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Social State: The return of squalor

Steve Hilditch 27/11/12

Social State: Housing PolicyThe large majority of people are adequately or well-housed. That’s why housing is the dog that never barks when Elections come around. But for more than a generation – since Thatcher ended council housebuilding - we have failed to build enough new homes of all types to keep up with rising demand. And chickens are coming home to roost.

The core failure to build is the root cause of our now familiar problems. House prices are far too high due to scarcity and easy credit. Rents have followed suit. Social housing is frighteningly scarce. Escalating housing benefit is the inevitable outcome of the growing dependence on expensive private renting rather than cheaper social renting. To its credit, Labour tackled the enormous investment backlog in existing social homes, but failed to build enough new affordable homes until Gordon Brown’s Keynesian fling following the banking collapse.

Three decades of failure were followed by a huge lurch backwards as Eric Pickles and Iain Duncan Smith pursued their prejudices. Housing investment was cut by over 60%. Virtually no new social rented homes are being built, only the Orwellian ‘affordable rent’ - homes at up to 80% of market rents. Demand from both ends - people excluded from home ownership and a rising tide of homeless and displaced people - has become focused on private renting, and rents have rocketed. Even William Beveridge couldn’t solve the problem of rent and we have not tackled it properly in the 70 years since.

In a highly competitive market the poor lose out. The return of one of Beveridge’s five evils - squalor - is in evidence all around us, from the re-emergence of ‘bed and breakfast’, to more homeless on the streets, to rising overcrowding and sharing, to the new phenomenon of ‘sheds with beds’. The housing and welfare benefit reforms, in their bewildering variety, leave millions of people facing unbridgeable gaps between income and housing costs. Benefit recipients – according to ex-Minister Sarah Teather  – are deliberately demonised. Yet the rapid growth in new housing benefit claims is coming from people in work who can no longer meet their housing costs.

The new Government in 2015 will inherit a housing emergency. But the crisis can be tackled if there is the will. So what needs to be done?

First, we need a big increase in the building of social rented homes. Construction caused the second dip in the recession and might cause the third. Housing schemes sit on the shelf and could be activated rapidly. Housebuilding is labour intensive, creates strong multipliers through the supply industries, does not suck in imports, and reduced unemployment means that the Treasury gets most of the investment back. Building social rented homes (which eventually pay for themselves) means the housing benefit bill would start to fall as families living in expensive private rented homes or hugely expensive temporary accommodation move to much cheaper social rented homes. After the successful reform of council housing finance, many Councils have considerable capacity to finance and build new homes. A more radical reform of the public borrowing rules could unlock a wave of investment that has been stymied for many years by Treasury orthodoxy.

Secondly, we must restore a pro-active planning system that aims to meet community needs. Tory theory that higher developers’ profits would encourage more housebuilding is misconceived. It just leads to higher profit. Land values should be controlled through land value taxation and more public ownership. The creeping segregation we are seeing under the Tories should end: we should fulfil Aneurin Bevan’s vision of ‘the living tapestry’ of the mixed community.

Thirdly, the Banks must be made to work for new home owners. Even if first time buyers can afford repayments they cannot raise the huge deposits that are required. There are ways of easing this but it is unacceptable for the Banks to be so unresponsive when they have had such extraordinary support from the taxpayer.

Fourthly, we must regulate letting agents and private renting, starting with the most squalid homes. Standards must be raised and bad practice tackled. Longer tenancies should become the norm and rent caps should replace benefit caps. 

Finally, we must restore the homelessness and benefits safety nets. Housing benefit caps are likely to stay but must reflect conditions in the real housing market and not leave people having to choose between food and rent. The Coalition has effectively ended the homelessness safety net. Forcing families to move hundreds of miles from London – the majority of London boroughs are now doing this, it is not just a ‘rich central London’ issue – is a disgrace because of the human cost involved and especially the impact on children.



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