The Corn Laws of 1815 aimed to protect the interests of large landowners by restricting the import of foreign grain. As a result, food prices increased significantly and ‘hard-working families’ found they had less surplus income to pay their rent or to buy clothes and other manufactured goods. For the poorest families, more than half of their income could be spent on bread alone. This created a ‘cost of living crisis’ that stifled economic growth and caused unemployment to rise. Thousands of people were forced to turn to to their local parish for support. This meant either ‘outdoor’ relief (i.e. benefits) paid to them in their own homes, or ‘indoor’ relief – the workhouse. Continue reading →

In October 2010, Inside Housing published an iconic front page – The End of Social Housing 1945 – 2010. It’s taken three and a half years but a group of housing people has finally responded to that message and decided that enough is enough. SHOUT – Social Housing Under Threat – aka The Campaign for Social Housing has now been formed. Continue reading →

Do you recall the Abbey Habit? If you were born before 1990 you may remember a time when our High Streets were littered with building society branches. A century ago there were over 2,000 building societies. Only 45 remain and, apart from the Nationwide, most are small regional outfits. Does the disappearance of building societies hold any lessons for the affordable housing sector? I believe so.

The first building societies appeared in the late eighteenth century and tended to be “terminating” bodies – their members bought land to build homes and then liquidated the society once this had been achieved. But these were slowly replaced by “permanent societies”, taking deposits and lending to homebuyers over the long term. Their core values were based on mutuality and self help, and their rules limited what they could do as corporate bodies. Each member had a single vote and there were restrictions on mergers and takeovers. They were also prudent lenders, which helped to limit house price inflation. All slightly dull perhaps, but building societies were the main providers of mortgages for most of the twentieth century and responsible for a huge increase in home ownership – from 23 percent in 1918 to 70 percent by the end of the century. They did more to change the social fabric of the UK than any other financial institutions.

But all this changed with the 1986 Building Societies Act, which allowed them to offer retail banking services and to de-mutualise if 75 percent of their members voted for it. Banks were also allowed to offer mortgages. The distinction between banks and building societies became blurred. Does this sound familiar?

Over the next decade most of the largest societies voted to de-mutualise. Borrowers and depositors opted for a fast buck (I was one of them) without any real understanding of the wider consequences of demutualisation. Boards and executives were keen to privatise because their salaries soared and it offered opportunities for mergers and takeovers – the empire builders had arrived. Does this sound familiar?

The largest societies – Bradford & Bingley, Abbey National, Halifax, Alliance & Leicester, Northern Rock and The Woolwich – all became banks. Yet not one of them now exists as a separate legal entity – all of them have been swallowed up by Santander, Lloyds, Barclays and the other big banks. This agglomeration created banking behemoths that were “too big to fail” and paved the way for the credit crisis and the hit on the taxpayer when the whole structure collapsed.

So over a twenty-year period an entire sector virtually disappeared, and the vast majority of the British public is worse off as a result. In 2006 an all party Parliamentary report concluded that the demutualised societies offered less choice, were providing more expensive products and that the main beneficiaries of de-mutualisation had been executives and non-executives. Between 1993 and 2000 the total remuneration of chief executives in demutualised societies increased by 293 percent, compared to only 65 percent in mutual societies. And on top of this, the advisers, lawyers and bankers in the City picked up over £1 billion in fees. But the reckless lending following the 1986 Act also contributed to house price inflation.

If you believe it is far-fetched to think that this could happen to the affordable housing sector, think again. According to the HCA’s global accounts our sector has assets of £71 billion and annual turnover of £14 billion. These are big figures and an attractive meal ticket for the money men in the City. Our sector is being increasingly squeezed by reduced levels of grant and an increasing reliance upon private finance and market products. Not only will the City exert a growing influence but, it seems to me increasingly likely that some Boards and Executives, ever anxious to expand their empires, will be tempted to morph into private sector companies.

The recent heated debate about “that” Bromford open letter has highlighted a division within the sector between “traditionalists” and those who increasingly seek to ape the memes and mantras of the private sector. For the latter group, “old fashioned” social housing seems to be trailing somewhere in the background but, like Building Societies discarding mutuality, prudence and stability, if we discard social housing what are we for exactly? What then sets us apart form other private sector providers, who in most cases can do the private sector stuff much more efficiently and ruthlessly than we can?

So if I had a message for those who want to go down the private sector route it would be this. Don’t be seduced by the whizz and bang of the private sector. Stick to your core principles of social housing and a social purpose. Your equivalents in the building society movement forged ahead with the same degree of optmism and bravado as you, but they were defenceless against the big beasts of finance and they ended up leading their organisations over a cliff, albeit with a fat pension in their back pockets.

The example of the Nationwide should be an example to us all. They stuck to their principles, refused to demutualise and have just posted record profits. Being “dull” has its merits.

Note: With thanks to Tom Murtha who prompted the original idea for this blog.

(First published at Inside Housing 26th November 2013)

I’m setting off for Manchester shortly, but I thought I would leave you with one of those quirky housing stories that this blog is fond of.

I believe I first became aware of the Mole Man of Hackney in the nineteen-eighties, when I lived in Hackney Wick. But I may be wrong, for this is a story that is so Gothic, so bizarre, that it seems to belong more to mythology than to real life. Charles Dickens would have loved this case of a classic English eccentric who, quite literally, undermined the peace and tranquility of his neighbours. Iain Sinclair, the chronicler of hidden London, devotes a chapter to the Mole Man in his recent book: “Hackney, That Rose-Red Empire”.

In brief, William Lyttle was a civil engineer who bought a pair of semi-detached houses in Mortimer Road, De Beauvoir Town, Hackney in the early seventies. He started building rickety extensions in the garden, which was soon filled with assorted car wrecks and piles of junk. But he also had a strong desire to “improve’ his property by creating new spaces beneath the house. Unbeknown to his neighbours and using only a shovel and a homemade pulley system he tunnelled into the soft London clay and built a vast network of tunnels beneath and beyond the property, stretching for 20 metres in all directions, some going down ten metres. Some of them were big enough to stand up in. He planned a leisure centre and a sauna, but it was only when a bus fell into a hole in the road outside the property that the Council became aware of his activities. After years of legal action he was finally evicted by Hackney Council in 2006 and ordered to pay £350,000 towards the cost of remedial works. Hackney’s engineers took away 20 tonnes of material from the property and estimated that he had excavated 100 cubic metres of soil.

After his eviction, he was put up in a hotel for three years and then re-housed on the top floor of a council block. But he continued his excavations and knocked holes into several of the walls, causing a huge amount of damage, until he was found dead of natural causes in 2010 aged 79. His Mortimer Road property is now to be auctioned and is expected to fetch £750,000.

For myself, I can think of little worse than the thought that someone was digging beneath me and undermining my house, unseen and unheard. Conventional anti-social behaviour can be dealt with eventually, but William Lyttle’s activities were of a different order completely. Part of me believes that he must have been THE neighbour from hell, (or at least from the underworld!), but I also admire his eccentric individuality. But was his obsessive behaviour any different from that of Joseph Williamson, the man who built the strange network of tunnels under Liverpool? Lyttle could devote just his own labour to the task, but Williamson had an army of unemployed workers at his disposal.

You can read more about the Mole Man of Hackney here and here. The Daily Mail story helpfully includes a photograph of a real mole, just so that you distinguish between it and Mr Lyttle!THE neighbour from hell

(First published at Inside Housing 2th June 2012)