Who is Social Housing for, and who should it be for?

7/28/2019 Who is Social Housing for, and who should it be for?

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Who is social housing for, and who should it be for?1

Alex Marsh

School for Policy Studies

The University of Bristol

Bristol, BS8 1TZ, United Kingdom

e: [email protected]

(10/04/13)

The UK housing system is undergoing seismic change. While the Global Financial

Crisis has played a significant role in triggering change, particularly in the mortgage

market, that is by no means the whole story. For example, owner occupation peaked

in 2003-04 and was already on the wane by the time the financial crisis hit.

The arrival of so-called Generation Rent presents us with significant policy

challenges right now. But if it is an enduring feature of the landscape then it also has

huge ramifications for the future of social policy more broadly. If there are going to

be more substantial cohorts of people arriving in older age without achieving

outright home ownership then that is going to pose significant questions about

pensioner poverty, sustainable housing costs in older age, and paying for long-term

care.

I am not proposing to provide the answer to the key questions: Who is social

housing for? And who should it be for? Rather I am going to reflect on how thesedebates have evolved over time and where they might go next.

And I want to be clear that Bristol is not alone in attempting to reconcile the

competing pressures on the social housing stock. Local authorities up and down the

country are getting together with partners and other stakeholders and collectively

scratching their heads, trying to discern the best route forward.

And I want to be clear that there is no right answer to these questions.

There is an answer that works for you. That works for here. And that works for now.But it is an answer that is most likely provisional. And it is an answer that is most

likely partial. It may be impossible to satisfactorily square the particularly

complicated circle you are facing.

We face particularly challenging times, both economically and politically. But we

also face new opportunities in relation to the allocation of social housing. While

there remain a thicket of legal constraints on what can and cant be done, arguably

the system now offers more flexibility at local level than it has for a long time.

1 This is the text to accompany my presentation to the Bristol City Council event Who is social housing

for?, 09/04/13.


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I want to start by going back, before looking forward.

1. Who is social housing for?

The problems of access and allocation were wrestling with now may not be a

continual feature of the debate around social housing, but they are undoubtedly a

recurrent feature.

In the UK social housing on any significant scale got started after the First World

War.

Local authorities were chosen as the delivery vehicle for a national policy in part

because they represented a pre-existing structure that covered the whole country.

They offered a mechanism through which central government could make thingshappen relatively quickly. Other countries opted for different types of organisation

housing companies or housing associations as the vehicle to deliver non-market

rented housing. As my colleague at the LSE Anne Power wrote some 25 years ago:

councils became landlords without commitment, plan or forethought.2

The advent of large-scale state involvement in housing is associated with the

political slogan homes fit for heroes. So at the outset there was a perception that it

is was a reward for ones contribution to society.

The idea that certain households were entitled to reasonable preference emergedin the 1920s. Such households should be given some form of headstart when

accessing social housing. That idea has stayed with us to the present day. However,

along the way the question of which households should be given reasonable

preference has been contested: categories of eligible households have been argued

over and the rules have been redefined.

The history of social housing over the long half century (1919-1979) of its rise is one

of oscillation between different understandings of the purpose of social housing. The

pendulum has swung between periods when it was seen as a mainstream tenure

providing housing for general needs and periods when there was a focus on slumclearance and the housing of those in most acute need.

Throughout this period the tenure grew numerically and proportionately so that at

its numerical peak three out of ten households were living in local authority housing

alone. It was, by definition, a mainstream general needs tenure.

Throughout this period there was also a tension between suitability and need in

the allocation of social housing. And the definition of need here has been unstable:

2 Cited in Cowan, D. (2011) Housing law and policy, Cambridge, CUP.


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it has been seen as encompassing not only housing need (eg. overcrowding

accommodation) but also social need.

Symbolic of the early years of social housing was the housing inspector. These were

usually middle aged, middle class women who passed judgement on the suitability

of a particular household for a social housing tenancy. Judgement was passed on

housekeeping standards and whether a household could be entrusted with the

stewardship of the social rented property.

Social housing was not for the poorest and the most problematic. They lived in

private renting.

Suitability was progressively displaced in the policy rhetoric. From the 1960s

onward greater emphasis was placed upon apparently objective methods of

assessing comparative need as the basis for determining priority for access to social

housing. Perhaps the zenith of this approach was the passing of the 1977 Housing

(Homeless Persons) Act.

While the policy rhetoric changed and new practices developed, the way the policy

operated on the ground often changed rather more slowly. Concerns with suitability

lingered.

Needs-based allocation schemes proved problematic for a variety of reasons,

including their complexity, lack of transparency, and the incentives that were

created for applicants to try to game the system.

But it was their interaction with other policy developments that proved to be a lethal

cocktail for social housing. In particular, the interaction of legal requirements to give

priority in allocations to certain households with the outcomes of the Right to Buy

and the reduction in the supply of relets resulted in a higher and higher proportion

of lettings going to those with acute needs. In areas of most acute housing pressure

statutorily homeless households came to account for the vast majority of lettings.

The net result of this process in some local authority areas is geographical

concentrations of poverty and management problems.And this process can become self-reinforcing as areas become labelled as

problematic and stigmatized. There is a risk that areas become disconnected from

labour markets and that households can experience problems with (re)entering the

labour market as a result of, for example, postcode discrimination.


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2. On the effective use of social housing resources

The idea that social housing provides people with accommodation throughout their

lives has considerable currency. But in some senses it is a remnant of the era of social

housing as a mass tenure, which has already passed.

In fact the idea of a home for life in local authority housing was not embodied in

law in the form of secure tenancies until 1980. The current Coalition government has

challenged it sharply, on the basis that allowing people to stay in situ, even though

their housing needs have changed, isnt the most effective use of scarce resources.

A while ago the relevant Government department linked subsidized rents with

housing need. They argued that there were households who could afford to live in

the private sector and whose continued occupation of the houses at subsidised

rents means the exclusion of those whose need is unquestionably greater.3

But who was this?

Grant Shapps in 2011, pressing the case for social housing reform?

No, the Ministry of Health in 1931.

And in 1933, the London County Council wrote to 300 tenants suggesting that they

vacate their properties in the interests of those persons whose need was greater. It

appears that half actually did so.4

Debates over access to social housing as household circumstances improve are not

new.

3. Continuity and change in social housing allocations

Continuity

Some of the key parameters of the allocations framework have been left relatively

unscathed by the Coalition government. In particular, the notion of reasonablepreference, and the broad categories within it, is still with us, although an emphasis

upon the housing of ex-service personnel has been added.

There are also a set of broader duties associated with, for example, the Equalities Act

and the Children Act that have to be taken into account when framing policy.

3 Cited in Cowan, D. (2011) Housing law and policy, Cambridge, CUP.

4 Ministry of Health, 15th Annual Report 1933-1934, Cmd 4664, London: HMSO, 1934, p 160.


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Change

We are, however, experiencing quite a significant change in the orientation of policy.

Choice was the big theme in allocations from the late 1990s onward. The Labour

Government promoted choice based lettings an idea imported from theNetherlands throughout the 2000s. Choice based lettings typically represented a

radical simplification of systems for prioritising applicants. The intention was to

increase the intelligibility of the system in order to facilitate comparison and

consumer choice.

The notion of choice carried through into the relaxation of registration criteria. In

order to open up the possibility of different types of household accessing social

housing including those who are assessed as having limited or no housing need

the hurdle for entry to the system needed to be lowered. So waiting lists were

opened up and requirements relating to local connection, for example, were diluted.

If you had no assessed housing need the chances of accessing a social letting may

have been, in practice, very possibly vanishingly small, but there was nothing to

stop you from registering with the system. Who knows, you might get lucky. In fact,

this was one of successes of choice-based lettings. By opening up the system to a

wider pool of applicants it was possible to let many of the properties that had

previously been deemed difficult to let.

One byproduct of choice based lettings is that waiting list or housing register data

become less informative as a measure of local housing need. If anyone can join theregister, regardless of their level of housing need, then the register may be carrying a

large number of people who are adequately housed but who might just prefer a

social housing tenancy, should one be available. We have seen waiting lists grow

sharply over the last decade. Some of that undoubtedly represents a genuine

increase in housing need, but how much is difficult to say.

This was something we pointed out to DCLG (or ODPM, as it then was) way back at

the start of the CBL era. Even though the data are rather suspect, it hasnt stopped

housing ministers under the current Government invoking the large increase in the

waiting list as a justification for changing of the system and seeking to weaken

security of tenure.

While choice-based lettings had positive outcomes, it is not without drawbacks. In

particular, there is the issue of raised, but ultimately unfulfilled, expectations.

Inserting the word choice into the title of these schemes might lead applicants to

think they were actually going to have a choice. And a choice, read positively,

suggests the availability of more than one option that is desirable.

At best what they might find, as one housing manager in the Midlands put it, is that

they can: choose to be considered for a property, rather than being in the position


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of choosing a property for themselves. In contrast, they may find that the choice

available is not one that is particularly appetizing. The prospect on offer in one low

demand area in the North West was characterised to me by a local housing officer as:

like choosing between something you dont like and something you like less than

that.

While there were positives and negatives to choice-based lettings, it appears that this

Government is rather less enthusiastic about the whole idea than its predecessor.

A couple of developments featured prominently in the discussions around CBL, but

they are in fact conceptually separate.

The first is common application procedures and, a major step beyond that, common

allocations policies. Taken to the extreme this became a single system for handling

all new lets and relets in an area though a single administrative process. Greater

commonality of approach makes the system easier for the applicant to negotiate. It

doesnt matter at which point they enter the system, which landlord they approach,

they will only have to come to grips with a single application system, a single set of

rules. Some degree of common procedure was already operating in some local

authority areas well before CBL arrived. Other authorities used CBL to work with

their partners to move towards greater commonality. In Bristol the arrangement has

not evolved to a common allocation policy, but such arrangements have emerged

and functioned effectively in other areas.

But are these sort of shared approaches still an aspiration?

By suggesting the possibility of handling transfers, where reasonable preference

does not apply, through separate systems of allocation it would appear that at

national level the government is rowing back from some of the key principles of the

CBL approach. But that doesnt mean that common approaches cannot still serve a

purpose locally.

Or is the future one involving a return to landlords operating their own lettings

criteria through their own processes? The resulting system would be more

fragmented or more tailored and targeted, depending on your perspective.

Another component of the CBL initiative was to break out of administrative

boundaries to create city-region, sub-regional or regional systems for allocating

rental property. In its more expansive form it could also encompass accessing

properties in the private rented sector or through forms of intermediate or low cost

home ownership.

Are the problems currently facing the city best handled within its administrative

boundaries? Or is the idea of the city-region and the functional housing market area

key to achieving positive housing outcomes for the maximum number of


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households? Is there a case for redoubling efforts to forge strategic and operational

links across local authority boundaries?

The shift away from such an overriding emphasis on choice for applicants is not the

only aspect of the system that has changed.

Under the Localism Act we have also seen changes to the way in which local

authorities can discharge their homelessness duty. It may be that local authorities

have to continue to work within broadly the same structures for prioritising

households, but the Government has reconfigured what follows from being accepted

as statutorily homeless. No longer does that status necessarily lead to a security or

assured tenancy in social housing. Rather it can lead to a suitable private rented

sector tenancy of at least 12 months duration. The key change here is that previously

the local authority had been obliged to secure the applicants consent for discharge

of duty into the private rented sector. That requirement has now been removed.

There is a question mark about how sustainable this option will be, given the

changes to the local housing allowance. It may well be that as restrictions on benefits

progressively tighten over time local authorities cannot find suitable affordable

private rented tenancies. If a local authority were loath to export homeless applicants

to cheaper areas then it faces a dilemma.

The final piece of the allocations jigsaw that has changed relates to security of tenure

and the arrival of the fixed-term tenancy. The Governments view is that such

tenancies should be for five years, and in exceptional circumstances they can be fortwo years.

It is clear that different local authorities are responding to the possibility of offering

fixed term tenancies in different ways. Some local authorities have taken explicit

policy decisions not to use them and to stick with secure tenancies in local authority

housing. At the other extreme are authorities who seem keen to probe the limits of

what constitutes an exceptional circumstance and seek to offer two year tenancies

at every available opportunity.

And lurking somewhere in the background we have the proposal that goes underthe name of pay to stay. Grant Shapps, as Housing Minister, was keen on the idea

that if households wish to stay in their social rented property after their household

economic circumstances have improved then they should be obliged to pay a higher

possibly a market rent for the property. The idea was consulted on a while ago

and then everything went rather quiet. But it made a cameo appearance in last

months Budget. So it hasnt disappeared entirely.

Whether, if the idea is implemented, it will be passed on to local authorities as a

power or a duty we dont yet know.


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If this idea emerges as a policy and is embraced then it is likely affect allocations

indirectly in a number of ways. It could reduce the attractiveness of social housing in

the first place. It could create perverse incentives for the household not to improve

their circumstances. It creates the incentive for households in improving

circumstances to exercise their Right to Buy if they want to stay where they are.

Alternative futures

It is possible to identify alternative futures for social housing. Which one comes to

pass is, to some extent, a matter of local policy choice.

In thinking about this issue we need to question whether established thinking and

old solutions are sufficient. Will it be enough simply to tinker and tweak? Will a

reweighting and reordering of the various preference and priority categories besufficient?

Or is a more radical rethink required? It is appropriate, for example, to look much

more closely at the way in which affordability issues feature in needs assessment?

The law imposes constraints upon what can be done, but the structures are looser

than they have been for some time. So there is more flexibility.

A key part of the decision on future directions is a consideration of risks.

Reforms to the social security system loom large. We have the impact of theunderoccupancy rules; the 500 per week benefit ceiling; direct payments; and

Universal Credit, which may or may not arrive, and may or may not bring absolute

chaos in its wake.

We tend to focus upon the implications of these changes for tenants and their ability

to sustain their current accommodation. We think in terms of current tenants need

for mobility to adjust their housing consumption either within or beyond the social

rented sector. Are our allocation systems responsive enough to deal with the sorts of

problems that are going to emerge?

But we also need to be aware of the implications of these changes for the

sustainability of existing business models and their implications for the delivery of

new social housing.

Were currently in the middle of the Affordable Housing regime that has increased

rents. This has either been underpinned by larger housing benefit bills or reprofiling

of tenants towards those who are able to pay higher rents without assistance.

We know that the Affordable Rent regime is time-limited. Unless the Government

has a Damascene conversion in relation to the wisdom of public borrowing, in futurenew development is likely to require greater reliance on private funding and the use


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of new, and possibly more exotic, financial mechanisms. The implication is again

likely to be upward pressure on rents. And again that in turn may mean greater

reliance on housing benefit to make the finances stack up. Or different types of

tenants.

There may well be significant trade-offs between keeping rents low and continuing

to develop on a significant scale, although it will most likely vary substantially

between landlords.

Equally importantly, can we be sure this is it? Are the benefit changes we already

know about the only changes the Government is going to make? Or can we expect

another round of cuts affecting welfare budgets? It seems highly likely. If so then are

current business models and business plans suited to even more straitened times?

How many business strategies are in the process of being reformulated in order to

reduce key sensitivities and increase resilience? And how does that fold back in tothe sort of tenants and hence allocations policies landlords are looking for?

How are allocation priorities to be set for the next period?

At individual level, who is to be seen as most deserving of assistance or least

blameworthy for their misfortune? For when it comes down to it those are the sorts

of judgements that underpin allocations schemes.

And how are judgements about which individuals deserve assistance to be balanced

with their aggregate impacts?

For many years landlords have been used to thinking about sustainable and

balanced communities: something that it is often easier to acknowledge at the policy

level than to deliver in practice. This concern for sustainable communities can be

and has been reformulated as another type of risk management.

But alongside social sustainability we are increasingly finding economic concerns

being raised. What is the role of social housing in helping to sustain the local

economy? What is its role in housing local low income workers ahead of those with

more acute and identifiable housing and social needs? It may be that greater priorityfor low income workers is going to be inevitable in order to ensure that local

economies keep functioning. The knock-on consequences of not reprioritising here

would be too great. But of course a change of strategy will itself have different

knock-on consequences that will need to be managed.

Two of the most obvious likely future directions for social housing are as:

1. Welfare housing. The sector residualises towards a safety net for the most

vulnerable the tenure of last resort for those unable to secure accommodation by

other means. A revised Right to Buy and the uneconomic nature and increased


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riskiness of new development mean the sector doesnt grow. This moves social

housing more towards the sorts of models operated in the US or Australia.

2. Housing primarily for the low income strivers. The sector moves upmarket so

that a greater proportion of lettings go to those in low paid but relatively secure

employment. This stabilises business plans and allows access to new forms of

finance for development. This has been referred to by practitioners as improving the

average quality of lettings. In many ways this would represent a return to where

we started for social housing. But a modern version of the strategy would probably

include involvement in supplying other types of housing product also, such as

shared equity or intermediate rent and market rent.

The second of these futures seems more likely than the first. If nothing else, the

pressure on Registered Providers to deliver on their business plans and satisfy their

lenders will mean some will feel obliged to go in search of more diverse and moresecure income streams.

The question then becomes what happens to the most vulnerable? If they are not

living in social housing they are likely to gravitate towards the bottom end of the

private rental market. Indeed, that is already happening. But to what extent is this

move managed? And to what extent should local authorities be taking action to

ensure that housing conditions in this part of the market do not deteriorate too

dramatically? Any rethinking of the aims of social housing needs to be embedded in

a broader strategy across the rental sector as a whole.

But are these alternative futures mutually exclusive? Or can they be reconciled and

combined?

Is it possible to do something the tenancy lengths? Can a differentiated local policy

be developed that allows the sector to act both as long term accommodation for

those who would struggle to live independently elsewhere and at the same time

provide a temporary safety net? And can such an approach be framed in a way that

avoids creating perverse incentives?

If the sector is going to seek to combine these alternative futures and cater for boththe most vulnerable and those who need help primarily to cope with affordability

issues then there are further choices.

Is it a question of mixing even more diverse communities in specific locations?

Mixed communities have been a policy application for a long time, but their

achievement in practice can be a challenge.

Or is it a question of adopting more explicit strategies of segmentation and

differentiation? Would it be appropriate to cater for different groups of tenants

under different brands with different allocations procedures? This could avoid anyof the connotations of welfare housing impairing the success of attempts to


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provide more market-oriented products to assist households with affordability

issues. This type of differentiation has been managed by Registered Providers

through the use of group structures. Is the future one in which this approach

becomes more common? If that is the favoured model then, for me, it tends to

suggest a considerable degree of co-operation between landlords to planstrategically placing allocations policy within a much broader context.

All these questions take me back to the start. There is no right answer. We are the

start of a process that is seeking an answer that works for you. That works for here.

And that works for now.

Who is Social Housing for, and who should it be for?

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