SocialismToday           Socialist Party magazine

Socialism Today 108 - April 2007

What future for social housing?

THE PUBLICATION of the government commissioned review of social housing by John Hills in February is a good point to take stock of New Labour’s increasingly neo-liberal housing policy. Hills may disappoint some zealots in New Labour think-tanks by making a defence of a basic role for social housing and by coming out against their idea of stripping existing tenants of security of tenure. But his report holds no promise of major reinvestment in council housing along the lines implied by the votes of three successive Labour Party conferences for the ‘fourth option’. What is more, as government spin doctors have chosen to emphasise, he leaves the door open to removing security of tenure for new tenants and he suggests new ways to sell off social housing to tenants.

Despite the desperate shortage of affordable housing, accepted in government reports such as that by Kate Barker, there is very little in this report on increasing the supply of new housing. There are 1.6 million households on council waiting lists, and more who are inadequately housed but do not qualify to get on a waiting list, for whom this is a desperately urgent issue. Meeting their needs would require a massive expansion of cheap rented housing, but that is simply not on New Labour’s agenda. Instead, Hills concentrates on the future mix of home ownership and rented accommodation, and on what is called ‘choice’.

Meanwhile, the government is still trying to press ahead with stock transfers out of the council sector to housing associations. Recently, transfers have been defeated in a number of places, showing that determined mass campaigns can get results. However, Labour has transferred far more than the Tories; there are now as many housing association tenants as council tenants.

Housing associations are called ‘not for profit’ organisations because they do not distribute profit to their shareholders. Of course, the banks that lend to them make massive profits, and they pay their chief executives fat salaries. Unlike council landlords, they are not accountable to elected representatives. But defenders of stock transfer have been keen to point out that this is not full privatisation and have claimed that associations are fundamentally different from profit-distributing public limited companies (plcs). Recently, however, The Guardian reported that Places for People, a big housing association group, was exploring the possibility of ‘flotation’ on the stock exchange, of becoming a plc. Fearful of the political consequences, they quickly denied that they intended to proceed with this option and Jon Rouse, the boss of the Housing Corporation, a quango that currently funds and regulates associations, made a statement ruling out flotation.

It would be foolish, however, to think this has put the idea off the agenda. The chief executive of Housing Quality Network, a major organisation providing advice to big associations, commented: "Don’t get distracted by what Places for People may or may not have thought about flotation. Plenty of other associations are styled like public limited companies. They may be rubbernecking Places for People right now, but up and down the land heavy right foots are itching to press the pedal to the metal". (Inside Housing, 26 January 2007)

Challenging Rouse’s opposition to flotation directly, he asks: "Is it some kind of moral case? I don’t follow the logic. If plc developers can manage social housing, why can’t associations become plcs? Is his objection simply that flotation is against the current rules? Again, that argument doesn’t stack up. The Cave review of social housing [another government commissioned review which has yet to report] is specifically asked to stimulate competition by bringing in profit-seeking bodies and restructuring existing providers".

The author of these lines is well placed to express the impatience of housing association bosses. Even if they do not get their way on this, many associations are, as he says, ‘styled like plcs’. The Housing Corporation is anyway due to disappear into a new agency, which will include the current English Partnerships, a quango that currently works closely with the private sector on land deals and regeneration. The new agency is likely to be more ‘business friendly’. Since 2005 social housing grant has been given direct to private developers as well as to associations, and this is expected to increase. There is no sign of ministers retreating here.

An underlying theme in the Hills report is that home ownership offers a route out of social exclusion. Hence the suggestion that social housing tenants should be encouraged to ‘choose’ to buy at least a share of the equity in their home. This chimes with the notion of an ‘asset based welfare state’ currently popular in the New Labour think-tanks, and touted as a solution to the so-called pensions crisis, the health-care crisis, funding of higher education and, seemingly, any other call for money. In similar vein, Gordon Brown has spoken in golden terms of a ‘home-owning, share-owning, asset-owning democracy’. Essentially, this amounts to: ‘use your assets, and don’t expect a handout’. In reality, the end of the welfare state.

It is easy to see why home ownership is popular in a period of massive house price inflation. It looks like a lottery where everyone is a winner. Despite this, research from Shelter shows that 72% of people prioritise ‘affordability’ and a ‘safe neighbourhood’ ahead of ownership, which suggests that not everyone is as carried away with the idea as New Labour thinks.

The drive to increase home ownership is one of the factors that have led to areas of social housing becoming concentrations of poverty, with the associated social problems. Better off tenants have become owner-occupiers. This shift has also contributed to the desperate shortage of affordable housing as the most desirable council homes have been sold off. The shortage is so acute that Hills suggests people should be offered tenancies on a short-term basis only, with the idea that they can progress in to home ownership, although he acknowledges that there are ‘problems’ with this. At the launch press conference he spoke of the importance of stability and security to tenants, seemingly trying to counter the government’s spin.

As others have pointed out, a temporary place to stay is not the same as a home, and does not provide a good basis for the much discussed ‘sustainable’ communities. Hills says he is keen to dilute concentrations of poverty and disadvantage through moving more prosperous owners into these areas. This is simply to move the problem around when the real need is to reduce poverty and inequality. Solidly working-class council estates can be sustainable communities without introducing middle-class owners if there are decent jobs and services.

The increase in home ownership already means that the majority of the poorest 10% of the population are already homeowners. They may be ‘asset rich’ but that doesn’t mean that they have the cash to maintain their property or keep up with the mortgage payments. Repossessions have risen 65% in the last year and a recession would produce a social catastrophe for struggling homeowners. A serious recession or major increase in interest rates (and mortgage repayments) would be a catastrophe for low income owners. People aspire to home ownership as a way to get a decent, secure home. But young people, stretched to the limit paying off student loans, and borrowing as much as five times their annual income through a mortgage, will feel cheated when they are told that the trade off for the privilege of ownership is that they pay for their children’s education or for their pension and health care in old age.

Some have greeted the Hills review with relief. The Labour MP and housing campaigner Austin Mitchell saw it as supporting the principles behind council housing and Socialist Worker described it as a disappointment for New Labour. But it is wrong to hold out a false hope that New Labour is undergoing a conversion to the principles of public housing. The report opens the door to removing security of tenure for some social housing tenants, promotes home ownership as a way out of social exclusion, and suggests further sales of social housing stock. It does not oppose the gradual privatisation of housing or any of the government’s other neo-liberal measures.

The terms of debate on housing illustrate how thorough has been the transformation of the Labour Party into a capitalist party. Rather than holding out a forlorn hope that ministers will suddenly be ‘re-converted’, the task is to build mass campaigns, and to pull together working-class campaigns and organisations to create a new political alternative to the neo-liberal parties.

Paul Kennedy


Home About Us | Back Issues | Reviews | Links | Contact Us | Subscribe | Search | Top of page