I am a follower of George Osborne. In the same way that I am a follower of Real Madrid’s Cristiano Ronaldo. It’s quite different from being a “fan”. I watch his performances closely in the knowledge he possesses the most tricks of any player of his generation.
Let me explain.
This Chancellor’s set piece financial statements usually follow a simple pattern; Stage 1; three to four weeks of Treasury briefings of almighty rows in government (the Sunday Times seemingly the receptacle of choice for such stories) and over playing how tough settlements might be so that when the day of the statement / budget arrives it seems better than it might have been. In short Osborne lines up what looks like a powerful volley that will shake the crossbar, and instead delivers a dinky chip that looks prettier, but still ends up in the back of the net. Stage 2: In the immediate aftermath there is a good headline in the Evening Standard, followed by evening news bulletins sticking rigidly to the Treasury’s very well briefed core messages. Stage 3: In years past with the help of the opposition shadow treasury team, the narrative gradually changed as journalists were provided with pointers towards specific groups who lost out, small but unintended policy anomalies and in the case of 2012, all of the above on a large scale plus a tax on pasties. Just like Ronaldo, the Chancellor is adept at dropping his shoulder and feinting one way sending the opposition off in that direction, while he neatly steers the ball in the other. Sometimes it can take a while to catch up with him.
The housing sector isn’t immune from being wrong footed by the Chancellor. There seems to have been an almost complacent “well that wasn’t so bad was it?” reaction from the sector, with too little scrutiny below the surface. Commentary has focused on the extension of LHA rates to new social housing tenancies, impact of the tax credits half turn (it’s not really a U-turn as new claimants on Universal Credit will still be affected) and welcoming the increased funding for development. However little attention seems to have been given to some of the small print, namely;
- Despite all the talk of “an increase in funding for affordable housing” what the Chancellor forgot to mention in his Commons speech but the OBR forecast document helpfully points out is that capital grants to Housing associations are actually being cut in 2016-17 and 2017-18. This isn’t defined as an overall cut however, because the grant rises again from 2018-19 and again there after. However the 2020 rise is outside of the spending review period and is essentially a semi-commitment the government does not necessarily have to keep. Therefore in the spending review period there is a net reduction in grant. The “mix” has also changed with less grant earmarked for the social sector and more now targeted at owner occupation. The shared-ownership grants will also be made available to the private sector. Incredibly, the statement from the National Housing Federation failed to mention either of these two facts. The chart below from the OBR gives some further detail;
- The OBR forecasts that there will be 34,000 less affordable homes built than would have been the case without Osborne’s emergency budget in July and the November CSR/Autumn Statement announcements. The Chancellor keeps insisting he is a builder, the question remains about the numbers and tenures he’s building and for whom.
- All of this bears a striking resemblance to the government’s de facto Housing Policy handbook, the Policy Exchange paper “The future of Housing Associations” which advocated the creation of two tiers of housing association, a higher tier being completely independent of central government grant and a second tier who are.
- The Social Housing / LHA benefit convergence for new tenants is a longer term measure than it seems. Its effect will increase as time goes on. It initially saves £220m by 2020, a relatively small saving in terms of the Housing Benefit budget, but when social rents return to rising faster than inflation (which all HRA business plans are reliant on), the long term effect could be substantial.
These are just four short points and the IFS and Resolution Foundation have done excellent work in a more thorough analysis.
So, with crowd pleasing tricks such as the Help to Buy London, money for developers, and a partial reinstatement of a stamp duty cliff he abolished just a few months ago, plus the u-turn that is not a u-turn, the Chancellor has re-asserted himself as the most skillful player in the league at present after a dip in form over the summer. However back in the studio, when the pundits watch the video of the housing sector’s performance, the commentary will be far from glowing in what has been a troubled season so far.
Jacob Quagliozzi is External Affairs and Communications Coordinator for Commonweal Housing