Category Archives: EDITORIAL

EDITORIAL – A DISGRACE AND AN EMBARRASSMENT

The way London is governed at a strategic level is a disgrace and an embarrassment. For the people who live in the ‘greatest city in the world’ (copyright S.Khan) to be governed in such an infantile way is an insult to democracy. London provides more than Scotland in revenue to the Treasury and in return the capital receives crumbs. America was lost because the colonies epitomised their plight with the slogan ‘no taxation without representation’. London has a better case for financial independence than Scotland yet still has to go Oliver Twist-like to the Treasury to have some more of its money back. As it is London is allowed to keep just seven per cent of the revenue it raises compared to half in New York and 70 per cent in Tokyo. Strangely the devolution of more financial powers to the capital failed to catch fire during the mayoral campaign. (In the eleventh century William the Conqueror confirmed the city’s independence and self-government)

The elections in May to become Mayor of London and the London Assembly were dominated by less all conquering figures. The Financial Times in an editorial, 23 April, was less than impressed with the leading candidates for mayor. “Staring at the voters of Europe’s largest city are two Lilliputian choices for mayor. The Conservative Zac Goldsmith and the Labour party’s Sadiq Khan have had many months to show they are equal to London. They have failed. It is hard to associate either man with a big policy idea or a definitive achievement in their careers. Sure enough, their plans for this city of global importance are woefully inadequate when they are at all discernible” They are described as a miserable brace of candidates for a position that has weak executive powers by global standards. (The same summary could be made of the latest intake of members elected to the London Assembly. They have failed to impress since they were elected.)

London has less self-governing powers since the London County Council was first established in 1889. By the time it came to celebrate its fifty years in existence in 1939 it had built itself a reputation unsurpassed in local government. W. Eric Jackson in his short history of the London County Council titled Achievement writes, “With its range of important functions, its great achievements, its immense equipment in buildings and installations, its recognition in the eyes of London and of the world, and with its influence in the development of the life, work and public services of the capital, the Council felt satisfied that it had in a great measure justified the hope and enthusiasm which had impelled its creation” Its range of responsibilities was to be enlarged during and after the Second World War until it was replaced by the Greater London Council in 1965.

It was not only the range of the GLC’s powers extended but the area over which it had responsibility was enlarged. Its demise in 1986 came not as a result of the extension of its powers geographically but because the Prime Minister at the time believed that the leader of the Greater London Council was using his role to extend his own powers beyond his remit. Thus in 2000 the powers of the new body were limited. Despite this being the case Ken Livingstone once again tried to increase the powers of Mayor. He succeeded in having some powers over housing returned to the capital if not the powers to finance a new building programme. It was his successor that reaped the benefit.

Housing was the big issue of the campaign yet the two main contenders failed to attend the two housing hustings that were held during the campaign. What was also inexplicable was the failure of the Evening Standard to connect its campaign, begun the previous September, on Angell Town council estate in Peckham with the state of housing in the capital, not just council estates, during the election campaign. Also during the months before the May elections the Evening Standard failed to highlight the devastating effects the Housing and Planning Bill – the worst piece of legislation to come before Parliament in many a year – would have on London 3,500 council estates. It will have a second chance to redeem itself next year when the government introduces a new Housing Bill with the promise of ‘radical’ housing ‘reforms’ that will have no doubt an equally disruptive impact, if unopposed.

It was only in November 2016 when some ‘star’ architect proposed that London should be socially cleansed of people whom he considered worthy to mix with people who bought the homes he designed that the Evening Standard found its voice. The ‘star’ architect seemed to have had a ‘brain fade’ and forgotten that it is people whom he considered not worthy to live within the city boundaries who service such buildings and do the jobs that keep the city moving, clean and fed. As it stated in its editorial, “It is wrong to categorise those occupying social housing as free-riders. The vast majority work, often in vital jobs that keep this city running. Affordable housing is similarly essential” (TMcG is a council tenant) It concludes that “central London filled only with the rich would not only be a depressing prospect but one which would make it unviable” Readers will be able to see when the new housing bill is announced whether its word is its bond. (A special mention for Inside Housing magazine, the mouthpiece of the National Housing Federation; its coverage of housing over the past year from the perspective other than housing associations, has been pathetic. Was that why the executive editor left?)

It will be not for any policy differences between candidates that the Mayoral contest will be remembered but the Tory campaign that was “vicious, dirty and personal”. That is how Evening Standard columnist Rosamund Unwin described the campaign. Peter Oborne, political columnist and life-long Tory, described Goldsmith’s campaign as the most repulsive he had experienced. Goldsmith’s denunciation of Sadiq Khan in a Sunday newspaper days before the election in terms that prophesied the end of London as we know it, if his Labour opponent was elected were pitiful from someone who was seen previously as a green compassionate Conservative. It too was a disgrace and an embarrassment.
Terry McGrenera

PS The weekend after the election I went shopping and the girl at the checkout asked me why I looked so glum. I told her about the election and how I had come last in the list of candidates and that I was beaten even by the Animal Welfare Party. I voted for them, she said. I said nothing. There I was thinking the election was about such matters as housing.

IF PROOF WERE NEEDED

The Housing Times Issue 2

If proof were needed by anyone of the impact that the Housing and Planning Bill will have upon people struggling to keep a roof over their heads they would have been left in no doubt had they attended the packed meetings held at Islington and Camden town halls in February as part of the campaign to inform, organise and preventing the proposals ever receiving the Royal Assent. In particular the proposals requiring registered providers, including both housing associations and local authorities to charge higher rents (at market rate, or a proportion of market rates) for those tenants who had a higher income, a policy known as “pay to stay”. The summer budget of 2015 defined high income as £40,000 in London. For one couple at the meeting in Islington this would mean their rent rising from £140 to over £600 a week. They are one of many people in the same situation. Whilst forcing people to pay more to live in their homes the government is introducing a twenty per cent discount to first-time buyers who are under the age of 40.

The House of Commons Communities and Local Government Select Committee in its report on the government’s plans to extend the right to buy to housing associations was critical of the proposal that placed a new legal duty on councils to guarantee the provision of 200,000 ‘Starter Homes’ on new development sites. The proposal was announced by the Prime Minister in his 2015 conference speech. He told his audience that, ‘Starter Homes’ would be counted as ‘affordable housing’ for planning purposes including section 106 agreements, previously one of the main means whereby ‘affordable housing’ was provided. The report states that “Starter Homes will instead only allow people who could afford to buy anyway to purchase a more expensive home. Given that the discount will only last for five years, Starter Homes would likely be an extremely attractive investment for prospective buyers with an almost guaranteed profit if sold after five years”

To emphasise the committee’s concern at the proposal, their report states – in bold print – that the proposal should not lead to fewer ‘truly’ affordable homes to rent build but “There is a finite amount of money available from developers to deliver affordable housing, and the duty placed on councils is likely to mean that building Starter Homes could be prioritised over other types of affordable housing. Local authorities will be under pressure to satisfy their legal obligations, and this could make negotiations with developers extremely difficult and could undermine Local Plans.”It ends by saying that Starter Homes should not be built ahead of other forms of tenure where the need exists and that it is vital that homes for affordable rent are built to reflect local needs and circumstances.

The report also commented on the impact that not only the measures contained in the Housing Bill but also the July 2015 Budget and November Spending Review would have on the plans of housing associations to build more homes. In the 2015 summer Budget it was announced that all rents in social housing would be reduced by one per cent for four years, with housing associations and local authorities expected to meet the shortfall in income through more efficient use of their grant funding. The announcement came shortly after the start of a ten-year rent settlement, and caused concern significant concern to housing associations. The reduction in rent income for housing associations will curtail their ability to build more homes. The abandonment of the ten year agreement has created also significant uncertainly among the financial sector that ultimately fund their development plans.

George Osborne was obviously irked by the £2.4 billion profit made by housing associations in 2014 and of the salaries of some of its chief executives. He decided therefore that housing associations should share the burden that other sectors of society were experiencing. The Select Committee report fears that the first consequence of the rent cut will be reduction of non-statutory services. It cites the survey of housing association chief executives conducted by Inside Housing which found that 72 percent of housing associations who responded were likely to consider cutting back or scrapping non-core activities as a result of the rent cut. (No mention was made whether their salaries would be cut back.)

One of the reports mentioned in the House of Commons Select Committee report was the study by the Cambridge Centre for Housing and Planning Research on understanding the likely poverty impacts of the extension of the right to buy on housing association tenants from the forced sale of higher value local authority homes. The Joseph Rowntree Foundation commissioned the study to explore the implications of the two stands of the Bill over the first five years after it became operational. Without doubt the most significant sentence in the report is the one that states that the research did not consider whether the homes sold could be replaced but what would be the tenure of the homes that they replaced.

The report considered three different sets of situations. The first situation is where homes are replaced and let at the same rent levels, the second where the replacement stock was let at affordable rent levels. (The third situation is where new homes are built for sale as shared ownership.) In the first instance the report found that there would be a positive impact on poverty levels. With the higher rents in the second situation, poverty levels would be expected to increase.

All the plans of the government are resting on the funds from the sale of high-value council homes – the brood mares that the government hopes will produce the funds which will make all the other outcomes possible. Suffice it to say, a heavy burden has been placed on their backs. The report notes that the impact of the sale of council homes will present enormous challenges to local authorities who already face difficulties in meeting housing need and that a dramatic reduction in lettings through selling off high-value homes is likely to cause severe difficulties. The report concludes that in the longer term subsidy for right to buy discounts cannot be found solely from selling off council homes without a continual stretching of the definition of high value, meaning that local authorities may be forced to sell increasing numbers of lower valued homes of its housing stock. If people were in any doubt that the Conservative government has declared war on social housing, the Housing and Planning Bill provides the proof, if proof were needed.

Terry McGrenera

COSY CARTELS AND COURTESY

Issue 3 The Housing Times

“(Tax) policy is determined through committees and consultation processes in which the tax avoidance industry’s repre-sentatives dominate, before being nodded through by parliament without proper scrutiny. This cosy cartel urgently needs dismantling. Taxation needs to be reclaimed from the vested interests by public and parliament.”

The Great Tax Robbery by Richards Brooks

Following George Osborne’s first spending review in October 2010 a group of guys met in the Nag’s Head pub in Islington for a drink, and being Islington; they discussed the impact of the measures he had announced. The review planned to cut half a million public sector jobs and £7 billion from the welfare budget to pay for a crisis that was not of their making. A few weeks earlier Vodafone, the mobile phone company, settlement with the Inland Revenue was announced. The reason why their tax bill hit the headlines was because the offshore tax avoidance scheme it used to vastly reduce the amount of tax they paid to the government. Later that evening, “when we were all a bit tipsy”, recalled one of the group that they decided to target a Vodafone store. To attract other like minded people they chose the hash tag ‘UK Uncut’ on Twitter to announce their formation. The following week seventy people gathered at Vodafone’s Oxford Street store to highlight the inequity of the company’s tax settlement. On the following Saturday thirty Vodafone stores had to close their doors after being targeted. The group cannot have imagined that their boozy night in a pub about how unfair it was that half a million people were to lose their jobs in order to reduce the debt left by the 2008 crash was to raise questions about the body responsible for collecting the revenue to reduce the debt as well as revealing that it was actively colluding with companies like Vodafone to make that job harder.

Further enquiries were to reveal that Britain’s third biggest company had reached an agreement with the Her Majesty’s Revenue and Customs which saved the company several billion pounds over the previous decade but which potentially fell foul of British anti-tax avoidance laws. The investment bank Goldman Sachs was another high profile company, where bonuses in billions are annually shared among employees, which had reached a deal with the HMRC in settlement of a tax demand. To avoid paying millions of pounds in national insurance contributions the bonuses the bank had a scheme whereby they were paid by way of an offshore offshoot of the company. As part of the settlement reached with the HMRC the company was “excused” interest charges of around the same amount it tried to avoid – £20 million.

In December 2011 the public accounts committee published what it called a “damming indictment of HMRC and the ways its senior officials handle tax disputes with large corporations.” The report concluded “The department (HMRC) is not being even-handed in its treatment of taxpayers.” Richard Brooks in his book published the findings of a report – Being Bold, a radical approach to raising revenue and defeating the deficit, complied by the Association of Revenue Customs Officers in September 2010 which showed the imbalance in prosecutions for benefit fraud compared to fiddling your income tax return. Brooks writes there is plenty of prejudice behind the imbalance; the poor make easier targets than the rich.

A report from the Organisation for Economic Cooperation and Development on the causes of the greatest financial crisis since the 1930s listed several “tax policies as exacerbating factors” as responsible for the crash of 2008.Despite the crash that nearly collapsed the world economy, governments are still giving what Brooks calls “tax advantages to economy swamping levels of debt and bankers’ bonuses based on illusory profits that conceal sometimes cataclysmic risks. What’s more, they are being sharpened by the British government.”

Richard Brooks writes that the tax avoidance issue is a political one. Something that Gordon Brown recognised when he became Chancellor. In July 1997 he said that the government would be “committed to the proper funding of public services will not tolerate the avoidance of taxation and will be relentless in its war against tax avoidance.” Brooks comments that over time observers learned that such language merely to be an example of the usual Brown bluster. He concludes that over the last few years the British government has ripped the guts out of laws that protect the country’s corporate tax base. In doing so it has turned Britain into a corporate tax haven, inviting multinationals to shelter income offshore and encouraging them to place real business overseas. In doing so Britain has become a more unequal and meaner place to live. In recent years there have been many examples of cosy cartels between vested interests and publicly accountable bodies. Perhaps the most insidious, infamous and indefensible was the one that existed between the Metropolitan Police and Murdoch newspapers. The police also failed to live up to the standards that are expected of them in numerous cases involving vulnerable children.

Standards of courtesy also seemed to have dropped in recent years. Following the publication of the first issue of the Housing Times I sent copies to a number of newspapers and television networks. Since it was the first issue I enclosed t-shirts and mugs with the front page headline emblazoned upon them. Suffice it to say that the response has been somewhat similar to that of the parable the Good Samaritan. The editor of the Evening Standard, its chief leader writer and City Hall reporter were all given copies, mugs and t-shirts. None responded. Same outcome as regards the BBC’s Politics Programme and the BBC London’s political editor. I am still waiting for an acknowledgement from the chief executive of the Chartered Institute of Housing (now received). I left a copy and t-shirt for the editor of the Observer with the guys in the post room at the Guardian’s offices. The editor of the Morning Star is in receipt of a copy and t-shirt. It was pas de response from Paul Mason, now ex-economics editor at Channel Four. It was the same from the editor of Guardian Housing Network, Jane Dudman.

Honourable mentions go to Danny Dorling, Becky Tunstall and Anna Clarke from academia. Martin Wolf replied by email as did Susan Emmett from Savills. As in the parable of the Good Samaritan there was only one person who had the courtesy to call and thank me in person – Helen Lewis, deputy editor of the New Statesman. Now about that write-up….

Terry McGrenera