Independence...Integrity...Value

March 2016

Mar 8th 2016, 11:13

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21st March 2016

The 2016 budget was announced last week. In the past every detail of a budget was kept a secret until the Chancellor began to speak in Parliament but today most of the contents of a budget seem to be announced a few days in advance!

What struck me most about this budget was that attention was focused on the ‘sugar tax’ and the miscellaneous tax cuts and additional expenditure that the Chancellor announced but very little comment was made about the main financial announcement that the budget contained. This is the fact that the Treasury’s financial forecasts include £3.5billion of savings that have yet to be identified. Presumably these will fall on the ‘unprotected’ budgets including housing, local government and welfare.

Since the budget the government has also backed down on its proposal to save a further £1.2billion from Personal Independence Payments for disabled people. It appears that many in the Parliamentary Conservative Party have decided that the reductions in budgets for disabled people have now gone far enough so presumably these budgets are now also ‘protected’. Indeed Stephen Crabb MP, now Secretary of State for Work & Pensions has said that there will be NO further reductions to ANY welfare budgets! This increases the ‘gap’ in the government’s budget from £3.5billion to £4.7billion and reduces its options for finding those savings. Incidentally, a proportion of these budget reductions will fall on the Northern Irish, Scottish and Welsh budgets through the ‘Barnett formula’.

The macroeconomic position also gives cause for concern. In the years up to 2008, growth in the economy was dependent on increasing private borrowing that proved unsustainable. Since then, despite the government reducing expenditure significantly since 2010, government spending has still exceeded tax receipts with the result that government has continued to borrow significantly (£72billion in 2015/16 for example). In the absence of a recovery in consumer expenditure or exports this government deficit has been the main driver of economic growth. However, everyone appears to be agreed that this is not sustainable and if the government succeeds in eliminating this deficit as planned it is difficult to see how economic growth will be sustained!

I have written a briefing paper on the implications of the budget for housing and local government that can be freely downloaded from HERE

Meanwhile the Housing & Planning Bill is still making its way through Parliament. The Bill contains a number of significant proposals for housing and local government including:

  • Starter Homes
  • The ‘voluntary’ right to buy for housing association tenants.
  • The sale of ‘high value’ council homes.
  • Near-market rents for social tenants on ‘high incomes’
  • Reducing Regulation of Social Housing
  • Phasing out of lifetime tenancies
  • Measures to tackle rogue landlords
  • Neighbourhood Planning
  • Planning reforms including automatic planning permission on brownfield sites and to support small builders.

One of my concerns about the direction of government policy on housing is its emphasis on reversing the decline in owner-occupation by providing subsidies to buyers. My fear is that this approach will prove both expensive and ineffective. The reason why I think this will be the case is that the supply of private sector housing appears to be what economists call ‘inelastic’. This means that an increase in demand will result in higher prices rather than increased supply. Evidence for this includes the fact that the supply of new private sector housing has remained remarkably constant ever since the 1950s despite there being significant fluctuations in economic activity and the fact that the significant increase the value of the national stock of housing since the 1990s has been mainly due to increased values rather than to an increase in the numbers of houses. If my analysis is correct, the subsidies that the government is offering to owner-occupiers will simply inflate prices leaving owner-occupation still unaffordable for people with modest incomes while the national shortage of housing will remain. Paradoxically, spending less on subsidising owner-occupation may make owner-occupation more affordable and save the government money!

We will be holding seminars in London and Leeds next month that will examine all the implications of the Housing & Planning Bill for housing and local government. For more information or to make a booking please click HERE

15th March 2016

Last week I presented a seminar on ‘All You Want to Know about Local Authority Housing Finance’ in London. This was the first in our 2016 series that provides an introduction and overview of local authority housing finance. The delegates said that the information provided was relevant, the quality of presentation was excellent and the training met their needs fully. They described the session as useful, interesting, comprehensive and valuable. I am grateful to all those who attended.

The next sessions will be held in Leeds in July and London in November. For further information or to make a booking please click HERE

The seminar is also available in-house. For further information about in-house options please contact me at Adrian.waite@awics.co.uk or 017683-52165

George Osborne will be presenting his budget tomorrow and it is widely expected that it will include more budget reductions and some surprises that will have implications for local government and housing. We are therefore holding a webinar on Friday afternoon that will explain the implications of the budget for local government and housing. For more information or to make a booking please click HERE

The March edition of the ‘AWICS Scottish News’ has just been published. This newsletter includes articles on:

  • Scottish Budget and Housing
  • Scottish Budget and Welfare
  • Participatory Budgeting
  • Housing Benefit and the Local Housing Allowance Cap
  • Health & Social Care Integration
  • Focus on Perth & Kinross
  • Scottish Social Housing Finance

To download your FREE copy please click HERE

We have also launched the 2016 edition of our seminar ‘All You Want to Know about Scottish Social Housing Finance’. This seminar is a useful introduction and overview of this important subject and will be held in Edinburgh on 7th June 2016. The seminar will answer the following questions:

  • What financial environment are Scottish local authorities and housing associations working in?
  • How do the finances of Scottish local authority housing services work?
  • How do the finances of Scottish Housing Associations work?
  • How is the development of new social housing funded?

For further information or to make a booking please click HERE

The Housing & Planning Bill is expected to receive royal assent soon despite the storm of protests that it has caused. It will legislate for the ‘voluntary right to buy’ for housing associations, the sale of high value council homes, ‘pay to stay’, ‘starter homes’ and changes to tenancy agreements and planning laws. Late changes are still being made such as the government announcement last week that benefit claimants would be exempt from ‘pay to stay’. The funding of ‘starter homes’ has also been called into question with the banks declaring themselves reluctant to provide loans on the basis proposed and questions being asked about the potential role of housing associations.

We will be holding seminars in London and Leeds next month that will examine the implications of the Housing & Planning Bill for housing and local government. For more information or to make a booking please click HERE

8th March 2016

This week we have launched our 2016 series of seminars on ‘All You Want to Know about Housing Association Finance’. These seminars are designed for people who are not financial experts and provide a solid grounding in the basics of housing association finance including:

  • The financial environment in which housing associations work
  • Regulatory requirements including Viability and Value for Money
  • Income & Expenditure Accounts, Balance Sheets and Cash Flows
  • How Development and other Capital Expenditure is financed
  • Budgeting, Budgetary Control and Risk Management
  • Asset Management and Treasury Management
  • Developments in government policy including ‘right to buy’, rent reductions, pay to stay and welfare reform
  • The implications of the Housing & Planning Bill – including low cost home-ownership
  • The future funding of sheltered housing and community investment

If you think that a working knowledge of housing association finance would put you in a position of advantage this may be the seminar for you. Our venues and dates are:

  • London: Novotel Hotel, Waterloo – Tuesday 17th May 2016
  • North: Novotel Hotel, Leeds – Tuesday 24th May 2016

For further information or to make a booking please click HERE

We have also published the 2016 edition of our popular book ‘All You Want to Know about Local Authority Housing Finance’ this week. For more information or to order your copy please click HERE

Service charges are an integral part of landlords’ work in financing value for money services and sustaining customer satisfaction. Housing Associations have traditionally levied service charges with most local authorities in England introducing them in the ‘noughties’. In Wales, local authorities and housing associations have introduced service charges as part of the Welsh government’s new rent policy. The rolling out of Universal Credit is having an impact on benefit entitlement for service charges.

The calculation and management of service charges for leaseholders and tenants can be complex. We have recently worked with a number of social landlords on various aspects of service charges and have published a new web page and a brochure that outlines some of the services that we offer to help social landlords with service charges. To see the web page please click HERE and to download your free copy of the brochure please click HERE

The United Kingdom government’s plans for welfare reform are controversial in all parts of the United Kingdom. However, some powers over eleven benefits and £2.7billion of welfare spending have now been devolved to the Scottish Government that has long been a critic of the United Kingdom government’s policy in this area. These powers include disability living and attendance allowances, winter fuel payments and the under-occupation penalty. The Scottish Government will also be able to establish new benefits with the agreement on timing of the Department for Work & Pensions.

The Scottish Government plans to set up a new benefits agency that will oversee and simplify welfare in Scotland. Scottish ministers say that it will offer a more compassionate and streamlined service than that of the Department for Work & Pensions. Doubtless those with an interest in welfare will be keen to compare the outcomes in Scotland and the rest of the United Kingdom.

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