All posts from: July 2011
Here’s an interesting piece of trivia, but one that is worth sharing I think. I’ve been looking at the history of “The Big Society” and it has its roots in the Chinese Communist Party. In 1988 a Chinese Political theorist called Lia Xun wrote a treatise called “Marx and Engels’s Thoughts on Small Government and Current Economic Reform”, which was published as a book in 1991 called “Small Government, Big Society.”
This was taken up by the Party and the National Congress of the Chinese Communist Party in 2004 met under the banner of “Big Society, Small Government’. Students of political history will know that Marx and Engels believed that the state existed to maintain class oppression and that, under communism, the state would wither away, so “Big Society, Small Government” fitted in with the economic liberalism that had been a feature of Chinese society under the reforms initiated by Den Xiaoping. The 2004 Congress endorsed a programme of charitable undertakings and the creation of civil organizations which would “become bridges and belts linking the Party and government with the mass, an indispensable force to promote economic development and social progress, and play an important role in the harmonious development of a socialist civilization.”
Liao Xun had previously quoted Thomas Jefferson who wrote that the best government is the one that governs least. This meant that the state should serve the individual and should not interfere in everything. Liao Xun had a vision of the future where the state had three main roles: as a “soccer referee” setting out the basic rules, as a “traffic police” making sure that communications were free flowing and as a “fire fighter” dealing with emergencies and disasters. Beyond this the private citizen would have responsibility for looking after himself and building a prosperous society. Ownership of property would be diverse, including individual and collective ownership. He wanted to strengthen the social autonomous organisations of villages and towns and devolve democracy to the lowest possible level.
So far, I have been unable to find a direct ideological link between the Chinese writings and Cameron’s Big Society vision, but the parallels are remarkable, I think you will agree.
‘Supermarket to shake up sector’, read the headline in Inside Housing, following the announcement at Harrogate that an un-named supermarket chain intended to enter the social housing sector.
The supermarket has yet to appear, but the notion that new entrants to the sector will somehow ‘shake it up’ and make social housing more beholden to market forces seems to me optimistic at best. The UK has over four million social housing homes and it will take decades before any new provider will have even a marginal impact upon supply. Of course, private landlords have to pitch their rents and the quality of their product according to the laws of supply and demand, otherwise they go bust. Butsocial housing providers are more or less immune from the impact of the market. In fact, we are probably one of the most recession-proof industries to work in. Apart from a few areas of low demand, the sector is a virtual monopoly since, with 1.5 million households on waiting lists, demand greatly exceeds supply. From one end of the country to the other social housing has few variations in design or standards, our rents are set for us and apart from chasing rent arrears, most rental income is guaranteed through direct housing benefits. We’re a bit like the old GPO telephone service – you can have any ‘phone you like so long as it’s a black Bakelite one with a dial on the front. So market imperatives are largely absent, which is why the drive for improvement comes either from within or from regulators, or both, unlike in the private sector where survival of the fittest is the key driver.
What would it take for market forces to have any impact on the social housing sector, and would it do us any good? The logic of competition is that prospective tenants in any area would have a wide range of social landlords to choose from, all offering a range of different properties at differing rents. This would require every town to have a dozen or more providers competing against each other, with supply and demand in balance, so that the best would survive and the worst would fail. Yet this is the very antithesis of stock rationalization and would be highly inefficient. One way for the sector to face up to market forces would be for the TSA to levy fines on bad performers – something they already have the power to do, although the revenue goes straight to the Treasury. Instead of charging a flat fee to providers, why not make charges according to the regulatory time spent with each provider? So the TSA could become self funding and the worst performers would go bust under the burden of fines.
It will be interesting to see what will happen as the (so-called) affordable housing programme kicks in. For some providers, a third of their stock could be set at close to market rents within 5 years. I am still not clear who these properties are going to be let to – those furthest from the job market, and hence dependent on benefits, or the relatively well off? HCA guidance states it should be let through existing systems, which will trap people on benefits. But if those same people can source alternative accommodation in the private sector at a similar standard then social landlords could well find themselves competing against private landlords, and it will be a very different world.
Today’s announcement of the “affordable rents’ programme show that 90% of the new homes will be provided by housing associations. But there are quite a few local authorities on the list and also some private developers like Keepmoat, Persimmon and Taylor Wimpey. After years in the wilderness it will be interesting to see how new council housing will look and feel.
So London gets 36% of the national cake to produce 27% of the homes. A good result for London and Boris. The North East and the North West get around 10% of the cake each, but the East and South East only receives 13% of the national total, less than the Midlands and the South/South West, even though housing needs in the south east are acute. A quick analysis of the cost per home shows that the East and South East can produce a unit for less than £16,000 whereas in London it costs nearly twice as much, at almost £29,000. My guess is that the Eastern region accounts for most of that favourable figure, because they were producing homes with the lowest level of grant under the previous system. It’s also interesting to note that it costs over £22,000 to produce a single new home in the North East, the second most expensive region after London. This highlights the fact that the affordable rent programme does not work in most of the north and requires a larger subsidy. Moreover, you can buy a decent terraced house in Middlesbrough for £10,000. I’m sure additional analysis will follow, but these are my initial thoughts.
A Lib Dem peer has tabled the so-called “Cambridge amendment” to the Localism Bill. If passed, it would give communities the power to decide the mix of shops in their areas and to reject those that could lead to their towns and cities becoming “clones”. Last year Cambridge was voted the top clone town in the UK for its lack of independent shops. But the Mill Road area of Cambridge, where I live, is famous for its range of independent shops. There is a diverse and eclectic mix along the road – cycle shops, antique shops, Korean, Asian, and Chinese grocers, greengrocers, independent cafes and award-winning butchers. Last weekend an EDL march attempted to protest at the local mosque but was rebuffed. But Mill Road is under threat from chains. A small Tesco was opened a couple of years ago in the face of vociferous opposition and now Sainsbury’s want to set up shop. The Cambridge amendment would allow local people to protect the character and diversity of places like Mill Road by deciding the range and type of shops they want.
Liberal Democrat Peer, Lord Anthony Greaves of Pendle tabled the amendment on “health and diversity of town centres and high streets” drawn up by Cambridge City Council. It would require councils to draw up retail diversity plans, in partnership with residents, and the council would have to consider these plans when dealing with applications for retail change of use. They would also have to take into account the balance of independent and multiple traders, unit sizes and classes of use. Local councillor Killian Bourke described it as, “a fundamentally localist proposition. If local people want more national chains on their high streets, this amendment would help them to get that; if, on the other hand, people want a higher proportion of smaller, independent shops, it would make that easier to achieve too. It would provide a flexible tool that would only need to be utilised where local people wanted it.”
How is this relevant to housing? Well, we all know that there are clear links between bad housing and health and that many of our residents suffer from food poverty as a result of lack of transport and an inability to source decent food locally. The BMA says that multiple housing deprivation poses a health risk that is on the same scale as smoking and, on average, greater than the dangers of excessive alcohol intake. The Cambridge amendment would allow local communities to draw up plans that would prescribe the range of shops that they want in their area and to stop, for example, yet another takeaway moving in. It would also present an opportunity for social enterprises that deal in healthy food, or in services that local people actually want, to move into a neighbourhood. It’s something for all landlords with an interest in community health and community development to keep an eye on.
I sit on the Board of Howard Cottage Housing Association in Letchworth, and this is our centenary year. We were founded in 1911 by Sir Ebenezer Howard, the man who created the Garden Cities. His portrait watches over our meetings and, with his Biblical name and walrus-like moustache, he looks like a typical reactionary Edwardian gentleman. But dig a little deeper and you will find that Howard is very much a man of our times, for his vision encompasses many of our current pre-occupations, such as food miles, community land trusts, self sufficiency, social cohesion and eco-towns.
In 1898 Howard published his only book, “Tomorrow: a Peaceful Path to Real Reform”. It was re-issued in 1902 as “Garden Cities of Tomorrow”. The first title reveals his true intent, for Howard was a social revolutionary who saw the garden cities as “a stepping stone to a higher and better form of industrial life”, - a world where the worst aspects of city and country living would be eliminated, and only the best aspects retained.
Howard’s model Garden City was an estate of 6,000 acres, built on agricultural land, of which only 1,000 acres would be urban, giving a population of 30,000 at 30 to the acre. The remaining 5,000 acres would girdle the town and contain, fields, market gardens and workshops, allowing food and goods to be easily shipped to the town (low food miles). Sewage from the town would be used to fertilise the surrounding fields and power would be produced locally. Once the city reached its optimum population of 30,000 a new city would be built beyond the green belt and a radial set of cities would eventually be created with a larger central city at the core, each connected with an efficient rail system.
But here is the interesting part. The freehold of land within the Garden City would be held in trust for the benefit of its residents so that, as ground rents rose and the original mortgage was paid off, the revenues would fund the entire operation of the municipality, including health services, pensions and social insurance. This is a truly modern vision, a kind of eco-town which would be self sufficient and sustainable, where food miles are minimised and where a new system of land ownership allows the community to benefit from uplifts in values, providing a comprehensive welfare system semi-independent of national constraints. In truth, Howard was more than a century ahead of his time.
But unlike many theorists, Howard actually saw some aspects of his vision translated into reality. Under his leadership, work began on Letchworth, the world’s first Garden City, in 1903, and on Welwyn Garden City in 1920. However, like many revolutionaries, his theories were only partly understood and the notion of self-sustaining welfare states within each garden city has not been carried through, although the Letchworth Heritage Foundation still retains freehold ownership of a significant proportion of land and business premises and provides a range of services to the residents of the town.
The Garden City movement developed into the Royal Town Planning Institute, and Patrick Abercrombie’s Greater London Plan of 1944 proposed a green belt and a wheel of new satellite towns around London. This was the direct result of Howard’s original vision. A few weeks ago Howard Cottage Housing Association hosted a centenary event where David Orr, John Lewis and James Tickell led a public debate that considered Ebenezer Howard’s impact upon present-day thinking. If you have any interest in the history of our sector and the development of town planning in the UK I urge you to re-visit Ebenezer Howard’s legacy.
The resignation this week of Andrea Hill, the controversial chief executive of Suffolk County Council, has been big news in the East of England. Whistle-blowing allegations of a bullying management style and fraudulent expense claims were not substantiated, but the Council decided that they needed to move on and so she received a £218,000 pay-off – her annual salary. She famously refused to take a cut in her pay, even though she was overseeing a major programme of cuts. But according to a recent article by Financial Times journalist Lucy Kellaway (available on the BBC website) chief executives are a special breed who rarely admit to any failings. When asked the classic interview question, “What are your weaknesses?” they inevitably give answers that double as strengths: “I am too impatient…I am a perfectionist…I work too hard and people have problems keeping up with me.”
Kellaway has been studying chief executives for the past fifteen years and has drawn up her own list of their seven deadly sins: “They are control freaks. They are vain. They are ditherers. They don’t listen. They are bullies. They are afraid of conflict. And they can’t do small talk.” That seems a tad harsh to me, and I know many chief executives who are innocent of at least some of the items on that list, but her conclusion is that people are afraid of speaking “truth to power”.
I wrote recently about some interesting work by Professor Geert Hofstede, a Dutch academic, and it’s worth repeating. He studied what he calls the Power-Distance index, a measure of the extent to which power is either deferred to or challenged within any culture or organisation. It has been used to study crashes in the airline industry. Korean Air lost sixteen planes and 700 lives between 1981 and 1997. The primary cause was found to be a culture where junior pilots were too subservient to senior pilots. They used “mitigating language” to query or challenge their captains. So they would say, “Captain, I beg to inform you that the fuel tanks are nearly empty”, instead of, “Captain, unless you land this plane within ten minutes we will all die!” By tackling this subservient culture the airline has lost no planes since 1997. (See Malcolm Gladwell’s “Outliers: The Story of Success” for a brilliant account of this episode.) The moral of the story is that staff must feel comfortable about challenging their leaders if disasters are to be averted.
The case of Fred “the shred” Goodwin is one of the more extreme examples of an out-of-control chief executive. He ran RBS as if it was his personal property, overseeing a ruthless expansion programme that culminated in the disastrous purchase of ABN Amro at the height of the boom. He built a £350m headquarters in Edinburgh and used a private jet. On his watch RBS lost £24.1 billion, the biggest in UK corporate history. One of his former managers said of him: “Many executives are scared of him. He runs the place with an iron fist, sets out what is wanted, and you are expected to deliver”. His bullying style created a lemming-like culture and he took the entire organisation over the cliff. Strong leadership is one thing but where were the RBS Board and the whistleblowers? I am convinced that the affordable housing sector contains a number of mini-Goodwins, who run their organisations like their own personal property and are deaf to any dissent. Their Boards are weak and incompetent. With the withdrawal of effective regulation it is becoming increasingly likely that we will see a major scandal in the sector within the next few years. Speaking truth to power needs to become embedded in every organisation.
A recent British Social Attitudes Survey published by DCLG (hat-tip Jules Birch) reveals some interesting attitudes to new housebuilding.
Nearly 3,000 people were interviewed in 2010. Nationally, only 28 percent of people supported more homes being built in their local area while 46 percent opposed it. But it is the variations that are interesting.
Around 46 percent of council and housing association tenants support newbuild in their area compared to just 23 percent of home owners, and older people are more likely to oppose house-building – 52 percent of those aged 65 and above were opposed compared to only 43 percent of those aged 18 to 34.
Only inner London (plus 17% percent) and the North East (plus 1 percent) have a positive net support for new homes, whereas Outer London (minus 33 percent) and Eastern England (minus 32 percent) have the lowest level of support for new homes.
When respondents who did not support new housebuilding in their area were asked to think about the advantages of new homes (employment, better transport, schools etc) 33 percent said that nothing would make them support new building.
This shows that the CIH, NHF and the house-building industry have a tremendous battle ahead of them if they are to convince the country of the benefits of house-building.
The provisions in the Localism Bill place greater emphasis upon local consultation and neighbourhood plans. To some, this is a green light to nimbys.
The CLG guide to the Bill states that, “Local communities would also be able to grant full or outline planning permission in areas where they most want to see new homes and businesses, making it easier and quicker for development to go ahead.”
But if communities don’t want new homes in the first place then it’s not going to happen! The Bill also abolishes the Infrastructure Planning Commission and places decisions about major planning decisions that are “important to our overall economy and society” in the hands of Ministers.
In Cambridge, where I live, work has started on 3,000 new homes around the fringes of the City. This growth is needed because Cambridge is at the heart of the nation’s biotech industries and without it the national economy will suffer, yet it’s not clear to me whether similar decisions in future will be left to local communities or to the Minister.
It’s highly unlikely that the people of Cambridge would have voted for growth, but sometimes governments have to govern in the national interest. The danger of the Localism Bill is that it presents Ministers with a brilliant cop out when tough decisions have to be made.
Like Pontius Pilate, they can wash their hands and say, “Nothing to do with me, we’ve given power to the people.” Frankly, I will believe it when I see it.
In the doublethink world of George Orwell’s “1984” words mean the opposite of their true meaning. So the Ministry of Truth deals in lies, the Ministry of Peace wages war, the Ministry of Love engages in torture and the Ministry of Plenty is concerned with starvation. The three slogans of the Party are War is Peace, Freedom is Slavery, and Ignorance is Strength. Orwell also wrote that, “Political language ….is designed to make lies sound truthful and murder respectable…”
In the housing sector we are sometimes rather keen on words and phrases that either mean the opposite of their true meaning or that make “lies sound truthful”. The biggest current culprit is, of course, the “affordable rent” programme. I can remember a time when an affordable rent was defined as 25 percent of net income. Webster defines affordable as, “to manage to bear without serious detriment.” That may be slightly vague, but to me it means that you should be able to pay your rent and then live reasonably well, perhaps run a car, have a holiday and save a bit for the future. So how is a rent of £300 a week in Cambridge (where I live) or £450 a week in London remotely affordable to people on low and modest incomes? Yet our sector appears to have swallowed the affordable rent canard hook, line and sinker. Admittedly it is the only game in town, but are some associations really so desperate for growth at all costs that they are willing to sell themselves for a few extra units? For big developers in the south, particularly those bidding for 100 percent conversions of voids, the profile of their stock could change dramatically - within five years more than a third of their homes could become unaffordable, forcing thousands of people into poverty. Have they really thought this through? There is a danger that housing providers are about to fall into a trap that will further stigmatise the sector, similar to the trap we fell into thirty years’ ago when we complied with a purist needs-based approach to allocations, shutting the door upon large sections of the working working-class and causing the sector be become residualised. At Harrogate a couple of weeks ago there was much discussion about re-naming the affordable rent regime. A few suggestions were: “so-called affordable rents”, “naffordable”, or simply “unaffordable rents”. I prefer the last one. Words should mean what they say and say what they mean.
Whilst I am on the topic of words and their meaning, another phrase that should be binned is “social housing”. Why do we persist with it? For me, it conjures up images of National Health spectacles and coal in the bath. Does it mean that non-social housing is anti-social or asocial? Do we really believe that private developers, and the planners and architects they work with, don’t have a social purpose, an interest in building sustainable homes and viable communities? We should move on from this kind of segmentation – increasingly we are taking an holistic view of housing markets and considering how different providers can meet the differing needs of customers. If we are to have “social housing” then why not “social greengrocers” or “social dentists”? The phrase is out of date, degrading and meaningless. Why not just “housing” or, more clunky perhaps, “housing provided by councils and housing associations”?