Acrimony in the UK: Housing privatisation, social cleansing, the property-speculation bonanza & land ownership

by Keith Parkins and Mark S Brown - February 2007

'Tenants all round Britain are intent on defending council housing against
a government dogmatically committed to privatisation. Decent, affordable,
secure and accountable housing provided by the local council has served
generations well. And contrary to myth, it pays for itself - if all the
money it brings in is reinvested.' - Alan Walter, Defend Council Housing.


Nearly 10 years into the New Labour project, and what is the legacy of
Blair's Britain? Massive inequality, estimated to be at the highest level
for forty years. Inequality by 40% between 1979 and 2001. Whilst the
average salary for a man working full-time in the City is nearly £90,000,
everybody else is lucky to be on £25,000. The pernicious presence of an
underclass grows for sections of the population who are either long-term
unemployed, in negative equity, and, particularly in London, those who may
be described as being effectively in 'economic slavery', caught in a
highly-inflated private rented sector, unable to afford to get onto the
property ladder within a market where house prices are completely out of
their reach. With the main domestic investment in the economy being
property, an inequity of capital gains accrue to beneficiaries of the
property bubble in a massively appreciating market. Speculation in housing
in general is having a destabilising effect on house prices, forcing rents
to rise to pay for profits, green space destroyed, and tenancies becoming
less secure.

Worse still, there is evidence that, as with privatised health services,
mergers and acquisitions within the housing association sector is leading
to a process of corporate consolidation. Land and housing is rapidly
becoming in itself an international commodities market, with future
options to be traded, such as through Real Estate Investment Trusts
(REITs). Capital is flowing through the City of London and the other
global equity nodes such as Tokyo and New York, and the assets of
stakeholder networks of shareholder ownership and pension fund holders are
invested into plundering state assets. For example, in Germany, people are
finding public housing stock being sold off. Municipal authorities are
happy to sell their housing, as it helps clear municipal debt. The mantra
public debt is unacceptable, private debt is ok as it provides the
opportunity for profit.


From Thatcher to the Great Neo-Labour sell-off - Social housing under attack

From the start of the 1980s onwards, the reduction in the amount of
council housing stock came about because of the drive towards right-to-buy
under Margaret Thatcher, with the offer of the sale of council houses at
huge discounts to sitting tenants. This may have been acceptable if the
capital released was ploughed back into social housing, but this was not
to be. Money realised on sale was not ploughed back into social housing,
and, because of absurd rules on the use of capital receipts and the
less-than-value sales, councils were prevented from building new homes to
replace those sold.

Although promoted as giving the ordinary man a stake in society, a first
step on the property ladder, the Thatcher policy was nothing of the sort.
It was about destroying the stranglehold large municipal authorities had
on housing.

The legacy of the Thatcher policy has been record high waiting lists,
record low new tenancies, and the run-down condition of council stock due
to years of inadequate council financing. Across Britain, the reality is
that council housing was deliberately run down into a state of dereliction
beyond councils' financial capability to deal with it, to then be used to
justify the wholesale transfer of council housing stock to the private
sector.

New Labour's priority since it got into power in 1997 has been to
facilitate the transfer of housing stock to the private sector at the
expense of council provision, to accelerate the Thatcher privatisation.
After years of a shortfall in the building of new council housing (only
31,000 'affordable' homes were built in 1993-4), in order to be allowed to
expand or improve their stock, councils were held to ransom to encourage
the transfer of council stock into the private sector. Right across
Britain, large-scale stock transfer has occurred, either to housing
associations, or registered social landlords (RSLs) as they are now known,
a friendly name that hides their ruthless capitalist face, essentially a
private finance initiative that puts bankers in charge of the funds, or an
Arms-Length Management Organisation (ALMO), in which although still owned
by the council, it is no longer controlled by the council, a board of
unelected directors, halfway privatisation, all neatly parcelled up and
ready for disposal.

The government's rational for making long overdue investment conditional
on transfer of ownership to one of these three variants of privatised
ownership has been the same rational used to justify the 'selling-off' of
council housing to tenants. Generally speaking, tenants are reluctant to
invest money in something that is not theirs, especially if they are
forced through disrepair to undertake tasks like maintenance and repair
that are a landlord's responsibility. On the surface, this is a legitimate
rational.

Across the country, tenants have been given a choice in local ballots, or
what is jokingly called a choice, on whether or not their housing is
privatised. No one would dispute that council housing is bad, the estates
badly managed, badly run down, a complete lack of accountability.
Therefore it was understandable that when the first wave of ballots went
through, tenants voted yes. Especially when tenants were promised new
kitchens, bathrooms, etc. But tenants are not given a real choice, as they
only hear one side of the argument.

However, in some areas around the country, tenants voted 'no', often
overwhelmingly no, to keep housing within the public sector. In
Brighton, 77% of tenants voted no on a 62.4% turnout last week (February
22nd, 2007). This is the same margin of victory that was seen in Camden in
2004 the second time around, after being balloted twice (because they
didn't give the council the correct vote first time around). In spite of
the government spending £500,000 of local taxpayers money to force a yes
vote. The hundreds of millions of pounds that were available from central
government for modernisation, were the tenants to have voted yes, is no
longer available.

The campaign group Defend Council Housing has shown that there is already
sufficient rental income coming in to make existing council housing
self-financing and sustainable. In a document produced by the House of
Commons council housing group, it is clear that the government effectively
siphons off £1.5 billion from housing revenue accounts and profits by
another £0.5 billion from preventing the use of capital receipts. This
means that £2 billion could be spent on providing new homes and improving
stock. Then there are also the grants the government is only too willing
to give to the private sector, once council housing is privatised. In
2003-04 the government budgeted £800 million to subsidise sell-offs.

In July 2004, the Commons Public Accounts Committee concluded that selling
off council housing costs the taxpayer at least £1,300 a home more than
council doing the improvements. In other words it is dogma driving the
process, not pragmatism.

The big trade unions pushed through policy recommendation at the Labour
Party's National Policy Forum for recognition of the 'Fourth Option' of
council housing, where the housing would remain under council control, a
policy which has been repeatedly ratified at the Party Conference.
However, New Labour has refused to include what the grass roots wants in
its Party Manifesto, backtracking on a commitment and going against the
wishes of its own members. Labour Party Conference has so far ratified
this policy three times.

Professor John Hills published his 'Ends & Means' report on 20th February,
on the role of social housing, disappointing the Communities Secretary of
State Ruth Kelly, in recognising the role of public housing in providing
decent, affordable and secure housing. Mrs Kelly had anticipated Professor
Hills to back her recent annoucement that means testing and the ending of
long-term secure tenancies become new policy.


Social cleansing across the UK

The rot that set in under Thatcher has escalated under Neo-Labour,
destroying what little is left of social housing. Not satisfied with the
damage to date to social housing - starving councils of funding, forcing
tenants into the private sector - New Labour had a few more wacky
Thatcherite ideas in the pipeline as part of a package of reforms taken up
by housing associations, RSLs and ALMOs, such as tenants being given
fixed-term contracts, possibly as short as five years.

The main bone of contention with privatisation has been the lack of
democratic control or proper redress for tenants in disputes with housing
associations - the continuing worry in all these schemes. The threat to
tenants' rights include the tendency of council tenants' secure tenancies
being replaced with less secure 'assured' tenancies, making eviction
easier. Rents are, on average, 17% higher than council rents. Tenants have
no automatic right to representation on a Housing Association board of
management, and tenant board members are often excluded from
decision-making. And even where tenants are represented on boards, it is
often not the tenants who choose who their representatives will be, and
the tenants who do sit on the board are gagged by secrecy, legally have to
act for the organisation not the tenants, or in other words tokinism.

Council housing often sits on expensive real estate. It is proposed that
councils relocate their tenants, no doubt to a less desirable part of
town, 'liberating' profitable land upon which the housing stands.
Relocation from prime real estate is already happening. Sixteen of the
London local authorities have been offering tenants anything up to £30,000
to leave their homes. It was the forced removal of some of Newcastle's
poorest people so that the land could be redeveloped as luxury yuppie
apartments that did for neo-Labour in Newcastle, as has happened in
Liverpool, where whole swathes of social housing is being cleared. In
London, squatters held out on the Pepys Estate, holding up plans to sell
off land on the banks of the Thames overlooking Canary Wharf for yuppie
apartments.

In Farnborough in Hampshire, Pavilion Housing Association tenants are
being forced out of their homes to enable them to be bulldozed to make way
for a car park for an unwanted superstore. Their homes are in an appalling
state of repair to help to encourage them to leave. Currently in
maisonettes surrounded by a grassy area where the children can safely
play, they are to be relocated to two blocks of flats. The tenants were
not asked if they wished to leave. Meanwhile, early this year, the local
council gave away £195,000 to Pavilion to ensure properties in their
possession previously let to students are kept low-rent having been
transferred to the pivate rented sector - a job that they should already
be doing as a housing association!


The pathfinder programme and the situation in Liverpool

In Liverpool, Pathfinder - a New Labour/John Prescott pet project - is
responsible for swathes of Victorian housing (tens of thousands of homes)
being destroyed in the name of urban regeneration. It would cost far less
to renovate the existing housing, than new build, and would provide better
quality housing, but that would not provide development opportunities for
developers. And that is what Pathfinder is all about, development
opportunities for developers and helping housing associations to rapidly
expand.

In Liverpool, home-owners are being offered paltry sums for their homes.
If they refuse, they are served Compulsory Purchase Orders (CPOs) and
their homes seized. If they play ball, they are offered a housing
association home as they are no longer in a position to get back on the
property ladder. Private tenants are being dumped on sink estates, if they
refuse what they are offered, they are deemed intentionally homeless.

Local Labour MP Jane Kennedy described the plan as 'social cleansing' at
the public inquiry that approved the plans. In a major setback to the
plans of the consortium of housing associations, English Partnerships, the
Housing Corporation and Liverpool Council, in September 2006 a local
resident - Elisabeth Pascoe - successfully challenged a Compulsory
Purchase Order on her home in the High Court in London, claiming that the
CPO violated her Human Rights.

Pathfinder is part of a wider trend of forcing council tenants into the
private sector through the sale of their homes to housing associations and
for existing housing associations through mergers and acquisitions to form
ever larger unaccountable property conglomerates.

Tenants have a say when they are first transfered to the private sector,
they subsequently have no say on what happens to their homes thereafter,
they are not even consulted.

Mike Lane from Tenants Action Group, on the privatisation of housing in
Liverpool:
'Housing is in such a bad way because the housing associations, and the
council who own nearly 60% of the housing stock have let it fall into a
dreadful state of repair. This has been deliberately done because the
council wants to transfer their houses to housing associations, while they
cash in on the ‘Get-rich-quick’ schemes of regeneration and the City of
Culture. I am a tenant and I unsuccessfully attempted to get onto one of
the five Neighbourhood Planning Groups in the New Deal Regeneration area
of Kensington, an area which is located adjacent to the city centre, which
is in the process of an architectural renaissance involving the Duke of
Westminster’s Grosvenor Estates in a £750m redevelopment, thanks to a
250-year lease on a 42.5 acre area of the city centre.' Liverpool becomes
European Capital of Culture in 2008.

Hidden in the Pathfinder small print is that one of its intended outcomes
is to increase property prices. So much for neo-Labour crocodile tears for
those who cannot afford a decent home.

In Liverpool, Pathfinder has caused property prices to increase four-fold.
Good news indeed for those who have got a foothold on the property ladder.

Meanwhile, over 1,000 city centre flats lie empty, according to Kate
Mansey from the Liverpool Daily Post (27 December 2006).
 http://www.indymedia.org.uk/en/2007/01/359216.html


The ill-gotten gain of the Housing Association bonanza

Between 1990 and 2003, £13 billion was siphoned off from tenants' rents by
the Treasury. No small wonder there is a £19 billion backlog of repairs
and improvements.

When housing is transferred to a private company, that company is allowed
to keep all the rents to spend on the homes, and is no longer required to
support the historic debt of building them, receiving subsidy from central
government. While the government claims that there is no money available
for council housing, it pours billions into subsidising its privatisation
programme. In 2004-05, the total subsidy paid out to housing associations
amounted to £689 million, with £100m of it coming from taxpayers, the rest
coming from tenants' rents.

The accusation is that Housing Associations are now little more than
property development companies. They are not restricted to 'social
housing', and many are using this freedom to act as traditional property
developers and speculators. The process of mergers and acquisitions within
the sector may mean there will soon be only a handful of housing
associations left in the country. These mergers and acquisitions are being
forced through by the industry regulator, the Housing Corporation. For
instance, in Hampshire, Pavilion was acquired by Eastleigh-based Atlantic
to form First Wessex. Less than a year on, First Wessex is trying to
acquire other housing associations.

The underlying problem identified within Housing Associations, RSLs and
ALMOs, is the lack of transparency, the lack of accountability and the
lack of means of representation to decision-making regarding rental
increases, with their social remit long forgotten. The allegation is that
housing associations are deliberately complex structures, set up that way
to both avoid tax and accountability. There are no shareholders, and they
are instead managed by a board comprised of roughly one-third councillors,
one-third tenants (usually selected by the Housing Association), and
one-third outside business interests, which immediately means the tenants
are a minority voice.


Developer takes All
“At the heart of the housing market is the availability of development
land. A building site now constitutes between half to two-thirds of the
cost of a new house or dwelling. As such, it is the main driver across the
country in the price a house, especially a new house, will fetch. However,
the market for development land is rigged”, Stuart Beevor, Managing
Director of Legal & General Property and Chairman of the Property
Investment Forum, speaking at the Financial Times property conference in
London on 7 July 1998. “The market is very imperfect. It proceeds on word
of mouth and trade secrets.”(Taken from “Who Owns Britain”, by Kevin
Cahill, 2001).

Do you remember playing that game with little green houses and title deeds
and funny money? Well while you were enjoying a game, a land owner, a
housing contractor, a banker and an unelected politician set about drawing
up different rules so that not they but other people who need houses would
continually be landing on their doorstep and would pay ever increasing
rents and property prices while the four controlled via a monopoly ALL the
land on which houses ..etc could be built. What has been happening is that
in the absence of any government guidance, legislation or even public
acknowledgement, private parties who qualify as the big players with large
financial backing are enabled to pre-empt people's housing needs,
specifically pre-empt the decisions of the planning departments and have
bought up the potential building land.

The Barker Report on housing published in 2004, identified the assembly of
land banks and "building out" sites (the slow release of land for
housebuilding) as restricting the supply of houses. On page 81, Barker
showed that seven named corporations hold the potential building land
round the towns to satisfy all the nation’s housing requirements for the
next four and a half years.
"Land is the critical factor in explaining competitive pressure in the
housebuilding industry" p77
"Land is in scarce supply" p77
However, because land is not identified as a good or service, no solution
was offered by Kate Barker regarding the market in land. Barker did offer
a solution to the problem of inflated land value, advocating a new
development tax on the uplift value of the grant of planning permission,
which is now being implemented, which is being legislated for through the
newly legislated for Planning Gain supplement (but which worryingly
doesn't exempt low impact development or social activities in the current
draft).

Now Barker's 2nd report on land use planning, published at the end of
2006, has extended this blueprint, advocating a fast-track planning regime
and building houses on green belt land. It is a contuinuation of the
legislative framework whereby a coterie of landed interests, now joined by
financial interests increasingly investing in property, conspire to
protect a powerbase of landed hegemony, making plentiful land look scarce,
and being paid from the public purse to keep it that way (the urban
population inhabits less than 8% of the surface area of the British
Isles). The exclusive land ownership class in the UK have traditionally
perpetuated exclusion, while bolstering the cultural power of landed
wealth by their constant engendering of images of continuity and
tradition, dispicting themselves as "custodians of the countryside", with
pressure groups such as the Council for the Protection of Rural England
long doing their bidding - painting a picture of a rural idyll on the
verge of decimation from the dreaded threat of urban overspill. At no
point do the CPRE recognise in their ruling class propganda the faint
possibility that a recolonisation of the countryside is even a remote
possibility - viewing the masses with contempt akin to a neoconservative
agenda.



The future?

Transfer of housing stock to Housing Associations is, say campaigners,
nothing less than back-door privatisation of social housing. And as with
PFIs and PPPs, the cost to the tax payer escalates, and tenants suffer
deteriorating services at higher costs. This has to be seen within the
context of WTO/GATS wholesale transfer of public services to the private
sector, where private greed overrides public need (and removes any form of
democratic control or accountability). Of the 106 areas to be liberalised
(ie opened up to the private sector), housing is one. All transfers of
housing stock will be subject to open competition and could be acquired by
international private capital. Such 'liberalisation' may even specifically
prohibit Tenant Management Organisations, which could provide a
democratic, accountable alternative to both housing associations and
council housing.

The campaign network Defend Council Housing, as the name implies, is
opposed to the sell-off of council housing. But this should only be seen
as a defensive position. Ultimately council housing should be in the hands
of the tenants, not-for-profit companies, run by the tenants for the
tenants. To argue for anything less, would be perverse, as it would keep
council housing in the hands of the very people who are doing their best
to stitch up their tenants. There are sequential benefits to tenants
running their own affairs: tenants acquire confidence through running
their own affairs, become politicised, start to challenge what is
happening around them - benefits the corrupt ruling class would not wish
to see.

REITs will see increased speculation in property, a process which will
further push up house-price inflation, as property becomes the nest-egg
asset store which has the inadvertant side-effect on the cost of rent,
depriving low income groups of access to housing. Particularly in the UK,
inflated property values have become the collateral investment stores of
wealth for a financial hub in the city of London which is recycling
economic proceeds from investments across the world, with the proceeds
shared through shareownership and pension funds. Rising prosperity within
the property bubble belies the reality of increasing economic inequality,
and social disenfranchisment particularly of the younger generations with
limited scope to step onto the property ladder in a vastly inflating
property market.

A coterie of financial interests which consolidate the private sector
housing sector coalese around a more entrenched protection racket which
has existed for centuries. A small group of wealthy, powerful and
politically entrenched people - the traditional landlords, the NFU and
build/developers with giant land banks, maliciously spread a campaign of
misinformation to protect their ill gained profits amounting to £billions
annually. This group long ago captured political power in parliament and
now concentrate on manipulating their monopoly of landownership (see Kevin
Cahill's book "Who Owns Britain?"). This coup was achieved by promoting
advantageous laws shifting the burden of tax from land tax to income tax,
now to council tax. This is done through securing massive state subsidies
through agriculture, and increased land values through both EU grants and
by manipulating the planning laws in their favour. Large developers
exercise a monopoly on access to the planning process through an
inordinate level of capital which, at it's most extreme level, can be used
against council departments to push through building schemes through the
constant threat of appeal, which councils with limited financial resources
cannot withstand in the long run.

The time has come for the low income sections of society to take back what
is theirs, denied to them from when traditional land ownership patterns
were set with the invasion of William the Conqueror, and later, with the
numerous acts of enclosure which served to exclude masses of people from
the countryside.

More immediately, and practically, we need to extend the right-to-buy to
the private sctor, as well as protect existing council housing stock with
a view to increasing this stock in the future. Such measures need to be
combined with a reintroduction of controlled rents, secure tenancies and
punitive rating - rather than rate relief - of second homes.



References

Fred Harrison, Boom Bust: House Prices, Banking and the Depression of
2010, Shepheard-Walwyn, 2005
 http://www.heureka.clara.net/books/

Mike Lane, Whole communities will be decimated through gentrification!,
Indymedia UK, 2 September 2004
 http://www.indymedia.org.uk/en/2004/09/297187.html

Mike Lane, The Regeneration Game, 2006 {DVD}

Austin Mitchell, Labour conference backs direct investment third year in a
row, Defend Council Housing newspaper, October/November 2006

Sebastian Mueller, Impacts of Privatisation, September 2006 {briefing
paper for London Social Forum housing conference}

Keith Parkins, A sense of the masses - a manifesto for the new revolution,
www.heureka.clara.net, October 2003
 http://www.heureka.clara.net/gaia/democracy.htm

Keith Parkins, Social landlords are deviating from their intended purpose,
Indymedia UK, 20 January 2004
 http://www.indymedia.org.uk/en/2004/01/284142.html

Keith Parkins, Social housing landlords the new corporations, Corporate
Watch newsletter No 17, January-February 2004

Keith Parkins, Camden council house transfer - Camden Town Hall meeting,
Indymedia UK, 11 February 2004
 http://www.indymedia.org.uk/en/2004/02/285210.html

Keith Parkins, Guildford say NO to council house transfer, Indymedia UK,
13 February 2004
 http://www.indymedia.org.uk/en/2004/02/285304.html

Keith Parkins, Registered social landlords - the new corporations,
Indymedia UK, 18 February 2004
 http://www.indymedia.org.uk/en/2004/02/285607.html

Keith Parkins, Camden forced to back down, Indymedia UK, 3 July 2004
 http://www.indymedia.org.uk/en/2004/07/295552.html

Keith Parkins, Audit Commission savage Pavilion Housing Association,
Indymedia UK, 27 July 2004
 http://www.indymedia.org.uk/en/2004/07/295403.html

Keith Parkins, Camden lashes out at opponents of council house sell off,
Indymedia UK, 27 July 2004
 http://www.indymedia.org.uk/en/2004/07/295402.html

Keith Parkins, Social housing under attack, Indymedia UK, 5 August 2004
 http://www.indymedia.org.uk/en/2004/08/295893.html

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 http://www.indymedia.org.uk/en/2004/08/296145.html

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 http://www.indymedia.org.uk/en/2004/08/296396.html

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2004
 http://www.indymedia.org.uk/en/2004/11/300374.html

Keith Parkins, Scandal of Pepys Estate, Indymedia UK, 9 February 2005
 http://www.indymedia.org.uk/en/2005/02/305021.html

Keith Parkins, pathfinder schemes, Indymedia UK, 14 February 2005
 http://www.indymedia.org.uk/en/2005/02/305219.html

Keith Parkins, Pathfinder schemes - a path to corruption?, Indymedia UK,
14 March 2005
 http://www.indymedia.org.uk/en/2005/03/306577.html

Keith Parkins, First Wessex plan takeover of Portsmouth housing, Indymedia
UK, 12 September 2006
 http://www.indymedia.org.uk/en/2006/09/350606.html

Keith Parkins, Liverpool resident halts Pathfinder programme, Indymedia
UK, 27 September 2006
 http://www.indymedia.org.uk/en/2006/09/351960.html

Keith Parkins, London Social Forum - housing and land rights conference,
Indymedia UK, 2 October 2006
 http://www.indymedia.org.uk/en/2006/10/352437.html?c=on

Keith Parkins, Pathfinder hits the buffer, Indymedia UK, 17 October 2006
 http://www.indymedia.org.uk/en/regions/liverpool/2006/10/353777.html

Keith Parkins, Housing Association Mergers, Indymedia UK, 19 October 2006
 http://www.indymedia.org.uk/en/2006/10/353908.html?c=on

Simon Whelan, Experts describe UK as world’s 'first onshore tax haven',
Indymedia UK, 6 January 2007
 http://www.indymedia.org.uk/en/2007/01/359377.html

"Who owns Britain" by Kevin Cahill, Canongate Press, 2001