A Extract From A Paper by Michael E. Stone, Ph.D.
Support and Disclaimer:
This research was made
possible through an Atlantic Fellowship
in Public Policy, funded by the British Foreign
and Commonwealth Office, and administered by the British Council.
Additional support has been provided by the Centre
for Urban and Community Research, Goldsmiths
College, University of London; and the John W.
McCormack Institute for Public
Affairs, University of Massachusetts Boston.
The views expressed herein are not necessarily those of the British
Foreign and Commonwealth Office, the
British Council, Goldsmiths College,
or the University of Massachusetts
Boston.
Acknowledgements:
Community Activists: Malcolm
Cadman, Bill Ellson, Steve Hurren, Jean Kysow, Jessica Leech, Shirley Mucklow,
Pete Pope, Jess Steele
Housing Professionals: Keith Anderson, John Bader, Alan Bonney, Lorraine Campbell, Simon Cribbens,
Emyr Evans, Barbara Gray,
Pat Hayes, Andy Kennedy, Colm McCaughley, David Orr, Steve Palmer, Emma Peters, Roland Smithies,
Louise Spires, Sarah Thurman
Goldsmiths College CUCR Staff: Les Back, Ben Gidley, Paul Halliday, Roger Hewitt, Carole Keegan, Michael Keith,
Azra Khan, Marjorie Mayo, Neil
Spicer, Chenli Vautier, Bridget Ward
© Copyright, 2003, Michael E. Stone. All rights reserved.
Michael E. Stone, Ph.D. Atlantic Fellow in Public Policy May 2003
Introduction
Social housing is a very significant part of the housing stock in the UK, accounting for about 25 percent of all housing. Social housing – consisting of local authority public housing and non-profit housing association dwellings – continues to provide accommodation to more than 5 million households, by no means
all of them low income. Social housing
remains important, and continues to
have a substantial constituency – despite
the loss of about four out of every ten local authority (council) dwellings to sales, transfers and demolitions over the past two decades (losses
only partially offset by the increase in housing association dwellings), and despite the ostensible “residualisation” of social housing as the UK has
been swept by the US-style idealisation and ideology of private speculative homeownership.
In the US, by contrast, publicly subsidised housing comprises only about 5 percent of the stock,
and most of this is not truly social, i.e., owned by public or not-for-profit entities. Rather, over
half of all subsidised housing in the US is owned by profit-making companies and individuals who receive various
types of public subsidies that
reduce rents for residents while assuring profits for investors. Unlike social
housing in the UK, subsidised housing in the US has always been “residual” and
served a predominantly low-income
population. This difference is not,
however, due to more widespread homeownership
in the US: indeed both nations have virtually identical rates of homeownership, slightly under 70 percent. The difference in scale is due primarily
to the existence of a much larger and more powerful private
rental industry in the US, which has long
and effectively prevented the growth
of a substantial social housing industry and ensured, since
the 1960s, that most housing subsidies be directed to
private, for-profit development and
ownership of rental housing.
Over the past two decades subsidised housing in the US has also faced severe challenges, some of them similar to those facing social housing in the UK, others rather different. The public housing stock has been reduced by about 100,000 units, out of a total stock of about 2 million units. This has occurred not through sales to residents as in the UK, but through large-scale demolition and redevelopment, rather like estate regeneration in the UK. In some cases it has involved reconstruction by private companies with far less than full replacement of the lost units, in other cases with no replacement of low-income housing at all. In addition, about 100,000 subsidised units have been lost in privately developed and owned estates, as the owners have elected to opt out of subsidy programs and convert the housing to market-rate. Furthermore, as in the UK, public funding for new production has supported fewer new units and been shallower. Finally, somewhat similar to the UK, a growing share of housing support has been in the form of rental assistance in scattered private rental housing. In the US this is in the form of vouchers, that work somewhat like UK housing benefit, although vouchers never cover the full rent and are not available as an entitlement.
This paper is focused primarily on social housing in the UK
At selected points (it is) drawing upon the US experience to elucidate issues and draw mutual lessons. The emphasis is on ownership and tenure, financing, resident activism and participation, and to some extent rent- setting and affordability. The first section begins with an historical sketch of social/subsidised housing in the two countries, identifying aspects of convergence and divergence in social housing policy and practice since the late 19th century. It concludes with a summary of major current issues around social housing in the UK along a number of dimensions: physical, ownership, financing, social, participation and activism. The sources for this investigation have been government, professional, academic and advocacy material – hard-copy and web-based – supplemented by several interviews.
The second section is about social housing in the southeast London borough of Lewisham.
Given the complexity of the issues and constraints of this project, I determined that the only way in which I could move beyond general knowledge gleaned primarily from published sources would be through direct encounter with a particular locale. I also realised that engagement with this locale would enable me to look at some geographical, physical and social issues – place, space and race – more tractably than is possible at the national scale.
Fortuitously, my
host institution is located and has been actively working in a borough which
is particularly appropriate for such a case study. Lewisham has
a large amount of social housing, a diverse population, a skilled local authority housing staff, an array of large and small housing associations, and a tradition of resident and community activism. Whilst
the housing situation in London is certainly
different in some respects from that outside of London, and the south of England is different from the rest of the UK, in many ways
the issues around social housing in Lewisham
and how they are being grappled with are not so different from what is taking place
in cities across the UK. Even though
they are not facing the same private market pressures as London, places such as Birmingham and Manchester,
Edinburgh and Glasgow, Belfast and Derry/Londonderry, as well as many
other cities, have large amounts of
social housing, increasingly diverse populations and substantial poverty,
strong political cultures, and evolving relationships among the statutory, voluntary and community entities concerned
with social housing.
The second section of the paper begins with an overview of the location and demographics of Lewisham, followed by a selective history of social housing in the borough.
Some particular attention is given to racial issues and community activism in social housing as they have manifested themselves in recent decades. This is followed by discussion of current policy issues and local initiatives, as well as some prospects for the future as perceived by some of those involved. The sources have included: historical materials; data, maps and documents obtained from Lewisham Housing staff and website; reports from the Centre for Urban and Community Research at Goldsmiths College; interviews with activists and professionals; and first-hand observations.
The final section draws upon what I have learned about social housing in the UK in general and Lewisham in particular, and upon my work on housing in the US, to provide some reflective recommendations and proposals.
Potential reforms are proposed with regard to social housing finance and the roles of local authorities and housing associations. The proposals have not been evaluated using any formal schema, but have been guided in a loose way by principles of efficiency, effectiveness, equity, democracy and social inclusion. They are intended to stimulate thought and provoke discussion, without claiming to be in any way comprehensive or definitive.
Social Housing in the UK and
US
Historical Overview
The history of social housing in the UK and US reveals periods of convergence and periods of divergence in philosophy and policy. The periods of divergence have resulted in a far larger social housing sector in the UK, and continuation of a broader level of support for social housing despite considerable convergence with the US in recent decades.
Pre-World War I
Social housing in the UK and US had rather similar origins in the late 19th century cooperative movement and so-called “philanthropic” housing, but thereafter diverged quite substantially.
During the nineteenth century, programs for the cooperative ownership of places of work and residence were integral parts of the utopian and revolutionary critiques of capitalism in the United States as well as Europe. In Britain, the cooperative housekeeping movement promoted housing and living arrangements in which“[h]ouseholds retained their individual homes and privacy, but ate some meals in a communal dining room and shared other communal facilities” (Pearson, 1988, p. 1).1 In the US, Melusina Fay Pierce advocated cooperative residential neighbourhoods as early as 1869 (Hayden, 1984, pp. 29 and 72-74), as part of a vision she shared with many feminists and some socialists who saw a seamless connection between the public and private and the productive and reproductive realms in a radically transformed industrial society.
Although a small number of cooperative housekeeping developments were built in England between 1874 and 1925 (Pearson, 1988, p. 189), most of the earliest coops actually developed in Britain and the United States did not embody this radical vision, but were instead variations on rental in Britain (Birchall, 1988, pp. 95-97) or a form of homeownership in the US. The first coops in the US (in New York between 1876 and 1885) were for high income urbanites (Siegler and Levy, 1987, p. 14), presaging modern luxury coops (especially in New York) and condominiums (in Boston and other US cities). It was not until the twentieth century that the first fully-mutual, non-speculative, socially-oriented cooperative housing was developed in the US, and not surprisingly, most early coops of this sort were in New York and under union auspices. In the early part of the century, several workers’ housing cooperatives were developed (Abrams, 1946, p. 182; Siegler and Levy, 1987, p. 14), but most did not last.
During this period there was a similar modest cooperative housing movement in continental Europe, especially in Germany (Harloe, 1995, p. 52-53). In Britain the cooperative impulse manifested itself primarily in the form of cooperative building societies, which used pooled savings to finance working-class owner-occupation (Birchall, 1988, pp. 91-92). However, “[b]y the end of the century these were becoming large-scale organisations, no longer with any real cooperative basis and certainly not with any strong links to the organised working class...” (Harloe, 1995, p. 35).
In the late nineteenth century moral righteousness and enlightened self-interest on the part of some capitalists stimulated a modest move toward “philanthropic” housing in both Europe and North America. In Britain, limited-dividend “philanthropy at five percent” began as early as the 1840s (Malpass and Murie, 1999, p. 29). This was followed later in the century by a number of charitable trusts, the most famous being Peabody, Guinness and Rothschild (Malpass and Murie, 1999, p. 30).
In the US the same impulses resulted in non-profit or limited dividend projects in a number of cities in the early part of the twentieth century, totalling several thousand units. Because profits from development and ownership were eliminated or restricted, the housing was slightly less expensive initially than speculative new housing. But in both the UK and US, with construction costs to be paid off out of rents, the units were still more expensive than the tenements occupied by poor and working-class people, so the residents were mostly moderate to middle income. Furthermore, the strict management of tenant behaviour and the emphasis on “moral uplift” in this and similar housing tended to result in exclusion for social as well as economic reasons (Malpass and Murie, 1999, p. 30). Had these developments remained out of the speculative market, by today they might be debt-free social housing and hence much less expensive than speculatively owned apartments of the same vintage or newer. However, most were eventually sold. As Charles Abrams aptly put it (1946, p. 175): “Philanthropy could no more solve the problem of housing than it could solve the problem of poverty.”
Apart from these early historical connections in cooperatives and philanthropic
housing, a great divergence opened between the UK and US even before the twentieth century in terms of governmental involvement in
social housing. In 1890 the UK
Parliament provided the legislative authority, but no financial assistance, for local governments develop housing for working-class tenants (Malpass and Murie, 1999, p. 32). In 1888 the London County Council (LCC)
was created as a unitary governing
authority for the entire area of
Greater London (except the City, which was and is still autonomous), with
the development and redevelopment of
housing as a major part of its mandate
(Akroyd, 2000, p. 705-706).
In 1896 the LCC developed the first council
(public) housing, in the East End, specifically in
Bethnal Green near the top of Brick Lane.
Known as the Boundary Estate, it “comprised
an area of 14 3/4 acres and involved displacement
of over 5,700 persons...” (London County
Council, 1937, p. 4). Multi-story brick structures built around a small central park,
the estate stills stands; it remains
rented council housing and, not surprisingly, is listed and may not be demolished. Whilst the surrounding area has witnessed enormous demographic changes, in terms of a large influx of Bengalis and more recent
gentrification, the population of the Bethnal Green estate is largely older and white; reportedly they are too poor to have exercised the “right
to buy.” Also, the units are very small and lack modern
amenities, so speculative market
pressures have not swept it away as
social housing (M. Keith, 2002).
Nonetheless, given the housing market
pressures in the area and absent
other protections, it is plausible to predict eventual sale of the units,
followed by internal reconfiguration
as luxury housing within the listed shells
of the buildings.
Over the next eighteen years, the LCC developed high-quality public housing in various parts of London. Other major cities of Britain, notably Sheffield, Liverpool and Glasgow, also actively developed public housing. By the outbreak of World War I, about 24,000 units had been built (Malpass and Murie, 1999, p. 33). Whilst this activity addressed only a tiny fraction of the need, the experience established the principle of public responsibility for housing in the UK, and established the practical capacity to deliver such social housing. By contrast, in the US the only public foray into housing production prior to the 1930s was for civilian workers in war-related industries during World War I (Stone, 1993, pp. 77-78).
The Inter-War Period
Britain and the US emerged from World War I with very different housing needs and very different political environments, accelerating the divergence in social housing attitudes and policies that had begun two to three decades earlier. Peter Malpass and Alan Murie have summarised the situation in the UK as follows (1999, p. 37):
[T]here was a serious
decline in the level of housing
production for most of the decade before 1914, and new building fell
still further during the war itself. The
result was that by 1918 there was a severe housing shortage which for economic
reasons private enterprise could not tackle effectively, especially in the short term, and which for political reasons
the state could not ignore.
Michael Stone has described the very different environment in the US
over the same period of history
(1993, pp. 73-74):
In 1905 construction of new, non-farm housing units jumped dramatically to ... a level 50 percent higher than the previous peak in 1892. Even with cyclical fluctuations associated with the overall economy, residential construction remained at historically high levels through 1916, after which US involvement in World War I ended the boom.... The sustained level of construction increased the total amount of non-farm housing by over 45 percent in just the twelve years from 1905 through 1916.... Owner-occupied units doubled ..., as growing numbers of middle-class and better-paid skilled workers took on indebted homeownership.... The non-farm homeownership rate, which had been stuck at under 37 percent through the 1890s, grew ... to ... 41 percent in 1920....
The severe housing shortage in Britain after the War,
together with private renting as the
predominant tenure and the fear of
social unrest if (and when) landlords
exploited their advantage (Harloe, 1995,
pp. 99ff.), led to the imposition of
rent control and an enormous
expansion of social housing by local authorities. Quoting again Malpass and Murie (p. 37):
The development of local authority housing can be seen as a positive response to the negative effects of rent control. At first, local authorities built mainly relatively high- quality houses, at lower densities than had been the norm for private working-class housing before 1914. Throughout the 1920s, local authorities concentrated on reducing the housing shortage and at a time of high costs their contribution represented the main source of supply of housing for the working class.
However the combination
of high costs, high quality, low density and relatively low subsidy inevitably
led to rents which were above controlled rents at the lower end of the private market.
In other words, during the
1920s when housing policy was concerned with reducing the overall shortage, the public sector emerged as
a tenure serving mainly the rather better-off workers and tending to exclude the
least well off.
During the 1920s the total stock of council housing increased to about half a million units (estimated from Malpass and
Murie, Figure 3.1, page 39),
establishing social housing as a significant feature of the physical, social
and political landscape of Britain.
Nonetheless, for most of the decade social production was considerably exceeded by private
production, for both
owner-occupation and private rental. Private renting remained the predominant
tenure – and continued to be so until the 1950s – despite the
growth of owner-occupation through new construction and conversion of
private rental stock (Malpass and
Murie, 1999, pp. 38-39, and p. 11).
For the most part, the
situation in the US in the 1920s was quite different. There was an enormous housing boom, far
exceeding the pre-war boom.
About 60 percent of the new housing was single-family houses, further increasing
the non-farm homeownership rate to
46 percent by 1930 (Stone, 1993, pp. 79 and 86). As social housing remained quantitatively insignificant, the balance of new housing
consisted of a large increase in the
stock of private rental housing.
Nonetheless, interest in social housing in the US did not disappear entirely in the 1920s. Similar to continental Europe, but in contrast with Britain (Harloe, 1995, pp. 101-102), there was a continued focus on cooperative housing. In the late 1920s New York State passed a limited-dividend housing law (known as “Mitchell-Lama”) that, among other things, facilitated coops for moderate-income and middle-income people (Siegler and Levy, 1987, p.14). One of the first was the Workers Cooperative Colony in the Bronx, developed by the Amalgamated Clothing Workers. Completed in 1928, it grew eventually to 1,400 units and still remains a coop (Wright, 1981, pp. 198-199; Hayden, 1984, p. 91; Siegler and Levy,1987, p. 14). However, despite state tax exemption, the coops developed by labour groups in New York were affordable only to higher-paid workers. Furthermore, subletting and turnover tended to undermine the socially oriented philosophical foundations (Abrams, 1946, pp. 181-182).
The Great Depression of 1930s
saw the emergence of a permanent
public housing program in the
US. It also saw a rather remarkable convergence of UK social housing
policy toward the US philosophy. Whilst the primary focus of the US
government’s large-scale engagement with housing in the 1930s (and ever
since) has been on mortgage lending,
home building and home ownership (Stone, 1993, pp. 94-97, and
pp. 163-188), the one major exception
was public housing, which differed in its financing, development,
ownership and occupancy.
By the time Franklin D. Roosevelt took office as President in the spring of 1933, political pressure was growing for a major public works program to provide construction jobs and use construction to boost the overall economy in the US. Some of the more progressive housing reformers supported this movement as a way of getting federal resources for the production of public housing for low-income families. Federal legislation passed in the summer of 1933 authorised the use of some public works funds to finance construction of low-cost housing, along with slum clearance. Whilst modest, the program foundered on legal challenges; but a new, legally successful, and permanent, public housing program took its place (N. Keith, 1973, pp. 23-24). Under the US Housing Act of 1937, local housing authorities would have complete responsibility for developing, owning and managing projects, with the federal government providing capital financing and regulatory oversight (US Congress, 1975, p. 9). By 1939, the program was fully in operation; and before World War II brought the program to a virtual halt, over 270,000 new units were started, accounting for one out of eight housing starts over the four-year period (Stone, 1993, p. 98).
Although US federal regulations required that local housing authorities house the very poor, the local agencies had a lot of control over where they would build and whom they would accept – generally white families consisting of two parents and children. Indeed, the poorest families could not afford public housing, since rents had to cover all of the operating expenses for the housing (though not the capital costs, which the federal government paid for). Social workers investigated families to determine their fitness and likelihood to improve themselves through improved living conditions. Furthermore, to provide a broader public purpose rationale and minimise the impact on private rents, emphasis was placed on redevelopment of so-called slums rather than greenfield development. And whilst this early public housing was solidly built and sometimes externally attractive, the interior designs were generally spartan, to convey a certain psychological message and avoid making public housing as appealing physically as new private rental housing (Wright,
1981, pp. 229-231).
In the early 1930s UK social housing policy underwent a shift that presaged the US approach
just described. As Malpass and Murie
have explained (1999, p. 38):
After 1930, and more especially after 1933, however, local authorities were pushed toward a quite different role, abandoning general needs housing in favour of slum clearance and redevelopment.... The standard of new local authority housing was reduced, partly in order to produce rents that could be afforded by poor families. Another factor was probably the desire to make council housing less attractive to people who could afford secure private accommodation.
Nonetheless, by the beginning
of World
War
II, Britain had over a million council units, 10 percent of the entire housing stock (Malpass and Murie, 1999, page 43). Whilst produced
over a much longer period of time, this was about four times the number
of public housing units in the US, a country about five times larger
in population; i.e., proportionally, Britain had about 20 times as much public housing as the US.
The Post-War Period
The period immediately after World War II again saw wide divergence between social housing policy and practice in the UK and US, growing out of different physical and political conditions. Although both countries faced housing shortages from the wartime diversion of labour and materials, for Britain this period had been longer by two years. At least as significantly, the US had been spared the bombing that Britain had experienced. In America, “homes for heroes” meant millions of modest single-family, owner-occupied houses sprawling across the countryside – socially underwritten private production and individualised consumption. In Britain, “homes for heroes” meant millions of council flats with indoor plumbing and central heating – socially underwritten public production and collective consumption.
In the UK, local authorities
produced more than 2.9 million
housing units in the two decades
after the War, initially in response to the enormous housing shortage and as an essential
part of the welfare state. In the first
phase, until the mid
1950s, most of this housing was of high quality. Much
was in outlying, greenfield
areas, consisting of semi-detached
dwellings with gardens. This was
housing for the “deserving” working
class, who had borne the sufferings of the war and had political clout, having
swept the Labour Party into power
after the War (Malpass and Murie,
1999, pp. 53-57).
In the mid 1950s social housing policy in Britain shifted back toward convergence with US policy, with a focus on slum clearance and re-housing of lower-income inner-city populations, and with a decline in the quality of new social housing (Malpass and Murie, 1999, p. 55). In the US, whilst the most significant elements of housing policy in the postwar era were aimed at suburban homeownership and stable economic growth, the Housing Acts of 1949 and 1954 created the famous and often-infamous urban renewal program. They authorised continuation of the federal public housing program, but stipulated that no new public housing be built except to replace “slum” housing as part of urban redevelopment/ renewal (Stone, 1993, pp. 111-112).
Secondarily, there was also modest growth of several hundred thousand units of cooperative housing in US after World War II. The great majority of these were middle-income cooperatives, with government mortgage insurance or financing, but no subsidies other than state or local tax concessions. In addition, there evolved a whole infrastructure to undertake development and provide technical assistance, services and training for coop housing (Siegler and Levy, 1987, pp. 16-19). Indeed, after the War some progressive housing activists advocated a large-scale coop program as part of urban redevelopment, as a complement to public housing for households who could not qualify for the latter, and as model for eventual conversion of public housing to resident control (Abrams, 1946, pp. 179-187). From the mid-fifties, though, middle-income interest waned in the face of “anti-collectivist” ideology and the suburban triumph.
In the 1960s inner-city public housing continued to expand in both the UK and US, primarily as
part continued of slum clearance. The
housing was typically in large estates of monolithic blocks of flats, often of dubious
quality design and construction. In both countries there was substantial
increase of low-income and non-white
families
in such public housing. The congruence of such social and physical
configurations has led in both countries to increasing stigmatisation and marginalisation
of great swathes of public housing.
At the same time, governments in the UK and US were also opening avenues for much greater private sector involvement in publicly assisted housing. In Britain this took the form of policy support for housing associations, “which enabled public funds to be channeled to associations, established the modern framework for their operation and provided the basis for later growth” (Malpass and Murie, 1999, p. 73). Initially, however, this was unsubsidised assistance, very similar to the type of support in the US for coop housing described just above. Similarly as well, interest waned after an initial wave of activity (Malpass and Murie,1999, p. 73).
The opportunities for UK housing associations changed substantially, however, with the new legislation in the early 1970s that enabled housing associations for the first time to receive subsidies for provision of rental housing and launched their rapid and still-increasing role in the UK. Malpass and Murie have summarised some of the essential changes as follows
(1999, p. 75):
The new subsidy system recognised the particular financial structure and vulnerability of associations during th development process, and their lack of a pool of older properties to cross-subsidise rents on new schemes….
To finance housing association activity, a new set of subsidies was introduced. The main one – Housing Action Grant (HAG) – was a deficit subsidy and applied to new building and acquisitions, improvement works and conversions. It has always been administered as a capital grant rather than as an annual contribution to debt charges….
In the US, the late 1950s, and especially the 1960s, witnessed an even more profound tilt in policy toward private sector involvement in the development and ownership of housing for low and moderate-income households. To a limited degree, this change parallels the growth of support for housing association movement in the UK. The closest direct parallel is provided by the relatively progressive Section 202 Program created by the Housing Act of 1959, which provided direct federal loans, with terms of up to fifty years, at below-market interest rates (initially less than 3 percent) to non-profit entities for production and management of multifamily rental housing for the elderly, expanded in 1964 to include non elderly disabled (US Congress, 1975, pp. 68-69).
Unlike all subsequent housing production programs, Section 202 has from the outset been
restricted to development and ownership by non-profit (and public) entities. The result has been the emergence of a set of organisations specialising in such housing, although some regional and community-based non-profits have included 202s among their broader housing repertoires. Owners of Section 202 housing may not sell the housing into the speculative market, at least during the term of federal financing and regulation; and even in the rare instances of foreclosure, projects have been transferred to other non-profit owners. Furthermore, since 1990 Section 202 housing development has been financed by direct federal capital grants rather than any debt. These features have made the 202 Program the greatest success and premier model of privately-owned social housing in the US (Stone, 1993, pp. 201 and 259).
For the most part, though, the shift in the US toward public support for private provision of low and moderate housing has represented a distinctly American path toward for-profit subsidised housing. In the early 1960s, the federal government made available below-market mortgage financing for family housing, to be provided by “limited dividend” corporations, as well as non-profits, coops and public agencies other than public housing authorities (US Congress, 1975, p. 76). For the first few years, profit-motivated developers were not major participants because the profit potential was not sufficient. Only after the Internal Revenue Service changed its rules regarding accelerated depreciation of rental properties in 1967 did the program take off, since profit-oriented developers and their investment partners now could realise tremendous tax-shelter benefits.
Since the late 1960s, a succession of programs that provide direct subsidies to private developers, in conjunction with attractive tax incentives, have been the principal mechanism in the US for production of housing for low and moderate-income people (Stone, 1993, pp. 113-114). This framework certainly stimulated production: from 1969 through 1983 subsidised housing production in the US averaged over 200,000 units a year, including more than 300,000 a year from 1970 through 1973 (Stone, 1993, p. 155), by far the highest rates before or since. However, the tax benefits in this approach are used up after 15-20 years, so the policy included “expiring use restrictions” that permit developers to opt out and convert to unsubsidised housing after 20 years.
In Great Britain public rented housing increased from 12 percent of all housing in 1945 to nearly 32 percent in 1979 (plus a small, but unspecified additional percentage in housing associations, with just modest growth in the 1970s [Malpass and Murie, 1999, p. 59]). Over the same period, subsidised rental housing in the US (including subsidised for-profit developments) increased from less than one percent of all housing to about five percent, with two-thirds of that increase just in the 1970s (Stone, 1993, p. 158). Thus, despite periods and policies that bore some similarities, the two countries had quite different social housing environments at the beginning of the 1980s. Both were, however, entering periods with somewhat similar political regimes, regimes with similar attitudes toward social housing, but with rather different strategies given their housing different contexts.
The Thatcher/Reagan Period
The Thatcher regime that began in 1979 in Britain, and the Reagan regime that began in 1981 in the US, marked the closest convergence between the two countries ideologically of any historical period in the 20th century, if not longer. In both countries there were attacks on public housing as part of broad attacks on the very notion of the welfare state, yet modest growth in privately developed social housing in the UK and subsidised housing in the US.
Also, Britain now successfully emulated the US in the provision of homeownership and deepening of property-owning ideology, building on the considerable idealisation of individual, largely debt-encumbered homeownership that already existed (Cole and Furbey, 1994, p. 179).
In Britain not only was public housing a much larger proportion of all housing than in the US, it also housed a much more diverse population socio-economically and geographically. Thus, while US policy in the 1980s and early 1990s consisted primarily of draconian cuts in funding for new subsidised housing, cuts of comparable magnitude in the UK were greatly overshadowed by a shrewd policy to dispose of the best public housing occupied by the best- off council tenants (Cole and Furbey, 1994, Chapter 7). The so-called “right to buy” scheme offered council tenants deep financial discounts – up to 70 percent off the market value for tenants of 20 or more years residency – if they chose to buy their units, but not so deep that most would not still need additional financing. It also involved the weakest of resale restrictions, permitting resale after five years (later reduced to three years) into the speculative market with no price limitation or repayment requirements (Forrest and Murie,1988, p. 56). This meant that the right to buy could be and was most extensively exercised by tenants who could qualify for and afford mortgages, and who lived in the best quality housing in the most desirable locations (Forrest and Murie, 1988, Chapters 5 and 6).
Between 1981 and 1996 owner-occupied housing increased from about 56 percent of occupied housing in the UK to 67 percent (Malpass and Murie, 1999, Table 5.3, p. 88) – a rate in 1996 comparable to that of the US. “More than half of the growth of the owner- occupied sector has been associated with the transfer of public sector housing stock, especially the Right to Buy” (Malpass and Murie, p. 89). More than 1.9 million units of local authority housing, three-tenths of the 6.5 million in 1979, had been lost to right to buy by.
- (Tables B1 and B2).
Furthermore, three-quarters of the funds generated for the public treasury by the sale of council housing to residents was used to repay some of the remaining debt on council housing (Durden, 2001, p. 140), rather being available to local authorities where it might have helped to finance replacement housing. Furthermore, the net receipts available to local
authorities only served to offset central government cuts in housing funds, and they needed to be used to maintain the existing stock rather than any new building (Forrest and Murie, 1988, pp. 96-97).
With the simultaneous reduction of general subsidy for public housing production, local authority housing production in the UK declined from over 100,000 units a year during most of the 1970s to fewer than 30,000 a year by the mid-1980s and essentially zero by 1993 (Golland, 1998, Figure 1.2, p. 7). Even with a modest shift to support for housing associations, total social housing production in the UK declined from an average of about
130,000 a year until the late 1970s to little over 30,000 a year from the mid-1980s through the early 1990s (Balchin, 1996, Table 14.3, p. 213; McCrone and Stephens, 1995, Figure 8.1, p. 141). Similarly in the US, subsidised housing production, which had averaged over 200,000 units a year from the late 1960s until the early 1980s, declined to fewer than 50,000 units a year by the late 1980s and into the 1990s – and only about ten percent of this was public housing (Stone, 1993, pp. 154-161, and Figure 5.9, p. 155).
The Thatcher policy thus brought Britain considerably closer to the US, by boosting middle- class homeownership, slashing social housing production and “residualising” public housing. “Residualisation” involved three inter-related elements:
$ reducing substantially the amount and proportion of public housing, primarily through transfers of ownership, and secondarily through private development and ownership of the very small amount of social housing production that took place; leaving most of the remaining public housing as large urban estates (or “projects,” in the American sense), often of lower quality construction and maintenance; and
shifting the public housing population to one considerably poorer and less white (Forrest and Murie, 1988, pp. 11-12; Harloe, 1995, p. 367; Malpass and Murie, 1999, p. 274).
Nonetheless, social housing remained a much larger component of housing in the UK, even though it declined from nearly a third of all housing in 1981 to less than a quarter in 1996 (Malpass and Murie, 1999, Table 5.3, p. 88).
In the US, by contrast, only about six percent of all households were receiving housing subsidies in the early 1990s (Stone, 1993, p. 160).
Current Issues in UK Social Housing
In the late 1980s and early 1990s, the severe right-wing governments of Margaret Thatcher and Ronald Reagan gave way to somewhat “softer” conservative governments of George Bush I and John Major. These governments were, in turn, replaced by the centrist governments of Bill Clinton in 1993 and Tony Blair in 1997. With this progression, in both countries there was successively increased central government support for social and subsidized housing, but no where near the degree of philosophical and financial support that had existed prior to 1980.4 Furthermore, in both the UK and US, there was no rollback in the diminution of public housing. Private sector involvement in provision of new social/ subsidized housing, which in the US had become dominant in the 1960s and 1970s, now achieved dominance in the UK as well. Whilst in the UK private sector social housing providers are nominally not-for-profit – in contrast with the US where most new subsidized housing remains for-profit – in the area of housing finance Britain has also followed the earlier course of the US, consisting of public incentives and subsidies to leverage private financing.
The issues that are dominant today – issues that continued and emerged during the past decade – are many and complex in both the US and UK. It is not possible to describe them fully, let alone adequately analyze and evaluate them. In this section what I will therefore provide are observations on what seem to be some of the most important issues around social housing in the UK. The issues are considered in five categories, although in many ways they are interwoven and inseparable: physical, ownership, financing, social issues, and resident activism and participation.5
Physical Issues
There are several major physical issues in social housing, not all of which are receiving the same level of attention:
· the condition of council housing estates
· the quality of newly built housing association stock
· the need for additional social housing
As mentioned in the historical discussion, nearly all of the local authority stock was built before 1980. As a result of age, as well as limited asset management and capital infusions, much of the rental housing still owned by local authorities is physically obsolescent and/or deteriorating. Most of the stock built before the 1960s is apparently structurally sound, and much of it remains very attractive on the exterior. Some went through a modernisation process 30 to 40 years ago, but whether or not that occurred the physical systems, roofs, windows, and brickwork of many of these old estates need major upgrading or replacement. In addition, a large amount of the council housing built in the 1960s and 1970s was poorly designed and constructed; maintenance requirements have been high and sometimes inadequate. Some of this stock is physically sound, if not necessarily beautiful, and has been the focus of upgrading, including some interior and exterior reconfiguration. For some, though, the combination of poor design and poor condition argue for demolition and replacement. In certain instances the latter argument is being applied, however, to some council housing that could be renovated cost-effectively, but is situated on land now effectively deemed “too valuable for poor people.”
Beginning in the late 1980s and accelerating through the 1990s, the UK government responded to the physical crisis of council housing with a series of “regeneration” programs (Malpass and Murie, 1999, p. 92). These schemes have tended to focus on large, run-down inner-city estates, many of which had been “hard to let” -- sometimes for more than a decade -- for social reasons as least as much as for physical reasons. Such programs, which have gone through a series of incarnations and are continuing, have been renewing estates physically through a mix of renovation and demolition/replacement. Over time, these schemes have evolved to include attention to social issues and resident participation.
It is estimated that the backlog of repairs and improvements needed in council housing is £19 billion (UK DETR, 2000).
The Blair government made a commitment for its first Parliamentary session from 1997-2002 of about £3.6 billion out of “set aside” capital receipts (much of it from sale of council housing) for this purpose, and funding under regeneration initiatives boosted this somewhat (Malpass and Murie, 1999, p. 277; Durden, 2001, pp. 147-8).
At the beginning of 2003 the government committed about £2.8 billion over the next three years to upgrading council housing (UK Office of the Deputy Prime Minister, 2003b). Thus about a third of the need may be met through government appropriations. Dealing with the gap is bound up with contentious issues of ownership transfer and private financing, as will be discussed in later sections.
Whilst attention has understandably been focused on the condition of the remaining local authority stock, lurking just over the horizon is the question of the quality of the units being developed by housing associations. With about a million of these units having been newly built (in England) since the late 1980s, it would be expected that such housing would have very long useful lives remaining. Yet activists have been raising questions that may or may not be justified, about the quality. Not surprisingly, organised defenders of council housing have made the challenge (Defend Council Housing, 2003, p.26), but in my conversations locally I have been told by several people that housing association units typically are being designed and built with 25 year useful lives in order to keep costs down. I have not located independent professional evaluations that could confirm or disconfirm this claim, but one academic study does report that with respect to design and space standards, if not construction quality, the competitive cost regime established by the Housing Corporation in 1988, has resulted in “a continuing decline in the standards of homes built by RSLs” (Symes and Karn, 1998, p. 19).
The other very big physical issue is the need for a large amount of additional social housing. Quite apart from anticipated household growth, unmet social need has been estimated as 650,000 to 700,000 mostly in the south of England (including London). Whilst the existence of as many as 770,000 vacant dwellings might appear to offer the solution, the vacant units are not where the needs are (Durden, 2001, p. 145).
Obviously there is no realistic way of overcoming this spatial mismatch by moving large numbers of people and/or houses. Taking into account household growth and continuing demolition of some existing social housing, it is estimated that about 100,000-115,000 new social housing units would need to be built each year for the next two decades to meet the need. Yet the recent rate of construction of social housing has been less than 30,000 units a year (Durden, p. 145). Whether and how the rate of social production can be substantially increased is bound up, yet again, with issues of ownership and financing.