Kevin Gulliver is the director of Birmingham-based research charity the Human City Institute and chair of the Centre for Community Research but writes in a personal capacity; his interests are social and economic policy, especially relating to housing, health, communities and inequalities
In his Labour Party conference speech Ed Miliband defined the essence of his ‘One Nation’ strategy as “those with the broadest shoulders will always bear the greatest burden”, suggesting that tackling inequality would be a core characteristic of a future Labour government under his leadership.
The Leader of the Opposition provided an example of how the ‘One Nation’ approach might be put into practice; the next Labour government would concentrate upon the 50 per cent of young people choosing not to go to university rather than the other half who the last Labour government encouraged successfully to aspire to a university education; one implication being that extending opportunities and improving the life chances of the many have to go hand-in-hand with a more equal society.
So how might a ‘One Nation’ approach be rolled out for other policy areas?
Applying it to housing suggests future focus might be on a largely neglected, and increasingly demonised, social housing sector rather than further expansion of home ownership which reached its 70 per cent zenith in 2007 and is now on its way down to a more sustainable 65 per cent of all homes.
Of course more social housing per se is needed in the face of a collapse in housing starts and completions, expanding waiting lists, homelessness back on an upwards trend, a sliding housing market that has failed to improve affordability, and a construction industry back in recession.
Yet, in ‘One Nation’ terms, how social housing is expanded is as important as building more social homes. Attempts to rebrand social housing as “taxpayer funded” housing, and social tenants as scroungers, feckless work avoiders and rioters is the legacy of former housing minister Grant Shapps – now Conservative Party chairman.
A ‘One Nation’ housing policy, then, must rest upon improving the poor reputation of social housing, even if unfairly gained, and seek to improve tenants’ lot.
These two policy goals can be achieved in concert by a future Labour administration adopting ‘A New Deal for Tenants’ which seeks to create a flourishing social housing sector built firstly upon improved affordability of rents, which have increased ahead of inflation for almost 25 years and created a steep poverty trap for tenants seeking work.
And, secondly, it should rest upon enabling tenants to accumulate assets without an unsustainable move into home ownership, so advancing an asset-owning democracy.
The move to private funding of social housing from 1988 onwards enabled investment to be kept off the national accounts but was underpinned by a transfer of subsidy from bricks and mortar to housing costs.
Today, for every £1 spent on social house building, £10 is spent on housing benefit compared to a ratio of £1 to £1 in 1979; so investment has moved from an economically rational activity – housing production that provides national assets – to one that moves resources into the private financial sector through loan repayments from housing benefit via social landlords.
At a time when government can borrow for virtually no cost, and where investment in physical assets would show on the national balance sheet whereas housing benefit is a ‘lost’ subsidy in accounting terms, public spending on social housing construction makes economic sense.
To improve the reputation of social housing, a ‘One Nation’ housing policy would channel publically-sourced social housing investment via a newly established Tenants Mutual to enable tenants to own assets and to reduce the wealth gap with homeowners – currently standing at more than £100,000.
All tenants would be members of the Tenants Mutual which would aggregate tenants’ ‘quasi-asset accounts’ in the style of the Children’s Mutual. Tenants could save into these accounts too and social landlords and others would also be able to invest to build the fund.
This would represent great value for money to the taxpayer by targeting public investment on economically valuable new construction activity, community infrastructure, the supply chain and employment while improving the image of social housing in the public mind. Costs would also be offset over time by lessening strain on the housing benefit budget through lower rents.
A ‘One Nation’ housing policy requires that those left behind – social housing tenants – receive priority from a future Labour government. It will also involve the Labour Party thinking creatively to challenge wealth inequality, invest in homes and neighbourhoods at the same time as building out of recession.
The Tenants Mutual as the centrepiece of a ‘One Nation’ housing policy would increase the number of social homes by at least 200,000 over a Parliament, upgrade community facilities to replace lost regeneration funding, stimulate economic growth, improve the self-esteem and life chances of social tenants and reduce dependency upon high-cost lenders. All in all, a range of desirable policy targets would be hit through a mutual model.