can labour build better?
Our housing crisis has been decades, if not generations, in the making and it’s widely accepted that new houses and large-scale infrastructure projects are critical for future economic growth and prosperity but how did we get to this point and can Labour build any better? As it stands today, there are 1.2 million households on social housing waiting lists in England which coincides sharply with the decline in ‘council houses’ since 1979: 5.5 million to 4.4 million.
Whilst it’s now strongly associated with Thatcherism, council house tenants have been able to buy their homes since 1936 and the policy has been a feature of Labour’s manifestos ever since. After WWII, both centrist parties had competed over which could build the most social homes to replace inner-city slums and Harold Macmillan made his name by delivering the then Tory target of 300,000 homes per year in the early 50s. By the end of the 70s around one in three houses in the UK was in public ownership.
Thatcher’s government made three significant changes. First, they adopted the belief that council house sales would accelerate a property-owning democracy and such properties should only be provided as a safety net. Second, the Housing Act 1980 gave tenants of just three years’ standing the right to buy their home at a substantial discount, of up to 70%, on the market price. Third, and crucially, it legislated to prevent councils from using the income from these sales to build more housing. Labour’s ambition had been to build two new homes from each one sold but, going even further, future legislation forced local authorities to use 75% of sales receipts in paying down debt. In short, councils were forced to sell-off housing stock and were prevented from building any replacements.
Annual sales peaked at 175,000 in 1982 and by 1997 more than 1.7 million dwellings had been sold off. Home ownership, the ‘British Dream’ rose from 55% in 1979 to 71% in 2003 and, in the process has generated #47 billion for the Treasury. The policy achieved its goal of effecting a marked switch in political allegiance and was further compounded by her government’s decision to actively cut the housing budget where three-quarters of the cuts in her first term were made.
Before 1979, the rent that council tenants paid went into maintaining and building council houses but this was now massively disrupted, which now appears something of a false economy. Housing benefit, previously a relatively obscure welfare top-up, has become the second-biggest item in the Work & Pension’s budget, standing at more than #20 billion a year. Ironically, a third of this goes straight to private landlords and over 40% can be attributed to properties sold under the right-to-buy scheme. In reality, the government pays inflated rents on behalf of welfare claimants living in homes it once owned!
Labour’s promise to build 1.5 million homes and a ‘constellation’ of new towns is necessary and overdue. Its oft been said that our planning can be summed up as ‘build absolutely nothing anywhere near anything or anybody!’ Furthermore, its proposed #7 billion National Wealth Fund will provide a template for public-private cooperation, accelerate growth in the green economy and its mission to attract #3 of private investment for every #1 of public investment looks both sensible and achievable. Going further, Labour should pledge to replace purchased social homes at a 1:1 rate, reduce the discounts to buyers, increase the length of tenure necessary and ensure 100% of right-to-buy sales receipts are spent rebuilding the nation’s housing stock. Simples!
