By Alistair McIntosh, CEO HQN
It’s baffling, isn’t it? You go to see a housing association and they tell you how hard it is to get social rents to stack up. And they’re right. Then you read the new Shelter report which says social housing pays for itself. And they’re right too. How can this be?
It’s because we are looking at everything the wrong way. Shelter is bringing in the savings to benefit bills from charging social rents instead of private rents. They are saying that this is how the Treasury should do its sums.
That’s how to get to the true costs and benefits. But this is not part and parcel of the viability appraisals done by individual associations. And for a very good reason. As things stand it doesn’t matter a jot. They stand or fall based on their own accounts, not those of the UK. This is what is leading to short-term every-man-for-himself thinking. It’s got to change. We must take the blinkers off. And we are not the only ones.
Hitachi is telling our government that they’d get things done faster if they just bit the bullet and nationalised big projects. Of course, they are talking about nuclear power stations. But there is something in this for us, too. If we are building new towns or doing a complex regeneration, it could be a good idea to get government to hold the ring. The risk is just too big for associations, councils or companies to take on by themselves. Something is bound to go wrong. It usually does. You will always hit technical problems that you didn’t foresee. That’s just the way it is. And if you are relying on profits from sales, that will come back to bite you at the worst time.
A few years ago, I was talking to some tenants on an estate that was going to be flattened. And, boy oh boy, did it have issues. Something needed to be done. The developers were promising to replace it with the New Jerusalem.
Yes, every tenant would get a splendid new home. It did look very exciting. What did I say? Don’t bother listening to these promises. The people making them will not be the ones delivering them down the line. There will be some type of cock-up and the plans will change.
It won’t be for the better. The risk would be a lot less if the state was in charge from the get-go. And of course it would bring in investors and experts to do the day to day lifting. If we gave tenants firm promises at the start we could break some logjams, couldn’t we?
So, for the really big stuff I think we do need to look to government. But most of the time councils and associations are the right answer. The Green Paper needs to make them more accountable. But how do we put them on a better financial footing? We need a new financial regime for housing.
At the moment we have a clash. Housing associations and councils struggle to put the money in place to build homes at social rents. It doesn’t stack up. Yet the Treasury should be crying out for them to save money and boost the economy. How do we get back on track?
First things first. The Treasury should run a check on the Shelter figures. They will be right as Capital Economics put them together and they are a top-notch outfit. But there is always room for debate on these things as there are so many assumptions about what happens and when. So knock the heads together and just agree a figure on the savings and use it to boost the grants to councils and associations today. That’s a quick fix.
But we also need to change how we do accounts for social housing. These need to show the savings to the benefits bill of low rents. And landlords must be compensated for this by the government so they can stay viable. According to the Shelter figures, there should be enough money in there to keep the landlords and the Treasury sweet.
Does this sound fanciful? Well, it’s the best I can do. And it’s a hell of a lot better than going on a roller coaster ride of relying on sales. You’re bound to come off at some point. It’s time for a fresh start. We will need to save money and boost the economy under Brexit. Cutting rents and building homes is a win-win. Go for it.