North West Communities Alliance

Much PR spin surrounded the launch of the Glasgow Housing Stock Transfer proposal by Wendy Alexander and Glasgow City Council. The reality of the proposal was obscured by the speeches and glitzy summaries. The reality of the transfer proposal is, however, very different.

The real situation can be seen in the official report on transfer, "Better Homes, Stronger Communities: a report on the key financial issues" by Ernst & Young. That report is not available to the public, and is marked "Private and Confidential", which gives a taste of the degree of openness surrounding the Glasgow Housing Stock Transfer. A copy has, however, been obtained by us, and its key points included and referenced in this discussion.

The picture of transfer which emerges from the official report is very different from that presented to the public.

No Local Housing Association Role
Contrary to what was said at the launch, and especially to at a second launch in Hampden for the Housing Associations themselves, there will be no meaningful role for Housing Associations (sections 1.39 to 1.48 of the official report).

The report states that the proposed Glasgow Housing Quango will be solely responsible for: procuring funding; owning the houses; establishing rent levels; employing the staff; and cross subsidising between different areas of the City.

That does not leave much for the other two proposed structures: Local Housing Organisations (LHOs);  and Area Housing Partnerships (AHPs)

The proposed Local Housing Organisations will micro-manage repairs, in much the same way as current Tenants Management Co-Operatives: but unfortunately the LHO boards will comprise only hand picked tenants, while the successful and genuinely tenant run TMCs are to be shut down as part of the transfer, supposedly because the are too small. In fact the LHOs will be too large to properly perform the role of TMCs - even the smallest LHO will be many times larger than the largest existing TMC, and far larger than the previously imagined maximum size for tenant management. They are to be made so large in order to allow their boards to be packed with the right kind of tenant representatives (see below).

The proposed Area Housing 'Partnerships' – the only part of the structure where Housing Associations are allowed any role - are to be solely discussion forums. Their list of responsibilities reads like a collection of buzz words: "promoting…"; "bringing together…"; "exploiting opportunities…"; "affirming that business plans are consistent"; "reporting to…"; "sharing best practice"; "co-ordinating" etc. These seem to have been contemplated purely to allow Ministers to spread the illusion that Housing Association will be involved. If created, they would be unlikely to manage to do anything other than waste public money.

Funders' in Absolute Control
Another illusion that is scorched by the official report is the idea of a benevolent not-for-profit landlord. In fact, there is no proposal to transfer anything to not-for-profit housing organisations. The proposal is to transfer housing to one single housing quango – which will very much be for-profit.

Also, there has been talk from Glasgow City Council of guarantees for rent. This

Sections 2.52 to 2.54 of the official report state quite clearly:

"Funders will make it a loan condition that they have the right to intervene ahead of any guarantees provided to tenants on either rent policy or the capital program".

"They will also require the right to intervene where a management team and/or service provider fail to perform as projected".

"Lenders will require a clear order of priority to be established and adhered to for the use of available cash".

In other words the funders' will run the entire show. The primary funders' are to be DeutscheBank (Section 2.71) and the City of London Bond Market (Section 2.74). This is why tenants are more than justified in using the term 'privatisation'.

Right to Buy for Housing Associations
The extension of the right to buy at discount will mean the end of Local Housing Associations. Their best stock will disappear, leaving them with the unpaid debt associated with the lost houses. It is exactly this problem which has placed Council Housing in the situation it is in today. The RTBing out of existence of Local Housing Associations is an integral part of the proposal: New Labour cannot tolerate any success outwith the private sector; its new Housing Quango cannot tolerate any successful competitors.

No Genuine Tenant or Community Involvement
The LHOs are already in existence, in the form of Neighbourhood Housing Forums. These will assume the full powers - management of routine repairs - of the LHOs post-transfer (see appendix C section 3.2). With the combined City Wide forum, they are also employed now to give the appearance of tenant consultation for transfer. The process of election of the tenants representatives is crucially important to how the new structures will operate.

In fact the forum members are appointed by City Housing Management. Many are not tenants at all, but owner occupiers. The forums meet in City Housing premises. City Housing officials participate in the meetings. For the first six months or more of their existence, the forums were chaired by the local City Housing Neighbourhood Manager. Their minutes are still recorded by City Housing Officials, who also circulate both the minutes and the agendas.

With few exceptions, the supposed tenants representatives represent only the City Housing management who picked them. Ordinary tenants are not involved, consulted or informed. Yet the Framework Agreement (Appendix C in the official report), states in its Foreword that:

"And moulding this proposal will be the tenants of Glasgow"

"It will be the people of Glasgow who are the architects of this proposal" [and remember this appears in a "private and confidential" document!]

"This is for the people. This is by the people."

"...tenants will be at the centre of this project...change should be driven from the local level." (2.1)

"Individual tenants need to be informed and involved at every stage in the process." (2.1)

etc.

Mass Demolition and Tenant Clearance
By far the worst aspect of this transfer proposal is the demolition of up to 27,000 Council Houses.

The official report states that there are currently 98,500 Council Houses in Glasgow (section 8.24). However, "In the period immediately after transfer...[there will be]...a reduced stock of 85,000 units."  (Section 8.26). 13,500 houses are to be demolished immediately on transfer. This confirms previous reports, which have implied that between 22,000 and 27,000 houses are to be demolished. We believe the intention is to demolish around 13,500 instantly and demolish the rest within the first few years of transfer.

Unfortunately, these houses are currently occupied by families, and form communities of long standing. Their demolition would be a crime against humanity. This is especially the case when it is remembered that these houses are not to be replaced - a net reduction in stock by up to 27,000 houses is proposed. Housing Associations have no plans or means to construct anything like that number of houses for rent. The people who currently make these houses their homes have nothing to look forward to but scrabbling for whatever we can find in the expanding slum-landlord sector of private housing. Our only crime is to live in communities where land values are high.

Private Funders' Unnecessary
In the first 10 years, £2,346M of rent will be received (section 2.42). This is substantially more money than the £944M planned to be raised from private funders'. Since the £944M borrowings have a cost associated with them of £524M (interest + repayments + debt service reserve + fees),  not much money is realised from the private funders' over the first ten years. This is especially so when the sums lost to VAT are taken into account (see below).

The drawbacks of involving private funders' (see above "funders' in absolute control"), are not justified for such a relatively small financial contribution. Our conclusion is that the private funders' are being introduced and given control for purely ideological reasons. We tenants are being sold off to satisfy New Labour dogma.

The investment categories given in section 2.26 require more detail, but it seems to us that a painless reduction could be achieved by, for example, reducing the overcladding programme, or investigating the large sums assigned to the "other" category. Overcladding is often of only cosmetic benefit to buildings.

£200M lost in VAT
The official report states that: "The GHA will not benefit from the Section 33 VAT shelter available to the Council, the result of which is a potential cost of £200M" (section 3.1). This means that £200M will be paid by the Glasgow Housing Association Quango to the British Treasury in the first ten years post-transfer. This is a very substantial part of the £944M to be raised from private funders - and remember the ability to raise that £944M is the whole reason for transfering from public ownership and loosing the VAT shelter in the first place.

Refurbishment physically impossible in given timescale
The official report makes it clear that it will be impossible to undertake the scale of housing investment proposed without first completing a massive training programme (sections 8.51-8.76). We do not believe such a programme will be undertaken or even seriously considered. The cost of training would be colossal and would take years to complete. An apprentice takes four years to train, and only a limited number could be trained at any one time. The proposals do not envisage either this kind of delay in implementation or that additional expense.

The outcome will therefore be:

"...a very real possibility of the capital investment programme being eroded by wage inflation due to acute shortages in key trades that exist at all levels in the economy." (section 8.74)

We believe that the investment will in fact be squandered on cowboy contractors employing unqualified workmen. The work will be substandard, even dangerous in the case of electrical and gas installation, leaving some tenants in a worse position than before the 'improvements' were carried out.

If the refurbishment programme were to be properly phased in and prioritised, it would be possible to ensure skilled workers were available and high quality refurbishment carried out. Such a solution would eliminate the need to involve private funders', and so is not being considered.

North West Communities Alliance, Glasgow.
June 2000

For More Information, contact:
Billy M^cAllister, Chairperson, 6 Gairbraid Place, Glasgow G20 8DN