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The Coalition’s Record on Housing: Policy, spending and outcomes

Social Policy Association Conference 201414th-16th July, Sheffield

Delivered 15th July

Becky TunstallCentre for Housing Policy, University of York

01904 321 475Becky.tunstall@york.ac.uk

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This paper is a small part of a large programme:‘Social policy in a cold climate’

Three year research programme running 2011-2015Lead by Prof Ruth Lupton, University of ManchesterFunded by JRF, Nuffield, Trust for London

Aims:• To track social policy goals, funding, implementation, impacts 2007-

2014– A series of reports on New Labour policy were published 2013– Now assessing change 2010- due to the recession, austerity, and other

Coalition policy

For more information:http://sticerd.lse.ac.uk/case/_new/research/Social_Policy_in_a_Cold_Climate.asp

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Contents of paper

1) Introduction: Context and inheritance2) Broad policy goals 2010- 3) Actual policies 2010- 4) Resources expended 2010- 5) Outputs and outcomes achieved 2010- (data to date)6) Summary

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1) Introduction: Context/inheritance (i)

• Housing implicated in credit crunch, recession– Drop in housing devt 2007- = drop in employment, demand, GDP– Drop in house prices 2007- = reduction in consumption, demand, GDP

• Housing directly affected by credit crunch, recession– Increased caution of lenders 2008- added to existing affordability

problem– Provision of new housing generally procyclical– Low interest rate policy 2009- protects borrowers (but creates future

risk)• Labour govt policy 2008- started with some of main potential

responses:– Stamp duty holidays– Bridging funds for stalled development schemes

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(ii)

• But Coalition diagnosed long term problems too: housing system “dysfunctional”, with “persistent market failure” (Cameron and Clegg in HM Government 2011) before 2007

• Interpretation widely shared (eg Whitehead and Williams 2011); increasingly part of public discourse (2013-)

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2) Broad Coalition policy aims

How to identify them - sources used:• Coalition agreement (HM Govt 2010)• Emergency and other budgets, CSR• Legislation esp Localism Act 2011, Welfare Reform Act 2012;

regulations and orders• Other policy documents esp Laying the Foundations: A housing

strategy for England, 2011• Statements on www.gov.uk • Ministerial speeches and departmental announcements; some pre-

2010 shadow speeches• Some pre- and post-2010 think tank papers esp CSJ, Policy Exchange• (Circular but) – significance of inputs • Academic commentary – as yet in short supply

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Constraints on aims (i): The Coalition’s broad approach to housing policy

• Housing policy was a means to achieve economic policy goals: – “We need to get the housing market… moving again. This is central for our

plans for economic growth” (HM Government 2011 pvii). • To some extent, economic policy could be a means to achieve

housing policy goals• However, housing policy goals were clearly subsidiary to, and

constrained by, economic policy goals: – “Housing must take its share of the burden. If we don’t there is a real threat

to the economic future of this country” (Shapps 2010b npn).

(and - principally by improving access to home ownership - housing policy might contribute to social mobility, health and wellbeing (HM Government 2011)).

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Constraints on aims (ii)

Central government’s role was, and should be, limited:• “Housing is the most market-oriented of all my Department’s

responsibilities. Policy should go with the grain of the market” (Pickles 2011a npn).

• “When I say ‘we’, I really mean you [private and voluntary sector audiences] . You are the ones who will do all the hard work” (Shapps 2011c).

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The Coalition’s specific stated policy aims

1. Increasing the number of available homes (CLG)2. Improving the rented sector (CLG)3. Providing housing support for older and vulnerable people

(CLG)4. Helping people to buy a home (CLG, HMT and HCA)5. Simplifying the welfare system and making sure work pays

(DWP)6. Achieving strong and sustainable economic growth (BIS,

HMT and UKEF)

Table 1: Housing and housing-linked policies amongst the Coalition government’s 224 overall stated policy aims, and responsible departmentsSource: www.clg.gov.uk Accessed January 2013

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Comments on specific stated aimsSpecific, stated policies are only part of policy – need to examine resources and ‘non policy’

Specific, stated policies include contradictory policies Eg Stated aim 1. Actual policy package includes policies likely to delay/decrease the number of general needs homes available compared to trend and ceteris paribus

• Affordable Housing Programme – a substantial cut in funding and unprecedented ‘end to new social housing’

• Abolition of Regional Spatial Strategies and house building targets; new National Planning Framework, neighbourhood plans, powers to stop ‘garden grabbing’, other use class changes, reissue of PPG 3 (in interests of localism)

(These issues are not unique to the Coalition govt)

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3) Actual policies 2010-

My view of the most significant policy tools and policies 2010-2014 in terms of the precedents set; people/homes affected; resources…– ‘End of social housing’ (emergency budget)– Commitment to increase private renting (Laying the Foundations)– Restructuring of planning system (Coalition Agreement 2010;

Localism Act 2011)– Substantial change in Housing Benefit eligibility (regulations and

orders, Welfare Reform Act 2012)– Help to Buy (Budget 2013).

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4) Resources expended: Following the money

Defining total UK govt housing resources =

DCLG expenditure on housing (England)+ HMT on-going expenditure on housing and new schemes (some UK, some England)+ DWP expenditure on Housing Benefit (UK)

+ Scottish, Welsh, NI govt expenditure on housing?+ LA expenditure on housing (in addition to ring-fenced

budgets from central govt)?+ Registered Provider (housing association) expenditure? + How to deal with capital expenditure and loan support over eg 30 years?

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Data: UK govt accounts

Department of Communities and Local Government (DCLG) expenditure , ‘resource’ (revenue) and capital (England)

All UK govt expenditure on housing and housing-linked things

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DCLG expenditure (England)

i. ‘Departmental Expenditure Limits’ (DEL) (fixed budgets), a) ‘resource’ and b) capital

ii. + ‘Departmental Annual Managed Expenditure’ (AME) (budgets fluctuate according to need, rules), a) ‘resource’ and b) capital

– Both available for 2 parts of DCLG:• ‘Communities’: includes: housing to buy and rent; tenant

empowerment; homelessness, rough sleepers and supporting people to stay in their homes; building standards; support for homeowners;

• ‘Local govt’: includes financial support to Local Authorities, including revenue support grant.

– DCLG DEL + AME not all govt‘s housing expenditure– Not only housing expenditure

i) a) DCLG Departmental Expenditure Limits, Resource (England), real terms (2012/13 prices), £m

Source: PESA 2013 Table 1.4

2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16£0

£5,000

£10,000

£15,000

£20,000

£25,000

£30,000

£35,000

£40,000

CLG Communities CLG Local Government

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DCLG DEL Resource: Summary

2009/10 £37bn2015/16 £12bn (planned) (real terms, 2012/13 prices)

Biggest percentage reduction of all departments: -66% local government section; -76% communities section

Other big losers: Foreign and Commonwealth Office - 49%; Transport - 44%; DWP - 38%; DEFRA - 37%

BUT - Up to £8bn of the £11bn real terms budget drop due to changes in responsibilities (eg transfer of some business rates to LAs, Council tax benefit to LAs)

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i) b) DCLG Departmental Expenditure Limits, Capital, (England), real terms (2012/13 prices), £m

2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16£0

£1,000

£2,000

£3,000

£4,000

£5,000

£6,000

£7,000

£8,000

£9,000

£10,000

CLG Communities CLG Local GovernmentSource: PESA 2013 Table 1.9

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DCLG DEL Capital: Summary

-62% 2009/10-2015/16Largest percentage reduction amongst depts with significant capital budgets

Autumn Statement 2012:– DCLG (Communities) got one of largest absolute increases in capital

DEL for 2013/14 and 2014/15: £0.7bn and £0.8bn (HMT 2013 p47). Budget 2013: – New funds for Help to Buy and Build to rent schemes, mainly for

DCLG’s Capital DEL budget: £1.3bn in 2013-14 and £1.9bn in 2014-15 (HMT 2013 p47)

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(iii) UK govt expenditure by type

Total UK govt housing expenditure = ‘Housing and community amenities’• Housing development (LA devt and ‘other social’ devt) (28% of the

total in 2009/10)• Community development• Water supply• Street lighting• R&D housing and community amenities• Housing and community amenities n.e.c.

+ ‘Social support: housing’ (Housing Benefit)

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‘Housing and community amenities’ expenditure, UK, real terms (2012/13 prices), £bn

Source: PESA 2013 Table 4.3

1989-90

1990-91

1991-92

1992-93

1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13£0

£2

£4

£6

£8

£10

£12

£14

£16

£18

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UK govt ‘housing and communities’ expenditure

– Dramatic increase in spending from 2nd Labour term, 2001-– Peak 2008/09– Fall under Coalition 2009/10-2011/12 was £6.7bn or 43%– Stablised in 2012/13.

Expenditure remains at or above level seen for the 1990s and early 2000s.

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UK govt ‘housing and communities’ expenditure in the nations of the UK, 2007/08-2011/12, gross terms, £ per

head

2007-08 2008-09 2009-10 2010-11 2011-12£0

£100

£200

£300

£400

£500

£600

£700

£800

Northern Ireland Scotland England Wales

Source: PESA 2013 Table 9.15

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UK govt ‘housing and communities’ expenditure by nation: Summary

Much higher spending per head in NI

Cuts varied: Under the Coalition, 2009/10-2011/12, spending per head changed:- -45% England- -14% in Scotland- -15% in Northern Ireland- +8% Wales

Spending per head rose slightly in the second year of Coalition government 2010/11-2011/12 in all nations except England

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‘Housing and community amenities’ expenditure in the regions of England, 2007/08-2011/12, gross terms, £

per head

Source: PESA 2013 Table 9.10

2007-08 2008-09 2009-10 2010-11 2011-12£0

£50

£100

£150

£200

£250

£300

£350

£400

£450

£500

London North West North EastYorkshire and the Humber South West South EastEast Midlands East West Midlands

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UK govt ‘housing and communities’ expenditure by region: Summary

Much higher spending per head in London; somewhat higher in NE

Cuts varied: Under the Coalition, 2009/10-2011/12, spending per head changed:- -60% East- -51% South West, South East- -48% London

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UK govt ‘housing devt’ expenditure (part of ‘housing and communities’ expenditure), 2007/08-2011/12, gross terms, £m

2007-08 2008-09 2009-10 2010-11 2011-12£0

£2,000

£4,000

£6,000

£8,000

£10,000

£12,000

Source: PESA 2013 Table 10.1

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UK govt ‘housing devt’ expenditure: Summary

Peaked in 2009/10Fell 44% to 2012/13

Changes for UK housing devt in gross terms closely match the extent of reduction seen for DCLG Capital Departmental Expenditure Limits for England in real terms over the same period

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UK govt ‘Social protection: Housing’ expenditure, 2007/08-2011/12, gross terms, £m

2007-08 2008-09 2009-10 2010-11 2011-12£0

£5,000

£10,000

£15,000

£20,000

£25,000

£30,000

Source: PESA 2013 Table 10.1

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UK govt ‘social protection: housing’ expenditure: Summary

Unlike all previous forms of housing expenditure, social protection: housing rose under the Labour government and continued to rise under the Coalition

Gross spending increase 2009/10-2011/12:• +£3.0bn• +13%

Unlike all previous forms of housing expenditure, change was similar in the nations of the UK:• +13% England• +13% Wales• +12% Scotland• +15% Northern Ireland

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Final summary on money

2009/10-2011/12:+£3bn (gross) increase in ‘social protection: housing’<£6.7bn (real) reduction in ‘housing and community amenities’ <£4.7bn (gross) reduction in ‘housing development’

Did housing “take its share of the burden” (Shapps 2010b npn)?• In England, DCLG and ‘housing and community amenities’ spending took

more than share. Big difference between England and other nations• ‘Social support: housing’ did not take its share• Result has been a switch in mix between ‘housing and community

amenities’ (inc new devt) and ‘social support: housing’:– Social support housing 58% -> 72%, housing devt 28%->18%

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5) Outputs

Comparing baseline - 2010/11- (depending on policy start date), with most recent – 2012/13 and 2013/14 in some cases ie 1-3 years

Eg For Policy 1. Increasing the number of general needs homes available – Potential indicators: a) New housing completions; b) net increase in total stock; c) public subsidy per additional affordable unit

2.Improving the rented sector – Potential indicators: a) Change in number/proportion of rented homes meeting the Decent Homes Standard; b) Reduction in registered disputes between landlords and tenants; c) Increase in tenant satisfaction…

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Eg Aim 1a): UK housing completions, all tenures: Q2 2010-Q1 2013: Increased number of homes -but no rise in rate of completion

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

10,000

20,000

30,000

40,000

50,000

60,000

Private Enterprise Housing Associations Local Authorities

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Outputs: Who (if anyone) gained

Need to add in assessment of impact on equityUsually absent in housing studies – hard to get data on housing cost/affordability/quality/disadvantage split by income on inequalities in these measures

Eg 1. For Policies to increase the number of general needs homes available, potential indicators =• Net impact on size, percentage of affordable housing stock (proxy

for supply to poorer)• Net impact on ‘housing need’ – harder to assess; can state not great• Net impact on ‘housing cost induced poverty’ - negligible

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6) Summary

Follow the money

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References

HM Government (2011) Laying the Foundations: A housing strategy for England London: Stationery OfficeHM Government (2010) The Coalition: our programme for government (‘The Coalition agreement’) London: HM GovernmentHM Treasury (2013) Public expenditure: Statistical analyses (‘PESA’) 2013 July 2013 Cmd 8663 London: HM TreasuryPickles, E (2011a) Speech to the Home Builders Federation ‘One year on' conference, Home Builders’ Federation, Savoy Place, London, 31st OctoberShapps, G (2010b) Speech to the National Housing Federation annual conference 2010, Birmingham, 22nd September Shapps, G (2011c) Speech to ‘No second night out’ Homeless Link conference 12th October Whitehead, C and Williams, P (2011) ‘Causes and consequences? Exploring the shape and direction of the housing system in the UK post the financial crisis’ Housing Studies 26(7-8), pp1157-1169???