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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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