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Moss John Moss says rent subsidies are unsustainable

The goal of social housing policy should be to make streets with social homes indistinguishable from those without them. So telling people who get on, that they have to get out, is wrong.

We all know the problem. The kids causing trouble; the parents who seem to care nothing for the neighbourhood; the graffiti and the litter. And we say, behind our hands, of course, that the problems come from, “the estate”, by which we mean the council or social “estate” which lurks, certainly in London and other major cities, round most corners.

So why not aim to get rid of estates?

As the Conservative candidate for Hackney South and Shoreditch in 2005, I was fighting a seat with almost as much “social” housing as Simon Hughes’ Bermondsey seat. In one ward – where we famously won a council by-election and got Andrew Boff elected – the percentage was 62%. And yes, with the estates came the problems.

Parents were desperate to find larger homes as they outgrew the flats they had been allocated years ago and their teenage children kicked back against the cramped circumstances. They feared for them as they escaped the family home in to, what? Often the gatherings of dope smoking youths congregating on the stairs, sometimes in to the clutches of more serious gangs.

Yet just round the corner from the estates were streets of Victorian terraces attractive enough to have tempted a young family of lawyers in the 80s – Tony and Cherie Blair – and which are probably amongst the most expensive homes in Hackney. (It is rumoured that a young Tony was turned down by the local ward committee when he applied to be a Council candidate. Such a shame, he could have had a glittering career in Hackney local government.)

But how do you challenge the estate mentality? Well, the first thing you do is stop suggesting that when people living in social housing get on in life, that they should be pressured in to getting out. By all means, review their income and establish whether they continue to need the support of a below-market, taxpayer-subsidised rent, but don’t make them leave.

In fact, we should be positively encouraging those who find work or who have long-standing roots in a neighbourhood, to stay. They can lift an area by providing the extra spending power that comes from being employed, they can provide positive role models to others and, particularly elderly people, can provide the glue that comes from having extended families in an area – looking after kids as they come home from school, helping maintain a network of family, friends and neighbours across an area – precisely what was lost in the major slum clearances which followed the war and which preceded the building of just those estates.

So, whilst getting rid of estates might sound like a call for the bulldozer, what it actually means is a move away from the “bricks and mortar” approach to social housing which is far too obsessed with the number of houses and flats which are “affordable” and not sufficiently focussed on building neighbourhoods which have a balance of home types and tenures and where households can adapt the nature of their occupation of a home, without moving out.

So, how do we achieve this?

No matter how you look at it, the system of giving house-builders capital grants to build homes on the basis they then let them out at below-market rents, then allocating those homes to people who, once in occupation, can benefit from a below market rent for life, is simply unsustainable. We do not build social supermarkets to meet food need, we give people cash and the problem we face is not starvation, it is obesity!

So, we must complete the journey started in the early 1980s, when funding to meet new housing need was delivered mostly through increases in Housing Benefit payments, rather than funding for new home building. In 1980/81, only 0.4bn was spent on Housing Benefit, by 2003/04, this had risen to £12.6bn and whilst spending on new, affordable house building also rose from £4.0bn to £6.2bn, this represented just 33% of all spending on housing welfare in 2003/04, against 57% in 1980/81.1

Sadly, even this level of “investment” achieved much less under Tony Blair than it had under Margaret Thatcher. When compared with the real value of spending in the 1980s, Blair spent about the same on average yet achieve barely 23,000 new social homes a year, against Thatcher and Major’s figure of 48,4002.

Since then, Housing Benefit has grown to over £15bn in 2007/08 and with the effects of the 07-09 recession this has ballooned to £20bn this year. So with capital spending static at around £6bn, we already deal with over 75% of “housing welfare” by way of Housing Benefit paid to households with insufficient income to help them pay market rents.

If we were to complete the transition so all tenants, social or private, paid market rents and sought support through Housing Benefit if they needed it, then the ownership and status of the bricks and mortar would be largely irrelevant. As your circumstances changed, your benefit levels would adjust. There would be no need for “reviews”, it would happen just as it does now when you increase your income from work.

Hopefully, the work being done by Iain Duncan-Smith will mean this is co-ordinated with other welfare payments, ending the double whammy that hits families so hard now as they try to move in to work. In fact, in light of ID-S’s preferred shift to a negative income tax style support through universal benefit to support household income, the continuation of the subsidy-for-life system operating in council housing looks increasingly out of place.

This could happen gradually, with tenants in social homes seeing their rents rise as their income increased and new tenants paying market rents and getting support from Housing Benefit if they needed it. Over time, all social homes would be rented at market rents.  So we would have a single system of housing welfare, supporting the income of those households who cannot meet the local market rent for the home that they need. If ID-S gets it right, as household income rose, the amount of housing benefit paid would fall, but the household would still be better off. Eventually, they would be meeting the market rent out of their earned income with no support from benefits.

The funding which currently supports the building of new social homes would transfer over to the welfare budget and Councils and Housing Associations would have higher income, against which they could borrow and build more homes. Provided they kept to a prudent level of debt, say 50% of value, there would be no risk to the public finances and it could release over £100bn of new investment. Ultimately, we could close down the Housing ministry in the DCLG entirely – sorry Grant…..

And if peoples’ needs change, for example when their children grow up and move out, they should be encouraged to buy their homes, rather than being forced out, so they can stay in their home and the benefit of their role in the neighbourhood be retained.

In our manifesto, we talked about letting people earn equity for good behaviour, but only letting them cash this in if they leave. Why? Why not let them use this as a deposit towards buying their home and why not provide this as part of a “staircase” to full ownership, with free equity up to ten percent, a BOGOF deal on the next 25% and then the opportunity to buy the balance at full value? Why not let them trade that equity back if they need to move in future, with the former landlord having a first right of refusal?

On a trip to Holland, where they operate a much more liberal housing welfare system, the Chief Executive of one of their Housing Associations said to me that it was his goal to see the bank cleaner living next to the bank clerk and the bank manager, but for nobody to be able to tell from the outside, which house was which.  That ought to  be the goal of social housing policy, not the perpetuation of the socially segregated ghettoes to which Simon Hughes seems so wedded.

82 comments for: Charge market rents for Council Tenants who can afford it

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