By Andy Mayer
October 28th, 2010 at 12:01 am
| | Posted in UK Politics
The national debate on changes to housing benefit has descended into a rhetorical slanging match, with both sides snarling at one another with mutual incomprehension.
In the red corner the Left accuse the government of ‘social cleansing’; a twisting of the language of genocidal war crimes, apparently deemed appropriate by the ‘new generation’ of Labour groping for a sense of proportion at the bottom of a barrel. The system it describes is one that at most will gradually force a small number of people to move a few miles from where they currently live.
In the blue corner the comeback is to accuse the Left of attempting to justify ‘social engineering’; it cannot be right or ‘fair’ to spend taxpayers money granting housing privileges to non-taxpayers that taxpayers cannot afford for themselves, such as avoiding sharing. Preserving the diversity of communities, whatever that means, is an aesthetic preference, not an argument about social justice. Any arguments about disruption, moving costs, changing schools and so on all apply equally to non-claimants who find themselves down on their luck or living in an area with costs inflating faster than their spending power. Those of us not on benefits live where we can afford to live.
The other major argument deployed by red corner is to blame the shortage of housing for high prices. This is something of a irrelevant truism. Demand exceeds supply across the housing sector. Shortages then impact taxpayers as much as those in need.
Much of the shortages are also due to the political choices taken around high levels of intervention in the sector, from the slum clearances started by the Torrens Act in 1868, to the first rent controls in 1915, to building and planning regulations. Whatever the merits and good intentions behind these changes, building new homes is now a hard risky slog through bureaucracy.
Private investment in social housing is a difficult investment case. Even where schemes can be made to break even, or can be subsidised through quotas, it still has to be relatively more attractive that other calls on capital to close the deal.
These difficulties also apply to the public sector. Even if you can raise bonds to pay for new housing, the only places where it makes economic sense are those the private sector won’t touch. Otherwise there is no market failure to correct. If you build or maintain stock in attractive areas you are actively destroying value; a dead-weight loss in foregone economic activity and lost tax revenues on the back of it. The precise problem the housing benefit changes is trying to correct.
There are market failures in housing. Land is a natural monopoly, overcrowded slums lacking basic utilities are breeding grounds for diseases, crime and fire hazards. But there is precious little evidence state-run utopia is much better. Indeed one of the key moans about market forces breaking up communities is precisely the argument used against state imposed slum clearances in the first place.
Rent controls destroyed maintenance incentives and turned neat Victorian terraces into Rachmanite slums. The 1950/60s experiments in brutalist architecture speak for themselves and have been being blown up across Britain since Birkenhead in 1979. Much housing reform in the last two decades has been driven by the need to correct the mistakes made by national and local government in the previous century.
The proposed changes whilst unpopular with those impacted and vocal pressure groups, are not unpopular amongst their working neighbours.
It is likely then Parliamentary process will see some concessions to transition arrangements and hardship relief. But the central change, restoring some basic market sense to the social sector, will remain. Meanwhile the narrative war will continue to driven by the reporting of extreme cases and class war allusions to the real thing.