Housing In Briefs - FRFI 254 Dec 2016/Jan 2017

Autumn Statement: smoke and mirrors

The measures announced by Chancellor Philip Hammond in the Autumn Statement will do precisely nothing to resolve the housing crisis for the working class. The promise of £1.4bn to build 40,000 ‘affordable homes’ – with an additional £3.15bn for 90,000 in London – is the same old sleight of hand. Firstly, it begs the question: ‘affordable’ for whom? ‘Affordable’, ‘submarket’ and ‘intermediary’ rents are all euphemisms for anything up to 80% of market rents – ie unaffordable for the majority of people in most of Britain. In London so-called ‘intermediate housing’ requires a minimum salary of £57,000 a year. In southeast London, as the 35percent.org campaign has discovered, Southwark Labour Council’s new planning policy for the Old Kent Road ‘regeneration’ now allows developers to decide for themselves what constitutes ‘affordable housing’. Secondly, there have already been massive handouts of government money to private builders to tackle the housing crisis. In the words of economist Paul Mason, this has simply resulted in ‘a glut of luxury apartments and a shortage of homes for ordinary people’.

 

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Newcastle Labour Council: cutting to the bone

On 12 October, Newcastle Labour council opened its latest cuts budget to public consultation. The package details a further £70m of cuts to public services over the next three years, with £30m to be cut during 2017-18. Overall, Newcastle’s budget will be slashed by £291m between 2010 and 2020. Along with all other local authorities, Newcastle will rely entirely on business rates and council tax for its income by 2020.

In 2010 Newcastle council received £164m of support from central government. The council has cut further and deeper than has been demanded of it, using a reduction in funding of £164m to justify ripping £291m of resources from the city’s residents. Every Labour councillor in Newcastle has voted for every cut passed in Newcastle since 2010. Now they can hide behind a rule change agreed at the 2016 Labour Party Conference which makes them liable for expulsion for abstaining on, let alone voting against a legal budget.

 

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Salford's housing crisis

Salford building

Salford, one of the most deprived cities in the country, is at the frontline of Britain’s current housing crisis as it struggles with public sell-offs, demolitions and rising rents. From a high of some 25,000 properties in the 1970s, Salford’s last remaining council houses were surrendered to private hands in a deal with Salix Homes in early 2015. This move, at a time of unprecedented housing demand, escalating rents, and falling incomes is seen by many as further proof of the abandonment of working class communities by Salford City’s Labour-run council.

With all social housing in the city now firmly within the control of housing associations – which function in essence as private providers – there is increasing anxiety for many tenants. Indeed, these providers continue to rewrite the definition of social housing to reflect changing priorities within the sector. For example, City West Housing Trust, Salford’s largest provider of social housing, has indicated that it intends to move away from its social housing commitment as it seeks to ‘maximise returns’. Salix Homes has stated that it is to ‘work to change the view that social housing is a home for life towards being a resource for a particular time’, signalling the end of secure tenancies. Of course, there is little financial incentive for them in offering concessionary rents in a period of high-return private markets. Instead, housing associations are concentrating on the more profitable area of ‘affordable rent’ which can be as much as 40% above social rent.

 

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Savills: helping capital buy up public land

The estate agent Savills acts as an instrument for the corporate takeover of London’s council housing stock. Its major shareholders are City and international investment companies. Other shareholders are international corporations, combining banking, investment and insurance businesses. Most of its board of directors either currently serve on the boards of or were drawn from the directorships of companies including: Goldman Sachs (Asia); HSBC Holdings; Sky plc; Dresdner Kleinwort; Citigroup; and the London-based hedge fund Rubicon Fund Management. Trevor Rayne reports.

As surplus funds have poured into property ownership around the world so Savills’ profits have risen; profits are up 141% from 2011 to 2015 and total shareholder return is up 170% over the same period. Profits in 2015 rose 21% on 2014’s figure to £121.4m. In 2015, 56% of Savills’ profits were made outside the UK, (Savills Annual Report 2015) and in the same year Savills won the UK Property Industry Superbrand of the Year award for the eighth consecutive year and the award for Best Real Estate Agency in China and Vietnam.

 

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Autumn Statement – no end to benefit cuts

Prime Minister Theresa May’s pledge in July 2016 that she would build a ‘fairer Britain’, helping those who had been ‘left behind’ and were ‘just about managing’ was a lie as the Autumn Statement on 23 November showed. Those who are ‘just about managing’ – a euphemism for millions of working class people living in poverty or on the edge of it – received a pittance: a reduction of the taper rate on universal credit from 65p per pound to 62p per pound that is earned above the basic income limit, a marginal tax rate of 74.2%.

 

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