A sinister social housing agenda

As the Minister responsible for the first wave of post-war house building, Aneurin Bevan was driven by the belief that modern housing estates should provide homes for people from all sections of society. While the post-1980 erosion of England’s social housing sector – a result of the number of homes sold off under Right to Buy outstripping the number of new build social homes – skewed the composition of social housing towards those most in need, the enduring myth of mono-tenure ‘sink’ estates is largely without foundation. Most estates contain a genuine mix of social housing tenants, owner-occupiers and private renters.  So, somewhat diminished, Bevan’s vision of the “living tapestry of a mixed community,” survives, albeit in the more prosaic Planning Policy Statement 3 which commits the government to the creation of “sustainable, inclusive, mixed communities in all areas, both rural and urban”.

Yet if the coalition government truly valued these ideals, it would praise tenants that have improved their circumstances rather than penalise them. Instead, the housing minister, Grant Shapps, has outlined plans that would force households that collectively earn over £100,000 to pay market rents. Government ministers waste no opportunity to associate living in social housing with a damaging lack of aspiration, yet this initiative would see a family in social housing with four earners, each on £25,000 a year, perhaps with the two young adults struggling to save for a deposit to buy their first home, having their rent dramatically raised.

Of course, the idea of a minority of relatively wealthy people paying social rents while others struggle is galling, but the numbers of social housing tenants it applies to is so statistically insignificant (around 0.1%) that it is also an irrelevance that would require a vast bureaucracy to target. In the same way that measures in the localism bill enabled the removal of security of tenure from the 400,000 or so new tenancies created each year, the initiative is a clear signal to the overwhelming majority of low-income social housing tenants that aspiring to bettering themselves will result in periodic means-testing to determine whether they still “deserve” to remain in social housing.

What lies behind this mismatch between a purported belief in mixed communities and the suggestion that social housing should be restricted to those on low incomes? The answer lies in the government’s ideological desire to embed in the public consciousness the notion that social housing is a form of welfare that in itself encourages dependency. As David Cameron put it in his introduction to a 2009 Conservative housing policy paper:

“Generations of families are trapped in social housing, denied the chance to break out or to buy their own property. I don’t want a child’s life-story to be written before they’re even born, and a responsible housing policy which helps people up and out of dependency can help rewrite that story.”

In redefining social housing as welfare subsidy, rather than a cost-effective platform from which those on low incomes can strive to improve their circumstances, the government seeks to build wider public support for its real agenda: the removal of social renting and its replacement with a market-related substitute that will price out many of those low-income households that depend on it.

This is the only explanation for a glaring contradiction at the heart of the government’s “Affordable Rent” programme. The programme, billed as a “new more flexible form of social housing”, has provided cover for the government to slash the affordable house-building budget by 60% by enabling new or re-let social housing to be charged at rents up to a maximum of 80% of average market rent. The problem is that the supposedly social homes provided under Affordable Rent will be unaffordable for low-income households across large swaths of urban England.

Figures show that for many parts of the country the gross annual income needed to afford new housing built under this programme is far in excess of the current average gross median annual income of social housing households in England, before receipt of housing benefit, of £13,000 a year. Take Leeds, for example, where a one-bedroom property charging 80% of median market rents will require earnings of £16,971 a year. Or Birmingham, where a two-bedroom property charging 80% of median market rents will require an annual household income of £18,857.

The government’s retort is that under the Affordable Rent programme, rents can be up to 80% of market rate and in many cases they will actually be lower. This is true. In London the average looks set to be 64.5%. Yet even in this best-case scenario the programme still prices out many low-income households, especially in London and the south east. In the City of Westminster in London, households will need a staggering gross income of £58,800 to afford a two-bed property charging 60% market rents (4.5% below the predicted London average) and things aren’t much better even in London’s most deprived boroughs.

Ministers have suggested that the disparity is not a problem because tenants would be able to access housing benefit. However, the housing benefit caps that the government has introduced as part of its welfare reform means this is not an option for households in many parts of the country. And in those cases where housing benefit offers a bridge over the chasm between earnings and new rent levels, it will mean a substantial addition to the housing benefit bill, up to £1.2bn on some estimates.

What this all adds up to is an agenda that aims to shrink further what truly affordable social housing remains, farm an increasingly transient population of the poorest into the less visible bottom end of the private rented sector, and use a publicly subsidised programme to price out low-income households from vast swaths of urban England. Much of it was trailed by politicians and thinktankers on the right before the general election, most notably in the notorious minutes of the meeting hosted by Localis. The unintended consequences will be numerous but it is a fair assumption that the policy will result in both an increased cost to the taxpayer in additions to the housing benefit bill and a further decline in the numbers of genuinely mixed communities.