Councils have been queuing up to transfer their
housing to other landlords, not because they think this is necessarily the best way
forward but because this is perceived as the only way of overcoming constraints on major
repairs and improvements. When the Government agreed to write off £22 million of
Burnley’s housing debt to allow the switch to the Burnley and Padiham Association,
the temptation became too great to resist. In Birmingham, stock transfer is being sold to
tenants on the basis of a write-off of £650m of debt that will release money for
modernisation. In response, tenants question why the money is apparently available if they
change landlord, but not otherwise. They recognise this Hobson’s Choice when they see
it. So, apparently does the Deputy Prime Minister, who, in introducing the housing green
paper to the Commons, acknowledged that "it was unfair that local authority tenants
should be discriminated against because local authorities were not allowed to raise
resources against their assets and the income stream to improve the quality of their
housing". He went on to claim that proposals in the green paper would change this
("I have removed that discrimination" he said). If only he had!
What is being proposed falls far short of this. Any extra investment will only be
available to "the best-performing authorities" provided they establish an
"arms length company". It seems illogical that organisations that are performing
well should be required to hand over their functions to another body that is less
accountable. It is interesting that in the debate on the Transport Bill covering Air
Traffic Control, John Prescott pilloried the idea of a non-profit-making trust alternative
to manage this service because "trust arrangements" "failed to provide
adequate investment or proper accountability". In response to an intervention I made
asking whether his comments applied to registered social landlords to which the Government
proposes to transfer council housing, he said "While a trust arrangement could raise
capital to make the necessary investment, it could not provide the sort of flexibility,
management and efficiency that we want".
I would certainly not argue that council housing is well-managed. But is that
surprising? Who with any choice wants to work for an organisation that spends most of its
time saying "No". In my experience, the most competent housing officers leave as
soon as they can, often leaving chaos behind as a result of their attempts to service
demands to provide some quick fix to intractable problems. Those in Government who charge
council housing as being inefficient, should stop ignoring their own culpability in local
authorities’ inability to carry out the renovations needed in an ageing housing
stock. Furthermore, it is becoming increasingly clear that, despite their favoured status
and extra subsidy, housing associations are experiencing the same problems as councils
when they become the tenure of last resort.
There are some good ideas in the green paper, particularly those that follow up on the
report of Lord Roger’s Urban Task Force but we have a long way to go to live up to
the promise of Quality and Choice, the title of the green paper. It is very welcome that
the Government has acknowledged that the deterioration of the housing stock has resulted
from lack of investment and pledged to deal with the repairs backlog over 10 years. But
how? On this £19 billion question, the green paper only says the Government is
considering what levels of public investment should be made available. Rather than
addressing the discrimination against council housing and providing real choice, emphasis
remains on stock transfer or private finance initiatives as if these provide some magic
solution. Private money that artificially does not count as a public sector liability
still has to be paid for,either out of higher rents or taxpayers’ subsidy. Just look
at the soaring housing benefit bill arising out of similar Tory policies.
With total Government debt at 39% of GDP being well inside the 60% Maastricht criterion
and pension fund managers crying out for the issue of more Government bonds, there is
absolutely no need for the Government to keep bearing down on investment in public
infrastructure. The £22 billion that is coming into Government coffers as a result of the
auction of mobile phone licences makes this even more nonsensical. Surely, to use this
windfall to pay back dwindling public debt is equivalent to the action of the servant in
the parable of the talents, who buries his master’s money in the ground rather than
investing it. Prudence dictates that these resources should be used to invest in housing
and other projects, such as transport and scientific research that will underpin
wealth-creating activities and thus reduce future public expenditure. Who knows, then we
might even be able to get to grips with the much-needed reform of housing benefit.