Miliband should focus on building social housing

Image: JD Hancock

Image: JD Hancock

Ed Miliband has proposed the implementation of rent controls and longer tenancies if he is elected. At the moment, many last up to six months, with the norm being a year.

Labour has proposed extending tenancies to three years, with a six month probation during which the landlord can evict tenants for certain discrepancies, such as anti-social behaviour and failure to meet rental payments.

Reforms which create greater stability for people’s housing situations should be welcomed. Shelter claimed in March 2014 that in 2013 alone, more than 200,000 people faced eviction because they asked a landlord to fix a problem in their home.

Miliband also proposes to place a ceiling on rent increases. There have been many attacks from the Conservatives in relation to this policy, such as Boris Johnson’s description of it as “Mugabe style expropriations”, giving the impression that Miliband aims to create some form of Stalinist state.

Of course, this is hyperbole, the proposals are modest, even compared to previous rent controls seen in this country in the 1960s and ‘70s.

However, there are problems with Miliband’s policy, because it does not address the root causes of the current housing crisis – a lack of supply.

This lack is not due to the excess of demand that Nigel Farage often speaks of; in which our shores are swamped by immigrants, who surge into our housing stock. The simple truth is that supply has failed to keep pace with the demand of the citizens of this country.

We are experiencing the lowest levels of house building in peace time since the 1920s. According to the Institute for Public Policy Research, if house building continues at current levels, by 2025, England will build 750,000 fewer homes than are needed. Miliband has committed Labour to building 200,000 homes a year by 2020, but the focus should be on what type of housing is being constructed.

Since Margaret Thatcher’s “Right to Buy” policy in the 1980 which encouraged council house tenants to buy their own homes, there has been a chronic shortage of social housing. By the mid-1980s just 20,000 new council houses were being built, compared to 200,000 a year being constructed by local authorities in the early 1950s.

Shockingly, these figures dropped still further during the years of Tony Blair and Gordon Brown’s New Labour.

There are currently 5 million people stuck on social housing waiting lists; a figure which betrays a narrative of those with lower incomes, unable to access social housing, turning to the often more expensive private sector. Indeed, rents have increased 13 per cent since 2010.

The housing benefit bill is predicted to be £25 billion by 2017. One reason for the spiralling cost of housing benefit is that people who cannot afford private rents are forced into them by a lack of social housing. The state is left to subsidise their meagre income through housing benefit simply so they can afford to keep a roof over their heads.

Thus, a programme of building social housing, far from costing the state, would, in the long term, save money by reducing the housing benefit bill. Not only this, but it would provide local authorities with a stream of income in the form of rents and create employment.

Labour’s policy is well-intentioned but it deflects from the real issue at the heart of the housing crisis – a lack of social housing. The free market has been given virtually free reign over our housing market for the past 30 years. The housing crisis we now face is a failure of that market, and this failure invites government intervention in order to reverse the damage.

If the state fails to build these homes, we are storing serious problems for our future.

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