Housing Green Paper – the devil is in the detail

Some weeks back the Daily Mirror announced on its front page “the return of the Council house”. Gordon Brown would apparently enable local councils to start building them again. At last, “a government that listens to the people” said Austin Mitchell MP (somewhat prematurely), one of the mainstays of the Defend Council Housing campaign. In response to George Monbiot’s criticism of union support for New Labour in the Guardian, Tony Woodley wrote: 

“We have had successes. Unions put forward the arguments for … building more council housing. Grassroots activists at Labour ‘s conference supported us and the government acted (our emphasis).” 

How has the government acted Tony? We would see the action as opposed to the talk when the Housing Green Paper was published. You can judge for yourself by reading it: Housing Green Paper The T&G section of Unite welcomed the government’s announcement of an extra £8 billion for affordable homes as “a big step in the right direction”. 

“Gordon Brown has listened to the millions struggling to buy or rent a home,” said Jack Dromey, deputy general secretary of the T&G. However, said Dromey: 

“The Green Paper does not go far enough in putting right all past wrongs, when tenants were told to transfer from the council if you want desperately needed repairs and renovation. The T&G section of Unite will continue to press, therefore, for further progress on a greater level playing field in the promised second-stage announcement in the autumn.” 

The Defend Council Housing Campaign, in an initial response to the Green Paper said: 

“The Housing Green Paper published today falls a long way short of meeting the expectations of supporters of council housing and the five tests agreed at the Defend Council Housing conference on July 12 (see DCH policy statement). In the face of pressure from a formidable alliance of council tenants, trade unions, councillors and MPs government is still trying to wriggle to avoid conceding the ‘Fourth Option’ of direct investment in decent, affordable, secure and accountable council housing. The government’s core strategy for providing new homes relies on the private sector (including Registered Social Landlords). The private sector has failed up to now to provide the homes we need and there is no indication they will do any better in the future.”  What does the government propose? At least 70,000 more “affordable homes” by 2010-11. But these include ‘shared equity’ and ‘shared ownership’. You may remember already that you can buy a 25% share of a house (paying part mortgage and rent). The government was considering reducing this to a ludicrous 10%. 

They are proposing at least 45,000 new ‘social homes’ a year by 2010-11, with a goal of 50,000 by the next spending review. True to form they want to “promote greater private sector involvement in increasing social housing”. Coyly the Green Papers says that “Demographic change and other factors have reduced the number of available lettings for households newly entering the social sector.” Needless to say the lack of council house building and the policy of “right to buy” are not mentioned. 

The only ‘social housing’ which has been built since the days of Thatcher has been built by Housing Associations.  The Green paper says: “We now want to test whether some council-backed schemes could bring in other benefits, not least when linked to council owned land, which would offer good value for money in comparison with traditional Housing Association development.” 

It further says: “We expect councils to undertake direct development only where it offers better valuefor money than other options. But where they choose to invest their own money innew supply, we think councils should be able to keep the income and capital returnsfrom those additional new homes. We would welcome views on the practicalitiesof making these changes, as well as the potential for them to encourage more localinvestment in new housing.” 

Holding open the possibility of councils building new council housing the government then indicates that such a situation would be a rare event. 

“However, before we considered extending access to social housing grant to councils in their own right, we would need to establish rigorous criteria for selecting potential local authority developers. These would have to ensure value for money and deliverability, but also have a means of controlling the public sector spending and borrowing impacts of an increase in council house building, as any increase would have to be affordable within national as well as local public expenditure and borrowing limits. In most cases, we would expect models which offer access to private finance to provide better value for money, delivering more affordable homes for the public investment. 

The government wants to see councils setting up local companies, probably with private sector involvement, to build new houses. This may well be outside of the Housing Revenue system, and hence they would be able to keep hold of their receipts. They are considering ‘self-financing’: “allowing somecouncils to in effect leave the HRA subsidy system and retain their rental incomes.” 

The government is considering ‘reform’ of the HRA subsidy system whereby monies are redistributed to poorer areas. The Green Paper says: “The case for more local control over income and investment decisions has been strongly made. But dismantling a redistributive system would risk creating winners and losers. This is a sensitive issue and we will need to understand how changes could protect those who depend on subsidies generated by the surpluses of others within the current system.” 

The government is also reviewing the rules in relation to capital receipts “to incentivise local authority shared equity schemes”. It proposes to “Support local councils to build additional shared ownership homes on their land through new Local Housing Companies”, and “Increase opportunities for social tenants to purchase a share in their own home, with further proposals later this year.” 

What we clearly have in the Green Paper is Brown’s refusal to implement the “Fourth Option” and the policy which has been passed at the last three Labour conferences. Brown has given the appearance of a concession but in essence he refuses to give councils the right to build council housing because it would be counted towards public sector borrowing. He still maintains his prejudice against the public sector. Indeed it is not beyond the bounds of possibility that the review of the HRA would open up the prospect of ‘self-financing’ councils similar to NHS Trusts which compete with each other. 

When you consider that there are 1.6 million people on Council waiting list, the government’s aim of 50,000 units of social housing for rent per year, would take over 30 years to create enough units for them. In his press release Jack Dromey said that: 

“The prejudice of Whitehall against town hall is now being replaced with a recognition of the key strategic role of councils as a builder and provider of affordable homes for rent.”  

Jack is seeing what he wants to see and not what is there. In fact the Green Paper contradicts his statement. The government is proposing that where the local council does have a role in building the natural assumption will be that some other ‘vehicle’ will be chosen rather than the ‘direct investment’ which the Defend Council Housing campaign has been demanding. Moreover, the government intends to maintain the ‘right to buy’ which has been responsible for the massive decline in the number of Council houses available. 

The DCHC picked up the rhetoric of the government in relation to ‘choice’. This might have been a legitimate tactic, calling the bluff of government rhetoric in a situation where council tenants were in reality being denied the choice of staying with their councils and raising the standard of the stock. However, in the light of the Green Paper, the emphasis should now be shifted to the need for a council house building programme which requires public subsidy. And we should should demand the end of the ‘right to buy’ which has greatly worsened the housing crisis. 

As the collapse of Metronet shows, PFI/PPP and all variants of privatisation are a false economy, because although the debt is not shown on public sector borrowing, the public has to pick up the tab is a company goes bellyup.  

I’ll give the last word to Jack, speaking at the DCHC conference on July 12th. 

“Yesterday saw, again as Austin has said, some welcome announcements. There’s 3 bills and a commitment to 3 million new homes by 2020. Including crucially councils once again being able to build new homes. Its an irony isn’t it that when I grew up, Labour and Conservative governments used to vie with one another as to who could build the most homes. It was Harold McMillan who boasted one year of having built 300,000 new homes. Once again we want to see massive council house building on that scale. A green paper will now be published, next week… the devil will be in the detail. “ 

Yes Jack, the devil is certainly in the detail.

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