ConDemed: The Great Housing and Welfare Swindle: Part 2
ConDem Nation by Marxist Nutter, previously published here
See Part 1
How we got here…
Part 1 was a potted history of UK housing and welfare policy. The aim was to answer the question: How did we get here? It is important to establish the context of current policy, if we are to contest it and, in Part 1, I wanted to draw out some key contextual themes which are I think are often overlooked when contesting current government policy.
First, the 1980s marked a radical break with UK economic and social policy. Thatcher’s response to the crisis of Keynesian economics led to the establishment of a New Right hegemony. Her elevation of the individual over society (for there was ‘no such thing’) drove the thinking behind Right to Buy (RTB) policy, which still haunts UK housing policy even now. Her hegemony expanded in to numerous areas of social and economic policy and became a new ‘common sense’ understanding of reality and one based on neo-liberal economic assumptions. New Labour (1997-2008) were very much constrained by this hegemony and rather than contesting it, further sedimented it.
[…] it was during the New Labour years that neoliberal, free-market fundamentalism finally became “common sense”. “I would say that New Labour come closer to institutionalising neoliberalism as a social and political form than Thatcher did. She destroyed everything in order to have a flat plane on which to build, but there was serious opposition and struggle. Thatcherism was a slash-and-burn strategy. With Blair, the language became more adaptive; it found ways of presenting itself to Labour supporters as well.”
Interview with Stuart Hall
Second, New Labour, unable or unwilling to challenge global capitalism, sought to mitigate its worst effects through a massive expansion of the welfare state. Rather being a safety net for people who had ‘hit hard times’ the welfare state, under Labour, became a means by which the UK government subsidised employers. By introducing Tax Credits and also through housing benefit New Labour provided government payments to low paid workers to cover their cost of living. This allowed employers to pay low wages and so remain competitive in the global marketplace. New Labour’s approach was underpinned by the assumptions that the economy would always continue to grow (no more boom and bust) and this would cover the cost of government borrowing, credit would always be freely available to government, businesses and individuals. This allowed them to pursue very expensive policies on welfare and housing.
Third, when the credit crunch came, the Right were, once again, better able than the Left to articulate the hegemonic interpretation of events. A new hegemony was constructed which managed to frame the (global) economic crisis as a problem caused by too much government spending. The analogies with household debt and the ‘national credit card’, although bordering on the absurd, were very powerful and allowed the Right to articulate a powerful discourse that ‘the money had run out’ and large spending cuts were required.
Fourth, this resulted in a new and dangerous hegemony (the hegemony of ‘austerity’) which constructed welfare recipients (and through certain slippages in the discourse sometimes social housing tenants) as a primary source of high spending and a key target for government cuts and closed off crucial policy alternatives such as further government borrowing (the cost of which is currently low) in favour of a discourse of ‘austerity’.
Where we are now…
Opposition against government policy often revolves around providing evidence about the effects of the proposed or recently implemented policy. This assumes policy is decided rationally and can be contested through the presentation of rational arguments and evidence. Such a strategy ignores the affective dimension of policy. In Part 1, I drew on the work of the Psychoanalyst Jacques Lacan to show the fantastmatic dimension of the current discourse of welfare. According to political theorists David Howarth and Jason Glynos, the fantasmatic dimension of a hegemony explains why it ‘grips subjects’, or in other words, why people become especially attached to particular interpretations of reality. A Lacanian approach emphasises people’s emotional investment in a hegemony rather than the assumption that people are convinced by an argument (or discourse) through reasoned dialogue and evidence.
A rational perspective of current events would perhaps interpret the increase of welfare expenditure as primarily driven by the (New Labour) desire to mitigate the effects of stagnant wages, inflation and the increasing cost of housing on low paid workers. Certainly the evidence would seem to suggest that the unemployed (so called ‘benefit scroungers’) account for only a fraction of the welfare bill. Thus a slippage in discourse is required in order to make significant cuts to the welfare bill that will affect low paid workers and yet allow this to be interpreted as mainly affecting ‘benefit scroungers’. Rationally speaking, cutting benefits for the unemployed would make very little difference to the overall benefit bill (see Part 1). Indeed rationally speaking it may make sense to increase taxes on the wealthy, and increase government borrowing to provide a Keynesian style stimulus for the economy. Recent economic performance that has resulted from the coalition’s economics of austerity also seems to show that the hegemony of austerity is self-defeating and irrational, in terms of economic growth. The hysteria peddled by the coalition parties in 2010 which compared the UK economy to Greece was also, without a shadow of a doubt, a highly irrational argument. In short the hegemony of austerity has nothing to do with evidence or reason; but it does serve certain interests key to the coalition partners. It serves to make the poor and unemployed the target of cuts and detract focus from the banking sector and the crisis that runs to the core of a neo-liberal system, which all parties are heavily emotionally and intellectually invested in. It closes off competing interpretations of reality which may call for higher taxes for the well paid/ asset rich and a re-structuring of the economy away from privatisation toward nationalisation. Certainly, under the politics of austerity privatisation has continued and expanded into health, prisons and the police, to the great benefit of private capital and is likely to lead, as history is shown is often the case with privatisation, to poorer services at higher costs for the end users.
Only in the context of this irrational hegemony of austerity and its strong fantasmatic appeal does current government welfare and housing policy make any sense. Welfare and housing policy are not based on evidence or reason; but the ability of the Right to articulate a hegemonic interpretation of current economic and social reality that also happens to serve elite interests. Therefore contesting this agenda through evidence and reason is to fundamentally misunderstand the nature of policy and could even be seen as an irrational strategy.
Contours of Current Policy
The coalition government have made and are making wide ranging reforms to housing and welfare policy. In keeping with the hegemony of austerity most of these take the form of cutting government expenditure. Let us have a look at the range of policy measures introduced under the coalition government.
One of the first moves of the coalition government was to abolish the Audit Commission and Tenant Services Authority (TSA). Certainly the Commission was expensive and had perhaps already done its best work in driving up standards in housing provision. The one size fits all KLOE approach to inspection was arguably stifling innovation. However, in what has now become a key theme of the coalition, spurious claims about savings generated from the closure of the Commission are unlikely to be realised (see also).
The abolition of the TSA and its functions being absorbed into the Homes and Communities Agency (HCA) led to a massive watering down of its new regulatory framework (published just a year before its closure) in terms of tenant empowerment. Although much of the wording of the TSA Framework remains intact, the emphasis shifted from tenant empowerment to the financial viability of housing providers. The new regulatory committee (part of the HCA) make it clear they will only regulate proactively when it comes to issues of governance, financial viability and value for money and will avoid becoming involved in ‘consumer issues’. An interesting con –trick was played here. Under the guise of empowering tenants to regulate landlords (co-regulation) the new regulatory regime actually dis-empowers them by removing support from the regulator to back them up. Under the TSA regulatory framework, landlords were required by regulation to allow themselves to be scrutinised by tenants. Although technically this is still the case, now the regulator has made it clear that it will only enforce these regulations where there is a ‘serious detriment’ to tenants (i.e. it is a matter of life and death) and so in most cases will not get involved to support tenants in holding their landlord to account. This is spun as passing the role of regulation to tenants and so empowering them, in reality without backing from the regulator one wonders how much power small groups of tenants will have to hold large landlords to account.
In line with the cuts agenda, the government significantly reduced the grant funding of new affordable homes. Instead of grant funding being the primary vehicle for the construction of new social housing, the coalition’s approach was to stretch the definition of ‘affordable homes’ to the absurd. Their new development funding model involved the development of (so called) ‘affordable housing’ at near market rents (known as ‘affordable rent’). The projected extra income generated by these new ‘affordable rent’ homes can be used by developing landlords to secure finance. This model requires landlords to draw down their own reserves and sweat their assets to build homes that are let at higher rents with minimal grant funding.
Reforms to the private rented sector have already been wide ranging and it is possible more is on the way. These reforms include capping of local housing allowance (LHA) rates, the abolition of the single room rate for people under 35 years of age (meaning these people will only get housing benefit to a level that will cover shared accommodation, regardless of the fact there is a lack of such accommodation in many areas). LHA rates were also set at the level of the bottom third of local rents as opposed to the median level (meaning fewer homes would be available for people on housing benefit). The coalition’s rationale for these reforms is as follows:
The measures announced will provide a fairer and more sustainable Housing Benefit scheme by taking steps to ensure that people on benefit are not living in accommodation that would be out of the reach of most people in work, creating a fairer system for low-income working families and for the taxpayer. It will avoid the present situation where Housing Benefit recipients are able to live in very expensive properties in areas that most working people supporting themselves would have no prospect of being able to afford. [My emphasis]
Consider the above in the context of the argument made in Part 1, concerning the fantasmatic dimension of welfare discourse, bearing in mind that in an increasing number of cases housing benefit recipients and working people are one in the same.
In addition to the above, reforms stemming from the Localism Act (2011) and revised allocations guidance to local authorities allows them to discharge their homelessness duty into the private sector, which is made much harder by LHA reforms which limited the amount of accommodation available to people claiming housing benefit in the private sector (this just is one of many examples where government policy seems to contradict itself). The allocations guidance also encourages local authorities to prioritise ‘working people’.
The Localism Act also reformed social tenancies through the introduction of fixed term tenancies which abolishes the right to secure tenure for new social housing tenants. This policy may allow housing providers more flexibility to manage their stock by making it easier to terminate tenancies when a tenant’s circumstances change (e.g. kids have moved out so the housing provider can now force the tenant to take a smaller property); but are also likely to result in significant administrative burdens for providers of social housing. What is very fanciful indeed is the idea (put forward by the government) that social tenants will have got higher paid jobs and will be able to move into home ownership or the private rented sector at the end of their fixed term tenancy. These claims seem somewhat out of touch with the reality of social mobility in the UK, the fact that private rents are increasing and the dim prospects of home ownership for the majority of future social housing tenants. The government like to emphasise that security of tenure for existing tenants is protected; but this is not entirely true; as should a secure tenant chose to transfer to (or exchange into) a property let on ‘affordable rent’ terms they would potentially lose their security of tenure.
The fact private rents are increasing is not a fact the government are willing to accept. Both the former Housing Minister (Grant Shapps, the one who likes to change his identity) and the Prime Minister continuously claimed their LHA reforms led to private rents decreasing despite their being a great deal of evidence to contradict this assertion.
Grant Shapps has a dodgy record when it comes to statistics, trying to argue black is white in terms of house building. He has gone to extreme lengths to paint the sorry state of house building under the coalition in a positive light. Despite the dodgy Shappstistics affordable home building declined under his watch and many of the homes built were ‘affordable rent’ (which are not affordable in many cases, see above).
As noted in Part 1, many issues associated with the lack of affordable housing can be traced back to Thatcher’s RTB policy. In this context, then it seems strange that the coalition would seek to ‘re-invigorate’ it! Although there has thus far been a low take up of this policy, it still serves as a master class in media spin and manipulation. The Department of Communities and Local Government (DCLG) have spent £660k to advertise the scheme, which shows that despite the nation being ‘broke’ there is still money available to support pet projects close to ministers’ hearts. This policy was always going to be controversial with the housing sector, which may explain the decision to release the consultation just before Christmas 2011 and have a shorter than recommended consultation period (which was mainly taken up with the Christmas break) – leading to a certain sense of panic among some local authorities who clearly felt they were not given adequate time to respond.
The grounds for urgency are that the consultation period is so short (6 weeks, over the Christmas period) that it has not been possible to go through the usual process. However the consultation relates to proposed major changes to Right to Buy (RTB) discounts and has major implications for Sheffield. It is important that we provide a strong response to these proposed changes. Source
When the policy was finally announced it also differed significantly from the proposals outlined in the consultation. However the greatest example of media manipulation and spin, I leave until last. This was the constant claim made by Grant Shapps that the policy would result in a ‘one for one’ replacement, no doubt to mitigate criticisms of the original RTB policy (see Part 1). For a start the social rented homes lost would only, at best, be replaced by ‘affordable rent’ homes (so hardly a like for like replacement). Grant Shapps was quoted in the media as saying that homes sold ‘will be replaced on a one-for-one basis by a new affordable rent property, ensuring there is no reduction in the number of affordable homes’. This implied that all homes sold under the RTB scheme would be replaced; however this is not the intention. RTB had technically never stopped and homes have continued to be sold under RTB ever since the policy came in. The new coalition policy was to change the discount rates to encourage more people to buy their council house. It is not the intention of the re-invigorated right to buy to replace all these homes; indeed special emphasis should be given to the word ‘additional’ in the quote that appears on DCLG’s website.
[..]we are also determined to maintain the number of affordable homes for rent – so for the first time, every additional home that is sold will be replaced by a new affordable home on a one-for-one basis. The new homes for affordable rent will help get the nation building again, and help councils meet housing need
What is meant by this is that an obscure formula is to be used to calculate how many homes would have been sold (under RTB) without the change in policy and then any additional sales (on top of those given by the calculation) would be ‘replaced’. Therefore despite the impression given, not all homes sold under RTB would be replaced (even by ‘affordable rent’ homes). In addition, despite the unequivocal rhetoric from the government the consultation document did not seem so certain that one-for-one replacements could be achieved, even within the government’s own terms. Speaking of certain models for the delivery of ‘replacement homes’ the consultation said:
[…]it would be unlikely that all the available receipts were used for replacement homes and so would be very unlikely to deliver one-for-one replacement at the national level.
However, while directing councils on the use of receipts is likely to increase the number of replacement homes (compared to the Local Model), it is still very unlikely to achieve one-for-one replacement across England
The delivery model chosen was deemed to only be able to provide one-for-one replacements at the national level; however at the local level, affordable homes would often not be ‘replaced’
Under this model some areas would not be able to replace all additional Right to Buy sales while for others replacements would exceed sales.
This means that certain areas (where house prices are low) could see a real reduction in their affordable housing stock and as housing allocations are decided locally could put a real strain on certain local authorities and communities. These details were, however, predictably absent from government press releases.
Having outlined some of the government’s major housing reforms and changes to how housing benefit was delivered in the private rented sector, let us now turn to look in detail at the relationship between welfare reforms and the social rented sector.
Welfare Reforms and Housing
An aspect of government discourse, which I have alluded to a few times so far, is the slippage in discourse between the construction of the benefit recipient and that of the social tenant. I think this should be the subject of more in depth analysis (and I may take this project on myself if others do not); and certainly warrants a paper in its own right. However it is certainly interesting in this context to note that one key aspect of the welfare reforms are aimed specifically at social tenants. This is the size criteria or ‘bedroom tax’. This reform targets those deemed to be under-occupying in the social rented sector, through a reduction in their housing benefit. This is calculated based on the claimant’s housing benefit eligible rent, so those deemed to be under-occupying by one bedroom will have their benefit reduced by 14% of their rent (25% for those deemed to be under-occupying by two bedrooms). This has some nasty consequences working people as well as the unemployed.
For example, take somebody (deemed to be) under-occupying by one bedroom, whose housing benefit eligible rent is £100/week. If they are unemployed and on full housing benefit they will lose £14/week housing benefit so their total housing benefit payment would be reduced to £86/week; however somebody who is in work (on a low income) and only receives partial housing benefit of £14/week will lose all their benefit.
This reform was ‘sold’ by the government as trying to encourage the better use of social housing; however in many cases there is a lack of suitable social housing for people to move to, in order to avoid the penalty. Also the projected savings of this measure that the government outline in their impact assessment would not be realised if the policy were to achieve its stated aim and result in tenants moving to smaller accommodation. It has also been recognised that this policy will have a particularly devastating effect on disabled people.
[The government] know that any saving for the nation’s housing benefit bill depends, paradoxically, upon people not moving, staying put and ‘absorbing’ the benefit cut. Indeed, if everyone downsized to the PRS [private rented sector], the housing benefit bill would be substantially higher. They claim the change will incentivise people to work. But they also know, as made clear by the DWP’s own Equality Impact Assessment, that over two-thirds of the households affected include a tenant with a long-term illness or disability.
An aspect of welfare reform which is especially interesting, if we bear in mind the fantasmatic appeal of government narratives, is the benefit cap. This will affect people in both the private rented and social sector. The impact will mainly be felt by poor and low paid people with large families who live in expensive parts of the country (such as London and the South East). This reform caps benefits to the level of the average household (net) income of £26,000/ year. The following quote explains the rationale of the reform, and I would ask the reader to once again recall the discussion of the fantasmatic narrative of the ‘benefit scrounger’ articulated in the media (noted in Part 1) as they read it:
I would like to make some general points about the rationale for the household benefit cap. First, there is a principled point that households should not be able to receive more on benefits than the average working family in Great Britain earns in work. Secondly, people on benefits should face the same choices as working families, including about where they can afford to live. Thirdly, someone in work should always be better off than someone on benefits. The proposed cap of £500 a week is equivalent to an annual salary of £35,000 a year before tax. We have set the cap at the median earned income for working families after tax and national insurance [My emphasis]
(Source: HL Deb 23 January 2012 c806 )
A Bleak Future?
I hope the reader has followed me thus far through my whistle stop tour of the coalition government’s housing and benefit reforms. It is worth pausing now to consider the impact these reforms have had and are likely to have.
Certainly allocations and LHA reforms have played a role in the 26% increase in homelessness and the increase in rough sleeping experienced since the coalition has come to power. It is also likely that they have played a large part in the 44% increase in the use of temporary bed and breakfast accommodation to house homeless people, in spite of central government trying to blame local authorities.
In an excellent article for the Independent Stuart Hodkinson spells out the likely impact of welfare reforms:
The government’s own figures – which almost always under-state the real impact – suggest that 660,000 households will lose on average £14 a week with 120,000 households losing more than £20 per week. Ministers, well-versed in Orwellian double-speak, say it’s all about fairness to the taxpayers’ subsidising the ‘spare rooms’ and to those forced to live in overcrowded conditions or on waiting lists by the under-occupiers. But this is just nonsense. For families affected, what the state defines as a spare room will typically be a child’s bedroom; for many single tenants, this will have either been their home for decades or the only available home they were offered at the time due to the chronic shortages of social housing that resulted from earlier waves of privatisation and cuts… Tenants will be forced to choose between greater poverty or moving home – but where will they go? Perhaps in the Coalition’s fantasy world, under-occupiers will magically swap with over-occupiers but in the real world this can’t happen for two simple reasons. First, there is a general shortage of single occupancy social housing so people can’t downsize; and secondly, most of the over-crowding is in the South and most of the under-occupancy is in the North.The Department for Work and Pensions’ own impact assessment spells out the consequences: “individuals may have to look further a field for appropriately sized accommodation or move to the private rented sector, otherwise they shall need to meet the shortfall through other means such as employment, using savings or by taking in a lodger …”
So far in this article, I have not discussed the changes to incapacity benefits and the assessment process led by the company Atos. This has been widely reported and is certainly a huge scandal. The targeting of cuts on the poor and disabled has already led to much suffering, depression and death; and it is likely the welfare reforms yet to come will only make this worse.
Another (hidden) reform that has received little attention and about which little is currently known is council tax reform. This will vary from local authority to local authority. However the proposals I have seen from some local authorities will certainly have dramatic impacts on the incomes of poor households. Combined with other welfare reforms the effects of council tax reform could be devastating and may well be the final straw for many hard pushed people.
It seems likely as well that the introduction of universal credit will not go smoothly and the introduction of direct payments to tenants will impact housing providers’ revenue streams making it even less likely that they can deliver the much needed new build affordable housing.
Affordable house building has already declined under this government, despite it being the ‘gold standard’ on which they are to be measured. The government’s new ‘growth strategy’ (in quotation marks as it is better described as a back of a fag packet idea) has already led to confusion for affordable housing. The government has now been forced to admit that it could lead to 10,000 fewer affordable homes being built. The passage of the Growth Infrastructure Bill will only incentivise developers to sit on their sites and not build, while they await the Bill’s passing so that they can take advantage of it to drop the amount of affordable homes they are required to build under section 106 agreements and so boost their profits to the further detriment of affordable housing provision. These plans will completely stall house building in the short term (during the passage of the Bill) and (as the government admit) seriously risk resulting in fewer affordable homes in the long term.
The relationship between welfare reform and the ‘affordable rent’ model for the supply of new homes would also seem to be something the government have failed to think through. ‘Affordable rents’ mean higher rents and if these higher rents are being paid for by benefits then it follows benefit expenditure may well increase. This is certainly a convoluted way to fund new housing supply, even before we consider the impact of welfare reforms. Rather than paying direct grant subsidy to build new homes, rents are increased and these higher rents are, in part, funded by benefit payments which help to generate funds for new supply. It would seem simpler to just pay grants rather than subsidising new build through benefits. The ability of housing providers to gain finance on the basis of these rents is crucial to this model and may well be put in jeopardy by the introduction of universal credit and direct payments to tenants. In addition, a damning report by the National Audit Office (NAO) warns that welfare reforms will increasingly make all types of housing unaffordable for the working poor.
The National Audit Office says that within five years 48% of England’s 275 local authorities would have more than twice as many benefit claimants as two-bedroom dwellings, the most popular housing stock, available to rent. In January the government capped housing benefit payments, so that on a two-bedroom home the maximum benefit payable would be £250 a week. The allowances are also being scaled back by pegging them to the bottom third of rents in any borough – and then from next April benefits will rise more slowly than rents. The result is that in many towns and cities there will not be enough affordable homes to rent for those claiming local housing allowance, the benefit paid to tenants of private landlords.The NAO warns: “More households would need to top up rents from other sources. Households in areas with larger shortfalls in ‘affordable’ private housing will face strong incentives to move to areas with smaller shortfalls or surpluses.”
Contesting the Coalition or Contesting the Hegemony?
The rational case, the evidence and perhaps even basic human morality are all stacked up against the government. The power of the government’s position does not come from rational argument or evidence, it comes from the establishment of a hegemony of austerity that justifies cuts. This hegemony is sedimented through the emotional investment people have in it through fantastmatic narratives about ‘benefit scroungers’. These narratives both justify and garnish support for cuts that will harm a great number and diverse range of the British public. This is not just a party political issue. All political parties (despite their minor differences) have bought into this hegemony. They are all neo-liberals; they all believe that cuts to welfare are needed (or that public feeling on the issue makes them necessary) and they all advocate various forms of austerity.
I am a great fan of Jules Birch’s blog in Inside Housing magazine; however in a recent blog (which is excellent and would encourage people to read it) I think he misses these crucial points. He calls for more evidence from the government around the benefits of the Growth and Infrastructure Bill. I think Birch is making a well-intentioned and common mistake (common amongst those lobby groups, charities etc involved in contesting government policy) in thinking that policy is about evidence. I have written elsewhere about evidence based policy and the dangerous (New Labour) rhetoric of ‘what works’, for now I will simply quote Wayne Parsons on the issue.
[T]he policy orientation is, above all, contextual. Lasswell would have considered the question of ‘what works?’ as arrant and dangerous nonsense. ‘What works’ is about: what works, for whom, when, and how?; or what kind of evidence works for what kind of problem/ policy in what context, and for whom? … ‘Evidence’, as postpositivist approaches to policy analysis argue, is inextricably interconnected with the problem of participation, power and inequalities in power’
Hence I have emphasised context (the whole point of Part 1) and power (elite interests served by the hegemony of austerity) and now raise the issue of participation with, or rather, contestation of government policy. I would add one important component into Parsons’ mix however and that is the role of emotion and the affective (fantasmatic) dimension in policy making.
No matter how much evidence is brought to bear against government policy, no matter how rational and well argued the cases made by Shelter, The Joseph Rowntree Foundation, disability rights activists and others, nothing will change unless we find a way to contest the entire hegemony of austerity (and we probably need to contest the neo-liberal hegemony on which it rests as well). There is no point in just campaigning against the Conservatives or the Liberal Democrats either. New Labour bought into Thatcher’s neo-liberalsim and they have bought into the coalition’s austerity as well. We need to campaign against the entire hegemony – we need campaign against the dominant view of ‘common sense’.
What sediments any hegemony is its fantasmatic logic. This is all about emotional investment; not reason or evidence. Evidence will have no impact on somebody’s emotional investment in a policy agenda. Here Shelter has the best approach. Shelter often focus on cases of individuals affected by policy – they engage the affective dimensions of the policy debate – in other words they appeal to emotions. Any counter narrative to the current hegemony will need to skilfully weave in affective argument with reasoned dialogue and evidence, balancing these appropriately for each intervention. However policy should no longer just be contested on a case by case basis. The entire policy framework, the hegemony in which it is articulated and the historical context of the hegemony all need to be brought into the debate (as I have attempted to do here).
Here I think we should support the Occupy movement who seem to have moved furthest in this direction; but there is a need for a strategic and aligned approach that resists the tendency to break up into factions. We must work together – the stakes have never been higher.