Looking Forward to the General Election
This article first appeared in CIH's Housing magazine in November 2009
Former Inside Housing editor Kate Murray looks forward to the next general election and takes the measure of party policy and its likely impact on housing around the UK.
If the 1997 general election is remembered for the slogan ‘education, education, education’, then surely the phrase on everyone’s lips come next year’s poll will be ‘cuts, cuts, cuts’. With all of the main parties queuing up to pledge just how committed they are to slashing spending, it’s clear that there are tough times ahead for public services, no matter who wins the election in 2010. In this tight spending environment, housing professionals are already gearing up to ensure housing isn’t among the areas which are hardest hit. Chartered Institute of Housing director of policy Richard Capie says: ‘We all know fiscally it’s going to be very, very tight. We need to be looking at making sure housing remains a priority and at attracting funding into the sector and perhaps more significantly at making the most of the money already in housing.’
Although the politicians share the same tough language on cuts, there are clear dividing lines on policy. Labour has one over-riding priority - more new homes, even if that means shifting cash away from other key areas, such as the decent homes programme for the newer arm’s-length management organisations. There was little new in the way of policy initiatives at the party’s conference this time, other than plans for supported housing for teenage mums. The Lib Dems, meanwhile, are talking of local housing bonds to help communities fund new housing. They also suggest turning over empty social homes in areas slated for regeneration to first-time buyers willing to put the work in to put them up to scratch - a scheme described by Lib Dem housing spokesperson Sarah Teather as ‘housing for self-starters’.
But much of the attention in the housing world is, not surprisingly given their lead in the opinion polls, focused on the Conservatives. If they can convert their current commanding position into a Commons majority next year, then we can expect some big changes. Firstly, they would do away with what they regard as ‘pointless’ housing targets. They are also promising to scrap regional assemblies and spatial strategies. Both the Homes and Communities Agency and the Tenant Services Authority could go the same way if recent comments by shadow housing minister Grant Shapps are anything to go by. In his speech to this autumn’s Conservative conference, Mr Shapps condemned Labour’s ‘top-down Soviet-style’ approach to housing. But he did pledge that building new homes would be a priority under a Tory administration, promising to create a ‘nation of homebuilders’.
The pledge has been welcomed by many in the housing world. ‘There’s a recognition by both Labour and the Conservatives that new development is necessary, not just to address the need that’s out there but for the sake of economic competitiveness,’ says Mr Capie. Jim Strang, chief executive of Parkhead Housing Association says: ‘With the general election, one of the big issues facing all of us is getting people back to work. One of the best ways of doing that is investment in construction projects. It’s a win win - you are creating a stable economy and stable communities.’ But if there’s strong support for the principle of building many more new homes to meet housing need, putting the theory into practice is a lot trickier.
The economic downturn has, as we all know, hit new development hard. And housing professionals aren’t optimistic that we will see a massive upturn any time soon. David Eastgate, chief executive of Hyde Housing Group, a big developing housing association, says there is talk of trying to encourage associations to return to cross-subsidising their affordable housing development with housing for sale or shared ownership as the public finances are going to be so tight. But he warns: ‘You are dealing with organisations that are risk averse and because of the movement in the market, some have had their fingers burnt to a greater or lesser degree. Everyone is not going to go piling back in to risky cross subsidy when the economic recovery is fragile. The delivery of new affordable housing is going to be difficult.’ Mr Eastgate says his association will work where it can on new development. But it is also pressing hard for a new type of affordable housing model which could attract much-needed cash from institutional investors into the sector.
Hyde went to all three main party conferences this year to talk about the idea. ‘We think there’s a massive hole in the market for an affordable rented product that’s not social rented housing and not market rented housing,’ says Mr Eastgate. He points to the 40 per cent of people in London who earn too much to get social housing - but not enough to buy a home. ‘It would be run for people who are sitting on a waiting list and won’t get housed for 25 years because they don’t currently score enough points,’ he says. ‘An affordable rented product would relieve the pressure on waiting lists, with flexible rent for people on low incomes and people on slightly higher paying a little more. We are hoping to make the point to whichever party forms the next government that it will make their money go further.’
The CIH says these sorts of new models must be explored if the housing sector is to respond to people’s housing aspirations and needs in the future. ‘We need to make sure we focus not just on new supply but on exploring some of the other questions about changes we need to make to existing housing across tenures,’ says Mr Capie. ‘We in the sector know that the amount of choice for tenants is really limited. Those people on low incomes who don’t fit into the need categories we have created, we don’t have a product for them.’ He suggests that the next government will need to start looking at some of these big issues like making renting more attractive, revamping routes into home ownership and considering flexible rents based on individual circumstances.But is any party prepared to make significant reform a priority?
There have been signs that some Conservatives are thinking along very radical lines. In particular, a paper for the think tank Localis co-authored by Hammersmith & Fulham council leader Stephen Greenhalgh has made waves by calling for the wholesale deregulation of social housing. As Richard Capie points outs, the person who had most mentions in relation to housing at this year’s Labour conference was Stephen Greenhalgh. The Localis proposals would see a move to near market rents, higher income subsidies and a corresponding fall in capital investment. They would also spell the end of the current allocations regime and the introduction of a common tenure for the public and private sectors. The thinking appears to have had some influence within Conservative circles, with Grant Shapps echoing its language on creating decent neighbourhoods. Yet Mr Shapps has also distanced himself from the furore over possible changes to tenure with an explicit pledge in his conference speech to ‘protect and respect the rights of social tenants’. So we won’t necessarily see the most radical Tory ideas making it onto the statute book if David Cameron gets to Number 10.
And housing professionals in England will not want reform for reform’s sake. They will be keen that an incoming government doesn’t ditch positive moves, like the overhaul of the housing finance system. ‘We need to see a degree of continuity; there are good things that this government has in train - HRA reform being one of them,’ says Mr Capie. ‘It’s important that an incoming government takes a rounded view about what fits with its ambitions and doesn’t derail pieces of work that the housing profession and residents have called for.’
Nonetheless there is clearly an appetite from politicians and housing professionals alike to deal with some of the most intractable issues facing the housing sector. Again though, it all comes back to spending constraints. One of the Conservatives’ big ideas is to encourage new housebuilding by matching pound for pound the council tax for the new homes for six years. But the CIH estimates this proposal could cost just under £500 million a year - or well over £3 billion over six years. Will that money come from other housing programmes? And will there be other funding available for some of the more ambitious reforms?
It’s not just in England that big questions are being asked about future funding for housing. In the other countries of the UK the pressure is on too, and the outcome of the Westminster general election could have big implications, even with the devolved responsibilities for housing. Keith Edwards, director of CIH Cymru, says whoever wins the election, Wales can expect a few lean years. ‘It’s going to be tight and that’s going to ripple through to Wales,’ he warns. He says if the Conservatives form the next administration, the dynamics between a Tory government in Westminster and a Labour/Plaid Cymru administration in Cardiff will be particularly interesting. Money is coming in to improve Welsh housing, thanks to a transfer programme which has seen nine successful transfer ballots in the last two and a half years. But CIH Cymru is pushing hard for more recognition of the importance of housing-led regeneration to produce economic benefits when times are tough. ‘When money’s tight, you really want to look at where the Welsh pound is going to deliver not just one outcome, but a lot of outcomes,’ says Mr Edwards.
In Scotland, spending on housing is to fall by more than £200m next year after cash was previously brought forward. The Scottish Government has now called on Westminster to release more money. But Jim Strang says: ‘The Scottish government can if it wishes invest more in housing. One of the biggest arguments up to the Scottish election in 2011 will be whether the government has the right priorities. The fact that it’s cutting the budget doesn’t suggest it does. If it is serious about meeting the 2012 homelessness target and the 2015 quality housing standard it is going to have to look at its priorities.’He argues that now is the worst possible time to cut investment. ‘We shouldn’t cut expenditure at this stage, otherwise we will jeopardise medium to long-term recovery,’ he says. ‘We should be looking to get as much bang for our buck as we can.’Investment should also get into tackling problems in the private sector, both with dilapidated private rental stock and right to buy properties which are falling into disrepair, Mr Strang says. ‘ A few years ago, you could always spot the person who had bought as their house had new windows and doors; now you can spot the owner-ocuupied homes because they are becoming more and more dilapidated,’ he says.
In Northern Ireland, there are major funding issues too. CIH Vice President Paddy Gray, who is a professor in housing management and policy at the University of Ulster, highlights the debate currently underway about bringing the Northern Ireland Housing Executive out of the public sector borrowing requirement and allowing it to access private finance. ‘The estimates suggest we need 3,000 social homes a year. The minister has committed to 1750,’ he says. ‘The big issue is how can we increase supply. There is a question whether we could reprofile the housing executive, to create an organisation, say Northern Ireland Housing Ltd, whether set up as an ALMO or local housing company. Of course you would need to ensure it wasn’t at the expense of housing associations.’The executive itself has pointed to the Westminster government’s commitment to build more social homes in England, calling for a similar approach in Northern Ireland to maintain the construction industry and tackle the demand for homes.
But across the UK, it will be a huge challenge to find that investment necessary to increase housing supply. At a time of swingeing cuts to public expenditure, housing professionals will be expected to use all their experience to come up with effective ways of making investment go further. Mr Capie says politicians must make use of the ‘incredible resource’ they have in the housing sector. ‘One of the key things we have to do is to emphasise the expertise and ideas out there in the profession.’
