Examination of Witnesses (Questions 387
- 399)
MONDAY 19 MARCH 2007
PROFESSOR JOHN
HILLS
Q387 Chair: Professor
Hills, can I welcome you to the Committee; we are looking forward
to exploring with you many of the points made in your excellent
report. Can I start off by asking you a question relating to whether
the priority for government should be retaining higher earners
within social housing so that we get a better social mix, or freeing
up social lettings for the people who really need them?
Professor Hills: As with many
of these questions, there are, of course, trade-offs. I think
part of the context of this, though, is the change in the composition
of social tenants as a group over the last 25 years. When one
looks at who are likely to be social tenants today and at the
income distribution of social tenants, there are very few people
in the top half of the income distribution who are social tenants.
Now, that might not matter in a policy sense if we were content
for social housing to have, as its overwhelming focus, the housing
of people on lower incomes and those in greatest need, but because
we provided so much social housing in the particular form we did
and because so much is built on estates, the income mix matters
a great deal. Certainly where one is looking at social housing
which is in estates, and two thirds of social housing is still
located within areas originally built as council estates, retaining
people on higher incomes and with more prospects and with more
labour market connections would seem to me to be rather a helpful
move, and measures that would encourage people to leave when they
would not do otherwise in the name of freeing up a tenancy for
somebody else would seem to me to be unhelpful, because of the
degree to which those areas have now polarised, and we are dealing
with a situation where nearly half of all social housing is located
in the 20% deprived neighbourhoods in the country. There may be
some different issues in other parts of the country where social
housing is not as polarised as that, but predominantly I would
see it as being something of a mark of a success of the way we
were running social housing if we were able to retain more of
the people on higher incomes than we have done.
Q388 Chair: Can
I ask you about allocation policies, because it is surely a consequence
of the excess demand on social housing and the allocation policies
which are leading to precisely the conditions you describe, so
it would suggest that since it is not possible to vastly increase
the supply the practical way forward, if one followed your line,
would be to alter allocation policies, and if so in what way.
Professor Hills: We are in some
ways in an unenviable situation, as it is now. We have a stock
which is predominantly located but not entirely on estates; the
population has become more predominantly lower income than it
was 25 years ago; and one of the things my report draws attention
to is the way in which the pressures on the sector have increased
greatly in the last six years. The report draws attention to the
rapid decline in the number of existing properties available to
re-let to new tenants, and I think that is a striking new phenomenon
over the last few years.
Q389 Chair: Can
we move to what you think needs to be done, and specifically do
you think the allocations policies need to be altered?
Professor Hills: I was suggesting
in the report that allocations policies need to be reviewed; that
as part of a drive to improve the mix within the existing stock
and existing areas, one of the things we could do, at least to
start with, is to ensure the allocations policies are not exacerbating
the polarisation we have. The point I was trying to make was that
I do not think one can solve the problem through allocations policies
alone because the pressure on the sector is so great, but we can
at least make sure that we are not running things in a way that
all the people in greatest need and lowest incomes are put in
particular areas. I do think there are some positive lessons from
the experience of choice-based lettings in the last few years
which might have led to increased polarisation, but the evidence
suggests they did not.
Q390 Mr Betts:
I have a couple of issues, one of which is perhaps to remove some
fairly inaccurate reporting that occurred which clearly caused
a great deal of concern to many existing tenants in social rented
housing, in that you were recommending that they all lost the
security of tenure to their home. Presumably you are not recommending
that. Are you suggesting any changes to the security of tenure
of any future tenants when they are allocating property?
Professor Hills: Thank you for
the opportunity to make that clear. There was a wildly inaccurate
report in one of the national newspapers the day before my report
was published, and I think the headline was "Three million
tenants to lose their security of tenure". If you have had
a chance to look at the report you will see on page 155 that I
go through in detail a number of arguments as to why security
of tenure is potentially rather helpful in one of what seem to
me to be the key aims of social housing which is to help support
people getting on in their lives and to give them security and
strong incentives to be able to do that, and so I make no such
recommendation. There clearly are people in the housing world
who faced with the pressures of trying to meet the demands on
them would like to find some way in which we can encourage people
to move on, but I think it would be extremely unhelpful if one
is thinking about supporting people and building their livelihoods
if people had hanging over them a threat that if their circumstances
improved they would somehow lose their home. That, however, is
a different issue from the issue as to whether we should be simply
offering both the existing tenants but in particular the new inflow
of people in housing need just one choice, which is a route to
queue through to a social tenancy. There may be other forms of
support we can offer to some people which would be more appropriate
to them. For example, in the report one is looking at young people
and it may well be more appropriate to be offering them some kind
of support that combines accommodation and support with getting
employment, and training in the way that foyers do rather than
assuming the solution is to put somebody in a queue for a social
tenancy, but I do not make any other recommendations about reviewing
security of tenure for the inflow. What I do suggest, and you
will have seen this in the report in its summary, is a number
of ways in which we can open up a number of options to both the
inflow and to existing tenants.
Q391 Mr Betts:
Can I follow through on the allocations policy issue as well?
Just looking at the experience of my own city in Sheffield, probably
going back to the 1980s it is probably true that half the lettings
that the housing department did and the city council were probably
to existing tenants who transferred to a different property, and
there was a fair flow around of people trying to improve their
circumstances but also get a home that more adequately met their
particular requirements at the time. Then they moved on to a much
more so-called needs-based allocations system where if you had
a particular need, homelessness or massive overcrowding, you went
straight to the top of the queue and the property that became
vacant was allocated to you. Certainly there is a lot of evidence
then that people, say, who wanted to move to be nearer to family
or grandparents, so that both members of the household could go
out to work because childcare was taken care of in an affordable
way, were then denied that opportunity and once they were stuck
in a council property they lost the choice to move nearer to the
grandparents because that house that was going empty next to the
grandparents went to a homeless family. Is that the sort of issue
you are trying to get to the bottom of and, if so, how can it
be addressed effectively?
Professor Hills: It certainly
is one of the issues highlighted by the evidence I reviewed. I
think it is striking the extent to which, and you will see this
in the summary of the report you have, if one tries to analyse
why social tenants are dissatisfied with their accommodation,
and more dissatisfied with their accommodation than people in
private rented housing or an occupation, it is predominantly amongst
the group of people aged 45 and younger that you see the high
levels of dissatisfaction. Another piece of evidence that goes
along with that is that if you look at people with similar levels
of space per person, so similar degrees of crowding, the social
tenants will be more likely to say they are dissatisfied than
the private tenants or the owners, and I think that reflects two
different things. One is that the social tenants will have had
much less choice in making some kind of trade-off between size
of accommodation and its location in the way people in the other
tenures may have done, but the second is that people's prospects
of moving on are that much smaller once you are in social housing
because transfers are becoming so much more difficult, so people
see themselves as becoming stuck for longer and longer, and one
of the consequences of the rapid drop in re-lets in the last six
years combined with, although there has been a recent fall, a
fairly constant level of statutory homelessness allocations is
there has been much less property available for non-statutory
homeless entrants to the sector. Those entrants are, as far as
I can see, increasingly coming in on the basis of a second level
of needs-based criteria, the reasonable preference criteria, and
it appears that those kinds of needs-based criteria are being
applied to transfers within existing stock as well, so the example
you gave of wanting to move nearer to somebody who might provide
child care would not be enough in many areas to give somebody
priority to move even though the effect of them moving is to create
a vacancy behind them, and it may be that that kind of issue around
transfer is a rather large one.
Q392 Sir Paul Beresford:
It is an old argument and discussion but should we be moving towards,
if we come back to the original question, subsidising people rather
than bricks and mortar, to some degree at least?
Professor Hills: Of course we
do both, and the question is the balance between the two. In the
last twenty years or so we have moved much more to subsidising
people through either housing benefit or through the still relatively
favourable treatment of owner/occupiers, so that bricks and mortar
subsidy plays a smaller role but is still there and I run through
in the report the policy dilemma that that creates. On the one
hand a system which subsidises bricks and mortar can have these
effects that tie people to a particular place and make it hard
for people to move and create all the pressures within a rationing
system that you will be familiar with, and I am sure your constituents
report to you. On the other hand, given the level of cost within
the private sector, if we were to rely entirely on a system of
personal subsidy run through the housing benefit, we would create
far worse benefit traps than we have at the moment. In fact, we
have moved towards more reliance on housing benefit than historically.
One of the big advantages of the social housing is the potential
poverty trap effects with the level of social rents as they are
are much lower than those for people who are paying private rents.
At the most radical end one can imagine some kind of system where
somebody had a transferable voucher that they could take with
them, and I talk about those kinds of proposals in one section
of the report. I think they carry with them some of the same problems
as we have at the moment; if that is a very valuable voucher that
people can carry around with them then people will queue and will
have to go through all the same hurdles to prove need that they
do in order to get to social housing at the moment, so as you
said it is an old policy dilemma and it is not one to which this
report produces any magical solution I am afraid, but I certainly
do not end up in a situation where I think that we should throw
out the baby with the bathwater. I think there still is a strong
case for provision of social housing at submarket rents, but that
case relies on a number of potential advantages of doing that
and I suggest in the report that the evidence shows that we are
not meeting the full potential advantages that we could get from
social housing.
Q393 Sir Paul Beresford:
The homeless strategies at the moment mean that many people are
in the private rented sector but are trapped. The buy-to-let market
is, to some degree, booming but the policy of moving them into
the private rented sector seems to exacerbate the problem of getting
them into work. You have touched on the trap. Would that be right?
And have you got any solutions or suggestions?
Professor Hills: The evidence
I have seen and the analysis I have been able to do suggests that
in many ways actually being within the private rented sector,
despite the greater poverty trap effects of higher rents and housing
benefit problems, means that you see easier moves into work than
within the social rented sector. Now, there are a whole series
of reasons why that might happen. Some of that is to do with the
effects of exactly where social housing is located, and given
the polarised nature of the neighbourhoods in which much social
housing is located at the moment that creates difficulties in
contact with labour markets and makes it harder for people to
find work, but there is a particular issue I think around the
difficulties of moving within the sector, and I highlight what
did seem to me to be very striking evidence of how few moves happen
within social housing once people are there for job-related reasons.
If you look at all moves across the country, where people move
house either within the same area or between areas, about one
in eight of those moves is for job-related reasons.
Q394 Chair: Given
that a very large proportion of people in social housing are in
receipt of various incapacity type benefits, would you not expect
that those not in work are never going to be in work?
Professor Hills: Of course one
would expect a high level of worklessness given the characteristics
of people living within social housing but one would not necessarily
expect quite such a high level. Given the category of need or
personal characteristics the level of worklessness within social
housing is still high. That may be because people with the greatest
problems are screened into social housing and out of the private
sector, so that is part of the explanation. It is hard to explain
only by that.
Q395 Emily Thornberry:
I am very interested in what you have to say about transfers because
certainly in a constituency like mine we have huge numbers of
people on the waiting list but at least we might be able to do
is transfer people into areas they want to be as opposed to areas
that are inappropriate, but the mechanisms available for people
to do transfers seem to me to be so supine. Move UK deals with
hardly anything like the traffic one would expect; there is not
enough emphasis put on mutual exchange in my view, and there is
not sufficient funding available to help people out of social
housing and on to the housing ladder if they want to move out
of the area and possibly move to being near relatives where the
property prices might be cheaper. Do you agree with any of that?
Professor Hills: I think I would
agree with most of that. The national mobility schemes are incredibly
limited. The number of people moving is miniscule by comparison
with the nearly four million social tenancies that we are talking
about. My suggestion in the report as to the potential way forward
is to try and build on what choice-based lettings have achieved.
Within a very tight group of people who get access to social housing
there have been some positive improvements as a result of choice-based
lettings. I think there are things we can do to widen the pool,
the area over which they operate, both within a region but also
to some extent nationally.
Q396 Anne Main:
I would like to take you back because I am getting a rehearsing
of the issues but not a lot of suggested solutions. We saw in
Manchester on our very valuable visit that the minute you start
making areas more attractive to live in and be in, the house prices
go up and make houses less affordable and also the rents go up.
How would you, then, if you are trying to get areas not to be
large mono tenure areas of worklessness, solve that dilemma of
making it a more attractive area to live in with more opportunities
for people and yet still keep the rents so low that people can
afford to live there?
Professor Hills: Certainly to
start with, as you know from what I was asked to do in this report,
the aim was to start a debate rather than to produce a blueprint
and a whole series of recommendations. What I do do at the end
of the report in its summary is to point to a number of directions
where I think we could do better than we are doing at the moment.
We do need to remember that we do have a very big asset within
social housing stock worth at least £400 billion, so we are
not starting from nothing; we do have that property there at the
moment but we use it in a very inflexible way. I am not sure quite
how much this helps you but one of the developments which I have
found really quite interesting in thinking how we cope with the
fact that we start with property that is located in estates but
we would like to diversify it was the success of a scheme called
"Selling alternate vacants on estates" run by the Joseph
Rowntree Housing Trust in York, in New Earswick, where they found
that their very attractive cottage estate had become residualised
as a result of allocations over a long period. They then set on
a policy of, when two vacancies come up they will let one and
sell one and use the proceeds of selling one to replace it not
with somewhere in the middle of York but somewhere in a more mixed
area, and therefore diversify the stock in that way. Now initially
when they did that to start with they made a loss and it did have
the effect that house prices went up but of course from that point
of view it is an advantage—
Q397 Anne Main:
Do you think that is more advantageous than trying to encourage
owners paying higher rent to be in social rented properties?
Professor Hills: As I said at
the beginning, given how few relatively higher earners we have
in social housing, if we are dealing with areas that have become
residualised, there is a lot to be said for trying to do things
that will encourage people at least to stay in the same place—not
necessarily social tenants but to offer people options that will
hold them there and also to run property and the area in a way
so that they do want to stay.
Q398 Martin Horwood:
My question is almost the mirror image of Anne's. You talk a lot
about the need to break down the polarisation and to create more
mixed communities both ways. It is clear to me why someone who
is currently a social tenant would want to move to one of the
areas Anne describes which is becoming more attractive, but the
mirror image is why would anybody who has a choice, who is able
to buy, choose to buy in one of the old estates? It is possible
that it is cheap but if it is simply on the basis of them being
absolutely dirt cheap to buy, how then do you stop private buy-to-let
landlords scooping them all up and letting them back to social
tenants again because they are going to be the more reliable sources
of income for a landlord?
Professor Hills: Price will obviously
be part of this and we know from experience that people do buy
at a particular price within these areas, and the experience of
things like the Rowntree SAVE scheme shows that people do buy
in areas that have become stigmatised, and that helps break down
the stigma. We also know that people do pay market rents to move
into some of these estates through what is illegal sub-letting,
so there is a market for people to move into some of these areas
but we do not harness that.
Q399 Martin Horwood:
You say that removes the stigma but I cannot quite see how, actually.
If these are at rock bottom market rates how does that remove
the stigma?
Professor Hills: We know that
the opposite process happened. We know that areas that were not
stigmatised became stigmatised as a result of lettings flow over
a 20 year period.
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