The problem

New Labour's record on housing policy is a disgrace. Here's the indictment drawn up by the National Housing Federation, the outfit that represents housing associations. They say we face a 'housing time bomb,' an 'explosion of housing need.' There are 1.6 million on council house waiting lists. Their numbers are growing by 7.6% a year. Repossessions were up by 65% last year to 17,000 losing their homes, and official homelessness went up by 14.4% between 2000 and 2005.

All this is happening because we are not building enough houses. Last year we built less than any year since the 1920s. And because so few new homes are being built, prices go up so as to be completely unaffordable for the poorer in our society. New Labour has left housing provision to the market, and the market has failed to provide enough. We need a crash house-building programme, and that requires government action.

A history of house provision  

Housing provision has always been a political issue. The working class has always had to involve itself in struggle for decent affordable housing for all. It still must.

At the beginning of the last century, nearly all workers lived in private rented accommodation. Many of these were slums. Local councils did have the power to build houses, but before the First World War many working men (and all women) lacked the vote. So there were relatively few Labour controlled councils with the mind to build houses.
The War caused a rush of workers into industrial areas such as Clydeside to work in the munitions factories. This gave the slum landlords the chance they needed to jack up rents. In 1915 working women in Glasgow, backed by the trade unions, went on rent strike. Munitions workers had a strong bargaining position, and the government was forced to decree a rent freeze.

Therefore what capitalist would build new houses to rent, if they couldn't make money out of them? But between the Wars four million houses were built. Many were built in the suburbs for sale. Great numbers of middle class people and the upper sections of the working class were now able to own their own houses for the first time.
At the same time Labour's vote was rising steadily at the expense of the Liberals, and more and more councils went Labour. And those councils built more than a million council houses interwar, good quality homes available at rents working class families could afford.  

Council house blues  

Councils were not hamstrung for cash in the interwar period, even though the Tories were in power nationally for most of the time. For instance, the London County Council fell to Labour and its leader Herbert Morrison had Hackney marshes drained and the reclaimed land used for housing the working class, in part using government grants.
The blitz in the Second World War devastated the housing stock. The situation was made worse by the conscription of virtually all potential building workers. The end of War saw a terrible shortage of homes, with working class families forced to squat in disused aerodromes and army and prisoner of war camps. Aneurin Bevan was Minister for Housing as well as Health in the post-War Labour government. In addition to setting up the National Health Service, he insisted on building world-class council houses (I was brought up in one). The quality of these homes with huge gardens front and back meant that nobody living in one need regard themselves as second class citizen. No council tenant need aspire to owning their own house as long as their tenancy was secure and their rent modest.

But for years after the War, the housing situation was dominated by chronic shortage. Tens of thousands lived in prefabs and other temporary accommodation. The inner city slums still had to be cleared. The temptation was on councils to cut corners. As the proportion of the population in council housing went up to 40% in the 1960s, some councils were flinging up bleak blocks of flats on soulless estates that soon became a new generation of slums.

In 1979 Margaret Thatcher changed the nature of housing provision forever, as she hoped. She allowed council tenants to buy their own council houses at discounts of up to 75%. Longstanding tenants found they could pay less on a mortgage to buy their house than to pay the rent the council charged. Of course if they continued as tenants they would be paying till the end of their days, while if they bought they would be sitting on a nice little appreciating asset. For some it was a no-brainer.
For others the options were different. Thatcher didn't just introduce the 'right to buy.' Her government presided over mass unemployment, which quickly went over three million. The unemployed and those on benefits couldn't buy their place, and for those stuck on the estates of flats thrown up in the 1960s, nobody would really want to buy their flat on the open market. Many council properties quickly became sink estates occupied overwhelmingly by people on benefits. Despite the best efforts of the tenants to keep up standards, some became no-go areas after dark.

That seemed to spell doom for council house building. What was the point of spending £45,000 to build a house, if a twenty-year council tenant moved in and could buy it for half that sum? A year later the local Labour councillor would see the property on the market tarted up and going for £80,000. (This is anecdotal evidence from an Ealing councillor in the 1980s.)
How had council housing usually paid for itself? The council had to pay up front for the house. After about four or five years of getting in rents, the council would have broken even. So new house building was subsidised by existing tenants. But hundreds of thousands of former council tenants weren't paying rent any more. In effect those who exercised the right to buy were running off with public funds, and they were also shrinking the pool of available social housing.

Thatcher didn't make it any easier for Labour councils. She launched a series of cuts in state subsidies to local authorities. Then she just banned them from spending money on things the Tories didn't approve of. Nobody is building council houses any more, and we have lost 3.5 million houses since 1979, most because of the 'right to buy.'

Fightback

Government policy has been a continuation of Thatcher's, and it's a disaster for the poor. Instead of letting local councils borrow on the same terms as housing associations, they have kept the restrictions imposed by Thatcher on what local authorities can do. Councils can still not borrow to build houses. Instead of letting them keep rent receipts to maintain the existing stock and build new houses, the Treasury has grabbed £2 billion a year from local councils, three quarters of the money. In May 2007 Yvette Cooper announced that councils could now keep the receipts from council house sales - ten years too late!

Council house provision here continues to decay, partly as a result of government policy. The government is offering a poisoned choice of options to council tenants. They are encouraging housing associations to take over the estates. Housing associations do not build houses, they just manage the estates as landlords. Or tenants can come under the control of an Arms' Length Management Organisation (ALMO), or have a Private Finance Initiative consortium to do up the housing stock. This may sound like an alphabet soup of organisations. These hybrids all have one thing in common. They are in business to make money out of social housing. One way they do this is by gentrifying the properties so the people most in need can no longer afford to live there. Where are these people supposed to go? The PFI brigade will be given away swathes of land, some of which they will use to build profitable (non-affordable) housing.

Labour Party conference has opposed this attempted destruction of council housing. They want an end to the rigged ballots, where tenants are in effect blackmailed to either vote for improvements by going private or continuing to decay as a council-run estate. Along with the Defend Council Housing campaign, tenants want a fourth option - for council housing to be kept and be given a level playing field - the same resources as New Labour would throw away on an ALMO or the PFI crooks. Incredibly in 224 out of 360 ballots, tenants have rejected privatisation and affirmed their belief in the principle of council housing. They are right. Our council housing stock is a £400 billion asset for the nation built up over generations that should be conserved and improved, not something to be stolen.

Private housing out of reach

So more and more people are forced on to the private housing market to get a roof over their head. But the 1.6 million on council house waiting lists show this is not an option for everyone. Home ownership is often presented as a natural result of increasing prosperity or an exercise of 'choice.' It is nothing of the sort. Statistics show that the countries with the highest proportion of homeowners are India and Thailand. But their homes are, in many cases, hovels. In Germany and Sweden the quality of the housing stock is on average higher than in Britain. There, so long as they have security of tenure, more workers have the option to rent than in Britain, and they are happy to do that.

Now a big majority of households go for owning their own house, not because we've become a 'property owning democracy,' but because they have no choice. Soon four in five will own their own house, or rather the mortgage on it.  At present the average price of a house is £180,000, six times average earnings. In the past banks have gone by a rule of thumb that the maximum repayments anyone could afford was five times earnings. Now they just throw money at borrowers, blowing up the house price bubble. And repayments are edging up as the Bank of England pushes up interest rates. Hence the rise in repossessions and homelessness.

For workers on less than average earnings, it is proving impossible to get a foot on the bottom rung of the property ladder. Many people are completely dependent on family financial support to get a roof over their head Yvette Cooper has warned that 70% of young couples will be unable to afford a home. So what is she doing about it?

House prices are often described as a ladder. We've all met people who've done very well out of rising house prices. But really the whole thing is more like a roundabout. You only benefit if you can get off at the right time. Property prices have tripled in the past ten years. But how does that benefit you if you're sitting in the same bricks and mortar? If you need to move house, it's probably going to cost you three times as much to move as it would have ten years ago. Overall it's a zero sum game, with as many losers as winners.

There is no doubt that the present rise in house prices is a bubble. The definition of a bubble is when prices go up because people are buying, and people are buying because prices are going up. Nobody can predict when the bubble will burst, but that is what bubbles usually do. Then you get a situation where prices are going down because people are selling, and people are selling because prices are going down. The last time the house price bubble burst was in the 1990s. Millions were left with 'negative equity'.  They were stuck in a house that was worth less than when they took out the mortgage, so they couldn't move and couldn't really afford to stay.

Conventional economic theory, always an apologist for capitalism, says this shouldn't happen. When rising demand causes the price of a commodity to rise, capitalists will up the supply and all will be well. But builders are not building more houses. Clearly, in relation to housing need, capitalism is not delivering the goods.

The way forward

What is the government doing about all this? Mainly they are supinely waiting on the market, though it is clear we could wait forever. What we need is massively more affordable social housing. It is clear that housing must be built in a planned manner on the order of the public sector. It must be publicly owned and affordable, and there can be no question of tenants being allowed to walk away with a public resource.

Ask the building companies what the problem is and they say it is planning restrictions. They are slavering to carve up the green belt. Rubbish. Most of them are sitting on portfolios of development land as a speculative investment. What we want is houses near our jobs. There are not many jobs on the green belt. Our main immediate strategy must be to build to regenerate the inner cities and end urban blight, by building first on brownfield sites.

We want council's powers to be restored for the sake of local democracy. What's the point in voting for councillors if they can't decide anything? But we face a national housing crisis. That needs national action.

We have over 200,000 homeless (and how do you count rough sleepers?). Meanwhile the rich have a quarter of a million second homes, most only used at weekends. These are often located in picturesque but low paying parts of the country. The rush for second homes creates ghost villages and drives property prices completely beyond the reach of the locals. We can and should tax second homes more than the ones people actually live in. But the problem will only really be dealt with by creating a more equal society where everybody can afford a roof over their head and nobody can flaunt their wealth at the rest of us.

The big building companies have failed. They must be taken over. The construction industry is a jungle. Half a dozen big firms dominate the industry - Wimpey, Balfour Beatty, Bovis, Persimmon and the rest of them. They dictate what to do to a cat's cradle of sub-contractors. At the bottom of the pile are thousands of little firms consisting of little more than two men and a ladder, and so-called self-employed workers on the lump. As a result of this chaos, construction has one of the worst safety records of any industry Take over the big boys and we can plan and run the whole show.

We need to own the land as well. What we need is a National Housing Corporation to make an inventory of the land and materials at our disposal and draw up a strategy for a mass programme of house building.

One of the problems of Prescott's plan for housing in the Thames gateway is that there is little provision for affordable housing. Secondly it is basically a matter of dumping a load of private housing estates down without planning for jobs or social amenities to go with them, and in some cases with inadequate infrastructure. Housing provision must be part of an overall socialist plan.