A new vision for social housing

Originally posted at www.insidehousing.co.uk on January 8.

Sooner or later a government will have to come up with a long-term plan for housing like the one that Theresa May launched this week for the NHS.

In place of the endless promises of the ‘jam tomorrow’ of more new homes at some point in the next parliament it would need a commitment that goes beyond the next election or even the one after that.

Today’s report from the independent Social Housing Commission provides a stark illustration of what is needed and the scale of the resources required.

And this is much more than the usual call for more from the social housing lobby. The 16 commissioners are drawn from across the political spectrum, with former Labour leader Ed Miliband matched by former Conservative ministers Lady Warsi and Lord O’Neill, and from across society, with Baroness Doreen Lawrence joined by members of the Grenfell community. There were also 13 public debates around the country and responses from 31,000 people.

Their report calls for a new vision for social housing and a new deal for those who live in it, with a programme of 3.1m new social homes over the next 20 years, a complete overhaul of regulation and a new national tenants’ voice.

The scale of that programme – 150,000 a year at an annual cost of £10.7bn during the construction phase – seems enough to blow the doors off at the Treasury.

And the predictable and underwhelming response from the Ministry for Housing, Communities and Local Government is that is has already committed a further £2bn over the next 10 years, given extra freedom to councils and published a green paper.

However, former Conservative Treasury minister Lord O’Neill says it is ‘well within [the government’s] financial reach’ and represents ‘the only hope the government has of hitting its 300,000 homes a year target’.

The 3.1m total includes 1.3m homes for people in the greatest housing need but the vision for social housing also embraces many more people who do not qualify for it under the current system: 1.2m people trapped in insecure private renting who cannot afford to buy; and 690,000 older private renters facing high housing costs into retirement.

And that also means a switch back from paying for housing via the personal subsidy of housing benefit – a system Lord O’Neill describes as ‘shockingly inefficient’ – to investment in bricks and mortar that would be treated the same as borrowing to fund infrastructure.

Accompanying analysis by Capital Economics argues that savings in housing benefit from cheaper rents and increased tax receipts from the construction programme would reduce the net cost to £3.8bn a year over the 20 years – and the whole thing would pay for itself and start to generate a return for taxpayers after 39 years.

None of these arguments are particularly new – and Capital Economics did similar analysis for SHOUT three and a half years ago that highlighted the ‘fiscal myopia’ of subsidising high rents rather than homes – but the context for them has changed.

Instead of a new Conservative government proclaiming the need to sell off even more social housing, we have an exhausted one that has taken steps in the opposite direction and quotes approvingly from the pro-council housing Tory manifestos of the 1950s.

That new context was evident on the Today programme this morning as Ed Miliband harked back to the days of Bevan and Macmillan as he argued that governments of all parties have failed on housing.

The report does not recommend the abolition of the right to buy, arguing instead that government should ensure that any scheme is sustainable by replacing any social housing sold.

Baroness Warsi frames her support for the commission’s recommendations in terms of social mobility, arguing in The Times this morning that the shrinking stock of social housing and failure to replace stock sold off also led to the decline of the right to buy as a key route to ownership for first-time buyers.

And Lord O’Neill argues in The Sun that:

‘Done properly, it can offer a whole generation the chance of low rents, secure tenancies and a genuine path to home ownership — something private renting has no chance of achieving.’

Some will disagree with the emphasis but these are signs of the political consensus that will be needed to fix housing in the long term – this week’s NHS plan has plenty of critics but at least it looks beyond the next election and focuses on prevention.

The last 40 years have seen more insecurity, higher rents, a one-off boost to home ownership followed by the expansion of private renting, all of it based on the assumption that housing benefit would take the strain.

The results are all around us and it’s way past time for an alternative.

Steve Hilditch’s blog on Red Brick has great analysis of the report, highlighting what is really significant about it as well as some of the issues it glosses over.