Defend council housing!

Submitted by Anon on 12 January, 2005 - 5:59

In the run-up to the 1997 general election, the British public was presented with a choice of two similar housing policies by the two main parties. The Conservatives promised wholesale privatisation of council housing. Labour wanted councils to ballot their tenants on whether or not they wanted ownership of their estates to be “transferred” to housing associations. The end seemed to be nigh for council housing. One of the best, and most successful, welfare policies of the twentieth century was to be swept aside by the neo-liberal consensus.

The attack on council housing began a long time before 1997 when the Thatcher government brought in the “right-to-buy” scheme, allowing council tenants to buy their homes at knock down prices. The policy ensured most of the country’s best council homes were taken out of the social housing pot. Council housing became something only for the poor and desperate.

The Tories then refused to give local authorities the money they needed to build significant numbers of new homes and to renovate existing ones. What was left of council stock declined dramatically in quality.

The Tories’ policy had a far broader social, and political impact. Housing is no longer perceived of as an essential social need, in the same way that education and health care, despite everything, still are. We have been told to think only in terms of the “housing market” — homes are seen as investments, rather than as places to live. The shift has generated a massive profit-making opportunity for the capitalists — from DIY superstores to a boom in mortgage lending.

New Labour must have thought that they would easily get their way on housing transfers. So much public housing stock was in a bad state of disrepair, So much money was being spent on publicising the various bids from housing associations — they seemed to be offers that tenants couldn’t or wouldn’t refuse.

However, tenants’ associations were very quick to pick up on the flaws in the transfer policy.

Under the new contracts tenants would lose a lot of their security of tenure. There was a lack of accountability of the new management structures. Although most transfer deals offered existing tenants a rent freeze in the short term, there was no guarantee that rents would not, in the longer term, rise to the average level of housing association rents. Those rents were significantly higher than the average of council rents.

The issue of rents really demonstrated why transfers were happening in the first place. Housing associations needed to borrow money to improve the housing. But they would have to borrow money at a higher rate of interest than councils. They would therefore charge higher rents. And the bottom line was that the banks could make more profits out of them.

In 1998, the Defend Council Housing campaign was launched by several tenants’ associations and trade union branches. It was to gather more and more support over the years as it helped communities across the country organise successful “no” campaigns in transfer ballots. National trade unions, a broad swathe of Labour MPs, and even councillors who were sick of being blackmailed into privatisation by central government joined the campaign. By the election of 2001, it became clear that New Labour would have to change tack in its second term if it was to continue its campaign to privatise public housing.

The Government’s new approach was twin track. They announced two new options for privatisation: PFI and ALMO.

ALMOs (Arm’s Length Management Organisations) involved the best local authority housing departments being made into independent corporations, still owned by the council but free from day-to-day council control. PFIs involved private companies coming in to run redevelopments of individual estates and to continue to manage those estates over a 30 year period.

The Government also announced a “decent homes” policy, in other words they did what they are so fond of doing, they set a target. This was to make all social housing meet certain quality standards by 2010. Not a bad idea in and of itself, but it was an attempt to push more councils into accepting one of the privatisation options.

Once again council housing campaigners were able to challenge the government’s plans.

ALMOs, they said, were a stepping stone to privatisation (either through future legislation or “levering in” of private finance), undermined local control and co-ordination and involved huge start up costs.

And PFI in council housing had all the problems associated with PFI in other public services. Public money was to be used to underwrite financial risks, public land was being given away to developers. PFI and ALMO schemes were now being voted down. There were new defeats for transfer proposals.

Pressure was building for a “fourth option” — affordable, decent quality homes under council ownership and control. In June 2004, the Commons Council Housing Group produced a report showing that the existing repair backlog could be met and new houses built if the government adopted the following measures:

• Stop using public money to subsidise privatisation (writing off debts, spending on set up costs, consultations and legal fees, etc).

• Ring fence the national housing revenue account and ensure that all tenants’ rents are spent on their homes. Stop “negative subsidy”.

• Ring fence all the money from housing capital receipts for reinvestment in council housing.

• Enable councils to borrow like other landlords on their rental income and stock.

• Take up the Office of the Deputy Prime Minister’s proposal to provide an “investment allowance” as a revenue stream to support council borrowing for investment.

• Avoid higher housing benefit costs after transfer by redirecting funding into investment in council housing.

In September 2004, the Labour Party leadership suffered a humiliating defeat at annual conference after delegates voted in favour of a level playing field for the “fourth option”. This forced Prescott into considering a review of government policy, a commitment that he later wriggled out of.

A growing number of councils have refused to give in to the government blackmail and have opted to keep their stock under council control.

However, government policy shows no signs of changing. Prescott reportedly has plans to give ALMOs complete ownership of their stock and Blair is rumoured to want to extend “right-to-buy” to housing association tenants!

A glimpse of the future is perhaps provided by the Marcon estate in Hackney, where the local council wants to knock down one of its blocks and replace it with a mainly private estate and minus its current community hall.

The campaign for good quality council housing has been one of the most successful in recent memory, but much more needs to be done in order to force the Blairites to back down. The next stage must be to go on the offensive and organise actions such as rent strikes, industrial actions and occupations of estates threatened with demolition. Despite huge opposition, the Government seems ready to up the stakes, so we must be too.

Housing wealth gap

A report produced for the homeless charity Shelter in November 2004 showed that housing is now the single greatest repository of wealth held by individuals in Britain. Over the last 30 years levels of housing wealth have grown from £44 billion in 1971 to £2.4 trillion in 2002.

However, housing wealth is rising much faster for better-off families than for poorer households, a trend that is exacerbated by rising house prices. The report, which set out to measure the correlation between child poverty and housing, showed that housing wealth for children living in the best-off areas has increased 20 times more than the housing wealth of children living in the worst-off areas. Poorer families are today more likely to be trapped in “low value areas” and miss out on the better services, jobs, education and resulting life-chances that a move to a more prosperous area could bring.

The Government of course continues to believe that the key to tackling these issues is to aspire to produce the thing that has caused the problem in the first place — that is, a growth in home ownership. That is why John Prescott has announced a large government-sponsored programme to build homes valued at around £60,000. These would be provided by housing associations in which tenants would be offered a part- equity stake, a “portable asset”, which could be transferred to another home on the open market after a few years. The scheme has many of the flaws of “right to buy” schemes. What happens if people can no longer afford to pay for their “equity”? What interest will the housing association charge?

Low-rent, public sector, decent homes, with security of tenure are the best way to get people out of housing poverty.

Council housing facts

• Six million people live in 2.5 million council homes.

• 20 years ago there were five million council homes. 2.5 million have been sold off.

• In 1970 there were 172,000 new council homes built. By 2001 this had dropped to 487 new council homes.

• The number of newly built social houses for rent has fallen from 42,700 in 1994-5 to around 21,000 in 2002-3.

• In 2002-3 council tenants paid an average of £2,500 in rent but received only £1,500 in services.

• Harrow, Cambridge, Barking and Dagenham and Darlington councils have said they will not be pursuing any of the Government’s “options”.

By Dan Nichols

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