Opinion: Spinning the death of affordable housing

At the heart of politics lie battles over meaning. In an uncertain world there is plenty of scope to contest the definition of problems and the perceived effectiveness of solutions. Under Labour we came to think of agenda management as “spin”, and to condemn it. But the Blairites were simply the most egregious and effective exponents of the political arts. All politicians face decisions about the message and how one would ideally like it interpreted.

This seems particularly pertinent in relation to current discussions about affordable housing. We’re seeing the government providing some creative readings of what is on offer.

One component of the debate is the battle over “fairness”. The term is, of course, utterly meaningless without further specification. We can all agree fairness is desirable, even though we mean radically different things by it. That is its strength and its weakness in political discourse.

The government, particularly its bluer contingent, are trying rather successfully to shift the dominant interpretation of fairness away from the appropriate assistance to the disadvantaged and towards the interests of the tax-payer. It isn’t a new debate, but clearly an opportunity has presented itself for another lap around that particular track.

But that’s not my principal concern here. I want to consider the current agenda relating to the supply of affordable housing, to the extent this is yet clear.

The government has announced the construction of 150,000 affordable social rented homes over four years. At one level this is fair enough. The claim is that this is a faster rate of addition to the social housing stock than occurred under Labour. That claim needs a bit of unpacking. It only makes sense if you compare the net addition to the stock under Labour – new construction minus Right to Buy sales and other disposals – with gross additions to the stock under the current regime. Which of course doesn’t make sense.

It could be forced to make sense if the Right to Buy were to be suspended and demolition ceased. It isn’t clear these are formal policies, but de facto a move to 5 year tenancies for council tenants could render the Right to Buy ineffective and reductions in the availability of funding could do for demolition.

But never mind its plausibility, as an argument it plays well on Question Time.

And all this is to leave aside the point that an addition to the stock of 150,000 units over four years falls a long way short of expert estimates of what is required. At least there is the consolation that Labour didn’t really get very close to what is required either.

The further confusion is that the government has cut the social housing capital budget in half. The plan is to square the circle by allowing rents on properties managed by social landlords to rise to 80% of local market levels.

This raises the question: what do we mean by “affordable housing”? The term has had a relatively stable meaning for many years – rented housing let at rents (significantly) below market levels. It can also encompass other types of provision, such as some low cost homeownership initiatives. This meaning is now being destabilised.

The government’s proposal will see social rents in some areas quadruple, although in other areas the impact would be much more modest. The government seems to be taking the position that if a dwelling can be made affordable because the tenant is eligible for assistance through housing benefit then it is an affordable dwelling. But that is no different from the private rented sector. The distinctive understanding of “affordable housing” dissolves.

The consequences of this policy being implemented are potentially significant. It is in tension with broader policy objectives to smooth the transition off benefit and into work. More households will be caught in a deeper benefit trap. Equally it is unlikely that the policy will save much public money if housing benefit has to take the strain. Social rents also feed into the calculation of the rate of inflation and therefore rent increases have an impact on the achievement of broader macroeconomic objectives.

We appear to be destined to repeat history here. In the late 1980s and early 1990s the previous Tory government pursued a similar strategy of raising social housing rents. The policy ran out of steam in the mid-1990s when it was pointed out that it was costing the government more in benefit payments than it was saving in subsidies to prices.

In those days the problem was not just housing benefit but also that the uprating of a wide range of welfare benefits was tied to RPI. So the public spending implications were considerable. In this respect the current government has the advantage that it has already taken the decision to decouple many benefits from RPI and base uprating on CPI. But clearly it isn’t going to be hugely advantageous for those who rely on assistance from benefits to secure an acceptable standard of living.

It may be that the government considers it has no option but to build fewer houses, charge more for them, and offer less generous assistance to those in need. But it would be more honest to say they are doing something different than to go through a tortuous process of claiming they are not. There are signs that views are hardening and the tactics are to shift in this direction. The substance may not be palatable, but at least it has the virtue of honesty.

While policy discussion is being conducted in familiar language, the death of affordable housing as we have known it is imminent – unless there is the will to contest attempts to manipulate language and reframe the debate to the disadvantage of the already disadvantaged.

Alex Marsh is a Liberal Democrat member who blogs at alexsarchives.wordpress.com

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27 Comments

  • Finally a post on this blog that admits the truth about the coalition’s housing policy.

    The National Housing Federation have already stated that by their analysis the total number of affordable homes built will be zero.

    That’s right all you apologists, zero. Not one, single, affordable home, at all, anywhere.

    My question to Lib Dems everywhere?

    What is your Red Line? What policy catastrophy will make you think again?

  • “What is your Red Line? What policy catastrophy will make you think again?”

    My personal red line was crossed some time ago, hence the ‘ex’ in my sig, I think that it won’t be long before the ‘old’ LibDems are completely replaced by ‘new Tory’ LibDems

    nige (exLD)

  • David Morton 3rd Nov '10 - 5:42pm

    I’m deeply grateful for this superb piece.

  • Dominic Curran 3rd Nov '10 - 5:54pm

    Hi alex,

    A timely article. I have recently written about exactly this subject on LDV, as indeed has Andrew Stunell, ‘Our Man in the Department’. There is a good, strong debate around these issues, one that will become clearer when the Decentralisation and Localism Bill is published on 22 November.

    Let’s deal with the numbers issue. The Government says that they will build c150k new homes over four years. They also estimate that they will sell some 25k from Right To Buy (RTB). That leaves a net addition of c125k social homes to the housing stock. Given that RTB sales have been greater than social home completions in every government since 1979, Andrew Stunell can truthfully claim that, as long as numbers stay as predicted , this government will be the first to have a net addition to the housing stock for thirty years. (As an aside to this, the Government is also increasingly fond of saying that this year they are completing more social houses than in any year under Labour. This happily ignores the fact that the homes finished this year will have started under Labour, with money provided by Labour. I am no cheerleader for the last government, but even i object to claming their social home completions as our own).

    I’m prepared to accept the Goverment’s commitment to building new homes, and will take their 150k gross (or 125k net) completions on trust for the moment. That’s mainly because we have Ministers like Andrew Stunell who I think are good and decent, adjectives that I have trouble applying to Conservative MPs.

    What seems bonkers, however, is the expectation that rents at 80% of market rate are ‘affordable’. No. They. Are. Not. They may be if HB is paying for it, but then we get into a merry Whitehall go-round of the Communities and Local Government Department getting the Department of Work and Pensions to pay for their housebuilding programme through HB, instead of funding it directly. In getting the homes built by HB receipts and the rents paid to housing associations, the Government is taking our tax money, asking tenants to claim it (itself an exhausting process, as anyone who has ever claimed HB will know), paying administrators to distribute it, asking RSLs to collect it, and then using it to lever in cash from banks to build new homes. What a huge waste of time and money, when the Government could just build homes with the money in the first place, without, literally, sending it all round the houses.

    We are barely scratching the surface of the issues here, but i’ll stop now and spare readers any more of me.

  • @ stephen w

    “Has funding for house construction been abolished?”

    Pretty much. The funds channelled into the banks have been channelled by the banks into boosting their balance sheets and into overseas activities, Private-sector house-building is in the doldrums with very limited availability of finance from banks.

  • From the lead article: “In the late 1980s and early 1990s the previous Tory government pursued a similar strategy of raising social housing rents. The policy ran out of steam in the mid-1990s when it was pointed out that it was costing the government more in benefit payments than it was saving in subsidies to prices.”

    Correct! Overall welfare payments peaked at over 12% of GDP in 1993 and 1994. They’re now as low as they were during the 1960s.And not much higher than the 1950s. If you read the daily newspapers – and believed the rhetoric from Osborne and Co – you’d likely think that welfare payments are at all time high.

    See graph

    http://www.ukpublicspending.co.uk/downchart_ukgs.php?year=1950_2011&state=UK&view=1&expand=&units=p&fy=2010&chart=40-total&bar=1&stack=1&size=m&color=c&title=Welfare Chart

  • stephen w wrote –
    “Let’s wait to see what happens before we give up on the government entirely.”

    That’s like saying ‘lets to see if the horse bolts before we shut the stable door’ and all the while people will go through real hardship while we “wait and see”

  • This raises the question: what do we mean by “affordable housing”? The term has had a relatively stable meaning for many years – rented housing let at rents (significantly) below market levels.

    I imagine that most people think they mean a house they can afford. I don’t care about the number of council houses, or whatever they are called today.

    Getting lower house prices is mostly a matter of building new houses, and that would certainly be possible at current sales prices, if you could get a new development through the planning system.

    Which is why the current government has scrapped the regional develoment plans, and is simply going to give money to councils that give planning permission for new houses.

    http://www.communities.gov.uk/housing/housingsupply/

    ” we will shift control over housebuilding from central government to local authorities and the community. We do not believe that top-down housing targets work so we are replacing these with powerful financial incentives.”

  • Just to try to get some perspective back into this and to widen the focus of the housing discussion:
    Affordable housing does not get built by the government. It gets built via the activities of housing associations and councils.
    Where I am, the way affordable housing gets built is by requiring developers to allocate a percentage of new development to be built as affordable and handed over to a housing association. No public money involved. Up until now the percentage in our planning policy has been quite low, and we are very very slowly adding to affordable housing. Even the Tories have realised it isn’t good enough. So now the percentage has more than doubled, and we expect to get a lot more affordable housing as a result. To give you an idea how much: we are due 35% of 10000 houses by 2026, that’s 3500. It’s not enough, but it’s a lot more than has been delivered locally in the past 16 years.

  • Dominic Curran 4th Nov '10 - 9:27am

    @ MrsB
    “the way affordable housing gets built is by requiring developers to allocate a percentage of new development to be built as affordable and handed over to a housing association. No public money involved”

    that’s only a little bit true. Some AH is delivered through S106 agreements of the sort you mention. However, if there is an massive reduction in private housebuilding – which, relative to the past ten years, there is – then there are no developments on which to ‘tax’ affordable housing in this way. Most social housing that has been built nationally (if not necessarily in your local area) in the past 20 years has been by housing associations, and they are grant funded by the state.

  • Andrew Duffield 4th Nov '10 - 10:51am

    Introduce LVT – or even just start talking about introducing it – and we could have a million empty homes back on the market for rent or sale. Affordable housing is the automatic consequence. Used to be a no brainer for this party.

  • coldcomfort 4th Nov '10 - 11:39am

    This thread just shows how fiendishly complicated it all is. Affordable housing suffered its’ first tumour when Thatcher introduced the sale of council houses, largely to escape the costs & irritation of having to deal with tenants who abused the system. Over the years it has developed into a full blown cancer which has pretty well killed the patient. To turn it round one must start with a rent setting system. In a part of Manchester not far from Andrew Stunell’s constituency a house is being rented out at £478 a month. Virtually next door an identical house is for sale at £55000 and round the corner the same house is on part ownership for £19950. If the landlord thought he’d find a tenant he’d charge double the rent. As it is, however you play with the figures, he is on at least 12% return on capital. Not bad!!. Next you have to take into compulsory purchase any property that has been empty over one year. But no one has the courage – certainly not Labour. By all means become an ex-LibDem if you must but where would you go? Better surely to continue to do battle from within. Lib Dems are still better than anyone else at ordinary membership involvement in the political process.

  • .
    @Oranjepan – where do you get your facts from?

    1) At the peak of the house price bubble top rate mortgages were being accepted at 20x salary.

    2) Now this is down to 9x salary.

    3) Last month it was reported the rolling quarterly average of house prices saw its first drop in living memory.

    4) …the benefits won’t really start to be felt … until a whole cycle has been completed … and mortgages fall below the 5x salary barrier.

  • @Oranjpan

    1) At the peak of the house price bubble top rate mortgages were being accepted at 20x salary.

    In fact, it was x7!

    2) Now this is down to 9x salary.

    In fact, it is currently between x4 and x5!

    3) Last month it was reported the rolling quarterly average of house prices saw its first drop in living memory.

    You’ve failed to provide any evidence for this assertion. Don’t bother yourself anymore, your claim is wrong!

    4) …the benefits won’t really start to be felt … until a whole cycle has been completed … and mortgages fall below the 5x salary barrier.

    In fact, they fell below the x5 barrier in the UK two years ago.

    Would you say you’re prone to – let’s be generous – gross exaggeration?

  • @ Oranjepan

    “…the NFT current average house price to income ratios in the south-east are 9x”

    Not only have you got your facts wrong, but you’re also confusing the relationship between income and mortgages applications with the relationship between typical incomes and typical house prices.

    Here’s what you wrote:
    “At the peak of the house price bubble top rate mortgages were being accepted at 20x salary. Now this is down to 9x salary.”

    This is demonstrated by your use of the word, “mortgages.” It’s the eleventh word in your sentence.

    All clear now?

    You didn’t answer the question: would you say you’re prone to gross exaggeration? – but I think we know the answer to that question, don’t we?

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