GETTING INSIDE HOUSING
THE HOMES FOR BRITAIN RALLY ON ST.PATRICK’S DAY ORGANISED BY THE NATIONAL HOUSING FEDERATION, THE BODY THAT REPRESENTS HOUSING ASSOCIAITONS, IS NOT ABOUT HIGHLIGHTING THE HOUSING CRISIS BUT A PRE-ELECTION PUBLICITY STUNT TO PROMOTE HOUSING ASSOCIATIONS
This year, as in previous years, in the weeks before the annual Budget statement by the Chancellor of the Exchequer, George Osborne, many organisations make representations to him on behalf of their industries and interests in order that he looks kindly upon them, particularly since the downturn in the economy. This year’s budget will be the last before the general election in May. The National Housing Federation, the organisation that represents housing associations, is organising a “huge” rally the day before the budget not to seek any financial reward or leniency from the Chancellor of the Exchequer. The rally is the climax of the campaign organised by the National Housing Federation (NHF) to highlight, supposedly, the housing crisis. That is not the case. There is an alternative motive to the rally. It is intended to be a show of strength to the government that, as a letter in The Times, 7 February, written by the chief executive of the National Housing Federation David Orr, and signed by other people such as the chief executive of the Chartered Institute of Housing, Grainia Long, to say to the government that they were “ready to play our part but need the next government to meet us halfway by providing real leadership and a commitment to solve the issue.” The letter is a little coy as to what is meant by real leadership. Although they don’t say what they want, it is to fill the void left by the local authorities as the main provider of social housing.
Their chances of doing so were boosted by the terms of reference of the Elphicke-House review into the role of local authorities in housing supply which made it clear that the review must not produce any recommendations that breached the government’s fiscal consolidation plans or require changes to the government’s national accounting framework. It meant that the limit on local authority borrowing would remain in place. Boosted also by the key recommendation of the Elphicke-House review that the role of local authorities was to change from being a statutory housing provider to one of being merely a housing delivery enabler represents an opportunity for the NHF to take their place. Finally the NHF hopes to benefit from the decision by the government to release public sector land to build 100,000 homes by March 2015. Whether the use of the word “huge” by the NHF is appropriate to describe the rally they have organised for St Patrick’s Day remains to be seen. Westminster Central Hall has been booked to hold the multitude. Its capacity isn’t huge; it is 2,200.
George Osborne made his intentions for social housing clear in his Comprehensible Spending Review in the autumn of 2010. There was to be no new direct grant for social housing. The decision was described by the Inside Housing reporter Carl Brown as heralding its slow death as a form of tenure. The magazine’s editorial said it was a bleak week for social housing. “Above all, it was a bleak week for tens of thousands of England’s poorest who the coalition government has effectively abandoned.” He added the hundreds of thousands of homes built in the post war decades formed the backbone of the welfare state. He ended by saying that the packages of measures in the spending review mean the end of social housing as part of the welfare.
George Osborne in the 2013 Autumn statement announced a review of the role of local authorities as regards housing supply. Its purpose was to consider the role that councils can play going forward in helping to meet the housing needs of their local population, within the context of the need to ensure good value for money and fiscal discipline. In January 2014 the two people who were to conduct the review were announced. They were Natalie Elphicke and Keith House. Natalie Elphicke, a housing finance lawyer who chairs the housing working party of the think tank established by Iain Duncan Smith called the Centre for Social Justice. In 2010 she wrote a report for the think tan Policy Exchange called Housing People; Housing Finance which called for housing associations to be allowed to raise equity finance in order to build social housing without grant. In 2014 she co-authored with Calum Mercer, former finance director Circle Housing Association, a report titled Million Homes, Million Lives: A Better Deal for Nation Rent. Natalie Elphicke is a former director of the Conservative Policy Forum and is the wife of Charles Elphicke, Conservative MP for Dover. Keith House is the Liberal Democrat leader of Eastleigh council in Hampshire and a former vice-chair of the Local Government Association. In 2012 when he was vice-chair of the LGA he wrote to the government stating that councils were “desperate” to do more to help solve the housing crisis and called for the government to help by “arming councils with greater freedom and financial flexibilities.” So it is rather ironic that he was appointed to a review did not include lifting the limit on local authority as part of its remit.
Whilst the choice of Elphicke and House might not have been to everyone’s liking it was the limitations placed on their remit by the government that riled some people. “The review”, the terms of reference stated, “must not produce any recommendations that breach the government’s fiscal consolidation plans or require changes to the government’s national accounting network.” The reason given for limiting the scope of the review was that the government wanted to support stability in the local government housing sector.
Elphicke and House in the foreword to the review write that the roles and responsibilities of councils have been transformed by the Localism Act 2011 and the self-financing settlement for council homes. It was for this reason that the review was established. As a result of the new context in which councils must function the review wanted to see “if more could be done by councils to boost house building and to create strong and sustainable communities.” In addition whether “what extra steps, measures and reforms could be taken forward to enable councils to boost the building of new homes, to support growth and prosperity for the communities they serve.”
Besides trying to see what more councils could do to support housing supply by making maximum use of their existing asset base to support new development through asset sales the review wanted to see how data on local authority Housing Revenue Account assets, including housing and land could be made more transparent in line with the government’s recent Transparency Code measures.
Sometimes the recommendations by reviews or reports commissioned by government, especially into contentious matters, are muffled or resemble clues for a cryptic crossword. That is not the case with Elphicke and House’s review although they write rather glowingly of how the very best councils can shape a vision for the communities they serve and well as being dynamic, original and in making that vision happen. They write, “Our review was established in the context of the new roles and opportunities for councils. We believe that councils could achieve much more by taking a more central role in providing new homes. Our key recommendation is that councils change: from being statutory providers to being Housing Delivery Enablers. Councils have a primary rope in setting out a vision for the development of their areas. They can be active in creating housing opportunity. Councils can be proactive in identifying housing need, growth and opportunity. They can work closely with businesses and other partners to share ideas and experience – and actively use their assets and knowledge to unlock housing opportunities and deliver more homes, to build strong and sustainable communities.” Local authorities were to be treated like brood mares.
To achieve such objectives they believe partnerships are important and point out that the overwhelming majority of councils are already working in housing associations. They add, seeing and hearing first-hand accounts of what many councils can and do achieve has been inspiring. Considering the role that local authorities played during the twentieth century and the powers at its disposal a generation ago the language used by Elphicke and House must be demeaning and insulting to anyone from that era. Their capacities to borrow to build homes having been restricted local authorities are being forced to dispose of land for nominal amounts in order to accelerate development. Furthermore, the review recommends the establishment of development panels to speed up the construction and development of homes on public land. Elphicke and House write, “Delivery Panel Partners can provide a framework panel of prequalified housing developers, and are available to a wide range of public bodies that may own land that they wish to dispose for housing.”
The review also looked at the disposal of larger areas of public land that could be disposed. It has been estimated, the review states, that central and local government owns £370 billion worth of land and property and that the government is taking action to release to release its vacant or disused land. The coalition government aims to release public sector land with capacity to deliver 100,000 homes by March 2015. The Homes and Communities Agency will be the government’s land disposal agency. Devolved power to the Greater London Authority, or more to the point the Mayor, will perform the same function in London. Elphicke and House recommend that a Housing and Finance Institute should be established to promote and support the sharing of ideas and drive innovation in housing finance.
The evolution of the key recommendation of the Elphicke-House can be traced to a policy paper on housing written by Natalie Elphicke for the Policy Exchange think tank in 2010. As regards local authorities she writes it has been suggested that local authorities could have a larger role to play in housing delivery. “However, the scope for significant development being financed and delivered by them will be restricted by the national requirements to significantly and quickly reduce public sector borrowing. The government is committed to reducing the total public net borrowing from £154.7 billion to £20 billion by 2016 and to reducing revenue spending by 25 per cent. Borrowing undertaken by local authorities is included within the calculation of the public net borrowing.” Natalie Elphicke writes that small scale house building programmes may be delivered, such as converting garages, by the reform of the Housing Revenue Account but “it seems unlikely that local authorities will be able to secure significant funds to assist with large scale developments, although they may be able to stimulate activity by deferring consideration for land which they own, or by taking part in joint ventures with other parties.” (It is a view not shared by Grainia Long, the departing chief executive of the Chartered Institute of Housing in an article in July 2014 for Inside Housing. She reminded readers that “In 1968, at the height of England’s house building efforts, 40 per cent of all homes were built by councils. Whenever output by the private sector has been high, councils’ contributions have been high too, and they have been working in partnership. While models of housing supply have change, there is now widespread recognition that the necessary levels of house building will not be achieved unless local authorities are fully engaged and contributing.” At the time of Grania Long’s article the Elphicke-House review was taking contributions from many organisations, councils and others and there can be no doubt what she wrote cannot have escaped their notice.)
It cannot have escaped anybody’s notice that since the government announced that it intended to release surplus public land for housing in June 2011 by the housing minister Grant Shapps and its progress report a year later housing associations as well as commercial developers have eyed the prospect of sharing the spoils. (It set up also an advisory group led by Tony Pidgley, chairman of the Berkeley Group to provide commercial expertise. Berkeley Homes were responsible for the One Tower Bridge skyscraper. Its next big project is to redevelop the demolished Ferrier council estate in Kidbrooke. They plan to build more than 4,000 homes and a 31 storey tower block).
Savills the property specialists in their Autumn 2014 report estimated that public land could deliver as many as two million new homes based on their analysis of public records of the central government estate in England and the land holdings of the Greater London Authority. One of the biggest landowners in the United Kingdom is the National Health Service with total assets valued at more than £31 billion. Hitherto the NHS followed well established ways of disposing of land which include selling on the open market but the Department of health to encourage the process set up the £100 million Growth and Efficient Fund to incentivise and support NHS organisations to make savings by releasing land for housing by 31 March 2015. In the chancellor’s Autumn statement in December 2014, the government increased its ambition for public sector land, confirming its aims to release land with the capacity for up to 150,000 homes between 20105 and 2020.
The NHF in a pamphlet titled Surplus NHS land; a best value alternative sets out its case. It states, “This policy paper sets out the alternatives to the NHS’s traditional and well-established approach to disposing of land, which usually involves selling it at market price. Working with housing associations, this new approach would offer an ongoing revenue stream from the NHS estate through the development of affordable housing, rather than a one-off capital gain, achieving even greater financial returns over the medium to long-term. By working in partnership with housing association, the NHS could use the profits from its estate to cross-subsidise the building of high quality supported housing schemes for patients recovering from mental health problems.”
The policy paper goes on to argue for an alternative definition of best value. Too often best value is interpreted as achieving the maximum upfront price for land. It argues, “The Federation believes that best value should be quantified in terms of wider social, economic and environmental value, not simply price, and has been urging government to broaden the definition of best value along these lines.”(Another NHF publication called Making creative use of NHS estate makes the same case and it is obvious they are singing from the same hymn sheet by the use of the same language on occasions – ‘there are well established ways in which the NHS disposes of land’ and ‘the NHS has well established ways of disposing of surplus land’).It is worth mentioning that housing associations have land banks with a value in excess of £1.3 billion and collectively recorded a surplus of £1.9 billion in 2013. This was despite the introduction to an article in June 2014 in Inside Housing reviewing the sector’s performance as “a bit plodding” in 2013.
By way of explanation the article quoted Richard Hill, at the time chief executive of the Homes and Community Agency, saying that the huge drop in house building numbers of recent years was down to a change in schemes from the old grant funding to the 2011 to 2015 affordable homes scheme. He added that from next year that there will be more reason to be optimistic. David Orr, chief executive of the National Housing Federation, outlining his vision of the future in 2003 in the foreword to a pamphlet called An Ambition to Deliver: Housing Associations Unbounded published in 2014 reflected this feeling. He writes, “We are optimistic about the future and looking forward to embracing the opportunities and challenges ahead.” By 2033 he sees housing associations owning and managing more than double the number of homes we do currently, setting our own rent, deciding who lives in our homes and selling a greater number of homes too.
Why is David Orr optimistic? There are only above 100,000 new homes being built a year when in excess of double that number are needed and the number of council homes has fallen by 250,000. Government capital investment in affordable housing fell by 63 per cent in 2010 whilst the people on housing waiting lists have doubled in the last decade. As to how housing associations will achieve their ambition to deliver David Orr is just as coy as in his letter, 7 February, in The Times. He believes it can be done by stretching government investment (sic) and unlocking under-used capacity in new innovative ways.
Exploring new and innovative ways of accessing finance for housing associations was the subject of Natalie Elphicke’s policy paper for the Policy Exchange in 2010. She writes, “Until the late 1980s, associations were overwhelmingly reliant on government finance to build new affordable housing. Since that time the share of government grant required to finance new building has fallen to around a third. Since the credit crunch, the government has had to provide high levels of additional finance to support the housing association sector – without this continuing support, the 1980s financing model for housing associations is broken. Given the state of the public finances, reliance on this is neither realistic nor viable.”
Using a quote from Kate Barker’s review of housing supply in 2004 – ‘A weak supply of housing contributes to macroeconomic instability and hinders labour, market inflexibility and constraining economic growth’ – Natalie Elphicke remarks that circumstances have changed and that today the problem is money. The problem could be solved by housing associations transforming themselves into social enterprises to unlock additional investment in order to provide new homes and stimulate economic growth, without government grant. Three models are mentioned; the BUPA model, the John Lewis model and the Coop model.
In the four years since 2010 that Natalie Elphicke wrote her policy paper the consequences of the coalition government’s reduction in capital grant funding the housing crisis has got worse and will get worse because the population is expected to increase by nearly 5 million over the decade to 2020. Rather than wait for the earth to move and the government to adopt what she proposes Natalie Elphicke has founded a not-for-profit company to put your ideas into action. The company is called Million Homes, Million Lives. Her plans were set out in two policy documents, co-written with Calum Mercer, called Nation Rent and A better Deal for Nation Rent. The documents have been made possible by the assistance of many organisations including housing associations as well as think tanks and institutional developers. As much as Elphicke is disgusted by the housing crisis it is the total failure of everyone involved, from government to housing associations and housing charities to come up with a “cunning plan” or otherwise to help solve the housing crisis.
Over the past decade the authors write in the introduction to Nation Rent the composition of the housing market has changed. Since the credit crunch the finance markets which delivered funding for residential rental housing, particularly housing association market, have undergone permanent change. The authors ask the question whether this is the end of home ownership and will we become a nation of renters. Although the authors see home ownership as the ultimate goal their two reports are a call to arms to everyone involved in housing who want to build a long term housing market catering for all tenures. Their aims are grounded on three principles; a whole market solution to increase the housing supply of social rent through to home ownership, an investment portfolio demonstrating good long term returns set at levels to be attractive to long term institutional investors and the provision of subsidised homes equivalent to the predicted need for affordable homes, without reliance on government capital. The report Nation Rent sets out why the authors have established their company and A Better Deal for nation Rent explains how what is proposed.
It is a sign of how the upheavals of the past decade in the economy since the credit crunch, the welfare changes that have been imposed and the cack-handed policies that have been adopted by the coalition government, that it is not a surprise to learn Natalie Elphicke is not alone in thinking there must be a better way. Whilst Natalie Elphicke and Calum Mercer had housing associations in mind as the vehicle whereby more homes could be built, Christopher Walker in his policy paper published by the think tank Policy Exchange is more direct as to how the housing crisis might be solved. It is, as the title of his policy paper states, by Freeing Housing Associations. He is the head of housing, planning and urban policy at Policy Exchange. Previously he worked as a civil servant in the Government’s Economic Service. Walker begins by declaring that there is a housing crisis and that it is the poorest in society who are the worst affected by the lack of new homes that are being built. Housing associations are building most of the new affordable homes but the tragedy, he writes, is that within the housing association sector there is certainly sufficient financial capacity to build many more affordable and market homes than are currently being built. He believes the sector as a whole could deliver as many as 100,000 affordable and market homes each year. What is stopping the sector is a “byzantine system of regulatory rules and financial constraints.” The situation is exacerbated by a significant number of significant housing associations that build few or no new affordable homes.
As it is the housing association sector made a profit of £1.9 billion in 2013 but he believes the sector could be making a much bigger surplus of around £3.billion a year if housing associations were given more freedom to use their balance sheet capacity through strategic asset management, were encouraged and supported to build more market homes for sale, and had access to cheaper debt finance.” His frustration comes from the fact that he considers the current system of government funding, through modest levels of capital grant is no longer fit for purpose. Despite reductions in capital grant funding from 2010, it still costs the exchequer £1.1 billion a year at a time when the public finances remain tight. The grant levels on offer to housing associations are no longer commensurate with the burdens and risks that grant (funding) places on them. “In short, the grant deal model where the government invested generous levels of repayable equity in housing associations homes, instead of providing a grant with its multitude of restrictive conditions, could be a more attractive deal to both parties. Furthermore such a model could, ultimately, cost the government nothing in terms of public expenditure because the investment could be treated as a financial transaction, and would almost certainly provide better financial support to housing associations.”
Chris Walker’s in his report believes that a sector-wide annual surplus of £3 billion a year could be achieved, and a better funding model supplementing it, housing associations could be building or acquiring 60,000 affordable homes a year. Building more affordable homes will not bring down the waiting lists on its own but along with building homes for sale would improve affordability and reduce the pressure on the social sector. From 2015 housing associations are planning to build around 7,500 homes for sale yet they could be building as many as 22,500 without being overly exposed to housing market risk. This chimes with the long term plans contained in the NHF’S Ambition to Deliver document which sees housing associations building 120,000 homes a year in total.
Walker’s report outlines what the areas that are currently stopping housing associations providing the increased numbers of homes for sale and for rent; the economic regulation and system of allocations attached to historical grant, the reduction in the level of grant coupled with affordable rents imposes unacceptable financial risks on housing associations following the coalition government welfare reforms., the failure of some housing associations to use their surpluses to cross-subsidise building affordable housing, and lastly, housing associations that do not develop or acquire new build affordable homes. It is not hard to detect Walker’s annoyance with the present state of affairs that holds back housing associations from building more homes. “It is likely that central and local government are not going to have funds to increase expenditure on affordable housing due to continued fiscal constraints. The funds necessary to increase affordable housing supply have to come from elsewhere, ultimately from bigger housing associations surpluses and alternative private sector funding.” Walker admits that the vision for delivery is ambitious and that some difficult policy changes are needed to make it happen but that the potential prize is great.
Central to Walker’s plans is the creation of new category of housing association that is independent of historical housing grant. “All housing associations would be allowed to apply to become independent. Successful applicants would need to have shown a strong and long-track record of new affordable housing delivery. The new giant-independent housing associations would be the exemplars and beacons of new housing deliver in the sector.” (It all sounds somewhat similar to the creation of the Premier League when they broke away from the Football League in 1992) The overarching principle behind grant-independent housing associations is freeing them up to use their balance sheets and assets to increase the affordable housing stock. The current arrangements, Walker writes, “belong in the 1970s and are no longer fit for purpose.”
In return for their ‘freedom’ the grant-independent would offer to pay off the historical grant – at a discount – over a thirty year period to minimise any impact on housing association cash-flows and surpluses. (This would not to the liking of local authorities who in return for retaining the proceeds of their housing revenue account agreed to pay off their historical debt owed to government) Also grant-independent status would allow housing associations to sell vacant social homes or convert them into market rented properties, absolve housing associations of most of its local authority nominations obligations and give housing associations the freedom to set its rent policy, subject to certain limits in accordance with housing benefit provisions.
David Orr commented upon the publication of Chris Walker’s report in his monthly blog last November. The new report, the sub-heading stated, recommends greater freedoms for housing associations but it also contains some more controversial proposals. Yet more than half of his post is about the NHF’S “visionary” Ambition to Deliver, which he reminds readers was published some months before in February 2014. He describes NHF document as being “indeed a remarkable and visionary ambition.” For housing associations to deliver their “visionary” ambition some important “things” need to change. The next paragraph of his post highlights the most important of the changes that need to be made. They are “that housing associations and their boards must be genuinely in control of their own futures and their own decision making. They must be able to set their own rents and make their own decisions about who their homes are let to. At present government controls housing associations rents – and has made an abject mess of it. We have all kinds of variations, mostly based on short term political considerations rather than effective housing policy. Housing associations know the neighbourhoods and places where they work. They know the economic circumstances of their residents. They need to be able to set rents that affect those realities. They need to be able to decide who their homes are let to – often but not always in conjunction with local government partners. And they mist be able to decide what is the very best use of their property assets, which includes being able to sell vacant homes where to do so allows them to build more.”
As for the Chris Walker’s report, David Orr writes many of the issues he raises are discussed in an “interesting”, as in Steve ‘interesting’ Davis, report. Adding that it is “hugely”, as in “huge” rally, welcome that that this critical debate is given an airing as much of the detail in the report reinforces the need for housing associations to be free to use their creativity even more effectively. Again in bold type, he writes that not everyone will warm to the idea that historical grant should be paid off and even fewer will support the implicit idea that public capital investment may be unnecessary in the future. He warns to be wary of assuming mechanisms that work in some markets today will work in all markets in the future. A sixty page report on the future of housing associations is given less than sixty words. The word ‘independence’ is mentioned elsewhere, once.(David Orr needs a sub-editor for his blog to help him with his sentence construction; “We are delivering half of that”, “Housing associations understand this” and “We are clear that housing associations are central to doing this”. He writes, “There are too many rules and regulations at present”. Delete “at present” or put “At present” at the beginning of the sentence.)
“Housing associations exist for the benefit of the community”, writes the chief executive of the NHF. Some housing association tenants in Tower Hamlets have had cause to doubt that housing associations do exist for the benefit of the community. Council meetings in the second half of 2014 saw several petitions presented to the council. At the July meeting of the council Cllr. Rabina Khan, cabinet member for housing, said, in response to a question about housing associations, said there were nearly fifty housing associations in the borough with responsibility for over 30,000 homes. “This means that there are hugely differing standards of management and service and we have to make sure they work in the interests of their residents and the wider community.” Cllr. Khan added, “I am currently deeply disappointed with the overall performance of three of the housing associations in the borough where there has been a steady of complaints and disputes relating to poor performance and poor customer care.”
At the September meeting of the council two petitions were presented by members of the public and both of them involved the conduct of housing associations. The first petition was about a proposed development by Polar HARCA on Burdett Estate in Poplar. The proposed development, the petition stated, will result in the last bit of open space being taken from the community. The petition started, “To have a major development on our estate should be in consultation with the wider community and not a select few. Consultation with the estate board has been at best amateurish, and at worst, a sinister ploy to pursue its interests over the interests of the community.”
The second petition presented to the meeting was from 800 residents of a group of sheltered housing blocks that had been transferred from Tower Hamlets council to Bethnal Green and Victoria Park Housing Association which subsequently merged with Labo housing association to become Gateway Housing Association. They wanted to demolish some blocks which was contrary to the terms of the Offer Document at the time of transfer. In response to the petition Cllr. Oliur Rahman said that by coincidence he was invited to the Annual General Meeting of Gateway Housing Association only two days before the council meeting. He said that the chief executive, Sheron Carter, gave a glowing report of how it supported its vulnerable residents and that it had a very active resident group. In response the petitioner said there had been very little consultation between residents and Gateway. Cllr. Rabina Khan, responding on behalf of the council, said that she had written to the chairman of Gateway Housing Association and that officers had spoken to its chief executive. Cllr. Khan referred him to the council’s Older Persons Statement and was “deeply disappointed” that Gateway Housing Association had failed to comply with its contents.
Cllr Peter Golds, leader of the Conservative group on Tower Hamlets council mentioned a similar experience with Gateway Housing Association in his ward on the Isle of Dogs. He added what had happened to Bethnal Green and Victoria Park Housing Association was systematic of local housing associations being “gobbled up” when they merged with another housing association to form a larger organisation.
Peter Hetherington, former editor of the Society Section of The Guardian, in December 2007 asked the question whether housing associations were losing touch with their founding values. He wrote, “It is a long historical journey from medieval almshouses to the great charities of the nineteenth century philanthropists providing shelter for workers and the multi-billion pound businesses now delivering social housing. Today, those businesses, called housing associations are still overwhelmingly registered as charities, but their links with the past can appear tenuous as they morph into full-blown development “companies” – albeit without shareholders – to become big players in the wider housing market.”
Housing associations are at a crossroad, he added, facing pressure both from within and outside the movement. They are divided about their role; some associations clinging to their historical roots whilst other associations wanting more freedom to pursue a more commercially driven approach. To critics the core function of the provision of homes to rent now appears secondary to building home for sale to land development – thus making them indistinguishable from private corporations. The transformation and growth of housing associations over the past thirty years was a consequence of government policy during that period. As Alan Murie, professor of Urban Studies at Birmingham University, in his history of the Housing Corporation titled Moving Homes writes, “Housing associations became the chosen vehicle for the decentralisation of state funding through the transfer of development activity and assets from local government. In the subsequent period expansion was very rapid but the terms on which housing associations expanded were also very different. Private finance introduced powerful new stakeholders in the form of business. Those involved got used to growth, which itself became a major rationale for some organisations.”
David Orr insisted at the time the mixture of public and private money has brought huge benefits, with government grants of £30 billion over the past thirty years levering £35 billion of investment from associations borrowing against their assets. He maintains “this is the most successful mixing of public and private investment anywhere in the economy. I think we have quite a compelling offer and that comes from being independent.”
Although David Orr in his blog writes that the implicit idea that public capital investment may be unnecessary in the future has little support, Chris Walker believes the current grant levels will not be sustainable beyond 2018/19. Yet David Orr in the introduction to Ambition to Deliver writes that “We are not relying on others to play a part – though it would help. It is about what we can do ourselves.” What if that help came in the form of an pre-election announcement not of a continuation of current grant levels but an announcement from the government to offer a “heavy discount and with repayments spread over 30 years” on historical housing grant, would that be considered as helpful and at the same time constitute real leadership. (It is worth mentioning that Alex Morton, Chris Walker’s predecessor at Policy Exchange, is now part of the Prime Minister’s policy unit in Downing Street) Where better to make such an announcement than at a “huge” rally hosted by the National Housing Federation. It would give those assembled at Westminster Central Hall something to celebrate on St Patrick’s Day.
The National Housing Federation is not the only organisation that has set out a programme for the next government to put into practice. The GMB trade union published a report in 2014 which offered solutions that they want an incoming Labour government implement after the general election. It states that an incoming government will need to make affordable housing a central part of its economic and social strategy and that “some of the strategic institutional and legislative changes will take time but the intention needs to be clear from the start with some legislative commitments and an immediate emergency programme. There will a central role for local authorities within existing legislation and tight expenditure constraints.” As regards local authority borrowing powers the Treasury should adopt international standards for definition of Net Public Sector Borrowing and General Government Financial Deficit which would have the effect of excluding Local Authority borrowing for housing development from general government borrowing. At the same time as Chris Walker is seeking a write down on historic government grant for housing associations the GMB report that the Treasury should allow a write down of the inflated historic debt provision taken on by local authorities in return for keeping their Housing Revenue Accounts receipts.
The report acknowledges the number of new homes that Housing Associations have built has been impressive “but has gone nowhere near making up what used to be carried out by local authorities.” The 25-page report by the GMB is a much more impressive programme of what is required to solve the housing crisis because it accepts that there needs to be a very substantial strategy for council house building to be put in place urgently and that the resolution of the long term housing crisis is not possible without some significant public investment in housing of all kinds. As to whether in the present context any proposals for increased expenditure on housing is affordable the GMB’s report response is that the economic and political case for a massive increase in house building would have a multiplier effect on the economy. Building homes does more than provide a boost to the economy; housing is, as Danny Dorling writes in his book All that is solid, the great Housing Disaster, as near as most people personally get to what is called the greater economy because everyone is directly affected by housing, all of the time.