"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

How Jim Murphy's mistake cost Labour - and helped make Ruth Davidson

Scottish Labour's former leader's great mistake was to run away from Labour's Scottish referendum, not on it.

The strange revival of Conservative Scotland? Another poll from north of the border, this time from the Times and YouGov, shows the Tories experiencing a revival in Scotland, up to 28 per cent of the vote, enough to net seven extra seats from the SNP.

Adding to the Nationalists’ misery, according to the same poll, they would lose East Dunbartonshire to the Liberal Democrats, reducing their strength in the Commons to a still-formidable 47 seats.

It could be worse than the polls suggest, however. In the elections to the Scottish Parliament last year, parties which backed a No vote in the referendum did better in the first-past-the-post seats than the polls would have suggested – thanks to tactical voting by No voters, who backed whichever party had the best chance of beating the SNP.

The strategic insight of Ruth Davidson, the Conservative leader in Scotland, was to to recast her party as the loudest defender of the Union between Scotland and the rest of the United Kingdom. She has absorbed large chunks of that vote from the Liberal Democrats and Labour, but, paradoxically, at the Holyrood elections at least, the “Unionist coalition” she assembled helped those parties even though it cost the vote share.

The big thing to watch is not just where the parties of the Union make gains, but where they successfully form strong second-places against whoever the strongest pro-Union party is.

Davidson’s popularity and eye for a good photo opportunity – which came first is an interesting question – mean that the natural benefactor in most places will likely be the Tories.

But it could have been very different. The first politician to hit successfully upon the “last defender of the Union” routine was Ian Murray, the last Labour MP in Scotland, who squeezed both the  Liberal Democrat and Conservative vote in his seat of Edinburgh South.

His then-leader in Scotland, Jim Murphy, had a different idea. He fought the election in 2015 to the SNP’s left, with the slogan of “Whether you’re Yes, or No, the Tories have got to go”.  There were a couple of problems with that approach, as one  former staffer put it: “Firstly, the SNP weren’t going to put the Tories in, and everyone knew it. Secondly, no-one but us wanted to move on [from the referendum]”.

Then again under different leadership, this time under Kezia Dugdale, Scottish Labour once again fought a campaign explicitly to the left of the SNP, promising to increase taxation to blunt cuts devolved from Westminster, and an agnostic position on the referendum. Dugdale said she’d be open to voting to leave the United Kingdom if Britain left the European Union. Senior Scottish Labour figures flirted with the idea that the party might be neutral in a forthcoming election. Once again, the party tried to move on – but no-one else wanted to move on.

How different things might be if instead of running away from their referendum campaign, Jim Murphy had run towards it in 2015. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

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