Penfold Associates

We have had time to digest and analyse the Comprehensive Spending Review and consider its impact on the social housing sector. There will be a big reduction in public spending and DCLG is taking a significant hit. The National Housing Federation slammed the 60% cut in housing capital spending and issued dire warnings about the potential impact of Housing Benefit cuts and other welfare cuts. The NHF also warned that the end of ring-fencing would threaten Supporting People and Housing Market Renewal budgets. Similar responses came from across the sector with lots of people recognizing that benefit reforms were necessary but worrying about the implications of the changes being implemented.

But the spending cuts are not the biggest threat to the sector. The real problem is about attitude and belief.

David Orr, the NHF Chief Executive, picked up on this at September’s NHF Annual Conference. Responding to the address from the Conservative Housing Minister, Grant Shapps, he noted that while the Minister’s desire for more new homes depended on NHF and HBF members to deliver success, there was no feeling of common cause with this Minister. David criticised the Minister’s focus on executive pay, saying that the housing issues are bigger than this and the “Movement” (meaning the NHF membership) is ready to meet the challenge. He argued that there is a strong fit between housing associations and what the Government’s Big Society agenda is trying to achieve. He pointed to the real achievements of housing associations as summed up by the “In Business for Neighbourhoods” strap-line. Housing Associations have actually been delivering change in line with the Big Society for years.

The Minister obviously does not believe this. He recognizes that housing associations have brought a lot of private money into delivering new housing and improving the existing stock. However, he thinks they need to be more efficient – to really do more with less – and wants them to “sweat” the publicly funded equity on their impressive balance sheets: “This isn’t a gesture; we need to squeeze the most out of every pound spent”. He seems unimpressed by associations’ record in helping their tenants escape from benefit dependency into work or any of the wider achievements of housing associations in supporting deprived neighbourhoods.

The problem is not limited to one Minister or the Conservative members of the Coalition. The Liberal Democrat attitude to housing associations is at best ambivalent. Matthew Taylor (Lord Taylor of Goss Moor) is an ex-LibDem MP and is now the NHF Chair but that does not mean that LibDem supporters wholeheartedly support the sector. On the face of it there is a logic that says they should favour not-for-profit providers that are somewhere between the private and public sectors. But that is not necessarily the case. Many grass roots LibDems are strongly opposed to “privatisation” and would put both PFI and LSVT under that heading.

The wider public is also by no means wholeheartedly behind the housing association sector. An opinion survey shortly before the Comprehensive Spending Review suggested that half the population would be quite content to see cuts in social housing spending. There may be a housing crisis but a large element of the population does not see housing associations as part of the solution. There is a stigma that attaches to social housing and that stigma also attaches to the sector’s tenants. A lot of people would go much further than the Government with cuts to welfare budgets. Many see the sector as reinforcing benefit dependency rather than helping people get a foothold in the economy.

The sector is faced by a major problem. For the first time in many years there is no special place at the political table. Housing associations were a favoured delivery vehicle of both New Labour and the preceding Conservative Governments. This is no longer the case. There is a double challenge. The first challenge is to show that associations can deliver – making use of the value in existing assets in the way Grant Shapps proposes and developing new delivery models and partnerships which provide more affordable homes. The second is to disprove the assumption that housing associations actually contribute to the problems of poverty and deprivation rather than providing a sound platform that helps people get on. This is probably the most difficult of the challenges.

Kim Penfold
November 2010