By Councillor Dave Wilson / Latest News / 0 Comments

Solving our housing problems isn’t simply a question of building more houses – although that would be a start. As the Housing strategy report being presented to the Council’s Policy and Resources committee this week illustrates, the questions of what, where and how to build are complex. Sadly, our Council remains constrained by central government rules, an over-reliance on the private sector, and its own wilful misjudgements of how to push forward with the resources and tools it has available. Nothing that is proposed is radical enough to make a major shift in the supply and cost of housing. Not for the first time a lack of imagination and a rigid “the market knows best” dogma is preventing the Council from doing its job of looking after the interests of the people of the district.

The strategy document is of necessity long and very detailed, so summarising it runs the risk of over-simplifying the key issues, as well as ignoring the expertise which has been put into it by the officers of the Council. However, picking through it shows up some interesting underlying assumptions, some of which are clearly the result of political constraints imposed either by Government or the Council’s ruling group, and some missed opportunities. Taken together, all this means that targets are likely to be missed, and the real need for genuinely affordable housing in the district will remain unfulfilled.

Let’s begin with the challenge the Council faces.

The key issue is population, which is forecast to rise by 14% by 2031. That alone requires 16,000 new homes to be built. For comparison, there are currently only 66,777 homes in the district, so that’s 24% more homes which have to be built in the next 13 years. . In addition, there were 2,312 households (that’s the number of families, not individuals) on the housing needs register in 2017.

The current plan is to meet that demand almost wholly through private sector building. The problem which emerges from that approach is that the need is for smaller homes, especially for the lowest earners and new households, and mostly in the town and City centres. But of course what developers want to build are 3 and four bedroom houses, mostly in the rural areas, because that’s how they make the most money. Further, of course, developers only build when it suits them, because what they make money from is the difference in the value of the land when they buy it and when they sell it with a house on top. Because of the way housing finance works, the nominal value increase shows up on their balance sheets as soon as they get planning permission. Add into that the inflation in land values as demand for housing grows, and you can see the balance sheet swell without any work being done, while borrowing costs are artificially low. That’s the joy of capitalism, for you, right there. From that point on building and selling houses is simply the mechanism by which the developers release the value of the land as profit. Which is something they do when it suits their financial position, not when it suits the Council.

Now we come to the key issue. In this district, to buy a home in the cheapest 25% of the market would cost THIRTEEN times the income of someone in the lowest 25% of earners.  That’s so obviously not affordable that people have no option but to rent. Rents, however, have increased by 20% over a period when earnings have risen by only 6%.

So the Council says it will ensure that “all developments … must include 30% Affordable Housing.” Which would be great, except their record over the past three years has only delivered 21%. So how are they going to meet that target? They don’t say. That gap between a stated aspiration and any realistic mechanisms to achieve it is, sadly, a feature of the strategy.

Anyway, there’s another problem with “affordable” housing, which is that it’s not actually that affordable. According to the Government, an “Affordable Rent is … no more than 80 per cent of the local market rent (including service charges, where applicable)”. Since local rents have been driven up by student accommodation needs at least 30% of Canterbury households are unable to afford private rents.

Now you might think the obvious solution would be to build more publicly owned homes for rent. That way, you could control rents, build the sizes of property needed in the places they are needed, and thereby raise some money from rental income for future building. Investment, in other words. However, thanks to the Government, while it’s OK for the Council to borrow millions to buy Whitefriars, it is not OK to borrow any money to build social housing. And while some Councils have worked around this, ours simply will not.  

To make this worse, the number of Council-provided homes has gone down rather than up in the last 3 years, due to the Right to Buy and Government restrictions on the re-use of the £3 million raised from those sales. Now the Government intends to extend Right-to-Buy to Housing Associations, funded by the Council selling even more houses. That’s a policy which even our Council says it is “concerned” about. Strong words, by their standards.

What stands out from all this – which is only a fraction of the strategy – is the lacklustre response of our Council. In the last 3 years it has bought just 47 homes at a cost of £10 million, or £213,000 each. It has built precisely 6 homes in that period. Yet houses are much cheaper to build than to buy, and if the Council adopted best practice building techniques and built on land it already owns, it could build some of the much needed smaller homes for about half that price. In short, the response from the Council has been slow and cautious even while the problems get worse. This is outrageous in the face of a worsening problem renders the lives of thousands of local people miserable and condemns then to poverty because of the cost of housing – if they can find anywhere to live at all.

This heavy reliance on private builders is no sort of solution to our housing crisis. A Council which was really fighting to address the issues should be arguing to end, not extend, Right-to-Buy, and it would be adopting innovative solutions to get Council-owned housing built quickly. It would also enforce requirements for genuinely affordable homes to be built in all the new developments in the district, not allowing the developers to wriggle out of their commitments.

Of course, there are problems with the housing market that lie outside the control of this or any Council. The way in which developers are funded and the way in which planning permissions get “banked” by developers so that property values soar while they do nothing has to be addressed. The lack of effective rent controls, the scandal of empty properties, the fact that homes let to students or for AirB’nB type use avoid paying Council Tax … all these problems are national.

But we need our Council to fight these things and argue for change with Government. Working together, Councils across the Country are trying to do this. Ours fails to make any attempt to make the case for change, which is clearly a responsibility it should take on. So while the aspirations of the Housing Strategy are fine, they fail to deal with the root cause of the problem. We ought to expect more than this supine acceptance of the status quo from our Council.

By Councillor Dave Wilson / Latest News / 0 Comments

So where were we?

Last week’s column ended on a thought about whether outsourced services might be brought back into the City Council’s control. That’s worth further consideration, because so many residents are thoroughly fed up with the current poor levels of service, especially on refuse collection.

To justify that decision and to make sure it doesn’t just create more problems requires some careful thinking. Dogma, from either side, won’t help prevent another debacle.

In most cases there is not a scintilla of evidence for the idea that the private sector is simply better and more effective in providing services than Councils. But what the private sector is good at is doing things cheaper. How has it done that? Mostly by cutting the wages and conditions of its staff, cutting investment, reducing service levels, and coming back to its client Councils with a begging bowl when things go wrong as a result.

Serco, locally and nationally, has followed this formula, as have many of its rivals. But economic efficiency does not equate to service quality. Not a single thing has improved.

Which is annoying, because in theory there ought to be some benefits of scale that can be gained through outsourcing which individual Councils can’t achieve. Those are around things like buying or leasing vehicles, uniforms and equipment more cheaply through volume discounts; sharing back office administration functions (HR, payroll, head office costs and so on); improved sharing of good practice and innovation; and better shared use of facilities like refuse disposal sites.

One problem is that those savings end up as extra profit for the service provider rather than in reducing our Council Tax bills.

Here’s why. Public services need a lot of staff to carry them out. The cost of those staff can be as much as 85% of the total value of the contract. Now, if around 3% – 5% is profit (which it often is), then all those things listed above only amount to 10% of the total, so that even if you save 10% of that the net impact is only 1% of the total cost. The biggest cost is staffing, which is why in this austerity driven age, the sole focus has been on eroding wages and benefits.

As a result the staff have in effect been subsidising the service we get through wage cuts. Which is something that we as their customers should be ashamed of.

There are other problems with the idea that the private sector is more effective. Firstly, anyone who has worked extensively in both public and private sectors will know that there is inherent inefficiency in both, as in all large organisations. The private sector simply hides that behind its profits, until, it gets wrong and companies end up going bust, like Carillion.

No-one in the private sector has any idea about how to measure or report productivity, so they can’t justify claims that they are more efficient. Private companies just make sure that their income is more than their costs. And the means they use to do that are not available to the public sector, which has to be accountable for everything it does and is, moreover, under a statutory obligation to provide key services.

As an example, one way a business controls costs is by not doing things it can’t make a profit on. Companies can also sell off parts of their business, close shops and factories, move production overseas, set up shell companies to avoid tax, raise money from banks and share sales, and reduce competition by buying up rivals. Councils cannot do any of this.

In fact, the mantra that we hear from Conservatives that Councils and government departments should be run as businesses is utter nonsense. Structurally and strategically Councils have almost nothing in common with business. They are run by people who are democratically elected to represent the residents, not for their business skills. They are required by law to deliver a highly diverse set of services in a geographically prescribed area with no scope for growth or acquisition, are subject to high levels of public scrutiny and accountability – which creates costs and slows down speed of decision making – and have little or no control over their income base.  

None of this is to suggest that Councils shouldn’t be business-like. They have a duty, which most take very seriously, to use the money they are given carefully and for the most benefit for residents.

Which leads us back to the question of whether services should be brought back to direct delivery by the Council. Doing this would give us back the 3% to 5% profit being made by Serco, which would be helpful. And it would satisfy the calls from many residents if, at least, Serco was replaced by a more responsive and accountable organisation.

But costs would almost certainly rise. Why? Well, to start with, because one of the root causes of Serco’s many service failures is that they have under resourced the service. So it is obvious that the real cost of providing the service required is higher than is currently being paid, even after our Council’s astonishing generosity in providing Serco with an extra £300,000 to do the job they were already being paid for.

We might in any case want to provide better services than the basic level we get at the moment. More supervision in the parks, faster graffiti removal, better cleaning of the high streets and public areas are all things people are demanding. These bring benefits in terms of tourism, public safety and quality of life which would not only be a step change for our district but save public spending elsewhere, for example in policing – prevention, rather than cure, being a good investment.

None of this extra cost is the result of inefficiency. It’s actually hard to see how a Council owned and run service could be worse than the current position, in which almost none of the supposed benefits of outsourcing have been achieved. Since the service would be built from a blank sheet of paper it could be designed in a much more innovative and exciting way, as well.

If we want to have control over the services which impact the daily lives of residents and the image of our City, bringing services back into the Council makes perfect sense. Making the financial investment should not deter us when the benefits are so obvious.

 

By Councillor Alan Baldock / Latest News / / 0 Comments

Following the last council meeting, Simon Cook (the Conservative Leader of the Council) published an press release expressing with sadness that ‘an era of co-operation between the political groups on the city council appears to have ended’ and accusing Labour Councillors of ‘artificially creating headlines’. His statement suggested the local party were adopting a tone which mimicked parts of the country where, in his words, ‘the militant, hard-left Momentum group have undermined the work of democratically elected councils’.

Responding to these accusations, which have now mysteriously been taken off the Conservative Party website, Leader of the Labour Group, Councillor Alan Baldock today discussed the need for an effective opposition, stating firmly and fairly that ‘Canterbury is a one party state no more’.

In his full statement he made clear, his belief had always been that, that “councils are run on democratic lines. Indeed, it’s the responsibility of the opposition to scrutinize the proposals of the ruling party and challenge those that are unsound and to simply roll over and co-operate is to go against the interests and views of the many thousands of electors that did not support the Conservatives at the last local election in 2015.”

He also undermined the case that what Labour was doing was ‘ a sudden shift to the left’, defending its amendments which:

  1. Proposed £50,000 be put aside for  strategic plan to improve housing in the district because step change increase in the building of new council houses. Although some limited progress has been made, Canterbury City Council still has a waiting list of 2,700 and owns 700 fewer council houses than it did in 2012, so clearly a game-changer was needed. What the Conservatives are doing here, isn’t working. The aim was to create a 10-year strategic plan, obviously dovetailing with the work already underway, but setting up the conditions to build 100 new council houses every year in that period starting in 2020.It would have been a complex plan that needed to pull together partnerships, funding and opportunities hence the necessity of setting aside project funding.
  2. Asked for a little extra funding to kick-start local community-led projects reducing single-use plastics and packaging.We felt the opportunity for 1,000 new homes by 2030, to be owned by the council, may have been further investigation. The decision was made to reject the amendment. That’s politics. Labour lost.
  3. Proposed increasing from £10,000 to £20,000 money set aside already for residential on-street electric car charging next year. That £20,000 would have been matched by a further £60,000 of government money from the national “On Street Residential Charge-Point Scheme”. It would have enabled around 20 car charging points to be installed across the district. We took on board experience from cities much further forward with this technology than we are in Kent and decided this still small number would have given a much more robust start to this great and important initiative in our district.

In a final comment Councillor Baldock reminded Councillor Cook that Labour was committed to ‘working the Conservative, by being the opposition you so desperately need. Only when failings are pointed out, can anyone – even Conservative-led Canterbury City Council – be helped to do a better job.”