Housing Associations and Local Authorities, voluntary sector organisations and people in need of a home: we’re all now battered by the storm we’ve long seen coming. Whatever happens in the future, there’s no way back from where we are now. One Housing Association chief executive has commented that there are “a lot of people out there expecting some sort of normality to return. Normality won’t return; we’re operating now in the new normal.”’ (See PDF: Social Hearted; Commercially Minded: a report on tomorrow’s housing associations.)

Action is stirring in response to the housing shortage and the caps on housing benefit (‘bedroom tax’) and overall benefit entitlements. People cannot live indefinitely without security as to the roof over their heads without stirring – not in a country as essentially wealthy as Britain. Nor can housing providers or government remain passive indefinitely.

Nothing is clear yet; we live in a time where relationships are seeking redefinition: between people and public authority, people and voluntary agencies, people and private sector; between central and local government; between public, private and voluntary sectors. What will emerge we do not know. We – ordinary citizens – have to be aware of what’s happening if we are to have any kind of choice about the shape of things to come: if we are not to leave it to the market and the dominant political forces which currently shape it.

Where are we now?

Looking at housing, the context is one of severe shortage, the hardest impact being upon the poorest. Research by the Joseph Rowntree Foundation foresees a shortage of 1.1 million houses in England by 2020. Partly this is a failure over years to build in response to demand. Partly, as Aaron Peters and James Butler argue in Radio Novara’s ‘The Housing Crisis’, it is a failure to gain access to the UK’s stock of empty homes. The latest government data gives 734,000 empty homes in England, 301,449 of them empty for more than six months. Yet more houses are under-occupied, hence government’s bedroom tax policy in respect of social housing. But as Peters and Butler also point out, 88% of under-occupied properties are owner-occupied. Combine this shortage with recession, low wages, under-employment and benefit cuts, and we have a crisis.

Housing Associations [HAs] are struggling; have been doing so since their grants were cut a couple of years ago. Now their tenants are being squeezed hard. They are facing likely growing rent arrears both with the current cuts in housing benefit and overall benefit entitlement, and with Universal Credit’s insistence on being paid one month in arrears, the housing element going to tenant not landlord. One study of a Univeral Credit pilot in Southwark earlier this year shows tenants not previously in debt rapidly falling behind.

With arrears comes a loss of financial credibility. In February, Moody’s downgraded the credit rating of most Housing Associations and may do so again, depending not least on any government proposals to help HAs in difficulties.

Local Authorities and HAs (legally counted as public authorities) have their backs against the wall. Homeless applications to local authorities (LAs) were 6% higher in October to December 2012 than the previous year and increasing numbers of families are being placed in B&Bs, hitherto the last resort, pending the LA’s decision on their priority housing status. Growing numbers of homeless people are being rehoused by their LA in another area. As the financial squeeze continues without any possibility of suddenly-rising numbers of affordable homes, this can only worsen.

With house prices out of the reach of many, a growing proportion of people live in private rented accommodation, their numbers now equalling those in the social sector (See PDF: English Housing Survey Headline Report 2011-12). Average private rents in that year were about twice social ones. In 2012 out-of-London private rents rose by 3.4% nationally, in London by 7%  (Crisis response to the Communities and Local Government Select Committee inquiry into the Private Rented Sector, January 2013).

Where supply of tenants exceeds that of housing, landlords can pick and choose. Even for landlords who wish to let to housing benefit claimants, financially they are a dicey option. Meanwhile, more mortgage providers have introduced restrictions on buy-to-let mortgages, prohibiting letting to benefit claimants. Crisis indicates that in parts of London, under 2% of shared rented accommodation is available to the most disadvantaged benefit claimants, the under-35s who are only allowed the rate for a single room in a shared house.

How are we responding?

Some advocate mass appeals by social tenants against the under-occupancy charge (‘bedroom tax’). Others warn that this will simply clog up local authority and Tribunal administration and delay decisions on strong cases. Social tenants’ groups such as the Coast & Country Tenant Panel are combining regionally to plan campaigns.

Some housing providers are in practice joining the protest. The Knowsley Housing Trust has reclassified over 500 properties as having fewer bedrooms, though they deny that this is in response to the bedroom tax. Edinburgh City Council has undertaken to use all legitimate means to avoid eviction where tenants are in unavoidable arrears as a result of the bedroom tax. In Cambridge City, Labour councillors proposed both steps but were voted down, though their Lib Dem colleagues – in a majority – made their unhappiness with the bedroom tax clear.

Straws in the wind suggest that increasing numbers of LAs will seek to rebel. But they and housing authorities face grim financial limits and huge uncertainties. Remember that abolition of council tax benefit in favour of locally funded council tax relief schemes means that residents’ future inability to pay council tax will hit the LAs’ budgets, not central government’s.

In the private sector, too, people are taking action. In Islington, North London, a coalition of private tenants’ groups staged a protest outside lettings agents’ offices on 27th April. They called for lower rents, rent controls, regulation of lettings agents, longer and more secure tenancies, and an end to letting agents’ fees and to discrimination against people on housing benefit. There was similar action last month in Brixton. In Edinburgh, the Private Tenants Action Group have a well-entrenched campaign.

The need for private sector change is recognised. The protesters’ demands parallel ideas outlined in Labour’s proposed housing bill. Some LAs are working as quasi-letting agencies, offering bond guarantees which act as deposits and sometimes remaining on hand throughout the tenancy to help if problems arise. Housing Association Genesis, now expanding into the private rented sector, has announced tenancies of up to five years with annually agreed rent increases: a significant step forward from the six-month fixed-term common for Assured Shorthold Tenancies.

Even government is to some extent accepting the need of greater security for private tenants. Under pressure from the House of Lords – and following a critical report by the Office of Fair Trading in February (see PDF) – the Coalition has taken a small step forward with an amendment to its Enterprise and Regulatory Reform Bill. This will require letting and managing agencies to join a recognised ombudsman scheme with a complaints process for tenants and landlords.

Breaking down the social/private distinction

The post-war distinction between social and private housing is breaking down fast, adding further urgency to the call to reform the private sector. The Localism Act 2011 allowed local authorities to discharge their homelessness duty by offering priority homeless people private rentals, either in their area or outside it. Now housing authorities are entering the private rental market. The ‘G15’ group – the 15 biggest social landlords in London – plan by 2015 to build 13,000 affordable homes along with 4,000 for rent at market prices and at least 1,100 for sale at regular London prices. On the positive side, this will add to the stock of housing and of reputably-managed private rents. On the negative, it risks further blurring any focus on the needs of the poorest and nearly-poorest. HAs themselves are keenly aware of the risks.

Whatever the pros and cons, such moves are inevitable. HAs have to be inventive if they are to survive. Many are entering into partnerships with each other or merging, seeking economies of scale.

Since the Housing Act 1988, HAs have been allowed (and forced) to raise funds privately – mainly through bank loans – rather than depending almost entirely on non-repayable central government grants. In the last few years, bigger HAs have been issuing corporate bonds; 2012 saw what the Financial Times called a ‘flurry of activity’, with smaller as well as large HAs borrowing in total four times the previous high point of £1bn. A report by the Smith Institute suggests that some HAs are wary of diluting their social purpose or stepping outside their expertise, fearing also that the more they turn to the market, the less government will be willing to invest. However, ‘bond financing is set to increase and there are likely to be more innovative deals with institutional investors’. (Social Hearted; Commercially Minded: a report on tomorrow’s housing associations, April 2013).

So we can expect to see more partnerships between HAs, social enterprises and investors. The City of London Corporation (a local authority) and Big Society Capital recently invested in the Real Lettings Property Fund, part of homelessness charity Broadway. The money will buy and develop properties for homeless people not eligible for social housing. According to one investment director, ‘At its core is a simple principle, which we believe will have wide investor appeal – investing in property, for a purpose.’

We have entered a different world from that of taxpayer-financed social housing, returning to a quasi-Victorian model, albeit one lacking large-scale individual philanthropists. The Four Percent Industrial Dwellings Company of 1885, renamed the Industrial Dwellings Society (1885) Ltd in 1952 and now IDS, was founded by Jewish philanthropists and funded by £10 shares. Octavia Hill’s model dwellings were financed by loans at 5% interest from John Ruskin; at the time (from 1865), interest rates had been fluctuating between 2% and 10%; from 1867, 5% was a generous return on capital.

Responsibility and marginalisation

Initiatives like Broadway’s to tackle street homelessness are welcome, particularly when they provide permanent accommodation. More prominent are the ‘No Second Night Out’ initiatives funded by Communities & Local Government’s Homelessness Transition Fund. These aim to get people off the streets, giving them advice and where possible returning them to the support of family or friends. Such a scheme has opened in Peterborough, its greatest potential value being to prevent recently-homeless people slipping into longer-term problems. That’s good news. But brief interventions are unlikely to tackle entrenched poverty and homelessness.

When it comes to housing provision, housing authorities are likely to become tighter in their choice of tenants. Again, help is most accessible to those with the least entrenched problems; for the most marginalised, it’s hard to find a way back. The Smith Institute finds that ‘The general view among associations is that the focus for new homes will be largely on future tenants who are in work and who are not (or at least are less) reliant on housing benefit. This has provoked some councils to claim that they are left carrying all the burden of housing the most vulnerable. All the policy drivers are pulling associations away from housing the very poorest, which is placing enormous pressure on councils to allocate more people in the private rented sector.’ This at a time when private landlords are increasingly refusing housing benefit-dependent tenants.

Government believes that access to public services should depend upon individuals’ ability to take responsibility. Individual responsibility is at the heart of the Jobseeker’s Agreement and of the Claimant Commitment which nearly every Universal Credit claimant must make: parents, carers, all but the most-disabled people, un- and under-employed. Failure to keep the Agreement means benefits stop. State benefits are there for those who can more or less cope. It’s tougher for those slipping below that point.

Peterborough City Council’s ‘Peterborough Community Assistance Scheme’, replacing DWP’s now-defunct crisis loans and community care grants, provides emergency utility top-ups, microwaves and other goods in return – in theory at least – for acceptance of advice from the Citizens Advice Bureau, Credit Union and other partners. The aim is to ‘break the cycle of poverty’ by enabling people to tackle its causes. The theory has value for those whose need of support is small. The resources are not there to give it reality for those least able – for whatever reason – to ‘take responsibility’ consistently and alone.

In the housing world, introductory tenancies have been in use since 1996, allowing local authorities to make the first (usually) year of the tenancy conditional on the tenant’s good behaviour. The idea of combining the tenancy with support to find work is becoming routine amongst HAs. Gloucestershire’s Yarlington Housing Group last month took a further step by making renewal of its seven-year fixed term tenancies conditional upon adherence to individual ‘household ambition plans’. According to its Guide for Customers, this involves ‘ambitions’ for employment, training, education, healthy living and ‘skills for life’ such as DIY, money management or parenting. Yarlington and its ‘partner agencies’ undertake to help its tenants achieve their ‘ambitions’. We have yet to see the level of help to be proposed, but finances will inevitably rule out long-term support. There has been a spate of outrage at this intrusion by a landlord into its tenants’ private lives, but it’s part of the established pattern.

Where to from here?

So where are we now? In the public sector, strains are showing between central and local government, as local authorities are forced to deliver central government cuts. There are signs that some at least would opt to be on the side of those who protest, and will do so as far as they are able. But if they are not to go bankrupt, their room for manoeuvre is narrow. There is space here for a renewal of commitment to local democracy, if local people are willing to trust in a public authority. Distrust, for many, is currently too deep; but there is room for change.

However, under heavy financial pressure, LAs will be forced to choose their priorities. The hardest-to-reach people are the most expensive to help and most uncertain of reward. In times of hardship, short-term thinking is likely to win. That will marginalise those needing long-term help.

Housing associations are also responding to crisis. To survive, they will have to change; some are moving fast. Of necessity and sometimes by choice, they are being pushed along the road laid down by government. They may make housing more conditional upon good behaviour; they may look for more commercial financing; they may combine ‘social’ and private housing. In a world of multiple needs, multiple responses are needed.

The problem, as opponents of privatised services regularly point out, is cherry-picking. There are areas of the market for housing as for health, libraries and transport that will not pay the immediate funders. Even if one limits ‘gains’ to the financial sphere, they will not be realised for many years, and will be spread across many sectors. Where a family is not, for whatever reasons, currently able to ‘take responsibility’ in the required ways, providing a secure roof may pay off over half a generation by avoiding costs to  health, education, social services, crime-prevention and homelessness services.

This is where consumer/citizen activity and signs of response by LAs are to be welcomed. The more that individuals can come together, the more in particular that people potentially benefiting from the responsibility agenda and those at risk from it can come together, the more long-term hope there may be. The more they and local councillors can talk, breaking down distrust and instinctive hostilities, the better.

There’s no way back from the new normal. But one feature of this normality is apparently indefinite flux. Nothing about the future is set in stone. People are working to shape it; it’s up to all of us to take part.