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"Expensive" social housing is unfair for everyone in the system

Sell off the priciest homes, build more with the money, and everybody wins, argues Policy Exchange.

By Alex Morton Published 20 August 2012 9:15

Wrest Park, in Silsoe, England, is not social housing. Photograph: Getty Images

In England we face both a housing crisis and a growth crisis. Despite high house prices and high and rising rents, the number of homes started last year fell 4 per cent to 98,000. The complexity of this topic has floored the Coalition. Policies to kick start house building are failing. Some of the ideas being floated around Whitehall would actually make a bad situation worse by propping up a dysfunctional model of development. Social housing waiting lists have hit an all time high of over 1.8m households. Individuals and families are trapped waiting in often unsuitable accommodation. The Coalition wants to get our economy growing and sees more homes as key to this. They also grasp the housing crisis is focused on the young, disproportionately hit by Coalition policies that are increasing spend in some areas (pensions) but cutting others (tuition fees).

Fortunately, there is a popular policy that could lead to the development of a lot of new homes while making the welfare system a lot fairer. At present, around a fifth of the social housing stock in this country is "expensive" – worth more than the average for that sized property within the same region. Selling off this expensive housing stock when it becomes empty could raise £4.5bn a year. This could be used to build up to 170,000 new social homes a year, 850,000 over five years, the largest social house building programme since the 1970s. Current policy isn’t just unfair to the taxpayer but also the nearly two million families and individuals waiting on the social housing waiting list. One single family will be given a house that most taxpayers could never afford and force others to wait – possibly years.

The more you think about it, the less justified the current system seems. The public agree. 73 per cent agreed social tenants should not be offered new properties worth more than the average in the local authority. 60 per cent agreed social tenants should not be offered new properties in expensive area. The system is so unfair that even social tenants agreed with changing it. Across all regions, classes and tenures, people could see that the idea of expensive social housing for life just doesn’t fit with a fair welfare system.

There are muddled arguments against this on the grounds it would isolate social tenants and cause unemployment. But reform would only affects 20 per cent of the existing social housing stock, sold off slowly as it become vacant. If we mix new homes in the bottom half of the housing stock, and if we maintain 17 per cent of our homes as social housing, the mix would be a 2:1 ratio of private to social housing. On employment, the evidence shows higher employment in more expensive areas. But the link is weak. Even assuming just living in a more expensive area causes this rise in employment, rather than people with jobs living in more expensive areas, the cost per job created through expensive social housing is £2.5m. This eye-watering sum compares to £33,000 per job the Regional Growth Fund creates. Because of commuting, location isn’t that important.

We could create a huge amount of new decent quality council homes. Properties should have an open market value above a set minimum to ensure decent standards. Local people should control design and quality. We need to get a grip on housing policy. This is a quick and popular option that the civil service should have proposed years ago. So what is the Coalition waiting for?

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10 comments

Mon, 2012-08-20 18:55 — Davidaslindsay (not verified)

The social cleansing side is thoroughly pernicious, of course.

But yes, that really is Policy Exchange, the trading name of Michael Gove's office, proposing that money from the sale of council houses be used to build up to 170,000 new social homes per year, the largest programme for the construction of social housing since the 1970s, which in turn would create as many as a third of million jobs.

The Coalition will never do it. It would entail the ultimate repudiation of Thatcherism, her assault on council housing being the one thing that her supporters still feel able to defend unconditionally. In reality, it created the Housing Benefit racket and it used the gigantic gifting of capital assets by the State to enable the beneficiaries to enter the property market ahead of private tenants, or people still living at home, who had in either case saved for their deposits. What, exactly, was or is conservative or Tory about that? Or about moving in the characters from Shameless either alongside, or even in place of, the respectable working class?

And now, the doubts are being expressed even in the belly of the New Right beast. If Labour promised to build 170,000 new social homes per year, the largest programme for the construction of social housing since the 1970s, thereby creating a third of million jobs, then what would the New Right think tanks and their in house newspapers have to say? "Vote Labour"? If not, why not?

Ed Miliband, Jon Cruddas and Maurice Glasman, over to you.

Mon, 2012-08-20 18:39 — frances smith

sounds a bit too good to be true. i would first want to know what is meant by region, when a home is defined as being more expensive than average homes of that size in that region.

how big is that region? and seeing as this is an idea from a right wing think tank have they doctored the calculations to give the impression the houses are more expensive than they really are.

after all if you took an area in rural cheshire, average house prices would be quite high, however if you then included altrincham, the average house price would fall. but the average house price within a smaller area might make the cost of that house look quite reasonable.

and how have the figures for london been calculated? a lot of london boroughs are quite large, and it is therefore quite easy to create an impression of unfairness where there is none.

there is then also the issue that the numbers of such properties becoming empty over a period of time are actually quite small, so how and where, and under what circumstances will these new homes be built.

after selling one property will a site be found to build two new homes in the same region, or what?

and if there is a long time between the selling of the homes and the buying of the news ones what about the cost of housing the prospective tenants while the new homes are being built.

as the cost of replacement will vary massively depending on how its done.

lets not forget that some idiot right wing think tank came up with plans for boundary changes that would benefit the tories, but it turned out in the end that their figures were wrong, and the benefit to the tories was far less than the think tank believed they would be.

you can't really trust them, you know.

Mon, 2012-08-20 18:49 — frances smith

when reading anything written by a policy wonk that requires serious mathematical calculation always remember that if they could really do the maths they would have chosen an interesting job like being an engineer, so the fact that they are a policy wonk means they can't add up.

Mon, 2012-08-20 17:52 — Red Rain (not verified)

How many social homes [council homes] did Labour build? the Labour government’s general failure to build enough homes and the impact of Labour's ill-conceived: open door immigration policy didn't help an already desperate housing shortage.

Mon, 2012-08-20 14:26 — Jim Reid (not verified)

Incredibly naive to think that the money raised by selling off social housing would be used to build more social housing. That would be the idea put around to start with then when push came to shove and people actually realised thousands of new homes were going to be built in their area the NIMBY brigade would go into overdrive. End result? The money will just go into Treasury coffers.

Mon, 2012-08-20 13:55 — Indu Pendent

I cant fault the idea of setting minium standards for social housing. Alot of the 1950-1970s housing built by the magic State Fairy was rubbish, needs rebuilding (so has a high lifetime cost) and traps people in communities that hold their families back.

Indu's solution is to have a national register of state housing to enable free migration of people between regions, a national housing strategy to building houses to reduce labor costs in economic active areas, a tenant merit scheme to allow good tenants priority in queues and a tenants review scheme to discourage long term occupancy by the long term employable but unemployed.

Then people wonder why I'm often called a Tory troll even though I've heard Labour people talking about similar.

Any house built by the state needs to be attractive to the general market so that is can be sold off. There should be a steady supply of state built houses being sold to regulate the general market price of affordable houses.

Again -- trying to create a portfolio of private and public sector starter afforable houses strategically planned instead of mass council estates to smother people in municipal kindness. Very un-Labour. Housing is an area where Labour is a disaster.

Mon, 2012-08-20 13:17 — hugh markey (not verified)

Who's going to tell Prince Phillip? Suggest the 'landlords' friend Graham Shapps. He's up for it.

Homes for Heroes

Mon, 2012-08-20 11:08 — Steve Swift (not verified)

So are we abandoning equality and social mobility here? The argument appears to be that certain people don't deserve certain properties.

Mon, 2012-08-20 11:07 — Steve Swift (not verified)

So are we abandoning equality and social mobility here? The argument appears to be that certain people don't deserve certain properties.

Mon, 2012-08-20 11:01 — Herbert (not verified)

So how would this work? One expensive house is sold off? Two are built somewhere else, immediately the cash comes in? I don't think so. This is simply a cruel scam.