10 things about 2015: part 2

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

My look back at the year in housing on my blog concludes with five more big issues including the future of social landlords, welfare reform and poverty. For Part 1 go here.

6) Wrong or right to buy

Nothing sums up how just much turned on the election result as what happened with the Right to Buy. In February I blogged about the clarification that meant even fewer homes sold under the existing policy were being replaced than previously thought. April brought a buccaneering Tory pledge to extend it to housing association tenants and fund it by forcing councils the sell their ‘expensive’ stock. It was hard to see how it could possibly stack up except as a political gimmick but that was pretty much the point. It was an eye-catching election promise by a party desperate for victory and it seemed designed as a manifesto commitment that could be traded away in coalition negotiations.

Except that it worked. The Tories were unexpectedly elected with an overall majority and the mash-up of think tank proposals written on the back of an envelope somehow had to be implemented. The results would be disastrous for local authorities and the government faced a long battle in the House of Lords. And then everything changed all over again as the most vociferous opponents of the policy decided to accept it voluntarily.

7) Dealing the cards

It’s still not clear to me who gained more from the voluntary deal between the NHF and Greg Clark. We’ll never know whether the government could have got legislation through the House of Lords (and maybe even the Commons) but now it can claim to have met its manifesto commitment (while hoping tenants don’t notice how long it will take to phase in). Despite their shift in stance, housing associations can claim to have seen off much worse given the hostility of senior Conservatives and hatchet jobs in the media. Or was this a case of good cop, bad cop?

The plot thickened in November when the ONS decided to reclassify English housing associations as public sector. Avoiding precisely this has long been associations’ get out of jail free card against government interference and now it was happening. However, contrary to previous speculation, the decision turned out to have nothing to do with the Right to Buy and mostly related to pre-coalition legislation. Within weeks the government was tabling deregulatory amendments to the Housing Bill in a bid to get associations re-reclassified. One clear gain for associations was that Pay to Stay will now be voluntary for them.

All of which seems set to leave housing associations able to embrace a more commercial future beyond the deal. Some will do so enthusiastically while others wonder how they can maintain their social purpose.

For local authorities, less than four years after their own self-financing deal with the government, the future seems both clearer and grimmer. The Right to Buy, Pay to Stay and fixed-term tenancies for new tenants will now be compulsory for councils but voluntary for associations while their most valuable stock will be sold to pay for housing association discounts.

8) Caps and cuts

The Conservatives went into the election committed to finding £12 billion worth of cuts in benefits but refusing to say where they would find them. George Osborne first cut tax credits then was forced to think again by the House of Lords and Tory rebels. The cut for working families will instead be delayed until the end the parliament and the introduction of universal credit (which is of course on time and on budget).

That meant housing benefit was even more in the firing line than before. Social landlords and tenants had barely got their heads around the implications of the new £23,000 benefit cap than it was reduced again (to £20,000 outside London) in the Summer Budget. Another housing benefit cut had severe implications for landlords and limited gains for some tenants: the 1% a year cut in social rents. Osborne confounded expectations with only one more cut in the Spending Review but capping social sector housing benefit at LHA levels could have severe implications for supported housing unless the government comes up with exemptions not spelled out so far. In the private rented sector, LHA rates are frozen until 2020, creating a guarantee of rising rent shortfalls and arrears.

And the impact of previous cuts would not go away. In March a study by the LSE revealed the cumulative impact on housing association tenants and the government ignored an all-party call for amendments to the bedroom tax. In December, an independent evaluation revealed the grim reality of a controversial policy that has achieved next to none of its aims. Needless to say, the DWP sneaked it out on the final parliamentary day of the year.

9) Poverty and housing

Put housing and welfare reforms together and you’re left with perhaps the key question of 2015: where will the poor live? It will only become more urgent as housing investment is retargeted at home ownership, housing benefit is cut and the existing stock of social housing dwindles. In June I blogged about the two-way relationship between housing and poverty and a major research programme that concludes that policy should start with a recognition of the role that low rents and secure tenancies in social housing can play.

Despite the case for bricks and mortar investment and a Living Rent linked to incomes, policy is moving in the opposite direction. The Housing Bill introduces higher Pay to Stay rents that amount to a work tax on tenants and measures that stretch the definition of affordable to breaking point.

10) Home nations

The pace of change in England means that the gap with the rest of the UK on housing is formalising rapidly. The divergence was officially recognised when the Housing and Planning Bill became the first piece of legislation to be covered by English Votes for English Laws.

With the exception of cuts in welfare, the changes I’ve been talking about in this blog only apply in England. The governments of the other home nations face similar financial pressures thanks to UK-wide austerity but have responded very differently. Thanks to their legislative powers, Wales, Scotland and Northern Ireland can go their own way on housing. As an illustration, on the eve of the UK election, Wales had just finished a consultation on ending the Right to Buy and the housing minister was declaring that ‘we believe in social housing’. The Right to Buy ends in Scotland on 1 August.

Devolution was also afoot in England with London and Manchester leading the way, but will city deals and the Northern Powerhouse really amount to any more than localism (which seems to apply except where local decisions conflict with national policy)?

Wales continued its modest reforms of the private rented sector and in August its distinctive approach to homelessness prevention won praise from Crisis and the Joseph Rowntree Foundation but there were still questions about how far it could escape the logic of UK austerity. Scotland went its own way on private renting too, with more far-reaching plans for increased security of tenure and caps on rent increases in high-pressure areas. However, the debate about protection for tenants and ‘rent certainty’ in Ireland could have lessons for Holyrood.

The end of the year saw national differences thrown into even sharper relief in the spending review. Where England staked everything on home ownership, Wales increased investment in social housing, protected Supporting People and resisted the 1% rent cut. The housing debate in Scotland ahead of elections in May includes the SNP’s pledge to build 50,000 affordable homes (35,000 of them for social rent) in the next parliamentary term. By size of population, that’s the equivalent of England building 500,000 affordable homes including 350,000 for social rent by 2020.


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