Investing in social housing is costly, but could ultimately save money.
- Terrie Alafat, chief executive, Chartered Institute of Housing
- Sarah Calkin, deputy editor, LGC (chair)
- Colm Lacey, chief executive, Brick By Brick
- Alan Long, executive director, Mears Group
- Steve Osborne, head of business improvement, Mears Group
- Naz Parkar, service director for housing, Kirklees Metropolitan Council
- Simone Russell, corporate director, housing and communities, Welwyn Hatfield BC
- Christine Short, head of capital programmes, Islington LBC
- Deborah Upton, chief executive, East Kent Homes
- Kim Wright, group director, neighbourhoods and housing, Hackney LBC
‘Can you imagine two years ago any government creating a green paper on social housing?”
Terrie Alafat, chief executive of the Chartered Institute of Housing, is not alone in enjoying the new attention being bestowed on social housing. Last August’s social housing green paper seemingly showed the government has come to see the sector as useful and important after a long period of disinterest.
Ms Alafat praised its “stronger focus on consumer standards and consistent approach to regulation across the sector” and welcomed the idea of an updated decent homes standard, speaking at a roundtable on social housing and communities, convened by LGC and Mears Group in November 2018.
The roundtable broadly thought there were more positives than negatives in the green paper – an achievement. But there is a sense that the government lacks deep affection for the sector, and that it is not ready to deal with the stigma holding social housing back.
Central to this is why the green paper contained a chapter on home ownership, still implying this was the preferable tenure, a point Ms Alafat raised. She said it “seemed weird to describe social housing as springboard to ownership when it’s there to provide a safe and secure environment”.
“It did bang on about home ownership being the tenure of choice,” said Deborah Upton, chief executive of East Kent Homes. “To have a chapter saying ‘don’t worry, you’ll get into home ownership’ just after one about stigmatised social housing residents was disappointing, and not pitched properly.”
Likewise, Christine Short, head of capital programmes at Islington LBC, said: “The aspiration of home ownership is beyond a large section of the population and we should accept that.”
Simone Russell, corporate director, housing and communities at Welwyn Hatfield BC put it more bluntly: “We should remove myth that home ownership is the only aspirational product.”
The government’s attachment to owner occupation thus struck a discordant note. But Ms Alafat reported a significant change from her long experience in Whitehall, including as director of housing at the Department for Communities & Local Government and its predecessors from 2002-15.
“When I was director there were 160 staff in housing and now there are 600 and a director for social housing, so one can’t under-estimate that shift,” she said. “I think there is a growing sense that housing is not accessible and not affordable, and people are worried and they look to social housing. My sense is something has changed with public views on being able to access housing.”
This changed mood would, she said, make it difficult for politicians to drop their new focus on social housing even if they wanted to.
“The aspiration of home ownership is beyond a large section of the population and we should accept that.”
Christine Short, head of capital programmes, Islington LBC
Mears Group executive director Alan Long said that in this new climate the sector saving on benefit payments to private tenants and on hospital ‘bed blocking’.
“The green paper is a step in the right direction, but misses the trick of making the business case for social housing,” he said. “In hard economic terms it does not spell out to society the contribution social housing can make to pretty well every area of spend. That does not come through strongly enough and one way to overcome that is to point out benefits to society.”
He added that there is “a chronic absence of extra care and supported living in most parts of the country”, the result being “a massive impact on the NHS and social care”. “The only way to keep those budgets under control is to have much more suitable accommodation for the elderly,” Mr Long said.
The green paper’s chapter on stigma misfired, the panel felt, having included a curious reference to helping to solve this by holding street parties. Naz Parkar, service director for housing at Kirklees Metropolitan Council, said: “The stigma piece is a bit patronising. Why should we not have thriving communities across all tenures?”
He noted a striking example of the extent to which the sector, especially council housing, still suffers from stigma. When his council went to housebuilders with section 106 receipts to purchase unsold homes, the housebuilders were reluctant because they would be turned into council houses – though were willing to sell to housing associations.
“That is the scale of stigmatisation,” Mr Parkar said. “They felt it would affect values as people do not want to live next door to council tenants.”
Stigma was not the fault of either local authorities or housing associations, said Kim Wright, group director, neighbourhoods and housing at Hackney LBC. Rather it arose from the mistaken view that social housing provided only homes of last resort. “For many it gives them an anchor in the community,” she said.
Mr Long said he had asked tenant representatives where stigma arose from. “They all said anti-social behaviour, and you can’t have a decent home without a decent community,” he said. Creating such a community is a function of place-making, a role local authorities inescapably have but which was more optional for other landlords.
Ms Russell said: “Our function is to meet local housing need and we’ve 18 housing associations operating in our borough. As a local authority we have the place-making responsibility, which some organisations may choose [to fulfil] or not. But we cannot do it on our own, so we must enter into right partnerships.”
Building communities might be hampered by landlords’ emphasis on building homes, East Kent Homes’ Ms Upton said, noting also “existing homes are equally important as new ones and there is a danger we lose sight of that”.
“Housebuilders felt social housing would affect values as people do not want to live next door to council tenants.”
Naz Parkar, service director for housing, Kirklees Metropolitan Council
“Quality of design and place is important,” Mr Parkar said. “It’s not just the home, but that when you walk out of the front door there a sense of belonging and feeling safe.”
There was a general feeling among participants that councils and housing associations should not lose sight of their existing stock when making decisions on spending, especially because it is existing homes that would be affected by the green paper’s proposal for a new decent homes standard to replace that written in 2006.
The green paper is inconclusive about what might be included, but the panel agreed the present standard was obsolete and felt that if the green paper’s strictures on tenant engagement are taken seriously the new standard should cover much beyond the basics of kitchens and bathroom in the present one.
“The loudest voices I hear are around showers,” Mr Long said. “The decent homes standard is much more around baths and that does not reflect modern living. Wanting ducting for wi-fi is another example.
“In the early stages of the standard there was a huge debate between cost efficiency and choice and they were felt almost to be opposites. But the world has moved on from that mentality and in every other aspect of life there is more choice, so you cannot engage tenants unless there is some choice in there.”
Steve Osborne, Mears’ head of business improvement, agreed. “Choice makes a real difference to people, and that can be a choice over where money is spent,” he said. “You can say there is a pot of money here and choices to be made on which services it’s spent on. That can be a good way to manage expectations over where limited funds are spent.”
Ms Alafat suggested information technology might allow tenants options over their home’s appearance. “They may not have a choice about where they live, but they can have a choice over their home,” she said.
“When the standard was introduced there was little choice but now the consumer can go in and use diagrams to see what their place would look like with different options. I wonder that if there is a new standard, technology could make it easier to give real choice and be cost effective.”
Colm Lacey, chief executive of Croydon LBC’s housing company Brick by Brick, was concerned about the environmental consequences of a new standard.
“The process is to bring homes up to standard, but there is no concept there of what people would want to have in five years’ time,” he said. “And you also need to think about the environmental impact: what are we going to do with PVC windows in 20 years’ time? We must future-proof properties.”
That concern applies also to new homes. Despite the lifting of the borrowing cap on raising money for home building there are still regulatory thickets to negotiate before councils can build the homes needed. One relevant example is the rightto- buy legislation, which means councils might quickly lose ownership of new homes, negating the purpose of building them.
“Right-to-buy is a big issue for Croydon and we deliver very little general needs housing through the housing revenue account because it would be lost through rightto- buy,” Mr Lacey said. “The risk of losing all of that time and effort in a couple of years is too great, so we have to come up with these other structures to avoid that.”
He noted that the councils that were most successful at housing supply were “probably those that can circumvent the rules the best”.
Mr Parkar said Kirklees planned for 10,000 more homes by 2023. The council was committed to build 1,000 but it had “not geared up yet to deliver at the scale needed, and we need partners to help us get to market quickly”.
“You can take a financial hit on social housing subsidy with a view to saving itsomewhere else.”
Alan Long, executive director, Mears Group
When the council seeks development partners through conventional procurement, even using a public sector framework contract, it can take nine to 12 months to select a contractor and then a similar time to get into a contract. After that developers must mobilise.
“So we are finding innovative ways to get out there and increase supply,” Mr Parkar said. “We’re big fans of offsite [manufacturing of construction components] and have done a huge amount of work with different suppliers and we’re fortunate in having land for building.”
Offsite is one of the great hopes for tackling the housing shortage, allowing components to be mass produced under factory conditions and assembled on site by workers who are skilled but plentiful, as they have not needed the lengthy training of traditional trades.
Ms Wright said Hackney had been able to exploit its high land values to build by cross-subsidising affordable homes from those it sold. “We’re being unashamed to say we are selling that lot at market rate as it enables us to build affordable homes. We’ve got 3,000 so far using that model.”
Places without Hackney’s high land values might need traditional subsidy. Mr Parkar said: “There is also a subsidy model for providing houses that government needs to think about long and hard, as to build you need land and if not you’ve not got that you need subsidy.”
Ms Alafat noted there were “huge amounts of public land that could be more flexibly used across housing schemes”. However, Ms Wright said it had proven tough to get the Department of Health & Social Care and the Ministry of Defence to consider using their surplus land for homes, despite the One Public Estate initiative, which supports councils’ property projects with money and expertise.
There was “a sweet spot on subsidy we are not hitting”, Mr Lacey said, arguing that using subsidy would give better value to the public purse than providing social housing through other means.
While it is impossible to build a home cheaply in a high value area, Mr Long returned to his idea of arguing that public investment in social housing was sound economics for the government, as good quality affordable homes could save money on welfare and health spending
“You can take a financial hit on social housing subsidy with a view to saving it somewhere else. There is an enormous cost to not having enough affordable housing,” he said. “If we looked at costs in a different way, spending to build stock makes sense.”
The government is analysing responses to the green paper at present, with possible changes due this year. Whether ministers’ newly favourable view of the sector turns into hard cash and greater flexibilities over spending will determine how far it can go to solve the housing shortage.
Roundtable sponsored by Mears Group