Reform & Revolution 2 - The 1988 Housing Act
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Reform & Revolution: The 1988 Housing Act
Each month, 24housing investigates through personal testimony the top 10 events, chosen by our panel of experts, to have shaped housing in the last 60 years. This month we reach number two in our countdown. Ross Macmillan takes a look at the 1988 Housing Act.
2. The 1988 Housing Act – in a nutshell
The 1988 Housing Act set out the formal framework for introducing large-scale private finance to fund new and existing social housing. At the same time it improved the process by which existing local authority stock could be transferred usually to newly-formed housing associations, building on the provisions of the 1986 Housing and Planning Act. Approximately £50 billion of private finance has been raised for both development and stock transfer in the UK over the period 1988 to 2008.
Recalling the impact of the Act that enabled stock transfer and private finance to flourish, former Housing Corporation registrar James Tickell captures the ambivalence amid reform of the policies that pushed the Corporation towards a more modern style of regulation.
James Tickell says:
I joined the Housing Corporation in 1987 and was taken on in the run up to the 1988 Housing Act. It was a great place to work.
It was full of the most eccentric and maverick people. One of them was former Hyde Housing chief executive, the late Charlie Adams. He was a real renaissance man; cartoonist and raconteur. There was another colleague who was writing an opera and another (John Quayle) writing a history of British anarchism. Another doubled his earnings by betting on horses.
As registrar, anything that involved the official seal of the Housing Corporation came within what I was doing. Every loan that was agreed in those years basically had my signature on it.
It was frantic because there were loads of big new things coming through like stock transfers, private finance and Tenants’ Choice - a Conservative scheme for tenants to choose a new landlord.
When Tenants’ Choice was introduced a lot of local authorities felt their tenants would probably try and leave them so they decided to get rid of them first. It was a defensive move against something that wasn’t really a threat as it turned out because it was hugely bureaucratic and difficult to implement. Tenants’ Choice was quite misconceived.
The Corporation and government ministers were very very nervous about the early transfers because they thought local authorities would try and set up teams in housing associations and run them from a distance. Many of the existing housing associations were also very suspicious of transfer and there was a lot of lobbying to make sure transfers could never get hold of grant money.
We spent ages writing long procedures about how to show that all the board members of transfers were independent. It was things like if there was a tenant of a local authority who was a board member who also happened to be, say a dustman working for the local authority they would be banned on the grounds that the local authority might control them. Or even the wife of a dustman. So it was slightly obsessive at the beginning.
What became clear after a year or two is that transfers had a life of their own and as soon as they were set up they were trying to be independent of the local authorities.
One of the benefits of transfer that became apparent was that you could lever in private finance for the repair programme. People were more ambivalent about private finance, than transfer.
Although the two policies complemented each other, I believe they were a separate evolution. A lot of the people that worked at the Corporation at foot soldier level were sort of ‘Left’ leaning rather than ‘Conservative’ in their thinking. It was quite a radical kind of place, particularly at the worker level. So I think a lot of people were nervous about private finance and whether it was a sell out for the sector that would make it lose its purity and so on.
Suddenly people realised that it was probably quite a good idea as it allowed public funding to go quite a bit further. The Corporation had a special unit of people whose job it was to go and be nice to the banks. There were three or four people who just went out and did presentations to banks and spoke to lending committees because it was a completely new market.
I’d have to put on my best suit and look very serious. The whole deal was to convey that it was a good sector to lend to because of regulation. So we’d tell them what we did and how we sorted out problems. That’s what they wanted to see and hear – some serious regulators so they could be sure their investment was protected. Again it was actually very successful because I think there were some 20 or 30 lenders who became quite interested in the early stages. Nowadays, the number of lenders is dangerously low.
Until transfer happened there was a very cosy relationship between the Corporation and housing associations.
The regional directors of the Corporation were like baronial chiefs. They’d dole out the funding, occasionally reprimand those who went out of line and so on. Chief executives would carry favour with the regional directors. But in turn, the Corporation staff were very much part of the same social groupings and subject to peer pressure and so on. It’s what you call regulatory capture.
With the introduction of transfer it all had to become a bit more professional. Here were people coming into the sector that the regional directors had never lunched! It was quite a different kind of culture.
The Act pushed the Corporation towards a more modern style of regulation. It was good in that sense because it encouraged that slightly more arms length relationship.
1988: what else was happening?
• Sprinter Ben Johnson is stripped of his 100m gold medal at the Seoul Olympic Games after testing positive for drugs.
• Government loses battle to prevent publication of the Spycather, written by former secret service agent Peter Wright
• 35 people die after three trains are involved in a collision in Clapham, south London
• A Pan Am jumbo jet with 258 passengers on board crashes on to the town of Lockerbie near the Scottish borders.
• The Soviet Union signs an agreement pledging to withdraw its troops from Afghanistan
Tenants who have lived in Nye Bevan-era social housing since 1949 discuss how the ‘living tapestry of a mixed community’ vision translated into reality.
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