Thursday, 5 August 2010

David Cameron's Housing Policy-On-The-Hoof

The title of a post by Tim Carpenter of The Libertarian Party, which I repost in full
"During a “live Q&A” session, David Cameron was asked by a member of the audience about her predicament in relation to housing shortages. She was currently sleeping on an inflatable bed in the living room in her 2 bedroom council property so her two teenage daughters can each have a bedroom to themselves while the council had not found her a bigger house.

There are a few points I wanted to highlight. One was the question itself, which exposes a rather depressing mindset, next was David Cameron’s response that has good and not so good components to it, but first I will visit the concept of this thing often called “Council Housing”.

“Council Housing” is a common term often lazily used to describe many different things. I am sometimes guilty of this laziness, too, though I try to correct myself. The term forgets the work of charities such as Peabody and other Housing Associations. Some use the term “Affordable Housing”, which, right from the off, is totally subjective and meaningless - by definition pretty much all housing in the private sector is “affordable”, seeing as the resident can “afford” it. Another is the newspeak term “Social Housing” which is, along with most newspeak, meaningless yet attempts to get a manipulative hook into the mind and twist. That term has no respectable use.

A more appropriate term to use here might be “Subsidised Housing”, for the purpose, whether you agree with it ideologically or not, is out in the open – to provide a subsidy for housing. Once one uses this term, one can even incorporate any housing funded by or in part with Housing Benefit regardless of who owns the bricks and mortar. I think this is a very useful term, because it more aggressively begs the compound question “what, when, where and for whom?”. These questions are crying out to be revisited and David Cameron’s response has triggered a long overdue debate in the wider public domain, noting that such debates have never gone away for us in the Libertarian Party.

David Cameron’s response was very interesting. In a nutshell, he called into question the presumption that a Council Tenant has, basically, a subsidised tenancy for life and even transferable on to their children, without means testing. David Cameron suggested that people be re-assessed after a period of years to see if they still qualify for that accommodation. He opened those remarks with the recognition that the questioner’s need had grown, and how that should be tackled is also worthy of an airing, as it all comes into the mix.

The issues here are a) a subsidised secured tenancy without review, b) the ability for descendants to inherit same, c) the obligation upon the State to react to changes in circumstances and d) what constitutes a valid “change”.

Subsidised tenancy without review: David Cameron has dared question the status quo. This is long overdue. The idea that one is handed a secure, subsidised tenancy for life without a regular review of circumstances is amazing, astonishing. Some would describe it as obscene. I am one of those people. One would think that subsidised housing meant housing for those not able to afford market rates. Under that basis, regular means testing is a natural and expected part of the contract. Without regular reviews, the demand for subsidised housing will grow and grow as people temporarily slip into poverty but permanently gain access to the housing that that previous circumstance entitled. This creates a ratchet effect. The temptation to illegally sub-let is also there, and anyone who thinks this does not happen already is naïve.

Inheriting those secure, subsidised tenancies exacerbates the ratchet and potential for illegal sub-letting mentioned above. One must also not forget that the transfer of a secured, subsidised tenancy is a form of inheritance with real and significant value. Of course, the Left would not see any hypocrisy in such arrangements and their attitude to inheritance by “the rich”. Oh no [1].

To resolve the current situation, things need to change. While I can see that progress can be made by removing legal obligations upon Municipalities to maintain secure tenancies and inheritance – which is a non-Authoritarian, localising twist on suggestions made by David Cameron – we should also look at what is supposed to be going on – Subsidised Housing. If somebody no longer qualifies for subsidised housing, there should not be a need to evict them, but have the ability to charge them the rate of rent and costs that the family that otherwise would have rented that house at a subsidy is now paying outside. This way you remove the whole question of eviction and disruption to schools and community that people say will happen, while enabling the State to have the resources to house those in desperate need.

When you then consider that the cut-off need not and, in reality, should not be a binary all-or-nothing, the adjustments in the payment of housing benefit could provide a smooth transition as people earn steadily more. If market rates are levied on people who would qualify for subsidy, the higher Housing Benefit is there to meet those rents and so are netted off. What it does do is enable the Municipality to help those who need accommodation to get it without being blocked by those who are not quite ready to move out of Municipal housing.

In parallel, there needs to be further reductions in centrally enforced minimum levels of Housing Benefit, and to reduce or end the legal entitlement for people to gain more and more resources as they grow their families or access such funding while being a bad tenant. This localises the decision making process.

There is then the possibility to go one step further and have all the municipal housing stock charged at market rates and then Housing Benefit used as the mechanism to subsidise such rentals on a case by case basis[2]. One then only need to review Housing Benefit.

This will allow people more freedom of movement to find work, escape disruptive neighbours and remove the obligation upon the Municipality to house them. It will also expose the housing the State is not maintaining, for, as everyone would be free to move to private accommodation whilst Housing Benefit could never be higher than rentals, tenants will vote with their feet.

This then takes us on to the last point raised by David Cameron that I want to cover here, which is linked closely with the comments made by the questioner.

To remind ourselves, the questioner was explaining that the Council had not re-housed her, even though she was sleeping on a lilo in the living room so as to let her two teenage daughters have a bedroom each. David’s response appeared to acknowledge that her situation “had changed”.

I fail to see why this is a case for re housing. I had to share a room almost the entire time I lived in the family home. Many people grew up sharing their bedrooms and many expect to see their children having to do the same for the simple reason that they cannot afford to buy or rent the house that individual bedrooms require. It is hardly a privation or in any way damaging or limiting. If anything there is probably something to be said for the socialising effect it has on people. Those daughters are not even sharing with brothers[3].

It is best for us to not focus on specifics or individuals, but the generics - the apparent disregard for the burden on others to provide housing, often living in worse conditions, and that there is no automatic access to everything one wants just because one wants it nor a ratchet upwards due to lifestyle choices and/or expectations.

When one falls back on the need for subsidised housing, it is irresponsible to then wilfully seek to increase the burden you force upon others, specifically by increasing the size of ones family. While there should be the freedom to have children, there should not be a “right” to demand others subsidise them. This reality appears to escape some people. Many people would love to have more children, but out in the real world people do limit the number of children they have due to housing costs and logistics. They know that there is no Fairy Godmother to waive a magic wand and create a new, free, bedroom and the extra money to pay for it all. To that end, there should not be an automatic entitlement to increases in benefits (money, housing) to those already receiving them should they increase the size of their families. This should also cover those living at home with parents – if you want to have a family/children, then that should be the incentive to go out there and work for it, not produce children then expect housing and funds to arrive.

Subsidised housing should be considered as a last resort, not a lifestyle. If you want more space, one should work for it like everyone else has to.

While that seems harsh, the proposals above – moving to regular, consistent, transparent means testing of housing subsidy, ending inheritance, greater flexibility and opportunity for people to move where they wish and access to ever greater resources should significantly reduce perverse incentives and disincentives while ending the virtual imprisonment and immobility that comes with State housing as it now stands.

It should be stressed that the suggestions above – not all official Libertarian Party Policy at this time - are about dismantling centrally-imposed statutory/legal constraints and obligations upon Municipalities, i.e. not dictating to them. This means they can be free to respond to how local people wish them to respond to the situation. Some Municipalities might wish to keep things as they are, others may wish to adopt some of the alternatives that the liberalisation enables.

Housing subsidy is a major contribution to dependence on State largesse and is a factor in distorting rents and land use, as is the planning process. All these factors plus the wider benefits system and taxation combine to distort the market. Other adjustments are likely to be needed, but directly, Municipalities need to be freed from central control and the obligation to furnish perverse, grossly unfair (to the put upon working poor) “entitlements”.

[1] With the absence of regular review combined with the concept of inherited tenancies, one must then ask if there is or has been another agenda at work in the background. The ratchet effect would, if allowed to play out and if such housing provision was resourced like the veritable tumour, end up with significant numbers of people and even higher numbers of families benefiting directly or indirectly from such secured subsidised tenancies. This would be a cynical “lock in” to State largesse, a form of deadly embrace of vote buying to add to the others that Statists manage to “accidentally” create.

[2] It would not need a betting man to wager that we will see many people move from municipal housing into the private sector voluntarily when financial incentives to remain in such housing are removed.

[3] I was to say “boys”, but I have a feeling…
 While some of the points Tim Carpenter makes are reasonable, they do encroach on 'libertarian' ideas. For example, Tim makes the point: "....if you want to have a family/children, then that should be the incentive to go out there and work for it, not produce children then expect housing and funds to arrive." so the question has to be asked what happens when a family has an 'unplanned' addition - biological mistakes do occur. Likewise, on the question of parents with adult wage-earning children still living at home, why should they be penalised when the children are maybe saving up a deposit for a home of their own? Those buying, or renting, in the 'private', as against 'state', sector do not face such restrictions. Too many questions and not enough answers, methinks Tim...........

However, in the last paragraph of Tim Carpenter's post is an extremely valid point and that is that "Housing subsidy is a major contribution to dependence on State largesse and is a factor in distorting rents and land use, as is the planning process. All these factors plus the wider benefits system and taxation combine to distort the market........."


AntiCitizenOne said...

It's why I'm in favour of massive removal of planning regulations, and an LVT funding a Citizens dividend to replace ALL benefits.

All Housing subsidy achieves is less affordable houses.

I sometimes think the economy is set up for the benefit of rent-seekers at the expense of everyone else.

Tim Carpenter said...

"so the question has to be asked what happens when a family has an 'unplanned' addition"

Well, the same as if it happens in every other household, of course - you take responsibility. The alternative is what? Have the state dish out automatically? Unacceptable.

BTW, how does this "encroach on Libertarian ideas"? Forcing others to work to provide for you is hardly Libertarian.

"why should they be penalised when the children are maybe saving up a deposit for a home of their own?"

I think you need to explain what you mean by penalised and how this is in any way different from people who do not live in subsidised housing.

Cleaning Services said...

I thought Cameron idea is good. Lifetime tenancy doesn't seem normal to me. But it was rejected, so...r.i.p

Witterings From Witney said...

ACO, Agreed.

CS, Basic idea ok, but TC's article shows lack of thought by DC.

First question badly phrased by me. Accept your comment but actually what I meant to refer to in the situation suggested is that the additional costs of the new child should be taken into consideration when deciding whether such a family should be 'moved out' on purely financial grounds.

On second point I think you would agree that just because there are four wages coming into a household, the fact that those of the young adults may not be that much and that a fair proportion of their money is being 'saved', then again the family should not be penalised by the combined income forcing an end to the parent's tenancy.

Maybe I misunderstood what I thought was an authoratarian type statement and if so then I undreservedly apologise. I shall revisit my post and amend at the earliest opportunity.

Tim Carpenter said...

Hi WfW,

"the additional costs of the new child should be taken into consideration when deciding whether such a family should be 'moved out' on purely financial grounds."

Well, seeing as I am in favour in the post of moving on to the logical progression to exposing market rents for State rented property (or not subsidising those who want to subsidise) and using HB as the conduit to subsidise, the issue of eviction is neutralised. It simplifies so many things, removes the distortions, removes the emotive issue of eviction and as it is HB, it is performed regularly.

When you dismantle distortions, you remove the need to introduce or consider corrections to those distortions, which become distortions in themselves.

As for the second point, that too is covered, for all that will happen is that the parents no longer have dependants and so their HB will drop back somewhat and the resident young adults will contribute what they can and the advantage of their staying in the familial home is maintained.

However, I do not see why such adults should be given advantage over their contemporaries who are also living at home and not earning much even though their parents are wealthy.

Housing Benefit should be about providing accommodation for those who cannot quite afford market rates, not a means of wealth redistribution.

This is a complex, multi-layered issue and in my later comments on other places outlining the position, I think it is worth revisiting the form of words I have used on the blog to make the points somewhat clearer.

Tim Carpenter said...

as an additional point, ideally we do not need HB at all if housebuilding was free to meet demand and councils did not build stuff descending into virtual dereliction after a couple of decades.

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not a bad post, cool