Will we miss it when it’s gone?

Anthony Mason, Senior Associate INLOGOV

As the Housing and Planning Bill reaches its second reading in the House of Commons, Anthony Mason reflects on the slow death of council housing in England.

Have you noticed that ministers have taken to referring to council house tenancies as “subsidised tenancies” and council tenants as having “subsidised rents”?  The Housing Minister has especially embraced this Lynton Crosbie-esque habit – just for example in an interview with the Radio 4’s World at One on 14th October 2015.  Perhaps it’s understandable that ministers use this potentially emotive (and certainly inaccurate) language – but even our supposedly impartial civil service has adopted it in the formal consultation on the government’s “pay to stay” scheme out now.

If you google “subsidy” the one of the first definitions offered is a sum of money granted by the state or a public body to help an industry or business keep the price of a commodity or service low.  As aficionados know, council housing finance is a complexity wrapped in a convolution, but using that definition, by no means that I can think of, is council housing subsidised.

After many years of complicated national financial transfers where better off tenants bankrolled poorer ones; those English councils that retained council housing became self-financing on 1st April 2012.  This was a move long promoted by councils, developed by the prior Labour government, but actually put in place by Grant Shapps – that most Conservative of housing ministers.  Around 170 local authorities held housing stock at that time and of these, around 130 paid more than £13 billion to the government, with the government paying off around £6 billion of loans for the remaining authorities.  The deal was then that the service was ring-fenced and self-supporting; thus rents and judicious borrowing would support necessary expenditure on repairs and investment in homes.  The system is not supported by the taxpayer – either at the local or national level.  Clearly, some tenants claim housing benefit – which is a form of subsidy – but so do tenants in all sectors.

Ministerial attacks don’t end with imprecise language about the nature of council tenancies.  The Conservative government has set off a small earthquake around housing policy this year, only some of which is contained in the current Housing and Planning Bill (“pay to stay”; the right to buy for housing association tenants, and the forced sale of higher value council homes to pay for this).  Wider provisions include the ending of the requirement on developers to provide affordable rented homes as planning gain – and a likely requirement that only fixed term tenancies can be granted in future by councils and housing associations.

In a complete volte-face on self-financing, many of the Bill’s financial provisions will have the effect of imposing new levies on housing revenue accounts – as councils will have to make payments to government in advance, in recognition of the income they get from pay to stay and the forced sale of empty homes.  The Chancellor’s summer budget also imposed across the board real cuts in social rents.  And the specific housing provisions sit alongside welfare changes that affect so many social tenants of both housing associations and councils.

Perhaps a more refined understanding of housing language is needed to get to the root of what’s going on here.  Ministers’ promise is that homes sold under the right to buy will be replaced one for one.  What they actually mean is that homes let under social tenancies will be replaced by homes let at sub-market (that is, higher than social) rents or by low cost home ownership.  Where household incomes exceed an annual £30k outside London and £40k in London, social rents will be replaced with market rents.  Affordable (higher than social, but less than market) rented homes that were made available under planning gain settlements will now be replaced by low cost home ownership.  And many new developments of homes at affordable rents by housing association are being switched to home ownership and market rent.  So at every level of the system, lower rents will rise, or rent be replaced by home ownership.  Provisions from the coalition government’s “bedroom tax” (spare room subsidy); to the possible ending of lifetime tenancies, have the effect of increasing the turnover of council tenancies – and thus the speed at which social rented homes gradually convert up the rental-to-ownership ladder.

Whether one likes them or not, these changes constitute a coherent programme that seems to stem from a view that council housing is a problem that needs to be fixed – and that fixing it involves gradually stifling it.  While I wouldn’t argue for this proposition, I can at least see that it could be argued.  But the oddest thing about the government’s housing policy is that ministers have not set out to make such an argument.  Thus we have a radical set of measures bringing about the slow death of council housing without anyone being clear what the underlying disease is supposed to be.

So the usual confession: while I’ve worked in and around social housing all my adult life, I’m an owner occupier.  But I’m not blind to the harm that worship at the altar of ever higher house prices has done to our housing system and our economy.  It might just be that for UK PLC, our fixation with owner occupation does much more harm than council housing ever has.

Maybe we should all become council tenants?

Anthony Mason

Anthony Mason is a senior associate at INLOGOV where he specialises in consultancy around partnership and collaboration.  He started his career in local government and then spent more than 20 years in PwC’s public sector consultancy practice.  His professional background is in housing and neighbourhood regeneration.

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