Markets cannot end house building crisis
A LONDON newspaper recently announced in bold headlines: "Brown is brown bread" (for the benefit of non-Londoners, that means 'dead!'). Well, if Brown is brown bread his house building targets are toast!
There are rising numbers of house repossessions for homeowners struggling to keep up mortgage payments. Council housing tenants already suffer overcrowding, and councils have warned of a potential explosion of demand because of the economic squeeze and a receding hope of a home of their own for young people.
New Labour's home-building targets are to build 240,000 new homes a year by 2016 with a total of three million new homes by 2020. There are plenty of reasons for thinking these targets are far too low and that they will not even be met. In fact, following the credit crunch, work started on 25% fewer houses in January-March than in the corresponding period the year before.
Also, Brown's targets are based on the false hope that private developers would keep riding the crest of the wave of the credit boom, and that social landlords, using private finance, would do the same.
Now even ideological supporters of the "New Labour project" like journalist Polly Toynbee have turned on him: "Fewer houses have been built under Labour than at any time since the war, and he (Brown) was going to put it right. But he can't keep repeating that he's building three million homes when he never was: he just hoped the developers would." (The Guardian 16 May).
She dismisses Brown's policy of taking £200 million already allocated for social housing to buy unsold new flats. That will only buy 1,000 homes. And, Polly Toynbee asks, should he re-inflate the housing market bubble anyway?
The crisis in housing is typical of the problems facing New Labour. It isn't due to Brown's personal characteristics; the 'let the market run everything policy' created inequality and insecurity for working-class people, but this was softened in the boom years. Now, with end of the financial boom, it's traditional Labour supporters who are paying much of the price.
Building magazine reported that 1,000 jobs in house-building had gone in one week. This underplays the situation as builders tend to get rid of sub-contractors before they sack directly employed workers.
The Council of Mortgage lenders bluntly told the chancellor in May that the £50 billion facility from the Bank of England would not reverse the rising costs of mortgages. No wonder that the boss of Barratts (the house builders) has said publicly that the government's house-building targets cannot be achieved.
NEW LABOUR sees housing associations as an alternative to councils as a supplier of social housing. In fact New Labour ministers see HAs as an ally in their battle to introduce far more 'commercialisation' and 'marketisation' into the social housing sector.
But The Socialist has warned that Associations are not immune from the harsh economic climate ("Housing Association collapses" The Socialist 4 March). The government expects them to build the social rented housing needed to meet the target. But, as well as using government grants, the associations get funding by borrowing money from the banks, selling some of the houses they build outright, and selling others on a shared ownership basis.
The associations are being squeezed as all these sources of money become scarcer or more expensive. Just as the banks are making it harder and more expensive for homebuyers to get mortgages, they are getting cold feet at the thought of lending to associations. The Council of Mortgage Lenders has said that there is "no certainty" about the banks' capacity to make new loans in the short to medium term.
Associations will need to borrow £15 billion to meet the government's development targets of 155,000 new affordable homes between 2008 and 2011. The associations' "business plans" also assume they will receive income from outright sales of houses and "tranche sales" as shared owners buy more of their homes. But these areas of their businesses will be hit at least as hard as the rest of the property market, reducing another source of income.
Not only will housing associations have trouble building new homes but their ability to carry out repairs and service existing tenants is threatened. A government agency - the Housing Corporation - admits it has a list of ten associations facing "heightened risk" because they either have less than 20 months' credit in place, or are "heavily exposed" to the housing market. However, they won't tell tenants which associations they think are at risk!
Spending on housing is a major component of consumer expenditure. As the threat of recession grows, pressures will grow for an alternative policy to New Labour's nostrum of 'leave it to private enterprise.'
What is needed is much more than a new face in Number Ten. A new party with a programme based on taking over the banks and bringing the speculative builders into public ownership, would gain a big response from workers who feel betrayed by New Labour.
The government has effectively nationalised the banks' risk already - why not take them over fully and mobilise their resources to really tackle the housing crisis? No homeowner should face repossession from the banks when these financial giants have been expensively bailed out from the consequences of their own greed and stupidity!
NEW LABOUR has let council house building practically grind to a halt. A grand total of 277 council houses were built nationally in 2006. Council house waiting lists nationally add up to just over 1.6 million. But Shelter workers calculated last year that this figure could reach more than two million by 2010 - almost one million more than when Labour took power in 1997.
Coventry: Facing a "housing time bomb"
A BID by Coventry Socialist Party councillors Dave Nellist and Rob Windsor to commit Coventry council to build more affordable homes was defeated at a council meeting on 27 May.
Dave and Rob tried to amend the Local Area Agreement, a report going to the government on Coventry council's plans and priorities for the next three years.
The Socialist Party amendment, calling for a review of policies limiting 'affordable' homes to only 25% of any new housing developments, fell by 26 votes to 24.
Dave Nellist told the local press afterwards: "Coventry is facing a housing time bomb as more and more people, especially young families on average earnings, can't afford to buy or rent.
"When I first became a councillor ten years ago the ratio for the bottom 25% of house prices to the lowest 25% of earnings was 3.7 to 1. Today it 7.3 to 1. It's doubled.
"When the Coventry Homefinder website started last year there were 11,000 people registered as wanting a housing association property to rent; last Friday there were 22,489. So that's doubled too!
"But the number of homes and flats on offer on Coventry Homefinder today is 45. And the council's three-year plan is only to encourage the building of 304 new houses and flats a year. That's not enough to give people, especially young people, a decent start in life.
"There needs to be an urgent review of housing in Coventry and a radical shake-up in policy. The percentage of any new homes built which are affordable to people on average earnings needs to be doubled to 50%.
"What's more, the government needs to institute a national house-building programme giving local councils again the funds and the powers to build the homes we need."
Lambeth workers oppose sell-off
LAMBETH COUNCIL recently transferred management of its council housing to an arms length management organisation, (ALMO), a form of indirect privatisation, despite residents voting against it. It also proposes to give private companies ten-year contracts worth over £1.2 billion to run housing services.
Lambeth Unison commented: "They call this 'partnering' - really it is a licence for contractors to line their pockets and decimate the services tenants and leaseholders receive. Hundreds of Lambeth staff could be transferred to private sector firms and services provided away from local, democratic control.
"Lambeth Unison members are holding a consultative ballot on industrial action in a bid to stop this privatisation going through."
The branch has also organised a public meeting with speakers including PCS general secretary Mark Serwotka and local trade unionists on 11 June from 6.30pm at Lambeth Town Hall, Brixton.
HOUSE PRICES are falling further and faster than at any time since the early 1990s. New mortgage approvals for UK home buyers were at a lower level in March this year than at any time since Bank of England records on the subject started in 1993.
The Socialist Party says:
- No to privatisation! For publicly owned, high-quality council housing with low rents.
- For a tenants' vote on any changes, and an honest debate. Tenants' organisations and campaigns should have the same funding to put the tenants' case as the councils have to put theirs.
- Do the repairs, renovate our homes - clear the backlog of council house repairs, with no strings attached.
- For a massive building programme of publicly-owned housing to meet public need, on an environmentally sustainable basis.
- For democratic public ownership of the giant construction companies.
- Housing allocations to be decided by democratic bodies made up of local authority representatives and elected representatives of local community organisations, including tenants' associations and trade unions.
- Local authorities to have the power to force private landlords to charge a fair rent, to give secure tenure and to carry out renovation and repairs.
- For democratic public ownership of the banks and finance companies. Cancel all local authority debts and give mortgage holders low-interest loans. No to house repossessions.
Save Kender Housing office
WHEN LEWISHAM council organised a 'ward assembly' in New Cross ward recently, local people came with their concerns and problems inevitable in any inner-city area savaged by decades of service cuts.
The meeting organisers put us all on tables, "of about five people, please". They gave us big sheets of paper to write down problems that bothered us. They gave us small purple post-it notes to say what we liked about the area and yellow ones to say what we didn't like.
No questions were allowed, either to the Labour councillor who chaired this 'consultation' meeting or to council officials. There was no plenary session, where everyone could express views, just 'workshops' and report backs.
Most people found this management consultancy exercise pathetic and patronising - but the council had particularly good reason to limit discussion. Lewisham Homes, the arms-length body that runs council housing in Lewisham, wants to close Kender Housing Office, just a short walk from the assembly meeting.
They ignored the views of 86% of local residents who responded to the official 'consultation' letters and opposed the plan! Instead of a local housing office, the council say services will be provided from the Pepys office in Deptford which is miles away from Kender.
Many local people have to rely on public transport and there is no direct bus route from Kender to the new office. But the council report still recommends that the closure goes ahead.
Lewisham Homes claims it's too expensive to provide services at the Kender office. But the council report admits the cost of "maintaining and operating the New Cross office facilities" is just £75,600. That's about the same as the Mayor of Lewisham's annual salary! Further 'savings' will be made by not relocating all the staff to Pepys - ie redundancies. So tenants will travel further for understaffed services.
The final decision is with Lewisham's mayor and councillors. Lewisham Hands Off Our Homes campaign, together with Lewisham's Socialist Party councillors Ian Page and Chris Flood (whose constituents in Telegraph Hill ward are also affected by Kender's closure), have been collecting signatures on a petition calling on the mayor and Lewisham Homes to find the resources to save the Kender office.
The response has been angry. Local people are determined to keep this local facility open, despite Lewisham council's management consultancy tricks.
The fight for decent homes
LIKE OTHER councils, Lewisham has to bring its council housing up to national 'Decent Homes Standards' by 2012. A motion from Ian Page and Chris Flood in March's council meeting outlined how the council could use its legal powers to borrow money to pay for Decent Homes improvements without additional rent increases.
The motion proposed that Lewisham borrow £13 million to begin Decent Homes works in New Cross Gate area this year. The £13 million figure was based on the council's own calculations, sent out in a letter to every tenant during last November's transfer ballot when the council tried to sell off properties to Hyde Housing Association.
Unfortunately the ruling New Labour councillors argued it would be 'irresponsible' for Lewisham council to borrow the money needed to improve homes. This was even though £13 million would have added just 3% to the council's overall borrowing plans - and taken Lewisham's 'prudential borrowing', by comparison, to much the same level as Labour-controlled Tower Hamlets council in East London.
As Chris Flood pointed out, £13 million was less than half the £29.426 million the ruling councillors borrowed in 2006-7 to pay off Hyde's debts from a Lewisham-Hyde 'partnership project' to refurbish homes on a local estate!
Councils borrow money all the time. As public bodies, they can borrow at cheaper rates and more securely than commercial organisations like housing associations. There was no excuse to vote the plan down.
Chris and Ian's funding plan would have meant that Decent Homes works could have begun now in the New Cross Gate area. That it was defeated is disappointing. But the majority No vote last autumn against the plan to hand over homes to Hyde has had an impact.
Lewisham's ruling councillors have now agreed to approach the government "for additional funding for Lewisham Homes to deliver Decent Homes" for 1,181 properties in the former transfer area, although unfortunately not all of them.
Getting this funding still depends on Lewisham Homes getting a 'two-star performance rating' in 2009 - which won't be helped by cutting back local housing office services. But Lewisham's U-turn to approach the government for more funds, proves what we have been saying. We don't need to transfer to a housing association, pay higher housing association rents (nearly one-fifth more on average), lose our secure tenancies, and lose the right to vote for our landlord, to get Decent Homes improvements done!
In The Socialist 4 June 2008:
Environment and socialism
Socialist Party workplace news
Socialist Party campaigns
Socialist Party review
Socialist Party youth and students
Environment: Nuclear power
International socialist news and analysis