First they pump up housing prices, then they price people out of the homes they live in...

How capitalism created a housing crisis

WORKERS, MAR 2012 ISSUE

Lack of decent housing blights the lives of workers across Britain. We suffer over-crowding, crippling costs, substandard houses, and the inability of our youth to leave home and start a family. The building of affordable housing has virtually stopped, while existing supply is totally inadequate in areas like London where the population has soared, and prices have been inflated over a long period when banks offered cheap credit. Capitalism isn’t working.

High-rise student accommodation under construction at Tottenham Hale, North London
Photo: Workers

We have the lowest number of homes being built since WWII – 134,000 in 2010, yet an increase of 230,000 households per year, with concentrations in areas where workers come to search for work, increasingly falling victim to Rachman-type landlords. The overinflated house prices, and hence rents, of the boom period persist since we are propping up the banks that hold the inflated mortgages on their balance sheets.

To tackle the causes of the housing crisis, the government would have to take on the banks and the European Union. Instead, it opts instead for divide and rule: make those on housing benefit and the elderly move out of their houses. And it seizes the chance to allow easy and profitable development on green spaces, enabling developers to make a fortune while robbing us of our precious heritage.

Dismantling social housing

The Welfare Bill, much of which concerns the capping of housing benefit (HB), is contentious and divisive. In the Lords it was repeatedly defeated. But the government is determined to push it through, replacing an admittedly complex system of benefits with an electronic “universal credit”, incorporating HB.

The scandal is that housing benefit is a public subsidy for private landlords. It should be dealt with by imposing rent controls. But there is no intention to do this. The real agenda is to use the latest crisis of capitalism to chip away at the public provision of housing and put families further at the mercy of unregulated private landlords, with devastating consequences.

The other stated aim of the Bill was to get families out of dependency into work, or “changing the psychology” (Lord Freud). Support for this more laudable aspiration is virtually unanimous. People don’t want benefits – they want jobs, and homes they can afford. But where are the jobs? And what sort of jobs – will they pay for housing?

The implications of the benefits cap have been documented in Workers (May 2011). Nearly a year on, the government has firmed up plans for a HB cap of £26,000 a year net, regardless of family size, special needs or local property values.

Social cleansing

Eight million people occupy social housing in England, often in relatively affluent areas, ensuring a mix across the whole spectrum of the working class and discouraging the emergence of “ghettos”. This is all due to change.

Councils warn of an impending mass exodus out of central London, the pressures building up as arrears mount and families are evicted, removed from their support networks of family and friends. They warn of the destruction of mixed communities, increased applications for transfers, greater demand on bed and breakfast accommodation, reluctance of private landlords to let, marital break-up, and growing waiting lists, which already stand at 5 million across Britain.

Families are being pushed into a nomadic existence, drifting to de-industrialised areas such as northeast England or south Wales, or swathes of London, with a high degree of unemployment and poor housing. After all, they say, in this brave new world of free movement don’t we all expect to move house throughout our lives? That is capitalism’s plan for us, enforced through device of “mobility”, more accurately described as social cleansing.

Housing minister Grant Shapps attacked what he called a “lazy consensus” of tenants and landlords preventing reform of social housing. In addition to the current system of two-tier rents, Shapps now proposes that councils should offer “fixed” or “flexible” tenancies to new tenants instead of the secure tenancies, or relatively secure “assured” contracts. This is in line with the Localism Act of 2011, which paved the way for many of the changes. It would end the right to pass a tenancy on to children after one’s death, with the sense of security that gives to young people.

One aim of the Act is to recycle and cannibalise the inadequate supply that exists. So the housing vultures are eyeing homeowners not on benefit too, the so-called “baby boomers” with pensions and property. This is a vindictive piece of divide and rule.

With Labour support, Shapps has suggested that pensioners should move out of their homes to free up space for families. Councils could manage the old person’s property on a sort of equity release basis while they rent a small flat. Labour MP Caroline Flint says Shapps pinched the idea from her. A pilot scheme in the London Borough of Redbridge is said to have been a rip-off, with pensioners not only sacrificing their homes, but also losing disposable income. With a fifth of the population over 65 by 2020, the elderly are seen as expendable, easy pickings.

Transit camps not homes

Encouraged by Labour’s Frank Field, Shapps wants working people to be means tested regularly: if their earnings fluctuate above a certain level they should move out to make room for new tenants, or pay 80 per cent of the market rent. So they must choose between trying for higher pay or keeping their housing.

Under the Act, councils must prioritise those at a temporary crisis in their life, with only five years’ residence being the expected norm. This fundamental shift in policy shows there will be less, not more, social housing, and that it will come to resemble a transitional hostel system rather than universal provision for those who need the option of renting. The right to build a family home has given way to the lesser right simply to be “housed” during a period of hardship, as in the Poor Laws.

Canoeist and narrow boats on River Lea, East London, along which developers want to build more highrise flats. Local people have organised to protect such green spaces.
Photo: Workers

On 6 January Shapps announced his master plan for solving the crisis. Amid collapse of the markets, he talked about inheriting a “broken” system, where lenders won’t lend, builders can’t build, and buyers can’t buy. True, small construction firms have been struggling to stay afloat since 2008; the supply chain has been severely affected; 360,000 construction jobs are lost each year; and there has been a 99 per cent fall in affordable house building.

There are currently 1.2 million designated housing plots lying dormant and one million empty homes in need of refurbishment in Britain, many of them publicly owned. Landlords claim they are too expensive to renovate. Shapps announced that for existing social housing tenants the level of the Right To Buy (RTB) discount would be raised. Money from RTB sales would go to fund new affordable homes or renovate old ones. He proposed a private, new-build scheme for helping young people on to the housing ladder. A £400 million building fund would be set up to get builders back on to sites where construction has stalled.

But buying that rented flat or house “at half the value” under RTB – this turns out to be an entirely empty promise in the light of today’s house prices, and raising the maximum discount now to £50,000 makes not a jot of difference – it is not enough for a deposit in areas where social housing property is valued in the millions, as in many parts of London and the South East, where quite ordinary housing is double the national average. Buy-to-let landlords, subsidised through tax breaks, continue to buy up new housing in areas of high need, forcing up prices locally. And do we really need more sub-prime mortgages?

Try a shed

We are bringing up a generation who cannot afford even to start a family. Housing charity Shelter says a fifth of 18-to 34-year-olds still live with their parents. Civilised standards on living space were removed under Labour. The Fire Brigades Union reports that an increasing number of people in London are letting out wooden sheds with beds in their back gardens. Hospital burns units confirm a rise in injuries due to this type of shelter.

According to new research by a recruitment website, half of all foreign professionals (banking, law, telecommunications, creative industries) would rather move to London for work than to any other major city in the world. Many of them head for Canary Wharf in London, causing prices there to rocket. They displace the less well-off British financial sector workers, who are forced to migrate to old industrial districts, buying up council houses, former warehouses and factories, with a deposit that would have bought a whole house a few years ago. They displace in their turn the working class established there. The Welfare Bill is speeding up the process.

Population growth

By 2025 the population of Britain is predicted to be 70 million people, caused in large part by a steady stream of inward net migration. Until recently, the impact of this on housing, health, education and other services has been impossible to measure accurately because no previous government kept coordinated records.

Three-quarters of all migrants from abroad head for London and the South East, while the heaviest domestic migration is by Londoners themselves to the South East. It has been calculated that 803,000 more homes will need to be built by 2031 simply in the “technology corridor” comprising Ashford, Thames Gateway, Milton Keynes/South Midlands, Stansted and Cambridge. Demand is also high in Sheffield, Bristol and Cardiff. Even if house-building rises by 25 per cent, we are still set to be short of 800,000 homes by 2033.

Figures recently published reveal a 600,000 rise in migrants from Eastern Europe alone since May 2004, while it is estimated by France that 400,000 French workers are currently living and paying tax in Britain rather than in their own country. Encouraged by London’s mayor, Boris Johnson, that number is said to be up 100,000 on five years ago. These figures are likely to underestimate the true picture.

The National Planning Policy Framework talks of creating “inclusive and mixed communities” for families, the elderly and disabled, based on changing demogra-phics, but makes no mention of migration.

A real national housing plan

Future issues of Workers will discuss what a national housing plan, which cannot be treated in isolation, should look like. Until then, here in embryo are a few thoughts on rebuilding Britain:


• Prioritise jobs and housing for British workers by getting out of the EU.
• Replace welfare and poverty with jobs, homes and infrastructure.
• Develop rail and air transport nationwide in tandem with jobs.
• In the short term enable people to stay in their own homes.
• In the long term develop a strategy for decreasing pressure on “honey-pots”.
• Prioritise secure and affordable social housing.
• Take urgent action to provide young adults with affordable first homes.
• Restore planning controls.
• Re-impose rent controls on the private sector. ■

EU and the housing shortage

Unlike previous types of immigration, EU migration is unpredictable and unlimited, making planning a hit and miss affair. So long as Britain remains in the EU and subject to EU laws on free movement, governments will have no control over who comes here.

By the beginning of this year there were 370,000 migrants on the dole in Britain, originally admitted to work, study, or simply to holiday. If EU migrants lose their jobs or cannot meet their rent they are entitled to claim housing benefit and council tax and to apply for social housing, subject only to the deliberately vague “habitual residence test” (which is supposed to prove they have prospects and intend to stay). It is therefore obvious that the EU itself must be contributing substantially to Britain’s housing shortage.

Shapps’ solution encompasses a massive programme of land-release between 2012 and 2015, including brown-field sites such as NHS property, urban markets, and high streets where con-traction has resulted in blight. The Town & Country Planning Association estimates the release of public sector land to be worth £10 billion, but questions whether this will be for social need or sold to the highest bidder. Indeed the government talks of retaining 20 per cent “to ensure choice and competition in the market for land”.

Britain is a small island with a balance of town and country. British people want to keep it that way. We need and value all the green space and fresh air we can get. Desperate policies due to lack of forward planning and population control are now a serious threat to many greenfield sites, including farmland, village greens and sports fields, and the Green Belt around our cities preventing urban sprawl.

The revised National Planning Policy Framework will reduce 1,300 pages of planning regulations to around 52, with a “presumption in favour of development”, making it hard for local officials to reject inappropriate building proposals. Planning minister Greg Clark described presumption as the “golden thread” running throughout the reform. Opposition to the Framework, due to be finalised in March, is pouring in from bodies such as the National Trust, the RSPB, and the Campaign for Rural England. The government stands accused of favouring developers at the expense of the countryside. ■