HOUSING
‘Housing association new build will stop’
PSE’s Adam Hewitt reports from a Labour conference fringe event on welfare reform and the housing crisis. T
he Government is determined to clamp down on the benefi ts bill, not least housing
benefi t, which now consumes a huge proportion of public spending and distorts the entire housing and rental market.
Reform is needed, most agree, but the Government’s current approach is far too clumsy and simplistic and will lead to damaging unintended consequences, critics say.
Chief among these consequences, said Brian Johnson, outgoing chief executive of housing association Moat, speaking at the Labour conference fringe event ‘A balancing act: reforming
welfare while addressing the UK’s housing crisis’, is the impact on housing construction.
He explained: “Housing associations are charities, so every pound we get ultimately gets ploughed back into housing. We aim, when we build a new home, for it to break even over about 40 years: we lose money on it in the early years, we make money on it in the later years, and hopefully the two things balance each other.
“Absolutely intrinsic to that is the assumption that rents go up with infl ation. If rents don’t go up with infl ation, the model is broken.
“The thing that attracts private investors, whether it’s to affordable housing or the private rented sector, is rents rising with infl ation. I have to really strongly reinforce the point that the benefi ts and the housing agenda have to work together. If benefi ts are constricted – if housing benefi t doesn’t rise with infl ation, or,
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more likely, if the £500 benefi t cap doesn’t rise with infl ation, and that’s the sense we’re getting as we talk around Government at the moment – then, within one to two years, we will be in a position where we can’t raise rents with infl ation, and actually housing association new build will stop at that point.
“I just can’t stress enough how intrinsic [rents rising with infl ation] is to the model we use.”
‘Not a good housing solution for anyone’
Johnson also questioned the motives behind the so-called ‘bedroom tax’, which will affect about 15% of its tenants.
He noted that there are simply not enough one- bed housing units to move everyone who is currently in a house that the Government deems ‘too large’.
He said: “Even if I could wave a magic wand tomorrow and everyone suddenly said ‘I’m going to move to a home of a size where I’m not subject to the bedroom tax’, I’m still short of 5-7% of the stock [needed] of one-bedroom homes.
“Now, I’d question whether going out and building lots of one-bedroom homes is a particularly clever thing to do: I don’t think it is. I don’t think they’re a good housing solution for anyone. That’s pretty much mirrored throughout the south east: there’s a 7-8% structural shortage of one-bed homes as a result of the bedroom tax coming into force in April.”
No excuse
John Healey MP, Labour’s last housing minister up to the 2010 election, said he has noticed “a sharper edge of desperation” when people have come to see him at constituency surgeries over the last nine months, as a combination of
cuts and rules changes to housing benefi t have kicked in.
Universal credit “introduces an element of extra cost and extra uncertainty” for institutional investors, he said, that makes them less willing to build low-cost housing. ‘Public policy risk’ is therefore undermining investment in housing and infrastructure.
“Housing benefi t is at the heart of the problem – and the heart of the solution”, Healey said, noting that in the 1970s, about 80% of what the Government spent on housing went into housebuilding, and 20% into the equivalent of housing benefi t. Now, 95% of the housing budget goes in housing benefi ts, and only 5% into new housing. The cost of housing benefi t is approaching £100bn – the same as it costs to run the NHS in England for a year.
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