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1. The Need for a Housing Policy

From about 1750, the dawn of the industrial economy in the UK, the need for a housing policy began to grow as the population moved from the 'self-sufficiency' of an agrarian economy into crowded towns that gathered large numbers of workers to service the industrial economy.

Since 1868, Liberal and Conservative governments espoused the policy of laissez-faire, asserting that free from restraints the market would provide. For housing, this meant there was no need for a housing policy. It was a view they held, when the world's worst slums were located in the richest country in the world 1.

The private rent on a decent house is much the same as the cost of taking a loan to buy it, because both are calculated as a competitive percentage of the house value; so the poor can no more afford to rent a decent house than they can to buy it. Without a loan to buy, the free market has only one solution; it reduces rents, by overcrowding or reducing the quality of accommodation, until the poor can afford them. This provision of accommodation is called a Private Rented Consumer Service (PRCS) or simply the private rented sector, but it is a process of financing accommodation that is quite different from the investment processes of homeownership or of investment in a rented stock. Without large rent-subsidies, a PRCS becomes slum housing for the poor. Sixty percent of pre-WWII houses were privately rented and most of them were slums.

Boot and Shoe Yard

a cul-de-sac of 34 houses in Leeds. It housed 340 to 700, mostly itinerant, workers and it yielded the best annual interest rate in the borough'. During the cholera epidemic in 1832, 75 cartloads of soil were removed from the privies in Boot and Shoe Yard. It was the fear of cholera, typhus and tuberculosis that spread from these places, which led to the first Public Health Act in 1848. Even so, the first act of housing policy had to wait for Addison in 1919.

Philanthropic visionaries such as Robert Owen and Joseph Rowntree tried to show the benefits to be gained from a well-housed workforce but before World-War II, there was no national housing policy. The fledgling Labour Party achieved some improvements via Addison in 1919 and in 1930. Grants were provided to build workers houses, but only skilled and better-off workers could afford the rents. Conservatives expected private enterprise alone to meet the demand for housing (See the Appendix).

It took 200 years, two world wars, a depression and the extension of the vote to all women in 1928, before the public voice was heard on the necessity of a housing policy and before a Labour government first seriously addressed the problem in 1945.

Yet, it is the alarming truth that, the growth of our current housing problems are the logical result of a substantial return to pre-war housing policies.

Depressingly enough, the same thing had happened after WWI. Addison resigned from the Lib/Con coalition in 1921, because Conservatives reneged on the WWI promise to build 'Homes for Heroes'. He wrote: "The insanitary and overcrowding condition of multitudes of the people's dwellings arose whilst we were content that private enterprise alone should be expected to meet the necessities of the case."

But the promise was remade by Labour after WWII and Homes for Heroes were delivered in huge building programmes to serve the general need and to replace the slums and war-damaged houses.

THE GROWTH OF EQUITY

Private rents increase, as the value of a house increases with time. But a loan is fixed on the day of purchase, so that loan costs decrease with time. In addition to accommodation, loan repayments yield a growth in ownership of an increasingly valuable asset and this growth in value is called equity. The equity of council house stock was an effective income that grew to become larger than actual rents and allowed rents to be kept low, while driving net costs into surplus by the 1970s.

BEVAN - A POLICY OF INVESTMENT

Bevan built high-quality low-rent houses that were financed by anticipating the growth of equity in his rented stock. He provided seeding subsidies to keep rents low during the high cost period of establishing the early stock, but these subsidies were gradually replaced by equity income. It was not so widely understood, but the results were too popular to be openly opposed.

Completions

MACMILLAN - THE HIGH RENT POLICY

Conservatives were determined to restore the dominance of the private rented sector and for people to accept them, they had to eliminate low-rents. They began to undermine Bevan's vision of council housing with restrictive and patronising social policies and by exaggerating subsidies.

In 1953, they attempted to restrict their role to welfare housing. In 1972, they adopted a High Rent policy supported by high rent-subsidies and finally, when these were insufficient, they eliminated the low-rent stock by means of a Right-to-buy law in 1980. Public and private rents rose to private levels and subsidies escalated. The housing supply was decimated.

New building was halted by the discounts and existing stock was diminished by the sales. But the most damaging effect was that discounts stripped the equity from the stock and prevented it from being used to keep rents low.

The the option of low-cost rents was removed, which was the intended result, but high rents also depressed demand. Private rents and housing associations have not come close to replacing the loss of the low-cost rented sector.

The RTB law is the enforcer of the Conservative High Rent policy. It has driven both private and public rents high. And with high rent subsidies, it has caused a high priced and unstable housing market. The RTB law has taken us back to the 1930s.

Taxpayers are encouraged to blame tenants for high subsidies that have been engineered by Conservative housing policies. Tenants are victims, who have been turned into scapegoats.

'Help to buy', 'Buy to let', 'Bedroom taxes'' and 'Bussing Tenants to cheap estates' are attempts to halt the decline of first-time buyers and to limit the level of rent subsidies. But without a genuinely affordable rented sector, they are as much use as sticking plasters to repair a severed limb.

AN AFFORDABLE HOUSING POLICY

We must abolish the discounts of the Right-to-Buy law, which destroy the equity of the rented stock and prevent it from being used to reduce rents.

Tenants, like home buyers must be allowed to benefit from the equity of investment.

The natural growth of equity is an income from the stock that creates affordable rents without the need for subsidies. At no additional cost, low-rents can be made available to everyone without restrictions of class or income. It will return stability to a market that was shattered in 1971, when policies began to dismantled the low cost rented sector.

Lynsey Hanley in her book 'Estates - An Intimate History' said "The long decline of the council house was triggered by nothing more than a change of perspective, from one that saw public housing as providing the nation with a collective legacy to one that saw it as a brief stop on the path towards acquiring an individual legacy".

But It Was So Much More!

A Collective Legacy

The growth of equity in rented stock is an accumulative benefit to all tenants. It reduces rents to the cost of management and maintenance.

An individual Windfall

Rent-subsidies are a permanently high cost that is a crutch to support Conservative dogma. Sale-discounts and all grants to provide 'affordable housing' under the high-rent policy are windfall benefits to a tiny minority that is diverted from 'housing provision' to 'personal expenditure' within a single generation.


To this day, the fate of UK housing policy has been fought over the choice between these two paths and it is of critical importance that we understand them.


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