On 1 November 2017, Stoke Newington School organised a panel discussion on the future of social housing for 6th form students, parents and teachers. The IEA’s Kristian Niemietz was one of the panellists. The article below is based on his opening statement.

 

I’m not an expert on social housing specifically, but I have written quite a bit about Britain’s housing crisis more generally, and the crisis in social housing is, ultimately, just one of various manifestations of a more general housing crisis. It doesn’t exist in isolation. So I would like to talk a bit about the wider context.

Britain has a housing shortage. I’m not telling you anything new here; this is now, at least in principle, widely accepted. This shortage did not suddenly appear overnight. There has been no earthquake and no air raid. Instead, for over thirty years, Britain has been building fewer new houses than any other Western European country (relative to population size). Fewer than any of them. To give you an illustration: A couple of years ago, the French business press was writing about a crisis in the French construction industry. But during their so-called ‘crisis’, they were still building about twice as many homes as Britain. That was a crisis by their standards. For us, building just half of that counts as a normal year.

Yes, the number of housing units has increased. But this is because landlords are splitting existing flats into smaller studio flats, or basements into self-contained units. This is not new housing.

You need to look at the total residential floor space per household. That is a more sensible measure of housing supply. And on that measure, Britain has the lowest level of housing supply in Western Europe. Housing is expensive in Britain because there isn’t a lot of it. It is as simple as that.

However, what we don’t have is a specific shortage of social housing. I know that this sounds counterintuitive. You’re probably now thinking: ‘But there are millions of people on social housing waiting lists. There self-evidently is a shortage of social housing!’ But these waiting lists are the result of that overall lack of supply. People turn to social housing, because they have nowhere else to go. They cannot afford to buy a house, and they cannot afford to rent privately. So they turn to a social sector.

But as a proportion of the total housing stock, Britain has rather a lot of social housing. Almost a fifth of the housing stock is social housing. Almost one in five housing units are owned either by a council, or by a Social Housing Association. That is a very high proportion. It is one of the highest proportions in Western Europe. It is a higher proportion than in the Nordic countries, which are always held up as these great role models that everybody should emulate. Meanwhile, Switzerland has almost no social housing at all – but you won’t read about a housing crisis in a Swiss newspaper. They simply don’t need a lot of social housing. They have enough affordable market housing. People have alternatives. And that’s the kind of solution we should aspire to.

I would also question the assumption that social housing is an unequivocally good thing. “Social” is one of those weasel words that are used to insulate something from criticism and rational enquiry. When something comes with the attribute ‘social’ attached to it, you’re no longer allowed to criticise it. The merits of X can be debated, but ‘Social X’ is just obviously A Good Thing, which every sane and decent person must support.

But there actually is evidence that social housing can also exacerbate and entrench social problems. For example, it has been shown that social housing residents are less likely to be in work than other households with otherwise similar characteristics – same level of education, skills etc – living in a different tenure. It’s not quite clear why. But the fact that social housing is inflexible is probably part of the reason. If you’re a social housing tenant, and you realise that you would have better job prospects elsewhere, you cannot easily up your sticks and move there. You are pretty much stuck where you are, unless you are prepared to give up your entitlement to social housing.

It’s also not particularly popular. Surveys show that if you ask people about the tenure they aspire to, almost nobody says social housing. It is far more popular among left-leaning academics and commentators than it is among its residents or potential residents.

So no, I don’t think concentrating narrowly on social housing is the answer. We should sort out the more general problems, which affect all tenures, and all sectors of the British housing market, rather than obsessing over one specific subsector.

Why are we in this situation at all? It is quite astonishing, if you think about it. How hard can it be to get some houses built? How hard can it be to put a few bricks on top of each other, and some mortar in between them? We’re not talking about a high-tech sector here. We’re talking about building a spaceship. We’re talking about something that people have been doing for centuries. Why can’t we?

There are two mutually reinforcing reasons. The first one is that Britain has one of the most restrictive land use planning systems in the world, a system which puts up too many hurdles against building. Some of the most popular types of housing in Britain, some of the Victorian and Georgian terraced houses that cost an absolute fortune, could no longer be built today, in many parts of Britain. They violate height restrictions.

Restrictions like this prevent towns from densifying and growing upwards. And then there’s the so-called green belt around London and other towns, where virtually no development of any kind is permitted. Economists have been studying the impact of such restrictions for a long time, and there is lots of high-quality empirical evidence from around the world, which shows that they substantially raise housing costs.

The second reason is organised resistance to housebuilding, often described as NIMBYism, the ‘not in my back yard’ attitude. NIMBYism as a sentiment is not specifically British, that exists everywhere. What is more specifically British is organised NIMBYism. Elsewhere, NIMBYs might sit in a pub and grumble about housebuilding; here in Britain, they actively use their political muscle to stop it. I follow some of those NIMBY groups on Twitter. I get an impression of how they operate. They constantly egg each other on to get involved in some way: Sign this petition. Sign that letter to your MP or councillor. Respond to this consultation. Show up at that planning meeting. Voice your opposition here.

Each of these two sets of reasons – planning restrictions and NIMBYism – could potentially cause a housing crisis, but put them together, and you have an absolute guarantee. This is the stranglehold that we need to break. There’s nothing special about social housing. The solution lies further upstream. Sort out the upstream problems, and the rest will take care of itself.

 

Recommended reading:

Head of Health and Welfare

Dr Kristian Niemietz joined the IEA in 2008 as Poverty Research Fellow, becoming its Senior Research Fellow in 2013 and Head of Health and Welfare in 2015. Kristian is also a Fellow of the Age Endeavour Fellowship. He studied Economics at the Humboldt Universität zu Berlin and the Universidad de Salamanca, graduating in 2007 as Diplom-Volkswirt (≈MSc in Economics). During his studies, he interned at the Central Bank of Bolivia (2004), the National Statistics Office of Paraguay (2005), and at the IEA (2006). In 2013, he completed a PhD in Political Economy at King’s College London. Kristian previously worked as a Research Fellow at the Berlin-based Institute for Free Enterprise (IUF), and at King's College London, where he taught Economics throughout his postgraduate studies. He is a regular contributor to various journals in the UK, Germany and Switzerland.

2 thoughts on “Panel discussion: The future of social housing”

  1. Posted 08/11/2017 at 11:47 | Permalink

    An interesting statement on the causes of the current problem, that unusually highlights the surprisingly high amount of ‘social housing’ in the UK. Unfortunately, it also falls into the same trap as most commentators on the housing issue, by refusing to deal with the issue of immigration. The only time this issue gets mentioned is with the statement “Britain has been building fewer new houses than any other Western European country (relative to population size)”. Relative to population size is right – yet the other side of the supply/demand conundrum (increased population) does not get addressed at all. It may well be that a decision is made that the UK will continue to increase the number of new people in the country – that seems likely – but to do so without providing the homes for these people to live in is immoral. It is simply ridiculous to discuss the shortage of housing, without at least mentioning one of the main drivers for the increased demand.

  2. Posted 17/11/2017 at 09:28 | Permalink

    Good piece Kris.

    In my opinion, the planning height restrictions are the number one problem as they force developers to waste land on low-rise ‘toytown’ developments which are necessarily spread, out forcing greater car use to access local shops, schools, etc.. We could build at least twice as many dwellings on the same land, each with more floorspace if this were addressed.

    Planning regulations should be changed to allow a default assumption of up to four or five storeys – unless objectors can demonstrate very good reasons why not. This would be a simple change.

    Council Tax should also incorporate an element of Land Value Tax to encourage efficient land use (inefficient land use is more expensive for councils to provide services and raises less revenue currently). For new dwellings, this should represent perhaps (say) half the Council Tax valuation immediately and for older properties, it could be started at a low level and increased gradually over (say) 25 years to encourage more space efficient redevelopment.

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