Independence...Integrity...Value

May 2015

May 8th 2015, 16:06

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25th May 2015

I am writing this blog on the train on the way to Liverpool for an in-house session of ‘All You Want to Know about Service Charges in Social Housing’ tomorrow.

Our ‘open’ session was held in London last week. It was fully sold out and the feedback was good. Most delegates said that the information provided was ‘very relevant’, the quality of presentation was ‘excellent’ and that the training ‘fully’ met their needs. They described the session as ‘useful’, ‘interesting’, ‘clear’, ‘thorough’ and ‘practical’. I am grateful to all those who attended. Comments that delegates made included:

  • A very interesting day and a good general overview of service charges for someone new to the subject such as myself.
  • Great to be given papers before the course - most trainers provide very little.
  • Very detailed and interesting.

Our next ‘open’ session will be held in London on 10th June 2015. It is a useful introduction and overview of service charges in social housing that is designed for people who are not experts. There are still a few places available. For further information or to make a booking please click HERE

This week will see the first Queen’s speech of this parliament. One of the bills that is expected to be included will extend the right to buy to tenants of housing associations and oblige local authorities to sell high value homes.

Many commentators and people in the sector expressed surprise when it became known that these policies would be included in the Conservative manifesto. However, perhaps they should not have been as the ‘Policy Exchange’ – a right-wing ‘think tank’ – had proposed this in 2012 in a paper entitled ‘Ending Expensive Social Tenancies’. The paper defined a ‘high value’ social home as being one that is worth above the regional median, calculated that sales would raise £4.5billion a year and proposed that this be used to compensate housing associations for discounting right to buy sales, replace sold homes with new homes in lower value areas and establish a £1billion ‘brownfield regeneration fund’. The report starts with the following bold statement:

“When an expensive social property becomes vacant, it can go to a single fortunate household, or be sold to fund the building of multiple less expensive properties. This report argues the second option is a cost free way to fund building more homes.”

It goes on to argue that:

  • Expensive social housing has a much larger rental subsidy than normal properties as only 30% of the rent is set by the property’s value. A sensible estimate is that a property with a weekly £100 market rent has a weekly social rent of around £65, (£35 subsidy), but one with a weekly £300 market rent has a social rent of around £104, (£196 subsidy, five times higher).
  • Right to Buy for expensive properties means large government losses. Only large discounts could work, but large discounts (e.g. 66%) are poor value. Raising £5.5billion on a 66% discount means £16.5billion in sales and £11billion in discounts lost to government.
  • Future rents can be borrowed against new homes. Given cautious projections this could raise another £1.5billion on top of the £4.5billion raised, £6billion in total.
  • Using sensible estimates on land and construction the £6billion this policy raises could build 80,000 homes. This is a net gain of 50,000 social homes a year, given 30,000 of this are replacing homes sold.
  • Alternatively, the annual £4.5billion this raises before borrowing against future rents is similar to the last spending review’s £4.5billion capital spend on housing. This paid for 170,000 social homes, meaning a net annual gain of 140,000 homes.

Many in the sector would dispute this analysis and these conclusions but it appears that the government does not; although it has opted to use the proceeds to fund right to buy for housing association tenants in a way that was not envisaged by the ‘Policy Exchange’.

This policy would clearly have an impact on housing revenue account business plans. Firstly, there would be the effects on capital: The level of additional capital receipts would be highly unpredictable and potentially large – and complex processes would have to be introduced to re-distribute them and to allocate proportions of them to repay debt and build new homes. Secondly, there would be the effects on revenue: Reduced income from high value properties that had been relied upon in business plans and the self-financing settlement.

John Bibby, Head of Housing at Lincoln City Council told the ‘Local Government Chronicle’ this week that:

“There are a lot of implications for council business plans, which were all based on the assumption that there would be continued income from these properties over thirty years. The impact varies between local authorities and depends on what thresholds are set for sales.”

I will await the Queen’s speech with interest.

Our seminar and workshop; ‘Developments in Local Authority Housing Finance’ in London on 9th June 2015 will look at all developments in loal authority housing finance including the implications of selling high value properties. For more information or to book a place, please click HERE

This week we have published a briefing paper that considers the election of the new United Kingdom Conservative government in May 2015 and the implications for local government. It includes sections on:

  • The Conservative Manifesto
  • The Local Government Association's plan for the New Government
  • Reaction of the Local Government Association to the New Government
  • Other Local Government Reactions
  • The Chartered Institute of Public Finance & Accountancy Manifesto
  • Thoughts on local government reform from an organisational perspective
  • Conclusions

To download your FREE copy please click HERE

19th May 2015

I am writing this blog on the train on the way to London for tomorrow’s session of ‘All You Want to Know about Service Charges in Social Housing’. Housing Associations have traditionally levied service charges with most local authorities in England introducing them in the ‘noughties’. In Wales, local authorities are currently in the process of introducing service charges as part of the Welsh government’s new rent policy. Service charges are an integral part of landlords’ work in financing value for money services and sustaining customer satisfaction. They have always been relatively complex but with increased financial challenges and legal and financial complexity there is an increased need to understand how service charging works. There is therefore considerable interest in service charges and tomorrow’s session is fully booked. However, there are still a few places available at the 10th June session. For further information or to make a booking please click HERE

Yesterday I chaired my last meeting of the board of Impact Housing Association. I am standing down at next month’s annual general meeting after six years on the board including four as Chair. Our agenda included our annual accounts and our annual report to members. It is heartening to note that during the last four years we have:

  • Increased our annual development programme from 21 units to 75.
  • Opened a new ‘Foyer’ for young people in Kendal; and started the development of another in Whitehaven
  • Increased our return on assets from 3.7% to 4.3%
  • Increased our annual investment in responsive, cyclical and planned maintenance from £3.4million to £3.7million; and increased the proportion of repairs done on time from 94% to 99%
  • Reduced operating costs as a proportion of turnover from 50% to 47%
  • Developed a ‘money matters’ service that helped tenants to access £506,000 in additional benefits, grants and discretionary housing payments during 2014

Last year’s development programme included new developments and planning gain purchases and delivered 54 family homes, eight bungalows, four flat and nine low cost homes for first time buyers. This year we have committed £307,000 to support the development of 66 extra care elderly units in a new scheme at Brampton.

Last week I had some interesting correspondence with my local MP, Rory Stewart (who is now a minister), about the future development of affordable housing. His vision is clearly based on small community based schemes that address the needs of people who cannot afford to buy which he describes as follows:

“For many local Cumbrians, it is still difficult or unaffordable to buy a property locally, and I do not mean to suggest that we have solved local housing needs. However, this should not detract from those successes we have achieved, and we now have in place an incredible community model in Crosby Ravensworth, that if replicated across Cumbria, has the potential to identify and address local affordable housing needs, on a community-by-community basis.

“I have already written to every parish in this constituency offering to work alongside them to develop their own affordable housing scheme, and I have offered further support to the Cumbria Rural Housing Trust and the National Community Land Trust Network… Please be assured this remains something I am very much keen to develop further.”

The scheme at Crosby Ravensworth is a small community based scheme that required public subsidy. It is described in a briefing paper that I wrote in August 2010 when the scheme was first launched. A copy can be downloaded from HERE

11th May 2015

The 2015 General Election was held last week and we now have a new majority government.

I can’t help wondering, though, whether our electoral system is still fit for purpose. Is it really democratic for a party that receives 37% of the votes to receive an overall majority of the seats and form a single party government? Is it really democratic for nine million Labour voters to be represented by 232 MPs and one million Scottish National Party voters to be represented by 56 MPs; while four million UKIP voters are represented by one MP and a million Green voters also by a single MP? I am not making a party political point here but would such an election result be seen as acceptable in any other of the world’s democracies? I think all the political parties should give this matter some serious consideration before the next election from the point of view of ensuring a fit for purpose democratic system rather than considering party advantage.

However, the more pressing issue is for us to understand fully the implications of there being a majority Conservative government and their political programme.

Clearly austerity will continue as the government attempts to reduce the public sector deficit through reducing public expenditure rather than through raising taxation. Furthermore, as the government is committed to protecting budgets for education, health, welfare for the elderly and overseas aid; the budget reductions will be especially large in unprotected budgets such as local government, housing and welfare.

For local government, the Conservative manifesto promised:

  • We will devolve powers and budgets to boost local growth in England
  • We will help keep your council taxes low

Essentially this means ‘more of the same’. There will be more ‘localism’ and ‘more austerity’. Councils will have to make fundamental decisions about their strategies and radical changes to their budgets. They will have to consider how to become more commercial, secure greater value for money and which services they can afford to sustain. However, there should be major opportunities for Councils that can form ‘combined authorities’; negotiate the devolution of additional powers and ‘joined-up’ budgets; and achieve an increasingly independent and effective form of local government.

My local MP is Rory Stewart, a Conservative. Following his re-election he sent an email to his constituents that included the following comment about housing:

“Much of what we’ve achieved – in affordable housing… is due to the effort of Cumbrian communities.”

I don’t disagree that much has been done about affordable housing in the constituency – local communities have played a part and some of the new development has been by Impact Housing of which I am Chair – but I don’t think that anyone could argue that our efforts during the last five years have been anything like enough. There is still a housing crisis as supply fails to meet demand and private housing becomes increasingly unaffordable for many people to buy or rent. I therefore hope that the new government will do more to address the housing crisis than its predecessor.

The Conservative manifesto includes the following commitments on housing:

  • An extension of the right to buy to housing association tenants, this would be funded by local authorities selling their most expensive properties as they become vacant.
  • A commitment to build 200,000 starter homes specifically for first time buyers under 40. The homes will be offered for purchase at 20% below market prices, with these savings being achieved by exempting the developments from section 106 and from the community infrastructure levy, read our response.
  • Provide an additional 275,000 affordable homes by 2020.

The Conservative manifesto also includes a commitment to a further reduction in expenditure on welfare of £12billion. This will be achieved by:

  • Ending housing benefit being paid to those aged under 21, except those who are leaving care or who have children.
  • Lowering the overall benefit cap from £26,000 to £23,000.
  • A two year freeze on working age benefits, including housing benefit.
  • Further measures that have yet to be identified.

Many of these proposals are controversial but it is clear that they will now be implemented. There is not enough space in this blog to discuss them in detail but I have written a briefing paper on the implications of the General Election for Housing and Welfare that can be freely downloaded from HERE

During the next five years we will continue to provide our usual information service. This blog, our newsletters and briefing papers and our seminars and workshops will bring factual information and informed comment especially on matters of importance in local government and housing. During the autumn we will also be providing a series of webinars on topical issues.

Our seminar and workshop ‘Developments in Local Authority Housing Finance’ will include the implications of the new government. For more information or to make a booking please click HERE

4th May 2015

The 2015 General Election will be held this week. I have a postal vote and have already voted but it is a sad fact that many millions of people will not be voting. According to the electoral commission about one person in five has not registered to vote. Furthermore, of those registered to vote fewer than 70% are expected to do so. That means that only just over half of those eligible to vote in the general election will actually vote.

The level of registration to vote and the level of turnout vary between different groups. For example, 93% of owner-occupiers register to vote compared with 80% of social tenants and only 63% of private tenants. Turnout also differs between different groups for example with older people more likely to vote than younger people. This means that the voting population is not representative of the population as a whole.

Local authorities, as the bodies responsible for compiling electoral registers and organising elections have always encouraged people to register to vote and to actually vote. However, during this election some housing associations have also been encouraging their tenants to vote. One example is Knightstone Housing Association. Their Chief Executive, Nick Horne, told ‘Inside Housing’ that:

“Our position is that it’s very important to encourage all of our tenants to vote… During the regular meetings held with them we try to make sure they are aware there is an election and are registered to vote – we found out some young people weren’t. We encourage our tenants to find out about the candidates standing in their constituency and what their position is on housing… The political system is biased towards those who vote, who have the most wealth in the country.”

In Britain we pride ourselves on our democratic institutions but their credibility is undermined by the low level of participation in elections. While Knightstone Housing Association and others should be commended for encouraging people to register and to vote I think more is required if the problem is to be resolved.

Whatever the outcome of the general election and whichever party or combination of parties forms the next government, we will be providing our usual information service. This blog, our newsletters and briefing papers and our seminars and workshops will bring factual information and informed comment especially on matters of importance in local government and housing. In particular, on 9th June 2015 I will be presenting a seminar on ‘Developments in Local Authority Housing Finance’ in London that will be fully up to date with any new initiatives that the incoming government could be expected to make regarding local authority housing. For further information or to make a booking please click HERE

Last week we launched our new e-newsletter: The AWICS Scotland News. This e-newsletter is intended to provide news about public services, especially housing and local government, in Scotland.

While our existing e-newsletters, the ‘Public Services News’ and ‘AWICS Housing News’ will continue to include articles of interest to people in Scotland, I think there is a need for a separate e-newsletter for Scotland to reflect the unique political, legislative, regulatory, social and economic situation in Scotland and the specific issues that arise.

Our first edition is for May 2015. It includes articles on:

  • Scottish Housing Regulator: Global Accounts
  • Adult Social Care and Health Integration
  • Devolving Welfare to the Scottish Parliament
  • Scottish Land Reform
  • Perth & Kinross Council's initiatives
  • All You Want to Know about Scottish Social Housing Finance

To download your FREE copy please click HERE

Last week I told you that we are currently revising and updating our website. Since then we have updated the following:

  • My online biography. To view the updated page please click HERE
  • Open and in-house training. To view the updated page please click HERE
  • In-house training: Developments in Local Authority Housing Finance. To view the updated page please click HERE
  • In-house training: Housing Association Finance. To view the updated page please click HERE
  • In-house training: Local Authority Finance. To view the updated page please click HERE
  • In-house training: Welsh Social Housing Finance. To view the updated page please click HERE

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