Thursday, June 23, 2011

UNISON NDC 2011: Building a Future for Public Housing

These are some of my notes from the UNISON housing fringe on Monday evening. The meeting was chaired by Heather Wakefield, Head of Local Government. Other speakers were Lord Whitty (Housing Voice) and Mo Baines (APSE). I was billed for the first time as “NEC”.

Aim: What are housing associations up to and how will they respond to government policy?

Does the so called “affordable rent” model make any sense? Is it viable? Will it work for housing associations and those seeking decent, affordable homes?

Key points Housing Associations are operating in a difficult financial environment. Almost ££50 billion of debt is held by larger housing associations (with more than a thousand homes), £18 billion will be paid through re-financing. Housing associations see re-financing as a threat, as rates on new loans are likely to be higher than those currently held.

Under the new system housing associations will get, on average, about £32k per new home, instead of £80k that they received previously. They will be expected to make the difference by charging higher rents – at 80 per cent of the market rate – and use the increase in rents to support more borrowing. The government hope that this model, based on lower grant per home but increased borrowing, will deliver 150,000 new affordable homes by 2015. Remember this is not only on new build but could be also for existing stock.

A recent survey by Inside Housing magazine suggest that while the majority of the largest associations will make bids to gov to build homes under the new system, the extra risk and borrowing is leading to associations scaling back development plans. We will know more in July, when the Homes and Communities Agency awards contracts.

It is also becoming blatantly obvious that this new funding system doesn’t work for all regions. Whilst the difference between existing social rent (which as a rule of thumb is about 50% of market rent) and an 80% of market affordable rent in the South East is in the region of £60 per week, in the Midlands and the North it ranges from about £17 to about £25. Unsurprisingly such associations aren’t likely to generate the kinds of revenue that would enable the model to work.

UNISON, as a housing union, operating in an environment in which half of the public housing is delivered by housing associations and half by local authorities and ALMOs, has to work out two sets of issues. The first set of issues are will this so called affordable rent, based on 80 per cent of market rents, will deliver more decent homes for our members and their families, and working people on low to middle incomes people more broadly.

We know from internal surveys that more of our members are in the private rented sector than the social rented sector, and that this where most people who can’t afford to buy now find themselves. Would this group of people see Affordable Rent as a better option than the private rented sector? How would it work alongside traditional social housing?

As yet we don’t the answers, but we can see problems. In London the average housing association rent on a two bedroom property is £102 per week. An Tory unaffordable rent would be £248. How many low paid workers could afford that? Clearly this is unsustainable – especially when considered alongside cuts to Local Housing Allowance. (housing benefit)

The second set of issues does the new funding system impact on the sustainability and character of housing associations as employers of our members and potential members. Can employers make the new arrangements work in a way which guarantees their survival, and the jobs of our members? Is the business model this implies one that necessarily entails a tougher environment for people at work in housing associations? We have the private sector companies claiming they could save money by managing staff and estates on behalf of housing association. Of course this will be by the slashing and burning of our terms and conditions.

Its already tough out there, with pay cuts and attacks on terms and conditions. Would this make things worse? But as well as a threat is this also an opportunity? Can we organise around this new model in a way that is appealing to housing workers?

Again its early days. The signs are that everyone is cautious about trying to implement this system in the current economic climate. The least we can do, as a union that wants to grow in the sector, with a wider commitment to the provision of affordable housing, is to watch carefully how these issues develop over the months ahead and be prepared to speak out and act as necessary.
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