We’ve now had a few days to come to terms with the content of Local Decisions: a fairer future for social housing, the Coalition government’s consultation paper (CP) on social housing reform. The response has varied from the broadly positive to the outright condemnatory. In prefacing his comments on the CP last week Dave over at Nearly Legal was moved to invoke the term “cataclysmic”. He’s a chap with a good grasp of these matters. So I have been reflecting on whether I’d assess the proposals in similarly vivid terms.

Underpinning the need for reform, from the Coalition’s perspective, is a perception that there is unprecedented demand for social housing and those who currently benefit from access to it are not necessarily those who most “need” it. Waiting lists for social housing have increased dramatically over the last decade to close to 2 million and there are many thousands of tenants living in overcrowded accommodation. Yet at the same time there are hundreds of thousands of tenants “under-occupying” social housing properties – living in properties with more bedrooms than they are deemed to “need”. So the Coalition argues that something has to change to realise more fully the potential of this national asset.

The Consultation Paper begins with a welcome recognition of the value and benefits of social housing as it has been conventionally understood, although it is interesting that the issue is constructed as one of choice rather than lack of it:

1.2 Stable social housing, with subsidised rents, is the tenure of choice for many, particularly those who experience insecurity in other aspects of their lives, such as health, employment or relationships.

It goes on to reassert the value of housing stability. It then starts to place a question mark against the approach that is well-established in the UK:

1.5 Stable and secure social housing should provide a firm basis on which people can build a successful future. But far too often, the security and subsidised rent that social housing provides do not appear to help tenants to independence and self-sufficiency.

The interesting part of this particular paragraph is that it is framed using the rather weak “do not appear to”. This is important. The mechanisms by which social housing might have the undesirable side-effect of failing to foster independence and self-sufficiency are not spelt out. The implication is that the very generosity of the relatively low rent “lifetime” tenancies offered by local authorities – or assured tenancies offered by housing associations – are of such great benefit, particularly if further subsidised by Housing Benefit, that tenants have a strong incentive not to give them up in pursuit of greater labour market participation or meeting their housing needs and aspirations in the private sector.

It is undoubtedly the case that social housing is strongly associated with worklessness, for example. But a causal relationship is elusive. There is hardly compelling evidence that social housing causes worklessness, “trapping” tenants by the perverse incentive of unnecessarily generous security and affordability. There is an alternative line of argument that the real source of the problems lies not in the housing market but in the composition of the social housing population and the operation of the labour market for relatively low skilled workers, as well as the British systems of social security and childcare provision. From this perspective a social housing tenancy is simply acting as a proxy for a range of other factors that militate against “self-sufficiency”. To focus on tenure is to address a symptom rather than the cause. Of course, without a very clear articulation of the mechanisms that are supposed to be creating a problem it is more difficult to assess whether the prescribed change will deliver the cure.

So how does the Government see the changes needed in the social housing sector? The key to dealing the problems of social housing, and the failure of social housing tenants to achieve the levels of self-sufficiency the Government is expecting of them, are greater flexibility and choice:

1.19 We will create a more flexible system of social housing, one which recognises that everyone’s needs are not the same – a system which offers stability when it is needed; which helps people move for work; and which protects the most vulnerable in society.

1.20 The answer to the problem is fundamentally a local one: more choice for existing and prospective tenants; and local discretion that will enable social landlords to promote greater fairness between people seeking social housing and those who are in social housing, and provide the right sort of support to those who need it, for as long as they need it.

How, more precisely, is the Government proposing to deal with the problems they have identified?

The Consultation paper includes some reform proposals that are, on balance, positive – such as the brief section on dealing with Empty Homes, actions to facilitate mutual exchanges and enhance mobility. The proposed reforms of the Housing Revenue Account may well be beneficial, although there are no details yet so it’s a bit soon to judge. But these are only sideshows compared to the main event.

Proposals in the spotlight

The core of the consultation paper is a set of proposals that have the potential to reshape radically the social housing sector.

The main proposals that have attracted media attention will apply to new tenants, rather than all tenants. They can be summarised as:

• Giving local authorities the option of offering fixed term tenancies (minimum two years, but no maximum). Allowing local authorities the possibility of not renewing fixed term tenancies, including because the tenant’s circumstances have improved to the point that they no longer “need” social housing.
• The option of charging ‘affordable’ rents on new build and relet properties, on fixed-term tenancies. Affordable rents are higher than conventional social rents (up to 80% of market rent). Housing Benefit would take the strain where a tenant is eligible.

Local authorities will have the discretion to tailor their approach to using these new options. The Government plans to legislate to oblige each authority to develop a “strategic tenancy policy” setting out how they would utilize the new flexible tenancy and rent levels. In particular the government notes with respect to local authorities’ use of flexible tenancies: “We would expect that policy to reflect, among other matters, tenants’ levels of continuing need, work incentives and local pressures for social housing”.(para 2.30). Hence the suggestion that tenants will be expected to move out if their economic circumstances improve.

Responses to these proposals from other commentators have already highlighted the key issues:

• If local authorities make extensive use of the possibility of non-renewal of fixed term tenancies as a consequence of tenants’ improving economic circumstances then there will be further concentration of poverty in social housing and the sector will be residualised further.
• In areas where ‘affordable’ rents are considerably higher than existing social rents the use of such rents is likely to lead to a worsening of the poverty trap and associated disincentives to work. It will also work against the Government’s campaign to reduce the Housing Benefit bill.
• It is not at all obvious that the incentives in this system are more desirable than those seen as problematic in the existing system. If the consequence of improving ones economic circumstances is losing one’s home then there is likely to be a strong incentive not to do so.
• While the Government intends that flexible tenancies will have the same rights attached to them as existing secure tenancies, if landlords go for the two year fixed tenancies then that could effectively end the possibly of exercising the Right to Buy. If a tenancy were to be renewed it would imply that economic circumstances have not improved, and hence that the tenant was not sufficiently well off to exercise the Right to Buy. While if the tenant has the financial resources to exercise the Right to Buy the tenancy may not be renewed and they would have to move out.

But these are not the only provisions that potentially reshape the nature of social housing.

Under-occupation

The issue of under-occupation is a recurrent theme in social housing. It moved out of the limelight for a while under Labour: it smacks of managerialism and sat uneasily with the overriding rhetoric of choice. Now, even though choice continues to be given high profile, under-occupation is back.

The Consultation Paper is proposing to remove tenants who are seeking a transfer within the social housing sector from the integrated housing register. It appears that the Government feels that trying to deal with transfer tenants alongside households in housing need and homeless households means that transferring households do not come to the top of the allocations pile often enough. That means that few transferring households are able to trade down and in the process free up family houses for households with greater need for them.

This might be a plausible analysis of how allocation schemes are working. But since the Ahmad judgement in 2009 it has been possible for landlords to revise their allocation schemes in a way that could accommodate the prioritisation of transfers precisely because that would free up properties for use by households in severe housing need. The House of Lords considered this “obviously good housing management” and not in conflict with local authorities’ duties under allocations and homelessness legislation. So it isn’t clear that the Government’s proposal will provide local authorities with flexibilities that they don’t already have.

What the Consultation Paper doesn’t mention is that over at the DWP there are proposals to curtail the Housing Benefit of households in the social sector who are under-occupying. That is likely to act as a stronger incentive to move than a separate and more focused allocation process.

Homelessness

The Government sees their proposals for transfer applicants as returning us to the situation prior to the Homelessness Act 2002, which introduced the single integrated waiting list. An integrated system is typically seen as a desirable underpinning for a choice-based lettings scheme. The Government is less explicit in recognising that the 2002 Act’s introduction of open waiting lists, which allowed anyone to register for social housing whether or not they were in housing need, is a major reason for the increase in the waiting list numbers over the last decade.

Or, rather, the Government seeks to have it both ways. They invoke the overall numbers on the waiting list as an indication that something drastic needs to be done to the way we manage social housing in order to meet this desperate housing shortage – ie. end lifetime tenancies and move social housing to providing less secure housing for the poorest only. At the same time they argue that it is important to move away from open waiting lists in order to align expectations more clearly with available properties. It is argued that local authorities need to have discretion to gatekeep more effectively in order to stop people without realistic hope of rehousing getting on to the list in the first place. Hence, from this perspective, rising waiting lists are not an indicator of increased housing need but an indicator of more time-wasters.

The Consultation Paper is proposing some significant changes to the way in which local authorities can discharge their main statutory homelessness duty. In this respect the Government is channelling the spirit of the Major government of the early 1990s. They are proposing measures very similar to those implemented by the Major government in 1994 and overturned by the first Blair government. At the moment a local authority will typically discharge its duties towards statutorily homeless households by providing a secure tenancy in social housing. Duty can be discharged in the private rented sector with the tenant’s consent. The Consultation Paper proposes returning to the idea that, in order to relieve pressure on social housing and to change notions of entitlement, duty can be discharged into the private rented sector and it does not require the tenant’s consent. All it requires is that the local authority identifies a private tenancy of at least 12 months. There would be some limited protection in that if the household were to become homeless again within two years, without fault, then their homeless status would be reactivated.

This is potentially a profound challenge to existing understandings of citizens’ entitlement to housing and of the state’s obligations to assist those who are deemed to be statutorily homeless through no fault of their own.

Overcrowding

One of the vaguest parts of the Consultation Paper relates to overcrowding (section 7). There are a number of legal definitions of overcrowding in play at the moment. There is consideration of suitable accommodation in the Housing Act 1985, there is overcrowding as a risk under the Housing Health and Safety Rating introduced by the Housing Act 2004, and there is recent case law that has muddied the waters still further.

So precisely where the boundaries of ‘overcrowded’ lie at the moment is rather uncertain. This is important for all sorts of reasons, but one reason is that overcrowding can feed into judgements of the suitability of accommodation for the purposes of deciding whether someone is statutorily homeless.

The Consultation Paper suggests that it would be a good idea to look at this issue and bring some clarity, without going as far as to offer any sense of what a solution might look like.

More clarity has got to be desirable. But in the light of the comments made by Lord Freud a few weeks ago we have to be cautious about precisely where this is going. It could be that the long game is to reduce the standards for judging overcrowding and in that way dispose of part of the problem of excess demand for social housing (I discuss this further in Disposing of that pesky homelessness problem). That is surely not a progressive solution to the problem.

Localism, fairness and communities

The Government makes some strong claims about the ideas that it sees underpinning its proposals and the way in which they complement developments elsewhere:

1.38 Localism, fairness and focusing social housing on those most in need in a way that enables them to use it as a springboard to opportunity are at the heart of our proposed reforms. This will complement other forthcoming Government reforms, such as the sentencing and rehabilitation green paper and the Government’s drug strategy, which will set out new approaches to incentivise local partners to deliver outcomes focused on rehabilitation and recovery, including tackling housing needs where appropriate.

2.10 …  We want to increase radically the freedom available to all social landlords to determine the sort of tenancy they grant to new tenants. We want both local authorities and housing associations to have the flexibility to promote fairness; to ensure that help and support are focused on those who need it most when they need it most; and to build strong and cohesive communities.

Some of the themes identifiable in these paragraphs we have discussed already.

We have not discussed localism, but the idea is not explored very extensively in the Consultation Paper. We await the Localism Bill and the associated debate which, presumably, will flesh this out a bit more fully.

The fairness that the Consultation Paper has in mind is the fairness between current residents of social housing and applicants forced to sit on the waiting list or in overcrowded accommodation waiting for a more suitable property to become free. The Government is treating it as self-evident that the system needs rebalancing. Those already in social housing who are overconsuming housing and/or receiving benefit from the state when they are not in acute need are less deserving of assistance than those who are on the waiting list. That presupposes an ability to compare and prioritise the welfare of different households.

This is an important debate that needs to be conducted in more detail. And it needs to be conducted in relation to the final dimension: community. Housing is about individual circumstances and needs, but the aggregation of those individual circumstances is vitally important also. The Government wants to see strong and cohesive communities but says nothing very precise about what they mean by this or how their proposals will help achieve such communities. The last administration placed great emphasis upon the rhetoric of building sustainable communities, and did have some rather more clearly articulated ideas about what that might mean and what sort of action it might require.

It seems to me that there are some fundamental issues raised here. Is the policy direction outlined likely to deliver desirable outcomes at the level of communities? We know from previous research that a significant proportion of those who are seeking or living in social housing feel that social housing allocations are not fair. There is more than a suspicion that what some people mean by this is that households who have recently arrived in a locality and those from minority communities are “unfairly” getting access to resources ahead of “more deserving” indigenous households. One way to build strong and cohesive communities is, of course, to succumb to intolerance and exclusionary tendencies to create homogenous communities. There are some significant dangers here that need to be recognised and explored much more fully.

If we look over at the resurgence of NIMBYism that has followed the removal of local house building targets within the planning system we get a sense – if we needed one – that these are difficult and emotive issues.

The balance between the rights and freedoms of the individual, equality of opportunity, and the role of community is, of course, a fundamental and perennial concern. It is also important to move beyond considering the proposals on social housing reform in isolation and start to join the dots more effectively across policy areas. It something I’m planning on discussing further in a future post.

Fairer future or no future?

The Government claims that the Consultation Paper will usher in a fairer future for social housing. This is by no means self-evident. The paper is rather light on how this future is supposed to be realised. The paper makes some sensible points. And it is almost certainly true that greater flexibility is desirable if local authorities and housing associations are going to be able to manage their stock more effectively, even though creating the sorts of discretions envisaged is likely to keep the public lawyers busy.

Of course what difference the proposals would make if they were to become policy will depend on whether local authorities are keen to avail themselves of these new options and opportunities. A more pessimistic alternative future could be one in which the sector is characterised by greater poverty, greater stigmatisation, greater social closure of communities, and more severe poverty traps. I wouldn’t go so far as to say that the Consultation Paper is cataclysmic, but the route it appears to be charting is fraught with hazards. I am not at all convinced it represents a brighter future for social housing. It could very easily result, over the longer term, in a social housing sector as residual as those of the US or Australia – where social housing and social failure are pretty much synonymous.