Nonetheless, the HCA/GLA figures are still 17,000 short of Kris Hopkins’ figure of 197,792. Where are these missing “affordable” homes to be found? Do they include Help to Buy or other home ownership initiatives? 

Assuming the HCA/GLA figures tell most of the story, what this indicates is that over four out of every ten newly built homes  in the last four years were provided by the social housing sector, during a period when annual supply has been less than half of the required figure. Housebuilders have already admitted that a target of 200,000 homes a year is “impossible” and these figures show that they would need to double production to get anywhere close to this target, something that most commentators believe is unachievable. If that is the case it makes the argument for state intervention even more compelling, and this appears to be the conclusion that Sir Michael Lyons is coming to.

 

 

 

 

The Road Not Taken

Tue, 24 Jun 2014

This week’s gathering in Manchester could be a defining moment for social housing. Over the past year, the sector has started to change from being a navel-gazing, back-slapping, introverted industry into something better. Whether it’s engaging with bigots on twitter over reality TV shows, or coming up with smart new communication ideas, housing people are coming out of their bunker and engaging with the wider world. Paul Taylor’s Power Players’ list has highlighted the growing importance of social media, and the creation of campaigns like Council Homes Chat and SHOUT have drawn in a fresh generation of people who are prepared to stand up for social housing.

But the past year has also seen the rise of a potentially dangerous schism in the sector. We’ve arrived at a crossroads and some people are heading off in different directions. It reminds me of Robert Frost’s poem The Road Not Taken where a traveller is confronted by a choice of two roads. Let’s call them Market Road and Traditional Road. Heading down Market Road are those who are keen to embrace an increasingly commercial approach. They see “affordable rent” as the “only game in town” and are pushing into private lettings, market sale and even buying up private companies to expand their portfolio. They believe that a world without grant is possible and, in some cases,  that social rented housing is a failed brand that creates dependency. Heading down Traditional Road, are groups like Placeshapers and SHOUT who want the sector to stick to its core principles and to defend and promote its primary product, social rented housing.  

This divergence of views resulted in some terse exchanges during the year, starting with Mick Kent’s open letter to ministers which led to responses like this and this. Tony Stacey for Placeshapers made a powerful case against “affordable rent” (or AR,as he calls it) and in support of traditional community-based housing providers. The sector has “sleepwalked into acquiescence” he said.

Brendan Sarsfield from Family Mosaic sprang to the defence of the Market Roaders, which prompted this response from Steve Hilditch at Red Brick. Just a couple of weeks ago, a senior official at the GLA accused the opponents of affordable rent of being lazy and facile which also prompted this tart response from Steve Hildtich. Mick Kent even returned to the fray to suggest that public subsidy is a drug that we could wean ourselves off.  And on it goes.

I am involved with SHOUT, so I clearly favour the Traditional Road. I think there comes a point where “partnership” with bad policies starts to look self-defeating, and if we are being required to sell the family silver in order to build a few “unaffordable’” homes then it is time to say no. It’s not an easy decision, because housing providers have a moral duty to build homes, but they have to be the right homes, at the right price, and in the right places, and not just part of a numbers game. With thousands of homes being lost to the revamped right to buy and “converted” away from social rent, and a new product called affordable rent to buy (that will replace grants with loans) lurking around the corner, it must surely be time to say “enough is enough”.

My view is that Market Road leads to the cliff edge. I have cited in the past the example of the mutual building societies who believed, foolishly, that they could prosper in the big, bad banking world. They were wrong and few of them now exist. Over the next few years some housing associations may decide to become private entities, with the aim of competing in the wider property world, but I believe they too would soon be swallowed up as a result of shareholder pressure. The losers would be tenants.  

This growing divide within the sector is troubling. A divided sector is easier both to control and to ignore, and it is something that the NHF or and other trade and professional bodies should be very concerned about. At the very least, we should be able to agree on a common set of values, principles and actions that will help to protect social rented housing in the long term. 

No doubt there will be heated debate and argument over the next few days, but this reflects the fact that the sector faces some difficult choices. I would urge those who are heading down Market Road carefully to consider that the “Road Not Taken” may be the better alternative in the longer run. Take a deep breath and consider your history. Ten years from now, it would be good for the sector to be able to look back and repeat Robert Frost’s words: “Two roads diverged…and I/ I took the one less traveled by/ And that has made all the difference”.

 

Let it all out*

Wed, 18 Jun 2014

The official launch of SHOUT takes place in Westminster later today. Social Housing Under Threat was formed back in January and has been described by Steve Hilditch as the “most important campaigning initiative in this Parliament.”

The keynote speakers will be former housing minister John Healey MP and Councillor Gary Porter, vice-chairman of the Local Government Association. Lord Adebowale, Lib Dem MP John Leech and Natalie Bennett, leader of the Green Party, are all scheduled to speak. This cross-party approach is important, because SHOUT aims to appeal across the political spectrum and to show that placing social rented housing at the heart of a sensible housing policy makes political and financial sense.

Political sense because the stability and community created by the best social rented housing should appeal to both “One Nation” Tories  and the Labour left. Political sense because the social rented sector has by far the lowest proportion of non-decent homes and is a destination tenure for millions of people, unlike the private rented sector, and happy tenants make happy voters. Political sense because providing homes that are truly affordable allows more people to escape from a life on benefits and will “make work pay”. Financial sense because the housing benefit bill is almost £25 billion and rising, and making a long-term switch of tax pounds from propping up high rents to bricks and mortar will save money in the long run. Financial sense because every affordable home built generates an additional £108,000 in the economy and creates 2.3 jobs. Financial sense because 40 per cent of the Housing Benefit bill now goes to private landlords, and the average PRS tenant claims £23.41 more per week in housing benefit than the average social housing tenant.

The founding members of SHOUT - Alison Inman, Aileen Evans, Tom Murtha, Steve Hilditch, Kate Murray, Andy Rynham, Tony Stacey, Martin Wheatley, Kevin Gulliver, Tim Morton - are respected figures in the sector, and they all share a belief that social housing has a proud track record and that it is being unfairly maligned and eroded.  They believe that social rented housing can play a significant role in reducing homelessness and creating a nation that is more at ease with itself. They all believe that social housing is not ours to dispose of, but should be passed on to future generations in a better state than we found it. This is clearly not happening at present, because over a million homes have been lost to right to buy over the past few decades, wthout replacement, and the flow is increasing as a result of the re-invigorated right to buy and the “conversion” of homes to affordable rent. One of the key themes of the manifesto being launched today is that “enough is enough” - it’s time to consider alternative options to present policies.

Private housebuilders are now saying that  Ed Miliband’s target of 100,00 homes a year is impossible. This makes the case for an enhanced public role in housing provision even more compelling. By increasing investment, raising borrowing caps, putting in place robust planning agreements, and ensuring that new towns and garden cities contain a high proprtion of social rented homes we could achieve 100,000 social rented homes a year.

SHOUT does not suggest that social rented housing on its own is the answer to the nation’s housing ills, but it should be a significant element in a smart housing policy. Let’s hope that SHOUT’s message makes an impact upon the political classes. 

 

*”Shout, shout, Let it all out” - Tears for Fears 1984.

To read more about the private rented sector click here.

Expert advice

Tue, 10 Jun 2014

I’m old enough to remember when Denis Healey had to turn back at Heathrow to grovel before the IMF and agree to spending cuts of £2.5 billion in order to secure a £2.3 billion loan. Back then, the IMF was the enemy, but villains can become heroes and the latest IMF report on the UK economy makes you wish that they still had the power to call the shots. 

The IMF analysis is concise and the remedies are excellent: it warns of house price inflation spreading out from London and says that the relentless increase in mortgage to income ratios makes households more vulnerable to income and interest rate shocks. Whilst giving faint praise to Help to Buy (it has “played a role in unlocking mortgage credit for lower-income borrowers from other sources”) it warns that  the programme should be modified or withdrawn if prices continue to rise. The IMF highlights “key inefficiencies” in the UK system, including constraints on brownfield and greenfield developments, tax policies that discourage the most economically-efficient use of property (I assume they mean Council tax - more on this below) and “underdeveloped rental markets with relatively short lease terms” - an attack on the short termism and instability of our private rented sector. The report says that political consensus will be required if reforms are to be effective. Most tellingly, the IMF says that “imbalances in the housing market should be addressed through supply-side remedies. Fundamentally, house prices are rising because demand outstrips supply. The UK has a secular problem with inadequate housing supply, associated with planning restrictions and compounded by depressed housing starts since the financial crisis.” Three cheers for that. 

Interestingly the IMF also calls for more means testing of social benefits - a dig at the fact that over 50 percent of the welfare bill goes to older people and that a significant percentage of it - state pension, bus passes, TV licences, winter fuel allowances - are universal benefits, something I wrote about here.

In a related story, the EU has also called on the UK government to reform the “regressive” council tax system (I also wrote about that here), boost supply and reform help to Buy. Three cheers for that, too.

Not surprisingly, the response from the press and many politicans to this courteous advice from abroad has been curmudgeonly at best. The notion of Johnny foreigner offering advice on how we run our internal affairs had the popular press foaming at the mouth. Even Vince Cable said that “we don’t need the EU to tell us what’s going on here”.  

This Little England mentality does us few favours. Both the IMF and the EU Commission have vast experience of dealing with a huge number of differing economies. Surely they have some understanding of what works and what doesn’t. Could we not at least credit them with having views that are valid and worth considering? In housing terms, it’s like being offered good, free advice by a respected consultant. You might decide to ignore it, but at least give it a fair hearing.

 

 

 

Creating a stink

Wed, 4 Jun 2014

In the hot summer of 1858 the Thames stank. Over the past forty years, London’s population had trebled and the capital’s infrastructure was creaking. Sewers had been run by local commissioners and there was little co-ordination between districts. Factories, slaughterhouses and breweries discharged their effluent into the Thames and its tributaries, but new-fangled flush toilets had also been installed in many of London’s smarter homes, and they were now emptying their waste into the capital’s 200,000 cesspits, causing them to overflow into the surface water drains that fed into the river.  Day after day London’s temperature reached 90 degrees and no rain fell to flush away the mephitic effluent. Each day, 90 million gallons of sewage poured into the Thames. It was estimated that one fifth of the river’s volume was raw sewage. The smell was unspeakable. In the Houses of Parliament the blinds were coated with chlorine and zinc, and tons of lime were spread upon the Thames foreshore, but MPs and peers were forced to abandon their sessions.

The episode became known as The Great Stink.

For years, MPs had been dithering about the problem. They knew something had to be done but the political will was lacking and the (modest) costs were felt to be too high. MPs from outside London argued that Londoners alone should pay and those who were not affected by the problem paid little attention. Some politicians passed the buck. Lord John Manners, the Commissioner of Works (and therefore responsible for London’s sewers), stated that, “The River Thames was not in his jurisdiction”. A letter to the Times attacked the government’s tardiness. “If it is not technically their business now, they can easily make it so. Parliament is absolute”(my emphasis).

Cholera epidemics had killed 14,000 Londoners in 1849 and another 11,000 in 1853. Typhoid and cholera were believed to spread through airborne particles (the ‘miasma’), but John Snow, a doctor in Soho, proved that they were the result of sewage leaking into the drinking water supply. And yet still nothing was done.

Finally, the politicians could stand it no more. Within eighteen days a Bill to improve London’s sewers was drafted, debated and passed into law. The cost to Londoners would be 3 pence in the pound for 40 years (that’s a tax of 1.25 percent in today’s money). The brilliant engineer Joseph Bazalgette was appointed to design and build the new network of sewers, which would take effluent down to Barking Creek and out to sea. This included two massive interceptor sewers that were built directly on the Thames foreshore. Above them he built roads and gardens - the Thames embankment that now stretches from Chelsea to Tower Bridge.  More importantly, he calculated the size of his sewers by working out a generous daily allowance of sewage for each Londoner - and then doubled it. 260 million baked Staffordshire Blue bricks and the strongest available mortar were used. The overall cost was £3 million, but thousands of lives were saved and the quality of life of millions of Londoner’s improved immeasurably. The water supply ceased to be polluted and cholera and typhoid were virtually eradicated. As a result of this far-sighted investment in bricks and mortar Bazalgette’s sewers are still in use today, 150 years later.

For me, there are several lessons from this episode that are relevant to today’s housing crisis. First, to deal with such a major problem you need a clear vision of how things could be better, and a plan of how to get there. Second, often it is only a few far-sighted individuals who understand the scale of the problem and the solutions that are required, and many naysayers and reactionaries often emerge to argue against them. Third, a crisis on this scale requires a co-ordinated and strategic approach - a piecemeal patchwork of provision is doomed to fail. Finally, investing in high quality bricks and mortar and doing a proper job that will last for generations saves money, and lives, in the long term and adds to the sum of human wellbeing. I know that readers of this blog will understand the analogies I am making.

Bazalgette’s sewers are taken for for granted now, but they only exist because Parliament finally did the right thing and a far-sighted engineer did a sound job. Few people know much about the battles of the past that created our modern world, and some people think that history has stopped, but it never stops. No doubt the mid-Victorians looked back at the seventeenth century with scorn and distaste for its barbarism and corruption, and viewed their own age as enlightened and progressive. But we look back at the mid-Victorians with scorn and distaste for their toleration of disease and poverty. In equal measure, I have no doubt that people in the year 2164 will look back at us with scorn and distaste and wonder how it was possible that one of the richest countries in the world was unable to perform the simple task of properly housing its people.

Our task is to make politicians understand their historical role  and to make them comprehend that the housing crisis is made in Westminster. Policy follows politics and politicians are often slow to react to changes in society. The reactionaries and the naysayers often win the day and sometimes politicians will only act when they are personally affected by a problem.

“Parliament is absolute”. Perhaps we need to create another Great Stink to make Parliament do the right thing.

 

 

 

 

 

 

 

 

 

Voting pains

Tue, 27 May 2014

The election result is staggering, but let’s get it into perspective. UKIP control no councils and they have no MPs. In the EU election they took first place with 27.5 per cent of the vote but in the local elections they came third with 17 per cent, and only 35 per cent of the electorate bothered to vote, (thanks Russell Brand, good shout).

UKIP’s victory is clearly a major protest vote (and it’s not just about immigration), but it would be foolish to ignore the sentiments that underlie it. I think it unlikely that Nigel Farage will hold the balance of power next year, because winning seats under first past the post rather than PR is a different matter altogether, but UKIP will undoubtedly influence the policies of the main parties between now and the election. The Conservative government (the LibDems are now sleeping partners) will talk tough on immigration and will continue to tighten up on welfare and other benefits for migrants, even if this is in breach of EU rules. This may or may not be enough to appease the electorate. Labour will have to think again about offering a referendum.

So what part did housing play in the election outcome and what does it mean for our sector? Well, UKIP’s housing policy is quite simple: stop unfettered immigration and the housing crisis disappears. You can read it here on pages 8 and 9, (they would also scrap the bedroom tax). I’ve spent the last few years reading thousands of readers’ comments beneath housing stories in the popular press and the ‘No immigration, No housing crisis’ argument predominates. The concern about ‘concreting over the countryside’  (a house needs to be built every seven minutes due to immigration, say UKIP)  has widespread appeal for older homeowners – exactly the people who tend to oppose new homes. Immigration and housebuilding are inextricably linked in the minds of millions of voters and this is something we simply cannot ignore.

But UKIP also received mass support in poor white working class areas, with significant numbers of renters and social housing tenants voting for them them in places like Rotherham and Great Yarmouth where they won nine and ten seats respectively. In his recent debate with Nick Clegg, Farage said that surges in European immigration had “left the white working-class effectively as an underclass”. He knows where to get votes.

This recent ipsos-mori report contains useful data on public perceptions of immigration. It shows that White Britons living in the “Superdiverse” and “Cosmopolitan London/periphery” areas are least likely to want a reduction in immigration, whilst those living in “Northern manufacturing and industrial towns” and areas of “low migration” want to see immigration reduced the most. This helps to explain the paradox of the London results - our capital has the worst housing crisis but gave the lowest level of  support to UKIP, just 17 per cent of the vote compared to 34.5 per cent in the Eastern region. Overall, many Londoners appear to appreciate the benefits of immigration and many have shared in the wealth it has created.

Surprisingly, the ipsos-mori report also shows that many foreign-born residents want curbs on further immigration, with longstanding residents having stronger feelings on the matter than new arrivals. 70 per cent of immigrants who arrived before 1970 feel immigration should be reduced, compared to 37 percent of those who arrived between 2001 to 2005 and 28 percent of those who arrived after 2006. There is also some evidence that immigration does suppress wages at the lower end of the labour market. Again, findings like these cannot be ignored. 

Someone once said that introducing facts into the immigration debate is like teaching a pig to sing - it’s a waste of time and it annoys the pig. Nonetheless, to balance some of the rhetoric, we could start by noting the following points:

  • On average, the OBR says immigrants make a positive economic contribution, putting more into the public purse than they take out.  They are more likely to be young working people and they will pay our pensions.
  • 26 per cent of health professionals in the UK are migrant workers and one Government minister has said that the NHS would collapse without them.
  • Migrants are far more likely to live in the Private Rented Sector and there is no evidence that they take an unfair share of social housing.
  • Polls  show that people over-estimate the proportion of the foreign born population in the UK – according to ipsos-mori the public believe 31 percent are foreign born when the true figure is 13 percent.
  • 2.34 million EU migrants are living here but 1.8 million UK citizens live in the EU. The EU allows free movement of people, which benefits Britons wanting to live over there as much as EU nationals wanting live over here.  

The UK housing sector cannot afford to ignore the immigration debate because there is a danger that UKIP’s rhetoric will undermine our entire case about housing supply. We need better research and a better understanding of the net costs and benefits of immigration and the impacts upon housing markets.

Meanwhile, the next twelve months are going to be very interesting. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sprawl and the green belt

Tue, 20 May 2014

The revelation that more land in Surrey is devoted to golf than housing does not surprise me. I believe I started the golf story here back in November and it spread via Shelter to the Huffington PostCity AM and beyond. I even had requests for interviews from the Voice of Russia and Russia Today. The notion that golf takes up as much land as housing seemed to capture the media’s imagination - a lesson perhaps that we need to find simple and striking images to make housing understandable. 
 
The story highlights the absurd stranglehold that the green belt now has on many of our major towns and cities. Contrary to popular myth the green belt has no intrinsic amenity value, and a huge proportion of it is devoted to horses, golf courses or intensive agriculture and is inaccessible to the wider public. It takes up 13 percent of our land mass, compared to 10 percent for built up areas and its sole purpose  is to contain the ‘unrestricted sprawl’ of towns and cities. ‘Sprawl’ is a dirty word for the countryside lobby, but the best definition I have come across is ‘untidy and haphazard growth outward.’ On this basis, the current configuration of green belt land creates more sprawl than it prevents.  This is self evident because any urban area constrained by a tight green belt can only grow by building upwards or by building outwards beyond its green belt. London is constrained by a tight belt and so its commuter zone now stretches from the Isle of Wight to Yorkshire. You can study the extent of the green belt here.
 
Cambridge is a typical example. It is estimated that 40,000 people commute into the city every day, the majority from beyond its Green Belt, which is 3 to 6 miles wide and over six times larger than the city itself. 74 percent of the Cambridge Green Belt is devoted to intensive farming and has low aesthetic value. Much of it is closed to the public. Drive around the edge of Cambridge on any weekday and you will see countless fields inhabited by horses, but you will also probably end up in a traffic jam with thousands of unhappy commuters all trying to “jump” across the Green Belt to get into the city.  
 
The latest Cambridge local plan  proposes 14,000 new homes and 22,100 new jobs over the next 15 years. South Cambridgeshire, which surrounds Cambridge like a polo mint, proposes 19,000 new homes and 22,000 jobs in its latest plan, but most of the new homes in South Cambridgeshire will be in “new settlements” beyond the green belt. However, these new places are only needed because Cambridge sits at the centre of the district. None of them will be self sufficient and many of their new residents will end up commuting into Cambridge for work, leisure and shopping, adding to pressure on the city’s creaking road infrastructure and causing added pollution and congestion. These settlements are, in effect, suburban dormitories that should, in an ideal world, be built on the edge of Cambridge with accessible green lungs pushing out into the countryside. Instead, they are being plonked down in countryside beyond the green belt, preventing Cambridge from achieving its vision of being a “world class, compact city”. If this is not sprawl I don’t know what is. How can it be sustainable development to force people into their cars in order to access basic services such as department stores, swimming pools, museums, art gallieries, and leisure activities?
 
This picture is repeated in places like Bath, Oxford, York and London, which all have tight green belts. 
 
The green belt has doubled in size over the past forty years but countryside campaigners continue to view it as an ideological Maginot Line that must be defended at all costs. Surely they must realise that selective development of the least attractive parts of the green belt could create millions of new homes but would also allow the creation of new country parks and help to reduce unsustainable  levels of commuting and congestion? More importantly, new Green Belt could be added at the outer margins, and more of it could be opened up to public access - one of their key aims. 
 
The green belt now acts as a kind of apatheid wall keeping urban plebs confined at ever-increasing densities and forcing up land and house prices. Paul Cheshire of the LSE summed up green belts as “a very British form of discriminatory zoning, keeping the urban unwashed out of the home counties – and, of course, helping to turn houses into investment assets instead of places to live.” But green belts also create huge volumes of unneccessary journeys by car and train. 
 
The truth is that the green belt is not green, it creates sprawl and has outlived its usefulness.
 
 
 
 

Brownfield thirst

Tue, 13 May 2014

Countryside campaigners consistently argue that a “brownfield first” policy could avoid having to build on much of our countryside. Typical examples can be found here and here.

A new analysis by Nathaniel Lichfield and Partners shows that this is nonsense.

If you recall, the last  government decreed that 60 per cent of all new homes should be provided on brownfield sites, including back gardens. In reality, that meant a significant number of new homes were provided as a result of “garden grabbing”. The ward in Cambridge where I live saw a steep rise in inappropriate development on back gardens. The population grew by over a thousand between 2001 and 2011, putting undue pressure on schools and other services. Many parents are now having to drive their children to distant schools because the local ones are full. I’m not against a policy of densification but it has to be proportionate and sustainable. That was neither.

The NPPF ended this restrictive policy and gave local authorities the power to set their own rules on both brownfield (para 53) and gardens (para 110). In a previous blog I argued that brownfield on its own would never be enough to meet our housing needs. The NLP analysis confirms this and estimates that it could provide even fewer homes than I estimated – I came up with a figure of 1.5 million, their estimate is just over 1 million. This means that brownfield land can provide just 30 percent of the 3.5 million homes that need to be built over the next fifteen years, (although the actual requirement for new homes is much higher when you consider the deficits that have built up over the past decade or more).

One of the weaknesses of the countryside campaigners’ argument about brownfield is that they take a simplistic view of the national picture and just match the number of sites against the number of homes required. Yet brownfield sites are often not where people want to live, or cannot be sustainably developed, or have a local amenity value that should be protected, or they would be better developed for uses other than housing. The regional picture is very varied: brownfield sites could meet about 47 percent of identified housing needs in London and 63 percent in the north west, but in the north east  and the south west this falls to 18 percent and 20 percent respectively. 

What’s more about a fifth of brownfield sites outside London are in rural locations – old wartime aerodromes etc. Unless these can be turned into self-sufficient communities the danger is that they will become distant dormitories that create yet more commuting, which means they will not be sustainable in national planning terms. Better by far to create compact urban extensions to existing settlements. In addition, a significant proportion of sites (520) are in the green belt and any future development is likely to be fiercely opposed.

All of this means that it will become even more important to identify suitable greenfield and green belt sites that can accommodate sustainable development in order to meet future housing needs. Brownfield land on its own is simply not enough, and the next time Simon Jenkins and his pals suggest that it is, tell them they are just plain wrong.

 

 

 

 

Give me Shelter

Wed, 7 May 2014

At last, housing professionals are starting to come out of their bunker and challenge some of the prejudice and misinformation that exists about social housing.  Campaigns like  Council Homes Chat and SHOUT have inspired more housing folk to engage with the bigots and the ignorant on twitter and in the comments pages. For too long the affordable housing sector has lived within a rather complacent cocoon, but one of the things I’ve learned over the years is that we should never underestimate the level of ignorance about housing among the wider population. Even nominally intelligent people often seem clueless or impervious to rational thought when it comes to housing, and the rise of UKIP means that immigration often dominates the housing debate.

Which means that there has never been a greater need for well written reports and clever publicity that can get the housing message across to a wider public, something I wrote about nearly two years ago. Currently, some of the best output is coming from Shelter. Not only do they provide some of the clearest analysis of the breadth and scale of the housing crisis, with well thought out solutions, but they are also have the knack of distilling complex data into easily digestible images and soundbites. Who can forget their £50 chicken, for example?

Shelter’s latest report ‘Building the homes we need – A programme for the 2015 government’ - is a fine example. Produced with KPMG it sets out a clear summary of the consequences of the housing crisis – a huge housebuilding deficit, widening social inequality, homelessness, soaring house prices and rents, a decline in savings and pension provision, the rising HB bill – and then proceeds to a forensic analysis of the causes of the crisis. This covers landbanking, blockages in the  planning system, the decline of small housebuilders, the opaqueness of land ownership and land transactions, finance and investment.

The report quotes from the Treasury’s recent statement committing £100 billion to major infrastructure investment. ‘…infrastructure equips a country for future economic growth, and is often a pre- requisite for economic expansion to occur.’ It not only ‘creates the need for additional material to be produced and services to be employed, leading to job creation across the relevant parts of the supply chain …but allows the economy to function more efficiently’ in the long-term. This could have been written about housing investment, and the report makes a strong argument that housing should be treated as infrastructure in its own right, since every pound spent on construction generates £2.09 of economic output, and 92 percent of all housing investment stays in the UK, with 56 pence of each pound returning to the exchequer, of which 36 pence is direct savings in tax and benefits. This is a strong argument in favour of switching investment from housing benefit to bricks and mortar, something the SHOUT campaign is calling for.

Despite UKIP, it seems we could also learn a few things from our European neighbours. The report notes that 80 percent of Austrian homes are procured by self builders, compared to just 10 percent in the UK – the lowest in Europe. The building industry is increasingly becoming a ‘too big to fail’ cartel, dominated by big beasts, (in London just 23 firms were responsible for 70 percent of all homes built in the year to June 2012). Given the recent history of the banking crisis this should be ringing alarm bells in Whitehall.

Some of the key proposals in the report include:

  • Doubling the level of investment in the affordable homes programme, witih a better mix of tenures including truly affordable homes.
  • Relaxing green belt rules and allowing swaps of green belt land at the margins – something I have been writing about for a long time!
  • Making the planning system more pro-active.
  • Improving the level of data on land ownership and land costs so that land transactions are more transparent.
  • Building five garden cities.
  • Helping small building firms obtain finance and providing sites for small builders.
  • Introducing a new National Housing Investment Bank to finance affordable house building.
  • Putting housing centre stage in City Deals.
  • Raising council borrowing caps.

It’s hard to disagree with any of that. On planning, the report argues against a fundamental reform of the system due to the political cost (i.e. the nimby vote) but proposes new Home Zones, based on a Dutch model that has seen the construction of 90 urban extensions in recent years. These would be based on joint ventures, led by public-led development corporations and would provide investment and tax breaks to build new suburbs of between 200 and 5,000 homes, with a mix of tenures and space for self-builders. Crucially, they would be funded by uplifts in land values with landlowners receiving compensation based on their exisiting use value, rather than residential values. 

The report is clearly written and sets out the building blocks of a realistic step change in supply that would lead to well over 200,000 homes a year being built in England for  the first time in decades. It’s well worth a read.

Blaming the poor

Mon, 28 Apr 2014

The Corn Laws of 1815 aimed to protect the interests of large landowners by restricting the import of foreign grain. As a result, food prices increased significantly and ‘hard-working families’ found they had less surplus income to pay their rent or to buy clothes and other manufactured goods. For the poorest families, more than half of their income could be spent on bread alone. This created a  ‘cost of living crisis’ that stifled economic growth and caused unemployment to rise. Thousands of people were forced to turn to to their local parish for support. This meant either ‘outdoor’ relief (i.e. benefits)paid to them in their own homes, or ‘indoor’ relief – the workhouse.

In previous decades, the Old Poor Laws had made a clear distinction between the deserving and undeserving poor, with the latter often being whipped through the streets or placed in the stocks for public vilification. Responsibility for the poor fell upon England’s 15,000 parishes, with guardians deciding who should receive support from local ratepayers. But as poverty increased after the introduction of the Corn Laws, there was rising public anger about the growing burden on the parish system and a royal commission was appointed in 1832. The commission was driven by a Malthusian belief that the state was encouraging a growing underclass to breed unchecked. The commission fiddled the statistics to show that the number of able-bodied men receiving relief was much higher than the actual figure. In fact, as now, the overwhelming majority of those seeking help were the elderly, disabled or children, but the commission recommended a new, centralised system of relief for the poor that was enshrined in the Poor Law Reform Act of 1834. This ended outdoor relief for able-bodied people and made the punitive regime of the workhouse a central feature of the system. Being sent to the workhouse was like being sent to prison, so only the most desperate chose to go there.  

It was not until 1849 that the Corn Laws were fully repealed. Cheap American and Russian corn flooded into the country and food prices fell significantly. People had more money in their pockets, wages and employment rose and the economy prospered.

This long preamble is to make the point that much of the poverty that existed in the first half of the 19th century had been created by a deliberate act of government policy – the Corn Laws – that were designed to protect rich landowners. Yet it was the victims of this policy – the poor – who were attacked and demonised, rather than the policy itself.

Does this sound familiar? In my view, TV shows like Benefits Street and How to Get a Council House represent a return to this 19th century phenomenon of blaming and shaming the poor for being poor, rather than the system that created their poverty. These shows are often brilliant at highlighting the symptoms of poverty, and I do not believe they deliberately set out to demonise their subjects, but they rarely expose or explain the underlying causes of poverty, and this omission often produces a frenzy of schadenfreude among some viewers, who appear to take pleasure in the misery of others, blaming them for their predicament, rather than the system that created their poverty. Vile comments on social media, led by cheerleaders like Katie Hopkins, are the modern day equivalent of whipping the poor through the streets for being ‘undeserving’ (and top marks to those few housing folk who had the decency and courage to challenge some of these views on Twitter – we need more like them to come forward).  

Our ongoing housing crisis is the 21st century equivalent of the Corn Laws. It underpins the ‘cost of living crisis’ and is a principal cause of the growing reliance upon benefits. Yet too many of us treat the housing crisis as if it is an act of nature, like the weather, rather than a man-made crisis. The failure of successive governments to invest in new homes and release enough land for housing has created artificially high house prices and rents, which consume an increasing chunk of people’s incomes and prevent millions of them from living a decent life free from dependency upon benefits, just as the Corn Laws did in the 19th century. As with the Corn Laws, current housing policies are deeply regressive, because, in general, the lower your income, the more you will pay towards your housing costs. Our parliamentarians have caved in to the vested interests that want to preserve high house prices and rents,  just as politicians in the first half of the 19th century caved in to the large landowners who wanted to keep the price of grain high.  

So what’s to be done? Those who opposed the Corn Laws – notably Richard Cobden and John Bright – got themselves elected to Parliament and travelled the country, spreading the message that protectionism was to blame for the many poor and that a repeal of the Corn Laws would reduce poverty and lead to an increase in trade and prosperity. Every argument under the sun was used to attack their views and they were denounced in the press as extremists, but after years of tireless campaigning their righteous indignation eventually succeeded in persuading the wider public of the sense and morality of their cause and the Corn Laws were repealed. In the long term, their prognosis was completely vindicated.

The history lesson of the Corn Laws is this: bad policies that do harm to large numbers of people can, by human effort, be undone in order to do less harm, but this cannot happen without relentless campaigning and activism. That means that all those involved in housing need to reach out to the widest possible audience, making alliances with anyone who will join the cause,  to make the moral, social and financial case for a massive programme of housebuilding, as well as challenging the stigmatisation and prejudice that wraps itself around any discussion of social housing and benefits. Blaming the poor for creating their own predicament is not the answer. 

The mansion tax mistake

Tue, 15 Apr 2014

Labour and the Liberal Democrats have been flying the mansion tax kite for several years now, but details of how it would work in practice are still sketchy. In my view, the mansion tax is a bad idea and likely to come to nothing. Like the bedroom tax and the poll tax, the terminology is wrong and smacks too much of class war. Conservatives will always raise the image of the little old lady (or man) living on limited means in a £2 million house. This response from the leader of Kensington and Chelsea Council, describing the mansion tax as a ‘nasty’ tax, is typical.

A simpler, subtler option, which could raise as much as a proposed mansion tax, would be to reform council tax by stretching the distance between the bands and adding two bands at the top end, something I wrote about in 2012. It would add a much-needed dose of fairness and redistribution to a system that is grossly regressive and unfair.

To recap, council tax was introduced as a fudge after the big poll tax riot of 31st March 1990. It is a hybrid between a personal tax for council services and a property tax - the bigger your property, the more you pay. There are eight council tax bands in England (nine in Wales) ranging from Band A (properties worth up to £40,000 in 1991) to Band H (properties worth more than £320,000 in 1991). Valuations were cursory and have never been adequately updated. Band D is the benchmark, so people in Band A pay 6/9ths of the Band D tax and people in Band H pay 16/9ths of Band D. This means that a Band H property will be worth at least 8 times a Band A property, but the council tax will be only three times higher.

The regional picture is haphazard, and local authorities have discretion over the tax they set. The average band D tax is £1,468 in England but consider this: in my modest Band D house in Cambridge I pay £1,512 per year. A resident of Hyde Park One in Westminster, living in a property worth £140 million, pays a mere £1,353 a year in Band H, and this is just three times more than someone living in the cheapest home in Westminster who pays £451 a year.  The fact that I pay more council tax than a billionaire Russian oligarch is rather galling. 

There is an argument to be made that those in the largest properties should pay significantly more towards council services, both on grounds of fairness and redistribution, but also because larger properties generally take up more roads, sewers and street lights, and binmen have to travel farther to collect their bins.

It would be relatively easy to add two bands above the present Band H, say for properties valued from £320,000 to £500,000, from £500,000 to £750,000 and above £750,000. In today’s money, that would mean three bands, roughly from £1 million to £1.6 million, £1.6 million to £2.5 million and above £2.5 million, although London prices would be higher due to faster levels of inflation. The existing values are already in the system so the bands could be easily adjusted, but this could also be an opportunity to ‘stretch’ the bandings, so that those in a band H property end up paying four times more than those in Band A, rather than three times as at present, and those in the top band would pay six times more than those in the bottom band. It would be a much fairer system.

According to government figures around 130,000 properties are in band H although this appears to be an underestimate. Knight Frank reckon 50,000 homes are currently worth more than £2 million. For the sake of argument, let’s assume 25 percent of 130,000 would be in the new Band I and 10 percent in Band J (that’s 13,000 properties worth more than £2.6 million). A revised council tax regime could then look something like this:

BandNo of properties (million)Ratio to Band D (previous band in brackets)Current annual tax (average)New annual tax (average)Additional revenue (million)
A5.76/9£979£979nil
B4.57/9£1,142£1,142nil
C58/9£1,305£1,305nil
D3.59/9£1,468£1,468nil
E2.212/9 (11/9)£1,794£1,957£358
F1.115/9 (13/9)£2,120£2,447£360
G.818/9 (15/9)£2,447£2,936£391
H.08524/9 (18/9)£2,936£3,915£83
I.03329/9-£4,730£156
J.01336/9-£5,872£76

This could raise an additional £1.4 billion, but more importantly it makes the system fairer and more redistributive. It could also encourage some people in larger properties to downsize. Relief would be available for asset-rich, cash-poor residents, taking account of the currents savings rules for benefits. 

There are some signs that concern about the widening gap between rich and poor is gaining traction on the right. This thoughtful piece by the MP for Westminster is a case in point, and as I mentioned in my previous blog on this topic, the Free Enterprise Group of Conservative MPs might be willing to support a reform of council tax. A party that wants to present itself to the electorate as ‘the workers’ party’ could attract votes from ‘hard-working people’ with a policy that asks for the very well-off to pay slightly more in tax.

The policies that work best are often those that are introduced incrementally and subtly and with some degree of cross-party support. Reform of council tax could be spread over a period of years and would not be damaged by the negative connotations that surround the mansion tax.

View results 10 per page | 20 per page | 50 per page |

IH Subscription