The housing policy jigsaw – a picture begins to emerge?

[Originally posted on Liberal Democrat Voice, 30/12/10]

In yesterday’s post I set out key policy developments affecting housing. So what can we discern about the current government’s approach to housing?

For a start there is a continuing emphasis upon choice. This is particularly clear when discussing how to encourage underoccupying social renters to move. The CLG rhetoric is of increasing choice and making choices easier to realise. They neglect to cross-refer to the DWP proposals to cut the housing benefit of any social renter deemed to be seriously underoccupying. The approach isn’t all “carrot”.

The Local Housing Allowance (LHA) proposals more generally are framed in terms of housing choices – households losing benefit can either negotiate their rent downwards, find the money to make up the difference, or move somewhere cheaper. But for many poor households in high demand housing markets that is effectively no choice at all. So mobility in search of cheaper accommodation is inevitable. The knock-on consequences of this will be considerable and varied, across a wide range of public services, as the Government is only too well aware. Yet, one of the most striking passages in the Impact Assessment associated with the LHA reforms is para 26 in which the Government effectively concedes that it has absolutely no idea of the impact the reforms will have on mobility. That is an important – and accurate – admissions, which has implications for any attempt to understand where we are heading.

The Government is expecting the restrictions on LHA to put downward pressure on rents, both directly and through a reduction in local demand for cheaper accommodation as a result of out-migration of poorer households. Whether it will result in a discernible reduction in rents will depend on the precise demand conditions locally. And if we believe in the efficacy of markets, then we might expect rents to rise in those areas to which poorer households are seeking to relocate, thereby mitigating the LHA savings somewhat.

At the same time Local Decisions is proposing that local authorities be able to discharge their homelessness duties into the private rented sector, which will work in opposition to the objectives of the LHA reforms by increasing demand in the private rented sector. Similarly, restrictions have been placed on the interest rates associated with support available to distressed mortgage holders. This increases the risk that owner occupiers who suffer an adverse shock such as unemployment will be unable to maintain their current home. That is again likely to increase the pressure at the bottom end of the private rented market.

While proposals for flexible tenure and affordable rents could be interpreted as broadening the range of possibilities for those seeking assistance from social landlords, it is equally useful to think of them as geared primarily towards giving landlords more flexibility in the management of their assets.

What sort of communities are likely to result from current policies? Labour were aiming to increase income and social mix in relatively poor localities as a way of diluting deprivation and combating social exclusion. The policy was a very long way from perfect, but at least that’s what it was trying for. The whole direction of policy appears to have been thrown into reverse. It seems almost inevitable that the current policy will deliver greater spatial segregation. The LHA proposals point in that direction. In practice the proposals for flexible tenure also point in that direction. Either households who improve their circumstances will be required to move out of social housing areas because they no longer ‘need’ social housing or fixed term tenancies will create an even stronger set of work disincentives than exists already. Why improve your family’s circumstances if the price is the loss of your home and community? Presumably the reason why some households will feel they have to is that they’ll have their benefit cut by 10% if they don’t. It’s not so much “carrot and stick” policy as “stick and bigger stick”.

Similarly, while the use of affordable rents might increase the supply of rented housing it could do so at the cost of deepening the poverty trap, as compared to offering properties at social rents.

Finally, the use of flexible tenure is also likely to increase turnover within neighbours, which is often precisely the last thing that housing managers are looking for – particularly if those who have to move out are the more “successful” households.

Supporters of these proposals would see it as reasonable that households receiving LHA, for example, should not expect to live in areas in which “low income working households” cannot afford to live. Similarly, social housing should be concentrated on those who “really” need it. It is common sense to expect households to move on and make way for someone who is in greater need.

Yet arguing that benefit recipients shouldn’t live in areas out of reach of working families relies on a false binary – it suggests these are different groups of people. Poverty is dynamic. Employment is precarious. And working poor households who rely upon benefits for assistance will have to move. They will be forced into longer commutes, with the associated impact on their already stretched resources, on family life, and on the environment.

Expecting those who no longer ‘need’ social housing to move on will concentrate disadvantage and deplete social capital. And concentrating disadvantage does not build sustainable and successful communities. Depleting social capital makes for less resilient communities. If the public services and support that are provided to stabilise such communities are simultaneously being cut or taken away then that will only intensify problems.

Any argument that is based upon encouraging spatial segregation should also be of concern for its broader impact upon social cohesion. We are currently, nominally at least,“all in it together”. But that requires an appreciation and acceptance that we have a collective and common interest. The more we spatially and socially segregate the more attenuated such a sense of common interest becomes. The more we risk societal fracture.

A key issue here is that the Government seems to be engaged in an elaborate exercise in deckchair rearrangement – circulating poorer households around the rental housing carousel ever faster. The proposals they have brought forward to deal with the underlying problem of an inadequate housing stock are extremely modest. And, if the critics are right, then the precise form taken by the localism proposals for planning reform will be critical if we are going to avoid making things worse. Get it wrong and the push to localism will lead to a reduction in the rate of housing supply, which is already very modest by international standards.

When thinking about housing supply there are some fundamental questions about whose welfare one takes into consideration in these decisions – how do we represent those who cannot access localities because of shortage and cost? Those who are yet to form independent households? How do planning mechanisms adequately recognise the welfare of those who cannot be represented, alongside established and entrenched interests, without putting in place aggregate mechanisms that ride roughshod over the legitimate concerns and wishes of existing residents? We might see a traditional Liberal Democrat answer being that reconciling competing claims is the purpose of local government. But it would appear that part of the Coalition agenda is circumventing local representative democracy. These are not new questions. But they have a renewed urgency.

Of course, some of what the government is proposing is giving local authorities and housing associations as landlords the power to act in new ways. It may be that many landlords appreciate only too well the sort of negative impacts that can flow from flexibilising and destabilising housing systems too much. They may decline to exercise their new powers. If that is the case then the Coalition’s proposals may not usher in a bracing new era for social housing but something rather more muted.

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  1. Some other things maybe:

    A steady attack on the link between councils and social housing. For example putting a cap on HB implies moving a large number of people out of some London boroughs. Traditionally – and legally – people in housing need are the responsibility of the council where they have a local connection. The HB cap with a clear intention of moving people out to cheaper boroughs is abandoning this principle. Er, there are other examples. I just can’t think of any. Um, oh dear. Oh – the planning localisation stuff.

    A disintegration of the social housing system. Assuming the Tories’ plans work out we will have identical people in the same street in identical houses:
    * paying near market rents with no security renting from their local council
    * paying lower rents with security renting from their local council
    * paying near market rents with no security renting from a locally-based housing association
    * paying lower rents with security renting from a locally-based housing association
    * renting from a national housing association
    * private renting

    All accessed through the same route, a homelessness allocation. The social housing world is already pretty chaotic, adding another layer of chaos doesn’t seem to helpful to me.

    • Thanks for the comment. You are right, of course, the picture is even more complex than I painted it. And as a consequence even more problematic. To do justice to how this will evolve – in particular the equity implications for otherwise comparable households – would need a lot more space. But I can’t see much in what the government is saying that suggests we are heading for a positive future for social housing.

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