Stewart Smyth: In defence of the Housing Executive
Stewart Smyth is a lecturer at Queen’s University Management School, Belfast. Before joining academia, Stewart worked for many years as an accountant in industry, practice and the public sector.
He researches and writes on the neo-liberalisation of public services and social movements, including public housing and grass-roots tenants’ campaigns.
Stewart has published work in a range of academic journals and other media including Critical Social Policy, Public Money and Management, the Irish Times and the News Letter. He is the author of Keeping Our Housing Public report, published by NIPSA.
In January, Minister McCausland announced his plans to “reform” public housing. This involves the dismantling of the current NIHE. In the process, there are concerns over privatisation of public housing and the possible impact of this on the state’s legal duty to house homeless people.
However, it is the proposed privatisation of the NIHE housing through stock transfers that is the focus of this article. While the stock transfer policy has had little impact in NI to date, it is well established in Britain. The experience in Britain has been one of fast rising rents, fat cat salaries for executives and poor value for money for both tenants and taxpayers. The experience was summed up by one Glasgow tenant during that city’s stock transfer: “This is all about political ideology. This is not about better homes and stronger communities. It is PFI by the back door. It is a sell-off – it’s Railtrack all over again.”
The NIHE is sustainable
The Minister’s main motivation for the housing transfer is his claim that the NIHE needs a £5 billion investment and that those funds are not available from the public purse. However, transfer housing associations are not restricted by HM Treasury borrowing rules and so could borrow the funds needed.
Firstly, the £5 billion figure is gross; it does not include the rent that would be received. Second, the Minister gives the impression that all the investment would need to be found immediately or in the near future. In reality the investment period is 30 years. Third, the PwC report on the future of the NIHE found that the landlord function is financially sustainable; making an estimated surplus of £40 million in 2011.
When PwC financially modelled these figures they found that the NIHE would need to borrow as little as £60 million which would be repaid by the end of the thirty years. Furthermore, the landlord function would also make a cumulative surplus of between £62 -114 million in real terms.
The alternatives
These figures mean that alternative policies can be developed, if the Minister and the department are so minded. Three possible alternatives are explored in a recently published NIPSA report. These are:
- the level playing field – to allow the NIHE to borrow on the same basis as council housing in Britain;
- change the borrowing rules – by lobbying HM Treasury to change their restrictive borrowing rules as applied to the NIHE. The Executive parties are engaged in a campaign to change the Treasury rules on taxation for the benefit of corporations, why not for the benefit of the 90,000 households with the NIHE;
- invest in the future – there are both strong social and economic cases for investing in a new generation of first class, affordable and sustainable housing. Investment in construction projects like public housing can act as a stimulus for the economy as well as providing much needed housing.
What’s at stake?
As the housing market continues its dysfunctional behaviour with negative equity, repossessions rising, a lack of affordable mortgages and tens of thousands on the waiting lists; the proposed privatisation of the NIHE does not address any of these problems and risks accentuating some.
A range of independent reports on the NIHE have all highlighted the outstanding role it has played in improving the condition of the housing stock. Furthermore the PwC report states, the:
NIHE is one of the success stories from Northern Ireland’s recent history... It is rightly regarded nationally and internationally as a leading authority on ‘best practice’ on both housing management and community building.
In these circumstances, I am reminded of the old Joni Mitchell lyric: “Don’t it always seem to go / that you don’t know what you’ve got ‘til it’s gone”.
The message to the Minister is simple – stop mimicking the discredited housing policies of other jurisdictions and instead, develop a truly innovative policy that fits the needs of public housing in Northern Ireland.
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