Article for Daily Telegraph ("The owner-occupier’s party")
|Source:||Daily Telegraph , 1 July 1974|
|Editorial comments:||Item listed by date of publication. Alfred Sherman drafted this article for MT, his first work for her.|
|Themes:||Conservatism, Economy (general discussions), Monetary policy, Housing, Local government, Society, Social security and welfare|
WHAT PLATFORM FOR THE TORIES?—III
‘The owner-occupier's party’
The Conservative approach is based on a balance between rights and duties, between individuals and society. Its implication for economic policy is that citizens have the duty to support themselves and their families if humanly possible and the right to seek the optimum return for their effort. Society has the right to expect people to make this effort to be self-supporting and the duty to see that they have the scope, and a helping hand where needed. To encourage perpetual dependence would be the worst service we could do to them and society alike.
Contrary to what is often asserted, we are not and never have been a party of "laissez faire," i.e. leave matters to themselves and the hidden hand of the market will take care of all. But we do believe that the Government's overall responsibility for the nation's well-being must be exercised in harmony with the working of market forces. Otherwise the contradictions and distortions created make the best—intentioned policies counter-productive.
Housing is an example of these dangers. Housing has had its successes, but it has had too many failures as well. After 60 years of increasing State intervention in housing, we are reaching a situation where a large and growing proportion of the labour force and possibly a majority of manual workers are treated as though they were unable to house themselves without State assistance.
This seems economic absurdity. If the national economy can afford to house its citizens at given standards, how is it that this most individual of requirements cannot be met by the vast majority of people out of their own earned incomes? True, we have a duty to help the weaker people, but if five million council homes are not enough, then something is sadly amiss with our housing policy, or economy, or both.
Rent control has driven private and institutional capital the pension and insurance funds—out of housing for rent, or indeed out of housing generally. We have yet to find a way to bring it back, but we must, if we are to succeed in the long run.
Council housing creates its own demand. It can also create homelessness and bad housing. For one man's subsidy is another man's penalty.
Take London. The total council housing stock (boroughs plus GLC) increased by over a third in the past 10 years. Yet so did homelessness and the shortage of workers for essential services. Where has all the additional housing gone? Will "more of the same" cure? I doubt it. Since council housing is let at bargain prices—the real subsidy based on historical costs and interest rates is several times the Exchequer and rate subsidy—turn-over is very low.
So newcomers to London, who form an important element in the service labour force, face housing difficulties and low wages into the bargain. Worse still, councils voraciously buy up and bulldoze twilight areas, which have traditionally provided a haven for newcomers, and the first rung of the housing ladder for would-be owner-occupiers.
As council houses grow in number, the gap between their rents and their economic cost grows.
The Housing Research Foundation in its study "Home Ownership for Lower Income Families" says that the total cost of providing a new home privately or through the council is not very different, and now averages about £10,000 including land. It continues: "On average each new council house now costs roughly £900 a year in subsidy from taxes and rates (including the subsidy from very old council houses) …—Tax relief on an ordinary mortgage, if this be regarded as subsidy, averages about £280 a year."
Thus a programme of a quarter-of-a-million new council dwellings a year would mean more than £200 million a year extra in housing subsidies (much of the new building will be in high-cost areas). Five years' new building at that rate would generate another £1,000 million annual subsidy burden, almost as much as last year's domestic rate.
We are generally regarded as the owner-occupier's party. The greatest ambition of many people is to own their home. Numbers of them feel resentful that it is beyond their capacity to do so. The choice which faces the Government is to build new council houses at a subsidy of £900 million a year or to enable the builders to put homes for sale at a "subsidy" of £300 a year or less.
Council building can be wasteful in resources. The architects who build them don't live in them. We see the results in the big new estates in the large cities. They have become the problem areas of the future; they are the monuments of State capitalism.
Private building is generally more economical. It has to be. The private estates of "semis" have stood the test of time. They contain far more community spirit than the tall tower blocks. Those houses built in the 'thirties offered for the first time the chance of home ownership to thousands of people. It must be our aim to do the same again. People would buy a basic home, and add the trimmings themselves, improving and extending it over the years.
In the Conservative party we must have as our prime objective a big increase in home ownership.[fo 1] If some greater financial incentive is required we shall have to be prepared to give it. It is better to help people towards self-reliance than State-reliance.
We have looked for alternatives to bridge the gap between council tenants for life and owner-occupiers. Housing associations and societies are only part of the answer. We shall go on looking. Should all council tenancies be for an indefinite term, irrespective of changes in family size and income? And need all council house sales be freehold?
New housing is only part of the answer. For 30 years attention has been focused on the number of new houses: politicians have claimed, "We built X houses last year." But what about housing loss? Not only the millions of basically sound homes bulldozed since the war to make room for council estates. We must add the "discomfort years" and actual misery caused to millions of families who go on living in sub-standard accommodation for lack of proper maintenance and modernisation.
Rent control bears much of the blame. But many authorities' single-minded pursuit of "housing record"—new dwellings—has not only resulted in untold acres of private slums, but also led them to neglect their own existing council estates. This housing loss can be measured by the annual shortfall in maintenance and the accumulated backlog. The annual value of work which needed doing and was neglected has been equal to or greater than new council building during the post-war period. So much for "housing record."
We recognised this during the last Conservative administration and expanded our housing improvement grants. In our last year alone grants in respect of 316,000 were approved—more than three times the number in the last year of Socialism. As a result hundreds of thousands of dilapidated houses were rescued and turned into owner-occupied homes.
Housing cannot be isolated from the general economic situation. The building societies have a fine record of achievement in collective self-help. Their difficulties are not of their own making, so it is only right that the Government should consider new ways of helping them to keep down the mortgage rate. Otherwise there will be virtually no source of housing finance except State capital.
This in brief is our approach. Not a last word, not a blueprint for Utopia, but I hope a move away from the towers built on shaky economic foundations.