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| The government's Right to Buy scheme is no more than a stop gap measure in the battle to deal with the housing crisis and does little to shelter the poorest and most vulnerable from affordable housing shortages. |
On Wednesday, following PMQs, Chancellor George Osborne will make his Autumn Statement (Parker & Giugliano, 2015). The statement serves as a spending review, assessing how the treasury is faring with its budget plan, a plan that is dependent upon many factors.
The review will give the country a chance to peek inside Number 11 and discover, through the obscuring lens of politics-speak, how the Chancellor intends to achieve his planned cuts (Wheeler, 2015) - particularly after the damage done by Lib Dem, Labour and Crossbencher Lords to his attempts to cut spending on tax credits (BBC, 2015).
The view amongst independent assessors is that Osborne's cuts are set to have a drastic impact on those carrying the heaviest working burdens for the least reward (Ross, 2015; Milligan, 2015). With more money now having to found to lessen the burden on those losing tax credits, there are clear fears that those funds will be found simply by taking even more away from others (Wintour, 2015).
There is only one thing that can temper the impact of Chancellor Osborne's cuts, and that is the much vaunted efficiency of markets that those on the Right put so much faith in. Without increased efficiency, most tellingly demonstrated by a fall in the cost of living, the impact of welfare cuts will be drastic and long-lasting.
By far and away the most impactful part of the cost of living is the cost of housing. The Conservative's darling policy for this end is their 'Right to Buy' scheme, yet the scheme is controversial. The project offers huge discounts for housing association tenants to buy their rented houses, with certain terms and conditions (Sarling, 2015). Yet the project will be costly and the losses could very well fall most hard upon the housing associations themselves and councils, especially in the most deprived areas.
The intention, plainly, is to increase the number of houses on the buyers' market, so as to increase supply, and so competition, in order to decrease costs. However, the plan can only represent a stop gap, buying time for building of more houses. It cannot be a replacement for it.
Back in 2014, Alicia Glen, New York's Deputy mayor for housing and economic development, assessed the issue of housing affordability by drawing attention to problems with the UK's private rental sector (Murray, 2014). Glen remarked that the private rental in the UK is comparatively small and that management of private rental properties on a small scale is expensive and inefficient, stressing that only at a large scale can its costs be effectively reduced.
"The problem is if you don’t do affordable housing as rental housing by definition you’re going to lose that unit unless you have incredibly aggressive enforcement on resale. You could say - and a lot of conservatives would say - there’s nothing wrong with subsidising the production of a unit if a poor person lives there and 10 years later they sell it for a gazillion dollars - they’ve made money and that’s wealth creation. But you’ve lost the unit and so you’re not making any sort of long-term dent in the affordable housing crisis."
And yet, reports are pointing out that the scheme is already failing to tackle the essential problems of the housing crisis (Gallagher, 2015). Instead of increasing the availability of affordable housing, as many as two-fifths of Right to Buy properties have simply been let out privately by their new owners.
This so-called 'pillaging' of social housing is only a temporary means of diverting the housing crisis (Hutton, 2015). It takes affordable housing away from the poorest and most vulnerable to temporarily increase housing supply for those on middle incomes. Yet it doesn't break the cycles of debt and lending, along with asset investments which all drive up prices, and simply adds more properties to yet another housing bubble.
With Osborne's budget, everything depends upon the cost of living consistently falling. Yet without breaking the housing bubble, without a large increase in supply and competition, and without a scaling up of the operation of private rental - a project in which co-operatives should not be ruled out - the essential problems are not going to be fixed. The cost of housing will not fall, and so the cost of living will not fall.
If the cost of living does not fall, then Osborne's huge contraction of state spending, and the services and safety nets that funding supports, mean that the poorest and most vulnerable will be trapped. With cuts to support, along with wages and hours being reduced and made ever less secure, the poorest will be even further excluded - with housing, left in the hands of schemes like Right to Buy, becoming just another social mobility ladder that has been kicked away.
George Parker & Ferdinando Giugliano's 'Autumn Statement 2015: What’s going to give?'; in the Financial Times; 22 November 2015.
Brian Wheeler's 'Spending Review: Osborne under pressure on tax credits'; on the BBC; 22 November 2015.
'Tax credits: Lords vote to delay controversial cuts'; on the BBC; 26 October 2015.
Tim Ross' 'Spending Review: IFS warns of deepest cuts in history'; in The Telegraph; 21 November 2015.
Brian Milligan's 'Budget 2015: Squeeze to hit 13m families, says IFS'; on the BBC; 9 July 2015.
Patrick Wintour's 'Softening of tax credit blow to be funded by housing benefit cuts'; in The Guardian; 22 November 2015.
Joe Sarling's 'Right to Buy extension estimated to cost £12 billion'; for the National Housing Federation; 14 April 2015.
Paul Gallagher's 'Right to Buy: 40% of homes sold under Government scheme are being let out privately'; in The Independent; 14 August 2015.
Kate Murray's 'New York housing supremo: "The strength of a city is in its diversity"'; in The Guardian; 11 November 2014.
Will Hutton's 'The broadening of right-to-buy will inevitably worsen the housing crisis'; in The Guardian; 20 September 2015.
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