A challenging and thought-provoking piece in the Times called “We are picking up the bill for Right-to-Buy” by Ross Clark. It highlights some of the iniquities of our housing benefit system, which costs near enough £20billion a year to keep afloat. It is particularly obscene in the richer neighbourhoods of London where claimants are apparently living the life of Reilly in luxury homes at taxpayers expense. And many of them appear to be foreign and black, giving the Daily Mail apoplexy. Whether the situation is quite as comfortable as described by our right-wing press, I have my doubts, but there can be little doubt that the whole system is a mess and it’s not clear exactly what can be done about it.
Clark’s solution is this: resume building social housing with an emphasis on family units (this is primarily where the problem lies). But people have been saying this for years and it hasn’t exactly got us very far. The social housebuilding programme has been largely funded by slicing off some of the profits that the landowners and private developers were making, and now that these have more or less vanished, this avenue is looking a little thin. To re-invigorate it now would cost billions – money which simply is no longer available.
But would Clark’s solution really improve matters, or is it just more sticking plaster? The problem is essentially that we have created a two-tier housing market. There is the private sector, which is expensive and insecure (esp. for renters), and the social/council sector which is cheap and very secure. And subsidised to the tune of £20billion a year. This creates an enormous demand for social housing, a demand that is probably unquenchable as things stand. Building more social housing may go some way to meeting the current demand, but is going to create even more demand further down the pipeline, and may well end up costing even more to subsidise. It doesn’t strike at the root of the problem, which is that there are two different markets operating and cheap and secure housing is always going to be preferable to expensive and insecure, even more so now as windfall profits from owning private housing have been put on hold.
A more logical solution would be to have just one housing market. To do that, you have two options. One would be to privatise the social/council house sector, and remove all housing benefit, instead supporting the poor by some other method – for instance, giving them money and letting them decide how to spend it. Alternatively, you could nationalise all housing and have it all rented out by the state. Somehow I don’t expect to see either of these two options featuring heavily at the forthcoming Election!