THE HOUSING POLICY OF THE FUTURE

Nick Raynsford

All political parties have their ‘comfort zones’ to which they tend to retreat when the going gets tough.  Usually, these are policy areas where there is a line of continuity with the past, and where reaffirmation of old certainties sends reassurance to the party faithful.  Council housing is one such comfort zone.  From its earliest days, the Labour party promoted council housing as a solution to the acute housing problems which affected a high proportion of the population.

A political imperative 

In the early decades of the 20th century, the construction of good quality, sanitary homes, built by councils to replace the ghastly slums bequeathed to our cities by the rapid industrialisation of the 19th century, was an obvious political imperative.  What is less well remembered is that these homes were designed for, and let to, those judged by the local council to deserve better housing.  Allocations were often made on ‘merit’ by councillors, and applicants were usually subject to checks on the standards they maintained in their existing home before being offered the greatly coveted keys to a council house.

The poorest and most vulnerable were effectively excluded.  Homelessness was not recognised as a route into council housing.  On the contrary, homeless families were treated as welfare, not housing, responsibility and were usually only offered temporary accommodation – often in grim former workhouse buildings from which male partners were routinely excluded.  These punitive policies persisted right through until the 1970s.

The immediate post-war era was in fact the heyday of council housing.  Under both Labour and Conservative governments, numbers of new council homes rose to the point where council housing accounted for around a third of the country’s housing stock.  Ironically, the way that the numbers were achieved – mostly through large-scale, single tenure estates – was at odds with the ideal of social mix articulated by the architect of Labour’s post-war house building programme, Aneurin Bevan, who dreamed of a society in which ‘the doctor, the grocer, the butcher and the farm labourer all lived in the same street’.

The Right to Buy initiative 

Three factors combined to undermine confidence in the role of council housing: one economic, one physical, and one social.  Growing affluence in the post-war era made it possible for more people to aspire to owner-occupation.  Poor conditions on many council estates, built in the years when quantity was given greater priority than quality, tarnished the image of a once highly aspirational tenure.  And growing emphasis on the need to house the poorest and most vulnerable began to change the profile of council tenants. 

All that was required to ignite this dangerous cocktail of potentially explosive ingredients was an incoming Tory government in 1979, with its twin policies of drastic cuts in investment coupled with the Right to Buy initiative for council house tenants. The former guaranteed inadequate maintenance, a lack of replacement and deteriorating physical conditions on many estates; the latter encouraged the more affluent and aspirational to exit the tenure. So in under two decades, council housing had become a much smaller and frequently stigmatised residual welfare tenure, occupied by disproportionate numbers of the poor and unemployed, and suffering all the symptoms of political and financial neglect.

Labour’s initial response in the 1980s was politically inept.  Opposing the Right to Buy initiative sent a message to the aspirational working class that the party was hostile to their desire for something better.  Not surprisingly, they voted overwhelmingly for Thatcher in 1983.  Subsequently the party softened its position, but appeared embarrassed by its past opposition to the Right to Buy, a stance still widely supported by activists on local councils.  So it gave less and less attention to housing.  The subject which had dominated the headlines and the party’s social objectives from the 1900s to the 1960s became almost invisible in the manifesto of 1997.

The impact of the recession 

Now, with housing once again centre stage because of the impact of the recession, it is timely to look hard at what should be the basis of a Labour housing policy.  A great deal of media focus has been given to the claimed renaissance of council housing and because it is a classic ‘comfort zone’ policy area, both government and activists have taken this up.  There have been suggestions that a future Labour housing policy should focus around the building of a new generation of council homes.

But dreaming of the return to a golden age of council housing is a dangerous delusion which ignores both the changes which have occurred over the past 50 years and the context in which we are now living.  If we are to put in place the right policies to meet our country’s future housing needs, we need to address the realities of 21st century society.

Even after the impact of the housing market collapse, we remain a country in which a large majority of the population live in and aspire to owner-occupation.  Roughly 70 per cent of households are home owners, just over 10 per cent rent privately and the rest occupy social tenancies, split roughly half and half between councils and housing associations.  So council housing accommodates only around a tenth of the population.

It would be considered bizarre if the Labour party were to focus its health policy on the 11 per cent of the population who have private health insurance, rather than the vast majority who depend on the NHS.  Yet many siren voices argue that our housing policy should concentrate on the provision of council housing, rather than looking at how to respond to the needs and aspirations of the whole population.

Perpetuating the problem? 

Of course, council housing is aimed at those in need and it is entirely understandable that we should give emphasis in our housing policy to the most acute needs, including homelessness and overcrowding.  But to see the answer simply in the building of more council houses would be to perpetuate the problem, and it would reinforce the image of council housing as a residual sector only for the poorest and most needy.

The hard truth is that the emphasis on tenure in 20th century housing policy has left an unhappy legacy of social segregation with owner-occupied housing and council housing developed separately and in different locations.  The key challenge in a 21st century housing policy is to promote access to good quality and sustainable housing in ways that do not segregate the population by economic strata.  In other words, to return to the Bevan ideal of a society where, in an updated interpretation, the pensioner and the student, the banker and the bus driver, the IT manager and the shopkeeper all live in the same street.

This will only be achieved if we maintain a commitment to mixed tenure developments.  This means planning policies that continue to require an element of affordable and social housing in all significant new developments, and partnership working between local authorities, housing associations and the private sector.  A good tenure mix will not just involve owner-occupation and social housing, but also intermediate options such as shared equity and privately rented housing.  Without such options, the level of demand for social housing for those not able to afford outright owner-occupation will be far in excess of the potential supply, even with substantial increase in output.

Breaking down barriers 

In addition to developing new mixed tenure housing schemes, we need to transform existing mono-tenure estates, particularly those characterised by high levels of deprivation and unemployment.  This will require the creation or conversion of homes for sale in such areas, plus wider policy inputs to tackle the other social needs of the area, including worklessness.  The aim must be to put an end to the existence of areas stigmatised by poverty and deprivation.

So the key thrust of Labour’s housing policy should be to break down tenure barriers which have in the past inhibited opportunities for social and geographical mobility.  Rather than locking people  into one tenure for life, we should be making it easier for them to change tenure to suit their needs at different stages in their life.  This should include options both for increasing and decreasing any equity share they hold in a property, which would obviously be one way of responding to change in income which might otherwise threaten their ability to retain their home.  This would in effect give a ‘Right to Rent’ as well as a ‘Right to Buy’.  The latter, now that discounts have been reduced to modest amounts, would no longer have the effect of diminishing the available stock of rented homes, providing all sales receipts are –  as they should be – reinvested in new or improved social housing.

Given financial constraints in the coming years, it will be essential to maximise the output of affordable and social housing for every given pound of public expenditure.  This calls for both cross-subsidy between profitable development for outright sale and social rented and shared equity homes, which require subsidy to keep costs affordable.  It also requires more institutional investment in private renting.  Some question whether such models can still work, pointing out that the collapse in the housing market has led to a drastic reduction in the output of housing for sale and the availability of cross-subsidy through S106 agreements.

Ambitious targets 

The process of market adjustment has indeed been a very painful one, with a dramatic fall in output, but confidence is gradually returning and the availability of public sector funding for social and affordable housing is helping to restore viability in some new mixed tenure developments.  More needs to be done to help improve liquidity, while avoiding any trend back towards unsustainable house price inflation.

All of this points to the key role of government in setting the parameters for recovery and sustainable development in future years.  This requires both regulatory and financial inputs, but no return to the monopoly provider role which characterised the immediate post-war era.  The government’s role is to set a framework that facilitates mixed development while also promoting prudent mortgage lending and setting standards for new homes (and, crucially, their energy efficiency) to ensure that we meet our ambitious targets for reducing CO2 emissions from homes.

Local authorities have a vital role to play in local planning and development arrangements, including making maximum use of publicly owned land to facilitate new developments, and in building partnerships with housing associations and the private sector to deliver mixed tenure housing schemes.

We also need to incentivise all housing providers to do more.  Even before the credit crunch, output of new homes had for many years been lagging behind the levels needed to meet demand.  Private housebuilders have tended to blame rigidities in the planning system and the reluctance in particular of Conservative controlled councils to provide for the needs of their area.  There are certainly serious grounds to fear that current Tory policies to dismantle regional housing targets and leave local councils to decide how many homes are needed in their area will play into the hands of nimbys in opposing local housing development.  But the housebuilders themselves were comfortable with a regime in which under-supply fed through into higher home prices and hence profits.  Unlike most other markets, there has been a notable absence of expansionist businesses in the housing market seeking to maximise volume and to achieve a market share of

20 per cent or more.

As well as encouraging new entrants to the housing market, we should be making more use of the much greater capacity among the larger housing associations to expand provision of homes to rent and for sale.  The stronger associations no longer need to play second fiddle to private developers, but have proved their ability to undertake mixed tenure developments on their own.  Indeed, some are now interested in exploring new funding models in which they receive equity investment as well as traditional public sector grants.  At a time of heavy pressure on public finances, this may well help to sustain programmes of social and affordable housing that could otherwise face cuts in future years.

Supporting the user 

In all of this, the government’s role must be to promote the interests of the individual and the community rather than the providers of housing.  Housing policy in the 20th century was heavily focused on provider interests, whether we are talking about housebuilders or landlords of social rented housing.  A 21st century housing policy must instead support the interests of the users, whether home owners, tenants or people looking for a home. It should ensure that providers are effectively accountable and that the public can secure redress where service levels fall below acceptable standards.

So the challenge for Labour in the coming decade or two will be to stimulate an expanded programme of sustainable mixed tenure housing which meets a range of needs in a cost-effective way.  Government, both national and local, has huge roles to play, but this should not be confused by the ‘comfort zone’ call for a return to an older model of monopoly provision of council housing. 

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