2012/03/23 Draft paper – Why OLSX Supports a Social Housing Programme
Note by admin: The paper was written by Chris Fursdon-Davis. Chris asked for comments on the paper, so please use the comment box below to post your ideas.
Why OLSX Supports a Social Housing Programme
It was clear to the Economics Working Group of Occupy LSX that there is a self evident need for a new initiative in the development of a social housing programme and that the economic agenda is intuitively realistic. In the process of developing this policy paper, we have been immensely grateful for the very valuable input from, and the ability to draw upon, the work done by, of a number of organisations and individuals with dedicated experience and skill base in the field of housing.
Housing provision of one kind or another is the third most fundamental of human needs, the only necessities of greater importance being water and food. By any reasonable interpretation, a civilised society will acknowledge these needs as absolute priorities.
Faced with the undeniable logic of this statement, it is deeply unsettling to reflect upon the failure of successive governments over 30 years and more to develop or sustain any noteworthy policy to address the fundamentals of housing needs in the UK.
In essence this would seem to be the consequence of an ideological mantra of reliance upon ‘the private sector’ (neo-liberalism). The resulting model for housing provision has revealed itself as fundamentally flawed, insofar as it has failed to meet demand and contributed to the overpricing and insecurity of a boom bust market. This has been compounded by the disastrous way in which the market has, with the fatally flawed connivance of successive governments, been allowed to become a speculative instrument in the hands of a criminally irresponsible and shamefully unregulated banking and finance ‘industry’*.
The clearly evident and undeniable result is that we have been left with a major under-provision of accommodation, with prices and rents which verge upon or breach a barrier of un-affordability. The situation we find is an approximate 5 million people with a waiting list for 2 million homes.
*A somewhat cynical misnomer for an area of human endeavour which produces nothing other than the spawning of imagined multiplication of a so called wealth in a way that primarily harms rather than benefits the majority, with the inbuilt potential to provoke intermittent chaos. The added insult is that the ephemeral benefits of the house of cards is ever increasingly the financial/material plaything of the tiny minority (1%) of the manipulators of the system, with no noteworthy benefit accruing to the those who create the ‘wealth’ through their labours .
As a result of the near total emphasis on the economic ideology of the market,
provision strategies for social housing have not only been profoundly neglected, but also fallen foul of the damaging ‘market enhancing’ strategy of the subsidised sell off of social housing. It is appropriate to emphasise that there is nothing wrong with the principle of home ownership in itself, so long as there is a responsible policy in place to counter manipulative inflationary forces which make housing and rents unaffordable for far too many of those in need of a home.
There are a number of downsides to the policy of selling off social housing.
Foremost, this further erodes the already substantially depleted stock of such housing. This in its turn means that there will be a reduced pool of accommodation available at realistically affordable rents for those in need, the resulting shortfall being the consequence of a lack of a new-build social housing policy. Furthermore, such housing stock will subsequently be recycled in the private sector and become a part of a price band of housing that is unaffordable for that socio-economic group of aspirant dwellers who would have previously rented such properties. In addition, there is evidence that those who take advantage of the right to buy at a subsidised price will not uncommonly fall into a debt trap and, as a result, lose their home (details).
Recent/current policies and legislation are putting an additional and unacceptable strain upon rental provision, such that, in addition to the insult of the a new concept of so called ‘affordable’ rents, a combination of deregulation and undermining of security of tenure means that there are those who have already fallen victim to, and many who live in fear of, losing their rented homes as they become unaffordable. There is, in addition, the double financial bind of actual and relative reduction of incomes at a time of recession fuelled and government imposed austerity, both promising to be with us over quite a number of years (facts and figures).
The other issue of major concern in all of this is the severely depressed house building market, which, in view of the realistic anticipation of long term downturn of the economy, promises not only the hardship of unemployment in the sector but also the erosion of the building artisan skill base.
Should we wish to reclaim the mantle of a social order that truly cares about the fundamental needs of our fellow citizens, while there are many other issues of great and competing importance, one of our foremost challenges is to address the cumulative deficit of housing provision. There could be no better time to seize the opportunity which offers itself as a major project which can readily be addressed in ways that will benefit all.
A Housing Policy Fit for Purpose
It is proposed that the government should embark upon a major project of new- build social housing, with particular emphasis upon ‘starter homes’. Such housing will be of high quality, environmentally sound and socially integrated. Rents will be scaled to a true concept of income related affordability, and tenure will be secure within realistic constraints.
An initial round figure of 200,000 homes is suggested in the first year of this programme, with projection to complete one million new homes within five years.
It is noted that £325 billion of newly created money has been fed to the banks as a cumulative policy of quantitative easing, one declared intention being that this would help to stimulate the economy through investment in business. There is little evidence of any noteworthy effect of this kind to date, and there is uncertainty as to the potential benefits or otherwise of this untried financial instrument. It is suggested that it has helped to strengthen the frail banking sector and it has variously affected interest rates, with the particular disadvantage that it has had a major adverse impact upon an already ailing pensions market (fund/‘pot’).
In view of the seeming impotence of this policy in stimulating growth , it is suggested that a proportion of quantitative easing new money could be redirected in such a way as to fund the proposed social housing programme – perhaps something of the order of £20 billion in the first instance.
To do this it would be necessary to create a new body to manage the financial aspects of this programme. It might be felt that this would demand a specifically dedicated organisation, but this would have the disadvantage of having to build entirely new administrative structures and skills from a base of relative inexperience. Taking account of this, we favour the suggestion of converting at least a part of the Royal Bank of Scotland (RBS*) to a publicly owned facility for investment, with the social housing agenda as one part of its remit.
Additional Financial Considerations – i.e Funding Already Available
In view of the relative failure of the QE initiative to date, it would seem that there is good reason to believe that if ‘new’ money is to be injected into the economy, it would provide very real and immediately identifiable benefits if a proportion was earmarked for a social housing. The combined virtues of such a policy include an immediate impact upon the acute on chronic shortage of housing, and the much needed boost it would give to the internal economy, in which the housing sector in less straightened times is recognised as one of the most solid and central generators.
The infrastructure investment will be sound and long term, and this initiative will begin to address the substantial and proper concern about the very damaging deskilling impact of a long term depression in the building trade, especially in view of its central role in the domestic economic model.
While the overall plan did not seem to have been championed before, it became evident that its various component parts were variously reflected in a number of
*Reinvestment Bank for Society
outline planning documents developed by NGOs and individuals, backed by soundly researched analysis. Those whose advice and publications we have drawn upon are identified in the appendix to this document. They should not be seen as in any way associated with this Occupy initiative, but, because of their very real and committed concerns, a number have been extremely helpful in offering advice and in sharing their experience; for this we are much indebted.
It may be added that any one or all of those parties interested in Housing would be more natural proponents of a plan of this kind, and they will in some instances have made representations to government. However, the reason for this initiative from Occupy stems from the very real concern that the obvious necessity for such a plan remains subject to long term and serial neglect.
One of the particularly harmful effects of unbridled market forces in recent years has been the hyperinflation of land prices, with an inevitable adverse knock on effect upon house prices. There are a number of factors in the equation that have fuelled this, but the immediate issue of concern in the housing initiative championed here is as to how, by one or more devices, it may be possible to ‘defray’ excessive land prices with a view to establishing a much more cost effective model so as to enhance a financially sound and realistic basis for truly affordable rents.
In the first instance, land would be sourced from publicly owned ‘stocks’, which will be, or are already, in the gift of the Homes and Communities Agency. This would offer the opportunity for sound and ‘socially sensitive’ pricing, and a potential model for subsequent land release for new build. Novel ideas have been, or are being, explored by individuals or groups with a particular interest in the subject, and they should be invited to contribute to the processes involved in developing the proposed initiative (e.g. NEF etc). Individual projects would be explored with local communities to optimise social viability. For design and architectural input, there would be ready sources of expertise in the network of housing associations, along with the variety of NGOs, charitable or otherwise.
It will no doubt be argued that the phenomenon which is Occupy has no basis in experience or logic for making representations of this kind to government, and it is readily acknowledged that such reservations would, perhaps be understandable in principle. However, it has been our view that the massive importance of this matter is matched only by the extent to which it has been neglected over the years, such that we are now faced with a crisis situation to which the practical answer, as outlined above, is all too obvious. What is more, it can be readily achieved and at the same time benefit everybody, as is strongly supported by many able experts with depth of experience in the field..