We continue Dan Morley’s analysis of the crisis in UK housing….
A Desperate Situation in
‘Affordable Housing’
According to GVA Grimley (a
property consultancy firm) in their report on affordable housing, "there
is a stark imbalance between the rate of household formation and the provision
of new housing…the problem is huge and the honest analysis must be that only
a massive injection of direct government money would solve the problem, on a
scale not seen since the 1950s/60s…shortages of housing in both the social
and the private sectors will inevitably be with us for a generation."
The statistics are staggering. It
is instructive that the bare facts of the problem are recorded – and yet the perspective
is for the problem to only get worse. This is due to the market’s inability to
plan and provide, to the point that the state has had to prop it up, leaving no
room for a government programme of housebuilding (under capitalism that is).
The report goes on, "the stock of affordable housing has been in long term
decline…The stock of 4.5 million affordable dwellings in 1991 had reduced to
under 3.9 million by 2007…As at mid-2008 1.8 million households [comprising 5
million people] were on local authority waiting lists, compared with only just
over 1 million at the start of the decade."
Capitalism could only expand (and
in a very chaotic, unbalanced, top-heavy fashion) the national housing stock
through an enormous speculative bubble which only stored up greater problems
for today. Now we find ourselves in the farcical situation of having a
desperate, long-term housing shortage, and at the same time hundreds of
thousands of unemployed construction workers, idle land and idle brick
factories etc. The GVA Grimley report admits that the severe housing shortage
will be with us even should the housing market pick up, "even when the
market improves…shortages of labour [!] and materials [!] will push building
costs higher." If there are any shortages of labour and materials, we
would like to know what has happened to the army of unemployed construction
workers.
The absurdity of 21st Century
capitalist Britain is that science, including social science, has developed to
the point where we can accurately study patterns of development and
realistically predict certain results, and yet the social system of capitalism
prevents us from steering a course based on such useful information. So we know
that there will be an additional 260,000 households in England alone, every
year to 2026. The government’s pre 2007 housing crash target was to stimulate
the market to produce only 240,000 new homes per year for only five of those
years – 2016-2020. This says nothing of what proportion are social or
‘affordable’ housing.
"The Government’s target of
increasing the total housing output to 240,000 new homes per annum by 2016
would not be sufficient to meet the projected increase in households of 260,000
homes per annum (in reality more homes need to be built than the increase in
households due to second homes, losses from the housing stock, and vacant
properties). This figure would be on top of the existing backlog of
demand for both social and market housing." [GVA Grimley, Affordable
Housing 2009]
Of course, this was not a plan,
but a vain (and at that, still insufficient) hope in the market on the basis of
a short term boom, now finished. The government’s target, in itself inadequate
by more than 20,000 homes per year in England alone, will not be met even for
one year unless it is transformed from a target into a plan of production, i.e.
through the expropriation of the housing corporations and banks. The shortfall
is staggering. The sheer scale of lack of social housing is preparing enormous
social problems and it is clear that the new government has even less interest
in doing anything about it.
"The level of housebuilding
in England increased from a historic low of 129,500 in 2001 to a peak174,000 in 2007. However, 2008 saw completions fall to 142,000 as
housebuilders responded to falling demand…2009 is likely to see a further
dramatic fall in the number of dwellings completed to around 100,000 [!]…the
gap between supply and demand will continue to widen." [GVA Grimley,
Affordable Housing 2009]
30 Years of Privatisation of
‘Social’ Housing
It was earlier stated that the
general situation in Britain has been thirty years of counter reforms and the
undermining of workers’ rights. Notwithstanding some earlier measures from the
Heath government, this process of course really began with Thatcher, whose
landmark policy of counter reform was the previously mentioned ‘right to buy’
policy. We will come back to this in a moment. But another way of undermining
the gains of the working class in housing has been the effective banning of
local authorities’ ability to build council houses, deliberately paving the way
for private housing associations, subject to the vagaries of the market, to
replace genuine social housing, that is council housing. What unites the ‘right
to buy’ policy and the promotion of housing associations at the expense of
council housing is not by any means the ‘modernising’ breezes of the
free-market, but the conscious intervention of the state to artificially
manipulate the balance of forces in favour of privatisation.
Thus councils have not been able
to reinvest the surpluses gained from rent collection (yes, council housing
makes a surplus every year, despite the comparatively low rent rates), instead
it goes to central government. But nor has central government used this pool of
national collected rent to launch a massive reinvestment in local authority
housing stock. For instance, the government target to get all council housing
up to the ‘decent homes standard’ by 2010 has of course been missed. But
"UNISON has shown that the cost of using an investment allowance to clear
the backlog of work needed to bring homes up to the Decent Homes Standard is
easily affordable from the £2bn surplus generated annually by council
housing." [Defend Council Housing]
Another tactic is what in practice
amounts to enforced stock transfer. Unnecessarily decrepit estates, deprived of
government spending, are given an ultimatum by the council – they can either
vote to stay with the local authority and witness the estate continue to
crumble, or they can be transferred to a private housing association who, as we
know, have more money to invest only because the government has engineered it
that way. Despite this, council tenants have voted overwhelmingly to stay with
the council. Initially, they were not even given a choice at all (and we must
remember, this choice or rather bribe, is an ‘offer’ in the style of Vito
Corleone!), but won this right.
The justification for housing
associations is that they are supposed to be non-profit making, and to offer
all the advantages of council housing. But they exist as private entities in
the midst of a market, with booms and slumps, expansions and contractions of
credit. This compels them to behave like normal capitalist companies, albeit
ones subsidised by the taxpayer.
But recently the government has
limited their subsidies, something that will surely continue considering the
state of government finances. This has forced the associations to borrow from
private banks, who of course will only lend when it is on their terms. Of
course, bank lending has dried up massively in the last two years. This
situation threatens the existence of many housing associations and their
tenants. As a result, they have tried various ways to get out of their
obligations. The collapse in house prices has also compelled private home
builders to lessen their proportion of new builds that are ‘affordable’.
According to GVA Grimley, "housebuilders have tried to negotiate down the
proportion of each scheme attributed to affordable housing."
Another regulation for housing
associations that is not being met due to the pressures of the market is what
is known as ‘rent convergence.’ This is the government target to get housing
association rents and council rents to converge – at the moment housing
association rents are higher. But this is another target the market cannot
meet.
"… average English housing
association rent is not only still higher than the average council rent – it’s
a greater difference than in any year since 2000 and up 10% on the 2004 figure,
which itself was marginally up on 2003…housing association neighbours in the
same council [Adur, near Brighton] area have endured a 14% rise between 2003
and 2005…they have been forced to accept a whopping 21% increase in
2004/5" [Defend Council Housing]
Once these housing associations
exist, there is an inbuilt tendency toward mergers with other private housing
groups, and a gradual phasing out of their obligations, with the excuse of
financial difficulties.
"One of the most
controversial mergers – between financially troubled English Churches and
Riverside – would create England’s largest association with 52,000
properties…it now emerges that this transaction includes selling off 1,800
homes in a bid to put the association on a firmer financial footing…a total
of 6,000 housing association homes were sold off in 2004/5 on the open
market…and the Riverside/ECHG takeover is just one aspect of the growing fear
over the financial viability of associations as they take on an ever-larger
debt burden which is set to soar to £45bn over the next four years."
[Defend Council Housing]
No wonder the government does
everything it can to distort the playing field in favour of housing
associations! Whilst council rents are siphoned off, the government ploughs in
millions in subsidies to housing associations, who unlike local authorities are
allowed to reinvest their rents anyway.
"By 2005-6 government had
already spent £1.8bn on debt write-off in England; and has allocated another
£616m for 2006-07…In Scotland alone £1.7bn of public money has already been
spent subsidising transfer and the government is prepared to spend another
£1.2bn…The government is willing to wipe out debt to facilitate transfer, so
why not for retention where tenants choose to remain as council tenants?"
[Defend Council Housing]
Indeed, this is the essence and
the tragedy of the policy to undermine council housing – the subsidies ploughed
in to make the market ‘work’ dwarf what needs to be spent to improve the stock
of existing council housing, which could be funded from rents alone! If the
banks will not lend to housing associations, the government should not only
take the latter into public control, they should fund them from a plan derived
from the credit belonging to the banks they have been forced to nationalise
anyway!
As we have seen, the government
does not allow rents to be reinvested. This crisis of funding is made worse by
the fact that Councils are not allowed to borrow from banks, under the ‘public
sector borrowing requirement’, a completely needless piece of legislation based
on the capitalist prejudice against the public sector.
The Government has recently put a
proposal to councils to stop the ‘siphoning off’ of council rents centrally.
Essentially council’s would take on an amount of debt – but gain by not having
to pay rent income to the government. This may allow councils to build 10,000
homes (Gov”t figure). Welcome – but nowhere near enough of course. On this
basis, the number of homes built per council ranges from 1 to 374.
TO BE CONTINUED…..
