I had an interesting chat this week with a chap about twenty yards of towpath and market failure.
I was at the press launch for the next stage of development of Tower Works in what’s known as Holbeck Urban Village. The room, upstairs in the Cross Keys pub, was full of white middle aged men in suits – yes it was the construction industry ‘networking’.
After the speeches I spoke to someone from the Homes & Communities Agency (HCA). I used to work in housing and understood the role of the Housing Corporation, the HCA’s forerunner. It allocated grants to housing associations to build homes for rent or shared ownership, they also regulated the sector keeping up standards.
I had assumed the HCA did much the same, but it turns out to be a rather different beast. Of course it just carries out the policies of the government, but like The Force and gaffer tape it seems there is a good side and a dark side.
I’ll try and deal with the dark side first. When I left housing in 2006, associations were given a grant which they had to top up with a commercial loan in order to build houses. I was worried at the time that the grant had fallen and fallen over the years, which meant that the amount of loan went up. The cost of that loan was passed onto the tenants and rents kept rising.
But it was all OK because Housing Benefit took the strain. Which is fine until tenants, who are often rehoused during a difficult time in the lives, sort themselves out and find work, improve their situation and lose their Housing Benefit.
Now it seems there are no grants, just government loans and commercial loans. Housing associations aren’t expected to build new homes at ‘social’ rents, but at ‘affordable’ rents. If this sounds like Orwell’s Newspeak, that’s because it is. An affordable rent can be up to 80% of market (private) rent levels.
As if this isn’t bad enough, associations that want to build homes under this regime have to agree to convert their existing homes, as tenants leave and they are re-let, from social rent levels to affordable rents. But it’s all OK because Housing Benefit takes the strain again. This is the privatisation of social housing, at a time when Leeds has 80,000 people on the waiting list.
Except it’s not OK. Government subsidy has been switched from capital to revenue, it’s not a good deal for the tax payer. Rents have been allowed, encouraged to rise and then tenants get clobbered with the bedroom tax.
I said at the start that the HCA also has a good side, so let’s cheer ourselves up by talking about a canal towpath.
The HCA has been given the job of selling off land and buildings that the government want to get rid off. Projects like Tower Works: private apartments, offices and shops; are usually built on land owned by private companies. Companies are obliged to run their business to maximise benefit for their shareholders. The landowner will sell to the highest bidder regardless of what that bidder is going to do with the land.
As a government agency, the HCA can and does take a different approach. In the jargon, they can sell for ‘less than best’ price in order to gain a community benefit. In other words they can put conditions on the developer buying the land. They can also be canny about how they manage the land in the meantime. So the HCA have built twenty yards of towpath on the south bank of the Leeds Liverpool canal so that there is a pedestrian, public access to the site from that direction.
In the short term it will help commuters get from the station to work in Holbeck Urban Village avoiding busy roads. In the long term it will maintain public access to the historic Italianate towers that give the site its name and are part of our heritage. They have put on other conditions including the design of the scheme and timescales to start work.
They do all this to address ‘market failure’. It seems to be there is a lot of market failure about and it points to the need for a bigger role for the state in our economy rather than further cut backs. Please bear this in mind when you choose who to vote for on 7 May.
I’ll be back next week with more of my views from South of the River. If you’re on Twitter, you can follow me: @BeestonJeremy.