9 January 2015

People in Cornwall differ in what they think is the number of affordable houses (and open market houses) needed here, but all are agreed there is a shortage of affordables. Why is there a shortage? The question matters because understanding how we arrived here will help us to better understand what has to be done to end the shortage.

Root of the shortage
The root of our present problems go back the Margaret Thatcher’s Tory government (1979-92). In 1980 it enabled the sale of council houses to sitting tenants, a policy I agree with. It also disastrously and ideologically set its face against a pari passu replacement building program, which I certainly think should have been done, a clear necessity. Houses were sold, taken out of the public domain, and not replaced: the result was a steadily growing shortage of public housing. In part I think this antagonism to replacement council housing was initially due to a Tory belief that council tenants mostly voted Labour and owner occupiers Conservative. The Tory belief in a self-focused individualism and the central role of private property in that over against fraternity and cooperation also played a role.

To its shame, the last Labour government failed utterly to take housing seriously, kept the right-to-buy, but did not have a replacement program. Far too few affordable houses have been built under all governments since the 1980s. When it took office in 2010 the Tory Libdem government strangled the budget for affordable housing and thus added to the shortage.

There has since the 1970s been a change in the demographic characteristic of social housing with unemployment more prevalent and social difficulties for a minority of tenants. The present difficulty of buying an open market house because of high prices may be now changing the demographic of social housing yet again and also that of the private rented sector. See page 45 following in Ends and means (2007)by John Hills for some characteristics of tenants of social housing.

Owner occupiers have until recently increase in numbers and proportion – see the last paragraph of this section for the recent proportional fallback – and houses have become not just homes but also financial assets. Many owner occupiers have come to see public housing threatening the monetary value of their asset and consequently opposition to affordable housing in their vicinity grew.

Since 1980 the building of council houses has collapsed and there have been attempts to overwrite these changes by financially pressuring councils to hand over their council houses to housing associations and changing the nomenclature as well as the ownership. The language is now about social housing and affordable housing not council housing and the owners now tend to be hybrid housing associations not councils. This is partly an ideological rejection of councils and the public sector and partly a loss of confidence in councils’ abilities as landlords.

Note that the shortage, which also applies to open market houses, has led to a substantial rise in housing costs: prices of land, of houses on the open market, rents, and housing benefit to help pay rent. In turn, the failure to build public housing and the lucrative rents in the private sector have led to a shift in the proportion each sector has in housing from owner occupation to private rented.

Present failures
Certainly, the refusal of planning permission for housing proposals in the face of the loud and organised opposition of some voters is partly responsible for the shortage. There seems to be a failure by opponents of development to understand that the current funding model means open market housing has to be built to make financially possible affordable housing and a failure by opponents to come up with any viable funding source that would enable the building of only affordable housing, though I think that monopoly tenure undesirable.

I suspect that the local and neighbourhood plans now being created in Cornwall and elsewhere will make house building more difficult than it is. As far back as 2009 Andrew George, the Libdem MP for St Ives and a claimed supporter of affordable housing, acknowledged the negativity of localism on affordable provision: see the note on nimbyism below. Additionally, there is an ideological opposition by some to building on fields though there are few alternative sites. Every site anywhere seems to draw opposition.

To build a house costs money. I explained the current major system of funding in a previous post. As I have said, when it came to office in 2010 the Tory Libdem government heavily cut the funds for affordable housing and introduced unaffordable ‘affordable rents,’ dearer than social rents for which in turn they changed, adversely for tenants, the formula for the rent increases. Cuts in government finance and a struggling economy which adversely affected house builders have reduced building. In the three years 2011/12 to 2013/14 only 339 000 houses of all tenures were built in England, an average of 113 000 a year against a need which the Town and Country Planning Association inter alia puts at around 240 000 (see table 209 here.

Thus these are the main causes of our present shortage of affordable houses: the Thatcher non-replacement project; the changes in the demographic and perceptions of council estates; the opposition of some local people to any housing near them and on fields, whether affordable or open market; the cuts in funding and the weak economy; the failure of governments to see housing and affordable housing as priorities.

Note on nimbyism, localism and affordable houses: extract from mudhook post of 24 October 2011

“…during a debate in the Commons on 3 June 2009 about the relationship and distribution of powers between central and regional and local government, Peter Soulsby, the Labour MP for Leicester South, made a telling point which shattered the simplisticism of a hymn to localism. The debate begins at column 352 and I urge you to read it.

Soulsby argued reasonably that, while subsidiarity, the devolution to the local level of as much as possible, mattered, there was a tendency for local councils to reject housing plans in their areas on nimby grounds (column 357). This meant that a higher authority — in his view regional — had to tell them they must provide the housing. He added, absolutely rightly I think, that that the voices of local people seeking their first house and affordable housing “are far too easily drowned out by those who wish to oppose housing development in certain areas” (column 362). Central government had to overcome the local tendency to say no by setting housing targets “to reflect the needs of people throughout the country.

I think Soulsby demonstrated that localism has its limits and drawbacks.

Andrew George, Libdem MP for St Ives, who initiated the debate, endeavoured to reconcile the desire to see local powers with the reality of how such powers could be used to frustrate affordable housing. He agreed that a local council failing to meet local demand for affordable housing should be subjected to “pressure” from central government, whatever “pressure” means (column 357).
George also said that he accepted there was sometimes a need for “outside intervention,” that is by central government, to ensure that gipsy and traveller sites were provided where prejudice and discrimination prevented local provision (column 362). We’re back to taking powers of decision from locals and giving them to a larger deciding constituency again. I suspect the provision of gipsy sites is a serious problem for progressives advocating localism.

Interestingly, earlier George had argued in the Western Morning News for 26 July 2007 that “The simple principle should be established that decisions which affect one community and no other should be taken in that community and not by others outside it.” I explained here why I thought that an inadequate view.

What is interesting in all this is that fairly uncritical and simplistic claims for more powers for local decision-making by local councils or local people are confronted by two egregious examples of the likely failure of localism, the provision of affordable housing and gipsy sites. I think outside direction by central or regional government is needed to secure desired ends and those ends might well not be what many local people wanted. Additionally, localism turns out to be, well, not quite as local as people thought it would be.”

See also this report, Localism is making housing shortage worse, warns new report from the Guardian 24 June 2011.