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.
Well it’s here at last. After a few IT glitches, the government’s new streamlined planning guidance was published last week, and it’s potentially good news for housing. The new documents replace thousands of pages of previous guidance and arise from the review carried out by NHF CHair Matthew Taylor.
Back in April last year I commented on a little-noticed clause in the new National Planning Framework that gave cause for optimisim - the requirement for local authorities to look at market signals when casting their local plans. The exact wording reads as follows:“Plans should take account of market signals, such as land prices and housing affordability, and set out a clear strategy for allocating sufficient land which is suitable for development in their area, taking account of the needs of the residential and business communities.”
The new guidance puts meat on these bones and sets out how local authorities should plan for new supply. The starting point is the CLG’s household projections. But beyond, this, planning authorities will now need to look at local house prices and rents, employment growth, land prices and the appetite for self-buiid when they draw up their plans. Two key extracts from the section on future supply are worth quoting at length.
“Prices or rents rising faster than the national/local average may well indicate particular market undersupply relative to demand.”
“In areas where an upward adjustment is required, plan makers should set this adjustment at a level that is reasonable. The more significant the affordability constraints (as reflected in rising prices and rents, and worsening affordability ratio) and the stronger other indicators of high demand (eg the differential between land prices), the larger the improvement in affordability needed and, therefore, the larger the additional supply response should be.”
Simply put, this means that any upward divergence from national or “local” averages will require a boost in supply. It means that local authorities will need to have a clearer understanding of the housing and land markets in their area and plan for additional supply if the market is over-heating. It does not go quite as far as setting a target ratio of house prices to incomes but it is a good step forward. Assessments of housing need will have to be robust and will have to be based on a full understanding of the local housing market and follow the methodolgy set out in the guidance, and this will also give additional muscle to the Planning Inspectorate when bringing recalcitrant local authorities into line.
This will put pressure on local authorities in the south-east in particular. As I see it, local authorities with the largest ratio of house prices to incomes will have to make greater provision for new homes than those with lower ratios. In my Eastern region for instance, the NHF’s latest Home Truths sets out the ratio of median house prices to incomes for each local authority. The four authorities with the worst levels of affordability are Hertsmere (14.9), Three Rivers (14.7), Uttlesford (13.7) and St Albans (13.7) and they will all be expected to plan for more supply in order to redress the house price imbalance in their areas.
Of course, local authorities like these will argue that their areas are popular and that if they built across the entire district it would still not bring prices down. They will also argue the green belt will be put at risk by the new guidance. London boroughs are similarly constrained by a tight green belt. But there will be pressure to identify those areas of green belt land that have the least amenity or aesthetic value for future development and the “duty to co-operate” as set out in the NPPF means that tightly constrined local authorities will have to speak to their less constrained neighbours and plan accordingly. That means that places like North Herts and South Cambridgeshire will have to make cross-border plans with Stevenage and Cambridge respectively. The point is that no single authority should be allowed to evade their duties because they all have a part to play and if a single one opts out then it puts greater pressure on the rest.
A couple of caveats. The guidance is described as being in “test mode for 6 weeks” it’s not clear if this relates to the guidance itself or the new IT system that supports it. The guidance also has the fingerprints of Nick Boles all over it. I’ve written before about the threat to his postion from right-wing Tories and I hope he stays to see it through.
But here’s another thing. Why are we always outflanked by the countryside lobby whenever there are changes to planning or housing policies? The misanthropes at the CPRE rushed out a press release as soon as the guidance appeared and this was widely reported in The Telegraph (“Affordable housing rule threatens green belt”) and printed verbatim in many regional papers. From our sector, silence. Why did the HBF, NHF, the CIH and other housing bodies not issue press releases with headlines like “Planning changes offer hope for first-time buyers”? or “New planning rules provide hope for thousands of homeless people”? Why are we so slow off the mark? The result is that the whole housing supply agenda is dominated by the countryisde lobby. It makes me despair. The housing crisis is a serious business and we should treat it seriously.
“Those who cannot remember the past are condemned to repeat it.” “History repeats itself, first as tragedy second as farce.”
These were the two quotes that came to my mind in recent days as a series of reports showed that the housing market is on the lower slopes of yet another bubble. The Guardian reported a surge in buy-to-let mortgages and help to buy applications. The latest Halifax figures showed a 4.6 per cent increase in house prices over the past three months compared to the same period last year. The latest Royal Institute of Chartered Surveyers survey shows prices rising at their fastest rate since 2006 and first-time buyers are rushing to enter the market at the fastest rate since 2007. Asking prices are up and the gap between asking prices and sale prices is narrowing.
Yet for much of the popular press the rise in house prices is cause for celebration. The Express reported on ‘Booming Britain - ‘joy for millions as house prices rise.’ The Daily Mail followed suit, ‘Britain is booming’, viewing rising house prices as part of a good news story for the British economy.
This is what the Marxists used to call false consciousness. Rising house prices are good news for a tiny number of people – those trapped in negative equity. For the vast majority of the British people, a long-term fall in house prices and housing costs would do more to improve their standard of living than any other political measure.
This is a point made by Faisal Islam in this Observer article at the weekend, and I strongly recommend that you read it. He makes a further two points that are well worth repeating. The first is that the housing market is principally driven by cash and that whoever has the most cash generally gets the property they want. All the indicators show that cash is becoming more readily available and yet supply is increasing only slightly. Jules Birch highlighted this in his blog last week, pointing out that supply is still only meeting half of current demand. This will inevitably lead to rising prices as more cash competes for a fixed supply of homes.
The second point is that the housing market is very illiquid with only a few properties being traded at any time and each sale and purchase has high transaction costs. Government figures show that at the height of the last boom in 2006/07 there were 1.4 million transactions a year in England. This fell to 664,000 in 2008/09 and has risen to 800,000 over the last year. This means that even if transactions and supply rise slightly there will never be enough homes to satisfy rising demand. Paradoxically, any rise in transactions and supply will inevitably have an economic stimulus, which is exactly what George Osborne wishes to achive. Yet if this leads to a fall in unemployment to the Bank of England’s magic 7 per cent figure then interest rates will start to rise and all those new buyers who have stretched themselves to the limit will start to struggle with repayments. Result: boom followed by bust.
On the day of the Budget I wrote a blog predicting that help to buy would help to stimulate a demand-side spike in house prices and would do little to help supply or affordability. History should tell us that if you tinker with the housing market without addressing the underlying structural problems of supply, land and affordability then it will inevitably lead to problems. What we need is a political party that will make a long-term commitment to set rents and house prices at an agreed ratio of incomes and who will take the right steps to achieve their promise by planning for a proper supply of housing.
As Faisal Isalm points out, no political party has ever had the guts to deal with this issue, even though it would do more to improve our national living standards than any other single initiative.
What makes a house valuable? It may seem a stupid question but bear with me. Take this Georgian house in Bath’s Royal Crescent, built in 1770, which has been on the market for £3.2 million. A studio flat of just 19.5 square metres (that half a metre is so important!) is also on sale in the Crescent for a staggering £225,000. Yet the historic cost (and the present value) of the stone, bricks, timber, glass and the labour costs of the architect and the craftsmen who designed and built these properties are a tiny fraction of their current value. When we insure our house, the rebuild cost is usually much less than the value of the property. The difference is made up, of course, by the value of the underlying land, or more precisely the location of the land. Location, Location, Location.
This interesting article from Brian Green at Brickonomics highlights something that we surely all know to be self-evident – that the value of land as a percentage of house prices has rocketed. Back in the thirties, land could cost as little as 2 per cent of the sale price of the finished property. Many plotlanders in the twenties and thirties bought land at a pittance, cadged materials and used their own sweat equity to make a valued home. By the late fifties land accounted for around a quarter of house values but this has increased to 70 percent today. For me, this proves the point that land, or the lack of it, is the single most important issue in English housing today. Too little land and inadequate supply means rocketing house prices. I’ve consistently argued in these blogs that supply will only be boosted to reasonable levels when we end our obsession with protecting the countryside and hemming our people into towns and cities. We have plenty of land, and even if we built 3 million homes on the countryside it would take up less than one percent of England’s land area and we would still protect the best landscapes.
This chimes with an excellent new report from Shelter by Matt Griffith and Pete Jefferys which provides a forensic analysis of how we can reach the 250,000 homes a year that we need to build. It recognises that land policy is a critical element in boosting housing supply and that green belt swaps and a new town programme could produce 76,000 new homes a year – roughly three times the annual output of our sector. The report makes it clear that addressing the land issue is the only way that the current supply gap can be properly closed. This is big picture stuff, but it seems odd that it has to fall to a group like Shelter to state the obvious.
Yet the latest wheeze from the government completely ignores this key message about the need for more land. According to today’s Telegraph, Ministers want to cut red tape in the housebuilding industry but introduce a minimum size standard to end “rabbit hutch” Britiain. This is puzzling. Don’t Ministers undertand that our houses are some of the smallest in Europe because of the price of land and the lack of land supply? You cannot increase the footprint of the average home and maintain supply at exisiting levels if you don’t make more land available. If you don’t, it means fewer homes and higher prices. Nothing in this latest report indicates that more land will be released in order to meet the new standards and maintain or increase supply. I’m not arguing that a minimum size standard is wrong but the government really needs to think things through before they announce new policies.
Back to my original point. It’s land, stupid.
Nick Boles is the best planning minister we have had for years, but his position is being threatened by anti-growth Tories and he needs our support.
Boles may be a conservative – by instinct and tradition the natural home of the nimbys - but so was Harold Macmillan and he built more homes than any recent Labour administration. More importantly, Boles understands the key issues in planning and housing, through his background in Policy Exchange. He recognises that we have to build millions of new homes if we are to create a fairer and more civilised society. He also understands that the planning system must release more land in order to boost supply. In a speech last January he talked of our “decades-long failure to build enough houses. And the root cause of that is our decades-long refusal to release enough land for development.”
As Planning Minister, Boles oversees the National Planning Policy Framework and the Planning Inspectorate, which, of late, has been requiring many local authorities to increase their post-Localism Act housing targets. This is because the NPPF contains some key requirements that we, as a sector, should be defending at all costs. For example, it aims to “boost significantly the supply of housing” and says the Government’s key objective is “to increase significantly the delivery of new homes”. It requires local authorities to “prepare a Strategic Housing Market Assessment to assess their full housing requirements, working with neighbouring authorities where housing market areas cross administrative boundaries”.
This is all good stuff, but many traditionalist Shire Tories, including ex-ministers, don’t like it. In a recent Commons debate a gang of them lined up to attack the NPPF and Boles. They spouted the usual scraremongering stuff about “concreting over the countryside” and the imminent threat to the green belt. This comment from ex-prisons minister Crispin Blunt was typical:
“There is greenfield development in the green belt designated for my constituency at the behest of a planning inspector, rather than local people, which is evidence that our system is not working.”
But this is evidence that the system is working. The planning inspector is merely ensuring that local authorities do what is set out in the NPPF – a document created by the government that Blunt and his colleagues allegedly support. Eric Pickles has made it clear that localism is not a one-way street and that every local authority has to play their part in meeting housing needs. National and local politicians cannot assume that localism will allow them to evade their responsibilities to present and future generations, simply because a minority of vocal elderly home owners object to new homes being built, True Tories would understand this - their great philosopher Edmund Burke described society as a contract, “a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born”.
Failing to build the number of homes we need represents a breakdown of that partnership and is contemptuous of younger and future generations.
The NPPF needs time to bed down and to work effectively. The last thing that developers need, including housing associations, is yet more change in the planning system .
So my message to the sector is this. We need to defend the NPPF and Nick Boles. If he goes and the forces of reaction triumph it will put our cause back by years. So if you have any political influence at all please speak to your local councillors and MPs and express your support for Boles, Pickles, the NPPF and the critical role of the planning inspector. Say yes to homes.
Edmund Burke is also reputed to have said, “All that is necessary for the triumph of evil is that good men do nothing.” So please do something.
“You don’t know what you’ve got till it’s gone”, sang Joni Mitchell.
The creeping privatisation of social housing continues, but few people are noticing. One person who is, Steve Hilditch at Red Brick, has produced an interesting update on the so called “affordable rents” programme which, he claims, is “sucking the life out of social housing in London”. He reveals that five social housing properties are being converted to affordable rents for every property built. As he points out, “these new tenants are even more reliant on housing benefit. Not only have social rented homes been hijacked but also the pain will be felt through increased housing benefit payments for many years to come.”
For London, at least, it seems that every pound invested in the “affordable rents” programme is going to cost the taxpayer significantly more on the housing benefit bill, something that was completely ignored iin the CLG’s impact assessment. The CRS settlement suggests that the new average grant level for each “affordable home” will be £20,000, yet the average “affordable” rent in London will be £180 a week, leading to an HB bill of £9,360 a year for tenants on full benefit. So after just two years the the tax payer will be shelling out more in housing benefit than the initial up-front grant. Every year and for ever. As Steve Hilditch also points out, from 2015 for every £1 spent on grant, (administered by a large bureacracy - the HCA), the government will spend £20 on housing benefit. This is the economics of the asylum. Where is Margaret Hodge when you need her? It’s yet another brick removed from the wall of a sensible housing subsidy system.
One of my first jobs in Camden way back in 1980 was working as a tenant liaison officer, dealing with in-situ improvement works to blocks in King’s Cross and Camden Town. I dealt with many single tenants living in one-bed flats who were paying a rent of around £10 a week. That would be £36 a week today if rents had increased in line with general price inflation. But the actual rent of a one-bed council flat in Camden is now around £110 a week, so roughly three times general inflation. Nearly all the working-age tenants I dealt with were in work. I remember one man who worked as a gallery attendant in the National Gallery. The average gross salary in 1980 was £6,000 so his rent would have been around 10 percent of his salary, leaving him 90 percent of his wages to spend on other things, rather than wasting it on rent. Today someone in a one bed flat in Camden would have to be earning at least £66,000 to be paying 9 percent of his or her salary in rent.
Some of you may recall Sir George Young, the housing minister, in 1991, saying “housing benefit will take the strain”. It certainly has. Back in 1970 the housing support bill, (the equivalent of today’s Housing Benefit budget) was £22 million. That would be £288 million in today’s money, so the actual housing benefit bill, at £23 billion, is 80 times greater than it was in 1970.
In economic terms, Housing Benefit is a classic demand-side subsidy. Like Help to Buy, it does not boost supply;instead it allows rents to rise to the level of the subsidy, so it is inherently inflationary. It allows private landlords to milk the public purse and it allows affordable housing providers the chance to become lazy, as they receive a guaranteed government-set rent with very little effort. It also means that one government department (DWP) has had to pay for decisions made by another (CLG). Back in 1980 around 80 percent of housing subsidy went to bricks and mortar and 10 percent was personal. Today the ratio is 5 percent bricks and mortar and 95 percent personal.
Going back to 1946, the subsidy for council house building was £22 per house per year for 60 years – the Treasury contributed around 75 percent and councils put in 25 percent. Even allowing for inflation that subsidy would now be a tiny fraction of the value of the stock. Yet by switching it to rents, it becomes a burden on the taxpayer in perpetuity. Of course, the rental income for landlords would have been less if this switch had not taken place, but then their costs, particularly loan payments, would also have been less. There is a also a good chance that the sector would be less residualised than it is now because our tenants would be less reliant upon benefits to make ends meet. There would not exist the same problems of worklessness and all the social problems that go with it.
I think the history books will judge this switch of subsidy from property to people to be one of the most stupid policies of any government in any period, ever.
One of the frequent arguments put forward by countryside campaigners opposed to house building is that greenfield sites are needed for food production. According to this argument, new homes will endanger our ability to feed ourselves in the future.
The first response to this is that we don’t need to be self-sufficient in food. We are not a peasant economy. Of course, we need to think about air miles and local food production but short of a blockade by sea and air the UK is a modern trading nation that can import food from all around the world. Agriculture contributes less than one percent to UK GDP even though it takes up the vast majority of our land. We are much better at making and selling other thngs.
But if you look at a detailed analysis of land use in England you soon realise that there is another aspect to this argument. Ninety per cent of England is countryside – around 12 million hectares - but only 8.9 million hectares, or 74 percent, is actually used for agriculture, and around half of this is grazing land, mainly occupied by sheep and cattle. However, some of it is also occupied by horses. In fact, when you start to look at the statistics for the horse population some interesting figures emerge.
The estimate for the number of horses in England ranges from 600,000 to 1.1 million but no more than 20,000 of them are professional animals – i.e. involved in the horse-racing industry, eventing or dressage. According to the British Equestrian Trade Association an estimated 3.5 million people ride each year and the vast majority are leisure riders - and 75 percent of them are women and children. But there is also a problem with surplus and unwanted horses, with many reports of horses being dumped on land around the country.
According to the British Horse Industry Confederation, the average land grazed by each horse is one hectare. So even using a very conservative estimate, at least 600,000 hectares of England’s countryside is occupied by horses, and probably a lot more. To put this into context, this is almost HALF of the of the 1.3 million hectares of England that is built upon. What’s more, with the exception of a few rogue burgers, horses contribute precisely nothing to our food chain.
So just to be clear, horses occupy an area of land that is almost half the built up area of England. That is enough for 18 million homes! Most horses are grazed on land that may not be suitable for agriculture. In my previous blogs I have suggested that we need to build 3 million homes on greenfield sites over the next twenty years. In other words, just one seventh of the land currently used by horses could be built upon and it would have no impact upon food production whatsoever. This nails the argument that loss of greenfield land means loss of food production.
Now I have nothing against horses. I am sure they provide endless pleasure for millions of people, but we have to ask what our priorities are?
Drive around the north-east section of the M25 and you will see hundreds of horses grazing on scrubland that could accommodate thousands of new homes. Yet this is green belt land that is supposedly providing some kind of amenity value for Londoners. I don’t think so. Just a few miles away people are sleeping on the streets or in beds in sheds. You have to ask whether this is a wise use of resources. As I have argued before, one way to improve tackle affordability and homelessness in London would be to extend outwards towards the M25.
But this is not an argument about horses vs houses. Just a fraction of this unproductive land could meet our housing needs for generations to come.
“Housing is the soul of the Labour Party” says Jack Dromey, as he pledges that housing will be at the heart of Labour’s agenda for 2015. According to Dromey, Labour will “…rebuild this country, get our construction industry working again and give families a chance of owning a decent home for their children just like their parents did before them…because a decent home at a price people can afford is so essential to leading a healthy, happy life – and right now, too many people have to struggle too hard and too long to achieve that or it is simply out of reach.”
Ed Miliband has also evoked the memory of Clement Atlee in his ambitions for the next Labour government.
Two cheers for all of that. Unfortunately the rhetoric coming from the Labour Party is not matched by their thinking.
Take Ed Miliband’s latest wheeze that housebuilders who hoard land should have it taken away. “There are firms sitting on land, waiting for it to accumulate in value and not building on it. Land-owners with planning permission will simply not build.” he says.
There is little or no evidence for this. Kate Barker found no evidence for it nearly ten years ago and neither did the OFT more recently. House builders are sitting on land with around 3 years’ supply, which is quite normal given the protracted delays built into the planning process. What’s more, what would be the outcome of CPO action against housebuilders? It would tie the industry up in expensive legal action and who will develop the site at the end of the process? Another house builder? A housing association? In the meantime, nothing would be built. In fact, a Land Value Tax would be a far more effective way of shortening the timeline from acquisition to completion. But we also need a Royal Commission to look at the house-building industry as a whole, to investigate the cartel and to bring in more innovation and competition.
But the rhetoric coming from Miliband and Dromey obscures the fact that Labour is not putting forward any concrete proposals about public investment or showing any ambition about a massive boost to housing numbers, by announcing a programme of new settlements, for example.
What worries me more is that Hilary Benn, Dromey’s boss, has been spouting off about the planning system in a way that will have a completely negative impact on house building. Take this article in the Telegraph. Benn seems to think that a localist approach to planning will deliver the homes we need. He writes, “…we have to make localism really work. Local communities should decide where they want new homes and developments to go and then give their consent in the form of planning permission. It’s the difference between having a say and having it done to you…I don’t think that if given that power, communities will ignore the needs of young people and the nation as a whole”.
But this is precisely what communities always do! I’ve written here several times about the ingenious and well-organised campaigns run by nimbys against house building. Housing needs are rarely mentioned. Is Benn not aware of surveys showing that a majority of people do not see that there is a housing crisis in their local area? This recent poll from MORI, for example, shows that whilst 80 percent of people believe there is a national housing crisis only 44 percent believe there is a local crisis. Benn is deluding himself if he seriously believes that localism will deliver the 5 million homes we need to build over the next twenty years.
And why is he writing this nonsense in The Telegraph, home of the ludicrous “Hands off our Land” campaign, other than to appease the nimby vote?
Can you imagine a localist approach being applied to nuclear power stations or prisons? None would ever be built. New housing is barely more popular so why does Benn imagine that existing homeowners – who predominate in planning consultations and campaigns – will vote for new homes in their area? The fact is that there are times when governments have to govern in the national interest and make tough decisions that will not please all of the people all of the time. Putting the responsibility for new homes on communities is simply a short-sighted cop out. Nick Boles has shown a much greater degree of understanding of the realities of the planning system than Benn - to the extent that we now have the bizarre situation of a Tory Planning Minister being more hated by nimby campaigners than the Shadow Secretary of State. This is the world turned upside down!
Even more worrying is another story in The Telegraph where “Labour sources” say that a Labour government would abolish the NPPF. The shadow planning minister is also threatening to abolish CIL and section 106. This is bonkers. The NPPF is bedding in and all the evidence indicates that the Planning Inspectorate is taking a robust approach towards foot-dragging local authorities. Adding further uncertainty and delay into the planning system is the last thing that our sector needs.
Ed Miliband really needs to get a grip on his team. If he really wants to evoke the spirit of Clement Atlee and Aneurin Bevan he is not going to do it with Hilary Benn at the helm.
The latest affordable housebuilding statistics for 2012/2013 from the HCA and the GLA make for interesting but fairly grim reading.
As expected, the “affordable” homes programme is starting to make a significant impact. For 2012/13 it comprised just 19 percent of completions, against 39 percent for social rent. But the balance is switching fast. During 2012/13 “affordable” home starts-on-site comprised 64 percent of the total programme, compared to just 13 percent for social housing. (The four programme headings are affordable, social, intermediate and home ownership).
Interestingly, 36,000 homes in total were both started and completed in 2012/13 but this still represents a signigificant fall from previous years. There has been a 35 percent decline in the overall level of completions from two years ago, when 56,000 completions took place.
What I find puzzling, is the wide disparity between the HCA/GLA figures and the live tables produced by CLG. For 200/11 the CLG figures show that just over 22,000 “permanent” homes were completed by housing associations in England, compared to the HCA and GLA statistics showing 55,909 - i.e. more than double the CLG figure. Is this because the GLA and HCA are including renovations of existing properties and purchases of existing homes through First Buy? If so, the figures are rather misleading, as they are not adding to overall supply. If any statistics’ experts are reading this I would be grateful to understand the disparity.
The overall message is that the construction of traditional social housing is passing into history, and being replaced by a product that is probably unaffordable to most working people. A year or so from now some research should be commissioned on the impact of the “affordable” homes programme, in order to test a few key questions. How many of the tenants occupying “affordable” homes are of working age and able to work? How many have been dissuaded from entering work because of the high level of rent? How many are reliant upon housing benefits? Most importantly of all, what has been the impact on the housing benefit bill and would it have been cheaper to the public purse to put the subsidy into social housing rather than this more expensive (to the consumer) product? My guess is that, like the switch from bricks and mortar to personal subsidy, which has been a major cause of the housing benefot bill soaring to £23 billion, the affordable homes programme will prove to be a short-sighted and financially inept policy.
Sir Simon Jenkins is at it again. Having proclaimed “victory” in the battle over the NPPF last year (a hollow one as it turned out), the chairman of the National Trust now wants to extend rigid planning protection to even greater swathes of the English countryside.
In his latest Telegraph article Jenkins claims that “British planning has become a war zone to a degree I have not seen in my lifetime. This has nothing to do with growth and even less to do with housing need.” He calls for a grading system for ordinary greenfield sites and attempts to play down the extent of existing protection by claiming that, “Already some 15 per cent of England and Wales is national park, green belt or within areas of outstanding natural beauty.” This is simply not true! The true figure is 37 percent for England and around 20 percent for Wales. If you add in SSSIs a staggering 44 percent of England’s land mass is protected, and all of this land retains its protection under the NPPF, apart from a few tiny slivers of green belt. Why is Simon Jenkins allowed to spread untruths in a national newspaper?
Contrary to popular myth, only around 10 percent of England is built upon and much of this is open space and gardens. This leaves 46 of England as unprotected countryside. But let’s be absolutely clear – it is this 46 percent that Jenkins is talking about. He wants to grade land according to its “beauty”. How much land does the countryside lobby want? This would be the start of a very slippery slope and should be robustly resisted.
You may remember that Boris Johnson was slated when he claimed that coalition reforms could lead to Kosovo-style social cleansing in London. Yet Sir Simon Jenkins is proposing something similar in the countryside. Recently he said that young people growing up in rural areas had no right to live near their parents. They should move to the towns instead. “Are you going to say that people who have lived in the Windrush Valley [in the Cotswolds] for 100 years have a right to go on living there? No, I’m afraid they don’t. Sorry.”
I don’t know about you, but I resent being lectured on housing issues by multiple–home owners like Jenkins and his former Director General Dame Fiona Reynolds. It puts them on a par with intellectuals from the past like C.M. Joad, Sir Patrick Abrecrombie and Sir Clough Williams-Ellis. These people despised the urban masses, hated tinned food and bungalows and wanted to see the proles hemmed into urban areas so that the countryside could be enjoyed by the few and not the many. Nothing has changed. It is class war through the planning system.
Take the green belt. Its principal function is to to contain the urban population into towns and cities and prevent “sprawl”, but in the process it requires millions of people to commute millions of miles every year just to get to work. Yes, we need dense and compact cities but they must reflect economic and social realities. In 1875 Octavia Hill proposed a green belt around London. If it had been implemented it would have left our capital as a global backwater, with Cricklewood and Stratford stuck in countryside. The green belt is a denial of history – it stifles progress and causes more problems than it solves. Of course we must protect and preserve the best landscapes but a significant part of the green belt consists of land with little aesthetic or agricultural value.
At the risk of repeating myself, the countryside lobby is guilty of gross scaremongering and hyperbole when it describes the threat of new housebuilding. Most commentators agree that we need to build around 250,000 homes a year in England over the next 20 years to meet household growth and past under-supply. That’s 5 million new homes, of which no more than 2 million can be built on brownfield land. But how much countryside would the additional 3 million homes take in reality? At a conservative estimate of 30 to the hectare it would require 100,00 hectares or 1,000 square kilometers. That sounds a lot but it represents just 1.66 percent of the 60,000 square kilometres of “unprotected countryside I described above. And once those 5 million homes had been built guess how much of England would be built upon? It would increase from 10 percent to 10.7 percent, with almost 90 percent of England retained as countryside, much of it protected. So much for “concreting over the countryside”.
In the heated debate over housing and land we need facts and rational argument, not emotion and hyperbole. Jenkins and his ilk need to be challenged and bearded in their lairs, because they are the vanguard of Nimbyism and Nodamism (No Development after Mine). The truth is that every single person in this country lives in a place that was once countryside. As our brave Planning Minister, Nick Boles, has pointed out, “building homes brings more human happiness than preserving fields.” He’s right and we should repeat it loud and clear.
There’s a housing war going on in North Essex between Uttlesford District Council and the residents of Saffron Walden. Or at least that was the picture painted by the BBC in last night’s edition of “Town” with Nicholas Crane. It showed protestors lining up to condemn the Council’s draft local plan, which will see up to 1,200 homes being built on Saffron Walden’s eastern edge. The Council’s first stab at a plan had proposed a new settlement near Elsenham as a way of soaking up its housing targets, but residents there opposed it so Uttlesford switched tack to a policy of dispersal, requiring each major settlement to take its share of housing.
If you don’t know Saffron Walden (population 15,000 and named after the stigma of the crocus plant), it’s one of the finest medieval market towns in England, with excellent schools and a very high quality of life. And that is part of the problem – people are queuing up to live there. It is now more of a dormitory than a market town – thousands of its residents drive to London each day or drive to Audley End station, two miles west of the town, where they take a 50-minute train to the City. A local estate agent interviewed by Crane claimed that 50 percent of his buyers came from London. The shop at the station sells top quality wine, including £400 bottles, that are snapped up by returning commuters.
So, in a nutshell, a town that houses mostly incomers does not want any more incomers coming in to spoil their idyll. That is the nimby paradox laid bare. To be fair, the opposition group, called WeAreResidents, (what else could they be?) is well organised and their literature is simple and effective. They argue that the M11 and Audley End lie to the west of Saffron Walden so residents from the new homes will have to rat run through the town, causing gridlock and damage to the historic town centre. But like most nimby groups they largely ignore issues of housing need (other than to push for a new settlement elsewhere!) and clothe their opposition in fears about congestion, pollution and infrastructure when the naked truth is they simply want no development at all. Apparently, 99 percent of those who responded to the Council’s questionnaire opposed the new homes, although my guess is that most of these respondents were middle-class and older homeowners, the same demographic that tends to engage with the planning system nationwide.
Luckily, Crane was able to interview a couple of young people at the town’s skate park, which will be extended if the new homes go ahead. They were more positive about growth, claiming it would regenerate the town and bring more diversity. “We want everyone to enjoy the town…Saffron Walden is its own little bubble…a lot of people in the town are stuck in this market town ideal” they said (see 59.30). Yet voices like these are rarely heard in planning debates.
But the situation in Saffron Walden is typical of most prosperous towns in the south-east where development is proposed. The key issues are not just a lack of homes but an imbalance between homes and jobs exacerbated by the pernicious impact of the London employment and housing markets (too many jobs, too few homes) creating a commuter zone that stretches from the Isle of Wight to Lincolnshire and beyond.
This brings me to my main point. I sometimes hesitate to use the term nimby because it is a pejorative American import (and no sane person would support development in their actual back yard), but it has come to be used as a shorthand for selfishness and small c conservatism. Yet if I lived in Saffron Walden I am sure I would be torn between my knowledge of national housing issues and my desire to preserve the distinct identity of the town. But for now, the battle lines have been drawn, passions are aroused and there is probably little room for compromise on either side. For WeAreResidents the issues are about Council duplicty and incompetence, and arguments about the desperate need for new housing are not being heard. Yet surely there must be better ways of conducting national and local planning consultations in order to avoid these adversarial shouting matches? Government and local authorities need to think about new ways of engaging with all of their populations, and not just the usual suspects, about the need for new homes. Opponents of housing developments need to be persuaded to see the bigger picture – to be moved away from narrow nationalism towards internationalism if you like, and away from their own short term interests. All of us, after all, live in places that were once virgin countryside. Above all we need to do more to understand the psychology of nimbysim and to come up with better and more creative ways of facing up to it. This is something I shall return to in future blogs
I met with the Intergenerational Foundation last week. They were established to research inequalities between the generations and to campaign for government policies that are fair to all generations - whether old, young or those yet to be born.
Nowhere is intergenerational inequality more pronounced than in housing markets. Our man-made housing crisis is principally about supply, and hence affordability, but a secondary, and extremely worrying aspect of the crisis is the unfair distribution of accommodation and property between the young and the old.
Older people who bought their homes twenty or more years ago had the benefit of relatively low house prices and many received MIRAS until its abolition in 2000. But they also reaped the rewards of raging house price inflation, which has outpaced general inflation by a factor of four. My own history highlights the advantages enjoyed by many people of my generation. I bought a flat in Hackney in 1983 for £27,000 and sold it for £85,000 in 1988 buying a house in Cambridge for £79,000 that is now worth around £450,000. So in crude terms my initial investment has grown five-fold over a 30-year period. The younger generation has been largely excluded from this bonanza unless they have managed to secure very well paid employment or had the benefits of parental largesse. Back in the eighties, house prices were around three times the average salary, but average incomes are now £26,500 and the average house is priced at £235,000 – so a ratio of 9 times the average salary. The average deposit required to buy a home is now £27,000. Generation rent is the result of this growing level of house-price unaffordability.
But this gap between the generations is growing. According to the English Housing Survey the proportion of home-owning people aged under 35 has declined from 15 percent to 10 percent over the past ten years, and the proportion of owner-occupiers aged 35 to 44 has declined from 22 percent to 18 percent.
Savills estimates that the over-55s in England now own around 64 percent of all housing equity – amounting to £1.6 trillion, whereas the under-35s own less than 5 percent of total equity - about £110 billion. This is a scandalous level of inter-generational inequality. I am constantly surprised by the lack of anger and activism among the younger generation about their housing situation, although there are signs that this may be changing, as Jules Birch reported recently, and groups like PricedOut are growing in size and influence.
Elderly owner-occupiers are also more likely to “hoard” spare rooms and to occupy property that is much larger than their needs, with few incentives to downsize. But this inequality also exists in the social housing sector, where older people are also much more likely to under-occupy their properties to the disadvantage of those stuck in overcrowded properties or waiting on housing registers
This inter-generational divide is blighting the lives of millions of young people who are having to spend a much higher proprtion of their income on private rents. But it also puts pressure on the older generation who may feel guilty about their disproportionate levels of wealth and feel that their younger relatives are putting them under pressure to downsize or hurry up and die. It’s very Dickensian!
According to the Intergeneration Foundation, this disparity between the old and the young could be tackled by a range of policy initiatives, including changes to the planning system to increase the supply of smaller homes for older people, ending some universal benefits for wealthier older people, abolition of council tax concessions for single occupancy, ending stamp duty for those who downsize and a property or land value tax to encourage more efficient use of property. Whatever the answers, if policy and law makers wish to avoid rising levels of protest and civil unrest they should be paying more attention to this growing intergenerational divide.
It seems that David Cameron and Ed Miliband have both adopted “One Nation” as a key slogan for their parties. It was Benjamin Disraeli, of course, who coined “Two Nations” in his 1845 novel, Sybil, describing the rich and the poor, “between whom there is no intercourse and no sympathy; who are as ignorant of each other’s habits, thoughts, and feelings, as if they were dwellers in different zones, or inhabitants of different planets.”
The divide between rich and poor is possibly as wide as ever, but there is another manifestation of Two Nations that should be of equal concern to our politicians – the growing divide between London and the rest of the country.
Consider a few facts:
- The average London house price increased by nearly 10 percent in the past year. Prices in its wealthiest districts increased by 25 percent. Across the rest of the country house prices have been static or falling.
- Last year, 59 percent of buyers in the Prime Central London market came from overseas. For 37 percent of purchasers in the PCL their London property is not their primary residence.
- The total value of the UK’s housing stock is around £5 trillion and London accounts for 22.5 percent of it, even though it has only 12 percent of the country’s homes.
- The housing stock in the ten richest London boroughs is worth as much as the entire housing markets of Wales, Scotland and Northern Ireland put together.
- London has 4,224 multi-millionaires (individuals with net assets of £19m or more excluding their primary residences). But it also has some of the worst child poverty figures in England.
This has several consequences for London and the rest of the country. The first is that the upper classes are being squeezed out of their traditional neighbourhoods by foreign buyers, and this works its way down the pecking order, leaving the poorest increasingly unable to afford to live in London unless they are prepared to share squalid rooms at high rents, or lucky enough to get a social tenancy. (Whenever I go to London and see the thousands of low paid workers in sandwich bars and hotels (often from Eastern Europe) I ask myself, where do these people live? I have never seen an answer to that question. Does anyone know?)
Secondly, London’s population is growing, but supply has failed to keep up. London has a severe imbalance between affordable homes and jobs, so its commuter zone now stretches from the Isle of Wight to Yorkshire, and the numbers of people priced out of the housing market has soared. The numbers of people waiting for social housing is at an all time high, although the figures are now unreliable as many boroughs are restricting access to their lists.
These changes are also creating ghost districts in parts of London. I wrote a blog last year about a walk through the back streets from Kings Cross to the NHF office in Holborn. Even at weekends, these neighbourhoods are busy and bustling. Take the same walk through the back streets of Belgravia and Knightsbridge on any weekend and you will see few people. The streets and the houses are empty. The key difference is that 50 percent of Hoborn is social housing. In Belgravia it is close to zero and many of the homes have been bought by absentee owners. How can the neighbourhoods of any major city survive if properties are uninhabited?
London is a global capital and brings us a huge array of cultural and other benefits, but it is sucking in people and money from around the world to the extent that its housing market is now having an adverse impact upon the lives of millions of people. The city-state is starting to usurp the nation-state.
But what is to be done? There are no laws that force people to live in the properties they own. Even if council tax penalties were applied it would have little impact. The highest council tax in Westminster is a mere £1,360 per annum (a scandalous state of affairs). Increase this by a hundred-fold and it would barely register as loose change for the super rich.
The Smith Institute (named after John not Adam) highlighted these concerns in a report last year, describing the London housing market as dysfunctional, largely as a result of overseas investment. It called for a review of London’s housing strategy. It has reached the stage where London needs policies and laws that are different from those affecting the rest of the country. If politicians are serious about creating One Nation, they need to tackle the London problem as a matter of priority.
Regular readers of this blog will know that I was very involved in the debate over the new National Planning Policy Framework during 2011/12 and tried to stand up to the anti-growth brigade in the National Trust and the CPRE. I was described by a senior figure in the National Trust as one of its fiercest critics. I’ve long held the view that our backward approach to land use compared to countries like Germany is a major cause of our dysfunctional housing market and its crippling cycles of boom and bust. So it seemed to me that the NPPF, which talked about significantly boosting the supply of housing and a presumption in favour of sustainable development offered the potential to take a leap forward in housing supply.
My enthusiasm was short-lived because the coalition’s localism agenda and the abolition of regional spatial and housing strategies led many local authorities to sniff an opportunity to pander to their nimby voters and downscale their housing targets. Last December Policy Exchange reported that English Councils had knocked a total of 272,000 homes off the previous regional targets. In retrospect this was to be expected. Given the demographic profile of those who engage with their local planning system it was quite clear that giving local people the right to decide on housebuilding in their area was akin to giving turkeys the vote on whether to celebrate Christmas. Sometimes there is a lot to be said for centralism!
But the cavalry appears to have come to the rescue in the form of the planning inspectorate. A recent study by Nathaniel Lichfield & Partners (NLP) looked at the 55 local plans examined or submitted for examination in the year since the NPPF was finalised and found that 55 per cent had proposed reducing their housing targets and only 20 percent proposed an increase. But the planning inspector stepped in and required nearly half of local authorities to raise their target in order to be found acceptable. Of the total plans submitted, only four local authorities were allowed to get away with a housing target that was lower than the figures in the Regional Spatial Strategy, and of the 18 plans found to be sound following examinations nearly 80 percent had met or exceeded the previous RSS target. It is clear that the inspector is putting significant weight on previous RSS targets even though they have been abolished. This is very good news for housing.
Cue much gnashing of teeth from the National Trust and others, who now view localism as a farce. Well perhaps it is. There are times when governments have to take tough decisions in the national interest and override local views, and this is one of them. But it is important that housing providers keep a close eye on the local planning process in their areas of operation and make sure that housing needs assessments and housing targets are are sound.
They should do this even if it brings them into conflict with their local authority partners. After all, isn’t it part of our job to stand up for housing?
Is social media about to become the main new interface between landlords, staff and tenants? If you believed some of the hyperbole on #ukhousing you would think so. Apparently we are at the “tipping point” and lots of stuff like this is flying around. Personally, I don’t believe a word of it.
Don’t misunderstand me, Twitter and other forms of social media are powerful tools. Someone like Lord Sugar, with nearly 3 million followers, can reach more people than The Sun and The Daily Mirror put together. I am a devotee, one of a smallish group of housing folk who are active on Twitter, which is certainly one of the best ways to keep abreast of events in the housing world. Yet increasingly I feel that we housing tweeters are not much more than a self-reverential cabal, with very little influence beyond our immediate horizons. This first came home to me last year during the campaign over the National Planning Policy Framework. Our opponents in the National Trust and the CPRE were sending out hundreds of tweets every day to ministers and other opinion formers, yet the social housing sector was virtually silent. They made an impact. We did not.
There is a handful of housing stalwarts, led by people in organisations like Bromford and Halton Housing Trust, who are evangelical about social media. They see it as the future for us, our staff and our tenants. (Check out their websites and Twittter feeds to see how it could and should be done). They may be right, but the situation on the ground is light years away from their rosy vision. There are some companies, like Vodafone and Virgin, that do have a heavy customer service presence on Twitter but they are the exception and they deal with a very different demographic to us. Social housing tenants continue to have less access to the internet than the population as a whole, and the tenants I speak to are sceptical of the digital by default agenda. They appear to prefer old-fashioned methods like text, telephone, paper and, dare I say it, face-to-face contact at meetings, in local offices or on the doorstep. My hunch is that no more than one in a hundred tenants engage with their landlords using social media and that no more than one in a hundred housing staff regularly use social media as a means of interacting with tenants. Similarly, I don’t believe that more than ten percent of housing chief executives are active on social media.
If anyone can prove me wrong I would be happy to correct these figures!
To put this to the test, I looked at the main landlords close to me in Cambridge. Given that these landlords are all based around Silicon Fen you would perhaps expect them to have embraced these new technologies with gusto. But the results of my brief survey are not encouraging:
- Cambridge City Council - has no separate landlord presence on Facebook or Twitter. The Council has a Facebook account with 550 likes and 3,085 followers on Twitter. It made 39 tweets in April, which included interactions with just nine customers - not tenants.
- South Cambridgeshire has no separate landlord presence either. The Council’s Facebook page has 11 likes and its Twitter account has 1,952 followers. It tweeted 104 times in April, which included interactions with eight customers - not tenants.
- Luminus Group (stock transfer association in Hunts) has no visible Facebook or Twitter presence on its website and cannot be found on Twitter.
- Hereward Housing (stock transfer in East Cambridgeshire), has been absorbed into Sanctuary Group. The Sanctuary website has no visible Facebook or Twitter presence even though it is the largest social landlord in the country. I could find no presence on Twitter.
- Roddons Housing (stock transfer from Fenland Council), now part of the Circle group. No evidence of Facebook or Twitter presence on its home page. Not found on Twitter.
- Wherry Housing. Also part of the Circle Group. No visible Facebook or Twitter linkage on its home page. Has a Twitter account with 851 followers. It made 13 tweets in April, including interactions with two customers. No tweets in March, one in February. Has a Facebook page with 595 likes. No meaningful customer interaction.
- Cross Keys Homes (stock transfer in Peterborough) - probably the best landlord performer in my list. Has links to Twitter, YouTube and Facebook on its home page. Has 135 likes on Facebook with some evidence of customer interactions and 1,472 followers on Twitter. It made 23 tweets in April, which included interactions with two customers. The Chief Executive, Mick Leggett, is also active on Twitter.
- Hundred Houses Society Cambridge – no visible Facebook or Twitter presence on its home page.
- King Street Housing Society. Has links to Facebook and Twitter on its home page. It has a Twitter account with 355 followers and made 9 tweets in April, none involving customers. Facebook has 10 likes and 3 posts were made in April.
- Granta Housing, now part of Metropolitan Group. No evidence of any Facebook or Twitter links on their home page. Metropolitan’s Twitter account has 613 followers. One tweet was made in April, none in March.
- CHS Group (Cambridge Housing Society) No evidence of any Facebook or Twitter activity.
So eleven landlords managing over 150,000 properties engaged with just four tenants on Twitter in April! Not a great outcome. But are they representative of landlords across the country? I fear so.
To me, this indicates a sector that is, with a few exceptions, failing to embrace change. Is this because we are inherently conservative and wary of innovation? Or are landlords sceptical of these new platforms? Perhaps there is a suspicion that some forms of social media have shot their bolt and will not last. It seems that millions of people are deleting their Facebook accounts because of trust issues. I am one of them. As for LinkedIn, it doesn’t seem to know what it is! Perhaps these platforms are too young and too untested to be trusted or invested in. Perhaps another, better platfrom will emerge to replace them. Time will tell.
But this is not just about interacting with staff and customers, we need to think about the power of social media to influence and persuade. Imagine if just a fraction of our 4 million tenants could be persuaded to use Twitter as a campaigning tool to lobby politicians on housing and welfare issues, in the way that thousands of National Trust members lobbied over the NPPF. We could become a major force for change.
At around midnight on the evening of May 3rd 1979 I watched Margaret Thatcher’s cavalcade sweep past the end of my road in north London. She was on the way back to the count in her Finchley constituency. Just a few months earlier I had started my first job in housing, for Camden’s housing department. Little did I realise it at the time, but her election was to form the backdrop to my entire life in housing.
That winter of 78/79 in London was awful. It felt like a war zone, with rubbish piling up in the streets. Strikes gripped the divided nation. In some cities the dead were left unburied. Most people felt that it “couldn’t go on like this” so there was a real appetite for change. They say you should be careful what you wish for!
Younger readers may find it hard to understand the extent to which 1979 was a watershed in post-war politics. Since 1945 there had been a broad consensus on housing policy. Attlee, Churchill, Macmillan, Wilson and Heath had all broadly agreed that people could and should aspire to home ownership but that this would be part of a broad church of housing provision, underpinned by a regulated private rented sector and a strong council sector charging low rents. In 1953, Harold Macmillan the Conservative Housing Minister, built almost 200,000 council houses in England. As Prime Minister in 1957 he built 135,000. Harold Wilson built 154,000 council houses in 1967. Both sides of the House agreed that council housing was a good thing. But after 1979 this changed forever.
During the seventies Camden had been building 3,000 homes a year under the legendary housing director William Barnes. It had a huge architects’ department designing modernistic schemes such as the Alexandra Estate or Branch Hill. There was a sense of optimism, a feeling that we were creating the socialist nirvana that had been promised by the post-war settlement. But with Thatcher’s election these new build schemes started to dry up. During the seventies Camden had also bought up whole streets of Georgian and Victorian terraces for redevelopment or renewal. These too were put on hold. They were squatted or passed to short-life groups. One of my early jobs was managing this portfolio of over a thousand homes, working with short-life groups like West Hampstead Housing Association (now part of Genesis) or Short-Life Community Housing (now defunct). Post-Thatcher, many of these properties were left untouched for decades. Some of them, like the notorious Hillview estate, became dens of crime and prostitution.
Within a couple of years of Thatcher’s election London began to change. Wine bars and brash yuppies started to appear. The New Romantics replaced the punks. During the course of the decade waiting lists grew and the use of bed and breakfast soared. The council itself was torn apart by the battles over rate capping.
In discussing Margaret Thatcher’s housing legacy it is important to remember that she spent part of 1974 as Shadow Environment Minister, which included the housing brief. She understood the key issues as this, very dated, party political broadcast makes clear. She also knew that housing offered the opportunity to create the property owning democracy that she and her advisers dreamed of. It would remove people from the “tyranny” of the state, and turn them into good conservative voters in the process. “Every man and woman a capitalist.”
So what did she achieve? I think her housing legacy has five fundamental elements.
First, she ended the mass council house building that had characterised the post-war years. In 1979 councils in England built 75,000 homes. By 1990 this had fallen to 14,000, a gap that has never been replaced by housing association provision.
Secondly, she deregulated the private rented sector and put in place the conditions for the growth of the PRS that continue to the present day.
Thirdly, she introduced private finance into the housing association sector, leading to lower grants, less secure tenancies and higher rents.
Fourthly, she introduced the right to buy, which fundamentally changed the balance of tenures forever. In 1979, 29 percent of all homes in England were owned by councils and housing associations. By 2011 this had dropped to 17 percent. It was the greatest transfer of assets from the state to the individual in any era and generated more revenue for the Treasury than all other privatisations put together.
Finally, she engineered the switch of public subsidy from bricks and mortar to individuals, leading to huge increases in both council and housing association rents. As Sir George Young, the then housing minister, famously remarked in 1991, “housing benefit will take the strain”. It certainly has, soaring to £23 billion by 2013. (I think the history books will judge this to be one of the most stupid policies of any government in any period.)
In 1980 the typical rent for a one bed flat in Camden was £10 a week, the equivalent of about £36 in today’s money. The actual figure today would be around £115. In the House of Commons on the 16th December 1981 Gerald Kaufman condemned the government “for more doubling council house rents since coming to power. When the Government came to office in May 1979, the average council house rent stood at £6.40 a week. Two years later, by April this year, that rent had risen to £11.39 - an increase of 78 per cent.”
But we need to be quite clear. None of these fundamental shifts in policy that were put in place under Margaret Thatcher’s premiership have been undone by subsequent administrations. Our present housing system is the creature of her reforms.
And yet. The details of her housing record are not quite as straightforward as this. It is true that Thatcher thought there was something wrong with anyone who did not aspire to own their own home and the sale of council houses is, rightly, seen as her most enduring housing policy. But, as Jules Birch has pointed out, her approach to council sales was more nuanced than the subsequent mythology and the same is true of other aspects of her approach. She proceeded with more caution than you would have expected, and you have to remember that her early cabinets were dominated by “wets” – men who believed in the post war consensus. In fact, many more social dwellings were built under Thatcher than under Blair and Brown. 440,680 were built in England in the decade from 1980 to 1989 compared to 187,450 between 2000 and 2009. Admittedly, some of this was due to a slow winding-down of Labour’s plans, but these are interesting statistics, nonetheless. Similarly, the de-regulation of the private sector did not come until almost a decade after her election, in 1988, and the first transfer of council stock (Chiltern Hundreds) was also in 1988, something that seemed alien and unbelievable to me at the time. In fact, her comment about “no such thing as society” is also more nuanced when you read it carefully. In fact, there is a strong argument to be made that she was not actually a conservative at all. After all, it was the Tory grandees who shafted her at the end, not the electorate. She was, in truth, an extreme free market liberal.
But in the final analysis Margaret Thatcher’s housing legacy is quite simple. She swept away the post war consensus, and it has never been restored. In that sense, we are all Thatcher’s children, from the family struggling to pay an “affordable” rent of £180 a week to the housing association chief executive on a six-figure salary. There has been no more important figure in housing in my lifetime.
It is unfortunate that the current debate on welfare reform has been hijacked by tribal rhetoric about Mick Phillpott, strivers versus shirkers and the bedroom tax. Rather than illuminating the subject it only serves to cloud it in a fog of sound and fury. As a result, four key factors that are critical to a proper understanding of the current welfare system are rarely mentioned: population changes, rising rents, increases in unemployment and shrinking wages.
Take population, and consider this: between 1851 and 2011 the population of England increased from 16.8 million to 53 million. In 1851 the percentage of the population aged over 60 was 7 percent. In 1951 when the welfare state was being created it was 16 percent, and it is now 22 percent. So in the 160 years between 1851 and 2011 the proportion of the population aged 60 and above has trebled.
In 1951, there were only 300 people aged a hundred or above. By 2031, it is estimated that this could increase to 36,000. Our population is ageing, but the birth rate has also fallen. Since 1960, the crude UK birth rate fell from 17.5 to 12.8 per thousand. We are living longer and having fewer babies. In fact, although the birth rate has increased of late, it is still just 1.96 per woman, which is below the replacement rate. If this carries on, we will end up like Italy with a rapidly ageing population supported by a shrinking base of working age people. It is estimated that the ratio of working age people to pensioners could fall in the UK from 3.7 to 1 to 2.1 to 1 by 2040, which means two taxpayers would be paying the state pension of every retired person. That is not sustainable in the long term and it is why we need an influx of working-age, tax-paying immigrants to straighten out the population bulge and, literally, pay our pensions. (But getting this message across to the public at large is hellishly difficult, as I know to my cost when I have blogged about immigration in the past!)
The key point is that population policy is an important element in social policy. Populations are not static, they change constantly and any country, if it is to survive, needs to replenish its human capital and maintain a sensible age balance between working taxpayers and the retired.
So how does this relate to the welfare debate? Well it is certainly true that that welfare spending has increased significantly: it has trebled since 1951 – from around 4.4 percent of GDP to 13.5 percent now - but England in 1951 was a foreign country. The proportion of old people was much lower, rents were more affordable, unemployment was 3 percent rather than the current 8.5 percent and standards of living were still fairly primitive. Yet no one could possibly argue that we are a poorer country now than in 1951, so you would expect a higher proportion of current GDP to be spent on welfare.
But that does not mean we should not take a critical look at welfare spending.
According to IFS figures, pension payments (including winter fuel payments, pension credits and TV licences) now account for over 42 percent of the welfare bill – a fact that is often ignored. The next largest items of spending are housing benefit at 11.5 percent, child tax credits at 11 percent and child benefit at 6 percent. Income support and working tax credits (i.e. payments to people on low incomes) account for 7 percent of the total. So these six benefits represent three quarters of all welfare spending. By contrast, and despite all the shirker/ striver rhetoric of this government, Job Seekers’ Allowance accounts for only 2.4% of the total welfare spend.
Back in 1970 we spent just £22 million on housing benefit (or its equivalent at that time), now we spend a staggering £23 billion. But this is not because we have somehow become a nation of rent-dodging layabouts, it’s because rents, which are broadly linked to house prices, have increased way beyond inflation, especially in the private rented sector which is largely responsible for much of the recent increase in the HB bill. As Shelter pointed out recently, if food had increased in price at the same rate as housing, a chicken would now cost £51. Market rents (and many “affordable” and even social rents) are simply not affordable to people on low incomes. In recent years wages have also fallen in relation to inflation, leaving less disposable income to pay for rising rents and other goods. This has contributed to the increases in HB payments and the increase in payments to poorer working families through tax credits.
So by all means let’s have a debate, as George Osborne suggests, about the system that allowed Mick Philpott to rake in thousands of pounds in benefits. No one who has ever worked in housing can deny that the system does create some dependency, but the truth is that Mick Philpott is no more representative of welfare claimants than Harold Shipman is of doctors, and any dependency that exists is minor in relation to the bigger picture.
The more important debate is about the way that population changes, rising rents, rising unemployment and shrinking wages have impacted upon the welfare bill over the past few decades. Public opinion is firmly of the view that welfare spending is over-generous and disincentivises work, and this is not something that can be ignored. I’m not suggesting, therefore, that we should defend the status quo, but I also think it is disingenuous to oppose the current reforms, as the Labour Party has done, without coming up with credible alternative proposals, (although they seem to have rushed out some ideas over the weekend to show that they are not weak on welfare). So here are my headline suggestions.
Firstly, in any attempt to curb welfare spending we need to scrutinise the six big elements of expenditure that I outlined above, which account for three quarters of all spending. This means that we simply cannot ignore the pensions’ budget. Pension-age people have been mostly excluded from the current reforms, but is it right, for example, that wealthy pensioners should receive the state pension, winter fuel payments, free bus passes and free TV licences as of right? I know several well-off pensioners who put aside their state pension to fund expensive holidays. Shouldn’t this and other universal benefits be more rigorously means tested, or withdrawn altogether for wealthy people?
Secondly, the bedroom tax is a diversion and will not save money. The only realistic way of reducing the housing benefit bill is to raise wages and/or increase massively the supply of homes in order to push down rents. We spend £23 billion a year propping up high rents and only £1 billion a year on new affordable homes. That is a crazy imbalance and yet the obvious solution – a huge house-building programme delivered through a relaxation of planning laws and supply-side construction led by the public sector - is rarely countenanced, even though it would reduce unemployment (and hence benefits) and save billions in the long run. Investing in bricks and mortar rather than high rents makes sense in every way. A land value tax would also help to make better use of empty properties and unused land and would make rents more affordable.
Thirdly, working tax credits and income support (coupled with the soaring costs of HB) are also linked to falling wages and rising living costs, including rents. For low-paid workers who receive these benefits the government should be persuading or forcing their employers to pay a living wage. There is evidence that some employers are deliberately using short-term and temporary contracts and the workfare scheme to keep their employee costs down, which means that the state has to step in to support their low-paid employees. This is wrong and should be stopped. Why, for example, should taxpayers have to subsidise the profits of tax-dodging employers like Amazon by paying working tax credits to their poorly paid employees?
So, it’s time for a little more light and a little less heat on welfare. I offer up these proposals for debate and would welcome any comments.
Three years ago Policy Exchange published a report that contained a blistering attack on social housing. In summary it said that social housing cost the taxpayer £15 billion a year in direct costs, that tenants have poor social outcomes, that social housing disincentivises employment and creates welfare dependency, and that “social housing increases child poverty, mental health issues, and inequality of opportunity and wealth.” The report called for rents to be raised towards market levels, for a revived right to buy, for new tenants to have a path towards ownership and a limit on their security of tenure, for an end to the subsidy of new homes and for LSVT stock to be returned to public ownership. Since then, Policy Exchange has also called for high value social housing to be sold off. In 2009, Localis, another think tank, had reached similar conclusions. It said, “To continue building and publicly investing in the “social rent” template which provides tenancies for life with no incentive or requirement to seek work or move on and which locks investment and people into properties, makes no sense. It makes no sense for the individual who can all too easily fall into a dependency culture.” Iain Duncan Smith’s Centre for Social Justice has echoed these views.
Were we paying attention? Given that these three think tanks are among those most favoured by the Conservatives you might have expected a robust rebuttal from social housing providers and their representative bodies. If that happened, I must have missed it.
It may be useful to summarise what has happened to our sector since this government took office. Welfare reform is rolling over us - threatening the income and viability of some providers and the wellbeing of some tenants, new social housing is virtually non-existent (replaced by unaffordable “affordable” homes), bed and breakfast and homelessness are increasing, lifetime tenancies are on their way out, residency qualifications are being introduced for new applicants, well-off tenants can be charged market rents, the social housing stock is shrinking as a result of right to buy and affordable rent conversions and rents continue to rise faster than wages. In the wider housing field, many local authorities are cutting their targets for new homes, housebuilding has fallen to its lowest peacetime level for 100 years, millions of young people are priced out of the housing market, the unregulated and largely unaffordable private rented sector has overtaken the social rented sector in size, the new homes that are being built are some of the smallest in Europe. I could go on. Last week’s budget was a disaster for housing. All of the largesse was foolishly thrown at the demand side of the housing market with a few crumbs for our sector, and even that is at risk.
In short, most of the proposals set out in the Policy Exchange, CSJ and Localis reports are coming to pass. On Radio 4 last week, George Osborne said, “I don’t think the solution to our housing situation is to build many, many more social homes.” In other words, the notion that social housing is a failed sector is embedded at the highest level of government.
But despite all of this, we seem to persist in the deluded belief that we can somehow “influence” government policy behind the scenes. That by schmoozing with ministers at private dinners and in conference bars we will somehow change their course. It reminds me of the Marxist concept of false consciousness – defined as the failure to recognise the instruments of one’s oppression. Well it’s not working, and we need a Plan B.
When David Orr took on a more confrontational tone a couple of years ago he was urged to back down. It would only make things worse, he was told. Yet things could hardly be much worse. Perhaps we have lessons to learn from other sectors. Patient power after the mid-Staffs scandal has the government on the ropes. The hacking victims and Hacked Off have had a significant impact on government policy. Do we need a change of course to put tenants at the front of lobbying? Perhaps the bedroom tax protests will offer up some lessons. We can’t go on like this. Something has to change.
The budget promised little on housing and delivered less. That may sound pessimistic given George Osborne’s “dramatic intervention” in the housing market but the truth is that his announcement on Help to Buy, even though the figures are impressive, will do little to stimulate housebuilding and is likely to cause house price inflation, making things even worse for those who are priced out of the market.
The £5.4 billion Help to Buy scheme, designed to “tackle long-term problems in the housing market” has two elements. First, an equity loan scheme amounting to £3.5 billion for newbuild only. This allows first time and other buyers to put up a 5 percent deposit and then receive a 20 percent government equity loan so they only have to find a 75 percent mortgage. The equity loan is repaid when the property is sold. It is for houses valued up to £600,000 and is available from April 1st this year and will run for 3 years. The second element is a mortgage guarantee scheme starting next year, whereby buyers find a 5 percent deposit and the government guarantees the remaining 95 percent mortgage. This applies to newbuild and existing properties and the government will guarantee mortgages up to (an impressive) £130 billion. By my calculations £130 billion would cover around half a million mortgages annually, assuming loans at 95 percent of average UK house prices, which has the potential to capture a significant proportion of the existing mortage market as reported by the CML. But presumably this initiative will be limited if there are significant numbers of mortgage defaults?
But what will be the impact be in practice? The stock of existing homes is fixed, so pumping huge sums of money into the mortgage market will just push up prices. For newbuild, it’s been stated again and again on Inside Housing that the housebuilding industry is a virtual cartel and that housing supply is inelastic to demand so pushing more money at housebuilders will not make them build more; instead, they will just carry on as before, working their way slowly through their landbanks and keeping their margins high. This looks like a victory for the housebuilders. As Nick Pearce at the IPPR points out, house prices are now almost back to their 2008 levels, despite years of mortgage famine and recession. The danger is that Osborne’s initiatives, by boosting demand without any corresponding increase in supply, will just create yet another housing bubble. History repeating itself as tragedy.
The only two stimuli that would have led to a genuine increase in supply without inflating house prices were, firstly significant funding for public construction on public land and secondly, an announcement of a major programme of new towns or urban extensions, led by the public sector, on greenfield sites.
In terms of affordable housing, Osborne referred to an additional 15,000 new affordable homes up to 2015, but this will make little impact on waiting lists and represents just 6 percent of the 250,000 we need to build each year. His plans to re-invigorate the right to buy (again) by easing administration and raising the London discount to £100,000 will just take stock out of the public sector and will do little for those on waiting lists. One small ray of sunshine in the Budget Book is that the government is set to announce some certainty about social rents post 2015: “…at the 2015- 16 Spending Round the Government will… set out a social rental policy that gives social landlords certainty until 2025.” My guess is that this will mean target rents set at 80 percent of market rents.
Overall, a very disappointing budget for housing.
Over the past six weeks we have seen a succession of stories in the media about individual bedroom tax cases. It has dominated Prime Ministers’ Questions, there have been several public demonstrations (and more are planned), top celebrities have been tweeting about the tax, and the result has been what? A few minor concessions on children with disabilities, foster carers and armed forces personnel. The vast bulk of the bedroom tax regulations are still in force. With only 15 days to go until D-Day will anything change? I doubt it.
Over a month ago I wrote a blog here about the bedroom tax and said that “the government’s welfare reforms still have overwhelming public support. The striver/shirker rhetoric has popular appeal…Public opinion may shift if we see more hardship cases in the media but I doubt it, and it is always dangerous to make policy on the basis of individual cases. I still think most people support the basic principle that you should only get the benefit for what you need. The detailed arguments don’t concern them.”
This is confirmed by the latest polling from YouGov, carried out on the 7th and 8th March. 49% of the public support the bedroom tax and 38% oppose it. Admittedly the question doe not go into any technical detail, but given the torrent of media coverage in recent weeks it is telling that a majority of people still support the basic principle of the change. In fact, both this and other polls show that there is still widespread public support for welfare reform. In the same poll 70% said they wanted cuts in overseas aid, 39% wanted cuts in welfare spending and only 3% wanted cuts in the NHS or education. The YouGov article reports on other recent polls which found support for the notion that benefits are too generous and and promote dependency. Even a poll for the TUC at the end of last year found that 59% felt that Britain had a culture of benefit dependency, whereas only 29% supported the present system. This is why, in my view, the government is unlikely to deviate too far from their chosen course. (Of course, the effectiveness of their policy changes and the intelligence of their approach is another matter entirely!)
But these polls also show that the public is ambivalent about cuts. They want to see continued support for the “deserving poor” – the elderly and people with genuine disabilities - but reductions for those they see as “undeserving”. There is strong support for the benefit cap and withdrawal of benefits for those who refuse to work and the public perception is still that a great deal of fraud and misrepresentation remains in the system. My experience of working with tenant groups backs this up. Many individuals express broad support for some of the changes, even for the bedroom tax, but always on the basis that someone else is affected and not them as individuals. The “shirkers” are always other people. “They can’t mean me surely?” Well yes, they do.
When animals are confined to a smaller space they often start fighting over space and resources. I don’t wish to be too biologically deterministic but this is exactly what is happening in the housing world right now. Some tenants support the principle of the bedroom tax because their daughter/ mother/friend is living in overcrowded property and they see Mrs Bloggs next door living alone in a three-bed house. The comments beneath this story from a West Midlands newspaper are typical (and I’ve read a lot of these articles I can assure you). Tenant is being set against tenant in the fight for a diminishing resource. It’s a classic case of divide and rule – setting up the shirkers against the strivers or the have-a-littles against the have-nots. The truth is that the bedroom tax, however unpalatable, is a diversion from the bigger picture. Tenants and landlords should be uniting around three fundamental issues – the lack of affordable housing supply, the lack of work that pays and the growing disparity between earnings and prices, including rents. People will only be lifted out of welfare dependency and poor housing when there is a growing economy with better paid jobs combined with a massive programme of housebuilding. This is the ground we should be campaigning on.
The government is pressing ahead with its plans to allow developers to convert offices into homes, by relaxing permitted development rights that will allow Class B1 (offices) to be converted to C3 (residential) without the need for planning permission.
It is London and the south-east where this move is likely to have the biggest potential impact because of the shortage of new homes and because residential values are significantly higher than office values. In the West End the Financial Times reports that average residential values are £3,000 per sq ft compare to £2,375 for office space, so there is a clear incentive for developers to make the switch.
Implementation of the office to homes scheme is promised for the “spring”, whatever that means, but there remains a list of unanswered questions about how the changes will be implemented. We don’t know if any of the new homes will have to be affordable or how the Community Infrastructure Levy will apply, or how issues like amenity space and parking will be handled. Many office blocks are aesthetically challenged and may not convert to homes very easily. If a developer needs to change the external appearance of the building, for example by installing balconies, then planning permission will still be required. Then there are issues like space standards, circulation areas and energy efficiency. In London, the Mayor’s Supplementary Planning Guidance sets out minimum space standards and guidance on amenity space and aspect - for example to limit single aspect and north facing homes. Will this also apply to conversions?
When he announced the changes Eric Pickles said the change would “promote economic growth, provide more homes and still ensure that we safeguard environmentally protected land.” Some areas would be exempted but exemptions would be exceptional and only in situations where “unique local circumstances” would “lead to a loss of a nationally significant area of economic activity or substantial adverse economic consequences at the local authority level that are not off set by the positive benefits that the new rights would bring”. But Boris Johnson and others argued that the changes should not apply to the City of London and London’s Central Activities Zone (which includes all or part of ten boroughs. The deadline to apply for exemptions was the 22nd February but word is that a staggering 700 applications were received, which will make Mr Pickles very angry indeed! If huge tracts of the country are exempted then the impact will be very limited. No doubt officials at CLG are scrutinising the applications right now and deciding how few they will let through.
Yet in the larger scheme of things this move has to be viewed as a positive change. Most young people in London have given up any hope of buying or renting an affordable place, so converting offices to homes could help to improve their lot. Around a million people commute into London every day and the London travel to work zone now extends from Lincolnshire to the Isle of Wight. London’s property market is distorted by the impact of foreign buyers, but one of its biggest problems is the imbalance between homes and jobs. The same applies to cities like Oxford and Cambridge. In Cambridge, around 40,000 people commute into the city each day and the new local plan envisages 20,000 new jobs in the city but only 12,000 new homes. Boosting the number of new homes and reducing office space in these places has to be a good thing surely? The simple rules of supply and demand would suggest that if significant numbers of conversions take place it will lead to a fall in residential values as more homes come onto the market and a rise in office values as office space becomes scarcer. This could have the effect of pushing employers out of London in search of cheaper office accommodation. Again, is this such a bad thing? The truth is that in this digital age there are thousands of people working in London who have no reason to be there. They could just as easily be based in places like Salford (BBC land) or Middlesbrough, (where houses can be bought for £10,000).
So watch this space. Spring has sprung and the details of the scheme should be announced soon. But if any housing association or local authority development directors are reading this it would be well worth checking out redundant office space on your patch. One developer described the conversion of offices to homes as a potential goldrush. It would be a shame if housing providers missed out.
George Orwell described Doublethink as the ability to hold two contradictory beliefs in one’s mind simultaneously, and accept both of them. The latest IPSOS MORI survey on attitudes to housing reveals a widespread dose of Doublethink in the minds of the British public.
For example, 80 percent of us agree that “there is a housing crisis in Britain” but only 45 percent agree that “there is a housing crisis in my local area”, even though 59 percent disagree that “there is enough affordable housing to buy or rent in my local area”. Of course it is mathematically impossible for people to perceive that there is both a national crisis but not a local one, so this dysfunctional picture of public opinion neatly encapsulates one of the greatest problems facing British housebulding in modern times; what I call the NIMBY paradox. This can be summarised as follows: “Yes, I agree there is a housing crisis, but it is in the next town, the next County, over the horizon, not around here, so developers should build elsewhere.”
Some other interesting statistics from the IPSOS MORI survey are:
- 63 percent think that 25 percent or more of England’s land is built upon (the true figure is 9 percent).
- 90 percent agree that, “it will be harder for the children of today to buy or rent a home than it is for me”.
- 82 percent agree the government should give more attention to the issue of housing.
In terms of politics, 74 percent of Conservative voters agreed there was a national housing crisis compared to 83 percent of Labour voters. Yet only 35 percent of Conservative voters and 43 percent of Lib Dem voters agreed that there was a housing crisis in their local area, compared to 55 percent of Labour voters. It is, of course, the Conservative and Lib Dem voters who subscribe most fervently to the NIMBY paradox.
Traditionally, only 10 percent of voters see housing as a key election issue, even though millions suffer from the impacts of poor housing. Ben Page of MORI summarised this as follows: “Our regular polls find few people mention (housing) spontaneously and it tends to be, at most, a second order issue in local and national elections. It can be seen as something like the weather, that no one is responsible for.”
Something like the weather? If this is true, and the British public has developed a fatalistic attitude towards the housing crisis then it is deeply worrying. Mankind has put a man on the moon and mapped the human genome, so solving our housing problems should be relatively straightforward, but if the public believes that the housing crisis is more like a natural phenomenon than a man-made crisis then the chances of garnering enough public and political support for a decent approach to housing is receding. If people think nothing can be done then nothing will be done.
Compare and contrast this degree of fatalism to the immediate post-war period. Like now, there was a housing crisis. Many towns and cities had been bombed. Thousands of returning troops wanted a decent, affordable home to reward them for their years of sacrifice. But they didn’t wait patiently like sheep: instead there was a mass squatting movement that forced the government to take action. By the end of 1946 over one thousand redundant army camps in England and Wales had been squatted by nearly 40,000 people.
The post-War Labour government responded by launching a huge housing programme. In the ten years after 1946 over two million homes were built in England, from a standing start, and 75 percent of it was social housing, mostly council housing. At that time the national debt as a percentage of GDP was four times larger than now. By contrast, in the last ten years, we built just 1.4 million homes and only 16 percent was social housing. Yet the population of England in 1950 was 40 million and it’s now 53 million. So with fewer people and more debt we built thousands more homes. It shows what determined political action can do. But that will only happen now if the public is battering down the doors of their MPs’ and councillors’ surgeries, and politicians have the guts to stand up for housing and confront the NIMBY paradox. It also means a major change in approach is required – tinkering with the present system will not work because, as Ben Page from IPSOS MORI says, “Councils report public opposition to be the biggest block to building new homes” - the NIMBY paradox again! To by-pass this opposition we need a major programme of new settlements with land bought at agricultural prices and developed by not-for profit corporations. In 1948 Aneurin Bevan, the Minister for Health and Housing (now there’s a radical concept!) said, “The NHS will last as long as there are folk left with the faith to fight for it.”
The same could be said for decent, affordable housing. Who has the faith to fight for it?
There’s a row going on down in Eastleigh and it’s all about housing, which is good, (it’s about time housing became a major by-election issue), but it also exposes the hypocrisy and double standards of some of our politicians, which is bad.
Let me explain. This week, the Lib Dem-controlled Eastleigh Council gave outline planning approval to a scheme of 1,400 new homes, (including 420 affordable) and community facilities at Boorley Green, a site that is currently occupied by an old golf course and country club. I’ve looked at the plans and it looks like a decent, sustainable scheme with plenty of open space that complements the surrounding landscape. It will bring much-needed jobs and homes to the area. You can read the whole story here and here, and note that 600 local people have been marching against the new homes, claiming it will ‘tear the community apart’. Eastleigh District has a population of 125,000.
But the point is that Eastleigh Council had little option but to approve the scheme, because the national planning policy framework, (overseen, let’s not forget, by Conservatives Eric Pickles and Nick Boles) contains a presumption in favour of sustainable development where local plans are absent, silent or out of date. Eastleigh has no local plan and faces a shortfall in its five-year housing supply, so the presumption in favour of sustainable development applies. According to the officer report to the planning committee: ‘With an inability to demonstrate such a supply, it is appropriate to apply the presumption in favour of sustainable development unless the adverse impacts significantly and demonstrably outweigh the benefits, when assessed against the National Planning Policy Framework policies.’ Had they refused the scheme, Eastleigh would probably have faced an appeal and significant legal costs, and other greenfield sites would then be up for grabs.
But this has not stopped local and national Conservative politicians from attacking the Lib Dems over the Boorley Green scheme, particularly because their candidate Mike Thornton has, in the past, pledged to protect green open spaces. To his credit, Nick Clegg said that some greenfield sites need to be sacrificed for the greater good. ‘Protecting green spaces doesn’t mean you don’t provide homes for people to live in. People need affordable homes to live in,’ he said.
But last week, Grant Shapps, no less, attacked Nick Clegg for ‘planning to concrete over Eastleigh’s countryside’.
Grant Shapps was the housing minister for over five years. He of all people should understand the seriousness of our housing crisis. In the light of the heated debate over the implementation of the NPPF, and the misleading propaganda put out by countryside campaigners his use of the term ‘concrete over the countryside’ is unforgiveable. Just last year he said that 200,000 homes should be built in England every year, which he described as the only way to prevent further rises in rents and meet housing need. Does he see no disconnect between the petty, nimbyism he is espousing in Eastleigh and the wider national picture that he ruled over as housing minister? He and other politicians cannot expect the public to take them seriously if they play politics with such a serious issue, especially when Eastleigh Council has acted properly and is merely implementing the policy of Shapps’ own government. This spat also highlights the split within the Conservative Party between those who understand the key planning and housing issues, like Nick Boles, and the MPs of the counties who are instinctively anti- development.
The scale and complexity of the housing crisis is deep and wide. Few people fully understand its magnitude and its possible remedies. But politicians who have studied the subject have a duty to try to explain it in simple terms to the electorate. They also have a duty to lead and not to follow, to try to mould public opinion and not to cave in to it. If they ditch their knowledge and their principles and seek to woo the nimby vote as soon as an election comes around then we are all in serious trouble.
But this begs the wider question of why so few politicians at a local level take a firm stand against those who oppose new homes. Why will they not face down those who selfishly and routinely oppose new house building (people like these) and instead stand up for the priced-out generation, the homeless, the badly housed? Is it because this group is not so well organised, not so vocal and not so pushy? I fear so. It is always easier to protest against things than in favour of them. But if you have ever read Sherlock Holmes you will understand the story of the dog that barked in the night. Perhaps the people in housing need, who have been unheard at Eastleigh, will bark in the future and be heard above the noise of those who oppose new homes. We need to work with politicians who can help them to find their bark.
David Cameron made that rather self-defeating comment in the Commons on the 6th February during Prime Minister’s Questions. He’s right of course. My dictionary defines tax as “a compulsory contribution to state revenue, levied by the government on personal income and business profits or added to the costs of some goods, services and transactions.” By no stretch of the imagination can a reduction in benefit be defined as a tax, but it was Lord Best who coined the term during a Lords’ debate (echoes of the window tax) and it has stuck.
It’s the language that matters here. The Poll Tax was not a tax on voting and the Bedroom Tax is not a tax on bedrooms. Yet once these misleading terms enter the public consciousness they are very hard to shift. In March 1990 London saw vicious riots during a Poll Tax demonstration, which contributed to the resignation of Margaret Thatcher eight months later. I don’t think the Bedroom Tax is likely to have the same impact on David Cameron, but the government is on the back foot and they are on a slippery slope once they start adopting the language of their opponents. I first became aware of this on the 31st January when the DWP tweeted “Find out more about the so-called #bedroom tax which starts on 1st Aprill…”. Wrong! It’s bad politics and they need to get a grip. Alastair Campbell would never have allowed it!
But the problem for Labour is that the government’s welfare reforms still have overwhelming public support. The striver/shirker rhetoric has popular appeal and Labour will need to avoid coming across as the shirker’s friend. Public opinion may shift if we see more hardship cases in the media but I doubt it, and it is always dangerous to make policy on the basis of individual cases. I still think most people support the basic principle that you should only get the benefit for what you need. The detailed arguments don’t concern them. Hannah Fearn in the Guardian recently published a more balanced piece about the Bedroom Tax and it is well worth reading.
But meanwhile, there is a legal issue waiting in the wings that could still cause problems for the government. Last year the Court of Appeal ruled that the housing benefit regulations in the private rented sector breached Article 14 of the European Convention of Human Rights, because they failed to allow for an additional bedroom for people who had a non-resident overnight carer or for children with disabilities who needed to sleep in separate bedrooms. The DWP has issued guidance on this, and asked local authorites to make allowances for those affected. But the government has appealed to the Supreme Court and the case is due to be heard later this year, about eight months after the Bedroom Tax is introduced. If the government loses the case not only will it bolster the Conservative Eurosceptics but it will also open the door to a similar appeal against the Bedroom Tax criteria in the social rented sector. I was frankly surprised that the rules for eligibility under the Bedroom Tax were so restrictive and made no allowance for carers or for people who had to sleep apart for medical reasons. Would it not be good politics to concede on this point now and pre-empt any legal case? Similarly, I have been surprised that there have been no legal challenges on human rights grounds to the overall benefit cap, since it clearly discriminates against larger families. Any family that can claim a religious case for having many children would have a good case under human rights law, I would have thought. Perhaps a challenge will come once the legislation starts to bite.
All in all, there is still a long way to go on welfare reform.
Conservative MP Bernard Jenkin was on Radio 4 last night arguing for reform of the EU Habitats Directive, describing it as one of the biggest barriers to development in this country. The programme highlighted the case of a clergyman who had been refused permission to build a vicarage next to his rural church and was forced to drive 300 miles a week back and forth from his distant home, probably causing a great deal more environmental degradation in the process. I am sure any development officer reading this will be fully aware of the perverse outcomes of wildlife protection and that feeling of dread when something out of the ordinary is discovered on a site, whether it’s newts or Roman remains. Last week’s edition of The Planners (second episode on BBC tonight – don’t miss it) included an hilarious sequence as protestors against an edge-of-town development in Winsford scrabbled though the undergrowth in a desperate search for great crested newts. They found nothing, but there are apocryphal stories of nimbys dumping protected species on potential development sites.
This all highlights the widespread perception that development is “bad” for wildlife, as if the countryside was an an earthly idyll teeming with birds, mammals and insects where, in the words of WIlliam Boot, “feather-footed through the plashy fen passes the questing vole.” The reality is almost the exact opposite of this perception. Wildife in the countryside has experienced a catastrophic decline in recent decades, as a result of EU policy and modern farming methods, killed by pesticides, the removal of hedgerows and intensive crop rotation, among other things. By contrast wildlife in urban areas is thriving. I live close to the centre of Cambridge and within 400 yards of my house I have seen squirrels, hedgehogs, songbirds, hawks, herons, crows, woodpeckers, kingfishers, foxes and deer.
Over the Christmas break I heard two interesting stories about the beneficial impacts of development upon wildlife. My brother-in-law is a well-regarded ornothologist at the Sandwich Bay Bird Observatory, close to Pegwell Bay, which is a nationally important wildlife site. In 1968 a large cross-channel hoverport terminal was built there, which operated until 1982. Campaigners claimed that the hoverport would devastate local wildlife. In fact, when a wildlife audit was carried out a few years later it was found that every species was doing much better than before the hoverport was built. The reason? A huge exclusion zone had been put in place across an arc of the bay preventing people digging up lugworms for bait. The food chain was replenished and species thrived. Birds were not bothered by the occasional noise of the hovercraft. What killed them was lack of food. Similarly, a number of new arterial roads have been built across the Isle of Thanet over the past few years, linking one of the poorest parts of the south-east to Dover and London. Generally speaking, these have cut across sterile, monocultural fields where brassicas were traditionally grown. Wildlife deserts. Once again, these roads, with their verdant verges have become a haven for wildlife, sustaining a diverse vegetation, invertebrates, small mammals, birds and hawks. What’s more they now act as a vital corridor between pockets of wildlife, allowing species to spread and diversify.
The lesson is that development can be good for wildlife, even more so if ecologists and wildlife experts are included at the planning stage. Gardens, allotments, parks and other open space comprise over 50 percent of urban areas. Wildlife is generally not bothered by humans, what it cannot abide is poisons and lack of food. The Royal Horticultural Society states that the biodiversity of gardens and the urban managed environmentis of “major significance.”
Countryide campaigners have long argued that development is harmful to wildlife. In fact, well-planned urban areas can do more to promote and sustain a diverse wildlife than vast swathes of our countryisde. It’s a message we need to push as we campaign for more homes.
Could housing determine the outcome of the next election? Given that only around 10 percent of the public identify housing as one of the key issues facing the country this seems unlikely, but there is growing evidence that housing is becoming a key issue for a significant cohort of voters. This recent blog by the Research Director at IPSOS MORI reveals that 62 percent of private renters voted for Coalition parties in 2010, but only 37 percent would do so now. The Conservatives have lost support among outright owners and social renters (both down 6 percent), and among private renters (down 10 percent) but support for the Lib Dems has fallen by double digits for all four tenure groups. How much of this is due to government housing policies is debatable but MORI found that Labour had a 13-point lead on the Conservatives for “Having the best policies on housing.” This rose to a significant 37-point lead among social renters and a 15-point lead among private renters.
The private rented sector may form a key battleground at the next general election. According to Shelter, private renters, especially working, aspirational families aged between 24 and 35, could become the new “Mondeo men”, courted by all parties in the swing seats. These voters have effectively been priced out of the housing market and are increasingly dissatisfied with their prospects and may vote for those parties that offer the best housing deal. Shelter’s surveys suggest that 73 percent of renters can save only £50 a month after they have paid the rent and other essentials. Their chances of buying a place without external support are remote and with housebuilding figures heading downwards their plight will only get worse.
Some of the key swing seats in London and the south east are also the places with the greatest increase in private renters and the greatest increases in rents. It’s not surprising that Labour is therefore concentrating on policy issues in the private rented sector.
This is all well and good, but as a sector we also need to find a new tone and a new language to make the case for housing that appeals to this disenfranchised public and makes housing a genuine election issue, pushing it up the political agenda. Apologies for going off on a tangent here, but with “Lincoln” in the news I have been re-reading the U.S. constitution. It is a beautiful document – elegant, simple and clever. Take the first amendment: the Founding Fathers wanted to create “a more perfect union” where there would be no established religion, where citizens would be free to worship whichever god they chose – or none, where free speech and free assembly would be guaranteed and where there would be a free press. They could have written thousands of words setting these rights in stone. Instead they simply turned the notion on its head and wrote: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.” Forty five words that have endured for over two centuries. No law means that these basic human rights are protected for all time. Job done.
What has this got to do with housing? Well, we also need to find simple, clever and elegant ways of communicating complex ideas. As well as building better campaigning links with organisations like Shelter and Pricedout UK, we also need to find great communicators (Lincoln again!) who can get our message across to a wider public. In my view we have only one at present – David Orr. We need more.
But we also need to tackle head-on the issue of immigration. My recent blog on this topic reached over 500 comments. Any public debate about housing need and supply is now being hijacked by the anti-immigration lobby, as in “no immigration, no housing problem.” If these views prevail then housing will continue to occupy a low priority in the minds of politicians and the wider public. We need hard facts and hard arguments to face down this vociferous lobby.
So: appealing to the disenfranchised with clever, elegant and simple messages and facing head-on the immigration arguments against new housebuiding. These are our twin tasks. The housing outcome of the next election could depend upon them.
Over the past few months Comet, Jessops, Blockbuster and HMV have gone to the wall – the victims of online shopping and the rise of the out-of-town malls. The traditional high street is in decline. Does this have any implications for housing providers? I think so.
To begin with, most commentators predict that traditional retail outlets will continue to shrink. According to this retail expert, the number of stores set to close will double this year: the 500 busiest retail hubs will lose 4,000 outlets in 2013 compared to 2,000 in 2012, and 13,700 retailers are in ‘significant distress’, particularly shops selling books, stationery, pharmaceuticals, and alcohol.
Twenty years from now the traditional high street, if it manages to survive at all, is likely to be a much smaller entity with a different role. It will be destination for leisure and culture, where the shopping experience may be more about browsing for products and ordering them online, rather than buying actual physical things. This means that the amount of retail floorspace will decline and rents should fall. Many shops and sites will become redundant and local plans will need to redefine the hierarchy and extent of neighhbourhood, district and main shopping centres.
Large sections of the existing high street could become available for different uses – housing, community, leisure or cultural uses. For housing providers this means an opportunity to buy cheap sites and regenerate some areas in decline, because if we don’t do it who will? I recently walked around Margate and the east end of Ramsgate, two of the poorest and run-down places in the south east where every third shop is either a charity shop or empty. Places like these represent a golden opportunity for housing providers: attractive good quality housing could fill a void and act as a trail blazer for commercial and residential regeneration.
Customer habits are changing in other ways too. Many people now want to support independent businesses and shun some of the largest chains, especially when they are seen to be avoiding their fair share of taxes or ripping off farmers. Places like Totnes have led the way in campaigns against chains. In Cambridge, where I live, there is a burgeoning independent movement, facilitated by an excellent new guide that has helped to highlight the strength and vitality of the sector. Many of these businesses are supporting each other, sharing their products and skills. They can’t always compete with Tesco on price but they can offer something else – unique products, personal service and a sense of community well being that helps to build social capital.
The recent scandal about horse burgers has also highlighted an appetite for locally sourced food and for knowing exactly where your food comes from. I wrote recently about housing providers using food growing schemes as a way of creating employment and providing nourishing, affordable food, following the example of the Todmorden Incredible Edible scheme. The rise of the independent sector represents another opportunity – how about a food-growing social enterprise that supplies local independent stores?
The Portas review into the future of our high streets has highlighted all of these issues and is well worth a read. Housing providers need to look to the high street as a place for potential growth and investment. There are plenty of opportunities out there if only we are prepared to look and learn.
So, another year over and a new one just begun. The key events of 2012 have been admirably summed up by Jules Birch in his diptych of blogs, but I get the feeling that 2013 will be a different animal altogether. For me, the past eighteen months have been like the period from September 1939 to May 1940, between the fall of Poland to the fall of France – the Phoney War. There has been plenty of sabre rattling but the actual impacts of change have been relatively slight and the welfare bill is still going up. This year will be different, with many of the coalition’s reforms starting to bite.
This is my take on some of the key areas to look out for during 2013:
- The bedroom tax starts in April. Most of the housing providers I talk to know exactly who is affected but no one can tell you how it will unfold. Most tenants appear to be resigned to staying put and paying the extra rent from their own resources. But will we end up with a growing cohort of tenants who want to move, can’t move, won’t or can’t pay the rent and can’t be evicted? Only time will tell, but we should start to know the answers by late summer.
- The Universal Credit pathfinders kick off in April and the first new claims will start nationwide in October. Again, all the housing providers I talk to have plans in place but no one really know how it will unravel. We should be a little clearer by the autumn, but my hunch is that the implementation of Universal Credit will be further delayed, mainly due to ongoing IT issues, as suggested by this story.
- We should start to understand the impact of homeless people being placed in the private sector. Will local authorities be able to source enough decent private lets or will we have a growing rash of stories about homeless people being exported to the north? Will the new policy just set up a revolving door where we trap people in poverty on high private sector rents and see the same faces coming back again and again? Rents in the private rented sector are likely to increase and more cases of rogue landlords and squalid conditions will be uncovered. Rising PRS rents will also cause the housing benefit bill to increase. The picture should be clearer by the early summer.
- Most future completions in the social rented sector will be under the affordable rents’ programme with rents set at up to 80% of market rents. The average affordable rent in London is £180. Most of the providers I speak to don’t have a cunning strategy in place for letting these properties, other than through existing allocation schemes (as set out in HCA guidance). Does this mean that we end up trapping thousands of households in poverty, unable to work and unable to pay the high rents? Again, the outcome of this programme will become clearer during 2013.
- The localised Council tax benefit scheme kicks off in April, with many working age claimants required to pay up to £10 per week from their existing income to cover the 10 percent cut in national funding. This could be the hidden assassin, a Poll Tax mark two according to some commentators. By the early summer we will know how this is panning out.
- In May CLG will release house-building figures for the last quarter of the year. My hunch is that completions for 2012/13 will fall below the totemic figure of 100,000 and there will be a furious debate about government incompetence. The evidence from local planning suggests that house-building targets have been considerably scaled down from the now-abolished regional targets, despite my initial optimism that the new National Planning Policy Framework would stimulate growth. It hasn’t, and the consequences of allowing Nimbys to dominate the agenda will be plain for all to see by the early summer.
- In the wider housing market you can take your choice of a range of predictions about future house prices, but with interest rates at historic lows, households increasing, mortgage lending easing and a lack of supply I think we can expect to see some increases in prices during 2013.
The combined outcome of all these changes could make housing a top story during 2013 and unleash a wave of public anger about the failure of housing policy. Or not, as the case may be! All the evidence suggests that the housing situation for millions of people will only get worse during 2013, yet our sector seems curiously passive in the face of the growing crisis. Perhaps 2013 will also be the year that we get our act together and campaign more widely and more effectively for a better housing settlement. Don’t hold your breath.
The release of the latest census data could have a significant impact upon the housing debate, but perhaps not in a good way. Over the past eighteen months I have been writing regular blogs about planning and housing supply for Inside Housing and others. For my sins, I frequently read articles in The Telegraph and Daily Mail on housing and related issues. Reading the readers’ comments below these stories is always interesting, not to say depressing, because I would estimate that thirty percent of commentators cite immigration as the cause of the housing crisis.
This comment from “rhubarb” in a Telegraph story on the 30th November at 8.42am is typical: “We DON’T WANT more houses. We NEED less immigration.” Or this by “bladebone” on the 11th December at 22.13pm, also in The Telegraph: “The only real solution to the housing crisis: stop immigration, start repatriation.”
These views are not limited to the right-leaning press. You will find them in The Guardian and local papers, such as my own Cambridge Evening News, albeit less frequently. But the census revelation that 13% of the English and Welsh population was born outside the UK will only add fuel to these fires. We have to accept that a sizeable proportion of the population feels this way, even many of our tenants.
On this issue, Nick Boles our new planning minister cheered me up a week ago when he said that the amount of land built upon in England needs to increase from 9% to 12% in order to meet housing needs, (which led to a fierce backlash from The Telegraph, The Mail and countryside campaigners). But then he was interviewed by The Daily Mail and, perhaps playing to their gallery, stated that half of all new homes were required by migrants, and that the Labour government had “allowed the population of this country to expand dramatically”. He carried on, “The fact is – and I am critical of the last Government’s immigration policies – we allowed the population of this country to expand dramatically.” This was not helpful.
Immigration is a complex issue and needs to be discussed in a dispassionate way, but it is extremely important that we do not allow it to dominate the housing debate in an unhealthy way. Firstly, immigration brings huge economic benefits to the UK. Immigrants tend to be well educated and willing to work hard, and contrary to popular myth they do not usually qualify for social housing. There is a mass of evidence to show that the most successful economies are those that can take in and assimilate immigrants the quickest, pushing them up the social chain. In any event, the great proportion of recent immigrants are from the European A8 countries, and there is little we can do to prevent them coming and working here. Secondly, immigration needs to be discussed in terms of net arrivals - the numbers leaving compared to the numbers arriving. David Cameron has pledged to reduce this to below 100,000 a year, but it currently stands at 216,000. Because of the clamour from the Conservative backbenches and the threat of UKIP he has squeezed students and migrant workers – the very cohort who could help to boost the economy. Again, not helpful.
But in his Daily Mail interview, Nick Boles also said, “The population of England has gone up by two million in the last ten years. These people now live here, these people are now British and they need homes just like other British people.” Hear, hear. That’s exactly right, and we need to be repeating it loud and clear. If we are to be an inclusive, diverse and civilized society then we need to provide enough decent housing for all the people who choose to make their home here, regardless of who they are and where they come from. Repatriation is a fantasy. Let’s do our best to keep the debate truthful and honest and to let the facts hold sway over prejudice and ignorance.
Laurie Penny wrote a moving piece this week in response to the suicide of a 23-year-old and the growing despair of the priced-out generation, faced with rising rents and poor quality accommodation in the private rented sector.
According to Shelter, complaints about private landlords have increased by 27 per cent in the last three years and almost two thirds of these were about life-threatening hazards. This is hardly surprising given the dramatic growth of the sector in recent years, (it represents over 25 per cent of the stock in parts of London) and the fact that rogue landlords and scammers increasingly see the sector as a place to make a fast buck on the back of other people’s misery. But partnerships between social housing providers and reputable private landlords are going to become increasingly important in order to discharge homelessness duties. The distinction between the two sectors is already starting to blur, as this story about the acquisition of a private management agent by Places for People demonstrates.
Given these trends you would expect local authorities to be upping their game in terms of the advice and assistance they give to both landlords and tenants, but this is not the case according to a recent survey by David Lawrenson, a private rented sector consultant at Lettingfocus.com. He scrutinised the websites of 12 London boroughs and found that the quality and scope of information for tenants and landlords in the private rented sector ranges from mediocre to very poor. For example, only two boroughs gave any advice about unexplained letting agency fees - something that tenants repeatedly complain about. The problem on fees is so serious north of the border that the Scottish Government has just announced that it is to ban letting agents and landlords charging tenants any fees for any reason in connection with the set up of a tenancy. We should follow their example.
Similarly only two boroughs (not the same ones) made any mention of fraudulent and fake letting agencies ripping off prospective tenants – again, something that is a growing phenomenon in London.
Information about houses in multiple accommodation was also seriously lacking, he found, even though these properties represent the most ‘at-risk’ part of the sector, due to the dangers of fire and related health hazards. Local authorities have rigorous standards that they are required to enforce and yet the quality of information for both landlords and tenants was generally poor. Two boroughs had no information at all about HMOs on their websites. One unaccountably referred to the legal situation in Scotland, (the dangers of cut and paste).
Lawrenson feels that local authorities could do much more to help private landlords and tenants. He challenges local authorities to “significantly up their game” with the information that they make available to private landlords and tenants in the PRS.
But as the private rented sector grows, local authorities will also need to invest more resources in enforcement. It will only take a serious fire or serious incident for a spate of hand-wringing to ensue. The social housing sector and the majority of reputable landlords in the private rented sector have a vested interest in maintaining standards and driving out bad elements, but local authorities are also a key part of the equation and it seems they need to do better.
Planning Minister Nick Boles flew the flag for a step change in development this week, when he called for England’s developed area to increase from 10 percent to 12 percent in order meet the country’s future housing needs. This provoked a great deal of excitement on the twittersphere where the usual suspects (the CPRE and the National Trust) lined up to denounce him. Boles’ argument was hijacked slightly by his comments about “pig-ugly” developments and the “moral right” to a house with a garden, but his central contention, that we have consistently failed to release enough land for housing, is sound.
Shaun Spiers at the CPRE, perhaps conscious that his organisation is losing the argument about the economic stimulus of housebuilding, resorted to patronising abuse, comparing Boles to Sir Keith Joseph, the “mad monk”. As ever, Spiers set out a highly misleading and disingenuous case against development, implying that our housing crisis can be solved just by building on brownfield land and bringing empty properties back into use. It can’t and he knows it. The CPRE also sought to throw some dodgy data into the debate by claiming that 12% of England is built upon when the true figure is 10 percent, and as Mark Easton shows in this piece, once you take out gardens and other open space the true figure for the urban footprint is just 2.3 percent.
At the risk of repeating myself, it’s worth outlining the scale of the problem with land and housing supply. Between now and 2033 232,000 new households will be created every year (mostly the result of us living longer and in smaller households). That means we need to build at least 250,000 homes in each of the next twenty years to meet demand and make up for past under-supply – a total of 5 million homes. Only 1.5 million can be built on brownfield (a figure accepted by the CPRE) and empty homes would make barely a dent in the total housing requirement. That leaves around 3.5 million homes that will have to be built on current countryside. But at a density of 30 to the hectare this would require only 1,000 square kilometres, which is just 2 percent of the unprotected countryside in England and only 1 percent of countryside as a whole. That is the stark reality of the choice facing the country - build the homes we need for today and tomorrow or appease a vocal minority of countryside lobbyists - and all credit to Nick Boles for raising the issue.
The CPRE appears to accept, grudgingly, that a little countryside may have to be built upon, but they draw a red line around the Green Belt, of which not one inch must be touched. What they don’t tell you is that the Green Belt more than doubled in size between 1978 and 2008 as this briefing to Parliament makes clear. How much of England do the CPRE and the countryside campaigners want? Is it reasonable that they should be allowed to hold to ransom the 90% of us who live in towns and cities?
In 1927, one of the founders of the CPRE, the architect Clough Williams Ellis, wrote a book “England and The Octopus” – a polemic against the sprawl of urban areas into the countryside. But the post-war creation of 17,000 square kilometers of Green Belt in England (13% of our land mass) means that we now have in place almost a mirror image of the picture painted by Williams Ellis, as this map from The Telegraph shows. Zoom in on York, London or Cambridge, for example, and you will see how the Green Belt now holds these cities in its suffocating grip, with tentacles extending deep into their hearts.
I don’t wish to hold myself up as a class warrior, but it’s worth pointing out that there is a subtle element of class snobbery and class self-interest in this battle over land. Take a look at the “The Proud City”, a wonderful film from 1945 that includes a monocle-wearing Sir Patrick Abercrombie, (one of the founders of the CPRE) telling the working classes how they should live. Watch it from 7.30 onwards; Harry Enfield could do no better. Abercrombie, of course, was the architect of the 1944 Greater London Plan that did so much to wreck London’s prosperity in the post-war years by sucking skilled workers and businesses out into the new towns. Fast forward to today, and the fact remains that the membership of the National Trust and the CPRE is made up overwhelmingly of white, middle class, middle-aged homeowners who have little understanding or empathy with the plight of those who want to buy or rent a home of their own. This is why it is so refreshing and surprising that a Conservative minister should be flying the flag for development and potentially upsetting his natural supporters in the process. As a sector we should be doing our utmost to support Nick Boles and to make a compelling case against the naysayers who want to preserve England in aspic.
‘Buy land, they’re not making it anymore.’ - Mark Twain
I’ve been reading a remarkable Winston Churchill speech from 1909 and I suggest you do too, because it brilliantly encapsulates modern-day arguments about planning, land and housing supply. In arguing for a tax on land, Churchill describes land ownership as “a perpetual monopoly, and…the mother of all other forms of monopoly.” Read this passage, for example:
“Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains - and all the while the landlord sits still. Every one of those improvements is effected by the labour and cost of other people and the taxpayers. To not one of those improvements does the land monopolist…contribute, and yet by every one of them the value of his land is enhanced.”
It confirms something that I’ve long believed, that not only is land ownership a lottery, but the way we use and misuse land is both the cause of and the solution to all our housing problems. Land is the ultimate asset, yet in this country we allow land to be wasted, to stand unused or to be inadequately built upon. Look at any suburban housing estate or new settlement built in the last fifty years - Cambourne or Milton Keynes, for example - and despair at the waste of land, the pointless verges, the useless patches of open space frequented only by dog owners, the wasteful sprawl that requires any resident to use their car to get anywhere. These places are the antithesis of sustainable development.
In my last blog I wrote about the unfairness and regressive impact of Council Tax. Well a Land Value Tax may be the solution, and bring many other benefits besides. The basic principle is quite simple. Land is taxed on its intrinsic, underlying value based upon its location and its planning potential, regardless of what sits upon it, so the owner of a £30 million mansion in Belgravia would pay the same tax as an empty, developable site next door.
There are plenty of arguments against a Land Value Tax, not least the requirement to carry out an objective survey of values and keep it updated. But there are also strong arguments in favour, which seem to me to vastly outweigh the disadvantages. So far as I can see, the benefits include the following:
- The tax cannot be avoided. Land cannot be hidden or sent offshore. Everyone who owns land would pay the tax (with a few exemptions for charitable purposes and vulnerability). It would be simple to implement and collect once values had been set in place. The public would perceive it to be fairer than some other forms of taxation.
- Since the supply of land is finite it is inelastic in economic terms. Land cannot be added to or subtracted from, therefore a Land Value Tax would greatly diminish speculation in land and help to avoid the boom and bust that has so damaged our housing markets.
- It would encourage development and discourage land banking. The owner of any site would be encouraged to build and sell quickly in order to avoid paying the tax. By reducing speculation in land it would also cause land values to fall over the long term.
- It could act as a stimulus to regional development. The tax in low value areas would be considerably lower and businesses would be incentivised to move to cheaper areas in order to reduce their costs.
- It would encourage a more efficient use of housing stock. People would be discouraged from consuming more housing than they needed because the tax on larger properties would generally be higher than smaller ones within the same area.
- It would encourage compact urban areas because land owners would be incentivised to develop brownfield sites with a higher tax charge rather than marginal land where taxes are lower, and to create compact developments so that the individual tax burden is reduced.
A Land Value Tax would pay for local services and infrastructure – in effect it has the potential to wrap up section 106, Council Tax and the Community Infrastructure Levy into a single revenue stream, coupled with a national system of redistribution to poorer areas. Interestingly, LVT now has supporters across the political spectrum and support is growing. It seems to me that the time has come for a wider debate about the way we use and tax our land. Churchill’s 1909 speech is a good starting point.
Support appears to be growing within the Conservative Party for an overhaul of the Council Tax system to make the rich pay more.
The Sunday Times revealed recently that the Free Enterprise Group of Conservative MPs is ready to back a reform of the council tax system so that people in larger properties pay more tax, in return for LibDem support for further deficit reductions. It was reported that this could raise up to £650 million. The group proposes two new bands of council tax, one on properties valued at £1m-£1.2m, and another for those above £1.2 million. Other senior Tories are supporting the proposals. The average charge would be £4,000 and £7,000 a year respectively. This echoes Vince Cable’s call for a rather more complex mansion tax. So it appears that momentum is building for a reform of the system.
Just to remind you of the details, there are eight council tax bands in England based on property valuations in 1991, ranging from £40,000 in Band A to £320,000 in Band H. For London, that equates to approximate current house prices of £120,000 to £970,000, which means that almost every one of the 60,000 London properties in Band H would now be worth over £1 million.
Housing folk don’t tend to pay much attention to the Council Tax but it’s worth our attention for two reasons reasons. Firstly, it is innately regressive and unfair. Properties in Band H are eight times more valuable than those in Band A, yet people in Band H pay only three times as much as Band A. Because the bandings and valuations have been left virtually untouched since 1991 it has thrown up all kinds of anomalies in the way the charge is levied. The Joseph Rowntree Foundation reckons that 3.7 million households are worse off because they have not been moved to cheaper bands. The comparisons between London and other parts of the country throw up the most extreme anomalies. Someone living in a £50 million mansion in Westminster will pay the same as everyone else in Band H – just £1,369 per annum. I live in a terraced house in Cambridge (Band D) and pay £1,479, whereas someone in Band H in Cambridge pays £2,958, more than twice as much as the mansion-dweller in Westminster. It’s a completely unfair system.
But reform of Council tax could also have beneficial impacts upon housing supply. By making a fairer link between the value of the property you occupy and the tax you pay it could incentivise people to downsize and consume the amount of accommodation they need rather than what they want. The Welsh are one step ahead of us – they introduced a Band I in 2005 for properties worth more than £424,000. In England, we would need to introduce at least a couple of additional bands at the top end for properties worth more than £1 million and above.
You may remember that Grant Shapps attacked the social housing sector for its lazy consensus, but the lack of action on Council Tax by successive governments is just about as lazy as you can get. Tragically, with the memory of the Poll Tax riots still fresh in the memories of many politicians, local authority taxation is seen as a political hot potato that is best left untouched by governments of all persuasions. Yet taxing property makes sense, it cannot be hidden or moved and by and large the bigger your property the wealthier you are. Some readers may recall the removal and eventual abolition of MIRAS, which was achieved over a number of years. The way forward for Council Tax, it seems to me, is for a determined and clever government to take the same approach – subtle changes year by year that lead to a fairer and more progressive settlement over a period of years.
The news that Plus Dane housing association would be training bar staff and hairdressers to give welfare advice to its tenants was met with a fair degree of scepticism, not to say hilarity, on the Inside Housing comments’ pages. But I think they have a point.
Every community needs a hub and the local pub often fulfils this role. Yet, the traditional pub is under threat and is being plundered by profit-driven property developers. Housing associations are increasingly involved in community provision, and they are skilled property developers, so why not kill two birds with one stone - take on the pub as a community focus and provide much-needed homes alongside?
According to CAMRA, 12 pubs close across Britain every week and half of these closures are taking place in the suburbs - the very places that are most in need of a community focus. Some pub owners are now more interested in acting as property developers than running a pub, because their premises often have a development potential that outweighs any profit from running a licensed premises. This could be a perfect marriage – the housing assocation takes on the threatened pub, redevelops all or part of the site for affordable housing and keeps the pub running for the benefit of the community. After all, Councils have owned pubs for years and the government is keen to see community-owned pubs thriving all over England.
George Orwell once wrote an essay called The Moon under Water describing in loving detail his perfect local pub – a place that did not actually exist (although a pub chain of that name appeared fifty years later). Well my vision of a pub run by a housing association could look something like this: there is a normal public bar and saloon bar with comfortable seating where the usual range of alcoholic and non alcoholic drinks are available. The pub is tied to a local micro-brewery which is a tenant-run cooperative providing apprenticeships and employment opportunities. The pub too offers employment and training to local tenants. In a back room there is a bank of terminals where IT training takes place and tenants can deal with benefit claims. The local MP and councillors hold their surgeries here, and it is the focus for local meetings and campaigns. A housing officer and welfare benefits advisor hold frequent surgeries. In the large pub garden there is some gym equipment, and classes and sessions such as mother and toddler groups and dog training are held throughout the year.
Perhaps this sounds fanciful, and there may be objections to a housing association running a pub on faith or moral grounds, so it is not right for every area. But pubs often sit at the very centre of their neighbourhoods and they are, often, places of sociability, networking, laughter and social bonding. What better way hit the ground running with a ready-made community centre?
The latest house building figures are disappointing, but not for the reasons you may suppose
The figures for England show a net increase of 134,900 dwellings after taking account of new homes, conversions and demolitions. New build has increased by 10,460 to 128,160 over last year – which was the worst since 1923 remember.
Most of the net increase occurred in the South East, South West and East Anglia. London fared less well, with 9 of the 33 London boroughs showing a net decease in housing numbers, which perhaps helps to explain this story.
But the position on affordable housing is less rosy. Nearly 60,000 affordable homes were provided in 2011/12 – a decrease of 4 per cent on the 60,430 built in 2010/11. Of these, 37,540 were for social rent – a decrease of 3 percent – and 930 were “affordable” – the first time these have appeared in the official figures.
My problem with these figures is that they present two dangers to our sector.
The first is that this slight increase in numbers will let the government off the hook with its housing strategy and lead to complacency. Ministers, including Grant Shapps, will be cock-a-hoop that house building is on the turn even though we are still building less than 50 per cent of what is needed.
But the second danger is that the recent GDP figures showed a growing economy even though construction output had declined, (which seems hard to square with these latest house building figures, I must say). This may lead the government to believe that the economy can grow without the house-building stimulus that was deemed so essential a few weeks ago. If this is the case, ministers may be more inclined to place less emphasis on supporting the housing sector and to cave in to those Tory MPS who have a natural tendency to oppose new homes in their constituencies.
Worrying times ahead for our sector perhaps?
Under the new National Planning Policy Framework councils will have to put in place a “sound” local plan in by March next year, otherwise there will be a “presumption in favour of sustainable development” where plans are absent, silent or out of date.
According to Nick Boles, the new Planning Minister, the number of local authorities with a local plan has increased markedly. 219 councils (65% of the total) now have published plans in place and of these 148 are “sound”. This is a big increase from May 2010 when only 60 local authorities had a local plan. Astonishingly, the city of York has not had a local plan for forty years.
This plan-led and “bottom-up” approach will supposedly provide the homes we need. Councils will have to make an objective assessment of housing need based on household projections and co-operate with neighbouring authorities across housing market areas to provide the right mix of market and affordable homes over a 15 year period.
So far so good. But the evidence to date is that many local authorities, particularly in the south-east, are trying to shirk their housing responsibilities by downgrading the housing targets that were set out in the previous Regional Spatial Strategies and ignoring projections for new households. A report for Parliament last June found that although half of all local authorities intended to stick with the target set out in the RSS a significant number were planning to reduce their housing numbers, amounting to a loss of around 31,400 houses each year across England - that’s not much less than a thrid of our actual build figure. Much of this reduction is in the south east where the need is greatest and schemes are the most viable.
As an example of this worrying trend it’s worth considering St Albans, and I’m grateful to planning guru Andrew Lainton for highlighting this case. According to the NHF, St Albans has the highest average house price in the Eastern region - £420,396 - and the second highest ratio of house prices to incomes – 14.2.
Now, the NPPF states that local authorities should take account of local house prices when they draw up their local plan. “Plans should take account of market signals, such as land prices and housing affordability, and set out a clear strategy for allocating sufficient land which is suitable for development in their area, taking account of the needs of the residential and business communities.” (para 17 - Core Planning Principles”.)
On this basis, you would think that the good burghers of St Albans would be straining at the leash to ensure that they built a shedload of new homes over the next 15 years in order to make housing more affordable for their local citizens. Not a bit of it. This NIMBY-driven Council has just agreed a new target of 250 homes each year compared to the 360 set out in the RSS, even though CLG estimates that there will be a growth of 11,700 new households in the district between 2010 and 2028 – i.e. 688 new households per annum.
The report to the Council’s cabinet is an absolute masterpiece, and deserves to be read by anyone interested in the gestation of planning policy. In brief, St Albans Council views its green belt as sacroscant, so the report assiduously cherry picks from the NPPF and ministerial statements to find the words that will support their position, and uses a medley of tenuous arguments to justify the new housing target, ignoring all the requirements in favour of a higher build figure. For example, the report suggests that local infrastructure could not cope with new homes, but given that the M1/M25 interchange (one of the busiest in the country) falls within the district this is like arguing that a few gallons of added water will cause the Thames to overflow. Yet the St Albans’ green belt comprises 80 percent (121 sq km ) of the district’s area. Do the maths and you realise that even building on just 1 percent of it would provide around 3,750 homes – double what they aim to build.
We can only hope that the Planning Inspectorate will come down hard on authorities like St Albans, find their draft plan unsound and make the Council face up to its housing responsibilities. If St Albans and other like-minded authorities are allowed to evade their housing duties then the cumulative impact will be catastrophic for the nation’s housing situation.
There was a bit of a spat in the housing association world last week when Mark Henderson, the chief executive of Home Group called for ‘”fewer, larger and better’ associations.” Tony Stacey, head of the PlaceShapers’ Group hit back, arguing that Henderson’s call for sector-wide consolidation ‘flies in the face of facts’.
I have to admit I am mostly with Tony on this one. About ten years ago I wrote an article for the old “Housing” magazine, called “Dawn of the Monster Age”, arguing that the move towards consolidation in the housing association sector could be bad for tenants, and that large, monolithic council housing departments were in danger of being replaced by even larger landlords that were less democratic, less accountable and harder to regulate. I believe time has proved me to be right.
To illustrate the perils of consolidation, let me tell you a story about a small rural local authority that transferred its stock to a new housing association twenty years ago. For the sake of the story, I will call it the Acacia Housing Association. Acacia purchased as its new office a large Georgian building in the centre of the district’s main town. Over a hundred staff were based there. Acacia set about upgrading the stock, building new homes and improving services. It was run by a local Board that included local councillors, and tenants were heavily involved in all aspects of service improvement. All went well for a number of years until, unaccountably, Acacia took the decision to join one of the country’s largest housing associations as part of a group structure. Of course they were promised the earth: they would keep their identity and their local Board, none of the services would be centralised and there would be a massive injection of cash for new homes. But shortly afterwards other local authorities in the region transferred their stock to the parent association, and so the fine Georgian office became a regional centre and its localist remit slowly disappeared. Bit by bit, services were transferred to the head office over a hundred miles away. Today, Acacia has no legal identity, its name has been expunged from history, its stock swallowed up into the parent association. There is no local board, no genuine tenant engagement, services are mostly run from remote call centres and only a handful of staff have been left behind. The relationship with the rural local authority is very poor, but they are powerless to do much about it. What’s more, the fine Georgian office, paid for by the tenants of the rural district, has now been sold for several million pounds, and this sum has been swallowed up in the parent association’s global accounts. I call that asset stripping. But is the service to local tenants any better? I very much doubt it.
This is the stark reality of consolidation and it is a story that has been repeated up and down the land over the past twenty years. Have tenants ever been genuinely consulted about these fundamental changes within their landlord? No, they have not. Consolidation means less accountability, remote service provision, remote decision-making and the decline of tenant engagement.
But that is not to say that small is always beautiful either. If landlords are too small it means waste and duplication as Boards and highly paid executives are supported by too few homes. My gut feeling is that the optimum size for a managing association is in the range of 5,000 to 10,000 homes, but the stock needs to be geographically concentrated. Ultimately, housing is a personal service, which needs shoes and boots on the ground and faces at the door, and that is neither effective nor efficient if the closest office is sixty or more miles away.
Tony Stacey, in his response to Henderson, refers to the failing Vestia housing group in Holland – a victim of meddling in derivatives. But similar parallels can be drawn with our own banking and housebuilding industries. The expansionism and recklessness of our “fewer and larger” banks almost bankrupted the UK economy. Our “fewer and larger” housebuilders act as a virtual cartel and are more interested in land speculation than volume house building. They are not models that our housing sector should follow. To be fair to Mark Henderson, his comments focused on development issues and unlocking the capacity of smaller providers. But just as there is a case for splitting retail banks from investment banks the case for splitting housing development from housing management is perhaps just as strong, in my view. Why not create the “fewer and larger” development associations that can produce the stock that smaller, managing associations desperately need?
I’ve no doubt the debate about size will continue, and it will only need one of our larger associations to go the way of Vestia for it to be brought more sharply into focus. Perhaps that event is not too far away.
Most people accept that our housing market is bust. House prices remain stubbornly high even though a whole generation can’t afford to buy. The planning system won’t deliver the homes we need, and builders won’t build them even if it did. The private rented sector is growing yet rents are still rising and in many parts of the country it costs more to rent than to buy. Bed and breakfast is booming. Every year, the government invests around £1 billion on new “affordable” housing, yet spends £23 billion on propping up high rents through the housing benefit system. It’s a crazy world.
But it’s important to remember that this dysfunctional housing market does not just create personal misery, it also has damaging economic consequences.
A recent piece of research by Shelter shows that if private rents had risen only at the same rate as general inflation since 2001 private tenants would now have an additional £8 billion in their pockets, that’s an astonishing £2,000 per household each year. Imagine what an impact that extra income could have on the economy.
But it strikes me that the Shelter research could also be applied to the owner occupied sector. House prices have increased at roughly four times the rate of general inflation over the past thirty years. That means bigger mortgages, which means less disposable income for home-owners. As a result, our housing costs are the third highest in Europe. I haven’t been able to source any figures on how this impacts on household incomes, but my back of an envelope calculations go as follows: the LSE calculates that rents would have risen by only 22% if they had followed CPI since 2001 compared to an actual increase of 76%. If we apply the same ratios to the 11 million home-owners with mortgages, paying an average of £500 a month, (that’s £66 billion a year), then homeowners would have an extra £19.5 billion in their pockets every year if house prices had increased in line with CPI. That’s £1,770 for each household. (Of course interest rates are at an historically low level and a like-for- like comparison is difficult, but I think my figures are in the right ball-park, unless anyone out there is prepared to challenge them?)
So that means private renters and owners have effectively been robbed of a staggering £27.5 billion per annum as a result of inflation-busting house prices and rents. That’s roughly half of the entire annual spend on education. Imagine if that money was available for spending by households in the UK economy instead of being poured into the pockets of landlords and mortgage companies, and then swallowed up by the the sub-prime debt mountain. Is it any wonder that our economy is suffering from a lack of demand? And of course, high rents also add to the cost of goods in the shops, as they increase the overheads of all traders.
Compare and contrast this to Germany where house prices have fallen by ten percent in real terms over the past thirty years and where housing costs are significantly lower, due primarily to their willingness to release sufficient land to keep housing markets in balance, to restrict the amount of mortgage credit and to regulate the private rented sector making it an attractive alternative for potential home-owners. As a result, Germans enjoy stable housing rents and house prices and some of the highest standards of living in Europe. They can invest their surplus cash in savings, cars, holidays and other consumer products that benefit the economy.
The clear message from this is; yes housebuilding can provide a major economic stimulus, but it is low rents and low house prices relative to incomes that will create the greatest economic benefits in the long term. David Cameron’s attack on the NIMBYs this week was a welcome development but we still have miles to go before we reap the benefits of a balanced housing market and restore the pounds missing from our pockets.
This is a brief article about the power of images and the distortions of the media.
On the 12th September I wrote a blog for Inside Housing about the politics of the green belt and pointed out that papers like The Mail and The Telegraph, along with their allies in the countryside lobby, repeatedly use misleading images of ancient woodland and rolling countryside when they campaign against housing development, even though these landscapes are not at risk of being “concreted over”.
I made reference to the photograph in this Daily Mail article and wrote “I very much doubt that is Green Belt.” Study the photograph closely before you read on. Now have a look at this article in the Daily Telegraph. It is the same photograph but this time it is Tuscany, apparently. So is The Mail photograph Tuscany or not? On the balance of probabilities, I think it is. It is certainly not an English landscape so far as I can judge. Thanks to Alasdair Rae for spotting this, via Twitter. Private Eye covered this mistake in its latest edition, and the Mail has been advised of the error but they have not removed the photograph. So an average reader of the article will imagine a) that this image is of the green belt and b) that this landscape is under threat. Both untrue. It’s either deliberate propaganda or very lazy journalism.
The CPRE was at it again more recently. Their latest press campaign carried this image, supposedly of the green belt. Again, it is extremely unlikely that this landscape would ever be at risk. The National Planning Policy Framework is very explicit that landscape of poorer quality should be developed first. Yet the CPRE and their allies continue to propaganise in this way. I tweeted them to say that it would be more truthful and honest if they used images like this when they campaign about the threat to the green belt. No response.
Why is this important? Because a picture tells a thousand words, and if opponents of housebuilding continue to propagandise and manipulate images in this way the drip, drip effect will be immense. The public will be led to believe that the best landscapes are at risk, when they are not, and the prospects for a sensible planning and housing policy will be harmed. These media outlets and their NIMBY allies need to be challenged at every opportunity. As I’ve repeatedly argued in these blogs, we could build more than 3 million new homes on less than 1 percent of the English countryside. That means not one inch of the landscapes portrayed by the CPRE, The Mail and others would be at risk. I can’t speak for Tuscany!
Are landlords exploiting their tenant activists? The thought occurred to me this week when I attended and spoke at a tenants’ conference. There was much discussion about tenant scrutiny panels and everyone appears to be busy working with them or setting them up as a result of the revised regulatory regime.
During one presentation it was revealed that the tenant scrutiny panel at a 28,000-home association had been directly responsible for an increase in customer satisfaction from 57 percent to 100 percent. This statistic intrigued me. To begin with, I don’t accept that 100 percent satisfaction is ever possible, but it also begs the question: what on earth were highly paid executives and board members failing to do that unpaid tenants could achieve in their spare time?
Tenants on scrutiny panels are now expected to digest huge amounts of policy documents and performance reports yet it seems we are expecting them to do it for little or no remuneration, other than the kudos and self-satisfaction that they apparently gain from their involvement. I can’t see many paid executives being willing to carry out such work for free, can you? From a rather unscientific survey on the internet I could find only one housing provider that is paying its tenant scrutineers – Flagship Group is paying £2,000 per annum. I am sure there may be others, but the general rule seems to be that these posts are unpaid.
When I raise this issue, people say to me, “Oh if we pay them they will lose their benefits.” This attitude seems to me to be symptomatic of the way that our sector often patronises and infantilise tenants. If we assume that all tenant activists are on benefits and we carry on doing what we’ve always done then we will get what we’ve always got. It’s a vicious circle. Whenever I speak to tenants’ groups I see overwhelmingly elderly, white people. To be frank, they do not represent tenants as a whole. Does it never occur to us that paying a decent rate of pay could actually encourage recruitment from a wider pool of people and bring forward tenants with relevant skills and expertise who can take on the challenge of effective scrutiny? Payment not only concentrates the mind (as a paid Board member I know this to be true) but it can encourage competition and recruitment from beyond the usual suspects. Only if tenant scrutiny panellists are properly resourced and supported - and paid - will they be able really to scrutinise every aspect of their landlords service, (including, heaven forfend, looking at the salaries of the chief executive and senior staff!) In the absence of proper remuneration there is a danger that scrutiny will revert to the usual lip service, where panels end up looking at day to day service issues, rather than bigger stategic and operational issues, allowing Boards and senior executives to go their mery way unchallenged.
Going back to the landlord I mentioned above, it has a turnover of more than £150 million. Its Board members are paid £7,000 and the chief executive is paid over £175,000. So far as I can see, its tenant activists, who have supposedly been responsible for so much improvement, are paid nothing! Payment to tenant scrutineers on the same basis as Board members (is their job any less important?) would represent a tiny fraction of turnover - just a few pence from every tenant each week. Surely we can see sense on this issue and pay tenants a decent rate for the job they are expected to do?
Why are we not building the number of homes we need?
Apart from a lack of public subsidy, most commentators agree that there are three principal culprits. Firstly, the planning system, which the government appears to believe is the ringleader in the dock. They are only half right. Planning departments spend much of their time on development control, which is important in preserving and enhancing our built environment. There is a debate to be had about the level of red tape, but the government’s decision to relax permitted development rights and allow unfettered construction of extensions and conservatories will do little to stimulate growth and will probably lead to community conflict – the very antithesis of localism. It is bonkers. The strategic side of planning is certainly a key barrier to growth by failing to release sufficient land for our housing needs. But here the government appears to have scored an own goal by removing national and regional house-building targets and putting the onus on local people to vote for development, using bribes like the new homes bonus, neighbourhood planning and the community infrastructure levy to persuade people to accept growth. The early evidence is that many local authorities are using the bonus for anything but new homes and are reducing their housing targets from the previous regional figures. Given that property owners tend to dominate local planning debates it seems unlikely that a bottom-up approach will provide the new homes we need, and there are no signs that the government is thinking about a new genernation of garden cities, as flagged in the NPPF.
The second culprit is the lack of mortgage finance, but this is both a bad and a good thing. Bad because almost an entire generation is being denied the chance to buy a home of their own but good because it is helping to suppress demand and thus keep house prices stable. But as soon as banks rebuild their balance sheets and turn on the mortgage tap house prices will rise and we will be in the foothills of yet another housing bubble. Why? Because, as we all know, house-building is inelastic to demand. Increasing demand without a corresponding increase in supply inevitably leads to higher prices.
Which brings me to the principal culprit of this blog, the house-builders themselves. We all know by now that our house-building industry is unfit for purpose. Their principal objectives are to speculate in land and maximise their margins, rather than respond to needs or demand. But in some respects house-builders are an easy target. I was struck by this recent blog from planning academic Sarah Payne who presents a great analysis of the world of risk that house-builders inhabit, where any slight change in land prices, house prices or interest rates can destroy their business plan at a stroke and where planning can take years to achieve, adding further uncertainty to their operations. So, like Winnie the Pooh with his honey, they hoard their land, minimise their risks and, in order not to unsettle fragile local housing markets they release new homes a few at a time. It keeps their shareholders happy, but land availability is at the root of this problem. If house-builders were certain that they could sell their product at the cost of production plus a reasonable margin they would be no different to car or widget makers, and would produce homes to meet demand, and even create new demand by diversifying their product. It is principally the scarcity of land that causes them to act so cautiously.
So house-builders act rationally in an irrational world. But they do it together and the industry is increasingly dominated by a few big players. Smaller builders are disappearing fast and the industry is failing to respond to demand, and failing to create new demand for their mostly unimaginative products (cedar cladding anyone?). As Jules Birch pointed out recently, they are increasingly feather-bedded with huge government subsidies. They also have the power to silence or suppress any criticism, as this incident shows. To me, the house-building industry looks and sounds increasingly like a cartel.
If we think about historic cartels like the supermarkets, the airline industry or telecoms, they were tackled by deregulation and competition. EasyJet and Ryanair destroyed the complacency and over-pricing of British Airways and other national carriers. Aldi, Netto and Lidl shook up the supermarket industry, the deregulation of BT allowed other telecom providers into the market. Not only did this increase choice and push down prices, but these new entrants also created demand – by flying to new destinations, for example. It’s debatable whether stag weekends in Prague are a good or bad thing in the wider scheme of things, but the budget airlines undoubtedly revolutionised a moribund industry.
Why has the same process not happened in house-building? Where are the new entrants, the competition, the innovation, the new products, the creation of new demand? An entire generation wants to buy but the house-building industry is simply not interested. Can you imagine any other sector where this would even be possible?
So what is the answer? More competition certainly. Nationalisation or enforced fragmentation of the sector? Deregulation? The creation of a new not-for-profit housebuilder who could take on public land and build to meet needs? More land obviously. But as Sarah Payne points out, if I had all the answers I would be on my way to London to bang on the door of the CLG! I don’t, but something clearly needs to be done. The last time the OFT investigated the house-building industry was in 2007. Perhaps they need to have another look.
Green belt policy represents a lazy consensus and should be challenged by the housing sector, writes Colin Wiles
Last week’s YouGov poll for The Sunday Times showed that the government’s planning reforms are broadly supported and opposed in equal measure by the public. But countryside campaigners have made much of the fact that the poll showed strong opposition to any development in the Green Belt. Only 14% were in favour and 78% against.
Dig a little deeper, however, and you find that the question asked by YouGov was this:
Q: Some people have suggested that the government should relax the planning rules in the Green belt in order to boost the economy by helping housebuilders. Other people think planning restrictions on the Green belt should remain tight to stop urban sprawl and the loss of green space.
Do you think think government should or should not relax planning laws in the Green Belt?
I call that rather a leading (or even misleading question). After all, who wants to help housebuilders? A more balanced question could have been:
Q: Some people have suggested that the government should relax the planning rules in the Green belt in order to provide the new homes that the country desperately needs and which cannot be provided within towns and cities due to lack of space. At the same time, additional Green Belt would be provided to replace the land built upon. Other people think planning restrictions on the Green belt should remain tight to stop urban sprawl and the loss of green space
Do you think think government should or should not relax planning laws in the Green Belt?
Would this have elicited a more favourable response? Perhaps. But it does indicate how little the public knows about the nature, scale and impact of the Green Belt, a situation that is not helped by the scaremongering and misinformation spread by countryside campaigners, such as this latest missive from the CPRE. They claim a chunk of the Green Belt the size of Slough is at risk from development. To put that into perspective Slough is 33 square kilometers, whereas the total area of the Green Belt is nearly 17,000 sq km. So less than one fifth of one percent of the Green Belt is “at risk” from development - a figure so minuscule that it does not even register on my cheap calculator. Let’s not forget that the Green Belt comprises 13 percent of England’s land area and has been massively extended in recent decades.
Which begs the question, what is the Green Belt for exactly? Contrary to public myth, its principal function is to prevent urban sprawl. It has no intrinsic aesthetic, amenity or public access value and a great deal of it comprises scrubby horse pasture, quarries, gravel pits, and other equally unattractive pieces of land – just drive around the M25 if you don’t believe me. Much of it is chemical-soaked fields that are a stranger to wildlife. But the very word “sprawl” is an out-of-date and emotive notion that reflects eighty-year old thinking. Ribbon development and sprawl did blight many of our cities in the thirties, but no one is talking about that now. Selective development on the Green Belt would involve well planned urban extensions that would create jobs and homes, open up green spaces to the public, encourage wildlife and help to reduce some of the toxic pollution and misery that is suffered by the millions of people who have to “jump” the Green Belt every day to get to work. Take Cambridge, where I live. Every day, 40,000 people struggle to get into the city, in most cases because they cannot afford to buy or rent within the city. They sit in their cars on the congested A14 looking out on groups of scruffy horses grazing on scrubby Green Belt land – the very land that is meant to improve their quality of life! Horses before people. You could not make it up!
Almost 90 percent of England’s population lives within the Green Belt and it has the potential to solve most of our housing problems. I have argued many times that the policy needs to be reviewed in order to build the homes we need and to provide breathing space for our increasingly dense urban areas, where open spaces and playing fields are being gobbled up by developers, creating an increasingly hemmed-in population.
Yet whenever anyone so much as mentions development on the Green Belt it elicits a furious response from the right-wing press and reactionary countryside campaigners. Part of the problem is with the word “Green” – it conjures up an image of a bucolic Merrie England, charming cottages nestling in rolling hills, just like the miseading picture in this Daily Mail editorial (I very much doubt that is Green Belt). “Green” is a misnomer. I propose we re-name it the “Red Belt” to reflect the asphyxiating impact it has on our towns and cities. But we also need to ensure that there is a more balanced debate about the role and status of the Green Belt. Luckily, time and population growth are on our side. Andrew Lainton, one of the fiercest supporters of the strategic role of the Green Belt and a prolific blogger on planning issues, appears to admit as much in his latest blog. We must either build on the Green Belt or plan for a new generation of garden cities beyond it. Or both.
But if we built on just 3 percent of the Green Belt we could provide 2 million homes, and 97 percent of it would be left untouched. The lost 3 percent could be added at the margins from unprotected countryside. Surely this is a win-win situation for everyone involved?
There has been much talk lately about a lazy consensus in the social housing sector. Well the Green Belt really does represent a lazy consensus in planning policy. It is a concept that is unfit for purpose. Our sector needs to challenge this consensus and make the case for smart growth on Green Belt land.