Where the Other Half Lives

Lower Income Housing in a Neoliberal World

Sarah Glynn

• Publisher: Pluto Press
• Year: 2009
• Edition: 1
• eBook ISBN:
  9781783715497
• Topic: Politics & International Relations
• Subtopic: Social Policy
• Index: Politics & International Relations

Housing has become a hot topic. The media is filled with stories of individual housing hardship and of major property-related financial crises: of crippling personal debts, rundown social housing, homelessness, mass demolition, spiralling prices, unaffordability and global recession. This book links all of these through a radical analysis that puts housing at the heart of critical economic and political debate. The authors show that these problems arise from the fact that houses are no longer seen primarily as homes for living in, but rather as a source of profit. Case studies from the UK, the US and other western countries are set into a overview of how housing has changed over the last few decades. The book also examines campaigns for better housing and explores possibilities for a different approach to this most fundamental of human needs.

Part I

Background: When ‘There is No Such Thing as Society’^*

*	Margaret Thatcher, Interview with Woman’s Own magazine, 23 September 1987 <http://www.margaretthatcher.org/speeches/displaydocument.asp?docid=106689> [accessed 26 November 2008].

1

IF PUBLIC HOUSING DIDN’T EXIST, WE’D HAVE TO INVENT IT

Sarah Glynn

A housing crisis is not a natural phenomenon. Housing systems are man-made, and can be remade. The argument in this book is that current developments in housing must be understood as part of a long-planned and deliberate imposition of neoliberal economic systems that are spreading – albeit unevenly and with local variations – across the globe. Neoliberalism, as the name implies, is based on a return to the ideas of free-market liberalism that predominated before the development of the welfare state and the Keynesian mixed economy. The history of this earlier period provides a stark warning for those who would rely on neoliberal economics to provide adequate housing. In fact, the same social-democratic welfare systems that are currently under attack by the forces of marketisation have their origins in attempts to rescue the casualties of that previous period of free-market capitalism.

Before starting to look at what is happening as those systems are dismantled, it is important to understand why and how they developed in the first place. Significantly, even states, such as the US, that have always placed strong emphasis on free-market values, found it necessary for government to intervene to some extent in the housing market so as to provide a safety net of a minimal amount of subsidised rented housing. The nature and form of housing market intervention differs widely from country to country. All that can be done here in this brief introduction is give some idea of the kind of systems that emerged – and that are now facing different forms of marketisation and privatisation. But first this chapter will look at why they emerged, and it will do this by focusing on the historical example with which the editor is most familiar.

British housing policy cannot claim to be any sort of norm or model, though the forces that created it are similar to those found elsewhere. But Britain was in the vanguard of industrial urbanisation, and Thatcherite and post-Thatcherite Britain has become a vanguard of neoliberalism, so it is not inappropriate to concentrate some attention on the developments in British housing that happened in between. Crucial to those developments were debates about state intervention in the market and a reluctance to interfere in private property. Similar debates were occurring across the industrialised nations and provide ominous prefigurations of arguments today.

Nineteenth-century Capitalist Paternalism

By the mid nineteenth century, the overcrowding and squalor of Britain’s rapidly expanding industrial towns and cities was being recorded in numerous concerned reports and sensational newspaper articles. But under laissez-faire capitalism, it was not believed to be right or necessary by the ruling classes to intervene in the housing market. Until after the First World War, nine out of ten households rented their home from private landlords. It was not thought to be the role of government to unbalance the relationship between landlord and tenant, while charity was believed to encourage dependency and fecklessness.

Poverty was generally seen as part of the natural order of society, but there were limits to what was regarded as acceptable, both morally and practically. Victorian society made an important distinction between the deserving and undeserving poor, with ideas and practices that appear to be seeing a revival in policies such as the US system of Workfare and its derivatives.¹ It was believed that those who were better off had a duty to help those who were unable to help themselves – such as the sick and aged – and to keep them from total destitution. And those who, through no fault of their own, had fallen on hard times should be given help to help themselves and be shown the correct path by their well-heeled moral superiors. But many, especially among the very poorest, were believed to be responsible for their own fates and little better than criminals. An important step in the argument for better housing was to stop blaming slum housing on those who lived in it.

At a practical level, though, slum housing affected everyone. There was a fear that close proximity to the lowest layers would pull down the ‘deserving poor’, and that slums provided a haven and hiding place for criminals. Importantly, diseases that thrived in the slums did not respect the slum’s borders. Improved housing would help maintain a healthier, more efficient work-force. It would also help to keep calm potential sources of unrest. The destruction of working-class housing in Paris was regarded as contributing to the 1848 revolutions,² and that same year Lord Shaftesbury claimed, after a meeting of the housing association that he co-founded, ‘this is the way to stifle Chartism’.³

While the mass of housing provision was left to the market, a few pioneering groups attempted to temper market forces through the agency of housing associations, or the establishment of model villages. These were, however, still commercial ventures that were expected to bring in a certain degree of profit. Model villages, which included homes for sale as well as for rent, were the product of the benign despotism of certain leading industrialists. The villages were an attempt to realise a paternalistic vision of an ideal, and highly controlled, social order: a vision of a community of healthy, happy workers based around their employment. Housing associations were generally funded by wealthy shareholders and aimed to demonstrate by example that it was possible to build good-quality homes for working-class tenants and still bring in a comfortable 4 or 5 per cent return on the initial investment.⁴

Both model villages and housing associations were aimed at better-off workers, and this approach was defended by the argument that improvements would filter down as the workers vacated their old homes. The idea of benefits filtering down is one that has often been used by proponents of the free market (‘trickle-down economics’), but with little evidence of success. Despite a growing population, better homes were left unlet where people simply could not afford the rent, and it has been estimated that in 1914 15 per cent of households were sharing with others and unable to afford their own home, while 4 per cent of homes were empty.⁵

Octavia Hill used piecemeal improvements to provide better homes for a poorer layer and avoid the wholesale displacements of slum clearance, but physical standards were lower and the level of paternalistic control considerably higher. She herself described her method as a ‘tremendous despotism’ and referred to ruling over her tenants.⁶ Together with a team of women workers trained in her methods, she worked for some of the more philanthropic owners of existing slum property to manage and improve it and yet still bring in a 5 per cent profit. This was done through personal involvement with the tenants, to ‘rouse habits of industry and effort’.⁷ Those who responded were rewarded with improvements to their homes, while others whose behaviour fell short of the required standards, or who did not pay the rent, were evicted. Hill was highly and vocally critical of the idea of state subsidy and her elevation of the doctrine of self-help has found echoes in current criticisms of the welfare state. It is also possible to draw parallels between Victorian ideas about the civilising influence of middle-class example, which influenced Hill and also the contemporary settlement movement, and arguments now being put forward in support of mixed-income communities (of which more in Chapter 3). Although the fame of Hill’s enterprises was international, their actual influence was very limited and took no account of the scale of the housing problem. As A.S. Wohl concluded:

… her contribution was, after all, a negative one. Traditional philanthropic capitalism and individualistic efforts had to be proved inadequate and wanting before late Victorians could comfortably accept the necessity for state or municipal socialism, and the need for the council flat.⁸

The Health of the Nation

Nineteenth-century housing legislation was largely prompted by concerns over public health, and in 1875, local authorities were given the power to demolish whole areas deemed unfit for human habitation. Reconstruction was usually carried out by the housing associations, but was far from adequate; and with compensation to owners based on rent receipts, the worst, rack-renting landlords were rewarded at huge public expense. Moreover, for every slum cleared, overcrowding increased in the surrounding areas. The Public Health Act of the same year gave rise to new local by-laws on the design and layout of new buildings – but extra building costs were reflected in higher rents. Ten years later, the Royal Commission on the Housing of the Working Classes, set up in response to appalling conditions in London, reached the important conclusion that the problem was the acute shortage of affordable housing: slum dwellers could not generally be blamed for the conditions in which they lived, and the state had a duty to intervene to overcome what was seen as a temporary housing shortage.

Besides the immediately practical drivers for reform already noted, developments at this time need to be understood in the context of a growing labour movement. Workers were gaining a new political weight, which was also reflected in an extension of the election franchise, and politicians were being forced to listen to their concerns. The Paris Commune of 1871 (like the later Bolshevik revolution) was seen as a warning of the alternative.⁹

Although there are earlier examples of local authority housing, the 1890 Housing Act is seen as a milestone in British housing legislation, as it made it easier for the authorities to build and manage housing themselves, resulting in around 28,000 ‘council houses’ by 1914. These were still expected to make a profit – if only a small one – after servicing the heavy debt on the borrowed funds used for their construction. So, once again they could not house the poorest people (including most of those displaced by slum clearance) and relied on filtering down. There was, however, scope for local authorities to subsidise their homes using their own income, which was raised through the rates – a local property tax. This was found increasingly necessary, accounting for a quarter of the running costs of British local authority houses by 1916–17.¹⁰

Interfering with the Sanctity of the Market

While some degree of interference in the market had become accepted as unavoidable, the reluctance with which this was done was made clear by Lord Salisbury, under whose prime ministership the 1890 Act was passed. He thought that the local authorities should be given the chance to try and build cheaper dwellings than the housing associations, but that for them to get involved in the ‘general provision of cottages’ would only be justified where ‘some exceptional obstacle has arrested the action of private enterprise’. He was also very wary of ‘rents which did not represent the real cost’ of building, which he felt would drive everyone else out of the market.¹¹

The history of the gradual acceptance of the need for government intervention, and eventually, after the First World War, of government subsidy, is worth revisiting because so many of the old arguments against interfering in the market have never really gone away and are being revived today. It is a history that is highly politicised because it has impacts for the future of state-subsidised housing. Debate centres on the significance of the special circumstances of the war, and there are also arguments, which will be taken up in Chapter 13, about the role played by campaigns organised by tenants and progressive politicians and by the fear among the political elites of more radical political demands. The crucial question is whether poor housing was inevitable under a capitalist economy, so that state subsidy was a necessity if people were ever to have decent homes.

By 1914, the acute shortage of affordable housing for those on low incomes, and the poor quality of much of the housing that did exist, had long been acknowledged. Private investment was not producing the necessary homes, and councils who built under the 1890 Act were increasingly having to subsidise them themselves out of the rates.

Campaigns for state intervention were supported by socialist groups, but many Conservatives also welcomed proposals that would take a burden off the rates, and there was also support by some Liberals, although they generally preferred to concentrate on land reform. Arguments for government to take a role in improving housing did not have to depend on appeals to morality. There were good economic and political reasons for promoting a healthy work-force and a fit source of military recruits, and everyone benefited from a healthier city.

But the political elites were also responding to pressure from below, and this will be examined in greater detail in Chapter 13. The power of tenant protests lay not just in their immediate impact, but also in the fact that they were supported by an increasingly powerful ...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• List of Figures
• Preface and Acknowledgements
• Introduction
• Part I Background: When ‘There is no such thing as Society’
• Part II Case Studies: Real Lives and Real Estate
• Part III The Way Forward: Strategy and Tactics
• About the Authors
• Index