by Peter Clayton
While the Government views owner-occupation as the major means of housing the population this approach has significant implications for the role played by local government in Britain, marking a shift away from the traditional role of local government as a major provider of accommodation.
Owner-occupation is being actively encouraged in the sale of council housing, but ownership is not a universally acceptable solution. Those who are in an area temporarily and those who cannot afford (or do not wish) to buy are unimpressed by the Government’s initiatives.
Although there has been an increasing desire on behalf of the general public to own their own homes, the rapid rise in the level of mortgage default by first-time buyers would indicate that this may not be so easily attained in practice. Arguably, Britain as a nation may be nearing a saturated market for this form of tenure.
The level of sales of council housing will probably fall as the more desirable properties are disposed of, leaving an unsaleable core of “problem” estates with, for example, a high proportion of tenants who fail to pay their rent regularly. On other estates the housing stock was never designed for sale as individual properties.
With the UK’s wide regional differences in economic activity, the encouragement of ever-higher levels of owner-occupation will reduce the mobility of labour. This is wholly inconsistent with government employment policy, which urges the unemployed to seek job opportunities in areas of expansion.
It is important, therefore, to consider the basic tenets of the Government’s policy. It sees its economic role primarily as that of an “enabler”, creating favourable conditions within which market forces can operate more freely. A major requirement is the provision of stable money, reducing the annual rate of inflation by stringent control of both the money supply and government spending. This makes a significant retreat from the post-war roles of government both as a provider and a manager of the economy. The Government views the outcomes provided by the interplay of market forces as inherently superior to administered solutions.
Paradoxically, this has led the Conservatives into taking greater control of local government expenditure as the present government has perceived councils to be inhibiting the operation of free markets. Yet they enjoy no special constitutional rights, and only possess freedom of action in so far as this does not conflict with the aims of central government.
There are several reasons for a greater degree of central control. Greater spending by local authorities can offset any central government attempts to reduce the PSBR: tighter controls have been imposed on council spending to prevent this. These include rate-capping and preventing local authorities unwilling to reduce their expenditure from passing on any shortfall to their ratepayers, but these restrictions have been fiercely resisted.
“Across the board” reductions in financial support bear harder on current expenditure than on capital expenditure. Interest on loans to finance past capital expenditure must be paid at the same rate as before the cuts, regardless of reduced grant support. A local council may be faced with cutting jobs and services or breaking the law.
Local election turn-outs are invariably lower than at general elections, reflecting the perceived relevance of local government by the local voters. There are other outlets for the expression of public opinion on specific issues — the local press and pressure groups. These may influence authorities but bear no financial responsibility: far less are they accountable. The Government intends the community charge to strengthen the link between the local electorate and local financial accountability.
Local government is multi-functional, and efficiency and performance have not been — indeed cannot be — judged solely in terms of profitability: it is frequently accused of being big, bureaucratic, unresponsive and inefficient. Mrs Thatcher’s administration sees local government as being part of a bureaucratic problem, and it has appealed directly to individuals’ self-interest, in the promotion of the sale of council housing, for example.
The reduced role of local government has been accompanied by the growth of quangos, the non-elected bodies funded directly by central government. The establishment of urban development corporations and housing action trusts present a direct challenge to local government.
Current Tory policy sees rented accommodation being provided by the private sector, which requires the stimulus of direct profits. When coupled with the reductions in subsidies to the rented sector, this implies higher rents. The Government’s solution is to transfer the residue of local authority housing to other landlords on the basis of “tenants’ choice”. They must vote to retain their present local authority landlord, but if there is no majority for this option there is an automatic right of transfer to a private landlord. If a tenant fails to vote, then he or she is assumed to want a change of landlord! Furthermore, a tenant may have recently moved, but if his or her name remains on the tenants’ register at the time of the ballot and no vote is cast, then they will be deemed to have voted in favour of a change of landlord. Under the proposed legislation, the central government could purchase an estate compulsorily and transfer it to another landlord; equally, a local authority no longer wishing to own its own stock could transfer it to a Housing Action Trust.
A recent opinion poll showed that 51% of tenants wanted to stay under their current local authority’s control — hardly an overwhelming show of support for local authority housing management. Yet only 1% would choose a private landlord.
The future of rented housing is also affected by changes in housing benefits, highlighting a further inconsistency in government policy. The DOE has cut expenditure by imposing rent rises on local authorities, yet the DHSS has had to absorb these rises as more and more tenants qualify for housing benefits and income supplements. The Government tightened up housing benefit entitlement, targeting benefits towards those in hardship, but simultaneously transforming a scheme formerly based on tapering aid into one where the rate of benefit is now sharply withdrawn. Only the very poor qualify, creating a new poverty trap for the low paid and undermining the Government’s housing policy. Those low-income groups cannot afford to pay, unaided, the higher rent levels now expected.
A policy that simultaneously takes money both from housing construction undertaken by local authorities and also from income support for the low paid must be open to the most stringent criticism. Again, a threat to local democracy is posed by the increased centralisation of power, and the steady erosion of the responsibilities of local authorities is likely to affect the calibre of future local representatives.
Thus the Government’s housing policy is only one part of a general commitment to market forces, while in practice different aspects of this policy appear increasingly inconsistent. Higher levels of owner-occupation inhibit rather than increase labour mobility between regions.
Local authorities are attacked as political entities perceived to be capable of frustrating central government policy: their moral claim to do so as representative bodies is increasingly being called into question. Quangos which the Government sees as being able to respond more rapidly to, and to concentrate resources more effectively on, problem areas are increasingly looked on as a means of cutting through this frustration. Yet the key question remains unresolved, and it is one that transcends housing as a single issue — vital though this is to the well-being of the nation. The broader and more disturbing point is whether or not centrally devised and enforced solutions are equally applicable to each particular local circumstance, and thus whether or not the central government can be believed to have a monopoly of wisdom.