From the archive: Towards a popular left wing housing policy

Thomas Neumark /   April 11, 2013 at 8:34 PM 2,055 views

housing

The death of Margret Thatcher reminds us that she was the last Prime Minister to have a popular housing policy.

The famous right to buy policy is still seen by many people as her greatest achievement.

I doubt even their biggest supporters would list the housing policies of Major or Blair as among their greatest achievements. As I argued last week the Labour party has yet to fully detail a decent, popular housing policy. This post will attempt an initial outline of what such a policy might look like.

Public opinion

To design a decent, popular housing policy we need to understand the public’s views on housing.

The most obvious thing to say here is that the public, broadly, want to own a home.

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64% of people who rent privately want to own a home and 70% of people living with friends or relatives want to own a home. Fully a quarter of people who live in social housing also want to own a home.

Why do the public think it’s hard to buy a home?

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As you can see from this chart, many people say that houses are too expensive for them to buy, that it’s hard for them to get a mortgage or that mortgage repayments are too high.

Finally, what do the public think could or should be done to make it easier to buy a home?

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Lots of people are hoping for a windfall to help them buy a home. Short of that, or a pay rise, ideas around reducing house prices or making mortgages cheaper or more accessible are clearly popular.

State of the industry

As well as understanding public opinion, to design a popular housing policy we need to understand the current state of the housing industry.

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Since the credit crunch there has been a dramatic reduction in the number of households getting mortgages. This number seems to have stabilised but shows no sign of returning to the numbers we say before the recession. Image

 

 

 

 

 

 

 

 

 

 

 

Similarly, the percentage of households that own their home has been steadily declining since before the recession.

So, fewer and fewer people own their home, fewer people are able to get mortgages and yet people would very much like to own their home.

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While that is the overall picture, the facts of the matter look very different depending on where you live. The map above shows the ratio between low wages and cheaper homes in different areas of England. You can see that there are many areas (such as the North East) where cheap homes are not expensive when compared to low wages, while there are other areas (obviously West London but also the South coast) where cheap homes are essentially out of the reach of people on low incomes.

Principles of a popular left wing housing policy

Before we take the plunge and outline some specific ideas for a popular decent housing policy for the Labour party it is worth pausing and asking, what makes up popular decent Labour policies in general?

I would point to three characteristics (there is not much method here other than this excellent blog by Nick Pierce)

1. They build institutions

You only have to think about how much popular the NHS is than tax credits to understand that people can have much stronger positive feelings towards institutions than other types of public policy.

2. They pool or share risk

The NHS, unemployment benefit (actually a Liberal policy, but there you go) or, to a lesser extent, schools and even the BBC, are delivered by at such incredibly low costs because everyone pays in. This means we can all benefit from sharing the risk in a way that schemes that were offered to much fewer people could not provide.

3. They build a better economy

The modernisation of British industry after the Second World War, through nationalisation, or the introduction of the minimum wage, are both examples of popular Labour policies (at the time!) that not only improved the economy in a dry GDP type of sense but also built an economy that people felt more comfortable with.

Towards a popular left wing housing policy

All that is left for us to do then is to mix together what we have learned about public opinion, the state of the housing industry and the characteristics of popular Labour policies and we can come up with some decent popular policies. Easy, right? Perhaps not. Here are some initial thoughts though.

– The People’s House

Labour could pledge to begin the construction of a selection of basic homes to buy at low cost. This could be done in a number of ways including allowing councils to set up their own house building companies, having a state owned house builder (as they do in, for example Korea) or, more simply, by giving more support to housing associations to develop homes for sale.

– A People’s Mortgage

Similarly, Labour could pledge to introduce a basic, low cost mortgage for people on low or middle incomes seeking to buy their first homes. This could be done in a number of ways including through the Post Office, credit unions or even the state owned banks.

– Local homes

Labour should seek to ensure that these housing policies are delivered in a way that is sensitive to the specifics of each area. This could mean using processes like participative design where people get a say on what their future home will look like as well as giving a prominent role to local authorities and other agencies that operate closer to the ground.

– Reforming housing benefit

Housing benefit and local housing allowance currently cover renting. There are other types of government support for people having trouble paying their mortgage and other schemes to help people buy a new home (such as shared ownership homes).

An interesting policy area for Labour might be to look at reforming benefits that are currently given to people to help them pay for their rent so that these benefits could actually go towards buying a home. Countries such as South Africa have given people on low incomes one off grants to help them buy homes. At present, with our high house prices, this seems unthinkable, but perhaps could become a possibility if government was building low cost houses.

These are some initial thoughts. I would be interested in comments on any aspect of this.

For those of who are interested in this kind of thing you might read IPPR’s recent(ish) housing report, the Labour Party’s policy document on renting or the Resolution Foundation’s work on housing.

Courtesy of Thomas Neumark at Dream Housing

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