Sorting Rich from Poor
Policy Exchange, a right-wing think-tank, is calling on councils and housing associations to sell off their most valuable housing stock. Policy Exchange has a variable record. It was an advocate of the government’s austerity programme, predicting in August 2010 that ‘if the Coalition stays the course on cutting spending’, then ‘growth through most of 2011’ should be the ‘strongest seen in the UK since the late 1980s’. It also made the odd prediction in 2010 that a stagnant housing market would lead to a fall in council housing waiting lists, which have since reached their highest levels for many years.
The housing minister, Grant Shapps, has called Policy Exchange’s new argument ‘blindingly obvious’. Why not sell off expensive properties to get a two-for-the-price-of-one deal? Why should tenants live in these expensive places anyway, especially if their rent is paid through housing benefit?
As it happens there are several compelling reasons not to do as Policy Exchange recommends. The first is about using assets. If you want to buy a second home, and have a first house on which you don’t owe very much, the best way of raising money is to extend your mortgage on the house you already have. Councils and housing associations have, on average, outstanding debts of only £17,000 per house. Most housing associations already sweat their assets, and the last thing they want to do is to lose the most valuable of them. This is especially true when house prices are still lower than they were before the crunch in 2007. In London, too, they’ll have half an eye on what will happen if a house is sold: in Kensington or Westminster there’s a good chance it will be bought as an asset by a private investor and kept empty.
Then there is the effect on tenants. Shapps has been singing the praises of a mobility scheme he introduced. HomeSwap Direct gives tenants a chance ‘to improve their job prospects, live closer to family or simply move to a home better suited to their changing needs’. Quite right too. But it depends on a varied stock being available. One example he gives is of a woman living in rural Norfolk who swapped her council house for one in Norwich, closer to her job. But under the Policy Exchange scheme, the village house in Norfolk would be sold off, not relet. And someone has to do those low-paid jobs in Westminster and other expensive areas, which often involve unsocial hours. Where are they going to live, if not in a council flat near where they work and at a reasonable rent?
The biggest question is whether we want to continue sorting the rich from the poor. Two years ago, Policy Exchange poured scorn on Labour’s policy of trying to create mixed communities. But Central London still has many of them, largely thanks to the remaining council housing and the likes of the Peabody Trust and Notting Hill Housing Trust (both launched, at different times, to provide low-cost housing in high-cost areas). Danny Dorling and Phil Rees showed in 2003 that since the 1970s Britain has become increasingly divided geographically between rich and poor. Shirley Porter was pulled up short by the district auditor for her efforts to accelerate the process in Westminster in the 1980s, but Hammersmith and Fulham council is still trying to sell off whole estates and replace them with luxury flats. Social inequality is not only about the growing gap in income between the rich and the rest. It’s also about making sure the haves live as far as possible from have-nots.