Wrong to Buy

For decades I have been a loyal taxpayer, contributing to the coffers of the Treasury and local government with a plethora of different taxes. I have contributed to the NHS, museums, libraries, roads and public art galleries. I must have paid for the streetlamp outside my house many times over. Yet no one would ever suggest that I should have the right to buy “my” streetlamp at a discount, or to buy a discounted share in the roads, museums and art galleries of Cambridge so that I can enjoy them for my own benefit to the exclusion of others. The fact is that these things have been paid for by past and present generations in order that present and future generations can enjoy them in perpetuity. This is a fundamental principle of public provision that the majority of people accept and support.

But this principle of protecting and preserving public assets for the benefit of future generations was smashed apart by the Right to Buy, the greatest and most “popular” privatisation of the Thatcher years. Valuable homes were gifted to the people who were lucky enough to be living in them at the time. Nearly two million properties have been sold and about a third of them have been sold on to private landlords, who often charge significantly higher rents and rake in billions of pounds in Housing Benefit. Forty percent of the soaring HB bill now goes to private landlords.

The last government cleverly allowed the Right to Buy to fade away by reducing discounts, but this government has ramped them up again. As a result 5,944 homes were sold in England in 2012/13 but this doubled to 11,261 in 2013/14. Add to this the loss of social rented housing through voluntary sales and conversions to “affordable rent” and England has seen a loss of 63,00 social rented homes over the past two years, rightly described as a “disaster” by Steve Hilditch at Red Brick.

When the Right to Buy was “re-invigorated” in 2012 ministers pledged that every home sold would be replaced. In fact, only one is being replaced for every five sold and the replacements are mostly unaffordable “affordable “ homes, not the social rented homes that have been lost. The public were lied to. Nick Atkin does the maths for you here and describes the impact on a single housing provider.

But you can tell it’s an election year because last week, the Telegraph ramped up the Right to Buy rhetoric by proposing that it should be extended to housing association properties. Several people have written about that already. But Allister Heath, the Telegraph’s deputy editor went even further and proposed that a radical Conservative government should “gift” every social housing tenant the home they live in, i.e free, gratis and for nothing.

This nonsense is barely worth responding to but the trouble is you never know where it might lead. Allister is a pure free marketer and although I have some respect for his trenchant views on the need for housebuilding he is clearly pretty clueless when it comes to social housing, which is worrying for such a senior journalist.

Let’s consider the consequences of his proposal. Firstly, every housing association, ALMO and local authority housing department would more or less cease to exist, with the loss of thousands of jobs.

Secondly, every tenant would suddenly find they owned their own home with all the burdens that go with it. Our sector houses thousands of vulnerable people who would struggle to deal with this responsibility. How would those on low incomes pay for the upkeep of their homes? Many properties would soon start to decay, adding to the nation’s housing woes. Many ex-tenants, thinking they had won the lottery, would decide to cash in their asset, happy to pay a 35 per cent tax on the sale value. This would create massive volatility as properties flooded the market. Many would end up back in the private rented sector once their windfall had been spent, adding massively to housing pressures and the housing benefit bill. Many of the vacated homes would be snapped up by private investors, again adding to the HB bill.

Secondly, the £45 billion of grant that sits on housing association balance sheets would have to be written off or repaid from the “tax” on future sales, but what about the £52 billion of debt? Presumably this would also have to be repaid with the proceeds of the “tax”, at risk of creating a crisis within the banking industry and a rapid loss of confidence in the government on the part of lenders. Then what happens to the 1.8 million households on waiting lists and all the homeless people who seek comfort from their local authority? For them, the private rented sector would be the only destination and the HB bill would go stratospheric. I could go on, but is this what we really want?

The truth is that the Right to Buy is not grounded in moral, economic or social utility. It is an arbitrary gift to those who happen to be lucky enough to be living in a property at the right time. It increases the welfare bill and worsens the nation’s housing problems. Its implementation is based on ideology, not reason. Politicians on the right see social housing as a socialist concept that must be eliminated. It is a proxy target for the NHS, seen as the great “socialist” success story but which enjoys greater public support and protection. This is partly a symptom of our failure to make the case for social housing. It’s a case we must make with greater force as the election approaches.

(First published at Inside Housing on 27th January 2015)

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