The fall guys – Part Two

Originally posted on July 28 on Inside Edge 2, my blog for Inside Housing

So does it really cost housing associations £150,000 to build what housebuilders can deliver for £90,000?

The first part of this blog examined last week’s Channel 4 News reportclaiming that: ‘Government plans to build more affordable homes are being frustrated by the poor performance of housing associations.’ I concluded that it made some legitimate points, especially on executive pay, but otherwise did not stand up to serious scrutiny.

This second part of the blog is devoted to what I think was the most serious charge:

‘According to private housebuilders, the cost of delivering a house is £90,000 but when you ask housing associations they say they have to spend £150,000 to deliver a home. Now they’ll tell you that the homes are better but is it justified that they build only two-thirds of what private housebuilders do with the same amount of money.’

This is the key fact (or factoid) in the report. It would not be a complete surprise if private housebuilders could deliver homes a bit cheaper than housing associations. They build in bigger volumes. Building homes and trading in land is what they do and they are not distracted by other considerations such as managing homes for tenants. And, as the report pointed out, housing association homes may also be bigger or built to a higher standard. Against that, housebuilders carry more risk and so take higher profit margins than the contractors who build homes for associations.

Read the rest of this entry »

Advertisements

The fall guys – Part One

Originally posted on July 28 on Inside Edge 2, my blog for Inside Housing

Here’s my attempt to separate fact from factoid in one of the most controversial TV news reports on housing in years.

I couldn’t watch last week’s Channel 4 News investigation of housing associations on the night but I think the issues it raised are important enough to come back to it in detail.

The clues that something was not quite right about this report were there even for people who know nothing about housing. The musical soundtrack (ironically a song about the campaign for justice by a wrongly convicted boxer) and the quirky graphics (houses appearing and disappearing) were there as distractions. The fact that in the studio discussion that followed the anti-association case had to be made by the so-called ‘Tax Payers’ Alliance (the self-appointed scrutineers of government spending who refuse to say where their own funding comes from) was further evidence.

The closing commentary confirmed this impression. We were told that:

‘There’s a fierce philosophical row between the Tories on the one hand and the Left on the other about the future of associations. One side wants radical change and the other is desperate to protect its ability to serve the community as it sees fit.’

Really? That may be how the Conservatives would like to present it but it demonstrates a complete lack of awareness of the political context for housing. As associations see fit? I’ll let the fact that this point was illustrated by film of a protestor from ‘the Left’ holding a banner from Defend Council Housing saying ‘No Privatisation Sell-Offs’ and ‘Invest in Council Housing Now’ speak for itself.

But what really shocked me from a programme that I admire and watch regularly was that this welter of unsourced statistics and rampant editorialising went out as the main story of the evening. The failure to understand housing and housebuilding was so complete it would be almost comical – except that this report plus trailers in The Spectator and The Times are part of a media and political narrative with deadly serious implications for the future.

Read the rest of this entry »


Shifting sands

Originally posted on July 23 on Inside Edge 2, my blog for Inside Housing

A new report aims to maximise Section 106 contributions to affordable housing but the government seems intent on moving in the opposite direction.

Rethinking Planning Obligations is the result of research for the Joseph Rowntree Foundation by a team from Oxford Brookes University and the University of East London. It notes a sharp fall in the contribution from Section 106 since the credit crunch: from 32,000 in 2006/07 (65% of all affordable homes) to 16,000 in 2012/13 (still significant but only 37% of the total). Contributions to affordable housing varied across case study areas from 2% to 87%.

The decline is partly the result of the housing market downturn: planning permissions agreed before 2007 with high proportions of affordable housing were not viable after the crunch and had to be renegotiated.

However, the government has also introduced a series of changes that make it easier for developers to argue down their contribution, and secretive viability assessments have become a key weapon. For detailed examples of how it works, see Oliver Wainwright’s story about Neo Bankside in The Guardian this week or The Bureau of Investigative Journalism’s story from May about Greenwich Peninsula.

Read the rest of this entry »


Cuts, caps and goalposts

Originally posted on July 22 on Inside Edge 2, my blog for Inside Housing 

Looking to gauge the effects of the latest benefit cuts on housing? The official impact assessments are at best a starting point.

Documents published for the second reading of the Welfare Reform and Work Bill on Monday evening (available here) do give the Department for Work and Pensions’ (DWP) view on what to expect, but there are several reasons why it is a severely blinkered one.

First, they only cover what is actually in the Bill and many of the main housing benefit changes in the Budget do not require primary legislation.

So there is an impact assessment of the five-year freeze on most working age benefits but it does not include the freeze of the local housing allowance. Similarly, we do not get the DWP view on ending automatic entitlement to housing benefit for 18 to 21-year-olds because that will be done by regulation rather than primary legislation.

Read the rest of this entry »


State of the nation

Originally published on July 16 on Inside Edge 2, my blog for Inside Housing

Results from the latest English Housing Survey reveal some fascinating details about where and how we live and how much we pay for it.

Headline findings from the survey for 2013/14 were published in February. As I blogged at the time, they revealed the full scale of the shift in tenure: this was not just about private renting overtaking social renting but outright ownership overtaking buying with a mortgage.

The results published on Thursday provide much more detail on that and much more besides. Here are some details that caught my eye:

100 years of changing tenure

Most of the 20th century was all about the decline of private renting from a tenure that housed three-quarters of us in 1918 to less than 10% of us by the 1980s. Until then, social renting was expanding almost as quickly as home ownership but it retreated again in the wake of the right to buy. But the 21st century has seen a big decline in home ownership too and the rebirth of private renting:

shift

Read the rest of this entry »


If at first you don’t succeed

Originally posted on July 13 on Inside Edge 2, my blog for Inside Housing

It may have important new provisions on housing and planning but the name of the government’s new productivity strategy rather gives the game away.

Described as ‘the second half of the Budget’, Fixing the Foundations was published by the Department for Business Innovation and Skills but includes chapters on housing and planning and welfare that amplify decisions taken in the first half.

But does the name remind you of anything? Go back four years and David Cameron himself was launching a ‘radical and unashamedly ambitious’ housing strategy. The title? Laying the Foundations.

Once they’ve stopped sucking air through their teeth, any builder will tell you that once you’ve laid the foundations and built on top of them, it’s enormously expensive to start to fix them. It’s also a pretty good indication that the foundations were pretty rocky to begin with.

Read the rest of this entry »


Work hard, do the right thing – and get screwed

How has George Osborne got away with a Budget that will hurt the very people he claims it will help most: hardworking families?

The headlines are all about One Nation, National Living Wage and tax cuts but, as the dust settles, the calculations that have emerged so far make clear that the poorest households are going to suffer significant cuts in income. While a series of cuts such as the lower benefit cap will hit out-of-work households hard, people in work face a series of technical changes to tax credits and benefits that will make many of them substantially worse off.

To give some idea, here are the three main cuts:

  • A four-year freeze in working age benefits saving £4 billion by 2020/21. The Institute for Fiscal Studies estimates that this alone means that 13 million families will lose an average of £260 a year. Of those, 7.4 million are in work and will lose £280 a year. The freeze will also hit child benefit, which David Cameron promised to protect.
  • £6 billion worth of cuts to tax credits (and subsequently universal credit) and associated housing allowances from April 2017. The IFS says new claimants will lose credit entitlement for more than two children, losing the average of £3,670 a year that currently goes to 872,000 families (548,000 in work). On top of that, the family element in credits for the first child will be cut for new claimants and housing allowances associated with both will be cut too. Kate Webb of Shelter calculates that just one change – the removal of the family premium, an allowance of earned income before housing benefit starts to be withdrawn for working families with children – could cost a single mother working 20 hours a week at the new national living wage £11 a week. That’s not much less than the bedroom tax.
  • Cuts to work allowances that mean working households will lose tax credits/universal credit much more quickly than now. At the moment, credits start to be withdrawn once family earnings rise above £6,420. That will fall to just £3,850. This will cost 3 million working families just over £1,000 a year each. Credits will also be withdrawn at a faster rate once they hit that threshold.

Read the rest of this entry »