Speech to the Cml Cymru biennial conference
"Ladies and Gentlemen - Good Afternoon, Pnawn Da,
Having attended this Conference in previous years' as Cheshire Building Society Area Manager in North Wales, Gogledd Cymru, it is a strange - and even surreal - experience standing before you today now that I have crossed over to the other side - the political side, that is, although whether that means poacher turned gamekeeper, or vice versa, I will leave to you to decide!
As well as 22 years' experience in the Financial Services Industry, with 21 of them spent in a Building Society, I was also a Voluntary Board Member with Venture Housing Association on Merseyside for 12 years.
This morning you heard presentations from the Welsh Assembly Government. By contrast, I am speaking to you today as an opposition Member of the National Assembly for Wales.
It remains my strong conviction that housing is the key vehicle for Social Justice and Regeneration.
By this I mean the use of housing regeneration to stimulate local training, skills, employment, economic development, social enterprise, health and strong, safe communities. In other words, putting people first.
My perception and regret is that this has not so far been given sufficient priority as 'the glue' that holds social and economic regeneration together in our devolved Wales.
So after 'Life on the Outside' in the Private, Mutual and Voluntary Business sectors, how do I compare 'Life on the Inside' now?
At the risk of sounding biased or subjective, I will give you my initial observations:
:: Business is about getting things done, devolved politics thus far has been about talking about getting things done;
:: About aspirational targets rather than planned when-by dates;
:: About strategies, reviews, reports and consultations rather than action;
:: About the mantra of partnership and sustainability rather than real partnership and sustainability;
:: About denying 'best practice' if dogma gets in the way;
:: About closed minds rather than better outcomes for our customers, the people of Wales;
:: About trying to do too much too quickly rather than doing less and doing it better;
:: About measuring success by headline public expenditure rather than the key business drivers of maximum customer service at minimum efficient management cost;
:: And about building houses on sand rather than solid foundations.
As this month's "Consumer Issues in Housing" Report by the Welsh Consumer Council states: "The shortage of affordable housing is restricting people's choice and placing extra pressure on the availability of social housing. Unless house-building and renovation of existing homes is stepped up, Wales could face a housing crisis in coming years".
The Assembly Audit Commmittee's Report on "Renewal of Private Sector Housing in Wales", published in May 2004, identified the backlog of urgent repair work in the private housing sector as £1.1 billion.
To help tackle this, CML Cymru proposed a "Welsh Home Improvement Lending Agency" that would provide low-interest home repair loans to 'asset rich, cash poor' homeowners who were otherwise financially excluded.
The Social Justice and Regeneration Committee's Report on "Housing for Older People" recommended that "the Welsh Assembly Government should establish a 'not for profit' Welsh Home Improvement lending Agency to address the problems associated with equity release".
However, while accepting the need to look at the issue of loans, the Minister, Edwina Hart, stated "that this would not be feasible on a national organisational basis."
The Minister has investigated how loans are being developed on a local basis with organisations elsewhere in the UK, and I understand that she is now looking at two local pilot schemes in Wales with intermediary organisations from Birmingham or London.
Some of the loan finance will be provided by Local Authorities and some by commercial lenders accessed via the intermediary organisations. The pilots will then be used to decide if this is the right strategy or if we need to return to an all-Wales approach.
All I can say is that I hope they can access funds at rates as low as those available to CML Members', and that adequate loan finance from Local Authorities will be available at a time when cuts in local services or big Council Tax increases are expected!
As a matter of interest, the Report on "Housing for Older People" also recommended that the Welsh Assembly Government should encourage the UK Government to support proposals by the Financial Services Authority that regulation of equity release loans should transfer from the 1974 Consumer Credit Act to the Mortgage Code.
In her response, The Minister stated that she was considering this recommendation further with the UK Government. The bad news is that the FSA told us this would require another CeMap exam!
We are told by the Welsh Assembly Government that the explanation for the shortage of affordable housing for rent or assisted purchase, the reason for rising housing waiting lists and homelessness, and the justification for a 40% fall in the number of First time House buyers in Wales since 1997 is increasing house prices in a commercial marketplace.
By contrast, a letter which I received from the Principality Building Society accurately states that "high house prices are being driven by a lack of supply of both private and social housing".
Funding for the Welsh Social Housing Grant Programme was £173.7 million in 1996/7, with £98.6 million from Government and £75.1 million private finance via Registered Social Landlords. This year it totals just £96.4 million, a 45% fall, with devolved Government funding cut by £42.2 million.
In consequence, new social housing dwellings completed in Wales by local authorities and registered social landlords fell from 14,457 between 1992 and 1996 to 4,450 between 1997 and 1999 and just 3,183 between 1999 and 2003.
To put this last figure in perspective, just 376 social housing dwellings were completed in North Wales, when the Local Authority Waiting List in Gwynedd alone had by this summer risen to 2,000, with re-lets falling.
In its Draft Budget for Wales last month, the Welsh Assembly Government announced an extra £16 million Social Housing Grant for 2005/6, then flat-lining for 3 years', still £26 million below its 1996/7 level and subject to top-slicing for "Extracare" housing schemes.
It also projected an extra £20 million Wanless funding for 2006/7, then flat-lining for 2 years, in recognition of the impact of housing on health and wellbeing. Even with this included, Social Housing Grant in 2008 would still be below its level in 1996/7.
I believe strongly that we need a vibrant social rental sector, but I am also a great fan of low cost home ownership schemes.
The Cheshire Building Society provided a large number of Shared Ownership mortgages in North Wales, and when Tai Cymru rolled out the then new Homebuy Scheme in the mid-1990s with Principality Building Society support, I convinced the Cheshire Building Society that it should become the second Building Society to grant approval.
I am therefore very concerned that a failure to keep the terms and conditions of these schemes up-to-date and in line with market conditions is frustrating the ability of affordable housing providers to invest either Homebuy or recycled Shared Ownership funding.
As the largest Welsh Homebuy provider, Gwynedd County Council, told me: "Homebuy is becoming increasingly difficult to spend - even with 50% funding, increases in house prices mean that applicants are having difficulty raising the other 50%".
Against this backdrop it is perhaps therefore not surprising that homelessness is again on the increase, or that cuts in social affordable housing combined with a rising backlog in urgent housing maintenance and repairs is hitting lower income households the hardest.
UK Government figures show priority homelessness in Wales at 7,747 in 1993, down to 4,297 in 1997. However, recent figures from Shelter record homelessness in Wales rising to 9,100 last year and 98,000 Welsh homes unfit for human habitation.
And now Conwy Borough Council have written to me to express their concern that amendments to the Homelessness Act 2002 have created a Housing Allocation Policy in Wales that, in differing from England, "appears to be to the disadvantage of local people".
They state that, "for example, in assessing people who are in priority need of housing, the English Regulations include people who have left prison if they are 'vulnerable'.
The regulations for Wales do not require such a person to be vulnerable, with the effect that anyone who is homeless on leaving prison will have priority over our law abiding citizens who may have been on a housing list for a long time. This seems perverse."
Of course ex-offenders must receive rehabilitation and housing with appropriate support, but to do it in this way and then to pass the buck and cost to Local Authorities is, I believe, perverse, irresponsible and unsustainable.
So what are we going to do about all of this and about turning warm words from politicians into real housing action?
Welsh Conservative proposals:
:: Would prioritise quality affordable housing from new build and existing stock and use it to promote sustainable economic and social regeneration.
:: Would increase provision of social housing and opportunities for home ownership.
:: Would restore investment in Welsh Social Housing for rent and assisted purchase to pre-1997 levels.
:: Would review the Homebuy Scheme in terms of both maximum borrowing limits and the mix of 'new build' and 'do it yourself' existing property according to local need.
:: Would seek to introduce innovative new affordable housing schemes that promote shared equity and help first time buyers, key workers and those struggling to own their own home.
:: Would promote affordability within local planning guidelines and focus on mixed community development.
:: Would prioritise the £4.1 billion backlog in urgent council and private housing repairs.
:: Would engage with housing sector professionals.
:: And would focus on both urban housing need and the particular problems in the rural, welsh-speaking regions of Wales.
Running through all of this would be our core theme that housing affordability is about people, not buildings.
Last month, one of my Party colleagues, Glyn Davies, sponsored a meeting in the Assembly entitled "Tackling the affordable housing crisis through Community Land Trusts". As non-profit, community based organisations, Community Land Trusts remove land from the speculative market and make affordable housing available to local people least served by the prevailing market.
The community land trust land is held freehold, permanently and never sold. Community land trust homeowners own buildings with a leasehold agreement from the trust, and when they want to move, the lease gives the trust the option to buy back the home according to a resale formula.
The aim is to give homeowners a reasonable return on their investment, while keeping the price affordable for others.
There are presently three Community Land Trust projects in Gwynedd and two in Powys.
However, as with the introduction of previous affordable housing schemes, and as with all proposed home ownership schemes which include restrictions on re-sale - including calls for a two-tier housing market and a shared model for Section 106 - this will require the active co-operation, advice and endorsement of a mortgage industry that must protect the security of its loans.
The Welsh Assembly Government should therefore be acting as facilitator, working pro-actively and in real equality of partnership with the Council of Mortgage Lenders and its members' now, so that the growing threat of a Welsh housing crisis does not become a self-fulfilling prophecy.
Beyond this, the good news is that there is all-Party support for the Welsh Housing Quality Standard, although its 2012 target date is, putting it politely, looking increasingly problematic!
As Gwynedd County Council Housing Department put it to me this summer: "We want to be the strategic housing authority, but based on what we can realistically achieve with our own resources and therefore working with the voluntary and private sectors. We are concerned about the 'Quality Standard' because we can't walk away from our often pre-war stock. We are looking at all options, including using our own resources and prudential borrowing, but it will be some time yet before we come to a decision."
The September 2004 Institute of Welsh Affairs Report, "The future of Social Housing in Wales", explains why Housing Stock Transfer has been an integral part of the Welsh Assembly Government's programme to bring council housing stock up to the Welsh Quality Housing Standard by 2012.
It states that "its advocates believe its roll-out could see the transformation of the condition of local authority housing with an attendant impact on the economic and social well-being of Welsh communities.
However, the implementation of this policy has been problematic, with some local authorities unconvinced that it is the only possible path, organisations being formed to 'defend council housing', and tenants in council houses using their right to vote on the transfer of stock in their area in sharply differing ways."
To put matters in perspective, the £3 billion backlog in council house repairs is £1.7 billion more than total European Objective One funding for Wales over 2000 - 2006.
Supporters of Stock Transfer and Registered Social Landlords, amongst which I include myself, argue that the only source of money on this scale is to be found from the value of the existing stock itself.
Wales' 183,000 council houses have an asset value estimated at some £7 billion. At the same time, treasury rules prevent local authorities from borrowing against this equity since it would increase the public sector borrowing requirement.
Registered Social landlords are not subject to these restrictions and local authorities therefore have the option of transferring ownership and management to them so that they can borrow against the equity to improve the stock.
However, only two tenants referendums on stock transfer have so far been undertaken, with tenants in Bridgend voting to approve a stock transfer to a new Housing Association, Valleys to Coast.
This association is planning to invest £70 million over the next 5 years and £159 million by 2013 in the 6,500 houses transferred to it, together with £6 million in environmental and estate improvements and training for local people in the skills needed to do the renovation and repair work.
By contrast, Wrexham tenants voted against stock transfer and the Council now has to find other means to access the £274 million needed to improve its stock by 2012.
Meanwhile it is reported that Denbighshire, having examined all other options, is planning to hold a referendum by early 2005, that some other authorities are also contemplating referendums on stock transfer schemes …and that some have yet to submit any plans.
Social Justice and Regeneration Minister, Edwina Hart, recently reported to the Social Justice and regeneration Committee that a letter sent jointly with the Leader of the Welsh Local Government Association had been sent to Welsh Local Authority leaders and Chief Executives expressing concern at the lack of progress in housing business planning at local authority level.
They re-affirmed their commitment to the Quality Standard being delivered by 2012 and the Minister stated that "if it appears that business plans and subsequent option appraisals are not given a greater priority at local level, I will have to consider what further action to take".
However, the Minister also reported to Committee that she wrote to the Treasury in April this year proposing "Wholly Owned Local Authority Companies" as an alternative for local authorities seeking to raise the additional investment essential to achieving the Welsh Quality Homes Standard by 2012.
In his response, Treasury Minister Paul Boateng MP stated that he was "unable to agree to the proposed approach since borrowing by local authority owned companies would lead to further pressures on public expenditure limits".
Undeterred, the Minister has written again to the Treasury seeking reconsideration of the initial rejection.
We will all be watching future developments with interest, noting how far we have now moved from the Welsh Assembly Government's proposed "Community Mutual" model with tenant participation at its core, and recognising the further delays to action by some local authorities that will now inevitably result.
The Minister also told us that local authorities wishing to pursue the company option would be required to demonstrate that they would enter into joint arrangements to procure contracts using the Egan report principles of 'Rethinking Construction'.
This would deliver significant economies of scale and create opportunities for economic regeneration.
When I pointed out that Registered Social Landlords with established expertise and infrastructure could also do this, I was concerned when she responded by stating that "it was the first that she had heard about Registered Social landlords meeting this criteria"!
My concern followed her statement at the previous Committee meeting on 29th September, when she outlined her plan to use "Rethinking Construction" principles in concentrating Social Housing Grant into a smaller number of larger rolling procurement programmes - "working closely with local authorities…. to jointly commission longer-term development programmes with selected RSLs."
She added that she recognised "that implementation of these proposals would mean the end of direct development for many RSLs", although the transfer of dwellings to existing zoned RSLs' should allow non-developing RSLs' to continue to grow.
From my experience of this process on Merseyside, I suggested to her that 'big is not always beautiful' and that this process should be driven by organisational efficiency and bottom-up tenant participation rather than sheer size!
I will conclude by referring to the growing clamour for action over affordable rural housing.
A Welsh Local Government Association Report has called for the restoration of social housing grant to levels that would allow more affordable social housing, stating that "large areas of rural Wales are at risk of becoming stagnant commuter dormitories and retirement areas".
The CLA Rural Housing Working Group reports that the pressures on rural housing are likely to increase unless urgent action is taken and that the national debate on housing and current planning policies is neglecting the growing crisis in housing in rural areas."
The Chartered Institute of Housing Cymru categorises the factors impacting on the supply of affordable rural housing in Wales as:
:: Inward migration, particularly of commuters and people retiring to rural areas;
:: Outward migration, particularly of young people; and
:: Population changes putting Welsh language and culture under threat in some settlements.
It adds that an adequate supply of affordable housing for rent is key to creating sustainable communities because:
:: Rural economy salaries are often insufficient to support a mortgage;
:: Rural employment is often seasonal or temporary; and
:: Low income and benefit dependent households cannot obtain or sustain a mortgage.
And Business in the Community states that "to strengthen the case for affordable housing, there is a need to draw out the linkages between housing and the local economy.
The lack of affordable housing impacts on the ability to sustain existing businesses and to attract new business. The shortage of affordable housing is putting new businesses off from settling and young people are leaving to live in larger towns."
As the President of Business in the Community, The Prince of Wales, states: "The rural housing problem is acute and it needs to be addressed with some urgency. In many rural communities the housing needs of local people far outstrip the supply of affordable housing and the consequences are severe, particularly for young people.
Business in the Community has developed an increasingly effective rural programme which has proved that business can play a very real and important role in the revival of our rural areas - and I have encouraged the organization to look more closely at how business can play a positive role in the provision of affordable rural housing."
Business in the Community are now looking to hold a regional Affordable Housing Event in Gwynedd based upon a similar event held in Penrith, Cumbria earlier this year.
So if devolved Government will not take the lead, the message, loud and clear, is that others will - they will because they will not accept the unacceptable, they will because they will not accept a situation in which today's young adults are the first generation since the Industrial Revolution to live in poorer housing accommodation than their parents, and they will because they understand that quality housing for all is central to everything else that we all want to achieve.
After all, there is no place like home, and no place like Wales in which to rent or buy it!
Diolch yn Fawr."