Jules Birch, Inside Housing

09/04/2013

The first part of my analysis of Margaret Thatcher’s housing legacy looks at the right to buy and the property-owning democracy.

The death of the former prime minister got me thinking in what I hope is a dispassionate way about what her time in office meant to housing.

What seems to be undeniable is that the right to buy represented a sea change. Many people would nominate British Gas or British Airways or BT as her greatest privatisation but council housing was bigger than any of them. Some 1.5 million homes were sold between 1979 and 1990 (500,000 of those between 1979 and 1983). Capital receipts from the right to buy totalled £17.6 billion between 1979 and 1989 compared to £23.5 billion from all the other privatisations put together.

It is the one housing policy that is being mentioned in all of the obituaries and hagiographies in the national media but the truth about Thatcher and the right to buy is more complex that you might think.

It’s not just that there were thousands of council house sales long before she became Tory leader. It’s more that when the idea of a right to buy (as opposed to voluntary sales by landlords) was first proposed one of its most prominent opponents was a shadow environment secretary called Margaret Thatcher. For most of the details that follow I am indebted to the brilliant Five Giants: A Biography of the Welfare State by Nicholas Timmins.

When Edward Heath wanted to include the right to buy in the Conservative manifesto for the October 1974 manifesto he was proposing something that directly impacted on her shadow environment secretary portfolio. She believed that it would be unfair to people who had to save to buy their homes. ‘What will they say on my Wates estates?’ she asked at the time.

When she took over from Heath as Tory leader there were even more radical ideas knocking around. Peter Walker, an archetypal ‘wet’ who she had sacked from the shadow Cabinet, proposed that council houses should just be given to anyone who had paid their rent for 20 years and that the rent should be treated as a mortgage for anyone else. He argued that it would make sense financially because councils would no longer have to meet management and repair costs. However, Thatcher again opposed the idea. According to Walker: ‘Margaret was against it because she felt it would upset “our” people who had struggled to pay their mortgages.’

Meanwhile, according to Timmins, something similar to the right to buy came very close to being Labour policy first. The message came over loud and clear on the doorsteps at the 1974 election that tenants wanted to own their homes and Downing Street advisors worked on a scheme for ‘lifetime enfranchisement’. It had the enthusiastic backing of prime minister Harold Wilson but foundered on opposition from advisers and ministers at the Department of the Environment.

So history could easily have been very different at the 1979 election. Instead the right to buy went on to become indelibly associated with a politician who had at first opposed the idea and arguably became a key factor in her three election victories as aspirational working class voters in places like Basildon switched to the Tories.

However, as Steve Hilditch points out over at Red Brick, the truth is again a bit more complicated. The 1979 manifesto did not make a big deal out of the right to buy and it included all sorts of safeguards on sheltered housing, rural areas and resales. There was also no mention of what would go with it: dramatic cuts in housing subsidies that would help cut public spending but also push up rents and encourage more sales. The big differences with what had gone before were the scale of the sales and the fact that the proceeds were not reinvested in housing.

The combined result was a decisive break with the housing policy consensus that had operated since 1945. From 1980/81 council house sales outstripped new homes built and they have done so ever since. The discount was gradually increased until by 1986 it was 60 per cent after 30 years’ tenancy on houses and 70 per cent after 15 years for a flat. Some 32 per cent of England’s stock was sold between 1979 and 1990. Academics Ray Forrest and Alan Murie conclude in Built to Last, ROOF’s book on housing policy: ‘There is no doubt that if the local authority housing programme is treated as self-contained, the term “asset-stripping” is perfectly appropriate.’

Among the consequences in the 1980s were increased residualisation in council housing and increased homelessness across the country but these were not concerns for Margaret Thatcher. As she said in a famous interview in 1987:

‘I think we have gone through a period when too many children and people have been given to understand “I have a problem, it is the government’s job to cope with it!” or “I have a problem, I will go and get a grant to cope with it!”; “I am homeless, the government must house me!” and so they are casting their problems on society and who is society? There is no such thing! There are individual men and women and there are families, and no government can do anything except through people and people look to themselves first.’

The other major theme of what I think of as Margaret Thatcher Mark I was the rise of home ownership. In her very first speech as Tory leader, Thatcher had proclaimed her belief in the old Tory idea of a ‘property-owning democracy’. As her original opposition to the right to buy showed, she was instinctively on the side of ‘our people’ and that meant people who were saving to buy a new home. She was enthusiastically backed by the major housebuilders. In part they were reacting against Labour’s flirtation with nationalising them but few things summed up the sprit of buccaneering capitalism better than the TV adverts featuring Lawrie Barratt (the founder of Barratts who died last year) in a helicopter flying over his building sites. Barratt homes divided opinion but Thatcher liked them so much that she knighted him and bought one for her retirement.

Home ownership grew by more than three million homes between 1979 and 1990 (more than a third of them right to buy tenants). That was all supported by increasingly deregulated mortgage lending and lavish mortgage tax relief that was giving almost 10 million home owners an average of £800 a year each at a cost of almost £8 billion by 1990. Unsurprisingly house prices grew rapidly too, culminating in an almighty boom and bust in 1989 and 1990 and repossessions that were double the levels seen in the recent crash.

So that was Thatcherism Mark I. Mark II would have to wait until 1988 when her government created the conditions for the rise of housing associations, private renting, housing benefit and the housing system we have today. More on that tomorrow.

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