FROM SLUMS TO SLUMS IN THREE GENERATIONS; HOUSING POLICY AND THE POLITICAL ECONOMY OF THE WELFARE STATE, 1945-2005.

Harold Carter

University of Oxford

Abstract

Housing was the major domestic priority of all postwar UK governments.  By 1970 the physical conditions of British housing had been transformed; by the 1990s seventy per cent of households in England owned their own homes.  Yet in 2012 there were still parts of many cities that deserved labeling as slums. Why had massive public expenditure not managed to achieve the goal of successive governments?

Vested interests, created by each wave of intervention, limited subsequent policy choices.  From about 1950 to about 1995, governments expanded owner occupation via a wide range of subsidies, but increasingly restricted the supply of land by restrictive planning laws. There was a massive (and unremarked) tenurial revolution, as privately rented houses were sold off to owner occupiers. At the same time, slum clearance created large single-tenure areas. This changed the nature of the demand for council housing  (once occupied by the upper skilled working-class). In some parts of the country, gentrification removed a once-affordable source of owner-occupied housing.  But rent control meant there were few homes for would-be renters. Access to good quality social housing thus became a very high-stakes game, for those on modest incomes – and a major source of ethnic tension in some inner cities.

From the mid 1980s on, means-tested help with rent payments and market liberalization  provided new help to would-be private renters. By 2010 this had resulted in the provision of over 2.2 million new privately rented dwellings in under twenty years  (almost as many as had vanished between 1960 and 1975).  Small debt-funded capitalist landlords, and tenants with limited security of tenure, would have been familiar one hundred years earlier. But this time the government was paying the rent; guaranteeing the market for a new generation of slum landlords, while producing severe disincentives to labour-market participation by the poor.  This new form of subsidy (coupled with continuing high land prices) helped to increase nominal rents much faster than average earnings. Housing benefit expenditure rose £11 billion in 2000 to £22 billion in 2010.

As, on the surface, the British housing market moved away from social democracy and towards market liberalism, its underpinnings moved in the opposite direction.   Measure was piled on measure, and subsidy on subsidy, until at the end of the century the influence of government had become all-pervasive.

Social amelioration of this kind faces two major problems.  The first problem is that it tends to reward the majority at the expense of the weak. The second great problem is that it depends on a continuing flow of new resources, to fix each new problem while still maintaining preserving the interests of existing clients.  If liberal democracies survive by buying-off trouble from new problems, while continuing to support accrued vested interests, how will they manage if economic growth can no longer be relied upon? Based on the experience of the UK housing market, it seems likely that they will focus their resources on those in the middle. This does not bode well for the poor.