So far, social landlords have weathered the welfare reform storm, but with its full force yet to be felt can the sector survive without leaving tenants to be blown away by the winds of change?
By Mark Cantrell
First published in the April/May 2015 edition of Housing magazine
FIRST there’s the calm, then there’s the storm, and if you’re really unlucky – it blows your house away. Actually, we’re talking about welfare reform and the impact it has on rent arrears, so it’s nothing like a storm as such; this is more like a policy neutron bomb – it blows away people but leaves the housing standing. Well, the nukes haven’t gone off yet, if you want to stick with the metaphor of Armageddon, but the horizon’s certainly looking cloudy if you want to run with the storm; either way, the impact of austerity and welfare reform has barely begun – and it’s bound to cause havoc with that basic business function of collecting the rent. So far, for all the ructions over the bedroom tax and the like, the sector has fared rather better than expected. At the end of last year, Baker Tilly released the findings of a benchmarking survey with 70 housing providers. The purpose was to assess the impact of welfare reform. All told, the firm found that the impact had been significantly less than anticipated, but it warned against taking a false sense of security from its findings. The average level of rent arrears during 2013/14 was 3.29%, slightly down on the anticipated 3.9% revealed in the survey the previous year. However, Baker Tilly said that providers predicted the rates will rise to 4.14% in 2015/16 once the wider Universal Credit takes effect. “Our survey suggests that providers have coped very well with the removal of the spare room subsidy and the introduction of the benefit cap, but the risk from the introduction of Universal Credit hasn’t gone away,” said Gary Moreton, Baker Tilley’s head of social housing. “While there remains some uncertainty as to when the policy will be fully implemented, evidence from the pilot areas clearly shows that tenants go into arrears when moved onto Universal Credit, so providers need to remain vigilant to this risk, and try to understand what mitigating steps they can take which are likely to be the most effective.” As the report concludes: “The effects of direct payments on rent arrears, across the sector, is as yet unknown and if the benefit cap is reduced further, tenant incomes will become even more stretched. It is possible to liken the situation to a ‘calm before the storm’.” The storm has already hit for some; those tenants hit in the pocket by the harsh realities of welfare reform. And it’s not simply about the impact of the bedroom tax. There’s the cap on benefits – currently set at £26,000 – and the prospect of direct payment to tenants of the housing benefit element under Universal Credit that is giving the sector’s rent collectors something of a headache. Well, don’t reach for the painkillers yet. David Cameron has stated an intention to reduce the benefit cap to £23,000 should the Conservatives secure office following May’s election. This has set alarm bells ringing at Moat Housing, which operates across the South East. It has published a report into the likely impact of such a reduction. Its conclusion – devastating. The Prime Minister’s proposal has severe implications for affordability in the local authority areas where it operates, Moat said – making both Affordable Rent and social rent unaffordable. In short, families on low incomes – whether on benefits, ordinary mortals’ wages, or a mix of both – will no longer be able to afford a home in the social sector. According to the report, all three-bedroom properties where Moat operates would become “instantly unaffordable” for both Affordable and social rents under a £23,000 cap. Furthermore, two-bedroom properties would become instantly unaffordable at Affordable Rent in eight local authority areas where it operates, while they would become unaffordable in 83% of local authorities within two years. By the end of four years, they would have become unaffordable in all areas. In terms of social rent, Moat’s report said that two-bedroom properties would become unaffordable in 80% of local authorities within four years and become universally unaffordable within six years. One-bedroom properties would remain affordable – but only in the short term. Doesn’t bode well for rent arrears, does it? This is speculation, of course – it all depends on the outcome of the election – but there’s nothing speculative about the impact of the Department of Work and Pensions’ (DWP) increasingly controversial regime of benefit sanctions, which were introduced under the Welfare Reform Act 2012. These are something of a wildcard, deemed as capricious in nature by critics; they can deprive tenants of income seemingly at the drop of a hat. Moreover, according to the charity Crisis, the sanctions regime operates to something of a ‘postcode lottery’. In March this year, the charity released a report deploring the sanctions regime. This preceded a further critical report from the Work and Pensions Select Committee of MPs, which called for an independent review to investigate whether sanctions were being applied “appropriately, fairly and proportionately”. In theory, sanctions imposed on people claiming JobSeekers Allowance or Employment Support Allowance should not affect their claims for Housing Benefit or Local Housing Allowance, but the system has been criticised for a lack of communication between JobCentres and councils that has led to some of those sanctioned losing their housing support too. Back in January, the Residential Landlords Association (RLA) expressed its concern that sanctions were unfairly leaving PRS landlords with mounting rent arrears” because of this failure to communicate. “The problem has, if anything, got worse despite both the Department of Work and Pensions and councils being well aware of its existence, not to mention the unnecessary rent arrears and untold misery it inflicts on tens of thousands of tenants. Landlords, already reeling from some of the worst affects of welfare reform, are also experiencing mounting rent arrears, caused by this same issue,” the organisation said. Earlier still, in April 2014, the Scottish Federation of Housing Associations (SFHA) released a report – ‘Cause for Concern?’ – setting out its concerns about the impact of sanctions. Based on a survey of members, 69% had seen an increase in the number of tenants sanctioned in the course of 2013. Given that 60% of housing association tenants in Scotland rely on housing benefit to pay the rent in full or in part, it is little wonder that the SFHA considered JSA sanctions a “significant risk for social landlords”. “When Housing Benefit claims are suspended as a direct result of a sanction, tenants are being left with no income to pay rent... While hardship payments are available from DWP for struggling tenants, too often these are ‘too little too late’,” the report said. “Sanctions can trigger a ‘catastrophic effect’ on a tenant’s ability to pay priority debts, and consequently tenants, who had never previously been in arrears, are now falling into rent arrears. In extreme cases, sanctions have caused tenants to terminate their tenancy after being left with no income.” The obvious solution, of course, is to ensure that Housing Benefit isn’t interrupted when and if a tenant is sanctioned, but there’s a fly in that ointment – the prospect of direct payment. Is it feckless to feed hungry mouths before clearing a rent account or simply human? That’s the rock and a hard place a growing number of tenants are facing; indirectly, so too are their landlords. Even without this sanctions ‘bomb’, housing associations are under increasing pressure to square their bottom line with their social purpose; in effect to fight for a future as a social landlord. One has to wonder, as the pressure mounts, if any – how many? – might break and opt for a path of least resistance that leads to a gentrified future catering to higher-earning groups. For now, though, the fight goes on to preserve what passes for the sector’s body and soul. “Like all landlords, we are now deeply immersed in the process of managing, as best we can, the impact of welfare reforms including the roll out of Universal Credit. Sadly, the sector’s worse fears have materialised and tenants’ arrears are growing. Individuals who have never been in debt are now being chased for rent arrears,” said Angela Forshaw, director of landlord services at Liverpool Mutual Homes (LMH), who is also the chair of Liverpool Housing Associations Welfare Reform Group. “We are spending a massive amount of extra time, energy and resource to understand the underlying reasons, which are often very complex and extremely personal, so we can best tailor solutions. This requires a significant amount of additional non-mainstream tenancy work by housing officers who now need a far greater range of knowledge and skills than ever before. By its very nature, this kind of personal support work is very labour intensive and can take its toll. This on top of making sure tenants are on the right benefits, maximising income, minimising outgoings and where relevant, making DHP applications on their behalf.” Unemployment is a big factor, but – as the Joseph Rowntree Foundation recently reminded with its report into poverty and social exclusion in Scotland – work is no guaranteed route out of poverty; nor indeed liberation from a reliance on benefits to help make ends meet. Some people, as we are becoming all too painfully aware, work hard for their poverty. None of these issues are unique, of course, which is why LMH’s Forshaw more or less speaks for social landlords nationwide, whether or not she intended to. “This is happening across the country. And it prompts the question: can the sector sustain this approach over the long term and as more people and families move onto Universal Credit?” she added. “While our efforts to engage in positive activity like helping people to find work are playing a vital role in minimising rent arrears, ultimately the system is against us and landlords are going to be significantly affected. It is hard to appreciate the promised simplified welfare benefits system when both parties – tenant and landlord – apparently lose out.” Sadly, if the worst-case scenario comes to pass, it’s tenants that stand to lose the most – their homes. This article first appeared in the April/May 2015 print edition of Housing magazine. It was subsequently published on the Housing Excellence website, 29 April 2015
The 2015 general election is imminent and it will decide the fate of millions struggling to secure a decent home they can afford, but as the politicians compete for votes can our aspiration to solve the housing crisis trump their aspiration for power?
By Mark Cantrell
First published in the April/May 2015 edition of Housing magazine
ASPIRATION would be a fine thing, if it weren’t so tragic, but in a sense this is very much what the coming election is all about. The question is whose hopes and dreams will be sacrificed in the battle to seize control of Parliament – and at what cost to Britain’s social and economic fabric? As we know, a lot of people aspire to own their home, but the homeownership dream is dying; a sizeable chunk of people aspire to find a secure, stable home in the social sector, but it’s been hacked to the bone; the private rented sector has enjoyed phenomenal growth, mopping up the refugees from these crumbling tenures, but it’s become an expensive and insecure place, built on the back of people who really – desperately – aspire to be anywhere but here. Meanwhile, David Cameron aspires to lead the next government, a true-blue Tory administration purged of the Liberal Democrat element that helped him secure power back in 2010. Labour’s Ed Miliband, naturally, wants to give Cameron the boot and take up residence in Number 10 himself. As for the LibDems, well, presumably they aspire to avoid being cast into electoral oblivion. And then we have the wildcards – the Green Party, the Scottish Nationalist Party (SNP), Plaid Cymru, even UKIP – looking to play ‘kingmaker’, or at least matchmaker, in the formation of a new coalition government. Never before have parties of the electoral fringes (with apologies to the SNP, which is of course a major player in Scotland) enjoyed such potential to shape the UK’s political landscape. Well, they might want to learn a lesson or two from the LibDems; the party that paved the way for the UK’s venture into the unfamiliar territory of coalition. Not least, on 8 May they might wake up to learn the risks of venturing into government partnership with parties not quite in alignment with their own claimed values and policies.
Nick Clegg puts a brave face on it these days, but the truth is his party supped of a poisoned chalice when it made the deal that led them out of the backbench wilderness and into government office. It’s certainly been historic – the first true coalition, and a stable one at that, and the first time Liberals have held offices of state since the Second World War. It seemed, at long last, that the LibDems had arrived. And they may well pay a heavy price for that fleeting period of governmental glory. Politics, like life, is frequently unfair – as Margaret Thatcher once noted – and rightly or wrongly, Clegg and his party compadres have stirred a stew of anger over the last five years. The party bosses claim they’ve been a moderating influence on their Conservative colleagues, but many who invested their vote in 2010 have come to see the party as an enabler of right wing excess. There is a sense of betrayal, for which 7 May offers the chance of payback. Clegg looks set to endure his Portillo moment. And he may not be alone. Elections and electorates can be fickle beasts, of course. Clegg may survive, but it is likely that the LibDems will – if not face outright oblivion – be sent packing to the backbenches from whence they came. The fate of the LibDems, however, is neither here nor there. They’ve shot their bolt. Now it’s somebody else’s turn. Pundits have offered up 2015 as the most unpredictable general election for a generation or more. The uncertainty extends beyond the question of the likely winner – Conservative or Labour – but whether either of them will emerge victorious at all. There’s a real expectation of a hung parliament, which will unleash a scramble to cut to a deal with one or more of the minority parties in an effort to clinch the prime ministerial crown. Britain’s political policy landscape is up for grabs in more ways than one. Little wonder, then, that the smaller players smell blood – all of a sudden they matter a great deal. Potentially, they provide the means to bolster the status quo, or provide leverage to radically shift the nation’s future. Either way, regardless of the manifesto commitments the respective parties publish, any negotiations to secure a coalition government will mean that we the electorate can’t be entirely sure what it is we’re voting for. Remember those disgruntled LibDem voters? Of course, there’s also a chance that the electorate could play the joker in the pack and give either Labour or Tory factions a workable majority. Stranger things have happened. But these aren’t the only factions in play this coming election. Housing has emerged as a major issue, acknowledged by the political parties to varying degrees; millions of people affected by the housing crisis will be looking to them for redress. Indeed, a number of campaigns and civil society organisations are looking to mobilise this constituency – Homes for Britain, SHOUT, Generation Rent, and others – in an effort to win the election for housing. There’s a palpable sense that this is a make-or-break election for the housing world – especially the social variety. Homes for Britain is demanding that the next government devise a plan to resolve the housing crisis within a generation – and publish its plan in the first year of the next Parliament – while SHOUT calls for at least 100,000 new social housing a year. The generally accepted figure for the number of homes we need to build a year is 240,000, covering all tenures, so how have the political players answered this call thus far? Election manifestos are yet to be published (at the time of writing, Parliament has only just been dissolved), but it’s not as if the political parties haven’t been dropping less-than-subtle hints. On the whole, the offerings are somewhat underwhelming, perhaps even a source of foreboding for those at the sharp end of the housing crisis. David Cameron set out a private market vision during a speech in Colchester, heavily focused on subsidising home ownership, a degree of regulation for private renting, planning reform, and a package more or less familiar from the last five years. For frustrated first-time buyers he dangled the small carrot of 200,000 cut-price so-called Starter Homes. It’s hardly an all out assault on the housing crisis. Social housing evidently barely figures in Conservative thinking. Although, the party has raised the prospect of a ‘right to move’ for tenants and reiterated its commitment to Right-to-Buy. Indeed, Cameron has raised the possibility of extending the policy to housing associations. Given the pressure the National Housing Federation and its member landlords have applied in pursuit of a solution to the crisis, it is difficult not to interpret Cameron’s proposal as a deliberate slap in the face, not to mention a piece of vote-catching populism. Labour, meanwhile, is relying heavily on the Lyons Review to provide its housing offer. Chief among this is the target to build 200,000 new homes a year by 2020. All told, it’s a rather more mixed tenure offer than the Tories are making, with measures to support first-time buyers, give councils greater scope to build homes, and introduce measures to increase competition in the housebuilding market. Pertinently, for those eager to see a concerted effort to tackle the housing crisis, Labour has said it will make it a national priority. In office, if it wins, it will set up a new cross-government taskforce to drive a co-ordinated approach to increasing the supply of housing. All told, Labour has claimed it will boost the supply of affordable housing. Great stuff, no doubt, but as we are learning to our cost, ‘affordable’ isn’t always so. The Greens proved far less coy on the matter of affordability; the party has declared an intention to build social housing. Yes, that’s right – full-blown social housing and 500,000 of them by 2020. That’s a clear commitment, lifted right out of SHOUT’s manifesto, but if it wants to act on this promise it’ll need to play some serious hardball around the negotiating table in the event of a hung parliament, if it secures a presence that merits it being a coalition power-broker, of course. There’s a lot to mull over; far more than can be condensed into these pages, but from the perspective of the housing world, it’s all about finding a way to meld the aspiration for a decent home – whatever the tenure – with the aspiration for political office of those standing for election. So, there’s a lot riding on the outcome. Predictions are dangerous in any election, all the more so in this uncertain contest. But on past record, and the offerings currently laid before us, it seems safe to say that whoever wins the election the biggest loser looks set to be social housing – and with it, the scope for a genuine, sustainable solution to the housing crisis. Right now, the politicians want our votes; that offers a chance, however slim, to bend them to our will. But they are a notoriously slippery breed when it comes to commitments. It’s when we, the electorate, have served our purpose that the real fight to force a solution to the housing crisis begins. Strangely, we may actually need another hung parliament to break the deadlock between those two old, entrenched power-blocs that are Conservative and Labour. A new coalition might be the answer to our prayers – or our waking nightmare. Until then, all we can do is hold to our aspiration. Vote wisely. And good luck. This article first appeared as the cover story for the April/May 2015 print edition of Housing magazine. It subsequently appeared on the Housing Excellence website, 27 April 2015
Tom Murtha has been dubbed the “conscience of housing”, now the retired chief executive turned social housing agitator tells Mark Cantrell why the tenure matters and why its stewards must relearn a fighting spirit
First publishing in the April/May 2015 edition of Housing magazine
SOMETIMES, it’s personal; professionalism needs that spark to light the fire in its belly it needs to make a difference. Enter Tom Murtha. Since he retired as chief executive of Midland Heart three years ago, he’s been striking flint with his outspoken efforts to re-ignite the social housing world’s fighting spirit. “A lot of people think that because I’ve become a little bit more outspoken in the last couple of years there’s been a change in my outlook, but the reality is, if anyone knows my history – and I celebrate 40 years in housing next year – I’ve always had a reputation for being outspoken,” he said. “I guess I can speak out a little bit more now I’m no longer a chief executive but I hope I did speak out when I was [one]. I was one of the few to challenge Grant Shapps when he started to talk about ‘lazy social housing’ and he demonised the sector. “I don’t see things from an operational point of view anymore: I see things from a policy point of view, and reflect right back to the beginning of my career when I was always opposed to inequality, when I was always opposed to people being oppressed, I was always opposed to people being poor, and I was always opposed to racism. On all those issues, I’ve been incredibly constant throughout my career.” Murtha is one of the founding members of the campaign, Social Housing Under Threat (SHOUT), which is dedicated to challenging the ‘lazy consensus’ that the tenure has had its day. When he’s not making a nuisance of himself in the pursuit of its cause, he serves as chair of HACT, as well as homelessness charity Emmaus, and he’s on the board of Plus Dane – “it keeps me real” he said. Social housing is a “force for good” as far as Murtha is concerned. “I come from the generation immediately after the war where social housing provided a home for millions and millions of people. Compare that to before the war, when people were living in poverty and very poor housing, I think it was an amazing transformation – and we should continue to celebrate that. Social housing has continued to do that over a long period of time,” he said. “Clearly the environment has changed, society has changed, financial approaches to what we do have changed, but at its best social housing still produces the best quality, the best managed property at the best price in the country. We lose that at our peril. It provides a safety net, but it also provides a springboard: a home and stability provides everything else we need in life to move on. “I recognise there have been difficulties, I recognise there has been talk of residualisation, but the reality is the majority of people living in social housing are ordinary people just like you and me who want to live an ordinary life. They want the opportunities that we have had, and sometimes don’t have those opportunities and maybe need a bit more support. I don’t actually sign up to the proposition that social housing has failed.” Perhaps it’s more a case that the tenure has been failed by its stewards; a failing that has left it wide open to external attack. “I don’t think as a sector we’ve sold our product well enough. I hate to use the word product because it puts it in a different dimension, but I think we have allowed others to talk the product down,” Murtha said. “Some of our leaders have not spoken up for the product strongly enough, and I guess that’s why I’ve been speaking up for it in the last two or three years. I got quite angry that we seem to be losing something that I think is very precious.” He cites Right-to-Buy, which has taken a heavy toll on stocks of council housing – a policy David Cameron recently suggested would be extended to housing associations if his party won the election – then there’s the conversion to “so-called” Affordable Rent, the collapse in investment to build new social stock, and so does it continue to dwindle. Murtha is clearly outraged by this. “[Social housing is] something that we should be protecting and building and growing – and be very proud of,” he added. “Not to be naive, not to look at the world through rose-coloured spectacles, but actually proud of a product that millions of people live in and millions of people enjoy. What we provide is something that is extremely high quality, well-managed, and at a really good price. We’re crazy if we don’t continue to promote that.” So, how did the social sector lose its campaigning edge? “It’s become too professional, I don’t know,” he laughed. Then added: “I talk a lot about values. I talk about passion. I talk about the need occasionally to get angry. I believe that we should continue to innovate as a sector. But I also believe that there was a spirit in the sector, which the people who founded housing associations had, about social justice and helping those in greatest need, and which delivered some of the greatest developments we as a sector have. “That is now under attack – and I worry that as a sector we have not resisted it enough. I think we have lost some of that campaigning and lobbying spirit as we’ve become more professional and, in inverted commas, more commercial. We’ve lost 120,000 social homes in the last three years: that’s the equivalent of a city the size of Leicester – and we’ve had no outcry about it.” He added: “It’s only when social housing is no longer there that people will realise how important it is. The starting point of a successful society and a flourishing economy is a decent home, and for millions of people social housing is still their only hope of a decent home. And we forget that. I fear that if social housing disappears more and more people will be homeless, more and more people will suffer, society will suffer, and the economy will suffer.” For Murtha, social housing inevitably mingles the professional and the personal since it is intimately tied up with his own family history and experience. He hasn’t just forged a career in the sector; he was born and raised in social housing. And, as he has written about on his blog, it was social housing that provided his family with a stable home after a period of homelessness. Today, while he no longer resides in the tenure himself, social housing provides the homes where all of his extended family live their lives. So he knows the value and importance of social housing from lived experience, and this undoubtedly fuels his campaigning ire. But it’s not a cause that Murtha – or his fellow SHOUTers – can secure alone. The wider sector needs to find that will to win. “Social housing is in my blood,” he said. “I’ve worked in it for 40 years; I’ve lived in it. I believe in this sector – I just wish the sector would believe in itself more.”
This article first appeared in the April/May 2015 print edition of Housing magazine. It was subsequently published on the Housing Excellence website, 28 April 2015
