Housing Associations – a failed experiment and time to get rid

It’s hard enough now to find somewhere genuinely affordable to live and will be worse for your children and grandchildren.

Here I discuss how Housing Associations are as much to blame for the UK’s housing crisis of supply as the Thatcher, Major, Blair, Brown and Coalition governments. The Housing Associations who are correctly called Private Registered Providers have neither the capacity or the inclination to build new housing in the quantities the UK needs.

The housing association experiment that began in earnest from 1988 onwards has failed and failed miserably and today’s generation, tomorrows and the day afters generation will suffer for it in ever increasing degrees of severity.

Where will you, your children and your grandchildren live is the real question that flows from the housing crisis.

The Housing Association Experiment?

From the early 1980’s Thatcher’s RTB as well as selling off many council homes and the best ones too and for which the money went to central government not local councils introduced a cultural dynamic as ‘merely’ renting became second-class and non-aspirational.

In the mid 1980’s we saw the radical response to this from the ‘Militant’ council in Liverpool which built more council housing than the rest of the UK put together, good quality and much needed council housing too.  While that is typically only seen in its political context it had a critical economic issue – that council borrowing went onto the Public Sector Borrowing Requirement (PSBR) that was then and ever since been a key issue.

In 1986 Thatcher guillotined the Single European Act through Parliament to see the UK join the single market and a condition of entry was the amount of public sector debt or PSBR.  Councils were not allowed to borrow to build housing in simple terms.

In 1988 the interim fudge happened with the Housing Association experiment and the Large Scale Voluntary (sic) Transfer of over 1. 4 million council houses to Housing Associations began.  HA’s by virtue of not being public sector – and why they are correctly called Private Registered Providers – could borrow and did so to improve the neglected council housing stock for which councils were unable to borrow against to improve the ailing condition of former council housing.

Yet housing associations both old and newly created did NOT replace the new house building that councils had been developing and the real cause of the housing crisis of supply today began in earnest.

Even in the late 1970’s councils were still building over 100,000 new properties per year while housing associations were building 13,000 or so and since then HA’s have built just 23,000 per year on average and so we have seen 30+ years of not building enough homes because councils are not allowed to build for a combination of PSBR and because of political ideology.

The same PSBR was a critical factor in the ERM (Exchange Rate Mechanism) and subsequent attempts at meeting criteria for the Euro and of course throughout the 1990’s and since the cultural issue that merely renting is non-aspirational and a second-class issue pervaded.

Yet in all that three decades housing associations were charging 13% more in rents which also increased by way in excess of inflation each and every year and until 2010 grant levels (the misnamed ‘subsidy’) levels were still largely maintained.  However despite this cash cow with its excess rental income over and above what the remaining council landlords charged failed to translate into investment in new house building by housing associations.

The 80,000 homes per year shortfalls from 1980 were in part filled with private enterprise developing more and also by private landlords with buy to let but as the official figures below show at least 50,000 per year was added to the UK housing need that was not being met- a figure which has increased by 70,000 and more since the millenium.

ukhsgdevbydecadebywhom

The housing crisis then becomes so acute after the banking crash of 2007/2008 that it finally makes the political agenda AND private enterprise (Barratt, Persimmon etc) reduce their new house building by 50,000 units per year as shown in blue on the chart above while housing associations barely build more than they did through the 1990s, and of course councils are still not allowed to build.

Almost 50% of 1980 council housing stock is now in the hands of housing associations and its ownership has moved from the public sector to the private sector which means that decisions on whether to build or not are not based on local public need but on local private bottom line figures of Private Registered Providers.

Around 20% (at most) of housing associations develop new properties whereas a far higher number of councils did build before they were transferred by the LSVT construct and fudge of the Housing Association Experiment which as the numbers starkly show has failed the UK housing need.

The post 2015 government under Cameron are committed wholly to homes for sale and home ownership and largely because home ownership has fallen to 64% from a high of 71% under Blair, yet a report by HSBC today suggests that the Autumn Statement will see the May administration sanction a massive public sector house building programme.

This suggested Keynesian public house building is – coincidentally of course – precisely what Corbyn stated was his policy a week or so ago with the promise of 100,000 council houses being built per year and 500,000 in all under a Labour parliamentary term.  As I said about that here it makes sense and gets the matter on the political agenda as the ONLY way to solve the housing crisis is for mass council house building.  All of that also means the Housing Association Experiment has failed the country too!

The Corbyn Effect?

The housing association commentariat said I was wrong and Corbyn meant social housing in terms of 100,000 new builds per year.  then when Corbyn confirmed he did mean 100,000 council houses the retort was its irrelevant as Corbyn will never be elected.  I then said that Corbyn’s policy was right and the ONLY way to solve the housing crisis was mass council house building and he is getting the issue on the political agenda which of course led to more ridicule of that view from the HA commentariat.

Now we see in the reports about the HSBC view that the issue is not only on the agenda but that the May government will take a fundamentally different approach to the Cameron government and are considering mass public sector building and taking the same Keynesian approach of the Corbyn policy.  HSBC say:

In the current environment, the case for public investment is compelling. Interest rates can’t go any lower, uncertainty is extreme and borrowing is cheap. Moreover there is evidence that fiscal multipliers (i.e. the GDP impact of fiscal stimulus) are larger when the economy is in a slump.

And then:

“We argue that increasing public sector investment may be the most effective form of stimulus and that there is no shortage of infrastructure investment opportunities, notably in transport and housebuilding

This suggests the May government will finally accept that the Thatcherite Right to Buy experiment and the Housing Association Experiment it threw up by fudged consequence were failures.

Of course it will never be framed that way yet that is what it amounts to and I am equally certain that the Conservatives will avoid wherever they can new council house building and seek for it to be built by anyone but local government.  That policy will also fail to solve the housing crisis, which is an issue that Corbyn has picked up and seen in simple yet correct terms of where will my children and grandchildren live that troubles today’s home owners and tenants who cannot afford to buy or to rent privately

The provision of housing and how a country houses its population has been left to the vagaries of the free market ever since Thatcher and that government policy which has been adopted by every government since Thatcher has failed.

The small but significant minority of housing associations who are aggressively private focused such as the G15 cabal that dangle David Orr as a puppet on a string as the CEO of the National Housing Federation will become ever more private and will shaft their public sector councils by evicting en masse with the Benefit Cap and refusing to accommodate the ‘benefit tenant’ in ever greater numbers because of it and will seek to wrest every last penny out of existing tenants with the pay MORE to stay policy too.

The perverse London house prices caused by the housing crisis of under supply which in turn was created by the failed RTB and Housing Association Experiments has unleashed this HA monster who do not give a stuff for the social purpose they ridiculously claim to have as their guiding ethos.

I am aware of a number of councils who have ALMOs – another construct to get around the LSVT HA experiment and who are all strongly leaning towards bringing those ALMOs back in house, or in simple terms becoming council housing again. They are right to do so as the benefits of this far far outweigh the potential negatives from existing and pending government housing policy and privately so many local council leaders say they regret the Large Scale Voluntary Transfer or the fudged housing association experiment as I correctly term it here.

The G15 puppet in David Orr and the NHF are seeking to blame everyone else for their failures and crying over funding cuts and moaning that private landlords have taken advantage of Housing Benefit and excuse after excuse which I dismiss as that here and are still saying to government give us the money without conditions and we will build the numbers you want when their past record and their lack of capacity to ever get near such figures are all on their past record … of failure … as the simple factual chart above shows.

What the chart doesn’t show is that Housing Associations get £1.1 billion more in Housing Benefit each year than the equivalent number of council landlords receive.  That excess income alone equates to 55,000 lots of £20k ‘subsidy’ per year and was additional to the £1.125 billion per year in ‘subsidy’ received from 2011 to 2015 after Shapps reduced it to £4.5 billion over 4 years.  Enough according to the NHF’s own benchmark subsidy figure for a further 55,000 new builds per year making 110,000 per year in all … yet the housing associations averaged just 30,000 per year or 80,000 per year less than they could have done per year in the last parliament.

The inclination not to build is strong now that housing associations have a PRIVATE Registered Provider ethos and no longer have a public sector ethos and public sector duties that over 50% of them once had when they were council properties and landlords.

In summary, housing associations have failed and do not have the capacity or the inclination to solve the housing crisis or even to stem the housing crisis either.  It can only be solved through mass council house building which, political ideology aside, is just as much and a more important national infrastructure project than HS2.  We will get there eventually and council landlords will make some of the same mistakes they did in the 50’s, 60’s, 70’s and 80’s and hopefully far fewer; yet what this will achieve is housing in sufficient numbers that is in the public interest and not in the private bottom line interest of wannabe private landlords in housing associations.

When that happens the government can finally start to address the two most important UK housing questions of the electorate in where will my children live and where will my grandchildren live. It’s way past time to swiftly hasten the demise of pretend social landlords called housing associations.

 

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17 thoughts on “Housing Associations – a failed experiment and time to get rid

  1. I chaired a “transfer” housing association from 1989 to 1995, before being inched out because they felt they needed a finance-person in the chair, the better to sweet talk the Halifax Building Society into providing the money we needed. It didn’t work – that association, despite all the promises of maintaining local control, got swallowed up by a bigger association, which got swallowed up by a bigger one still, and is about to be swallowed yet again. The theory was that Right to Buy would fund new build – but plainly it didn’t. Government wanted to get out of housing provision, Tory councils wanted the same, the market was supposed to provide – which is why we’re where we are now; and in all of this, the Housing Corporation, as was, and the National Federation were spectacularly useless at advancing the cause of social housing at anything like genuinely affordable rents. The NHF was just a trade body for the pre-existing HAs which got fatter courtesy of the stock transfers – the whole sector is a jobs-for-the-boys racket, with approved consultants, accountants, solicitors, chasing each other to provide lucrative advice. You’d think from reading David Orr’s sob-stories in the ever-receptive Guardian that HAs were about advancing the rights of tenants, involving them in management, keeping rents low – but just the same tricks are being introduced into the NHS, a merry-go-round of consultants pocketing ever larger fees to introduce private capital into the service, and all for our benefit! If you believe it.

      1. I have just signed an online petition (CARE2) entitled “STOP LANDLORD MP’S VOTING ON HOUSING LAW”..over a third of MP’s buy to let and this includes CAMERON AND OSBOURNE.. This is clearly “A CONFLICT OF INTERESTS”.. ..the GREED of the TORIES is relentless., as the fog clears , its becomes obvious why CAMERON AND HIS CRONIES are out to demolish social housing..They must be stopped from lining their pockets at the expense of the needy and vulnerable in our society… please sign the petition..and expose them for what they are.. GREEDY B*******S!

  2. I have found your usually lucid and well researched articles on welfare issues very helpful but in this case I think you have missed some key issues and have allowed your natural opposition to government policy to distort your view and take aim at the wrong target. Government policy is still the villain of this piece and Housing Associations ar as much the victim as Local Authorities. There are some in the HA world who deserve your rhetoric as there are some private landlords who are equally deserving but the vast majority of HAs and their staff are just as committed to housing for those in need as you and you do them a gross disservice by your scattergun approach. In addition, your research seems to be lacking this time in that you have failed to take consideration of some important factors and focuses on the headline numbers which, as we all know, invariably mask a more complex situation. Makes me wonder if your other articles have been equally flawed.

    1. Nigel, I genuinely appreciate your anger on behalf of social housing professionals and indeed I share it, as do they, for they do genuinely care for the job they do and see it as a vocation not just a job.

      However much government policy government originated issues there is still the response of (a)social landlords to consider because those responses ARE the reality.

      The vast majority of social housing professionals are aghast at the asocial way landlords are responding – eg the lowest ever level of social rent properties last year in the post war period – yet it is NOT just a case of this move towards affordable rent and private rent and private sale and all other move away from the true social purpose that all housing associations proclaim, is necessary and a case of pragmatism. It is far from this and when the figures are correctly viewed the HA’s have built up surpluses have not delivered social rent homes, have chosen to chase the money in a short-term fashion and have blamed everyone else whilst adopting a Teflon coat and a holier than thou position.

      The we haven’t had a choice arguments are painfully superficial and the move away from any semblance of social purpose has been a deliberate not enforced choice led by the G15 cabal and the perverse London only focus and agenda of NHF policy.

      We now have the NHF crowdfunding for an IT solution that enables its tenants to be charged more in pay MORE to stay, a policy that is entirely voluntary for housing associations to adopt. That one policy alone counters the it is all governments fault position as does the ‘voluntary’ (ahem) right to buy that NHF jumped into bed with government over too.

      In summary, I am glad you see the post as a slight on social housing professionals and your anger is correct, yet that is based on the hugely flawed premise that anyone other than the very asocial bean counters in housing associations make strategic decisions.

  3. Oh dear Joe. I feel like I should slash my wrists and throw myself in the river at my failure to spent the last 25 years of my time productively trying to help those in housing need. Maybe the 5 years I spent working in a local authority will redeem me in St Peter’s eyes when the time comes?
    Seriously though whilst I can have sympathy with the generalised drift of some of your political posturing the combination of specific detailed data coupled with generalised opinion just plays to those who think that there are simple solutions to complex problems.
    If you want Council house building as per Jeremy Corbyn’s aims then fine in principle (and we can agree to put some of the drawbacks of LA control on one side for this discussion) but your headline is “Housing Associations a Failed Experiment”
    I have made this point before and sorry to get on MY soapbox again, but my housing association (we don’t refer to ourselves as a RP) has been around a lot longer than 1988. Furthermore I don’t see how it can possibly be argued that the bigger housing associations are not better on the whole than private landlords the growth of which has also been the consequence of 1988. What you are arguing for is a 3rd way. You/I may not have wanted to start from this point but we are where we are and we are all victims of whatever the Government of the time. To complete your premise, ” and Time to Get Rid”…how?
    I have to be my own version of subversive in trying to hang onto the ideals of what I believe in while working with the tool available to me in the environment in which I operate.

    Best wishes

    1. The post was to get discussion going and while I do say not all HA’s and allude to the most gregarious and openly private focused HA’s, the post is aimed at a wider audience and so does not allow space to pin down the specific types of HA’s I am getting at and saying have failed.

      Many, the vast majority of LSVT’s for example and the smaller specialist housing associations are happy to work in one locale and have the needs of that locale at heart and cater well for it (outside of 13% higher rents and the slow drip in their cases of the misnamed ‘affordable’ (sic) rent model)

      Yet the large HA’s of which all or a tiny % is not ex council stock are the villains of the piece and the failures too – as they have failed their stated social purpose and ethos and simply chased the bottom line – in short they act no differently to private landlords and for them ‘housing’ is about bricks and mortar only and not about people.

      PRS landlords filled the vacuum that HAs could not when LA’s were no longer able to develop and they could an should have done more.

      I am not arguing for a third way per se, I am stating a view that the re-introduction of LA’s developing is the ONLY way to solve the housing crisis an I have been saying so well before Corbyn adopted it as policy. Not out of any nostalgia but because it IS the only way to arrest the housing shortage that is seen as the main element of the ubiquitous ‘housing crisis’ term.

      The “Housing Association Experiment” has failed – the construct the 1998 Act and political ideology forced that saw 1.4 million council homes become HA managed – is my main point and I believe it is a valid one.

      There are many very good HAs out there and whether they call themselves HA or RP, far too many unfortunately are PRPs and far too many of them are being driven down the private road by the NHF focus.

      I wish they weren’t but they are

      1. Well, point taken and my comments are meant for discussion also. I suspect that my organisation might, as a housing association benefit from your ‘back-handed’ compliment however I think there is a danger of over simplification. Its not up for me to speak for others and as I say I share some anxieties about the motives of some Chief Exec’s but I would stress that we are all different in terms of our social purpose and ethos so it is not help to make it sound to the uninitiated like a case of them and us.
        At the risk of straying into politics, I think it could be argued that 1988 opened the door to the ideology of the market being the solution through PRS which mostly unregulated as it is has been far more damaging than what you are talking about. It wasn’t about the PRS filling the void exactly it was a case of getting money for nothing (and without accepting the social consequences)/ Neither can I agree with you that greedy uncaring Private Landlords and Large HA’s can be equated. I think you should turn your attention on the PRS for a change and how that does not offer value for money for the taxpayer.
        I see the point about Councils and their historic capacity to build, but it all boils down to cash and if the sort of enormous investment necessary were made available then I don’t see why housing associations wouldn’t be able to cope; certainly at this point Councils lack the skills and staff capacity to respond without many years of catch up. To suggest otherwise stands being accused of political posturing.
        So, on the whole I can’t accept your premise. From my point of view to solve the housing crisis is not quite my aim but rather to pick up those who fall by the way. That’s what I mean by one size not fitting all and I don’t want to be thrown out with the bath water. On the other hand the right wing amongst Tories are still misunderstanding that taking grants from Government over the years does not mean to say that we can be considered the Government’s playthings. You might say my housing association has always been private, certainly we see ourselves both independant and a charity.
        Best wishes

      2. Fair points and as you will see from my response to Nigel here, there is a distinct element of choice with many HA’s moving ever more private which they attempt to disguise in the highly superficial we have to go down this road and its all governments fault.

        Everyone focuses on the PRS and is precisely why I chose not to. There is some blame that can be attached to HAs yet even the worst of them persist that its not their fault, they have a social purpose and rely upon the ‘public good, private bad’ principle.

        That level of superficiality has to be challenged (is it part of Shapps ‘lazy consensus’ tag too? Yes and I hate agreeing with him!)

        If you trawl through my plethora of blogs you will find some direct compliments of housing associations and I don’t usually give or infer backhanded ones

  4. In the mid 1980’s we saw the radical response to this from the ‘Militant’ council in Liverpool which built more council housing than the rest of the UK put together, good quality and much needed council housing too. While that is typically only seen in its political context it had a critical economic issue – that council borrowing went onto the Public Sector Borrowing Requirement (PSBR) that was then and ever since been a key issue.

    I note with some concern that the communities moved to these “New Council Homes” were forced to give up their CHOSEN route of “Community Owned co-operative housing estates” as I can only record 1 group who had to select and vote their own resident Councillors ( against the militant council) then after twice taking Liverpool council to court to win their own community housing scheme. If they had ended up in Liverpool council housing, they would be in a much worst state I would assume. Unless you know of ANY council estates in the UK that are not areas of deprivation, built on the greed on speculative development and filled with residents from so called “slum dwelling inner city areas”, that now foster and provide Land banks and economic available development to business incubation, also run by councils, LEP’s and the Morally upstanding CEO’s of RSL’s.

    Both Council’s and RSL’s and anyone entering the social housing arena, should equate themselves with the mere facts that “community owned” Community assets ARE NOT theirs if owned by their council, or any supposed morally supportive and valiantly just RSL. They are not social housing. They too are social experiments.

    Though I cannot remember the book, written on the subject, of which I shall try to find. How anyone can confuse a council mandated social housing scheme with “community housing”, and not social engineering, gentrification with slum clearance.

    My Council gave my estate to it’s employees for -£0, they remortgaged on securitisation of social rental income, then low and behold, welfare caps, bedroom tax allowed them to remove poor tenants and the socially challenged blamed for creating areas of poverty and worklessness, infecting ( GDP, areas of SOA) misleading to better council demographic profiles.

    Check out what my Landlord is up to now!

    http://www.onemanchester.co.uk/ ex city south ex council ex social ex community.

    no resident vote, no social housing built, no resident ownership, but great for the company, the pension and the players. At no personal cost. An asset stripping pole dancing social enterprise at residents expense. We have never had any public AGM’s. Now the orckastrators of this plan, from the city exec to the RSL CEO, HCA, cheif exec’s and MAYOR and learned champions have a housing strategy worked out for Greater Manchester. NOT ONE SOCIAL HOME to be built?

    Forgive them for they know what they DO!

    Butchers selling carrots.

  5. I enjoy the discussion which as you say Joe is what it is all about. however as I said there is a difficulty in presenting simple solutions for complex problems. I can accept your strong views as long as you don’t mind me popping up occasionally to remind everyone that as far as I am concerned there is another story to be told, another way of looking at things, while sharing the concern.
    In line with what I said earlier, I would probably be quite comfortable with the label of being a private landlord (the early days of my association were about building a stock base on private donations and no grants) but one with a charitable purpose and that for me is the twist. Is ‘charitable’ the same as “social purpose” and how is that lost as we chase the money to help even more people? Yes you seem to appreciate the subtle difference between HA’s personally but we all get damned by the, ‘you’re all the same’ argument. That’s why I need to challenge.

    1. Chasing the money is fine as long as it helps more people. Yet when HA’s get £x and then choose to build less than they could with that money there are not helping more people but less. A classic example of this is the THT/L&Q announcement from last week.
      Same principle as “Homes for Britain” which advocated homes built for outright sale. While that develops profits to reinvest for future development and ‘could’ eventually see more built if the conditions change such as land prices, construction costs and others then increases the theory falls down and means less are being built and fewer helped.
      All the same? Wholly agree and that works in so many ways as often sector says we are all the same, same purpose and so on yet as the recent ‘mergers’ collapsing (and some de-mergers taking place) then the sector is not and has never been homogeneous.

  6. What we need is a sound national housing policy and I think that was what, “Homes for Britain” was calling for. The fact that Osbourne did not deliver that is a separate issue that housing associations shouldn’t take the rap for. I consider that we, at my Association, are part of the “Sector” (I personally think the word, “Movement” is long since dead) but I argue (and continue to do so) that we are not the same purpose. As for , “build less than what they (or in this case we) could”, is that not rather subjective? Actually we are agreed in our different way in demanding more investment for a wider range of affordable housing provision going forward.

    1. Homes for Britain saw the NHF want 120,000 new per year of which absolutely ZERO were for social rent.

      The breakdown was :
      50k for affordable (sic) rent
      10k for gross market rent
      30k for shared ownership
      30k for outright sale
      120k TOTAL

      …and zero for social rent – which is a movement but not one that could ever be called social.

      HAs developed 40,000 last year according to NHF ‘best-presented’ figures and their highest ever on record.

      Hence Homes for Britain as well as being 100% asocial was a deluded figure as it would mean HAs have to triple their output which they clearly cannot do – and so to pin that blame on Osborne is excuse

      1. Well I did say “sound”. Given where we are now (and not 50 years ago), it would have been unrealistic to suggest a higher figure and not to reflect the complexity of the market place. I don’t think that their use of “affordable” is necessarily the same as Grant Shapps but all that is a bit academic because we have found in some cases what we might call ‘social’ rents (or is that ‘target’ rents or as it now described, ‘formula’ rents???!) could be carried above inflation up to or even beyond 80% Market Rent . Do you have a definition of ‘social’ rent?
        I think I calculate that you would like to see between 120-150k social homes built pa? To achieve that you would need to return to the levels of grant per property given to Councils and housing associations in the early 1980’s. If that could be achieved I have no doubt that housing associations could achieve that output (subject to LA Planning support). I don’t have anything against Councils but if you dropped that on their lap they would have to go through the learning curve again and they would probably wish to ‘subcontract’ it out? That is of course unless funding is available to restore LA staff levels to that of the 1980’s?
        Sorry but Osbourne is ultimately to blame but maybe his options were limited. There was underinvestment from political parties of all colours.

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