The Budget: disastrous housing policy continues

The lack of coherent, affordable housing and land policies since the 1980s is at the heart of the UK’s social and economic woes. As the late Professor Peter Ambrose wrote in 2005:

We argue that there have been failures of vision, collective memory, strategy and regulation that have wasted many billions of taxpayers’ money. The deregulation of financial markets in the 1980s sparked off a flood of house purchase lending that has underpinned massive house price rises and consumed £600 billion of investment that could have found a better use renewing our infrastructure or in research and development to make Britain more competitive in a global market rather than in bolstering house and land prices. The increasing commitment, from 23% to 72% of GDP since 1980, to house purchase loans seems unsustainable; furthermore the increasing flow of demand side subsidies are working to enrich landlords and land vendors, not to stimulate more housing output. The analysis shows that more money has gone into housing but fewer houses have come out. Housing benefits and allowances have imposed a huge and increasing burden on state finances. [1]

He was one of the few who saw the 2008 disaster coming. The 2013 budget continues the same disaster prone and chaotic link between unregulated finance and land in limited supply.  It is assumed that “stimulating the market” will increase supply, when more likely it will increase prices when our housing is already overvalued.  As Shelter has pointed out if food prices had risen at the same rate as house prices over the last 40 years, a chicken would now cost £51.18. Four pints of milk would be £10.45, and a loaf of bread would set you back £4.36

In London, if not elsewhere, overseas investors, fleeing their dodgy economies, and bankers spending their bonuses, are flooding the market with money buying homes, forcing rents and prices to rise, so squeezing out first time and other young buyers of their homes, moving them away from their jobs and fuelling the London housing crisis.

Stephen Hill of the Pro-housing Alliance commented on the budget:

Artificially boosting the building of homes for market sale or rent in the UK is just one more example of the predatory capitalism that has created the current financial crisis. For every new construction related job it undoubtedly creates, the net effect of ‘getting the housing market moving again’ i.e. ‘values’ going up, is to suck the life out of the productive economy and reduce GDP. Speculative extraction of the scarcity value of land by landowners, developers and providers of credit is at the rotten core of our zombie economy and divided society.

Housing Policy should cover all tenures

A coherent housing policy and budget would cover all tenures. But Osborne is obsessively attached to the promotion of a property owning democracy. He can only throw a few crumbs to first time buyers of new builds; but the crumbs will have to be regurgitated when the home is sold. He is fighting a trend.

We would all be better off if he could match his polices to present facts rather on dreams of the future “heaven” of a “perfect market”. Home ownership has begun to diminish and the private rented sector is overtaking social renters. Places and People estimate that there will be 5.5 million private rented households by 2016. Local Authorities are just coming to terms with the localisation of housing provision, and seeing the need for policies covering all tenures from Housing Association, RSL and Council Housing, but the Osborne cannot let go of central government endorsement of ownership.

Our existing housing has some appalling conditions.  The worst is in the private rented sector, even though much of increase in the PRS is in the newer and better quality housing.  The Government’s own figures show 207,000 households in the private rented sector are overcrowded (almost 6%) with 843,000 having a serious health and safety hazard. 1.4 million are classified as non-decent.  At the same time almost 3.3 million owner-occupied homes are classified as non-decent with over 2.2 million having a serious risk to health and or safety. Privately rented homes are also more likely to have damp and mould.  The Government has cut support for local authorities to improve existing housing to zero; yet this sort of housing renewal supports local small business and provides work. Improving existing housing also reduces exported costs, such as on the NHS. Poor housing conditions are an obvious social determinant of health and exacerbate health inequalities. The Budget does nothing to recognize or address this.

Impact of the Housing Benefit Caps

Housing Associations are concerned that the cocktail of direct payments, benefit cuts, housing benefit caps, under occupation penalty, taxation of benefits by councils and council tax arrears will inhibit HA’s ability to inflate and collect rents and so reduce their capacity to build homes. Angelo Sommariva, Public Affairs and Policy Manager of Moat, has also pointed to the total mismatch between the demand for one bedroom accommodation created by the bedroom tax and lack of one bedroom properties in the South East.

Among the many failures to match welfare policy to present facts is an expensive avoidance by Osborne of the economic, personal and social costs when incomes cannot buy adequate, food, fuel clothes, transport and other necessities.  Dr Steve Field, former Chairman of the BMA, is now charged with tackling health inequalities in the NHS. He says, “The fact that the gap (in life expectancy between rich and poor) has widened is inexplicable”. Explanations should be sought beyond smoking and obesity.

The Department of Health has refused to discuss the impact of low incomes on health. In 2009 Labour ministers at the DWP sent research about the relationship between low birth weight, poor maternal nutrition and poverty incomes to Ministers at the DoH. The Institute of Brain Chemistry and Human Nutrition has shown a link between poor maternal nutrition, low birth weight and the poor mental development of the offspring in the womb.

There is a link between poverty incomes, debt and malnutrition. It was bad before the cuts, housing benefit caps and the new imposition of council tax, and is getting worse. The rapid emergence of food banks, which cannot provide a regular healthy diet, and the rise in fuel poverty, so increasing winter deaths among the poorest citizens, should stimulate discussion in the DoH about the impact on health inequalities of “welfare” policies at the DWP and the Treasury which reduce the lowest incomes and increases the costs to the taxpayer in the NHS.

Alice Thompson, writing in The Times on budget day, “A bedroom tax is just what families need”, chose the wrong ethical polarity; “the real victims of the bedroom tax aren’t those who will lose £14 a week housing benefit for having a spare bedroom but those who have no home”.

They are, however, both victims of the failures of the 1979, 1997 and 2010 governments to get to grips with poverty, inequality and the lack of a coherent affordable housing policy. It is better to contrast tenants hit by the caps and homeless people with the people flooding into London from southern European countries, the Middle East and China, or banker’s bonuses, buying second or third homes and leaving them empty. This property boom forces rents above the housing benefit caps creating spiralling insecurity of tenure and employment for increasing numbers of London families and disruption of the education of their children. Land should be used for the common good and all speculation in it regulated or abolished.

Rev Paul Nicolson, Taxpayers Against Poverty & Pro-Housing Alliance