by James Meek
Another possibility is that housing associations will come to the rescue. They now let to many more households in England than councils. What are they? And how did so much come to hang on them?
One of the oddest things about the privatisations of water, the railways, electricity and the rest is that they were framed as binary possibilities: stay or go, stick or twist. Those who had a stake in the outcome were either for privatisation, or for the persistence of state ownership. Other forms of organisation weren’t considered. If there were proposals for another way that was neither the nationalised status quo nor stock market flotation, they went unheard. With housing, when Right to Buy came in, an alternative already existed, alongside private and state ownership. Housing associations had existed in various forms since the Middle Ages, philanthropic organisations set up to house the needy. They aren’t always charities, though sometimes they are. Technically they’re both ‘industrial and provident societies’ and ‘registered social landlords’. They’re run on commercial lines – they borrow money at commercial rates, they may build houses for sale or for market rent, they strive to avoid losing money – but they’re forbidden to make a profit, they don’t pay dividends and they don’t have shareholders. Whatever surplus they make is put back in service of their primary function, which is to provide low-rent homes for the less well-off.
Some of the early housing associations are still around: the Peabody Trust, for instance, set up in the 1860s by the Anglo-American businessman and philanthropist George Peabody, which now rents out more than 20,000 homes in London; and the Joseph Rowntree Housing Trust, which originated in a trust set up by the chocolate-maker in 1904 to administer the model village of New Earswick near York. New Earswick is still there, still offering homes at below market rent. In the 1960s, idealists in North and West London reacted against the slum landlords’ petty exploitations and the demolition-happy dogma of the state. In 1963, Bruce Kenrick – who would a few years later set up the homelessness charity Shelter, just as the nation was absorbing the shock of Cathy Come Home, Ken Loach’s film about homelessness – founded the Notting Hill Housing Trust, which today, as the Notting Hill Housing Association, has 27,000 homes in London. In 1968 the architects David Levitt and David Bernstein and the planner Beverly Bernstein set up Circle 33, now part of a consortium of nine housing associations across England called Circle Housing.
The shift of housing associations away from their philanthropic, idealistic and anarchic roots began in 1974, when the government of a more statist era started giving them grants to build more homes than their modest means would otherwise have allowed. But the transformational step came in 1988, amid the hubris and anti-statist zeal of Thatcher’s radical third term. Right to Buy was faltering; the best-built and most attractive council houses had been sold, leaving councils still responsible for millions of tenants who, lacking the means or desire to buy their homes, continued to live in vast estates that the councils had been starved of the funds to maintain. And because the Treasury had captured the councils’ sales receipts and diverted the rents of their most prosperous tenants to mortgage lenders, the councils lacked the financial muscle to correct, by refurbishment, or demolition and replacement, the design flaws blighting so many estates.
Huge sums were needed to bring these decayed or badly built forests of brick and concrete up to a decent standard. Barring a tax increase, the money could only be got by borrowing, and the stream of revenue from council tenants’ rents made excellent collateral. But the government of 1988 didn’t want to let councils borrow. Partly this was because of a belief that the public sector was incompetent; mainly it was because the sums needed would have to be added to Britain’s total government debt, exposing how the Thatcher-era tax cuts had put the country’s finances in jeopardy. So they turned to the housing associations. First, non-profit making as they were, they were formally designated part of the ‘private sector’, making it possible for them to borrow on the open market without the debt showing up on the government’s books. Then, the government made it possible for councils to sell their housing stock wholesale (or estate by estate if they preferred) to housing associations specially created for the purpose. The only obstacle to a council shedding its municipal housing was a clause, grudgingly added after parliamentary pressure, making it obligatory for tenants to be balloted before a stock transfer could go through.
The first wave of stock transfers was relatively small-scale: mainly rural Conservative councils, starting with Chiltern District Council in Buckinghamshire, which transferred its entire stock of 4,650 houses to the new Chiltern Hundreds Housing Association (still operating today under the name Paradigm). It was under New Labour that the policy took off. Tony Blair and Gordon Brown intended to do the right thing by their party’s natural supporters, the remaining millions of council tenants, and renovate their decaying homes. But they didn’t intend to let Britain’s municipalities take on extra debt to bulk the government’s grants up to the levels required. Pressure was put on councils to offload estates and tenants, and the councils, in turn, put pressure on tenants to vote in favour. ‘Yes’ campaigns got public money; ‘no’ campaigns didn’t. It was made clear to tenants that a ‘yes’ vote would result in money being made available quickly to renovate their homes, while a ‘no’ vote would put refurbishment in doubt. The government spent billions of pounds easing the way for the new housing associations by wiping out the debt attached to the homes they acquired. Council after council went through the process. Glasgow shed its 80,000 council houses; Sunderland disposed of 36,000; in the spring of 2003, Walsall and Coventry sold 43,000 between them. By the end of 2008, there were 170 councils with no council houses left.
In 1985, housing associations ran only 13 per cent of all social housing. The rest were council houses. By 2007, it was half and half; by 2012, only 1.7 million homes were still in council hands, against 2.4 million owned by housing associations. The housing associations seemed the ideal embodiment of Third Way economics, motivated neither by profit nor by state command, a parallel to academies in education and foundation trusts in health, yet with an old and noble pedigree. At a ceremony marking the handover of 17,000 homes in Tameside in 1999, Tony Blair said stock transfers ‘buried for good the old ideological split between public and private sector’.
On the face of it, by ploughing what surplus they make back into building more homes, and doing so, on the whole, with efficiency and respect for tenants, housing associations represent a setback to the prevailing neoliberal consensus that the lust for personal gain embodied in shareholder capitalism is the only deep motivator that can make an organisation succeed. A study by the Joseph Rowntree Foundation in 2009 found that most housing associations which took over and renovated council estates had exceeded the official standards for good homes, in terms of facilities and living space; had given tenants a bigger say in estate management compared to supposedly more democratic councils; and had gone beyond their remit to invest in community facilities like libraries and schools. Lynsey Hanley, who bought a previously privatised council flat on an ugly, decayed estate in Tower Hamlets and became involved in a successful campaign to have the estate transferred to a housing association, knocked down and rebuilt from scratch, wrote:
It’s a testament to the sheer horridness of many estates that their tenants have, like us, elected to have their own homes destroyed in order that something better might replace them, that crime and anti-social behaviour might be designed out and that overcrowded households might finally be able to offer their children a room of their own … tenants not only voted for it, but designed it themselves. The one complaint that was raised most often in our steering-group meetings was that ‘the council has never listened to us.’
Opponents of stock transfers argue that they were simply a second attempt to purge the country of direct state responsibility for an essential human need after the first attempt, Right to Buy, slowed down; that they were, in effect, another privatisation, and one th
at cost the state dear. A report on stock transfers by the National Audit Office in 2003 judged the programme a success but conceded that if councils had been allowed to use grants and loans to renovate a million homes themselves, it would have cost £1.3 billion less than getting housing associations to do it. The NAO said there were other benefits: shifting risk from taxpayers to the housing associations, getting repairs done faster and giving tenants a bigger say (as a rule housing associations give tenants a third of the seats on the boards running their estates). Yet as the social-policy thinker Norman Ginsburg put it in his article ‘The Privatisation of Council Housing’ (2005), ‘There is no question that improvements have been accelerated by the transfer, but that is only because local authorities were prevented from doing them. There is undoubtedly increased tenant participation … but whether tenants exert any more collective influence than they did within local electoral politics is highly debatable.’ As for the notion of risk transfer, he said, was it such a wonderful thing to transfer risk from taxpayer to the assumed-to-be-too-poor-to-pay-taxes tenants? ‘It appears to be celebrating the loss of a public responsibility for meeting basic needs.’
Whether councils, given the chance, could have carried out the vast renovation programme that the housing associations are successfully pursuing (few who have lived in British cities for a generation, even if they don’t live on a council estate, can fail to have noticed how much less grotty the estates look) is a question that can’t be answered. The successful renovation of 70,000 council houses carried out in Birmingham after its council tenants voted against stock transfer in 2002 suggests that they could. But housing associations are dominant now in the place council housing used to be, and as the effects of Right to Buy, increasing population and the failure of the market to build enough houses to cope with it have become apparent, successive governments have turned to housing associations to fill the gap. In 2005, the housing association wave came to the Cranbrook Estate.
Rather than try to transfer its stock in one go, Tower Hamlets has done it estate by estate. Its preferred bidder for Cranbrook was Swan Housing Association, created in the 1990s to own and run a set of former new-town homes in Basildon, Essex. Headed by an experienced housing manager, John Synnuck, the organisation began to expand, building homes and acquiring them from councils in stock transfers. They were opposed by an organisation called Defend Council Housing, rallied locally by George Galloway, who after his expulsion from the Labour Party over his anti-Iraq war activities had fought and won the parliamentary seat of Bethnal Green and Bow under the Respect banner. Defend Council Housing claimed that the Swan takeover amounted to a privatisation of the estate by a rapacious corporation. They won the argument and got the votes. Cranbrook is still in council hands. But supporters of the housing association claim residents made a terrible mistake; that the housing association takeover wouldn’t have been, and couldn’t have been, a privatisation at all; that the residents were deceived into opting for a bleaker, more insecure future. ‘Defend Council Housing caused real damage,’ David Orr, head of the National Housing Federation, the umbrella body for housing associations, told me. ‘They persuaded people to vote against their own best interests in pursuit of an ideology about council housing. And I think that’s unforgivable … a hundred years ago, 90 per cent of us lived in private rented housing, and most of it was squalid, and it was council housing that changed that. But the idea that the way you defend council housing and its place, not just in history but in the present and in the future, is by attacking housing associations, and by persuading people not to vote for things that were clearly in their interests – I just think that’s crass.’
In the course of the Cranbrook campaign – one of many contested by Defend Council Housing activists around the country – Galloway wasn’t always scrupulous about the facts. Like virtually all housing associations, Swan doesn’t pay dividends and doesn’t have shareholders. It was therefore inaccurate for Galloway to say of Swan: ‘These organisations exist for their own corporate reasons and their own corporate benefits, including their shareholders, to whom they distribute a dividend.’ Glyn Robbins, a housing theorist and part-time political activist who chaired the meeting where I met Pat Quinn, also took part in the anti-Swan campaign at Cranbrook. He doesn’t go as far as Galloway, but still calls housing associations ‘private companies, run as businesses’.
We met for the second time in his office at Quaker Court, the Islington council estate where he works as a housing manager. Speaking with his activist’s hat on, he told me that the promotion of housing associations as benign, philanthropic organisations was a trick. ‘They had this kind of cosy, non-threatening image. At times some were benign and did good deeds but as they became more and more reliant on private sector finance and more and more commercially oriented they have become, for people in most housing need, far more similar to the private sector. Where do we draw the line between not paying dividends to private investors and paying housing association chief executives quarter of a million pound salaries? If you want to work in the public sector, aren’t you beholden to accept a different kind of reward that reflects that ethos?’
I went to see Swan at work renovating a council estate it has taken over in Bow, another part of Tower Hamlets. Three enormous, decayed tower blocks are being refurbished inside and out in a site hemmed in by railway lines. Swan’s architects have used the space at the foot of the high-rises to build hundreds of low-rise new flats and houses that compare favourably in size and appearance to others being built by private developers elsewhere in East London. Any council tenant on the estate who wants one of the new or refurbished flats, at a rent similar to the one they were already paying, will get one. The homes left over will be let at market rents, sold as shared-ownership properties, or sold outright; Swan will use the proceeds from these commercial activities to cross-subsidise its social housing. The reason Doreen Kendall was against the Swan takeover of the Cranbrook Estate wasn’t some erroneous idea that Swan was a for-profit company, but that Swan intended to finance the refurbishment of the estate by obliterating Lubetkin’s design: their plan was to build new homes on top of and in the gaps between existing ones, gaps which, for instance, contain the Cranbrook residents’ community centre. Some of these homes would have been sold, or let out at market rents.
Even as governments have courted and flattered the housing associations, they’ve chivvied them into becoming financially more creative in finding ways to go about their business. They’ve cut the grant they give them to help them build, forcing them to use whatever extra space they can carve out of each council estate they take over, or out of each new development they start, to build houses for sale or private rent for the purposes of crosssubsidy. By encouraging the housing associations to take on more private debt and to carry out more and more private work to fund their altruistic activities, the government makes them look more and more like for-profit companies. The danger is that social housing might ultimately become a philanthropic stub on a private body, like the donations a bank makes to charity.
There have been some troubling instances of fat cattery at the housing associations. None of the hundred names on the most recent list of housing association chief executives’ salaries published by the journal Inside Housing, which keeps them under fantastically detailed scrutiny, earns less than £100,000 a year; sixteen of them (including Synnuck of Swan) earn more than £200,000. In 2010, the association Housing 21 gave its retiring chief executive, Melinda Phillips, a package worth more than half a million pounds – salary and pension worth £207,000, and what was effectively a farewell gift of £300,000. In August 2013, Great Places Housing Group showed similar generosity to its retiring chief, Stephen Porter. Along with £204,000 in wages, pension payments and bonus, the board handed him a parting gift of £245,000. Altogether it was the equivalent of £28 from every Great Places tenant household.
Housing associations have diversified furiously. The Gentoo Group, created out of the trans
fer of Sunderland’s council houses in 2001, has gone into construction, facilities management, solar panels, bulletproof glass, train windows and a software package called Streetwise that helps housing managers track and control estate troublemakers (‘Streetwise can calculate the cost of each type of intervention or legal action taken, allowing an organisation to identify the most cost-effective way of dealing with anti-social behaviour’). A third of Gentoo’s £175 million turnover is unrelated to social housing, although the company assured me that it doesn’t subsidise its other activities from tenants’ rent. At the same time, Gentoo, whose chief executive, Peter Walls, almost doubled his salary at transfer when he switched from being the council’s director of housing, struggles to find ways to build new homes for the less well-off. Sunderland’s population is falling, and it was always part of the plan to demolish 5.000 homes by 2021. But the result of knocking down 4,000 former council houses, selling 4,500 to Right to Buyers and building 1,500 affordable rent replacements is a net loss of 7,000 affordable homes.