The Housing Crisis – Is a massive building programme sufficient to resolve the housing crisis?
It is a common-place that a massive building programme is the way, even the only way, to resolve the housing crisis facing the young, those on low and middle incomes and the homeless. Well if my Borough of Wandsworth is any indication the answer is definitely NO.
In Nine Elms, less than a mile from Westminster a development of 20,000+ flats, home to maybe 60,000 people, has begun and will be largely completed in ten years time. But no one imagines that this development will have any affect whatsoever on the housing crisis in London. It is not a problem we have with the construction industry, nor with the planning system. The problem is distribution!
Nine Elms and Battersea Power Station, with first sales going to rich Malaysians but also rich Europeans (including Brits) may not be absolutely typical but what if the higher earners continue to trade up and use their market power to invest in the housing market and use rental income as an alternative to final salary pensions? What if they act as the mortgage lenders for their children – the so-called Bank of Mum and Dad? What if the massive growth of the buy-to-rent mortgage industry is clear evidence of a long-term trend to yet more exploitive rents.
The Tory mantra about the market clearly just doesn’t work – at least not in the UK in housing. We have to take back control of the market; as a society we have to resolve the issue of distribution. The Tories recognise this to an extent and are trying to tackle the issue in the socially rented sector with the mean-spirited Bedroom Tax, but it only tackles a small sector of the market and it only tackles an easy defenceless target – the poor, social tenants. Meanwhile the social sector gets smaller and smaller and the better off collar more and more of the market.
There are three interesting and dramatic examples of this process apparent in my analysis of how “right-to-buy” has operated in Tory Wandsworth. Firstly let’s look at the overall impact. Of the 18,000 Wandsworth Council properties sold nearly 6,000, 1 in 3, are now privately rented. (see my blog of December, 2012) Some of these rental properties are part of quite large portfolios. Several millionaires have been created. Their millions have, of course, been created out of the increased rents imposed on private tenants, rents ironically frequently paid by the state in the form of housing benefits. Many examples exist in Battersea’s Doddington estate, where Council flats being let at £200 per week to families classified by the Council as being “in need”, sit side by side with others being rented out at over £500 per week using landlord practises not far short of what fifty years ago would have been known as Rachmanism (Google Peter Rachman for a brief history).
Another completely different example is where small council blocks have been bought up by developers and redeveloped as very expensive town houses. One example is in Sisters’ Avenue (see March, 2013, Blog), where six modest post-war family flats were sold to sitting tenants in the 1980s at an average price of £17,500. In the late 1990s and early 2000s they were sold on to a developer at about £300,000 each. Now the six replacement town houses are being bought at £1.95 million a time. The end result has no doubt been a major improvement in the quality and scale of the housing stock and certainly the relative enrichment of six working class Battersea families but also a complete loss of affordable housing. The effect, unintentional of course, has been of some lucky people pulling up the ladder behind themselves.
Whatever the rationale, the benefits for the original purchaser, the enormous political gain for the Tory Party, there can be little doubt that “right-to-buy” has been disastrous for the future of affordable housing in Wandsworth and by extension much of London.
To counter this situation the London Labour Housing Group (LLHG) has produced a powerful and useful manifesto for the London Borough Elections of 2014 but it admits that as long as the Government and the London Mayor are under Tory control there are limits to what can be done. Typical of the dilemma facing Labour is the comment of Councillor Peter John, Leader of London Borough of Southwark at a recent Battersea Labour Party meeting, where he asked, “Just what are the prospects for social housing in Southwark, when the new council housing we are building now is subject to government subsidised right-to-buy schemes”?
The LLHG understands the problem but it is beyond its competence or political power to challenge the real issue, which in my view is the way that much of politics in general and property taxation in particular is so warped in favour of higher income groups. There is clear evidence of the former in George Osborne’s introduction of the “Help to Buy” incentive aimed at encouraging house price rises but doing very little for housing construction – a plan many economists clearly believe to be about creating a feelgood factor and not a sustainable housing boom. As to the latter the inequity of property taxation in the UK hardly needs mention – in Wandsworth for example the Council Tax on the many expensive £1 million+ properties in the Borough is currently £1,357 per year, exactly double that on the average property (serious comparisons difficult as no revaluations since 1991 – another example of the moneyed classes, scaring Governments off re-distributive taxation).
Unfortunately, the only policy remedies that I see are to take control of the market, to close the market in social housing and to control the private rented sector. But the politics of controlling the market (subsidising large scale construction for the social sector), abolishing “right-to-buy” and controlling rents is beyond the Labour Party as at present and, to be fair, beyond political reality unless the political mood can be changed in the same radical way that the Tories managed in the 1980s.
Trade Unions – more power to their elbows
There can be little doubt that in the battle between capital and labour, the shift of power from capital to labour which characterised early post-war Britain, has gone into reverse. The apogee of union power was the moment of the collapse of the Ted Heath Government in February, 1974.
The unions had exercised great power in the fifties, when they did much to raise worker standards of living to unparalleled heights in a far more equal society than we see today. This also happened in the United States and in the rest of the English speaking world, especially Canada, Australia and New Zealand.
The unions did not get much credit for this achievement especially from the overwhelmingly hostile press, but they were generally recognised as a pillar of British society. One dramatic symbol of this rise was Harold Wilson’s promotion in 1964 of Frank Cousins, General Secretary of TGWU (Transport and General Workers’ Union), to be Minister for Technology, a post of high importance to the Government, focused as it was on the “White Heat of Technology”. (pictured right)
It was reasonable to expect that the unions were likely to become a long-term, central element of the corporate state – rather as they are in modern Germany, their historic role being to a considerable extent a product of British advisors in the immediate aftermath of World War II. Unfortunately the unions over-reached themselves and missed this historic opportunity, perhaps for all time.
Even in the sixties, Hugh Scanlon (AEU – Amalgamated Engineering Union) and Jack Jones (TGWU) were the media’s “Terrible twins”, as they exercised union power in many a disruptive industrial dispute. But more damagingly they also took on the politicians and thwarted Barbara Castle’s attempt to draw them into the corporate state through the mechanism of her policy white paper In Place of Strife.
There was little doubt that the trade union movement was a powerful voice in the land. So much so that one opinion poll in 1977 showed that 54% thought Jack Jones was the most powerful man in the country. But many others thought that unions should keep to “their proper role” of defending and strengthening workers’ rights and pay and conditions and not indulge in political activities. The battle over the trade union role in society was to be joined in earnest in the 1980s.
In 1973-74 the miners’ leader, Jo Gormley, had led the miners in a successful campaign for higher pay, which had ended with Labour’s General Election victory of February 28th. Ted Heath had gone to the country asking, “Who rules?” The country replied, “Not you mate” (The Tory Election Manifesto was called “Who Governs Britain?”). But an apparently great miners’ victory sowed the seeds of the unions’ downfall, most especially the NUM (National Union of Mineworkers). The unions arguably became complacent and expected favours from the incoming Labour administration. But by the time Thatcher became PM, the Tories were adamant that they would never be subject to union power again.
So when Thatcher decided to close mines and reduce the size of the mining industry, she set up quite deliberately the battlefield for a war against the miners. Unfortunately for the left, and I would argue for the country, the miners were now led by Arthur Scargill. He was keen to exercise power but had neither the native cunning nor the considered approach of Gormley. Scargill went into battle when British coal stocks were at a record high and British dependence on coal was declining as North Sea oil and gas was coming on stream. (It was ironic that at the same time as she was condemning trade unions in the UK, Mrs. Thatcher considered them to be a bulwark of freedom in communist Poland!)
The decline of union power had begun and has continued ever since, with New Labour almost as keen not to go back to the days of union ascendancy as the Tories.
But now we can see what a long-term disaster that decline has been for the majority of the workforce and for the country. Now neo-liberalism is in command. We have millions on zero hours contracts – not just working for exploitative private employers but also for local authorities, the NHS and the civil service. As a country, we “compete” for having the most flexible work-force, for having the weakest labour protection laws and for paying the lowest wages.
As a Councillor I know only too well the pressures on local authorities to put every task out to competitive testing or rather to the ruthless exploitation of labour. Once we had women, and they usually were women, providing home help and meals on wheels to pensioners, and working regular hours at trade union negotiated rates. Now we have temporary part-time workers, possibly paid at lower than legal minimum wages – many of whom are not paid for travel time between jobs. Just imagine what the salaried middle classes would make of not being paid for travel time between clients.
My colleagues are so beaten down by standard clichés such as “the users do not care who delivers the service, they only care about the quality of the service” that they just do not see that the logical end of this process is a low paid, low skilled, low spending labour force. Not many years ago Wandsworth’s Tory Leader provoked derision on the Labour benches when he claimed that the workers’ pay and conditions were no concern of his. Now his remark would pass without comment or criticism; it would be the statement of the obvious.
The Tories used to say that Labour only cared about the providers and not the consumers. If it was ever true, it is no longer, at least for the workers by hand – workers by brain, such as doctors, airline pilots, lawyers, still have their unions (and the Labour Party), or professional associations to look after them. But the workers by hand are left helpless against the neo-liberals. And they get little help from Labour, hence the party’s weakness amongst its traditional supporters.
But now – at last – the public at large are becoming more aware of the imbalance between labour and capital with large and growing campaigns for the “the living wage” and against zero hours contracts. The Labour party is in danger of being way behind public opinion.
The brightest of the capitalist class knows well that a low paid and low spending workforce is not of much benefit to them; they recognise, even if Tory politicians don’t, that the demand element of the economy cannot be ignored. Labour must campaign for higher wages, a doubling of the minimum wage, the end of internships, the death of zero hours’ contracts and a closer and healthier relationship with a vibrant trade union movement.
The trade unions in general are weaker today than they have been for a hundred years. We need them to be more powerful and to take a more active role in the guidance and direction of business in this country. We need works councils and trade union involvement in management, defined in law as it is in Germany. We also need fair but restrictive legislation on the right to strike – again Germany would be a good model. We need a workers’ movement, which is stronger than it is today. We need more power to their elbows.
Tony Belton
Tony Belton 