2017 Housing Perspectives – concluding thoughts: ‘We resolved crises of housing and poverty before, we can do it again’
In our final exclusive comment piece as part of the 75th anniversary of the Beveridge Report, Richard Rawes, chairman of the Webb Memorial Trust, says we can resolve the crises of poverty and housing with the right impetus.
After decades of reforms and policy manoeuvring, the housing crisis in England is getting worse. Housing supply remains well below what it was before the financial crisis, new social housing has almost disappeared, buying or renting has become even more unaffordable, homeownership is in decline, a third of private rented homes fail to meet the ‘Decent Homes Standard’, and homelessness is increasing. If these trends continue, the housing crisis will become a major catastrophe, with the gap between the housing ‘haves’ and the housing ‘have nots’ becoming unbridgeable.
By 2025, housing could be an even bigger driver of extreme poverty and inequality. The great social reformers, Sidney and Beatrice Webb and William Beveridge, must be turning in their graves. For them, ending housing poverty was the hallmark of a prosperous and civilised society. While councils built a million homes in the inter-war years, mostly for low income households, council house building in recent years has struggled to get beyond 2,000 units.
We have collectively failed to address the housing and poverty challenges we face. It is 75 years since the publication of the Beveridge Report, which drew heavily on the Webbs’ research on how poor housing was a cause of poverty and ill health. Great progress has been made since, not least in ending the squalor and destitution of slum housing. Yet, housing inequalities today are widening and the most vulnerable are being left behind. We are in danger of going backwards, not forwards.
England is now indisputably a divided housing nation, not only between landlords, owner occupiers and renters but also between young and old and between high housing demand areas and elsewhere. Most worrying is the rise in housing poverty, particularly among those on low incomes and in work. The impacts on children of long waiting times and cold, damp and overcrowded housing is movingly illustrated in Rys Farthing’s essay on children’s voices. This affects not only the day to day experiences of young people but also their educational attainment and future life prospects.
As housing costs rise, more and more tenants rely on housing benefit to pay their rent. As a consequence, and despite punitive cost savings, the housing benefit bill has doubled since the early 2000s to £25bn a year – some 11% of welfare spending. Effectively, subsidies for the construction of affordable housing have been replaced by ever increasing welfare payments – an expensive mistake. This benefit bill is likely to continue to spiral, with a growing proportion of rent subsidy paid to private landlords. As articulated by Toby Lloyd, head of housing development at Shelter, without interventions in the market upstream, attempts to put a cap on this rise will inevitably increase housing poverty.
So, what can be done to ensure that housing helps to create a fairer and more inclusive society? According to Birmingham University’s research for the Webb Memorial Trust, policy makers should look to the principles that drove early post-war public housing, i.e. a flexible mix of tenures, with councils and housing associations providing both social and private rented homes. This ‘hybrid’ approach would “help restore civil society roles in housing and allow a greater emphasis on community stewardship”.
Follow the 2017 Housing Perspectives series: Housing, poverty and the good society – what can we achieve by 2025?
This series of perspectives also provides a reassuring consensus that poverty can be solved and that such solutions can make a major contribution to a ‘good society’. While 14 different viewpoints from a wide range of organisations have been expressed, some common themes emerge in finding solutions to the complex interaction between housing and poverty.
In terms of supply, while the current need is for at least 250,000 homes a year, the private sector has never built more than around 150,000 homes and it is not in its interest to flood the market. So whatever incentives and ‘planning freedoms’ are introduced, it is highly unlikely that the development industry will meet the need on its own, particularly for ‘affordable’ homes. Any solution therefore has to complement private sector construction with some combination of council, housing association and community-led housing.
If this is part of the answer, why are we in the midst of a major sell-off of public land, both by government departments and local authorities? Whatever the short-term need to boost public finances at a critical time, this is a wasted opportunity to both solve the shortage of affordable housing and ensure that it is the public who benefit from any increase in land value arising from the change of planning use. Taking land costs out of the equation provides the opportunity for a building programme of affordable housing which can pay for itself over its lifetime, particularly with the support of some upfront capital grant to address issues such as contamination, demolition and public infrastructure.
An extension of this approach could enable local authorities to compulsorily purchase land at, or close to, existing land use values, as promoted by Duncan Bowie, senior lecturer at the University of Westminster. Again, this would ensure that increases in land value remain in the public domain. Whether the development of this land is through local authorities, community land trusts or New Town Corporations is less important than the principle of local accountability and the assets being managed for the public good. The government’s new garden towns and villages programme provides an opportunity to revisit the funding regimes used for the post-war New Towns, which ‘captured’ the rise in values and ploughed it back into the community, including cross-subsidising rents.
Increasing the supply of social housing will not solve housing poverty but it will make a difference over time. However, while housing shortages and high housing costs are a key cause of poverty in many areas, it is also the case that unemployment or low household income mean that many families can only afford the poorest quality housing, often in the private rented sector. While most councils have significantly improved the quality of their homes through the decent homes programmes, around a third of private rented homes fail to meet this standard. Given the massive increase in private renting, from 10% to 19% of housing stock, the lack of controls on this sector is surprising. Issues of overcrowding, cold, damp and high energy costs are common problems, together with the fear among tenants that if they complain, they could either be ejected from the property or improvements made and the rents put up. There is now a strong case for the registration of private sector landlords, together with annual inspections and greater powers of intervention for local authorities.
The lack of security for private sector tenants has been highlighted by Compass in a recent report ‘Secure and Free’, commissioned by the Webb Memorial Trust. Among the report’s ideas are measures to curb future rent growth and improve security for tenants. Drawing on ideas from Friends of the Earth and Civitas, they also suggest that security be improved for home-owners through a ‘right to sell’ and ‘right to stay’, so that those who can no longer afford mortgage repayments can sell their properties and remain as tenants paying fair rents.
Regional differences make it impossible to identify universally effective solutions. In particular, demand for housing is inherently linked to the local economy and workforce needs. In this respect, the government’s commitment to providing a national industrial strategy is helpful, particularly in the context of Brexit. However, this also underlines the need for far greater devolution to local areas, including revenue raising powers. This would enable authorities to better coordinate employment and residential growth, put together robust business plans for the construction of affordable housing and ensure the condition of existing public and private rental stock.
In this respect, the comment from Brian Robson (Joseph Rowntree Foundation) is interesting in that Scotland, Wales and Northern Ireland have put in place policies that are successfully meeting their housing needs, while England is making little or no progress. Wales and Scotland also have in place a mandatory system of private landlord registration.
As well as housing conditions, tackling the causes of poverty is as much about planning and regeneration in helping to create the kind of places where people want to live. Building successful new communities and urban extensions takes time, public engagement and political commitment. Mixed tenure planning policies, offering access to good schools, employment, retail and leisure facilities, can make a big difference. Indeed, some of the most desirable places to live are ones with a mix of uses and a mix of residents. This can be enhanced by ‘joined up’ support to residents; there are some excellent examples of housing providers offering a holistic advice service, rather than a ‘housing management’ service. Clearly such an approach is not available to private sector tenants, who have to rely on voluntary agencies for support such as Citizens Advice.
So in a nutshell, drawing on this series of perspectives, here are some suggestions that could make a real difference in addressing the impact of the current crisis on our most deprived communities:
- Stop those policies that are making things worse – planning changes that hand the enhanced value of housing land to landowners instead of the community, house purchase subsidies that inflate prices, etc.
- Reintroduce a capital grant system to address derelict land, demolition and upfront infrastructure costs, enabling new affordable housing to be constructed and a progressive reduction in housing benefit costs
- Relax the constraints on local authority borrowing and encourage councils and housing associations to adopt a ‘hybrid’ approach, with a flexible mix of tenures providing both social and private rented homes
- Retain public land instead of selling it, requiring local councils and communities to retain the freehold and invest in housing for the future
- Enable local councils to compulsory purchase land at existing use value
- Address the overall housing supply by developing new towns, villages and urban extensions, using the New Towns principles to ensure future sustainability
- Set the new Industrial Strategy in the context of a national spatial plan, both to help rebalance the economy and to better plan the links between housing and employment
- Accelerate the programme of devolution, including revenue raising powers, to enable devolved authorities to make long-term investments on behalf of local communities
- Rethink property taxation, including council tax and stamp duty, to better reflect land values and residents’ ‘ability to pay’
- Bring in a system of private landlord registration, with annual inspections and improved enforcement powers for local authorities
- Ensure that, if ‘right to buy’ is retained, there is a government backed system to replace all lost affordable housing stock
- Introduce a ‘right to stay’ so that those who can no longer afford mortgage repayments can sell their properties and remain as tenants.
We have resolved crises of housing and poverty in the past – and in much more difficult circumstances, particularly after two world wars. With strong political will, a cross-party consensus and a trust in local democracy, we can do so again.
Richard Rawes is the chairman of the Webb Memorial Trust.
This article was written for the Webb Memorial Trust and the All-Party Parliamentary Group on Poverty as part of the 75th anniversary of the Beveridge Report and is part of a series of articles.