Memorandum by Shelter
Shelter is grateful for the opportunity to provide
supplementary evidence outlining our views on the Housing Green
Paper before the select committee finalises its report into the
Supply of Rented Housing.
We welcome the Housing Green Paper, which clearly
symbolises the new Prime Minister's personal commitment to a massive
increase in housebuilding. In particular, we very strongly support
the 50 per cent increase in the number of new social rented homes
the Government plans to have built—an additional 45,000
in 2010-11. This would take the number of social homes built each
year beyond the levels achieved in the mid-1990s.
The committee will recall endorsing Shelter's
original recommendation that 50,000 extra social rented homes
are needed annually over the course of the next Spending Review
period to keep pace with Kate Barker's assessment of "acute"
newly arising housing need and meet the target of halving the
use of temporary accommodation by 2010. We note, that in her statement
to the House of Commons, Housing Minister, Yvette Cooper MP, acknowledged
this scale of need, and indicated that the Government would aim
to reach that rate of new social housebuilding during the course
of the next Spending Review period. We hope the committee will
restate its support for this objective and recommend that it should
be achieved in 2011-12 at the latest.
At the same time, we note that, thus far, CLG
has not specified the number of new social homes it wants to see
built in 2008-09 and 2009-10. This uncertainty clearly needs to
be resolved urgently if the Housing Corporation is to know exactly
how much funding is available and Registered Social Landlords
themselves are able to submit bids for Social Housing Grant to
pursue new schemes in April 2008.
Anecdotal evidence about the development capacity
within the housing association sector suggests that there will
have to be a phased approach. However, Shelter very strongly believes
that the number of new social homes should exceed the current
rate of 30,000 in both of these years. We have therefore recommended
that CLG should ensure that the Housing Corporation is given funding
to provide 35,000 new social homes in Year 1 and 40,000 in Year
2 of the CSR period. We would welcome the committee's support
on this point.
Clearly, the Government's inability to keep
pace with newly-arising need for social housing, places an additional
requirement to make good this deficit in subsequent spending rounds.
The rate of social housebuilding must therefore increase beyond
50,000 a year after 2011-12. It is not possible, at this stage,
to identify exactly how many new social homes will be needed,
but Shelter believes that between one quarter and one-third of
the three million new homes planned between now and 2020 will
have to be social rented housing, if the Government is to make
any real impact in helping the growing numbers of households languishing
on council waiting lists.
The key question, of course, is how these short
and longer-term objectives can be met, and so this note focuses
specifically on the proposals in Chapter 8 of the Housing Green
Paper.
Comprehensive Spending Review
The Green Paper indicates that around £8
billion will be spent on affordable housing over the CSR period,
of which at least £6.5 billion will be used to fund new social
rented homes. CLG claims that this total is almost £3 billion
more than was invested from SR2004. Early indications have been
that there is not a big increase in investment for LCHO products.
This claim merits further interrogation, as £3 billion could
theoretically deliver almost all the extra social housing Shelter
has called for, not only during the final year, but throughout
the CSR period.
Unfortunately, however, there has been some
ambiguity over funding in the past. In July 2004, the then-Deputy
Prime Minister argued that an additional £430 million would
be invested in new social housing. It later became clear that
much of this "extra" funding was in fact centrally-pooled
Local Authority Social Housing Grant that would have been available
for new social homes in any case. Further, this funding would
only be available in 2007-08. As a result, the Housing Corporation's
output in 2005-06 was exceptionally low—just 16,500 social
homes.
Shelter hopes therefore, that the committee
will recommend that CLG make it clear at an early stage exactly
how much funding is available for social housing over the three
year period.
Increasing housing associations contribution
Shelter welcomes the central role housing associations
have played in the provision of new social housing since the late-1980s
and we support their continued place as the key agents of delivery.
However, we note that there have long been suggestions that RSLs
could deliver new homes more efficiently and that the grant-rate
per unit built should be reduced accordingly. When this took place
in the mid- to late-1990s, both quality and the proportion of
family-sized homes were said to have suffered. RSLs have also
argued that steeper rent increases and even a declining interest
in social housebuilding could also occur if grant-rates were to
be reduced again. Shelter accepts that any changes must be introduced
sensitively. Nevertheless, we do have sympathy for the view that
RSLs could make better use of their reserves and borrowing capacity
to subsidise development, and support the Housing Corporation's
efforts to ensure better value for money from the Affordable Housing
Programme.
Working with the private sector
Shelter had a number of concerns about the Government's
decision to allow private developers to bid for Social Housing
Grant, and we supported the National Housing Federation's efforts
to persuade ministers to ensure a level playing field between
the for-profit and not-for-profit sectors. We would therefore
encourage the committee to recommend that the Housing Corporation
monitor closely standards on privately-developed social housing
estates and publish its findings.
A Renewed role for local authorities
Shelter also welcomes the renewed role for local
authorities in the direct supply of new social housing and the
recent changes to allow Special Purpose Vehicles or Arms Length
Management Organisations to bid for Social Housing Grant. We hope
that the first ten such bodies pre-qualified as being eligible
for bidding in the next round will be successful in securing SHG
to enable this approach to be properly tested. We support the
proposal to extend pre-qualification to two-star ALMOs and hope
that more SPVs and ALMOs will be given pre-qualification status
next year.
Local authority new build within the HRA
The Housing Revenue Account has provided a useful
redistributive mechanism to ensure that local authorities facing
intense pressure on their own stock can deliver effective management
and maintenance of those homes and estates. However, it is clear
that, to some extent, it has also been a disincentive to those
who might have considered using their own land and capital receipts
to build extra council housing. We agree therefore with the principle
that, where councils choose to invest money and land, they should
be able to keep the income and capital returns from those additional
homes.
Reforming the HRA
It is also understandable that, CLG also wants
to explore options for the longer-term reform of this redistributive
subsidy system, including allowing some councils to leave HRA
and become self-financing. We assume that those councils who are
net-contributors are the most likely to leave, and anticipate
that this could have an impact on the funding available for those
remaining. We would not want to see councils with relatively high
management and maintenance costs resulting for example from having
an above-average proportion of flats in tower blocks being penalised.
Shelter therefore supports the proposal that those leaving the
HRA subsidy system should face a one-off adjustment to their HRA,
based on the present value of anticipated future subsidies or
surplus payments were they to remain. We believe this should be
incorporated within the self-financing pilot.
Changes to rules on capital receipts
Shelter strongly believes that income from the
sale of council homes should be reinvested in replacement stock.
Much greater transparency and accountability at both the national
and local level is required to ensure this is the case. We therefore
welcome the review of rules governing the treatment of housing
capital receipts. While some councils are critical of HM Treasury's
central-pooling arrangements for Right to Buy receipts, it is
clear that, in the past, many local authorities used the receipts
they are allowed to retain to fund non-housing capital projects.
Some even used them to cross-subsidise revenue costs and lower
Council Tax. In theory, central-pooling has ensured those receipts
can be recycled as funding in areas of greatest housing need.
It is also clear, that a number of authorities
have contributed a very high level of receipts to the central
pot in recent years, for example as a result of the high number
of Right to Buy sales in London prior to the introduction of the
reduced £16,000 maximum discount. Obviously, with a finite
stock of council housing, this cannot continue indefinitely, and
in fact, there is already a significant drop off in Right to Buy
sales across London. It is only right that, as receipts from sales
in London subsidised Social Housing Grant in other parts of the
country for a number of years, so receipts from those regions
should now be used to underpin SHG in the Capital.
Temporary to Settled Homes
The Green Paper also looks towards a "significant
expansion of the Settled Homes Initiative scheme in London, which
allows councils and partners to buy back properties for families
in temporary accommodation." Shelter very strongly supported
the "Temporary to Permanent" idea first proposed by
the Association of London Government (now London Councils) and
we have been involved on the Board of Local Space Ltd in Newham.
This involved the stock transfer of 450 LB Newham flats to provide
a dowry against which Local Space could borrow funding to purchase
properties on the open market. Around two-thirds of the homes
would be available as social housing by the end of the 15 year
business plan.
It makes sense to ensure that the £500
million of Housing Benefit now being spent paying rent to private
landlords accommodating homeless families, delivers better value
for money to the taxpayer. Specifically, the principle of using
this revenue expenditure to acquire new social housing is a sound
one and so we welcome the £30 million pilot scheme in London.
By taking direct control of the temporary accommodation LB Newham
and Local Space has been able to drive up physical and management
standards. The initiative is also helping regenerate a deprived
part of Newham, in which poor quality private rented housing was
prevalent.
However, we note that there has been a subtle
shift in policy from "Temporary to Permanent" towards
"Temporary to Settled" accommodation over the past 12
months. As originally envisaged, at least by Shelter, the scheme
was designed to provide a better experience of TA while homeless
families waited for a Secure or Assured Tenancy in a Council or
Housing Association property to become available. Homeless families
would not lose the "Reasonable Preference" they currently
enjoy when bidding under Choice-Based Lettings.
Increasingly, it seems CLG sees this "settled"
accommodation, which is effectively an Assured Shorthold Tenancy,
as an alternative to that. Shelter disagrees with this analysis.
We very strongly feel that the lack of security of tenure and
the high rents mean that, in most cases, "settled" accommodation
is unlikely to be an effective solution to homelessness. We hope
that committee will agree with this analysis and recommend that
CLG amends the eligibility criteria for the "Settled Homes
Initiative" funding so it no longer prioritises schemes delivering
ASTs and ensures that local authorities involved do not withdraw
the reasonable preference of homeless households placed in this
type of temporary accommodation.
Meeting the rural challenge
In our submission to the Comprehensive Spending
Review, Shelter argued that the rural housing crisis has become
so acute, that at least 5% of the Housing Corporation's Affordable
Housing Programme should be ring-fenced for rural settlements
of fewer than 3,000 people. We welcome the investment already
directed at building social housing in rural areas and innovations
such as the seven pilot Rural Community Land Trusts. Ultimately,
however, more needs to be done to ensure social homes are built
in rural settlements. We hope, therefore, that the committee will
recommend that CLG set a target of at least 5% of the Housing
Corporation's programme being in these areas.
More family homes
Shelter has long campaigned to highlight the
impact of overcrowded conditions on the health, education and
life chances of young children, and so we welcome the emphasis
on family-sized homes in PPS3, and the London Housing Board's
target that 35 per cent of its programme should be three-bedroom
or more. We hope the committee will recommend that CLG encourage
the other Regional Housing Boards to aim for significant increases
in family-sized homes in the Housing Corporation's forthcoming
Affordable Housing Programme.
Private rented sector
We note that this Green Paper is all but silent
on the issue of Private Rented Housing. While it is understandable
that the new Prime Minister will have wanted to focus on the supply
of new housing at the start of his term of office, we hope that
further policy reforms, including reform of the private rented
sector, will be brought forward in the months to come. Any recommendations
made by the committee in support of Shelter's proposals to reform
the PRS would be very timely.
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