How do you build affordable housing? Correspondence from Ernest Mallett.

Ernest Mallett is the Molesey Residents Association councillor for West Molesey.  Below is a very brief bio. For more information regarding Mr Mallett, follow this link. http://surreyindependents.org.uk/team/ernestmallett/

Ernest is a very experienced  councillor and a cornerstone of the Molesey community having lived in the town for almost 50 years.

 He is a member of the Elmbridge Local Committee which is gaining significant influence on issues affecting Molesey schools. Ernest also sits on the Adults & Lifelong Learningand the Planning and Regulatory Committee. His successful re-election to the County Council was supported by Molesey Residents’ Association.
Inappropriate housing development on Molesey’s open spaces remains a serious problem as in spite of Ernest leading local opposition, some local open space has now disappeared and other areas are subject to developer intentions.
Ernest Mallett is in favour of building affordable housing to provide homes for the many people waiting on the council housing list. I asked him how this could be achieved and his response was most informative. He has given me permission to share his email correspondence of 13.2.21.

Dear Delia,

Yes, the situation is that:

  1. The councils throughout the land should step up to the plate and stop pretending that they are hamstrung on this problem. Virtually all of them, including Elmbridge, have ‘percentage of developments’ which must be allocated for affordable housing in their Local Plans and therefore, in their planning regulations. However, they and the government, on a large number of development applications, opt out of this requirement, either on the grounds that the area concerned is not socially suitable for affordable units or that it is uneconomic for the developer to provide them. So, councils accept a financial contribution to affordable housing instead. This is one way they wash their hands of the problem. The money is of no use to them for housing, since they cannot compete on price with developers, due to government financial regulations, for housing development land, certainly not in any areas where the housing market is at all competitive.
  2. Councils should stop using money which is generated from the housing market, for more general projects which are not housing, e.g. ‘Right-to-buy’ money is not ring-fenced and the government’s large grants as housing compensation, listed as ‘New Homes Bonus’, should only be applied to housing, it is not ring-fenced.
  3. Councils are content to develop any amount of Green Belt, as is the government, provided it is not housing. Not only does this cover Hospitals, Schools, Waste Stations. Quarries, Oil Wells, Sporting Complex’s with buildings taking up land space the size of 50 to 60 house plots, but also other institutional uses. The public seems to think that Green Belt is protected but quite apart from the fact that some of the Green Belt has to go because it is already partly in some kind of development described above, or like Quarries,  sand/gravel/oil/gas has to be extracted where it is and in 20 to 50 years it will be turned back to open land, (a vision which historically has not proved to be very accurate), the other situation also applies, this is where councils and other bodies shift functions, such as schools or some institutional  buildings out of normal development land onto Green Belt and then sell off the created vacant site for profit.

Therefore, since there is in fact, very little control of the many ways by which Green Belt can be developed, why put a sancrosanct restriction on against the housing need. (I support the retention of all green spaces in urban and semi-urban areas where such land is the open space on residents doorstep but in fact, the present attitude to any development of Green Belt, even if is scrub land no use for farming, simply results that those in the urban and semi-urban areas lose the green area which does not actually have a Green Belt notation, mostly this is school fields and sports fields, allotments, ex-sewage farms or ex-council tip areas. The problem is that any discussion on Green Belt is immediately turned into a possible loss of commons and parks or other public areas, which are not areas which anyone wanting a more sensible approach would consider releasing).

  1. The solution is for the government to put in some controls and at the same time, free some of the restrictions.

‘Right-to-Buy receipts should be for Housing Only; ‘New Homes Bonus’ should be for Housing only; Recently the government has reduced the ban on councils borrowing for Housing. This borrowing, which has been freely available for councils to invest in Warehouses, Shopping Centres & other non-Housing ventures, should be completely freed for Housing and price limitations left to the market. Quite clearly, the government should set a mandated percentage of affordable housing development on all sites above, say 4 houses, with the usual restrictions that sites cannot be artificially segmented. Further, the government could mandate a portion of the council’s capital receipts for housing, they already allow a portion to be subsumed into the revenue part of council finance.

Background Summary :

Part of the problem is that journalists and commentators, including those who appear on the BBC, do not have any appreciation of the background to the Housing problem. Yes, it is true that it has intractable elements which are difficult to deal with. However, Mrs, Thatcher started it by banning councils from building houses and feeding the equivalent social housing finance through the City in the form of Buy-to- Let Borrowings. It also brought rents up to a level which could not serve the lower social class market as well as non-stable living. Also, what she did not know, was that Housing Benefit was not previously paid by the government or ratepayer/C.T., but by the non-benefit council tenants. Now, Housing Benefit is a big government expense. Extension of these same effects also were caused by Tony Blair, when he put massive pressure on Councils to get rid of their prime housing function by selling off the Council House stock to Housing Associations. The pressure was not allowing Councils to borrow to update the stock which borrowing was available to Housing Associations. The result was that Councils which did sell, some 50% or more, got a government enforced price of between 5% and 7% of the capital value. Even at this level, Elmbridge took some £55m on board but then Tony Blair allowed all but about 7% of this to be spent on anything. Elmbridge put £20m of this into the staff pension fund and funded a new Leisure Centre out of some of the remainder, (in the Green Belt of course).

The Housing Associations quickly raised the salaries of staff and the expenses and the amounts they needed to hold in reserve, acquiring the funds by borrowing against the Housing asset they had very cheaply acquired. Now the situation has gone even further away from social housing, in that if you have a look at what the situation in Elmbridge is, you will find that the relevant Housing Association, P.A., is building some sites either totally for private sale or mostly for part equity, whilst the lower income group on their housing lists have no chance of an affordable rented house or unit. Furthermore, this is happening on ex-council house sites which they are redeveloping.  On top of this, benevolent persons who happen misguidedly to left their large house to the Council or the Housing Association for the benefit of social housing, finds this is sold to the private sector and does not yield any real affordable housing benefit.

All of this can be summed up. M.P.’s of all parties give out crocodile tears but they are all responsible, some councillors are concerned but they have either lost control to Housing Associations, which have since got into the hands of managers with a large intention of acting commercially, and/or they are hemmed in by government regulations and seem unable to control their own planning and finance officers.

Finally, and my apologies for the extension of this reply, Cameron mostly regularised the new private housing Levy, now known as Community-Infrastructure-Levy, (CiL), which had previously been arbitrarily operated under vague planning law by a few councils. Cameron removed the fudges by which councils were able to put, what was really a tax onto developers, into a proper legal tax structure. The effect of this is that Councils now collect many millions of tax money which is very loosely controlled as to how it is spent. Councils, could if they wished, persuade the government to legitimise a portion of this to fund social housing at no loss to the government which also ,represents zero interest money for the council. This could solve council’s funding problems for social housing, but if done on a significant scale, would need specific government approval. As an example of this income, I recently checked on one modest house squashed in a corner in a normal road in West Molesey, the CIL payment was £56,000 which has to be paid before a brick is laid,

Ernest Mallett.

13.2.21