On housing, while Ed has got it wrong, Boris has the answer

While Ed Miliband has got it wrong on housing policy, Boris Johnson has the answer, writes Vidhya Alakeson, Director of Research and Strategy at the Resolution Foundation.

Vidhya Alakeson is the Director of Research and Strategy at the Resolution Foundation

In his speech on social responsibility today, Ed Miliband argued that low income working people and those doing voluntary work should be given priority for council housing.

While this might help position his leadership, it is misguided as a piece of housing policy. Shifting ordinary working families into social housing to replace more vulnerable groups does not fix a housing crisis, it simply creates a new one. Local Authorities will find themselves paying higher costs to house vulnerable families and the homeless in the private sector.

While Ed has got it wrong, Boris Johnson has the answer. Instead of expanding social housing, the Mayor is seeking a massive expansion of private rented housing that will provide ordinary working families with higher quality homes.

The basic problem with Mr Miliband’s proposal is that it would only make sense if there were a massive expansion in social housing. Even before the government’s decision to cut grants for social house building, the rate of growth of the sector has been falling since 2007. Now, there is £4 billion less coming from government to expand the sector and millions still on the waiting list.

Faced with a shortage of supply, prioritising working families at the expense of those who are out of work will simply push the most vulnerable into an even more precarious situation. In the end, this will cost the public sector more as local authorities retain a duty to house the homeless.

Less pre-disposed to rely on social housing as the answer, Boris is sensibly looking to the private rented sector to meet the needs of working families for high quality, affordable homes. The percentage of under-35-year-olds on low-to-middle incomes in the private rented sector has tripled since 1988 and is likely to keep growing as home ownership remains out of reach.

As more of this group start families in rented homes, what is needed is a massive expansion of the sector coupled with a better offer for tenants: higher quality, family sized homes, more consistent management, and greater security of tenure. This is what countries such as Switzerland and Germany offer long-term tenants and this makes renting a more acceptable long-term choice. In Switzerland, more people rent than buy.

With less funding coming from government for housing, the Mayor is looking to the private sector to fill the gap. Some councils, such as Birmingham and Barking and Dagenham, have already secured private investment for the development of hundreds of new homes for rent on the basis of the council investing its land upfront. The Mayor is setting up the London Housing Property Company to do the same on a grander scale, investing land owned by the London Development Agency and Greater London Authority to kick start development.

Prioritising working people over those who are more vulnerable in the allocation of council housing may seem like a quick political win for a struggling leadership. But it’s hard to believe that Mr Miliband will have the stomach for the consequences of this policy as vulnerable families find themselves homeless. Social housing is an important part of the housing mix but it is not the answer to the housing needs of ordinary working families.

Boris Johnson is right to focus instead on securing private investment to build new homes for rent in the private sector.

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19 Responses to “On housing, while Ed has got it wrong, Boris has the answer”

  1. DCLG Press Officer

    "On housing, while #EdMiliband has got it wrong, #Boris has the answer". #ResolutionFoundation. #Labour #Conservative http://t.co/sx0NIv2

  2. Tory Press HQ

    "On housing, while #EdMiliband has got it wrong, #Boris has the answer". #ResolutionFoundation. #Labour #Conservative http://t.co/sx0NIv2

  3. Robbo

    "On housing, while #EdMiliband has got it wrong, #Boris has the answer". #ResolutionFoundation. #Labour #Conservative http://t.co/sx0NIv2

  4. Duncan Stott

    RT @leftfootfwd: On housing, while Ed has got it wrong, Boris has the answer http://t.co/KrQI4F3

  5. Emma Lindley

    RT @leftfootfwd: On housing, while Ed has got it wrong, Boris has the answer: http://bit.ly/mfNfNc <<shifting ordinary working families into

  6. Dave Citizen

    Vidhya – before pronouncing on the merits of people’s answers you should take more time considering whether you are considering the right question.

    The ability of working people to afford suitable housing depends on two key factors: the wealth created by our economy and the distribution of that wealth. A productive economy is more competitive if the costs of housing (and therefore productive labour) are reduced – housing costs are much less likely to fall if houses are turned into profit returning assets with the effect that labour costs are held artificially high.

    Then we have the economic costs of inequality that are exacerbated by the private renting sector. The more people who pay a portion of their wages to maintain rental profits and landlord lifestyles the less productive labour is available to the real wealth creating economy. Adam Smith spoke of a hierarchy of productivity in terms of labour and major landowners were rightly placed at the bottom.

    Boris has answered the wrong question correctly. I suggest his question was something like: what would be good for increasing the relative wealth of Britain’s rich property owners.

  7. Nick

    This can only work together with a decent framework of regulation – and funding for enforcement – to ensure decent a decent standard of housing though.

    I speak as someone who is still trying to recover a rent advance and a tenancy deposit unlawfully retained by a former landlord in the private rented sector. They’ve been convicted of two counts of illegal eviction and the local authority has a number of outstanding complaints but they can continue to act as a landlord and the council has no funds to take enforcement action. I will now have to take complex and costly legal action in an area of law that even lawyers and judges have said is a nightmare but the govt does not want to deal with because regulation is a dirt word.

    Boris has backed that approach despite having powers to take action. His policy amounts to pump priming the slums of tomorrow unless there are measures to ensure quality as well as quantity of homes for private rent.

  8. Simon Landau

    And this blog is why the Tories and Resolution will never ‘get’ social housing. It is what it says on the tin – not vulnerable housing.

  9. Boris Johnson

    On housing, while Ed has got it wrong, Boris has the answer – Left Foot Forward: Left Foot ForwardOn hou… http://bit.ly/mDbbBc #London

  10. Support for Boris’ housing policy on left-wing blog. | Boris Backer.

    […] It’s one of those sites written by, about and for lefties. With that in mind, today’s guest-post praising Boris’ housing policy was particularly notable. The post was written by Vidhya […]

  11. Kevin leonard

    Keep it real for goodness sake the real problem is the inflated cost of buying a home in today’s market kept artificially high over the last 30 years by successive governments who loved the perception that the UK was doing well because of all the debt.
    The only way to redress this is to embark on a wave of house building not seen since the end of WW2 Yes it will mean effectively the devaluation of the pound world wide as the bubble is popped from within but until we get this under control it will be always a cause for concern for all.
    Another thing to be done is to remove ourselves from the stagnation causing European Union whose desire for a federalist state is driving all mainstream political parties down the path of destruction in the belief that we in the UK can survive as a one trick(housing sales)pony.

  12. Selohesra

    Boris is a class act – underneath that buffoon exterior is a highly inteligent political operator – I suspect he is biding his time and will be ready to step in when the Tories ditch Dave for just being Blair II.

  13. Clare Fernyhough

    Yes, we need to build more homes both social and private to bring house prices and rentals down: nothing new there, but exactly what labour should be announcing rather than what we heard yesterday.

    As for who gets priority with regard to social housing, I wouldn’t worry about it. If labour don’t return to power and repeal the welfare reforms that affect housing the simple fact is that social housing will no longer exist. I have worked out that due to the government forcing my housing association to raise my rent above inflation until 2025, my small semi detatched house in one of the poorest areas in the UK, and attracting some of the lowest rents in the country, will cost around £112 per week in 5 years time; in 9 years £169. One bedroom flats often cost more than semi’s since they are newer; it doesn’t take much to work out that a single person earning minimum wage will not be able to afford the rent.

    As for homelessness costing local authorities more, firstly, the Local Housing Alowance in my area is now set so low, lower that social housing rentals, that it doesn’t reflect the local rental market at all. Also, I thought that the localism bill ensured that local authorities are no longer required by law to addresss homelessness?

    As usual, all of these announcements concerning housing provision are ill thought out and don’t reflect the issues at all. They seem designed to appeal to certain sections of the population who would like nothing more than to see millions social tenants evited, whether they receive housing benefit or not. This will be the real crisis in housing; millions of people who can neither afford social housing or private lets: a recipe for disaster in anyone’s book.

    Build more homes, scrap the housing benefit reforms which include unaffordable rent rises, or there won’t just be a housing crisis, there will be a humanitarian one.

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