From the NS archive: The twenty-year wait

19 December 1980: Britain will soon be well on the way to recreating the slum housing problems of the Forties.

In this article from 1980, Steve Schifferes, a former research officer for the housing charity Shelter and now a professor at London’s City University, reports on the collapse of social housing. In the year prior to Margaret Thatcher’s appointment to power, around 100,000 council houses were built per year in England. Yet only 18 months into her Conservative government, Schifferes was worrying that there will be “hardly any new council houses” – a fear proven correct by 1983 as the level of building had halved. Housing took the major brunt of the Tories’ spending cuts, and with the introduction of new policies such as Right to Buy which allowed tenants to buy their social homes at a significant discount, Schifferes predicted that by 1984 there “will be two million households on council waiting lists with new applicants waiting, on average, 21 years”. Schifferes insisted that a new, bolder scheme was required – a demand still left unanswered 40 years later.

Within a few years hardly any new council houses will be built in Britain; those on council house waiting lists will have to wait for up to 20 years for a home and Britain will be well set on the way to recreating the slum housing problems of the Forties. These are the main conclusions of Shelter’s survey of the cuts in local authority house building, which are only reinforced by this week’s decision by Michael Heseltine to extend the moratorium on new council house building.

Housing is taking the major brunt of the government’s spending cuts: three-quarters of the total for the next four years as outlined in the Public Expenditure White Paper. By 1984 housing will account for 3.9 per cent of government spending, compared with 7.3 per cent last year. Labour and Tory governments alike have found housing an attractive target for cuts in public spending. As a large proportion of the Budget is capital spending, single swipes of the axe apparently save large sums of money.

In addition, concentration on new house building appears politically less risky: cutbacks in programmes such as estate modernisation affect identifiable groups but new building only affects the future housing of the homeless and those on the waiting list – a less readily identifiable group to whom no promises have been made.

To make matters worse, cuts in capital spending take years to show up in the figures, so one package of cuts has little immediate effect, provoking another lot. As this week’s announcement of rent rises of up to £3.25 a week shows, the government is also trying to cut spending on housing revenue; but fluctuating interest rates and the operation of rent rebates takes the net cut both less certain and smaller than might be expected, so the brunt of the cuts will still fall on capital spending. Many councils are likely to make further capital cuts of their own, so long as there are doubts over the future further finance.

As a result, by 1983 it is likely that less than 30,000 council houses in England will be built per year, even fewer than suggested by the Select Committee on the Environment. This compares with over 100,000 just three years ago, and will hit those currently on housing waiting lists who lack the access to a decent home at a reasonable price provided by owner occupation and public sector housing. Half the people on council housing waiting lists live as part of another household. And, in London for example, the average head of household income of a family on the waiting list in 1978 was £2,600, compared with the average for first-time buyers of £5,100. Even the increases in council rents will not release houses to those on the waiting lists: better off tenants will not be driven into the private owner-occupied sector but will tend to buy their council house at a massive discount.

The cutback in council house building will eliminate the so-called housing surplus. This was, in fact, a mirage created by assuming that most single people sharing accommodation did not want a home of their own and that housing in one part of the country could be offset by housing elsewhere. But now even this disappears, becoming a housing deficit of half a million homes by 1984. Shelter estimates that by then there will be two million households on council waiting lists with new applicants waiting, on average, 21 years. Some councils will just stop housing anyone from the list.

These estimates may be conservative in view of current economic and demographic trends. In a recession the demand for council housing always rises and the supply of council houses available for re-letting to people on the waiting lists falls. In addition, the rising number of marriages, divorces and old people in the population are powerful demographic pressures increasing demand. Already, record numbers of people are joining the waiting lists.

But the problem is not just one of absolute shortage. Britain’s housing stock is deteriorating rapidly and the bulge of older housing requiring immediate attention is going to increase sharply in the 1980s: a third of Britain’s housing stock was built before the First World War, and the majority that is in bad condition is owned by private landlords and elderly owner-occupiers who are unwilling or cannot afford to repair it. A recent survey in Birmingham estimated that 80,000 of the city’s 107,000 pre-1919 houses will have to be improved in the next decade to prevent them becoming substandard. The Association of Metropolitan Authorities reckoned that the total cost of major repairs in 1976 (at today’s prices) for all Britain’s housing was over £14bn.

It is worth remembering that one of the preconditions for the current attack on public housing was the failure of the Labour government’s housing policy, in particular and crucially in the field of housing finance. Attempts to reform this were effectively abandoned when Peter Shore succeeded the late Anthony Crosland at the Department of the Environment. Housing faces a fundamental financial difficulty which was apparent to the 19th century private enterprise property companies and philanthropic trusts, which were unable to provide enough decent housing that met public health regulation and was within the mean of the average worker. This is the main reason for the emergence of public housing before the First World War, acknowledged equally by the Conservatives as well as Labour.

This week’s decision to raise the limit on some building society loans from £25,000 to £37,000 shows the government is still determined to preserve the regressive subsidy to owner-occupiers. A government seriously committed to housing reform would have to tackle this feature of housing finance, which also ensures that the subsidy to owner-occupiers is open-ended and will grow continuously in future years, as well as the unequal distribution of council house subsidy.

The other major area where structural changes are needed is in the system of allocating council housing and in mobility. The government has proposed a scheme to help council tenants who want to move house, but councils are not compelled to observe it and in any case it only makes available 1 per cent of lettings. With the increased pressures councils will be facing in the next two years, a much bolder scheme is needed.

Read more from the NS archive here, and sign up to the weekly “From the archive” newsletter here. A selection of pieces spanning the New Statesman’s history has recently been published as “Statesmanship” (Weidenfeld & Nicolson).