Housing: haves and have-nots /FRFI 232 Apr/May 2013

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Fight Racism! Fight Imperialism! 232 April/May 2013

The ruling class justification for the bedroom tax is that it is the ‘under-occupation’ of homes by some families that leaves thousands of others in overcrowded accommodation. This divide and rule tactic is a cover-up for the real problem – the decimation of council housing stock through ‘right to buy’ programmes and the end of any council house building programme. The bedroom tax will be a further nail in the coffin as it ends secure tenancies and enables the full privatisation of all forms of social housing. BARNABY MITCHELL reports.

From the 1950s well into the 1970s, councils built over 130,000 houses a year, rehousing millions of people from slums to brand new homes with inside toilets and central heating. Since the mid 1980s social sector house-building has averaged below 30,000 a year. In the financial year 1999-2000, local authorities in England built just 60 houses and over the last ten years, just 5,000 altogether.

By the late 1970s, close to seven million households lived in local authority council housing. Successive governments then started to cut investment in housing. Margaret Thatcher led the charge: her government stopped councils from subsidising new house building, introduced ‘right to buy’ and cut housing repair budgets. ‘Right to buy’ was initially proposed by Labour in its manifesto for the 1959 general election.

Between 1980 and 1996, 2.2 million homes were bought by tenants. When councils sold properties housing law prevented them from investing the money in replacements. ‘Right to buy’ continued under Labour after 1997. The total value of council homes sold since 1980 amounts to £85.9bn. This makes it by far the largest privatisation in the UK.

In 1979, 42% of the British population lived in council housing. Today it is only 12%, with a further 6% renting from housing associations and cooperatives. There are now 1.8 million people on council housing waiting lists. One third of the council houses sold off in the 1980s are now owned by private landlords.

The Thatcher government also introduced ‘stock transfer’, encouraging local authorities to sell chunks of their housing stock to the private or charitable housing association sector. Between 1980 and 2009, 1.4 million council houses were transferred in this way. From 1997, the Labour government introduced Private Finance Initiative contracts (PFI). In June 2010, the National Audit Office revealed that the cost of £4.3bn worth of signed-off PFI projects in the housing sector was £694m more than expected.

Housing associations: a halfway house to privatisation

There are now over 1,500 housing associations in England holding around 2.5 million homes. Approximately 40% of social housing stock is owned by local authorities, 15% is managed by Arms Length Management Organisations (ALMOs) and 45% by housing associations.

ALMOs, established in 2000, are not-for-profit companies which provide housing management services on behalf of a local authority. By July 2008, there were 70 ALMOs in the UK managing half of all council housing. Tenants were given the ‘choice’ of voting to have their homes transferred from local authority ownership to a housing association, to establish an ALMO or to remain council tenants. If they chose the latter, millions of pounds of investment for repairs would be withheld. It is clear the ALMO was designed to introduce private business culture into housing management.

ALMOs are not strictly privately financed, but local authorities are encouraged to borrow from the private market and develop partnerships with private companies. Tenant representatives who sit on the boards of housing associations and ALMOs have no decision-making powers and are not allowed to represent fellow tenants because they are bound by company law.

He who controls the purse strings makes the rules

Housing associations, which borrowed large amounts to fund land purchases for development, have been hit by the economic downturn. They are run like private corporations, borrowing money from banks, engaging in property speculation and building housing developments for profit. Some housing associations are lobbying to become private companies. Labour’s original Housing and Regeneration Act 2008, amended after protests, would have allowed profit-making companies to register as social landlords and existing social landlords to operate as profit-making companies.

The transfer of council housing to housing associations results in higher rents, the loss of secure tenancies, inflated pay packets for senior managers, profits for banks and more risk of homelessness for tenants. Housing associations are allowed to charge market rents, whereas council secure tenancies guarantee a fair rent. According to the Housing Corporation, housing association rents were 12% higher than equivalent council house rents in 2007.

Most social housing providers are now seeking to cross-subsidise ‘social rent’ by generating profits from new homes built either for outright sale, for shared equity schemes or through the government’s ‘affordable homes’ programme. Because this programme is part-funded by private finance, housing associations can set their rents at 80% of market levels to repay the loans. The government has also removed the legal requirement for social landlords to offer secure tenancies and has introduced flexible tenancies of two years, reviewed at regular intervals.

London’s 15 biggest social landlords are collaborating to construct 13,000 ‘affordable’ homes by 2015. They will also provide an additional 4,000 homes for rent at market price and more than 1,100 for sale at London market prices. The average cost of a home in London in £400,000. Even ‘affordable’ homes will be out of reach for working class people since the rents will be 80% of local private rents. Many of these houses will be for sale under shared ownership schemes which require buyers to have significant savings in order to secure a mortgage. In truth, ‘affordable’ housing is anything but.