Housing and Social Policy

Contemporary Themes and Critical Perspectives

Peter Somerville, Nigel Sprigings, Peter Somerville, Nigel Sprigings

• Publisher: Routledge
• Year: 2005
• eBook ISBN: 9781134455249
• Edition: 1
• Topic: Architecture
• Subtopic: Architecture General

This topical book transforms the analysis of housing problems into a lively, interesting and contentious subject of social scientific study, addressing themes of residential experience, inclusion/empowerment, sustainability and professionalism/managerialism, which lie at the heart of the housing and social policy debate. Each chapterconsiders a specific social category - such as class, gender, or disability - and evaluates the experience and understanding of housing and social policy under this category.

With innovative approaches to conceptualising housing and a clear, defined structure, Housing and Social Policy encourages students and practitioners in both arenas to think reflexively about housing as a central instrument of social policy and social experience.

1 Introduction

Nigel Sprigings and Peter Somerville

Ideally, one aim of any book with the title ‘Housing and Social Policy’ should be to consider, explicate and evaluate the ways in which housing interventions by governments help to achieve social policy objectives. This task would include elucidation of alternative policies that government may have rejected but the broad remit would be the housing aspects of the full range of social policy. Obviously, the scope of such a book would be encyclopedic. This may be one of the reasons why previous books on the subject have tended to concentrate primarily on the nuts and bolts of housing service delivery in the public sector, often linking housing needs issues with other welfare services. Clapham et al. open their book ‘Housing and Social Policy’ with the statement that their

book focuses on two key relationships: that between housing policy and social policy, and that between the provision of housing and the provision of other welfare services such as the health service, the education system, the personal social services and the social security system

(Clapham et al. 1990: ix)

This places housing policy squarely amongst the welfare services with an emphasis on public provision in its various forms. The definition of social policy they use covers ‘the areas of consumption in which the state plays a central role’ and they recognise that this is ‘not uncontroversial’. But the emphasis is on consideration of the way welfare services ‘interact’ to achieve social objectives. This leads to considerations of community care and homelessness policies and practices in some detail. Such an approach meets a particular need for students and practitioners wanting to understand recent social policy and the changes this imposes on, or requires of, their organisations.

The aim of this book is different in that it will try to see social policy more widely than welfare provision. Social policy in this light includes a wider range of interventions across all sectors not just the public sector. While this requires consideration of some nuts and bolts issues that are not commonly covered in such a book (for example, strategies to tackle anti-social behaviour or house design for disabled people), it also creates the opportunity to evaluate those policies and practices in the light of social theory. This is where we hope the book offers an original perspective that will give it an audience wider than that focused on housing and directly related welfare services. Consequently, there are some notable absences from the main content, such as homelessness or community care, while other core issues usually found in housing policy books, such as the right to buy and its impacts, are not addressed in any great detail. These issues are well covered in other books: for example, on homelessness see Hutson and Clapham (1999), Kennett and Marsh (2000); on the right to buy see Malpass and Murie (1999).

Instead the chapters consider aspects of social policy with a housing focus but informed by social theory as it relates to the topic area. This approach not only provides an explanation of what policy approaches have achieved but also allows for the development of critical understanding of the subject area through elucidation of social theory debates that have driven or resulted from those policies.

Housing is ubiquitous in that, in some form, it is generally accepted to be essential to all the nation’s residents at every stage (or some stages) of their lives. Even travellers have occasional call on permanent housing provision and are partially provided for under homelessness legislation. Housing policy, however, as a form of welfare policy, is not ubiquitous. A change of housing policy, such as significantly reducing the supply of public housing, as happened in the 1980s, may not impact directly on the majority of individuals in the country unless they need council housing and find it in short supply. Of course, many people never need to call on the supply of council housing as they live their lives in privately owned homes, tied housing or privately rented housing. Government policy has more influence on our housing circumstances than might at first be imagined (see Spink, this volume) but this does not alter the fact that, for many people, housing policy impacts on them only indirectly and often over time. An example of this would be where government failure to stimulate supply across all sectors causes cyclical increases in the value of owned homes (see below). Another would be the current availability of a three bedroom semi-detached house in suburbia that may have depended on a long forgotten construction subsidy from the 1930s.

Lowe (2004) cites research illustrating how different national housing structures interact closely with other areas of social policy such as health and pensions. High housing ownership economies have higher inflation over time¹ and tend to more marketised provision of welfare services whereas low home ownership economies tend to be more state welfare oriented in other provision too. There may be a chicken and egg factor here but, given the links between ownership and capital accumulation through inflation, the social and economic reach of housingrelated policies is one of the key factors in determining personal and economic well-being. Renters tend to become relatively poorer, for example, in a system that generates unearned wealth for owners. That the owners benefit from social policy may not be immediately obvious to them but is vital for their personal economic gain.

The importance of the housing sector to national economic performance is a key message of the reports issued by the recent Barker Review of Housing Supply (Barker 2003, 2004). Barker states clearly that ‘a weak supply of housing contributes to macroeconomic instability and hinders labour market flexibility, constraining economic growth’ (Barker 2004: 1).

In seeking ways to understand the operation of the current market(s) for housing and making proposals for increased flexibility the Barker Review considered both the public and private sectors. It assessed land release and planning practices and policies, and considered the economics of the building industry and its responses (or lack of supply responses) to increased housing market demand as well as the factors that generate demand and the consequences of a prolonged period of undersupply. In making recommendations on the topics within its brief it acknowledged the need to ‘strike a balance’ between a range of social policy goals such as

• greater economic stability and economic growth;
• adequate and affordable housing for a growing population;
• meeting the aspirations of individuals as to the amount of space, the location and nature of housing to be provided;
• efficient allocation of resources, in particular land; and
• environmental and amenity considerations.

(Barker 2004: 12)

The broad economic role and context that Barker places first on this list is crucial to understanding housing and social policy even for those of us who doubt the ability of economists to fully represent issues such as aspirations, environment and amenity in human life.

Except in the immediate postwar years of 1945 to 1949, growth in home ownership since the First World War has always outpaced the growth in public provision. When it finally became the dominant (as well as the favoured) tenure in the early 1970s, the implications for the economy of the country as a whole were enormous. Arguably, the policy of promoting ownership while the supply industry failed to meet growing demand (Hamnett 1999; Barker 2004) led to a volatile market. Barker argues that a range of factors contributed to this supply failure including planning controls, land banking by builders, inefficiency compared to the European construction industry and a culture of risk aversion in the building industry. Whatever the cause(s) the resulting price volatility affects the economy so extensively that Britain’s membership of the European Monetary Union (EMU) now substantially depends on our ability to exercise control over these historically unstable housing markets. As Barker states:

As well as the significance of housing supply for national economic wellbeing and individual welfare, housing supply is highly relevant to the issue of membership of Economic Monetary Union (EMU). In 2003, HM Treasury published its assessment of the five economic tests and 18 supporting studies. The assessment of the five tests concluded that: ‘… the incompatibility of housing structures means that the housing market is a high risk factor to the achievement of settled and sustainable convergence’.
The study shows that low housing supply responsiveness could have contributed to the greater trend increase in real house prices in the UK. The study also noted that UK households had greater ease of access to additional equity resulting from house price rises. Together, these characteristics meant that increases in house prices tended to have a stronger influence on consumer spending than in many other countries.

(Barker 2003: 1)

The organisation of the housing market in the UK itself tends to encourage lack of responsiveness to changing demand and general inefficiency in the housebuilding industry. Barker presents evidence that builders, under the current system, can maximise profit by holding land back from development (thus benefiting from a restrictive planning system; relaxation of this system is advocated as a stimulus to supply), that volatility itself restricts supply (as a 1 per cent shift in price can make an 8 per cent difference to profit so builders are cautious and favour shortage), and that inefficiency arises because profits can be achieved without efficiency gains. Barker even claims that the quality of our new housing suffers as a result of the failures in the operation of the market (Barker 2003: 94). This occurs when old stock of low quality is not cleared from the market but instead serves to hold down prices in the second-hand market thus impacting on the quality of new provision for first time buyers for which old stock is a direct price competitor. Builders presumably hold down the price by reducing quality rather than increasing efficiency. The evidence presented in the Barker Review is that many consumers are dissatisfied with the quality of the product and would not buy again from that supplier.

Seeking a simple analysis of the volatility of the housing market is doomed to failure, partly because of the range of social policies and personal choices/ aspirations that impact upon it. Nevin et al. (1999) have identified drivers of housing markets, operating at a minimum of four distinct levels:

• National level where increased mortgage availability has led to increased accessibility of ownership in the new and second-hand housing markets. Housing benefit changes have created new ‘markets’ for rented housing across the private and social sectors. Aspirations to ownership have increased, with accessibility resulting in changing perceptions of social rented housing and its residualisation, thus reducing demand for housing funded directly through public spending. Economic and labour market restructuring has created inequalities of income and job security, which impact on households’ ability to achieve housing aspirations. This same labour market restructuring affects patterns of migration by moving attractive jobs to some regions (Massey 1995) while reducing the ability of households to move (Barker 2004). National policy has rejected demolition programmes as either a supply or quality control mechanism, with clearance programmes falling from a peak of 70,000 per year in the 1970s to less than 2,000 per year by the turn of the century (www.odpm.gov.uk). Improvement grant contributions to the private sector have declined from their mid-1980s’ peaks back to 1970s’ levels.
• Regional level where decentralisation of population and employment has resulted from some of the above national drivers. Significantly the populations of the major cities have been declining for some time with patterns of suburbanisation and increased travel to work distances/patterns.
• Local authority level. This is an administrative rather than ‘natural’ area but it has significance where historic patterns of housing provision by type (terraced housing, flats) or tenure (the predominance of social renting) show significant divergence from national norms or averages. For example, Manchester has the lowest proportion of owner-occupied stock outside London. These patterns of provision have impacted on housing demand within the boroughs as a whole but have amplified effects at …
• Local level where neighbourhoods can be dominated by unpopular tenures or house types and where significant proportions of housing can be old and in poor condition. These neighbourhoods can fall into rapid decline where old/ failing infrastructure and eroded employment bases can combine with poor services and facilities to create very poor areas with little inward migration or investment. (Nevin et al. 1999: 4–8)

Traditionally, housing policy has been discussed in terms of meeting government identified, or locally assessed, ‘housing needs’. Policy discussion of the concept of housing market(s) has developed alongside the growing dominance of owner occupation as the main housing tenure in the UK. Obviously, there are different sub-markets, reflecting the different tenures, but the main market is now for owneroccupied housing, with drivers generally accepted to be:

• health of the economy as reflected in personal income growth affecting demand;
• the level of supply which should increase with demand in a well functioning market but with overall supply actually rising between 1 per cent and 2 per cent per year;
• demographic factors such as population levels, household formation, and migration within and across UK borders.

Many economic analysts have studied the cycles of boom and slump in the UK housing market and have given us some understanding of the national patterns and processes. Hamnett, for example, first establishes that there is a longer-term relationship between house prices and household incomes, and then attempts to understand the shorter-term house price cycles in the light of this longer-term relationship. He argues that house prices rise in line with earnings rather than with retail prices because ‘housing has a high and positive income elasticity of demand. In other words, for a given increase in income, people are likely to devote a high proportion to housing’ (Hamnett 1999: 14).

Broadly speaking, house prices rise over time because housing is a key element of household consumption and, as incomes rise, people are both willing and able to put a substantial proportion of their income into buying a house or moving up-market to a larger, more desirable and usually more expensive home. As already noted the number of home owners has risen from four million immediately after the Second World War to 16 million today. Supply [of new housing] is largely fixed in the short term as the building industry only builds 150,000 to 200,000 units a year (about one per cent of the owner occupied stock) and planning restrictions mean that the supply of land is limited, particularly in south-east England, which tends to push up house prices. Although over six million houses have been transferred to owner occupation from private and social renting, since the war demand for home ownership has exceeded supply.

(Hamnett 1999: 17)

With regard to the causes of house price cycles, Hamnett argues that ‘booms are triggered by changes in the number of people in the key first-time buyer age groups, by increases in real income and mortgage availability’ (Hamnett 1999: 12). He then maps the major house price booms, beginning with that of 1971–2, with evidence pointing to two causal factors:

The first was a demographic shock…The 25–29 age group grew sharply in size from 1971 to 1973 … With a static supply of housing, prices began to rise rapidly, assisted by Barber’s early 1970s Conservative credit boom which made borrowing far easier than hitherto.

(Hamnett 1999: 24)

This boom began in London and south-east England and spread, with a slight lag (about twelve months), to the regions. The house price/earnings ratio rose from 3.25 in 1970 to 4.95 in 1973. After the ensuing slump, house building fell back, as did house sales (transactions), with the house price/earnings ratio declining to 3.34 by 1977.

Each cycle has been characterised by essentially the same pattern. At the start of each upturn, real incomes tend to rise faster than house prices and the house price/income ratio is at or below its long term historic norm of 3.5. As the volume of sales rises, any overhang of unsold property on the market begins to dry up and (as housing supply is largely fixed) prices begin to rise quite sharply. The house price/income ratio rises and, as the cycle nears its peak, house prices rise ahead of incomes to the point where the ratio becomes unsustainably high and prices stabilise and fall in real terms. Subsequently, as incomes continue to rise, the house price/earnings ratio falls back until the conditions are in place for a new boom.

(Hamnett 1999: 24)

The later booms followed the same pattern, with the house price/earnings ratio rising to 3.82 in 1978 before falling back, and to 4.43 in 1989 before falling back. It is worth noting at this point that Barker has identified a fall in the supply of new owner-occupied housing over recent years (along with a long-term fall in public supply since the 1980s) rather than either the traditional stability Hamnett refers to or the increase (in response to demand) that market economics would predict. Other housing economists have commented on the failure of existing economic modelling techniques. For example, Maclennan says:

There is no more or less complex econometric model available which accurately tracks and explains the 10 year history of the housing market. Changing financial sector behaviour, shifts in government policies, the importance of expectations and confidence are not only difficult to model but, further, ‘causality’ becomes elusive when they are happening about the same time.

(Maclennan 1994: 13)

Housing policy, as an element of social policy, is constrained by the lack of understanding of its causal elements at national and local level. This may be particularly important if ‘markets’ are relied upon to replace an interventionist public housing supply policy as has happened over time in the UK, and some of the discussion in this book is an analysis of this trend to marketisation.

So, a reduced supply of housing does not necessarily result in a reduced demand. However, if demand remains constant while supply falls, the inevitable consequence is rising prices. This puts house prices further and further out of the reach of lower-income households. Continuing government intervention is therefore required in order to ensure that such households can access affordable housing (to buy or rent), for example, through income support (suc...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contributors
• 1 Introduction
• 2 What has the state ever done for us?
• 3 Housing policy and social justice
• 4 Places, ‘folk devils’ and social policy
• 5 Housing, class and social policy
• 6 Ethnicity, ‘race’ and policy issues
• 7 Housing, gender and social policy
• 8 Disability and inclusive housing design
• 9 Squatting since 1945
• 10 Housing and urban regeneration policy
• 11 Housing and social policy futures