SocialismToday           Socialist Party magazine

Labour’s neo-liberal housing policy

SEVEN OUT of ten people in Britain think that there is a housing crisis, according to a Mori poll (Inside Housing, 22 October 2004). Tony Blair and John Prescott have announced that housing is at the top of the political agenda. Even a government-commissioned review, headed by the economist, Kate Barker, said that an extra 17,000 to 23,000 affordable homes were needed every year.

In the past, this might have heralded a crash programme of council house building but that is not what New Labour has in mind. The vote at last autumn’s Labour Party conference allowing councils to do some building again reflects the pressure of the tenants’ and labour movement campaign but is a long way from a reversal of government policy.

The provision of housing through housing associations rather than councils originates – like much New Labour policy – with the last Tory government. The Tories came up with the idea of ‘tenants’ choice’ before the 1987 election and implemented it in the 1988 Housing Act. The same act introduced private finance in housing association development. Associations were allowed to borrow against rental income, with tenants given the chance to jump from the ‘municipal yoke’ to ‘free’ independent landlords. Security of tenure was reduced for new housing association tenants, who previously had the same rights as council house tenants, to make associations more attractive to the banks. In practice, tenants’ choice was almost wholly unused. But the lack of enthusiasm from tenants did not stop the government, and councils keen to get rid of their financial liabilities to repair housing, from pressing ahead. Academics have commentated: "Rather than dissatisfied tenants driving a transfer process it was disabled landlords seeking to resolve their dilemma through transfer". (Murie & Nevin in Cowan & Marsh, Two Steps Forward: Housing Policy into the New Millennium, 2001)

Much of the thinking behind this was developed by Nicholas Ridley, the environment minister who played a central role in planning Margaret Thatcher’s assault on the trade unions. He set about breaking up direct service provision by local authorities, dressing it up as an attempt to make services more responsive. He wrote that authorities would operate in a "more pluralist way, alongside a wide variety of public, private and voluntary agencies".

Blair’s most recent speeches simply go further down this road of opening up service provision to the private sector. Marxists do not want to copy the top-down, bureaucratic welfare organisations that became dominant after the second world war, but no user of public services should take Blair’s talk of choice at face value. The government has made it clear that when council tenants are offered the ‘choice’ of transferring, there is only one ‘right’ answer.

Housing associations are officially independent, which means that their borrowing is not shown as part of the public sector borrowing requirement. The drive to reduce the PSBR was one of the reasons for using them. They do not distribute profits to their shareholders. However, they do open up territory for the banks to make money through borrowing. Lending to housing associations is low-risk because they are subject to tight regulation and the banks calculate that it would be politically unpalatable for government to allow one to go bust.

Housing association boards are not subject to democratic accountability, they are more like self-perpetuating oligarchies. Until recently, the payment of board members was not allowed. Increasingly, however, chairs of boards are pocketing up to £20,000 a year. Some chief executives earn over £200,000 a year and it is certain that recent scandals where huge extra contractual payments have been revealed are not isolated cases. Chief executives of typical, small 3-5,000 unit stock transfer associations struggle by on around £100,000 a year.

Initially, stock transfers took place in shire counties where opposition from the organised working class was generally less and where property values were high, making the new housing associations more financially viable. After 1995, various financial sweeteners were introduced to interest the financial institutions in low-value, run-down, inner-city areas. While Labour had previously opposed the break-up of council housing, the first term of New Labour government transferred considerably more housing than the previous two Tory terms. Now housing associations are seen as playing a key role in urban regeneration (helping the banks and property speculators make money) and in the huge new development planned north and east of London (also helping the banks and property speculators).

In addition, the government has decided to pay grants directly to private developers. Currently, £200 million is earmarked for the likes of Barretts. If this pilot is judged a success, private developers will be able to bid for the whole of the Housing Corporation’s £3.3 billion programme. The Housing Corporation has stated that publicly-funded but privately-owned housing would not be subject to regulation. The National Housing Federation has already called for housing associations to be released from the "burden" of regulation so that they can compete on equal terms with the private sector.

Council tenants are told that the choice is transfer to a housing association that will be able to raise the finance to do their repairs, or stay with the council and get no money. When balloted, even faced with this loaded alternative, tenants have repeatedly voted to stay with the council – rejecting Blair’s ‘choice’. The big housing associations do not have a great record of maintaining homes. They behave increasingly like large private corporations. When not forced to repair homes for their tenants, who are largely captive customers, they would rather pump resources into growth and diversification. Peabody, one of the largest associations, is being forced to sell 1,100 homes to raise the £212 million to bring its stock up to the government’s ‘Decent Homes Standard’ by 2010 and catch up on a backlog of work. It has been rapped over the knuckles, but the chief executive who presided over this position has landed a better job in the office of the deputy prime minister – the department responsible for housing!

Although there is talk of money being made available for council house building, government policy still points in the direction of the market and private profit. It is unlikely that councils would be well-placed to compete for grants against large associations and private builders, having run down their development departments. And it is doubtful that the government intends that they should play a significant role. The housing minister, Keith Hill, recently stated that the ‘fourth option’, where the government would release funds to councils, is "not an option". (Housing Today, 22 October 2004) A Fabian pamphlet, written by a well-connected business consultant in the housing sector, has suggested that the government should transfer all stock, offering tenants a choice of which landlord their homes go to and no option to stay with the council.

Historically, social housing has been built on a large scale when there has been mass struggle and when the future of capitalism was seen to be under threat; in Britain, for example, after the two world wars. Consequently, even in 1954, under a Tory government, 220,000 council homes were built. On a smaller scale, on the basis of a Marxist leadership and mass struggle, Liverpool city council built good quality housing in the 1980s. In these periods, social housing was of relatively good quality and was seen as desirable by workers. Today, it is increasingly ‘residualised’, a euphemism for the fact that people who could move out have already done so, leaving the poor and the sick.

The success of anti-transfer campaigns shows that New Labour’s false ‘choice’ can be countered. In the next few years there will be major battles to defend public services on a number of fronts. Socialists will continue to defend council housing and will link the problems of council tenants to the housing problems faced by wide sections of society. In Britain, 70% of homes are owner-occupied. The tenure sector with the largest number of homes in disrepair is the owner-occupied sector. Owners struggle to pay mortgages to the same financial institutions that ultimately rake in profit from social housing rents. With house-price inflation stalling and interest rates rising, the pressure on less well-off owner-occupiers seems set to increase. By showing the common sources of their problems, a mass party campaigning on socialist lines could capture the imagination of large numbers of owner-occupiers, social housing tenants, private tenants, young people unable to get on the ‘housing ladder’, and the homeless.

Paul Kennedy


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