Coalition’s housing plans will disincentivise aspiration

Stephen Evans has worked on and published research on a range of public policy areas, including welfare reform, skills, productivity and housing; he spent five years as a Senior Policy Adviser at HM Treasury, as well as two years working on the independent Leitch Review of Skills and went on to be Chief Economist at the Social Market Foundation

The government yesterday unveiled what it describes as “the most radical reform of social housing in a generation”. The housing minister, Grant Shapps, argues that:

“The new system … will also be more flexible, with councils and housing associations able to offer fixed tenancies that give people the helping hand they need, when they need it. But above all it will be fairer – councils will now be able to make decisions that genuinely meet the needs of local people.”

Attracting most attention has been the end of guaranteed lifelong tenancies, though only for new tenants – current tenants will be exempted from the change.

The idea is to promote greater mobility, and also to free up housing stock for new tenants in need, by requiring those whose financial circumstances improve to move. It will be for local councils and housing associations to decide on what basis to offer tenancies, but the minimum will be two years.

There is a sound argument to try to support greater mobility in social housing – only five per cent of social tenants moved home over the past year compared to almost a quarter of tenants in the private sector, though it is unclear what an ‘optimal’ level would be. It is also important to emphasise that it is councils and housing associations that will decide the length of tenancies, so the key question is how they will use their new freedoms.

However, the clear risk is that telling people they will need to move if their financial circumstances improve could provide a disincentive to find work, not least as the Department for Work and Pensions’s white paper on welfare reform argues that people value the certainty of benefits and this can lead to them not taking up work. Councils and housing associations will need to proceed with caution.

In addition, there is a risk to the balance of communities – social housing could, even more so than today, become the preserve of those out of work. The evidence on whether a ‘culture of worklessness’, whereby high levels of worklessness in an area have a knock-on impact on people, is mixed, but there is clearly a risk in removing positive role models for working and further embedding the default that the aspiration is, when successful, to move out of the area.

This could go against the goal of mixed income communities and undermine regeneration efforts which rely on mixed communities.

While the end of lifelong tenure has attracted most attention, there are a number of other details in the Department of Communities and Local Government’s announcement. Councils will be able to set their own rules about who qualifies to go on the housing waiting list.

The government has also confirmed its introduction of the Affordable Rents scheme trailed in the Spending Review. Under this, social landlords will be able to offer tenancies based on 80 per cent of market rents, rather than 70 per cent as currently.

Previous analysis by Left Foot Forward showed the potential tensions within this policy that will need to be squared for it to work. Innovative new models are going to be needed if this range of policy changes are going to be able to deliver an increased supply of affordable housing.

Finally, the government confirmed its decision to abolish the Tenant Services Authority (TSA), the body which regulates social housing. Instead, tenants will be expected to scrutinise and hold their landlords to account directly, with landlords required to support tenants’ panels in order to do so. The government argues this is to empower tenants, but it is not clear what support will be available for tenants in doing so (either from their landlords or elsewhere) or what will happen where tenants do not set up these panels.