Ruth Kelly Announces Review of Social Housing

The text of Ruth Kelly's speech to the Chartered Institute of Housing annual conference:

Thank you Barrington [Billings, CIH President] for the very stimulating comments you have made in introduction.

I am delighted to be here at my first CIH conference to see and learn from the impressive work of you and your members. 

The Department for Communities and Local Government is built on the old ODPM but in many ways is a new Department. The addition of key responsibilities, from the Home Office and DTI, gives us a great  opportunity to think about communities in a more rounded way and I am determined that we use this opportunity to make a real difference to communities up and down the country, with housing at the centre of the Department’s new focus.

First of all, housing is vital if we are to ensure that the economy can continue to be buoyant, run near full capacity but without setting off inflation.  When I was in the Bank of England and the Treasury I saw just how crucial housing was to economic performance.  And so my department has a key role in the fundamental issues of labour supply, labour flexibility and ultimately Britain’s productivity and prosperity. And these economic issues must be at the centre of the department’s thinking. 

Secondly, housing also says a lot about what we value and what kind of society we want to promote. As a nation we are becoming more diverse and many trends point towards society becoming polarised. A society where there is an ever-greater trend for different groups – rich and poor and different ethnic groups – to live together in a society that is more at ease with itself. And there is an important role for government, not least through housing policy, trying to create mixed communities. The type of housing in an area, its size, tenure and its design all affect the way a community sees itself and how it is seen by others.

Thirdly, housing is an inspiration and opportunity. I want to see a society in which everyone has the opportunity to get on fulfil their potential – no matter who they are or where the come from. A society that values and promotes social mobility. We all know how most people associate getting on with owning a home or getting a better one. People naturally value the sense of security that having an asset brings.  Important points of progress in many of our lives come when we move out of the family home and start renting or get our first foot on the housing ladder - whether we buy outright or through some form of shared ownership.

And fourth, environment sustainability is vital in housing - from climate change to improving people’s local quality of life.  This means building with quality not just quantity and taking extra efforts to improve energy efficiency and reduce carbon efficiency People who say building new homes must be bad for the environment are just plain wrong. We have a moral imperitive to build more homes and to do so in a way which is sustainable.  On the local level we must think as much about decent communities as we do decent homes.  People want green spaces, safe places for their children to play and good local shops.

Each of these is a huge challenge.  There will be tough decisions to take if we are to respond to them.  But they cannot be ducked.  We must have the confidence to think through these challenges and address each of them in a considered way.  If we continue to take the tough decisions this could be a golden age for housing policy – being at the heart of creating a more prosperous and fairer society.

Reform since 1997

We have a solid record of achievement to build on. 

In 1997 we were faced with an unstable market,  a massive £19 billion backlog of social housing repairs, more than two million homes failing basic decency standards and too many of society’s most vulnerable people on the streets or in bed and breakfast accomodation.

This is why our first phase of reform was about fashioning the right economic environment for housing policy and starting to tackle some of the fundamental problems we faced.

Unprecedented economic stability, lower interest rates and historically low levels of repossessions gave families the confidence to buy and house builders to invest.  And we started to turn around decades of neglect in other areas as well:

• Because we made the decision early to invest in renovating social housing we are – you are – on track to deliver an outstanding result by anyone’s standards – by 2010, 3.6 million more decent homes with 8 million people benefiting from a better quality of life. 
• And because we took the tough but right decisions in our first term, rough sleeping is now down by two thirds and long-term Bed and Breakfast accommodation for families is a thing of the past.  Tales of Tory Ministers having to step over those sleeping rough on the way to the opera are just a distant memory.

Improvements in our first term cleared the way for a second wave of reform and a focus on housing markets that work- where supply matches demand and needs are met in a period of rising aspiration and household growth.

As we move forward to deliver the houses people need government must not only put investment in – it also needs to ensure, through the planning process, that where it is needed, land is available to build new homes. In order to meet the housing need that we all recognise exists, local authorities will sometimes need to make difficult decisions and we need to support them through this process.

And many are responding.  We invited local partners to come forward with proposals for housing growth and we have an overwhelming response, with over 50 local authorities expressing a strong interest, submitting more than 20 applications. I am therefore today publishing details of the 22 individual bids for which we have a full proposal that are being actively considered for Growth Point status.  The early indications are that the full proposals have the potential to secure around half of the increased housing supply envisaged in our response to Kate Barker’s first report – that is 80,000 additional homes by 2016.

Coupled with this higher demand for housing in the South is the problem of low demand in some communities in the North and the Midlands. And where in the past abandonment and dereliction were left to sap the life from communities we set up nine Market Renewal Pathfinders. Nearly 30,000 homes have already been improved, house prices have doubled and crime is down.  We must build on this success in those areas, while all the time keeping an eye on the market to ensure we are doing the right things cost effectively.

To this end, on housing market renewal I can announce today an additional £106 million for Manchester Salford over the next two years.  And on top of this £46 million for housing markets in the Tees Valley, West Yorkshire and West Cumbria.  That means over £1.2 Billion over five years being invested in market renewal.  Money which means that urban renaissance will be shared as widely as possible.

Of course there are some disagreements, as always, as to how we should act, how dirigiste we should be and exactly what mechanisms the state should use.  But I think that the rationale for many of these interventions is now clear.   We have taken tough decisions, put our money where our mouth is and started to win some of the big debates.   Thanks to all of you in Councils, Housing Associations, ALMOs and the private sector who have worked so hard on these agendas and continue to do so.

Social housing in the 21st Century

With solid foundations to build on we now need to shape the next phase of reform.  We must be relentless in delivering on the overall housing targets set by Kate Barker. And of course we must drive through the commitments we have made to increase the supply of social housing, ensuring we get to the target of 30,000 additional social homes a year by 2007/08. This is right and to be frank over due.

But as we do this, we must ensure that our social housing policy is fit for purpose given our 21st century objectives for housing and communities.

It is interesting to think that social housing barely existed 100 years ago.  But while the wealthy either owned – or more likely rented a decent house – the poor had no other option but to live in the worst houses in the worst areas.  The resulting slums, poor public health and overcrowding was what so angered reformers like Octavia Hill and George Peabody.  And from the late 19th century their example led to action by the state.

So the purpose of social housing at this stage was clear- to provide a decent quality home and security for those in need - effectively providing people with support in the form of bricks and mortar rather than through a direct income subsidy.
Between 1919 and 1939, 1.5 million "homes fit for heroes" were built in England and Wales.  In the decade after World War Two, a almost 2 million more were built and large-scale building continued in the 1960s and 1970s.  By 1979 over 30% of the population was living in social housing.

This was an impressive enterprise - and social housing has given generations a quality home.  It spelt the end for landlords who lived up to the stereotype of Rachman with unfair rents and appalling conditions.  And whilst the design of public housing has had its failures, much of it has stood the test of time and surpasses in quality much in the private sector.

In some places the policies of the past created vast areas of single tenure homes – all socially rented.  Sometimes this worked well.  However, too often this led to concentrated deprivation and exclusion.  It meant areas where the only way of changing housing tenure or type was to leave, something which only compounded the problem further. 

And because of a range of factors, including rising owner occupation, a decline in social house building and the Right-to-Buy we have seen what is horribly called the ‘residualisation’ of social housing - over half of working aged social tenants are out of work. 

So the rationale underpinning social housing, which drove the original social reformers of the early 20th Century is still valid.  It must retain its role in supporting those in the most need.  But in the early 21st Century we need to ask whether there should be other core objectives.   I believe that there are two that are particularly important.
First, we need now to see how social housing can help us create genuinely mixed communities – places where people from different backgrounds and at different life stages live together.

A mixed community means a much greater variety of housing type, size and tenure, and all of a quality that will attract and retain a genuine income spread.  It is at the heart of a sustainable community in the wider sense.  Of course people want to feel comfortable in their own home, but they also want to be a part of their local community. And well functioning mixed communities will be the ones that work in terms of the local economy, in terms of social cohesion and in terms of creating a vibrant civic culture.

Despite the many excellent projects across the country like the Plymouth Grove scheme in Manchester and Attwood Green in Birmingham, we have to work even harder to transform those places where deprivation remains in heavy concentrations. That is why we have identified places like Canning Town in East London and Gipton in Leeds as places where we can help explore how to create mixed communities.

We can take heart from the excellent work we are now seeing in Milton Keynes, that if we get housing policy right – in combination with action in other areas like transport or shops and leisure facilities, a great deal can be achieved.  The exemplars that you have produced through your own efforts and our support need to become the norm. 

The second core objective for social housing in the 21st century is to promote social mobility.  While maintaining the important values of security and quality, we must maximise the opportunities that social housing brings for people to get on in their lives.  It must give tenants greater choice and be a spring board into ownership for those who only need it for a short period of time as well as those who need it for life. 

One of the programmes we have introduced is Social Homebuy.  This enables tenants to become part owners without having to leave the communities in which they are established.  And unlike right to buy, it allows the revenues to be kept by the local authority or the RSL.  I think that this is a tremendously important initiative that can help meet the aspirations of many who cannot afford to buy outright but do want to get a step on the housing ladder.  And local authorities and housing associations can keep the money they raise to invest in social and affordable housing.  Some housing associations have embraced the scheme enthusiastically: on current projections over 3,000 people will be helped in the next two years.

But I want us to go much further because I believe that everyone needs to feel that they have a ‘right to own’ should they choose to exercise it. We must step up to the challenge – creating a society in which every young couple is able to achieve their dream of  a step on the housing ladder and the possibility of owning their own home. So I want every local authority and every housing association not currently involved in Social Homebuy to look hard at why that is and really question whether not taking part is good for their tenants.  For our part I have asked my Department to consult with stakeholders and tenants as to whether there are any barriers, for housing associations, local authorities or tenants, to the take-up of Social Homebuy that we can and should remove.

In addition to this, the joint DCLG / HMT shared equity taskforce is looking more widely at the role of shared equity schemes.  The challenge here is to do this and to increase supply, whilst making sure that schemes do not just push up prices.

Roles of local authorities in making this all happen

If social housing is to be at the heart of forging mixed communities, and if it is to be linked to other tenures in a way which promotes flexibility and responsiveness to families needs, we need to ask who is best placed to make this happen.

I am clear that it is at the local level that priorities should be determined and delivery secured. In education I saw a major and increasing role for the local authority, but as a commissioner and strategic leader rather than a provider. I want to see local authorities taking an increasingly powerful strategic role on housing.  They are ideally placed to take an overview – across all tenures using their planning powers as well as housing policy to deliver mixed communities.  And they are in the right place to work with others including housing associations, regional housing and planning bodies the private sector and of course the local community.  Of course they also lead on many big aspects of what makes a successful community.

Some authorities are already doing this with impressive results, for example Sheffield who were LGA Council of the Year in 2005. The challenge is to make this strategic approach the norm for the future.  But what other powers do local authorities need?  How can they best play their strategic role?

Conclusion

So housing will be vital as the country faces up to major economic and social challenges. 

As we enter the next phase of reform we must be relentless in delivering on our commitments to increase the supply of decent housing, continuing to reduce homelessness and make housing more environmentally sustainable.  But it is also the time to consider what role social housing can play in delivering the government’s wider objectives. 

That is why I have asked Professor John Hills to carry out an independent assessment of social housing. Fresh from the pension commission, John will look carefully at how social housing can best respond to some of the issues I have raised today.  He will report to me by the end of the year with his views on the role of social housing in the 21st century.  On how it can be central to forging the kind of communities and society we want to live in and how it can unlock people’s potential, allowing them to achieve as well as protecting the vulnerable.

As part of the process CIH will be organising a series of events giving a range of organisations and people the opportunity to feed in to discussions.  I am determined that we learn from the best and most innovative practice out there and many of you are already grappling with these issues. 
We must be open to debate and discussion – recognising risks but also welcoming opportunities.

We must build on the achievements of the past decade.

We must harness the energy of people in this room. 

I look forward to working with all of you in the coming months to take forward this agenda.

Speech by Ruth Kelly MP on 20 June 2006.