Is it darkest before dawn?

With a bit of a ‘Clegg up’ from the Liberal Democrats, David Cameron finally managed to reach the top job in British politics. So now the Coalition Government has ‘bedded in’, what’s in it for the housing world? Mark Cantrell reports

We are both committed to turning old thinking on its head and developing new approaches to government,” said the Coalition partners David Cameron and Nick Clegg, presenting the new Government’s programme for the months and years ahead.

After a tensely negotiated shotgun wedding to form the first true coalition government for over 70 years, they certainly did. Though the specific context of their words related to a shift in the relationship between citizen and State to foster greater transparency in public life and decentralise power, it could just as easily apply to this curious amalgamation of politico-ideological creeds.

Any such relaxation in the historic trend towards increasingly centralised state power would in itself be of significance, but in terms of the Coalition, the country treads into unfamiliar – if not entirely alien – territory.

Rules of engagement
Undoubtedly, it is something of a bitter-sweet pill for Cameron, given his party failed to gain sufficient Parliamentary seats to unambiguously form a Conservative Government; for Clegg and his Liberal Democrats it’s the chance to at least sip the heady brew of power for the first time in generations.

Politically speaking, this may yet prove a poison chalice for the Liberal Democrats, but for now they remain very much the unknown quantity in the amalgam of power. On the face of it, they are the junior partners, with only five Cabinet positions, and dominated by the sheer force of Conservative numbers, yet as Clegg demonstrated in the formative postelection days, they remain – at least for now – the crucial lynchpin for the stable government both party leaders promised. For all the potential fault-lines that are inevitable in this coalition and that may yet scupper the deal, it may also open up a creative space where new policy ideas can cross-fertilise and flourish.

There have already been some ructions, but the serious business of government is now gathering pace. After the publication of the Coalition’s Programme for Government, there rapidly came the Chancellor of the Exchequer George Osborne’s announcement of £6.2 billion cuts, followed by the Queen’s Speech that outlined the Coalition’s inaugural legislative programme. After a tense wait for the housing sector to learn its lot, the industry finally has some idea of what lies ahead. Much detail remains to be filled in, and what is known is a source of some trepidation, but perhaps overall it leaves some scope for hope – and hard lobbying to ensure that housing, especially social housing, isn’t left in the cold.

Get with the programme
Outside of the polling booth, when they make their election choice on the ballot paper, housing professionals and the sector as a whole has no choice in who it must work with in Governmental circles. In that regard, the shift from the era of New Labour, to this age of the Lib-Cons, changes nothing – lobbying and hard-nosed negotiation remain the order of the day. On the ground, nothing has changed in terms of the demand for housing and the associated challenges involved in meeting needs. But the proposed decentralisation of power may open up avenues to expand the venues for creative discussion and practical delivery.

The Decentralisation & Localism Bill in the Queen’s Speech was welcomed by many in the industry and associated sectors, though in itself it is somewhat indicative of the legislative programme overall, in that housing fell into the overall thematic categories, rather than finding itself the primary focus. As well as the above bill, the Welfare Reform Bill and the Energy & Green Economy Bill have major implications for the work of the housing sector, and of course the sector is well placed to contribute to
the remit of those programmes.

“The housing sector is well-placed to support government in taking forward its welfare reform agenda and has considerable experience of the barriers that welfare can sometimes provide in supporting people back into employment,” said Richard Capie, the CIH ’s director of policy and practice. “Similarly, with over 27 per cent of our carbon emissions coming from our existing housing stock, housing providers will be keen to access funding and support for retrofitting measures – both in the private and social housing sectors.

“CIH has long advocated a stronger role for local communities and their councils as being best placed to understand and shape housing markets. We are enthusiastic about the potential that a localism agenda, hand in hand with local incentives and funding, could have in tackling the housing crisis we face today.”

David Orr, chief executive of the NHF said: “It’s right that local communities should have a say on whether new homes and developments are built in their area – and we support the Government’s localism agenda. However, with waiting lists for social homes at record levels, we must ensure that this approach will still deliver the new homes the country desperately needs and does not become a nimby’s charter.”

The axe man cometh
The ousting of the Labour Party at the polls, with the subsequent formation of the Coalition, has been called a “seismic shift” in national politics, but the real rumblings will no doubt come from the long anticipated – indeed feared – age of austerity as the cuts begin to bite.

At the time of writing, the country was still awaiting the Chancellor of the Exchequer’s emergency budget on 22 June, but Cameron had already indicated that the Government’s plans to tackle the country’s £156 billion deficit will have “enormous implications” for the country.

“How we deal with these things will affect our economy, our society – indeed our whole way of life,” the Prime Minister said in a speech delivered on 7 June. “The decisions we make will affect every single
person in our country. And the effects of those decisions will stay with us for years, perhaps decades, to come. It is precisely because these decisions are so momentous, because they will have such enormous implications, and because we cannot afford either to duck them or to get them wrong that I want to make sure we go about the urgent task of cutting our deficit in a way that is open, responsible and fair.”

Osborne hit the ground running when he took the top Treasury job, quickly releasing details of some quick cuts tallying some £6.2 billion for the year 2010-11 in his public expenditure review. As well as efficiency savings and departmental cutbacks, quangos are also in line to feel the sharp edge of the new economic realities.

Among the departmental cuts, Communities & Local Government (DCLG) was expected to identify £780 million of cuts, but there was some good news in the form of £170 million of additional cash allocated to deliver more affordable homes. Even so, welcome though that money is, the axe man hasn’t yet left the woods.

“These are difficult times, and it is clear that funding for housing has come under close scrutiny,” said Sarah Webb, chief executive of the CIH .

“[The] announcement suggests a mixed bag for housing. On the one hand there are cuts from housing pledge initiatives; on the other hand these savings have been re-allocated into new affordable housing. It is encouraging that there is obviously a commitment here to supporting house building and investment in much needed social housing.

“What isn’t fully clear, however, are the nature of the cuts to existing initiatives and the impact their withdrawal could have. It also remains to be seen what reductions in funding for local government and devolved authorities could have on their respective housing responsibilities. Looking ahead, it is apparent that the emergency budget and spending review remain key in providing details of how government intends to address the deficit in coming months and years, including the full scale of implications for housing.”

David Orr, chief executive of the NHF, welcomed the extra £170 million for affordable housing, but was less certain about the potential impact of the budget cuts expected of the DCLG . He said: “With record housing waiting lists and over-crowding reaching epidemic proportions in many places across the country, the need for more social housing has never been greater. This hopefully signals the Government’s long-term commitment to protecting public spending on social housing and tackling the country’s chronic housing crisis. Housing can play a vital role in supporting a private sector-led recovery by stimulating growth in the construction industry.”

Not everyone displayed such sang-froid about the initial cuts, with the union Unite saying the Government had taken an “economic wrong turn” by “sucking £6 billion out of a still fragile economy”, and heralded far worse cuts to come. The organisation cited a TUC study that claims 29 per cent of public expenditure goes directly to the private sector, indicating that public sector cuts can have damaging implications for private businesses.

“The Government is paying its expected homage to the City and to socalled ‘markets’, instead of putting the full emphasis on maintaining jobs and economic recovery,” said Gail Cartmail, the union’s assistant general secretary for the public sector. “Investment to stimulate the economy has to come from somewhere. If the private sector is not investing sufficiently in communities, the only other avenue is government. In many communities, the public sector is the major employer. The £6 billion worth of cuts will translate into job losses very quickly, which in turn will add to the Government’s financial problems by increasing unemployment and welfare payments.”

Life at the sharp end
Some of those cuts expected of the DCLG will be felt through the Homes & Communities Agency, with £50 million respectively clawed back from the Housing Market Renewal scheme (a cut of 20 per cent) and the Kickstart programme. The department also recouped £100 million from the National Affordable Housing Programme on uncommitted and unallocated schemes. The Gypsy & Traveller Sites Grant was also effectively scrapped.

The loss of the Kickstart money did not go down well with the Home Builders’ Federation (HBF). Stewart Baseley, the organisation’s chairman said: “Cutting Kickstart money, that creates immediate benefits in terms of local jobs and for the wider economy is a cut on investment not waste.

Public money invested through Kickstart pulled in many more times that in private sector investment – which will now be lost to the economy. The announcement is extremely disappointing when we are in the midst of an acute housing crisis and a shortage approaching a million homes, yet building less than in any peacetime year since 1923.”

The new regime is certainly setting the tone for the years to come, and the arguments will undoubtedly continue as to the best way to address the political and economic framework that the housing world rests in. British politics has indeed seen a seismic shift, and the aftershocks as the political ground settles into place will doubtless continue for some time, but for all that it will inevitably shake up the housing industry, there is no critical reason why it should bring the house down.

Change and uncertainty is inevitable – but, as the saying goes, the only thing to fear is fear itself.