WRAGs or riches

What do you mean you don’t check the government’s statistical publication lists every few days? Well, you should be glad I do!

I was having a quick check through the most recent quarterly benefit summary release (as you do) and was reminded of an odd fact. Currently (well, August 2017- the closest we have to currently), about two thirds of people who receive Employment and Support Allowance (ESA) are in what is known as the support group, with 17% in the work related activity group (WRAG). I’m going to argue that this is pretty telling about decision making- I’ll explain why in a minute, but perhaps first I should remind everyone what I’m talking about.

[Skip to “Now, here” if you’re already more aware of ESA than you’d like to be]

Employment and Support Allowance tries to separate out claimants into three groups based on their symptoms:

  1. Those who are fit for work- who need to go back to work or claim another benefit like jobseekers allowance.
  2. Those who are not fit for work, but with some help may be able to move in that direction. This is the ‘work related activity group’.
  3. Those who are not fit for work and also cannot undertake activities to move them closer to being able to work. This is the ‘support group’.

There are different rates of payment between the bottom two groups, whereas the only option to stay on ESA for first time claimants put in the first group is an appeal, which whilst it is going through the motions comes with a rate of pay equal to jobseeker’s allowance.

People who made a new claim, or people who had made an appeal and were waiting for it to be heard were bundled together into something called the ‘assessment phase’, a sort of limbo where they waited for an outcome.

ESA has changed significantly, mostly via a series of incremental tweaks, in the 10 years it has been up and running, but these points have stayed the same.

Now, here (to me at least) is the interesting bit. When the government originally created ESA it thought that the number of claimants in the work related activity would be higher than the number in the support group. I’ll put that another way, the work related activity group was going to be the main group, with the support group being just for the smaller number who were too unwell to engage in classes and tutoring to get people closer to the labour market. The focus of policy making, the thing that made ESA different from the previous sickness benefits was this group.

Here’s what the explanatory memorandum to the legislation said:

Screenshot 2018-03-15 at 2.57.57 PM

I’ve had a little play on stat-xplore to show what actually happened- here are my sheets, which is all derived from the stat-xplore info.

Screenshot 2018-03-18 at 1.57.50 PM

Reliable information started coming out from early 2010. To begin with there were more people in the work related activity group, but the numbers placed into the support group started soaring through 2011 all the way up to late 2015 where, potentially as a result of the number of migrations moving to a trickle, it has now plateaued. The numbers in the work related activity group rise at first, but have been on a slight downward trend since the middle of 2013.

The number in the support group passed the number in the work related activity group in February 2013 and have never looked back.

If you look at the total caseload stacked together we can see that the growth of the support group really underpins the whole of the benefit:

Screenshot 2018-03-18 at 1.59.38 PM

This isn’t what it was supposed to look like. But what can be the cause of it?

This issue was actually flagged in the Year 5 independent review of the benefit from Dr Paul Litchfield. He was particularly interested in the number of young people coming forward with very high mental health needs, a situation he accepts ESA results will only reflect rather than necessarily being able to solve.

Following his report the government looked at the data. Their view was that a big part of the issue related to the widening of who was included in the support group. By incremental changes the scope of the support group has widened, but it still does not cover the vast majority of illnesses and disabilities people have when they claim a benefit.

A second issue pointed to by the government was due to the delays in assessments. The government got into a hole where they couldn’t process claims fast enough (this is an understatement), leading to claimants being in the assessment phase for far longer than originally planned. According to the government, many claims were closed in this period (ie. the people got better or stopped sending in sicknotes) which they believed was skewed towards claimantrs who would have failed the ESA. I don’t know on what evidential basis they have decided this- almost all welfare rights professionals I know have seen claimants with very strong cases having claims closed on them.

Finally and in connection with the delays, the government claimed that to clear the backlog they were making decisions on paper in some cases. Where this happened, the only things they could decide was to put someone in the support group or to let their claim continue on to a full assessment. The argument was that this inflates the proportional size of the support group whilst those who will eventually end up in the work related activity group linger in the assessment phase.

I’m not saying that any of these responses is inaccurate, but they don’t seem to capture the issue fully. The second and third issues relate to delays in assessment and we are not quite in the same place with this anymore. So if the delays and paper processing aren’t happening at the same rate, why are double the number of assessments leading to the support group than to the work related activity group- a circumstance the DWP’s own explanatory notes state is stabilising?

There are other possible explanations and I’m not surprised that the government aren’t dwelling on them. The first possibility is that the scheme was, or has become, badly designed for the purpose it was intending. I’ll put that another way- whilst the intention was for a majority of people to end up in the work related activity group, the actual scheme didn’t achieve this. Many claimants may have been more afflicted than was predicted- people had symptoms that placed them in the support group. Alternatively, and especially with the medical descriptors (the points-based test most claimants go through to quality for ESA) becoming harder over time, claimants who were originally envisaged to qualify for the benefit are turned down.

Another set of explanations relate to the application of the medical test by health care professionals and decision makers. We know that the majority of people who take their claim to appeal are successful. We know there are serious, long-lasting concerns about decision making and the medical assessments. I’d argue that a significant proportion of people turned down for ESA would, on balance (perhaps once they’ve sat down with a welf to talk it through), argue that they should be in the work related activity group. So is decision making part of the reason people aren’t getting into the work related activity group in the numbers originally predicted?

Add into this changes to manual reconsiderations, stopping many people from receiving payments if they apply again following a refusal and paying those in the work related activity group the same as jobseekers allowance and you start to see something that looks a lot like a squeeze on exactly the groups of people who might eventually end up in the work related activity group. With regular(ish) reviews of claims for people in the work related activity group (and less often in the support group) placement in this group looks difficult to achieve and then precarious once it is achieved, even if the claimant’s symptoms are unchanged.

Finally, the government did change the rules for people receiving the contribution based ESA, in order to limit the amount of time they could claim it. I thought this might be part of the issue but when you look at it, the numbers receiving contribution based ESA have been fairly stable over a long period (this doesn’t mean it is the same people claiming) so it’s not quite clear if this is a factor.

Maybe there’s another way to put all this. The original intention of ESA was to figure out who could, with support, move more towards work and provide them with extra help. In one sense it doesn’t matter whether this is a majority of claimants or not. But what does matter is whether or not people receive support relevant to their needs.

At the start of the post I referred to the difference between the intention and reality as “telling”. What I mean is it looks exactly like restricted and temporary access to the work related activity group seems to be the outcome the system as a whole produces. Having people with health conditions claim jobseekers allowance with all the expectations that entails isn’t necessarily helpful. Similarly, putting people on a carousel of assessment, reassessment and appeals isn’t helpful either.

So a system operating (by design or implementation) to exclude marginal cases means a significant skew towards those cases where there is no argument. A system intended to help people get closer to employment doesn’t work if it excludes precisely those people who would benefit most. I’d argue that’s exactly what we are seeing and that these statistics are just further evidence that something has gone very wrong with ESA.

Inviolable viability

Right, are we all enthused and ready to go? Viability is dead: long live, um, something that looks a lot like it.

Before I am accused (again) of cynicism approaching apocalyptic levels, let me first say, the fact that the government are trying to do something about viability is positive. I’ll try and get into what I think it means in a bit, but given the amount of bluster about the policies I think it is worth actually trying to get down on paper what the government are proposing.

Under the current system, many local plans include a brief sketch on what requirements a site might have for affordable housing, education facilities, green space and other bits of infrastructure. Nowadays this is split between in section 106 agreement (which is negotiable) and in many areas Community Infrastructure Levy (which isn’t). But the real tooth and nail side of what is required for a site comes during the planning application, where the need for infrastructure, followed closely by the developer’s ability to pay for it out of the eventual sale of homes is bashed out.

The developer gets to use the price they paid for the land (however inflated that is by the prospect of planning permission) and lots of other bits and bobs go into their very detailed spreadsheet to prove their point. The local authority then makes a decision based on the agreement. If agreement can’t be reached within a set timescale, or if the application is refused because the developer’s won’t budge then it can go to an appeal where an inspector and, eventually, the secretary of state can decide upon the merits of the application. Parties who feel (legally) hard done by can apply for judicial review, which can and does quash decisions and demand a rehearing.

In the new system, first proposed last year and now laid out in slightly more detail, the major discussions about the viability of sites will take place during the plan making process. I’ve written before about this process; one of the positive things about centrally suggested targets is that the massively long-winded process of establishing housing need can be removed, which would have made the local plan process quicker. But reaching an assessment of infrastructure need and viability for every site included during the process and coming to an agreement of this with developers, is going to be a huge and time consuming ask. Developers will no doubt (and quite understandably, from a business point of view) use the local plan process to try and extract the best deal for themselves at this point, rather than further down the track.

Yes, in the end it is the local authority that draws up the local plan, but developers will go into the local plan examination (where a planning inspector in effect decides whether it is “thumbs up” or “thumbs down”) with all of their legal arguments, expensive lawyers and fabby dabby spreadsheets ready to prove their point. Those spreadsheets will now be public and use something approaching a set methodology, which is a huge victory for transparency campaigners. But it doesn’t necessarily mean that a small band of local campaigners doing this in their spare time will be able to outwit a company whose profit levels are at least partly based on extracting just this kind of victory. Many council planning departments, often stung by large costs if they lose judicial reviews or appeal cases, will be very cautious of pushing hard if they know they may not win.

Another good(ish) thing is that the land value being proposed for viability assessments is not the price paid for the land, but some inbetween figure. As Shelter have commented, given recent land sales have possibly been inflated by the current market, the new assessments might be higher than you might hope. It is a step in the right direction, but the wording- particularly that the land value should be set at “the minimum price at which it is considered a rational landowner would be willing to sell their land” means this could all fall down rather quickly. If that’s the case there is nothing to stop landowners working collectively to ensure prices remain high.

This all means that the local plan process becomes longer than it would have been and there is no guarantee this will lead to additional affordable accommodation. The government may be hoping land prices will fall as a result of this change, which seems hopeful and best and naive at worst.

The government are stating that once the local plan process is complete (however long that takes) that will be that. But of course, they have to (and to their credit, have) considered the other situations, for example when a site outside of the local plan comes forward. Or, indeed, the economic world changes significantly and developers are suddenly significantly more or less able to pay. In that situation local authorities will have to work with developers to assess or reassess these agreements.

There will be disagreements, claims will be lodged and eventually a set of precedents will be made about what counts as a change and what doesn’t. Unless there has been a big change in developer’s business plans this will then become the new normal. They will use the precedent to turn the drip into a flood. That’s not a criticism of developers- they are acting rationally. It is a criticism of the proposed system. It gives them an inch of wiggle room and expects they won’t take a mile. As with my previous post, I confidently predict we’ll be back in the same situation with viability and affordable housing within a few years.

BUT! The government have added a backstop- with a not very discreet threat for a system where “contributions to affordable housing and infrastructure to be set nationally, and to be non-negotiable”. Given my previous comments you’ll not be surprised that I like the second part of that. I would much prefer a system where the connection between overall viability, developer’s expectations of tidy profits and affordable housing is broken. I don’t see why it would make sense for this to be set nationally, when practically everything else in local plan making is, um, local. Neither Theresa May or Sajid Javid mentioned it in detail in their speeches, so I think this was only planned for certain eyes only. It’s a threat to developers of what could happen if the system doesn’t work and in my opinion a pretty idle one, much like the threat to end help to buy.

The proposals I sketched out in my previous post would be stronger than those being threatened by government and they should feel free to use them if they would like. But given I don’t think they have much intention to actually do this I won’t hold my breath.

So we have been promised another revolution only to see some generally positive but not exactly world-shattering reforms. Before too long we have to ask ourselves why this is? Do ministers over-sell proposals that they know are milquetoast? Are they convinced that one more set of changes will push the housebuilders over the edge to become the sort of civil minded operators the government want them to be? Are they making comments based on what they hope newspapers will report rather than what will actually make a difference?

The key issue, in a way, is that government is stuck. Changes since the late 1970s mean that the major housebuilders are the only people who can deliver at scale. The government seems willing to pay lip service to other forms of building, but know that these can only take off with either significant government investment, underwriting loans and subsidy (for small builders, community housing, housing associations, etc) or local government debt (for council housing).

Another option would be development corporations, often used for new towns but theoretically usable anywhere. This would involve local authorities, builders, landowners and trades coming together to create new homes. The corporation could be structured to prevent perverse incentives (including a risk of chummy contract-giving between the partners) and provide incentives for actual building. The builders wouldn’t like this as it threatens their ownership of large parts of the process, but it is something more akin to a revolution than some (admittedly positive) tinkering with viability.

The government are right that there is no silver bullet to ending the housing affordability crisis, but I do wish they would put away the rubber ones.

As a final note, is it worth remembering that the government has consistently said that the first report from the Letwin review will be coming with the Spring Statement next week. This wasn’t mentioned in either speech (Sajid Javid referred to the publication of the full report at the (Autumn) Budget), so I will be very interested to know whether something will be released and what it says.

Build to rent or build to build?

Build to rent, is it a way to get some top quality new rental housing or just another brick in the wall? There’s plenty of chatter about this new type of development coming forward, but what is it, what does it mean for the planning system and affordable housing and what will happen as the market matures?

Build to rent is in many ways something new. Large scale investors like pensions schemes are seeking ways to find returns and have hit upon the idea of having their own property portfolios. These aren’t mom and pop landlords with a property here and there, but organisations who have the ability to buy and sell entire buildings and blocks on a whim. But there is part of the problem- they like the idea of rental income from assets that grow in value over time but don’t want to have to deal with the issues relating to having leaseholders or other owners to get in their way.

What they’d prefer is a nice clean, wholly owned asset that can be theirs outright, traded easily and the rental returns known. This kind of housing doesn’t exactly exist in the UK (or in many places in the world) and the most obvious way to create it is to build it. So yes, there is hundred of millions of pounds floating around right now looking for investment in housing- hooray!

But that money doesn’t particularly care where it is investing, as long as it can get the best return for the investors. Where the best deal is might relate to the rents that can be expected, the land cost, the costs associated with planning and who will let them build exactly the kind of block they’d like to see. Manchester of Salford, Leeds or Bradford, London or Colchester, Milan or Barcelona- what matters to them, quite reasonably, is where the net return is highest.

Of course all housebuilders are like this to an extent, but whereas traditional builders are looking for a pipeline of land across a range of sites, from city centre to the surrounding countryside, to buy develop and then sell, build to rent developers are looking for inner city properties where the principle of development has been agreed since Victoria was on the throne where they can buy the land, build the asset and then hold it as such, selling on the whole unit at the appropriate time.

With traditional housebuilders the key issue fought in the planning system is where homes will be built. With build to rent the key issue is what homes will be built. As I mentioned above, the need for a nicely packaged up unit precludes anything quite as messy as sales of flats to a housing association or even something as messy as shared ownership or even, shock horror, someone else owning a property in their building! It would be bad for the portfolio to have a couple of appendages and provisos thrown in with any sale and therefore reduce the market value of the asset.

Many authorities in the UK, including big cities need significant amounts of new housing. This is both due to a genuine requirement to meet the needs of their residents and because they have more or less objectively assessed needs that are required to keep their planning system ticking over. A developer, whoever they are, turning up and stating that they are interesting in building a few thousand homes on underused or unused city centre sites is a godsend.

So let’s say you work for the planning department and a developer comes in saying just that- they want to build thousands of properties to rent. But there is a catch. Firstly, they are also talking to a few other cities and can only really decide on one or two locations to build at the scale they want. Secondly, their business model doesn’t really allow them to have affordable housing on site, so could they pretty please just pay cash instead? Thirdly, like all other developers, costs are high and profits are low, so they might not be able to pay all that much towards affordable housing anyhow. Fourthly, they operate in a cut-throat market where information is king, so please could any negotiations and agreements be held in secret?

Now, generals are always fighting the last war, but you’d hope planning departments are a bit quicker off the bat than that. Because let’s be clear, the opportunities for significant new developments are enough for authorities to have to consider changing their rules to keep ahead.

Earlier this week I praised Jennifer Williams’s recent article on affordable housing in Manchester. One of the key things behind the continued growth of city centre housing in Manchester -but also the complete lack of on-site affordable housing- is the willingness to get in front of the curve for build to rent. You can’t apply planning rules just for certain types of investments though, so every developer gets to play the same game- offsite contributions for affordable housing (sometimes called commuted sums), confidential viability reports, excellent but private shared spaces without significant contributions to public spaces.

Perhaps “race to the bottom” is too strong a term, but I think we need to see that Manchester is the outrider for city centre housing outside of London and look at the impact build to rent is having there.

As I’ve mentioned before, commuted sums as opposed to affordable housing onsite isn’t necessarily a bad thing, although there is a need to prevent areas from becoming ghettos of either rich or poor households. Councils or housing associations can use that money to invest in their own large scale schemes rather than a smattering of housing here and there and the smart ones could create their own mixed schemes with market and affordable homes side by side.

But no payments, or money that disappears into the ether through a viability process or into an “affordable housing saving fund” that never gets spent is never a positive thing. Development after development in or near a city centre without public space is also not great.

As with my previous comments on viability, I’m coming round to the view that no process framed around negotiation will actually be able to put the genie back in the bottle. The changes to the national planning policy framework may make some temporary difference, but I am going to firmly predict that a small army of lawyers and consultants will put us back to where we are now within 5 years. Amending viability simply isn’t enough for affordable housing, the goal must be to remove the connection between the two.

What might be better is putting affordable housing into some form of tax like the existing Community Infrastructure Levy. An amount could be worked out from the average square footage of a proposed development (or sale price of properties if you’d rather) and this could be paid to the council for them to build affordable housing (either directly or by housing association grant), with clear accounting to show this is done. A developer who wants to reduce this bill could offer a number of homes in payment for their charge, but this would be at affordable house prices rather than the full purchase price of the property.

Another change would be for local authorities to work together to set clear boundaries on what they will and won’t accept. Hopefully I’ve shown that there is an oblique strategy, perhaps even an unintentional one, to change the planning system in order to fit it around build to rent. If larger local authorities, for example the metro mayoral cities and the English core cities came together to set out what they would like their planning system to look like, they could seek to insist on published viability statements and set affordable housing quotas. This could stop developers trying to play one city off against another, but it of course comes with a healthy reward for cities going back on the agreement.

It remains to be seen how this new market will mature. As I mentioned at the start of the piece, one of the reasons investors are looking to build is because there aren’t currently the type of properties available for them to invest in. Of course there are other benefits to putting value into a bare bit of earth, particularly the one shared by more traditional housebuilders that this will appreciate the value significantly.

But once there are a raft of new build to rent properties available, will investors keep on building, or will they be happy trading the buildings that exist between each other? I’ll put that another way- there are plenty of shares that come onto the stock exchange, but the vast majority of the role of the exchange is to trade existing shares. Buy low, sell high, or at least buy for a lower price than you sell for! It is fair to say pension schemes dabble in the markets, usually in long term investments, so they are likely to be quite happy to think this way about property as well.

Sure there will be property managers who actually do things like sort out repairs and they won’t be affected by these shenanigans. The average tenant won’t notice ownership changing, perhaps the brass plaque outside the door will occasionally morph overnight into something new. But from a housing supply issue, we have to consider whether build to rent will be a major builder for many years to come or -once there are enough properties to play the asset appreciation game- whether it will be a niche portfolio for certain schemes to hold and trade between themselves.

If it is to be a major source of new housing then the issues seen in Manchester might be heading to a town near you on a large scale. If it is the former, then are the changes (or resistance to changes, such as publishing viability reports) being made to local planning systems (for all developments, remember) worth accepting for a limited local reward?

Social careless talk costs

Or, millions now living will never pay inheritance tax. I’m going to do something odd for a second: I’m going to praise the intention behind the most controversial aspect of the 2017 Conservative manifesto. You see, whatever you may think about the politics of the situation, the authors did at least try to do something about paying for social care.

The common wisdom is now that this was a particularly stupid thing to do, but in electoral terms, they thought they had the election in the bag and were trying to use that to lever a manifesto commitment to doing something about social care. They could have said nothing and kicked the can down the road, but at least they tried to get something past the radar that could have increased funds for social care.

Of course, it didn’t work. The manifesto fell apart within days, mostly because of this particular issue and the sudden realisation that, unlike the Dilnot Commission recommendations, there was no plan for an upper limit on contributions from an individual. So a millionaire who lived to an old age and developed very high care needs could lose almost all of their assets before the state started picking up the tab, whereas a “lucky” millionaire could be hit by a truck and pass all of their assets after inheritance tax on to their children or other beneficiaries.

So here was have the latest iteration of the social care farce- everyone accepts more money needs to go into the social care system, but no-one is quite sure how to (or perhaps more accurately “who will”) pay for it. Anyone making a suggestion is shot down in flames. Which it is why I guess the Conservative Party manifesto writers thought it was worth a go. It wasn’t.

Which leads us to the tricky question of how we get out of this mess. The Dilnot Commission tried the slow and steady approach, but that led to it being left on the shelf. The Conservative manifesto tried an “under the radar” approach, but that manifestly failed as well. Labour are currently saying they will seek cross-party consensus, which sounds like they won’t exactly hit the ground running if they get the keys to 10 Downing Street- and we know they have other priorities that they said they will go for straight away.

The key issue is that whatever is decided someone will have to end up paying some more and every party is prepared to use this against any other party that tries to suggest changes. Whether it is Labour’s tax bombshell, the death tax or the Conservative dementia tax, there is enough toxic gas around any social care policy to make any significant changes to social care fees almost impossible.

At the same time the current system rumbles on. Local authorities are finding themselves hard pressed as demand rises (indeed, this is the case for both adult and child social care) and the half-hearted attempts of government to introduce intermediate funding are not covering the additional pressures. Worse still, a significant amount of the press seem to link council tax rises with profligacy rather than a response to rising demand and stinging reductions in grant funding.

So what can we do about it?

I know of precisely zero people who see council tax as a long term sustainable way to fund local authorities, especially relating to rising social care costs. Sure, there is some tinkering to maximums, exemptions, re-rating and additional rates that could make some difference, but these most likely mean those in more expensive homes will have to pay more. The system will still be largely regressive be based on a proxy of wealth rather than wealth itself and is unlikely to cover the extra pressures in the long run.

Another option would be to allow councils their own tax raising powers. This would be devolution in action, with some authorities plumping for a local income tax, others going for some sort of land value tax, some a form of the current council tax arrangements etc. etc. There can be no getting away from the idea that many people would end up paying more, but this could be locally controlled with the best and worst ways showing themselves over time. Of course this would lead to the dreaded postcode lottery, but that is the outcome of living in a multi-tiered democracy. The powers could be given to devolved areas first and they could be the testing ground for the new system. But if we are to believe that the significant pressures also largely affect shire counties (with an ageing, asset-and-housing-rich population) then their time must also come for a different but higher level of taxation.

With much recent talk about intergenerational fairness there also needs to be discussion about how any additional payments are structured across age groups. Increases in taxation for young workers might chafe if they are struggling to find affordable housing. It might be worth looking for the margins around what taxations can impact older or more affluent people.

I think one area ripe for looking into is housing wealth- that is, the wealth a person has in their home *after* their mortgage is taken off. So your home-owning 30 something might have a few grand of “wealth” and your outright-home-owning older person will have hundreds of thousands. This isn’t available money and shouldn’t be taxed as such, but could be used as a proxy for payments. So a tax of 0.5% a year of housing wealth would be a couple of hundred pounds a year for a couple who have paid off a few years of their mortgage but will be higher for those who have paid off more. For no-one will it be higher than their actual repayments. Renters won’t be directly affected, so those who are saving to buy a home will be able to do this without being encumbered by further taxes. An amount could be added to pension credit to cover those who are truly asset rich and cash poor, but I think there is a tendency to overstate this group rather than accept that there are many older people who are both cash and asset rich- especially when the one biggest cost of paying for housing is no longer there.

But then there is also the big daddy of them all. You see, if the debate around social care fees is so toxic then the discussion around inheritance is nuclear. Inheritance tax is truly one of the most reviled but misunderstood taxes out there.

Firstly, barely any estates end up paying it. In 2014/15 (the latest stats we have) the estates of just 1 in 25 people who passed away led to an inheritance tax charge. That’s actually the highest it has been since 2007/8. So whilst there can be a genuine argument about inheritance tax the first thing we need to do is reassure the vast majority of people that they won’t end up paying it. One issue is that the current threshold for payment (£325,000 with £100,000 more for residences) is enough to ensnare people who own property in the south east, which can pitch a large amount of the media and political classes against the policy as they will be adversely affected. Another is that people feel they should be able to pass their assets on to their children, which is potentially another way of saying that the distribution of wealth should be entrenched- the children of the rich should also be rich.

Part of this comes from a desire to ensure your own offspring are protected from the vagrancies of the economy and society. But that misses the point- if housing were more affordable and if extra costs in old age were paid through the state, then there wouldn’t be a need for intergenerational insurance against unfortunate circumstances. In any case and for any estate, there would still be at least £325,000 to share between any benefactors in the current system (and for those with high amounts of assets far more) so we have to move away from this idea that inheritance tax is somehow a social ill or a way of destroying the bonds between parents and their adult children.

Indeed, mild changes to inheritance tax- decreasing the asset threshold, increasing the proportion due and removing the recent addition of the £100,000 residence threshold (which raises to £175,000 in 2020/21) could help provide a significant additional income for the treasury to provide social care costs.

But you won’t get anywhere politically by telling people they are being unreasonable. This is true when you look at increasing social care costs or inheritance tax.

One way to try and cover more of the care costs is wider changes the taxation system, like the devolved taxation system I’ve sketched above. Regions or combined authority areas could be freed to set their own taxes- take their own risks and watch what each other are doing to improve their own regimes. But I’ll be clear about one thing, if government does give powers to smaller areas it has to avoid setting limiting conditions that prevent local decision makers from having the final decision. Anything else would just be a pointless exercise in micro-management.

Another way is to offer people a genuine choice in a consultation. No, I’m not recommending a referendum, but something that makes clear the balance between individuals who go on to need support paying more (as in the Conservative manifesto) or higher taxation as a form of collective insurance. It could outline who would pay more under extended inheritance tax or a housing wealth tax, what that would raise and what it would mean for social care fees. It could then offer these, a mixed system with some other tax changes or a “no tax change” option that meant individuals affected would have to pay more than they are currently.

That would allow a short but meaningful public discussion on what we want to see as a country. And if we could keep the pithy titles and constructive ambiguity to a minimum that would also be appreciated.

Rough sleeping and smooth sailing

I wish I could move on from talking about housing on this blog. But stuff keeps on being proposed that piques my interest. The latest such thing is the Labour announcement on housing for rough sleepers.

This was announced on Sunday, perfectly to fit in with the Sunday newspapers and interview circuit, but I wanted to have a couple of days to have a think about it and what it really means. You see, I cannot imagine anyone would have any issue with more homes for those with recent experience of sleeping rough, in particular as much of the evidence from housing first suggests that this can make a difference in people’s lives.

But it is worth having a look at the policy, because there is something interesting going on. In brief, the wording around the policy announcement looks like it is about housing supply, but in actual fact it is about housing allocations.

So let’s quickly run through what’s been said. Labour is proposing that it will seek to provide 8,000 houses for people with experiencing of sleeping rough, both as part of their existing commitments and as an immediate implementation of the housing first policy.

The government currently have pilots of housing first, which is essence is about providing people with long term accommodation before seeking to overcome any other issues that may be causing homelessness. It has many fans (the author included) but crucially it is about not only providing accommodation but also a significant level of support in order to access services in order to prevent a return to the streets. As Jeremy Swain has recently reiterated, there are factors in returning to homelessness that have to be overcome and experience states that includes intensive work from professional agencies seeking to keep people in the home.

But where are the homes to come from? The Labour press release states quite clearly that instead of building new accommodation, which will take time, they will be seeking agreements with housing associations to provide homes as they become available and replace them with newly built homes from their aspirational social housebuilding programme.

So the homes are existing affordable accommodation (whatever that means!) from registered providers that you would expect to have gone to someone else in need if they were not used as part of this scheme.

Let’s put that a different way. You run the allocations for a housing association. You have a 1 bedroom home become vacant and have to choose between:

  • A rough sleeper.
  • A disabled single person living in an unaffordable privately rented home.
  • A disabled couple living in a privately rented home in severe disrepair.
  • A vulnerable young person living in temporary accommodation who has not slept rough.

Now, each of these households is likely to meet the legal definition of homelessness and indeed for priority need. Exactly who gets the property will depend on the allocations policy of the association or, if the work with a local authority, the council’s own allocations policy.

What Labour are saying is that they will prioritise the rough sleeper over the other households and apply this nationally so that allocation policies will only apply after the need is met for rough sleepers. That’s a policy decision and it isn’t a bad one per se, but it needs to be understood as a decision on allocations. Using that home for a rough sleeper will take it away from someone else who also needs it- someone is going to get it and someone is going to not.

Of course Labour have also made a commitment for a huge increase in the number of affordable homes, but as the press release says, this will take time. So those households will have to wait longer than they might otherwise have done. Again, that’s a policy choice and not an unreasonable one, but moving other households further down the queue has to be understood as a consequence.

What would be a worry is if these policies aren’t tied up together. Any government is used to getting some of its policies through and not others, so I can easily see a situation where the rough sleeper policy comes forward (it is, after all using existing properties) but the policy of building affordable homes stumbles along the way or is delayed. Even governments that are very quick off the blocks (1945 and 1997, I’m looking at you here!) have some things that go on the back-burner or hit unexpected consequences. If you have taken on homes on the guarantee that you will replace them then there is a need to complete both sides of the bargain.

Another comment to make is why this is only housing association homes? The present government almost came unstuck when it tried to introduce right to buy for housing associations. It is unclear why policy makers from different parties see housing association properties -homes built by non-governmental bodies overwhelmingly for the public benefit although often funded by public subsidy- as theirs to dip into when they feel like it. I’m not sure if the sector will be up for another round of tough negotiation, especially to provide a service many of them feel that they do anyway.

As I mentioned above, the key issue will be the level of support that come with rough sleepers into the new homes. There’s no mention of that in the release, or how it will be funded, although it is fair to say that many rough sleepers already receive a significant level of personal support, so this may be that the organisations who currently work with them will continue to do so, hopefully with some level of financial backing from government. The alternative is a replication of what has happened many times previously, where the settled accommodation breaks down and people return to living on the streets.

Another way to provide homes for rough sleepers would be to buy up homes from landlords with buy to let mortgages looking to sell vacant properties (or, even better, empty homes), perhaps on the “we buy any car” approach of a quick sale for a below-market price. The homes could then be improved and made tenant-ready quickly (providing opportunities for local tradespeople or for skills training). This removes the “robbing Peter to pay Paul” aspect of the policy whilst still ensuring a quick turnaround for those who need homes. It’s not a new idea either, it is something quite a few councils, charities and other organisations do, but government backing could make it much larger and more effective.

In his interviews on Sunday Jeremy Corbyn also returned to the idea of compulsory purchase of high value homes “deliberately kept vacant”. Now, he hasn’t provided a number for how many properties he thinks would be involved and I would think it would be very hard to for local authorities to prove mens rea in cases of empty homes. That word “deliberate” sticks out like a sore thumb to me. With a requirement to prove why a home is being kept empty I don’t think it will lead to many compulsory purchases, so it may be an attempt to put the wind up financial speculators rather than a policy that will make a huge difference on the ground. Of course we’d have to see the final policy, it could exclude that difficult word “deliberate” and have some impact on some homes.

So the housing first announcement is another piece in the jigsaw. There are other ways to achieve a quick expansion of homes for housing first, most notably working directly with local authorities or housing associations rather than trying to buy up housing from the latter. If Labour are serious about their affordable housebuilding plans and are willing to put in the resources to pay for it then this may be one small but important cog in the machine. What we must not forget is that providing a home is not sufficient to keep someone off the streets- it is just the first step and the ongoing support that person receives is just as significant as the roof over their head.

The long tail of affordable housing and how it can wag again

How fast do you have to run to stand still? And do you really have to run twice as fast as that to get somewhere else?

It’s a question we’ve been grappling with ever since the Red Queen posed it and none more so than with affordable housing.

Well, that was a question I was going to try and look at in this post. But then I found out that not only are they susceptible to a bit of genial name-calling, Shelter also have access to a time machine and have gone back to 2014 to write essentially the same post.

What’s a naptime blogger to do then? Well, it would be helpful to see what has changed since then and maybe have a think about the current trends in net affordable house building.

But first we have to draw a pretty big distinction between affordable housing and “affordable housing”. You see, in most areas when you think about affordable you consider whether someone’s income can cover the cost of the item. Not so in housing, where the government’s definition of “affordable” relates to the market price- the definition of affordable rent is 80% of the market rent in the same area.

This might not seem like a terrible thing and in some areas it just so happens that 80% of the market price is within an affordable range for a relatively low income family. But in reality that’s more of a happy accident than an outcome of wise policy making.

It didn’t used to be wholly this way. Most social housing rents were traditionally set based on the actual costs of paying for the property and its upkeep, with landlords (local authorities and housing associations, in the main) given very broad parameters to set rents. Whilst in power Labour argued that this led to wildly different rents for what was in effect the same house and, through controlled increases in rent, tried to get all social providers to roughly the same rent for the same property- called a “formula rent”. This equation looked at the price of the house and also the median earnings in the area. But it was only a proxy to allow for equalisation in the medium-run.

And it didn’t get there, because Labour slowed down the process and then the Conservatives came in and chose to increase and then reduce social rents at the same rate for everybody. Only now are they looking to allow authorities to increase rents again. This means rents are still quite divergent between providers and between areas.

So, and I can’t be clear enough about this, neither social rent on older stock nor affordable rent really have any direct connection with affordability built in. Social rents are by and large lower (in many areas far lower) than affordable rents and are therefore more affordable. But there is no real mechanism to ensure that stays the case. New social rented homes (those few that are built) often have rent set at the formula rate, but then affordability is only one consideration among others.

When the new “80% of market” definition came along most providers didn’t immediately switch all of their properties to it when a new tenant moved in. What many did was make newly built homes (usually by developers as part of s106 agreements) available for affordable rent as a way to cross subsidise other, more affordable housing. Indeed, until recently building for affordable rent was required through the government’s affordable homes programme, meaning councils who couldn’t borrow (because of central government limits) had no other choice than to build homes for “affordable rent”. Collectively, although mostly for the legacy reasons, this means that the vast majority of affordable homes available today are at a social rent. That’s the good news.

The bad news is the number of new build social rented homes has fallen year on year, from nearly 40,000 in 2010/11 to 6,800 in 2015/16 (with even fewer provisionally accounted for in 2016/17). The number of right to buy completions has been edging up since 2011/12, both when the financial crisis was bottoming out (and when low income households were more able to get mortgages) and when the government significantly increased the amount of discount a household could receive to buy their home. What’s more, as most new affordable homes won’t yet have a right to buy discount, we can safely assume these were almost all social rent homes sold.

Screenshot 2018-01-23 at 3.28.16 PM

So in 2015/16 more than 3 homes at sold under right to buy for every social rent home that was built. Even if you add affordable rent into the mix there are only 1,358 more homes being built than lost. And what’s more, whilst there should be 1 for 1 replacement of homes sold under right to buy, that has never been the case, looks like it will be a very long time until it is the case and if it does happen it will by and large affordable homes replacing social homes, thus adding little to the mix of truly affordable homes.

Put that another way, since 1991/92 there have been 215,000 more homes sold under right to buy than new social rented homes built.  That’s more homes than there are in Bradford.

This is also the case with affordable housing in parts of new developments. Where “affordable homes” are agreed as part of s106 agreements, they often either become “affordable rent” or an intermediate option that is most likely shared ownership. More councils are starting to accept payments in cash for off site provision in lieu of affordable accommodation, which at least means councils can build what they want but does lead to worries about the ghettoisation of “rich areas” and “poor areas”.

Of course developers are hit and miss when it comes to actually providing affordable homes as part of their developments. As part of the planning process they are able to argue that they cannot make their scheme viable with the level of affordable accommodation set by the local authority. This means they are able to negotiate, often significantly or to zero, the amount of affordable housing on the site. Of course every single site can be just about viable at the same time as the heads of the developments earn £100 million bonuses.

In fact it is fair to say that there is something more than a cottage industry set-up to help developers argue their case for lowering affordable housing requirements through the viability process. Perhaps we could call it a 6 bedroom, triple garage industry?

The recent government consultation on viability (amongst other things) goes some way to address this, effectively saying that the local plan is the place to be clear about viability of individual sites and once agreed there is little reason to change it. There are however a couple of issues with this. This first is that councils will take time to update their local plans (remember it is a process that is measured in years) so the current system will remain in each area until they have (or are at least approaching) a replacement plan. The second is that there will still be flexibility in the system (for example by judicial review on the reasonableness of individual decisions) for developers to tease open a loophole or two that they can then drive a bus through. Followed inevitably by bus lane markings and an open highway. Perhaps this is the world-weary cynic in me, but I fear the approach laid out there will lead us back to the same situation in 3-5 years.

Given that developers see having lawyers on a retainer as part and parcel of the industry, I would rather something that looks more like a hard to avoid tax than an easy to evade agreement. Yes, that might mess with their business case and yes, that will meant hey might have to change their modus operandi to suit the new circumstances. Given that might have as many positives and negatives it is a risk I’m willing to pay.

So councils are at the limits of what they can build, when they and housing associations do build they often choose (when they have a choice) to go for affordable rent. When developers build they often try to limit their affordable accommodation and when they do build it what is made is usually “affordable rent” or another type of intermediate accommodation. So where does that leave those who genuinely need truly affordable accommodation?

I fear trying to create a new type of rent level will just lead to another competing layer in the market. Removing “affordable rent” from what counts as affordable rented accommodation, especially under s106, would help restore some sense. Whilst councils are free to set terms in their local plan I think it would make sense for discussion on affordable accommodation to be based on what proportion of people in the local area could afford to live in the agreed accommodation. So if “affordable rent” stays, it could be renamed “rent that X% of people locally could afford to pay”.

Local authorities and most housing associations truly do want to build genuinely affordable homes, so giving them the powers to do borrow and build will make a huge difference in building of new affordable homes. Central government continuing the move away from “affordable rent” will allow councils and housing associations to build homes at a rent they think is appropriate and needed in their local area.

Finally, without wanting to sound like a scratched record, the bath will only fill if you put the plug in. Right to buy is leeching away truly affordable housing, giving some households a cash injection (when they sell the homes) and giving a number of private landlords an unearned field day as they swoop in, buy a former council home on the cheap and move in tenants paying market price. In a way, it would be better to give the tenants the discount to buy another house, at least then the landlord wouldn’t have to go through the cost of building a new property, although it wouldn’t help take the steam out of the wider housing market.

It would take many years for the total supply of social housing to dry up, but if we don’t look to do something more about it now then it could still happen. Given the need that clearly exists for affordable accommodation, that would be a huge mistake.

Empty homes, vacant stats and a bugbear

Happy new year! And don’t the Liberal Democrats know how to celebrate, with a widely reported press release calling the number of empty homes in the UK a “scandal”.

Now, I’m not party political in this blog. Yes, I spend a fair amount of time critiquing the government, but that is because they are the government. They are the ones able to see their policies come to fruition on a national scale, so it shouldn’t be too surprising that I want to look at that. But something caught my eye in the Lib Dem release, something that gets my goat every time I see it, no matter which organisation it comes from.

Let’s get on the same page first- using some simple language. Empty homes aren’t great and bringing them back into use is a good thing. I don’t disagree with the main conclusion of the release, that Councils need further powers to bring empty homes -the vast majority of which are privately held- back into use. However, when you actually dig into the data, there is some richness that has been missed and indeed some uncomfortable truths about where empty homes are that means policy directed only at solving this may not be completely successful.

Others have quite rightly pointed out that the numbers seem large, until you compare them with the total national housing stock, or indeed the numbers of new net homes the country actually requires. I’m not going to repeat those unnecessarily, but they are important points to make. Every single long term empty home could be brought back into use without making a really significant dent in the ongoing housing need for the country.

What I really want to talk about is the relative size of local authorities and why it makes comparing overall numbers particularly pointless. The press release goes into detail of the areas with the highest number of empty homes, citing Durham, Leeds, Bradford and Cornwall as the areas with the most empty homes. That may be true, of the places that replied. But what that doesn’t understand is that local authorities have huge differences in population and numbers of dwellings. So comparing absolutes for these areas is bound to lead to larger areas having more of a wide variety of variables.

I’ll put it another way. Let’s say I run a cat charity. I want to put out a press release saying which area is the “most cat loving”. So I write to the cat department of every local authority asking them how many homes have cats in the area. I dutifully get the answers back, put them in a spreadsheet and what do you know, the “most cat loving areas” are Birmingham, Leeds, Glasgow, Edinburgh and Liverpool. Why is that? Because they are the local authority areas with the biggest populations and number of households.

So one area has a higher number of empty homes than another, but what does that mean? Are we to expect to see more empty homes if we take a walk around the streets? Of course not, if there are 3 times the number of empty homes, but the authority is 10 times as large, then it looks to me like public policy is better focused on the smaller area.

So, in my opinion, what the authors of the press release should have done is work out the proportion of empty homes compared to the number of dwellings in the area. I don’t know why they didn’t; the figures are freely available for England, Scotland and Wales. I do know it takes about 2 hours to manually copy and paste them across into the spreadsheet, because that’s exactly what I did.

Here’s my version of the press release statistics, with sheets reordering the list of local authorities based on the proportion of vacant homes and the proportions of 5 year and 10 year vacant homes. This makes for some much more interesting and frankly depressing reading.

The 10 areas with the highest proportion of empty homes are:

Screenshot 2018-01-04 at 2.12.52 PM

And here is the proportion at 5 years:

Screenshot 2018-01-04 at 2.13.30 PM

And here it is at 10 years:

Screenshot 2018-01-04 at 2.14.10 PM

I’m not quite sure what is happening in Wycombe and Chiltern (this might be related to the law of small numbers), but the rest of the list looks somewhat familiar. All the original “big four” have dropped out apart from Durham and that looks in keeping with what could be an actual issue. Scottish, Northern, Welsh, Midlands, former strong working communities now de-industrialised, towns not cities, with relatively low house prices dominate the lists.

It is almost like the proportion of empty homes is a symptom of another problem rather than something that can be solved in isolation. So going on about empty homes in isolation might not be the best thing to do, when the issue might well be depopulation and corresponding low house prices.

The other thing to repeat is look at how small those figures are. Outside of Shetland (which will be an outlier due to its tiny overall size and living conditions) the areas with the highest proportion of empty homes after 10 years is less than one in 300. Yes, people get very upset if that one in 300 (or less) happens to be next door to them, but we do need a bit of perspective when thinking about policy.

This puts the over-simplified conclusion of the Lib Dem release under some doubt. If empty homes are a blight and a waste (and they are!) then the areas with the highest proportion of them must be the areas with the biggest proportions of blight and waste. But perhaps what is required is not just Councils taking over empty homes, but wider and more thoughtful approaches to improve the economy of those areas and give empty homeowners a reason to want to bring them back into use.

There’s a couple of other flaws with the release, the most major being that a large number of Councils aren’t included. Both Manchester and Birmingham (Councils, not the whole conurbations) manage to not be included in the release, most likely as a result of not getting the FOI response back before the Lib Dems wanted to issue it. Sure, that can only increase the overall number of empty homes, but it can change the overall proportion of homes and looking at the government’s figures suggests that Manchester especially has an interesting (and positive) story to tell about bringing empty homes back into use.

Which brings me onto the final point of concern about the release, which is the over-reliance on looking at Empty Dwelling Management Orders (EDMOs) on bringing empty homes back into use. The Lib Dems have actually asked Councils how many homes have been brought back and how many EDMOs they have used. The only thing that they have reported is the proportion of Councils using EDMOs. When you actually look at their own figures, what you see is that areas like Leeds (although be careful about proportions rather than overall numbers!) and Newcastle are bringing the most empty homes back into use and they are doing it without significant use of EDMOs!

Clearly, if the press release authors wanted to look at bringing empty homes back into use, if they really wanted to understand what worked and what didn’t then they might have asked the areas doing best what was happening. I’m sure (in fact, I know) both of the Councils in these cities have been trying very hard to bring down the numbers. But at least part of the answer might lie in the fact that both these cities have inward investment, public and private and improving economies.

Which takes us back to the earlier point- perhaps what this data is showing us is the solution to empty homes is found in improving the wider economy of de-industrialised areas, particularly towns, as well as individual measures on housing.

Assessed need and its objectification

It must be Christmas because I’m talking about planning again! Not only that, but going back to the topics of one of my first posts– the attempts to estimate of how many houses we need.

Reading Inside Housing the other day I came across a slightly strange article title: ‘More than 30,000 new homes were in areas where they were not needed, according to government formula’. Is that true, I thought to myself and, frankly, what could it possibly mean? Follow me on a little circle and I’ll try and explain, hopefully trying to demystify quite a lot of planning-speak as we do so.

First off it is worth reminding ourselves where we are. For a longer explanation, feel free to look at my earlier post. Under the current rules, local authorities have to investigate their own housing need and convince an inspector that the methodology they have used to calculate housing need (and the answers that follow from this) are accurate. Some authorities convince inspectors, some don’t. There are very few hard and fast rules to this, other than bring as much evidence as you can and explain why you did or didn’t include everything you can think of. The total amount for the country is therefore an accumulation of what each local authority has decided.

The government are proposing a new methodology that is consistent across England and can be worked out fairly quickly and easily. Crucially, instead of accumulation, the government has effectively sought out a way to distribute a national figure for housing growth (between 225,000 and 275,000 a year, more on this below) and then worked out a methodology that achieves this and spreads the national figure over the country.

So the first and absolutely clunkingly obvious thing to point out is that these methodologies are different. They may try and measure the same thing, but they go about it in completely different ways and we shouldn’t be surprised if they come to different national and local conclusions. One seeks to try and make each local area right, probably with a bit of leeway and then accumulate them nationally to something possibly right-ish with lots of leeway. The other tries to take a national view and then spread it about the country, using a crude (but therefore easy to understand) measure of affordability to do so. It is consistent and easy to understand, but as a consequence of being crude, more likely to be wrong for each individual local authority area.

Is there one that is more right and one that is more wrong? Well, in terms of trying to work out how many households there will be in, say, 15 years time, there probably is. Indeed, you only need to look at the work of Andrew Lainton to see an impressive attempt to try and find an even better, consistent, relatively easy to understand methodology.

But even the most spreadsheet happy statistician would have to accept that all they can try to achieve is a good estimate. Frankly, we may only know which was more right when we get there and even then the outcome is likely to be predicated on the actions taken until that point (because creating homes can also create households!).

Let’s put that another way- the numbers the government are using are a little bit fudgey. To begin with, the 225,000 to 275,000 range is quite large; 50,000 homes a year difference between them! The figures come from February’s white paper, with a footnote stating where these numbers come from. This includes the 13 year old Barker Report, which even Kate Barker herself has incredulously commented upon it still being used.

I’m not saying these numbers are wrong, I’m saying there is a 22% difference between 225,000 and 275,000. But what matters isn’t that the number is exactly right, but that local authorities have an idea about the housing need in their area that is seen as required and are actively doing something to meet it in a reasonable and plan-led way.

I’d much rather a good but not perfect guess now, rather than an exact answer some time in the future. And yes, that goes for distribution across areas as well as well as for the national figure.

The alternative approach, the one we have had for the last few years, is to have argument on top of argument about what the actual number, down to the last digit, should be. Local plans have been kept in a form of hiatus for years as these arguments progress. What this has meant, as I’ve detailed in my previous post, isn’t no development, but development where housebuilders want (apart from the green belt) at a rate that suits them.

But what about these 30,000 homes that “weren’t needed”? What the report goes on to say is that this is the difference between the additions to housing stock in the last year and what the same local authorities would have as their targets under the proposed new methodology. Hopefully, you’ll be able to see where the mistake (known or otherwise) is there.

Firstly, the new methodology hasn’t been implemented yet (the government are looking at the consultation responses) and even if they were almost all local authorities haven’t had enough time to update their plans based on the new proposals. Secondly, these were almost certainly homes that were needed in one sense or another not least because the housebuilders, who effectively control the market for new completions, knew they could sell them. Thirdly, the targets are really minimums, with a reasonable amount of over-supply having the potential to offset other years that might be leaner. An area that only just meets its target every year is in for a shock in a low year!

So I can’t quite see what the issue is with the fact that in some authorities some homes are being built. There is much to be critical of the government for in strategic planning. Most notably, making local authorities wholly responsible for builders failing to deliver new homes whilst denying (or at least kicking the can down the road of giving) them the powers to actually do anything about this. Such powers inevitably include letting councils actually build new social homes for rent at a scale that would help alleviate some pressure.

In essence the long discussions about housing numbers have got in the way of delivering homes and taken up a lot of conversation time that could have been spent looking at what could actually help deliver homes, particularly affordable homes (for sale or rent), where they are needed most.

But hopefully what I’ve gone some way to showing is that whilst assessments of need are more or less arbitrary -and the government’s proposals are at the “more arbitrary” end of that- what really matters is that there is a clear and achievable challenge for everyone involved in housing supply to meet and time and space to come to real and actual ways to achieve them. The alternative is essentially a parlour game, where anyone with a spreadsheet and a set of range calculations can have their two pennies.

I’m happy to take part in that game, but would also like to see some decent homes built at the right prices in the right places first. If setting a clear figure and empowering people to get out and build according to a plan can achieve that then let’s get on and do it.

Numbers and numbness

Has everyone seen the video of the man who uses excel to paint? Well, I can’t say I’m anywhere near as interesting as him, but I can usually hold down a spreadsheet and extract some valuable information from it.

The heart wrenching testimony from the work and pensions committee have shown, once again, that the systems looking into what benefits people with health issues receive are not working properly.

As regular readers will know, I have already shared my two pennies on one of the reasons I think employment and support allowance (ESA) and personal independence payments (PIP) appeals are going through the roof and why mandatory reconsiderations (the new-ish process the DWP is forcing on claimants) are not helpful. I’m not alone in wanting to look at this, indeed, the work and pensions committee have an ongoing investigation into PIP and ESA assessments, where that recent testimony came from. As part of this the DWP has given them some supporting statistics, which are a treasure trove of interesting information.

That said, like most treasure you do have to do some digging. I’m always very interested in looking at government responses to select committees (or, for many local authorities, scrutiny committees). If you know what to look for you can often find what information the authors are trying very, very hard to avoid saying, whilst putting the data out into the open.

And so it is with the data tables the DWP have released, alongside an explanatory document that explains far more than it is trying to let on. That said, if you read just the explanatory document you wouldn’t see much of interest. But when you actually look in detail, you can see what they are hoping you will miss.

Before we get into the data proper, let’s just take a quick step back and remind ourselves what mandatory reconsiderations are. Introduced in 2013, this was an additional step where a benefit claimant thought a decision was wrong. Instead of just being able to appeal straight away, they had to ask for the DWP to look again at the decision and then only once this was complete could they, separately, appeal against the decision.

This was controversial as it was adding another layer of decision making, expecting claimants to understand the process and to push forward through a difficult and complicated appeals process if they believed the decision was wrong. This is even more difficult when you think that simultaneous cuts to legal aid mean fewer and fewer people can be appropriately represented through the appeals process.

What I find odd about the explanatory document is that it consistently puts each statistic into the context of a larger cohort. So we don’t see just the outcomes from mandatory reconsiderations, we see that within the context of all claimants.

Screenshot 2017-12-05 at 7.23.42 PM

Similarly, we don’t see just the proportion of PIP decisions that are overturned at the first tier tribunal, we see that within the context of all mandatory reconsideration decisions.

Screenshot 2017-12-05 at 7.25.10 PM

This makes issues appear smaller than they are. Sure, lots of people are asking for mandatory reconsiderations and then appealing, but they want you to look at it in the context of the whole benefit, where other people are not asking for a reconsideration and then appealing. Surely those people are happy with their decision?

Coming from that second graph, the second odd thing I notice is the insistence that there is a small (2 percentage points) gap between different health conditions. The suggestion seems to be that conditions are treated quite similarly and have similar results.

Well, both those oddities can be rectified by having a look at the actual data. As I suggested at the start of the post, I have held the statistics down and given them a bit of a thrashing out, which is available here. The graphs that follow all come from my tables, which are themselves simply rearrangements of the DWP statistics.

So, when we look at the actual data of decision making we can see some interesting results. Firstly, and coming straight from the government’s data, we can see that a whole lot of people stop after the mandatory reconsideration stage. Nearly 450,000 claims had PIP decisions upheld by mandatory reconsideration between 2013 and July 2017. All of those could have applied for an appeal if they still disagreed, yet only 126,000 have had appeals heard. Similarly, 448,000 ESA claims were upheld at mandatory reconsideration, but only 152,700 cases were heard.

What does this mean?  I suspect, particularly for the more recent decisions, appeals have been made but not yet heard; the tribunal service have a big backlog for obvious reasons. It also means mandatory reconsideration has been an exceptionally powerful tool for stopping people from appealing. It’s hard to tell why that is, perhaps some genuinely accepted the DWPs version of events? But perhaps along with this, people are giving up, or are unable to cope with the stress of further appeals or blindly accept what the DWP is telling them or, worst of all, think that the mandatory reconsideration was the appeal. Further research is most definitely required, because I don’t think society can see this as a win until we know what is really going on.

But more than that, when you look at the overall appeal outcomes, these statistics start to mirror those of the tribunal service itself. Wade through the data and this shows the DWP confirming that 62% of their PIP decisions are overturned on appeal. For ESA it is nearly 45% between 2013 and July 2017.

The ESA result sounds better, until you see that the proportion overturned has been going up each year since 2013, with the rate so far this year matching 2016/17s high point of 61%.

Screenshot 2017-12-05 at 7.51.15 PM

So whilst mandatory reconsiderations may be preventing many people from appealing, those that do appeal are winning their cases in droves. It’s just like Sir Henry Brooke said a few weeks ago.

Coming onto the second oddity from the explanatory document, this idea that diseases are treated approximately the same. That looks like it is a result of the contextualising data rather than the actual facts. Here is the chart for different primary health conditions for PIP:
Screenshot 2017-12-05 at 7.57.20 PM

In PIP the highest areas of tribunal overturns are for immune diseases (100% of the 100 cases over those years), visual disease (77% overturns) and neurological disease (70%). The lowest is metabolic disease, with just (just!) 50% of the cases being overturned at tribunal.

And here it is for ESA:Screenshot 2017-12-05 at 7.59.25 PM

For ESA the highest proportion of successful appeals was in cases with ear and mastoid processes (60% of the admittedly small 500 cases over the period) with a wide selection of health problems getting 50% of claimants being successful in their appeals. There are so many at 50% I had to check I wasn’t using the same data twice! The lowest is childbirth and related issues with no successful cases recorded. Due to the way the DWP has collated these figures (to the nearest 100) this means a small proportion of cases could have been successful. Injury and poisoning, one of the biggest groups of people appealing decisions,  has the next highest failure rate, with only (only!) 36% being successful at appeal.

Overall, if you aren’t aware of the DWPs terrible record at appeals you should be shocked by how high each and every one of these numbers is. The DWP is losing cases by the bucketload, which asks serious questions about their competence and about the process of mandatory reconsideration.

What’s more, and however they are trying to argue it, it is losing cases for some primary health conditions more than it is others, so they should be looking at this to work out what they can do to make better decisions the first (or second) time around.  Finally, especially on ESA, it is losing a higher proportion of cases each year, indicating something is very wrong with its decision making.

I think the DWP is trying to say that the focus from people like myself is on a small proportion of their decisions. Those of us on the outside only think about appeal decisions and not about those people who accepted the decision, either when it was first made or after the mandatory reconsideration. But that misses the point: we don’t know why people didn’t appeal. Some might have been happy with the decision, but are others simply unable to get through the process themselves? Many of the decisions (particularly the refusals) could have been just as bad as those getting to appeal, but we simply don’t know. The heartfelt responses the work and pensions committee have received in recent weeks point to the fact that people feel let down and confused about the whole process.

This is a key issue with mandatory reconsiderations- it has added another layer in decision making. A layer suggestive of a tickbox exercise that seems to put droves of people off appealing further, even if they may well have a case on appeal. It is another piece of paper to fill in, another time you have to explain your health condition to a stranger, placing yourself emotionally on the line and another place where -as does happen- there is a chance the award can go down as well as up.

I think we can all agree mandatory reconsideration isn’t working. I don’t want to put extra work on the tribunals service, but I can’t see how the DWP can justify maintaining the current mandatory reconsideration process when their appeal outcomes are so bad. The DWP used to always reconsider their decisions after an appeal in any case, so we have to ask why this obstructive layer is allowed to remain.

PS I’m aware that the charts have some of the primary health conditions names chopped down. It is basically impossible to do it any other way when you have such big names for conditions. All of the full condition names are available on the google document containing the charts and sheets for your persual.

Please please please Letwin get what I want

It would be the first time. So, are we all enjoying the post-budget lull? It is quite possible that Philip Hammond will be off our TV screens for a little while (at least on things relating to his brief) as the world returns to worrying about Brexit.

In my previous post about the budget I tried to outline why I would be concerned about any policies announced that would have a long lead in time. Frankly, I’m worried the government, in its current iteration, won’t last long enough to bring in the longer term policies it announces.

So the news that a major part of the “housing budget” will be another review into turning planning permissions into homes, this time chaired by Sir Oliver Letwin, is a particular worry. It has been given a short period to assemble and write up its conclusions, with the demand that it should have published the results by the Spring Statement (March 2018).

Even then, it looks like a tall order for the government to stay in its current guise. Who knows what might happen in the next few months and, as experience has taught me, I won’t be celebrating any positive policy changes until they are enacted or implemented.

Of course Sir Oliver won’t have to necessarily commission new bits of research, he could just look into what has already been proposed and choose some options. He could look at the Barker Review, the Calcutt Review, the Lyons Review, the most recent Parliamentary briefings on housing supply, their own white paper and the Farmer Review, looking into skills shortages and demographic change. Plus plenty of others (feel free to tell me your favourite!).

Indeed, Sir Oliver has a veritable smorgasboard of options available to him. What needs to happen is for the government to actually take some of them and implement them. Which is where the problem lies.

For the government seems very keen to offer further demand measures whilst not really combatting the need for supply. Put simply the government’s approach since at least Eric Pickles’s days has been to force councils to release more sites whilst posturing and taking tough to housebuilders whilst doing very little to change the market to strongly incentivise or directly create steel toe capped boots on the ground. This has led to the situation where developers have lots of options on which site to choose, but no time or incentive to actually build much faster than they are already.

This approach was evident once again in the budget, with limited support for council building (£1bn seems like a lot of money but it spreads very thinly over the country) and lots of loan underwriting and guarantees. As if all housebuilders need is the final push to get them over the line on individual sites. If only they had share issues or assets they could borrow against.
It’s actually been a common point of my last few posts- political will is required to move beyond this and that means deciding to directly impact some negatively in order to help others. It’s as true with unrepentant city centre drivers as it is with housebuilders.

Trying to capture and reinvest land value uplifts (which is rather popular at the moment) would stop those who have land to sell from receiving the full market price. Robust compulsory purchase order powers (or use it or lose it), joint partnerships or new homes corporations will take business and/or profits away from existing housebuilders. Reducing house prices (however that is achieved) or reducing the rate of growth of house prices would impact people who already own homes.

Indeed, what the government seems incredibly shy of is actually using an arm of the state to directly build homes at scale. Yes, local authorities have been very adept at setting up joint ventures and yes, the government has some small scale schemes like the accelerated construction scheme. But at present these don’t add up enough to a significant market intervention. More funding, especially to cover start-up costs (you’d hope building would be self-funding quite quickly) are required in order to allow one bit or another to build at scale in a way that competes with existing developers.

There’s a word for this kind of decision making. That word is politics. Politicians are accountable to us as voters, but that isn’t the same thing as them needing to please each individual person by each individual decision.

So Sir Oliver, and by extension the government, don’t have to venture very far to solve the particular puzzle of increasing housing supply. Indeed, they have everything they need.

What they want to do, and what they are struggling to find is a way is to achieve, is creating supply without upsetting anyone else, particularly existing homeowners, landowners, landlords or those whose supposed purpose is to build houses on land. But in the real world that is very often simply necessary. It’s a puzzle of their own making, in their own heads and if they could see beyond it they would be able to deliver positive changes.

We’ve come full circle in a way. The government need to make a decision; they have the policy options laid out infront of them. But choosing not to choose is about the worst thing they can do. More delays and half measures make building the right homes in the right places at the right prices significantly more difficult.