Housing and Local Democracy

Housing

Mick Antoniw MS and Mike Hedges MS

Housing is the third necessity of life, after food and water, but far too many people live in substandard accommodation or are homeless, or concerned about where they will be moving to next. 

Private rented sector

Mark Drakeford announced last year the Welsh Government’s intention to ban ‘no-fault’ or ‘Section 21’ evictions in the private rented sector. Section 21 of the Housing Act 1988 gives landlords the power to evict tenants without having to give a reason. Once a tenant has received a Section 21 notice, they have two months from the date of the notice to move out. If the tenant has not moved out in that time, the landlord can apply to the courts for a possession order. Landlords can also gain possession through a Section 8, fault-based, notice where tenants have not paid their rent or have acted in an anti-social way. If tenants are settled in a property, the ban on Section 21 would mean that they would not have to move unless they had breached the terms of their tenancy.

Shelter Cymru have supported the proposed ban, arguing that private renters in Wales should have the same rights as tenants in other parts of the world. According to them, the ban would not stop landlords from getting the property back if they had a genuine reason, but it would give tenants the reassurance that, as long as they pay rent on time and look after the property, they will have a home for as long as they need it, making the private rented sector a fairer place to live for everyone. 

The Senedd has already passed legislation that gives tenants a degree of additional security – the Renting Homes (Wales) Act 2016 – which, among other things, prevents the practice of ‘retaliatory eviction’, where a landlord issues a ‘no fault’ possession notice following a request from a tenant to undertake maintenance or repair work on the property; as well as requiring landlords to ensure that their dwellings are fit for human habitation, by installing functioning smoke alarms, carbon monoxide detectors and electrical and gas safety certificates. Incredibly, this legislation has still not come into force, nearly five years after it was carried, due to delays on the part of HM Courts and Tribunals Service, on whose co-operation the Welsh Government is reliant in such matters. The Welsh Government has now introduced a Renting Homes (Amendment) (Wales) Bill, which would amend the earlier legislation prior to its implementation, and contains the provisions to give private renters greater security of tenure. 

Unfortunately, the Welsh Government has retreated from Mark’s initial pledge to end ‘no fault’ evictions altogether and the new bill would simply extend the minimum notice period for a no-fault eviction from two to six months, as well as increasing from four to six months the period after occupation of the property during which such a notice cannot be issued. The reason given for this is that a complete ban on ‘no-fault’ evictions would breach landlords’ right “to enjoy their property peacefully” under the European Convention on Human Rights, as enshrined in the Human Rights Act 1998. Scotland has abolished its own equivalent of Section 21 but, for the above reason, it has replaced it with alternative grounds that the landlord could use when the tenant is not at fault. In these situations, only 84 days’ notice is required but it is not clear why Wales could not take the same approach as Scotland but combine it with a longer notice period. The impact of Covid has meant that there is no longer sufficient legislative time to complete the passage of the Amendment Bill before the Senedd elections and the amended Act is not now expected to be implemented before 2022, so Welsh Labour should look at the possibilities of strengthening its proposals, in line with Mark’s original pledge, if it is re-elected in May.

Leasehold Reform

In recent years we have seen an increase in the number of houses being built on the bases of leasehold, rather than freehold, tenure. Leasehold housing requires the payment of an annual ground rent to the freeholder. These annual rents, usually modest at first often have clauses which require periodic increases in the ground rent. The consequence of this system of tenure is that after a certain period (usually 100-125 years) the land on which the property is built reverts to the freeholder. Over time, the cost of the ground rent increases and the value of the property decreases. There are often restrictions on the use of the property. In some cases communal facilities such as playgrounds, pieces of spare land and even the road, pavements and lighting are subject to a local management contract run by a company, which charges for their services. These are services which would normally be provided by the local Council through the payment of the Council tax but which the developer has bypassed in order to obtain planning permission.

The impact of these restrictions and devices is to make the properties increasingly difficult to sell and more expensive to maintain. A survey carried out in conjunction with the Leasehold Advisory Service found 57% of leaseholders somewhat or strongly agreed that they regretted buying a leasehold property.

It is our view that leasehold is an unfair and outdated system of tenure and that all local facilities should be built to a standard and requirement that they are on completion adopted by the local council. The Welsh Government has obtained an agreement from the main house-building companies that they will not build new leasehold housing. This is welcome but not sufficient: Welsh Labour should include in its manifesto a commitment to legislate to ban the granting of planning permission for the building of leasehold housing and the prohibition of local service management contracts.

Planning Permission for New Dwellings

Planning permission for all new developments need to include a condition that all street lights, drainage, pavements and roads are built to the standard for adoption by the local authority. Far too often developers build houses and put in roads that are not up to the standard for the council to adopt them. Those who have bought the houses often become aware of this only when they contact the council for repairs and are told that the road has not been adopted. The building of roads and the other infrastructure to adoptable standard was common practice in the past but some large construction companies have stopped doing it so we must legislate to make them.

Registered Social Landlords and Council Housing

We need more social housing. Affordable housing should mean council and registered social landlord (housing association) housing. Rather than just an all-Wales target, we should have targets for each local authority area, so that local need can be met. The only time since the Second World War when there was an adequate supply of housing was when substantial council housing was being built. We have to build enough affordable homes to meet Wales’ projected housing needs over the next five years.  This should be achieved through empowerment of local councils to make full use of their powers and borrowing capacity to build homes and bring empty homes back into use for social rent.

Housing associations and councils, where there has not been a stock transfer, should always have a common waiting list. Having a transfer system between housing associations and council housing would also make it easier for people to move. Currently, you have to know which registered social landlords have properties in the area in which you wish to live but, with a common application system, people would only have to register once. With transfers, people could then move between properties belonging to different housing associations and also between housing association and council properties.

Housing associations are in an increasingly precarious situation. Because they borrow commercially, their credit rating depends largely upon rates of rent collected. With changes to the benefits system making payment – and therefore collection – of rent harder, housing associations’ credit rating drops and makes borrowing more expensive, particularly in times of higher interest rates. Eventually, this will lead to housing associations or their stock being sold to the private sector, which was almost certainly the original political goal when stock transfer was promoted by government.

All housing associations holding stock transferred from local authorities should ballot their tenants on returning to council control. This would provide sufficient ‘critical mass’ for councils to employ direct management and works teams once again. With councils’ ability to borrow very cheaply from the Public Works Loan Board, building new council homes and maintaining stock will enable provision of sufficient good quality homes for all.

Rent Control

Social rent increases should be capped at Consumer Price Index inflation so that rents do not outpace wages or benefits. In addition, we should investigate the possibility, and implications, of offering protection against rent increases after someone has been a tenant for a set number of years, as well as the introduction of rules to ensure succession rights for family members living in the property. Finally, the administration of housing finance needs to ensure that existing tenants do not bear the cost of new homes and that they are funded similarly to other Council buildings.

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The Structure of Local Government in Wales

Peter Rowlands

As part of the second phase of Welsh Labour’s policy consultation, the paper entitled ‘Regional Working’ stated that ’the existing pattern of unitary local authorities (LAs) represents as good a balance between local engagement and economies of scale as any alternative’. This is an extraordinary statement to make; for four years (2014 to 2018) the Welsh Government (WG) sought to reduce the number of LAs from 22 down to 12 at most. In 2018, it capitulated to strong opposition from the LAs and withdrew its merger policy. LAs can still choose to merge on a voluntary basis, but none have so far done so. 

I argue that the WG should seek to reduce the number of LAs, for two reasons. 

Firstly, it is a question of size. Most of the LAs in Wales are well below the population level that would generally be regarded as necessary to deliver services efficiently. There is no absolute standard for this, but most unitary authorities in England are substantially larger on average than those in Wales. Only three of the 32 London Boroughs and four of the 36 Metropolitan boroughs have populations below 200,000, and only ten of the remaining 56 unitary authorities have populations below 150,000. In Northern Ireland, only one of 11 authorities has a population below 135,000. 

In contrast, the majority of Welsh LAs, 15 out of 22, have populations below 150,000, with seven below 100,000 (including four below 75,000). The only other part of the UK which is similar to Wales in this respect is Scotland, where 11 out of the 32 councils have populations below 100,000, although three of these are small island councils. There have been proposals to merge small LAs in Scotland.

The reluctance on the part of Welsh LAs to support mergers is a conservative position that perpetuates inefficiency at the cost of better service provision. 

Secondly, rather than insist on a rational structure based on larger units, the WG says that the current structure of 22 LAs can be accepted ‘on the basis that systematic regional arrangements were established’. This refers to new Corporate Joint Committees (CJCs) as the latest extension to consortia arrangements, which were established some years ago as a means of facilitating cooperation between LAs. 

To date, this cooperation has focussed mainly on education through the four regional consortia. However, the new CJCs are planned to be more comprehensive in their scope and structure. They would be legal bodies for the regions that they cover, to which all functions covering land use planning, transport and economic development must be transferred, with the likely inclusion of school improvement, and to which other LA functions may be transferred, by LAs themselves or by the WG following service failure.  

What is being suggested here is clearly a new tier of local government, which could grow to a significant size as an increasing array of functions are thought to be better administered over a wider area. The key objection here is a basic democratic one, the lack of accountability. CJCs will only be accountable to their constituent councils, and not to their electorates. This is unacceptable.

What we are confronted with overall is a double whammy: a structure of councils which are in the main too small to function efficiently, and to partly compensate for that a completely unaccountable upper tier of administration. 

It would be far better for WG to bite the bullet and initiate a major reorganisation now; if working on a regional basis is necessary then LAs should be big enough to be able to do so. If this does not happen, the provision of front line services in Wales will remain hampered by the costs of an inefficient local government structure. 

A new structure could be based on some existing boundaries (including those for health, fire and police) some of the existing consortia and the proposed Northern CJC. The other proposed CJCs should not be a model: one is too small (only two LAs with a total population of about 200,000) while the other is too big (ten LAs with a total population of about 1,670,000, over half the population of Wales). 

A suggested new structure of 5 LAs is as follows: 

1. North Wales (covering Anglesey, Gwynedd, Conwy, Flintshire, Denbighshire and Wrexham) There is an exact fit with one health board, police authority, fire service and existing education consortium. The population of the new authority would be approximately 700,000 (which is also the basis for the recommended CJC)

2. Mid and West Wales (covering Pembrokeshire, Carmarthenshire, Ceredigion and Powys), giving a population of approximately 510,000. There is an exact fit with one police authority and two health boards which should be merged. 

3. South West Wales (covering Swansea, Neath/Port Talbot and Bridgend), encompassing a population of approximately 530,000. There is an exact fit with the health board. Fire would remain shared with Mid and West, but requires the transfer of the Bridgend area from the South Wales fire service. The police authority would remain shared with South Central. 

4. South Central Wales (covering Cardiff, Vale of Glamorgan, Rhondda Cynon Taf and Merthyr Tydfil), encompassing a population of 790,000. There is an exact fit with two health boards which should be merged. The police service would remain shared with South West, while the fire service would remain shared with South East. 

5. South East Wales (covering Caerphilly, Blaenau Gwent, Torfaen, Newport and Monmouthshire) encompassing a population of 590,000. There is an exact fit with one police authority and health board. The fire service would remain shared with South Central. 

All these new authorities would have viable populations of at least 500,000, with the biggest only half as much again as that. Three would have a major town at its centre. There would be five sets of mergers of existing authorities, two of four and one each of six, five and three. There would also be two mergers of two health boards so that each new LA would correspond to one health board. All consortia would be abolished as they would be replaced by the new authorities, although only in North Wales was there an exact fit with the new authority. There would be no point in adding to the number of police or fire authorities, which would remain at four and three respectively (particularly as a single all Wales police service has been mooted).

The suggested reorganisation would generate substantial savings and better run services. It would also avoid a ‘democratic deficit’ caused by power being held by CJCs which were not directly accountable to the electorate. The increased size and remoteness of the new councils would be a problem, but this could be countered by an improved network of Community Council; these should operate everywhere, rather than just in rural or fringe suburban areas as is currently the case. These could be consolidated through mergers to create more effective bodies, with new bodies created to cover urban areas.

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Are Mergers The Answer for Local Government in Wales?

Mike Hedges, MS for Swansea East

Local Government mergers are again being considered and there is a political consensus that we need larger local authorities. 

One argument put forward in favour of mergers is population size. It is true that several Welsh local authorities in Wales have fewer than 100,000 people living in them (particular examples being Ynys Môn, Blaenau Gwent and Merthyr Tydfil). It is also true that both England and Scotland have several unitary authorities larger than Cardiff (with Cardiff having a population of approximately 350,000); however, Scotland also has 5 local authorities smaller than Merthyr (Inverclyde, Clackmannanshire, Western Isles, Orkney and Shetland) while England has one (Rutland). There is clearly a lack of consistency with this approach. 

A second argument put forward in favour of mergers is that larger authorities are more efficient and effective. If this were the case two things would happen: council tax would be lower (the larger the authority, the lower the council tax rate) and performance would be better. 

Firstly, on council tax rates, 2018/19 Welsh Government data indicated that, while it was the case that the two smallest local authorities (Blaenau Gwent and Merthyr Tydfil) are in the bottom two places regarding council tax, medium sized authorities appear to perform better than either large or small authorities when it comes to the cost of council tax to the resident. Scotland has less variation in council tax than Wales, but the lowest council tax is the Western Islands and Shetland and the largest council, Glasgow, has the largest band D council tax rate. 

Secondly, it is worth considering the quality of services provided. The Western Mail (in 2015/16) considered a series of indicators across a range of local government services (including education, social care, housing, environment, transport etc.) and ranked the local authorities out of 112 points. The data did not favour larger authorities; rather medium-sized authorities took the top places. The conclusion drawn was that the quality of services was not directly proportional to the size of the local authority. 

A third argument offered is that Wales has used large mergers in other sectors to good effect. Examples include the Welsh Ambulance Service; 7 large local heath boards (which replaced 22 local health boards and 7 NHS Trusts and where population sizes vary between Powys at just over 130,000 to Betsi Cadwaladr at just under 700,000); 4 regional educational consortia; and Natural Resources Wales (NRW), a merger of the Countryside Council for Wales, Environment Agency Wales and the Forestry Commission Wales. It is worth noting that Betsi Cadwaladr, the largest of the 7 local health boards, has only recently come out of special measures after many years, while since the creation of NRW there have been a number of loans from Invest to Save to fund redundancies and a highly critical Auditor General report regarding the sale of trees.

Are mergers always right?

The direction of travel is clearly moving towards larger and fewer organisations. Those who look at it simply, calculate the savings from reducing the number of senior staff and thus provide more money for front line services.

However, mergers are expensive, with redundancy costs and the cost of re-badging the organisation. More expensive is creating a single ICT system from the systems of the predecessor organisations, as some will still be under contract and others will need to be updated or closed down and merged into the new system. All these are up-front costs, and whilst the cost of local government reorganisation in 1996 was approximately 5% of annual expenditure for each council, that was without the variations in terms and conditions between authorities that exist today.

The simplistic conclusion of some is that following a merger, all the senior post duplication is removed and thus substantial ongoing savings are made. This ignores issues such as the fact that senior managers carry out tasks and if the number of managers is reduced the tasks have to be reassigned, because the same number of decisions need to be made.

There are a number of other considerations, as follows:

• Economic theory predicts that an organisation may become less efficient if it becomes too large.
• Larger organisations often suffer poor communication because they find it difficult to maintain an effective flow of information between departments, divisions or between head office and outlying parts.
• Coordination problems also affect large organisations with many departments and divisions as they find it much harder to coordinate operations.
• ‘X’ inefficiency is the loss of management efficiency that occurs when organisations become large and operate in uncompetitive markets. Such loses of efficiency include over paying for resources, such as paying managers salaries higher than needed to secure their services, and excessive waste of resources.
• Local authority workers were not furloughed during the pandemic. They were at the core of the response, along with other public sector workers, to keep the country going. The thanks they have had is a pay freeze from the Conservative UK Government.

One final point relating to the network of over 700 town and community councils across Wales: there is no consistency with these bodies, which often suffer from a general lack of governance and accountability. As a minimum, any councillors should be directly elected to these bodies by the residents in question; it should be the case that people are appointed to these bodies. 

In conclusion, there are key questions to be posed of the merger agenda. It is worth considering whether larger organisations (such as Betsi Cadwalladr) perform better than smaller ones; whether the creation of all Wales organisations (such as the Welsh Ambulance Service produced an improved service); and whether the merger of several existing organisations (such as NRW) has led to improved services. 

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