Two futures

WHAT IS the future of social housing? With John Hills due to give his verdict soon, two contrasting views have emerged this week.

Today communities secretary Ruth Kelly will use a speech to the Fabian Society to ‘kick start a debate on the big challenges we’re facing’. Her big idea is to allow social housing tenants to buy a much smaller stake in their homes than at the moment – 10% rather than 25%. She told the Today programme this morning that this would help close the gap between people who can get on the housing ladder with parental help and those who are excluded from it. Go here to download or podcast Ruth Kelly’s interview [click on podcast].

Yesterday the pressure group Defend Council Housing launched a report [downloads PDF] calling for a reversal in government policy to allow local authorities to keep their stock and invest in it directly. Kelly argues that lowering the threshhold for ownership could help thousands more tenants who want a way on to the housing ladder but can’t afford it at the moment. And she argued that this was not in conflict with increasing supply:

‘It’s not a question of either/or but a question of as we build those homes can we meet people’s aspirations as well as people’s need for security.’

However, HHSE’s Adam Sampson [go here and click on listen again] told Today: ‘We’re talking about something that is at best irrelevant to the housing crisis and at worst could exacerbate it.’ He also called for a clear commitment to reinvest any money raised in housing, something that Kelly went most of the way to doing (referring to the failure to reinvest right to buy receipts and saying ‘we can’t make those mistakes again’) without actually giving a guarantee.

Another barrier to the scheme could be interest from tenants. Kelly referred to high levels of interest among tenants at Notting Hill Housing Trust, which is experimenting with the idea, but tenants have not exactly been queuing round the corner for schemes like social homebuy (25% stake in your existing home) and open market home buy (25% equity loan to buy).

Defend Council Housing claims the support of 260 MPs for its early day motions calling for a change in policy. The last three Labour conferences have also voted in favour of a fourth option for council housing rather than transfer, ALMO or PFI.

The report, Dear Gordon, which looks set to be launched on the same day as the Hills review next week, is clearly an attempt to stake out an alternative future. It calls for councils to be allowed to invest the money they raise from housing and for debt to be written off as in transfer to create a level playing field. And it argues that the agenda behind the Hills and Cave reviews is one of undermining secure tenancies and releasing market forces.

It also challenges Kelly’s assertion at the last Labour conference that the fourth option would cost an extra £12 billion:

‘Ministers are deliberately trying to confuse three things: RSL higher costs; the implications of agreeing the principles associated with the ‘Fourth Option’; and the actual cost today of improving all remaining council homes.’

The report outlines how the fourth option would work in some detail:

  • Ring fence all the money that belongs to council housing (tenants rents, ‘right to buy’ and other capital receipts) to fund an ‘investment allowance’ as first discussed in the ODPM’s own blue skies review of housing finance;
  • Provide a ‘level playing field’ on debt so that authorities where tenants decide to keep the council as their landlord get debt written-off (or taken over) on the same terms as those who sell their homes;
  • Set Management & Maintenance Allowances (M&M;) and Major Repairs Allowances (MRA) at a level that supports actual costs;
  • Respect tenants choice and stop wasting money on one-sided expensive PR campaigns promoting privatisation;
  • Encourage best practice by funding a genuinely independent tenants movement in each authority and establishing a Continuous Improvement Task Force to utilise expertise from authorities with a good track record to offer assistance to authorities who need help with improving particular services.

The plan set out in Dear Gordon seems reasonable enough, but adopting it would require a reversal of the last 20 years of government policy on council housing – a policy that Gordon Brown has accepted and even accelerated as chancellor.