The Housing Times Issue 1
The front cover of the September 2009 issue of the sadly missed housing magazine Roof highlighted the article by Julian Birch about what kind of plans the Conservatives would bring forward for housing should they win the general election the following year. Birch begins his article by accepting that cuts in the housing budget look certain whoever wins the election. He posed the question; “Do plans already surfacing in think tanks and Tory local authorities signal a radical assault on social housing?” An indication of their plans was contained in a Green Paper they published in April 2009. They included scrapping top-down regional planning targets with bottom-up local incentives. Other than encouraging more shared ownership and backing local housing trusts it is not clear, Birch writes, what the party would do in government. Former Labour housing minister Nick Raynsford had a clearer idea. He believed that there would be drastic cuts in investment as well as the dismantling of the regional planning framework. “What we saw in 1979-80 would be mild by comparison with what is going to happen if the Conservatives win the next election. If you add in the ideological pressure coming from places like Hammersmith and Fulham that is profoundly hostile to social housing and is social engineering on a grand scale, you have the making of a policy that would be disastrous around the country.”
In July 2009 Tory controlled Hammersmith and Fulham council was accused of social cleansing when plans were made public about their proposals to demolish council estates within the borough. The plans, obtained under a Freedom of Information request, showed that the council hoped to move out tenants and replace them with private homes and retail developments. Council leader Stephen Greenhaigh, who also headed David Cameron’s Conservative Councils Innovation Unit, states in the report, The Principles for Social Housing Reform, believes council housing is “warehousing poverty” and entrenches welfare dependency.
Stephen Greenhaigh denied the council had any plans to move low income residents out to other areas of London but the question remains where people will go if as plans contained in the Council’s Local Development Framework go ahead to demolish large council estates in White City, West Kensington as well as Hammersmith and Fulham. The council sent a leaflet to all tenants on the White City estate giving them a guarantee that they will “not be left without a home or moved out of the borough” should demolition take place. There was no guarantee, as with other council estates in London under threat of demolition that any tenant exercising the option to return, would be offered a home at the same rent as they paid previously.
The Freedom of Information request, submitted by Andy Slaughter, the Labour MP for Ealing and Shepherd’s Bush, disclosed how Stephen Greenhaigh and town hall officials helped to draft the proposals in the Localis report. Even more remarkably one note discussed how to handle a backlash from residents. A note states that social housing is “not about giving somebody a £1 million home for life. “Another note says it is “hard to get rid of people” and Porteresque accusations of gerrymandering or social engineering need to be faced head on.” The note adds “funding is needed for political problem of management” and “warns that “political pain is a factor – can local politicians accept the level of pain involved in making it happen”
The plans that Stephen Greenhaigh proposed were the same as ones included in a report, published in April 2009, he wrote, with John Moss a chartered surveyor and Conservative parliamentary candidate in the 2005 general election, and published by the thinktank Localis. The introduction to the report, The Principles for Social Housing Reform, includes a quote from David Cameron that an incoming will not retreat from social reform because of the current crisis in public finances. “My Party understands something crucially important Fiscal responsibility needs a social conscience, or it is not responsible at all.” For the authors of the report, that meant applying their social conscience to the state of social housing in inner cities.
Greenhaigh and Moss write that “social housing has become welfare housing where both a dependency culture and a culture of entitlement predominate. There is real concern that the current social housing system is failing the very people it was designed to help. Social housing was meant to help people out of the slums. Instead many social housing estates have become the very ghettos of multiple social deprivation that they were supposed to replace.” Whilst this is true it is because of the criterion that determines the allocation system – local authorities are obliged to house the most vulnerable. A fact accepted by the authors when they write, “Estates where deprived households are concentrated because of housing policies are not places sought by people with any choice.” Another reason is the failure by successive governments to return the revenue from the sale of homes under the right to buy legislation. What seems to prick the social conscience of the authors, certainly in London, is that council estates are situated in the inner cities on prime real estate which are worth billions if they were in private hands.
As the authors write, “While the social case for reform is undeniable, the financial case is just as strong. A conservative estimate values public sector housing stock at around £300 billion and yet the return to Registered Social Landlords and councils on this capital investment is barely 1 per cent. There are huge social, economic and financial pay-offs if we get the reform of social housing right. The current social housing is warehousing poverty in the core of our great cities – cities which need to be the very engines of economic growth.” The language used by the authors has a Victorian resonance; they reassure those who cannot house themselves that social housing would be provided for them but believe that the system should be only for people – the deserving poor – who, as they state, work hard and play by the rules.
Greenhaigh and Moss were so confident that their plans will be put into practice after the success of their party’s chances in the forthcoming 2010 general election that the last paragraph of the introduction of the report is solely about their introduction. They write; “Now we just need the incoming Conservative government – which will have an unprecedented opportunity with so many of our councils also being in Conservative control – to be bold and be brave and act on its social conscience by listening to the housing professionals who are fed up with tinkering around the edges and embrace a reform agenda that will contribute hugely to fixing our broken society”
The proposals contained both in the 2010 Budget and later in the year the Comprehensive Spending Review could never be described as tinkering around the edges. The June 2010 emergency Budget announced £11 billion of welfare savings to be rolled out by 2014. The 2010 Spending Review promised hopefully that welfare costs would fall over the next four years. One housing magazine, 24 Housing, described 2010 as the year that shook housing. Summing up in its December issue what had changed since the general election in May it stated, “Seven months on and the socio-political landscape of this country has changed forever. With funded ring-fenced in areas such as health, education and overseas aid, housing was always going to be vulnerable to George Osborne’s spending axe – and so it proved” It isn’t just the reduction in the housing budget, it added, that has shaken social housing to its very foundations, and it’s the radical reforms to tenure, welfare and benefits that will force housing providers to take a long hard look at how they operate in the future” Following the Comprehensive Spending Review another housing magazine, Inside Housing, believed that the sixty per cent cut to the housing budget heralding the end of social housing. Its editorial put the measures into their historical context thus: “What became known as asocial housing was conceived by William Beveridge in 1942 and brought to life by Clement Attlee’s Labour government in 1945. The hundreds of thousands of homes build in the following decades formed the backbone of the welfare state” The package of reforms, it ends, means the end of social housing as part of the welfare state. Abigail Davies, head of policy at the Chartered Institute of Housing, said, “This clearly appears to be the end of government funded social housing, if not necessarily the end of the provision of asocial housing”
Whilst the cuts announced by George Osborne in his Budget and in the Comprehensive Spending Review were a surprise it was no surprise that the Conservative took the axe to the boards that set the regional housing targets. Eric Pickles had warned in August 2009 that any incoming Conservative government would abolish them. He abolished them on July 2010.Local authorities had already begun tearing up plans for new housing in May when he wrote to them to confirm that the regional targets were to be axed.
Just as significant as the demise of the bodies that set the regional housing targets was the scrapping of the independent housing affordability watchdog, the National Housing and Planning Unit. Its remit was to advise on how to improve the affordability of housing. A review of the body at the end of 2009 had found that it was successfully fulfilling its role, and recommended it should also conduct research into local housing markets on behalf of local authorities. Before its demise the Advice Unit had calculated that England need to build 240,000 homes a year to meet demand. Peter Williams, chairman of the National Housing and Planning Advice Unit, wrote a letter to housing minister Grant Shapps before it was disbanded warning that the UK faced increasingly severe social and economic consequences of the failure to build more homes. He added “getting back to the level of house building we saw before the recession is nowhere near enough. We need to deliver half as many again extra homes.”
Another organisation that was seen as superfluous to requirements by the new government was the Tenant Services Authority. Its abolition was announced by Grant Shapps at the Chartered Institute of Housing’s annual conference in June 2010. Addressing conference delegates he told them that the “TSA is toast”.
Not to be outdone David Cameron in a speech in Birmingham in August stated he wanted to see the end of lifetime tenancies for new council tenants. “There is a question mark about whether, in future. We should be asking when you are given a council home, is it for a fixed period?” His speech was to coincide with the publication of a consultation paper on the subject. Yet the Conservative Party went into the general election stating that it had no policy to change the current or future security of tenure of tenants in social housing. Within a year one of the measures introduced as part of the 2011 Localism Act was the abolition of the automatic long term security of tenure for new social housing tenants. Under the Act, landlords were now allowed to offer fixed term tenancies of only five years as standard if they choose to do so with extension dependent upon good behaviour.
As Professor Rebecca Tunstall of York University writes in her review of the Coalition’s record on housing, “The Act contained what was described as “a radical programme of reform” for social housing (HM Government 2011p.ix), giving local authorities and ‘registered providers’ new options on the length of tenancies, and local authorities on new options on access to and allocation of social housing. The idea was to more closely target tenancies on the periods of greatest need and through this to discourage infinite long term occupancy of social housing.” Professor Tunstall adds social housing allocation by local authorities reformed, with the entitlement to a social home no longer being less strictly determined by housing need, and at the same time greater priority being permitted for economically active households. The automatic long term security of tenure for new social housing tenants was abolished.
The Conservative-led coalition’s approach to social housing besides being ideologically driven must also be seen in the context of the deficit and in which savings had to be made to the overall housing benefit budget. Again, as Professor Tunstall writes, “Spending on housing benefit constitutes a major element of total government expenditure on housing policy across the UK, although it does not directly build, maintain or improve any actual housing stock. Rather than being an investment in housing stock, it is paid to landlords for existing homes” It was people renting in the private sector that bore the brunt of the cap on housing benefit. From 2011, the cap or ‘Local housing Allowance’ was set at the 30th percentile of local market rents. In addition, the LHA was capped at £400, regardless of household size or actual rent. From 2013, LHA caps increased in line with a new, generally less generous measure of inflation (the consumer price index rather than the retail price index) – meaning that the number of properties at rents where the housing benefit would cover all the cost was progressively reduced.
Polly Toynbee and David Walker in their book Cameron’s Coup in their chapter called Waging War on Welfare write “The most devastating cut was invisible to the naked eye. From 2010 all benefits (other than pensions) have been up rated annually using a lower measure of inflation, the Consumer Prices Index (CPI), does not include housing. (The higher measure, the Retail Prices Index (RPI), was kept for tax thresholds and grants to business – and pensions). As a result claimants are losing at least 10 per cent of the value of their benefits over the next decade and onwards. This not only cut the DWP bill, it guaranteed the poor would go on getting poorer in relation to everyone else. Here the Tory legacy is formidable. In addition, the government decreed an even more direct cut in the value of benefits: from 2013 to 2016 no payments are to increase by more than 1 per cent – except pensions” Also the annual benefit cap for individual households was fixed at £26,000.
The onus on implementing the cuts was passed to local authorities. Council officers were press ganged into administrating the bedroom tax. The benefit helping poor households pay council tax was cut. Toynbee and Walker write, “From April 2013 councils had to devise their own systems, but must exempt pensioners. Support grants were cut by 10 per cent, so councils either passed the cut on to the poorer or subsidised payments out of their depleting resources. The majority pushed the reductions on, but within a year arrears were mounting among the 2.3 million households required to pay council tax for the first time”
Of all the measures introduced by the Conservative-led coalition aimed at reducing the housing benefit bill it is the so-called bedroom tax that will be remembered. Toynbee and Walker write, “The Coalition, prejudiced against social housing, did no research and rushed ahead with a cut in housing benefit for all working-age tenants deemed to have ‘spare’ rooms. The government tried to call it ‘removal of the spare room subsidy’but inevitably it became the bedroom tax. It a class measure, a demonstration of housing inequality, when most ‘spare’ rooms are in homes owned by their occupiers. Half a million households in the UK or one in eight social tenants were affected. Housing benefit was cut by 14 per cent – an average of £12 a week – for one spare room and 25 per cent for two” Such a policy, imposed without any impact assessment gave rise to numerous decisions. One family was charged for the rooms left vacated when their two sons went to fight in Afghanistan. Another family was charged for the empty room after their daughter died. The government rushed to exempt the homes of service personnel and other instances where ‘spare’ rooms were necessary for medical reasons.
So did the medicine work? Less than five per cent of affected claimants downsized in the first year. Two-thirds of those affected were disabled, 220,000 had children and were reluctant to move because of the impact it would have on their education. In many instances, councils had no ‘spare’ smaller flats and instead the only option was to rent more expensive homes in the private sector. Toynbee and Walker commenting on the policy write “nothing stamps the character of the government as clearly as its assault on the welfare state and its campaign to turn public opinion against the needy. Its legacy is a cruel, less civilised country and a hardening of hearts.”
The hardening of hearts was evident in the comments made by Stephen Greenhaigh in an article he wrote for the website Conservative Home about social housing which revealed the thinking behind the proposals contained in his report Principles for Social Housing Reform. They were read out in the House of Commons during a debate on social housing on 5 May 2011 by Labour’s Andy Slaughter. In his article he linked Boris Johnson’s victory in 2008 to the distribution of social housing in the capital. Greenhaigh wrote, “Boris Johnson’s stunning victory in our capital city was largely a suburban revolt. Why is this? The current state and levels of social housing in our inner cities provide part of the answer. All our inner cities have relatively high levels of social housing compared to their suburbs. Today social housing has become welfare housing where both a dependency culture and a culture of entitlement dominate.”
Slaughter added that such comments “should have received more attention from the media, and I wish that they did, but I think there is enough morality in the governing parties for them to go back and look at what they are doing in relation to housing policy and to think again. We are talking about future generations of people in this country who are growing up in conditions that are wholly uncivilised and wholly unworthy of this country”(Karen Buck’s contribution to the debate deserves mention. She said, “We all agree that the problems facing social housing are complex, long term and difficult to resolve. We know that the supply of social housing has been squeezed for decades, principally through the non-replacement of right-to-buy stock during the 1980s and 1990s, but it is a shame that more properties were not built under the Labour government”
How true, when Labour was elected in 1997 it had the opportunity to resolve the crisis of social housing and failed to do so. It failed to put a stop to council house sales which caused the crisis in social housing, it refused to return to local authorities all but a pittance of the receipts from council house sales and tried to offset the remaining council housing stock to housing associations through the stock transfer option.
Toynbee and Walker’s words about a less civilised country fell on deaf ears following the 2015 general election. Housing policy during the years of the coalition was but a precursor of what was to follow. In the first week of October the government published a new housing bill. It was another nail in the coffin of social housing and another attempt to increase home ownership. The latter was to be achieved by allowing housing association tenants the right to buy their homes. Not for the first time the front cover of Inside Housing magazine summed up the situation. Its headline was “low-cost rented accommodation set to decline as government focuses on ownership”. Its editorial explained that “Higher earning private renters will be bumped into home ownership, but this will be at the expense of secure housing for people in the greatest need. The directing of funds towards Starter Homes and away from new homes for affordable rent effectively means this is a problem that more families will be facing in the future”
The housing bill produced numerous responses on the Guardian newspaper Housing Network site. An article, by Colin Wiles, titled “David Cameron is on track to kill off social housing. The sub-headline added that no one who had followed the past five years of Tory policy will be surprised that government wants to scrap the requirement to build affordable homes. The article analyses the subtext to the bill; “To understand Conservative thinking on housing policy, it is worth scrutinising some of the reports produced by their favourite think tank, Policy Exchange. A 2010 report on making housing affordable argued that “social housing increases child poverty, mental health issues and inequality of opportunity and wealth. A 2011 Policy Exchange report on growth in cities called for election 106 agreements to be scrapped altogether.” They were scrapped as part of the proposals announced in the bill. Who is the author of both of these reports, the article asks – a policy geek called Alex Morton who was the director of the Policy Exchange think tank and who now works for David Cameron in Downing Street, as a special adviser on housing and planning.
In its last issue of the year Inside Housing published a four page review of 2015. One of the sections highlighted the people it considered to be the villains of the year. It mentioned the deputy chief executive of the Accord Group, who was jailed for stealing £325,000 from them despite being on a salary of £147,000. He was jailed for three years. The section mentioned one other person – Alex Morton. He was included, it explained, because “Many in the (housing) sector would (also) point to number 10 Downing Street adviser Alex Morton, who has been blamed for allegedly pushing government policies such as the rent cut and selling high-value stock” (Among the reports he wrote whilst he was director of Policy Exchange included one that recommended ending expensive social tenancies.)
On 2 November the Housing Bill was given a second reading. The Secretary of State, Greg Clark, in his speech laid not so much a broad strategy for housing that included a mass housing building programme but merely a justification for the extension of the right to buy to housing associations. The bill, he said, sought to correct a “30-year injustice that council tenants have had the right-to-buy their homes but housing associations tenants have not” Furthermore, the funds to compensate housing associations for their loss will come from the sale of council homes. (Clauses 56 to 72 require the forced sell-off of affordable council homes to fund an extension of the right-to-buy to housing associations homes.) The Bill marked the end of the stream of money from section 106 agreements which will now be diverted to subsidise starter homes for first-time buyers. On this specific point Andy Slaughter rose to state that the common thread running through the Bill is an attack on social housing which will exacerbate the social cleansing the Tories are carrying out in London. In response John Healey, Labour’s housing spokesman, said the fundamental flaw with the Bill and the government’s plans is that they “put all their chips on starter homes and on home ownership” He added, “The Secretary of State devoted most of his speech to home ownership, but that fell each and every year since 2010” John Healey ended his response by saying that “the Bill is driven by the politics of the Conservative Party, not the housing needs of the country. Like the cut to tax credits, this Bill is the Chancellor’s work, with his political fingerprints all over it. Above all, it fails the same low and middle-income working families that the Tories claim they will represent. It will lead to a huge loss of affordable homes to rent and buy, and (will) be a huge let-down to those who believed the Tories election pledges. The Bill will prove to be bad policy and bad politics”
On this particular point Alan Brown, the Scottish National Party’s housing spokesman highlighted the idiocy of the policy by comparing the estimated amount that the right-to-buy discount payments to housing associations, approximately £1012 billion, and the £12 billion the Government is proposing to cut from the welfare budget.
As Clive Betts, chairman of the House of Commons Local Government committee, mentioned that irrespective of the merits or otherwise of the starter homes, the provision will not add a single property to those being built over the course of this Parliament. Over the past decade 250,000 homes have been built as a result of 106 section agreements. Furthermore he highlighted the control the Bill would give the government to micro-manage planning permissions on brownfield sites and local authorities will lose their influence to negotiate infrastructure deals. In the case of major infrastructure projects, it will be possible for housing to be approved with no local consent. The Royal Town Planning Institute has described the increase in the powers of Whitehall in this matter as “extraordinary”.
Finally he pointed out the different views between the effect of the right to buy will have in how many homes will be built. David Orr, chief executive of the National Housing Federation, believes that the right to buy proposals that more homes will be built which is contrary to what the Chartered Institute of Housing have stated. They believe that the sale of affordable homes to fund the extension of the right to buy could mean the loss of 195,000 affordable rented homes in the next five years.
Not surprising the Conservative and Labour candidates for Mayor of London contributed to the debate. Zac Goldsmith supported the Bill but proposed an amendment that would see a net gain of affordable housing in London as a result of the policy to sell off council housing. Sadiq Khan replied by stating that the Bill would damage London’s social mix, accelerating the exodus of poorer people out of the capital. London would lose substantial amounts of affordable family homes and that the city’s low and middle-income families will be squeezed out to fund the sell-off of housing associations homes nationwide. He finished by saying that “This Bill is a missed opportunity. It will not fix London’s housing crisis; in fact it will make it worse. It will not deliver the genuinely affordable homes Londoners need to buy or rent.”
Jim Fitzpatrick quoted from a House of Commons library briefing paper which confirmed what Sadiq Khan mentioned that there was no requirement in the Bill to replacement homes sold under right to buy locally. He quoted also from the briefing given on the Bill by the Local Government Association that the extension of the right to buy should not be funded by forcing councils to sell off their homes. David Lammy in his contribution said that the Bill will see the decimation of social housing. There was no other area of government policy, he said, where Conservatives would support the idea of giving money to those who have and taking it from those who have not – the poor.
Boris Johnson was in support of the extension of right to buy to housing associations – an historical injustice – and also stated that it must be right where possible “to sell off high-value council homes and use the proceeds to fund not just the subsidy (sic) but the construction of new homes” He tried to justify the sell off of social housing by comparing London with other capital cities. He said, “Members might not be aware that London already has a huge stock of social housing, with 33 per cent of homes in the centre of the city social homes of one type or another, compared with only 7 per cent in Manhattan and 17 per cent in Paris. Across the whole of Greater London, the figure is 24 per cent. High-value council homes in London could be sold, with the proceeds used to build more low-cost homes in London” Whatever the intentions of what is being proposed – and in spite of what the Mayor of London has said on the subject about not wanting to see a Kosovo style situation on his watch – the Bill will see the social cleansing of the poor from most of inner London.
Justin Madders, one of the Labour Party’s 2015 general election in-take, said the greatest omission from the Bill is any kind of plan to meet the existing need for social housing. He described the Bill as a “misguided, rushed, contemptible, and ideological, back of a fag packet disgrace” Another of the new intake of Labour MPs is Daniel Zeichner, Cambridge, and who is equally unhappy about the Bill. It was, he said, a Bill promises a bleak future for young people, struggling to find a home of their own, and too often relying on their parents for financial help. He mentioned the impact would have on local authorities. In particular he cited the case of Cambridge city council which spent years working on a long term strategy to put its housing finances on a strong, sustainable footing as well as developing a business plan stretching over three decades. The Bill, and the cut in rents proposed in the Welfare Reform and Work Bill are combining to scupper all that hard work. “Cambridge City council estimates that the Bill will result directly in the loss of a quarter of our housing stock. Far from securing the city’s housing finances, as was planned, the Bill means that the financial projection is for it to go into deficit. That is where the government’s so-called long-term economic plan takes us”
Roberta Blackman-Woods, summarising the Labour Party’s opposition to the Bill, said she feared there would be another five years of failure to add to the previous five years. In 2014, “the Tories built the fewest affordable homes for more than two decades – fewer than 11,000 homes for social rent compared with 33,000 in Labour’s last year in office. Spending on housing benefit has risen by £4.4 billion since 2010, because of ever increasing rents. It is the same old Tory story: a 36 per cent rise in homelessness and a massive rise in rough sleeping” She ended by saying the Bill is “an all-out assault on social housing, a smash and grab on council stock and a power steal from local authorities and councils. The Bill does nothing to address five years of failure; indeed, it does not detail how a single affordable home will be built”
It wasn’t just the progress of the government’s Bill through Parliament that focused MPs minds on housing just before Christmas, the Labour Party a couple of days before the House of Commons shut up shop until the New Year recess chose to have a debate highlighting what it considered the Government’s failure on housing since 2010. John Healey, in moving the debate stated that the government had a shameful record on housing. There had been “rising homelessness, falling home-ownership, escalating rents, deep cuts in investment and the lowest level of house-building since the 1920s” He claimed when he was housing minister in the final year of the previous Labour government, “we got under way the largest council house building programme we had for more than two decades”
The Labour Party, having previously tried to wash their hands of council housing, through its stock transfer policy as well as its disinclination to repeal the right to buy legislation, was left with no alternative than to loosen the restrictions that prevented local authorities from building homes again. (Three times the Labour Party conference had passed resolutions in support of council housing but to no avail.) It was an admission that neither housing associations nor the market could fill the void left by local authorities.
As to why the Labour Party, and in particular Gordon Brown, failed to switch to the internationally agreed accounting rules used in the rest of Europe as regards investment in public enterprises is a mystery. It was a mystery that puzzled John Perry, policy adviser for the Chartered Institute of Housing, as he wrote in the letter in The Guardian in July 2009. “Investment in council housing should not be in the main measure of public debt in the first place. Elsewhere in Europe investment in public enterprises which have a significant income is not counted against general government borrowing. So why won’t the government move over towards European accounting rules, and give itself more freedom to
invest in services where that investment will generate extra income?”
Ironically it took the Governor of the Bank of England Mark Carney in a speech in 2014 to reiterate that markets must be balanced with a social contract based on a “trinity of distributive justice, social equity and intergenerational equity” to achieve a society in which people place their trust. “Capitalism loses its sense of moderation when the belief in the power of the market enters the realm of faith. In the decades prior to the crisis such radicalism came to dominate economic ideas and became a pattern of social behaviour. To counteract this tenancy, individuals and their firms must have a sense of their responsibilities for the broader system. Prosperity requires not just investment in economic capital but investment in social capital.”
Although the debate nominally was about the record of the government for the five years from 2010 John Healey included in his speech the present government’s proposals contained in the July Budget and the autumn statement. He said, “The Housing and Planning Bill strangles the ability and obligation of both private and public sectors to build the affordable homes to rent and to buy that are badly needed. In addition there is an extraordinary forced sell-off of council homes to fund an extension of the right to buy, with no prospect or commitment of one-for-one replacement in the local area” He added that in the very last sitting of the Housing and Planning Bill the government introduced plans to scrap secure tenancies for council tenants. The decision will force council to offer fixed-term tenancies of between two to five years which is something David Cameron proposed in 2010.
John Healey mentioned that the Housing and Planning Bill puts 33 new centralising powers in the hands of the Secretary of State, from directing starter homes to be built instead of affordable to fixing rents for so-called high-income tenants. The powers, he said, “include a legalised annual cash grab from councils, which totally undermines their ability to plan for housing need in their area. The Bill also rips up the contract of localising local finance for housing, which until this point has been the subject of all-party support. Ministers will have sweeping new powers to award “automatic planning permission” – the so-called “permission in principle”. That is not simply a policy for dealing with brownfield sites; it is a power and policy for any site allocated for use in a local plan. There will be no need to apply for full planning permission, no limitations on what sort of development can be built and no planning gain or obligation on developers.”
In response the housing minister Brandon Lewis said that in speaking for more than 32 minutes John Healey made no mention of any measures by the Labour Party to solve the housing crisis. The minister defended the measures proposed against rogue landlords in the Bill, the extension of right to buy to housing associations tenants, the starter homes initiative as well as making the system that helps people to develop their own plans for house building more efficient and faster.
Since the 2015 general election the Labour Party has not only to contend with attacks from the Tories but also from the Scottish National Party. Alan Brown’s speech contained several swipes at Labour’s record on housing. “There is no doubt that the roots of the current housing crisis stem from the Housing Act 1980 – an Act that Labour contemplated introducing before it lost power…. Labour could have invested in a council housing building programme but, like the Tories, in the main chose to leave affordable housing to the markets and to social landlords.
We have heard about the sorry state of affairs whereby the coalition government actually built more council housing in
five years than Labour did in 13 years.On the council housing
theme, I point out that in Scotland the Scottish National Party has now delivered more than 6,000 council houses, which compares to a grand total of six that Labour delivered when it was in power” Alan Brown asked as regards the Housing and Planning Bill what council is going to invest in England in council housing in the future as its stock will be at risk of getting sold off. The same, he said, will apply to housing associations. It effectively privatises housing associations and will lead to social cleansing.
There were a number of notable contributions from backbench Labour MPs, in particular from Karen Buck, Helen Hayes and Theresa Pearce, all representing constituencies in London. Helen Hayes, who sits on the Communities and Local Government committee WAR ON
SOCIAL HOUSINGsaid, “The minister for Housing and Planning came to the committee and could not give any assurances that the numbers underpinning his proposed radical reform of housing policy add up. Next month, will be asked to vote on a set of ideologically driven, uncosted and unproven proposals in the Housing and Planning Bill, which is a pitifully poor response to the biggest housing crisis that this country has faced since the second world war”
It is not only politicians who have been venting their feelings about the Bill. Brian Rye, acting general secretary of UCATT, the construction workers trade union, described the Bill as “dictated by right-wing ideology”. He added the government’s aim is to “strip Britain of all social housing” Stewart Lansley and Joanna Mack writing in their recent book Breadline Britain: the rise of mass poverty agree; “Over the last thirty years, housing policy has been dominated by one overriding aim – to boost levels of homeownership” All political parties, they continue, have signed up to the “ambition of greater home ownership, promoting it in a myriad of ways, from the relaxation of lending rules in the 1980s to the promotion of low-cost homeownership schemes. But while most of those able to jump on board the homeownership drive have been the winners from this strategy, greater reliance on markets has proved increasingly dysfunctional for those left out. Council house sales have greatly outstripped the volume of new building, leaving a greatly depleted social housing stock unable to cope with demand, so that families in need, and the young, have been left increasingly dependent on an underregulated and expensive private rental market. The core failure of the housing system has been one of the key drivers behind the rise in poverty, restricting housing choice, trapping rising numbers in unacceptable housing conditions and putting growing pressure not just on household finances but also on the benefits system”
Peter Hetherington, former editor of the Guardian’s Society section wrote recently in the paper that the government had turned housing policy on its head. “A long-cherished obligation to provide a roof for those on low-income has been abandoned Home ownership is all.” From 2016, as part of George Osborne’s vaunted ‘national crusade’ to build one million private houses build by 2020 English councils will have a legal duty to rush through plans for “starter homes and no obligation whatsoever to deliver affordable and social rented housing” He adds the housing and planning bill is being fast-tracked through Parliament and the full impact of this proposed legislation even alarms those with no political axe to grind. Under the present system developers – section 106 agreements – were legally obliged to provide an element of social housing (cash or some community facility was an alternative) in new housing as a precondition for planning permission. The proposed Housing and Planning Bill removes this requirement. The chancellor is diverting funds to help hundreds of thousands onto the housing ladder through subsidising home ownership at a time when the demand is for affordable rented housing. Unsurprisingly, Hetherington writes, this is being labelled the biggest housing revolution since the 1980s (a week later the housing minister in the House of Commons stated that “we have announced the largest Government house building programme for 40 years” Earlier in the debate John Healey said the minister was prone to a bit of “bullish bluster” Dictionary definition: bluster, to speak boastfully) Hetherington concludes that the government is in denial about the scale of the problem.
It is not just the ‘usual suspects’ who have warned that the one-dimensional blinkered housing policy of the government will run aground upon the rocks and once again sink the economy. (Campbell Tickell consulting – at the heart of housing – in their September briefing has an advert on the back page promoting their services and asks if Perfect Storm
2.0 is on the way?) Again they are not the only people who are warning of the consequences of the government’s direction of travel of a vital sector of the economy. Savills, the property consultants, in their quarterly report for Autumn 2015 put the spotlight on the future of sub-market housing. In its introduction it considers the impact of policy changes. “The Conservative Government has made housing in England a key issue for this parliament. They are particularly intent on reversing the decline in owner occupation seen over the last two decades. To do so the Government is moving ahead with a range of reforms which are focused on increasing the supply of market housing. It remains to be seen how successful this approach will be given the number of outstanding questions
It adds that the policies likely to have a long lasting effect on the sub-market housing sector and the ability to provide enough homes across the spectrum of housing need. In particular the future role of housing associations is clearly up for debate and the Government wants to see them acting more ‘efficiently’, delivering more market and sub-market homes for ownership rather than social or affordable rent. It remains to be seen whether the economy will be able to ride out the impact of a ‘perfect storm’ if it fails to alter course. There can be no doubt that the impact of any crash will mean that the men, women and children below deck in social housing will struggle to survive.
In an analysis of the situation it comes to the conclusion that the housing market ‘needs’ sub-market housing. It states the case thus; “Annual housing need in England for nearly 250,000 new homes and the Government has recently adopted a ‘target’ of 200,000 new homes per annum over the course of the parliament. Even if we were building this number of homes, current pricing means that 70,000 of these households would not be able to access the market unassisted every year. That’s 350.000 households over the term of a parliament.”
This is not the first time that Savills warned about the dangers of a lop-sided housing market. In 2013 in Bridging the Gap in Housing they showed that reduced market turnover and the low levels of new housing supply were preventing 500,000 households per annum from moving onto and up the housing ladder. Transaction levels remained repressed and housing supply continued to fall short of need.
Housing supply was hindered by the erosion of government support for sub-market rented housing and the failure of housing associations to fill the gap for additional sub-market housing. It proved that the analysis by Savills for a healthy submarket was correct. S
Since housing associations are central to the plans of the government to increase home ownership Susan Emmett from Savills sets out a summary of their analysis in an issue of Inside Housing. She writes that the direction of government policy, which focuses so fervently on home ownership to the detriment of other tenures, risks delivering fewer not more homes overall. It will leave a gaping hole (as if hit by an iceberg?) where truly affordable housing used to be. That is because, she explains, discounted Starter Homes will be unaffordable for buyers on average salaries in the majority of London boroughs and areas in the south of England. Our analysis shows that a 20 per cent discount to the average house price makes it possible to borrow enough in just 45 per cent of all local authorities in England. It is not a surprise that she writes that there are still many unanswered questions about the policy. (Her article begins by even questioning whether it’s worth the debt and massive deposit involved to become a home owner. If H M Bateman, whose observations of social gaffes graced the pages of Punch magazine for decades, were alive he would surely have drawn one about ‘The journalist who questioned the sacrifices of becoming a homeowner’.)
There are other matters to be considered about the policy, she adds. “Such a narrow emphasis on building for home ownership disregards one of the basic principles of developing housing for the open market: absorption rates. House builders will only deliver new homes at the speed at which they can sell them. Nobody wants large amounts of unsold stock on their balance sheet” Thus by making Starter Homes the new ‘affordable’ tenure it reduces the pool of other sub-market housing. The government’s approach, Susan Emmett writes, “is diametrically opposed to what we really should be doing to speed up housing delivery: diversifying tenure. You can build twice as fast if half of the homes delivered to the rental or affordable sector and not competing with those for market sale. That’s assuming that the market is moving and sales are being agreed”
Susan Emmett ends by reiterating that what must be remembered is that the property market is cyclical and that demand for homes is driven by economics factors including interest rates, mortgage availability, wage growth, and consumer confidence rather than just housing need. Two disappointing economic indicators just before Christmas will not have helped housing market recovery; firstly, there was the worse than expected borrowing figures and, secondly, growth figures for third quarter of the year were revised down. Following the publication of the economic forecasts Emmett’s final word of caution is timely; it is that developers must bear in mind the risks associated with building for market sale. The same Emmett writes applies to government policy. It remains to be seen whether the government will change course to avoid their plans hitting an unforeseen obstacle. It would seem not from the “bullish bluster” of the housing minister, so far. (The Independent in its editorial 8 December 2015, titled Home Truths, was rather uncomplimentary about Brandon Lewis as well as expressing doubts about the government’s housing policy. “Mr Cameron’s failure to address the balance of supply versus demand in the housing market will leave a lasting black mark against the Conservative legacy. A lack of credible leadership is to blame. There have been four Conservative housing ministers in four years. The current incumbent, Brandon Lewis, has been virtually erased from all public announcements on housing by Mr Osborne, but it reflects poorly on his record that he is so invisible when he is responsible for solving the nation’s most significant domestic problem” It notes also the lack of government funding available for social housing.)
Even a Conservative commentator such as journalist and author Peter Oborne thinks the situation unsatisfactory that it is near nigh impossible to find somewhere affordable to live in London or the South of England unless you are rich because of the greatly overheated market. He writes, “To believe that those of modest means are not entitled to live in the cities, towns, villages, communities that they also serve, to assert that only wealth confers the ‘right’ is indefensible: to believe that it is of no consequence to society when families are separated, communities and neighbourhoods uprooted and destroyed is frankly insane. It is also a betrayal of genuine Conservative values”
Before the Bill goes to the House of Lords it returns to the House of Commons for its third reading on 5 January 2016. There have been more than 150 submissions to the Committee regarding the proposals contained in the Bill. They range from councillors, councils, housing associations, tenants, builders and such bodies as the Council of Mortgage Lenders and the Joseph Rowntree Foundation. They include the group, Architects for Social Housing. In their submission titled, The End of Social Housing, they outline their objection to the Bill. They believe, “The Housing and Planning Bill is one of the most dangerous and far-reaching pieces of legislation (that will be) passed in this country in a long time, yet its true impact has been unreported in the mainstream press and is largely unknown to the general public” It lists the reasons why it finds the Bill so obnoxious. They are, briefly; extending the right to buy to housing associations, oblige local authorities to sell ‘high value’ council housing, pay to stay, class housing estates as brownfield land thus making it easier to obtain and the subsidising of starter homes.
Whether the government will be forced to change course as it did over the tax credits U-turn may well depend upon badly the Bill is savaged, as with the tax credit proposals, when it goes to the House of Lords. Battle plans are well in at an advanced stage and the Lords are battled-hardened from their previous encounter. This particular ‘Dad’s Army’ are ready to show that “they don’t like it up them” to the government once again. Liberal Democrat peers, reports Inside Housing, plan to lineup a not so thin line, numerically speaking, of 102 members in support of any amendment to the Bill. The Labour Party plans several attacks on the Bill with a number of amendments and with the support of crossbench peers should be able to defeat the government on any vote. Furthermore the House of Lords economic committee is currently holding an inquiry into housing and has heard evidence from the economist Kate Barker, who chaired an inquiry a decade ago on housing supply and in 2014 wrote the booklet Housing: Where’s the plan? The committee also heard evidence from Danny Dorling, Oxford University professor and author of All that is Solid: the Great British Housing Disaster.
It says a lot about the priorities of universities and the study of housing that there is now only one degree course in London on housing – quite extraordinary considering the housing situation in the capital – and even that is not about housing policy but housing practice for housing professionals to improve their career prospects. (Likewise politically, housing has been downgraded. In Attlee’s post-war government the housing minister was a member of the cabinet.) Professor Rebecca Tunstall, who was a prodigy of Professor Anne Power at the London School of Economics, left to join the staff of York University, which is one of the last bastions of housing research. Housing is now studied at the LSE only as part of a public policy course. It is also significant that for neither Professor Danny Dorling nor Dame Kate Barker are housing academics. Dame Kate Barker is an economist and Professor Dorling is a social geographer. (A month after the 2015 general election on June 15 the House of Lords held a debate on affordable housing. It was at the instigation of Labour peer Lord (Larry) Whitty. At one and the same time it was an effort to state what policies Labour would have introduced had it won the election along with some helpful suggestions to the Conservative government – let local authorities borrow against their assets – and a request not to proceed with the extension of right to buy to housing associations)
Near the end of Danny Dorling’s book he makes it clear the motivation for writing the book. He writes, “This book has been concerned with why it is that the activity and dignity and freedom of millions of people in Britain, and hundreds of millions of people around the world are at stake because they cannot get secure access to decent housing. Or, to put it more as a politician might, these are people who are not free to be who they could be, to do what they could do, to hold up their heads and live without fear of debt, to live where it would be reasonable to live. These people could be you. They are the majority. In economically unequal countries it is not that poorer or just average people do not work hard enough or try to save enough; it is that we have allowed a few to become too rich, with the result that most of us find it hard to find suitable places to live in at all. Because of actions by the rich -such as buying property for investment purposes and turning 1970s flats back into giant 1920s-style townhouses – housing becomes more and more of a struggle for each successive generation in the UK. People need to stop thinking of decent housing as something that only a few deserve, and realise that it is something we all need. In almost all rich countries we have never had as much housing available as we have now. Never has our financial model for allocating that housing been more obviously wanting than it is now”
Furthermore, he continues, “The way we organise our housing influences many other aspects of our lives, including our preferred way of getting to work and hence how far from work we live. Public transport and other public policies are more easily improved when housing policy is improved. By contrast, the more individualist is the housing policy that a country adopts, the more individualist its transport becomes. More and more people will come to rely on cars to get them to almost any destination and the more people rely on cars, the more segregated each residential neighbourhood becomes. Make renting attractive and affordable; dampen the expectations of speculative gains on buying property, and poorer areas rise in attractiveness, while places that were mainly popular because they were expensive become both less popular and less expensive. Left alone, the market fails to move towards that equilibrium… Think about what else goes wrong when housing goes wrong. How hard is it to recruit teachers in a city where the prices and rents are astronomical?”) Ditto nurses, doctors, bus drivers, public sector workers and restaurant staff.
With the property boom – and bust – very much in mind, Dorling writes, “Housing shows how markets can fail and a failure in this area matters more than in almost any other area of our lives. That is because we need housing every day, all of us, all of the time” (Elsewhere in his book Dorling gives his definitive definition of what housing is. He writes, “Housing is of greater political consequence than most other areas of government policy. It’s as near as most people personally get to what is called the greater economy. Employment comes a close send to housing, but most pensioners, children and many others are not employed, whereas everyone is directly affected by housing, all of the time”)
There is an apocryphal story of a former famous footballer who ordered champagne for himself and his female companion from room service in the hotel he was staying for the night. When it arrived, the waiter asked him ‘where did it all go wrong?’ The same question could be asked of housing in the UK. The answer is not so much that demand has outstripped supply: it goes deep into the prevailing economic ethos of the times and a belief that the rich must be rewarded. It is a question that David Marquand sought to answer in his book Mammons Kingdom. The book, he begins, was born of incredulity. He assumed that after the global and financial crash of 2008 there would be a sea-change in the economic orthodoxy as there had been after the Wall Street Crash of 1929 and the Great Depression of the 1930s. He was wrong. He writes, “Just as the crisis of the previous half-century, the crisis of 2008 and its aftermath tore gaping holes in the intellectual system that had underpinned the assumptions of central bankers, ratings agencies, business schools and professional economists for a generation, and had shaped the politics of international economic institutions such as the World Trade Organisation and the International Monetary Fund. On a deeper level, the crisis exploded the dogmas spawned by that system: that government intervention in the economy does more harm than good, that markets should therefore be left to regulate themselves, that rewards reflect productivity, that, since ‘rising tide lifts all boats’, the forces that make the super-rich richer also benefit the poor, that the information available to buyers and sellers in the market place is symmetrical, that the choices made by unfettered economic agents are rational and that the booms and busts which had been capitalism most obvious hallmark were no more” He was to be disappointed. The hunt for a new politico-economic paradigm to replace the current one never took place. He searched in vain for a modern day Roosevelt who called upon his fellow Americans to ‘drive the money changers from the temple’, instead the years since the crash has been a search for a cleaned-up version of business as usual. Marquand believes that, like a psychoanalyst, in order to resolve the problem it is necessary to dig deep into the buried riches of British history and culture. Cultural changes did far more than technological or economic ones to topple the elites of the post-war era and herald the neo-liberal mindset.
Will Hutton is one of the people whom David Marquand singles out as having tried since the 1980s to provide a narrative to replace the neo-liberal ascendency of the past thirty years. Will Hutton is nothing if not a trier. Will Hutton over the past thirty years has tried through books such as The State We’re In to have politicians, in particular Tony Blair after the 1997 general election, adopt his ideas for a very different economy and society. In his latest book, a sequel to his earlier book, How Good Can We Be, he writes “New Labour’s landslide victory was my generation’s chance. The electorate wanted a government that would address the obvious deficiencies of Thatcherism by providing a more just economy and society with less inequality and les outright poverty, underpinned by renewed, improved and responsive public services”
Will Hutton also was to be disappointed. What the electorate got was a continuation of the Thatcherite settlement. Blair baulked at almost all the substantive reforms that Will Hutton advocated in his book. In his latest book he writes, “Before the 1997 election Blair and his immediate circle were mildly sympathetic to the thrust of the arguments in The State We’re In. But the left of his party told him they had not come into politics to create stakeholder capitalism; Gordon Brown and Peter Mandelson meanwhile, already bitterly at odds, were united in their belief that the agenda would be portrayed as anti-business and corporatist and that Labour could not risk derailing what promised to be a successful election campaign by allowing its policies to be seen to be overtly influenced by one ‘left-wing’ writer/writer/intellectual.”
New Labour “Did not want to portray itself as a great reforming government, improving the lot of ordinary people as part of a wider challenge to the deformed institutions of contemporary British capitalism. It preferred to do what it could under the radar and not frighten the horses. After all, the economy seemed to be working as free market theory said it would. Reform required political bravery, a willingness to take on powerful vested interests, convictions that they needed reform and a readiness to risk being called anti-business. New Labour had no appetite for any of that.”
Hutton writes, looking back on the warnings about the impact of marketisation society and the shredding of the social contract now seem self-evident. The sale of council houses has a few rivals as a self-defeating policy. “The sale of council houses without replacing them would lead to cherry-picking of the best properties, leaving behind concentrations of the disadvantaged into ghettos of the worst, rising long-term homelessness and an explosive rise in the housing benefit bill as ever more tenants were forced to rent privately (at increasingly extortionate rents), so that more of Britain’s population receive cash allowances to pay their rents than any other (country) in the OECD.”
The announcement that the Conservative government’s proposal to extend the right to buy to housing associations tenants came after Will Hutton’s book was published. Although he is no longer editor of the Observer, Will Hutton still writes a column for the newspaper. On 20 October 2015 he wrote about the government’s decision to do so. The headline to his article made it clear what he thought of the decision: The broadening of right to buy will inevitably worsen the housing crisis if housing associations are forced to sell to tenants as the impact on the market will be catastrophic.
The British housing market is crazy, perhaps the craziest in the world, he begins. Hutton explains why; “Would-be homeowners, with minimal deposit, now need to earn more than £100,000 a year to buy an average house in much of London and the southeast. Yet prices are still rising.” The rest have to rent but even that has risen by 10 per cent from the previous year. Hence social housing has never been more important. What the government is proposing is a ‘double whammy’ for social housing. To compensate housing associations for the sale of their stock, local authorities will have to, by law, sell off vacant ‘high value’ stock. Hutton believes that offering huge bungs to sitting tenants of both council and housing associations is perverse.
Danny Dorling believes that vested interests in British housing are currently stoking up the embers of the last crash to create a new crisis. Who are the ‘vested interests’? Why they are none other than the pantomime villains – the banks. Let Will Hutton explain; “Everything has its roots in unaffordable property prices. As Adair Turner, former chair of the Financial Services Authority, argues in his remarkable new book Between Debt and the Devil, banks in every country are diverting an ever higher share of their loans to real estate. That amounts to now 60 per cent of all lending across 17 countries, (as shown by recent research by three economists about the banking system in these countries) doubling over the last 50 years. It is real estate that is the principle cause of the increase in private sector debt, rising in the UK from 50 per cent of GDP in 1960 to 170 per cent today -a much more concerning figure than public debt (Ann Pettifor, the economist, highlighted the dangers of First World debt some years ago). Individual banks like lending against real estate: it is such good collateral that they rarely lose money, so they – and their regulators – judge that they can allocate less of their capital to underwrite any risk, making it especially profitable. The more they lend, the higher the price and the more secure the collateral.”
The snag, Turner says, is that it interacts with the capacity of today’s banks to create money. As they are obliged, even under the Basel agreements, to hold such tiny reserves of their own capital, modern banking has become a debt creation monster – churning out mortgages and naturally inflating real estate prices because real estate is in fixed supply, as Mark Twain remarked. Although this is a global phenomenon it is particularly acute in densely populated Britain with tight planning laws and property largely untaxed. British banks have become an acute exemplar of a global trend, directing as much as 85 per cent of all their lending to real estate and thus driving property prices to incredible heights.
To change this situation, Britain will need to tax property more, relax planning laws build more housing and above all control the debt process monster. This would have the effect of unwinding the spiralling house prices rise and lessen the prospect of another financial crash and at the same time avoid the devastating impact it would have on millions of people who have a mortgage millstone around their neck. Hutton believes it would also make “conservative politicians” feel less inclined to pillage social housing for opportunities for home ownership because the whole structure would work better. (Hutton also believes that the Labour Party can learn the lesson of its defeat and make a comeback in 2020)
The situation is not going to change in the foreseeable future, writes Hutton, “Prices will carry on rising. Already people in their early 30s owe twice as much debt as their parents, the next cohort of 30-year-olds will owe even more – facing the prospect of servicing a mortgage until they die. Ultimately, there will simply be too much debt in relation to income, and like any Ponzi scheme, the whole edifice will unravel – generating yet another banking crisis while real estate prices fall back, but not before an epidemic of housing distress.”
Will Hutton ends his article by lamenting that it is a commentary on our times that what he calls ‘mainstream Labour’ when in power and right to the 2015 general election did not have the courage to state the bleeding obvious when it came to housing. National debate, the Labour Party and the country are the poorer as a consequence. It is to Will Hutton’s credit and perseverance to point out again, to coin a phrase the state we’re in. As Private Fraser from Dad’s Army might have said ‘we’re all doomed’, unless there is a wholesale structural and democratic overhaul of the state.
The credit for putting into context what the government is proposing to do belongs to Will Hutton. He writes, “The great intellectuals of the Enlightenment movement proposed that if society was to transcend theocracy, anarchy or despotism, then it had to be underwritten by such a social contract embodying notions of social justice. To organise society as an individualistic war in which each person was pitted against another was barbaric, while other models, slavishly following the rules of one religion or one supreme leader, denied freedom” By raising the pursuit of home ownership above all other models of tenures in the Housing and Planning Bill the Conservative Party has, in its own barbaric way, pitted one person against another person. The Conservative government has declared war on social housing.