The sector could generate creative responses to the housing crisis, but increased state control isn’t helping.
Nearly 30 years ago a revolution took place in social housing – a revolution designed, introduced and implemented by a Conservative government. The 1988 Housing Act made it possible for housing associations to borrow commercially, so they could build and improve the stock of housing. Over the following decades England was distinguished across the globe by two things:
- it capitalised housing associations, enabling the raising of £80 billion of finance in the private markets, and so becoming the biggest and most successful example of private finance for social good in Europe; and, much more fundamentally…
- it broke the link between housing squalor and poverty.
Estates where housing was previously owned by local authorities were transferred to charitable and non-profit control. In turn, they saw massive improvement. Damp, decrepit housing was replaced by high-standard housing, both converted and built from new. And in this way a secure platform was provided to millions of people, enabling them to put down roots and build better, more secure lives.
This huge success was one of the triumphs of that Conservative government. It was copied across the world, and resulted in a strong, resilient and effective housing association sector, and the deployment of very high levels of private funding to undoubted social good.
Today this great success is in jeopardy. Housing associations are challenged for their asset base, criticised for their performance, and, since the Chancellor’s Summer Budget, are subject to controls on their income through imposed rent reductions, and reductions to their asset base through the proposed imposition of the Right to Buy.
What has happened to change the same political party’s thinking so radically?
In part, the housing association sector may be paying the price of success. It has grown and professionalised, and in doing so has made enemies and lost the automatic protection afforded to smaller struggling charities. Service failings are magnified, and differences about policy and priority amplified. And in a period of financial austerity, it is not surprising that governments of any hue will look with envy on the large asset base and apparently comfortable balance sheet of some housing associations.
At the Joseph Rowntree Foundation and Housing Trust, our concern is with people and places affected by poverty. The ability of housing associations to build and develop is important in this context because the low-cost rented housing they own and manage is a vital means of mitigating and alleviating poverty.
Looking forward, housing associations could make a significant contribution towards the Government’s house-building ambitions, but their ambition and capacity to do so will be limited by recent changes as they stand. Similarly, continuing to develop low-cost rented housing will depend on new and innovative solutions in an era when public investment is in short supply. The diversity of the sector should enable creative responses to this dilemma, but these are less likely to emerge if housing associations are constrained by increasing state control.
Today’s housing associations are the product of a very successful Conservative policy that attracted the admiration of the world, and housed tenants as well as dramatically improving the nation’s housing stock.
The current criticisms and challenge to business plans are an odd reward for a sector that has done so much to attract private funding, and build and manage housing.