Far from rolling back the private sector in order to rebuild a truly public national housing system based on need, Labour is proposing to dismantle entirely the system of central subsidy that served the working class since the 1930s.…
In July 2009 the long and determined campaign for direct government funding of council housing (the so-called Fourth Option) resulted in a victory of sorts when housing minister John Healey announced that all the money for housing repairs withheld under the Blair administration would be released. In future, councils could also keep money from rents and right-to-buy (RTB) sales to re-invest in social housing locally.
On the face of it, £12.3 billion over 30 years plus a promise of capital grants to meet the backlog of repairs is a generous package and a real breakthrough for tenants, allowing the Decent Homes programme to be carried out at last.
But the complete picture reveals another story. In fact, over that period £68 billion was siphoned off to the Treasury from rents and RTB. According to the February 2007 Hills Report into social housing, this income subsidised home-ownership to the tune of £18.4 billion in the period 2004-2005, compared with only £15.4 billion spent on social housing including housing benefit.
There are, moreover, some hefty capitalist strings attached to the Healey package. True to form, the Brown government, like those of Blair and Thatcher before him, provides for the privateers to rake off the profits.
Far from rolling back the private sector in order to rebuild a truly public national housing system based on need, Labour is proposing to dismantle entirely the traditional method of central subsidy, which has served the working class since the 1930s.
This means that council homes and housing associations are to be brought under one new regulatory body, the Tenant Services Authority, part of whose remit will be to encourage reliance on discredited private finance initiatives and partnerships (PFIs and PPPs) and ensure – in the government’s words – that social housing does not “undermine the overall government fiscal position” (significantly including the EU-imposed restrictions on borrowing).
What was merely creeping privatisation of social housing since the 1980s is now going full gallop. The current crisis of capitalism (self-inflicted) has exacerbated the problem for the Treasury, which wants to devolve most of the responsibility for funding as well as management on to self-financing local councils. These councils will have to go it alone.
In a twist to the campaign’s success, the councils’ newly acquired right to retain the revenue from sales will probably give impetus to the practice of sell-offs, which have contributed to the huge deficit in housing stock today, with 2 million households (5 million people) on waiting lists nationwide, swelled by recent repossessions.
Failure
Housing associations have failed to build enough houses to plug the gap. Written evidence to Parliament reveals them dropping out of schemes because of risk. Multi-billion pound local housing companies with a regeneration remit across local authority boundaries are being set up to address this problem. But they will be allowed to build for private sale, while eating up public money.
It is now generally known that private companies have a poor record of delivering the goods for society. PFIs are expensive (high interest rates, minimum 15 per cent profits, lawyers and con-sultants, costs of monitoring the contract). Targets are inevitably scaled back as they seek to maximise profits while minimising investment and risk.
Previous experience has shown that money to subsidise profits will be taken from rents unless these are carefully ring fenced. The National Audit Office in 2003 pointed out that councils are cheaper for the same work. The government admitted in January this year that regeneration relying on PPPs has run into the buffers because of recession.
Distinctions between private and public have long been blurred, as the business model has been adopted. Since the 1980s public subsidies were diverted from democratically elected councils to so-called “not-for-profit” housing associations (though only the tenants and workers are not for profit). It is now commonplace for tenants and residents to be described as “customers” in a social housing “market”.
Customer “choice” masks the reality of desperate need. Under the old system, families who got to the top of the council waiting list were then matched to available vacancies. Now, under the misleadingly named 2002 Homelessness Act, they are encouraged to “bid” for “choice-based lettings” advertised in local papers or on the web. All local authorities are to adopt this method by 2010, extending to low-cost ownership and private rents being rolled out regionally across borough boundaries.
Already there are examples of professional single people obtaining family-sized flats, particularly in housing associations, which operate a private market alongside social housing and without the same accountability as councils. These commercial arms are in fact private developers subsidised through the rents of existing tenants. Private occupants of social housing also pay market rents, contributing to a general rise in rents to an unaffordable level.
Trapped
The thinking behind housing associations was partly to provide a mixed community with “key workers” such as teachers or nurses earning reasonable wages alongside unskilled or unemployed workers. It was thought that this would offset the problems of council estates with their ghettos of people trapped in poverty (what Radio 4’s Analysis programme in February this year called “unsocial housing”). It was only recently that housing association tenants were given the “right to acquire” their homes through various schemes – for the most part unworkable, as pay has not kept pace with property values. So-called “affordable” homes are no longer affordable; as of March 2009, over 10,000 stand empty.
As housing associations restructure and form mergers to avoid breaking covenants on their loans, banks are able to increase repayment costs (nationally there is a £46 billion loan book). The collapse of Lehman Bros caused banks to call in tens of millions of pounds.
Active banks in the social housing sector have dropped from ten to just two over the past two years and lending costs have not decreased in line with cuts in interest rates. The former regulator, the Housing Corporation, said perhaps six to ten associations were in danger of going under.
Government debate around “mobility” (buying one’s way out of sink estates, or being forced to give up secure council tenancies) has likewise gone quiet with the recession. As David Orr from the National Federation of Tenants said: “The market has collapsed around us, the model does not work in this market.” He could simply have said, “Capitalism does not work.”
Capitalism does not provide homes for families to live in and put down roots. It treats housing like a lottery, with buy-to-let and mortgage fraud inflating house prices and preventing first-time buyers. It thrives on credit card debt and unaffordable sub-prime mortgages.
Its corrosive spirit infects those who snap up and fraudulently sub-let social housing. It prefers short-hold to secure tenancies, it strips away all protection and working-class organisation, it reduces standards to the meanest level in the name of efficiency and economy. It proclaims “tenant involvement”, while leaving landlords free to exploit.
Above all, councils must be properly funded. Under the new arrangements they will be able to apply for a Social Housing Grant and tenants must see that they do. But in this new devolved situation tenants will need their eyes wide open and all their powers of unity intact to mount the next stage of the struggle to keep local authority housing public.