Death of the Council House
In the last issue of HIP, we called for further contributions to the debate about housing in Hastings and particularly the rental sector. Here HIP’s Kent Barker offers a historical perspective to help explain the current accommodation crisis.
“No single piece of legislation has enabled the transfer of so much capital wealth from the state to the people”. The words are those of Michael Heseltine, Environment Secretary in 1979. But giving people the opportunity to own their council home wasn’t his scheme, it was that of his boss, Margaret Thatcher, first elected Prime Minister in 1979. Less than a year later came the 1980 Housing Act ushering in the Right to Buy.
Unsurprisingly, it was extremely popular. Six million people living in council accommodation in the early 1970s were entitled to buy their home from their local council at discounts of up to 70%. Two million of them did so, and the rest of the council housing stock was passed to Housing Associations or Arms Length Management Organisations (ALMOs) which ran them. Councils were effectively forbidden from providing homes and the 60-year era of local authority social housing came crashing down.
Why does this matter? Because the amount of social housing fell from around 6.5 million units in 1979 to roughly 2 million in 2017. In a nutshell it’s why we have a housing crisis today and, more importantly to the current debate, it’s why it’s so expensive to rent privately.
Two other vital factors are also down to Thatcher. Although councils received the money from the enforced sale of their properties, they were legally forbidden to re-invest the money in replacement housing – it HAD to be done through the Housing Associations or ALMOs. This was great for councils who received sizeable windfalls, great for government who reduced rate support grants to councils, and a disaster for prospective tenants who found social housing ever harder to obtain. The second factor was the introduction of Housing Benefit. The Tory government recognised that, without subsidised council houses, hundreds of thousands of the poorest people would become homeless. So what to do? Ah, of course, pay housing benefits direct to private landlords who were, or soon would be, Conservative voters. A win win.
The downside was that it artificially raised rents up to, and beyond, the reasonably generous benefit levels. Some private landlords refused to take Housing Benefit tenants, but many did so in the knowledge that their rent was absolutely guaranteed. Even now those receiving Local Housing Allowance (LHA) are subject to much of the same treatment from landlords – variously shunned or desired as a regular source of income.
Effectively, housing benefit subsidies have meant that a large chunk of social housing was transferred from democratically controlled local authorities to unregulated private landlords – which in turn launched the ‘Buy-to-Let’ stampede, which resulted in rampant house price inflation making it ever harder to get on the housing ladder. Buy-to-Let has only evolved into ever more profit-driven schemes, often ignoring any sense of social responsibility.
Right to Buy remains today. So social housing built by Housing Associations often ends up in private hands, as will Hastings Borough Council’s new council houses, given enough time.
Many applauded the creation of Thatcher’s ‘home-owning democracy’ but for the increasing millions of renters unable to buy, and sometimes unable to rent, it’s been a catastrophe.
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