Friday, 11 April 2014

New investment bodies to accelerate building

This week has seen proposals from both the Mayor of London, for the creation of a 'London Housing Bank', and the Homes and Communities Agency (HCA) for a new 80-employee 'Investments' division.

The aim of the 'London Housing Bank', says the Mayor, is to accelerate the pace of development and generate additional housing supply, particularly on large, multi-phased sites.

The 'London Housing Bank' would initially offer loans to fund the building of homes at sub-market rents for a fixed period of time. At the end of this period the Mayor would be paid back (including interest) and then the homes could either continue to be rented at sub-market prices, or could be rented at market rents, or sold.

Mayor of London Boris Johnson said:
"The proposed London Housing Bank is just one of several highly innovative new schemes we are pioneering here at City Hall to help meet the needs of hard working Londoners. Through this exciting new fund we hope to provide thousands of brand new homes many years sooner than would otherwise be possible, and make them available to rent at more affordable, below market, rates for hardworking Londoners."
The Mayor is consulting agencies and organisations within the housing industry on the 'London Housing Bank' proposals. The closing date for responses is the 21 May 2014.

According to an exclusive article in Inside Housing the HCA's new 'Investments' division will be headed up by bankers and will manage a £25 billion recoverable investment portfolio.

An HCA spokesperson said the investment portfolio would include policies currently administered by the HCA, such as the Help to Buy programme and Build to Rent scheme. Inside Housing says 'the HCA hopes the structure will be in place by the end of September' 2014.

Wednesday, 9 April 2014

MPs unconvinced by Universal Credit timetable

Work and Pensions Secretary
Iain Duncan Smith
MPs on the Work and Pensions Select Committee say there is still worrying uncertainty about the new Universal Credit (UC) IT system, in a report published today.  This includes how it will work, how much it will cost, and who will develop it.

The report also accuses the government of hampering the Committee’s scrutiny of UC implementation by failing to provide accurate, timely and detailed information, stating that it is unacceptable for the government only to provide information about major policy changes when forced to do so by the imminent prospect of being held to account in a public oral evidence session.

National roll-out of UC was due to begin in October 2013. But problems with IT systems meant that major changes to the implementation timetable were made in July and then again in December 2013. Currently, UC claims are still limited to 10 Pathfinder Jobcentres. New claims are not expected to be extended to the whole of Great Britain until 2016; and the bulk of existing claimants will not move over to UC until 2016-17.

The Committee Chair Dame Anne Begg MP contrasted the 4,280 people, mainly with simple claims, who were claiming UC by December 2013  with the 1.22m claiming Jobseekers Allowance the same month. She said:
“Whilst it is right to ensure that the system works properly before extending it, there is a difference between cautious progress and a snail’s pace.  Given the excruciatingly slow pace of roll-out to date, it is hard to see how the most recent implementation timetable can be met.”
The Department for Work and Pensions (DWP) is trying to resolve the IT problems by developing a new “end-state solution” for UC IT which will eventually replace the IT system currently in use in the UC Pathfinders. However, money is still being spent on the existing IT being used in the Pathfinder while the end-state solution is developed.

Begg said:
“Given the small number of people currently claiming UC, the Government should consider whether it would be a better use of taxpayers’ money to abandon further development of the existing system and focus solely on the end-state solution.

“Despite the millions being spent on the end-state IT solution it is still not clear when the system will be ready or even how it will work. It is still not ready for testing on the first 100 claimants, and we have no indication of when it will be possible to test it on a bigger and more representative group of claimants.”
In response, a DWP spokesperson said:
“Universal Credit and its IT systems are very clearly working well, with claimants receiving the new benefit and moving into work. We deliberately started in a slow, controlled and safe way, which the Committee itself has long recommended, so we can expand Universal Credit securely to more people. Universal Credit is on track and we will start expanding it to other Jobcentres from this summer. We have made our plans to roll out Universal Credit very clear with regular updates.”
Amongst its recommendations and conclusions, the Committee called for the DWP to make available to it the revised business case for UC showing the effect of changes to the implementation timetable on the overall costs and savings of the programme.

The report called for detailed information about the and operation and funding of the support that vulnerable people will need to adjust to Universal Credit when the final version of the Local Support Services Framework is published in autumn 2014.

It also asked DWP to provide local authorities with clarity on the funding that will be available in 2014-15 and 2015-16 to cover the additional cost of administering housing benefit for much longer than anticipated, due to the delays in implementing UC.

Tuesday, 8 April 2014

Impact of welfare reforms in London

Landlords are increasingly terminating assured shorthold tenancies (AST) prematurely and are more reluctant to rent to housing benefit tenants, according to a new report published today by the London Assembly Housing Committee.

The report, Assessing the consequences of welfare reform, examines available housing data in three key areas:
  • affordability and access to accommodation, particularly in the private rented sector
  • movement of households within and out of London
  • rising homelessness and the increased use of temporary accommodation
In the private rented sector, it found that there has been a four-fold increase in the number of AST terminations since 2010, rising from 300 to over 1,400 per quarter.

The receipt of housing benefit has now reached one in four households in the capital. The report explains this is due to London’s high housing costs and the more recent downward pressure on wages.

The report also found that the costs of using temporary accommodation have been rising due to a shortage of suitable accommodation and the subsequent competition between councils to procure this accommodation.

In response to its findings the Committee recommends that:
  • the Government should ensure Local Housing Allowance (LHA) rates are reviewed regularly and take account of the higher housing costs in London
  • the Mayor should publish regular monitoring data on the impact of welfare reforms on London’s households and against his housing priorities
  • the Mayor and London Councils should produce an assessment of the impact on movement of claimant households within, and out of, London, and publish regular monitoring data
  • the Mayor should seek an exemption from direct payments for those in temporary accommodation, to minimise the risks landlords.
Chair of the Housing Committee Darren Johnson AM said:

"While there has been no large-scale and sudden movement of households from London, we have heard evidence of a range of problems including more evictions and rising homelessness and Councils are having more difficulty finding affordable accommodation for their residents."

"The Mayor and the Government should do more to closely monitor the impact of changes to housing benefit. The welfare system must ensure that those at risk, particularly vulnerable households, get the support they need to continue living in London."

Monday, 7 April 2014

Building homes: extra borrowing powers for councils

The Government has today published a prospectus setting out the way councils can bid for a share of £300 million of extra borrowing to build up to 10,000 affordable homes.

Communities Secretary Eric Pickles and Chief Secretary to the Treasury Danny Alexander explained the extra borrowing will be made available through an increase in the housing revenue account borrowing cap, and invested in new housing over 2 years from 2015.

The ministers also want to see active asset management and the disposals of high value vacant stock forming part of any bid. Danny Alexander said:
"This additional borrowing flexibility, together with funding from the sales of high value social homes and other forms of local investment will deliver 10,000 new affordable housing over the next few years – supporting the construction sector and providing new homes."
The £300 million of additional borrowing was first announced in the Autumn Statement 2013 and forms part of the Local Growth Fund, available to councils who have a proposal agreed by their Local Enterprise Partnership.

At the same time, the Government is reforming the system for council house finance by allowing them to:
  • keep their rents and receipts from house or land sales, in return for taking more responsibility for housing in their area
  • sell vacant land at below market value to a broad range of organisations if it is then used to build affordable housing.
The Government anticipates that the extra funding and flexibilities will enable councils to complement the affordable homes programme.

The deadline for bids, including expressions of interest, is 16 June 2014.

Is the Coalition "past its sell by date"?

The Conservative Party held its Spring Forum on 5 April, prompting Prime Minister David Cameron to say that his party has "some huge fights on the horizon", while arguing that failure to secure a Tory election victory would be likely to derail Britain's economic recovery. "Britain is coming back", said Mr Cameron to loud applause.

The Prime Minister also reminded delegates of the forthcoming tax changes designed to make Britain 'the best place to invest', saying he has written to over a million businesses and charities urging them to see if they are entitled to a £2,000 National Insurance break.

The event inspired former Housing Minister, Grant Shapps, to pen an article for 'The Spectator' claiming that, 'Other parties are shouting from the sidelines', while the Tories take the lead with policies which are rebuilding the economy and 'doing justice to our vulnerable and elderly'.

The Spring Forum became a launchpad for senior Conservatives - notably Lord Tebbit and Priti Patel MP - to call for the coalition's annulment.  Priti Patel said that the its raison d'etre has "effectively expired", and it should be removed to pave the way for a Conservative majority. Lord Tebbit said, "the sooner it is broken up, the better". He went further saying, "The coalition is beginning to smell past its sell by date, and the sooner it is broken up the better, never to be returned to."