The political environment and housing associations

The political environment and housing associations

Keynote speech by Danny Dorling: Placeshapers conference :Building Homes and Lives, Trade Union Congress Centre, London, November 16th.

The Prime Minster, Teresa May, began her speech to the Lord Mayor’s banquet on November 14th with these words:

“My Lord Mayor, My Late Lord Mayor, Your Grace, My Lord Chancellor, Your Excellencies, My Lords, Aldermen, Sheriffs, Chief Commoner, ladies and gentlemen. We meet tonight in a world transformed. A year ago, few among us would have predicted the events ahead. A clear, determined decision to leave the European Union and forge a bold, new, confident future for ourselves in the world. And, of course, a new President-elect in the US who defied the polls and the pundits all the way up to election day itself. Change is in the air. And when people demand change, it is the job of politicians to respond. But it’s also the job of all those in positions of influence and power – politicians, business leaders and others – to understand the drivers of that demand too. And I think that if we take a step back and look at the world around us, one of the most important drivers becomes clear – the forces of liberalism and globalisation which have held sway in Britain, America and across the Western world for years have left too many people behind.”

You may wonder who the ‘chief commoner’ was, but that was not the strangest phrase in the statement above. The strangest phrase was ‘the forces of liberalism’. By which she actually meant ‘growing economic inequality’. And she went on to say:

“Let’s be clear: those forces have had – and continue to have – an overwhelmingly positive impact on our world. Liberalism and globalisation have delivered unprecedented levels of wealth and opportunity. They have lifted millions out of poverty around the world. They have brought nations closer together, broken down barriers and improved standards of living and consumer choice. And they underpin the rules-based international system that is key to global prosperity and security and which I am clear we must protect and seek to strengthen.”

So – our prime minster is committed to protect and strengthen a regime that had increased economic inequality in the USA and UK to levels not seen since before the Second World War. She does not appear to know that the UK and USA have been extremely unusual, the most unusual of all affluent nations, in allowing this form of economic ‘liberalism’ to become so very extreme. She is ill informed about the global and local distributions of wealth and opportunity and how they have changed since the 1970s when both the USA and the UK were at their most economically equal. Her words explain our current dilemma because they reveal the current ignorance of our elite and the beliefs that underlie that ignorance. Beliefs that came to be held in the 1970s among a small group of people as ‘the truth’ and which resulted in an social experience in the UK and USA which has had dire results – cumulating most recently in the Brexit and Trump votes.

The 1970s were far from utopia, but they were the decade in which we first began to address housing for all seriously in the wake of the November 16th 1966 broadcasting of Cathy Come Home. While free marketers, the architects of our current ‘economic liberalism’ and ruthless profit maximising globalization were plotting their take over of the state, others were using the state to ensure that all would be well housed; that all would receive a good secondary education without segregation; that the health system would be properly funded; that the full employment we had enjoyed until then would be maintained.

Full employment was lost in the 1980s; a commitment to housing all well went in the 1990s, in the 2000s we saw school segregation rise, and this decade has seen health funding cuts and the first large absolute rise in deaths in the UK outside of a flu pandemic year. So, like the USA, we have problems – lots of problems and unusual problems. Other affluent countries house their populations better, school them with less segregation, fund health better and do not celebrate growing inequality as our elite celebrate their ‘economic liberalism’. This is why street homelessness is so much a feature of the USA and UK.

So Let’s turn to Housing Associations

Theresa May’s government appears more disposed towards housing associations than the Cameron administration with warmer words about flexibility of support and hints that policy that promoted home ownership alone is now recognised to be flawed. Other European countries succeed with a high proportion of people enjoying good quality renting.

The autumn statement on 23 November will be the test of this along with a promised white paper that will set out a more comprehensive policy approach. Whether that turns out to be genuinely comprehensive and of a long-term nature that would attract wider political support remains to be seen. Given the record of all governments in recent history, I fear more short term unachievable commitments and no appetite to deal with the structural causes of the housing crisis given the vested interests at stake.

It is not all about land supply, green belt protection, planning constraints, high house prices. Fundamentally we have a problem with our commitment to ‘economic liberalism’ and growing income and wealth inequality that results in terrible outcomes for housing.

Whatever is contained in future policy commitments, it is clear that the emphasis on the need for more house-building and pressure to increase supply of all types will continue. What there is no sign of as yet is an understanding that we need to see a much more efficient use of our total existing stock of housing – and that in particular requires the building of housing for elderly people without stairs near to where they currently live and near to large hospitals.

Recent Bank of England and government announcements show an increase in support for housing associations working alongside LAs to do to more and that’s a positive! But any success is dependent on HAs demonstrating that they are doing their best to add to the supply of new homes; and a far better planning regime that takes into account local transport problems rather then the piecemeal – site by site free-market mess that we currently operate.

The individual maximisation of wellbeing – whether it is for an individual family, or even an individual housing association, can easily result in a reduction of wellbeing for all – this is the fundamental free market error. You see it as roads clog up with cars, and school children are pushed into a market for education, as fewer and fewer of our bedrooms in Britain are slept in on any one night – year after year.

Housing association are doing their best to demonstrate they can help – and like so many others – you rightly argue that mixed tenure, regeneration and affordability are just as important as increasing supply. There’s no point just building new homes for sale or shared ownership and ignoring the many who will never be able to get a mortgage even if (as housing ministers keep repeating) ideally everyone (and particularly those who vote) would like to be a home owner… We cannot all be home-owners and in a better housed country many would not prefer to be.

The affordability debate is crucial too with new “affordable” rented housing being no such thing where rents are linked to market levels in the South and are far too high for those on average or below average earnings to afford. Capital subsidy for new social housing was slashed in 2010 on the basis that rents could rise with housing benefit taking the strain. That of course was not a good investment and inevitably the government’s response to the spiralling HB bill has been to cap the amount payable to tenants (and reduce that cap over time). They then require social landlords to cut their rents across the board, without reinstating any capital subsidy, thus threatening new supply.

In other parts of the country where market rents are low, the rent cut has increased pressure on your business plans And the LHA cap will be so low in some areas that many of you face a real challenge in being able to let larger homes and cover your costs.

Of course, a reintroduction of some form of private sector rent control would do much to reduce homelessness and HB bills and improve affordability in high pressure areas but there’s no sign of the political will to go down that route and a buy to let market that would potentially crash if income streams were curtailed. So politicians talk only about trying to increase the supply of rented housing in the apparent hope that market forces will see rents stabilise. Although I often wonder if they really hope for this given that such a large proportion of MPs are themselves private landlords.

In addition to demonstrating that you are delivering new supply, the other key government agenda is ‘efficiency’. There are still those who claim that there are far too many Housing Associations, with too many executives on inflated salaries and hence great waste. If waste was reduced and the number of Housing Associations reduced through mergers then, it is said, hey presto there’d be no need for government support as the capacity released would fill the gap.

Last night I argued in parliament that we did not need half a dozen ‘senior management teams’ to manage half a dozen state secondary schools in one small town. We could just have one team – there are parallels and it is worth asking why there is more than one senior management team for housing associations in any local authority area. In the past – when we have run out of money – we have created far better things: The NHS in 1948, the end of grammars in the 1970s – both due to the middle class becoming poorer.

I know there is no proven link between organisational efficiency and size. Just as with schools there are good big schools and bad big schools, and good small schools and bad small schools – but we need to see an increase in cooperation and a decrease in competition in education, in health and in housing. Fundamentally markets are often very inefficient in areas of natural monopoly – the UK has help demonstrated this by making so many such huge mistakes – just think about the trains. But there is also a case to be made for allowing people choice where that choice does not help others. Because of this I have always supported right-to-buy, but not a scheme that fails to ensure replacement of sold stock

When there is time we need to consider the opposite to right-to-buy more – the right-to-sell and stay put as a tenant.

We are currently in a crisis. You rightly are focussing on flexible responses to local needs and the wider needs you can support in your diverse communities. And you are upping your contribution to new supply and delivering efficiencies. In doing so the signs are that the Government wants to work with you and listen. This crisis includes escalating homelessness and the still uncertain future for the funding of supported housing, an issue I know many of you remain deeply concerned about too. It’s tough out there and some of you will thrive better than others in this fast moving and at times scary world. But it’s even tougher out there if you are homeless or under constant threat of homelessness with little hope of a safe, secure and genuinely affordable home. As PlaceShapers I know you care deeply about this. What better date for you to come together and reflect on what more you can do individually and collectively to help the Cathys of today.