Housing Supply and Homelessness

Lord Hain Excerpts

Thursday 5th December 2024 Lords Chamber

[Lord Hain (Lab)]

My Lords, it is a real pleasure to follow the noble Baroness, Lady Smith of Llanfaes, who speaks with real eloquence. Her voice is important in this Chamber. I say of the right reverend Primate that whenever I have him speak in this House, he has done so with passion, conviction and authority on some of the great social inequalities and issues of our day, and he will be missed.

For far too long, Governments have left it to the market to tackle Britain’s housing crisis, and it has not worked, leaving a chronic housing shortage which has been pushing up house prices and making private rents unaffordable, creating mammoth waiting lists for social housing and driving up the annual housing benefit bill, as the noble Lord, Lord Shipley, pointed out earlier.

The 2010-15 Conservative-Lib Dem coalition Government committed to spend only £10 on building new homes for every £100 on housing benefit—virtually a reversal of 40 years ago, when, of every £100 we spent on housing, £80 was invested in bricks and mortar and £20 was spent on housing benefit.

Even Labour’s ambitious and admirable commitment to raise housebuilding to 300,000 homes a year during this Parliament still leaves a gap, with millions of families on council waiting lists and millions more adult children staying with their parents because they cannot find or afford a home of their own. The average home cost 3.5 times average earnings in 1997. By 2023, it cost more than eight times. How can young couples be expected to climb the housing ladder when it is impossibly expensive for them to find a place on its lowest rung?

Oxford University Professor John Muellbauer has found that in the UK, on average over 70% of the value of homes is in the value of the land on which they are built. He urges central government and local authorities to work together in using public funds to buy development plots, in effect to establish a national land bank, for subsequent sale with planning permission to private developers at a profit to the community. He argues that such a radical move could transform housing supply and that similar initiatives have succeeded in South Korea, Singapore, Taiwan and Hong Kong in accelerating urban development and in making housing more affordable.

It is important to recognise that the state—much derided and denigrated by right-wing think tanks—has played a major role in promoting economic growth ever since the Industrial Revolution, fulfilling basic functions such as promoting public health, housing the homeless, educating the young, supporting the old, caring for social casualties of all kinds, enforcing the law, defending the nation against threats from abroad—and periodically saving the banking system from itself and protecting the real economy from a slide into slump. Increasingly since the Second World War, and especially in capitalist economies such as the US, South Korea, Singapore, Israel, Taiwan, Germany and Brazil, the state has done more than just fix market failure by funding the basic research that leads to discovery and invention, educating young people and providing the infrastructure on which the market economy depends, including housing.

The Conservative vision of individual empowerment through private markets and private property ownership simply has not worked. It was given a strong run from 2010 to 2024, with savage public spending cuts and economic incompetence typified by Liz Truss’s disaster, provoking a massive public backlash which ejected them from power. Remember also Margaret Thatcher’s popular capitalism, which in the 1980s seemed to capture the mood and was electorally successful, especially through selling council properties—but the fatal flaw was not reinvesting the revenues in building new council homes. The result has been a chronic shortage of affordable housing for both rent and purchase.

Through heavily discounted council home sales and cut-price share offers in privatised utilities, Conservative rhetoric promised each individual a stake in capitalism. Despite the fact that home ownership was more widespread for a time, it has since declined to a modern low. Official statistics showed that the proportion of homes lived in by owner occupiers in the year 2023–24, last year, had dropped to 65%, down from 71% under Labour in 2003 and its lowest level for 35 years. New social housebuilding has also plummeted, leaving calamitous shortages of affordable housing for rent or sale.

The neoliberal mantra has not worked. As a mechanism for delivering adequate housing, the free market has failed abysmally, which is why public investment is now more vital than ever before to clear up this appalling housing mess.