Visions of Housing Policy I

Labour party debate focuses on the logistical strategies of stock transfers for remaining council houses, while working within the constraints of rent and disinvestment policies, which have radically changed the structures of housing provision over the last 40 years. But, logistics should not be confused with policy. In particular, the uneven application of the Right to Buy must not be solved by extending it across all social housing because that would make the reform of housing policy more difficult. The Right to Buy is a key policy of disinvestment thought necessary to revive the private rented sector, but growth has failed to replace the disinvestment. The deep problems of housing provision, the property-less poor and the stability of the housing market are laid at the door of current policy and the loss of the low cost rented sector.

Visions and Logistics

The Conservative party has dominated the wider issues of housing policy for nearly forty years and by their lack of an alternative vision, the Labour Party appears to have accepted the constraints of working within these structures. Perhaps it is not surprising that tensions exist between the logistical strategies of labour councillors and their government ministers. It is important that the dangers should be very clearly recognised. The logistical strategies, which exist within the physical and financial structures of housing policy have a great momentum and can have a huge effect on the viability of new reform.

In a Fabians Society tract "Transfer of Affections" (15th December 2005) Jeff Zitron claims that the "Government and Party seem to be on different sides of a sterile debate over the future of council housing". It goes on to recommend the "end of the era of council-owned housing by compelling all local authorities to transfer their housing stock to third sector landlords", which "could give them real control over the management of their homes and restore a degree of democratic accountability that no longer applies to local authorities".

Zitron's paper raises important issues, which need to be addressed; the empowerment of tenants, the difficulties of funding and measures required to meet the 2010 deadline for all social housing to achieve the Decent Homes Standard. These are logistical issues, which involve the administration of huge resources. But the paper also calls for the extension of the Right to Buy across all social housing, a terminal change in the nature of those resources. It strays far beyond any justification of its presentation, apparently not recognising the difference between logistics and the core structures of housing policy.

This paper attempts to trace the visions of housing policy that have led us to the present time and the need for a new vision of Complementary Housing. It seeks to addresses, not only the problems of social housing, but the structures of housing policy, which influence every section of the housing market. However, it must first address the points raised in the Transfer of Affections paper, which could further compromise our capacity to solve the deep problems of the housing market and especially the issue of the right to buy. I have no doubt that the confusion, between the logistical policies of best practice and the overall structures of housing policy lie at the heart of Labour Party disputes.

Getting a Wider View

It is tempting to claim that the 'Transfer of Affections' paper "can't see the wood for the trees", but it identifies realities observed at ground level of such controversial and pressing concern that the wider visions of housing policy have got lost.

"The division between the Labour Government and the Labour Party over stock transfer is undermining the interests of tenants and preventing many of our worst estates from being improved. A policy of universal stock transfer could give them real control over the management of their homes and restore a degree of democratic accountability that no longer applies to local authorities. Labour's third term should end the era of council-owned housing by compelling all local authorities to transfer their housing stock to third sector landlords."

"The Government, whilst claiming that stock transfer is just one of several options available to tenants and councils, offers no comparably funded route for councils that want to retain all their stock… The Party's attitude towards council housing reflects a political relationship between local authorities and their tenants that simply doesn't exist any more; tenants no longer control their homes through controlling their council. Meanwhile, the Government creates the illusion that tenants are choosing from a range of investment options. But, in reality, many tenants are simply being asked to choose between transfer to a housing association or no investment."

"We also need to see the Right to Manage and the Right to Buy extended to all housing association tenants… Council tenants in place at the time of a stock transfer keep their Right to Buy. Tenants coming in after transfer (and many tenants of non-transfer associations) do not have that right".

Indeed, "this disparity cannot be justified", but Zitron makes little attempt to justify its removal by extending the right to buy. It is irresponsible to ignore the huge balance sheet losses, which are the reality of discounted sales and it is a non-sequitur argument to claim that Glasgow's transfer under the new Scottish Secure Tenancy regime changes that fact, or the evident difficulty it adds to the problem of raising private finance.

"This paper proposes that the housing association and co-operative sector should be the provider of social housing, not councils, and that the demonstrable scope of that sector to give tenants greater control should be tapped. New standards of accountability for the housing association sector need to be set, and greater opportunities provided for tenants to shape how the sector develops… All transfers would follow the Community Gateway Model".

It seems that a further confusion is emerging. The co-operative housing sector maintains a clear distinction between the Community Gateway Model, which is to do with management and the ideas of New Mutualism/Community Land Trusts, which define the policies of financial provision for co-operative housing (MHO). Mutual Home Ownership is a form of shared ownership, which uses a sophisticated (Canadian) spreadsheet to calculate the monthly components of rent, capital repayment, inflation and value appreciation. It prohibits the crude concept of the right to buy, since it fairly attributes the chosen proportions of usage and investment. It is an alternative choice, which depends on available income. It falls in the middle of what I would call, a complementary spectrum, between the financial idea of council housing and homeownership. It is not compatible with the right to buy and because of its dependence on income does not fit the concept of social housing.

It seems obvious that we are buried in the consequences of Conservative housing policy and haunted by the shibboleth of council housing. The discussion is about the logistics of social housing, which dominates the attention of local council decision-making and therefore the debate between councils and government. But it lacks any clear vision; about how we arrived here and about exactly where it is that we wish to go.

"Social housing development and management should be delivered through a regulated independent sector, with the regulators ensuring competition and diversity, and actively supporting and enforcing user involvement". "No one holds anything like the powers of the housing association regulator, the Housing Corporation, to whip a non-performing or inept landlord into line."

But these powers were created in 1982 to enforce the alignment of HA rent levels with the deregulated private rented sector. In 1989, they were refined to this end still further and in effect have not been much reformed. But that is not to say, that they couldn't be used to promote tenant empowerment.

The Right to Buy

One paragraph, in Zitron's paper, makes a serious attempt to justify the policy of the Right to Buy.

"on the grounds of consistency and fairness", … "the Right to Buy provides the seeds of empowerment in a different way. Given the relatively low income of social housing's customers, the Right to Buy is about encouraging mobility and wealth transfer to tenants. It has been an important mechanism for doing just that. The better-off, including many politicians and housing professionals, accumulate capital (and then use it as an additional source of spending power) with help from the taxpayer through tax relief on pensions, saving schemes and, in the past, mortgage tax relief. They release equity and do so without attracting derision. Why cannot social housing tenants have the same kind of economic power?"

Two wrongs don't make a right. The argument is full of flaws and a wider view shows that it would extend a central injustice of current housing policy.

The loss of a low-cost rented alternative to home ownership has created problems far beyond those of social housing.

The present structures of housing policy have created a significant new class of poverty, the 'property-less poor'. Why are we the least socially mobile country in Europe? Why do more of our children from poor families fail to escape from poverty themselves? These questions are affected by housing policy in ways that no change in logistics can solve.

Poverty Education and Poor Households

It is a contention of this paper that the failure to reform housing policy is damaging the government's efforts, in education and health, to combat poverty in the UK. Whilst Sure Start Local Programmes to improve services for young children have been hailed as a success by the Lancet medical journal, the overall picture is bleak. Despite billions being invested in education, children born in deprived homes are no more likely to escape poverty than they were 30 years ago, it is claimed. Sir Peter Lampl, chairman of the Sutton Trust, called for an independent inquiry into how to break down the UK's rigid class barriers. He said: "Shamefully, Britain remains stuck at the bottom of the international league tables when it comes to social mobility."

Because of its price and durability investment is the only means of providing affordable housing. Homeownership, over the period of a lifetime is cheap. Its how the free market works. Initially the loan repayment costs are very high, but these fall with inflation and are usually completed in 25-30 years. For low-income families the initial cost of repayments is prohibitive. Without a loan, the free market has another solution. A landlord makes the investment and sells accommodation by rent as a consumer service i.e. private rented accommodation. As the value of the house increases, the rent increases and the tenant has no share in the investment. The market works against the tenant in a private market.

It is because the free market makes this fundamental distinction between a consumer service and investment, that so often, it has the effect of making a distinction between the rich and the poor. It is the task of government to create structures, which allow investment to work also for the benefit of the poor. Council housing did that; the investment value of the stock created rents that low-income families could afford. The discounts of the Right to Buy policy destroyed the investment value of the stock and enforce the levy of high rents.