- Created: Wednesday, 24 August 2016 21:41
- Written by Robert Clough
Boundary House residents outside Waltham Forest housing office - the Labour-run council is guilty of social cleansing
Housing associations own or manage nearly 60% of social housing across Britain – 2.86 million homes compared to 2.05 million homes owned by local authorities. Although some are registered charities, and all claim a social purpose, they are in fact turning into monopolies keen to jettison any obligations to their tenants. They actively contribute to the housing crisis facing the working class because their building programmes all but exclude the provision of any new social housing. They aim to match their official description: private registered providers, and to become gigantic and greedy landlords breathing contempt for their working class tenants.
Just over half of housing association properties were acquired through large-scale stock transfers of council housing in the 1990s and 2000s. Initiated in 1988, the policy was enthusiastically supported by the 1997-2010 Labour governments. Tenants who had to approve such transfers were bribed with the promises of government funding for a huge backlog of repairs. Where bribery did not work – tenants would lose significant rights with such transfers – councils were prepared to use intimidation and rig the votes to get the results they wanted. It was privatisation by stealth.
In March 2011, the eight largest housing associations owned or ran 365,000 homes. Three years later, that stock had grown to 524,000. Now their combined holdings are greater than 700,000, or a quarter of all housing association stock. In 2011 only two housing associations held a portfolio greater than 50,000 properties, and the largest had 70,000. Now three housing associations alone own or manage 360,000 properties, and none of the eight largest housing associations has fewer than 50,000 properties. Mergers and acquisitions are concentrating housing associations into monopolies.
As with all privatisation programmes, the managers of the organisations spun out of state control have been among the main beneficiaries. Data for 177 housing associations obtained by Inside Housing shows that all but seven paid their chief executive more than £100,000 per annum, and 33 paid more than £200,000. Top of the league is David Cowans, chief executive of London-based Places for People, who took home £481,000 in 2014/15. Cowans is influential in Tory circles; his contribution was acknowledged in a pamphlet published in 2009 by thinktank Localis called Principles for Social Housing Reform which proposed ending security of tenure, raising social housing rents to market levels, and removing rights from homeless people. Another person whose contribution was acknowledged is Kate Davies, chief executive of Notting Hill Trust (annual salary £211,000) who chaired a Housing and Dependency working group for Ian Duncan Smith’s Centre for Social Justice in which she concluded that ‘social housing is not a desirable destination; private ownership is preferable to state provided solutions’ and recommended that ‘councils and housing associations should be free to use new social housing, and existing social housing as it becomes available, as they see fit.’ These are the sort of people now running housing associations: they ooze anti-working class prejudice.
Private sector levels of pay make for private sector ambitions, and housing associations make a lot of money. They have a secure income from the 63% of their 2.8 million social housing tenants who receive housing benefit, helped by the ConDem coalition policy to allow them to increase social housing rents annually by RPI plus 0.5%. This brought social housing rents closer in line with equivalents in the private sector. It was a bonanza: housing associations netted £2.6bn extra from housing benefit tenants alone and £3.8bn from all tenants between 2010 and 2015 without having to do anything extra (see Speye.wordpress.com). According to Moody’s, the credit rating agency, operating margins rose from 22% in 2010 to 29% in 2014.
But the surpluses they can build up from providing social housing are no longer sufficient: housing associations want even greater margins, and are concentrating on building houses for sale or for so-called ‘affordable’ rent. ‘Affordable’ rent can be up to 80% of local market rents, and will not be covered by housing benefit. In 2015/16, housing associations built just over 40,000 houses, a pitiful number. Only 5,464 were for social rent; almost as many were for open market sale (5,205) and a further 8,797 for ‘affordable’ sale. Of the remainder, 18,592 were for ‘affordable’ rent and 2,096 for market rent. The huge merger underway between L&Q, Hyde and East Thames housing associations – 135,000 properties in their combined portfolio – has plans to build 100,000 new homes over the next ten years. Half of them will be ‘affordable’ homes, the remainder for rent or sale at commercial rates. Chief executive designate of the new housing association, Elaine Bailey, following the trend set by Cowans and Davies, had a word to say to tenants:
‘We will also be asking our residents to take more personal responsibility in respecting their homes and making an effort to help themselves. For too long, housing associations have picked up the bill for damage or repairs that we are not responsible for. The odd toilet seat fix here and a lightbulb replacement there adds up to millions of pounds of help.’
With this caricature, she could really lash out: ‘But worse than that, we have been responsible and are partly to blame for the dependency culture we have created.’ Bailey is a former Serco managing director and before that worked as a manager in the prison construction service.
Housing associations will not build new social housing: government subsidies are only available for ‘affordable’ homes. In 2009/10 government funding through the Homes and Communities Agency (the regulatory body for housing associations) provided 28,859 homes for social rent; in 2015/16 it was 602. It would not be a financially viable option for housing associations to fund new social homes by issuing bonds or taking out bank loans. Turnover from house sales reached £1.4bn in 2016 compared to £900m in 2014 (Moody’s), 13% of overall housing association turnover.
Changes to housing benefit regulations and the requirements of the 2016 Housing and Planning Act will speed the transformation of housing associations into private monopolies. Despite attempts to control the housing benefit budget through cuts in both eligibility and benefit rates, it rose from £21.4bn in 2010/11 to £24.4bn in 2015/16 as the number of claimants in work rose from 651,000 to 1,089,000. In response, the 2015 Tory budget required councils and housing associations to cut social rents by 1% per year for five years. Although housing association executives bleated that this would cause them huge financial problems, it will accelerate the transfer of social housing stock into housing for ‘affordable’ rent: between 2012 and 2015, the number of ‘affordable’ rent properties grew from 7,354 to 123,264 of which 76,259 were converted from former social rented stock. More social housing will be made available for re-let at ‘affordable’ rates with the introduction of the reduced Overall Benefit Cap in the autumn, possibly 7 November. This will limit the total amount of benefit a family can receive to £23,000 in London and £20,000 outside, and will lead to the eviction of tens of thousands of families. In addition, the introduction of Local Housing Allowance maximum rates for social housing in April 2018 will result in the closure of sheltered housing schemes, adding to the levels of homelessness. Already the rate of evictions for rent arrears has risen, from 7,535 in 2010 to 9,425 in 2015, although from 2012 housing associations were no longer obliged to report this data.
The 2016 Housing Act enables all social housing providers to charge a market rent for those households earning more than £40,000 pa in London and £31,000 outside with a taper of 15p in the pound over these thresholds. While this is voluntary for housing associations, they can retain the extra rent they charge, unlike councils which are not only obliged to charge the market rent, but also have to hand the surplus back to central government. ‘Pay more to stay’ will be taken up by housing associations in London and the southeast and add to pressure on tenants to buy their properties under the Act. Further cash will come from an extension of Right to Buy, with hefty discounts to be paid for by transferring receipts from the sale of high-value council houses – robbing Peter to pay Paul. Any tenant with more than three years’ occupation will be eligible, and discounts could be up to £103,900 in London or £77,900 outside. This will further reduce the availability of decent housing for the working class.
Housing associations are the Trojan horse of social housing. They are dropping the pretence of a social purpose, and are concerned only to make more and more money. Their only interest in social housing tenants is as a source of income against which they can draw loans to build houses for market sale or rent. They are no different now from private landlords except in their size. They are diminishing the stock of decent social housing available to the working class, and we must be prepared to fight them. The first steps will include defending families threatened with eviction under the reduced overall benefit cap. The time for a fightback is now!
Fight Racism! Fight Imperialism! 252 August/September 2016