05.05.2022

Stunts, problems and solutions

The ‘right to buy’ scam exposes the Tories as the party of buy-to-let landlords, property speculators and City-boy financiers, argues Mike Macnair

On May 2 Boris Johnson was reported in The Sunday Telegraph to be reviving the idea - already floated and indeed trialled under David Cameron - of extending “tenant’s right to buy” to Housing Association properties. The Financial Times on Monday rightly commented that

A succession of Conservative leaders have sought to revive Right to Buy, with homeowners traditionally being more likely to vote for their party.

The prime minister is keen to shift the public’s focus away from the ‘partygate’ scandal ahead of Thursday’s local elections and demonstrate that his government is focused on policymaking.

The Express on Tuesday similarly front-page headlined “Boris’s right to buy plan is vote winner”.

The proposal is in substance naked theft from charities (the Housing Associations, which are charitable providers of subsidised housing for the poor) for the sake of marginal and, at the end of the day, short-term electoral advantage for the Tory Party. ‘Short-term’ because the fate of former council housing bought under ‘right to buy’ has been very extensively to pass through the hands of the former tenant owners into the hands of buy-to-let operators.

And indeed, unlike council right-to-buy, which disposed of state property,¹ the proposal is a plain violation of the charities’ property rights within the European Convention on Human Rights, First Protocol article 1:

Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No-one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

In consequence, it would be extraordinarily difficult to justify imposing right-to-buy against Housing Associations in the Strasbourg Court of Human Rights, unless the British state was prepared to pay to the charities full market value of the properties,² so that the subsidy to tenant purchasers came wholly out of government funds. Hence, it is very likely that this announcement is merely a typical Boris Johnson bare-faced lie, to be abandoned as soon as it has done the job of distracting attention from ‘partygate’ and mitigating Tory losses in Thursday’s local elections.

There is a striking coincidence between Johnson’s ‘neo-Thatcherite’ spin proposal and two other stories about housing that came out in the last week.

The Telegraph ran on the same day the story that “Buy-to-let landlords turn to insurance policies in face of eviction chaos”. During the Covid pandemic, as is familiar, the government imposed a moratorium on evictions - but did not stop the rent or interest arrears themselves building up, as people were unable to work, whether due to illness or to the economic effects of shutdowns, etc. The eviction moratorium was lifted as from June 2021, though for business evictions it was continued till March 2022.³ The result has been, according to the Telegraph’s story, both “soaring arrears” and an immense backlog in possession proceedings in the courts, with eviction now taking a median period of 42 weeks, and sometimes up to 17 months, to move from initial landlord claim to reach actual eviction. Hence landlords are now in increasing numbers buying insurance against rent arrears; but this, in turn, reduces their profit margins (so rents will go up); and it also means that the insurers insist on landlords not letting to tenants who are ‘poor credit risks’.

Meanwhile, the Financial Times on April 27 carried a substantial article on ‘What’s causing the global rental squeeze?’ Urban rents, the FT reports, are shooting up - not just in Britain, but also elsewhere. In London, speculation on capital values looks more attractive than letting, so that the amount of property available to renters has reduced. The FT also points to an inflow of capital from investment funds into housing, and in this context quotes Canadian lawyer and former UN special rapporteur on housing Leilani Farha saying that “investment funds are ill suited to owning homes: the need to generate returns for investors must either jack up rents or cut their maintenance costs; either way tenants lose out”. And “Favourable conditions for investors and real estate professionals will not work for tenants. For housing, which is a human right, trickle-down economics doesn’t work”.

The FT’s ‘right to buy’ story reminded us that “Officials said that the issue had been sidelined by a bigger focus on increasing housebuilding through a radical shake-up of the planning system, although that initiative has also stalled after a backlash from Tory voters.” This issue is plainly enough also a part of the story of soaring rents. The site, ‘Building.co.uk’, on April 20 had an extended account by Joey Gardiner of what had become of the radical planning reform proposals.⁴ The failure of the Tories’ ‘planning reforms’ illustrates, as I argued in November last year, that British domestic politics is gridlocked in spite of the absence of constitutional ‘checks and balances’ like those blamed for political gridlock in the USA.⁵

Chronic

It is common to talk about the ‘housing crisis’.⁶ But to do so is to render the word ‘crisis’ - which in its origins means a sudden shocking or decisive event, or the moment at which a disease turns either to death or to recovery - mean no more than ‘problem’. The ‘housing crisis’ has lasted, in substance, ever since the emergence of capitalism. The Erection of Cottages Act 1589 prohibited the construction of new cottages without four acres of land attached - an effort to restore the imagined patterns of medieval agricultural housing. It was repealed in 1775 on the ground that it was causing a housing shortage.

Under the ‘Old Poor Law’ from 1601, parishes were from an early date concerned in making housing provision for the poor.⁷ In the later 18th and 19th century the perception of the then existing urban working class housing as insanitary and a reservoir for cholera, typhus, etc led in the mid and later 19th century to efforts to improve the quality of working class housing - both in the form of private, quasi-charitable initiatives and of state interventions.⁸ Meanwhile, employers were driven to build housing for their workers.⁹

Alongside these was the development by the upper section of the working class itself of the building societies movement - in its initial stages arguably a form of illegal subversive organisation, but later accepted and regulated.¹⁰

Already in the 18th century there was a conflict perceived between investors obtaining the returns they wanted from building developments, and so on, and housing the poor. This can be illustrated from a study of 18th century housing developments which showed the use of covenants to force the building of more expensive housing;¹¹ and from the later 19th century, from the provision of section 11 of the Housing of the Working Classes Act 1885, which provided that aristocratic landowners and their trustees were permitted to sell, lease or otherwise dispose of land for the housing of the working classes, in spite of the fact that other uses would be more profitable.¹²

The logical implication was that the charity operations would always tend to be outbid in sales of land by investors seeking higher returns. But the resulting costs fall not only on workers, but decisively on industrial and commercial employers, since, if the workers cannot afford places to lay their heads to sleep, etc (plus whatever transport costs are needed to get to the workplace), they cannot work. Hence uncontrolled rents mean that wages have to rise, without any increase in workers’ disposable income, and profits have to fall. Uncontrolled rents are, then, merely a transfer of surplus value created in industry from productive capitalists to large and small landlords and property speculators as sub-classes.

With the Housing of the Working Classes Act 1890, it began to be recognised that this necessary conflict required the creation of tax-funded, subsidised, public housing: council housing. Alongside council housing was a series of specialist forms of public housing: military barracks and quarters replaced ‘billeting’; police housing; nurses’ accommodation near hospitals, etc.¹³

The cost-feasibility of these operations was given in part by the abolition of agricultural subsidy in the 1846 repeal of the Corn Laws. By making much farming only problematically profitable, this exerted a sustained downwards pressure on land prices until the restoration of agricultural subsidy (in different forms) in World War II.¹⁴

Council housing remained initially at a limited scale. But the intense pressure on housing in the vicinity of armaments factories produced in 1915 both the Glasgow rent strikes and lobbying from arms manufacturers, leading to the first Rent Restriction Act.¹⁵ After 1918, complete decontrol of rents proved to be politically impossible even for Tories; but expanding council housing continued through the 1960s to be a politically easier option for Tories than rent control, since at least it provided contracts for the building trade.¹⁶

The Tory Party remained, as it still remains, the party at the end of the day of large and small landlords and speculators, and inclined to prioritise their interests over those of employers. This was reflected in cuts to public housing maintenance budgets, as well as the subsidy to freehold-mortgage tenure provided through the tax system:¹⁷ the object was to shift away from the acceptability of public housing by fraudulent means, creating ‘less eligibility’, as tenants would be unable to get repairs done.¹⁸ Meanwhile, the courts undermined rent control in the private rented sector through judicial legislation in the 1950s Court of Appeal, which overthrew a nearly 500-year-old property law dogma in order to create a loophole for landlords.¹⁹

By 1980, the ground had been prepared for the Thatcher government’s coup d’état of the landlords and financiers against both labour and industrial and commercial employers. Rent control was abolished, first in the private and then in the public sector, and ‘right to buy’ eviscerated the public housing stock. This, of course, went alongside ‘shock therapy’ to destroy a wide range of industries, accepting the drift towards the dominance of finance in the UK economy. The ideological frame in the housing context was the claim that ‘freeing’ the land markets would, under the regime of modern financial arrangements, allow the satisfaction of housing needs by purely market means.

But this illusion - if it was ever an illusion and not just a fraudulent misrepresentation in the interests of a narrow group of Conservative donors - rapidly failed. The markets and financial engineering can no more provide housing for the working classes than they could in the 18th century. The ability of the City-boy financiers to engage in day-to-day dickering and bargaining arbitrage on a global scale depends on the techies, cleaners, transport workers, power workers, and so on, not being able to engage in dickering and bargaining over the price of their services: if everyone could do that, we would have medieval town markets or bazaars and nothing more. It is the proletarianisation of the large part of the labour force which allows capital to operate on a global scale.

In this context, wages have a material floor and, as I said before, uncontrolled rents and property prices are a tax on employers as well as employees, for the benefit of the sub-classes of landlords and property speculators. The result was that the abolition of rent control and marginalisation of council housing was rapidly followed by the introduction of ‘housing benefit’ and its various incarnations - as of 2017, a £23 billion per year element of the welfare bill, roughly 17% of that bill.²⁰

Meanwhile, the dream of the ‘property-owning democracy’ has also faded, as property prices (propped up by Keynesian money-printing in response to the 1998, 2001 and 2007-08 crashes) have risen to levels that are wildly disproportionate to wages, which have been held down by anti-union laws and by the entry of Chinese, etc labour in transition from the farms into global labour markets. Purchase has become beyond the reach of most of the young, and we are, gradually, shifting into ‘generation rent’.²¹

In London, we are almost in the territory which was attempted to be regulated by the Housing of the Working Classes Act 1885, section 9:

(1) A tent, van, shed, or similar structure used for human habitation, which is in such a state as to be a nuisance or injurious to health, or which is so overcrowded as to be injurious to the health of the inmates, whether or not members of the same family, shall be deemed to be a nuisance within the meaning of section 91 of the Public Health Act, 1875; and the provisions of that act shall apply accordingly.

(2) A sanitary authority may make byelaws for promoting cleanliness in, and the habitable condition of tents, vans, sheds and similar structures used for human habitation, and for preventing the spread of infectious disease by the persons inhabiting the same, and generally for the prevention of nuisances in connexion with the same.

In sum, the housing problem is not a ‘crisis’, but a chronic problem of capitalism. It is currently exacerbated by the fact that the Tory Party under Thatcher removed the primary practical methods of treating the symptoms - public housing and rent control - substituting quack remedies which end with the mere payment of £23 billion per year to Tory supporters at the expense of the general taxpayer. To attempt to revive Thatcherite quack remedies for the housing problem at the present date should be treated as analogous to advocacy of the reintroduction of asbestos products in buildings or putting thalidomide back on the market.

Planning

The history of the housing question in 18th-20th century British capitalist society illustrates that the market cannot provide satisfactory housing for the working class. The reason is perfectly simple: the quantity of land is substantially fixed, and building tower blocks or artificial islands only ‘fiddles at the edges’ with this. Hence, rising land prices (whether as capital prices or as rents) do not produce an increased supply of land in response. They produce a mere transfer of value from employers (and to a lesser extent workers) to the sub-classes of large and small landlords and land speculators.

The ‘hidden hand’ was already in the hands of Bernard Mandeville and Adam Smith merely a slightly secularised version of the sparrow-falls providentialism that was satirised by Voltaire in the form of Dr Pangloss’s doctrine that in “this best of all possible worlds” “everything is necessarily for the best of ends”.²² It retains this character in the form of “Dynamic Stochastic General Equilibrium”. The inability to provide affordable and sanitary housing for the workers on whom capitalism itself depends, because of the unlimited rapacity (‘rational choices’) of the landowner monopolists, is merely an example of the point.

The Tories are correct to suppose that the introduction of planning controls after World War II exacerbated the problem: however, it did so because of their own decision to hold onto planning controls, but give back speculator’s profit. The planning controls introduced in 1949 were accompanied by ‘development charges’ to nationalise the gains. When the Tories in 1954 abolished development charges, the result was that ‘planning permission’ came to be an added value for development land, which added to the effect of agricultural subsidy in raising land prices. But the Tories now cannot take back the planning system, since it supports the high property values of their voter base in the suburban and rural middle classes, and the interests of their contributor base among landlords and speculators.

For the same reason, they cannot permit the property market to crash, even though it badly needs to crash in order to restore any degree of health to it. The property price crash of the early 1990s produced as a delayed effect Blair’s landslide in 1997, and both the Blair-Brown governments and subsequent governments have learnt all too well the lesson that the (ageing) middle class and upper-working class homeowners cannot be touched, even by allowing rate revaluation in order to restore local government.

Nonetheless, solutions to the housing problem unavoidably involve planning in natura: that is, directly planning for the production of use-values in spite of the result not being ‘economically efficient’. When employers built ‘company towns’ they were planning in natura within their businesses. The quasi-charitable initiatives of the mid-19th century, the various regulatory rules of the same period and the public housing of the late 19th and 20th were all similarly planning in natura, with the end goal of producing sanitary and affordable housing for the working classes, which the market could not deliver.

Public housing was a step further away from capitalism, since, while building workers were paid out of taxation funds, the land was taken by expropriation - compulsory purchase orders. And where works were organised by Council Direct Labour Organisations, though workers were paid and materials purchased out of money raised by taxes, there was a substantial element of planning in natura of the works. Hence the determined efforts of Thatcher and subsequent governments to compel outsourcing through ‘compulsory competitive tendering’ - in practice increasing the costs of works by giving advantages in the tender process to large, legally represented corporations.

What this story tells us is that, when the Fabians and Social Democrats said that it was possible to wring from capitalism reforms which would improve the situation of the working class, they were not wrong. Where they were wrong was in relation to how reforms could be won, and in relation to whether reforms could be defended against counteroffensives from the capitalist class or sections of this class, or thievery by pro-capitalist politicians.

Constitution

The reforms were won not merely because industrial and commercial employers had an interest, against the landlords, in workers’ ability to work and wages not being forced up by rent rises. The sanctity of property and the illusions of the ‘hidden hand’ would probably have won out against those considerations alone. Workers were also self-organising in trade unions, cooperatives and mutuals, and beginning on a small scale to organise politically - and the rapid growth of the German Social Democratic Party, even under illegality, offered a beacon of hope to workers and the left and cast a shadow over the Liberal and Tory political duopoly. Rent control in 1915 responded not just to arms manufacturers’ lobbying, but also to mass rent strikes.

Conversely, the reforms were lost through a series of complex long-term manipulations and frauds by the Conservative Party and its ideological satellites - beginning in the 1950s, with a long-term goal of restoring the ‘free market’ (meaning landlord monopolies) through steps like conning Labour into accepting tax relief on mortgage interest, abolishing development charges, judicial loopholing of the Rent Acts, the squeezes on local authority maintenance budgets to create ‘less eligibility’, and so on. The Tories do long-term frauds, not just short-term ones.

And they were also lost through the gradual implications of Labour’s loyalism - as, by the 1970s, the Labour right was no longer prepared to defend public housing and accepted the idea of the dominance of freehold-mortgage. If Tony Crosland and co could have seen what the actual outcome of their illusions in the ‘housing market’ would be in the 2000s, they might have recoiled; but, in reality, they backed the Tories’ schemes to restore British landlordism.

To win and - especially - to defend reforms, the working class needs aims beyond the winning of concessions, while leaving the landlords and capitalists the power to take them back through the sale of justice (‘free market in legal services’), the lying, bribed-press oligopolies, and the ability to buy Labour as well as Tory MPs. Hence the working class needs its own disloyalist party and its own disloyalist media. The resource implications mean that we need effective unity of the disloyalist left: a real Communist Party, rather than the groups that are all we have now with their - in fact loyalist - broad fronts.

mike.macnair@weeklyworker.co.uk

Though ‘right to buy’ violated a centuries-old constitutional convention of the autonomy of local government, the Heath and Thatcher governments practically destroyed this convention, leading to the present reduction of local politics to careerism and bureaucratic management.↩︎
On valuation see: www.gov.uk/guidance/compulsory-purchase-and-compensation-guide-2-compensation-to-business-owners-and-occupiers.↩︎
www.london.gov.uk/coronavirus/rights-renters-and-landlords-during-coronavirus; www.reuters.com/world/uk/uk-extends-covid-ban-forced-evictions-businesses-2021-06-16.↩︎
www.building.co.uk/features/whatever-happened-to-those-radical-planning-reforms/5117090.article.↩︎
‘In modern times’ Weekly Worker November 15 2021: weeklyworker.co.uk/worker/1372/in-modern-times.↩︎
Eg, ‘Who caused the UK’s housing crisis?’ Financial Times January 22; L Geraghty, ‘Why does the UK have a housing crisis? Big Issue February 28; ‘Right-to-buy won’t fix Britain’s housing crisis’ Spectator May 2; ‘How right to buy fuelled the housing crisis’ New Statesman May 3.↩︎
Eg, J Broad, ‘Housing the rural poor in southern England, 1650-1850’ Agricultural History Review Vol 48 (2000), pp151-70.↩︎
The perception was in fact earlier, but intensifying in later 18th century: K Siena Rotten bodies: class and contagion in 18th century England New Haven CT 2019. S Morris, ‘Market solutions for social problems: working class housing in nineteenth century’ Economic History Review Vol 54 (2001), pp525-45 is keen to play up the ‘market’ aspect of the offered solutions studied, but clarifies the early date of initiatives. London County Council Housing of the working classes 1855-1912 London 1913 is more focused on state actions.↩︎
Eg, J Melling, ‘Employers, industrial housing and the evolution of company welfare policies in Britain’s heavy industry: West Scotland, 1870-1920’ International review of social history Vol 26 (1981), pp255-301; T Frasch and T Wyke, ‘Housing the workers: revisiting employer villages in mid-19th-century Europe’ in J Czierpka, K Oerters and N Thorade (eds) Regions, industries and heritage: perspectives on economy, society and culture in modern western Europe Palgrave Macmillan 2015, pp173-97.↩︎
EJ Cleary The building society movement London 1965: the illegality argument (in 1812) is at pp15-16.↩︎
CW Chalklin, ‘Urban housing estates in the eighteenth century’ Urban Studies Vol 5 (1968), pp67-85, at pp78-83.↩︎
Included in the Settled Land Act 1925, section 57; S Bridge et al (eds) Megarry and Wade, the law of real property (London 2019, p459) points out that the repeal of this provision via the Trusts of Land and Appointment of Trustees Act 1996 makes this no longer allowable.↩︎
On barracks see TA Pace, ‘Army barracks in the United Kingdom: a brief review of their development’ Journal of the Royal Army Medical Corps (1953), pp158-169. Police housing: the history is less immediately visible, but: www.nao.org.uk/pubsarchive/wp-content/uploads/sites/14/2018/11/Home-Office-Control-and-Management-of-the-Metropolitan-Police-Estate.pdf shows the state in London as of 1989; ‘Police housing crisis as forces sell off homes’ Independent June 4 2000. On nurses: googling does not produce a general treatment, but a series of individual accounts of the provision of purpose-built nurses’ accommodation linked to individual hospitals; see also, on district nurses: qniheritage.org.uk/history/district-nurses-homes.↩︎
A Offer, ‘Farm tenure and land values in England, c1750-1950’ Economic History Review Vol 44 (1991), pp1-20 (chart at p14). A Jadevicius, S Huston, A Baum and A Butler in ‘Two centuries of farmland prices in England’ Journal of Property Research Vol 35 (2018), pp72-94, find flatter prices before 1940, but the same ‘hockey stick’ rise after 1940. Compare also: www.schroders.com/en/insights/economics/what-174-years-of-data-tell-us-about-house-price-affordability-in-the-uk (2021), showing the ratio of house prices to average earnings declining between 1845 and 1923 - then rising, but not exponentially until the 1990s.↩︎
1915: R Harrison, ‘The war emergency workers’ national committee 1914-1920’ in A Briggs and J Saville (eds) Essays in labour history 1886-1923 London 1971, chapter 9.↩︎
Inter-war issues - references at: www.nationalarchives.gov.uk/cabinetpapers/themes/public-housing.htm#Between the wars. Post-World War II - P Weiler, ‘The rise and fall of the Conservatives’ “grand design for housing”, 1951-64’ Contemporary British History Vol 14 (2000), pp122-50. Cf also P Dunleavy The politics of mass housing in Britain 1945-1975 Oxford 1981.↩︎
A brief summary of some of the policy initiatives is contained in B Lund, ‘The housing crisis as the long-term casualty of austerity politics, 1918-2018’: www.historyandpolicy.org/policy-papers/papers/the-housing-crisis-as-the-long-term-casualty-of-austerity-politics-1918-2018 (2018).↩︎
For one of the consequences of this Heath squeeze on repair budgets see Liverpool City Council v Irwin [1977] AC 239 (council under no obligation to keep the lifts running in tower blocks).↩︎
M Macnair, ‘Can judges be trusted with the common law?’ in R Ekins and G Gee (ed) Judicial power and the left London 2017, chapter 4.↩︎
Cf W Wilson Private rented housing: the rent control debate House of Commons Library Briefing Paper 6760, April 3 2017.↩︎
Among various discussions see, for example, A Heywood, ‘The end of the affair: implications of declining home ownership’, Smith Institute 2011; also: abcfinance.co.uk/blog/generation-rent-study (undated, probably 2019).↩︎
Candide chapter 1: fiatlux-day.org/e2a/literature/candide/alternate/candide_1-4.html paras 4 and 5; athena.unige.ch/athena/voltaire/voltaire-candide.pdf at p4, “dans ce meilleur des mondes possibles” “tout est nécessairement pour la meilleure fin”.↩︎