We're still waiting for the rebirth of council housing

Back from the brink, maybe

Not so long ago, the consensus was that the days of council housing were numbered. Then came the credit crunch - and hints of a resurrection. Mark Cantrell reports

First published in the February 2009 edition of Northern Housing

THERE'S little doubt that council housing was once expected to undergo a managed extinction, but since the housing market became the epicentre of today’s economic quakes, there has arisen the tantalising prospect of the resurrection of the much-maligned notion of public housing.

The prospect first began to peer over the parapet shortly after Gordon Brown became the incumbent at Number 10. Since then, there have been what are best described as ‘nods, winks and hints’ that a new era for council housing is on the cards. For many, however, that’s the problem - it’s still on the cards and not becoming any kind of reality. Patience in some quarters is wearing a little threadbare.

“For millions, home ownership is an unattainable dream and many people are now questioning whether it’s worth dreaming as repossessions rise and property values fall again,” said Tony Kearns, deputy general secretary of the Communication Workers Union (CWU). “Instead of subsidising the private market, it makes sense for government to improve existing council homes and estates and start building a new generation of first class council housing for people on the waiting list.”

Kearns was speaking in support of the long-standing Defend Council Housing campaign on the eve of its national conference back in November last year. The arguments are nothing new in the pursuit of the “Fourth Option”, but such views have gained a fresh sense of urgency and impetus given the current economic woes.

Bob Russell MP, in questions to the then newly appointed housing minister Margaret Beckett, said: “Hundreds of thousands of children are living in accommodation that is deemed unsuitable for them and their families, and that is a direct result of 25 years of failed housing policies by successive Governments who have refused to allow council houses to be built. Given the collapse of the housing market... if the Government can find billions to bail out bankers, why can they not find sufficient money to build the family council houses for those hundreds of thousands of children?” (Hansard, 14 October 2008).

Beckett responded that the demand “does not all have to be met through council housing” but that the government “will be happy to see a greater expansion of provision by councils”. She added: “The Government have announced their intention to change the revenue and capital rules that apply to new council homes in order to remove financial disincentives to new build by local authorities.”

While it may not satisfy many, it does reflect a certain thawing in the policy landscape. There is still a long way to go, however, before the political permafrost melts enough for the sector to begin generating new homes at anything like the rate its housing association cousins have achieved to date.

A report from the Local Government Association (LGA), published last summer, said that in 2006/07 local authorities built 245 council homes, compared to 22,194 units built by housing associations. It argued that if councils had the same freedom and flexibility enjoyed by housing associations, they could easily match the figure.

In theory, paying into the central Treasury fund is a redistributive measure whereby stronger authorities assist the weaker, but in practice more and more councils paying into the fund feel it has become a ‘negative subsidy’ that is dragging down the capabilities of the 60 or so councils who have retained stock. This year the central fund, after payouts to around 50 local authorities, is said to be in surplus to the tune of £194 million. This figure is expected to grow substantially in the years ahead - up to £894 million by 2022.

“Councils could be using this money to build thousands of new council homes to help solve the housing crisis and to improve the homes of existing tenants,” says Councillor Paul Bettison, the LGA’s spokesman for housing. “The rents that tenants pay to their council should be spent entirely on their housing needs and the needs of local people. If this tenant tax continues, there could be serious long-term consequence for the future of council housing.”

Right-to-Buy is another bone of contention, not just because councils are required to surrender 75 per cent of the capital receipts from the sale of every home to the government’s coffers. The long-running policy has massively depleted stock. And it isn’t just hurting local authority stocks - housing associations are feeling the pinch too.

Right-to-Buy, introduced in 1980, has been described as Margaret Thatcher’s most successful privatisation programme; it helped many people to buy their way into the property market but led to a massive depletion in the number of council homes, with over two million sold by the end of the last century. It clearly proved a successful programme for the ferociously pro-market PM - it achieved its aims of boosting levels of home ownership while undermining public ownership long after her government faded into history.

There were wider consequences of the policy too, noted by the Joseph Rowntree Foundation as long ago as 1998. Then, it reported that the “remaining social rented housing stock is disproportionately concentrated in areas with lower demand for housing with fewer opportunities for employment” and that “Right-to-Buy, alongside other policies, has contributed to the increased concentration of low-income households in the social rented sector and in particular estates”.

Right-to-Buy remains a serious issue, such that the NHF has called for a “temporary ban” on new tenants buying their homes. Simply, more homes were bought - at a discount - between 1999 and 2007 than were built, the organisation said. That is, 440,000 were sold off, while only 205,123 new homes were built in that time.

“For those able to take advantage of the big discounts available to buy their home, the right-to-buy policy has unquestionably been a massive success,” said David Orr, the NHF’s chief executive. “But for the four million people currently stuck on waiting lists, the mass sell-off of affordable housing has deprived them - and future generations - of a home. Set against a backdrop of rocketing waiting list numbers, rising repossessions and unemployment, the country cannot afford to sell off any more affordable homes on the cheap.”

There’s a long way to go, even with the largesse of political will and financial capital, it will take time for the machinery of housebuilding to gain momentum and contribute to the stock being built by housing associations, but some councils are already beginning to take their first small steps back into the housebuilding business.

For this to grow into anything more than a token gesture, however, demands clear action from government - not just hints and nods. The sector is waiting for a clear lead - and for those old ghosts to finally be laid to rest.

This article first appeared in the February 2009 edition of Northern Housing and was subsequently republished on Housing Excellence, 3 April 2009.