housing | ukwatch.net

Housing Crisis

Alex Doherty — Tue, 30 Sep 2008 20:32:41 +0000

Why has this Labour Government found it so difficult to come up with a comprehensive housing strategy since it came to power in 1997? Is it because ministers regard the issue as an embarrassment?

Shortly after taking up residence in Number 10 Downing Street, Tony Blair visited to the Holly Street Estate in Hackney. He was there to launch his Government’s New Deal for Communities Initiative. The wall in front of which he was photographed was demolished just hours later by the same builders with whom he posed. As former Tory housing minister David Curry subsequently pointed out, the regeneration of the Holly Street Estate had actually begun under John Major’s Government.

Again, soon after he became Prime Minister, Blair went to the Aylesbury Estate in Peckham to tell its residents they had not been forgotten. The truth is that, during the ’97 election campaign, his strategists told him to forget about London’s council estates and concentrate on wooing middle-class voters in the south of England if he wanted to take power. Voters in Aylesbury, Buckinghamshire were more important than Aylesbury, Peckham. That’s a view to which some

in the Labour leadership still cling, even as their hopes of securing a fourth term in office evaporate.

Just before the 2005 general election, housing magazine Roof reviewed the Government’s housing record after seven years. The 2002 Homeless Act and the reduction in the numbers of people sleeping rough was welcomed. But there were also notable failures. The number of households in temporary accommodation had doubled, the amount of new social housing being built had fallen to its lowest level since the Second World War and a property price boom had wrecked the hopes of many young people in search of their first home.

The Government asked architect Lord Rogers to set up a taskforce to come up with a strategy for the renaissance of Britain’s cities. Lord Rogers’ report was published in July 1999 and contained 100 recommendations. By November the following year, Lord Rogers was accusing ministers of being “disappointingly negative” about its key proposals. They were, he believed, not prepared to come up with the money necessary to put his proposals into practice.

It was worse than that. In February 2003, the central government housing grant to local authorities was withdrawn. This meant councils no longer had a key role as the provider of new homes.

At the same time, the Government was encouraging local authorities to dispose of their existing housing stock. However, in July 2003, the House of Commons Public Accounts Committee concluded that stock transfers constituted a more expensive way of bringing council housing up to the decent homes standard than allowing the work to be done by the local authorities themselves.

The withdrawal of local government grants and the inability of housing associations to fill the gap had a dramatic effect on the housing market. The Greater London Authority’s economics unit commissioned a report on the situation. Market Failure and the Housing Market was published in May 2003. The most significant sentence in it was: “Those in need of housing are much less likely to have a strong voice in the political process compared to those who are already housed.”

After Tony Blair stepped down as Prime Minister, Shelter commented that his legacy would be a deepening of the housing crisis. Blair presided over a widening gap between housing supply and demand, meaning some enjoyed a great boost to their personal wealth as property prices spiralled, while many others have been left behind with no hope of a decent home of their own. The charity added that, unless Gordon Brown tackled the housing crisis by funding more social housing, his legacy could be just as lamentable. Sadly, Brown’s “rescue package” for the housing market, announced earlier this month, was described by one commentator as sending a canoe to aid the Titanic.

In addition, Brown’s proposal to spend £200 million to buy unsold homes, unveiled in May this year, was criticised as no more than a political gesture, since it would only help around 1,000 families. Brown has a habit of trying to pass off half-hearted responses to pressing social and economic problems as dramatic policy shifts.

So the perception people have of him is that he has failed to grasp the opportunities and meet the challenges that being Prime Minister presents, even though he was desperate to get the job. However, because of the housing crisis, he still has a chance to act in such a way that could end doubts about his future while going a long way to address the housing situation in a positive, practical and fair way.

After months of dithering, the Government finally decided to take Northern Rock it into public ownership. At least £50 billion of public money guaranteed its survival. In the United States, George Bush’s administration nationalised mortgage giants Fannie Mae and Freddie Mac to save them from collapse.

It is going to take proper public investment and not a hotchpotch of half-measures to build the homes we need in Britain.

John Ruskin, the Victorian socialist, once declared that it was “the first duty of the state to see that every child born therein shall be well housed”. The current Prime Minister and his predecessor in Number 10 Downing Street have failed in that duty.

It will be ironic if the sub-prime housing crisis in America and the drive to own your home encouraged by successive Tory and Labour governments over the past 30 years has initiated the train of events that brings the house down on Gordon Brown’s Government.

Terry McGrenera is editor of The Green Paper – politics for the planet and its peopleWHY has this Labour Government found it so difficult to come up with a comprehensive housing strategy since it came to power in 1997? Is it because ministers regard the issue as an embarrassment?

in the Labour leadership still cling, even as their hopes of securing a fourth term in office evaporate.

It was worse than that. In February 2003, the central government housing grant to local authorities was withdrawn. This meant councils no longer had a key role as the provider of new homes.

It is going to take proper public investment and not a hotchpotch of half-measures to build the homes we need in Britain.

Terry McGrenera is editor of The Green Paper – politics for the planet and its people

What's the matter with Sunderland?

JamieSW — Tue, 23 Sep 2008 11:16:35 +0000

Ingratitude, if Madeleine Bunting’s apologia for New Labour is any guide, is what is the matter with Sunderland. The city has been ploughed with an avalanche of development cash. A school is to be rebuilt every year for the next fourteen years. Health centres, children’s centres, business parks, new development zones with the marina, fancy apartments and coffee shops… And the locals react by sputtering “you’ve done nothing for me”, slagging off immigrants and voting Tory. There is some weird “disconnect” between Labour’s actually loveable behaviour toward one of its most loyal constituencies and its dismal status in the popular perception. Working class Toryism, in the form of support for a set of sentiments including ‘individual self-reliance’ and ‘community’ and ‘family values’, is on the rise once more, a la 1979. The obvious conclusion is that the left must rally behind the government. Some version of this is likely to be the overall diagnosis of the soft left as Labour loses its so-called heartlands: regardless of all the disappointments and betrayals, despite the warmongering, privatization, pandering to employers and union-bashing, the real problem is the basic inability of the working class to recognise its true allies. The root problem is its affectless indifference and disloyalty, its susceptibility to racism and nationalism, and its gullibility as regards Tory propaganda.

So, what is the truth of the matter? What is the matter with Sunderland? What might Madeleine Bunting have found out had she not been relying upon the word of Chris Mullins MP? One of the most pressing issues facing working class areas in this country, without question, is housing. In Sunderland, as elsewhere, the government has been pressing for the complete privatization of housing stock. Sedgefield Borough Council, for example, having lost a vote in favour of transfer in 2005, has been trying to persuade residents yet again to go with privatization. What is causing the residents to doubt the word of council chiefs is that the company that would take over the houses – Gentoo, formerly the Sunderland Housing Group (eulogised here) – has a track record of failure. The company was awarded an £80m contract in 2002 to regenerate a poor estate called Doxford Park, some six years ago, and it has only recently begun work. Similarly, when thousands of council houses were transferred to the group in 2001, Gentoo/SHG invested millions in new private homes, and neglected to build the rented accomodation it was obliged to build. 6,200 council houses were demolished, sold off or left empty, but the company only built 111 new houses over the next four years. The number of people seeking a home rose from approximately 5,000 to over 19,000. Meanwhile, it did successfully build the private developments, including maritime housing and the Athanaeum – the sort of investment and development that Bunting lauds, albeit with a grudging admission that “critics say” it may not seem of much use to single mothers and those on incapacity benefit.

Bear in mind that Gentoo/SHG is a Registered Social Landlord (RSL), exactly the kind of landlord that the government says we have least to fear from. An RSL is answerable to the Housing Corporation, and supposedly behaves better than other private landlords. If the Housing Corporation doesn’t hold them accountable, then those co-responsible for sealing the deal should. In fact, the behaviour of Gentoo/SHG had been noted before by local Labour councillors Mike Tansey and Brynley Sidaway, and they did try to alert residents and fellow councillors to the problem. Both Sidaway and Tansey rejected stock transfer because the result, where the government had been able to impose its scheme, was a rise in rents and an increase in homelessness. However, by 2006, they had been driven out of the Labour Party for their pains. They became independents, and on the back of a successful campaign against stock transfer a lively local Respect group was built. What they had to say was important, and their actions benefited the people they represented. By contrast, Labour policy at both a local and national level pitted it against its traditional working class supporters. There is a clue right there: those elected Labour Party members who try to represent their constituents effectively have been punished and expelled.

It is important to understand the rationale behind the government’s transfer policy. It wants to fund housing, but it is committed to a taxation structure that cannot raise the necessary funds without hitting the poor harder. So, either local authorities would have to borrow, thus breaking the government’s fiscal rules, or they would have to neglect housing, thus destroying the working class voting base. By transferring homes to private housing groups like Gentoo/SHG, they can allow huge amounts of money to be borrowed for investment, because the costs will be formally borne by the social landlord. If the government were not so committed to a neoliberal policy mix, it could raise taxation on upper income brackets and on corporations, to fund such investment. The ugly side of this neoliberalism is a tendency to blame the poor for their plight. One of the government’s recent proposals, dreamed up by Housing Minister Caroline Flint, was to compel unemployed recipients of council housing to sign degrading “commitment contracts” which compelled them to agree to actively seek work if they wanted to be allowed a council house – thus blaming the unemployed for their situation and forcing them to humiliate themselves in a lifeless labour market at pain of losing their home. Local Labour Party loyalists felt compelled to distance themselves from Flint’s ideas. There is another clue: the government has been complacent about its core working class vote, assuming that they had nowhere else to go, and therefore has scapegoated working class people for its failures.

Another of the government’s prominent policy agendas, so dear to its heart that it made this a central plank in the 2001 election despite over 80% public disapporval, is the private finance initiative. I have written enough about its obscene wastefulness here before. Once again, the rationale behind the policy is that it appears to provide something for nothing: money for investment without incurring debts or driving up taxes in the short-run. But the net result is almost invariably a poorer quality of service and a higher cost. For example, in Coventry, two hospitals were replaced by one hospital, with fewer beds and staff overall, and a final cost of £900m, 30 times higher than it would have been to simply renovate the two existing hospitals and keep the beds and staff. In Northumberland, four fire stations were closed and replaced with two under a £10m PFI scheme. One could go on at some length. In Sunderland, as elsewhere, local government functions including in health, education, road-building, street-lighting and waste management have all been outsourced to private companies under expensive PFI and PPP schemes.

Perhaps the most controversial application of the PFI model is in the national health service. Patricia Hewitt announced in 2006 that there would be big cutbacks in public spending on the NHS. She said that the reason was that generous government investment had not been spent on reforms but on salaries for greedy public servants. In fact, as Allyson Pollock pointed out, the government’s market-driven reforms had created the crisis. The costs of this marketisation consumed between 6% and 14% of the NHS national budget, on a conservative estimate. As a result, thousands of NHS staff were shed in hospitals up and down the country. The impact has, predictably, been to alienate Labour’s usual supporters. One of the main campaigners against the government’s NHS cuts in Sunderland has been a well-known local nurse named Kathy Haq, who had been lauded in 1999 for embarking on an unpaid, voluntary mission to improve healthcare in Bangladesh and who had run a support network for victims of a doctor who had raped patients. Haq might have been exactly the sort of person whom New Labour would wish to win over: a devoted public servant and campaigner, who had worked for the NHS for forty years. But she joined Respect when it was launched in the area in 2006, and became the branch secretary. One reason is that City Hospitals Sunderland Foundation Trust ran up debts of over £5m and therefore made plans to shed 10% of its staff, particularly in the Sunderland Royal Hospital. Patients were also angered when local hospitals started to charge for parking, following the lead set by PFI hospitals across the country. Problems within the NHS have been a prominent theme in the local press. In fact, although Bunting refers to the Tory capture for the Ryhope constituency in a bye-election with a low turnout, she does not notice that a surprisingly large component of Labour’s vote, perhaps more than a third, appears to have been redistributed over some years to an independent local campaigner and former journalist known as Patrick Lavelle, who made his name by campaigning on the NHS. Another clue, then: investment isn’t the same thing as provision, and one cannot disaggregate the money supplied from the way it is spent and the policies underpinning it. If working class voters experience a decline in service, the fact that a large amount of money has been spent on producing the decline makes it even worse. The PFI was originally a Tory policy, but by adopting it, the government has handed the Tories one of their main propaganda planks: higher spending equals more bureaucracy and less efficiency.

Sunderland is one of the poorest places in England. Mainly as a result of the destruction of its extraction and manufacturing industries, it has suffered a declining population, particularly among working age males, and this trend is projected to continue at least until 2023. That means a smaller tax base for the city, especially as those who remain are likely to be those with the least resources. More than fifty percent of its children live in low income families, according to the Child Poverty Action Group, which is well above the national average. Even official unemployment is almost double the national average [.pdf] according to the Office for National Statistics, while a total of 31% of the working age population is estimated to be out of work. Large numbers of people are kept on long term incapacity benefit to conceal the real rate of unemployment, albeit incapacity among older males in former mining areas is in fact quite widespread. The government has a number of solutions for the industrial hinterlands, but among them is not a revival of the manufacturing base or of the unions that can maintain decent incomes. One of the few big manufacturers in Sunderland is the Nissan car plant, which was built in 1986. The plant is symbolic of a supposedly ‘new’ high-tech economy vaunted by neoliberals of all stripes. But Nissan has repeatedly threatened to close the plant or slash thousands of jobs, and has repeatedly been bailed out with millions in government grants. And while it does employ thousands of local people, who are unionised, it is hardly a substitute for the massive industries of the past. The government is committed to a City-based growth policy with a strong pound, and as a consequence has seen well over a million manufacturing jobs lost on its watch. As has been widely noticed by now, this is one reason why the UK economy is particularly exposed to the chaos in the financial markets, and why it stands least prepared to withstand a crash.

Under New Labour, the remaining mining pits in Sunderland were allowed to disappear, with nothing to replace them. Today, the biggest employer in Sunderland is the government, while the services industry is the biggest sector of employment in the city. The council has sought to rejuvenate the economy by gentrifying it, making it into a more tourist-friendly zone, and building up a financial services industry, which is today almost as big as the manufacturing sector. All of these factors make Sunderland particularly susceptible to the toxic situation that we now face: public sector pay cuts, cuts in spending, a crisis in the financial sector, and higher food and energy prices. In addition, while Bunting mentions a disproportionately high rate of single motherhood and incapacity in Sunderland, she does not mention the government’s policies of rolling back single mother benefits and incapacity benefits. These, in addition to a vindictive plan to force the long-term unemployed to do ‘community service’ as if they were criminals, are poison for a local Labour Party seeking to gather votes. Further, in a city with life expectancy well below the national average, the government’s plans to raise the retirement age and privatise the pension system – while demanding that people save money they don’t have to invest in a pension scheme that floats on the oh-so-reliable stock market – is asking for trouble. To that should be added a recent rise in pensioner poverty, when a fifth of pensioners already lived on less than £5,000 a year.

Sunderland is supposedly an example of where the government has genuinely tried to help the poor, yet is losing support from voters who fail to recognise New Labour’s loyalty to them, while imprudently flirting with the Tories. In truth, while New Labour has delivered some very mild reforms, there could hardly be a more dramatic example of its policies failing the working class on the one hand, and punishing them on the other. The story of Sunderland is typical in this respect. There remains one question: will Sunderland go Tory, and if so, will it be for the reasons Bunting suggests? Sunderland still has a majority Labour council, and will probably return a Labour MP even on a relatively low turnout. The worst wipeouts for the government will be in the south-east, while the polls show the Tories making least headway in core Labour areas. Further, there is nothing to support the claim that once heartland Labour constituencies are won over to right-wing sentiments, and Bunting offers no evidence for this assertion. There is certainly nothing comparable to 1979, when Thatcher won on a platform of aggressively right-wing and anti-union policies. David Cameron is successfully appropriating the centrist language and sentiments of New Labour, even positioning themselves to the ‘left’ of the government on some questions. In Wales and Scotland, where there are centre-left and sometimes radical left alternatives, the Tories are not reviving at anywhere near the rate that they have been in England. And while the Tories are likely to be the beneficiaries of government unpopularity in England, the process of party identity breaking down is advancing rapidly for both Labour and Conservative parties. What is the matter with Sunderland is what is the matter with the UK as a whole. The system is failing, the neoliberal solution doesn’t work, parliament is increasingly impervious to our needs, and we’re facing a crisis in which we find elected officials happy to pour money into the City, but extremely reluctant at best to do anything which alters the fundamentally unfair distribution of wealth and power in the society.

Student living - this isn’t Hollyoaks

Alex Doherty — Thu, 18 Sep 2008 09:32:15 +0000

With the beginning of the 2008/09 academic year fast approaching, students will soon be settling in to the realities of student life. For new students this means at some point they’ve made a choice: between studying away from home on the one hand and continuing to live with their parents on the other. Almost a third of students choose the latter option. This often means a long commute to a university chosen on the basis of its location instead of its merits – but at least these students have the security of a roof over their head. For those who have chosen to study away from home, often unaware of the true cost of student life, this means moving in to student accommodation and an ongoing struggle against poverty, unscrupulous landlords and, more often than not, appalling living conditions.

From the first day of the first semester there is one thing that all students can be sure of: their maintenance loan won’t be enough to keep body and soul together. Students are entitled to no more than £3000 non-income assessed, which rises to a mere £4600 for students from the poorest backgrounds. Compare this with an average rent of £60 per week (which works out at £3120 for the year) and then add on the rising cost of utilities, food and other necessities and the loan system is exposed for what it really is – a disgrace. The only way for most students to make ends meet is to work at least part of the time during the semester and burden themselves with overdrafts and credit cards the rest of the time. During the summer holidays when the loan has dried up students are forced to seek out whatever work they can get and have none of the usual rights to Job Seekers’ Allowance or other benefits that most workers can fall back on.

The Government has done nothing to make student housing more affordable. Most first year students looking to live away from home for the first time look to move in to university owned halls of residence. In this way they are guaranteed good quality housing at a cheap price. Thanks to PFI, these residences are now being opened up to profiteering vultures from the private sector. To give an example from a 2002 Unison report; at Luton University student nurses were told they had to leave their halls of residence and move into new PFI-built halls. Their rents shot up from £177 per month to £244 per month with at least one student being forced to sleep in their car! Besides incredibly inflated prices, these profiteers also force students to sign longer contracts, so that students living at university during term time are forced to sign 52 week contracts and pay rent even when they know they won’t be living there.

Besides being unaffordable, private housing is also a playground for bad landlords. Surely students ought to be able to expect landlords to fulfil their contracts as an absolute minimum? Apparently not. More and more students are living with damp, infestation, poor or nonexistent heating and unsafe appliances – to the complete indifference of landlords. Landlords therefore often get away with breaking the law – the long and arduous process through the courts will always favour the landlord in the long run.

All this begs the question: why is student housing in such a bad state and what needs to be done to improve it? The question of housing isn’t, after all, isolated to students. In the current economic climate more and more people are finding it difficult to keep up with their rent and mortgage repayments. The Tories and New Labour have no solution beyond opening housing up further to the private sector. PFI and private landlords only succeed in driving students to the breadline and ultimately out of education altogether. The only way to win our rights for both a decent education and decent housing is through the organised labour and student movements. The NUS and the Unions must organise together at the grassroots and fight to force the Labour government to act on the housing disgrace. The Labour government must adopt socialist policies now to assure workers and students alike affordable and secure housing:

No to privatisation of student halls of residence!

Begin a massive programme of decent social housing!

A living grant for all students!

The answer is public

tim — Sun, 31 Aug 2008 16:27:04 +0000

Even the dogs in the street now know that something has to be done about the housing crisis, but the government is confused over what aspect of the crisis to concentrate on.

Its pronouncements have tended to prioritise the “need” to restore confidence in the housing market, which means stabilising the finances of lenders with cheap state loans.

This will do little to increase the number of mortgages being offered to first-time buyers or to assist overstretched homeowners hit hard by the rising cost of borrowing.

Banks and other financial institutions will use these cheap funds to ensure that directors and shareholders do not bear the brunt of the financial crisis.

The relevance of this approach to Britain’s real housing crisis oscillates between negligible and nil.

There are huge numbers of people who need decent accommodation but who are in a position neither to buy nor to rent privately.

The government has to draw a distinction between the financial crisis in the housing market, which was caused by the banks’ greed and reckless speculation, and the real housing crisis, which expresses itself in growing numbers of families and individuals being denied the right to a decent home.

New Labour ministers are too ready to accept the neoliberal argument that government should not involve itself in housing provision.

On the contrary, the housing crisis is so serious that it requires a response almost as determined as that needed after the second world war to overcome shortages and drive up housing standards.

The government-led, non-mandated retreat from public provision, ownership and management of housing has been a disaster.

Reliance on market forces in a situation of ever-growing demand has driven up house prices astronomically, reserved most local authority housing stock for those on benefits and driven low-paid and even average-income workers into the grasping arms of the private rented sector.

Government funding of new council homes, with a return to restriction of the right to buy, could make a real dent in homelessness and help to hold down runaway inflation in the housing market after the current slump.

It could also be used to enforce advanced environmental features to reduce pressure on energy and water resources. If the government restricts itself to bailing out the banks, it will fully deserve the contempt that it brings on itself.

What we need is a new dawn

Ellie Keen — Sun, 08 Jun 2008 23:02:06 +0000

Gordon Brown’s apparent decision to build more nuclear power stations because fuel prices are going through the roof is bizarre. It takes 15-20 years to build a nuclear power station. Hard-pressed hauliers and the fuel poor cannot wait that long. Nuclear power is irrelevant to addressing the present cost of fuel. And it can do next to nothing to ease the cost of heating homes.

Rising oil prices are already significantly reducing car and plane use. For home heating, the sensible way to proceed is by a rapid shift to domestic renewable energy: solar, wind-power, air or ground heat pumps, biomass (wood-burning boilers) and micro-generation. Germany is already proving the huge success of this policy through feed-in tariffs which enable families to generate their own energy and sell on any excess to the national grid at a profit.

Sadly, the British Government has turned its back on such ideas because it is committed to industrial vested interests. We hear a lot about empowering the consumer, but where this would really count – with decentralised energy systems – the fossil fuel and nuclear industries have the inside track.

This is not the only example of Government prejudices holding back desperately needed changes. In the current turmoil in financial markets, as the crisis broke and it became clear that City trading in near-worthless financial derivatives or “structured investment vehicles” had been a major ingredient in the collapse, it was decided there would be no change in light-touch regulation.

No committee of inquiry would be set up to deal with the rottenness of the financial system. Despite the toxic mix of poor accounting transparency, risk-laden financial products, evasive offshore operations, weak banking regulation and a gross lack of public accountability, a return to business-as-usual (if that were possible) was judged better than cleaning out the Augean stables.

As far as housing is concerned, the shortage of social, affordable housing has reached crisis levels. There are 1,634,000 households on the waiting list in 2004, according to the latest available data. The actual figure is probably nearer two million. In addition, nearly 100,000 households are registered homeless. Yet virtually no council houses have been built over the past 10 years.

Local authorities get no grant from the Government for house-building and are forbidden to borrow on the open market against the security of their housing stock to fund the tens of thousands of affordable houses for rent that are needed. However, housing associations are permitted to borrow on the market, to an extent equal to their grant from the Government, so that their house-building is doubled. Making a political point against council housing because of an obsession with owner occupation is wholly unacceptable.

If council tenants want their homes to be repaired and modernised, they have been required to vote in a ballot either to be transferred to a private landlord, a housing association or a so-called arm’s length management organisation. If they reject these options and opt to stay with the council, their homes have simply been left to deteriorate.

This is about ideology, not meeting housing need. Are ministers oblivious to the needs of the quarter of the population with the lowest incomes who do not have the wage levels or the regularity of employment to afford owner-occupation when mortgage debt to income is now on a six-to-one ratio or even higher?

Some people are rather better off. The chief executives of the FTSE 100 companies now take home on average more than £71,000 a week. Meanwhile, employees in their companies on the minimum wage take home £200 a week – 350 times less. Like other bosses before him who brought down their companies, Adam Applegarth was able to walk away from Northern Rock with a golden goodbye (£760,000 in his case), while hundreds of jobs could be lost in the north-East of England with little or no compensation.

Non-domicile tax refugees, many of them millionaires, are untroubled by the Inland Revenue because taxing the rich is a reminder of the bad old days. The Treasury has even retreated from the minimalist proposals on non-doms.

The fiasco over the abolition of the 10p tax band has still not been properly rectified. Alistair Darling’s compensation scheme, which still leaves 1.1 million of the 5.3 million losers worse off, comes to an end after one year. What is needed is not a bit more tax credit adjustment, but the re-introduction of the 10p tax rate with the £6.6 billion cost funded by redistribution from the richest 5 per cent in society with incomes over £150,000 whose wealth has quadrupled under this Government.

The enthusiasm for the private sector in all things has led to more problems. Through 1997-2002, the public accounts were in surplus. However, instead of the huge public rebuilding programme being financed cheaply via the Public Works Loan Board, the decision was made to hand over the construction and management of new hospitals, schools, roads and prisons to Private Finance Initiative schemes. This is a distinctly “unsound money” policy – top-slicing public expenditure for 30-50 years ahead, pushing a number of health trusts into bankruptcy and opening up re-financing scams offering even bigger profit rake-offs. And it has been pushed through with future liabilities for the public purse of more than £100 billion, even though many surveys have found that the PFI does not generally offer the best value for money.

The poorest in our society are probably more vulnerable now than at any time for a century and workers can still be arbitrarily dismissed in their first year of employment without any rights. Yet the Government continues to restrict trade union rights. Nor will it implement the European Union’s Charter of Fundamental Rights for all citizens, which all the other 26 EU member states have accepted without demur. The charter bans excessive working hours (British workers work longer hours per week than anyone else in Europe) and would allow secondary action in industrial disputes (which is not an issue anywhere else in Europe).

It’s not Gordon Brown’s leadership that’s the problem. It’s the policies that have alienated Labour’s core vote. Changing the leader will alter little unless the policies are altered in a manner to convince those voters Labour is now fully on their side.

Michael Meacher is Labour MP for Oldham West and Royton and a former environment minister

House repossessions rising sharply

tim — Mon, 26 May 2008 21:22:50 +0000

Figures released by the UK Ministry of Justice (MoJ) on May 9 showed a marked increase in homeowners facing court action for repossession of their homes. The figure of 37,740 for the last three months was an increase of 17 percent on the last quarter and a 20 percent increase on the figures one year ago.

Repossessions have risen in most of the English regions. The figures indicate that lenders are quicker to resort to the threat of court action. A press release issued by the housing charity Shelter explained that at the time of the last housing crisis in 1991, there were 2.5 court actions initiated for each repossession that went ahead. Last year the figure was five.

Adam Sampson, Shelter’s chief executive, stated: “The worst fears of thousands of homeowners are now becoming a tragic reality. Mortgage lenders should be helping homeowners stay in their homes, but with some, it’s a case of miss a couple of payments and you’ll find yourself in court.”

Shelter estimates the likely total number of repossessions this year will be around the 53,000. During 1993 at the height of the economic turndown, figures for repossession peaked at just under 60,000.

The Citizens Advice Bureau (a charity offering advice to people, especially on debt) issued a statement in response to the MoJ. It said: “We have seen a very sharp rise in the number of people coming to us with mortgage arrears, and evidence that in too many cases lenders are using court action as a first rather than last resort.”

A BBC2 “Newsnight” report by Paul Mason featured a regional breakdown of the figures finding a correlation between the numbers of repossessions and falling house prices. They showed an increase in repossessions of 23 percent in the West Midlands, 32 percent in Lincolnshire, 37 percent in South Wales and 44 percent in North Wales. In each case house prices in the regions were markedly down. The only region to buck the trend was London, where repossessions were slightly down and house prices were still rising.

Repossessions in Shrewsbury were up 111 percent, Haverford West up 91 percent and Skegness up by 76 percent. All were low income towns. Families who had struggled to get on the property ladder were now coming under pressure. Adam Sampson interviewed for the programme said that vulnerable families now being hit by job losses, sickness or marital break-up were under threat.

The programme made the point that the last time repossessions were as high was in the economic downturn of the early 1990s, but the big difference was that we are not seeing unemployment significantly rise yet. But it is clear that job losses are increasing. The Chartered Management Institute has just reported an increase in the number of managers who are being made redundant. The figure is up by three percent on last year.

Savings levels, which have historically been low in Britain, have fallen dramatically. According to a report from Call Credit, the reference agency, millions of families are using what savings they have to survive in the face of rising mortgage payments food and fuel costs.

Those who have no savings are sinking further into debt. Debt agencies report an increase in the number of professional workers in well-paid jobs who are turning to them for advice. Community Money Advice, a charity which provides advice throughout the UK, has experienced an 85 percent increase in clients.

“The rise is huge because of the big increase in middle class debt,” said Jane Elliot, coordinator of Transact the umbrella organisation for debt advice services.

For the moment those in well paid jobs are managing to hang on to their homes. But they are disappearing beneath a mountain of debt. A further increase in the number of repossessions is likely as the impact of the credit crunch deepens. Sections of the population who would once have thought of themselves as financially secure are increasingly being drawn into the morass.

A Shelter report issued in January of this year showed how the crisis in the finance industry is impacting on house repossessions. They note “dramatically rising house prices have made home ownership less affordable to the majority of first-time buyers,” which means people borrowing many multiples of income to finance the purchase.

The sub-prime mortgage sector is not as big in England as in the United States, but the report notes that “levels of repossessions in the sub-prime sector are 10 times higher than in the mainstream sector.”

The report also pointed out the growing trend of people with multiple debt problems re-mortgaging in an attempt to simplify and resolve their debts. The report says that “Households who are experiencing financial difficulty can face a barrage of aggressive marketing encouraging them to address their debt in some way. These arrangements are often debt consolidation loans … converting an unsecured, low priority debt into one that can result in the loss of their home…. Shelter advice workers report that the party seeking possession of the client’s home is increasingly a second charge lender whose charge on the property can amount to as little as a few thousand pounds.”

Figures issued by the Royal Institute of Chartered Surveyors (Rics) show house prices falling across the country, resulting from a fall in demand. Around 40 percent less mortgages were issued over the last year than over the previous year. The Halifax bank (a leading mortgage provider) is expecting prices to fall a further 10 percent over the next couple of years.

Ian Perry, a Rics spokesman, told the Independent, “The real issue is the collapse in the number of housing transactions, which has very real implications, not just for the property industry but also the high street and the wider economy.”

In spite of recent Bank of England interest rate reductions, mortgage lenders are becoming increasingly reluctant to sell mortgages to people, reflecting fear of the still ongoing impact of the sub-prime crisis in America which has led to the credit crunch and the severe tightening of money supply.

A recent BBC TV programme, “The Truth about Property,” explained that a year ago there were around 15,000 mortgage products on offer. Today the figure is 4,000. Also lenders are demanding big deposits and in most cases will not lend more than 90 percent of the value of the house. The programme featured Simon Elkin, married with two children and earning a good salary of £50,000-plus as a wedding photographer. He had savings and a good credit record, yet was unable to obtain a mortgage.

A growing phenomenon is the rise in so called Mortgage Rescue companies. They offer to buy houses from people in difficulty or under threat of repossession. The Shelter report says of these schemes that “advertising is often misleading, implying that borrowers can stay in their homes on a long term basis … the company will buy the property at a price far below full market value and rent it back to the former owners on an assured short hold tenancy that gives minimal security of tenure.”

Currently these types of schemes are unregulated. The tightening of the mortgage market is also affecting people who took out mortgages to produce rental income, which mushroomed over the last few years. Many people bought property as a secure income for the future. They are also subject to the tightening of the mortgage market and when mortgages are due for renewal end up with more expensive ones, often costing more than the incomes they get from rents. These properties can become subject to repossession, leaving the tenants with no home.

Attacks on the welfare state that began under Thatcher and were enthusiastically endorsed by Labour have hit housing provision. Currently mortgage holders, who through loss of job, illness, etc., are forced to turn to the state for financial support may be entitled to help from the Income Support for Mortgage Interest (ISMI) scheme. The Shelter report of January 2008 shows how this has been eroded. “This safety net was cut back in stages as a reaction to the rapid rise in claims,” the report explains, “during the housing market crash of the early 1990s. The ability of the current safety net to deal with the effects of economic recession, or a collapse of the housing market, is untested. Many fear that the current arrangements would lead to significant hardship and rapid rises in repossessions.”

When the government cut back on ISMI, the expectation was that people would be able to rely on Mortgage Payment Protection Insurance policies. But only a quarter of mortgages are covered by these insurance policies. Those without protection tend to be the less well-off. Also the report notes, “Payment protection insurance policies in general … have been criticised for being inadequate, because they do not cover many common reasons for falling behind with payments …”

Also under attack over the last three decades has been the provision of social housing. Currently around four million people are on the waiting lists of councils or housing associations. A Local Government Association (LGA) report published May 16 expects this to rise to five million by the year 2010 and that around 50 percent of councils cannot meet current demand.

“With the banks overstretching their credit facilities,” Paul Bettison, LGA chairman explained, “it could well mean that in the coming months councils will have to pick up the pieces as people end up on social housing waiting lists.”

A catastrophic housing crisis is unfolding, of which the government is fully aware. Labour’s housing minister, Caroline Flint, inadvertently let the cat out of the bag when a photographer caught details of a cabinet paper she was carrying. One line read, “Given present trends they will clearly show sizeable falls in prices later this year—at best down 5-10 percent year on year.”

Rats Loose in the Granary

Ellie Keen — Wed, 23 Apr 2008 00:00:00 +0000

Put rats in charge of the granary and, without doubt, you will get cereal thieving, and haven’t Gordon Brown and his Chancellor Alistair Darling found the truth behind that rather feeble joke.

Not even waiting 24 hours after the deadly duo hurled £50 billion their way, the pack of merchant bankers who style themselves Britain’s finance industry, but ought more accurately to be known as the country’s top predators, have stuck two fingers up at them and gone their own merry and profiteering way.

Despite all of Mr Brown’s sanctimonious pleading on Monday that the £50 billion windfall to the bankers was to stabilise the mortgage industry and give back a chance to first-time buyers to enter the housing market, Britain’s second-largest lender Abbey announced on Tuesday that it is to screw customers who can’t stump up at least 25 per cent of the price of their home as a deposit.

With lower rates and its tracker mortgage only being made available for those with a large deposit, the first-time buyer is, as one City source put it, “stuck, unless they have parents who can help.”

So, home-buyers who cannot afford a large initial deposit or don’t have a rich mummy and daddy behind them will be forced to take less competitive rates and pay more on their monthly repayments.

Once again, as with the 10p tax rate abolition, it’s the rich what gets the pleasure and the poor what takes the blame.

And is there any clearer way for Abbey to let Mr Brown know just who is in charge in the City and underline that it isn’t him?

Well, other bankers clearly think that there is.

Not content with access to £50 billion to defray its risks, the boss of the Royal Bank of Scotland is asking shareholders to pump in £12 billion of new capital, diluting their existing holdings by a hefty percentage unless they fork out again, given that the new rights offer is in the ratio of 11 new shares for every 18 existing shares that they hold.

According to RBS boss Sir Fred Goodwin, whose £4.2 million pay package included a £2.9 million bonus last year, the bank’s financial position was “satisfactory” less than two months ago.

Does anyone seriously believe that things have changed so much in just eight or nine weeks?

And, if they have, should people who did not even foresee it be left in charge of the banking industry?

It should be noted that the bank, which claims to have lost another £5.9 billion recently, spent nearly £50 billion last year on the acquisition of Dutch bank ABN Amro, so it certainly isn’t down to its last few bob.

And other banks are expected to jump on the rights issue bandwagon, including Barclays and Halifax Bank of Scotland. Both banks are denying this, but they would, wouldn’t they?

The result of all this would seem to be that £50 billion of taxpayers’ cash has vanished into the banks’ black hole and many billions more are going to be raised by rights issues, all to correct the absolute dog’s breakfast that a pack of avaricious speculators have made of the banking system that they are still to be left in charge of.

Meanwhile the lower paid are screwed on their tax, cut out of the housing market, the government is giving away their cash, and no attempt is being made by central or local government to supply social housing in anything like the amounts needed.

And they say that socialists are the impractical and unrealistic ones!

Lifetime Homes

Ellie Keen — Wed, 27 Feb 2008 23:54:19 +0000

Maybe it’s my age, but I had more than a sense of déjà vu when Hazel Blears and Caroline Flint announced the government’s policy on lifetime homes this week. It’s great to see the enthusiasm, but it is a bit like watching a teenager discover rock-’n’-roll.

For those who missed this seismic moment, the government has decreed that new standards of accessibility (lifetime homes, to those in the know) should apply to new housing – and that we shouldn’t stop there, but should think in terms of ‘lifetime neighbourhoods’ too. I’m all for this, as I’m already worrying about how I’ll get my pavement buggy down to the local alehouse and back up the hill after a pint or three.

But for those who equate government announcements with action, let’s just pause and consider how long it’s taken to get here. Back in the mid 1990s, I edited a magazine about housing and was quite closely involved in this sort of thing. We ran a campaign calling on the then Tory government and on social landlords, then quaintly known as housing associations, to ensure all new homes were built to lifetime homes standards.

Fast forward a decade and a half, and here’s the announcement we’ve been waiting for. From 2013. Oh, and social housing should lead the way, with new homes conforming to the standards by 2011. And there’ll be a national housing advice service, something else that did the rounds a decade or two ago.

Apart from the sheer cheek of presenting such tardiness as a great leap forward, while giving the construction industry another three years of unsustainable practice, this new national strategy is far less visionary than it purports to be. Lifetime neighbourhoods is a fine concept, but surely there’s more to it than better lighting and appropriately positioned bus stops.

The heart of a neighbourhood is the activity that goes on there, and there’s a great opportunity to invest in neighbourhood centres and organisations that bring older people together, enabling them to use their talents for mutual support and volunteering. People wouldn’t get so irate about post offices closing if something better took their place.

Perhaps the most amusing line in the announcement was this: ‘The government is clear that urgent action is required now to better design communities and support older people.’ Most of us show more urgency in visiting the dentist.

Three Million Homes?

Tim Holmes — Tue, 27 Nov 2007 20:52:17 +0000

It sounds preposterous: three million new homes in England alone by 2020. My instinct is to fight this project. It threatens Britain’s countryside, the character of our towns, our water supplies and carbon targets. Today the Housing and Regeneration Bill, which will help to implement this building programme, has its second reading in the House of Commons(1). Where should we stand?

Is the housing crisis as acute as some people have claimed? Or has it been whipped up by the House Builders’ Federation, hoping to get their claws into the countryside? To find out whether these homes are really needed, I asked the charity Shelter to take me to meet some of the people it works with in London. I had no idea. I simply had no idea.

Wendy Castle moved into her flat in the Trellick Tower in west London when her eldest child was a baby. He’s now 16, and she has three others between 13 and 2. But her flat has only two bedrooms. She sleeps in one of them with her two youngest children. The room is completely filled by beds. On one side they are jammed against the window, which no longer shuts properly. On the other they are pressed against the heater, which can’t be used because of the fire risk. Her two oldest boys share an even smaller room.

She keeps her flat in a state of Japanese minimalism, but in the tiny living room the children were sitting on each other’s laps to watch the television. Like all the women I met that day, Wendy – tough as she has become – cried when she told me how this crowding was affecting her children. Her oldest boy is falling behind at school because “he physically does not have space to do his homework. He can’t do anything till the other kids go to bed.”

But the real shock came when she explained why she was stuck. Kensington and Chelsea, like several London boroughs, operates a points system, reflecting people’s level of deprivation(2). Every Monday morning it posts up the flats available for social tenants (those who pay less than the market rate). People with enough points can bid for them. Wendy has 40. She has been able to bid on only one occasion. Though her family is officially “severely overcrowded”, she came 87th out of 92. Eighty-six households, bidding for the same flat, were deemed to be in greater need than hers. “I’ve tried everything. But when I ring them they say ‘I don’t know why you bother – you ain’t got the points’.”

In a block across the road from the tower I visited Aisha and Abdul Omarzaiy. They have 280 points, but they have also been told they are wasting their time. Aisha and Abdul received asylum from Afghanistan in 1992. They were given this flat five months after they arrived and promised that after 6 months they’d be moved to a bigger place. They now have four children between 19 and 2, in a tiny two-bedroomed flat. (Remember this, next time someone claims that people granted asylum get priority(3)). The oldest boy and girl share a room, a desk and a homework rota. The youngest girl sleeps in bed with her mother. Abdul and the 10 year-old sleep on the living room floor. The 19 year-old has dyslexia and needs peace to concentrate: he is now re-sitting his A-levels for the second time. He can’t bring friends home, as there is nowhere for them to speak privately, and he’s embarrassed about sharing a room with his sister. Like Wendy, Aisha keeps the flat neat and sparse. But prison cells are more spacious.

Now suffering from severe depression, Aisha has lobbied the council and written to her MP. “When I had three children they told me I’d be moved straight away if had another one. I didn’t want another one. But after 7 years the fourth came along. They still won’t move us.” The council did offer a solution: to put the oldest boy in a hostel. “”They told us straight,” Abdul said. “They don’t have big properties. One comes in once a year and they give it to the highest priority.”

Kensington and Chelsea, as the diligent ward councillor Emma Dent Coad told me, has a poor record on social housing: a kind of economic cleansing seems to be taking place(4). But there are similar backlogs all over London. Shelter took me to meet Jacqueline Pennant, who lives with her children in a tiny maisonette in south Wandsworth. She has osteoarthritis and a hairline fracture in the spine, a prolapsed disc and sciatica in both legs. She should be confined to a wheelchair, but it won’t fit in the house. She dragged herself from one piece of furniture to the next, then up the narrow stairs, clutching at the bannisters, her face gnarled up in pain. I saw this in Britain, in November 2007.

Jacqueline and her three children have been in this two-bedroomed house for 13 years. In 1996, she thought she was about to be moved and packed her stuff into boxes. Eleven years later they are still shutting out the light as she waits like Miss Haversham for the date that never comes. Her oldest boy has severe attention deficit hyperactivity disorder and finds the crowding unbearable. The middle one is routinely hospitalised with asthma, exacerbated by sleeping in a tiny slot between his mother’s bed and the wall. In the kitchen you can touch both walls with your palms. “If I can’t use my wheelchair I don’t have a life,” Jacqueline told me. “The strain on my back has made my problems a lot worse. I’m so depressed and frustrated.”

This is a small sample, but it’s indicative of a quiet social catastrophe. Over half a million households are officially overcrowded(5), 85,000 are in temporary accomodation(6), 1.6m are on the social housing waiting list(7). Even before you consider the backlog, the newly-arising need for homes is projected to run at some 220,000 a year(8). Shelter’s surveys tell the same story over and over: children struggling with their schoolwork, parents crushed by depression and stress, families living in conditions familiar to Dickens and Engels.

Part of this crisis arises from the Labour government’s shocking failure to build social homes. Though she was the first to allow council houses to be sold, so undermining long-term provision, during Margaret Thatcher’s tenure social homes were built at an average rate of 46,600 a year(9). Under Blair, it fell to 17,300(10), while almost half a million council houses were sold off, at an average rate of 48,300 a year(11). In this respect at least, new Labour has been as Thatcherite as Thatcher.

It is true that much more could be done to mobilise empty houses(12), help elderly people to move into smaller flats and stamp out Britain’s ugliest inequality: second homes(13). It is disappointing to see how little of this there is in the bill. But even if all such measures were used, they would release perhaps half a million homes. I find myself, to my intense discomfort, supporting the preposterous housing target. There’s a legitimate debate to be had about where and how these homes are built. But – though it hooks in my green guts to admit it – built they must be.

www.monbiot.com

References:

1. http://www.publications.parliament.uk/pa/cm200708/cmbills/008/08008.i-v….

2. This system is called “Choice-Based Lettings”. See http://www.communities.gov.uk/housing/housingmanagementcare/choicebasedl…

3. The claim that people from ethnic minorities get preference is also false. The government points out that “Black and Minority Ethnic (BME) households are disproportionately found in overcrowded households. As the chart below shows, in London, nearly 30% of children in BME households and over 10% of children in white households live in overcrowded conditions.” Department for Communities and Local Government, July 2007. Homes for the future: more affordable, more sustainable, p58.
http://www.communities.gov.uk/documents/housing/pdf/439986

4. She cites government figures showing that only 27% of new homes built in Kensington and Chelsea are affordable (social or low cost market homes). In Hammersmith and Fulham, the best-performing borough, the proportion is 82%.

5. 526,000 in 2005-6. Department for Communities and Local Government, July 2007. Homes for the future: more affordable, more sustainable, p73.
http://www.communities.gov.uk/documents/housing/pdf/439986

6. 84,900 in Quarter 2, 2007. Shelter, October 2007. Shelter’s response to the CLG Green Paper – Homes for the future: more affordable, more sustainable, p12. http://england.shelter.org.uk/files/docs/33095/10-07%20Green%20Paper%20-...

7. Department for Communities and Local Government, July 2007. Homes for the future: more affordable, more sustainable, p20. http://www.communities.gov.uk/documents/housing/pdf/439986

8. ibid, p17.

9. DCLG, August 2007. Table 244. Housebuilding: permanent dwellings completed, by tenure, England, historical calendar year series. www.communities.gov.uk/documents/housing/xls/140912

10. ibid.

11. The annual figures can be seen here: DCLG and Office of National Statistics, December 2006. Housing Statistics 2006. Table 10.1, p128. http://www.communities.gov.uk/documents/housing/pdf/154124

12. Using government figures, Shelter says there were 676,000 empty properties in England in 2006.

13. There are 260,000 in England, according to DCLG, 2006. Housing Statistics Summary, Number 26. Survey of English Housing Provisional Results: 2005/06, p25.