The first green paper of spring

Labour got there first. Their social housing green paper is out, with a not at all connected to the local elections launch at the LGA’s offices.

Anyone reading my blog over the last few months will not be surprised that much of what is in the paper is very welcome. But as a serious and relatively complete policy document there is always going to be some critique (rather than criticism, I hasten to add) to undertake in order to understand it fully. This is especially true as the paper reads like a set of policies that are, in a sense, shovel ready. So this critique is meant as a compliment- this is exactly what I would do if it was a green paper from a government.

I suspect that much of this has been due to the forensic and policy-focused approach of John Healey, who has both always been impressive in housing and has had the brief (on and off, slightly) for long enough time to really get to grips with it. There is an argument for giving ministers (and their shadow counterparts) long periods in posts in order to understand the deeper issues and John Healey is the proof that it can work. Perhaps the government should take note.

There is a huge amount of detail in the paper, so I want to pick out a few bits. Firstly I’ll look at some of the major positives (of which there are a few!) and then look at where there are gaps or opportunities to do things a little bit differently than suggested.

So, the positives. Labour have set a clear (if amazingly round) target for the delivery of new social housing. The government’s social housing green paper has mostly been framed around improving matters for existing tenants, not creating new tenants. That’s why the JRF have been so clear in trying to push for new homes alongside other changes- a battle I’m not sure they are winning with the current government.

Delivering 100,000 new affordable homes a year will be a challenge for any government and it will take a significant effort from local authorities, housing associations and other providers of social housing to achieve. I believe the will is there, even in areas not wholly committed to large scale housebuilding, but a target like this will require a herculean effort from the social and building sector to see through.

Moving on to the definition of “affordable housing”, the green paper suggests getting rid of the 80% of market rent test. Good. What replaces it is slightly more interesting. Whilst trumpeting a new average income based living rent the “core” of the affordable homes programme will be the good old formula rent. That’s not a bad starting place, but the formula only has loose ties with affordability, so it is worth considering if there are other options available.

The paper is positive about the role of housing associations, both as a not for profit service for their tenants and as one of the ways to create new social housing. There have been previously been concerns about Jeremy Corbyn’s support for housing associations, so it is good to see real inclusion of them in these plans. Yes, that comes with some additional requirements, inclusion in freedom of information legislation for one thing, but that seems to be a small price worth paying so that they can play a part in large scale social house building.

No-one will be surprised that suspending right to buy (preferably off a cliff) and scrapping the bedroom tax are welcome. Both create significant issues and cannot sensibly be justified- as the paper suggests- social housebuilding is likely to reduce the overall benefit bill.

Moving onto something the paper doesn’t do- I’m certainly relieved that it doesn’t try to reinvent the wheel when it comes to funding new social homes. The key issue is not that new homes are too expensive to be built by local authorities; they usually make a surplus over their lifespan. It is that there is an arbitrary limit on the amount councils can borrow, even though they are sat on huge assets (the very homes they currently let out!).

The current government has repeatedly, maddenly, tried to put forward different ways to fund selective council house building, usually through one off loans or grants, whilst keeping the purse strings themselves. This allows them to appear to be the ones making the decisions whilst touting a very big number (usually £X million, so not actually that big in housing terms!) and simultaneously refusing to allow local authorities to borrow off their existing assets. So it is great that the paper suggests the main way for new council homes to come about is through borrowing up to the prudential limit. That is, in a way, all that is required for stock owning local authorities with a desire to build.

Helping councils that have transferred their stock to a housing association to build a new generation of council housing is positive. Government loans will allow them to build up (literally) assets which they can then borrow against. What might be needed is provisions or guarantees that this new stock won’t itself be transferred at some point in the future, negating the whole process.

In terms of wider financing, the paper is sensible (but brief) in suggesting other sources of funding, including institutional schemes like pension funds, could be harnessed for housing associations. There is nothing wrong in any of that, but it is worth remembering that pension funds will put money where they can make money- if there is another, better opportunity for them then they will go elsewhere. Certainly funding affordable housebuilding is likely to be low risk, but will it have the returns of other investment opportunities?

Which brings us to things with (in my view) slight alternatives to the policies laid out. Firstly, the paper is looking to set targets for local authorities building social housing, almost as a subset of the objectively assessed need I’ve spoken about before. They’ve not outlined how that would take place and I worry that trying to force councils who don’t want to build affordable housing will take focus, time and money away from providing for councils who do. If they try and split the 100,000 a year based on some affordability calculation (as with the government’s proposed OAN measure) then areas who may be less able to find sites, have less recent experience of building to date and overall willing to build quickly may have a higher target.

It is unclear what the sanction would be for authorities that don’t meet their targets. The paper (rightly) talks more about incentives than threats, but if they are serious about every area delivering social housing then threats may eventually have to be issued, much as they are currently over local plan adoption. What the mechanism for this will be remains to be seen.

The best alternative for me, at least to begin with, is to work with those who want to build. Get up to scale with social house building in those areas who will relish the opportunity and hope that those remaining will be converted either by showing it can be done or by political pressure from their own residents who see it happening elsewhere.

The green paper is also a touch vague on how a Labour government would actually close the viability loophole. There’s talk about boosting support for councils to prove schemes are viable with affordable housing with independent viability experts to sweep in. I’d worry how liable those independent experts will be to regulatory capture, especially as you would expect that they will be drawn from and potentially looking for work from, existing builders.

It is worth remembering that the government has threatened (however idly) that it could go further and set affordable proportions or payments centrally. There is an opportunity for Labour to outmanoeuvre them and promise to shut the viability door once and for all. Perhaps there were concerns about appearing to knock big builders (something it is counterintuitively easier for the conservatives to do) but the outcome looks less like closing the loophole and more like bolstering one side against the other whilst keeping the rules by and large the same.

The clawback clause does do a bit of work to cover this, but balance sheets are often malleable to what the company creating them wishes to show. It would take either extremely well written rules or forensic auditing to check whether companies have made additional profits on individual sites or not.

Another way the paper is vaguer than I would like is on supported housing reform. Yes, the government’s current plans don’t have the support of the sector and yes, a period of talking to them again might be required. But we have been in this limbo for years and the can does keep being kicked down the road. I think any government has enough options laid out infront of them, it needs to make a decision and see it through. That’s going to annoy some people- potentially older people who may have to pay more either in life or in death. That’s politics.

Finally for this (short!) section on alternatives, the paper is clear that it wishes to see different households knitted together into a mixed community, but is short on a mechanism for how this is achieved. For private sites there are plenty of opportunities to achieve this, mostly around the rules governing how the affordable homes do not differ from the other homes and are not located in one cluster away from prying eyes. For new social housing sites, which will clearly be a growth industry if the society seen in the paper comes to pass, it is a little bit less clear.

Yes, having a range of the affordable tenure types mentioned in the paper will do a bit as will a supply of new council homes being available not just to those who desperately need a home, but without a mechanism to achieve mixed communities I think it is potentially over-optimistic to think they will appear organically. How this will be achieved, how large scale council or joint built sites can be attractive enough to want potential owner occupiers to move into will be a challenge and one that needs to be considered deeply before the concrete is mixed.

So, overall, lashings of positives and much for a future government to get their teeth stuck into. You can only hope the government are looking over their own draft social housing green paper and wondering if it matches this one in terms of its ambition and clarity (prediction: it won’t). Whilst deliverability is key I think there is enough substance in the paper to make many of the proposals possible and, frankly, aiming high is better than not aiming at all.

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.