I had a leeetle bit of a moan about Twitter at the weekend — in particular its tendency to turn even normally quite intelligent and courteous people into the worst kind of insult-spewing trolls — and I’m afraid I’m going to do it again now…
Yesterday saw the launch by the think-tank Policy Exchange of a report entitled Ending Expensive Social Tenancies. Now I’ve not had chance to read it yet. (It’s 48 pages long.) But then I doubt that many folk have.
You don’t have to agree with its reasoning or conclusions to try and engage with its arguments.
Unless you’re Lord (John) Prescott, of course.
In which case, you see the name ‘Policy Exchange’… you think “That’s Cameron’s favourite think-tank. Therefore they’re evil. And everything they say is wrong”… and you immediately launch an oh-so-lolarious Twitter hashtag, LOLicyExchange (geddit??!)… all so that you can dodge accountability for any of the issues that 13 years of Labour government failed to get to grips with.
Thankfully, there are some serious folk around who did bother to read the Policy Exchange report, and recognised its virtues — as well as its flaws. The best I’ve read is by Ian Mulheirn of the Social Market Foundation: it’s to the point, constructively critical, balanced and — even better — brief. Here’s its intro…
Yesterday’s Policy Exchange report proposing that valuable social housing be sold off to pay for more housing in cheaper areas caused a predictable furore. Opponents quickly united around the claim that the idea would lead to social segregation. Proponents pointed out that social segregation is exactly what’s currently experienced by many of the 1.8 million families on social housing waiting lists.
Hyperbole aside, any balanced interpretation of the idea must recognise that there are valid concerns on both sides of the debate. Selling all valuable social housing would indeed exacerbate social segregation, and no reasonable person wants to create social housing ghettos. But that’s not sufficient reason to be against the idea in principle. Tying up billions of pounds in property in central London to allow a few families to live in places that nobody else can afford, while millions of families are denied housing, surely doesn’t serve anyone’s social priorities. The principle advanced by Policy Exchange is therefore entirely reasonable – the debate we should be having is how far to take it.
You can read Ian’s post in full here.
* Stephen was Editor (and Co-Editor) of Liberal Democrat Voice from 2007 to 2015, and writes at The Collected Stephen Tall.
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26 Comments
“Tying up billions of pounds in property in central London to allow a few families to live in places that nobody else can afford, while millions of families are denied housing, surely doesn’t serve anyone’s social priorities. ”
precisely.
http://blogs.telegraph.co.uk/finance/timworstall/100019557/council-houses-and-social-cleansing-try-to-keep-a-straight-face-while-the-lefties-tie-themselves-in-knots/
John Prescott denounced me as the “Unacceptable reincarnation of Norman Tebbit” when I wrote a paper for Policy Exchange once, and he clearly hadn’t read it. I was also denounced by Tories, and LDs, one of whom at least had the decency to apologise privately for doing so. None of them could have read the report in the interval between launch and condemnation, given the speed with which they rushed to condemn it. Such is life as a think tanker.
BUT, let me give John P his due. He made a film on the issue a couple of years later, and we discussed my report. It was clear that he had read it, cover to cover, and thought about the issues.
Instant rebuttal has its place, but politicians, including Prescott, think more than you give them credit for.
@ Tim Leunig – “… politicians, including Prescott, think more than you give them credit for.”
I’ll take your word for it, Tim. But I shouldn’t have to.
Social housing providers already have the opportunity to sell off individual homes instead of reletting them, if they think it well provide capital receipts to build more.
The key problem with the argument about the Policy Exchange report is the assumption/assertion that social housing constitutes subsidised housing. It does not. Social housing rents pay for the full cost of building the home and the full cost of repairing it, plus the management costs. It isn’t subsidised in any way, and it does not cost social housing providers anything to keep high value property.
There is no doubt that requiring social housing providers to sell off property which is above the regional average will lead immediately to no more new allocations in a large part of central London and over time to a very large area with almost no affordable housing, while new developments are all concentrated in the more affordable areas. A bifurcating, divided city is not good news for anyone.
Describing council housing as ‘subsidised’ when it clearly isn’t, is propaganda worthy of Goebbels, not Tebbit.
I’d argue that social housing is subsidised, in that the house could attract a larger income for the council if it was let out at market value. Some of the notional rent is forfeited (for perfectly justifiable social reasons, as is the job of the public sector), but still that forfeited income is to my mind a subsidy.
I guess that it might come down to semantics. But come off it Steve, “propaganda worthy of Goebbels” is hyperbole worthy of, well, the comments sections on a popular politics blog. Ah.
@ David Bothroyd “Social housing rents pay for the full cost of building the home and the full cost of repairing it, plus the management costs.”
That’s not the same thing as saying it’s not subsidised – rent is set below the market value. By the way Shelter is very clear about this, and (as Duncan does above) quite happy to justify why the subsidy is needed:
Duncan Stott
“I guess that it might come down to semantics. But come off it Steve, “propaganda worthy of Goebbels” is hyperbole worthy of, well, the comments sections on a popular politics blog. Ah.”
I disagree. I’m really not being hyperbolic.
Council housing is not subsidised. A ‘subsidy’ would imply that it is costing taxpayers their money to provide council housing -when, in reality, council houses more than pay for themselves – the rents more than cover the long-term maintenance costs. To describe it as subsidised is precisely the kind of nonsensical, emotional-driven, politically -motivated and idealogical zealotry one expects to and does find in the pages of the lower quality tabloids. The fact that council housing was re-branded as social housing by the right wing was also political propaganda. All of this propaganda is aimed at one thing – to make sure as many of the population are paying the maximum possible to have a (small) roof over their heads in order that the landlord class can extract their economic rent. I find this propaganda vile and objectionable in the extreme, especially when I think of the decency and principles of the like of my grandfather (a headteacher and highly respected member of the community) who lived in a council house most of his life and refused to take Thatcher’s bribe (at a financial loss to himself) because he believed in the provision of good quality council housing as an alternative (choice) to the private rented sector.
The answer is simple – build enough council housing so that there are no waiting lists – that way everyone that wants to live in one can and those that don’t don’t – and the Daily Mail bigots who think they’re ‘subsidising’ someone else can go and live the life of council house luxury if they wish.
Let me pose those condeming this report a simple question. When Frank Dobson moves out of his million pound council flat in Bloomsbury should Camdem Council:
a) let it to some lucky family which will house lets say 4 people ( it has 6 rooms)
b) buy one 2 bed and 2, 3 bed flats in kentish Town one mile up the road housing say 11-12 people.
Clue: in Nov 2011 there were 23,019 people on the housing waiting list in camden.
@David Boothroyd: If social housing isn’t subsidised, why are there so many people sub letting their council houses at considerably higher rents in the open market? The difference between what a council tenant pays, and what they can charge if they sub let is the subsidy.
If the State is paying for the houses to be built, with tax payers money, then if it doesn’t receive the best return it can on its investment (ie charging market rents) then the people who are housed on below market rents are receiving a subsidy from the State. For perfectly reasonable social reasons – we wish to provide housing for those who cannot afford market rents. But don’t pretend they aren’t subsidised.
And as for council rents paying for the whole cost of building and maintaining council houses, I suggest you try financing the building and maintenance of a house on council rent levels and see how far you get.
@Jim
The vast majority of council housing is paid for – the state doesn’t owe any money borrowed against them. They are therefore not subsidised according to the dictionary definition of the word and the understanding of the word used by the population at large (other than think-the-way-we-tell-you-to-tanks and tabloid proprietors).
@Simon McGrath
Out of interest, do you own a private house in London? If so, when did you buy it? Are you paying the market rate for it (i.e. based on today’s market purchase price which is a function of today’s market rent)? If you bought it several years ago then aren’t you being subsidised by everyone else in London who, in turn, are being subsidised by any monopolies, cartels and failed, subsidised industries that may be operating there (the City covers all of those) that extract wealth from everyone else.
This is all a bit of a distraction isn’t it. The real problem (for Londoners) is that housing costs are too high for many people. The people that benefit from those high prices are trying to distract peoples attention by targeting council house tenants. The argument goes thus – everything’s awful in London because of high prices therefore why should a very small number of people get away without paying those high prices. My argument is this – why have the high prices? It’s not as if London’s overcrowded – there’s less people living there than at the end of the second world war.
Simon McGrath: I agree (and said the same in an article in 2008 you might enjoy): http://www.insidehousing.co.uk/ihstory.aspx?storycode=6500711
Prof John Hills (author of Ends and Means, the best thing on social housing), and a lefty called the reduction in rents from market levels a subsidy, and so do Shelter. That is good enough for me to think of this as a subsidy.
@Tim Leunig
The definition of a subsidy is very straightforward. It doesn’t matter if you can quote Prof Fred Bloggs or the Institute of Dodgy Definitions . What matters is the actual reasoning and evidence. Look up the word ‘subsidy’ in a dictionary and please tell me how the taxpayer is paying a grant or financial aid to the upkeep of an asset that provides a greater return than its maintenance costs.
The general public actually understand what a subsidy is – e.g. paying a farmer to keep a field fallow, giving huge sums of money to the City, etc. Council houses are not subsidised. It is more than disingenuous to suggest they are – it is deliberately misleading.
steve, i bet if you asked the ‘general’ public whether they thought benefits claiments living in half million pound houses represented a subsidy they would say “yes”, and one they rather resented too.
The so-called ‘market rent’ is an arbitrary level representing the amount of rent which can be obtained for assured shorthold private sector tenancies, among the people seeking to take assured shorthold tenancies. It does not include local authority and RSL tenancies; were they hypothetically included then no-one really knows what would happen because there are so many more of them than there are assured shorthold tenancies. The ‘market rent’ is not therefore something that can be taken as an objective assessment of value.
Affordable housing rents are, on the other hand, an objective assessment. They are set on the basis of covering the cost of building and maintaining the property. They are obviously below the so-called ‘market rent’ because they do not include the private sector profit motive, but not including the profit does not amount to a subsidy.
I hope that people remember that Frank Dobson was living in the same flat as a private tenant for many years before, in the late 1970s, it and all the others in the area were compulsory purchased by Camden council which intended to redevelop the area. The redevelopment did not happen but everyone then became council tenants. So the claim that Frank Dobson is occupying a council tenancy at the expense of someone else is highly misleading.
On Frank Dobson, if, as David Boothroyd says, he is living in a council flat where he has been a tenant since the 1970s, he is behaving in a remarkably philanthropic way. He could have bought the flat under “right to buy”, sold it off, and made a large profit. Instead, when he moves on it will be handed back to the council to be reallocated to a family in need. It seems to me to be a remarkable demonstration of the twisted nature of our public commentary that the few high-minded people who behave in this way are vilified rather than praised for not taking the subsidy that was offered in order that a future generation may enjoy the benefits.
Jim
And as for council rents paying for the whole cost of building and maintaining council houses, I suggest you try financing the building and maintenance of a house on council rent levels and see how far you get.
Yes, council rents pay for the whole cost of building and maintaining council houses because the acquisition of land and the building was done a long time ago when it was much cheaper. I find when arguing about this with most people that they start off believing that council housing is “subsidised”, but when you explain to them that the rents pay the full current costs associated with them (maintenance and any remaining repayment of loans used to build them) they agree they were wrong to suppose they were “subsidised”. So as a matter of semantics, most people don’t think the word “subsidised” covers the failure to make maximum income from assets, they see it as applying only when there is a real transfer of cash. The reason people suppose council house rents to be subsidised is that they don’t appreciate the extent to which private rents have a profit element, though that profit is dispersed to all those who profited from capital gains as the property was passed on, not necessarily all to the current landlord.
The existence of the remaining council housing in expensive parts greatly reduces what would otherwise be paid in housing benefits. There is a huge and growing cost falling on all taxpayers which originates from the decision of the governments of the 1980s and 1990s to run down council housing. There is also the social cost of children being brought up in poor quality insecure housing. I believe I am a better and more productive person because I grew up in a house with a garden and security of tenure. The equivalent to my parents today could never afford the small council house we lived in then, such houses are on sale at a cost no-one on average wage could afford, let alone the low waged.
On the general question of subsidy, if we take this line the government could impose charges in all sorts of areas where it does not. It could put tolls on many of the main roads on the grounds people would pay them if they had to, therefore it is a “subsidy” not to have them. Obviously it could sell off all remaining school playing fields on the grounds that it is a “subsidy” to keep them rather than make the profits that could be made from selling them. Indeed, it could introduce humane ways of killing off all those unproductive people whose very continuing existence could be considered a “subsidy”.
When the post war mass council housing programs were originally devised, they were not intended only to provide accomodation for the needy. The idea was that a public sector in housing would emerge, and that greater social cohesion and egalitarianism could be brought about with people from many different backgrounds and professions living in the same areas and communities. This suggested policy shows that recognition of this original intention has been finally been totally abandoned. Now social housing is considered something only for the needy, not a societal good. I would argue that this is a bad thing. In the short term selling off of more expensive stock and further ghettoisation might provide more slum accomodation for the poor, but in the long term concentration of low-income communities can only hope to entrench crime, desperation, a lack of aspiration, disengagement with society at large, and apathy. The ultimate social and economic cost, IMO, of turning away from the original goals of council housing (something that admittedly began a long time ago) will be greater than the social and economic benefit gained by building more of such housing in already deprived areas.
The notion that council housing is ‘subsidised’ comes from extreme economic classical-liberal/neo-liberal dogma. The belief is that since there is an ‘opportunity cost’ in not renting the houses out at market rates, these rents are subsidised. This notion of ‘oppotunity cost’, although valid in a sense, is often latched upon to justify absurd beliefs based entirely around hypothetical (unknowable and knowable). It would certainly be ridiculous to suggest that taxpayers are ‘subsidising’ (in any widely held or dictionary definition of the meaning) rents simply because councils aren’t making as big a profit from rents as they otherwise could, yet it doesn’t stop people from trying, especially those with an ideological axe to grind.
@jedibeeftrix
“steve, i bet if you asked the ‘general’ public whether they thought benefits claiments living in half million pound houses represented a subsidy they would say “yes”, and one they rather resented too”
Argumentum ad populum in other words. If the ‘general public’ (by which you probably mean ‘people who agree with me as well as Daily Mail/ Sun readers) thinks that by not making as large a profit as you could on rent you are offering a subsidy, they would be wrong.
The choice of words you use in your appeal to public sentiment are revealing. The cost of a house is irrelevant to whether it is being subsidised or not, by any defition (including the erroneous one advocated by some above). By mentioning £500,000 council houses you are being disingenous and making a demagogic appeal to prejudice directed against benefit claiments and council housing tenants generally. If this is not the case why would you not ask ‘the public’ whether a social housing tenant living in a £50,000 property is being subsidised? In both cases, the rent will be below market rent.
On a slightly more pedantic note, it is logically fallacious to suggest that the truth of a claim is dependent on how many people believe it to be true. Simply because the majority of the public might believe that council house tenants are being subsidised, that doesn’t make this true. Simply because the majority of the public might believe that Bankers are criminals, that Nick Clegg is a ‘traitor’, or that America was the first country to launch a man into space, this doesn’t make any of those claims true. Such majoritarianism and populism is deeply illiberalin character, as are appeals to the ‘general public’ as if it were a single homogenous thinking entity..
@jedibeeftrix
I apologise, upon reading the comment you were replying to I realise you were merely objecting to the notion that the general public would support Steve’s viewpoint over your own.
@David Boothroyd
The key problem with the argument about the Policy Exchange report is the assumption/assertion that social housing constitutes subsidised housing. It does not. Social housing rents pay for the full cost of building the home and the full cost of repairing it, plus the management costs. It isn’t subsidised in any way, and it does not cost social housing providers anything to keep high value property.
I can’t help feeling that you have got that seriously wrong. Part of my reason for saying that is that I used to be involved in the audit of a few Housing Associations. At the time (more than 20 years ago) there was a significant amount of government grant called HAG (Housing Association Grant) paid for each new HA property on the basis that there was no way that the rent was expected to cover the financing costs, maintenance and management.
Are you completely ignoring that when you say that socail housing is not subsidised?
Also, if (say) 1000 units of new social housing were built now, are you saying that they would be no subsidy? There is no way the rent would fully cover financing costs, maintenance and management.
Incidentally, it is clearly incorrect to say “it does not cost social housing providers anything to keep high value property.” If nothing else (and I think there is a lot else) there is the Opportunity Cost – effectively what Simon McGrath referred to above.
Intriguing that none of those who are fulminating agaisnt this have answered my question of whether once Frank Dobson no longer needs his million pound flat the COuncil would do better to sell it and house 11 people in Kentish Town rather than 4 in Blomsbury
It is not the councils fault that prices are over inflated. They cost no more to run than they ever did. The fact that they could sell for more now is irrelevant. Not only that there is an element of social cleansing to these arguments that originates in the Conservatives failure to take key London seats in the last election..
Shouldn’t we be considering decent and affordable housing as a basic human right for people in this country? Shouldn’t poor people, those on low incomes and people with disablities or long-term health problems have an element of choice in housing provision? Needless to say wealthy people like the Duke of W (who have often inherited money or property) have plenty of housing choices and often own multiple properties……..
Strange, isn’t it. Millions of London properties are being ‘subsidised’ in exactly the same manner as the council houses users described, given that they were purchased (or inherited from a time) when house prices were much lower in real terms. In fact, the scale of the private ownership ‘subsidy’ is far greater than the council house ‘subsidy’ for London. So, why aren’t the private owners of the houses inherited from past-times being vilified in the same manner? I am quite sure that some of the people who have commented above are in ‘receipt’ of the same London ‘subsidy’ but don’t think the expression applies to them because they own privately. Hypocrisy, I say.
To remove the ‘subsidy’ for both private home-owners and council tenants a Land Value Tax should be introduced at a high enough level and more council houses need to be built. Both of these policies would remove the notional ‘subsidy’ for both. It is worth noting that it is only private sector owners can convert the ‘subsidy’ to actual cash by renting their house at today’s higher real rents – council houses users can only do this illegally.