“The social consequences of Right to Buy have been disastrous. Approximately 40% of homes sold have ended up in the private rental sector with their exploitative rents, which push up the housing benefit bill.”
By Martin Wicks
It was what the delegates wanted to hear. Labour’s mantra according to Lisa Nandy was “council housing, council housing, council housing”. Yet in Keir Starmer’s speech you could say (although he didn’t use the word) his mantra was “Labour is the party of home ownership”. There wasn’t much detail in either speech though Keir Starmer said that Labour’s target was 70% home ownership and this would be funded by a mortgage guarantee scheme. Lisa Nandy said that ‘social housing’ would become the second highest tenure, though she said nothing about its funding.
What would a Labour government have to do to achieve these aims? Currently, in England, owner occupation is 1,553,000 short of 70%. In the case of ‘social housing’ the combined total of council and housing association homes is 771,000 short of the numbers for the private rented sector.
These are conflicting objectives. For a Labour government to fund home ownership with a mortgage guarantees scheme at a time when prices are extortionate would, in effect be a subsidy for the monopoly house builders. In March 2021 Keir Starmer hauled the Tories over the coals for their 95% mortgage scheme because “It fuelled a housing bubble, pushed up prices, and made owning a home more difficult…”. How would a Labour mortgage guarantee scheme be any different?
That speech in Parliament was the one swallow which didn’t make a spring.
“If the Government were serious about fixing the broken housing market, they would have announced plans for a new generation of genuinely affordable council houses. Instead, 230,000 council homes have been lost since 2010, yet the Chancellor focused today on returning to subsidising 95% of mortgages.”
That was a rare reference to council housing, of which nothing more was heard.
A 70% home ownership target is unfeasible. During its 13 years in office, despite New Labour’s veneration of homes ownership, owner occupation in England marginally fell from 67.8% to 67.7%. It has since declined even further. There can be no increase in home ownership without a significant fall in prices. Both lower quartile and median new build homes have prices more than 10 times income.
Before Right to Buy council housing facilitated home ownership in as much as the rent levels enabled tenants to save up a deposit, buy a home on the market and hand back the keys to the council, enabling somebody else from the waiting list to take the tenancy. A large scale council building programme is the most efficient way to drag market prices down because it would take hundreds of thousands of families out of the market; make it less of a sellers’ market.
There can be no resolution of the housing crisis without a return to large scale council house building and that requires central government grant. So we need to know, if Labour is to fund council house building, how much grant is it going to be made available? Currently only £54,000 on average is available for social rent homes from Homes England. That’s why councils build so little and there are now less than 1.6 million council homes left.
There is another critical question which needs resolving; that of Right to Buy. In her conference speech Lisa Nandy said “..the idea of a home for life handed on in common ownership to future generations is an idea worth fighting for.” Logically her comment should lead Labour to commit to ending RTB. However, Inside Housing reported “…Ms Nandy was asked at a fringe event where Labour stood on the policy that the current Conservative government has pledged to extend.” She replied that the policy was under review, but for her “this issue was that councils were never able to keep the receipts from the sales and replace the stock.”
We know from talking to senior Labour figures that they are worried that the Tories will accuse them of not supporting “aspiration” if they say they will end RTB. It’s an argument which is not difficult to challenge. The social consequences of RTB have been disastrous. Approximately 40% of homes sold have ended up in the private rental sector with their exploitative rents, which push up the housing benefit bill. Councils have less revenue to maintain the homes they have left because of the loss of rent. If RTB is maintained then councils have to build 10,000 council homes a year just to replace homes sold. That figure hasn’t been achieved for 30 years. End RTB and all new building increases the stock and begins to shrink the waiting list.
Contrary to Keir Starmer’s assertion that home ownership is “the bedrock of security and aspiration” it can become an albatross round the neck; a source of insecurity, as many are now finding as interest rates shoot up. So long as Labour continues to behave and speak as if home ownership is superior than mere renting, then council housing will be viewed as housing for the poor. That’s what it is today as a result of the shortage of available homes.
Prior to the Atlee government council housing was conceived as for the working class and the poor. That government, however, conceived of it as for “general needs”. Indeed, to provide the council housing that was desperately needed, the government restricted the number of homes for sale on the market to one in five. In a situation today in which many people’s aspirations relate to the necessities of life – being able to feed your children and yourself, being able to afford to turn on the heating – council housing should be Labour’s first housing priority. It should be a priority over subsidising home ownership at exploitative prices and supporting the super-profits of the big builders.
It might also be worth reminding Rachel Reeves, the Chancellor if Labour is elected, that the Atlee governments house building programme (as well as the NHS) was carried out at a time when the national debt was 250% of GDP.
The overwhelming view of the Labour membership was clearly expressed at the 2019 and 2021 conferences. The resolutions passed called on Labour to commit funding 150,000 social rent homes a year of which 100,000 at least would be council homes, ending RTB, funding retrofitting of all council homes, dealing with the second homes crisis and so on. Social rent council housing with a secure tenancy can provide a liberation to a generation imprisoned in the expensive and often poor quality private rented sector.
- Martin Wicks, writing in a personal capacity, is the Secretary of the Labour Campaign for Council Housing. You can follow them on Facebook and twitter.
- For more detailed analysis of why council housing should be Labour’s first housing, see this long form article from the Labour Campaign for Council Housing.
