From benefits to bricks – IPPR report

After so many different pronouncements on housing and welfare in particular over the last few months, it was great to see a centre-left think tank produce a comprehensive view on a range of policy areas – IPPR’s report on ‘The Condition of Britain: Strategies for Social Renewal‘. Whilst this is by no means comprehensive, it is a good starting point for some policy discussions around the key issues of power devolution, encouraging engagement and joining up approaches to tackling complex social problems. I was encouraged by much of what is in the report, its focus and its conclusions – even if some appear somewhat random. Whilst the report covers six main areas: families; young people; working life; housing; crime and exclusion; and older people, my focus is on the housing ideas discussed and the recommendations that are drawn out. It is clear that with the endorsement of Ed Miliband and others in the Labour Party, the recommendations in this report may well form a key part of Labour policy for the next election, so may need to be taken seriously.

Much of the criticism of the current regime centres around the shift to a benefits driven system rather than one based on capital investment in building new homes and on the continued centralisation of control over housing policy. A staggering statistic that is quoted is that 95% of government spending on housing goes on subsidising rents through the benefits system, with only 5% invested in building new homes – how can that be right? We seem to have a system based on subsidising private landlords rather than one based on building new social housing for those in need. This is a balance that needs redressing, we have tried relying on the private sector to build enough homes and it clearly isn’t working, it must surely be time to consider enabling councils and other social housing providers to build more. And this is at the basis of the recommendations in the IPPR report – providing local choice, control and ability to provide for local needs.

There are 5 main housing recommendations in the report based around a significant process of housing policy decentralisation, providing extra powers to local areas in relation to issues around land market dysfunctions, shifting from benefits to bricks and providing greater control over budgets and housing spend. Rather than just giving local councils the responsibility for meeting local housing needs they should also be given the power and resources to address those needs. All of these are controls and responsibilities that local councils have been asking for, particularly in our core cities, and will undoubtedly help councils to have more control over how housing is delivered in their area. But will it work, will local politicians be brave enough to allocate sites and build the numbers required? Their track record in some areas of the country is not great is it?

The IPPR report partially addresses this by suggesting that local control and responsibility needs to be set within a framework of national housing objectives, resources and accountability. I would go further and argue that a central-local negotiation also needs to happen to ascertain the number of new homes to be built in each area, the proportion that should be affordable and guidance on tenure percentages – affordable rent, social, self/custom build, market rent, market sale.

The main approach, however, is to provide a system of incentives, making it worthwhile for local councils to build because they recoup financial benefit from doing so. The incentives include some new ideas and an extension of existing opportunities, including a gradually escalating development tax to be levied on stalled sites, retention of savings achieved locally on housing benefit spend through an earn-back deal, controls over rents and greater freedom to borrow against existing stock. There is also a significant emphasis on devolving housing capital budgets where groups of councils are working together well and can show strong joint working arrangements – this could be city regions or county areas, sub national rather than regional, to help cities that are particularly constrained by tight boundaries. The idea would be to require collaboration across boundaries, including identifying land for new housing to meet needs, in order to quality for a devolved housing capital budget – it would be interesting to know if this really would incentivise local councils sufficiently to overcome local opposition?

The report includes the notion of turning the funding regime on its head and giving local councils control of public spending on housing through the establishment of multi-year affordable housing funds (AHF), combining an areas share of national spend on housing investment and housing benefit into one fund controlled locally. The emphasis once again is on combined authorities, as the only local structure that would have the capacity to operate such large funds and strategic delivery. At the moment the main formally agreed combined authorities in England are in the north of the country, others haven’t yet gone down this route but have preferred to maintain the informal arrangements and/or operate through their LEPs. It would be interesting to know more about how combined authorities work with LEPs and what different structures might be acceptable under such a model in order to attract the funding – one size does definitely not fit all.

The issues raised over accountability are interesting and one of the perennial problems with delegated authority, how do you assess adequately whether or not government funds have been wisely spent to meet local needs. The suggestion put forward is for an ‘affordability index’ providing an objective measure of local performance with the HCA in a monitoring role. This may work but one can only imagine the debate around what the index should contain and may just create additional bureaucracy in an already overly bureaucratic system.

There is much to be applauded in this new report and it raises some interesting points for debate but I’m not sure it goes far enough to address the housing crisis. There are questions left unanswered about national housing targets, land values and land nationalisation and the development of more social housing by councils. But a great start to encouraging more debate about some critical issues.

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2 thoughts on “From benefits to bricks – IPPR report

  1. You criticise councils for not building enough homes, but did anyone, perhaps Blair and his cronies excepted, see the fastest rise ever in population coming? I don’t think so. In fact, it was not long ago that we were closing schools for falling pupil numbers. It will take time to catch up, though personally in this rapidly changing World I doubt we ever will. The regrettable rise in private landlords, fuelled by a belief that property is far better than a pension and the “buy to let” mortgage industry, not only effected the chances of first time buyers but has cost us a fortune in housing benefit. Did anybody see that coming? I don’t think so. The sorry state of our housing market is just another example of short term ideas with little regard for long term consequences. You can have as many IPPR Reports as you like, that will never change!

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    • Fair point Paul, and I agree about the short term ideas issue, we seem to continue with new initiative after new initiative without having a longer term plan, not just for housing but for many aspects of our social policy.

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