"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.

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?

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

 

Alex Morton is a senior research fellow at Policy Exchange

Chuka Umunna speaks at the launch of Labour's education manifesto during the general election. Photograph: Getty Images.
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After so badly misjudging the leadership contest, how will the Blairites handle Corbyn?

The left-winger's opponents are divided between conciliation and aggression. 

When Labour lost the general election in May, the party’s modernisers sensed an opportunity. Ed Miliband, one of the most left-wing members of the shadow cabinet, had been unambiguously rejected and the Tories had achieved their first majority in 23 years. More than any other section of the party, the Blairites could claim to have foreseen such an outcome. Surely the pendulum would swing their way?

Yet now, as Labour’s leadership contest reaches its denouement, those on the right are asking themselves how they misjudged the landscape so badly. Their chosen candidate, Liz Kendall, is expected to finish a poor fourth and the party is poised to elect Jeremy Corbyn, the most left-wing leader in its 115-year history. For a faction that never ceases to underline the importance of winning elections, it will be a humbling result.

Though the crash has been sudden, the Blairites have long been in decline. Gordon Brown won the leadership unchallenged and senior figures such as John Reid, James Purnell and Alan Milburn chose to depart from the stage rather than fight on. In 2010, David Miliband, the front-runner in the leadership election, lost to his brother after stubbornly refusing to distance himself from the Iraq war and alienating undecided MPs with his imperiousness.

When the younger Miliband lost, the modernisers moved fast – too fast. “They’re behaving like family members taking jewellery off a corpse,” a rival campaign source told me on 9 May. Many Labour supporters agreed. The rush of op-eds and media interviews antagonised a membership that wanted to grieve in peace. The modernising contenders – Chuka Umunna, Liz Kendall, Mary Creagh, Tristram Hunt – gave the impression that the Blairites wanted to drown out all other voices. “It was a huge mistake for so many players from that wing of the party to be put into the field,” a shadow cabinet minister told me. “In 1994, forces from the soft left to the modernising right united around Tony Blair. The lesson is never again can we have multiple candidates.”

While conducting their post-mortem, the Blairites are grappling with the question of how to handle Corbyn. For some, the answer is simple. “There shouldn’t be an accommodation with Corbyn,” John McTernan, Blair’s former director of political operations, told me. “Corbyn is a disaster and he should be allowed to be his own disaster.” But most now adopt a more conciliatory tone. John Woodcock, the chair of Progress, told me: “If he wins, he will be the democratically elected leader and I don’t think there will be any serious attempt to actually depose him or to make it impossible for him to lead.”

Umunna, who earlier rebuked his party for “behaving like a petulant child”, has emphasised that MPs “must accept the result of our contest when it comes and support our new leader in developing an agenda that can return Labour to office”. The shadow business secretary even suggests that he would be prepared to discuss serving in Corbyn’s shadow cabinet if he changed his stances on issues such as nuclear disarmament, Nato, the EU and taxation. Were Umunna, a former leadership contender, to adopt a policy of aggression, he would risk being blamed should Corbyn fail.

Suggestions that the new parliamentary group Labour for the Common Good represents “the resistance” are therefore derided by those close to it. The organisation, which was launched by Umunna and Hunt before Corbyn’s surge, is aimed instead at ensuring the intellectual renewal that modernisers acknowledge has been absent since 2007. It will also try to unite the party’s disparate mainstream factions: the Blairites, the Brownites, the soft left, the old right and Blue Labour. The ascent of Corbyn, who has the declared support of just 15 MPs (6.5 per cent of the party), has persuaded many that they cannot afford the narcissism of small differences. “We need to start working together and not knocking lumps out of each other,” Woodcock says. There will be no defections, no SDP Mk II. “Jeremy’s supporters really underestimate how Labour to the core the modernisers are,” Pat McFadden, the shadow Europe minister, told me.

Although they will not change their party, the Blairites are also not prepared to change their views. “Those of us on this side of Labour are always accused of being willing to sell out for power,” a senior moderniser told me. “Well, we do have political principles and they’re not up for bartering.” He continued: “Jeremy Corbyn is not a moderate . . .
He’s an unreconstructed Bennite who regards the British army as morally equivalent to the IRA. I’m not working with that.”

Most MPs believe that Corbyn will fail but they are divided on when. McFadden has predicted that the left-winger “may even get a poll bounce in the short term, because he’s new and thinking differently”. A member of the shadow cabinet suggested that Labour could eventually fall to as low as 15 per cent in the polls and lose hundreds of councillors.

The challenge for the Blairites is to reboot themselves in time to appear to be an attractive alternative if and when Corbyn falters. Some draw hope from the performance of Tessa Jowell, who they still believe will win the London mayoral selection. “I’ve spoken to people who are voting enthusiastically both for Jeremy and for Tessa,” Wes Streeting, the newly elected MP for Ilford North, said. “They have both run very optimistic, hopeful, positive campaigns.”

But if Corbyn falls, it does not follow that the modernisers will rise. “The question is: how do we stop it happening again if he does go?” a senior frontbencher said. “He’s got no interest or incentive to change the voting method. We could lose nurse and end up with something worse.” If the road back to power is long for Labour, it is longest of all for the Blairites. 

George Eaton is political editor of the New Statesman.

This article first appeared in the 03 September 2015 issue of the New Statesman, Pope of the masses