[This is the text accompanying my presentation to the 2nd Social Liberal Forum Conference: “Social justice across generations”, King's College London, 14/07/12. Not all of it was delivered on the day, because of the way the session panned out and because there's too much of it. My thanks to my co-contributors Paula Keaveney, Emily Davey and Martin Tod - and to everyone who attended - for a really interesting session.]
We are experiencing a momentous period in UK housing – both in terms of the housing system itself and housing policy. This is not simply a product of the current economic crisis but of the crisis layered on top of longer-term and deeply-rooted problems.
We are witnessing a housing transformation on the ground. The last five or six years have seen an increase of more than a million households living in the private rented sector. This is in part because of the scarcity of mortgages for first time buyers; one of the consequences of the Global Financial Crisis.
And we are witnessing a transformation in the thinking underpinning housing policy. As those who play #shappsbingo know, Grant Shapps regularly refers to his aim of shattering the “lazy” consensus in housing policy. I don’t agree with him on much, but I think it is fair to say that there was a consensus on the broad parameters of housing policy, and that he has shattered it. Ideas that a few years ago were only whispered among the more outré right wing think tanks are now the premises upon which policy is based.
And if we don’t like the direction in which housing policy is heading then we will need to come up with some strong social liberal arguments as to why not. In my view housing policy needs refounding.
I would suggest that we need to go back to first principles and ask: what is policy trying to achieve? Why does the government intervene in the housing market at all? For decades governments have lined up behind statements like “a decent home for all at a price within their means”. But I’m not sure that is still the priority for policy. Or, at least, given the substance of policy it would be barely credible to claim serious adherence to this objective.
Given the changes we have witnessed over the last few years, we face different possible futures. From where we are now we could seek to embed a new tenure distribution. The UK system would effectively converge with those of some continental European systems: where renting into your 30s and moving into owner occupation in middle age is the norm. Alternatively, we may not want to remodel the aspirations that have underpinned housing policy for the last three decades – the overarching aim of increasing owner occupation. In that case we need to think whether steps can be taken to throw into reverse recent processes of transformation towards more renting.
More than that, when thinking about refounding housing policy we need to recognise interconnections and think holistically. We need to look across tenures. We need to recognise the political, economic and social significance of good quality accommodation. We need to recognise the way in which housing policy interconnects with – and indeed possibly depends upon – policy decisions in other fields.
I want to highlight three particular issues (selected from those I identified in Housing Challenges).
Access and affordability
There is a consensus that we are facing a crisis of access and affordability. And it appears that there is also a consensus that the solution lies in increasing the supply of new housing. Greater housing supply would shift the balance of supply and demand, further reducing rents and house prices, and thereby increase affordability. The idea that inadequate supply is not simply a short-term problem following the crash but a long-standing structural issue is pretty well embedded at a policy level.
There is broad support for the argument that investing in new construction would have significant positive macroeconomic impacts through employment generation and activity in secondary markets.
The question is who and how. And who is going to pay to get things going. Some are looking hopefully towards the private sector, perhaps induced to build again by the sweetener of cheap public land. Others would perhaps side with Aneurin Bevan’s sentiment when he famously noted that “the speculative builder, by his very nature is not a plannable instrument”: instead we need to look to social landlords to step in.
I think there is an equally important, but perhaps thornier, issue. Localism.
Localism is a fine concept in the abstract. But the way in which it is currently being implemented following the passage of the Localism Act is in many places putting a brake on development. Precisely the opposite of what’s needed. The Localism Act is not by definition a NIMBY charter. But that is how it is being deployed in localities that desperately need more housing.
We need to understand this phenomenon better if we are to overcome it. And to my mind that is intimately tied up with policy developments in other areas. For example, for as long as there is uncertainty over the funding of long term care, with older people sensing a risk that they may be required to pay tens or hundreds of thousands towards their own care, then it makes perfect sense for them to try to resist any policy that would potentially reduce the value of their homes. And this then interacts with politics. If older people are more inclined to vote than younger people then we shouldn’t be surprised if policy is largely shaped with the interests of older people in mind.
Quality and security
We have witnessed an explosion of private renting and significant reforms impacting upon social housing via the Localism Act and the Welfare Reform Act. As a result there are more households living in insecure rented accommodation.
More broadly we could argue that what we are seeing is the reconnection of housing quality and household income. Housing policy interventions to provide social housing and subsidized rents were originally designed precisely to break this link. Poor households were able to access accommodation that was beyond their reach in the market. That link is now being reforged.
We can see it in the statistics for the increasing incidence of overcrowding, which is only going to get worse as more of the welfare benefit cuts kick in.
If the Universal Credit system isn’t defeated by insurmountable IT problems and arrives on time next year then we could face a period of intense housing market disruption. It is housing benefit that is going to be hit if a benefit-dependent household comes up against the overall cap on benefit. A large number of households are going to become unable to afford their current accommodation.
But have we lost sight of the reasons why overcrowding is a bad thing? There are a range of negative health impacts. And there are important impacts upon child development. It seems perverse to be proud of the few hundred pounds of the pupil premium – which in itself is a good thing – when at the same time benefit cuts mean that children overcrowd and as a consequence find their educational development impaired. Giving with one hand and taking away something more valuable with the other. The intergenerational impacts of forcing poor households into poorer accommodation are likely to be considerable.
There are some interesting developments around regulation of private renting occurring at the moment. This is one possible route to seeking to manage the risks associated with more households finding themselves in private renting. In particular, the Welsh Assembly is currently consulting on implementing a statutory register of private landlords. Substantial fines are proposed for landlords who do not register. Scotland already has a comprehensive registration system, but the idea was rejected in England on the arrival of the Coalition. If the policy in this area evolves in the same way as the smoking ban then perhaps it will be imported back into England in the near future. Some thought would need to be given to managing negative impacts upon supply. I have argued in the past that work needs to be done to change the culture of landlordism, as a prerequisite for minimising the negative impact of a more comprehensive approach to regulation.
Spatial segregation, social cohesion and social identification
The thrust of current policy – reconnecting housing consumption with household income – will result in greater spatial sorting of households. If poor households are no longer able to access state resources to allow them to live in higher value areas then they will gravitate towards cheaper areas. As a result policy will most likely reduce the prevalence and degree of mixed communities. Policies such as the proposed “pay to stay” policy for better off households in social housing will most likely reinforce these tendencies, and the stigmatization of social housing as welfare housing. The prevailing Coalition narrative is that this is as it should be: taxpayers shouldn’t be expected to subsidize poor households to live in richer areas that they themselves are not able to afford. Increasingly this proposition is treated as self-evidently common sense. It is easy to forget that it represents a complete reorientation of policy. Over most of the 2000s the policy aim was to encourage more mixed communities as a means of diluting poverty, reducing stigma, reconnecting neighbourhoods with the labour market and wider society. There was a sense that exposure to “the other” was a means of facilitating mutual toleration, social cohesion and social identification. This is gone, in policy thinking in England at least.
Do mixed communities matter? I don’t think we’ve really thought about this. The focus is upon the individual and choice, not upon the aggregate impacts of those choices and whether they are on balance negative. Yet we know from the research literature that we should be concerned about things like neighbourhood effects – poor people living in areas of concentrated disadvantage perform worse on a range of measures than similar poor people in more mixed areas, as do their children.
So I think we would do well to return to the Preamble and consider, when we say that “we seek to balance the fundamental values of liberty, equality and community”, precisely what we mean by community and whether current policy directions are likely to sustain the types of communities we see as desirable.