News and views from Paul Bull, the Labour and Co-operative Councillor for the St THOMAS Ward of Exeter City Council. Promoted by Dom Collins on behalf of Paul Bull, both of 26b, Clifton Hill, Exeter, EX1 2DJ.
Maybe it’s just as well as well the UK has voted to leave the European Union: when it comes to our national record on housing and homelessness, we seem to be heading for relegation anywya.
In just one year, the UK has fallen from 12th place to 20th in the Housing Exclusion Index, a league table ranking the 28 EU states by their capacity to house their populations adequately. Only poorer countries from Eastern Europe – such as Hungary and Bulgaria – and those worst hit by the the Eurozone crisis – Greece, Italy and Portugal – finished lower than the UK. In fact, the UK was paced below not just Nordic countries and the rest of western Europe, but also Poland and Croatia.
This was the sharpest decline of any nation in the EU, and the damage was done mainly by cuts to Housing Benefit. So it’s just as well Prime Minister Theresa May and Work & Pensions Secretary Damien Green have pledged that there will be “no new search for cuts’ in benefits – except that budget decisions already taken will make matters worse.
Cuts to Housing Benefit already in train include a freeze in LHA [the Local Housing Allowance paid to private tenants] until 2020 regardless of any rent increases, a cap on Housing Benefit at LHA levels, and the withdrawal of automatic entitlement for under-21s.
Housing Benefit is paid to a rapidly rising number people who are in-work as well as out-of-work, and the changes will mean that it will cover less and less of their rent as time goes on. For people out-of-work, the Household Benefit Cap will be reduced to £20,000 [£23,000 in London] from November, making rents unaffordable for larger families, even in social housing and for people in expensive areas.
The Index, produced by FEANTSA [the European Federation of National Organisations working with the Homeless] and Fondation Abbé Pierre[a French campaign against bad housing], uses European statistics on housing cost, overcrowding, the effects of tenure and other factors to monitor the quality and affordability of housing in each member state.
To save May and Green’s blushes, perhaps it’s best if Brexit does mean Brexit.
Ahead of the Budget on Wednesday Labour has released new figures showing that on current trends the number of homeless families is set to reach almost 400,000 by 2020.
Headline ‘statutory homelessness’ statistics only capture those people who fall into a small number of so-called ‘priority need’ groups containing the most vulnerable applicants like pregnant women and young people leaving care. Along with charities and academics, Labour has argued that a much better measure also includes ‘prevention and relief’ cases where councils step in to stop families becoming homeless.
This more comprehensive measure reveals that homelessness rose to 275,000 families last year, up 75,000 from 2010, and is set to hit 369,000 by 2020 on current trends.
This is in addition to rough sleeping figures which records people sleeping on the streets and has doubled in the last five years.
This rise can be traced directly to decisions taken by George Osborne in previous Budgets which have led to big cuts in housing support over the last five years, including:
· cuts to housing benefit support worth over £5bn since 2010 – 13 separate cuts to housing benefit over the last five years, including the bedroom tax and breaking the link between private rented sector housing benefit and private rents;
· cuts to ‘supporting people’ funding for homelessness services – the National Audit Office have revealed that vital funding for homelessness services fell by 45 per cent between 2010 and 2015;
· soaring private rents – averaging over £1600 extra each year than in 2010; and
· the loss of affordable homes – with over 100,000 fewer council homes than in 2010.
Without a change of direction from George Osborne, cuts in this Parliament are set to hit housing services and support on an even bigger scale:
· the further impact of cuts to housing benefit is set to total almost £11bn between 2015 and 2020, plus a new cap on housing benefit announced in the Autumn Statement which homelessness organisations say will lead to the mass closure of their services;
· further cuts to local authority support meaning homelessness services unable to cope – the IFS calculate further real terms cuts of around 7 per cent to council budgets over the next five years;
· private rent rises are set to continue with Savills predict an inflation-busting 16.5 per cent increase in average rents over the next five years; and
· A further loss of 300,000 social rented homes predicted over the next five years.
Commenting, Labour’s Shadow Secretary of State for Housing and Planning John Healey MP said:
“Rising homeless figures carry the starkest warning for the Chancellor ahead of the Budget.
“This spiralling scale of homelessness shames us all when Britain is one of the richest countries in the world. It is a test of our basic humanity. It should shake the Chancellor from his complacency about the growing homeless crisis and shock him into action.
“The homeless figures hide personal stories of hurt and hopelessness; thousands of people whose ordinary lives have fallen apart from illness, debt, family break-up, addiction or redundancy.
“His failure to control housing costs and crude cuts to housing support over the last five years are making the problem much worse. The Government have no long-term housing plan for the country.
“George Osborne must use the Budget this week to stop the upward spiral of homelessness which is being driven by the government’s own housing policy failures.
“He must now re-think the multi-billion pound cuts to housing and homelessness support which are set to bite during this Parliament, as well as strengthening the law to help prevent homelessness happening in the first place as Labour has done in Wales.”
· Between 2009/10 and 2014/15 the average annual increase in this wider measure of homelessness was 6%. If the rate of increase in the last five years continued over the next five years this would mean 369,124 homelessness cases by 2019/20.
Councils are keen to build more homes and the LGA is working hard to ensure proposed housing reforms don’t make that job more difficult.
Councils share the Government’s ambition to increase house building and enable home ownership.
From the outset, the LGA has been working privately and publicly to try to mitigate any of the potential negative impacts and unintended consequences of Government housing reforms on behalf of councils and local communities, But it is clear that the Housing and Planning Bill has wide-ranging implications for local communities.
Measures within the Bill – currently being debated in the Lords – risk combining to reduce the number of existing council homes, which local authorities will be forced to sell and then struggle to replace.
This could lead to an increase in the Housing Benefit bill as more people are forced to move into the more expensive private rented sector. This will do nothing to help councils reduce homelessness and the use of temporary accommodation.
The LGA has opposed plans to force councils to sell off homes to fund the Right to Buy extension to social housing, and a mandatory Pay to Stay policy [see below] and the provision of Starter Homes at the expense of affordable homes to rent. Meanwhile, we have been working at real estate services provider, Savills to understand the impact of these housing policies, as part of our effort to make the case for additional flexibilities to Government, Parliament and partners.
Plans for Starter Homes at discounted prices, for example, will help support home ownership in some areas but will nbe out of reach for all people in need of affordable housing in 220 council areas, according to Savills. We have argued that councils must have the flexibilities to shape the number, location, types and quality of Starter Homes to ensure that they meet local need, alongside other affordable homes for rent.
The LGA also strongly opposes the proposal to require councils to charge mandatory market-based rents to higher income tenants, and to take a sum of money from councils based on a national estimate of the additional income from higher rents. Many social housing tenants across the country will be unable to afford market rents or take up the offer to by their council house under this policy.
This Pay to Stay policy needs to be voluntary for councils – as it will be for housing associations to protect social housing tenants, and avoid hard-working families being penalised, people being disincentivised to work and earn more, and key workers, such as nurses, teachers or social workers, having to move out of their local area. Councils must also retain any additional income generated from rents to reinvest in new and existing homes.
The LGA insists the extension of Right to Buy to housing association tenants must not be funded by forcing councils to sell off homes. As a minimum, the LGA forecasts councils would be forced to sell 22,000 ‘high value’ homes in order to fund this extension.
This number could be much higher depending on how the Government chooses to define ‘high value’. Councils should always be free to manage their assets to meet the needs of local communities and must retain 100% of all receipts to reinvest in new and existing housing.
The LGA will continue to firmly make the case – in both private and public – regarding the importance of councils playing a lead role in house building, reducing homelessness and benefits, and enabling home ownership.
Cllr Peter Box is Chair of the LGA’s Environment, Economy, Housing and Transport Board.
Analysis: Impact of the Housing and Planning Bill
Savills and the LGA project that 66,000 council homes will be sold to tenants under the existing Right to Buy scheme by 2020.
Local authorities could then be forced to sell a further 22,000 ‘high value’ homes by the end of the decade to fund plans to extend the scheme to housing association tenants. This could vary depending on how the Government defines ‘high value’ for different areas.
Required rent reductions, of 1% a year for the next 4 years, take £2.2bn from council housing budgets by 2020 – making building replacements extremely difficult.
There is a risk that of the 88,000 homes sold up to 2020, 80,000 will not be replaced. This will add £210m to the Housing Benefit bill.
Forcing councils to sell off homes to fund the extension of Right to Buy to housing association tenants could cost councils £6bn by 2020, according to Savills. A total of 5,500 homes would be sold each year should ‘high value’ be defined as the top third value of the regional market.
Discounted starter homes will be out of reach for all people in need of affordable housing – defined as those who would have to spend 30% of their household income to buy or rent a home – in 220 council areas [67%], and for more than 90% of people in a further 80 [25%] council areas.
Should the Pay to Stay policy be mandatory for all social tenants, around 50% of tenants deemed high income in the South East, East of England and London would not be able to pay market rents or take up Right to Buy, and would need to move out of the area to find a similar property.