Labour needs to be pressed to put council housing at the top of its priorities list
THE contradiction between Labour’s official housing policies and the more radical aspirations of members and supporters was highlighted at the recent Liverpool conference.
First, the delegates voted to remit the National Policy Forum housing section report. The only pledge in it was the promise to build one million “genuinely affordable homes” over 10 years, “the majority of which will be social rent.” Yet the current level of funding promised will not support 50,000 or more “social rent” homes a year.
Second, the composite resolution on housing voted through included a number of policies which, if adopted, would mark a significant step forward from Labour’s existing policy. Labour had only committed to suspension of right to buy, but the composite motion unequivocally supported ending RTB. This would mark a qualitative break with New Labour’s housing philosophy which painted self-interest as “aspiration.”
Third, the composite called for the building of 100,000 “social rent” homes a year. This contradicts Labour’s policy of 100,000 “affordable homes” for rent and sale. Despite these welcome advances, there remain a number of unresolved issues and some problematic policies. Although the composite talked of “the biggest council housing programme for 30 years,” there is still no commitment to a specific number of council homes — no target.
John Healey’s office has told us that they don’t know how many will be built because it’s up to councils to decide. Yet Labour can determine how many council homes it aspires to have built by deciding on the amount of grant available to councils, rather than make them bid for funds against housing associations.
Labour’s commitment on funding is just £4 billion a year, for council housing, housing associations and for shared ownership. The definition of “affordable homes” includes home ownership. So councils could bid for grant for shared-ownership homes alone, and they would be fulfilling their duty to promote “affordable homes” without building a single council home.
In the conference compositing meeting Healey resisted attempts to increase this figure, and would only agree on the wording “significant grant.” Asked what this meant, he said £4 billion a year.
This is completely inadequate for a large-scale council housebuilding programme. The current government announced last year an extra £2bn which might be used to support the building of 25,000 social rent homes, with a grant of £80,000 per property. Such a sum would be reasonable and affordable.
New Labour’s National Affordable Homes Programme offered around £60,000 but that was 10 years ago. With £80,000 it would be possible to support the building of 50,000 council homes for £4bn a year, 100,000 for £8bn.
The problem is that the shadow housing minister is still resisting making council housing Labour’s “first housing priority.” Clinging to New Labour’s infatuation with home ownership, he committed Labour to funding Help to Buy until 2027. This programme has made a fortune for the big builders and has driven up house prices. It has been reported that in the compositing meeting he said: “It makes a profit, why would we end it?” How so?
Because it demands of the buyer that they pay back the government not the 20 per cent loan they were originally given but 20 per cent of the value of the house when it is sold on or the mortgage finishes.
That and the annual fee at RPI plus 1 per cent will in fact fleece these buyers. Unfortunately, the composite motion included support for first-time buyers, which could be interpreted as support for Help to Buy.
While the debate on what policy a Labour government should carry out is critical, we cannot passively wait for a Labour government.
We should be campaigning against the current government’s current housing proposals. Two issues underline the passivity of the shadow housing minister’s office currently: the question of council rents and the threat of a new round of stock transfers.
The Tory government is proposing to increase council rents from 2020 by CPI plus 1 per cent. This means at least five years of above-inflation rent increases.
Although council tenants have had 1 per cent rent cuts for four years, under New Labour and the coalition they had many years of above-inflation rent increases, as a result of the policy to “equalise” rents between councils and housing associations.
Moreover, not all tenants have had the rent cuts. Councils have the flexibility to set rents up to 5 per cent above the “target rent.” Hence some councils are increasing the rent of new tenants even though they are applying the rent cut to existing ones.
Reintroducing above-inflation increases mean making the tenants pay for the funding shortage for which the government is responsible.
Thus far Labour has failed to oppose these increases. Healey’s office told us that this issue will be considered as part of its consultation on Labour’s green paper. Yet with a government consultation taking place now, Labour should be opposing above-inflation rent increases. Or does it support them?
The Tories are currently consulting on their housing green paper. Sneaked in under the heading of “tenant empowerment,” the idea of a new round of stock transfers is floated.
Healey’s office told us: “We’re very sceptical of the benefits of more large-scale stock transfers.” However, they said they would “wait to see further detail.” This is another mistake in our view. As with the rent issue, Labour should be publicly opposing a new round of transfers, to try and stop a proposal being brought forward in a white paper.
Of course, the Tories may well throw New Labour’s support for stock transfers in their face. The reply to that is that New Labour’s policy was wrong.
The Labour conference and other evidence suggests that Labour members and voters overwhelmingly support a large-scale council housing programme as a “first priority” for a Labour government. Yet there is as yet no commitment to support such a priority and to providing the finance for it.
The root of the housing crisis lies in the domination of housebuilding by commodity production. The large-scale housebuilders are not interested in building homes for need, only maximising their profits. Building “too many” homes will lower their returns.
The desperate shortage of council housing (there are only 1.6 million council homes left in England) can only be tackled if building on the scale of 100,000 a year was carried out. If right to buy was abandoned, then a five-year programme could see council stock numbers pass the two million mark.
Apart from providing a secure and affordable home for 500,000 extra people, it would also have the benefit of taking those numbers out of the private rental market and cut the numbers of those forced to try for a mortgage by the shortage of council housing and the high private-sector rents. It would be less of a seller’s market and prices would be likely to fall.
Following the Liverpool conference, pressure needs to be brought to bear on Labour for it to commit to ending right to buy and building 100,000 “social rent” homes a year, preferably council housing.
[This article first appeared in the Morning Star.]