Comment: The impending housing disaster
The government’s policy on housing will turn a fragile situation into a full-blown disaster.
By Nick Raynsford MP
We have just come through the most serious recession in my lifetime. Housing inevitably was badly affected. Private housebuilding in England fell from just over 150,000 new starts in 2007 to just 60,000 in 2009. This clearly had a serious impact, but things would have been far worse had the then Labour Government not taken a series of bold measures to counter the downturn.
As a result of the fiscal stimulus and more specific policies targeted at the housing market, repossessions which had been forecast to rise to similar levels to those seen in the recession of the early 1990s peaked at half that level; and because of investment through the Homes and Communities Agency in schemes such as Kickstart, the National Affordable Housing programme and Homebuy Direct, social and affordable housing programmes were maintained and confidence began to return to the market.
In the early months of this year, housebuilders were reporting month on month improvements in house sales and in the output of new homes. It appeared that we had turned the corner.
Then came the general election and the formation of the coalition government. Since then a series of ill-considered, uncoordinated, untested and frankly irresponsible policy announcements and cuts have destroyed the prospects of recovery, brought the housing market to the verge of a double-dip recession and spread alarm and concern around almost every sector of the community in need of better housing.
Confidence in the private housebuilding industry has been severely damaged over the past 6 months by ill-thought out changes to the planning regime, a continuing mortgage famine, fears about rising levels of unemployment, and severe cuts to the Homes and Communities Agency budget that had been supporting many new housing and regeneration schemes.
The Times reported last week (20th October) that Bellway, Britain’s sixth largest housebuilder had “delivered what one analyst described as an ‘unremittingly bleak’ assessment of the housing market”:
“The Newcastle-based company said that while it had enjoyed a strong spring selling season consumer confidence had ‘slowly ebbed away’ after the general election and subsequent media discussion of how the government planned to tackle Britain’s budget deficit.”
Now one might expect that Ministers, confronted with such dire evidence of the negative impact their policies have had over the past 6 months would now be reconsidering some of their impetuous early decisions and their harsh cuts package.
However instead of changing course, Ministers continue to press ahead on their doomed journey, ignoring all the evidence of impending disaster, and pinning their hopes on the so called ‘Housing bonus’ incentive.
The scheme has been promised as the panacea for the housing market for the last 6 months or more. In the summer, the Housing Minister promised anxious housebuilders that it would be launched before the summer recess. Then we were told all would be revealed in the autumn. Now we are promised a consultation in November. Yet all the while, confidence is draining away from the housing market.
And there are masses of unanswered questions about how the supposed panacea will work. Will it as originally claimed, apply to all new homes granted planning consent, or only to net additions to the housing stock? If the latter how will that incentivise regeneration and brownfield developments where because of the need to demolish existing substandard dwellings, no net increase in the stock is likely for many years.
How many homes will the scheme generate – and how will this compare with the 160,000 homes for which plans have already been ditched since the general election, and the further 120,000 – 140,000 which could be lost in the coming year, according to the report from Tetlow King planning for the National Housing Federation?
And what will be the impact, in terms of cuts to local authorities, of funding the scheme? Which authorities will gain and which lose? How will the bonus be split between districts and counties, bearing in mind that it is the former who have to give planning consent, but the latter who have to meet most consequential infrastructure costs?
As if the damage caused by their harsh Housing Benefit Cuts and their maladroit destabilising of the housing market was not enough, this Government has also embarked, in clear breach of Conservative election pledges, on dismantling the whole basis of social housing in England.
Being able to enjoy security in one’s own home is an asset which almost all of us in this House take for granted. So do the great majority of the population. The old adage ‘An Englishman’s home is his castle’ reflects a deep-seated belief that a secure home is a bedrock of a decent society. So why is it that coalition politicians who take it for granted that they should enjoy the benefit of security, should so lightly – with no manifesto commitment or mention in the coalition agreement – move to take away that precious security from a whole group of our fellow citizens, who arguably need security more than anyone?
The only credible argument advanced by those who advocate the policy is that it will ‘free up’ social housing, so making more homes available to those in need. But any serious analysis of the Government’s proposals shows very clearly, first that it will not have this effect, quite the contrary it will discourage mobility, and second that if it did have the intended effect, this would have disastrous social consequences. Let’s take them in turn.
If existing tenants are not to lose their security, but new lettings will be on a new basis, without traditional security of tenure and at 80% of market rents, what will be the consequence? Obviously existing tenants who might have considered moving to a small home, so releasing larger accommodation to those in need, will have second thoughts if the result is a loss of security and a rent increase. So the policy would have the opposite effect of that intended.
Worse still would be the consequence of using the new insecure tenancies to require tenants to move on if their income increased or if they were judged to have enjoyed sufficient time in social housing. What chance is there of creating mixed and balanced communities rather than ghettos of deprivation, if anyone who gets on, is told they have to leave. If only the poor and the unemployed can occupy social housing, this is a recipe for residualisation and a total disincentive to aspiration.
So the whole concept is flawed in principle, and it would have catastrophic effects in practice. How would people on low incomes be able to cope with a near market rent for supposedly social housing. In the SE10 postal district at the heart of my constituency, average market rents are estimated at £380 a week. 80% of that would involve a rent level of over £300 a week for a supposedly social letting. No one in low-paid work could consider such a tenancy, unless they were to have most of the costs met by Housing Benefit. And if they did, I can already see the double whammy of some sanctimonious Minister calling for further Housing Benefit cuts or caps on the grounds that people on benefit should not be able to live in such expensive areas.
In its 5 months in office the coalition government has already has a disastrous impact on housing in this country, the recovery from recession has been stalled, housebuilding is in crisis, social housing is facing a death warrant, private renting is being undermined by Housing Benefit cuts, hundreds of thousands of tenants are fearful as to how they can continue to afford their rent, many many more are under the threat of having to move or facing the bleak prospect of homelessness.
It is difficult to think of a more inept and deplorable record in such a short period of time. One can only hope that Ministers will come to their senses and recognise that this is no way to run housing policy. Our country and our people deserve better.
Nick Raynsford is Labour Member of Parliament for Greenwich and Woolwich
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