Yesterday I was privileged to be invited to speak at a London School of Economics seminar on homelessness.
The focus of my talk was on local authority duties to homeless people. I began by emphasising that in my view we can’t see homelessness as an issue on its own, it is a symptom of wider housing policy and market context.
The broken housing market results in insufficient affordable housing supply being available, which is particularly acute in London. Suppressed values of Local Housing Allowance across London make the private rented sector unrealistic as a solution and mean that Councils are using local Council tax funding to pay for temporary accommodation well above LHA levels. The lack of affordable local supply puts pressure on Councils to find cheaper alternatives, often outside the home borough and increasingly outside London completely.
So 55,000 London households are in temporary accommodation, 80% of them with children. There are very well demonstrated negative impacts of living in temporary accommodation on health, wellbeing, educational achievement, employment prospects and social networks.
There is an acute lack of affordable housing in London, with decreasing turnover rates in existing social housing and much of new supply in recent years dependent on s106 Planning agreements (that can only deliver at the pace of the private market) and Registered Provider schemes (that have increasingly relied on their own market sale cross-subsidy, which is now looking highly risky, if not impossible to sustain).
This has meant homeless families being stuck in temporary accommodation for longer and longer periods, waiting for a permanent offer of affordable housing. Many Boroughs have seen TA waiting times increase from many months to many years, with families left in TA for over a decade not uncommon now. Even though they may be in self-contained accommodation, they have no security of tenure, they can be asked to move at short notice, away from work, schools, family, health and social support networks. Often Councils undertaking large estate regeneration schemes use vacant blocks awaiting demolition for homeless TA, an efficient use of buildings from a financial perspective but hardly a positive message of the value and respect given to parents and children who have already been through the trauma and turmoil of homelessness.
The Homelessness Reduction Act 2018 has so far led to an increase in the number of households accepted as homeless and placed in TA. The legislation was welcomed as progressive in principle, but came with insufficient additional grant funding and an uphill struggle to find affordable accommodation given the impacts of welfare reform and benefit caps.
Not only has the volume of statutory homeless cases gone up, the time taken by Council staff with each household has increased (with new personal housing plans for each household) and the data inputting task has also expanded with the Government’s new H-CLIC system experiencing significant teething problems.
LSE research commissioned by London Councils this year showed that:
What are Councils in London doing?
Of course, Boroughs are now building new Council housing in increasing numbers, with grant from Mayor Sadiq Khan, using Right To Buy receipts, and finally able to borrow after Theresa May lifted the HRA debt cap. But gearing up and delivering new affordable homes takes time, so homelessness continues to rise.
Many Boroughs are now buying homes specifically to provide homeless TA, often buying back ex-RTB properties on Council estates at full market prices, despite selling them at a substantial discount in the past. In some cases, this is being done through new publicly owned companies such as Housing Gateway in Enfield which has bought over 400 homes for homeless families. Another 400 have been bought by Tower Hamlets Council in the last two years, including homes on local Council and RP estates as well as private homes bought in other London boroughs.
As well as acting individually, Boroughs are collaborating to have more influence and control over the private market, rather than competing for supply and forcing up prices. Last year Boroughs set up two new collaborative not for profit companies:
So Boroughs are showing they can innovate, collaborate and improve the security of the temporary supply for homeless families.
They are also collaborating on ensuring quality of B&B hotels and nightly paid temporary accommodation, through the Setting The Standard initiative, which is currently in development - a pan-London inspection service to drive up standards and exclude poor quality supply.
What more does the Government need to do?
Thanks to LSE for hosting this discussion with a diverse audience of students, academics and other interested participants.
So what does the future hold for the emerging local authority housing companies? Will they survive and prosper, or be a short-lived anomaly? Much depends on central Government and how it chooses to legislate - the Localism Act currently provides the general power of competence that, more broadly than the well-being powers that preceded it, enables local authorities to do almost anything they want to, unless explicitly ruled out elsewhere in the law. Trading offers councils a route towards self-sufficiency through commercial activity that can supplement local taxation and business rates to meet the costs of essential local services, without calling on central Government grant support. This must be a trend welcomed by the Treasury, provided the risks taken by fledgling council companies do not result in losses or bankruptcies. Arguably there are unlikely to be any outright business failures in this sector, given the reputational impact in a political environment; councils will carefully bail out any of their wholly owned companies that fail to become profitable, and then quietly dissolve them.
With the consolidation and merger trend in the housing association sector creating mega-mergers of multi-billion pound landlords, will there be pressure on local authority housing companies to rationalise and combine efforts to achieve efficiencies and economies of scale? This looks unlikely, given the rather parochial local political motivation and control of these entities. They may be mostly rather small with turnovers of only a few millions at best, but for local elected councillors they offer control, payback and something tangible to show to the community, in a way that increasingly distant larger housing associations may struggle to demonstrate.