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Interview
An equitable answer?
Interview
An equitable answer?


Social policy professor John Hills has been wrestling with how we can better use existing social housing to help the most vulnerable make the most of their lives. Alison Benjamin takes him to task on his findings

Wednesday February 21, 2007
The Guardian

Professor John Hills
Professor John Hills

Dressed in a corduroy suit, John Hills, director of the Centre for Analysis of Social Exclusion at the London School of Economics and professor of social policy, looks every inch the academic. Talking ahead of yesterday's launch of his eagerly awaited review on the role social housing can play in 21st-century housing policy, he says he hopes it will "spark off a debate. People may realise the problems are different or the challenges are bigger than they thought, and the policy solutions aren't all in one direction."

Hills' independent review was commissioned by the communities secretary, Ruth Kelly, who wants to know what reforms will ensure that social housing helps wider government objectives such as helping people get on in life, creating mixed communities and reducing inequality.

One solution - which she proposed last week in a speech to the Fabian Society and which would allow council and housing association tenants to buy as little as a 10% equity stake in their homes - is in his report, Ends and Means: The Future Roles of Social Housing in England.

Housing campaigners may well ask why the review promotes social housing as a wealth-creating asset, rather than calling for thousands more council or housing association homes to be built when there are 1.5 million people languishing on waiting lists in England - a rise of 500,000 since this government came to power.

Hills makes it clear that his remit was not about increasing the number of homes but about how the existing stock can be better used. His research, he says, has identified three big challenges facing the sector, and he is adamant that building new homes is not one of them.

"Regardless of if we're building 20,000 or 40,000 or 60,000 new units a year, what is happening to the 3.8m units already here and how well we run them is going to be for a long time to come far more important and deserves a huge amount of attention," he says. "Only to concentrate on new building would be a mistake, and it is one we've made in the past."

Satisfaction levels

The first challenge, he insists, is the quality of service offered by social housing landlords. He points to how dissatisfaction rates have crept up in the past decade: one in seven tenants are unhappy with their local area and accommodation; one in five with their landlord; one in four with the standards of repair and maintenance; and under-45s are the most unhappy with their homes. While he admits that overcrowding is more of a problem for council or housing association tenants than for homeowners, or people renting privately, his suggestion to improve satisfaction levels is to give tenants more of a say in how their housing is run.

The second challenge Hills identifies is mixed communities. "Because two-thirds of social housing is in areas originally built as isolated council estates, and over the last 25 years access into social housing has been increasingly dominated by those in greatest need, you end up with geographical polarisation," he explains. But isn't that what people call ghettos? "I wouldn't call them ghettos," Hills replies.

He suggests social landlords could reverse this polarisation by selling, or renting out commercially, property on their existing estates and using the proceeds to buy property for their tenants to rent in other areas where there is less social housing. But improving the income mix isn't necessarily achieved by swapping people: "It's by helping to ensure people already living there have got a livelihood."

This neatly brings Hills, without so much as a pause, to his third big challenge for social housing: how to get more tenants into work. More than half those of working age living in social housing are without paid work, twice the national rate.

"There you have a real conundrum," says Hills, "because one of the fundamental justifications of having social housing where people pay below market rent is that it should help them in the labour market.If you're paying £60 or £70 a week your take-off point to get clear of the benefit trap is much earlier than if you're paying £180 a week rent in the private sector.

"Even allowing for the fact that social housing tenants are disadvantaged in the job market because they are lone parents, or lack qualifications, or suffer from high levels of ill health and disability, there are still fewer in work than you would expect."

"Think through the consequences," he urges. "If you are living on an estate and have two people of working age on either side of you, the chances of them both working is just one in 10. That can have devastating effects on links into job markets. It's one reason why social housing is so concentrated in low-income areas now. Half of social housing is in the most deprived fifth of areas."

Hills wants housing support offered at job centres and help with finding work at the housing office. I point out that the £300-a-week rent charged for temporary accommodation in London is the main barrier to homeless families working, and makes it hard for them to then get a job when they do move into social housing years later, and he concedes that "some aspects of housing policy are unhelpful".

He also acknowledges that pressures in social housing have got "much, much tougher" than when he was last asked to examine the sector seven years ago as part of a forum set up by the Institute of Public Policy Reform think tank.

He attributes the pressure to a lack of turnover in the stock, which he says is the result of rising house prices stopping tenants moving out and a change in the tenants' age profile, so fewer tenancies are coming up as older tenants die. This translates into 80,000 fewer relets a year. "Despite 50,000 fewer social housing units being built and the Right to Buy reducing the pool of council homes, we were still able to take 250,000 new households throughout the 70, 80 and 90s," says Hills. "But when you at look at 2000, it has come down to 170,000. This leads to almost the whole system being gummed up. What we have is a pressure cooker effect."

Hills is concerned that this leads to what he calls a "strikingly" low level of job-related mobility. While nationally one-in-eight moves is associated with work, only a few thousand social tenants each year can move to be nearer a new job.

So why not just build millions of new social homes? Even Kelly acknowledged last week that the government needs to build more than the current supply of 30,000 homes per year, and she said "ambitious" plans for increasing social housing would be set out as part of the 2007 comprehensive spending review.

"The amount of social housing we have as a country depends on how much we are prepared to spend," Hills responds. "Yes, the more social housing we have the less the pressure on the pressure cooker, but with the best will in the world we're not going to build hundreds of thousands of new units every year to replace the 1.9m lost under Right to Buy."

Why not? As an economist, Hills answers by doing the maths. It costs £60k of public subsidy to build a social housing unit, so that's £60m for every 10,000 units. Yet he dismisses any notion that the social cost of housing thousands of families in temporary or overcrowded accommodation could be more expensive. "You can make a good case for building to make up the shortfall of units we lost through relets, but you're doing that to standstill, so we're still left with the questions - how do we make the best use of the stock we've got and how do you best support the livelihoods of the tenants there?"

Hills is keen for a significant expansion in local cost homes that people can part-rent, part-buy. They cost the public purse half that of building a new unit of social housing, he points out, yet they account for just 1% of the owner-occupied stock.

They are one item on a menu of options he suggests could be offered to would-be social housing tenants. Others include a 10% equity stake for existing tenants that is being piloted in west London by Notting Hill Housing. Does this mean that Hills believes that, as tenants' financial circumstances improve, they should no longer be entitled to cheap rents? "If you are serious about trying to increase the livelihoods of tenants, you have to be careful not to set up disincentives," he warns.

The review has opened Hills' eyes to the growing wealth inequality between home owners and tenants. He predicts that cascading housing wealth from generation to generation will further increase divisions. Equity schemes therefore makes sense in the context of a government with ambitious targets for poverty and inequality. "If you are worried about wealth inequality," he says, "then doing something about the asset levels of social tenants is a pretty well-targeted way of doing it."

· Read Ends and Means

Curriculum Vitae

Age 52.

Status Married.

Lives Highbury, north London.

Education Nottingham high school; Abingdon school, Oxfordshire; Cambridge University, BA economics; Birmingham University, MSocSc economics.

Career 1997-present professor, social policy, London School of Economics, and director, ESRC Research Centre for Analysis of Social Exclusion, LSE; 1994-97: reader in economics and social policy, LSE; 1986-97: senior research fellow/co-director, welfare state programme, LSE; 1984-86: senior adviser to commission of inquiry into taxation, Zimbabwe; 1982-84: senior research officer, Institute for Fiscal Studies; 1980-82: economist, Treasury and Civil Service Select Committee; 1979-80: senior economic assistant, Department of the Environment; 1976-78: fellow of the Overseas Development Institute; 1976-78: research assistant, department of applied economics, Cambridge University; 1973-76: research assistant, European Atomic Energy Commission Institute for Transuranium Elements.

Interests Fell walking."