Multi-million pound investment in council estates fails to secure social change

These findings emerged from a study at the University of Sheffield, supported by the Joseph Rowntree Foundation. The research found that housing associations invested £1.3 billion on local authority estates in the three financial years 1991-2 to 1993-4. The money spent included £761 million in public subsidies - a fifth of all Housing Association Grant (HAG) allocated for those years.

The study found that:

• The investment resulted in 26,000 new homes. Since the vast majority were replacing substandard council properties, there was no overall increase in the housing stock.
• Although many of the new housing association properties were houses with gardens, they were sometimes unpopular with tenants if the surrounding estate had a poor reputation. Homes on a third of the estates that the researchers studied in detail were proving hard to let.
• Rents charged for the new homes were between 25 and 75 per cent higher than those for equivalent, modernised council houses. This was in spite of deliberate efforts by associations to hold down costs, including specific rent agreements with local authorities in some areas.
• Despite the desire of many local authorities and housing associations to create more mixed communities, the social profile of those moving into new housing association properties on these estates was similar to that of tenants moving on to the estates as a whole and onto housing association properties elsewhere.
• Eight out of ten recent lettings were to households where no adult was in paid work and eight out of ten new tenants had young children. The majority of those housed were claiming Housing Benefit.
• Half the housing associations studied were involved in additional initiatives to regenerate the local economy and two thirds included a requirement to use local labour in their building contracts. Even so, there was little evidence of long-term success creating jobs for estate residents unless the initiatives were part of a wider regeneration programme, such as City Challenge.
• Partnership agreements between associations and local authorities were mostly concerned with the detail of building land transactions, building standards and the allocation of new properties. Few took a longer-term view of the way that estates could be managed.

The report notes that housing associations were increasingly drawn into working on council estates in the early 1990s as the capital funding available to local authorities for improving housing stock was cut back by government. The criteria set by the Housing Corporation for assessing bids for HAG further encouraged joint working.

Schemes typically involved local authorities providing housing associations with free or discounted building land and free site clearance in return for the right to nominate a proportion of tenants moving in. This meant the amount of HAG required per new home was less on council estates than other housing association developments.

The researchers found that housing associations had further sought to hold down costs - and rents - by subsidising developments from their own reserves. This, and the low capital value of properties on unpopular estates, meant that joint working with local authorities was a risky investment compared with other housing association activities.

Tony Crook, Professor of Town and Regional Planning at Sheffield University and co-author of the report said: "Housing associations' financial viability has not been enhanced by these developments. Under current arrangements, those engaged in council estate modernisation face a long-term financial squeeze as their balance sheets show the effects of using reserves and the negative relationship between the costs of development and the low values of the resulting stock."

The researchers conclude that housing associations would do better to concentrate their investment in priority areas where there was action to regenerate and de-stigmatise the entire estate. It suggests that policies for allocating new tenancies may need to take more account of the need to achieve mixed communities, rather than the housing needs of individuals.

The report also calls for a reassessment of HAG rates and the competitive bidding process to achieve lower rents and reduce the number of tenants depending on Housing Benefit. Prof. Crook said: "There is likely to be a pay-off from having higher rates of 'bricks and mortar' subsidy, so that rents are lower, less Housing Benefit has to be paid and poverty and unemployment traps are reduced. This would enable the creation of more diverse and less disadvantaged communities."