HOUSING ASSOCIATIONS CASHING IN ON COVID-19?
Discussion is growing about housing associations (“HAs”) choosing to make use of Her Majesty’s Government’s Job Retention Scheme (“JRS”) which aims to mitigate financial difficulty while protecting jobs during the current Covid-19 crisis (“C-19”).
I am disappointed, but perhaps not wholly surprised by some comments expressed by “professionals” in this discussion; yet, for those who believe that Tenants’ needs and rights take priority, it becomes clear why HAs should not seek taxpayer funds to supplement their business revenues during this C-19 situation.
How local councils treated their Tenants’ Rents
Worryingly there is direct comparison from recent history: councils for many years raided their statutory Housing Revenue Accounts (HRA) to subsidise non-housing activities that they supplied by law through the General Rate Fund such as refuse collection, street cleansing, environmental health, elections and administration. Their rationale ranged from explicitly political (keeping General Rates low, wooing voters and being on top of Government - Department of the Environment in those days - league tables etc); through to a brutish disregard of Tenants’ rights and aspirations. It was not uncommon for councillors and employees to refer to council Tenants as “the great unwashed” and to make jokes about them “keeping coal in the bath”.
As a council officer, I and a few others challenged our political masters, as we sought to champion both morality and the cause of our Tenants.
Jobs and reputations were put on the line.
Speaking truth to power is a minority occupation.
Those were challenging times; local politics had become dangerously polarised (e.g. Derek Hatton in Liverpool; Ted Knight in Lambeth; Shirley Porter in Westminster), fermented in council chambers and boiled out onto the streets in protests and actual violence. For some today the “riots of 1981” are in history books; they were real for me and others as young housing managers.
But councils’ actions were plainly wrong, since tenants were being forced to subsidise non-housing council services; thus paying twice for services; first through their Rates (later Council Tax), and then through the passporting of their Rent payments to the General Fund. If it was even barely legal, it was not moral.
Oddly, I don’t recall civil servants or politicians challenging this and it was left to housing professionals to seek to defend council housing and council tenants.
As an important sidebar, this haemorrhaging of funds was a key reason for the lack of finance for housing maintenance (described by the Audit Commission as part of “The Crisis of Council Housing”). It also drove double-digit rent increases – in my last experience in local government this was almost 20% over two years. This calamitous situation spurred me to establish Luminus Group and the acquisition of Huntingdonshire’s 7,500 homes in 2000. Indeed the original “LSVT” (“Large-scale voluntary transfer”) policy was focused on addressing badly broken council housing business plans. We should not forget that such failures of public policy contributed to residualisation of public housing and the growth of
Returning to the current discussion, it’s clear that HA Tenants pay for their landlords’ services under a formal contract of tenancy; they also pay tax in common with other UK citizens. Those tax revenues are being used by HM Government to fund the JRS. Therefore, unless HAs reimburse their Tenants for all or some of the rent paid (to account for the JRS subsidy), logically those Tenants are paying twice for the same service – first in their rent to support their landlord’s business; and then in their taxes as Government pays their landlord for the same services.
I have seen no reporting about whether rent payments from Tenants have been reduced or stopped; or benefit subsidy returned by HAs to Government. Where public subsidy continues to be received by HAs it is difficult to see how they could be doing anything other than “double recovery” as stated by Jamie Gamble, partner at law firm Ward Hadaway as reported in the housing press.
So, to summarise,
1. Tenants are paying their landlords, and they also are paying Government through taxes, through which they, if indirectly, are then paying their landlord – for the second time.
2. HAs are collecting Tenants’ Rents and tax-funded housing subsidy; in addition they are claiming a further Job Retention Scheme subsidy from Government that is particular to the C-19 period.
Very shrewd and I wonder who advised them and whether Tenants’ groups know about this? It is notable that the Government's regulator of social housing has been silent on this matter.
If I have missed something here, then perhaps someone could say.