So I got my mortgage statement through the other day, like many people when this bundle of joy drops on their doorstep, I recoiled in horror at how little I had managed to pay off over the previous 12 months. This, as well as my father in laws insistence on informing me how little he paid for his first and subsequent properties (they were staying with us at the time, he isn’t always just sat by my doorstep waiting for me to open the post…that would be a little weird), got me thinking how times change and how difficult it is for people to own property, but also the importance of security and safety that comes with having a home.
At the same time I was preparing some work on motivation, specifically Maslow, for a Clients workbook (again…not literally at the same time…not everything in my life/house revolves around the letterbox, I don’t…sadly…live in a sitcom) and I got to wondering if there was any correlation between the release and understanding of motivational theories and the increase in real term cost of satisfying the motivational needs of shelter, security, stability, etc. Similarly, I thought it might be interesting to question the coalition’s understanding of such basic motivational theory when viewing the impact of the imminent welfare reforms.
In the ten years up to the financial crises, house prices rose by over 200%. The media peddles out the common notion that this was down to too many people, too much immigration (daily mail) and too few houses being being built/available, but that is an exaggeration of the truth (who’d have thought sections of the media stretch the truth?). During this time, for every four new people, three new homes were built. At the same time mortgage lending increased by over 370%.
The average house price in 1952 was £2000, in 2012 it is up to £162,000, an increase of 8,000%. To put this in context, figures from Moneywise show other goods such as a loaf of bread would cost £4.80, a pint of milk £3.20 and a dozen eggs £6.40. By anyone’s standards, those figures are bewildering.
In a similar dramatic vein, over the past 12 months we have seen the increased demonization of individuals who claim state benefits of some form or other, by those that should know better in Whitehall. Welfare Reform is now just round the corner, the impact of which will be huge for all concerned. In a measure that is, amongst other objectives, intended to simplify the benefits system and provide more independence to claimants, Universal Credit will pay benefits directly to individuals each month, an element of which will include their housing benefit. Alarmingly a recent report by Policis for the National Housing Federation estimates that nearly a third (29%) of working-age social housing residents, equivalent to one million people, risk falling into debt if all their benefits are paid to them in one single monthly payment.
Social housing organisations provide housing to roughly two-thirds of all housing benefit claimants. The bedroom tax, benefits cap (also not inflation linked) and direct payment of housing benefit to individuals has created the real threat of tenant displacement, increased homelessness and rent arrears. With the prospect of less stable income, there is also the possibility that these organisations will see damage to their credit rating, in turn meaning they would have to pay more to borrow more, which ultimately will affect their ability to build new affordable housing.
Talking of which, the statistics for affordable housing ‘starts’ and completions were recently published. Following on from the shambolic stats from 12 months ago, there is a slight increase in the number of ‘starts’ for the six month period between April and May this year…but we are still a whopping 72% down on the same period in 2010. Jules Birch takes an interesting look at it here, worth also reading his historical blogs on this area.
We are privileged to work within the social housing sector so we have seen examples of the responses and strategic measures they have put in place (collecting data on current ‘under-occupancy’ rates and diverting resources to mitigate losses) to counter act the inevitable drop in rental income, but the concerns that these organisations and many others are raising need to be addressed. The laissez-fair attitude of ploughing on regardless of consideration is mystifying.
Ultimately it is difficult to criticise the intentions behind benefit reform, creating incentives to work and squashing outdated and overlapping systems should be applauded. However, the execution of Universal Credit rings a number of alarm bells, not least the fact that according to a recent report by the Chartered Institute of Housing states that 400,000 of the country’s poorest families will have less income in 2015 than they did in 2010. I believe it was Ghandi who said “the measure of a society is how it treats its weakest members”, food for thought.
So, what’s the solution? I can’t profess to have the answers, but I do have an opinion. The debt based nature of the UK economy has caused a huge spike in house prices, from which we are all suffering…none more so than those forced to spend increasing amounts of ‘dead money’ renting whilst they attempt to save an often unfeasible deposit. Further regulation is therefore the logical answer, empirical studies in the US and Australia have highlighted that the cost of houses is directly linked to the acceleration of mortgage debt. Prior to 1975, we didn’t really have housing booms or busts…after this time, and coincidentally around the same time the banks became further deregulated…we have seen 3 significant busts. How many is enough?
As mentioned, I do believe that the intentions of Universal Credit are positive, but let’s not just plough headlong into delivery without first taking appropriate consideration of the most obvious shortcomings. Debate, discuss, improve and execute plans…before we as tax payers end up footing an even larger bill…and ultimately to the shame of us all, we see more people are left without homes.
If we are to consider Maslow’s theory of motivation that states that each of us is motivated by needs, our most basic needs cover shelter, security and stability. Isn’t it about time that we actually looked at the motivational theories and understood the fundamental needs that all society has? Ensure that people have a roof over their heads and you will go a bloody long way to providing a foundation (excuse the pun) to build upon and improve everyone lives. My message to all MPs is to stop the politicking, start being the public servants you are meant to be, there is far too much at stake here.