four - Strategic pragmatism? The state of British housing policy

Summary

Introduction

In January 2005 the government published the findings of an independent evaluation of English housing policy over the period 1975-2000 (Stephens et al, 2005). This was the first attempt to examine housing policy in this way since the 1977 review (DoE, 1977), and it provides the framework in this chapter for examining current policy developments.

The evaluation found that while many individual policy instruments were successful within their own terms, they often had unexpected and undesirable spillover effects. Sometimes spillover effects took the form of unacknowledged but unavoidable trade-offs between competing objectives. Policies were most successful when they followed the grain of social and economic change and least successful when they did not. Moreover, housing policies interact with related policies and institutions, notably social security and labour markets, to shape the nature of the housing system.

By the late 1990s, housing policy mimicked social security policy. The shift away from the use of social rented housing for general needs purposes mirrored the move away from universal benefits to those that were highly targeted through means testing. The two policies met with the emergence of Housing Benefit as by far the largest single financial subsidy for housing. Meanwhile the growth of home ownership, much of it due to the Right to Buy policy, was accompanied by mortgage market deregulation that not only expanded access to finance, but increased the liquidity of housing as an asset by making equity withdrawal relatively straightforward. Social and economic changes led to the decline in the nuclear family, the increase in household types at risk of poverty, the large rise in poverty and income inequality, and the polarisation of the labour market between two-earner and no-earner households. These were mirrored in acute tenure polarisation that often translated into spatial polarisation (Stephens et al, 2003).

The evaluation also demonstrated how the governance of housing policy has changed over the past three decades since the mid 1970s. The importance of the department with formal responsibility for housing (the Department of the Environment and its successors and now the Office of the Deputy Prime Minister, ODPM) diminished as the emphasis in subsidies shifted away from supply-side and towards Housing Benefit, which, in the 1980s, became the sole preserve of the department with responsibility for social security (now the Department for Work and Pensions).