Council housing, and the changing needs of capitalism.

Barry Biddulph explains the historical restructuring of council housing

The state provision of Council Housing has always been  bureaucratic, and top-down, based on the needs of capital.  The nature and scope of council housing has changed with the changing needs of capitalism.

Its heyday was the long post-war economic boom. Since then the structural crisis of British capitalism has led to social engineering by Conservative and Labour governments making council housing mainly accommodation for those stigmatised as the “undeserving poor.”In other words, working-class people who will not or do not conform to the requirements of the market economy and can function as a reserve army of labour when necessary.

The economic crisis and the Coalition Government  cuts will again restructure welfare provision. This includes council tenancies, rents and benefits. Make no mistake,  tenants are expected to pay the costs of the economic downturn. And current and future tenants alike face real  pain.

Currently, on average, about 65% of council tenants are on some form of state benefits such as housing benefits.  There will be a cut of 10% in housing benefit for those who spend more than a year on employment support allowance or JSA. Rents will rise and be  set by the state closer to market levels. Other welfare caps, such as cuts to disability payments, the new rules on working tax credits, and the cap on the total amount of housing benefit to be paid to each family, will add to the spiral of poverty. New tenancies will be temporary or fixed, depending on employers’ need for labour  and behaviour acceptable to the local authority.  Without security,  tenants will face pressure to “get on their bikes” and uproot themselves from family and friends to look for work elsewhere.

Despite the welfare myths of social harmony, housing provision by the state has never been a question of social benevolence, nor has it been a democratic collective provision. The origins of welfare capitalism were probably in Bismarck’s social insurance schemes in the 1880s in Germany. They were designed to win workers over from the influence of the Social Democratic Party.Lloyd George’s 1911 insurance schemes in Britain were similar attempts to moderate workers’ anti-capitalism, following given workers’ militancy at the time of mass  industrial struggles outside of state conciliation.

After the horrors of World War I, the popular mood was ‘homes for heroes’, there was also the influence of the Bolshevik revolution in Russia and the growing strength of the belief in some form of socialism as an alternative to capitalism.It was no coincidence that the origin of mass subsidised state council housing was in 1919, although there has been small experiments before that. That year strikes and violent struggles had revolutionary implications. State housing for the better off “respectable” workers who could pay the subsidised rent on time was an attempt to isolate the militants. Private enterprise had to be saved from itself, given the failure of small private landlords. However, mass unemployment tamed the working class in the interwar period and council housing was then restricted to slum clearance.

The restructuring of British capitalism following World War II was designed by the liberals Keynes and Beveridge, who again wanted to save capitalism by repairing its faults. Workers did not want a return to the 1930s’ mass unemployment and laissez-faire free market economics. Tory MP Quintin Hogg summed up the strategy, by saying, “If we don’t give them reform they will give us revolution.”  Besides, nearly four million homes had been destroyed or damaged by bombs during the war.

Yet the land and the building industry were left in capitalist ownership. So council housing was shaped by private enterprise. Again, as in the interwar period, slum clearance became the main theme and private capital and the market  was  preferred and subsidised to provide home ownership. In 1975, Labour Housing Minister Richard Crossman said it was not a Ministry of Housing, but a Ministry of Permissions, giving free rein to private contractors and builders. Most of the horrors of the council building in the 1960s-70s such as high-rise and prefab concrete structures and high-density poor quality housing were the result of national and local state partnerships with private capital. Some of these arrangements were corrupt, as in the case of  T. Dan Smith, an ex-Trotskyist, and council leader in the North East.

But in 1976, another Labour minister, Denis Healey, announced the end of Keynesianism and the long post-war boom with his phrase: ‘the party’s over’. Even so, it was  Margaret Thatcher who was seen as the historic watershed. Her battle cry was rolling back the state. Yet she failed, since state expenditure by government remained more or less the same at the end of her period in government as it was at the beginning. But she did  restructure state expenditure to fit Neo-Liberal individualism. Nowhere more so than in council housing where she organised the sale of the best properties at a huge discount to those workers who could afford the bargain. Then measures were put in place, such as raising rent towards  market levels, which tended to mean if you were in any kind of  paid work being a tenant was not worth it. This accelerated the trend to  concentrate  the lowest paid, those in insecure or casual employment, the  unemployed, the sick and the elderly, in council housing.

The proposed cuts will intensify this trend, but to the point where the question is posed: is this the end game for bureaucratic state provision of housing? Already by 2003 over 700,000 council dwellings had been transferred to other providers, mainly housing associations. Cameron’s “big society” small-state strategy will lead to more stock transfer which will result in higher rents, less secure tenancies, and the weeding out of less desirable or poorer or less compliant tenants.If the cuts are not stopped, the future prospect is one of record levels of homelessness, private rented overcrowded ghettos for the poorest sections of the working class, and the devaluation of labour power. This will mean a sharp general decline in  working people’s living standards.

3 thoughts on “Council housing, and the changing needs of capitalism.

  1. 3rd para from the end, “she” being Thatcher

    “Nowhere more so than in council housing where she organised the sale of the best properties at huge discount to those workers who could afford the bargain. Then measures were put in place, such as raising rent towards free market levels, which tended to mean if you were in any kind of reasonable paid work being a tenant was not worth it.”

    but i am in a council flat for 6 years, and the rent is very cheap: about half the “market-value”
    my job pays nearly £20G (surely “reasonable paid work”), tho next month they are taking 24% off me


  2. Hi

    A trend does not include everyone. There are variations in the regions.But most of the research shows what the academics describe as residualisation. (horrible word)

    The full context can often not be provided for comments due to space restrictions and editing

    In this case the context is the huge promotion of homeownership and easy access to mortgages before the credit crunch and the massive scope of the right to buy which took swathes of the best council housing out of the state sector.

    Stock transfer has also taken vast numbers of housing out of secure council tenancies. Again the best stock has gone. Or properties have been modernised with government money, providing the local council created Arms lengh management organisation to prepare for stock tranfer. The properties are then more tempting for being taken outside the local authority

    Yes your rent willl be pushed up to 80% of market rent according to the government spending review. Mybe they are trying to get you to change your mind about staying in council property! That’s assuming your property stays witht the local council or you can get a mortgage.

    Government propaganda about the big society and the possibility of council housng taking diferent social forms ie non secure tenancies has started already.


  3. The coalition goverment is now saying that new tenants in 2011 will have temporary two year tenancies and those who earn more than a certain level will face an end to their tenancy and presumably will have to seek private rented property if they cannot get a mortgage. I guess that the only workable system will be those who earn more than housing benefit entitlement allows. So the logic of council housing as a residual or left over tenancy or accommodation for the poorest will be stronger. If those on any kind of salary above benefit allowance level are in the private market looking for rented acommodation this will add to the pressure to force rents up and increase profits.


Comments are closed.