Britain is facing a massive housing crisis. There is an acute and growing shortage of housing; virtually no council housing has been built for decades; homelessness is increasing; private sector rents are soaring; the entire private sector is a disaster. Pete Gilman looks at the housing question in Britain and concludes: reform is not enough – only a bold socialist programme offers a solution.
“75,000 of our children will wake up homeless on Christmas morning.” – Shelter December 2012
Britain is facing a massive housing crisis. There is an acute and growing shortage of housing for those on average or below average income; virtually no council housing has been built for decades; homelessness is increasing; private sector rents are soaring; the entire private sector is a disaster; and thousands of people are being forced to move to cheaper parts of Britain because the cap on housing benefit means they can no longer afford to live in London or the south east. High rents and a lack of a safety net are forcing thousands of people, especially the young, into dependency; repossessions have risen to 30,000 per year; and estate agents are ruthlessly ripping off their tenants.
Every Labour MP and councillor can tell heart rending stories of what this means in reality, of the human suffering behind the statistics. Meanwhile some Tory councils are implementing a “radical” programme of substantial house building, but only for those on incomes of £60,000-£90,000 and above. Nothing is to be built for those on incomes under £60,000.
The Tories blame the crisis on council tenants having secure tenancies. They intend to end all secure tenancies and “rotate” council tenants out of their homes to make way for those “in greater housing need.” The Tories do not say what will happen to those “rotated” out to make way for those “in greater housing need.” And now they are saying that if they win the next election they will impose means testing on all council tenants. Those above a certain income or with a certain level of savings will be forcibly moved into private rented accommodation.
The exploitation of tenants
Private sector housing is a jungle; for many it is a disaster. Many people buying or renting in the private sector are being ruthlessly ripped off. Ever increasing numbers are in short term tenancies, which leads to stress, lack of stability, and regular moves leading to the continuous disruption of the children’s education. Shelter has reported 85,000 complaints against private landlords, 62% of which relate to life threatening hazards.
Private tenants are ruthlessly exploited, pay exorbitant rents, have little or no security of tenure, and often the accommodation is appalling. A 2010 survey showed that 37% of dwellings in the private rented sector failed to meet the Decent Homes Standard. Recent years have seen the re-emergence of slum landlords, much of whose property is in a very bad state of repair, regularly lacks basic amenities, and whose tenants are often the poorest and most vulnerable in society.
Some horrific cases of abuse are occurring in former council properties, bought by their tenants under various forms of discount agreement. After a number of years, when no longer required, the property is sold on to a landlord company or sometimes a ruthless “property dealer” who builds up a “portfolio” of former council properties, let at exorbitant rents with little and often no security of tenure and with little or no building maintenance.
Meanwhile, private sector house prices and rents are soaring. A June 2012 internal Labour Party report stated private sector rents in London are increasing at 14% a year. The Office for Budget Responsibility predicts the price of residential properties will increase by 27% over the next few years, and in London by 50%.
Rents have risen substantially faster than the rate of inflation every year for the last thirty years, and for most of those years substantially faster than the majority of incomes, especially in the case of the lower paid. Consequently, as a proportion of income, rents in Britain are the highest in the EU, and it is now normal for rents, both for social housing and in the private sector, to equal 50% of income, sometimes more. These rent increases are causing very real hardship to millions of people and drive many into poverty.
It has now become a widespread practise for landlords and landlord companies, when tenants on short term tenancies are forced to move, to give the property a luxury “makeover” and then increase rents by as much as 100%. Cases such as that of a property in Battersea where the monthly rent was increased from £1915 to £3445 are not untypical.
“Affordable” for whom?
The Tories now want to increase rents to 80% of market levels for council and housing association tenants. This would mean doubling, trebling or even quadrupling rents across Britain, and in inner London would mean council rents being increased to £350-£450 a week, and in some areas to much more. The June 2012 internal Labour Party report cited earlier showed that the average weekly rent for a three bedroom council property in Islington was £113, and the average market rent in Islington for identical three bedroom accommodation was £560 a week. For social rents on property to rise to 80% of market rents would mean a rent increase of £335 a week. In a classic example of the Orwellian way the Tories twist and distort the truth, they call these “affordable” rents.
The Tories boast that in one of their new planned development projects 40% will be “affordable housing”. We need to ask –affordable for whom? If 40% is “affordable” then the Tories are admitting 60% is unaffordable!
Liberal Democrat MP Danny Alexander, chief secretary to the Treasury, boasts his government is committed “to support 165,000 new affordable homes.” Again –affordable for whom?
For middle income families increasing the rent to 80% market levels will cause severe hardship, for low income families who need to watch every penny such increases will be a catastrophe. There are huge numbers of people in Britain whose total family income is below 80% of the local market rent. What will happen to these people?
In addition the interplay of market forces means social housing rent increases drive up private sector rents, so we face an ever accelerating but totally unsustainable upward spiral of ever greater rent increases.
Thatcher and the Right to Buy
Britain faces the gravest housing crisis since 1945, a crisis brought about by the policies of successive governments of leaving everything to the vagaries of the market, combined with a remorseless onslaught against council housing. Only the ending of these policies and the implementation of a socialist programme can solve this crisis provide the universal right to a place to live.
A major factor in Britain’s housing crisis is the virtual ending of the building of council housing. A priority of any genuinely progressive housing programme, therefore, must be a substantial increase in the building of new social housing, with the emphasis on council housing.
In 1979 Thatcher introduced “right to buy” ostensibly to enable council tenants to become owner occupiers by buying their council property, but in reality as a means of reducing council housing stock. Initially it was not a success. Few tenants sought to avail themselves of this right so Thatcher introduced the carrot and the stick: the carrot of huge discounts to provide big financial incentives to buy, coupled with the stick of huge rent increases to punish those who chose not to. It was these rent increases that coerced so many into buying their property.
A further consequence of “right to buy” was the later selling on of former council properties to estate agents and landlord companies who enormously increased the prices and rents and made a killing. It has been estimated that in some parts of the country as much as 40% of these former council properties ended up in the hands of private sector landlords.
Again this must be ended. When those who wish to sell on their purchased council property, (as distinct from passing it on to their descendants) the local authority must be given the first option to take this property back into social ownership instead of it automatically being passed on to the private sector. A simple formula can be worked out so that the tenant doesn’t lose out and the local authority does not pay an inflated “market” price.
For a mass programme of council housing construction
Since Thatcher, central government funding for construction of new council housing has virtually ended. Meanwhile, the ring-fencing of rates means council house building, where it has taken place at all, is funded exclusively by income from council rent, occasionally augmented by income from the sale of council housing. Such policies have virtually killed council house building, as they were intended to.
In 1948, the post-war Labour government built 227,616 council homes. During the period of the Blair government, both the National Housing Federation and Shelter called for the building of 100,000 new social housing homes every year. In its first full ten years in office the Blair government, however, built only 1833 council homes in England.
We have the skills and the resources to easily achieve a target of 100,000 per year – if anything, this target is too modest. The problem is the capitalist system, its anarchic nature, and its endless pursuit of profit, which means that such resources cannot be put to use.
The construction industry, meanwhile, is a total mess, worsened by sub-contracting, sub sub-contracting, and so on. To sort out this mess, to enforce safety regulations for construction workers, to provide both the required jobs and the apprenticeships needed, but most of all to build the necessary housing, the construction industry must be taken into public ownership.
We need a large scale council house building programme, funded by taking the banks and the major monopolies in society under public ownership. An enormous wealth in society currently lies idle in the bank accounts of big business. Such wealth, combined with the human forces that lie idle due to unemployment as part of a rational plan of production, could provide the basis for solving all of society’s housing needs.
Solving the housing crisis – reform is not enough
In the 1990s, Tony Blair committed the Labour Party to an ideological belief in “the enterprise of the market and the rigour of competition.” This so-called enterprise of the market has led to soaring unemployment, record youth unemployment, raging inflation, 1.4 million on zero hours contracts, ever worsening pay and conditions at work, the slow destruction of the NHS, the pillaging of the public sector by “predatory capitalists”, hundreds of consistently disastrous PFI schemes, savage attacks on benefits especially on those who are disabled, growing economic instability, and a banking crisis which has required tens of billions of pounds of taxpayers money to bail out the banks. Furthermore, workers and youth face an austerity programme with no end in sight.
When one manufacturer introduces new technology, not to increase productivity or reduce prices to the consumer, but to shed labour, all the others follow suit. When one energy company puts up its prices all the others do the same. When Tesco’s puts up its prices, so do Sainsbury’s and Morrison’s. When one retailer introduces zero hours contracts all the others follow. This is what “the rigour of competition” means in reality.
It is the “enterprise of the market” which has created the housing crisis. The capitalism system – with the “invisible hand” of the market – is the problem not the solution. Under capitalism, profit is everything. Shortages are more profitable than surpluses and, especially in housing, the greater the shortage the greater the profit.
Miliband and the other current Labour leaders call for the housing market to be regulated. But what happens if “the market” refuses to be regulated? The capitalist system is maintained in the interests of big business, and solely in their interest. Can we honestly expect them to allow their interests and their profits to be “threatened” by regulation? Moreover the banks have amply demonstrated “the inadequacy” of regulation.
Already some rental companies and managing agents (and the finance companies behind some of them) have indicated if they are not allowed to increase rents to whatever levels they see fit, or are made to grant security of tenure to tenants, the will withdraw their property from the market and deliberately increase homelessness in a landlords variation of the strike of capital. Construction companies, meanwhile, can (and some have) refuse to build council housing when they can build very lucrative luxury housing instead. Where landlord companies refuse to comply with regulation or organise their “strike of capital” they must be given a clear choice –comply or be taken into public ownership.
For a bold socialist programme!
Any government that took on the interests of profiteers to enact a socialist housing programme would instantly face enormous pressure from big business, the banks, the press, the Tories, and Blairite organisations like Progress. For a future Labour government to carry out a socialist programme, therefore, would require the support and the total involvement of a strong trade union movement to counter this pressure. An important pre-requisite would therefore be the total repeal of Thatcher’s anti trade union laws.
Everyone should have a decent place to live, as a basic human right. In the current situation of deep capitalist crisis, however, we instead see the contradiction of empty homes alongside homelessness. Only a bold socialist programme, mobilising the organised working class and building a mass movement in support of that programme, can lead to success and provide for the fundamentals needs of society.