Wednesday, 1 April 2015

A housing policy question for all politicians

One of the depressing things about having been politically active during the 1980s is that so many of the things we warned about happening, as a consequence of Tory policy then, have come to pass. 

Like many other policy areas, 1979 was a watershed in the landscape of housing opportunities in this country.  From 1918 to 1980, owner occupation and council housing grew while private renting gradually declined.  By 1980, a third of housing was rented from local authorities, just over half was in owner occupation while only 11% was privately rented.

By 2012, the private rented sector had increased to 17%,  while 10% was rented from housing associations and council owned housing had fallen to 8% of the total housing stock. 

It was the Right to Buy, and associated policies, which were responsible for this fundamental change in the pattern of housing tenure. Councils were always able to sell their housing to existing tenants but it was voluntary, and sales required the approval of central government.  However, the Conservative Party manifesto of 1979 manifesto made the sale of council houses a key part of the election campaign, offering generous discounts and no restrictions on resale. 

Conservative housing policy was also aimed at reviving the private rented sector by introducing shorthold tenancies, in order to make housing a more profitable investment for private landlords.

These polices were part and parcel of a wider agenda on the welfare state, which started in 1979 and continues to play out today. As two academics at Bristol University wrote in the early 1980s: “The reduction in the size of the public housing sector has become part of a general strategy to restructure and reduce state provision across the whole range of welfare services, from education, and health, to refuse collection”. (1)

Indeed this was the first, but by no means the last, government policy which promoted ‘subsidised individualism and residualised collectivism”. (2)

Thirty-five years after the Conservative's 1980 Housing Act we are facing the results of this fundamental shift in housing policy. The residualisation of council housing is reflected not only in the reduction in the size of the tenure but also in the increasing proportion of council tenants in receipt of social security benefits - partly because the better off ones bought and partly because of the rise in rents. 

Housing costs have increased across all tenures: amongst owner occupiers and private renters because of the continuing shortage of supply; amongst housing association and council tenants because of changes in housing finance.

There has been a fundamental shift of expenditure from capital investment in housing (building new homes) to revenue expenditure in the form of housing benefit (propping up higher rents in social housing and subsidising the profits of private landlords).  The latest manifestation of this shift is the introduction of ‘affordable rents’ for new housing association and council tenancies, set at a maximum of 80% of market rents and acknowledged by government as costing more in the long term because of the resulting increase in housing benefit expenditure.

The shift from capital investment to subsidising high rents has accelerated in the last five years, reflected in the dramatic reduction in the numbers of social housing properties built: in 2009-10, there was a total of 39,492 housing starts of properties to be let at social rent levels; by 2013-14, this had fallen to 3,961.  Even including housing to be let at ‘affordable rent’ levels and ‘affordable’ home ownership there had been a 22% reduction over this period.

The Coalition government has decried the increase in housing benefit, focussing on the ‘failure’ of individuals to find a job or work hard enough to get themselves ‘off benefits’.  In reality, it is government policy which has created the need to subsidise rents, but the focus on individuals suits the Conservative Party’s desire to bring about a residualisation of collective provision (i.e. the welfare state) until it only caters for a small stigmatised minority.

Not only have individuals suffered as a result of the shift in housing policy since 1979, but local authorities (and indeed government) now have less influence over whether housing markets will meet housing need. An erosion of local authority influence over rent levels (because of changes in housing finance) and over local housing markets generally makes it harder to, for example, ensure sufficient affordable housing to support local employment, or to prevent second home owners pushing up house prices.

The tragedy is that there seems to be very little resistance to the ideology which underpins these changes in housing policy and in particular very few people are defending the idea of secure, affordable, publicly owned housing. And now the Conservatives have floated the idea of extending the Right to Buy to housing association tenants, although they have been warned that this would severely threaten the financial viability of the sector. 

There is general agreement that the fundamental cause of housing problems in this country is the lack of supply, so Tory and Labour vie with each other to promise to tackle this by increasing house building.  The main sources of increased supply are, however, assumed to be in the owner occupied sector where government action is primarily limited to demand-side policies whose main impact is likely to be an increase in house prices.  At the same time the rent levels for any new social housing will not be set, as they previously were, by taking into account what local wage levels could sustain.  Instead, rents will be set in relation to market rents which, in high rent areas (but particularly London and the South East) will belie their Orwellian label of ‘affordable rents’ for many many people. 

The advantages of social housing used to be that you paid a rent which was affordable in the context of local wage levels, you got security of tenure, and you didn’t have to worry about the costs of repairs and maintenance.  In order to undermine this important option, Conservative policies since 1979 have resulted in an increase in rents, undermined security of tenure, and promoted individual self-interest to remove properties from future generations of households in housing need.

Buried in the Coalition government’s Impact Assessment on the introduction of ‘affordable rents’ is the statement: “ An increase in social supply reduces the numbers in housing need by three times as much as a rise in private supply of the same amount, with these housing services better targeted at those in need.”

So, a key question for all politicians during the rest of this general election campaign is: An increase in the supply of social housing is the most effective way of reducing the numbers in housing need, so will you invest in secure, affordable, publicly owned housing?

  1. Ray Forrest and Alan Murie, 1984. Right to Buy? Issues of Need, Equity and Polarisation in the Sale of Council Houses, University of Bristol, p.59.
  2. Ditto, p. 60.