Working it out

Six months on from the general election, it is clear this is a government that wants to make significant changes and it is in a hurry.

As a democratically elected government, it is perfectly entitled to make policy changes to deliver on its manifesto pledges and at present there is a whole raft of proposals aimed at delivering cultural change and financial savings.

One of the early surprises was the 1% rent reduction announced in the summer Budget.

Even though it is a major departure from the previous rent policy, it is relatively straightforward in terms of implementation.

Housing providers are busy reviewing their business plans, and in broad terms, we can expect to see some housing associations looking at efficiency savings and councils pulling back on some of their stock investment plans and new build programmes. We will then wait to see what happens from 2020 onwards

However, in some other areas, proposed policy changes need a lot of thought before they are implemented.

As a housing professional, I am concerned about the speed with which some policies are being formulated and implemented. For example, the Department for Communities and Local Government (DCLG) has recently published a consultation document on Pay to Stay.

The document only has three pages of text and it seeks views on supporting work incentives and administration costs. While these are relevant issues, there are much more fundamental concerns with the proposals that need discussion and the involvement of practitioners.

First, the thresholds are too low.

“As a housing professional, I am concerned about the speed with which some policies are being formulated and implemented.”

There are existing powers to charge higher rents to those earning over £60,000 a year, but I believe dropping the threshold as low as £30,000 outside London is going to have unintended consequences.

A household with two working people on incomes just above the minimum wage could get caught in the net. Are these low-paid working households the intended target? Add in some tax credit changes and we could see some households facing serious financial challenges.

If this government is really looking to be the champion of low-paid hard-working households, it needs to map out all the proposed policy changes and check for areas of overlap. If not, we will have some policy car crashes.

Secondly, the policy is potentially divisive as housing associations can keep the additional rental income raised, but councils have to send the money to the Treasury.

Why not have a level playing field and incentivise councils to implement the policy with their hearts in it?

Thirdly, unless there is a gateway for HMRC to share income information with landlords, implementing this policy is going to be an administrative nightmare.

Selling assets

Another example is the proposed sale of council-owned high-value assets to fund the extension of the Right to Buy to housing associations.

Civil servants know this cannot be relied on to deliver a definite financial sum and while some councils will lose significant numbers of properties, others will not have to sell a single property.

The Housing and Planning Bill now suggests the original proposal will be watered down, with councils having a “duty to consider” selling high-value assets.  We are also expecting to see some form of levy on all Housing Revenue Accounts. This was predictable from the start.

All the current policy changes have potential unintended consequences and I believe government has responsibility to identify as many of them as possible in advance of implementation to avoid back-tracking, U-turns and reputational damage.

I have a simple suggestion based on experience of being involved in sensible policy implementation.

Civil servants should set up a series of working groups to examine the consequences of implementing the current raft of changes.

Some years ago, I sat on two DCLG working groups looking at housing fraud and squatting in residential accommodation. Those working groups comprised civil servants from all the relevant departments and professionals from housing associations, councils and arm’s-length management organisations (ALMOs).

The membership also ensured coverage of small and large landlords. The terms of reference were simply about how best to make changes to meet the policy objective. For example, in the case of housing fraud, there was no point in considering making it a criminal offence if civil servants from the Ministry of Justice were not involved in the discussions.

In today’s context, we could have a number of working groups looking in detail at individual policy implications and an overarching group monitoring the overall implementation timetable and, most importantly, identifying and mitigating the unintended consequences. Maybe that is just too simple.

Eamon McGoldrick, managing director, National Federation of ALMOs