Memorandum by Unison (AFH 64)
1. INTRODUCTION
UNISON is the biggest trade union in Britain
with 1.3 million members. We represent people who work in public
services, in voluntary organisations and in private companies
providing services to the public.
UNISON organises workers in the areas of general
enquiry of the Committee. We are the largest union in the social
housing sector, which includes Local Authority and Housing Associations.
We have high membership in some occupations, which have been designated
"key workers", primarily, nurses, health workers and
social workers.
We also represent some of the poorest paid workers
in the UK, cleaners, catering staff, porters, classroom assistants
and carers all of whom are key workers in their own right and
also essential to helping the Government deliver world class public
services.
UNISON very much welcomes the recognition by
Government and the Select Committee of the important issue of
Affordable Housing. We believe that the provision of affordable
housing is an essential prerequisite for a decent and productive
society.
Housing can become the central platform by which
the Government can improve health services, raise educational
standards and tackle poverty and inequality. Housing is a critical
issue for UNISON, we believe that without addressing the issues
surrounding affordable housing, Government will find it hard to
improve public services.
The primary interest must be to ensure that
all workers have access to decent affordable housing in the location
of their choosing. There are serious concerns for the health and
safety of employees forced to travel great distances to work because
the housing market is excluding their efficient participation
in the labour markets.
SUMMARY OF
THE ISSUES
IN THE
AFFORDABLE HOUSING
DEBATE
— The country's current house building
programme is at its lowest since 1924.
— Poor investment in housing leads
to poor supply and pushes up housing costs for citizens.
— High housing costs leads to benefit
dependency and social exclusion creating "exported costs"
to other Government budgets such as health, education and policing.
— Demand side solutions such as the
Key Worker scheme can push up housing costs and exclude other
essential workers such as cleaners, caterers, classroom assistants
and nursing students.
— There are good grounds for arguing
that sufficient, good quality, affordable housing in the right
areas is in fact a key cost-saving element of infrastructure for
the efficient working of the economy.
— Local authorities are uniquely placed
to begin a revival of affordable housing. They have a strategic
role in assessing housing need. They now need to be given additional
borrowing powers to improve their own stock and commence a rebuilding
programme to ease regional affordability issues.
2. THE DEFINITION
OF "AFFORDABLE"
The definition of affordable has in effect two
meanings and spills into the wider debate about wage levels and
regional differences. Firstly the issue is about the affordability
in the current housing markets and its relation to income. Are
income levels sufficient to provide housing and keep people out
of poverty? Or secondly could housing be provided at cost levels
appropriate to incomes?
Affordability must be defined in relation to
ability to pay and include provision to remove the benefits trap.
It must also take account of regional disparities—what is
affordable in the North East is not affordable in the South East.
There should be discussions about a formula based on the real
cost of living, which would determine what is affordable.
There has been some academic and practical work
around minimum income standards which has been supported by UNISON.
Commissioned work from the Family Budget Unit estimated that a
lone parent with two children would need a disposable income of
£272 a week to sustain a "low cost but acceptable"
standard of living in East London. A family with two parents working,
one full time and one part-time, would need to earn £322
a week.
If these families were to live without means
tested benefits each adult would need to earn £6.30 an hour
(see Family Budget Unit, 2001).
We would ask the Committee to consider a caveat
to these figures in that the households that were portrayed in
the study are more fortunate than many. All are assumed to be
in good health, none had debt problems and each received all the
social security benefits to which they are entitled. The children
walk or cycle to school and the local authority housing which
they rent meets recognised standards.
Housing Association and private tenants pay
higher rents than those assumed here. Owners have mortgages, insurance
and external maintenance costs to pay. Rural households increasingly
need a car.
The table below reveals the percentage cost
of housing to each household budget used in the study, taking
the average rent of the area for a three-bed, terraced, local
authority dwelling at £79.03 and qualification for benefits.
VariablesTwo earners 38.5 + 17 hours
| | One earner 38.5
hours week
| One earner 17
hours week | No earner
|
| Cost of housing | £79.03
| £79.03 | £79.03 |
£79.03 |
| Percentage of rent to income | 24.5
| 28 | 29.7 | 31.2
|
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Income of course determines affordability and low pay is
a serious problem in areas such as East London. Commissioned UNISON
research uncovered wages as low as £3.75 an hour for cleaning
buses with ISS Stagecoach, £4 an hour for cleaning offices
with OCS at Canary Wharf and £4.05 an hour for cleaning Whipps
Cross Hospital with ISS Mediclean.
Moreover, the research reveals that the majority of staff
working for private contractors who are not protected by TUPE
have minimal rates of overtime pay, no London Weighting, sick
pay, bonuses, pension or compassionate leave. Low pay is not just
an area for the private sector either, many workers who we consider
to be Key to public sector reform are employed by local authorities
and health authorities on low pay.
In Local Government over 260,000 of our members on grades
4 and 5 earn below £5 an hour (2000 workforce data) and over
two thirds workforce earn less than £14,559, the Council
of Europe decency threshold, which is £7.37 an hour; 884,000
local authority staff fall below this threshold.
It is worth noting that the Government has recognised and
moved some way to dealing with low pay in the NHS, with the recent
pay settlement of 6.3 per cent for the lowest paid. This contrasts
sharply with a 3 per cent offer to local authority staff.
London is an area that is symbolic of the social polarisation
that now blights cities across the country where the rich and
poor work side by side. Yet our society could not function without
the support of public services and their servants and the labour
of thousands of cleaners, caterers, porters, security guards and
carers and yet they receive very little respect or reward.
3. THE SCALE
AND LOCATION
OF THE
DEMAND FOR
AFFORDABLE HOUSING;
THE ADEQUACY
OF THE
EXISTING SUPPLY
AND THE
AMOUNT OF
RESOURCES AVAILABLE
Housing demand has wide and varied patterns across cities,
regions and rural areas. UNISON believes that the demand for good
quality affordable housing is extensive and widespread no matter
the area.
However, local and regional housing are always determined
by national policies and spending priorities, therefore it is
helpful to consider the more general housing context from a national
and historical perspective. What becomes clear very quickly is
that we have failed to maintain or indeed improve investment in
housing production.
Despite mounting evidence that decent housing underpins health,
educational attainment and social well being we have singularly
failed as a society to address the issue. The evidence contained
below is from (Second Best Value, Professor Peter Ambrose, 2002:
the Health and Social Policy Research Centre, University of Brighton).
Housing investment and output
UK all-sector housing output in 2000 was the lowest since
1924 (with the exception of the war years).
Local authority housing output in England in 2000 was only
45 per cent of that in 1994, see Appendix 1.
Housing association housing output in England in 2000 was
only 57 per cent of that in 1994 and even the boosted plans for
2003-04 will produce only half the output of 1992-93.
Housing associations' gross investment expenditure fell from
£3.65 billion in 1993 to an estimated £1,68 billion
in 2001.
Gross real terms capital housing investment in England has
fallen from £8.6 billion in 1984 to £3.1 billion in
1999.
Government housing expenditure has fallen sharply since the
early 1990s and in 2000/1 was only 1.1 per cent of all Government
spending (compared to 2.6 per cent in 1992-93).
Household growth has outpaced housing units growth by 59,000
per year over the past five years; whereas in 1981 there was an
excess of housing units over households of 4.1 per cent there
is now an overall deficit.
Single Regeneration Budgets (SRB) are not delivering on housing
production, taking all SRB areas together, Round 1-4 housing completions
total fewer than 61,000 against a forecast of 308,000 for Rounds
1-5
International comparisons
UK housing investment as per cent of GDP is little over half
that of Germany, Netherlands, and Italy and stands at 3.3 per
cent, the lowest among 13 comparable countries.
Recent research (Stephens et al. 2002) found that
Britain experiences higher levels of poverty and inequality than
six comparator European nations.
During the 1990s Britain had the smallest social housing
building programme of the seven nations reviewed (ibid).
British housing was more polarised by tenure than that of
the other nations and the social sector more residualised (ibid).
A higher proportion of British social housing tenants were
on housing benefit compared to the other countries and this meant
that the effects of the poverty trap were more marked (ibid).
The proportion of unfit stock (8 per cent) is the second
highest among 13 comparable countries and our stock is exceptionally
old.
Loss of "affordable" stock
Between 1986 and 2000 nearly 973,000 units of public and
RSL housing were sold and only 385,000 new ones produced
The privatisation of finance
Parallel with the reduction of public grant levels has been
an increase in the privatisation of funding for social housing—the
volume of lending by financial institutions to RSLs for social
housing in England has increased from £100 million in 1988-89
to £800 million in 1999-2000 (or from 9.0 per cent of RSL's
gross investment to 45.7 per cent).
As an example, private financial institutions contributed
£44.4 million (36 per cent) towards the funding of the £122
million Central Stepney SRB housing programme and it has been
estimated that the investment produces a return of some £80
million over 25 years.
This has been a profitable investment with high levels of
safety as much of it is "underwritten" by rents subsidised
by Housing Benefit. The cost of private finance for social housing
development appears to be higher in Britain than elsewhere in
Europe (Stephens et al 2002).
The failure of "planning obligations"
Recent research shows that the number of "affordable"
housing units resulting from "planning obligations"
arrangements is far fewer than claimed or expected (Whitehead
et al 2000, GLA 2001).
Rising housing costs
The ratio of rents to average male incomes has worsened (for
RSLs from 12.4 per cent in 1988 to 16.9 per cent in 2000).
In the UK housing costs (both prices and rents) have outstripped
the RPI, and UNISON would argue wages and earnings, many times
over since the 1920s and especially since the early 1970s.
Capital-value related rent-setting systems being implemented
by Government, Local Authorities and Housing Associations are
likely to exacerbate these effects in high demand areas and produce
increased social polarisation.
Only a significant and sustained increase in housing supply
above current levels can and will deliver a solution to the question
of affordable housing.
4. ROLE OF
LOCAL AUTHORITIES
UNISON believes that local authorities are uniquely placed
to begin a revival of affordable housing. Local authorities now
have a strategic role in assessing housing need, they now need
to be given additional borrowing powers to improve their own stock
and commence a rebuilding programme to ease regional affordability
issues.
The proportion of housing stock in England owned and managed
by local authorities which peaked at just under 30 per cent in
the late 70s early 80s in now under 15 per cent. The chief reasons
for the decline in ownership have been the right to buy and large
scale voluntary transfers.
Local authorities have built and managed properties for those
unable or unwilling to compete in other market orientated housing
sectors. Local authorities were able to develop homes with affordable
rents because they pooled costs to arrive at average rents.
Authorities arrived at a rent profile for their stock in
any given year, not through housing revenue account subsidy, but
by averaging the total debt and running costs over their whole
stock of units. In addition local authorities have had access
to loan funding from the Public Works Loan Board at slightly sub-market
rates and sometimes on longer repayments. These are the factors
that worked to keep rents at lower levels.
UNISON argues that with investment in staff, modern management
techniques and improved tenant participation, local authorities
will provide one of the solutions in the quest for affordable
housing.
5. WHETHER TARGETS
ON DECENT
AND AFFORDABLE
HOUSING WILL
BE MET
BY CENTRAL
AND LOCAL
GOVERNMENT
UNISON is fundamentally concerned that the question of affordable
housing is related to supply. As the figures above show, our house
building programme has ground almost to a halt. UNISON believes
that while schemes such as The Starter Home Initiative (SHI) may
appear popular it is a temporary but ultimately flawed approach
for a number of reasons.
Firstly it is aimed at dealing with assisting the reforms
and improvement targets for the health service, education and
policing. It does not address the question of other essential
workers such as cleaners, catering staff, nursing students and
other support workers.
Secondly such demand side solutions can make the matter worse;
to increase the amount of buyers in the market place without improving
supply will drive up the price of housing. Government initiatives
have only sought to tackle the problem from how to help people
afford housing, they have not focused on how to create more affordable
housing.
UNISON believes that the Government needs to acknowledge
that demand side solutions are a temporary measure to the current
crisis and that greater incentives for other groups not currently
in the "Key Worker" category need to be developed.
6. CONCLUSION
Under-investment in housing over a long period has generated
a wide range of problems with severe cost consequences. The generation
of massive but currently unmeasured "exported costs",
eg poorer health, educational attainment, increased crime, (See
Ambrose, p 2002), to the providers of health, educational, police
and other services.
Housing shortages and high costs are complicating the recruitment
and retention of lower paid staff and inhibiting local and national
economic growth (a point repeatedly made by private sector employers
and the CBI—see for example Confederation of British Industry
2001).
There is danger of a further deepening of the labour shortage
crisis in our public services, thus preventing reform. If wages
are not going to increase significantly then rents, Council Tax,
water charges, childcare and transport costs need to come down—otherwise
many families will remain exposed to health risks, trapped on
benefits, unable to take up work and will continue to be socially
and economically excluded.
In view of all the demonstrable cost consequences of under-investing
in housing, (Ambrose, p 2002), there are good grounds for arguing
that sufficient, good quality, affordable housing in the right
areas is in fact a key cost-saving element of infrastructure for
the efficient working of the economy.
This is why UNISON says the nation can afford to prioritise
Housing Investment and we believe the Government has the ability
to significantly increase the level of housing capital investment
by local authorities.
The Government introduced some key changes to the way it
manages the economy. The Golden Rule: borrow only for (net) investment
and Sustainable Investment: net debt less than 40 per cent of
GDP.
The Golden Rule is being met comfortably at present and Net
public debt is also set to fall steadily below 40 per cent of
GDP. The Chancellor could increase Public Sector Net Debt for
housing production while still being within the Golden Rule and
housing investment obviously need not appear in one year but could
be phased and applied according to need and demand.
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