SocialismToday           Socialist Party magazine

Issue 219 June 2018

Labour’s halfway housing plan

The decades-old system of getting private developers to pay for affordable homes is "a stupid way of meeting this social need", and the government should directly fund them. "All companies should pay higher corporation tax… you can’t expect developers to continue to produce for the population’s social needs at this level. It should come from general taxation". (Social Housing Funding System is ‘Nuts’ Says Top Property Developer, Guardian, 14 May 2018)

In effect, this is a call for mass council house building. Unfortunately, that goes well beyond Labour’s new ‘green paper’ on social housing (Housing for the Many, April 2018). The quote actually comes from Roger Madeline, an executive of British Land, one of the UK’s biggest property development companies!

When Jeremy Corbyn first stood for Labour leadership he raised the idea that any solution has to start with a programme of mass council house building, and he called for rent control; ideas that had been off the agenda of mainstream politicians for decades. They received a huge, positive response from people outside the narrow establishment circles. The green paper contains many positive proposals that reflect this shift. Nonetheless, it still shows the mark of Labour’s right wing.

Shadow minister John Healey was a housing minister in Gordon Brown’s New Labour government, and was a prominent advocate of the Transatlantic Trade and Investment Partnership, the stalled neoliberal trade deal between the US and EU. He has tacked between attacking the Tories on housing (an easy target), speaking up for ‘affordable housing’, resigning as part of the infamous ‘chicken coup’ against Corbyn – only to be put back in post after it failed – and watering down Corbyn’s proposals.

Housing for the Many outlines the huge extent of housing need. It also traces the history and importance of social housing, the failure to invest adequately in it since 1980, and the Tories’ efforts since 2010 to finish it off. It commits Labour to build 100,000 ‘genuinely affordable’ homes per year, which is around six times the number being built now, "levels last achieved in 1978". However, Jeremy Corbyn had initially spoken of 100,000 council houses which is not the same thing.

There is a commitment to a new ‘decent homes’ programme. One-in-eight social homes fail this standard so that is very much needed. There are specific commitments to end the hated bedroom tax, protect housing benefit for the under 21s, and to "pause and fix" Universal Credit. Greater tenant involvement, curbs on land value speculation, and improved environmental standards are planned.

Labour would act to halt the loss of social rented homes, ending the disgraceful practice of converting them to the much higher ‘affordable rent’ when they become empty. This has meant that housing associations are currently responsible for a net loss of social housing. ‘Right to buy’ would be suspended – it should be ended. The Tories’ proposed policy of selling ‘high-value’ council homes to fund housing association ‘right to buy’ is to be abandoned.

The term ‘affordable rent’ is Orwellian ‘housingspeak’, signifying rents as high as 80% of the market rate, absolutely unaffordable for many. There is a welcome commitment to abolish it. But, instead of replacing it with social rent – what people pay for a council house – the green paper proposes a mix of higher ‘living rents’ and ‘low-cost’ home ownership. The idea derives from the London living rent introduced by mayor Sadiq Kahn. It is based on incomes in an area rather than the market rent, and contrasts with so-called affordable rent. Typically, however, a two-bedroomed property in the capital would cost £1,000/month compared to a social rent around £107/week.

Announcing the green paper, Jeremy Corbyn said a majority of the 100,000 would be social rented, but that does not appear in the document. The Homes England quango would get £4 billion to distribute to housing associations and local authorities. That was the amount available ten years ago. It was far too small even then.

It seems that Homes for the Many envisages a mix of tenures and competitive bidding for funding and borrowing by independent bodies, such as housing associations. That would keep borrowing off the government books. Presumably, this would be combined with the ‘stupid’ developer deals described by British Land’s Roger Madeline. Without more money and grants specifically allocated for house building, councils will not have the certainty and funding for the teams and resources required for sustained annual building programmes. Bluntly, this represents a failure to face up to the task.

The Tories have announced a ten-year programme of social rent increases, although rents are already unaffordable for many on benefits. Labour should oppose above-inflation rent rises but, again, the paper is silent on this. It does acknowledge that housing associations, which manage most social housing, have become more commercial, moving away from the social mission they were seen as fulfilling. A recent report from Savills real estate describes housing association profits as "seriously impressive", with core margins at 34.5%, much more than private house builders.

But the problems with new-look associations are not clearly spelt out. Their business model consists of providing an attractive investment opportunity to large-scale lenders through governance structures that give assurance to the lenders. They are not compatible with genuine resident representation, open board meetings or local accountability.

When stock was being transferred away from local authorities, a maximum size of 5,000 homes was set to give some assurance that the new organisations would be locally focused and accountable. However, the need for size, financial firepower and specialist skills to handle heavy borrowing has led to frenetic mergers and a process of financialisation. The largest housing association, Clarion, now has 125,000 homes with plans for another 50,000.

Another issue is increased risk, as associations play the markets and maximise their borrowing. Some have drawn parallels with the transformation of Northern Rock from a ‘boring’ building society to a ‘dynamic’ bank – before it had to be bailed out in 2008! Even Nick Raynesford, a housing minister under Tony Blair and an advocate of housing associations, warns of the danger that they have become too big to fail.

In the past, when an association ran into trouble, it would be absorbed by another. That no longer seems possible. Raynesford warns of "dire consequences": "When you transfer stock from one association to another there is normally no real change in tenants’ position, but in the event of a lender foreclosing, that could change". (UK Housing Associations Use Lure of Luxury in Social Mission, Financial Times, 6 September 2017)

Labour’s green paper opposes for-profit housing associations. This is timely given that L&G and Blackstone, the world’s largest property fund, plans to move into the sector. But large housing associations are also shaped to suit investors rather than their tenants and residents.

Madeline’s comments would not be supported by most private developers, and reflect an element of self-interest. They may also reflect a real understanding that the neoliberal approach to housing is producing a social catastrophe with deadly dangers for capital. His idea that the government should raise money from big business would have been accepted by most establishment politicians in Britain during the economic upswing after the second world war. In the current economic malaise, it is greeted with horror by capitalist politicians, including the Blairites.

A socialist Labour Party would campaign for a mass programme of council house building, rent control and security of tenure for private tenants as urgent steps. Labour frontbench housing spokespeople have scarcely mentioned rent control, which is hugely popular. If Labour councils also set needs budgets to build housing, with an assurance that a future Labour government would back them up, they would further undermine the Tories.

As in other areas, however, Labour is two parties uncomfortably bound together in one. To put forward a serious programme to resolve the housing crisis it will be essential to decisively break with austerity and neoliberalism and their political representatives still residing within the Labour Party.

Paul Kershaw

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