In the fourth in a series of blogs looking back at my time as Chief Executive, I explore the role politics has played in the story of the housing association sector.
By David Orr, Chief Executive of the National Housing Federation
27 September 2018
Having argued on Tuesday that housing associations are in control of their own destinies, I have to concede that governments have a pretty big influence as well. Over my 13 years, that influence has sometimes been benign and genuinely helpful, at others malign and hugely problematic. It’s certainly been a rollercoaster ride.
When I arrived in July 2005, Labour had just won a third election. They had big ambitions for regeneration, with a 15 year Housing Renewal Pathfinders scheme, and accepted that, despite their strong record on decent homes, they needed to do more to increase supply. The rent convergence regime, bringing housing association and council rents into line with each other, was rolling out. We began to explore a new regulatory settlement that would culminate in the closing of the Housing Corporation and the creation of the Tenant Services Authority (TSA) and the Homes and Communities Agency (HCA). We also had the Audit Commission with Key Lines of Enquiry and inspections.
From this distance, it now seems to have been a pretty good time. The economy seemed to be doing well and there was a sense that decisions were being made that were strategic and long term. The Government agreed to invest £8.4bn from 2008-11 to help housing associations to build 155,000 new homes, mostly for social rent with some for shared ownership. Housing was deemed to be a political priority with housing minister Yvette Cooper attending cabinet – and staying in post for long enough to make a difference.
Of course, those plans were hit hard by a global financial crash which changed the economic context in a fundamental way. Cheap long term bank debt disappeared more or less overnight. Caroline Flint came and went as Housing Minister, then Margaret Beckett arrived. In her eight months in office, she banned rent rises for council tenants, thus undermining years of work on rent convergence, and cancelled a proposed green paper on social housing. After her, John Healey took on the role and oversaw a fiscal stimulus programme put in place by Gordon Brown which invested new money in housing association development. Although some housing associations faced real problems as the value of their land plummeted, the sector once again proved that investing in housing during a downturn is good economics and good sense.
Then came the 2010 General Election, the Coalition Government and austerity
The new Government, with Grant Shapps as Housing Minister, cut funding for housing by two thirds – but wanted the same number of new homes for its money. Thus was born the Affordable Rent programme, where rents were set at 80% of market value.
Looking back, there may have been some merit in having this new, intermediate rent product – but only if it was available to those who could actually afford it. In reality, ‘affordable rent’ homes were allocated to people on very low incomes who really needed social rent. To the apparent surprise of the Coalition, but of no one else, the Housing Benefit bill rose and rose. Government investment in social rent stopped in its tracks. For the first time since the 1920s outside war years there was no public support for new homes for social rent.
We already had a housing crisis. All of this made ending that crisis more difficult, and the number of new homes built fell to historically low levels.
This was not the only change introduced under Grant Shapps. The TSA was famously declared ‘toast’, the Audit Commission was closed, Regional Development Agencies bit the dust and the Housing Market Renewal Pathfinders were cancelled overnight. This last in particular was difficult. There were legitimate questions about the Renewal Pathfinders, but their sudden shut down was an act of economic vandalism. It left fragile communities with half-developed sites, vacant and derelict land, and abandoned promises of new facilities and growth. In the 100+ pages of the 2010 Comprehensive Spending Review, there was no mention at all of regeneration.
This was also the period of welfare reform. I do not underestimate the financial challenges facing the nation at the time and there was no doubt that changes had to be made. Universal Credit is conceptually the right thing to do. But it is a huge reform, implemented, at least to begin with, far too quickly. And it happened at the same time as cuts: the bedroom tax, the Local Housing Allowance, cuts in personal support and more. Much of this was justified by a narrative that people in social housing were ‘welfare junkies’ or ‘benefit cheats’ and that the providers of social housing were part of the problem, not part of the solution.
After Shapps moved on, we went through one of the regular periods of housing minister merry go round Mark Prisk and Kris Hopkins briefly filled the role of Housing Minister before Brandon Lewis arrived in 2014, and retained his job beyond the 2015 election.
The 2015 election brought a new level of challenge to housing associations
Our response to it would define our future.
The Conservatives had promised to extend the Right to Buy to tenants of housing associations and to reduce the welfare budget by another £12bn, with housing and support clearly expected to bear the brunt of that cut. In November 2015, George Osborne ripped up the 10 year rent settlement agreed earlier that year and imposed a 1% per annum rent cut for 4 years, taking £3.8bn of possible investment out. Hostile stories appeared in government-friendly media, designed to undermine our reputation in politics and with the public. Our sector had been attacked before, but never with such ferocity and consistency.
A government that had reduced investment in new housing association homes for social rent to zero, and which had imposed restrictions on the kind of homes we could build, blamed the sector for not building enough new homes. A government that had by deliberate design caused rents to rise blamed the sector for having high rents. There was dark talk of a plan to nationalise all housing associations so that they could be properly privatised and sold off to the asset strippers. It’s difficult now to know just how real this threat was, but at the time it was widely believed to be real.
The temptation to cry foul from the rooftops and go into battle against an elected government was strong. Instead, supported by the Federation, boards and executives refocused their business plans and built a different kind of relationship with the Government. Instead of fighting the proposal to extend Right to Buy to housing association tenants, we looked for a way to protect our vital work and assets, deliver what tenants wanted, and accepted that the Government had been elected on this manifesto. Collectively, we established a sensible working relationship with Communities Secretary Greg Clark and did a deal with the Government. We knew that housing associations and the Government had a shared interest in ending the housing crisis, and that we would be far better off working together.
Housing associations had to take some very tough decisions but, despite, the increasing focus on value for money, they continued to invest in new homes and services. Their core ambition to provide high quality, affordable homes in great places remained. In some cases, it sharpened our thinking and made us think very carefully about priorities.
The fact remains, though, that this was bad for the people who rely on social housing and led to a whole lot of creative energy being expended on standing still.
On to Brexit and another General Election
In 2016, with the Brexit vote, the whole political landscape changed overnight. David Cameron resigned and Theresa May became Prime Minister, with Gavin Barwell as Housing Minister.
The warmer relationship we’d begun to build, against the odds, with the previous government became more positive again with the new Government. Theresa May made it clear that housing was a major domestic political priority and Gavin Barwell came from a constituency (Croydon Central) where the lack of affordable housing was the compelling local issue. The Government published a White Paper ‘Fixing our Broken Housing Market’, which clearly understood the need for new homes of all tenures – not just homes to buy.
Things changed dramatically again in the June 2017 election when the Conservatives lost their overall majority and Gavin Barwell lost his seat, to be replaced by Alok Sharma.
Then came the appalling, devastating tragedy of Grenfell
Much has been written already about the devastating impact of the fire. We, as landlords and professionals within the housing sector, can only commit to play our part with the rest of the nation to ensure that this never happens again.
But the tragedy was a moment of shock and reconsideration for the whole nation. At last, it demanded that we thought properly about the experience of living in social housing and the wider contribution to the life of our nation that social housing plays. Alok Sharma embarked on a tour of the country, talking to tenants in a systematic way that no other housing minister has. It led directly to a Social Housing Green Paper and a statement from the Government that social housing has a crucial role to play.
It is worth taking a moment to consider just how profound this change has been. Over the past two years, instead of social housing being regarded as a problem, it is now regarded as a critical part of our successful future. We have new public investment, albeit at a low level, in new homes for social rent. New government funding for development from a very bureaucratic, annual, scheme and tenure specific programme to a new series of strategic partnerships over a period of years with a much greater sense of ambition, risk sharing and partnership at the heart. This process has been given renewed emphasis by the Prime Minister at our National Housing Summit
Some of the worst excesses of the welfare cuts have been overturned. Housing costs for supported and sheltered housing will continue to be delivered through the housing benefit system. The Local Housing Allowance cap has been withdrawn from all forms of social housing. For the first time in what seems a very long time we are facing in the same direction with some clearly shared objectives and a sense that we are developing a partnership of equals – trusted partners of government rather than captured clients.
There is, of course, much to do. The changes so far, while hugely helpful, have undone damage and stopped bad things happening. Access to land for new housing remains a key problem. We are still building far too few homes and economic regeneration and renewal in our fragile housing markets is under resourced and apparently still of low priority.
The good news is that we have demonstrated that it is possible to work with the Government, whatever the nature of that Government, when there is clarity of ambition, good evidence and shared or overlapping objectives.