Today we are relaunching the cross-party MPs’ Group on Council Housing, to push the issue of council housing once again to the top of the agenda in parliament and government.
This is a crucial time for housing policy. We are in the depths of the worst housing crisis since the Second World War. All too often we see families living in B&Bs, young people who will never be able to afford their own homes, and hard-working people paying half of their income or more on accommodation costs.
Rough sleeping in the UK has more than doubled since 2012, with over 4,750 people now estimated to be sleeping on the streets, mostly in the capital. Hundreds of thousands more are sleeping in hostels, shelters, derelict buildings, or on other people’s sofas.
But there is a solution which has worked before and will work again – an adequate supply of council housing.
The current housing crisis is essentially an issue of severe undersupply of affordable housing over the past three decades. As well as the fact that we simply haven’t built enough homes, 40% of the social housing sold under the Right-to-Buy policy is now in the hands of private landlords. In some cases, the private rental on these properties is now 50% more expensive than local-authority-owned social housing.
Social housing is becoming so scarce that it has forced councils to radically redefine the term ‘vulnerable’ as there is less scope to house all vulnerable individuals. As we know from our caseload, this often leads to families having to endure unacceptable conditions including severe damp, dilapidation and overcrowding.
In last November’s budget, Philip Hammond announced plans to build 300,000 homes a year, yet only around 2% of new homes built in recent years have been earmarked for council housing. According to a report from the House of Commons Library, “Since 1939, the delivery of more than 200,000 homes per year in England has only happened in years when there have been major public-sector house-building programmes.”
It wasn’t always like this. It’s no coincidence that rates of housebuilding reached their post-war peak during the 1950s and ’60s when successive governments were committed to both private-sector and public-sector house building. Housing was plentiful and house prices stayed low so ordinary earners could obtain their own homes, as well as providing affordable rentals for those who needed them.
Unfortunately, the drive for council housing was killed off by Thatcher’s government, which starved the public sector of investment and sold off stock through Right-to-Buy. The success of the ’50s and ’60s, however, shows that prioritising council housing needn’t be a partisan issue, with the Conservative Harold Macmillan initiating some of the greatest council-house-building programmes. Cross-party working is a principle we are committed to in our MPs’ group.
There are several policy reasons why more council housing isn’t being built now and there won’t be one silver bullet that initiates the rates of house building we need.
There has been a lack of investment from central government in recent history – the National Housing Federation found that expenditure on housing development dropped from £11.4 billion in 2010 to £5.3 billion in 2015.
There must be a robust commitment to prioritise building council homes backed up by adequate funds. Although Theresa May’s announcement at the Conservative Party Conference last year that her government would invest £2 billion in social homes was welcome, this is only predicted to deliver an extra 25,000 homes by 2021.
Local-authority borrowing caps strangle councils’ ability to build the housing they want to provide. The Treasury Select Committee and the Local Government Association are among the voices demanding that the government allow local authorities to borrow to invest in housing, by lifting the cap.
The other major issue is land. Sky-high land prices are preventing local authorities from being able to access the land to build on, and incentivising cash-strapped councils to sell off the land they do own rather than build on it.
One part of the solution could be to legislate for all unused land owned by local authorities to be used exclusively to build council homes. This would prevent local authorities from selling off land that could be better used for the public good. The government needs to be driving this agenda; the whole country would benefit as almost all areas are affected by the lack of affordable housing.
But it is also vital to tackle the underlying issue of inflated land prices. Currently, land is priced at its potential development value rather than its actual pre-development value. This pushes he cost of undeveloped land up, making investment in council housing more expensive, and bizarrely it also rewards landowners for housing and infrastructure developments to which they don’t contribute.
The homeless charity Shelter has argued that a few small reforms to the 1961 Land Compensation Act and associated legislation on compulsory purchase orders would allow local authorities to purchase land at a much more reasonable price in order to use it for the common good.
Greater compulsory purchase powers for councils could also allow them to take advantage of the 200,000 homes that currently lie empty across the country and bring them into the public sector.
These are the kind of reforms we will be discussing at the revived MPs’ Group on Council Housing and we hope that this will be the start of cross-party consensus on the need to enable councils to once again deliver the housing we so desperately need.