Grant Shapps outside Manchester Central – the new home of the CIH conference (copyright Jason Lock)
Housing minister Grant Shapps warmed up for his performance at this year’s Chartered Institute of Housing conference by facing a grilling from the trade press. Did he crack under the pressure? Hardly.
The housing minister is relaxed and upbeat as we are ushered into the briefing room at Manchester Central.
This is something of a surprise. Not only is he just minutes from delivering a speech to what we presume will be a hostile audience, he has just been informed that homelessness is continuing to rise at a rapid rate in the same week that figures show affordable housing starts remain way behind the curve. But then again this is Grant Shapps, the rising star of the Conservative Party and one of the most charming people you could wish to meet. And he’s very proud of his record on housing.
Jon Land: A lot of talk at this year’s conference has been about post-2015. I’ve spoken to a number of housing association chief executives this week and they’re all currently planning for a future based on no grant at all. Are they right to do that?
GS: For a start no-one can quite predict the future. There’s a small issue of an election between now and 2015 so there’s no point being absolute about this. But I am prepared to say now that I think there is another round of Affordable Rent post-2015.
JL: Including government grant?
GS: In all honesty I find it difficult to imagine a world where there are no government grant for housing. As I say there’s a lot of factors, such as whether we’re in power, but I think it’s interesting and relevant that the opposition has never said it’s against Affordable Rent so in actual fact I think every government in the future will look to do this. And the next year or so will see everyone take stock. Affordable Rent was created at a very fast rate for the Spending Review. When we got into government we realised we had to sort out this deficit so (Affordable Rent) was a pretty rough and ready exercise in all honesty. But now we’ve got the opportunity ahead of the next Spending Review to really dig into the balance sheets of the sector. It’s a huge figure actually. Savills told me that if you take the value of all social tenanted stock out there, it comes to £450 billion. I have no idea if this is right or not, and I’m sure it’s subject to huge variation, but it does kind of hint there is more value to extract and build with and, of course, I think there’s more flexibility that can be used. Why have housing associations and councils sit on extremely expensive stock when there are enormous waiting lists and they could have the flexibility to sort those things out?
Hannah Fearn: There’s been a lot of discussion here about rent controls, which I know that your party is not interested in taking any further, but what have you got to say to delegates?
GS: First of all, it isn’t just me who doesn’t think rent controls are a good idea, Shelter think it’s a bad idea as well. Actually anyone who spends more than five minutes looking at this issue will come to the same conclusion. When rent controls were in place, the (private rented) sector was restricted to around eight percent of the housing market. Since rent controls were removed the sector has grown to around 16 percent of the overall market.
Not only that but the quality of housing – Rachman and all that – suffered under rent controls. What happens is, the only way to make money is to be a really bad landlord and that’s just not acceptable. Rent controls would be an unmitigated disaster. It’s such a glib response to say “rents are too high, let’s cap them” – housing costs are too high, buying a house is too high, everything relating to housing is too high, apart from build numbers - let’s stop before I take this analogy too far.
I think that people need to take a step back and take a look what’s happening with rents. The cost of buying a house has at least doubled between 1997 and 2007. In that 10-year boom bubble period rents didn’t. Rents rose at a much more leisurely pace and what happened after the crash is that rents started to accelerate and catch up with house prices. So there was quite a sharp readjustment and rise but still less than what happened in the decade before. Then in the last year, and this is statistical fact, rents have gone up at a slower pace than inflation.
Now, you can always come to an overheated part of London – and I suspect it is regionalised like that – and see that rents have risen much faster. But it’s a fact that rent rises moderated during 2011. You can check this with the English Housing Survey, there is no better place to check statistics.
I think the solution involves two things. Firstly we cannot continue paying private landlords so much housing benefit, so they keep sticking up rents – and I think what we have done has helped to moderate rents in the past year. The downward pressure from government is helping.
Secondly, we just need to build more homes.
Ross Macmillan: You are widely regarded as a high-flyer in your party. I want to talk about reshuffles and whether you see your future in housing?
GS: I saw a delegate last night who said to me in the summer of 2007, “well Grant you’re only here for the short term – nine months and you’ll be moved on; this is just a stepping stone for you”. Every time I see her, I remind her that I’m the longest serving housing minister of recent times. I love housing now, I really enjoy the brief, it’s great to be back here as minister let alone all the times I came when in opposition. As minister this is my third time in a row, you have to go back a long time to find someone who stayed that long. Certainly in the last administration there were nine of them during the 13 years. I’m very happy in housing and I’d be very happy to stay in it but these things are way beyond the control of any single minister. Reports of my demise, or moving on from the sector, have been wildly over-reported for many years.
RM: I also wanted to ask whether you’ve had any regrets so far? And if so, what would you do differently?
GS: That’s a great question. I think that what happens over a period of time is that your relationship with organisations in the sector matures. I think what’s happened at this year’s CIH conference - and I think the mood has been helped by the change of venue – is that there’s much more of a positive attitude from the sector. People are saying “let’s stop just coming to government and asking how much money are you going to give us this year”. Instead, because of having signed those contracts for 170,000 homes and having changed the model, there’s a different outlook from the CIH conference, which is more about how can we solve these things. Now, regrets – I think three years ago I should have had more faith in believing it was possible for the sector to deliver as it has and had I done so I could have hastened or urged the move to what is happening today with greater certainty.
Jon Land: Was that because you were slightly wary of the sector coming into the role?
GS: Trying not to be rude about it, even though I had been shadow housing minister for a number of years and now a long-standing housing minister, I still consider myself to be an outsider to the sector. And I think the sector thinks of me as an outsider. But actually, in the same way that it’s fantastic for delegates here to have people from outside come along and challenge the industry about its future, I think it’s quite useful to have a minister who isn’t just from the sector and therefore accepting of everything. I always thought that we could be better and greater and more innovative as a sector and actually that’s what happened.
Jules Birch: For those that face a huge rent increase (under ‘pay to stay’), is the obvious option to take up the Right to Buy and claim the £75,000 discount?
GS: My view on the Right to Buy is, if you’ve got someone who is capable of purchasing and servicing a mortgage then I don’t mind if they pay more to stay or actually buy the property – what we need to do is be much more aggressively focused on helping the most vulnerable, those on the waiting list, and there’s no point having a property tied up with lots of asset value and being unable to ever release it. So I don’t mind if we release that asset value by making people pay a higher rent and taking those tens of millions and building more homes or through them taking a discount and buying their property then using that money to build another home for affordable rent. By the way can I just mention the issue about one for one replacement and whether it’s possible. The answer is absolutely yes.
Rather than put in £60,000 per home under the old social rent programme, the new Affordable Rent programme is doing the same at £22,000. Now even if you put that figure at £30,000 or even £35,000, if you sell a house with a £75,000 discount and you pay off the debt of the house, plus a couple of thousand in admin fees, you’re still in almost every case comfortably capable of building another home. We’ve said the local authority can only put in 30 percent of the build cost for the new home from Right to Buy receipts and in some areas there will be quite a lot of money left over and in others not quite enough.
By the way I’m not an absolutist. I’m not proposing we should get rid of social rent entirely, I think there are very good reasons for it being there. n