Written by Mark Kirby
Record number of homeless dying while social housing completions hit record lows
ONS figures show that there were an estimated 726 deaths of homeless people in England and Wales registered in 2018, the highest year-to-year increase (22%) since the time series began. Further figures show the estimated number of deaths among homeless people has risen by 51% in the last 6 years.
At the same time the provision of social housing is in crisis. The number of council houses completed in the second quarter of 2019 fell to 490. There are now fewer council houses to rent than at any point in the last 50 years. The number available has more than halved over the last twenty years. Since 2012 the government has allowed 54581 council houses to be sold off but only built 12472 to replace them.
It is unfortunately true that this pattern was established by the last Labour government since shamefully in 2000 only 100 new council houses were built and in the following two years only 340. Clearly the approach of Labour has now dramatically changed.
It is no good building so-called ‘affordable’ housing which are 30% more expensive than social housing for the simple reason that there are in reality not affordable at all.
The next Labour government is committed to building more social housing to end the scourge of homelessness and families being the victims of rogue private landlords.
Here are five reasons you can’t trust the Tories to fix the housing crisis:
• Despite setting aside over £2bn to build 200,000 new starter homes, none were built.
• The number of new homes for affordable home ownership has almost halved since 2010.
• Under the Tories, the number of new social rented homes has fallen by over 80%, so we are now building 30,000 fewer socially rented homes each year than under Labour
• There are nearly 900,000 fewer home owning households under 45 than in 2010.
• Over 126,000 children are recorded as homeless in temporary accommodation – an increase of 70% since 2010.
Here is even more evidence of the parlous state of housing in the UK in 2019:
• The share of families headed by those aged 25-34 owning their home has fallen by almost half over recent decades, from 50 per cent in 1989 to 28 per cent in 2017.
• In 1980, the average working-age family spent one-tenth of its income on housing gross of housing benefit; today it spends one-fifth.
• In 1980, the average working-age family renting privately spent 12 per cent of its income on housing gross of housing benefit; today it spends almost three time this amount at 35 per cent.
• Housing cost to income ratios gross of housing benefit have increased fastest among those working-age families on the lowest incomes (in the bottom quintile), by 24 percentage points (from 15 to 39 per cent) between 1980 and 2017. This compares to just a 2 percentage point increase (from 7 to 9 per cent) for those on the highest incomes (in the top quintile).
• Seven-in-ten social renters in receipt of housing benefit had their rent fully covered by the benefit in 2010-12, but that share has fallen in recent years to just over a half in 2015-17.
• Low-income families have suffered a £1,200 living standards hit from fast rising housing costs since 2002. At the same time, thanks to falling interest rates, high-income families are £400 better off as their housing costs have fallen in real terms since 2002. This means that recent trends in housing costs have acted to push up inequality in the UK.
As a simple indicator of where the sympathies of the mainstream media lies, the Financial Times contained a readers letter which can be summarised as follows:
Letter to weekend FT…… I own a flat that I rent out to a lovely couple but I want to get them out so I can rent it on Airbnb as a holiday let preferably before Christmas. How do I go about doing that?
The reply simply states the mechanism by which it would not be possible before Christmas (not enough time under the regulations) but says the process otherwise is straightforward.
So Scrooge may not be able to evict by Xmas now, but will do so shortly afterwards. What a terrible indictment of Austerity Housing policy.
The Housing Crisis
Growing up and getting a house of your own seemed such a natural thing for many in the 1950s to the 1970s. But today we have no such normality. There are two key reasons for this: (1) the rise in income and wealth inequality which has fed through into house prices and (2) the virtual obliteration of social housing as the Tories seek to commodify and literally rent-seek from private rented housing.
Unaffordable House Purchases
House prices have risen much more than the general level of inflation, a phenomenon that started in the 1970s. if we apply the level of inflation seen in house prices to grocery items using their 1971 prices as a base, we would today face a situation where you would have to pay £2.15 for a pint of milk, £20.22 for a jar of coffee and £4 for a sliced loaf. In relation to housing, it is estimated that first-time buyers need an average income over £54,000 to buy a house (a rise of 9% in 3 years). This average housing figure obviously differs in areas of the UK but as an average shows the unaffordability for most. The figures vary from £26100 in Liverpool to £84000 in London – this latter figure putting people in the top 5% of income earners.
The semi-famous TT rider who made a fool of himself on Question Time recently for calling the Labour party liars for saying someone earning £80,000 pa was in the top 5% of income earners was probably not alone in his ignorance since although a large sum of money, it is not a picture of The Great Gatsby and the digital billionaires running Amazon, Google and Facebook.
Nonetheless, it is true that if you earn £80,000pa you are in the top 5% in 2019.
In other words, house ownership, unless you inherit it from your family, is effectively now open to only the top 20% of the population.
Which means the majority of people will now indeed form Generation Rent. For much of the twentieth century there were solutions for this. Following the passing of the Housing of the Working Classes Act 1885 and the housing Act of 1919, local authorities were provided with funds to construct council housing.
In 1946, 1 in 3 households owned their own house and most of the rest rented, either in the private sector or from social housing authorities (largely councils). 1 in 6 of the wealthiest 20% of people lived in social housing, as well as 1 in 4 of the poorest 20%.
However by 2005, only 2% of the wealthiest 20% and 49% of the poorest 20% lived in social housing.
Social Housing has effectively been allowed to become social ghettos and the beneficiaries of this have been private landlords whose creation as a class has been one of the biggest social changes in recent years. Social housing has also suffered from the depletion of stock via Right-toBuy policies and also simply by the lack of building. The latest housing building statistics show that local authorities in England started building 1,630 new homes in 2017/18. Contrast that with the figure from 40 years earlier when local authorities started building 90,750 homes in 1977/78.
Although owner occupation is still the largest form of housing tenure, among those renting, private renting now exceeds social renting. There were 23.9 million dwellings in England at 31 March 2017, an increase of 217,000 dwellings (0.92%) on the same point the previous year. 15.1 million dwellings were owner occupied dwellings, 4.8 million private rented dwellings and 4.0 million social and affordable rented dwellings (Private Registered Providers plus Local Authority).
One of the key problems with this terminology is the use of the word affordable because the big problem with that word is that it refers to property which for the vast majority of people is in fact unaffordable.
We have already noted that in terms of buying a house you would have to be in the top 20% of earners. But even if you are renting, much of the housing market may be out of reach. Shelter estimates that average rents in England are equivalent to around 32% of gross average pay.
So we should not glorify the term affordable housing with any legitimacy since it pretends to do something it does not do. The way the emergence of ‘affordable’ housing has coincided with the virtual disappearance of social rented housing can be clearly grasped from this graph from the latest Housing Statistics:
A key reason for all of this has been the clear ideological commitment of the Tories to the private sector. Whether it is via Westminister council using the selling of council houses to gerrymander elections or the general reduction in the council housing stock via Right-to-Buy legislation or the complete failure to build significant numbers of social housing units, or equally their willingness to subsidize private house buyers but not build social housing, the Tories have been consistent in their failures, some of which have been brought out clearly in this election. Memorably Andrew Neil made Liz Truss look completely foolish when pointing out that of the 200,000 starter housing units the government pledged to build in 2015, the exact number which had been built was 0. You can watch this for yourself at https://youtu.be/rTmSfzeHdEo
The other facts that emerged there are that the Tories have added about 244,000 homes to the stock from the private sector but only built 1750 social housing units in 2017 and 2640 in 2018 while there are over 1 million people on council house waiting lists. Nothing could make clearer the absolute aversion of the Tories to social housing and the reason is obvious – they wish to further enrich the private sector which for many people since the 1970s has been the cause of much of their indebtedness. The reaction to all this has seen the emergence of a number of groups including not only Shelter but more recent direct-action groups like ACORN the union https://acorntheunion.org.uk/about/
The Coming Crisis?:
We know that one of the key causes of the financial crash in 2008 was the reckless behaviour of the bankers in creating derivatives around mortgages for those on low incomes. These products known as sub-prime mortgages, were most often sold with a low-rate period for about 2 years, giving people the illusion of affordability. In fact, they are one factor that pushed house prices well beyond the general inflation rate:
They also created unbearable amounts of debt which banks then loaded onto states, turning it into a fiscal public crisis. That the Tories then tried to blame Labour is a bloody cheek but unfortunately some of the acts of New Labour, along with the unwillingness of the then Labour leadership to contest that narrative, meant this stuck. Obviously it needs to be challenged and we might get a chance since household debts levels and general debt levels are again approaching the levels seen in the mid-2000s.
Approx 1/3 of investment money is invested in structures that pay negative real returns which seems insane until you realise they are doing this for the certaintly it offers and the wish to avoid the uncertainty of the private equity market. These investors are well aware that another crash may happen and do not want to park their money in the area that might crash. As a result the price of government bonds is rising. Since this means their yield is low, it could be argued this is a good time for the government to raise lots of money through borrowing. To help fund the building of 100,000 council houses a year for example.
In summary the Housing promises in the 2019 Labour manifesto include:
• Building 100,000 council homes a year
• One million affordable homes to be built over 5 years in total
• A low-cost home ownership scheme: discounted so mortgage payments are no more than a third of average local incomes
• Making safe homes for all with sprinklers fitted in high-rise blocks
• Giving tenants a vote on all proposed regeneration schemes
• Scrapping section 21 no-fault evictions and establishing tenants’ unions
• Committed to “Warm Homes for All”, with loft insulation and double glazing.
• Suspend ‘Right to Buy’ and allow councils to re-purchase private-rented homes
• Giving renters the right to have pets