CIH Conference 2013
A cloud of uncertainty and some confusion seems to have hung over this year’s CiH Conference.
With the Government’s 2015/16 Spending Review coming out on the second day this is not surprising. CIH and NHF had asked for a £20Bn programme and in the event housing is to get £3.3Bn over three years with £957M per annum for an affordable rent programme and £400M for “rent to buy”. Housing Minister Mark Prisk thought this was a generous settlement and said that in return the sector would be expected to offer up efficiencies, conversions of social housing to affordable rent and disposals of stock – with bidding HAs considering the conversion of all relets to affordable rent. Grainia Long of CIH said housing was only getting a modest part of the £100Bn infrastructure package and the allocation was not the “game changer” needed. In her opening address she called for the sector to push Government into putting housing centre stage as it could kick-start the economy faster than other infrastructure. The Treasury seems to have missed this point … again. Grainia Long also noted that a lot of CIH members are having to implement policies they disagree with. Peter Schofield of CLG said that the need for deficit reduction does not allow for any growth in grant funding and the sector should look beyond traditional delivery models.
There was confusion, too, about the direction of regulatory reform. Julian Ashby the HCA’s regulatory chair said the sector’s response to the HCA discussion paper had been “robust and informative” but recognized the need for reform and welcomed the living wills concept as a tool to deal with providers in trouble. He felt providers had misunderstood the nature of the proposed ring-fence between social housing and commercial activities and had assumed it to be tighter than the HCA intended. He said HCA concern was not so much about the nature of the activity as the level of risk and whether that risk was properly priced. He said the concept seemed to cause more concern to providers than to lenders. He said a number of ring-fencing mechanisms are being considered prior to drafting the final scheme. This did not altogether quell concern (or resolve the confusion), with one housing association CE suggesting that the limit on non-social housing turnover would slash his association’s development activity by 50%.
Stressing the need to protect public investment, Ashby also suggested that social housing could become a “legacy” activity for some HAs as they diversify and warned that some diversification would bring about failure. This provoked Kay Boycott of Shelter to say HAs should stick to the core business and to warn that tapping into NHS money, for instance, risked stretching brand identity. In contrast, David Jepson of Regenda said our ageing population and NHS reform (and its funding crisis) gave us a unique opportunity that would also reduce NHS costs. Deborah McLaughlin the HCA’s North West director said some HAs might hold back from development to adjust to the new rent regime, welfare reform and other changes, but more positively said: “We will find a way to make it work”.
One piece of comparative certainty was provided by Jonathon Portes of NIESR. He said there was an unusual consensus amongst economists that the Government’s Help to Buy mortgage guarantee scheme would do nothing to increase housing supply. He said the Government’s housing strategy was “muddling through”.
Jon Rouse (now NHS Director General for social care, local government and care partnerships) said the £3.8Bn funding pot for health and social care will probably be overseen by the local health and wellbeing boards which could opt to allocate resources to housing-related support. He ruled out reinstating a Supporting People ring-fence.
On private finance, Clive Barnett of RBS warned that banks could be constrained in lending to the sector by the proposed capital requirements of the new Prudential Regulation Authority, treating HAs as commercial lending despite the strength of their covenant. Paul Smee of CML said the problems of Help to Buy were not necessarily insurmountable so long as the Government had an exit route at the end of the scheme. He said the mortgage market would inevitably become more regulated which would affect access to mortgages for some groups, eg the self-employed. Richard Hughes of Lloyds Bank warned that the private rented sector was not necessarily a money-spinner and that diversification did not have a great history of success in the housing association sector. More positively, Mark Florman the CE of the British Private Equity and Venture Capital Association said aggregating HA assets would encourage the bond markets to invest more, perhaps by another £20 – £30Bn and said the sector’s credit-worthiness was extraordinary.
Labour housing spokesperson Jack Dromey pledged to introduce a decent homes standard for the private rented sector, saying 35% was below the social housing DHS, but said Labour would also provide incentives for landlords to invest. He said the Tory NHS reforms ironically provided opportunities for greater integration of housing with health but Lorraine Jackson of the NHS warned that housing professionals would have to “learn the language of health” if they were to influence policy. She called for evidence to prove that cost savings could actually be made.
With demonstrators outside and a sceptical audience, Lord Freud defended the bedroom tax as being necessary to keep interest rates down, linking it to wider fiscal issues. He outlined the “managed payments” proposal for Housing Benefit to be paid to landlords when tenants are two months in arrears and DWP’s goal to return them to direct payment when the arrears are cleared. Eamon McGoldrick the National Federation of ALMOs managing director said social landlords should offer shared tenancies as a way to mitigate the bedroom tax. He also said local authorities had plans to deliver 25,000 new homes in the next five years but faced the barriers of bedroom tax, HRA borrowing caps, land shortages, RTB, and the threat of more welfare reform.
Other points from various sessions were:
• The challenge of attracting and retaining younger staff – only 19% of providers have a talent management strategy according to CIH
• The need for more commercial agility in the move from welfarism to “co-production”
• Home Group’s change in its call centre from scripts to a conversational approach
• Places for People is selling heating systems to schools and hospitals through a joint venture energy services company or ESCO
• A question mark posed by John Kiely of Savills over how effective joint procurement is for small landlords in present market conditions
• A statement from CIOB chief executive John Blythe that skills shortages mean we could not deliver volume and qualiity together in new homes even if expansion of programmes was possible.