The topic of social housing is particularly relevant to the Localist agenda. Central Government has pushed through its own agenda by a means of financial sticks and carrots. It has been very difficult for local housing authorities to follow their own local policy in this arrangement favouring centralized control.
Whatever the merits of councils as landlords as opposed to registered social landlords, the Government has not allowed a proper competition of social-housing models. Financially it has penalized those councils that retain their stock and placed the councils under pressure to transfer the stock.
Whereas housing associations can access other forms of private funding to meet the standard, the Government restricts the sources of funding local authorities can access and it can be very difficult to draw down government grants. Housing portfolio holders I have talked to have expressed their frustration at having no option but to transfer the stock, because of the way the Government funds councils.
Furthermore, social landlords must meet centrally determined targets regarding repairs and improvements. These targets can differ from the wishes of tenants. For example, whereas the Government’s Decent Homes Standard requires new bathrooms, tenants might actually be concerned about dilapidated fences and gates. Because of the funding arrangements the Central Government’s wishes will normally trump the wishes of local tenants or indeed local members.
“Negative subsidy can no longer be defended on grounds of
redistributive justice”
Government subsidy is calculated according to what a local authority should be charging in rent and then by calculating how much the authority should receive from or pay to Government if that notional rent were charged. A percentage of rental income is taken by Central Government if it is calculated that were the “correct” rent charged would lead to a surplus. Thereby well managed housing revenue accounts are penalized. This system is known as negative subsidy. Negative subsidy is entirely contrary to the principles of localism. Working against the concept of ideas being tested at a local level, it perversely encourages failure and discourages success. In such a set-up, where successful landlords must pay for the failing landlords, there is no incentive to manage effectively and innovatively.
Furthermore, negative subsidy can no longer be defended even on the grounds of redistributive justice. Most of the money collected from councils now goes into general government expenditure, rather than supporting other councils, which have a housing revenue account in deficit. Waverley Council is taking a lead in campaigning against this inequitable funding system.
“The Localist concept of different local solutions being found is potentially being suppressed”
The Government has recently suspended another controversial policy: rent convergence. This required local authorities to converge their rents with housing association rents, thereby significantly reducing one of the main attractions of remaining as a local authority tenant, that being the lower rents. Failure to converge can be punished by the Government funding system.
Because of the credit-crunch, the Government will no longer be forcing through this convergence. It is clearly desirable that tenants should be enabled to take responsibility for their own lives, exercise choice and follow their aspirations. It would be wrong to prevent tenants from being able to move out of council housing or councils from transferring their stock.
Notwithstanding this, it cannot be right that competition of ideas is being suppressed and local solutions not being implemented because of pressure from the Centre. It is important that local authorities are able to respond to the local demands made upon them, whether
that be a demand to transfer the housing stock or to remain with the Council as the landlord.
Tandridge District Council is on target to meet the decent homes standard and because of the overwhelming wishes of its tenants to remain with the council as landlord, unusually it has been able to exercise the so-called fourth option, and retain its stock. However, because of negative subsidy and capital receipts legislation, it would not be able to finance the
debt to launch a project of building new council houses, whatever the wishes of local members or those on the housing list might be. Once again the localist concept of
different local solutions being found is potentially being suppressed.
One important change in policy direction must therefore be a genuine devolution of decision making to local authorities that are directly answerable to their tenants. This should mean that tenants’ wishes are genuinely responded to, rather than the Whitehall bureaucrat’s
concept of what the tenant would wish.
Another important change should be to increase the tenants’ choice. Choice-based letting is a new system that allows those on the housing list to bid for a limited number of properties available. Because the stock available is fairly limited, although this shift in power away from the bureaucrat to the tenant has proved popular, it is not as radical a shift as might have been hoped.
From the policies being implemented or being discussed in the realm of ideas, it is clear that there are genuine Centre-Right solutions that would both devolve power and give tenants more choice. Local solutions are still being found, despite the straitjacket the Government
has imposed on local housing authorities. If local authorities and people were to be given greater freedom to test out local projects, the opportunity for new and innovative solutions would be even greater.
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