by Pat Turnbull 

The roots of the housing crisis we have now go back chiefly to the election of the Thatcher government in 1979 – though there were stirrings in the recessions of the 1970s. A Hansard report of a parliamentary debate on housing on 16 December 1981 reveals that in that year housing subsidies had been cut by more than £600 million and that they were due to be cut by a further £400 million in 1982 and virtually ended thereafter. The government had repealed a system under which about 66% of the cost of building local authority houses and improving older houses was paid by the Government in subsidy. This was the start of over forty years of neglect and underfunding of what is now called the social rented housing sector, because it now encompasses not only council housing but a large amount of housing association housing.

NEGATIVE RESULTS OF THESE POLICIES

The run down of the sector has had a very negative effect on the provision of housing as a whole, allowing the market to dominate. In 2023 the average market rent for a one-bedroom home in London was 46% of gross median pay.

The Thatcher government is most notorious for the Right to Buy policy which started in 1980, where council homes were sold off to their tenants at big discounts. By 31 March 2023, over 2,017,590 council homes had been sold off through Right to Buy. Forty percent of these are now rented out privately at market rents.

1.3 million households are on the waiting list for a council or housing association rented home. Even this is not a true figure of the level of need, as councils keep cutting the numbers by reducing eligibility to be on the list. In England, 117,450 households were in temporary accommodation as of 12 August 2024, according to Housing Today, a 12.3% increase since 31 March 2023.  This includes more than 150,000 children.

The rising cost of paying private landlords to house homeless families in insecure, inadequate and poorly regulated private rented homes has brought many councils to the verge of bankruptcy. Newham Council in London has asked for ‘exceptional financial support’ due to temporary accommodation housing pressures amounting to £100 million over three years. By 2027/28 one third of its budget could go on temporary accommodation. In fact 18 councils have currently been granted exceptional financial support, which is actually no extra money from government but merely either permission to borrow, or permission to use capital budgets to cover day to day expenditure. Hackney Council, also in London, has had an increase in net expenditure on homelessness from £7.38 million in 2017/18 to £21.5 million in 2023/24, due to the huge rise in the cost of temporary accommodation.

CONTINUING THE ROAD TO CRISIS 

The Labour government of 1997 to 2010 could have stopped the sell-off of council homes, started building more, and bought back those sold. But its standpoint right up to the financial crisis of 2008 was that everyone could be a home owner. In addition, on its watch and due to its policies, thousands of council homes were transferred from public ownership to housing associations, private bodies. Government subsidies which acted as an incentive to the housing associations were gradually withdrawn. Housing associations were encouraged to become developers of market housing to boost their finances.

It’s ten years since the 2014 publication of the Lyons Housing Review, a public policy review initiated by then Labour Party leader and leader of the opposition, Ed Miliband. It reported that the 2010 government spending review had seen capital investment in housing cut by 63% in real terms. For the past 14 years government funding to councils has also been steadily cut, with many councils chasing the same pipe dream, that building and selling market homes would make up for the lost finance.

So now we have a housing crisis and a Labour government which has stated its commitment to building 1.5 million new homes in five years. One of the first steps it has taken has been to undertake a review of the National Planning Policy Framework. This is the basis for city-wide and borough plans. The government claims to believe that the housing shortage is down to a failure of the planning system which is preventing homes from being built. Of course, housing is being built, overwhelmingly for market sale, often to investors. If anyone lives in it, it is at high market rents and with the lack of security offered by the so-called no fault eviction system where the landlord can evict without giving a reason. This system deters tenants from complaining about the state of the property, or rises in the rents.

SPECULATIVE PRIVATE DEVELOPMENT

The government’s claim that the planning system is to blame comes up against a range of opposing evidence. First, developers have large amounts of land with planning permission not being built on. Steve Howell, writing in the Big Issue on 26 July 2024, pointed out that Big Issue research in 2023 found that the land held by the top eight house-builders alone was 918,823 plots, an increase of 49% on 2018 and, as he said, ‘enough to keep them going until around 2040 at their current output’.

Second, developers keep the amount being built at a level where their profits will remain high. The Competition and Market Authority in their Housebuilding Market Study of February 26 2024, say this of speculative private development, ‘The evidence shows that private developers produce houses at a rate at which they can be sold without needing to reduce their prices, rather than diversifying the types and numbers of homes they build to meet the needs of different communities (for example, providing more affordable housing).’

Third, leaving house building to private developers who only build for profit will never produce housing which people on average, let alone low, incomes can afford. The Competition and Market Authority’s study revealed that around 60% of all houses built in 2021 to 2022 were delivered by speculative private development which, they said, ‘has seen the gap widen considerably between what the market will deliver and what communities need.’ We have evidence from the same year in London. The 19^th Annual Monitoring Report on the London Plan noted that in the year 2021/22, the number of net housing completions was 37,852. Only 3,721 of them were at what is described as ‘low-cost rent’, which also includes the separate category of London Affordable Rent which is about 50% higher than social rent. In 2017, the last time the Greater London Authority assessed housing need, the requirement for low-cost rent was put at 30,425 every year. So there is a huge contrast between what was needed and what was delivered.

The government appears also to believe that more housebuilding will bring down prices. So they have set a London target of 80,000 a year. Note again the huge difference from the actual delivery in 2021/22, a figure fairly similar to other years. In addition to the evidence already presented, an article in The Economist on 8 August 2024 entitled, Would building 1.5 million homes bring down British house prices?, answered itself -‘not by much’ - pointing to a range of other factors that also affect house prices.

NEED FOR MORE COUNCIL HOUSING 

The only times council housing has ever been built in large numbers has been when funding was provided by the government. High points were after the First and Second World Wars, when a rebellious mood in the country, a determination to fight for better living conditions, induced governments to take action. The other pressure was the existence of the Soviet Union and socialist Europe, with their public house building programmes and their very low rents. Under a planned economy, the German Democratic Republic achieved the goal of eliminating housing as a social problem by 1990. But then the country ceased to exist.

In addition to the loss of council housing through Right to Buy, so-called estate regeneration has led to the demolition of many more council houses – and housing association homes on former council estates. These are largely replaced by much denser developments, mainly of market homes for sale. The government’s proposed changes to the planning system will make approval of such schemes easier. The government proposes that there should be a presumption of approval for development on what is called brownfield land. Brownfield land is any land where there has ever been a built structure. Obviously housing estates come into this category. 

A wide range of bodies are now saying the only solution to the housing crisis is government funding to build or buy back council homes. Housing associations are keen to get government money as well. There is, however, little sign that the government plans to respond to the call. Secretary of State for Housing Matthew Pennycook has recently written to the Chair of Homes England calling on them to ‘maximise’ the numbers of social rent homes in the building programme of so-called affordable homes. The £500 million to be added to this programme, as announced in the Autumn Budget, together with changes to Right to Buy, is supposed to achieve a standstill position – no overall loss of stock – by April 2026.  And while Right to Buy was ended in Scotland on 1 August 2016 and in Wales on 26 January 2019, there are no plans to end it in England.

TENANT'S PROBLEMS

As far as tenants are concerned, the prospects for a united stance in their own interests have been complicated by what has happened in the past forty years. Council estates now have council tenants, council leaseholders who bought their homes under Right to Buy, leaseholders who have bought these homes since, and private tenants renting homes bought under Right to Buy. Forty percent of Right to Buy properties are now let out at market rents. Housing association estates have tenants on social rents and tenants on so-called affordable rents, at up to 80% of market rents, because they were allowed to change the rent level of certain properties when they became empty. Shared ownership is another category that has appeared, especially on estates which have been subject to regeneration.  Here the tenants pay a part mortgage, plus part rent, and is responsible for all repairs. There are many problems with shared ownership, not least that it is counted as affordable housing even though it is aimed at households earning up to £90,000 a year. So there is a great weakening of the common interests tenants on a council estate once had.

At the same time, the government has taken over rent setting for social rented homes. For most years a formula of above inflation rent rises has been applied. The Lyons Housing Review of 2014 reported that social sector rents had risen by about 46% in the previous decade while average earnings had increased by only 28%.  About half a million more people depended on housing benefit than in 2010. In the 1970s one-fifth of public spending on housing was on rent subsidies with the rest channeled directly into house building. Council and housing association tenants had a 7% rise last year and a 7.7% rise this year. Freedom of information data from local authorities across England, Wales and Scotland showed the number of social homes in arrears increased by 19% from 2019. In March the Regulator of Social Housing recorded an 8.4% rise in rent arrears owed to housing associations. (Hundreds of millions owed in rental arrears to councils and arrears on the rise, new data shows. The Independent, 30/9/24)

In the Autumn Budget the government proposed to consult on a programme of rent rises of inflation plus one per cent for five years. Council and housing association landlords have been calling for it to be ten years. If tenants are finding it hard to pay the rent now, what will happen as they rise each year? Tenants are becoming increasingly fearful of being unable to pay the rent and losing their homes. Housing association tenants in particular are on assured tenancies not secure tenancies like council tenants. Assured tenancies mean tenants can be evicted if they are as little as two months in rent arrears.

PRESSURE ON GOVERNMENT?

Council housing used to house about a third of us. Its very existence acted as a brake on private rents – which were also regulated before 1979 – and the prices of homes for sale. The winners from the loss of council housing have been developers, builders, investors and private landlords. They have a vested interest in keeping the status quo. The government is business friendly. But will they come under increasing pressure from Labour councils faced with the huge cost of housing the homeless in the private rented sector? Will tenants themselves rebel? Will the government be forced to implement the only solution to the housing crisis – government funding for more council housing?

 

Homeless protest in Manchester photo by Matt Harrop

More council housing needed photo by Mtaylor848