Beyond the deal

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

If the result of the NHF ballot was a foregone conclusion, just about everything else about the extension of the right to buy remains unclear.

With a majority of 93% by stock and 86% by membership, the NHF has a result it can present to the government as a resounding endorsement of its voluntary deal. True, it’s only 55% of those eligible to vote (or, as Joe Halewood argues, 20% of all registered providers) but that presentation is what really counts. Given the dubious nature and timing of the vote, this was always going to be the result (see my related post Deal or No Deal?).

But anyone looking for a response from Greg Clark at the Conservative conference on Monday will have come away disappointed. The communities secretary extolled the virtues of the right to buy, argued housing association tenants have the same ambitions to own as everyone else and delivered the line Tories wanted to hear: ‘We are doing what we promised, we are extending the right to buy to housing association tenants.’ But there was no explicit reference to the deal rushed through in time for the conference.

The omission may just be a demonstration of the political sensitivity involved. Early reports said Clark had watered down the manifesto pledge (something he denied, though the voluntary arrangement may result in the right to a discount rather than a right to buy for some tenants). However, it’s also a reflection of how much has still to be resolved.

There are numerous outstanding issues about the right to buy and housing associations. To name just a few: the practicalities of enforcing a ‘voluntary’ deal on associations that voted No or did not vote at all; the problems of doing it by regulation rather than legislation (though it’s hard to see how some sort of legislation can be avoided); questions raised by the Charity Commission and rural associations; and the potential for conflict between large developing associations and small selling ones. While the offer document sets out the principle of a deal in outline, most of the detail is still unclear.

However, the deal raises issues that go far beyond the right to buy or housing associations. I’ll concentrate here on two in particular.

First, the extension of the right to buy depends on the forced sale of council houses. That may seem obvious but the NHF has been at pains to compartmentalise the two issues and local authorities were not involved in its negotiations with Clark. Initial furious reactions came from London Labour councillors (the latest is from Philip Glanville of Hackney) but it’s clear that the anger goes across local government.

Monday saw the Conservative-led Local Government Association express its disappointment that the NHF has ‘secretly attempted to strike a deal to voluntarily deliver the right to buy extension on the back of forcing the sale of council homes, and by its willingness to move away from providing the genuinely affordable homes the most vulnerable in our communities need’.

It published a report estimating the cost of the policy at £6bn over the next four years (based on work by Savills estimating around 100,000 sales). LGA housing spokesman Cllr Peter Box (the Labour leader of Wakefield) called for councils to be allowed to manage their own assets and instead raise £13bn by developing surplus public land.

On Sunday night, LGA chairman Lord (Gary) Porter (the Conservative leader of South Holland) mounted an outspoken attack on the NHF at a Conservative conference fringe meeting. As Heather Spurr reports, he said the deal ‘could come back and bite them on the backside’ and ‘could be the start of the end of the Nat Fed’. He went on: ‘I think the G15 are getting their own way. A lot of the smallest providers, particularly the specialist providers, have been left out in the cold.’

Lord Porter was on the stage with Greg Clark at the conference on Monday afternoon but he was there to talk about decentralisation of power (a big theme of the day following George Osborne’s announcement on business rates). Quite how forcing councils to sell their most valuable assets fits with the new agenda of giving them more power and trusting them to run their own affairs remains to be seen since the two agendas are in fundamental conflict. It’s also far from clear how the loss of so many homes will help them meet their statutory responsibilities when budgets are about to be squeezed again.

That was a point made forcefully by the Chartered Institute of Public Finance and Accountancy in another report on Monday accusing the government of asset stripping councils and driving a wedge between them and housing associations. And in another conference fringe meeting, London’s deputy mayor Richard Blakeway said talks are continuing with the government about the need for a ringfence to keep the receipts from forced sales in the capital – and ministers will be acutely aware of next year’s mayoral elections. Given the high proportion of council housing and even higher proportion of expensive stock in London, that could threaten the funding for right to buy discounts elsewhere. The G15 has promised there will be no net loss of social housing in London but councils question how many would directly replace what they stand to lose.

My second key issue less immediate but arguably the real driver behind the voluntary deal: the government’s long-term ambitions on home ownership and housing associations’ role in delivering them. Greg Clark told the NHF two weeks ago that some Conservatives were tempted to look elsewhere for partners in this.

In his conference speech on Monday, George Osborne made the agenda clear: ‘This autumn we’ll direct our housing budget towards new homes for sale.’ That sounded even more explicit than the line in July’s productivity plan about ‘refocusing’ the housing budget on low-cost home ownership for first-time buyers.

Greg Clark argued in his speech that:

‘For years governments have talked about affordable homes but in my view not enough of them have been affordable homes to buy. I want us to put that right. I want us to build many more homes. I want us to build homes so that people can buy as well as rent: shared ownership homes and starter homes for young people. Now homes for rent will always have a role but why should signing a tenancy agreement mean signing away your aspirations to become a home owner? That’s why the right to buy is so important.’

That’s a passage that I think makes clear why the NHF offer document talks about far more than just the right to buy. Chapter 2 argues that the definition of replacement homes (for those sold under the right to buy) could include shared ownership, starter homes and other part rent-part buy models. Chapter 3 makes an even more radical offer through giving tenants equity stakes, deregulation to enable associations to dispose of stock more easily and ‘to convert vacant properties from social or affordable rent into other forms of tenure’ and changes in allocations to give them ‘greater control over who they house’.

Only time will tell if the deal will be enough to counter the obvious hostility to associations in the Conservative party beyond Clark and, if it is, how far they will move away from their traditional role.

Friday’s result was just the start of a process in which far more is at stake than just the right to buy.