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

1. The Coalition’s Record on Housing: Policy, spending and outcomes Social Policy Association Conference 2014 14th-16th July, Sheffield Delivered 15th July Becky Tunstall Centre for Housing Policy, University of York 01904 321 475 Becky.tunstall@york.ac.uk

2. This paper is a small part of a large programme:‘Social policy in a cold climate’ Three year research programme running 2011-2015 Lead by Prof Ruth Lupton, University of Manchester Funded 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

3. Contents of paper • Introduction: Context and inheritance • Broad policy goals 2010- • Actual policies 2010- • Resources expended 2010- • Outputs and outcomes achieved 2010- (data to date) • Summary

4. 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

5. (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-)

6. 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

7. 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)).

8. 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).

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

10. Comments on specific stated aims Specific, 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/decreasethe 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)

11. 3) Actual policies 2010- Myview 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).

12. 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?

13. 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

14. DCLG expenditure (England) • ‘Departmental Expenditure Limits’ (DEL) (fixed budgets), a) ‘resource’ and b) capital • + ‘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 allgovt‘s housing expenditure • Not only housing expenditure

15. i) a) DCLG Departmental Expenditure Limits, Resource (England), real terms (2012/13 prices), £m Source: PESA 2013 Table 1.4

16. DCLG DEL Resource: Summary 2009/10 £37bn 2015/16 £12bn (planned) (real terms, 2012/13 prices) Biggest percentage reductionof 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)

17. i) b) DCLG Departmental Expenditure Limits, Capital, (England), real terms (2012/13 prices), £m Source: PESA 2013 Table 1.9

18. DCLG DEL Capital: Summary -62% 2009/10-2015/16 Largest 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)

19. (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)

20. ‘Housing and community amenities’ expenditure, UK, real terms (2012/13 prices), £bn Source: PESA 2013 Table 4.3

21. 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.

22. UK govt ‘housing and communities’ expenditure in the nations of the UK, 2007/08-2011/12, gross terms, £ per head Source: PESA 2013 Table 9.15

23. 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

24. ‘Housing and community amenities’ expenditure in the regions of England, 2007/08-2011/12, gross terms, £ per head Source: PESA 2013 Table 9.10

25. 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

26. UK govt ‘housing devt’ expenditure (part of ‘housing and communities’ expenditure), 2007/08-2011/12, gross terms, £m Source: PESA 2013 Table 10.1

27. UK govt ‘housing devt’ expenditure: Summary Peaked in 2009/10 Fell 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

28. UK govt ‘Social protection: Housing’ expenditure, 2007/08-2011/12, gross terms, £m Source: PESA 2013 Table 10.1

29. 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

30. 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%

31. 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…

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

33. Outputs: Who (if anyone) gained Need to add in assessment of impact on equity Usually 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

34. 6) Summary Follow the money

35. References HM Government (2011) Laying the Foundations: A housing strategy for England London: Stationery Office HM Government (2010) The Coalition: our programme for government (‘The Coalition agreement’) London: HM Government HM Treasury (2013) Public expenditure: Statistical analyses(‘PESA’) 2013 July 2013 Cmd 8663 London: HM Treasury Pickles, E (2011a) Speech to the Home Builders Federation ‘One year on' conference, Home Builders’ Federation, Savoy Place, London, 31st October Shapps, 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???