Let us remind ourselves of why Council Houses were introduced in the first place. It all started with the Housing of the Working Classes Act 1885 which authorised local authorities to borrow money to construct housing for rent to working class people. It was designed to give people without the means to purchase their own home (predominately, but not exclusively working class) the right to a home which was fit for human habitation. Even today, there is housing in the private sector which fails that test. It was designed to give the stability and security that owning their own home would do, to improve the lot of the large majority of the population who fell into that category. At tthe end of the second world war, Nye Bevan, then responsible for Housing, said he wanted to create estates where “the working man, the doctor and the clergyman will live in close proximity to each other”. The council estate was designed to promote social cohesion – a one nation vision. Living in a council house has never prevented social mobility – its always been the lack of opportunity, or the lack of education, but never the lack of ambition.
Some people have talked of a subsidy to council house tenants. Can they give us the figures that prove this subsidy? Tenants pay rents – yes less than the market rent – which cover costs. The estate on which I live was built for approximately £1million roughly 40 years ago. The debt has been paid off by the council. The rent covers the cost of maintenance and improvements (at the moment they are going around fitting new kitchens, and upgrading heating), covers the cost of the staff in the housing department, and also makes up for things like empty properties and rent arrears/write offs etc. The Scottish Government grant is designed to cover the fixed running costs, and totals approximately 5% of the housing department’s income. The council is forbidden from using anything from its general revenue to subsidise the Housing Revenue account.
Why are the rents so low? Partly because the Council doesn’t have to make a massive profit on its rents, the council actually has fewer voids than the average private sector landlord, with less arrears. And also because the council looks at the long term – its not thinking about selling the property in 5 or 10 years time at a profit, or clearing the mortgage early. Nor is it desperate for a sky high rent, because its been locked into a mortgage deal with high interest rates.
Tenants have the security they need to settle down with their family – get their kids settled into a school, instead of having the threat of having to change address every 6 months (the typical length of a private tenancy agreement). They can get to know their neighbours – and build a community.The ability to own a pet, paint your bedroom, hang pictures are all things which contribute to making a council house a home, in a way a privately rented house is rarely able to match.
What this policy will do is to gradually ghetto-ise areas of our towns and cities, as occupants (I hesitate to use the word tenants) become transients – afraid to earn more in case they are thrown out – or moving from house to house with meagre possessions, unable to put down roots. This is not the country I want, nor is it the one that most people want.
Our housing market is now in such a position that many people will have to save for 20 years in order to get the deposit required. Mortgages have to be not for the usual 3 or 4 times average salary (see my previous post on what that figure actually is) but 6, 7 or even 8 times. Even at the bottom of the recent crash, the average house price across the UK was £151,000. Thats 6.5 times the average salary. And thats just an average, in much of the south and south east of England, the prices are much higher multiples. In short, ordinary people cannot afford to buy houses any more – and short of a catastrophic house price crash, they never will.
What we need is a massive house building programme – both private and council. Additional private properties will bring down the price of purchasing a house, so that council tenants can afford to move out to their own house, and additional social housing to house the millions on the waiting lists. It has the additional benefit of employing hundreds of thousands of people, boosting the economy as well.