This is in the FT this morning:
UK chancellor Rachel Reeves is planning to raise social rents by more than inflation for the next 10 years in an attempt to boost the building of affordable homes.
Reeves intends to introduce a 10-year formula in October's Budget that will increase annual rents in England by the CPI measure of inflation — currently 2.2 per cent — plus an additional 1 per cent, according to government insiders.
They add:
The move is aimed at encouraging the building of more affordable homes by providing certainty over cash flows to housing associations and councils — which are grappling with heavy debt burdens and large maintenance backlogs.
So, Reeves intends to hit those on lower incomes (because most of those in social housing do have lower incomes) with a penalty for the temerity of wanting to live in state-owned / subsidised housing when she could instead fund that subsidy with ease by removing the multiplicity of tax reliefs that the richest in our society enjoy.
This is social and economic insanity. I could just about imagine the Tories coming up with something as badly designed as this, but Reeves was (checks notes) apparently elected as a Labour MP and is a member of (checks notes, again) something called a Labour government.
Since when did Labour set out to punish those on low incomes?
Why will they not tax the richest fairly?
Why, if they want more social housing, will they not simply underpin the cost of providing it, and fund it themselves - as they could easily do?
Do we have to suffer almost five more years of this?
Of those questions, I can only answer the last, and the answer is probably yes.
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Surely about MPs will protest at this by voting against the budget, if this gets that far. Hopefully they will pressure the government to abandon it so it is just dropped now.
Is it to much to hope that Starmer will himself sense the madness and act?
But I wonder if this was just suggested to her by advisors of some description in an ill-advised attempt to solve a problem? if so, what has happened to her political antenna? Or is she simply hopeless as Chancellor? Others may know the answer…
It looks like an attempt to close the gap between ‘Affordable’ housing and social housing rents. A lot of Local Govt have used redevelopment to knock down social housing then replace it with private estates with a small % of ‘Affordable’ housing. This means social housing at approx. 40% of market price becomes ‘Affordable’ housing at 60-80% of market price. LA set the level and mostly it is set at 80%. The impact is usually to socially cleanse areas and disperse council tenants to sink properties.
However, it can be slow to redevelop housing estates and locals protest. Reeves plan will I assume close the gap between social housing and ‘Affordable’ housing. Eventually all social housing will be in cost at the 60-80% market price and aside from more secure tenancy in the social housing they will be equivalent. Watch this space for a weakening of security of tenure in social housing.
What are you supposed to do when the choice for you vote is not Evil vs Lesser Evil but two equal Evils?
Protest
Vote for the alternatives, come what may
Given we are down to 60% of the electorate voting in GEs (down from 85% when people thought they weren’t voting for a single transferable Party); I suspect people particularly dependent on social services of all kinds have just given up voting; and there is no sign they are either listening, or coming back. I suspect their view is: “What for; it will never happen, the promise will be broken and thrown in my face”. Faith, eh?
And, of course that is the whole point of the Westminster Cartel. Drive voting down to 40% or lower of the electorate; strictly old folk whose mind is made up and people with vested interests to defend, at any price. Then the vested interests and Cartel politicians can serve each other with little inconvenience for either. All it takes is a nod and wink. No social media needed.
‘Affordable housing’ is a misnomer, a deliberate one. It should be reported under the trade’s description act. An abuse of language by political abusers.
80% market rents draw social rents towards private rent levels because council HRAs are stand alone and do not get topped up by government anymore. Thatcherite retrenchment is alive and well.
Most development business appraisals using the lower social or ‘target rent’ cannot even pay down a loan in 50 years for a new home with Right to Buy Receipts too, – it results in more RTB receipts being used on one scheme (makes the receipts go less far) given that construction costs soared up to +20% and seem stuck there. Only schemes funded by 80% MR make it.
The whole thing in my view is completely unworkable and means only one thing that you allude to – cheap assets for the private sector to eventually mop up and exploit as councils ‘return’ their assets to the rich.
That’s the sort of sick people we are dealing with. And a government who will record the profit sector profiteering as GDP! Perfect!
Spot on Duncan. I have been trying to do some research about ‘mid-markets’ here in Scotland. Having been a social housing tenant from 1991-2019 we found ourselves not being able to move to a ground floor social housing flat (due to health issues) because of long waiting lists and came across the next level, called ‘mid-market’ which the Scottish Government describes by saying –
“Mid-market rent (MMR) is a type of affordable housing located mainly in larger urban centres, with rents being lower than in the private market, but higher than in the social housing sector (Serin et al. 2018). MMR aims to help households on modest incomes, who have difficulty accessing social rented housing, buying their own home, or renting privately.”
As far as I am aware, there is no similar situation south of the border?
But as this article from 2019 highlights, it’s a bizarre system too https://www.scottishhousingnews.com/articles/nick-pollard-mid-market-rent-legislation-in-scotland-a-costly-historical-anachronism. Most blocks of flats/sites built under these schemes have a mix of social and mid-market housing. What is even more bizarre is that the housing association we used to be with is under the same company group as the one we’re with now for MMR. MMR also falls under private sector leasing. We disputed our rent increase through the Scot Gov Rent Service. They applied private rent data to compare our rent rise; therefore, our rent was clearly lower than these figures.
It looks like both north and south of the border have a lot of problems with how housing is set up and financed.
To be fair, a rent convergence policy, whereby council tenant rents (social rents) were brought up to housing association tenant rents (affordable rent) was introduced by the last labour government in 2002, with the aim to achieve convergence within 10 years. Here’s a House of Commons briefing paper about it: https://researchbriefings.files.parliament.uk/documents/SN01090/SN01090.pdf
But does that make it a good idea?
I share your concerns about social rents increasing above inflation, especially as the majority of tenants will need to claim housing benefits to pay rent, which would have to come from the treasury, which defeats the object somewhat. I’d rather see a downward convergence in rents, where new tenants in HA stock pay the same rent as sitting council tenants. It could go even further with all affordable rents reduced to take more tenants out of the benefit system. That would be fairer.
The government should instead provide the development financing at nominal rates for all non profit housing providers, much the same as was done for councils borrowing via PWLB before 1980. The PWLB maturity loans over 50yrs were typically refinanced at term, on the original principal. It was an affordable way to fund municipal housing development and rents were much more affordable. This government would do well to look back at what used to work instead of pushing up rents for those who can least afford it, pushing up the benefits bill for the treasury in the process.
I’m sorry David but why would you want to converge rents between HAs and Council housing when both were capitalised differently?
Councils traditionally got their investment from government who created social housing in the first place remember and gave support grants for it to local councils (new build and repairs and maintenance).
Housing Associations (HAs) – related to alms houses – used finance to build and maintain from their rents, bequeathments/donations and interest bearing private loans so their rents would be slightly higher any way and many of the HAs started off as very small and localised remember?
As we know, Thatcher’s Tories hated councils, so housing development was encouraged through the less-professional non-profit HA sector instead and a government grant rate of 100% for your HA new build was the norm for a while.
And then what happened? Having got the HA sector going, the government then started to lower its grant rates so that HAs had to – guess what – secure more of their own funding through private sector banking loans and grant rates continued to shrink to those experienced by the council sector.
And thus was created an exploitative market in social housing by the private sector, just like (for example) the Snelsdon Group would advocate.
So, back to council housing. Why would rents need to go up? Because the government has underfunded it that’s why, not just to ‘converge’ with the more expensive funding of HA stock. Added to that, whenever you apply for development grant, the government would also ask for ‘rent conversions’ of existing units at social rent to 80% market rent at the next re-let. The new tenant will pay more.
None of this is really necessary until you accept that even now, after Thatcher, the state in this country is STILL being rolled back, and there are still councils with rather large historical building debt from the 50’s, 60, 70’s in the HRA loaded on there by a state whose policy was council housing. Government could cancel that debt.
And now HRAs across the country are building up new build debt again – but this time with less financial support from government than ever before, to the point that at some stage they will have to stop building or even sell off stock to raise finance to build or go to the private sector and cut a deal with government consent.
My view remains that social housing is heading for a brick wall. And that we’ve all been had. The sector needs more money – and not the effing interest bearing sort either.
Dear Pilgrim Slight Return,
I was arguing for a convergence down to more affordable levels, to reduce the amount of benefit payments the treasury is funding to support affordable rent. I was pointing out that the previous labour government, in 2002, had introduced a rent convergence policy to remove the disparity between council housing tenant rents and housing association tenant rents, as affordable rents were typically up to 80% or market rents (but subject to a cap, currently defined and a Local Housing Allowance). You are right that declining grant rates have forced HA’s to use more leverage to finance development, sometimes though issuing bonds themselves – this has constrained the amount of affordable housing development that can deliver. Local Authorities used to be able to borrow the money they wanted to build council houses on 50yr maturity loans through the PWLB. These loans could be recapitalised at term, making it a very easy way to deliver council homes on secure tenancies at social rent levels – rent levels low enough that only the minority of tenants need to claim benefit to pay rent. Now it’s 70% of all tenants need to claim benefit to pay rent.
My point is we have i the past been able to fund the development of council housing in a sustainable way on low rents with cheap borrowing direct for government. Thatcher broke that model, and we are today living with the consequences of that political decision – which was more about removing power from councils to deliver housing, which generated revenue surpluses that could fund other social infrastructure like swimming pools and libraries – than it was about giving tenants ‘freedoms’ – such as the right to buy.
Your final question, for me, shows the folly of electoral politics, when a few are given power to dominate the many. You rightly point out that as costs rise because of govt policy, many people will have no option but to pay up and gradually, or not so gradually, sink. There is literally no other action that they can take. As long as minority government exists (650 MPs counts as a minority) so will poverty, and seemingly without end, and for ever-increasing numbers. Audrey Lourde said that “the master’s tools won’t dismantle the master’s house”. Asking politicians to act on behalf of those without power will never achieve the hoped for aim, in my view, as it never has. Only protest of sufficient scale does that, however, the necessity for the existence of protest shows the inherent flaw in the system (as does massive inequality). I don’t think we’ve yet really seen how bad this is going to get. It says something when the needs of millions can be disregarded in favour of the greed of a few.
I’m sure PSR will be more au fait with the figures but there is already a sizeable proportion of people in social or council housing who have to rely in top up discretionary housing payments from the councils to even afford their current rents. So all Reeves is doing is causing further hardship for the councils.
Does the woman understand nothing? WTF has she been doing for her time as an MP?
Has she never met a financially stretched constituent and actually listened to them about how they have to stretch limited funds beyond breaking point?
There was also something in the Grauniad about her abolishing the £1bn hardship fund the councils draw on and use to support eg foodbanks.
FFS! She’s a monster.
My partner works for a local authority helpline dealing with discretionary fund payments. She is seldom off the phone and deals with it all quite well but what sticks out for her is the dignity of the people asking for help.
If this is cut, well, Reeves must surely think she is putting something back somewhere else – but what is it? Where?
SNP activists are continuing to make a fool of themselves on BBC Radio Scotland that there should have been no SNP meeting with an Israeli ambassador. Remarkably, BBC Scotland News is actually asking grown up questions of ingenues. The silly SNP vassals do not wish to understand the nature of diplomacy and context; they insist on showing off at no risk how ideologically virtuous they are; but nobody with power to do anything at all IS LISTENING OR CARES. They completely miss the point of diplomacy, and making a point in the real, and very, very bad world. Children should stay at home with fairy stories. They do not understand that Scotland meeting Israeli representatives to present a condemnation speaks not just to Israel, but calculatedly to the international community; to the US, to Britain, to European and world politics. It is all Scotland can do to leave any imprint at all on the politics. And the political centre of this whole issue is that Israel can only fight this war because the US allows and resources it with armaments. It is the US that requires to be influenced by what Scotland says to whom. Diplomacy is multi-faceted, indeed a Medusa headed ritualised performance. SNP activists are provincial children; they do not want to grow up.
But you have to agree John that Angus Robertson did not handle this well
That said, I agree that you get nowhere without talking – but Scotland failed to set the terms
No, nor did the Scottish government; the Israelis are pros at this, and cleaned Scotland out. The point is, everybody is missing the point. The only people who are benefiting politically from this SNP bloodletting, are the Israelis. This is the lesson Scotland should learn, but is too wrapt up in obsessive ideological logic-chopping (a constant and endlessly pathetic Scottish failure of concentration; they are just so easily distracted into self-criticism). It is idiocy. Learn from your mistakes. What Scotland prefers is to destroy everything invovled, including the lesson. It is a paradigm Scottish stupidity.
John, you have gone seriously off the rails there, and I am delighted to be one of the ‘SNP vassals’ complaining about the disgusting Robertson meeting. This was at the request of Israel, NOT Robertson, and the purpose was to discuss their objectives. Trade, cultural exchanges and most importantly the propaganda coup of torpedoing the principled position the SNP did have on Gaza. He was at best a naive idiot to have walked straight into the trap.
I do not challenge the fact that he walked into the trap, and he should have known there would be a trap; and was caught flat-footed when the trap sprang. All that is true. A very big lesson should have been learned; and that is no bad thing. It is a rarity that much is learned given the narrowness of SNP thinking, on most issues. Managerialism is not enough. There is a safe self-righteousness in the SNP that is more concerned with the safety of the self-righteousness than actually doing anything. Please do not tell me that is not true; it is an endemic characteristic in Scottish political life..
Was the meeting solely at the request of Israel? I have not seen clear evidence that this was the case. Even if it was the case, it was open to the Scottish government to negotiate the terms, before going. The Israeli’s would spin it once there was a meeting whatever was agreed, but preparedness is everything (it is not as if it was not predictable). it was open to the Scottish government to have publicised that it had the meeting solely to condemn the Israeli actions in Gaza, and the immediate need for a ceasefire, and present to the rest of the world, including the US and Britain further evidence of the extent of world condemnation.
Obviously, there are conditions under which a meeting would be rendered impossible; but refusing to engage under any circumstances is very typical SNP supporter; safe, righteous and guaranteed to achieve precisely nothing at all of value to anyone.
Postscript. On BBC Radio News GMS a Scottish Jew has now accused the SNP of antisemitism, specifically arguing that if they believe in a two state solution for Palestine, why will they not speak to both sides; especially as other major Western states are speaking to Israel? He feels unsafe. I do not think his whole argument was entirely fair, but the point above is well made, and I say to Mr Rideout; this is what happens when you mount easy high ideological wooden horses, what a superior view it offers ; it may be easy for him and the silly vassals to be “delighted” to take his position; but may I suggest he does not consider a second career in serious diplomacy, at least in the real world?
What is she doing?
It’s as though she does not understand that the housing revenue accounts (HRA) are ring fenced from (say) the general funds (community charge etc). It is the general funds that are being bled dry by (for example) temporary accommodation and niggardly central government grants.
So a council could have a healthy HRA but the general fund (where everything else the Council does is financed from) could be running on empty – bankrupt or nearly so.
So boosting HRAs will not save councils with dangerous under funded general funds – unless they divest themselves of their housing stock!! Eat their assets!
Many a HRA manager will be happy to see this rent rise, because the HRAs took a hit from Osbourne’s rent freeze and Covid. And it will help to make our development business appraisals more viable – for sure – but only because it looks like affordable housing grant is not being increased by government – there is no increase in capital investment so the tenant pays.
But the complaint’s we are getting about our 80% of market rents are growing. We are getting working people turning down properties because they are too expensive.
As you say, this does not make sense. It is stupid but also cruel. Does Reeves not know what is happening out here?
I never saw laissez-faire applying to a Labour government. Until now.
Thanks for the extra information. It helps to show up the true nature of the proposal.
You write ” It is stupid but also cruel.” My personal view is that it is a morally bankrupt proposal.
There really does need to be an MPs’ rebellion over this. It is difficult for me to believe that this is a labour Chancellor.
I have would also hope the Greens and LibDems would be against this and say so very loudly; surely there must be some effective opposition from somewhere??
It’s going to be a horribly cold and nasty winter for many millions when the increases kick in – the energy price cap going up 9%, increase in water bills, social rent increases and the removal of the winter fuel benefit.
I wonder how those voters feel who voted Labour in the belief that, once in government, Labour would drop Tory austerity and have people’s welfare at the heart of a Labour government. They must be as sick as parrots.
Labour are worse than the Tories. I expect increasing discontent.
Scammer & Co’s “thumbscrew government.” I wonder what all the numpties who voted for Labour are now thinking convinced they weren’t being sold a Tory Two pup?
Always remember that for Reeves and her colleagues, Labour is not the party for those on benefits. Everything she has done aligns with this statement.
Social rents should reflect the ability to pay…. so connected to the minimum wage or benefits.
Ideally, it should be available in sufficient quantities to “keep private landlords honest”.
You will, no doubt, see parallels with a State bank or state utilities supplier setting the benchmark for service and value that the private sector must match.
Agreed
In 1952, when my parents were ‘given’ a council house, it was on a road called the ‘higher income’ houses, where neighbours were other teachers, Egyptian staff at the local hospital, Polish GP’S, police officers and administrative staff at the Steelworks. Presumably, our rents were higher-we also lived opposite a park- but still went to school with all the other ‘lower income’ children.
“ Since when did Labour set out to punish those on low incomes?”
I would suggest since Starmer became leader and abandoned socialism.
As you have previously mentioned, certain political factions point the finger at “others” as the root of all our problems. As a pensioner I now find myself in the “other” grouping since Reeves’ winter fuel payments announcement. Just look at some of the opinions about pensioners now expressed on Twitter “X”. So now Labour is coming after the poorest in our community who live in social housing (as indeed do I). There is an old saying “If it looks like a duck, walks like a duck and quacks, it’s a duck!” Starmer’s Labour Party is looking more worrying by the day.
Oh no. This sounds more like something that the more right wing elements of the Conservative party would have come up with. Appalling. A bit embarrassing for all those who voted ‘Labour’ to get the Tories out!!!
2 child benefit limit (& thus hungry children) : no change or prospect
social rent rises for poor people : yup
high interest rates staying: yup
PFI & cuddling up to Blackjelly: yup
LINO for the rich few, whilst stamping on the faces of the poor many: yup
6 weeks after the election – how’s it looking?
exactly as predicted. Tory Continuity/LINO doing exactly what Tory 1 did. Different faces, identical policies.
We knew it would happen. It has.
It’s “Balancing the Bollocks” time yet again with a new government that supposedly was going to be different than the Tories or why bother voting. Why bother indeed!
It would be interesting to know what percentage of the total Social Housing rent bill is paid via Housing Benefit or Universal Credit.
In effect though the bulk of the increase will be paid by the State via HB or UC
A brilliant idea (not)
What is the point in being constantly surprised that tyrannical fascism does what it always has done – keep people poor and under stress so they fight between themselves and blame any scapegoat thrown to them.
So that the tyrants can carry on with wars and exploitation of the resources of the poorest in the world, using coercion and bribery, xenophobia, terrorism and bombs.
That means here at home too!
I’ll tell anyone interested that the personal is political is geopolitical.
I know people in the Collective Waste, want to believe they are isolated and special but we are not.
We are just made complicit in the genocidal pantomime.
Here see if this makes sense to the readers here.
‘African Hub
@AfricanHub_
Follow
Listen to what Sierra Leone first lady is saying
Your comments on this’
https://x.com/AfricanHub_/status/1825907938461966568
Thank you and well said, Richard.
When Reeves was elected in 2010, she talked even then about hard working families, i.e. those fortunate to be in work, and excluded others. She came across as an authoritarian, lacking in compassion and imagination, and despising people in difficult circumstances. It reminded me of that child of the manse, Gordon Brown. I learnt, but was not surprised, that she’s a fan of Nancy Astor.
I don’t think her former BOE colleagues thought much of her. Our head of government relations, now at a well known retailer, called her wooden after we met her at Portcullis House.
I have met her several times, some at her request.
The description is apt.
The thinking is similar.
Following the various meetings with Reeves did the anti-depressants work? 🙂
🙂
Thank you, Richard.
Not unrelated and hot off the press: https://aurelien2022.substack.com/p/what-can-you-do-when-you-dont-have.
I just read the start of it to my wife. We were discussing a prominent journalist.
Thank you, Richard.
I’m trying to guess who your wife and you thought of. Many candidates.
Ex BBC
Now with Global
Pass on my compliments – it’s a good read Colonel.
So many people who live in social housing don’t work anyway and their rent is paid wholly or partially by the state. Robbing Peter to pay Paul?
Can you supply your evidence? Fully detailed, please.
Not to hand, no. It wasn’t a malicious comment just an observation from my friends and family that don’t have so called ‘earned’ income because of disability, being on state pension or being unemployed are the ones that rent socially. Obviously, not all social renters are unemployed but since the decline in the amount of council housing, it is less likely to be housing for everyone and more likely to be housing for those who are considered most in need.
The why spraed a falsehood?
Why would you suggest this is a falsehood? The Guardian reports the following about these proposed increases ‘However, this is also likely to add to the government’s housing benefit bill across the period as many social renters receive housing support’ available here https://www.theguardian.com/society/article/2024/aug/21/social-housing-rents-to-rise-uk-affordable-housebuilding-rachel-reeves
I’m sorry but I don’t understand what you think I have said that is so outrageous. This saddens me.
But housing benefit is not only paid to people who do not work. I still don’t see why you made your claim, which feels like a trope, not a fact, and I challenge tropes.
67% of the tenants my org’ manage have some or all of their housing costs met by benefit.
Make sure you read that carefully.
Some of our rents are too expensive even for people in work.
We have some of the steepest tapers of benefits accompanying earned income.
Benefits are withdrawn too quickly for every pound earned and we have known this like forever.
All or nothing, that is the modern welfare state, with very little in between.
Your use of the word ‘robbing’ betrays your real thinking; not innocent at all
Austerity policies 101
Cut Winter Fuel Allowances for 11.4m OAPS
Pretend means testing is a fairer and more ‘cost effective” system
Increase social housing rents by inflation + ( using a compounding calculation)
Use the ‘jam tomorrow’ argument by pretending this won’t cause hardship but increase availability of social housing.
Stick to 1% growth in departmental budgets
Next ?????
Might we now have an unstated ruling caste?
Is there an available official definition of « Balancing the Books »?
1) Read Aurelian https://open.substack.com/pub/aurelien2022/p/what-can-you-do-when-you-dont-have?utm_source=email&redirect=app-store
2) Not that I am aware of – it is all made up
Thank you, both.
I echo Richard.
We’ve had a ruling caste for decades.
The feudal and capitalist class system might have morphed somewhat, but we are still heavily top down and centralised.
Even Radio 4 Toady presenters have described themselves as the ‘metropolitan elite’
Burnham’s ‘Managerial Revolution’ heralded the technocracy in 1941, strongly influencing Orwell’s 1984, but I think Galbraith’s ‘The New Industrial State’ in 1967 really spelt it out as mostly corporate rather than state control in western democracies (viz plutocracies) , but with state capitalism in authoritarian socialism mimicking corporate domination.
His view then that marketing was the driver for consumerism has definitely come to pass.
Consumer and political manipulation through PR was actually first described in the 1920s by Bernays.
He described the elite and their powers as:-
“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. …
We are governed, our minds are moulded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organised.
In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons… who understand the mental processes and social patterns of the masses.
It is they who pull the wires which control the public mind.”
“Propaganda” was published in 1928.
“Aurelian” is now further defining the technocrats within the political class in terms of the praetorian guard for the ‘inner party’, which is nowadays almost exclusively neoliberal (in the developed world).
Clinton’s ‘corporate liberalism’ entrenched Thatcher/Reaganism, with Blair’s 3rd Way technocrats later reinforcing it in the UK.
This has finally almost totally displaced the traditional Labour Party in predominantly serving corporate and financial interests.
And this is where the current Labour government are at.
I read a lot of Galbraith early in my economics career and revisited a lot maybe a decade ago. Much is still worth reading.
As a Yank I do not understand why any “For-Profit” developer would engage in Social Housing????
Social Housing needs to be built and operated by the government so any “profit” from social hosing may be plowed back into better upkeep of said Social Housing units or more Social Housing units outright.
Thank you.
Readers and you may be interested in: https://www.nakedcapitalism.com/2024/08/home-improvement.html.
Thanks
Ha! Tampa Bay – I will try to elucidate you with a real case history. This is my experience – it’s not made up.
I joined a District Council in England in 2000, straight from university.
The District Council ran the local council housing department and it went through a LSVT – Large Scale Voluntary Transfer, where the tenants get to vote to sell the housing stock to a management company that is essentially a housing association – to be called an LHC – a local housing company.
The promise is based on investment in their homes, board membership (for a select few), being free of political control and not in the hands of central government waiting for investment handouts and local control. Got that? OK. The tenants get lots to read and PR companies come in to deliver the message called in the business a ‘Tenant’s Friend’. Hmmm…………….
So, the council losing the housing gets a receipt – money that they can spend supporting other social housing in their area or on ‘other projects’. This Council had no overhanging debt on its stock – it had all paid for itself. So nothing was going to reduce their receipt, no debt to pay off – but really they had skin in the game – they would benefit from the sale and have only a residual role in housing in the area (say, managing the housing waiting list).
The council selling its housing was reported to have used a lot of the receipt to build a new swimming pool and gym facility, in an area where second homes and holiday lets mean that young people have to move away, because they are priced out or wait for eons on the affordable waiting list.
The receipt the Council got was from a loan the new LHC raised from a local building society. An interest bearing loan of course, from the private sector, not a grant from Government.
Now – where are we?
Well, today all the local housing offices and central office have been closed (bar one) and the LHC was absorbed into a large housing association structure (known as ‘groups) based locally in …………….Birmingham (not Alabama Tampa Bay – but the West Midlands, UK – but it might as well be in the U.S. given how long it takes them to respond to tenant’s needs!!!).
Ex-board members I see around town say that the LHC and the housing association structure it is part off is literally owned by what is now a bank (the local building society de-mutualised about 10 years ago). The bank would come in, look at the books and insist on cost cutting in order to reduce risk to paying down its loans – risk that it would charge for if not ‘managed’ – of course!
As far as I know, the group structuring these days is done to actually secure the payment of debt, in case one of the group members gets into financial trouble – and the amount of big names in housing associations that have hit the rocks through bad management over the years is a scandal and is legion – they are all not-for profit organisations and frequently get into trouble but are increasingly national. But essentially you have not for profit housing associations (HAs) being milked by banks and investors.
And the housing service? Well from what I can tell, its uniformly rubbish. HAs used too pool their surpluses to reduce rents. Now they’re paying off more debt so you can forget that. Thatcher’s Tories preferred HAs to Councils they said because HAs were more local and gave a better service (actually, they just hated councils – remember Nicholas Ridley anyone – part of the free-market Snelsdon Group?).
So there you go Tampa Bay – what more could a rich guy want – privatisation through loan finance, a nice steady income stream fed by 80% market rents, low cost (because the HAs have a huge repair backlog, get staff to work out of their cars, don’t run offices), oversubscribed etc., etc.
Now in America, I get the impression that if someone is going to screw you, they do it to your face and even tell you?
Over here in Blighty Tampa Bay, that would be considered rude and foolish. Manners matter you see. And subterfuge even more. Even when you are committing daylight robbery.
What a country.
Anyway, I hope that helps.
Best,
PSR
HAs have no shareholders but the number of executives earning more than the PM has been rising exponentially.
Graham
Whether being turned into a Local Housing Company (LHC) or an Arms Length Management Company (ALMO) the rules stipulate for public to private housing transfer a management board consisting of commonly, tenants, Councillors and independents.
There are no shareholders, but you are right about executive pay in social housing.
An ALMO will be capitalised from a Council HRA (housing revenue account); an LHC or housing association will have its own HRA or be part of a group HRA as far as I know.
It could be argued that the HA sector does have shareholders however – in the banks that fund them.
@Pilgrim Slight Return,
“Now in America, I get the impression that if someone is going to screw you, they do it to your face and even tell you?”
100% TRUE and CORRECT!
It is too complicated to go into here, as it definitely a four-pint discussion requiring a designated pint-puller, but oversimplification is the USA Public Housing (UK=Social Housing) is 100% government owned, operated and financed via government through the Federal Department of Housing and Urban Development, State Housing Commission and Local “Housing Authorities”. All three of these “agencies” are government agencies.
Affordable Housing is 90% public-private partnership.
“Manners matter you see”
Manners do NOT matter in the USA when there is money laying on the table.
One would be considered a “con-artist” for not telling the whole truth no matter how rude the truth may be.
‘Reeves intends to introduce a 10-year formula in October’s Budget that will increase annual rents in England by the CPI measure of inflation — currently 2.2 per cent — plus an additional 1 per cent, according to government insiders.’
I wonder if these ‘insiders’ mean an additional 1 per cent of 2,2 percent (ie a total increase of 2.22%) or do they actually mean an additional 1 percentage point increase (ie a total increase of 3.2 per cent )?
If the latter this means a rise of getting on for 50% above inflation.
3.2
The same thing happened during the Blair years: every year, social housing rents went up by a fixed percentage plus £5 a week. I believe the idea was to bring social rents up to the level of private rents, but they did not explain why this was a good thing. Market good, public bad? (A La–bour government.)
Last time round, it was shown over and over again that council rents were not subsidised; they paid for the buildings and maintenance, and in fact the government made a small profit on them (so on poor people) by handing out a council grant based on an estimate of what the income would be, but always overestimating it. That will have changed since the Blair years, with the Tory cuts to local government, and I don’t know now how things stand. But Labour does not seem interested in reinstating the cuts to government.
So, the sense in which council rents are subsidised (or were subsidised, back in the Blair days) was that they are less than the market rate. But this is an odd definition of what subsidised means, especially from a Labour government, which in the past thought that rescuing people from the housing market was a good thing.
We should remember that Labour also tried to get rid of council housing altogether, by only allowing money for renovation to housing associations, not councils. And then offering council residents, on a block by block basis, the opportunity to vote to leave the council and get a new kitchen. Again, why this was a good idea was never explained. It just seems that Blair’s Labour did not like local government but would not say so out loud.
Any idea of increasing council rents to pay for something else, or just to keep council tax/business rates down, means making what are generally poor people pay for things that less poor people do not want to pay the full amount for. And yes, some council rents will be paid for by Social Security, in which case that part of it is shifting budgets. So complicated way of getting money through, getting the Social Security budget to pay for something it was not intended for.
What personal taxes is scammer Rachel Reeves going to raise to allow the private sector banks to create new money in the form of loans, mainly house mortgages to allow this sector to maintain their fifty odd years inflationary house price spiral?
https://www.theguardian.com/money/article/2024/aug/21/what-personal-tax-rises-might-rachel-reeves-introduce-to-ease-uk-deficit
The “affordable housing” that is shared ownership is rapidly becoming a misnomer and unaffordable since the housing associations can and do raise the rent on their share annually. It’s a disaster waiting to happen, and I don’t think the wait will be long.
I agree with you
I always thought that likely
Is there any chance she is leaking these ridiculous ideas – in order to provoke a backlash from Labour MP’s and Labour supporters – so she can say to Starmer ‘not possilbe’?
Folorn hope.
Very forlorn hope
It is proposal’s like these that help fuel people to the Far Right
Most, but not all, who live in social/council homes are less well educated in the main.
When they – those in social/council housing – see such proposals and read the misinformation about what migrants receive, it turns heads and beliefs – a delight for the Far Right
If the proposal goes ahead, Labour will as you say have just five years and a very bad five years for those in social/council housing.
Am a social housing tenant in a very deprived area of Liverpool. Am too sick and disabled to work so struggling to subsist on benefits. Fortunately my housing benefit is paid straight to my landlord and covers all my rent (for now). We’re a mixed block. A lot of tenants work but are on very low incomes. I knew Labour would be awful so am not surprised. Increasing rents for social tenants in order to provide more ‘affordable’ housing is pure Thatcherite Toryism. Reeves has stated that Thatcher had a big influence on her politics. She’s worse than Starmer, I didn’t think that was possible. She comes across as lacking in any empathy, cold-hearted, cruel, callous, mean-spirited and miserly. I had a manager at work who had all these traits. She was a horrible bully. Everyone called her “The Ice Maiden”, which is what I now call Rachel freeze Reeves. Do they not hear the ordinary people of this country who are struggling so much? Increasing social rents, water and energy bills, and the removal of winter fuel allowance from pensioners will make people even more angry and desperate . As a non-white ethnic minority am terrified that these red Tories are paving the way for far-right fascism. 🙁 So glad I found this website. 🙂