By Jules Birch, Inside Housing

22/10/2012

‘We’re not in any way complacent,’ Mark Prisk told the Today programme this morning – having spent his interview being just that.

It’s the first time I’ve caught a media appearance by the successor to Grant Shapps, who was so ever-present in the radio and TV studios that he was dubbed the minister for Daybreak. Prisk is not on twitter either so other than a few brief interviews and a few blogs he is still a bit of a mystery to me.

The housing minister was reacting to the latest Home Truths report from the National Housing Federation, which includes the stat picked up everywhere that the number of people in work on housing benefit is rising by 10,000 a month.

The report forecasts that private rents will rise almost as quickly (35 per cent) over the next five years as they have over the last five (37 per cent). If that’s correct, then even more people will have to rely on housing benefit even if they are working. The total of in-work household claimants has grown by 417,830 or 86 per cent since 2009.

In previous years, Home Truths has concentrated more on the plight of first-time buyers and the falling proportion of home owners so this year’s report and the extensive coverage it is getting in the media feel like a major change in perceptions of the housing crisis. The Prisk interview was preceded by one with Milly, a single parent in the South East who is working but recently had to move because of restrictions on the local housing allowance. The only way she could find new accommodation was to lie to her landlord about being on housing benefit and to share with another single parent.

As I blogged after David Cameron’s speech at the Conservative conference too, there are clear signs that the government at last gets the fact that it has to increase housebuilding even if that means offending the nimbys. There are also signs that things are changing underneath the surface, as in Isabel Hardman’s report on Friday about a proposal by Jake Berry, parliamentary private secretary to Shapps, to penalise developers who landbank sites without building on them.

So it was intriguing to see what Prisk had to say (listen here from about 2 hours, 15 minutes in). His response to the interview with Milly was that:

‘We’ve had many years of low rates of housebuilding. I think it fell to the lowest rate since the 1920s under the last administration. So this is a systemic problem of a dysfunctional market and as they’ve said the key issue is getting more homes built both for sale and to rent. You heard from Milly’s point of view that the best way to help tenants is to expand the private rented sector so she has much more choice. It’s quite clear from what she was saying that she has very little choice at the moment to be able to shop around and get a better deal.’

So, asked interviewer Sarah Montague, the answer is to build an awful lot more homes?

‘Well I think we certainly do. Obviously it’s a controversial issue but I think when you look at the long-term problem, the fact that the number of homes built has been something like less than half the number of households formed, you’ve got to do that and that’s why we’re putting significant money into the affordable homes programme, 170,000 additional houses, and also particularly for private renting which I think is really important for the first time putting a debt guarantee which sounds technical but essentially it’s allowing much more investment to come into this market. Get some of the experienced players in Germany, Sweden and America and elsewhere to really help people like Milly.’

Let’s leave aside that the coalition’s share of the affordable homes programme is actually 80,000, there are intriguing hints here of the way that private renting is now at the top of the government agenda. It’s telling though that he thinks it will be the Germans, Swedes and Americans that will come to the rescue rather than our own investment-shy institutions?

Sarah Montague then pressed him on affordable rent. As the public accounts committee pointed out last week, if you finance them with higher rents you simply add to the housing benefit bill and the problem. Prisk replied:

‘There’s a flaw in their report which I think is that they’re making an assumption that every local authority will charge 80 per cent of market rents in order to deliver that extra £15 billion of private investment. In fact when you look at the numbers it’s much more like 65 per cent so I think they’ve got that number wrong.’

This is weak even if you leave aside the fact that it’s not local authorities that will be charging the higher rents. For the record the PAC actually said: ‘The Department has not done enough to understand the full impact of higher rent levels on tenants.

Housing providers can charge higher rents than before (on average 65% of market rents in London and up to 80% elsewhere).’ According to Prisk’s own department’s reply to a freedom of information request, the average proportion of market rent in regions outside London ranges from 77.7 per cent in the North East to 79.5 per cent in the North West.

]In any case, said Sarah Montague, we know that [market] rents are going up so even if it’s a lower percentage it’s still of a higher rent. Prisk replied:

‘We come back to several things. One, make sure the rented market is growing so there are more properties. Two, add that extra 170,000 on the affordable homes programme. Three, as the federation rightly say, let’s get that public land that’s been idle for too long sold – we’ve got land out there for about 33,000 houses sold now, get that into the market, get that underway. That’s the way to tackle this and make sure for example you help first-time buyers some of whom want to buy but are staying in rented property making more problems in the rented sector because they can’t raise a deposit.’

Montague pressed him again – ‘so public accounts committee are just wrong and have their facts wrong?’ – and Prisk replied:

‘Well they’re making assumptions about what councils are going to do on the basis that they’re going to charge 80 per cent. The evidence at the moment is that that is not the case. So I think that is where we differ with them. But we’re not in any way complacent about the challenge, people like Milly highlight the fact that for years the last government, all governments, have actually failed to build enough homes. We want to change that.’

Leave aside a second mistake about councils setting affordable rents and you’re left with an implicit acknowledgment that this government as well as the last one has failed on housebuilding. But is it really true that all governments failed? Between 1945 and 1979 they seemed to do pretty well and John Major didn’t do too badly. Gordon Brown (despite presiding over the lowest number of starts since the 1920s) at least did something in response to the crash. The problems have been mainly down to just three governments: those of Margaret Thatcher, Tony Blair and David Cameron (in that order).

Not in any way complacent? As Brian Green blogs over at Brickonomics, even the big housebuilders believe they can produce no more than 160,000 homes a year by 2017 without a significant change in land availability. That leaves a huge gap for the Swedish, German and American cavalry to fill – and that is just to stop things getting even worse. It does nothing about high house and land prices. It does nothing to resolve the problems faced by private tenants like Milly in a landlords’ market or the soaring rents that have defied David Cameron’s attempts to argue they are falling. As with the energy market, it’s one thing to say you want to bring charges by private suppliers down, quite another to achieve it.

Sooner or later a government will have to take much more radical action than anything that is being contemplated by this one. That won’t happen until ministers realise just how much they are still being complacent about when it comes to the housing crisis.

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