By Peter Ambrose
“No Place Like Home” – an introduction to Z2K Housing Review
- part 1: Why housing is so important
- part 2: What has gone wrong – the evidence
- part 3: Why has it gone wrong – the reasons
- part 4: The main lessons – and how to do it better
Andy explains that the mathematics behind the derivatives and other complex financial products that have helped to fuel the crisis are based on the mathematics of gambling devised centuries ago. So the investment behaviour of major City institutions in recent decades, as they have invested the funds on which the future health and welfare of millions depends, has been in effect one big profit-driven gamble.
From 2.40 all the data referred to is taken from the latest edition of the UK Housing Review, a compendium of housing data edited by Steve Wilcox and published annually by the Chartered Institute of Housing. Various estimates of the need for low-rent ‘social housing’ have been made in recent years by Shelter and others. The evidence as at 2005 was reviewed in the Z2K Memorandum to the Prime Minister on Unaffordable Housing (Appendix 4). The latest 2008 estimate by Holmans et al. of the Cambridge Centre for Housing and Planning Research puts the need for new ‘affordable’ rented housing at 97,000 per year. In 2007 the output was 51,000. At this rate, given the increase in the number of households, the shortfall would be180,000 homes in 2014 and maybe 300,000 in 2020. The problem is getting worse – and the Government’s use of the word ‘affordable’ is intentionally misleading (see below).
The key graph showing the house purchase credit explosion, explained from 3.30 onward, was included in the Z2K Memorandum to the Prime Minister on Unaffordable Housing of May 2005. This was widely distributed to relevant Government departments. It was also presented by a group from Z2K in a meeting with Treasury officials in March 2005. Given that the housing debt outstanding had risen from about 25% of GDP to about 75% we asked the question ‘Is this massive growth in house purchase credit sustainable – or might it be de-stabilising the economy in various ways?’ No one appeared to take this question seriously or be concerned that the lending volumes were clearly inflating house prices and rents and making housing less and less affordable. The general line from the Treasury was ‘It’s OK if the market is working OK’.
At 6.20 onward the Government’s use of the term ‘affordable’ is challenged. The use of the term is purely rhetorical unless there is some rigorous test of affordability as set out here which uses the well-established Minimum Income Standards (MIS) methodology, fully set out in the Z2K Memorandum to the Prime Minister on Minimum Income Standards 2004). In 2008 this methodology was modified by a Joseph Rowntree Foundation research team (see Bradshaw et al. A Minimum Income Standard for Britain: What People Think, JRF, 2008).
The calculation to establish affordability was launched as the Housing Affordability Standard (the HAS) at a large Mayoral Candidates Assembly in London in April 2008 when all four Mayoral candidates agreed to accept this definition of ‘affordable’ (see Human Rights TV coverage of this event). The actual HAS calculated and reported for a typical family household in Stepney working on the London Living Wage (£135 per week) expose as false the claims made by Government that all the ‘affordable housing’ being provided is really affordable.
At 12.35 further evidence is provided by some mothers in Wandsworth about the failures of the housing system, especially in relation to overcrowding and how this is affecting family health and the progress of their children at school. Two educationalists confirm their views and set out the headline findings of the survey of parents carried out by South London Citizens in the autumn of 2008 – the incidence of overcrowding in the sample in this area of the Borough of Wandsworth is either over 50% or over 80%, depending on the definition adopted. The health and social costs are manifest.
From 16.00 Housing Benefit is discussed. Reverend Paul Nicolson of the Zacchaeus 2000 Trust, from long practical experience of the issue, describes the complexity of the system and gives examples of some very serious instances of maladministration of benefits and the grievous ‘knock-on’ consequences that can ensue, many of which also affect mental health and impact on NHS costs. Apart from the mistakes that occur Paul stresses again that none of the benefits or the National Minimum Wage meet the evidenced test of adequacy as established by the MIS methodology. This leads to a forced reliance on exploitative moneylenders such as Provident plc. In addition there are profound and lifelong neurological consequences for the children of mothers suffering poverty-induced poor nutrition not only during pregnancy but from puberty onwards (See Michael Crawford, ‘Women will eliminate poverty in the UK’ at www.mccarrisonsociety.org.uk).
From 30.15 the all-encompassing nature of the housing problem is re-stated and reference made to a study carried out for Unison in 2007 that found a high degree of stress and mental health problems, and seriously diminished quality of life, related to high housing and living costs among households in the top 40% of the income range (Final Report of the LAWSE Project, Unison, October 2007).
In summary, there has been incompetence by successive governments in that they have not calculated the ‘exported costs’ of housing shortfall, high cost and poor conditions before deciding what proportion of total public spend should be invested in housing – and in what form this investment would be most cost-effective. A large private sector corporation would not behave in this way – not if it wanted to stay in business.