Housing associations' deal over right to buy could lead to the "social cleansing" of rich British cities

East London's New Era Estate. Image: Getty.

A gun to the head

Housing associations have until five o’clock on Friday afternoon to accept a “voluntary” deal on the right to buy that could change social housing for ever.

With 2.3m homes, housing associations are now the majority provider of affordable housing in Britain. The Conservative government was elected on a clear manifesto commitment to give housing association tenants parity with council tenants, by allowing them to buy their homes at a discount.

Yet rather than face the prospect of legislation that would force associations to sell their homes, the sector’s trade body, the National Housing Federation, has spent the summer conducting secret negotiations to offer a “voluntary deal” to the government. 

There is a great deal of ambiguity about the exact legal status of housing associations – but at present, their £60bn of debt does not sit on the government’s balance sheet. A compulsory Right to Buy scheme could change this forever: if private assets can be forcibly sold, they are clearly not private assets.

If the government were to find that it “owns” the debt, it could decide to move to privatise housing associations. The rumour is that investment bank Goldman Sachs has been appointed, to model how a nationalisation and privatisation of housing associations could be carried out. 

The NHF believes that introducing a voluntary Right to Buy scheme will avoid compulsion and stave off privatisation. To gauge how many housing associations would follow any voluntary scheme, it sent a form that resembles a ballot paper to 1,100 members of the NHF. Each association will get a vote proportional to the number of homes that they own.


In other words, a large association with 60,000 homes will have 60,000 votes on a single ballot paper. It’s akin to the old union block vote and, according to some critics, deeply undemocratic. (Editor’s note: The NHF say this is because it wishes to know how many homes would be included in the policy.)

Crucially, government statements earlier this year suggested that the discounts offered to tenants (up to £104,900 in London, £77,900 elsewhere) will be funded by the forced sale of high value council owned properties. The NHF doesn’t appear to have consulted the local authorities who would be affected by this “secret” deal, and many councillors are extremely angry.

The deal would allow housing associations to retain the receipt from any sales, and to build a replacement property of any tenure, including properties for outright sale. But individual housing associations will not be required to replace every property sold, or to replace them in the same area.

Instead, the sales and replacements will be totted up nationally – so associations could, at least in theory, sell high value properties in inner London and replace them in Sunderland. Critics fear that the Right to Buy, coupled with the forced sale of council stock, will lead to “social cleansing” in inner London and high value cities like Oxford and Cambridge. 

There are a number of questions hanging over this deal. How can housing associations be expected to make such a momentous decision so rapidly and based upon such scant information? Do individual housing associations and their trade body have a mandate to sell off what some still see as much-needed public assets?

Should the 66,000 families in temporary accommodation have a say? Or the 1.4m people on waiting lists? Or the millions of taxpayers who funded these schemes in the first place? And, crucially, why should Parliament be denied a vote on this critical issue?

The more you look at it, the more this looks like a grubby deal that requires proper public debate.

Colin Wiles is a housing and planning consultant at Wiles Consulting.

 
 
 
 

Uber has introduced a levy to fund electric vehicles in London. But who exactly is benefiting?

Bleurgh. Image: Getty.

Uber is introducing a levy of 15p per mile on London users to help fund a transition to electric vehicles and help tackle air pollution. Its goal is to encourage half its drivers to go electric by 2021 and to go fully electric by 2025.

There are a number of benefits to the idea. Moving to cleaner transportation is an important public good with a myriad of general health benefits. It should be an urgent priority for all UK cities. But the question of who pays for this transition is fundamental to whether it is done fairly. As a process, change needs be done in partnership with people, not to them.

So who is actually being asked to foot the bill for this much needed transition? Fresh analysis by the New Economics Foundation shows that while the PR benefits are likely to accrue to Uber, its consumers and drivers will foot the bill in its entirety, while also taking on much of the risk.

Uber estimate that drivers will be eligible for £4,500 in funds to purchase a new electric vehicle after three years of service – the maximum period of time for which drivers can accrue credit. By comparison, the cost of a cheap second-hand electric car meeting Uber’s requirements for UberX costs in excess of £12,000, while a second hand vehicle suitable for UberLux would set drivers back around £45,000.

For those drivers receiving around £4,500, this would still imply the need to contribute thousands of pounds, if not tens of thousands, in personal funds. Even after allowing for a fall in prices for electric vehicles, drivers are being asked to make a minimum contribution of between 55 per cent and 85 per cent towards the total cost of electrification. The remainder of the cost will be met indirectly by consumers – either in the form of higher charges or else being priced out Uber’s services altogether.


Where drivers don’t have access to this sort of cash, the expectation will be that they borrow – which means taking on the risk of debt repayments while earning close to minimum wage. Being able to keep the 15p levy once driving an electric vehicle is unlikely to cover the cost of new interest payments. But failure to use the scheme at all could mean unemployment after 2025.

While drivers are forced into arrears to consolidate their jobs, Uber may also find itself with a considerable surplus from the scheme, as a result of drivers leaving the platform early or choosing not to apply for the grant. Uber has suggested that any surplus will be reinvested into supporting facilities, such as charge points for electric cars. But this means that the cost of moving to green infrastructure is coming at the expense of extra private debt for drivers (which could otherwise have been funded out of the levy). Such a trade-off is simply incompatible with a green transition that is morally just.

The shift in strategy from Uber towards more renewable transport technology is clearly welcome on environmental grounds. Doing so solely at the expense of consumers drivers is not. For any transition to be fair, Uber needs to meet its share of the costs.

Duncan McCann is a Researcher at the New Economics Foundation. He tweets @DuncanEMcCann. You can find NEF’s work on transport here.