Lessons from history: A century ago, the Tories accepted that only councils could solve the housing crisis

A London family with all their possessions in the street following eviction from a slum, c1901. Image: Hulton Archive/Getty.

Nothing symbolises the perversity of the contemporary housing market better than the surfeit of luxury accommodation in central London postcodes, much of it contained in a rash of high-rise developments along the Thames.

As homelessness and overcrowding rise, social housing waiting lists grow, and millions of families face the high rents and permanent insecurity of the private rented sector, developers have nevertheless managed to over-supply the demand for high-end living in the capital.

This misalignment of priorities in housing feels like a peculiarly modern phenomenon: a symptom of London staking its place to be one of the world’s premiere cultural and financial centres, not to mention a playground for the rich. But many of the dynamics of today’s housing market – particularly its chronic failure to cater not just for the poor, but for the average working family – would have been familiar a century ago.

For years, politicians and the press had been wringing their hands about the housing conditions of the working classes in Britain’s industrial towns and cities, particularly London. Rents were high; overcrowding was severe. Conditions were so appalling that “the housing question” was regarded, first and foremost, as a public health consideration.

It would be too much to suggest an equivalence between the squalor of the 19th century slums and the housing plight facing many Londoners today. But it is no exaggeration to say there are very clear parallels between the way the housing market operated then and now, which should give today’s policymakers pause for thought.

First, housebuilding failed, year after year, to keep up with demand. It proceeded in fits and starts, dictated not by the constantly rising need for homes (due to the rapidly expanding population), but by wider economic conditions and their impact on house prices. Whenever prices fell, builders reduced their output.


Second, housing costs were punishingly high – rents in London absorbing for many up to half their wage – and the vast majority of people could not afford to buy their own home. Private landlords, offering hardly any security of tenure, controlled about 90 per cent of the housing stock.

Third, attempts by philanthropists and the earliest housing associations to provide for the poor were heroic but ultimately futile. The cost of land meant that they were consistently crowded out by private builders who wanted to construct homes for people of greater means.

Fundamentally, the housing system provided for the better off, and ignored the poor. By 1914, politicians of all stripes had begun to see the situation for what it was. Tories and Liberals just as much as the small band of Labour MPs had begun to despair that the private sector builders would ever provide all of the homes the country needed.

By the First World War, politicians were beginning to realise there was only one way out of this mess. What was missing, as today, was a meaningful programme of public sector housebuilding to bypass the private developers.

In 1913, a Conservative Party pamphlet concluded that the housing problem would be “irremediable” without state support for local authority housebuilding. The following year, on the eve of war, the then Liberal chancellor David Lloyd George told the Commons:

“You cannot provide houses in this country by private enterprise. I do not care what party is in power: whatever party it may be, I predict it will have to realise the fundamental fact that the builder for years has gradually been passing out of the field in the building of houses [for the poor] — he has been passing on to something which he finds more profitable.”

As soon as the First World War was over, the government would stop relying on speculative private builders to meet the country’s housing needs, and order councils to make up any shortfall between supply and demand. What the private sector did not build, councils would – and the Treasury would pick up the tab.

The massive council housebuilding programmes of the 1920s and 1930s, and then after the Second World War in the 1950s and 1960s, transformed the housing market and improved the living conditions of millions of people. Supply got ahead of demand, prices relative to incomes levelled out or even fell. Owner-occupation grew, and decent provision was made for those without the means to buy their own home.

Since the 1970s, and the collapse of public investment in housebuilding, things have come full circle. The housing market is prone to speculation, building fails to keep up with need, housing costs are rising, and a new generation of private landlords is coming to colonise the housing stock. As ministers grapple with these issues, they could do worse than look back to their early 20th century forebears for inspiration.

Daniel Bentley is editorial director at the think tank Civitas. His latest report, “The Housing Question: Overcoming the shortage of homes” can be read here.

 
 
 
 

Two east London boroughs are planning to tax nightlife to fund the clean up. Will it work?

A Shoreditch rave, 2013. Image: Getty.

No-one likes cleaning up after a party, but someone’s got to do it. On a city-wide scale, that job falls to the local authority. But that still leaves the question: who pays?

In east London, the number of bars and clubs has increased dramatically in recent years. The thriving club scene has come with benefits – but also a price tag for the morning clean-up and cost of policing. The boroughs of Hackney and Tower Hamlets are now looking to nightlife venues to cover these costs.

Back in 2012, councils were given powers to introduce ‘late night levies’: essentially a tax on all the licensed venues that open between midnight and 6am. The amount venues are expected to pay is based on the premises’ rateable value. Seventy per cent of any money raised goes to the police and the council keeps the rest.

Few councils took up the offer. Four years after the legislation was introduced, only eight local authorities had introduced a levy, including Southampton, Nottingham, and Cheltenham. Three of the levies were in the capital, including Camden and Islington. The most lucrative was in the City of London, where £420,000 was raised in the 2015-16 financial year.

Even in places where levies have been introduced, they haven’t always had the desired effect. Nottingham adopted a late night levy in November 2014. Last year, it emerged that the tax had raised £150,000 less than expected in its first year. Only a few months before, Cheltenham scrapped its levy after it similarly failed to meet expectations.


Last year, the House of Lords committee published its review of the 2003 Licensing Act. The committee found that “hardly any respondents believed that late night levies were currently working as they should be” – and councils reported that the obligation to pass revenues from the levy to the police had made the tax unappealing. Concluding its findings on the late night levy, the committee said: “We believe on balance that it has failed to achieve its objectives, and should be abolished.”

As might be expected of a nightlife tax, late night levies are also vociferously opposed by the hospitality industry. Commenting on the proposed levy in Tower Hamlets, Brigid Simmonds, chief executive at the British Beer and Pub Association, said: “A levy would represent a damaging new tax – it is the wrong approach. The focus should be on partnership working, with the police and local business, to address any issues in the night time economy.”

Nevertheless, boroughs in east London are pressing ahead with their plans. Tower Hamlets was recently forced to restart a consultation on its late night levy after a first attempt was the subject of a successful legal challenge by the Association of Licensed Multiple Retailers (ALMR). Kate Nicholls, chief executive at the ALMR, said:

“We will continue to oppose these measures wherever they are considered in any part of the UK and will urge local authorities’ to work with businesses, not against them, to find solutions to any issues they may have.”

Meanwhile, Hackney council intends to introduce a levy after a consultation which revealed 52 per cents of respondents were in favour of the plans. Announcing the consultation in February, licensing chair Emma Plouviez said:

“With ever-shrinking budgets, we need to find a way to ensure the our nightlife can continue to operate safely, so we’re considering looking to these businesses for a contribution towards making sure their customers can enjoy a safe night out and their neighbours and surrounding community doesn’t suffer.”

With budgets stretched, it’s inevitable that councils will seek to take advantage of any source of income they can. Nevertheless, earlier examples of the late night levy suggest this nightlife tax is unlikely to prove as lucrative as is hoped. Even if it does, should we expect nightlife venues to plug the gap left by public sector cuts?