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Our response to the Government’s consulation on homelessness

The Localism Act 2011 enables local authorities to end the main homelessness duty by arranging an offer of suitable accommodation in the private rented sector, without requiring the applicant’s agreement. The government’s consultation period ends tomorrow and more details about the consultation can be found here:

Here is our response, drafted by our Chair, Dr Stephen Battersby.

The Pro-Housing Alliance is a loose alliance of organizations and individuals who believe that a coherent housing policy should be based on the fundamental contribution of housing to public health, including mental health. Housing is a key social determinant of health and as such homelessness is a symptom of inadequate housing policies over decades. More recently, the housing market has been further distorted by irresponsible lending, and housing costs and prices adversely affect the economy.

The Alliance launched in September 2011 works to encourage others to join it in efforts to bring about a greater recognition of the role of housing in society as a determinant of health and well-being and as a vital element of infrastructure to service the growth of the national and local economies; it will seek to develop the components of a credible and just national housing policy including increasing the rate of new housing provision and a more realistic definition of affordability that relates to incomes. See

The Alliance does question whether the private rented sector is the appropriate vehicle to help meet the homelessness duties of local housing authorities. It seems the changes being instituted are less to do with needs of homeless people and more to do with reducing demands on hard-pressed local housing authorities. The growth in the PRS has largely been at the higher end of the market, and provides accommodation for those who previously would have been first time buyers. It is also true that the lack of finance to purchase housing now means that more responsible landlords in the PRS can and are letting to those who are in employment. This will leave homeless people to the worst aspects of the PRS unless local housing authorities are required to exercise greater control over these landlords.

Response to Consultation Questions

Question 1

The five areas listed might look reasonable at a superficial level, however the list obviously shows some confused thinking. Health and Safety matters must be fundamental, but that has to go beyond mere gas, electrical and fire safety. The physical condition is less of an issue if a more comprehensive approach is taken to ensuring that the property is free of significant risks to health and safety.

Licensing of a house in multiple occupation (HMO) is in itself no guarantee that the property is safe or even well managed if it has not been inspected (and there is no requirement to do so before granting a licence), but the quality of management is important, and there is some confused thinking in the consultation. However as was indicated in the report on HMO research undertaken for the Department of the Environment in 19851 it was unreasonable to expect private landlords to provide the intensity of support and management that some occupiers of HMOs need. That may seem to be distant, but the level of management under consideration then still was beyond routine property management what now might meet licensing requirements. Many homeless people by definition are vulnerable and in need of a level of support not found commonly in the private rented sector.

The key elements as to the quality of any rented property is the condition (as assessed against risks to health and safety of deficiencies) and the quality of management. Licensing is only one way of trying to ensure that the landlord is “fit and proper” and management arrangements are satisfactory, so that should be the fundamental requirement. However this could be achieved equally via accreditation and the document does not refer to where a local authority has adopted “selective licensing” which goes beyond just HMOs?

Question 2

Given the points above it is argued that a full HHSRS inspection should be required of any accommodation to assess whether or not it is suitable. This becomes even more important given that reference to a private landlord does not require the agreement of the homeless applicant. It cannot be right that a local authority could refer a homeless person to a property with a Category 1 hazard, where Parliament has determined that in other circumstances the local authority would have a duty to take one of the courses of action in Part 1 of the Housing Act 2004. The argument that a full rating inspection is costly is not accepted – it takes no more time to inspect under the HHSRS than under the fitness standard prior to 2006. If it is expected that a person visiting the property on behalf of the local authority will take account of the “general condition”, then this should be a proper inspection to identify risks to health and safety using the HHSRS. There is no other way of ensuring that the accommodation is free of Category 1 hazards. We would strongly oppose this work being done by “letting agents”.

Furthermore if it is felt that if there is concern that local authority’s may not have the resources to undertake such inspections, there is no reason why landlords should not be able to obtain and pay for inspection reports from suitably qualified environmental health practitioners. If this is a sector of the market in which they are providing accommodation and from which they will be deriving income they should be willing to pay for such assessments. There is an increasing number of environmental health practitioners working in private practice who could undertake such work. The important issue is that whoever undertakes the inspection can demonstrate their competence in HHSRS assessments. This would also address the “out of district” issue.

As the presence of valid gas and electric certificates are matters that can be taken into account under the HHSRS as well as being an indication of the quality of management these would be considered in any proper inspection. Fire safety is an HHSRS hazard (applicable to all accommodation) and many of the properties could be outside the scope of HMO licensing, and so the HHSRS will be the only way of assessing whether adequate fire safety protection is in place. Carbon monoxide and products of combustion is another HHSRS hazard and the presence or absence of a CO detector is a matter to be taken into account, so again would be covered by an HHSRS assessment. In short the easiest way to ensure that health and safety risks are absent or dealt with is by way of an HHSRS assessment.

As another important issue, crowding and space is an HHSRS hazard, and it would be wholly wrong for accommodation to be used that would lead to a Category 1 hazard for crowding and space – this is a more realistic approach than relying on statutory overcrowding provision and another argument for a proper HHSRS inspection.

Nor should it be forgotten that some Category 2 hazards (such as fall into Bands D and E) can still pose a significantly increased risk to health and safety.

So as a matter of equity, it should be a requirement of the order that to be suitable the property has to have been inspected and assessed under the HHSRS by a competent practitioner.

On management, local authorities are now used to assessing whether or not an applicant for an HMO licence is fit and proper and so there is no reason why the order should not reflect the same matters as in Parts 2 and 3 of the Housing Act 2004. If the requirements are appropriate for licensing generally then they must be appropriate for landlords who could be accommodating vulnerable people.

The presence or absence of appropriate certificates, including an EPC, a written tenancy agreement (the terms of which are not unfair) and how deposits have been dealt with previously (the landlord’s record on tenancy deposits rather than for the current homelessness applicant) are an indication of the quality of management. Landlords who cannot show that they meet ‘good practice’ on these matters should not be providing accommodation for homeless people. The Order should be explicit in this as such omissions reflect that the person is not fit and proper in this context.

It would be far better for the Order to require that the landlord demonstrates that they are competent managers, and this could be by holding and complying with any relevant licences (HMO or selective licence) and/or by be being accredited via a scheme acceptable to the local housing authority.

Question 4

Provisions on location should be strengthened not least to take account of children’s education as well as employment. Where there is evidence that the accommodation would incur additional social and economic costs (e.g. change of school or additional travel to work costs), then that accommodation should be deemed ‘unsuitable’. The one matter that appears to have been omitted is “informal support” as opposed to “key services” including support from friends and family.

The presumption must be that the accommodation should be within the district, particularly where children are involved so that there is no disruption to schooling and to the social peer group networks that are important to children’s learning experiences.

Question 5

The matters to be taken into account should again be specified in the Regulations.

Question 6

The performance of local housing authorities on homelessness varies considerably and it is important that as much as possible is set out in the Regulations on “suitability”. Thus the factors listed are the ones that should be taken into account. However, they may be “taken into account’ and then ignored. Education is another fundamental when addressing health inequity so the Regulations should also set out specific “deal breakers”. So it should be an absolute that any accommodation that would lead to disruption of schooling or education (whether of offspring or the applicant or member of their household) is unsuitable.


The use of the PRS to meet homelessness duties by local authorities is fraught with difficulty when the applicant has no say in the matter. It is therefore crucial that with the number of neglectful, inadequate and irresponsible landlords in the PRS, this does not become a charter for easy money, much of which could come from the public purse given rent levels. After all nearly 900,000 dwellings in the PRS have a Category 1 hazard – that represents 25% of all households in living in the PRS. Tight controls are therefore required over what is “suitable accommodation”. It could also provide another means of encouraging landlords to act more responsibly and professionally.

Should any clarification be required of these points please do not hesitate to contact the PHA.

Dr Stephen Battersby, Chair of the PHA


Parliament fails to accommodate growing housing problem

The following letter, from PHA member Paul Nicolson, was published in the Guardian this morning:

Housing policy represents another lack of strategy in the Queen’s speech (Editorial, 10 May). A combination of housing benefit caps, cuts and the rising prices and rents of a home will inflict ever increasing pain on Londoners. The Royal Institution of Chartered Surveyors tells us that house prices are falling everywhere except London, and Rightmove says optimistic sellers in the capital have driven asking prices nationally above their 2008 peak. Rents in London are being driven above the caps by a global free market which sees London property as a triple-A-rated safe haven for spare cash. Saif al-Islam Gaddafi, the son of the Libyan leader, was planning to make more than half a million pounds a year renting out his home in north London.

The coalition, with almost total silence from the opposition, has told Londoners to get on a housing ladder that is more like a moving staircase coming down, until the poorest are shunted off the bottom to who knows where as rents overtake caps. In the 1960s, many families were moved from the East End into new towns with newly built homes. This time there is no planned affordable rented housing to move to, just temporary accommodation, overcrowding and debt. Is anybody listening, does anybody care?

Housing Benefits

Two letters from PHA Members were published in the Guardian this morning:

It would have been good if the secretary of state for work and pensions had “found his bottle sooner”. He has turned private landlords into the rogue elephants in the housing policy room.

Land and property have become cash cows for the wealthy. They jacked up their uncontrolled rents to profit from uncontrolled but secure housing benefit from the 1990s; they are now liberated by the total insecurity of tenants receiving the local housing allowance (LHA) created by a thoughtless parliament in the 2008 crisis. “No welfare claimants here” is appearing in their windows or pinned to their front doors. A housing benefit claimant used to be a secure tenant with the rent paid direct to the landlord, but the coalition insists that the LHA should be paid into the tenant’s often empty, if not non-existent, bank account.

Security of tenure is being smashed by the move of uprating from RPI to CPI. Tenants have to move or are evicted, making way for a better, and more secure, profit from Olympic tourists and then from the high demand for homes in London. Migration is forced, with no planned affordable housing to move on to before the caps axe falls. The coalition is the bull in the china shop of social housing policy. Please sign this petition at

Rev Paul Nicolson
Chair, Zacchaeus 2000 Trust


It was reassuring to learn from the deputy leader that Southwark council do not intend to export their poorer households but plan to write into their contracts with housing providers that rents should be “genuinely affordable”.

The council may not be aware that four years ago, working with London Citizens, I developed a methodology for establishing a genuinely affordable rent level for any specified household type and location. This assumed an income at the London living wage, subtracted the costs of all defined non-housing necessities priced at lowest local cost and took the residue to be the “affordable rent” level. It worked out at £135 per week for a two adult plus two children household living in Stepney. At a public meeting Boris undertook to work with this definition of affordable. That he has not done so, and that so much “affordable” housing is clearly unaffordable to many is one of the meaner tricks played on the poor and vulnerable in London.

Professor Peter Ambrose
University of Brighton

Are they Fools or Knaves?

By Prof Peter Ambrose, University Brighton

The Government’s recent capping of housing benefit entitlements is already producing ‘forced migrations’ of poorer and more vulnerable households from expensive inner London suburbs to some outer suburbs – and then from some of these to towns hundreds of miles away such as Stoke.


The Treasury appears to be taking no account at all of the many and varied long-term costs to health, education and policing budgets that will inevitably be a direct result of this policy.


Cost elements under all three headings might include:


– as we know from Australian research and UK research in Stepney and Wandsworth the destabilisation of children’s lives, and quite possibly the overcrowding ensuing, is likely to lead to more aggressive behaviour both in the classroom and on the streets as young people compete more for space and lose some elements of parental and kinship control


– there will be costs involved for school managers in relation to unpredictable falling and rising school rolls, depending which end of the migration one looks at


– there will be disruptions to educational progress as children lose local circles of friends and have to adjust to new schools and areas, etc – they will be strangers in a strange place and not as a matter of choice.  It will not only be the children who move who will be affected but those already in the class


– there will be heavy movement and relocation costs for households that will probably not be properly covered and will lead to more debt, etc.


– there will be adverse mental health impacts as people lose control over a crucial aspect of their lives – deciding where they live (Marmot and others such as Wilkinson and Pickett have found that a key determinant ofthe ‘health gradient’ was not only income but also lack of control over one’s life). One might ask how this fits with the Government’s mental health strategy (No Health without Mental Health)


– there will be cost consequences of the break-up of well-established local three generational family structures akin to the mass movement of people from the East End to the New Towns in the early 1960s (Willmott and Young) – the difference being that was in some ways a positive bit of social policy. There will be movement away from any other social support mechanisms – local connection – and this will put further strain on the services in the ‘receiving’local authority area.


– there are other costs one could readily identify (which the PHA research project will be directed to identify or at least keep a look out for)


We regard it as part of the PHA’s job to call attention to the well-researched lessons of the past and to help construct some sort of collective memory among decision-makers. We are trying to insert some rigour into official thinking which, once again, reveals itself as either wilfully oblivious of past lessons (i.e. foolish) or simply indifferent to the predictable adverse effects on the vulnerable people affected by their policies (i.e. knavish).

Letter to Mayoral Candidates

As Chair of the Pro-Housing Alliance (see I am writing to Mayoral Candidates requesting that the various stated commitments to addressing the housing problems in London be demonstrated by agreeing to the following actions should you win the election next week:

  1. Set up a project to assess the “exported costs” on health, policing and educational achievement resulting from poor and overcrowded housing conditions and those costs to employers (public and private) attributable to a lack of genuinely affordable housing in the capital.
  2. Create a London Affordable rent figure using methodology such as the Living Wage calculation. The word ‘affordable’ must be evidence-based and related to the reality of people’s lives starting with the London Living Wage as income.
  3. Take immediate steps to prevent the need for London Boroughs to export households accepted as homeless to other parts of the country, and undertake to carry out an immediate assessment of the impact of the welfare reforms on vulnerable people and those on low incomes London.
  4.  Set a target of at least 42% of new social rented homes being 3 or more bedrooms as the supply of larger homes frees up existing smaller homes. This will also address the problem of crowding and lack of space.  Monitor and publish progress on this.
  5. Establish a statutorily binding definition of “overcrowding” that is appropriate to modern expectations and health needs. While overcrowding is an issue addressed in primary legislation (but note that the statutory overcrowding standard dates from the mid-1930s) there should be a clear definition for London that takes account of the modern needs of housing. This standard should preserve at least one room in a dwelling that does not have to been taken into account as a potential room used for sleeping.
  6. Pledge a commitment to the increasing use of Community Land Trusts and ensure this is delivered on.
  7. Take positive steps to make landlord accreditation in the private rented sector a real way of improving standards and ensuring repair of the of the existing stock- it is not clear at this time how many landlords are part of the London Landlord Accreditation Scheme. The Mayor should be doing more to promote this.  Provide the greater support to local authorities to ensure that alongside this they have the resources to tackle the worst landlords and squeeze them out of the market and also to bring empty properties back into use.

I look forward to receiving your response.

Yours sincerely


Dr Stephen Battersby

Chair, Pro Housing Alliance

Shameful cost of uprooting families

Letter published in The Independent, 26th April 2012:

The reckless forced migration of tenants out of London, to who knows where, creates costs for the taxpayer and to the wider economy that the Treasury never estimates (“Plans to house London’s poor in Stoke attacked as ‘social cleansing“, 25 April).

Educational under-achievement has been shown to be more likely as a result of the destabilisation of children’s lives. Deliberate overcrowding to make the rent fit the caps is also likely to lead to more aggressive behaviour both in the classroom and on the streets as young people compete for space and lose some elements of parental and kinship control. Children losing local circles of friends and adjusting to new schools also disrupts educational progress.

The housing benefit caps create unmanageable rent arrears. The stress of the parents in debt is known to affect the children. Debt is related to mental illness, which the Centre for Mental Health has shown is the most expensive illness for the NHS, the economy and in human misery.

There are social and economic consequences in the break-up of well-established local three-generational family structures, as was discovered in the mass movement from the East End to the new towns in the early 1960s. That movement was planned and new affordable housing was ready for the tenants.

This time the lack of any coherent housing policy for the past 40 years means the demand for affordable housing far outstrips the supply; no affordable homes were planned for the new homeless. They face a life of impoverished uncertainty of which Parliament should be ashamed.

Stephen Battersby, Chair, Pro-Housing Alliance, Past President, Chartered Institute of Environmental Health

Peter Archer, Chair, Care & Repair England

Professor Peter Ambrose, University of Brighton

The Rev Paul Nicolson, Chair, Zacchaeus 2000 Trust

Health Inequalities

Angela Mawle is the Chief Executive of the UK Public Health Association and a member of PHA.


Well, here we are eighteen months after the publication of the Government’s strategy for public health in England ‘Healthy Lives, Healthy People’ and all we have heard during that time is the cacophony about the NHS Reforms. The clamour started in July 2010 when the White Paper Equity and excellence: Liberating the NHS was published and subdued only a little after the Act was passed in March 2012. As ever, Public Health was squashed into the sidelines by the mighty NHS, our National Sickness Service. Never mind that prevention is better than cure, the Nation’s obsession with doctors, nurses and clinical interventions has led us into a blind alley where we are constantly dealing with the symptoms of societal, economic and environmental dysfunction throughapplying highly technological and pharmacological sticking plasters.


In 1988, Sir Donald Acheson, then Chief Medical Officer saw the over-riding imperative of ensuring good public health, describing public health as ‘the science and art of preventing disease, prolonging life and promoting health through the organised efforts of society’. He later described in his ground-breaking report the ‘Independent inquiry into inequalities in health (1998) how “Poverty, low wages and occupational stress, unemployment, poor housing, environmental pollution, poor education, limited access to transport and shops, crime and disorder, and a lack of recreational facilities all have an impact on people’s health”

It is not even as if these insights have not been built upon over the years. As recently as 2010 Sir Michael Marmot in his Stratehgic Review of Health Inequalities in England noted that “serious health inequalities do not arise by chance, and they cannot be attributed simply to genetic makeup, ‘bad’, unhealthy behaviour, or difficulties in access to medical care, important as those factors may be. Social andeconomic differences in health status reflect, and are caused by, social and economic inequalities in society”.

Well, we now have a public health white paper which actually acknowledges the findings of Sir Michael’s Review and has made the bold step of transferring local health improvement functions to local Councils and charging them with new obligations “to support integration and partnership working across social care, the NHS and public health.”

In the light of all this it remains a complete mystery to me as to why the public health workforce has not seized upon the opportunity to fashion a new and radical role in leading the development of healthy sustainable communities, rooted in social economic and environmental equity. The public health outcomes framework published in January 2012 actually identifies indicators for measuring progress on addressing the wider determinants of health, one of which is fuel poverty. Yet where is the clarion call from the public health community heralding this potential new era of prevention rather than cure? No, there is just a deafening silence whilst all seem to continue to lament the implementation of the Health and Social Care Act 2012

Sir Michael Marmot’s most recent consultation paper, The Role of The Health Workforce in Tackling Health Inequalities: Action on the social determinants of health  (April 2012) states “there is a huge opportunity to develop new programmes and momentumas NHS reforms are implemented in England and a new approach to public health is forged”.  How many more reports and White Papers will it take before actions become louder than words?

Lies, Damned Lies, and Government Statistics

Peter Archer is an independent consultant, a Partner at the Housing Consultancy Partnership, Chair of Care & Repair, England, Chair of the Chartered Institute of Environmental Health’s Professional Standards and Policy Committee, and Chair of St Peter’s Housing Association in Saltley, Birmingham

This government is becoming increasingly adept in hiding the extent of the reductions in local authority capital allocations. Ministers state that allocations have been ‘protected’ and ‘held’ at the same level as the previous years without saying that inflation and tax changes have effectively reduced the money available by many percentage points. Ministers repeatedly ‘announce’ the same allocation while failing to mention complementary capital allocations axed completely. A recent ploy employed by the Department for Communities and Local Government (DCLG) is not to date postings on their website so the reader does not know if this is the most recent statement or one from ‘yesteryear’.


Recent examples of my accusation relate to the money provided to support independent living at home for older people who are on low incomes, disabled or are frail and elderly. On 20th October 2010, as part of CSR10, Eric Pickles wrote to all local housing authorities (LHAs) setting out the detail of cuts in funding provided by the Department for Communities and Local Government (DCLG). Only then did LHAs appreciate that as from April 1st 2011 there would be no funding for private sector renewal (PSR).


The housing renewal budget (PSR) was first introduced by the government in 1949 to support the renovation and conversion of tenanted property. In 1983/84 the expenditure was in excess of £1 billion with most of the money going to support the 90% Repair Grant programme. In 2010/11 the PSR budget was £308 million.


The PSR figures for 2008/11 were:-       

CSR07                    2008-09                2009-10               2010-11                2008-11

Baseline               £347m                   £425m                   £308m                   £1.08Bn


Following CSR10 the private sector renewal allocation for the four financial years 2011/15, the anticipated life of this Parliament, the capital allocation is ZERO. The required Equality Impact Assessment (EIA) that followed the announcement of CSR10 published in November 2010 says that the government cannot anticipate the effect of removing more than a billion pounds from the finance available to local housing authorities because it ‘no longer requires authorities to submit the relevant statistics’. At the Pro-Housing Alliance (PHA) we have estimated that the removal of this budget will mean that at least 200,000 mainly elderly or disabled owner occupiers or private tenants annually will not receive help in carrying out adaptations, minor repairs or improving levels of affordable warmth.

Despite these swinging cuts affecting almost a million vulnerable families over the life of this government, the Housing Minister, Grant Shapps on 3rd January 2011 announced that ‘A New deal will help older people live at home for longer’. He said in a statement ‘As we get older the last thing we want is for our properties to become our prisons. We want to be able to enjoy the comfort of our own homes in our later years. But with nearly a fifth of our population expected to be over 65 by 2020, radical and urgent change is needed to ensure the nation’s housing meets the growing and changing demands that this is bringing, and will bring in the future. That’s why today I’m offering a new deal for older people, backed with millions of pounds of Government cash, to ensure elderly residents get the support they need to live independently and comfortably in their own homes for as long as they can, with particular support for those leaving hospital. Older people will be able to get the adaptations, repairs and improvements to their home that they need, safe in the knowledge that the help they are getting is from trusted tradesmen and advisers – not dodgy dealers and fraudsters out to exploit their situation.’ The ‘millions of pounds of government cash’ to which he referred was an extra £20 million to support the disabled facilities grant budget which he had managed to extract from an ‘underspend’ at the Department for Health.

On 23rd March 2012 the Housing Minister, Grant Shapps, wrote to local housing authority chief executives saying ‘The Disabled Facilities Grant programme has been protected. By the end of the spending review period the national Disabled Facilities Grant budget will increase from £169 million in 2010/11 to £185 million in 2014/15. The programme helps disabled people to live as comfortably and independently as possible in their own homes through the provision of adaptations. The programme is therefore key in delivering the Government’s objective of providing increased levels of care and support to both disabled and vulnerable people to help them live independently in their own homes.’ The allocation for the year just past 2011/12 was in fact £200 million, thanks to an extra £20 million from DH. So besides removing more than a billion pounds from the support previously available to vulnerable families carryout important repairs and adaptations, the government is effectively reducing the one remaining capital allocation for home adaptations.

The government’s media advisors should be congratulated. Almost a million vulnerable, elderly, or disabled people have lost more than a billion pounds of support to carryout out urgent repairs and adaptations and we all believe it to be a ‘good news’ story; well done Mr Shapps!

Premier League Values

Stephen Hill is an independent public interest practitioner, a chartered surveyor working in planning and development, and a founding member of the PHA and Taxpayers Against Poverty


The garrulous Peter Cruddas was unwise, not just because of what he said, but because he reminds us yet again how the current generation of political leaders has brought a wholly distorted set of values to our public life.


Entry to the “Premier League” of political influence costs only £250, 000, it seems. That is less than a month’s wages for some of our most celebrated footballers. If big business and wealthy individuals really are trying to buy favour and advantage at the expense of other businesses, and improve their prospects for exploiting private citizens…why so little?


A Treasury spokesperson revealed that the need for the national planning reforms announced this week was largely driven by ‘private conversations’ with investors and businesses who would have otherwise invested overseas rather than here. Who spoke to whom about what is, however, a secret. But surely, with such privileged access on major matters of state policy, our biggest businesses should have been expected to pay MUCH MORE than a mere quarter of a million. Have they no sense of proportion?


Many commentators have been using the Conservative’s fund raising activities to restate the increasing inequities that have become entrenched in public life under both Labour and Coalition governments. This is one of the best:


“Public services and taxation have a disparate impact on the contented electoral majority on the one hand and the less affluent on the other, and it is this difference that has clearly and plausibly produced the tax and fiscal policies of these last years. One part of the community pays the taxes and votes, another receives the benefits and does not vote.


In pursuit of the self-interest of those with voice and vote, it has been held that taxes should be reduced and not thereafter increased in any visible way; welfare services should, to the extent that is possible, be curtailed. There should not, however, be any reduction in favoured expenditures, especially for defence and financial rescue operations.


Support to failing financial institutions…is a fully defended function of the government, however evident the financial extravagance and extensive and visible larceny (…of the commercial banks…) that made it necessary. Were the appropriations for these rescue operations applied instead to government expenditures for welfare, that would be deemed burdensome and otherwise wholly intolerable.”


Not many political and economic commentators have quite this grand patrician style of political economist JK Galbraith… he speaks about the events of today, despite haveing been dead for six years. Galbraith was writing about the financial crises of the early 1990s. We have been here before, of course, and will be again, unless we start doing something different.


In 1991, he wrote ‘The Culture of Contentment’, explaining the causes and effects of Reaganomics and Thatcherite policies. He describes all economic policies, of the left or right, as acts of faith for which there is no objective evidence to suggest that they do actually work; all the evidence is that they don’t.


Politicians also trust in their sense of self-belief as being sufficient justification for their policies and actions. Blair and Brown, or Cameron and Osborne are simply the latest professors of economic faiths that they represent as certainties and inevitabilities. Snake oil salesman mostly pedalled harmless coloured waters, but these articles of economic faith are no placebos, having serious and immediate consequences for large parts of the population.


This background is an important starting place to understand what we need to do build many more new homes and make all housing more affordable. Before the summer break, I will be covering in later blogs:

  • Why we need a Chancellor who understands land economics
  • Why reducing private debt, much of it property debt, is a much more important political task than reducing public debt…and not just because private debt is six and half times greater than public debt.
  • Why the last thing that investors want is a deregulated planning system in whch there is even less certainty that the right stuff will be built in the right place than now.
  • Why landowners and unrestrained land price speculation are damaging society, the environment and the economy.
  • Why housing in London has become the bank for surplus wealth from the Middle East and Asia, and why that is bad for our health
  • Why we need a national housing and land policy, and a national housing bank

The Mortgage Lending Boom 1980-2007 – The £800bn Own Goal

In the period since the onset of the financial crisis in 2007 there has been much debate about the reasons and nature of the crisis and what adverse effects it has had on the UK economy and society. Much has been written about irresponsible mortgage lending without proper regard to borrowers’ ability to repay, staff bonuses based on volumes of sales of financial products whose longer term profit capacity had not been established, the miss-selling of mortgage protection insurance and similar malpractices. Debate on all these issues is well justified since they have all contributed to current ills.


But there has been a far larger and more damaging own goal as a result of the profit-seeking rush to lend in the period of financial de-regulation following the Thatcherite 1980s.One that has miss-applied £800bn of the scarce resource of investment.


The vast increase in mortgage lending to households way out of line with the growth of earnings was achieved by four main changes in lending practices following the deregulation:


1) taking account of increasing proportions of the second earner’s income (with a huge increase in reliance on paid childcare and, quite possibly, adverse consequences for the quality of parent/child relationships)

2) increasingthe length of the loan repayment term

3) increasing the multiple of loan granted to earnings (from around 2.5 to 5 or 6)

4) encouragingapplicants to overstate their incomes


See for an 8 minute acted scene illustrating these changes in lending practice.


Had the volume of mortgage lending moved up from 1980 in line with earnings, and had these practices not been adopted, total outstanding mortgage debt would have been about £200bn by 2007. In fact it was over £1,000bn – i.e. £1trillion.The enormous sum of about £800bn had been invested, or one would argue miss-invested, over this period in stimulating house prices.


In fact had house prices moved up with earnings since 1980 (and why should they have not done so had the flood of credit not happened) the average house price in 2007would have been about £60,000 making everyone’s life easier and sparing us all the massive fall-out effects from large-scale instabilities in house prices and consequently land prices and rents. The most damaging of these effects has been the current widespread unaffordability, especially in the private housing sectors.


But the real own goal of the neo-liberalism stemming from the 1980s has been the opportunity cost of applying the £800bn to boosting property values over the period to 2007, as distinct from using it for other more economically productive purposes to stimulate the competitive position of UK plc and the quality of life of our society. These could have included research and development spending for the productive sector, investment in hard infrastructure such as water mains and public transport, spending on social, health and educational facilities and even investment in putting the whole of the housing stock in decent condition – calculated at something like £25bn; peanuts when compared to £800bn and a highly cost-effective move in itself.


Better future management of these huge financial flows is the key economic issue for the Coalition to be thinking about. Or the 1980-2007 disaster will happen all over again as the economy recovers.

Peter Ambrose

 Visiting Professor in Housing and Health, University of Brighton

 Associate Housing Adviser, Zacchaeus 2000 Trust