The economic costs and real life consequences of the social housing crunch

Ahead of the Autumn Statement, Kevin Gulliver looks at the costs - economic and human - of the social housing crunch.


Kevin Gulliver is the director of Birmingham-based research charity the Human City Institute and chair of the Centre for Community Research but writes in a personal capacity; his interests are social and economic policy, especially relating to housing, health, communities and inequalities

Wednesday’s autumn statement by George Osborne will be delivered against the backdrop of failures in austerity, welfare reform and housing policy.

The government’s public debt reduction strategy, the accompanying austerity, the collapse in social house building, and poorly considered welfare reform have created a ‘social housing crunch’ where housing demand outstrips supply, labour mobility is restricted within an economy in and out of recession, and the viability of social housing communities is called into question.

Policy failure can be tracked back to the chancellor’s decision to cut two thirds of funding to the social house building programme in the 2010 comprehensive spending review. This triggered a collapse in new housing starts which accelerated the long-term decline of the UK’s social housing stock.

Today there are 1.2 million fewer social homes than 30 years ago at a time when the demand for social housing is growing, evidenced by ballooning waiting lists and rising homelessness.

Partly to combat the effects on the UK labour market of reduced numbers of social homes, the government created a National Mutual Exchange Scheme to stimulate mobility to support tenants’ efforts to find work. Yet social housing tenants are less able to move home than at any time for a generation.

The costs of this reduced mobility to the economy and the welfare system are estimated in excess of £1 billion each year.

A second policy failure is the government’s claim the fall-out from its relentless pursuit of austerity is being shared fairly – Osborne’s “we’re all in it together” mantra.

Yet austerity is hitting some of the country’s most vulnerable households – social tenants – hard. Tenants’ incomes – at less than £9,000 per annum on average and already low in comparison with even the median wage – have seen their purchasing power eroded by at least 10 per cent since 2008, equating to a total loss of real terms income circulating in social housing communities of more than £3bn over the intervening four years.

The cause is above inflation increases in necessities – such as food and fuel – which take up disproportionate amounts of tenants’ incomes.

Welfare reforms announced so far will remove a further £2bn from tenants’ pockets by 2015. Planned changes in some benefits – especially the ‘bedroom tax’, the benefit cap, the introduction of universal credit and the 10 per cent cut in council tax benefit – have left many tenants living on the margins.

But government proposals to cut a further £10bn from the welfare budget, if enacted, will push many vulnerable tenants over the edge.

Behind the figures are the human consequences of austerity and welfare reform.Tenants’ incomes are stretched to breaking point. Many can’t buy enough food to last the week, have to queue for bargains at-cut price supermarkets, rely on food banks or live on toast in the days before wages or benefit cheques are received.

Most are struggling with escalating fuel bills, having to put on extra layers of clothes to keep warm, only boil enough water for a single cup of tea, or go to bed early because they can’t afford to feed the meter.

The government’s aim of eradicating the structural deficit over the lifetime of a parliament – a target which has already slipped because of negative economic growth – has resulted in this ‘social housing crunch’. The disproportionate burden being borne by social tenants is greater than they can realistically endure. Geographical and social mobility have come to a standstill. And already poor tenants are getting poorer.

The combined effects of government policies will continue to affect the wellbeing of tenants, their life chances and the sustainability of social housing tenancies and communities unless the chancellor seeks another way on Wednesday.

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