Progressive Labour politicians should be leading the way on the delivery of gentle density and missing middle housing, not calling for bans on modest flats and apartment schemes.
Labour is missing a trick not leading on the creation of walkable urban living in communities dominated by single-family homes. Known as the ‘Missing Middle’, these housing options represent a whole variety of built forms. Built form that is compatible in size and scale with lower density neighbourhoods. It also provides diverse housing options that supports local shops, public transport and community-serving amenities. Middle housing would form part of a sustainable approach to the growing demand for walkability in our communities and the social need for housing.
What is ‘missing middle housing’?
Daniel Parolek argues for the reintroduction of these concepts in one of Planetizen’s top planning books ‘The Missing Middle’. Described as ‘middle’ because it sits in between mid-to-high-rise apartment buildings and your typical terraced, semi-detached, or detached homes. But many of these housing options have since gone ‘missing’, disappearing from new building stock figures or not being measured at all.
Whether young couples, teachers, paramedics, single professional women or baby boomers, many seek ways to live in a walkable neighbourhood. Many people also seek to live without the cost and maintenance burden of a terraced, semi-detached, or detached home. Or simply cannot afford to live in one. The ‘Missing Middle’ solves the mismatch between what is currently available in UK suburbia and the desire for walkable neighbourhoods.
Sadly, both Labour and the Conservatives are lacking in leadership in support of this type of built form. Instead, as we have seen from Croydon to Churchfields, local parties are kowtowing to NIMBYs in focus groups. These people trick them into believing that the real enemy is the person living in what are often the most affordable forms of accommodation. Flat dwellers and those residing in sub-divided houses.
We are preventing homes for those without children
Record numbers of women are reaching the age of 30 child-free, more than half (50.1 per cent) of women in England and Wales born in 1990 were without a child in 2020. This is almost three times higher than the figure in 1941 where 17.9 per cent of women were child free. Bearing this in mind we know that more households will be without children. Ignoring middle housing means we fail to provide for those who cannot afford to live in a family-sized house on their own.
But are young, highly educated, technology-driven millennials who desire mobile, walkable lifestyles that are prepared to exchange space for shorter commutes and mixed-use neighbourhoods a cause for concern? And does building new maisonettes, sub-divided townhouses, courtyard apartment schemes, or two to four storey apartment blocks really undermine the character of an area?
The correct answer is no if constructed to decent home standards. Politicians purporting to support policies that just focus on the three-bed family home are simply out of touch. Failing to address the needs of a shifting demographic, all based on an outdated myopic view of the world.
For the most part of the last century multi-unit or clustered housing types have been considered compatible with our communities. Often missing middle housing types have consisted of smaller units. This achieves higher density while maintaining connection to the streetscape without needing costly items such as lifts. Construction of such nature can come at a lower cost and increases build efficiency. It allows the creation of gentle density neatly placed into current residential and mixed-use development patterns.
Labour must not ban flats under any circumstances
To achieve real housing affordability, Labour cannot be standing on myopic outdated views such as “build houses, not flats”. The simple fact is we do not have enough of missing middle housing, which includes flats and sub-divided housing.
All too often apartment blocks with four to eight flats over four floors are said to be “too big”. Cited by those already well housed and more privileged than their broader communities. But we must choose our target base and we must draw the line somewhere. If we want to win elections should we be courting “would be” Labour voters who really want nothing other than to prevent change, or should we ask ourselves are these converts to our values, or are we traitors to ours?
If Labour wants to win marginals it needs to appeal to those who have Labour values inside them. Not by dragging out its stall to those who fail to recognise the damage caused by making our housing shortage worse. After all the middle aged, not the middle class are the real swing voters.
For anyone looking at whether housing should be considered to be a human right, a blinding light shines on the obviousness of the question. If housing is not a fundamental right, then what is the point of human rights campaigns?
A new publication jointly produced by Labour Housing Group and the Labour Campaign for Human Rights brings together a number of voices showing how this fundamental change could transform people’s lives. At a time of severe housing pressure in this country, fully implementing the UN’s right to adequate housing makes absolute sense.
The publication follows the adoption of the call for housing as a human right into UK laws by the Labour Party at its Annual Conference 2021.
A number of major Labour figures have called on the right to housing to be recognised and treated as a human right. In his leadership campaign, Keir Starmer said “We have to start treating housing as a fundamental human right”. Others including Andy Burnham have stated their support to the principle, and at Labour’s Annual Conference in 2021, the then Shadow Secretary of State for Housing, Lucy Powell, also spoke powerfully about housing as a human right being “at the heart of our New Settlement”.
What may now be different is that the Labour Party could be poised to go beyond just using the rhetoric of human rights, and instead use it as basis to orient our future housing policies and ensure that everyone, everywhere, can access a safe, decent and affordable home.
But what does this really mean, and why is it so exciting?
First, taking a human rights approach to housing starts by recognising that homelessness, unaffordable rents and unsafe housing are not just social ills, but serious human rights violations impacting millions of people. The flip side of this is to recognise that housing policy is not just about choices a government may or may not make, but about obligations they must fulfil. Legitimate political debate then begins to focus on how to end homelessness, not whether to do so.
Second, a human right to housing provides a framework in which progressive policy can de designed. According to international treaties ratified by the UK – and hopefully in the future incorporated into domestic law – governments must outline how they are acting to ensure housing is available, affordable, safe, decent and provides security of tenure. They must ensure this for everyone, and must take proactive measures to ensure equal provision for groups who may otherwise face discrimination or experience inequalities, whether they be women, minorities or people from Gypsy, Roma and Traveller communities, or face extra difficulties because of disabilities. Ambitious concrete policies will be needed to achieve all of these things, from mass council house building and abolition of Section 21 evictions, to ending the cladding scandal, getting rid of discriminatory “right to rent” checks, and providing adequate traveller sites.
Third, a human right to housing should ensure that change is not just driven from the top, but also by empowering residents, tenants and leaseholders to drive change from below. In part this means providing ways in which people can be meaningfully involved in developing policies and also have their complaints heard. One of the many human rights violated in the run up to the Grenfell fire was residents’ right to be heard, with safety complaints dismissed with fatal results. It also means identifying ways in which people can hold authorities accountable for their actions, and seek remedy when rights have been violated. In many cases this may mean effective complaints mechanisms, backed by clear information and support to individuals, in others it may mean recourse to courts with the support of adequate legal aid.
“Housing is a human right: how Labour can make it a reality” sets out the agenda for tackling the implementation of the right into English law, recognising that there is already a move to do so in both Wales and Scotland, and following the examples from elsewhere in the world. Experts including academics, a former UN special rapporteur on the right to adequate housing, and specialist housing lawyers focus on what the right would mean, how it has been adopted elsewhere in the world, and how it could be enforced.
Labour politicians from around the country have looked at how to guarantee the right to an affordable rent, already being worked on in London and Scotland, to good conditions for all tenants, and to access to a home.
Examples from elsewhere in the world show how progress has been made towards implementing the intention set out in Article 25 of the 1948 Universal Declaration of Human Rights, and in Article 11 of the 1966 International Covenant on Economic, Social and Cultural Rights (ICESCR) for housing to be included as a right for all nations. As Leilani Farha, former special rapporteur on the right to adequate housing has illustrated, enshrining the right in the laws of any country is not simple or speedy. Canada’s National Housing Strategy (2017) committed the state to progressively implementing the right of every Canadian to access adequate housing. A feasibility study recently published in Wales concludes that the UN expects governments to make progress toward the “fullest possible realisation of the right through the application of resources as they become available”.
So the question about whether we can afford to give our citizens this right – a question that comes up pretty soon in any conversation about this issue – can be answered: once we start to make financial decisions based on this right, then we will find that we can not only afford to do it, but it also makes economic sense to do it. And as the Canada Government has found, implementing this right influences a whole raft of other decisions, financial and otherwise.
The UN’s declaration sets out the principle that this should be seen as the right to live somewhere in security, peace and dignity, one that the war in Ukraine has highlighted only too painfully in recent weeks.
By recognising that housing is a human right, and committing to incorporate the right to adequate housing into UK law, the Labour Party has taken an important step in framing a progressive and transformative housing policy. There is much more work to do, but together we can do it. It is to be hoped that many others will join with Labour Housing Group and the Labour Campaign for Human Rights to work on how this right can be achieved here in our country.
This article was co-authored by the Labour Campaign for Human Rights and the Labour Housing Group.
Sheila is the Secretary for the Labour Housing Group and was one of several authors involved with the contribution.
Rural housing is one of the most pressing, and contentious, issues facing this country. If Labour is to stage a rural revival then we must confront this issue head on.
In my home constituency of North East Somerset, and across rural England, there is a great distrust around the idea of house building. It is common for people to feel that residents have little to no say over when and where new housing is built and that housing developers are unaccountable. These concerns are not misplaced. For too long we have seen housing developments simply bolted on to towns and villages with little to no thought about the impact these new developments have.
When housing developments are built without infrastructure such as shops, restaurants and healthcare facilities it puts pressure on the existing infrastructure in a town, particularly road infrastructure. Most towns and villages in North East Somerset are simply not equipped to deal with increases in traffic, often due to road size and layout.
When infrastructure is already crumbling under 11 years of Tory misrule these strains can be devastating. But this lack of infrastructure is equally damaging to new residents, a lack of shopping or healthcare provision nearby harms the ability to forge a community spirit in new developments. The Covid-19 pandemic has demonstrated clearly the dangers of isolation and it is incumbent on the Labour Party that our housing strategy acknowledges this.
As a consequence of austerity, rural communities have seen much of their infrastructure disappear. With police stations, fire stations and GP’s being closed in small towns and villages and often converted in to flats. This has increased the distrust around housing developments for many people. But it also contributes to the poor conditions of new housing: as a parish councillor who sits on the planning committee I have seen many examples where buildings are converted in to flats or flats are built.
Often, these flats do not have an appropriate number of parking spaces, which further contributes to the weakening of road infrastructure. If you live in a small town with roads designed in the late 19th and early 20th century, and there are cars parked on the road due to a lack of parking spaces, it can become very difficult to drive around.
We must also face up to the climate crisis. It is not possible, or desirable, to continually build on every field in perpetuity given the environmental consequences. Our green spaces must be protected, not just for the environmental benefit – and biodiversity benefits they provide, but for the mental health benefits the existence of these spaces provide for the people who live near them.
When we do build it must be with a with a long term plan in mind, rather than for the short term financial interests of housing developers. This means, building homes that can last for 100 years – and – envisioning what the community will look like at that point too, including its green spaces. A climate combating housing strategy must also include retrofitting old houses, as we’ve seen championed by our Labour Metro Mayor Dan Norris.
Despite this, there is a need for more housing in North East Somerset. In the towns and villages of my constituency there has long been a strong community spirit. However many people are concerned that children and young people are unable to afford housing in the communities they grew up in – and are forced to move to Bristol and Bath (further contributing to the housing issues faced in those cities) – never to return.
The only way to combat this loss of community, is of course to build more housing in these areas. But this house building must be accompanied by a strategy to assist people in renting and buying their own houses at a reasonable rate. Otherwise for many people the dream of living in the town they grew up in is unreachable.
I believe firmly that there is public support for building the houses we need to combat the crisis we face. But I also believe that more work needs to be done to gain the full confidence of people that under Labour housing will be a benefit to everyone.
Jonathan Wallcroft is a parish councillor in North East Somerset as well as the Secretary of the South West Branch of the Labour Housing Group and a steering group member of Labour Coast & Country.
Housing wealth inequality is a key driver in the reduction of social mobility.
Every child deserves a chance of economic success, no matter what their background. In England inheritance has become an ever-growing share of national income since the 1970s. It is these inheritances that are to blame for increasing wealth inequality between those with richer and poorer parents. We know there are substantial inequalities in the distribution of housing wealth in Britain. Often related to social class an income.
Sadly, stringent restrictions on new housing supply effectively limit the number of workers who can access the opportunities to create this wealth.
This article explores to what extent attempts to reduce housing wealth inequality can tackle these issues and help win Labour soft Tory votes?
Neighbourhood factors and wealth distribution make or break upward mobility
We know from studies in the United States that if a child moves to a wealthier neighbourhood, it increases the likelihood that the child would go to college. It also increases earnings on average by over 30% by the time they reached their mid-20s. We do not know exactly what the causal factor is in these studies, whether it be going to better schools or engaging with families with higher socio-economic status. But what is clear is that keeping people in places where earnings and job opportunities are not as good hampers social mobility and exacerbates wealth inequality.
Living in England means parental wealth is distributed extremely unequally. One fifth of people born in the 1980s have parents with wealth ‘per-heir’ of less than £10,000. Yet a quarter of people have per-heir parental wealth of £300,000 or more, while one in ten have £530,000 or more. Education and region are strong predictors of parental wealth. Children of Londoners have parents with over twice as much wealth, on average, as those with parents living in the North East such as my own.
Land use regulation is linked to house price increases, restricts the movement of labour, and is a causal factor of rising wealth inequality
It goes without saying policies that successfully redistribute these inheritances would have large effects on inequality and social mobility for later-born generations. The OECD recognises that land use determines health, environmental, social and economic outcomes. Arguing that rising inequality in recent decades is explained by “rising land and property prices”.
Even small changes in valuations of land and property can have major consequences on the distribution of wealth. Meanwhile we know increases in land and property prices tend to benefit older and wealthier households. This often comes at the expense of younger and poorer households.
For most of the 20th century workers moved to areas where new industry and opportunities were emerging, with farmers and the like moving from rural settings to cities. In the Great Migration of the United States some six million African-American workers left the South for factory jobs in cities like Chicago.
Yet when housing supply is highly restrictively regulated in certain areas, house prices are higher and population growth is smaller relative to the level of demand. Professor Edward Glaeser of Harvard University and Professor Joseph Gyourko of Wharton Business school make this argument. It is this tight regulation of land markets, often in a country’s most productive places, that leads labour to locate in places where wages and prices are lower.
NIMBYism and stringent restrictions on building new housing holds back the economy, harms workers, and hampers social mobility
In turn reducing a country’s overall economic output in the process. In arguably the single most influential article ever published on housing regulation, Chang-Tai Hsieh and Enrico Moretti’s “Housing Constraints and Spatial Misallocation” determines such these restrictions that have held by the US economy by over 36% of Gross Domestic Product between 1964 and 2009.
The rise of the property-rights revolution that is “Not In My Back Yard” has reduced the construction of new homes tremendously. In particular where the economy has been strongest and most productive. This is not just an American phenomenon. In England we know the impact of supply constraints have a substantive impact on house prices. A fact we cannot choose to ignore.
Its own findings highlight “as inheritance of these houses comes into play, we will see stark rises in inequalities”. The increasing sizes of inheritances received by those from wealthier backgrounds sets to limit the prospects of upward mobility for those from poorer backgrounds.
Labour needs to ask itself: does it care more about the preservation of housing wealth or the affordability of housing
As Michael Gove starts his new role as the Secretary of State for Levelling Up, Housing and Communities we must look back to his views on the matter. For example, he acknowledges in his 2013 Keith Joseph Memorial Lecture that “access to home ownership has become the preserve of those with family wealth”. In England, with reference to superstar cities like London, we know that two-thirds of house price versus rent increases between 1997 and 2018 can be explained by labour demand shocks and supply constraints.
A strong labour market is one a full employment and where employers must compete for workers. This makes an area more desirable to potential migrants and increases one’s willingness to pay for housing in an area. If the Labour Party is to be the party for labour, it must understand its role alongside supply constraints.
This means finding ways to allow labour to go to move to where the jobs are. We currently limit the number of workers who have access to such high productivity. But this is why we must build houses there to allow more workers to create wealth of their own.
Labour voters should care more about housing affordability than protecting housing wealth
Interestingly, Labour Party voters feature as an instrument in research methods to identify planning restrictiveness. On average, voters of the Labour Party have below-average incomes and housing wealth. Thus, it is expected that we should care less about the protection of housing wealth. Instead more about the affordability of housing.
Campaigners are fighting for planning reform to make housing more affordable
Sadly, in England we have seen the housing wealth preservers successfully lobby Government into submission. This has come much to the horror of campaigners for affordable house prices. Director of Priced Out, Anya Martin, said:
“We are horrified that Government is u-turning on planning reforms.”
“Renters have faced decades of rising costs because of our failure to build enough homes, and our planning system is at the heart of this failure.”
Priced Out finds itself alongside the National Federation of Builders. Who also have cried out they won’t forgive Conservative backbenchers for derailing the planning proposals. To note, smaller builders used to deliver 40% of homes during the 1980s, but now that figure is just 12%. This is in large part blamed on the current systems barriers to entry.
While some on the left deem the reforms a “ferocious attack on democracy”, they find themselves standing shoulder to shoulder with the wealth preservation lobby of some of the most affluent areas of the country.
Maidenhead, where the house price to earnings ratio is 12.7x, see its MP Theresa May having led the Tory revolt against planning reforms. Theresa Villiers MP for Chipping Barnet, where the household income needed to buy is £140,000, railed against the alleged reduction of democratic involvement in the planning system.
Both of whom see the ability to veto new homes in their local areas as the holy grail. Sadly, ignoring the fact local plans are politically led community consulted processes in themselves.
Labour needs to think about how they can win Tory safe seats like the Isle of Wight
Other Tory backbench MPs, such as Isle of Wight’s Bob Seely, have vociferously made the case against the “planning revolutionaries”. He represents an area with one of the worst levels of child poverty in the South East. Boasting below average incomes and weak productivity.
Average disposable household income on the Isle of Wight languishes below the UK average at £18,366 (-13% lower). The constituency has 2,149 households on its social housing waiting list. You would think with such demographics it would present itself as a target Labour seat for Keir Starmer.
Yet the Isle of Wight boasts a Tory majority of over 21,000 votes. Labour, being the party of tackling wealth inequality, needs to think about how people like Bob are effectively challenged. Last time Labour ever came close to winning Bob’s seat was in 1945. The year the Attlee government put housebuilding at the heart of its agenda.
There are concerns about how the island will handle the additional 400 new homes per year. Most of which arising from the latest housing need calculation. This comes on top of the 640 calculated using the meagre standard method. Shockingly, the Isle of Wight has a price-to-earnings ratio of over 8x the average income. But this bears no relevance to the Tory preservation lobby, no doubt as they directly benefit.
Construction provides jobs, wages, and keeps income in the community. It improves the local economy as workers employed on each project have wages to pass onto other local businesses. The Isle of Wight is crying out for such opportunities. But those hell bent on preserving wealth continue to deny them the opportunity.
But the issue goes much further than the island itself. For example, the ONS states that those living in neighbouring Central Hampshire have an average annual disposal income of £26,302 (+24.6% higher than the UK average).
For those looking across the water for opportunities from the Isle of Wight the outlook is bleak. New Forest District Council, next to the Isle of Wight, is only delivering half as many homes as it needs. In effect pricing out poor islanders who may wish to move to this more productive part of the country.
Backing meaningful planning reform means creating more opportunities for workers. Only then will wealth become redistributed more evenly.
Changes to land use regulations can form part of the biggest redistribution of wealth under a Labour government
Historically, local economic booms matched with local building booms. Prior to 1946 building was lightly regulated and housing was allowed to be built in areas of high demand. For example, there were 80,000 new build homes created in London in a single year of 1930 alone. Over 2.5x the net number of new homes delivered in 2017/18. A year that marked a decade long high, mostly by the private sector subsidised by government.
We know extensive restrictions on land use and building leads to higher house prices, rather than more homes and workers. If Labour is to be once again the party of the worker, it must deliver more homes. People used to move from poor places to richer places. However, due to restrictive land use regulations this pattern is on the decline.
We must allow the population to seek work in wealthier places. These are places where demand is strong and productivity is high. In doing so we will avoid unequal mobility and poverty traps created by a lack of new housing.
We must counter the NIMBY property-rights revolution to improve prosperity for all – and say ‘Yes In My Back Yard’
For constituencies like Bob’s to prosper, we must tackle the misallocation of labour. This means allowing workers to cross the Solent to the New Forest West and building more homes. While wealth inequality starts at home, it ends with allowing others to access creating that wealth of their own.
Thus, Labour needs to present the country with a vision for prosperity. It must do this by challenging the NIMBY property-rights revolution. One steeped in a world of draconian regulation, high prices, and ever more entrenching wealth inequality. In allowing more families to build wealth through the property owning democracy, it can create one that will become less unequal.
Labour must focus on improving opportunities for the workforce through land regulation. By redistributing wealth more fairly through building more homes in high demand areas it can achieve this. After all we know that data on wages shows big cities do bring prosperity to their wider areas.
By moving to “Yes In My Back Yard” (YIMBY) Labour can tackle wealth inequality and become once again the party of aspiration. Equipped with this vision it will can attract soft Tory voters, while at the same time putting labour back at the core of its policy-making.
Chris is the Editor of Red Brick blog and sits on the Labour Housing Group Executive Committee.
He currently is Chair of Poplar and Limehouse CLP, co-hosts the Priced Out podcast and is the Local Government and Housing Member Policy group lead for the Fabian Society.
Under Corbyn, Labour announced its bid to combat high rents through old-style rent ceilings. If we look back across history we see these have had many unintended consequences. Often we have found the introduction and continuance of rent controls have done more harm than good. So should Labour continue to embrace such a policy?
We know rent legislation cannot cure housing shortages. Rather, regulations such as rent ceilings merely mitigate the effects by giving comfort to sitting tenants – at the expense of prospective tenants. All too often we see false views on rent control spill over from popular misconceptions into apparently learned debates. It is for this reason why Labour must resign rent ceilings to housing history and focus on the real problems at hand.
History shows Rent Controls are Bad
In Britain we have recognised the damage done by rent controls as far back as The Rent Act in 1957. Where at the time we witnessed expensive properties freed from such regulations. Why? Because old-style rent ceilings foster dilapidation of housing stock, encourage immobility, and distort land-use patterns. It simply makes housing worse.
Originally the introduction of rent ceilings sought to protect tenants from rent rises caused by war-time shortages. Often caused by bombing. Yet many places have seen them retained and enforced ever since. Their perception as a temporary measure were often short lived, almost always becoming destructively permanent.
Late Swedish socialist economist Assar Lindbeck once said “rent controls appears to be the most efficient technique presently know to destroy a city – except for bombing”
An unsurprising statement when the average waiting time for a rent-controlled unit in Sweden is 11 years. In Sweden keeping rents low for a small section of renters sees tenants hold onto property they no longer wish to live in. Rent regulation incentivises lucky rent regulated tenants to sublet in the black market, often for a significant profit. One would argue this is hardly a socialist panacea.
Price Signals Allow Markets to Respond
Back in 1906 an earthquake hit San Francisco. Subsequent fires destroyed thousands of acres of buildings in the heart of the city. It resulted in 225,000 people becoming homeless. The city of 400,000 lost more than half its housing in three days. Yet market driven construction of new homes put roofs over many earthquake victims heads. In effect developers were able to respond to market demand through rising price signals.
Nevertheless, each remaining household still had to shelter 40% more people than it did before the quake. So what do you think the first local paper observed following the earthquake – a huge housing shortage surely? No, in fact the first San Francisco chronicle following the earthquake made no mention of housing shortage at all.
The market had responded and there was over three times more homes available to rent than advertised for sale. Just goes to show what can be achieved by the market without rent controls having distorting effects on new supply.
Rent Controls Deter New Construction
Contrast this to 1946, where the San Francisco population had increased from 635,000 by 200,000. All over a six-year period. By comparison, the number of dwellings had only increased by a fifth. While in 1906 the city had to shelter 40% more people than before the earthquake, by 1946 the city only had to accommodate around 10-12% more than before the war. This did not stop the Governor at the time going on record to describe the housing shortage “as the most critical problem facing California”. But what was so different?
In 1906 higher rents could signal to the market to build new construction. However, by 1946 imposing rent ceilings made this method of stimulating supply for rental homes illegal. The result? 730 houses listed for sale for every 10 homes listed for rent. The absence of a ceiling on selling homes, in conjunction with a ceiling on rents, had considerably distorting effects. It meant that prices were to rise as a large and increasing demand encountered a relatively fixed supply.
This meant many landlords ended up selling at inflated market prices, rather than renting to tenants with a price ceiling. Rentals effectively become almost impossible to find. At least at legal rent levels. Rich people with money still found plenty of homes to buy. Ceilings on rent provide the rich an advantage to satisfy their housing needs. Restrictions on rent only make this condition worse. We must also recognise that during this time incomes in San Francisco had doubled in comparison to levels before the war. This allowed people to pay more in rent even though legally they did not have to, exacerbating the proliferation of the black market.
Rent Controls Reduce Mobility and Increase Unemployment
Research by Joseph Schumpeter on unemployment recognises the correlation between lack of labour mobility and structural unemployment. In turn, rent controls artificially create more pressures on cities, notably because inhibiting rent increases puts a brake on the natural drift out to towns. We know more people leave London for the rest of the UK, than move from other places in the country to the capital. This is primarily due to relative affordability.
Studies from San Francisco by Stanford University shows rent control limits renters’ mobility by 20% and lowers displacement, which comes at the expense of a reduction in rental housing supply by 15%. Rent controls lead to a less mobile workforce, more structural unemployment, and less supply. No doubt hampering the economy and increasing state borrowing unnecessarily.
Rent Controls are Denigrated Across the Political Spectrum
Notwithstanding the above, rent control is considered the least contentious area of economics and is widely denigrated by economists from around the world. The agreement cuts across the political spectrum, from Hayek and Friedman agreeing on the “right”, to architect of the Swedish Labour Part’s welfare state Gunnar Myrdal on the “left”. It has literally been no longer a debate within the profession for a considerable length of time.
Rent Stabilisation is Ineffective
Maureen Corcoran has reflected on Germany’s rent regulation through its local rent index, arguing regulation improves affordability and transparency. But we have seen since Germany has moved to stricter rent control, with a 5-year rent ceiling, finding new rental property has become increasingly difficult. Rent stabilisation typically has more flexibility and freedom around having an ability to change tenant than old style rent ceilings. For example, if you make repairs, you can increase rents. Labour has mooted such types of control in the past, but we know these too still do more harm than good.
In New York rent stabilisation has ‘luxury de-control’, akin to the 1957 Rent Act in the UK. If a rent gets to a particular level, then it can leave the rent stabilisation regime all together. Professor Ingrid Ellen of NYU argues that outside of Manhattan rent stabilisation does not have that big of an effect on the market. She argues apartments can often be as close as $200 a part in terms of median market rental levels, in comparison to rent stabilised rents. This suggests even modern versions of rent ceilings remain ineffective for the most part.
The Evidence is Overwhelming: Rent Ceilings are Bad
Developers essentially end up wanting to build less, which can’t be a good thing. The rules in New York meant you typically did not have rent stabilised levels on new lettings, which was one way the rules tried to avoid such an issue. But still, what you saw in post-war New York was the conversion of a lot of rental apartment blocks into condominiums for home ownership. Once again, resulting in a net loss of rental stock. Lower supply means higher prices.
Thankfully, recent studies continue to put the rent control question to bed. In August 2020 by Thao Le, Edward Coulson, and Lily Shen published ‘Tenant Rights, Eviction, and Rent Affordability’. The paper demonstrated that for every one-unit increase in the toughness of rent control, evictions are reduced by almost 9%. It found rental housing costs becomes 6% more expensive where tenants have more protection against landlords through regulation. While a higher Tenant-Right Index is also negatively associated with a decrease in housing supply and an increase in the homeless rate. When we put ideology before evidence, empirically we see rent controls lead to worse outcomes.
Hanchen Jiang, Luis Quintero, and Xi Yang recently released their paper ‘Does Rent Regulation Affect Tenant Unemployment? Evidence from New York City’. It found that often the beneficiaries are those who are more well off and such regulation denotes a significant transfer of wealth to those on higher incomes. Rent-stabilised tenants are empirically more likely to be unemployed than private market-rate tenants, particularly if you are white and highly skilled. To what extent this could ever be seen as a progressive outcome still remains to be seen.
If Labour is to continue to encourage the proliferation of rent-controlled property it should achieve this through the construction of new social housing. Not blanket market distorting rent regulation. Rent control is great if you get it. However, it merely comes at the price of greater inequality for future generations.
Rent ceilings offer no cure to the housing shortage, and in combination with a planning system currently disconnecting local housing supply from local demand, demand-side rent regulations merely create more problems than they solve.
Editor of Red Brick. He is currently an Investment Manager at Guild Living, a Non-Executive Director of Housing for Women, and is on the Labour Housing Group Executive Committee.
Chris also co-hosts and produces the PricedOut UK Podcast.
As we enter 2021 there is no doubt that Britain is facing a housing crisis ─ a crisis of supply, demand, affordability and quality. Sadly, like an unwelcome ghost at the feast, all the Government seemed to be offering us last Christmas is reheated policy ideas, gone-off planning reform, regifted funding and a long hangover after a decade of austerity and welfare cuts.
In Hackney, where I am the Labour & Co-operative directly elected Mayor, house prices have risen by 71% in the last five years. Nationally, homelessness temporary accommodation (TA) placements have risen by 71% since 2010 and 80% of those in TA in Hackney are now estimated to be in work. And ‘permitted development rights’ have allowed landlords to turn former office blocks into homes without planning permission, leading to poor quality, rabbit-hutch homes ─ too often leading to private profit from the homelessness crisis.
It is a multifaceted crisis that the Tories think will be solved very simply ─ by reforming the planning system. Their latest White Paper, entitled Planning for the Future, sets out proposals to supposedly help increase the number of homes built every year, but will end up causing longer-term problems. Recently announced (and welcome) changes to the proposed new planning formula for house building will not undo the damage the rest of the proposals could bring about.
First, the proposals suggest scrapping local planning policies currently co-produced between councils and their communities. Local Plans and policies will be replaced by ‘national guidance’ that often just sets out the bare minimum level of standards that local people have rightly come to expect from developments ─ standards on affordability, sustainability and infrastructure.
Next, the Tories want to create a simpler zoning system, designating areas across England into three new categories: ‘growth’, ‘renewal’ and ‘protection’ areas. Importantly, ‘growth’ areas will give developers automatic planning permission to build, so long as they meet the national standards. Imagine the current permitted development rights on steroids.
These proposals are severely undemocratic ─ they will transfer power and responsibility away from local councils to Ministers and Whitehall Civil Servants, who will be able to set standards and zones in areas they have no knowledge of.
Automatic planning permission will mean local communities and councils will lose the one opportunity they have to assess and comment on developments in their areas. The scrapping of Local Plans will also mean local people will lose the chance to shape policy in their areas. This also risks that policies like Hackney’s new Child Friendly Places SPD or our commitments to green infrastructure and genuinely affordable workspace could be sidelined.
On infrastructure, the Government is suggesting ‘streamlining’ the current developer taxes into a single ‘Infrastructure Levy’. At the same time, the Government will introduce a mandatory 20% target for their new ‘affordable First Homes’, which is really just homes subsidised market-rate homes. This will hamper the already difficult negotiations the councils have to go through to push developers to provide genuinely affordable homes.
The Government also wants to implement the principles of biodiversity net-gain in the planning system, as well as a ‘biodiversity credits’ system to tax developers where they fail to meet net-gain targets. It’s a sound principle, but at the moment the credits will be paid straight to central government, and not the communities which will be impacted by the development.
At the same time, if councils lose the lever of our current planning system ─ being able to set local biodiversity policies and assess developments before they are built ─ it is unclear how the Government expects to achieve their principles. The risk is developers in ‘growth’ areas will use credits as a quick ‘get out of jail free’ card to simply pay a tax without contributing to nature recovery or biodiversity conservation which local people could benefit from. As I recently said in Parliament these conflicting policy objectives hardly feel joined up.
We know how important local green infrastructure is to local communities, particularly to those without a private outdoor space. If we didn’t, the coronavirus pandemic provided a valuable reminder. We also know the current planning system is better at achieving green space than no system at all ─ just 3.5% of new homes created through permitted development rights included access to private outdoor space, compared with 23.1% of homes delivered via planning permission.
And lastly there is the idea that these plans will increase supply; the Tory narrative is that really, it is a cumbersome planning process that is stopping homes being built. Well, in Hackney, 90% of residential planning applications submitted to the Council have been approved since 2010, but 25% of them have not been built. That is over 2,000 approved homes in Hackney that have not been built by developers, who are instead sitting on land in the Borough.
So at every turn, these plans will fail. They will not increase supply; they will reduce the amount of affordable housing; they will water down design and quality standards; and they will not tackle the biggest area of demand ─ social housing. Any planning authority, Labour or Conservative controlled, will tell you that when it comes to building homes, planning isn’t the problem.
Clearly, the private market alone will not meet the Tories ambition to see 300,000 homes built a year by the middle of this decade. This will be compounded by the economic shocks of coronavirus and Brexit. Ideology stops the Tories from seeing the clear practical contribution that large scale countercycle investment in green, social rented homes could bring across the UK and to communities like Hackney.
Building council homes is a pro-industry response. All the lessons from the previous recessions show that without council house-building, we will see a contraction of the construction industry, fewer small businesses, deskilled and unemployed workers and reduced competition ─ all resulting in fewer homes of all tenures being built.
Labour knows that when the market isn’t delivering for people, the Government must step in. Labour councils know that what we really need is a new generation of ‘Homes Fit for Heroes’.
The council-house building agenda in this country started after the First World War to house returning soldiers in affordable and high-quality homes, and we only marked that anniversary last year. Now we need homes fit for our heroes on the frontline of fighting the war against coronavirus.
The planning reforms might yet be another Dominic Cummings pet project that, now he has ungraciously left the building, may be dropped or watered down. But the Labour movement can’t take the chance of these proposals getting rushed through a Tory-majority Parliament.
If we believe in building genuinely affordable homes, with decent standards and built in sustainable communities that get a real say on development in their areas, the Labour movement must unite again to fight against these plans at every step of the way ─ and then fight for a return to mass council house building again.
Mayor Philip Glanville
Since 2016 Philip has been the Labour and Cooperative directly elected Mayor of Hackney, the borough’s second directly elected Mayor. He was re-elected in May 2018.
He was previously a councillor in Hoxton for ten years, and spent three years as Cabinet Member for Housing.
Seventy-five years ago, Britain was in the midst of a General Election that would transform the country for generations to come. And Clement Attlee’s 1945 landslide General Election victory was built on the foundations of Labour’s housing, construction and town planning policies.
To mark the 75th anniversary of Labour’s 1945 General Election victory, Paul Dimoldenberg introduces his new book:
In 1945, the British people took a very practical view of the future. They wanted a decent home, a job and not to have to worry when they became ill or fell on hard times. In short, they wanted a better life and saw Labour as the vehicle through which these aspirations could be achieved.
Labour promised ‘bread and butter’ improvements which secured the votes of working-class and middle-class families. With over 2 million houses damaged or destroyed by the blitz, over half of them in London, the scale of destruction throughout Britain explained the desperate need for new homes. Again, and again, homes and jobs were foremost in the minds of voters. Labour recognized these as the priorities. And the voters believed Labour would provide them. The Labour Manifesto promised:
“Housing will be one of the greatest and one of the earliest tests of a Government’s real determination to put the nation first. Labour’s pledge is firm and direct – it will proceed with a housing programme with the maximum practical speed until every family in this island has a good standard of accommodation. That may well mean centralising and pooling of building materials and components by the State, together with price control. If that is necessary to get the houses as it was necessary to get the guns and planes, Labour is ready.
And housing ought to be dealt with in relation to good town planning – pleasant surroundings, attractive lay-out, efficient utility services, including the necessary transport facilities.
There should be a Ministry of Housing and Planning combining the housing powers of the Ministry of Health with the planning powers of the Ministry of Town and Country Planning; and there must be a firm and united Government policy to enable the Ministry of Works to function as an efficient instrument in the service of all departments with building needs and of the nation as a whole.”
In Cardiff, James Callaghan recalled:
“Most questions were about demobilisation from the Forces or housing shortages. In my innocence and good faith, I promised rapid action on both and during the campaign my main slogan became: ‘We built the Spitfires. Now we can build the houses’”.
In Bishop Auckland, Hugh Dalton remembered:
“The big issues were pensions, housing and fear of a return to pre-war unemployment.”
At Ebbw Vale, Aneurin Bevan, picking up on the mood of the times, argued that:
“Low rents, spacious homes fitted with all the labour-saving appliances invented by modern domestic science, can be made available to all only if the task of house-building is organized on a national plan”.
In Preston, the Conservative MP, Julian Amery, described the grim reality for many:
“Much the biggest issue was housing. No new houses had been built since the war and there was fearful overcrowding. It was quite common to find eleven or twelve people sleeping in a single room, and in many of the slum districts there was virtually no sanitation”.
Winston Churchill’s daughter, Sarah, describes the day-to-day impulses that led many to put their trust in Labour. In a letter to her father, she explained that:
“The people I know who are Labour, don’t vote Labour for ideals or belief, but simply because life has been hard for them, often an unequal struggle, and they think that only by voting Labour will their daily struggle become easier. They are all decent people who want an easier and gayer life”.
The historians are in full agreement. A.J.P. Taylor recognized the main concerns of the electorate:
“They cared only for their own future: first housing, and then full employment and social security. Here Labour offered a convincing programme”.
Arthur Marwick concurred:
“Public opinion polls showed that the issue which most concerned people was housing. Labour effectively presented itself as the party most strongly committed to social reform.”
Angus Calder agrees:
“Labour had been elected, above all, on the issue of housing”.
This was ‘retail politics’ at its most potent. As the historian Paul Addison concludes in ‘The Road to 1945’:
“A simple but vital point about the 1945 election is that Labour put the material needs of the average family above all else in its campaign”.
And Labour delivered. Over the next 5 years, Labour built one million new homes.
Of course, the situation in 2020 is radically different to the challenges of 1945. But there are some real parallels.
Recent analysis by Nathaniel Barker for ‘Inside Housing’ has revealed that areas with the most overcrowded housing have been worst hit by COVID-19. The area with the highest COVID-19 death rate (144.3 deaths per 100,00) and the biggest housing overcrowding problem (25.2% of homes are overcrowded) – is Newham in east London. Just as with the wartime blitz, there is a clear London focus to the problems caused by overcrowding. Of the 30 areas with the highest percentages of households living in overcrowded conditions, Barker explains:
“26 are in London. Part of that can likely be explained by the acute affordable housing shortages in the city”
Over the next few years, Labour needs to learn from the 1945 experience, put the needs of the people at the forefront and develop a social housing programme for the 2020s and beyond.
All proceeds from the sale of the book will be donated to Foodbanks in Westminster.
Paul Dimoldenberg was first elected to Westminster City Council in 1982. He was Leader of the Labour Opposition Group from 1987-1990 and from 2004-2015. He is the author of ‘The Westminster Whistleblowers’, published by Politicos in 2006, which tells the story of the Westminster ‘Homes for Votes’ scandal of the 1980s and 1990s.
With the Tories on the proverbial housing policy ropes, Labour must continue to focus on progressive policies that result in more support for households at lower parts of the income distribution. To roll with the punches Labour must call for an increase in the Local Housing Allowance (LHA) to the median 50th percentile, scrap the discriminatory age restrictions to the Shared Accommodation Rate (SAR), and put those most in need at the heart of any emergency coronavirus plan and comprehensive vision for the future.
Shelter have announced we have a public health crisis on top of an already existing housing emergency. This is because millions of tenants, whether they be private, social, or intermediate, are presently not working due to the fact society has lost confidence in our ability to move around without catching a killer infection. This has happened in the middle of an existential housing emergency that has been significantly exacerbated by the Tories over the past decade.
Vicky Foxcroft, Lewisham Deptford MP, brutally exposed this in the Commons in Julylast year:
“Local housing allowance is supposed to cover the lowest 30% of market rents, but research by Shelter found that that is not possible in 97% of England. For example, in south-east London, local housing allowance will cover only the bottom 10% of rents. We have a housing crisis across the country and local housing allowance is not fit for purpose. Does the Minister agree that it must be raised to reflect the true cost of renting?”
House of Commons | Hansard | 01 July 2019 | Local Housing Allowance
For example, a single young person under the age of 35 in Ealing Southall would have found just 1% of shared properties affordable with the SAR available in 2018. A family with children looking for a two-bedroom property would find the LHA rate covered just 6% of the private market. This would mean they would have to find an extra £150 per month to afford a property within the cheapest third.
In 2019, 88,330 households in England found themselves living in temporary accommodation, a figure tragically up from 48,010 in 2010. That is equivalent to the size of a town like Grimsby, Guildford, or St Albans often having to live in bed and breakfast accommodation in the first instance, until something more suitable can be found.
Figure 1: Total Number of Households in Temporary Accommodation 31st December 2019
The Tories have at least attempted to unwind the horrendous consequences of their own bad policy through reforming “no fault” evictions, removing Section 21 of the Housing Act 1988, and making changes to the grounds for possession. Yet much of this will be a mere sticking a plaster over what are much deeper structural issues, with pressure on the housing benefit system having been exacerbated from years of weak wage growth and domestic price rises
The severity of the impact on households’ living standards has been to an extent normally associated with a severe recession, which has left the huge shortfalls between LHA and the true cost of renting one borne by the poorest. The result has left the country ill-prepared to face such a crisis, particularly as it braces itself for the biggest economic slump in over 300 years. This was not what Labour had it mind when it introduced LHA back in 2008 following evidence based research.
After an initial three-year pathfinder Labour set the LHA rate at the median 50th percentile of the local private market. Shared Accommodation Rates were applicable for those under 25, which meant that single claimants under 25 were forced to share with others rather than live on their own. It had an aim to give a flat fair allowance for the local area and enabled people to have choice. LHA was argued to increase incentivisation to work, namely through greater clarity of in-work benefits, and most importantly it was simple.
LHA was slashed in 2011 to the 30th percentile by the Coalition government, with the Liberal Democrats crooning it in, like mice singing in the cats choir. A year later LHA rates were delinked from market rents and increases there forth capped by CPI. An uncaring cap on benefits was further introduced in 2012 following George Osborne’s famous Conservative Party conference speech where he asked “where is the fairness?”.
Three years later George Osborne thought it was still not fair enough and pushed the benefit cap even lower in his Summer Budget of 2015. He brought this alongside an extension of SAR up to the under 35s, with a 5-year freeze to LHA announced in 2016.
Turns out George’s idea of “fairness” leaves poor families with mounting debt and pushes children into deeper poverty, with many families financial circumstances having worsened following the introduction of the policy. In large part having been left with an average gap between rent and housing benefit of £3,750 per year.
That said, evidence from Crisis identified that investing in LHA rates to cover 30% would prevent 6,000 households from becoming homeless over a three year period. It would also lift 32,000 households out of poverty, which would include 35,000 children. Off the back of this research, and vociferous campaigning by Labour Party politicians the Tories buckled, and ended their very own LHA freeze one year early.
Announced in January 2020 under The Social Security (Coronavirus) (Further Measures) Regulations 2020 the Government stated it would relink the LHA to the 30th percentile, which was set at the same level seen in the 2019 Labour Party manifesto.
But was this rate high enough?
The Liberal Democrats thought not. Their manifesto included a call to increase LHA in line with average rents in an area. Though fell short on whether this was the mean average, or the more robust to statistical outliers mean average. In any case nobody was going to believe that commitment with the Liberal Democrats having been the hand maiden for such cuts in the first place.
Yet their policymakers did have a point, as a move back to the average rent level for LHA is one backed by credible research. In August 2019 Crisis demonstrated a higher cost benefit could be achieved if LHA was restored to the 50th percentile rate in areas where the rates fall behind rents the most, and to 30th percentile everywhere else. The research also gave a nod to restoring all the rates to the cheapest half, which would bring the highest overall benefit. In effect restoring LHA to the progressive median average, not seen since the last Labour government, would be more equitable and more cost effective.
This begs the question why previously Labour only sought an increase to the 30th percentile when, under the previous Labour Government, the median average left fewer people choosing between eating or paying rent. Shelter have recently joining the ranks call for an increase in housing benefit to cover the cost of average rents and to lift of the benefit cap.
Labour’s recent announcements chime well. Thangam Debbonaire’s emergency five-point plan echoed such calls through laying out increases to LHA rates and an improved provision of Universal Credit. Shadow Secretary of State for Work and Pensions, Jonathan Reynolds, also called for urgent action on social security. Through a suspension of the benefit cap and removing the savings and two-child limit to Universal Credit.
At least now renters can take comfort both Labour and the experts are on their side.
Sadly, the Tories will be difficult to move on from the below average LHA rate and age discriminatory SAR policy, which will remain unfair and incredibly impudent towards those on the breadline. Yet Labour must continue to be bolder than its Tory counterparts on housing. For it to work effectively for a just society, it must call for an increase in LHA to the median 50th percentile rate, not the mean, and in the interest of fairness push for the abolishment of age discriminatory housing benefit criteria.
Co-Editor of Red Brick. Non-Executive Director of Housing for Women. Labour Housing Group, Executive Committee. Exploring innovative new models in housing with care in the for Guild Living. Previously Investment and Finance Manager at Quintain and Thor Equities.
Labour did stunningly well all over the country and we have many new Labour Councils who I hope will promote a strong housing agenda: more genuinely affordable homes, regulation of the private sector, searching out a humane response to dealing with the ending of the homelessness safety net and the cuts to housing benefit.
Labour Councils will face huge difficulties with little money and a Government which is following rigidly a high rent, no rights housing policy in the desperate hope that the market will respond. They will have to make appallingly hard choices but, as Neil Kinnock once said, better a dented shield than no shield at all.
The tragedy of London is that it is a Labour city but the Tories walked away with the spoils: the mayor holds all the housing powers and what little money is left. It bodes ill for Londoners: there will be no shield at all for them. Housing output will be nowhere near affordable, the proportion of earnings spent on housing will continue to rise, and the private rented sector will continue as the last unreformed and unmodernised great industry.
Andy Slaughter was spot on with his analysis of the real Tory agenda: few if any planning consents for new social rented housing; demolition without affordable replacement of social housing estates in valuable places; selling council properties without like-for-like replacement; and insecure and unaffordable new tenancies becoming commonplace in the social as well as the private rented sector.
Personally I’d rather have H’Angus the monkey as mayor than Boris Johnson. At least H’Angus campaigned on the policy of giving children free bananas when he won Hartelepool.
We will all have our theories as to why Ken Livingstone lost against such a benign political background. They say familiarity breeds contempt and there might be a bit of that after 40 years of seeing Ken on the London stage. There is no doubt that Boris Johnson the personality is a phenomenon unmatched in British politics (even if he makes my skin creep). His next target is Cameron and I’ll enjoy watching that battle unfold. But Johnson could have been beaten.
I certainly don’t agree with Peter Kellner and Tony Travers on the BBC (why don’t they have to declare their financial interests before commenting?) that it has nothing to do with the media. The personal vilification of Livingstone, the anti-Ken propaganda handed out to Londoners every day (called the Evening Standard), the supine broadcast media who just follow the papers wherever they go, and the overwhelmingly negative Johnson campaign, all had their impact. The media bias sets agendas: Ken’s tax affairs became a huge and genuinely damaging issue (unfairly in my view) whilst Johnson’s extensive contacts with the Murdochs hardly got a mention. Although at its peak it was excellent, the London Labour campaign machine seemed to take ages to get organised, with several changes of personnel. Add the damage done by the ‘hold your nose and vote Ken’ brigade, a few genuine backstabbers (Sugar, Clarke and Labour Uncut come to mind), and the result is the narrowest of defeats. If I can campaign for James Callaghan in 1979 and Tony Blair in 2005 these people can campaign for Ken Livingstone in 2012. It’s called political discipline and it means, whatever you do, you don’t let the Tories in because they really hurt people. Ken could have done better but we all could have done better, and we should have won. Let the lessons be learned.
The one thing that cannot be disputed is Ken’s housing record. I got annoyed by the Shelter and NHF line that the candidates weren’t talking about housing. Ken was, from the off and every time he got to his feet. Almost his first policy statement was about the private rented sector, the lettings agency and the London Living Rent – it was unexpected, innovative, and deserved much more coverage.
For 40 years, from Lambeth to Camden, from the GLC to the GLA, Ken has promoted housebuilding and genuinely affordable housing for Londoners. He has never been embarrassed to talk about Council housing. Given no housing powers and no money in 2000 when first elected mayor, Ken transformed housing prospects in London in an extraordinarily creative way, leaving in 2008 with a clear housing strategy for the capital and the biggest affordable housing programme in its history. It was a strategy for all: he invented the whole business of intermediate housing as a planning tool to help people in the middle as well. The achievement is nothing short of phenomenal.
This may be Ken’s last election campaign but I doubt if it is his last campaign. If he and Boris are both one of a kind, give me Ken’s kind every time.
The latest fault line in the Coalition seems to be developing around taxation.
Chancellor George Osborne is ‘reviewing’ the top 50% income tax rate, much to the annoyance of the LibDems, whose priority in income tax terms is to raise thresholds to take the lowest paid out of tax altogether. The LibDems have the Coalition Agreement on
their side and Danny Alexander is on the record as saying: “The idea that we are going to shift our focus to the wealthiest in the country at a time when everyone is under pressure is just in cloud cuckoo land.” But Osborne faces a lot of pressure from the Tory right, including Boris Johnson, who has called loudly for the 50% tax rate to go.
The LibDems’ Vince Cable has admitted that the top rate of tax should be removed, because the Coalition are united against high marginal rates of tax, but that it should be
replaced by a tax on wealth or on highly valued property, not a position that will endear him to the Tory right. Cable was a strong advocate for the LibDems manifesto promise (which didn’t make it into the Coalition Agreement) to introduce a Mansion Tax.
Last weekend Eric Pickles joined the debate (or bitter in-fighting, whichever you prefer),
arguing that the 50% tax band was only a temporary measure to reduce the deficit and lambasting the Mansion Tax idea: “It would be a very big mistake to start imposing
taxation on the back of changes in property values, particularly with big regional variations”….”People will suddenly find themselves in a mansion and they hadn’t realised it was a mansion. If it is only going to be mansions, the kind of thing you and I would regard as a mansion, it ain’t going to raise very much.” But he also makes clear he is against any increase in taxes on ‘the middle class’. As he is also against taxes for the rich, that doesn’t leave many options other than more cuts.
The LibDems’ original proposal for a 0.5% annual Mansion Tax on properties valued at £1 million or more was quickly revised when they realised how many people in LibDem target seats in London and the south east already owned homes that were over the threshold. Their revised proposal – a 1% annual tax on homes over £2 million – hit far fewer people and attracted more support – including from David Miliband during the Labour leadership election. The tax was estimated to raise £1.7 bn a year and Miliband claimed it would avoid the need to make savings in the housing benefit budget.
Taxing wealth, property and land has been a shibboleth for many in the Labour Party over
the years. The Labour Land Campaign has argued long and hard for the introduction of a Land Value Tax saying, in principle, that land is a finite resource, that increases in value are created by the society as a whole not the individual landowner, and that the community as a whole should benefit.
An excellent pamphlet by Toby Lloyd published by Compass in 2009 called ‘Don’t bet the house on it’ looked at the ways major reform of property taxation could help tackle our dysfunctional housing market and the crisis in housing supply. He detailed the advantages of introducing a LVT, making possible a total reform of the complex array of property-related taxation in this country.
Whether Labour’s housing policy review will venture into this territory will have to be seen. It would not be good if the LibDems managed to push the Coalition into adopting a Mansion Tax or any other additional property tax as part of a deal over removing the 50% tax band but Labour had not even got round to considering the matter. The argument about Mansion Tax could raise some fundamental issues about the housing and land markets that all parties have dodged for many years. Even if the Tories don’t like it, there may even prove to be a progressive majority in favour of a big reform.