Time to face the housing crisis head on

The UK housing shortage has reached crisis proportions. Building a few thousand ‘affordable’ homes is no solution.

In 2011, the Lib-Con coalition government promised to build 150,000 affordable homes. Two years later, that promise is nowhere near being met. In fact, the government looks set to oversee the building of just 37,000 affordable homes. Housing charities are warning that the shortfall in affordable homes has become critical – pointedly so in London. One such charity, Counterpoint, says 200,000 affordable homes are needed by 2021.

There is no doubt that there is a substantial housing problem in the UK. Local authorities like the London borough of Newham are embroiled in a campaign to identify and demolish ‘supersheds’ – the illegally occupied garden sheds that are sprouting up all over London. Meanwhile in Stockport, in north-west England, some homeless people have taken to living in sandstone caves. When people are priced out of the housing and rental markets to the point where they are forced to live in sheds and caves, it is clear there is a problem.

The government’s answer has been to encourage the building of more affordable homes, since the problem is that younger people in particular cannot afford to buy or rent a place. The ‘affordable homes’ programme, though, is a confusing concept.

When people say that new homes should be ‘affordable’, they lose sight of the fact that in a market society, the price of the home is not a building specification that you can set before hand, like window sizes or insulation efficiency. Prices move, sometimes downwards, or in the British housing market for the past quarter of a century, mostly upwards.

Today, the average UK house price is £238,976 – rising to £273,766 in the south east of England and £454,644 in Greater London. By comparison, the UK average annual wage for full-time workers was £26,500 in April 2012 – suggesting the average home now costs about nine times the average pre-tax salary. Though the economy overall is sluggish, house prices have bounced back since 2008. Many of the houses that cost so much today were once considered ‘affordable’, or even cheap. A former council flat in Camberwell in south London sold for £214,000, while those in Trellick Tower (once a ghetto) go for even more. Some of the houses once let by the man who epitomised slum landlords 50 years ago – Peter Rachman – today cost more than half a million pounds.

You can build ‘affordable’ homes – and scrimp on space and materials to make them as cheap as possible – but so great is the demand that once they are on the market, they cease to be affordable.

The government’s critics say that affordability can be maintained by keeping affordable homes out of the market, and allocating them instead according to social need, through housing associations and local authorities. That could be a solution for the very worst off, except that it is one that carries great social stigma – which is why the original sell-off of council housing was so popular with the public. The current government also faces a contradiction: it accepts the point that selling off publicly owned housing stock means less social housing, but it is not willing to give up on the promise of the ‘right to buy’. Whatever the government’s difficulties with social housing, it is nevertheless a sticking plaster on a great wound.

By looking at only the very worst cases of social need, the government and its critics are avoiding the problem that the shortfall in housebuilding is not just at the lower end of the market, but across the board. There are around 27million dwellings in the UK, but the rate at which new ones are being built - little more than 100,000 a year - is not enough to replace the dilapidated homes, let alone meet the growing demand from a larger, longer-living population, that lives in smaller families. There is not a shortage of ‘affordable homes’; there is a shortage of homes, full stop. Because the absolute number built is too few, the competition for the existing stock is great, which is why house prices in the UK only briefly fell in 2008 during the economic crisis, and bounced back so much quicker than the rest of the economy.

Britain’s restrictive planning laws, its conservative and misnamed ‘volume builders’, and its general prejudice against green-field developments have all added up to a major constraint on housebuilding – even before the current recession hit the industry. The shortfall carried on all through the previous two Labour administrations, because they found it easier to kow-tow to the coalition of conservationists and Tory shires that wanted to preserve England’s green and pleasant land to themselves, behind a ‘green belt’, and keep the masses out.

The government’s promises to get more ‘affordable housing’ have fallen short. Instead, new building of cheaper homes, like the rest of the housing stock, has dried up. Ministers hoped that they could encourage private industry to take up some of the slack. But of 1,786 registered providers of affordable homes, so far only 17 are profit-making. The promise that any social-housing stock lost through a restored ‘right to buy’ would be replaced, one-for-one, by new building has proved empty, as the new building has not happened.

The housing stock is so large, and aged, that it would not be easy to turn around. Many senior politicians have promised a turn to new building, as John Prescott did in 2002, Gordon Brown did in 2005 and David Cameron did in 2011. That they have failed to deal with the problem is damning; but in fairness, it would take a profound determination to overcome the accumulated resistance of a hostile planning system, overseen by reluctant professionals, pressured by entrenched conservation lobbies and let down by under-ambitious developers.

Both wings of the political class have recognised that the problem is pressing. But their solutions turn out to be too timid. Labour’s tentative attempts to embarrass the government over housing do not add up to much more than a slightly larger social-housing sector, complete with the authoritarian promise of officials controlling and micro-managing the lives of their ‘problem’ tenants. The Tories’ piecemeal nods to privatisation and the free market turn out to be mostly hot air, without any instinct to free the planning laws.

A real solution would no doubt involve both private and public sectors contributing, but driven from the top, as Labour’s Richard Crossman did in 1966, when he managed to get local authorities and private industry to build nearly half a million homes between them, around four times as many as were built last year. Nor was Crossman exceptional. Conservative prime minister Harold Macmillan had overseen a similarly large housebuilding programme a few years earlier.

The ambition to build ‘affordable homes’, though, is just a way of saying that we are going to tinker at the margins of the problem, meaning that the situation will only get worse.

James Heartfield is author most recently of The European Union and the End of Politics, published by ZER0 Books. Visit his website here.

For permission to republish spiked articles, please contact Viv Regan.

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