A critical look at some of the major changes
happening to social housing in the UK—and its likely effects on tenants
and those in housing need.
The Demolition of Social Housing?
Social housing in the UK provides homes for 8 million people - but
its prospects appear increasingly grim. With the decline of a
manufacturing base and the rise of financial capital in western
economies social housing has appeared to the ruling class as an
under-capitalised asset; its potential 'real' value remaining unrealised
by its protection from full exposure to market valuation.
Since the 1970s successive governments have shown a growing hostility
to the concept of state-subsidised housing for the lower orders.
Earlier Tory regimes had implemented limited 'right-to-buy' schemes for
some council tenants, and a 1970s Labour government had considered
similar schemes but abandoned it as too controversial and potentially
divisive a policy for the Party(1). Coming to power in 1979, Thatcher's
Tories had no such qualms or obstacles and tenants snapped up their
council homes at knock-down prices in this first wave of mass buy-outs
(with the discounts offered at the time for many tenants mortgage
payments worked out cheaper than continuing to rent).
In tandem with the share options offered in the sell-off of other
state assets, eg energy and telecommunications companies, the populist
myth of the property-owning, share-owning democracy was formed; the
democratisation of speculation for the masses.
But social housing still provides homes for millions of lower income
tenants who will never be able to afford to buy themselves property. And
this, as a component of the other economic and ideological changes of
the past 30 years, reveals a contradiction; a madly accelerating
property market pushing rent and sale prices to absurd levels alongside a
low wage workforce manning the service industries that now dominate
much of the UK economy. The main cost of reproduction (ie, reproducing
their own ability to labour) of the poorer parts of the workforce is
housing; and for a low wage economy to be viable this means the state
must subsidise - via housing benefit payments - these reproduction
costs. This alone makes the 'benefit scrounger' mythology of the
tabloids quite laughable(2); it is employers and landlords who are most
profiting from the housing benefit and tax credits payments that
subsidise the low wages they pay and high rents they charge. The average
private sector rent has risen by 63% since 1997. If governments
sincerely wanted to effectively reduce housing benefit costs, there's a
simple solution; bring back strict rent control measures for the private
sector (relating them to average incomes) to make rents more
affordable. (This, alongside long-term security of tenure, is how much
housing has been provided elsewhere in Europe(3).) Building more
rent-controlled social housing would have a similar effect. But that
would be against all their heartfelt principles...
In many discussions of social housing its opponents repeat the
misleading complaint that it is 'subsidised housing'. Yet in fact - once
the build costs are soon repaid - council housing returns an enormous
profit to the Treasury, recently running into hundreds of millions
annually!(4) One can also add in the massive profits made since the
1980s from the sale of over two million council houses. Similarly, the
larger Housing Associations are sitting on massive cash 'reserves' or
'surplus' (these 'charitable bodies' call it anything but what it is -
i.e., profit).(5) In fact, head for head, social housing tenants are far
less subsidised than are homeowners, commercial businesses, landlords
or politicians. It seems that what its opponents most resent when they
moan that social housing is 'subsidised' is not that it doesn't cover
its costs, which it more than does - but just that the maximum possible
market rent is not recovered from every property. For these rabid
profiteers, market prices are always unchallengeable truths and the last
word, therefore all satisfaction of human need must be regulated and
limited by them.(6)
In the past 25 years Housing Associations (HAs) have been promoted by
successive governments as a more tolerable provider of social housing
who could be more easily steered towards a market-orientated
approach(7). Despite a nominal official charitable status(8), HAs are
often large commercial enterprises, paying their Chief Execs six-figure
salaries, having large incomes and accumulated 'reserves' (as
'charities', they can't call it profit). Taking both state subsidies and
commercial loans, HAs have become the main providers of 'part-buy, part
rent' schemes. 70 percent of homes in new build projects are for sale
or rent at market prices, with only 30 percent for social housing
rental. So HAs often use their social housing stock as assets to
guarantee the bank loans that fund their property speculation(9). Many
have sister companies/wings that are solely commercial property
developers.
Despite being the main providers of so-called "affordable housing",
the part buy-part rent schemes are far beyond the affordability of those
most in housing need and appear to mainly provide a first foot on the
property ladder for young single professionals. With 5 million on social
housing waiting lists nationwide, one can see that the needs of the
property market, as always, take precedent over satisfaction of needs.
There are over 700,000 empty homes in the UK(10). An artificially
induced housing shortage maintains high prices, with the poorest
exploited the most.
* * *
The present Con-Dem coalition government are proposing changes in their new
Localism Bill
that may mean the effective end of access to social housing for many of
those most in need. Some of the contradictions of the Bill's goals may
make them unworkable in practice, but the changes proposed include;
Restricting access to social housing.
At present anyone can apply for social housing and will be assessed,
under nationally recognised legal guidelines, for priority according to
need. But under the new Bill councils will be able to draw up their own
criteria of eligibility for applying to join the housing waiting list;
this is apparently intended to be a means testing even of being
considered for housing.
An end to security of tenure.
Councils and HAs will have the option to issue only fixed-term
tenancies (minimum two years) to new tenants. This is despite the
government claims to want to create 'sustainable communities'. Means
testing is also proposed for new tenancies; so if a tenant's income
rises above a certain level they must leave social housing.
When the last Labour government considered in 2007 a similar attack
on tenancies 37 Lib Dem MPs voiced their opposition in Parliament,
"opposing both the stigmatisation of council housing as housing of last
resort and proposals to means test or time limit secure tenancies". Two
of these two-faced MPS are now cabinet ministers and another six are
junior ministers in the coalition government now implementing the
present 'time limited secure tenancies'.
Before being elected David Cameron claimed in April 2010 ‘The
Conservative Party has ‘no policy to change the current or future
security of tenure of tenants in social housing.’ (
Inside Housing
- 6 August 2010) Yet soon after becoming PM he announced a review of
social housing tenures.(11) (As well as owning ‘various property assets’
worth millions, including an expensive London home and a large country
pad in the Cotswolds, Cameron himself is currently
a rent-free tenant of the state at Downing St and has the use of the traditional PM’s country retreat at Chequers.)
But the ill-thought out proposals may well fail to achieve their aims. A survey of
"an Australian model used in New South Wales ... found
that fewer than 1% of fixed-term tenancies had actually been terminated
by the scheme - a complete reversal of what the government hopes to
achieve by freeing up housing stock for the most vulnerable.
Fixed-term tenancies could also prove costly, as landlords would be
forced to undertake lengthy resident reviews every two years. For a
government pushing aggressively for reduced unemployment figures, the
scheme could become a disincentive for tenants who do not wish to move
every two years as the result of an improved income.
In one of the many contradictions of the bill, tenants who improve
their own financial situation could actually make their standard of
living worsen, and tenants holding on to their homes will only narrow
opportunities for those already made homeless." (Guardian, 17 June 2011)
So tenants can lose their homes by getting a job or pay rise - and
then be forced to pay higher rent in the private sector, so reducing
overall income...
The government has also recently suggested that subletting by social housing tenants may be made a criminal offence.
Local authorities will be able to discharge their duty to the homeless by providing private sector accommodation.
Currently the homeless can refuse council offers of private
accommodation and insist on being offered council accommodation. But,
under the new changes, rather than providing eventual permanent social
housing council Homeless Persons Units can 'allocate' the homeless in
the direction of a private landlord and in so doing all their
obligations are fulfilled. This could mean the end of access to social
housing for many of those most in need, for example, with various health
problems - instead some of the most vulnerable will be permanently
dumped into the insecurity of the private rental sector, often at the
mercy of unscrupulous and unsympathetic landlords.
The costs for social landlords of revising their allocations and tenure procedures are estimated at a whopping £123 million (
Inside Housing, 4 June 2011).
The option for councils and HAs to charge 80% of market rent levels on new tenancies.
Again, this suggests the end of access to social housing for many. The
main effect of this policy would be in London and the south-east. In the
north, where there is often a surplus of available housing in both the
public and private sector, the government was surprised to find that if
this policy was applied northern HAs would in many cases have to reduce
their rents! But in other areas this policy, combined with new benefit
caps, will make housing access harder for the poor.
This policy seems designed to encourage HAs to evict more tenants; in
doing so, they immediately increase rental income and also qualify for
government development grants otherwise denied. The most vulnerable
tenants, without the know how to legally defend themselves, would
probably suffer most. Massive cuts in legal advice services only
increase this effect.
But there is a potential problem with implementing this policy - it threatens the charitable status of HAs;
"A key element of the coalition's housing policy - that
of charging new tenants 80 percent of the market rate - could be stymied
by the Charity Commission.
The commission has told the 1,236 charitable housing Associations (HAs)
in England and Wales they risk losing charitable status if they
implement the new rent regime, reminding them that to preserve their
status they must act in a manner that furthers their charitable
objectives for the public benefit.
Charging 80 percent of the market rate is not seen as particularly
"charitable" - not least as many families will find themselves in severe
difficulty when they are hit by the £500 benefit cap that is being
introduced (Eye 1287). The dilemma facing HAs is that if they lose
charitable status, they will lose benefits such as relief on business
rates and tax breaks.
An additional headache is that more councils are thought likely to
follow the lead of Labour-run Islington, which has threatened HAs that
it will not support their bids for development funding if they introduce
the new 80 percent rent regime." (Private Eye 1288, 13-26 May 2011.)(12)
But though not all local councils intend to immediately enforce these
measures - nearly half have stated they won't introduce fixed-term
tenancies - what politicians say now and what policies their councils
actually enforce later may well differ.
Other consequences for social housing tenants;
Family Mosaic have the dishonour of being the first Housing Association to
introduce Assured Shorthold Tenancies for new lets;
these are the same tenancies as used by private landlords, giving no
security and making it possible to terminate the tenancy with only a few
weeks notice. This is a move towards the likely 'social housing'
tenancy of the future - ie, not social housing as we know it. Future
tenancies may be time-limited, insecure, means tested and at or close to
market prices.
The government claims to want to encourage greater mobility in
tenants so they will be willing to move to where the jobs are (what
jobs?) and to move to smaller properties when they find themselves with
spare rooms after their children leave home. But who will want to move
if their new tenancy is insecure/fixed term, means tested and at up to
80% of market rent?
Tenants claiming Housing Benefit (HB) who have spare rooms will be penalised; they are likely to lose around 14% of HB for one spare room, 25% for two unused bedrooms.
There are also
proposals
to means test the income of social housing tenants and for the state to
give HAs legal powers to snoop into the financial details of tenants'
income. This will likely be a cap not on income of the
individual whose name is on the tenancy, but on overall household
income. Hammersmith & Fulham council have recently (Oct 2012)
announced an earnings cap of £40,200 on households. Their new tenancies
will be for a fixed term of 5 years and those exceeding the earnings cap
after that time will have to move out.
Other suggestions
are for a general earnings cap of £60,000; so if a husband earns
£20,000, his wife earns £25,000 and their son earns £16,000 they may
have to pay up to 80% of market rent. Hardly an incentive for anyone to
increase earnings if it means the result is to lose your home and be
forced into the poorly regulated, insecure and more expensive private
sector. Therefore an 'increase' in income could lead a household to have
to move into a more expensive property where the higher rent actually
decreases their overall income.
Further suggestions
are that on reaching a certain income level tenants will be given the
'options' of moving out, staying and paying up to 80% of market rent or
getting a mortgage via a part buy/part rent scheme run by HAs. These
part-ownership schemes can be a poor deal - purchasers can be subjected
to high costs and massive overcharging for maintenance works they are
contractually obliged to pay for.
These policies are being justified as 'freeing up properties for those more in need'.
But one can imagine the moral outcry if the same 'logic' was applied to the homeowner and their sacred private property;
e.g., that those with spare rooms should be forced to scale down to
make way for larger households or that those who can afford to move into
more expensive homes should be forced to do so - so that poorer first
time buyers can 'get on the property ladder'.
* * *
Some policies will affect social housing and private tenants alike;
A cap on the total amount of benefit received will be imposed; expected
to be around £350 a week for a single person and £500 for families with
children. This will probably be administered via Housing Benefit until
the new Universal Credit benefit regime begins in 2013. This cap will
only apply to people of working age. Again, the effects of high rents -
as a proportion of total benefits received - will be likely to influence
where benefit claimants can live.
Since January 2012 single persons (without dependents) in private
rented housing and aged under 35 will only be entitled to housing
benefit at the same rate as they would get for renting a single room in a
shared house. The government has also recently proposed a future
removal of all housing benefit entitlement from those under 25. These
measures will force some into moving from their present accommodation
and deter others from leaving the parental home.(13)
There will also be cuts in Council Tax Benefit(CTB). Until now
central government has funded CTB by giving money to local authorities
to pay to claimants. From 2013 the government will only give town halls
90% of this money; local councils will have to decide how they will deal
with the 10% shortfall. This is likely to mean claimants will have to
pay a few pounds each week out of their benefits to cover the shortfall.
And the general prospects for those in the private sector on
benefits? The housing charity Shelter predicts that "most inner-London
boroughs are likely to become almost entirely unaffordable to low income
tenants on housing benefit by 2016" (
Evening Standard,
24 Jun 2011). Apart from redrawing the map of the city's class divide
even more sharply, this will have its knock-on economic effects - eg,
the service economy that the wealthy property owning elite depend on
will face labour shortages and/or wage demands to compensate for
increased travel costs for workers (high fares, parking fees and
congestion charges make London's transport system one of the world's
most expensive). Many housing benefit claimants are low paid workers.
London may eventually become to resemble Paris; the city centre a
playground for the rich and tourism, encircled by banlieue-type suburbs
housing concentrations of the poor.
The effects won't be confined to London;
"A third of England will become unaffordable for
low-income households within a decade, according to a study by two
leading housing organisations.
A report by the housing charity Shelter and the Chartered Institute of
Housing (CIH) claims that government plans to overhaul housing benefit
would price low-income households out of a third of local authorities in
England, pushing them into areas of high unemployment.
The changes, to be introduced in 2013, were outlined in last month's
welfare reform bill, which established that future increases to local
housing allowance for private tenants will be linked to the consumer
price index of inflation rather than the cost of local rents.
Shelter and CIH warn that this means that, in places where rents rise
faster than inflation, housing benefit will increasingly fail to cover
housing costs." (Guardian, 5 March 2011) (14)
The use of social housing policy as a mechanism for social
engineering is now moving away from the goal of 'mixed communities'
(partly motivated by a desire to avoid concentrations of unruly
poverty) and towards an increasing class apartheid. Whereas previous
state policies enforced obligations on private developers in London to
provide a minority of "affordable housing" in new developments (usually
as part-buy and rental), Mayor Boris Johnson has now relaxed the rules.
Councils are already showing they will use this as a bargaining chip;
"Labour-controlled Southwark decreed last week that the
rich need no longer suffer from poor neighbours in new housing
developments in the north of the borough. But the decision to take £9
million in cash from the builders of 197 flats behind the Tate Modern,
rather than force them to sell 34 of the units to social housing
providers, is simply the latest brick taken from the wall of a
London-wide policy designed to encourage mixed communities.
Another example of the degradation of a plan to ensure that between 35%
and 50% of the homes on large sites were sold to government-aided
housing associations for rent or part-buy is Chelsea Barracks. Half the
638 flats in the long-abandoned Richard Rogers scheme were to be
subsidised, but not because the developer was feeling benevolent. It was
a rule insisted upon by Ken Livingstone.
Boris Johnson has softened the conditions, dropped the 50% target, and
now lets the boroughs decide. Here is how it's working. This week
Kensington & Chelsea Council passed plans by Qatari Diar to build
448 homes on the 13-acre site. Poorer folk will not be living in 224 of
the homes; instead there will be 123 "affordable" units.
The price the Qataris are paying not to have an extra 101 subsidised
homes on the site is £78 million. A huge amount, but it gives some
indication of the lengths developers will now go to avoid mixing rich
and poor. Why do they pay so much? The £772,000 per unit offset price at
Chelsea is an extreme exception. The £264,000 per unit being paid by
the Duke of Westminster's property company, Grosvenor, at Bankside is
high.
But it will encourage developers who sense a London-wide abandonment of
the rule that rich and poor should co-habit. "You can now take the risk
when buying a site, knowing you may be able to buy out the social
housing. Do that and you can charge more for the private flats." " (Evening Standard, 24 Jun 2011)(15)
So, in the geography of a class society, not having social housing tenants as neighbours adds value to property.
This city geography is potentially set to shift toward both more
"gated communities" of the security-conscious rich hiding behind CCTV
and concierges - and also more socially-cleansed street areas
gentrified, cleared of social housing and of private sector housing
benefit claimants priced out by benefit caps.
It now takes an income of over £100,000 pa to buy an average-priced
London home. Meanwhile, as more people default on their mortgages; "Last
year saw more than 44,000 households accepted as homeless in England - a
10% increase from the previous year, and the first increase in
homelessness for almost a decade." (
Guardian,
17 June 2011) Yet the main builders of new social housing are housing
associations, and construction industry insiders predict a 40 percent
drop in HA new builds as a result of Con-Dem housing policy.(16) At the
same time the legal and policy changes are likely to quickly accelerate
HA market speculation and reduce what is left of their social housing
provision;
"...associations are wrestling with their consciences to
decide whether to build homes for rents at higher levels - are they
charities, or developers? While some may opt out of the new, market-led
economy, others see it as the only way forward and are preparing to
transform their businesses. A number of social landlords are known to be
examining whether to change their constitutions, by either floating on
the stock market or becoming mutualised social enterprises - and may
even start to challenge commercial developers and housebuilders. The
former housebuilder says: “Boards are discussing their status, and
housebuilders are getting nearer to associations, and associations are
becoming more like housebuilders.” With the government’s affordable rent
plan pushing the sector out of its comfort zone, social housing is
likely to be a very different place in five years’ time."(17)
Housing Associations are also attacking their workers with ruthless
efficiency. As a recent letter in a London local paper put it,
commenting on one of the larger London-based HAs;
“So One Housing Group is slashing the pay of its workers
(Staff face sack and a wage cut - Tribune, 10 Aug) - with some losing
30% of their income, and this after a 4-year pay freeze! (Note that this
freeze was not applied to OHG executives' pay.) OHG workers report that
management are also increasing their workload, leading to increased
workplace stress, economic insecurity and a decline in services for
tenants.
It's sadly ironic that a 30% pay cut is likely to make some OHG workers
homeless. Yet OHG claims to be in good financial health with millions in
the bank as reserves. Meanwhile the six-figure salaries of those OHG
executives at the top remain in place; no "austerity" there.
OHG try to justify these cuts by claiming 'savings' will help improve
their care services - but cutting staff wages by up to 30% is unlikely
have such an effect. It will, though, aid OHG in their bidding wars for
care contracts as wages, working conditions and quality of care are
driven down in a race to the bottom.
Housing Associations(HAs) are often seen as charitable bodies, some even
having a legal charitable status. But OHG, like many HAs, focus much of
their activity on building for sale and rent at market prices. But even
the minority of so-called "affordable" housing they include in
new-build projects is out of reach of those most in need; eg, it was
recently reported that OHG was selling an "affordable" Islington
property for £705,000! With HAs happily lobbying for and implementing
the government's new insecure time-limited tenancies and new lets rented
at up to 80% of market value (all of which are arguably part of a
process of effective privatisation of social housing), OHG and other HA
management are showing clearly their real attitude towards both their
workers and their tenants - and where their business practices are
heading. It's time for tenants and workers to resist - and for a more
general movement against the appalling housing policies of this
government and their collaborators.
An OHG tenant (Islington Tribune, 23 August 2012)
* * *
With the rental market having failed to behave as some politicians
claimed it should and 'adapt itself ' to Housing Benefit caps by
lowering rents, some London councils are already talking of having to
house local homeless people hundreds of miles away in more affordable
areas. Politicians of all colours claim to want to promote "sustainable
communities" (but for who?). Yet, with homelessness growing, the effects
of the
Localism Bill will
actually mean less connection to any locality for those in most housing
need; the weakening of secure tenancies and decreased access to
permanent housing contained in this Bill (alongside housing benefits
caps) will ensure that.
Historically, housing struggles have tended to occur as a component
of wider working class confidence and assertiveness in struggle, which
tended to draw out the link between wages/income, housing costs and the
relative class distribution of resources in society overall. Made more
visible and explicit, in the process it became more contested. But what
forms could this take today? There is no tenants' movement now
comparable to the militancy of the 1950s, 60s and 70s when mass rent
strikes and tenant struggles opposed, often successfully, government
attacks on social housing. The large numbers of tenants, both unemployed
and low waged, who depend in part or wholly on housing benefit (often
paid direct to the landlord) have meant rent strikes were rarely a
practical option, even if the will was there(17). But after years of low
levels of struggle, will the present changes now face the emergence of a
co-ordinated resistance? The need is urgent and it's way past due...
* * *
1) See '
When the Lights Went Out: Britain in the Seventies' - by Andy Beckett; Faber & Faber, UK 2009, p. 422.
2) 2011 figures recently released by the government reveal that -
despite the scapegoating and exaggerations - benefit fraud only accounts
for 0.8 per cent of benefit expenditure. See 'Table 1: Total
Overpayments since 2005/06';
http://statistics.dwp.gov.uk/asd/asd2/fem/nsfr-final-160611.pdf
3) But the effect of numerous complaints to the European Commission by
the European Property Federation and by private landlords since 2000 has
resulted in the rolling back of rent control and security of tenure in
the rented sector. In Holland since 1 Jan 2011 the state can no longer
supply social housing to anyone earning more than €45,000 pa and even
this compromise with the EC is under review.
4)
http://www.guardian.co.uk/society/2008/jun/04/housing
5)
http://www.insidehousing.co.uk/finance/associations%E2%80%99-spare-cash-soars-towards-%C2%A31bn-mark/6518070.article
6) On the subsidy claims, see an illuminating discussion here;
http://www.insidehousing.co.uk/council-housing-is-not-subsidised/798.thread?PageNo=1&SortOrder=oldfirst&PageSize=20#comments
On the greater subsidies received by homeowners, see ‘
Welfare-scrounging homeowners?’ by Q. Bradley;
http://www.criticalplace.org.uk/?p=96
7) The 1988 Housing Act encouraged social housing landlords to seek
private funding and the 2008 Housing & Regeneration Act encouraged
private commercial investment and ownership in social housing.
8) Not all HAs are so legally defined; "Helena Partnerships Limited
(formerly Helena Housing Limited) (HHL) recently lost its appeal against
the First-Tier Tribunal (Tax)'s decision that it was not entitled to
corporation tax relief (comprising £6 million plus interest) on rental
income (
Helena Partnerships Limited v HMRC
[2011] FTC/42/2010). The Upper Tribunal (Tax and Chancery Chamber)
held that HHL was not a charity because it was not established for
exclusively charitable purposes."
http://www.bllaw.co.uk/sectors/charities_and_not-for-profit/news_and_updates/charity_law_news_june_2011/housing_association.aspx
9) But most HA property development is, for the moment, still subsidised
by government via Housing Corporation, Homes & Community Agency
Social Housing Grant and grant-in-kind (gifts of cheap urban land).
Typically this grant has been around 50%, but under the new
Localism Bill it will be as low as 15% - and only available if HAs contract to deliver 80% market rents in return.
10)
http://www.bbc.co.uk/news/uk-13507174
11) The Tory record so far on dishonest housing statements;
http://www.insidehousing.co.uk/tenancies/security-breach-%28part-1%29/6515910.blog
12) A revision to planning rules has recently been made in an attempt to
resolve this dilemma, but it appears only to be applicable to new build
properties;
http://www.communities.gov.uk/statements/corporate/affordablerent
13)
http://england.shelter.org.uk/get_advice/housing_benefit_and_local_housing_allowance/housing_benefit_if_you_are_under_35
14)
http://www.guardian.co.uk/society/2011/mar/05/benefit-low-income-households
15)
http://www.standard.co.uk/business/markets/a-poor-way-to-integrate-as-housing-rules-are-relaxed-6415040.html Note in the “
Shameless” picture and caption accompanying the article the snobby use of stereotypes of social housing tenants as thieving neighbours.
16)
http://www.building.co.uk/comment/affordable-rent-a-numbers-crisis/5016908.article
17) Ironically, the recent proposal to restore paying housing benefits
directly to all tenants may make rent strikes easier - though this would
depend on what kind of tenancy one holds.
Published by
Radical Islington
Online—June 2011
Hard copy—May 2012
This revised & updated edition—published October 2012
