The Case for Council Housing
On 22nd July Housing Secretary Robert Jenrick stated in an interview with ITV that Housing association “executive pay was out of control” and they need to return to the “strong and social moral mission”. Jenrick said this as a deflection tactic when discussing the lack of social housing being built (only 6,000 last year with over 1.1 million on waiting lists nationally). However, it is nonetheless true that housing associations no longer serve local needs, whilst simultaneously becoming poor employers and paying themselves very well.
For example, CEO of L&Q, one of London’s biggest housing associations, David Montague, has seen his pay rise by a massive 74% since 2010, to nearly £350,000. Similarly, Peabody boss Brendon Sarsfield had an increase of 17%, bringing his pay to £278,750 in 2019. David Cowans, of the national housing association Places for People, received a salary of £528,870 in 2018 — a rise of 9.8% from the previous year.
Teesside based Thirteen Group CEO was No 2 on the highest pay rise category, as published by Inside Housing magazine, with a pay rise off £44,848, taking him to £208,064 per annum, if you include pension contributions this takes his total pay package to over £240,000. Eight other members of staff are paid over £110,000. Compare that to the derisory pay award made to staff this year of £250 (plus a one-off bonus of £250) amounting to less than 1% for many, a real terms pay cut.
Beyond Housing, who look after properties mainly from Recar to Scarborough, are little better, despite being half the size of Thirteen Group. Their CEO gets a salary of £147,900, plus a car allowance of £13,500 giving her a total salary of £161,400.
Given that Thirteen Group were formed mainly from Middlesbrough, Stockton and Hartlepool Councils, transferring their stock and Beyond Housing being formed from Redcar and Scarborough doing the same, it is worthwhile comparing executive pay in some of those councils. Stockton Council has only four members of staff earning over £100K while Hartlepool have five, neither earning anything like the amount that CEOs in Housing Associations make.
It would be fair to point out that both nationally and locally these ‘not for profit’ housing associations can afford these huge wages as they build up ‘surpluses’ annually in the many millions. For example, our biggest local housing association, Thirteen, in 2019/20 recorded a surplus of £20.0m and in 2019 recorded a surplus of £23.1m.
Who gets to make these decisions you might well ask, where is the oversight? Again, to use our biggest local supplier of housing, Thirteen, as an example. They have a board; however, it is selected from within and has no elected council members on it, nor representation from the mayor’s office. This is despite a large proportion of its income coming via the benefits system and is therefore public money. The board members, not unreasonably receive an allowance and expenses, however, they added up to £176,000 for the year ending 2020.
If you are starting to think as some of these figures are starting to add up and it might be cheaper and better value for money to do this in the public sector under Local authority control, or even mayoral control, you might be right.
So, with all this money floating about, tenants must be getting a good service? I would argue no. When tenants got a vote on stock transfer, part of the sell was that the new landlord would not be part of some bigger organisation (the council) that provided education, social services, bin collections, etc. and that they could wholly focus on the housing needs of the community. This both nationally and locally became history very quickly as over the next few years, the ex-Stockton council arm’s length organisation amalgamated with Housing Hartlepool HA (ex-Hartlepool council) to form Vela and Erimus HA (ex-Middlesbrough Council) amalgamated with Tees Valley HA to form Fabrick. Vela then amalgamated with Fabrick, even though, when an organising committee of mainly residents, but also including councillors and Trade Union representatives had looked at the options for Tristar, they had voted unanimously to reject the approach of Fabrick. Since then, Thirteen, have greatly centralised their services and no longer have the numerous estate offices which were easily accessible to tenants and reduced them to one office in Stockton, Hartlepool and Middlesbrough, with no estate offices at all in places like Thornaby and Billingham.
Finally, what about the housing stock? The country has a housing supply problem; 1.1 million according to the government. Teesside is part of the problem; we may not have huge numbers sleeping on the streets. However, we will have many living in overcrowded accommodation under private landlords who frankly aren’t that bothered as long as they get the rent, as well as the sofa surfers who rely on the good will of family and friends. Britain has the oldest housing stock in Europe, much of it terraced housing dating back to the industrial revolution or built post war-built council estates which Margaret Thatcher put an end to in 1979. This has been made worse by the right to buy which resulted in much of the best housing being sold off, a great deal of which has ended up in the hands of private landlords who rent it out, not at a ‘social rent’ but at a ‘market rent’, making it unaffordable to many.
At the time of writing, I am unaware of any social housing being built in Teesside, this has been the case for several years now as housing associations await government grants through Homes England that are not forthcoming as the grants are focused on specific high affordability pressure areas of Newcastle, Leeds, Harrogate and York. Therefore, because of this failure of government policy, housing associations tend to build ‘affordable’ housing, which is frankly a long way from that for a large proportion of people. Thirteen, for example, the proportion of its stock that is social housing has fallen to 81.62% but having built 1200 ‘affordable houses’ the proportion of that type of home has risen from 10.43% to 12.57% in the last 3 years. This is an issue because “Affordable rented properties are defined as up to 80% of market rent but Social rented properties can only be rented out at up to 50% of market rent. This in areas where rent is comparatively low may not seem to be a huge amount in cash terms, but in those same areas there is also a great deal of deprivation which means that cash difference may well mean that social rented homes are – for low-income families- much more affordable than Affordable Rent.
It is as the Housing Secretary said, time for Housing associations to re-engage with the communities by embedding themselves within them, turn over some of that large amount of the cash they have held in reserve to build large amounts of social housing instead of the profit making unaffordable, ‘affordable housing’ for a not-for-profit organisations. Either that, or the housing should be given back to local authorities which would allow local people to decide what their priorities are in their town rather than the directors, many of whom don’t even live in the same region as their housing association’s tenants. It is also time for him to put the Government’s money where its mouth is and start to level up some of the housing provision in this country.
Paul Weston is a Labour Councillor and an ex-Trade Union Convenor at Stockton Council, Tristar Homes, Vela Group and Thirteen Group. He was also a member of the Steering groups which set up Tri Star homes & Vela group.