We Need To Talk About: Social Housing

“Before you can start building [houses] on any scale, every single industry in society has got to be organised and stimulated into production.” – Aneurin Bevan, 1946.

Austerity - The_Heilan_Coo.jpg

Credit: The Heilan Coo

The inferno at Grenfell Tower has claimed many lives (as I write, the official estimate for people dead or missing and presumed dead is 58.), has likely wiped out entire families and will have irrevocably changed an entire community forever.

It’s still too early to be fully deconstructing the causes and blames of this disaster but a few things have become widely reported and will likely play into the debate in the months and years to come.

However the blaze started (early reports suggest a power surge igniting a fridge on the 4th floor) it appears that the flames spread rapidly up the insulating cladding on the outside of the building, engulfing the entire structure in minutes and trapping many inside.

It has also emerged that the cladding involved was the cheaper of two options provided by the supplier and of a construction which would be illegal in several countries including the US and Germany. The fire resistant version of the cladding appears to have cost fractionally more – just £2 per square metre, or £5,000 for the entire block of flats. Further, it appears that at least part of the motivation for the choice of cladding was to improve the appearance of the flats for the benefit of nearby luxury high rises.

The Grenfell Action Group has been warning of a catalogue or failures of construction, maintenance and accountability for years. And the complete failure of leadership in the wake of the disaster, especially from PM May, has been appalling. This interview by MP David Lammy, who lost a friend in the blaze, does much to exemplify the sense of frustration and anger felt by a community which justifiably feels betrayed and it is no wonder at all that protests have occurred (so far peacefully).

Of course, the building contractors will all tell us that they are not to blame as they met all applicable regulations. And they’d almost certainly be correct. This is the nature of the relationship between capitalism and government regulations. It will always be the case that companies will meet regulations by the barest minimum that cost allows and will always lobby for those regulations to be decreased if the cost of lobbying is lower than the savings due to the regulation cut (for, in this case, politics can be reduced to just another form of investment).

I’ve been particularly appalled by one article in Bloomberg which takes on the extreme libertarian approach to this stating that all fire regulations should be scrapped because in the perfect world of the libertarian, any regulation which increases cost is unacceptable. Instead, the people who lived in the tower should have rationally weighed the risks of living in the tower with that cost and, if they wanted to, could have moved to some (presumably more expensive) tower nearby which DID include the safety features.

I shouldn’t need to fully dismantle this worldview. The residents of Grenfell did not have the choice of a hypothetical “safe” building next door into which they could move. Even if they did, humans simply are not the machine-like “rational actors” demanded of libertarianism nor do they always have the perfect information required to make such a choice (Could you identify a flammable cladding from a non-flammable one? If the libertarian landlord tells you, could you completely trust them? Could you tell if they were lying? Without any regulations, how would you hold them accountable if they were?)

I have written before, in less tragic terms, on the need for regulations to go well above and beyond the bare minimum. It will be essential if we wish to meet our targets to reduce energy consumption (which will be good for the environment and save a lot of people a lot of money in heating costs). I now believe it’s time to go much further than this. The private sector will always be an anchor against attempts to increase decent housing stock (especially for the poor) and to get the UK’s housing price inflation under control. It’s time for the government to start intervening and build social housing again.

Unconstrained by the needs to seek profit, the government can apply its own regulations, well above the “legal minimum” if need be, and can do some proper planning to ensure that it’s not just housing that’s being built (this has long been the failure of many projects in the past such as the high rises and the out-of-town blocks such as Easterhouse in Glasgow). We need to think about the amenities and the jobs and all the other functions of a town which enables communities to thrive. Common Weal has recently published some proposals on how local areas can control their own land and ensure that their specific needs are addressed on their terms. We can’t keep treating housing as a commodity for the rich, constantly pushing folk to “climb the property ladder”, treating those who can’t to the slums and the land-baggers and simply abandoning them. We can’t keep segregating people and reinforcing the class and wealth divides  and then blaming those on the bottom end for “just not striving hard enough“.

This isn’t to say that high-rises don’t have their place – endless suburban sprawls constantly bite into farmland and wild spaces and often fail to engender any sense of community at all, not to mention the health and climate effects caused by having to drive to reach anything other than your own house and the extra costs of delivering services to low density populations. Smart Cities, well designed with these factors in mind, may be a major factor towards a sustainable future (and I say this as someone who lives in a rural area).

And these cities need a lot of work to build. From brickies and plumbers, through planners and designers, past educators and mentors, to the computer experts who’ll get the smart systems going and keep them running, there is vast potential to employ a lot of people in this enterprise and to inject a huge amount economic activity into the country (in a far more productive manner than the zero-hours “gig” jobs that we’re being fed currently). If Austerity is to be ended, this could be one way to do it. And we know it works because the UK has been through exactly this before. An economy shattered by war from without (rather than Austerity from within) was reconstructed in the 1940’s and 1950’s and is still looked back on fondly as one of the UK’s golden ages. Here’s Nye Bevan talking in 1946 about his plans and how he got them started.

 

“That’s all great”, you say. “But how much will it cost and how do you pay for it?”

Government debt.

Did that put a shiver up your spine? Then you’ve been indoctrinated by the most dangerous ideas of the 21st century. The idea that government debt is a terrible thing.

We’re living in an age where the UK government can borrow on a 30 year bond for 1.7%. Inflation is currently 2.9%. There has never been a better time to invest as right now the debt is (in real terms) cheaper than free!

Applied to the housing market, this could be a major game changer. Not withstanding the ability to directly target areas which badly need investment (preferably by allowing these areas to borrow themselves through a National Investment Bank), the advantages in cost to the occupier are significant.

Right now, a £90,000, 25 year mortgage on a 4% compound rate would cost you about £475 per month and you’d pay back £142,500 over the term. A mortgage based on a government bond at our 1.7% (simple interest, rather than compound) would pay back over the 25 years for a little over £425 per month and, as a particular advantage to the renter, that monthly rate could be fixed for the entire mortgage period (it needn’t even be uprated for inflation as the bond isn’t). Try asking your bank for a mortgage rate fixed beyond five years. Try asking them to predict what the interest rate will be on year six.

BoE Interest Rate Predictions

(The Bank of England can’t do it, and they’re the ones who SET the rates!)

One the debt is paid off, it could be up to the government to decide whether the house remains as a social house and the occupier continues to pay rent (thus subsidising other housing), continues to live in their home rent free for the remainder of their occupation (thus preserving communities long term), or allows them to purchase the house (which would require the government to replace stock in a way that wasn’t done under Right-To-Buy)

And, of course, you can adjust the numbers as required to ensure that everyone can afford a house, built to far higher standards than the private sector will supply, without the need to make obscene levels of profits while doing so and in a location and surrounded by the services required to make that house a home embedded in a community built by and for all of us.

We didn’t need the Grenfell tragedy to have this conversation. People have been speaking about it for years now. The systemic problems in the UK’s housing industry have been apparent and have been either ignored or actively encouraged for too long. Maybe it’s time we started listening and reassessing.

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3 thoughts on “We Need To Talk About: Social Housing

  1. “We’re living in an age where the UK government can borrow on a 30 year bond for 1.7%.”

    That WOULD be very stupid and unnecessary when the UK government can borrow as much as it need to from the Bank of England interest-free and with no need to repay any of the money borrowed, simply adding the sum borrowed to the national debt.

    So long as government borrowing is not excessive to the extent of causing hyper-inflation (see Venezuela) then there’s no problem with a sovereign government borrowing from its own central bank for macro-economic purposes of stimulating growth when necessary or to meet particular emergency needs.

    I am still waiting for that particular penny to drop for the Scottish chattering classes so that you lot will finally begin to understand what I have been banging on about for years – my complaint against the SNP Scottish government’s disgraceful failure in agreeing a very poor fiscal framework with the UK which denies the Scottish government appropriate borrowing powers from the Bank of England, interest-free, the sums to be added to the Scottish national debt, as would befit a country’s government.

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  2. A couple of issues with this.

    “Further, it appears that at least part of the motivation for the choice of cladding was to improve the appearance of the flats for the benefit of nearby luxury high rises.”

    The primary motivation for installing cladding on flats is the improvement of living conditions inside the property. It does, in fact, make a huge difference to quality of life in these towers, as well as reducing heating costs for, what are often poor, tenants. That the result is often more aesthetically pleasing is a by product, and not an unwelcome one for residents – I’m not sure why you’ve decided only the wealthy care about the aesthetics of their environment?

    “Of course, the building contractors will all tell us that they are not to blame as they met all applicable regulations. And they’d almost certainly be correct. This is the nature of the relationship between capitalism and government regulations.”

    They are most certainly not correct. BR135 states that flammable cladding should not be used on residential buildings over 18 metres tall. The regulations were ignored.

    “It will always be the case that companies will meet regulations by the barest minimum that cost allows and will always lobby for those regulations to be decreased if the cost of lobbying is lower than the savings due to the regulation cut (for, in this case, politics can be reduced to just another form of investment).”

    This is a depressingly cynical view of the construction industry,. and isn’t actually bourne out through experience – certainly not when it comes to cladding of LA tower blocks. The majority of builders have been using more expensive, non combustible materials for decades – long before PE was ruled unsafe. (We’ve been using more expensive mineral wool cladding in Scotland since at least the mid 90s) Why? Well, because its idiotic to install flammable cladding on the outside of a residential tower block which relies solely on internal compartmentalisation for fire safety. Builders understand this. A reputable builder will build safe, no matter the regulations – they are not, by and large, killers. Most builders are reputable.

    This isn’t a massive nationwide failing, from what I can see there are 20 residential towers in the UK that have been clad in ACM PE, and these jobs all appear to have been carried out by the same subcontractor.

    What didn’t exist at Grenfell was a mechanism to ensure that a cowboy builder couldn’t enter the system and put lives at risk for the sake of a few quid, or detect when it had happened. Did anyone other than the subcontractor doing the actual cladding work ever know what had been used?

    I suspect there is also a certain amount of the “Railtrack effect” here – the fragmentation of the old council buildings departments in favour of outsourcing will have led to a loss of expertise – so even if someone at the council/TMO did know the builder was using a PE based cladding would they have understood what this meant? Do the modern architects who are brought in to work on these projects understand the original safety design ethos of the building in the way the old council designers did?

    This is a massive failing of the LA/AMLO/Outsourcing system of social housing management, which needs to be resolved.

    “this has long been the failure of many projects in the past such as the high rises”

    High rises have been a failure where councils have allowed them to become run down and used as sink estates. In cities (I cite Aberdeen as the best example in Scotland) where they have been managed and maintained properly they are generally well loved, comfortable and most importantly safe homes. Its a shame the attitude in this country towards high rise living in general is informed by the failures, rather than the successes.

    I agree with everything you say from that point on! 😀

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  3. “We’re living in an age where the UK government can borrow on a 30 year bond for 1.7%.”

    That WOULD be very stupid and unnecessary when the UK government can borrow as much as it needs to from the Bank of England interest-free and with no need to repay any of the money borrowed, simply adding the sum borrowed to the national debt.

    So long as government borrowing is not excessive to the extent of causing hyper-inflation (see Venezuela) then there’s no problem with a sovereign government borrowing from its own central bank for macro-economic purposes of stimulating growth when necessary or to meet particular emergency needs.

    I am still waiting for that particular penny to drop for the Scottish chattering classes so that you lot will finally begin to understand what I have been banging on about for years – my complaint against the SNP Scottish government’s disgraceful failure in agreeing a very poor fiscal framework with the UK which denies the Scottish government appropriate borrowing powers from the Bank of England, interest-free, the sums to be added to the Scottish national debt, as would befit a country’s government.

    Like

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