How to build popular support for social housing

What would a popular, left wing housing policy look like?

Three of the most pressing and controversial areas of government policy in the UK at present are; childcare, housing and adult social care (see for example Nick Pearce’s blog on the subject).

It was no surprise when in his recent budget, George Osborne included announcements of extra money in these three areas.

Briefly, he announced tax cuts to help families with childcare costs, government guarantees for people trying to get a mortgage and a cap on the maximum people can spend on care in later life (the cap will be £72,000).

The left in British politics has been developing strong counter arguments on these topics in recent years. However, I do not believe that the left has yet developed a strong idea that the public will back on how to reform the housing system on the UK.

The left has stronger arguments on adult social care and child care.

On adult social care, the government is doing far less than the Dilnot commission recommended (they recommended a cap of more like £35,000). More impressively, Andy Burnham has been floating the idea of a national care service that would be free at the point of use.

On childcare the government’s announcements seems to disproportionately benefit richer households. In contrast, the Resolution Foundation and others have been making the argument for more universal, high quality childcare services.

In both cases, the left has developed a case that a sizeable percentage of the public would support.

Despite a lot of work I do not think that the same could be said for housing.

For example, Jack Dromey’s response to the new housing policies announced in the budget rightly pointed out the government’s failure to stimulate the construction industry. However, it was weaker on what Labour’s alternative approach would look like.

For many on the left the default housing policy is to build more council houses. One of the major problems with this policy is that it is not popular with the public.

In general the public do not support the idea of building new homes of any type.

By a massive majority the public far prefer the idea of owning than renting.

And, when asked to say which housing policies they most support they chose giving assistance to first time buyers and increasing access to mortgages more than they chose building more council housing.

The challenge for the left then is, can they develop housing policies that both address the major problems of housing need facing the country and are popular with the public.

Any thoughts from readers would be most appreciated.

Build baby build

People are living longer and more people are living alone. That means that there are more households being formed than previously. That means we need more houses or flats for people to live in.

To be specific there will be 232,000 households per year formed over the next couple of decades in the UK.

Where will these new houses and flats come from?

The answer in Britain since the 1980s has been that private enterprise will build them.

But there’s a problem with that, they aren’t building enough houses and they don’t show any inclination to build enough houses, especially given the effect of the credit crunch.

Here is a graph of the number of houses built by private enterprise since World War 2.

You can see that it is very rare that in a given year there will be more than 200,000 units built by private house builders in the UK.

And that is just the overall situation. The house building industry has been hit very hard by the credit crunch, as you would imagine for an industry that relies on credit at so many stages of its business. For example, people buy homes using mortgages and developers often buy land on credit.

In response to these shocks the largest house builders, much like the banks, are repairing their balance sheets. Jules Birch reports that Taylor Wimpey are “continuing prioritisation of margin improvement ahead of volume growth”, and IPPR’s recent housing report includes quotes from executives of major house builders saying things like ‘our focus is to rebuild our margins’ and, on the prospect of increasing overall output, ‘we’ll double in size, but halve the margins, so what’s the point?’

This is a big concern because the major house builders in the UK account for a lot of the houses built. Although I would not go so far as some in criticizing the lack of competition in the industry, the list of the biggest house builders in the UK does not change much from year to year.

Here is a chart showing the number of units built by the largest developers over the past couple of years. These numbers are taken from their annual reports.

Again, you can see the continuity from year to year and the relatively small numbers compared to what is needed given the demand for housing.

The traditional policy response to this apparent and worsening impasse has been to reform the planning system to try and make it easier for developers to build houses. The latest example of this is the National Planning Policy Framework.

This is insufficient for several reasons not least the fact that housing developers profit from the current levels of supply and that communities can still stall developments, within or without the planning system, if they are sufficiently organized.

It is worth saying that we consistently saw more than 232,000 new units built each year in the UK in the past, when Local Authorities also built houses.

This chart illustrates that point. It shows the total number of new houses built each year. The difference between the blue line and the red line is the number of social housing units built.

Journalists, housing advocates, academics and politicians have all called on the government to support housing associations to build new houses by variously guaranteeing bonds or altering the quantitive easing measures currently being pursued by the Bank of England.

Certainly, government action is necessary since the private house builders  will not deliver the number of new homes that we need as things stand.