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| We are, optimistically, over the worst in the great ‘greenfield/brownfield’ debate. The point-scoring and posturing of the summer of 1998 is beginning to give way to a more mature debate on how the four million or so households likely to be created by 2016 can be housed in a sustainable way. It is timely, therefore to ask the supplementary: will the new forms of planning include mechanisms to ensure that those households unable to compete in the housing market place will be adequately housed, and if so, where? It is a question that seems conspicuous by its absence from the debate. The recent report of the Environment Transport and Regions Select committee warned that there seemed to be a problem looming both of supply and location, but the response to this point from government was hardly warm. The recently published Rogers Urban Task force interim report waxes about urban communities, neglected estates, and includes an encouraging ‘postcard from Stockwell Park Estate, Brixton’ but doesn’t mention the apparent fact that we need more social housing and that it will (presumably) need to go in towns and cities. Before trying to answer the question, we might profitably reflect for a moment about why it does not seem to be an issue. The best explanation I can come up with is that, to many peoples minds, the problem has been solved. Demand for social housing in the early and mid 1990s seems to have been matched by supply: there is a problem of crumbling council estates, but that has been tackled at last by the injection of sorely needed capital to enable hard-pressed housing committees to repair their stock, which in any event, seems to be shunned by would be tenants at least in some parts of the country. Surely, a modest level of investment in Housing Associations, the availability of some sites for the houses they want to build through planning gain, and a few innovative schemes like ‘living above the shop’ will sort any future problems out? All the evidence, when one looks for it, points towards the answer being ‘no’, and what is worse, simply building a few more homes than are currently planned (important though that is) will not in itself do the trick. The barrier to any serious attempt to get to grips with the issue lies with the market-led system which has been methodically put into place over more than a decade, and which will need to be recast if it is not to wreck any assistance that new bricks and mortar might provide. The market had had both long term and short term effects. In the early 90s it fortuitously cushioned the supply of rented accommodation. Negative equity, following the crash in property prices caused large numbers of people to take the rational decision to rent out their homes rather than take a large loss upon moving. A class of ‘amateur landlords’ came into being which is now fast disappearing as negative equity evaporates and people decide to sell. This is likely to mean that over the next few years the balance in supply and demand for rented sector property will no longer remain. In fact, the private sector has absorbed rather more than a balance, since the social rented sector has been steadily shrinking since the introduction of the ‘right to buy’ Council houses in 1980. Shortly before the last conservative government lost office, this was extended to Housing Association properties (with some exceptions) and overall, more than 100,000 more homes have been sold than have been built by all categories of social landlord since 1980. The myth put around by the early advocates of this policy was that people bought ‘their’ council house and would then stay: this has not proved to be the case. What government was doing, effectively was giving people a gift of a number of thousands of pounds to compete in the property market, and of course, once they have a tradable asset, they have traded at roughly the same rate as anyone else in the private sector. Indeed, this transfer from bricks to cash has been reflected across the field. The precipitous drop in investment in house build and repair has been mirrored by an even more vertiginous rise in the amount of money going into housing benefit, as fig. 1 demonstrates. The principle is the same. Rather than provide a property for those who need housing but cannot compete in the market to secure it, money has been given to the individual to allow him or her artificially to compete in the market for rented property. The theory was that this would provide a far wider market for rented property , new players would enter the market, and everyone would be happy. Except of course they weren’t. Where demand outstripped supply, the market rent rose, and the government found itself effectively signing open cheques to maintain the ability of the recipient to remain in the market. This pressure arose particularly in London and the south of England, and meant that housing benefit payments in total shot through the roof, reaching over £12 billion by 1996, a doubling of the bill at constant prices. Conversely, where supply exceeded demand, the recipient had a choice: either accept a council house often on a run down and possibly dangerous estate, or use the purchasing power HB provided to rent privately in the location of his or her choice. Not surprisingly, parts of the country experienced the blight of hard to let council estates whilst often not too far away, landlords were asking and gaining ever increasing rent levels for private property. Of course the instability caused by this misguided attempt to make social housing love the market ended in tears. The conservative government ‘capped’ housing benefit, so that in areas of high demand, those trying to rent privately have to dig into other benefits to pay the rent they are faced with as it steadily moves away from the payments they can obtain with HB. We now have the worst of all worlds. Very little public sector building is taking place, and yet in many parts of the country the device to give access to market rents has broken down. On top of this two further problems are emerging. The first relates to the proportion of the four million new housing units that are likely to be occupied by those unable to access the market. There are a range of estimates, but reasonably reliable figures calculated by Alan Holmans of the University of Cambridge suggest that between sixty and a hundred thousand new rented homes are going to be required for the next ten years or so. Anthony Meyer, of the Housing corporation , reported to the Select committee hearing that on his best estimates, grants to the housing corporation and consequent ‘added value’ loans would produce only about 40,000 units per year. (37,000 units will be completed in year 1999-2000). Local Authorities will build virtually none, and the impact of ‘living over the shop’ and similar schemes will be worthwhile but peripheral in numerical terms. In short, it seems that the present policy will result in a shortfall of between twenty and sixty thousand social housing units per year from now on. The availability of £3.8 billion for local authority use will, vitally, prevent the situation from getting worse by placing sorely needed funds into the repairs backlog, but that is all. The second additional problem arises from the brownfield targets now being set. It is by no means clear what additional measures may be adopted to reach them, but it is a starting certainty that, one way or another, the cost of land, of remediation, and the unit cost of building small numbers of units on marginal sites will add to the cost per social housing unit built, perhaps substantially. In any event, the ‘solution’ of system building large estates on greenfield sites beyond city boundaries that was adopted in the 1960s is not available both for planning and social reasons. Set against a static overall grant, this will simply mean fewer homes per million pound of grant. It would be sensible to analyse these problems, compounded as they are by variations in need in different parts of the country, by placing targets for social housing alongside overall targets on a region by region basis. This will set out the breadth of the task in a more realistic way, but it will, of course not get those units built. So what should we do? It is plain that we cannot rely on the same ‘market’ that is driving social housing into crisis becoming the instrument of salvation. In truth only modest numbers of social housing units will result from planning gain, and in many instances the sites realised only provide the space for the units already counted into the unequal equation. We need instead to recognise that a long term policy of providing a sub-market sector is once again important, just as it was in 1919, when the Addison Act recognised that requiring the soldiers returning from the trenches to go back to the unsanitary hovels they had left was not practical . The sub-market sector then resulted in the birth of the council housing department. We may not want to repeat some of the policy mistakes which resulted in some parts of the country spawning huge institutionalised and intergenerational sinks of deprivation, which then became the target for the critique that led to the ‘market knows best’ dogma of the 1980s. Measures might be taken to ensure that those who can move on, do so, but without taking the public assets used to assist them on their backs as they go. Far more houses need be built to meet the shortfall, but in so doing, it should be recognised that they must not be sold. There is no reason a ‘right to buy’ policy for older homes cannot be maintained: arguably their long existence has recouped much of the original asset cost in rents. But we cannot hope to tackle the incipient crisis I have sketched in if the weapons that are relied upon to do battle are being shipped out of the back door as fast as they can be put together. Tenants of these new homes can be afforded opportunity to buy: assistance might be provided to purchase elsewhere, or even a transfer to older property to enable a purchase to be put in train could be contemplated, but the new homes must stay as public and potentially reusable assets. Those followers of the argument who have not yet peeled away because they fear the political consequences of the logic of curtailing untrammelled social house sales will no doubt still balk at the other consequence of this line of discussion, namely that perhaps twice or three times the investment in social housing that presently takes place will have to be made available if the targets set out here are to be met. Where will the money to make genuine progress come from? Do we simply raise taxes to pay for it? Do we tell local authorities in time honoured fashion that they must, somehow raise the resources for a new era of council house building from their alleged land banks, reserves and limitless ability to make ‘efficiency savings’? There is, of course, no hidden pot of gold in the hands of local authorities waiting to be converted into new housing. By and large, though, Local Authority housing departments remain intact and will be able to absorb the management of further building without enormous new set up costs. There is also a generally efficient and enterprising Housing Association sector which can be trusted to do the same. But the initial funding for new build has to come from sources external to both of those agencies, and it is unlikely that treasury pursestrings will suddenly be loosened to conjure up new money from no-where. We need to look, perhaps at whether money already ‘spoken for’ might creatively be used, and indeed, such a fund already exists. It is at present largely in the pockets of fraudsters and their accomplices. There have been several investigations into the level of housing benefit fraud, and its estimated extent ranges from the £1 billion estimated by the first HB review in 1996, through to the £2 billion estimated by the Public Accounts committee in March 1998 to figures as high as £4 billion from other sources. Plans for mounting a rigorous attack on this level of fraud in the benefits system were outlined in the White Paper 'Beating Fraud is everyone’s business’ in July 1998. Let us say that this attack is modestly successful. Suppose the level of fraud is projected somewhere between the highest and lowest estimates - say £ 3.0 billion. Let us define ‘modestly successful’ as the recovery of 25% of that fraud - still an enormous amount of Housing Benefit money going to the wrong destination but a great improvement nevertheless. That would yield £750 million. That is a saving year on year, of money that is already allocated within budgets - and of course capped - for the purpose of housing Benefit. Treasury has already accepted that money collected as a result of congestion charging and workplace parking levies can be retained by local authorities to invest in integrated local transport schemes. It seems therefore, that no new principle is involved in putting fraud savings to use repairing the problems caused by the shift from investment in bricks and mortar and towards housing Benefit in the first place. Some will say that an attack on fraud to this extent will never take place in reality. They might be right, although pilots run by a number of Local Authorities have shown recovery of fraud reaching these levels when the issue is tackled in a determined way. We are in an era of incentives, and it is difficult to think of a better incentive for local authorities to tackle HB fraud systematically than that the proceeds would be returned to them and their social housing partners in the form of investment in the bricks and mortar that they know will be needed so badly in years to come. So what will we get for this money? The current Housing corporation programme in England for this year demonstrates that the unit cost to the corporation was £23,000 , less than the overall cost per unit by a substantial margin, but attainable because of the private finance that is levered into the equation by Housing Associations. As a simple sum, therefore, we would, on this basis get 32600 social homes per year from this amount of money - coincidentally well within the range of shortfall estimated by the Environment Select committee in its recent report. Even if the cost per unit rises in the way I have suggested the target is still in sight. The maturing of the ‘where are we all going to live’ debate has demonstrated that there is no magic bullet solution to the problem. A major step forward is made when the ramifications of the issue are truly appreciated. Just as we are realising that we will not solve our overall housing problems by converting some derelict warehouses into apartments, useful though that may be, so we will not seriously address the need for social housing over the next fifteen years by the peripheral measures that have so far taken centre stage. It is time, in my view to take in the big picture, take a deep breath and start work on a direction of policy radically away from the market tinkering which is set to serve us so badly in the new millennium. ends
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