In September 2018 Theresa May stated at the National Housing Federation (NHF) conference that from 2022 the Tory party would put an extra £2bn into social housing. This was picked up by the BBC as a major investment in ending the housing crisis.In reality it is a major reduction in funding that in practice brings the government commitment to solving the social housing issue to a halt.
If we step back in time to 2010, George Osbourne cut the annual capital funding budget for housing associations from £3bn to £450m. This amounts to a total cut of £ 15.3bn billion over the 6 year period that it was in force. in 2017 the Tories announced an "increase" to £7bn back dated to cover the period 2016 to 2021. This was increased to £9bn at the Conservative conference. This by historical standards was a fairly generous settlement coming in at £1.8bn per year, but still left a loss of £6bn for the period (worse if inflation is factored in) and for the period 2010-2021 a total loss of central government funding of £21.3 billion.
But worse still is the government announcement made in September 2018 that commits to spending an extra £2bn for the period of upto 2029. This amounts to an overall loss in the period up to 2029 of £30bn. It could be worse because there is no clarity in the statement from the Conservatives whether the commitment of money of £9bn will continue through to 2029. If inflation is factored in then the overall loss in funding to housing associations since 2010 is in the £34 billion range. At a time when local authority social housing budgets have been decimated and private rents are way above the reach of a large part of the population, this amounts to a end to support for social housing, not the much trumpeted idea that the government is investing in social housing. Even if the full 2 billion is channelled completely into house building, then the amount would at the best amount to 300,000 houses built over 10 years. This will not go near to meeting the housing need.
Over the years since the 1980s, successive governments have fostered and promoted an obsession with home ownership. George Osbourne’s Help to Buy programme or the gift that keeps on giving as it is referred to by private developers, has pumped billions into promoting home ownership, fuelling private developers’ profits and inflating the housing market. Loud and clear the message comes: buying is best, renting its poor cousin and social renting its destitute second cousin many times removed.
Alan Townshend Group Chief Executive at Southern Housing Group
The other factor is that the term Affordable Homes was used in Theresa May's speech to the National Housing Federation (NHF). Social housing and affordable housing are completely diffent and the 2 billion will be burned up very quickly if it is targeted at house builders for the affordable home market.
- Breaking the cycle of unjust stigma in social housing, Alan Townshend 19 September 2018 https://www.linkedin.com/pulse/breaking-cycle-unjust-stigma-social-housing-alan-townshend/
- The aditional £2 billion promised by the Conervatives over the next 10 years amounts to 200 million per year
- This goes nowhere near to bringing funding back to 2009 levels leaving a gap of £30bn (£34bn if inflation is factored in)
- Local Authority housing has declined at the same rate that housing association housing has increased
- Housing Associations are now the main provider of social housing
- No figures have been provided for the 2021 forward spending review so that this number could be lost in cuts in the overall budget
- With right to buy and the provision of "affordable homes" much of this money will be lost to social housing and end up in the private sector
- £24bn is paid to private landlords per year in housing benefit. A large increase in the budget for social housing would remove this cost and create a social asset
- Housing benefit paid to private landlords amounts to approximately £350 billion by 2028 as compared with £21 billion for social housing
- Private landlords receive more in one year in housing benefit than social housing will receive in 20 years
- Much of the private stock of housing is of poor quality. Social housing could remedy this, providing good housing and making money for the state
- There are more than 1.8 million households waiting for a social home of which there are 1.2 million in England alone
- Many of those on housing waiting lists have been on them for five or more years.
- More than a million on social housing waiting lists, 9th June 2018- https://www.bbc.com/news/education-44413766
No government since the 60s has a particularly good record on social housing. Whether it be the design and placement of social housing or the quantity built, governments have had a poor record. Although it was a Labour government that started the mass building of social housing, it is important to note that the subsequent Conservative government recognised the need for social housing and stepped up the building programme. From 1955 the pattern was social housing building was to increase under Labour governments, only to fall away again during Conservative governments. The collapse in social house building took place in 1980 at the time of introduction of right to buy. Social house building from 1980 fell off a cliff and by 1990 there was practically no social housing being built by local authorities. In 1990 Housing Association building was higher than local authority building for the first time, but has never come near to filling the gap with the loss of local authority building. However Housing Associations have often re-furbished houses that were no longer in use, bringing them back into the pool, although this has only partially closed the gap as many of the refurbished housing was already in use if of a substandard quality.
Private building increased sharply after the war and held up pretty well until the 2008 financial crash. Since the crash housbuilding was stagnant up until reaching pre-crash levels over the last 2 years.
The government have made a number of announcements over the last 8 years, indicating that recognised the need for new social homes, including the latest in September 2019 committing to a further £2bn over the next 10 years. Unfortunately none of these statements have turned into real action to resolve the crisis.
- David Cameron's government resurrected the 'right to buy' scheme they promised to replace any increase in the number of social homes sold, with new homes. As of March 2018 there was 63,000 sales of social homes as opposed to just 16,000 new builds.
- In the 2017 budget Phillip Hammond announced a large fund to increase social homes building. This fund was later retracted and used to prop up a failing NHS
- Theresa May has said on a number of occassions that the Conservatives are building one for one (one house built for one house sold under the right to buy scheme). The true figures are 1 built for every 7 sold.
The true figures for house building are dramatic. The number of new government-funded houses built for social rent each year has plummeted by 97 per cent since the Conservatives took office in 2010, official statistics have shown. More than 36,700 new socially rented homes were built with government money in England in 2010-11 – the year in which the Tories came to power in coalition with the Liberal Democrats. By the 2016-17, financial year that finished in April, that figure had fallen to just 1,102.
In the same period the total number of affordable homes built with government money more than halved – from 55,909 to 27,792.
The Conservatives were forced to U-turn during the the 2017 election campaign after Theresa May announced the Tories would deliver "a constant supply of new homes for social rent”. The Government was later forced to admit that the new homes would, in fact, be the significantly more expensive “affordable” homes.
The goverment still haven't grasped the seriousness of the housing crisis. In many respects it is unlikely they can. They are so wedded to austerity that they dare not make the money commitments required to solve the housing shortage. This is a false saving as they are wasting billions of pounds that is presently being funnelled into private landlords. Even their latest scheme of so called making more money available for housing has the words "affordable homes" attached where rents are 80% of the market rate. Government policy has always been to shore up the commercial market ensuring house price inflation. Money given by the government to the housing market has tended to worsen the shortage rather than remedy it.
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Most new Housing Association builds were leasehold or share buy properties. Even the latest Green Paper encourages 'affordable Social Housing' as in leasehold or share buy ignoring social rented affordable housing. 'Council housing breeds Labour voters'. Why else would the Tories hand back £281,000,000 to the Treasury in 2017 when we have so much homelessness, lack of affordable rented properties and poor housing stocks.
Land to Build
- Number of government-funded social homes falls by 97% since Conservatives took office, The Independent, 20 June 2017 - https://www.independent.co.uk/news/uk/home-news/social-housing-government-funded-properties-rent-falls-97-per-cent-study-homes-communities-agency-a7799116.html
Over the last 20 years housing associations have taken over more responsibility for providing social housing. It is a mixed picture with some housing associations providing excellent service, while others have performed badly. As can be seen in figure 7 since 2004 there has been a practically identical growth in Housing Association provision to the fall in local authority social housing.
At the height of funding for housing associations they were still only building houses at half the target. This figure should be seen with some caution. Being given a target that is not achievable with the funds available should not be fully laid at the door of housing associations. However it is true to say that many housing associations do run with lage overheads which leaves less money for house building
The official figures also reveal that on average housing associations spend 74p in the £1 on operating costs. This compares to some of the most efficient operators in the sector, who spend just 57p in the £1 on operating costs, and some of the worse examples, who spend more than 90p in the £1.
The problem with housing associations particularly those with charity status is that they are not answerable to government. This can mean that they have chief executives taking home six figure salaries. Housing associations have there place, but it is important that legislation ensures they work in the best interest of tenants. Certainly at the moment they are not filling the housing gap and local authority housing has the capability to create more ambitous capital schemes that serve a wider community at a faster turnaround.
Instead of socially rented homes that are typically available to vulnerable families at around 50 per cent of market value, the Government has prioritised the building of “affordable” homes for which rents can be charged at up to 80 per cent of market value. Critics say that, in many areas of the country, these rents are not genuinely affordable for people on low and middle incomes.
The Localism Act 2011 changed the rules on the length of tenancies for social renters. Social landlords can now let on short-term contracts of five years and, in some cases, as little as two years. While historically local authority social housing could mean a home of life, tenants now find themselves in a situation where there is instability in their housing provision.
It is important that those who rent from a social landlord have the opportunity of a permanent, secure home. However, the shortage of social housing means local authorities have to deal with the many thousands of households that are waiting, whether in temporary accommodation or in insecure private rentals, for the offer of a social home. Affordable homes are not the answer. Unlike social housing rents are much more subject to the market and as can be seen in the section Housing Market this is a sector that is seeing high inflation, way outside what the social tenant can afford. This instability in the market is leading to many families living in temporary accomodation, often away from their family and friends.
Shelter has campaigned for local authorities to carry on offering longer-term tenancies, where possible, to those households that are vulnerable and in need of a secure home; for example, households containing someone over 60 years of age, or people with a long-term medical or welfare need. They also recommend that families with children are offered longer-term tenancies so that their families can get the stability they need. It is unlikely that this will be welcomed by renters in the affordable homes space, as they will look to maximise profits by afford to pay the 80% of inflating rent prices.
Right to Buy
The Housing Act 1980, gave council tenants the right to buy the property they rented from the local authority.
Following the act home ownership grew from 55% of the population in 1980 to 64% in 1987. By the time Margaret Thatcher left office in 1990 it was 67%. 1.5 million council houses were sold by 1990, by 1995 it was 2.1 million and as a result of the Right to Buy the Treasury received £28 billion. Proponents of the Right to Buy argue that it gave working-class council tenants opportunities to get on the property ladder which they would not otherwise had had without the Act. However, by 2015-16, home ownership had declined from a high of 70.9% in 2003 back to 62.9%, the lowest level since 1985.
Tony Belton, a Labour councillor in South West London claimed that, "Speculators have made millions out of exploiting public assets." In March 2013 the Daily Mirror reported that Charles Gow, the son of Mrs. Thatcher’s housing minister, Ian Gow, bought 40 of the 120 former council flats in one housing project in Roehampton, in South West London. Rents soared in investor-owned ex-council flats.
By 2013, some tenants who had purchased their council flats, sold them later to speculators, investors or property companies. By 2013, a one-bedroom council flat that sold for £50,000 in the early 1990s, for example, had a market price of £250,000. A tight housing market led to increased rent as construction of new homes decreased.
A Freedom of Information (FOI) search in January 2019 discovered damning data on the impacts of right to buy:
- More than 40% of council houses sold under right to buy in London are now privately rented
- Tens of millions of pounds are being paid by local authorities to rent former council homes in order to house growing numbers of homeless families
- Some councils have bought back their former homes at more than six times the amount they sold them for
- Hundreds of private landlords now own five or more right-to-buy properties. There are several London boroughs where more than half the houses sold through the policy are now in the hands of private landlords. Private renters have to pay more than people living in council-owned properties.
Labour London assembly member Tom Copley said “Something has gone very wrong when tens of thousands of homes built to be let at social rents for the public good are now being rented out at market rates for private profit, sometimes back to the very councils that were forced to sell them,”
A serious flaw in councils being forced to sell off housing stock is that should they then become part of the private rental stock, where tenants are on housing benefit, the rent is now paid to private landlords rather than to the council. In a gig economy where more and more working people require housing support to provide a home this extracts wealth out of the economy and restricts councils from having the funds to expand and improve social housing.
- "Home ownership in England at a 30-year low, official figures show", "The Guardian", 2nd March 2017
- Ministers urged to halt right-to-buy scheme - Michael Savage, Guardian 19-Jan-2019: https://www.theguardian.com/society/2019/jan/19/ministers-urged-halt-right-buy-council-homes-rented