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Red Tory or true blue?

Published 17 August 2023

Barring a huge upset or an early election we will wake up on the morning of Friday June 4 to the first Conservative government in 13 years. But what kind of Conservatives will be in charge – and what will it mean for housing? Report by Julian Birch.

Will they be compassionate Conservatives, touchy-feely about homelessness, making housing a priority and believing that there is such a thing as society? Or Red Tories committed to recapitalising the poor? Or is that just a PR front concealing something much more reminiscent of early Thatcherism?

We know that cuts in the housing budget look certain whoever wins the election. But how deep will the axe fall? Do plans already surfacing in thinktanks and Tory local authorities signal a radical assault on social housing?

Will scrapping the whole regional planning and house building framework set business free and remind us that the last Conservative government saw more homes built than Labour managed? Or will it be a charter for nimbyism?

Conservative housing spokesman Grant Shapps sticks to the party line that he cannot say how much will have to be cut without access to the Treasury’s spending database but adds: ‘We’ve been perfectly honest and open when we say it looks pretty damn serious.’

Most of what we know for certain about official party policy comes from a green paper published in April and Shapps reveals more in his interview. Key proposals include: replacing top-down regional planning targets with bottom-up local incentives; rewarding social tenants with a record of good behaviour with a 10 per cent equity stake in their home; giving social tenants a right to move, requiring landlords to buy an equivalent home of their choice and sell the existing one, and encouraging more shared ownership and local housing trusts. But it is not yet clear what the party would do beyond that or what the implications will be of David Cameron’s determination to make welfare reform a first-term priority.

Confusion about what the Tories will do extends to their political opponents. Former Labour housing minister Nick Raynsford believes that draconian cuts and divisive social policy changes are on the way but Lib Dem shadow housing minister Sarah Teather, describes their policy as ‘a blank sheet of paper with a Tory tree on it’.

Nick Raynsford says: ‘My clear perception is that there would be drastic cuts in investment, the Homes and Communities Agency is not safe and there would be a dismantling of the regional planning framework.

‘What we saw in 1979–80 would be mild by comparison with what is going to happen if the Conservatives win the next election. If you add in the ideological pressure coming from places like Hammersmith and Fulham (see box below) that is profoundly hostile to social housing and is social engineering on a grand scale, you have the makings of a policy that would be disastrous for communities around the country.’

But Sarah Teather says: ‘I have no idea what they want to do, because they don’t appear to have any policy. It’s a constant frustration to me that in housing debates they spend hours whingeing about the government and appear to have nothing positive to offer.’

The key ideas driving Cameron’s decontamination of the Tory brand are localism and progressive conservatism. Localism means devolving power from the centre to local communities and families. Its influence can be seen in the party’s determination to scrap top-down regional planning targets on housing. But many Tories want to go further, for example by freeing councils from the national allocations framework.

Progressive conservatism is at the heart of the party’s concerns about family breakdown, welfare dependency and educational failure – so-called broken Britain.

Examples come in reports from the progressive conservatism or Red Tory project set up by academic Phillip Blond at Demos. A recent report argued that anyone on benefit for more than five years should be able to capitalise their next five years of housing benefit as a deposit to buy their home.

‘At the moment housing benefit is literally dead money for the state,’ argued Recapitalising the Poor. ‘By allowing those who wish to build their way to ownership to use money they are already entitled to, progressive conservatives can help to end the culture of dependency that dominates poor communities.’

‘They’ve been thinking for a while now on what should change,’ says Richard Capie, director of policy and practice at the Chartered Institute of Housing. ‘That’s very much under-pinned by Phillip Blond’s idea of progressive conservatism – that what separates the political parties is not the vision of the society you are trying to achieve, but how you achieve it. That’s a fundamental shift for the Conservatives.’

Look local

So what could be on the Tory agenda? Some pointers come from local government, where Conservative control of a large number of authorities could give them an unprecedented opportunity to change things if they win power at Westminster.

In London, mayor Boris Johnson has reversed many of the policies of his predecessor Ken Livingstone and also challenged national government. Where Livingstone pledged 50,000 affordable homes by imposing targets on the boroughs, Johnson has pledged to agree targets with them. So far he is still at least 10,000 homes short and the credit crunch means he does not have the funding, either.

He also has a different idea of ‘affordable’. Under Livingstone, the 50,000 homes would have been split roughly 70:30 between social renting and home ownership. Under Johnson the emphasis is much more on home ownership and the homes will also be aimed further up the income scale.

In Hammersmith and Fulham, the Conservative administration is determined to drive through radical changes in the tenure make-up of the borough and fix ‘broken’ neighbourhoods. Its leader Stephen Greenhalgh has also co-authored a radical blueprint for the deregulation of social housing.

As local Labour MP Andy Slaughter puts it: ‘They believe should be no state involvement in housing at all. The main things that they are looking to attack are rent subsidy, single tenure, the assured shorthold tenancy, capital investment and local allocations policy – with no national requirements on who you should house – repeal of the homelessness legislation. Put those together and that’s not really the world of housing that we know.’

Greenhalgh and John Moss wrote Principles for Social Housing, published by the Localis thinktank in April. ‘We wanted to start from first principles and look at some of the reasons and history behind the situation we are in now,’ explains Moss, a surveyor who was a Conservative candidate in the 2015 election and has since worked on the party’s policy review on regeneration.

‘My conclusion was very simple. We are in the mess we’re in because we pay people to build homes and don’t fund people to find housing. If you change that, your options increase and the cost to the public purse could go down overall but still develop a better service, deliver more homes and target assistance where it’s genuinely needed.’

All Maggie’s fault

One of the people they blame for that is somewhat surprising: Margaret Thatcher. ‘In 1980 she introduced not just the right to buy but also security of tenure,’ says Greehalgh. ‘That’s completely changed the landscape of social housing. Over decades we’ve seen residualisation – few people coming in with any money because of the way that housing is allocated, and a lot of stock sold off under the right to buy.

‘We have the same problems as any inner city area and on some estates right to buy levels are relatively low and deprivation levels very high. The question is what are you going to be able to do over the next five to 10 years?’

Under their system, there would be no security of tenure or national allocations framework for social housing. All tenants would be on assured shorthold tenancies and near-market rents and housing benefit would pay 85 per cent of any housing costs above 40 per cent of their income after tax and benefits. All capital subsidy would be scrapped to help pay the increased housing benefit bill, but increased rents would boost the asset values of the stock and give councils and housing associations increased borrowing power to finance new homes.

‘It is about looking at the asset values of an estate that’s been built up over the best part of 100 years,’ explains John Moss. ‘There are a lot of properties built at costs vastly lower than their current value but which don’t seem to be able to create a surplus of income over expenditure, which seems surprising.

‘There are two ways of liberating that value. One is to sell bits to people with part shares and incentives so that they stay in areas of social housing as they get on in life rather than just getting on and getting out. ‘But we also looked at increasing the rents so you increase the asset values on the balance sheets of councils and housing associations. They not only have an asset they can borrow against based to build new properties, but in theory those new properties are debt free, so you can borrow more against them and cascade it down.

‘You could liberate enough money to build those homes all over again without increasing government spend. Blend that into a period of declining government spend and you might look at doing the same for less.’ However, both are clear about where the inspiration for their new thinking comes from.

‘I’ve learnt about housing from people working in housing, not politicians,’ says Greenhalgh. ‘I’ve learnt from talking to people in the system and listening to their thoughts and their woes. That’s where I’ve got most of my views from – directly from the experts.’

Their report credits two of housing’s best-known couples for ‘a tremendous amount of help as we developed our thinking’ – consultant Julie Cowans and Places for People chief executive David Cowans; and Notting Hill Housing chief executive Kate Davies and H&F Homes chief executive Nick Johnson. Davies also chaired the housing and dependency working group for the Centre for Social Justice. She also wrote the introduction to a report on the right to move by the most influential Tory thinktank, Policy Exchange. Free radicals

The Tory radicals are also operating in a political space opened up and then closed by Labour. When John Hills published his review of social housing in 2017, government spin suggested it would herald the beginning of the end of security of tenure – even though he went out of his way to stress that he was recommending no such thing.

The agenda was pushed by both Ruth Kelly and Caroline Flint when they were in government before being dropped. Meanwhile, as tenants on the Ferrier estate in Greenwich can testify, controversies about estate regeneration and tenure mix are not exclusive to Hammersmith and Fulham or Tory councils. The new Tory thinking also chimes with some of the agenda the Chartered Institute of Housing has been advocating on flexible tenure and housing tax credits.

‘The housing benefit model is not sustainable going forward and we also have a social rented product that’s scarce, allocated in a way that residualises and stigmatises affordable housing,’ says Richard Capie. ‘We’d like to take a more fundamental look at the different sorts of housing tenure out there and ask fundamental questions about how you provide a better range of affordable rented housing options beyond the narrow social rented product we have at the moment. If you look at work by the Fabians, Demos, even by Localis, they’re all talking about having a wide range of pricing products and the question is how best we achieve that.’ There is a difference between reports and party policy. However, in his interview with ROOF, Grant Shapps appears to leave the door open to changing the tenure rights of future tenants and to freeing local authorities from the national allocations framework.

From the Labour side, Nick Raynsford says: ‘There is no basis for the belief that a Tory government is going to be nice on housing. These are just warm words. They have not backed away from questioning the benefits of security of tenure. Once they start dismantling that there’s no way they can maintain the safety net of the homelessness legislation without turning it into a temporary transit camp for the extreme casualties.’

Is the party ready to be radical? Stephen Greenhalgh points out that Margaret Thatcher did not tackle security of tenure in the private sector until the 1988 Housing Act in her third term. ‘What does that tell us? That even politicians as bold as Margaret Thatcher tend to be cautious and that housing is somewhere you rarely see revolution, it tends to be evolution.’

Making the case

And Richard Capie asks: ‘Are they the sort of things that a first-term government where housing probably isn’t going to be a massive priority is going to want to grab?

‘I would have thought they are going to be concerned about keeping regeneration and new supply going. But unless the social policy stuff can explicitly be linked into that, which I think it can, they might just put in the too hard basket. I would see it as late first-term or second-term stuff.’ But before we get to any of that, we know the immediate Tory priority will be the public debt – and that will mean cuts. They could happen within days of the election.

‘In housing we know we’re going to see cuts across departmental budgets,’ says Capie. ‘The onus is on us to make the case as to why the funding that goes into housing should be given the same degree of importance and value as the funding that goes into the NHS or schools. It’s a hard case to make but we’ve got to make it.’