Bonuses for houses?

On the face of it, this sounds like a good idea:  Councils in England offered new homes bonus (BBC). Housebuilding, particularly in the public-rented sector, has been too low for many years now, which may be fine for inflating the house prices for people who own a home, but is pretty lousy for those who don’t own one and can’t afford to buy. However, there are some flaws with this idea.

Firstly, it’s a new bonus to councils to build houses, but it’s not new money. So it will be taking money already allocated to helping councils build new houses, and diverting it to other councils. Read the rest of this entry »

Posted in Politics. Tags: , . 2 Comments »

How many times will we have to say “told you so”?

Skuds has an example of a the following phenomenon:

  • Before the election, Labour gets wind that the Tories have some policy that we think people won’t like.
  • Labour puts out a leaflet suggesting that the Tories may do this thing
  • The Tories go apeshit, claiming that the leaflet is lies and scaremongering
  • The Tories form the next government in coalition with the Lib Dems
  • The coalition starts to suggest or even roll out the very policy that they denied they were thinking of and accused Labour of underhandedness for talking about

This one is about the new proposals to stop the use of secure tenancy for council housing:

There was also the refusal by Cameron to promise to keep to the two weeks to get an appointment if you have a suspected cancer.

And the whole thing about how the cuts will affect frontline services even though the Tories denied that they would.

I’m sure there are more. This is not new, either. Before the 1979 election the [i]Daily Mail[/i] printed a list of ‘Labour Lies’ from campaign literature. Several of them turned out to be pretty much on the mark. One that was not quite as predicted was that the Tories would double VAT. They increased it from 8% to 15%, which is of course a whole 1% short of double.

Building for the future?

The government has today announced a £925M boost for house building. What it actually boils down to is:

  • £419M in repayable loans or equity financing
  • £130M for low-cost home ownership
  • £209M for social rented housing
  • £167M in non-repayable grants

This is to be spread over 270 projects, resulting in up to 22,400 new houses. However, it appears that most are already planned developments that have stalled. The programme is called ‘Kickstart’, and this is just the first phase.

I have to say that I am in favour of support of housing at the current time. Yes, market demand is down and prices are low compared to recent years, but the fact remains that we have a general housing shortage in the UK, which is getting acute in some areas.

The fixation with home-ownership has meant that the rented sector has been ignored. Private renting has been dominated by the buy-to-let market, which is under serious pressure as the equity behind the mortgages has been squeezed, and while interest rates are lower, the chances of tenants needing to move has increased the risks to landlords. I’ve always felt that tenants get a raw deal in this area anyway, with rapacious agents charging 10-15% for ‘management fees’ and doing little, while also charging for every thing they do on top (inventory checks, credit checks, drawing up a contract, etc etc), but of course they don’t charge ‘key money’ because that’s illegal.

Public rented housing has declined markedly over the past 30 years. As successive governments have promoted the right to buy, they have also forced councils to give away large discounts, and for a long time, also made sure that councils did not have the ability to replace stock. The Housing Associations – now called ‘Registered Social Landlords’ (RSLs) have been pushed into try and fill the gap, but they are largely undercapitalised and rely in large part on grants and favourable land deals (from councils in many cases) to build a modest number of properties each year.

That’s why, despite a slump in prices, the average house is worth about 6-8 times the average salary (the vagueness is because the definition of ‘average’ depends on which survey you look at, and house prices are not easy to accurately measure at times of low market activity). Most mortgages are limited to about 3-4 times annual salary – for good reason – and so you can see that people need to have a fair amount saved or in equity to be able to buy at present. This suggests (based on simple market theory) that demand is still high, and comparisons over history suggest that is the case.

Now, were I a free-market capitalist, right now I’d be suggesting that the market will correct this situation, and as if by magic, all will be well. Problem is that this doesn’t appear to have been the case over the past few decades of increasing private involvement in housing – if anything, the recent slump demonstrates that while the private sector can boost prices for owners and then create a self-destructive bubble, it cannot do much for people at the lower end of the market who get priced out of buying and get fleeced when renting.

So, instead, I believe that it is right for the government to stimulate the housing market by putting money (whether grants or loans) in to ensure that homes are available to buy or rent more easily, and hopefully at more reasonable prices. That they should have been doing this over the past 12 years, instead of simply producing targets for development that don’t go very far, is by-the-by. I can’t change the past, and neither can the government. That the likely next government will do less for housing is to me almost a given (the Tories seem to have a visceral hatred of social housing, where with New Labour it was just something that they didn’t understand, not having come from the background that many previous Labour politicians did). So we might as well welcome what we get when we can get it.

However, 22,400 houses is not going to solve the real problems we face. Check any local council that has a housing register. I believe many will have over 1,000 people on waiting lists, with a fair number of those homeless. There are far more people in what’s called the ‘hidden homeless’ – people who are living with parents or others because they can’t afford to move out into their own place, even though they really want to, and can’t qualify for assistance because they are working and have a ‘low housing need’. In the 1950s and 1960s, the UK were building about 150,000 houses a year – and that was just the social housing. Now the target is 150,000 in the next decade.

While there are people who are going to be against more housing, especially when it is planned for near where they live (especially social housing, because we can’t have the proles living near ‘nice’ people, can we?), the reality is that if we don’t built more than we are – more than we are even planning to – and if much of that new capacity is not for affordable renting (which tends to mean council or RSL), then we are going to be storing up problems for the future.

Important Public Consultation

On the Rugby Observer website there is an article that appears to have come a bit late to get into the latest print edition: Last chance to have your say.

What it concerns is the ‘Core Strategy’ for Rugby Borough. This is essentially about planning and development around the Borough over the next twenty years, and is part of the process of replacing the current ‘Local Plan’.

From the RBC website:

The document includes:

  • vision for the future of Rugby Borough to 2026.
  • Strategic allocations for housing and employment development up to 2026.
  • A Development Strategy for the Borough.
  • Planning policies which will be used to determine planning applications when the Core Strategy is adopted.
  • Proposal Maps showing sites for particular land uses and displaying relevant policies by identifying areas of protection, such as Green Belt and conservation areas.

The public has until 21 August to comment. Anything received after this date will not be considered, as the consultation period is fixed by law.

I haven’t really had time to go through it yet, and I can’t say that I know the area all that well so I may not be aware of all possible issues or the history of particular bits of land, but I’ll try to have a go.

Unfortunately, because the Observer publish their articles in such a way that you can’t select the text, you can’t follow the the web address that they put up there. It’s also not the address of the actual Core Strategy. In case anyone sees this in time, here is a better link:

http://www.rugby.gov.uk/site/scripts/documents_info.php?documentID=1205

For a paper copy, call the council on 01788 533762, or email forward.planning@rugby.gov.uk. The means of sending comments is explained there. You can’t just do so by dropping them a line, a particular form is required and specific criteria must be in place as grounds for objection, as this is the draft submission – the overall process has involved public consultation in periods over the past couple of years.

Rugby BC Full Council – 29 June 2009

I have dealt with the Cattle Market issue in a separate post, as it is long enough as it is. Quick summary – the application was passed, with all Conservatives in support as far as I can tell.

While I’d been to meetings of the Cabinet before, I’d never been in the public gallery. As the Cabinet is smaller, the public are usually allowed in to the back of the chamber. Not for this one.

Only about half a dozen members of the public turned up – a few of whom appeared to have connections to the council or local politics. I’ve seen meetings at Crawley where hundreds have turned up, and with the press coverage had expected at least 20 people to be there.

And it’s a good job too – the gallery would fit at most 50 people. It’s quite high up, and does not give a good view. Of the two rows of seats, the one in front will let you see up to 30 councillors without craning over the edge – and even then, you have to lean right over to look at the top of the heads of some of them. The view from the back row must be even worse.

At Crawley, there was a speaker system, with each councillor having a microphone, controlled by the mayor. Here, there’s none of that modern stuff. However, the acoustics were quite good. The lady next to me had forgotten her hearing aid, but seemed to be able to pick up most of what was said. I would even go as far as to say that it was much better (although the system at Crawley also meant that a member who spoke for too long could be cut off, rather than having to be interrupted).

Because of the vantage point (or lack of it) it was hard to see exactly which councillor was talking if they were at the back. Even if you could see them, it wasn’t always easy to see their nameplate (so if I get names wrong, that is why). On the other hand, the nameplates were at least colour coded so those I could see also told me which party they were in.

The mayor, Kam Kaur, did pretty well. It was her first full meeting after being elected, and it’s a daunting task – especially when there’s a contentious issue at hand.

Other than the Cattle Market application, the main debate held was on the changes to the Core Strategy – mainly around planning issues.

Like most towns (indeed most places in the UK), Rugby has a target to build a number of new homes in the next 15-20 years. Like most places, there is local opposition (especially when specific bits of land are mentioned).

Cllr Ron Ravenhall (Lib Dem) gave an odd speech suggesting that falling birthrates and the swine flu epidemic would mean that demand for housing would fall. There are two problems with Cllr Ravenhall’s facts. Firstly, he quoted a birth rate of 1.66 (which I assume he meant to mean the fertility rate, not births per 1000  people which would be about 12 for the UK). This is not the latest figure I have seen – it’s about 1.8 according to wikipedia, not far off replacement levels. Besides, there are other impacts on population and housing demand that he has forgotten – death rates falling and life expectancy rising would mean that overall population will grow – and the type of family unit has changed in that far more people are single than used to be (and this includes ageing widows/widowers).

There was also talk about how housing demand had fallen due to the recession. This is also poppycock. The real issue is that house prices were overinflated, to the point that people could not afford them, and then when the bubble burst in 2007, people found they couldn’t even afford the places they were buying. Still, house prices are on average about twice what they were 10 years ago, yet average/median incomes have not kept pace. So we find that where a house might have cost 3-4x a normal salary to buy, it now still costs 6-8 times a normal salary, even after a major market correction. Clearly demand is still high. If it isn’t, I suggest that this would mean that we have zero homelessness and few people on the register for council/social housing. I bet anyone a shiny pound coin that this is not the case.

So, why can’t we….

We are going into recession. We have banks who are reluctant to lend. We have housebuilders stopping work all over the country. We have thousands of people (25,000 in West Sussex alone) on local authority housing lists. We have houses that are falling in value but people still can’t afford to buy them.

So, how about a bit of actual socialism? Or, Keynesian economics anyway…

Let’s start building public housing again. Let’s use public money to buy out empty houses and half-finished building sites so that they can be worked on and rented out. It creates jobs, it makes housing more affordable and it could help spur activity in the wider economy.

If we can bail out banks for half a trillion quid, and reduce interest rates by a third at a stroke, can’t the government allow and push local authorities into this?

More bad news for the Crawley Tories

Back in January, the Conservatives had to admit defeat on their badly thought through and costed plans to transfer Crawley’s Council Housing stock.

Essentially, all of the bodies that had to approve their proposals refused to do so, mainly on the basis that the projected £60M costs were inflated. The Audit Commission, the local tenant’s panel, the ‘shadow board’ (the group set up to create the new entity which would take over the housing) and the Government office of the South East are difficult to argue with. Until then, it had only been the Labour councillors who had opposed putting the flawed plan to the vote of tenants. The Lib Dems appeared to prefer to tinker with the edges, and it was only when they gained a Tory defector and the true extent of the debace was apparent that they came to a definite position.

One of the things that was highlighted back in November was that the council had spent £30K on a DVD which had been rendered incorrect even before it was sent out. The Tory leadership had included a reference to the possibility of charging more for the vital Lifeline service (which provides a direct link between vulnerable elderly and ill tenants and the emergency/health services). However, this was defeated by Labour, Lib Dem and dissident Tory votes, but it was too late to remove this ‘threat’ from the DVD.

Turns out that this was not the only problem with it, or with other advertising sent out by the Council around the time to promote the idea of transfer. Today the Advertising Standards Authority said that Crawley Borough Council had potentially misled tenants and upheld two complaints:

A newsletter headlined “Council faces £12m shortfall to reach Decent Homes Standard (DHS)” said the Crawley authority would not be able to meet a £60m figure which it claimed was the minimum spend required on housing stock by 2010.

But the ASA upheld a complaint that this figure was misleading, because it included future maintenance costs beyond DHS guidance.

A second point of complaint concerned a promotional DVD which questioned the reliability of other information being disseminated at the time by the Defend Council Housing group.

The ASA concluded the material “unfairly denigrated” the aims of the group, which campaigned against the housing transfer.

So, the DVD also attacked the Defend Council Housing group. But the more important thing is that the ASA have also picked up on the Tory claims of a £12M shortfall in funding due to a need to spend £60M in three years. Even after the Audit Commission and others had pointed out that the £60M figure was too high, or referred to a much longer period of time, the Tory councillors were still sticking to the £12M funding gap. It doesn’t exist! And yet again, the Council are finding that an august body has called them on the claims.

Crawley council said: “We’re baffled because everything was checked and approved by the relevant parties in line with government guidelines.”

I’m ‘baffled’ because the Labour councillors, Defend Council Housing and others had been asking them to clarify their figures for months before they were ignominiously dropped. The fact that they did not, and still have not, suggests that either they didn’t know what the basis for the £60M really was (and how it compared to the actual spend to meet the Decent Homes Standard), or they did but didn’t want to admit that it was incorrect.

So did they lie, or can’t they add up? And the people of Crawley elected more of these muppets to run the town in May.

Overheard at the count

Now we can get the tenants back

From a senior local Tory, when they knew that they had a concrete majority on the Borough Council.

Now, I heard this second (or even third) hand. But I trust my source, and I think that the quote is entirely likely from the person I was told it came from.

Still, it matters more what they do than what they say. So, what will the Tories do for the tenants?

Political Lies

In the last edition of the Crawley News, a letter appeared from a Walter Shuttleworth which alleges that John Mortimer ‘vehemently supported’ the transfer of housing.

At best, Mr Shuttleworth is seriously misinformed, because John Mortimer has always taken the exact opposite stance, along with five other Labour councillors. At worst, Mr Shuttleworth is a liar. I expect that it is the former that is the case, although how anyone who has taken an interest in the housing issue over the past few years could have arrived at the conclusion that Cllr Mortimer did anything other than oppose transfer is beyond me.

I’m even more perplexed that Richard Symonds, normally a man who has an idea of what is going on, has repeated the allegations…

Ignorant and Misinformed Part 2

I thought that one central tenet of the Conservative Party approach was that whatever they are, they should be competent. After all, they represent the managerial classes, the business-owning classes, the people who run the economy, more than any other party in the UK.

So it must gall them when they look really stupid.

For example, this week’s Crawley News has a ‘leaked email’ containing the words of Brenda Burgess, Executive Member for Housing.

Michael Barrett, one of the Defend Council Housing campaigners had asked some fairly direct questions about the financial case for transfer in November. He’d been told that a response would come later. By the January 10th meeting, no answers had been forthcoming, and so he asked them again.

Brenda’s response was that answers would come later, which was not particularly well received.

The email, from the same day contains:

Mr B also said something about a blackhole for either revenue or capital. Any idea what he’s talking about? I was not prepared to ask him or answer any of his questions. No point. I just listen

I think (and I could be wrong) that the ‘blackhole’ that ‘Mr B’ referred to was the £12M deficit that the Tories kept telling us about (and continued to after they lost the vote). If the person in charge of the Housing Department and leading the transfer process doesn’t know what he’s talking about, that is massively worrying.

That she sees no point in dialogue with a member of the public speaks volumes. In May, the Tories won the council with, amongst others, a pledge to be ‘inclusive’ and create a new culture where ‘everyone is welcome’. Sure. As long as you don’t ask awkward questions though, eh?

Councillor Burgess has said she will not resign.

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