by Michael Carberry
In the last issue of Only Connect I asked, “What’s wrong with housing in Britain?” and argued that as shelter is one of the most basic needs for human survival it should be a first charge on governments to ensure that their citizens have access to decent and affordable accommodation. Next month I propose to look at ways in which this could be achieved, but in this article, I want to look at the role of governments in the UK housing market over the years and how successive government policies have often exacerbated rather than alleviated the current crisis.
“Homes fit for heroes to live in”
For over a century, starting with the 1915 Rent Act, British governments have intervened directly in the housing market. During the First World War, Prime Minister Lloyd George had promised “Homes fit for heroes to live in” and the 1919 Housing and Town Planning act together with the subsequent Wheatly Act of 1924 provided for central government subsidies for the building of local government council housing. Despite the subsequent recession and spending cuts, by 1933 some half a million new homes had been built in the public sector and government support for private sector builders saw a similar increase in the number of privately built houses.
The Second World War saw an almost complete stop in house building as industry was diverted to war work, and the widespread destruction or damage to houses by enemy bombing, meant that, by the end of the war, there was an estimated shortfall of three quarters of a million homes. Despite shortages of labour and materials and a debt to GDP ratio which reached over 200% by 1950, the post-war Labour government made housing a priority. Between 1945 and 1955 over one million new homes were built. To deal with the immediate problem, these included creating estates of ‘prefabs’ - prefabricated bungalows, mass produced to a standard design and quickly and easily erected on a concrete slab. Intended to last only ten years many have lasted until today; some have even been listed! Most importantly they rapidly provided decent affordable accommodation for some 150,000 families until more enduring accommodation could be built.
The council house revolution
The 1950s saw estates of council houses spreading all across the country going a long way to alleviate the post-war housing crisis. Such estates were no longer considered to be for ‘working class’ tenants only but for “general needs accommodation” catering for all classes. Aneurin Bevan, the Labour Minister of Health and Housing, promoted a vision of new estates where "the working man, the doctor and the clergyman will live in close proximity to each other". Many of them were attractive places to live, with leafy streets and well-maintained gardens. Tenants had security of tenure; they had the right to make improvements like installing new kitchens or bathrooms and generally expected to live in their home for many years, perhaps all their lives, and even pass them on to a surviving spouse or their children.
Policy differences
But the post-war consensus on housing dissolved as Labour and Conservative governments increasingly diverged on policy issues, with Labour favouring rent controls and regulation while Conservatives favoured deregulation and more reliance on market forces. Rather than build more council houses Conservative governments have focussed on helping people to buy, initially by giving tax relief on mortgage interest, a “middle class perk” abolished by Chancellor of the Exchequer, Gordon Brown, in April 2000 or later by David Cameron’s “Help to Buy” scheme in 2013. For the reasons set out in my previous article, these schemes tended to stimulate demand without increasing the supply, pushing up prices and making housing even less affordable for many thousands of people. Cameron’s scheme prompted a warning from the then Governor of the Bank of England, Mark Carney, about the risk of encouraging a recession and, in recent years, home ownership has indeed been falling, especially among younger people. At the same time, rent controls, which had existed in the UK since the 1915 Rent Act, were gradually relaxed and finally largely abolished by the Housing Act of 1988. Since then, rents as a proportion of income have risen steadily, eating up a higher proportion of incomes, making renting impossible for many families and forcing many young people to remain at home with their parents.
The 'Right to Buy'
But it was the 'Right to Buy' provisions in the 1980 Housing Act which were ultimately the most damaging. One of the signature policies of Margaret Thatcher’s government as part of her attempt to create a “property-owning democracy” this scheme offered social housing tenants the chance to purchase their homes at a discount of up to 70% on the market price. Unsurprisingly, 200,000 council houses were sold in 1982 alone and more than million by 1987. As a give-away of public sector assets to private individuals on a massive scale it was understandably hugely popular but the social consequences were often calamitous, especially in those communities where social housing represented the bulk, or at least a significant portion, of the available housing stock.
At a stroke, huge swathes of social housing were removed from the control of local authorities and Housing Associations who were also deprived of the historic rents with which to finance the construction or new properties and renovation of existing stock. As local councils were also restricted from borrowing to finance council house building, the result was a collapse in the building of new social housing which declined from an average of 33,000 units per year in the 1980s to almost zero by 1993, and has remained negligible ever since. Remaining properties, in fragmented locations and inextricably intermixed with private dwellings became more difficult and less economic to manage than whole blocks of flats or estates of houses and were often sold off to private landlords.
While some new owners were happy to pocket the subsidy, sell up and move up the ‘housing ladder’, other families found that faced with unemployment, rising mortgage interest rates and the unaccustomed costs of home maintenance they simply could not keep up the payments on their mortgages. Thousands of families lost the homes which they had lived in for years and were forced into the expensive private rental sector, often resulting in family break-up and huge distress to parents and children.
Local authorities’ Social Services, faced with destitute families, were forced to put them into expensive ‘bed-and-breakfast’ facilities at taxpayers’ expense. And as rising house prices and lack of affordable social housing forced more and more families into the private rental sector, expenditure on housing benefit has mushroomed out of all proportion. Between 2009 and 2022 the UK government spent over £305 billion on housing benefit, about a third of it to people in work. In other words, the government have opted to put billions of pounds of taxpayers’ money straight into the pockets of private landlords rather than spending it on providing decent and affordable social housing. Moreover, as the availability of social housing declined, it has increasingly had to be reserved for the poorest and most vulnerable or dysfunctional families so that all social housing tenants and indeed the whole idea of social housing have become stigmatised.
A deteriorating housing stock
Apart from the impact on the people, the policy was also frequently detrimental to the housing stock. In the South Yorkshire mining village where I grew up the sinking of the mine in the early years of the 20th century had been accompanied by the building of a ‘Model Village’ for the families of the four thousand or so miners who worked in the mine. Rows of neat, red-brick, terraced houses with small gardens were arranged around an open green space with a church, community hall and band-stand and larger detached houses for the mine management. Similar developments could be found in all the other mining villages of the area. Sixty years later the houses were small and old-fashioned but were well maintained, had been upgraded with modern kitchens and bathrooms and with their alternating red, blue and green doors and window-frames offered a harmonious and pleasant environment in which to live. The impact of selling off the properties, coupled with high unemployment resulting from pit closures, has been dramatic. Many of the houses are not maintained and becoming derelict. Some owners have improved their houses by painting the brickwork in garish colours or adding artificial stone cladding. Others have added unsightly porches or extensions destroying the harmony of the terraces or concreted over the gardens to park their cars. The open green space was sold to developers who filled it with boxy bungalows quite out of character with the surroundings. The area is now in inexorable decline.
Elsewhere the effect has been even worse. As the more responsible or enterprising tenants moved out those left were the very poor or inadequate. Vacant properties were snapped up by private landlords of the less reputable sort, prepared to collect rents by threats and intimidation rather than resort to the courts. When we moved to the village in 1955, part of the attraction for miners from Scotland and the North East was the provision by the National Coal Board (N.C.B.) at affordable rents of brand-new, three-bed-roomed, semi-detached houses with spacious gardens on the outskirts of the village and surrounded by open woodland and common. It was an ideal environment for a family with young children. My family moved house in 1964 but when I re-visited the estate in 1993 most of the houses (now all in private hands) had not been maintained. There were broken windows, trampled-down fences and missing gates. Many of the houses were derelict and boarded up with graffiti everywhere. Gardens were full of rubbish or rusting vehicles and the estate had become notorious for drugs and crime. The countryside was still as beautiful but in less than 30 years a new and attractive housing development had become a rural slum. It was heart-breaking.
Who benefits?
In many cases the benefits of the huge discounts do not go to the tenants. When my parents were offered the right to buy their NCB terraced house for the princely sum of £7,000 they, as pensioners, had neither the money nor the desire to purchase a house in which they had lived for 25 years and for which they would then have to pay for the maintenance. But for their six children (all professionals) it was an opportunity not to be missed. We purchased the house jointly on my parents’ behalf. When they died and the house was sold, we each pocketed several thousand pounds for having done absolutely nothing. That was a pattern repeated all over the country. When my late mother-in-law moved into sheltered accommodation, I was surprised that the rent for her tiny, one-bedroomed, warden-assisted flat was higher than we were charging for her old house. Moreover, as usual in the UK, the letting contract was for 12 months only and every year the rent was ratcheted up by more than the rate of inflation. The flats had been built as a social housing development managed by a housing trust but under the ‘Right to Buy’ were sold off cheaply to the occupants – in reality to their families. On the death or departure to a care home of the elderly relative the families put the flats in the hands of agents with instructions to maximise the rental income. Not surprisingly, many of these flats remain empty for months or even years at a time; they are too expensive for most of the elderly people of the area who really need them. In addition, the thousands of homes re-possessed from former Social Housing tenants, who took up the right to buy but could not afford to keep up mortgage payments, have been auctioned or sold off cheaply to private landlords or investors. As well as wholesale profiteering, the ‘Right to Buy’ scheme also provoked a wave of mis-selling by brokers and solicitors, charging excessive fees taken from their clients’ discounts which resulted in intervention by the Financial Conduct Authority.
Although the level of discount is less than formerly, a tenant can still buy their council house after as little as three years at a discount of 35% of the market price (up to £87,200, or £116,200 in London) and sell it on after five years with no penalty. More importantly a buyer can transfer it immediately to another family member without having to pay back any of the discount. This means that parents can give their adult children a leg-up on the housing ladder with a massive subsidy from the taxpayer while vulnerable families are being kept in bed-and-breakfast accommodation or expensive private rental accommodation also at taxpayers’ expense. A report in January 2013 by London Assembly member Tom Copley showed that 36% of homes sold under ‘Right to Buy’ in London (52,000 homes) were being rented by councils from private landlords, and in 2017 a BBC survey of council areas where waiting lists were rising showed the councils had bought back houses they had been forced to sell, sometimes at many times the original price.
A political choice
The ‘Right to Buy’ applies to all public sector housing (Local Authorities, Housing Associations, and Charitable Trusts etc.) but not to privately-owned rental accommodation. In other words, the government permits, indeed encourages, private individuals to exploit the housing rental sector for their own benefit while hamstringing local authorities and not-for-profit organizations seeking to provide decent affordable housing for those most in need. This is only comprehensible when one realizes that, as Margaret Thatcher’s right-hand man, Norman Tebbit, tacitly admitted, the real reason for the policy was always political; the permanent elimination of huge blocks of social housing seen as bastions of support for the Labour Party while enticing many of the occupants to vote Tory by enabling them to become property owners at public expense. The Thatcher government was undoubtedly very successful in achieving this double whammy but at a terrible cost to the welfare of many poor and vulnerable people and to the quantity and quality of housing stock across the UK. The ‘Right to Buy’ has been one of the most shameful examples of politically-motivated social vandalism in modern British history.
Both the Scottish and Welsh government have now abolished the ‘Right to Buy’.