Labour must be more radical on housing

We need to strike out beyond the confines of housing policy orthodoxies accepted by all political parties since the late 1980s.

We need to strike out beyond the confines of housing policy orthodoxies accepted by all political parties since the late 1980s

Overshadowed by the independence referendum in Scotland, last week’s National Housing Federation conference struggled to convey positive housing messages, including some from shadow housing minister Emma Reynolds.

Even so, Reynolds boosted the morale of NHF conference delegates with categorical assurance that a Labour government will repeal the hated Bedroom Tax.

This week’s Labour Party conference faces a similar challenge as Ed Miliband tries to wrench the media’s focus away from constitutional reform and onto ‘bread and butter’ issues, including housing. A first attempt was Miliband’s Saturday announcement to create New Homes Corporations as part of plans to ratchet-up housebuilding to 200,000 homes a year by 2020.

Alongside this, Labour has announced that the housebuilding industry will be diversified bringing in more small enterprises. And ‘landbanking’ will be tackled by strengthening local authority powers to withdraw planning permission from uncooperative developers.

These are laudable aims and speak to a more coordinated housing policy from Labour, to be bolstered by the pending publication of findings of the Sir Michael Lyons’ housing commission. And yet there’s little that’s radical here in the face of the UK’s mounting housing crisis.

As a reminder of the depth of this crisis, there are still 5 million people on social housing waiting lists. The ‘reinvigorated’ Right to Buy is reducing the number of social homes available even further to meet this level of need. Homelessness has increased by a fifth in the last four years. Housebuilding is at its lowest for 100 years.

And the affordability problem in the UK’s housing market, stoked by cheap credit in the years before the Credit Crunch, is almost back to where it was in 2007 with the average house price to average income ratio at 6.7 to 1. While house prices are lower than at their pre-Credit Crunch peak, wages have stagnated at a greater rate, so entrenching housing market unaffordability.

Rents are spiralling upwards in both the private and social rented sectors, underpinned by the taxpayer through a ballooning housing benefit budget. Private sector rents have climbed to an all-time average high of £761 monthly, rising by 2.4 per cent in the year to August alone. This has been fuelled by growth in buy-to-let which removes new homes from the first time buyer market, so embedding the Generation Rent phenomenon more deeply.

In the social housing sector, the operating margins on social housing lettings – the surplus not-for-profit housing associations make – have increased massively resulting in surpluses approaching £2bn annually – a tenfold increase from 2009. This is the result of above inflation rent increases over the long-term.

The nature of social renting is also changing with government policies pushing housing associations increasingly towards the commercial sphere. Many housing associations have moved into commercial activities to subsidise housebuilding since the government reduced public subsidy by two thirds in 2010 – the largest proportional fall in the Comprehensive Spending Review in that year.

The so-called Affordable Rent Programme, replacing funding for social housing, requires rents to be set at up to 80 per cent of the market level, so worsening housing affordability.

Taken together with low public investment, landbanking, rampant nimbyism, and home owners resisting new housing supply as it threatens their equity, housing unaffordability and the changing role of social landlords are all denuding the ability of the nation to house its citizens in affordable homes.

One lesson the Scottish referendum teaches us is that now is the time to be bold. We need to strike out beyond the confines of housing policy orthodoxies accepted by all political parties since the late 1980s.

There are no magic solutions that cost nothing. Much more public spending on social housebuilding by local authorities and housing associations and a government willing to challenge vested interests are the starting points. As SHOUT – the campaign to save social housing – has observed, the only time the required number of homes were built annually was when the housebuilding industry, local authorities and housing associations were all operating at full capacity with the government driving supply.

Nor can housing policy be divorced from wider economic and social policies. An unbalanced economy between the English regions, rising inequality and stagnant wages at the bottom of the pile all need tackling in concert.

The Miliband announcement of a hike in the minimum wage is a good start but a living wage, rent control, massive housebuilding and devolution of government to the English regions, all possibly paid for by a new wealth tax, must be the centrepieces of a broad policy to reduce inequality and spread prosperity.

Kevin Gulliver is director of Birmingham-based research charity the Human City Institute and chair of the Centre for Community Research but writes in a personal capacity

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