Category: action

Fixed in place

It’s time to review this post on the implementation of the Tories’ Health & Social Care Act in my local area. The news is, I think, good. The local rag:

The Haringey branch of national pressure group 38 Degrees is only the third in the country to get all its suggested amendments on buying health services written into the constitution of the Clinical Commissioning Group (CCG)…

Last month, 38 Degrees presented the CCG with a petition signed by more than 2,000 people backing its proposed amendments, which includes only using contractors or providers which are “good employers” and prohibit using companies which use improper tax avoidance and off-shore schemes.

Nice and all, but a bit fairtrade biscuits. The really good news flipped up on a Google alert a while back – it looks like the key Commissioning Support role, which provides the legal, administrative, IT, contract management, and other functional guts underpinning the CCGs, has stayed with NHS North-East London, aka the existing organisation.

In fact, looking at the list here, it seems to have kept all the CCGs on its patch on side. As a major concern is that the CSOs get outsourced to American companies who then arrange to give everything to their mates, this is an achievement.

Also, they have binned dreadful failco “Harmoni” from the out of hours GP service.

So, I’m classifying that as “under control, for now” and leaving the Google Alerts drone to watch it.

The Simple Plan: The Definitive Statement

OK, so this is the extended 12″ jacking tech-house hot wax remix of the piece at Liberal Conspiracy.

It’s October, 2013. As unseasonable snowfall turns the streets into a fairy wonderland and the transport system into a Pratchettesque mess, police are herding the last holdouts out of the Elthorne Estate in London, N19. Homeless shelters around the capital are brimming already. Elsewhere, thousands of families are facing up to a Christmas in seaside bed-and-breakfasts or semi-abandoned estates in semi-abandoned ex-industrial towns hundreds of miles away.

The occupations and demonstrations, although they made us all catch our breath, seized the headlines, and caused a whole lot of expense, trouble, and slippage, are over. It’s just not an option to go to jail with children on the breadline. In a few months’ time the courts will probably hold that Laurie Penny’s arrest under the Terrorism Act was flagrantly illegal, but by then the point will be academic.

Elsewhere, in the supposedly comfortable suburbs, more and more of the buy-to-let generation of landlords are staring at letters from their mortgage lenders demanding answers about their arrears. At a number of specialist finance houses, people are poring over increasingly grim spreadsheets, and the further you go towards the Bank of England, the greater the anxiety is becoming. Everyone is waiting for the trigger-event that will flip us into a second financial crisis.

This isn’t looking too pretty, is it? What’s up?

Over the 20th century, the UK made a political choice that we probably never articulated as such. That is, we decided that the huge expensive city in the lower right-hand corner of the map had to remain a proper city, rather than shipping out its working class to a concrete jungle on the M25 and giving over the centre to the role of a dead museum, sorry, an exciting retail and heritage offer for high-value tourism, and the City and the East to the banks. At the same time we decided that the outward sprawl had to stop, halting at the green belt. The solution, up to the 80s, was to make housing in the major cities into a public service. Since the 1980s and the key decision to sell the council properties accumulated up to then, the policy changed; instead of taking housing out of the market, we would instead subsidise it. As Tory minister Sir George Young said, housing benefit would take the strain.

Now, the strain will no longer be taken. Local housing allowance – it’s housing benefit but for people in private rentals – is to be drastically cut. Until now, the maximum rent LHA would pay was set at the 80th percentile of the distribution of rents in your area. (That is, the level at which 80% of rents are cheaper.) The Tories have now set it at the 30th.

Serious criticisms of this system tend to focus on the fact that it gives a lot of money to landlords. This is very true. Housing benefit (I’ll drop the technical distinction from here on) is paid to landlords, not to households. No claimant “receives thousands in housing benefit”. This has the effect that every landlord knows precisely how much the Government is willing to pay, and unsurprisingly, they tend to set their rents accordingly. The Tories, supposedly, hoped that rents would fall if they cut the rate.

There is only one problem. In the past, a typical landlord owned property outright, often property they had inherited. The buy-to-let era changed all that; now, they are much more likely to have bought the property with a mortgage. If the rent coming in falls below the payments on the mortgage, ruin is certain. Actually it’s worse than that, as the mortgage isn’t the only cost – they have to budget for maintenance and for voids, the periods between tenants.

Another important point is that the BTLers weren’t in it for income, but for capital gains. The tenants are there to pay the mortgage. Once the mortgage is paid, the property is yours, so your return on investment is the selling price divided by the deposit. It’s a classic example of leverage, which always juices the return by increasing risk. So, many of the BTLers didn’t stick at one property, but used more and more mortgages to swing a whole string of them with ever greater leverage. They can’t cut their rents without going bust.

If the tenants can’t pay, they will get the stick. Councils are actively planning to rehouse mass numbers of people outside London. London Councils, the boroughs’ umbrella organisation, reckons 133,000 households are hit. The Department for Work and Pensions estimates that over 100,000 more people will be “accepted” as homeless, and therefore the legal responsibility of someone to rehouse. This presumably includes their estimate of how many more of the homeless they can turn away. Shipped off to Stoke, south Wales, or Margate, they will be badgered to find jobs in some of the UK’s highest unemployment areas. Some of the UK’s most underfunded councils will have to provide for them, somehow. The worst of it is that the 30th percentile cap hits families first.

Of course, faced with this prospect, people will try to survive somehow. On the tenants’ side, some of them will try to disappear in the black economy and tolerate back-garden sheds, friends of friends’ sofas, or perhaps squat in repossessed property rather than be shipped away from their jobs. (Yes, their jobs; housing benefit is mostly paid to people in work. Surely I don’t need to say this.) On the landlords’ side, they will tell themselves that of course they can find new tenants. They will juggle financing between properties, personal loans, their credit cards, etc. But they will eventually fail. When they go bust, their lenders are going to repossess property that is worth much less than it is on their books for.

Most BTL financing didn’t come from the high-street clearing banks, but from specialist finance companies. The danger here is that “specialist finance” is a lot like “shadow banking” – companies that aren’t banks, and therefore escape from bank regulation, but don’t have access to the central bank in an emergency, but do provide services that amount to banking. This is notoriously dangerous. In many ways, the great financial crisis was a shadow-banking crisis on the grand scale. Many people expected the specialist lenders to crash in 2007-2008, but they survived – possibly because housing benefit was keeping the landlords they funded afloat. We don’t really know how shaky the specialists might be, and we don’t really know how the shadow banks and the real banks are linked. In 1974, the end of a bubble in London property funded by shadow banks led to a run on the shadow banks, which the authorities of the day hoped were separate from the real banks. They weren’t, and the Midland Bank came dangerously close to the edge.

So, our friends in the Conservative Party have come up with a policy that is likely to deliver an honest-to-goodness humanitarian disaster right here in London, and that also risks bringing about a second run on the banks, while bankrupting thousands of middle-class Kirstie Allsopp Kommandos, and leaving the city littered with repossessed crackhouses. She’s a beauty. The only bit of it that might work as desired is the Shirley Porter element; fewer Labour voters in London.

But there is a solution. Under Eric Pickles’ Localism Bill, councils get to keep their income from rent rather than giving it to the Government. So, let’s buy the houses, quick. I propose that the London Labour councils, and indeed any others who want to join, launch a jointly-owned company to buy up the BTLers’ property and to manage it as social housing. We could organise this via London Councils itself, as it is now Labour-controlled.

How much is that again?

The rents paid under housing benefit are worked out by the Valuation Office Agency, and for their Inner North London Broad Rental Market Area, the 30th percentile for three-bedroom properties is £340 a week. I don’t have data about the distribution of bedroom requirements, but it makes sense to assume that the bigger properties are the problem. This level is roughly the same around the inner ring of London councils. George Osborne has decided that the rate will be held to a 1% increase to 2015 and to the CPI inflation rate beyond that. There are 52 weeks in a year, 133,000 households claiming, so that estimates the flow of housing benefit into rents for the people involved at £2.3bn a year. That’s quite a lot of money. There’s also a £2bn “affordable housing” fund controlled by Boris Johnson we might bid for.

Councils can borrow money from the Government at a 2.8% interest rate, being the rate the Government can borrow for 10 years plus 1%. At 2.5% for 10 years, the stream of housing benefit for the people the Tories are targeting would be enough to pay off a £22bn bond issue. I’m going to set aside a billion as an allowance for maintenance and improvements – I’m really not sure how to model that, so there’s a fudge factor.

2.5%, not to speak of 2.8%, isn’t actually all that good. There is an enormous demand for safe assets that actually pay a coupon at the moment. Some councils, therefore, have decided to issue bonds on the open market instead. So have housing associations, as the Financial Times makes clear.

The appetite among long-term investors, such as pension funds and insurers, for debt secured by large portfolios of social housing has grown during the past year. Low government bond yields and the relative stability of social housing rental income, much of which is underpinned by government benefits, have made the sector increasingly attractive to risk-averse investors.

The demand is reflected in cheap cost of capital enjoyed by housing associations. The £42m bond issued by Places for People in January will, for example, pay interest of just 1 per cent for 10 years.

One per cent! In real terms, they’re actually paying us to keep their money.

Depending on who you ask, and using the Boris fund, this is worth between 77,000 and 139,000 properties, depending on how good a deal you could make. So, our buying vehicle issues 2.5% 10-year covered bonds, buys the properties, and hands them to the local housing department to manage. The tenants stay in them, and the housing benefit is paid to the vehicle, which uses it to pay off the interest and principal on the bonds. As the bonds are paid off, the rents could fall towards social levels. The BTLers get to make a relatively dignified exit, and the hit to the financial system is at least reduced.

And the plan could be scaled up. The annual housing benefit flow is about £23bn, so the Londoners targeted by Eric Pickles make up about 10% of the national bill, which reassures me about my calculations. Imagine the possibilities of doing something similar with the lot.

One problem I see is that the quality of a lot of the new-builds from the boom era is poor, and apparently some housing associations up North have refused properties they have been offered. To this, I would say that this is an emergency, and I have made some provision for the problem. Further, most of the new building was up North, rather than in London, and I suspect that a surprising proportion of houses acquired by the vehicle might turn out to be ex-local authority flats sold under right to buy.

This isn’t a new idea. In the 1970s, a lot of rental property was bought up by London Labour councils’ housing departments and they’ve still got more of it than you might think. When I lived across the street from the Elthorne, about half the buildings were actually council-owned, something that only became clear when the Decent Homes programme sent the builders round.

So, let’s buy the houses, quick. We have, depending on who you ask, between three and nine months before the bomb goes off, although it’s not at all beyond the bounds of possibility that the whole thing will be put off. It has been once before. But I think it is much better to turn up at the crisis with a solution than it is to expect people with children to fight the bailiffs.

house music all night long.

The Daily Mirror mocks Lord Freud’s overhoused condition and quotes Owen Jones:

We’re told this is about bringing down the £21billion housing benefit bill. But we’d save much more if we stopped using housing benefit to line the pockets of private landlords charging absurd rents.

Building homes would create jobs, and if we brought rents under control, we could bring down the housing benefit bill.

But we can hop ahead here. A housebuilding program would be worth having, but it can’t possibly happen for years. If it’s a question of whether properties rented to LHA claimants should be financed with BTL mortgages or by local authorities, it’s a nobrainer. Even putting up with the cuts, we could buy out the landlords under the Simple Plan.

Watch this space, as a guest post is currently with them.

(Remember Dan Kahneman; repetition, repetition, repetition.)

Anthony Hilton joins the Simple Plan!

The Indy‘s City editor (and he is very much a City editor, none of that “business” page nonsense) Anthony Hilton has joined the clamour for the simple plan to save the world!

Some of the larger associations are tapping into the aforesaid retail bond market, with Raglan, for example, raising £50m in September with an issue bought in its entirety by the Pensions Corporation, a pensions providing insurance company. But it is not enough. What we really need is for local authorities like Manchester, Leeds and Nottingham to float housing bonds in a similar way, but for much larger sums. They could then channel those millions into the thousands of housing associations which are too small to raise funds on their own account.

This does not happen because the Treasury – and hence George Osborne – does not want local government to be financially independent.

He’s thinking in terms of new build, housing associations, and the North, whereas I’m thinking in terms of buying up the BTL inventory, councils, and London. New build can’t possibly happen in time to save us, and the problem is concentrated in London. But I don’t see any disagreement of principle here.

The LSE Policy blog points out that George Osborne took the opportunity, during his “Hunker in the Bunker” mini-budget, to make things worse. They also provide a lot of useful detail if you’re trying to model the flow of Local Housing Allowance to landlords in London. If Osborne gets his way, the LHA rate will be held to a maximum 1% annual increase out to 2015 and to the CPI inflation rate thereafter. I had assumed zero growth in it, so I was pleased to be able to update the Simple Plan with some more data.

Updating it, I get a NPV of £22.19bn and therefore between 77,000 properties @£300k and 139,140 @Daniel Davies’ £166k, which I still struggle to imagine. Even coming up to £200k, though, still gets you 107,000 homes. On the other hand, the plan is quite insensitive to interest rates – at D^2’s pricing, even up at 3.36% you’d get enough stock to house the 133,000 LHA refugee households. Just getting rid of Gideon would add 2,200.

I had a twitterfest with Owen Hatherley and Rentergirl about this, but I really can’t get excited about how crappy a lot of the BTL new builds were in the light of the looming emergency. Anyway, the great bulk of the BTL new building was in the North, and a lot of the stock I envisage acquiring will be either conversions or else…you guessed it…ex-council.

Threats I worry about: the cost of management, which to be frank I have really no idea about, and the possibility that Osborne goes for broke between here and 2015 and abolishes housing benefit entirely.

Anyway, here’s Mr. Harriet Harman arguing for rent controls. It’s a start.

Barnet, Camden, Enfield, Haringey, Islington CCGs: Applications Open Now

OK. So you want to be part of Total Defence of the NHS. You want to join the 10,000. To be the first of the few. If you’re in any of the London boroughs in the title, here’s your chance. You have until the 15th July, Saturday, to apply on this web page.

There’s a gaggle of documentation to read, which I’m getting through now. Here’s a first and amazingly important point. Each one of those CCGs needs a lay member to act as Chair of the Audit Committee. This is probably the most important public appointment accessible to you, and it is especially accessible to anybody with accounting or financial experience. If you want leverage against privatisation, this is the place to stick your crowbar.

It’s a job in itself; all of them are. But they’ll even pay you. Time to take hilltops and create facts on the ground.

Netroots UK catchup

Other stuff from Netroots UK.

Having chugged through my official Brown Bag Lunch (which actually included Ribena, in a disturbingly infantilising touch), I went to the open space group on the Leveson inquiry. This ended up merging with the one on the LIBOR scandal. I was able to contribute by knowing how the LIBOR panel was meant to work, although we couldn’t get away from the point that separating investment and retail/commercial banking wouldn’t have helped because BarCap was big enough in its own right to be on the panel.

One point which everyone thought would resonate was that the scandal represented an attack on an institution that had relied on its members’ fair dealing. Exactly what to do with it, though, was harder. Could this support the Co-operative’s claim to buy the branches demerged out of Lloyds? Or a Leveson inquiry, but with banks? Of course there have already been inquiries, but then, the original ideal type of this kind of inquiry, the Pecora Committee, wasn’t the first inquiry or even the second into Wall Street in the 1920s.

What else? I went to one of the more tech-centric workshops, run by Blue State Digital. This was pretty good; I liked the point that Facebook advertising was usually a “hopeless waste of £2.50″, but it did have its uses. Those weren’t anything Facebook would want, though. Specifically, the ad-targeting tool lets you get a quick estimate of the size of a potential audience – input the demographics, locations, and search strings you’re interested in, and it spits out an estimate of your audience.

The other one was using it to bait your enemies. If you had a reasonable amount of information, you could place an ad that your target would have to read every time they logged in. This amused me more than a little.

Everyone, but everyone, loves ScraperWiki.

What else? WhoFundsYou scored thinktanks by the degree to which they are forthcoming about their funding. Astonishingly enough, Respublica, the “Not the Other” TaxPayers’ Alliance, and the Adam Smith Institute (no less) got an E. The very, very serious Centre for Policy Studies and Institute for Economic Affairs, and the somewhat less serious but certainly influential Policy Exchange and Centre for Social Justice got a D. You could have mistaken the score-card for a left-right political spectrum, as IPPR, Progress, Resolution Foundation, NEF, SMF, and Compass all got As, while Demos, Reform, the Fabians, and Policy Network got Bs. CentreForum was, superbly, right in the centre with Civitas and the Smith Institute.

It is telling that the distinction between wanktanks like Respublica and TPA and the Very, Very Serious ASI disappears on this scale.

Owen Jones has a lot of good laugh lines. The BSD people are good but self-satisfied. Clifford Singer is funny. I really regret missing the workshop on shooting better video on smartphones as I have zero video skills (even if their live demo was the traditional fiasco). You can’t hear anyone speaking anywhere in Congress House without using a loud hailer.

Notes from Netroots UK, and NHS total defence

So I went to the TUC’s Netroots UK shindig yesterday. I missed the first session, and chose to not go to the one with Paul Mason in order to go to one with practical content, specifically Richard Blogger and Ellie Mae O’Hagan’s on defending the NHS from within. Having joined an NHS foundation trust, it seemed useful.

Things that are worth knowing follow. First of all, Richard Blogger has the only sensible org chart for this I’ve ever seen. (You may remember our local NHS finance director’s effort to explain it.) A key fact is that there are some 10,000 elective or otherwise representative posts that want filling in the new structure. This is the biggest opportunity for shameless entryism in decades. If there are going to be representatives on boards for GP practices, there may be at least another 5,000 and perhaps more.

At the same time, the Health & Wellbeing Boards are standing up. These will incorporate between 500 and 1,000 local councillors. Town hall politics just got very important, and isn’t the big Labour win in the local elections sounding useful right now? A lot of these appointments will happen in the next 3 months, so you better get weaving.

This raises an important strategic question. Is it better to concentrate on entryism or lobbying (and electoral politics)?

Resources for people joining foundation trusts, CCGs, scrutiny committees, H&WBs, MH&WBs, etc. are poor and this is our fault. I met a couple of other people who had signed up, like me, and were now wondering what the next step was. Further, everyone else involved has staff except for the public. An argument can be made that it’s a better use of our valuable time to target the councillors. Councillors are expected to put in the hours, they get the support of officials, they get expenses. And they are subject to re-election, so they’ve got to listen.

The scrutiny committees are powerful, and are probably good targets. Also, the H&WBs (and of course the MH&WBs) have to prepare a strategy, which then informs the CCGs’ decisions. This is perhaps the Joint Strategic Needs Assessment I heard about, and sounds both important and also something councillors bear on.

I don’t think there is a clear answer here, at least not while the Labour Party itself hasn’t damn well ordered Labour councillors to join the committees. At least we didn’t arrive at one.

One thing that is a clear answer is that HealthWatch is apparently subject to compulsory tender, so we can probably write that one off. By contrast, it turns out, there is no statutory duty to tender for actual NHS services, and the campaign in Stroud set a legal precedent in this line. Unfortunately, the “Fighting the Cuts through the Courts” session clashed with this one, as lawyers rapidly turned out to be a big issue.

Another item on the schedule is the revision of the NHS constitution, which is a document with legal force. A working party is currently in being, including both Virgin and UNISON, with a consultation later this year.

An important operational issue seems to be access to information. Local authorities have to publish their forward plans and agendas ahead of time, and it’s not clear if this is so of CCGs.

As an interesting side question, someone wants to know what’s happening with “Dr Foster”, the semi-private thingy which acts as a combined management information system and media shop for the NHS.

Anyway, the take-aways for action were to get FOIA requests in for any and all consulting reports about CCGs and CSOs at the local level, and to identify the people writing H&WB strategy documents and lobby them.

This reminded me that MySociety built a Web application for recruiting local volunteers in constituencies and pushing out calls-to-action, Democracy Club, and indeed managed to get 100% coverage in the run-up to the 2010 election for things like collecting election literature and details of candidates.

It also reminded me, and I buttonholed Sunny Hundal about this, that somebody should be paying Richard Blogger.

Report back: CCG meeting

So, that Total Defence plan. Not long after blogging about the weird way becoming an NHS Foundation Trust member is mostly about the staff discounts, my Google Alert tail-warning receiver lit up. Specifically, it caught the fact that the Haringey Clinical Commissioning Group was going to have a public meeting, so off I went with a little notebook of talking points.

My first impression (as I was on time) was the usual depressing one – they’re all 117 years old, there’s four of them, and Christ, they’re odd, and one of them’s reading something called God’s Word Made Plain. Why did I volunteer again? But the room filled up, and then filled up some more, and eventually we counted up 53 MOPs who turned out.

The original agenda was all about “how the CCG can communicate with the public”, but when it got communicating, the message from the public was that the public wanted no part of that. It turned out that the local “Patients Panel” hadn’t met for years. An effort was made to explain the new NHS structure, and at this point, astonishment and disbelief set in as the CCG vice chair and the (existing) NHS finance director tried to draw the organisation on a flipchart. (It reminded me of the enchanted PowerPoint presentation in one of Charlie Stross’s novels.) So, GPs were meant to commission everything, and the PCT and SHA had been shut down, with 54% cuts imposed on their staff, but to keep the wheels turning, they were reorganising as a cluster in the meantime. Then, the GPs would take over, but the GPs themselves couldn’t be in a position to commission their own work, so they would be commissioned nationally, while some other services would be carved out of local commissioning.

One of the CCG doctors said of the re-org that “in terms of human pain it’s quite remarkable – managers are people too, you know”. Before the CCG took over, it would be allowed to have a “shadow budget” but no actual money, because it didn’t have an accountable finance function. And before it did, everyone would be sacked again. The national commissioning board would replace the SHAs, but would have four or possibly more regional branches that might be quite a lot like them.

The questions kept coming and eventually they abandoned the agenda in favour of just standing there fielding. It turned out that there was a 93 page national test that the CCG would have to apply, but nobody had seen a copy and nobody was clear about who set the test or how. There was a Joint Strategic Needs Assessment, carried out by the cluster and the local authority, but how that fed into this process was a mystery.

On the question of specialist services that would be carved-out of local commissioning and reserved to the national level, the chair had to be told that it wasn’t right and it wasn’t OK to say that “normal people” wouldn’t need to know about it because a lot of them are psychiatric in nature. It turned out that they represent 40% of the budget. The service-user activists got angry. As well as a Health and Wellbeing Board, whose makeup a Lib Dem councillor told me was still being debated, there is a Mental Health & Wellbeing Board, but the GPs have yet to deign to meet them because after all they’re only nutters (I paraphrase, but not much).

It turned out that the NHS organisations being butchered have a variety of huge databases of information vital to the commissioning process. Nobody seems to know what will happen to this.

The specialist/local interface seems to be enormously crucial, and a completely undemarcated frontier. The GPs are hugely keen on “continuous follow-up”, but it’s far from obvious why anyone would want follow-up by someone who has no specialist knowledge of their condition.

The FD confirmed the following figures in my talking points: the Government has budgeted £25 per head per year for the CCGs and the Commissioning Support Organisations. Of this, the NHS North Central London cluster says it can do the CSO job for £15/head/year, which leaves £10*225 kilocitizens in Haringey or £2.25m a year in funds flowing to the CCG as such. The CCG plans to have CSO staff co-located with it, and in fact to rely on the CSO for pretty much all its day-to-day functions.

Apparently the Government arrived at the figure of £25 by halving the existing Londonwide figure and dividing by the population.

Anyway, my take-home points: CSOs are crucial (although we knew that). Status of staff – are they civil servants? Who has responsibility for the public money flowing through them? What happens to this database? Further, the frontier problem between central and local is important. And I’ve got to get on to some of these assorted boards.

I was really pleased by the turnout, and the degree to which the crowd were intelligently angry. A surprising number of people had evidently taken the time to brief themselves in advance.

contacting the Government’s media-buying function

Back in the summer, as the News International scandal (well, beyond the scandal of its very existence) cranked up, we had a look at how the government buys newspaper display advertising and made an effort to reach out and touch the people in charge of it. I see no reason not to go round the buoy with this for another try. Back then, the Central Office of Information still existed, with a sword hanging over it. Now, we have Novated Frameworks. What?

Well, rather than having its own media-buying desk, the government has contracted the job out, via the Government Procurement Service. Some details about novatin’ a framework are here. Although it does seem that the end of COI is sliding right, there is a contact for the supplier here. Presumably, though, every agency now contracts with them on a per-project basis, thus saving literally thousands of pennies.