The construction of council housing in the UK primarily began in the 20th century, with the Housing Act of 1919. Initially, the intention was to provide high-quality, low-cost homes for the returning soldiers of World War 1. Over the coming decades, 1 million council homes were built between 1919 and 1939. The construction of these homes further accelerated following World War 2, with just under 2 million council homes built between 1946 and 1960. All of this changed however when the ‘Right to Buy’ scheme was introduced in 1980, by the incoming Conservative government. This legislation allowed tenants to purchase their homes at a discount of 33-50% off market value. Since then, the number of council homes built per annum has decreased drastically as construction fell to just over 30,000 units per annum during the 1980s; the sale of council homes averaging 110,000 per annum in the same decade. Although the aim of council homes has always been to provide affordable, high-quality housing for low-income individuals, this dream is far from the reality of council housing.
Social housing has long acted as a wage subsidy for low-skilled jobs in areas with otherwise high property costs. Take a cleaner for example – who have an average salary of £30,000 in London. Someone on this salary would hardly be able to afford a house, averaging at £700,000 in the capital, yet many large and small companies alike seem to have no trouble hiring cleaners at such low wages. This is enabled by council homes, which allow companies to pay lower wages as the public sector picks up the slack by having lower rental costs to accommodate their residents. By removing social housing, companies are forced to increase wages to accommodate for the higher prices of the private rental market – if they are to keep their workers.
Moreover, the poor quality of social housing is evident. A notable example of this is the Grenfell disaster of 2017, killing over 70 people. The fire that had occurred in the tower, was greatly exacerbated by the poor cladding throughout the building.
Thus due to the tight budgets that councils have, the quality of council homes pales in comparison to private homes. However, unlike private contractors who are responsible for building houses, councils escape liability – despite offering the contracts in the first place. The inherent risk that comes with housebuilding is borne by the private contractors and thus it is of no surprise that the quality of private housing far surpasses that of council homes.
In addition, building council homes only discourages the construction of homes by private constructors. This is due to the reduced availability of land caused by building council homes, leading to decreased profits for private contractors and thus lower tax revenue for the government. Council homes not only cost the government but also decrease the amount of tax revenue taken in.
The solution is a shift towards more private housing, which are of better quality. The affordability of private housing, however, has always been of contention. Proponents of council housing would argue that reducing the stock of social housing would only lead to an increase in private housing costs. On the contrary, whilst the number of council homes built per annum in the 1990s reached virtually zero, average house prices fell – from just over £100,000 in 1990 to £70,000 by 1996.
With this being said, in more recent years, excessive housing regulations have made housing less affordable than it could otherwise be. As the demand for housing continues to outpace supply, housing prices will invariably rise. The burdensome planning system has long been a barrier to investment in new, affordable housing.
Due to the existing system’s inefficiencies, obtaining planning approval takes far too long, with the more time that passes, the longer individuals are without adequate homes. These decisions have a huge economic impact – both owing to low levels of affordability and the fact that the UK workforce is becoming less mobile as a result of a shortage of adequate homes across the country.
Thus a reduction in excessive regulation with regard to planning rules will facilitate a return to the 1990s, when the demand didn’t vastly outstrip the supply for housing, allowing for more affordable homes – as a pose to the poor quality offered by council homes.