Memorandum-to-the-Prime-Minister-on-Unaffordable-Housing

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costs since <strong>the</strong>se are very sensitive <strong>to</strong> changes in <strong>the</strong> quantity of loan finance available and <strong>the</strong> terms on which it comes. The construction of council owned housing (3C) and its maintenance (5C), formerly often carried out by local authority building organisations, has in recent times been carried out almost entirely by private building contrac<strong>to</strong>rs. Allocation and reallocation (4C) has been on <strong>the</strong> basis of need and according <strong>to</strong> arrangements determined by each authority, normally taking <strong>the</strong> form of a ‘waiting list’ with individual weightings reflecting <strong>the</strong> level and type of need. In many areas of severe housing pressure virtually all allocations are <strong>to</strong> households that are statu<strong>to</strong>rily homeless and/or in some kind of emergency need. Given that much council s<strong>to</strong>ck is still in <strong>the</strong> form of ‘estates’ this means that households with severe difficulties tend <strong>to</strong> be housed in close proximity <strong>to</strong> each o<strong>the</strong>r.This is in sharp contrast <strong>to</strong> <strong>the</strong> situation during much of <strong>the</strong> 1920s <strong>to</strong> 1950s when council housing served more general needs and produced socially mixed communities. Sensitivity <strong>to</strong> privatisation is differential by stage From this analysis it is clear that <strong>the</strong> effects ‘privatisation’ might have on <strong>the</strong> capability of lower income people <strong>to</strong> access housing depend very much on which of <strong>the</strong> five stages are made more subject <strong>to</strong> market forces. Patterns of new housing promotion (Stage 1) necessarily reflect a public and collective process of planning at various levels.The balance of financing (Stage 2) has moved in favour of private capital sources, with adverse effects on <strong>the</strong> terms on which development capital can be accessed. Construction (Stage 3) and maintenance in use (Stage 5) have his<strong>to</strong>rically been almost entirely <strong>the</strong> province of private contrac<strong>to</strong>rs. Allocation (Stage 4) is <strong>the</strong> most sensitive stage in terms of affordability.There is a clear distinction between access governed by market power and access governed by need.The balance has moved sharply <strong>to</strong>wards access by market power in recent decades, both because of <strong>the</strong> changing pattern of production and because of <strong>the</strong> movements of existing s<strong>to</strong>ck from <strong>the</strong> council sec<strong>to</strong>r <strong>to</strong> <strong>the</strong> o<strong>the</strong>r two sec<strong>to</strong>rs.This has had seriously adverse effects on affordability for lower income households and has been a fac<strong>to</strong>r leading <strong>to</strong> a pattern of costly consequences outlined elsewhere in this <strong>Memorandum</strong>. It has also placed increasing burdens on <strong>the</strong> benefit and allowance payments that help poorer households meet housing costs. The key strategic issues From <strong>the</strong> diagram it is possible <strong>to</strong> identify <strong>the</strong> key issues that need <strong>to</strong> be considered and continually reconsidered if housing policy is <strong>to</strong> have a strategic, ra<strong>the</strong>r than just a crisis-management, dimension. 1.What proportion of <strong>to</strong>tal public expenditure should be allocated for housing support (i.e. down line 2)? 2. Of this allocation what should be <strong>the</strong> division between 2P, 2R and 2C - in o<strong>the</strong>r words how should <strong>the</strong> <strong>to</strong>tal housing spend be distributed between <strong>the</strong> three sec<strong>to</strong>rs - and why this distribution? 3.What proportion of investment funds reaching Boxes 2R and 2C should come from public expenditure programmes and borrowing sources and what proportion from <strong>the</strong> Private Capital Market (2PCM)? Zacchaeus 2000 Trust - <strong>Memorandum</strong> <strong>to</strong> <strong>the</strong> <strong>Prime</strong> <strong>Minister</strong> - May 2005 17
4. Of <strong>the</strong> <strong>to</strong>tal funds reaching Box 2 (Financing) what proportion should go along route A (<strong>to</strong> subsidise housing production), what along route B (<strong>to</strong> support consumption in <strong>the</strong> form of housing benefit or purchaser support) and what along route C (<strong>to</strong> keep existing s<strong>to</strong>ck in repair)? 5. For <strong>the</strong> existing s<strong>to</strong>ck of housing should <strong>the</strong> ratio of access by market power <strong>to</strong> access by need be changed by transfers of s<strong>to</strong>ck between <strong>the</strong> three sec<strong>to</strong>rs (Boxes 4P, 4R and 4C)? 6.To what extent should <strong>the</strong> agencies responsible for <strong>the</strong> development and management of non-market housing be democratically accountable and how should accountability best be achieved? 7. Should <strong>the</strong> overall impact of housing support be redistributively progressive, regressive or neutral? In <strong>the</strong> past most of <strong>the</strong>se questions have been determined reactively in <strong>the</strong> light of budgetary or elec<strong>to</strong>ral expediency ra<strong>the</strong>r than by any more clearly thought out process.This <strong>Memorandum</strong> argues that short-term expediency has produced outcomes that are heavily cost-ineffective in <strong>the</strong> use of public funds and ethically indefensible. A more strategic approach should now be adopted. 18 Zacchaeus 2000 Trust - <strong>Memorandum</strong> <strong>to</strong> <strong>the</strong> <strong>Prime</strong> <strong>Minister</strong> - May 2005
Page 1 and 2: Z2K ZACCHAEUS 2000 MEMORANDUM <stro
Page 3 and 4: 2 First published in Britain in 200
Page 5 and 6: Introduction The Prime</str
Page 7 and 8: 6 Zacchaeus 2000 Trust - Me
Page 9 and 10: 8 Zacchaeus 2000 Trust - Me
Page 11 and 12: Recommendation 2 Policy should buil
Page 13 and 14: Recommendation 10 Increased resourc
Page 15 and 16: The shaded boxes along the<
Page 17: RSLs have no direct electo<
Page 21 and 22: Similarly in urban regeneration sch
Page 23 and 24: 3. Increases in the</strong
Page 25 and 26: There may be some inconsistency in
Page 27 and 28: (a) producing units of a quality su
Page 29 and 30: 28 Zacchaeus 2000 Trust - M
Page 31 and 32: Fund they stress t
Page 33 and 34: homeless by local authorities (itse
Page 37 and 38: compared to 46% in
Page 39 and 40: approximately threefold rise in rea
Page 43 and 44: End of 1998 28,700 End of 2000 120,
Page 45 and 46: ‘...stock transf
Page 49 and 50: shown in Figure 3. (£ billions) 25
Page 51 and 52: Housing Association 3 Private Landl
Page 55 and 56: following the poli
Page 59 and 60: The evaluative comparison focused l
Page 61 and 62: costs (which would have included no
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68 Zacchaeus 2000 Trust - M
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A sclerotic market Young people fac
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enters with no housing assets seems
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Europe, and that the</stron
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76 reason for not joining a strike.
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is regarded as an essential step al
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provisions based upon partnership l
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Members could decide to</st
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The size of land value gains The ga
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For this reason, economists from Ad
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In the United Stat
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decline in Federal support for hous
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from stamp duty and council tax (Ll
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upward wage pressure and fewer recr
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So is there a way
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7. A show flat already exists <stro
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healthy living. Poverty happens und
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‘When was it that we saw you hung
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StanislasYassukovich, quoted earlie
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Bowley, M. (1945) Housing and <stro
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Phibbs, P. and Young, P. (2005) Hou
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Memorandum-to-the-Prime-Minister-on-Unaffordable-Housing

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