The End is Nigh

This was not a cheerful way to start the working day:



On my desk I found the latest Inside Housing magazine announcing the death of social housing. The coalition's so-called reforms effectively end social renting as a tenure. Requiring new social tenants to pay 80% of market rents will result in one of two things:

Housing Benefit will have to increase to cover the much more expensive rents, increasing how much is spent on benefits in order to subsidise the provision of new social housing;

Or

Housing Benefit won't increase and will no longer be sufficient to cover social rents, ending the safety net for the vulnerable that social housing was meant to be.

I wonder which will happen? Here's a clue: the government is totally obsessed with reducing the housing benefit bill.

The National Housing Federation are saying that the level of new social rents will be so high that in places like Camden, Hackney and Haringey households would need to earn £54,000 to pay their social rent without housing benefit. David Cameron's defense of this is, '[Are] our constituents working hard to give benefits so people can live in homes they could not even dream of? I don't think that's fair.'

This welfare-scroungers rhetoric, seemingly taken straight from the Daily Mail, makes me incredibly angry. Cameron is ignoring the fact that the housing market is a disaster in this country, supply is inadequate, owned and rented housing is getting less and less affordable, and there is a particularly acute shortage of housing for the most vulnerable. That's why spending on housing benefit has increased. In London and the economically thriving parts of the South, private renting (let alone buying a house) is unaffordable for people on an average wage. It is a barefaced lie that only unemployed 'scroungers' need housing benefit and social housing. It is also a barefaced lie that social housing is in any way mansion-like.

Here are some facts from the government's own housing statistics.

• The percentage of households who own their home outright and have no
  members of the household working (57%) is comparable to that for social
  renters. This is because both contain a high proportion of the retired.
  
  
• 31% of social tenants are retired; only 21% are under 35. Younger people are far more likely to be in private rented accommodation.
  
  
• Social housing is more likely to be overcrowded than private rented or owner-occupied. (6.7% of social renters, 5.4% of private renters and 1.6% of owner-occupiers are overcrowded.) A third of all overcrowded households live in London.
  
  
• More than a quarter of all children in the social rented sector (25.7%) are living in overcrowded conditions, compared to 5.8% in the owner-occupied sector and 15% in the private rented sector.
  
  
• More than a third of social renters work: 24% are in full time work, 10% in part time work. Only 8.4% are unemployed.
  
  Let me reiterate that: eight per cent of social tenants are unemployed. Would you like to see the table I got that number from? Here it is. David Cameron, your claims about unemployed scroungers are simply not true.
  
  
• 24.5% of social tenants are economically inactive, meaning that they can't work and are not getting Job Seeker's Allowance. These would be the disabled, ill, and full-time carers.
  
  
• Not all social renters receive housing benefit at the moment - 59% to be exact.
  
  
• Households buying a house with a mortgage had an average income more than three times that of social renters (£47,500 and £14,800 per annum respectively). 65% social renters have incomes of less than £15,000 per year.

Does it seem like social renters are getting an unfairly good deal here? I think not.

Social housing is allocated to those that most need it - the elderly, disabled, young people who've run away from abusive families, homeless families with children. I'll tell you what's not fair, Cameron: dumping these people on the streets, shunting them between bed & breakfasts, or forcing them into overcrowded accommodation. You don't need me to tell you that this will trap people in poverty.

How can this government have the gall to use the word 'fair' as their mantra whilst callously kicking away the welfare safety net? They have decided that if you can't afford shelter you're just not trying hard enough, whether you're a child, disabled, ill, elderly, or just another victim of the recession. William Beveridge must be spinning in his grave.

Dogbert Government

The Spending Review contains a lot of this sort of thing:

'The CLG settlement includes a 13 per cent real terms reduction to fire resource expenditure. This will require the Fire and Rescue Service to modernise, increase efficiency and deliver workforce reform.'

How this might be achieved without increasing the likelihood of people dying in fires is not stated. Rather, 'It will be for individual fire authorities to decide how to make these savings.'

It's assumed that every public service has a huge amount of waste and spare capacity. For some, this will be the case, but is it really safe to assume it for absolutely everything, including the emergency services?

This Dilbert cartoon sums up being told to cut 10%, or 20%, or 30% by a government with no idea of how this is to be achieved.


Thank you Scott Adams.

Incidentally, it might be an idea to check your smoke alarms.

Roof Over Your Head

For context, I have a particular professional and personal interest in housing policy. Previous missives include:

What's Wrong with Private Rental

What's Wrong with Owner Occupation

What's Wrong with Social Housing

Why I Won't to be Able to Buy a Home in the next Decade

The Coalition Don't Get it and the Coalition really don't get it.

A lot of rumours swirled around prior to the spending review about massive cuts to the housing budget. How bad was it? Worse than that.

It remains unclear exactly how much funding for affordable housing has been cut, as it's funded by a confusing patchwork of programmes. Here are the numbers provided in the spending review.

From 2008-11 the government's National Affordable Housing programme had £8.4 billion of funding, with a target of 180,000 new affordable homes a year. (As a result of the credit crunch, I'm pretty sure this target will be missed.) The CSR allocates £4.5 billion to affordable housing over the next three years, with a target of delivering up to 150,000 over the spending review period. This includes existing commitments, and is therefore effectively a four year target. Consequently, the annual target for new affordable homes has gone from 60,000 to 37,500. Of course, high targets are meaningless if you can't meet them. But despite this, CLG's token Liberal Democrat minister Andrew Stunnell is claiming that the current government will provide more affordable housing than Labour did. Given that the budget for affordable housing has been halved and the target cut by more than a third, this claim looks nothing short of delusional. It's based on increasing rents for social housing, which provides homes for the disabled, retired, and vulnerable, whilst reducing housing benefit.

Whilst Mr. Stunell is being mentioned, I should comment on what appears to be his pet project: affordable housing in abandoned farm buildings. Sounds like a bad joke? Here is the 'Homes on the Farm' press release.

Presumably this policy is based on some idea of bucolic country life, or perhaps nostalgia for the feudal system. What it would amount to is isolating those unable to afford market housing from jobs, services, and transport networks. I find it particularly absurd that the press release emphasises young people. Speaking as a genuine young person, most of us live in cities because that's where we can find jobs. Moreover, urban areas offer actual services and leisure activities, as well as not requiring utter dependence on a car. I grew up in the countryside and, frankly, after going to university in a city returning to quiet rural life isn't very attractive. I'm sure some young people do want to live where they grew up, but treating barn conversions as some sort of panacea for rural housing problems is misguided. Quite apart from the fact that this policy isn't supported by any funding or legislation, being merely an exortation to farmers and local authorities.

Once again, this demonstrates the government's failure to look in any way systematically at housing, employment and poverty. I know I say this a lot, but these issues are highly interconnected.

Two brighter notes, though. Firstly, the shadow housing minister Alison Seabeck is horrified by the hatchet taken to spending on housing. Secondly, the cuts to welfare, including housing benefit, will need to go through parliament. There is still time for MPs to wake up and smell the unfairness.

Just Keep Moving

On Friday Iain Duncan Smith advised the unemployed to 'get on a bus' to find work. As well as being incredibly patronising, this talk of the 'flexible labour market' ignores both economic theory and observable reality.

For a start, there is no economic rule that there will ever be enough jobs for everyone. At the moment, jobseekers outnumber vacancies to an almost farcical degree in economically weaker areas of the country. In the area of Wales Iain was discussing in his speech, for instance, there are approximately nine unemployed people for every vacancy. Presumably Mr. Duncan Smith would suggest that all those unable to get a job either commute further or move out of Wales.

Helpfully, the government will be making both options much more expensive in coming months and years. The costs of road, rail and bus travel will all rise. Petrol prices are creeping up again, VAT hits 20% in January, and the fuel escalator kicks back in next year. Road pricing is back on the cards. Bus subsidies are being cut by 20%. Rail fares will rise by 3% plus the Retail Price Index (currently 4.6%) each of the next three years. In fact, it looks like the best option will indeed be to get on your bike, as Norman Tebbit so famously suggested. Unfortunately, cycling from Wales to London on a daily basis is scarcely practical.

Moving house to get a job, though, would be even harder. Housing benefit is being substantially cut, the affordable housing budget has been hung, drawn and quartered (post on this to follow), and those in social housing have a newly created massive disincentive to move. New social tenancies will be on a novel and deceptively named 'affordable rent' basis, constituting 80% of market rent. That might sound reasonable, but in London would result in rents tripling. In Cambridge, I gather social rent would double under the new terms. Existing tenancies will remain on the same terms as they were created. If moving house would inevitably result in a vast increase in your rent, it would take a very attractive job to get you packing.

As with all the policy currently being made, Iain Duncan Smith's approach is entirely predicated on reducing spending, in this case on welfare. The Department of Work and Pensions isn't trying to strengthen the economy, reduce regional inequality, tackle long-term unemployment, or improve business confidence. It is assumed that swiftly reducing the deficit will cause these things to magically occur all by themselves. A number of nobel prize winning economists are sceptical of this.

Crudely cutting benefits, especially housing benefit, isn't going to make the labour market more flexible or create jobs. Indeed, jobs will be rapidly lost as the cuts bite. Encouraging people to move, or indeed forcing them to, is useless when there aren't jobs available. In the UK, housing costs strongly correlate with job availability, as house building has failed to keep up with demand in successful areas. Cuts to housing benefit and the affordable housing budget will move the unemployed away from jobs. Further away than they can commute, even if travel costs weren't rising steeply.

There's another significant problem here, and it concerns the Big Society. If communities are to unite in order to provide their own public services, as the coalition expects, they will need to be stable and cohesive. Housing benefit cuts will force hundreds of thousands of people to move, causing huge social upheaval. What hope have unsettled and precarious communities of successfully running libraries, community centres, and schools?

High levels of spending on welfare are a symptom of a geographically unbalanced economy and hugely dysfunctional housing market. Coalition policy is ignoring these causes in favour of the idea that anyone without a job just isn't trying hard enough. Again, it's hard to reconcile this insistence on believing the worst of people with a sudden flowering of voluntary work and community enterprise. All I can conclude is the government doesn't understand that things are connected, things like jobs and housing and transport. I wouldn't have thought that was too complex an idea to grasp, but unfortunately the Diary of a Civil Servant confirms that it is.

Across the Pond

Spending has been Comprehensively Reviewed, and I've been following it as best I can despite being on a first aid course. In theory I now know how to resuscitate people, so might end up as a Big Society paramedic in a few years when we can't afford real ones. (Public sector humour: I'm not sure it can get much blacker at this point.)

Whilst attempting to absorb the scale and implications of the spending review cuts, something kept nagging at the back of my head. I've just realised what it is. The coalition constantly treats public services as inherently wasteful, unnecessary, autocratic, and staffed by faceless hoards whose only aim is to spend taxpayers' money as quickly as possible. These attitudes sound familiar; they are shared by the American Tea Party movement. Although the Tea Party's political mores are somewhat incoherent, they heavily emphasise cutting government spending and taxes. They agitate for minimal government and greater freedom of individual and/or community action. They object to the public sector providing basic services, like healthcare and welfare.

What bitter irony that in the US a vocal but widely derided minority are espousing these policies, whilst in the UK they're suddenly the mainstream. But the UK never had anything even vaguely analogous to the Tea Party movement, and the coalition definitely didn't sweep to power on a dismantle-the-state ticket. How did we end up with government in the style of the crazy American right wing? Weren't the Liberal Democrats once a left wing political party? What the hell happened?

Make no mistake, this spending review can talk efficiency savings and streamlining procurement all it likes, but cuts like this are an unequivocal ideological statement. The government is saying that the state is far too big. There are too many people working in the public sector. There shouldn't be so many public services. It costs too much to provide everyone with a basic standard of living.

There are many, including plenty of public sector employees, who would agree with those statements in principle. Then they would protest vociferously about the high cost of train tickets, about class sizes at their child's school, about cancer drugs not being provided on the NHS, about the local community centre closing, about potholes in the road, about the lack of police on the streets, about their elderly relatives having to pay for care, about the costliness of being a student, about the wait for their local council to answer the phone, about inadequate flood defences, about the lack of NHS dentists, about every little thing that public sector does which we all take for granted. It might seem blindingly obvious, but still needs to be said: none of these services are going to improve when a lot of their money is taken away from them. Get used to being put on hold, to being told that there's now a charge, or just that no, we don't do that any longer.

There have been times when I thought perhaps I was being unduly paranoid to assume the government had an explicitly anti-state agenda. But then I came across this paragraph in the spending review document:

The Government will pay and tender for more services by results rather than be the default provider; look to set proportions of specific services that should be delivered by non-state providers including voluntary groups; and introduce new rights for communities to run services, own assets and for public service workers to form cooperatives. [...] Areas of focus for this approach: This approach will be explored in adult social care, early years, community health services, pathology services, youth services, court and tribunal services, and early interventions for the neediest families.

In other words, targets for privatisation and outsourcing, from a rabidly anti-targets regime no less. The mentions of voluntary groups and co-operatives are all very well and fluffy, but who is going to put in a cheaper bid to provide the service? The big private company with rock-bottom costs, or the local community group relying on grants? Faced with 30% cut in budget, local councils will have to pick the lowest cost option. Notice also that first to be sold off will be some of the most sensitive services required by the most vulnerable people, the kind of services with truly awful consequences when they fail.

I'm not going to go into everything that's depressing in the spending review, because I want to finish writing this within the decade. But briefly, the department that funds my job and almost everything I work on, Communities and Local Government, got the worst settlement of all. Over the next three years, their administration and programme budget will fall by 51%. Their capital budget will fall by 74%. That's tantamount to saying that most of what the department does is totally unnecessary. In case you wondered, these extraneous functions include providing affordable housing, planning, regeneration, and infrastructure.

But I am an optimist as well as a cynic, and have managed to find some vestiges of silver lining to the spending review. For one, the Carbon Reduction Commitment has been fiddled with to make it into a £1 billion stealth carbon tax on large businesses. It won't be hypothecated back into climate change mitigation, but it's still more of a carbon tax than I'd dared to hope for. In addition, the Department for Transport can no longer afford the £1.3 billion project to turn the A14 North of Cambridge into a vast motorway. In my personal view, the scheme was totally inappropriate and appallingly carbon-heavy, as well as a perpetual political flashpoint. I won't miss it, although the A14 needs fixing somehow (tolls?) as there are continually accidents on it.

Little rays of sunshine aside, the title of my blog has never seemed more appropriate: welcome to age of austerity. If the Tea Party have any sense (although frankly I doubt it), they'll be watching the UK with interest over the next few years. What happens when you suddenly and radically roll back all public services in an economically fragile country with high unemployment? Stay tuned to find out!

Particularly good spending review commentary that I've come across: the wonderful Joseph Stiglitz on why the cuts won't work and more on how local government got the worst of the spending review.