Labour’s legacy

Who could forget the spectacle of New Labour’s victorious leadership jigging to D:Ream’s dance classic Things can only get better? That anthem set the beat for the party’s 1997 landslide win which, of course, ran into a 13-year stretch in power. Back then, hopes were high that Tony Blair’s energetic government would transform the nation.

And things certainly needed to get better in social housing, a task which no less than nine Labour housing ministers have faced since Mr Blair’s victory. Decades of under-investment under both Conservative and Labour administrations had left more than half of all social tenant households - 2.3 million - living in unfit homes in England. Finding the £19 billion for the repairs backlog was widely considered an impossible task. The state of the private sector was worse. More than 60 per cent of privately rented and 40 per cent of owner-occupied homes needed urgent work.

The country was also losing social homes under Margaret Thatcher’s right to buy policy far faster than they were replaced. In the last year of the Conservative government which lost to Mr Blair, Great Britain suffered a net loss of 16,257 homes. Social house building was nosediving in tandem with investment levels into what appeared to be a terminal decline. The number of homes built by councils and housing associations plunged from its peak of 110,000 in 1980, the second year of the outgoing Conservative government’s 18-year tenure, to just 34,860 in 1996, its final full year. Things could not have looked worse for housing. So, 13 years and a freshly elected government on, did New Labour’s nine housing ministers manage to make good on D:Ream’s prediction?

A weak start

David Orr, chief executive at the National Housing Federation, finds both ‘big strengths and big weaknesses’ in the party’s performance. Labour made its biggest error right at the beginning, suggests Mr Orr, who back then headed the Scottish Federation of Housing Associations. ‘In the Tory administration, by the mid-90s, they were cutting back investment. [Then Labour chancellor] Gordon Brown didn’t need to accept those low levels of investment. It has taken several years to recover.’

Labour had pledged to stick to the previous government’s spending plans in its 1997 election manifesto. As a result, housing investment in Great Britain fell to its lowest level for decades. In 1997/98, just over £4 billion was spent by the government on social housing - less than in any year during the Conservative’s 18-year reign beforehand (see box, overleaf). In fact Labour spent significantly less each year on social housing during its first term than the Tories during its final four. The big increase only came during Labour’s third period in office: between 2005/06 and 2008/09 it doubled investment from the historically low levels of its first term to £32.6 billion. The increase was ‘too little, too late’ for Chris Holmes, director of homelessness charity Shelter from 1995 to 2000. ‘Eventually, the boom years of the Homes and Communities Agency came but the opportunity was really missed,’ he says.

Raising standards

One of Labour’s greatest legacies, however, was its pledge to make all social homes warm, weatherproof and with reasonably modern facilities under its new decent homes standard, which launched in 2002. Landlords were given until the end of 2010 to get their properties up to scratch.

The state of social housing was in such a ‘terrible mess’ when Labour came to power that many in the housing world swore it couldn’t be done, Mr Orr recalls. The scale of the challenge only made the decent homes programme all the more ‘amazing’, says Sarah Webb, chief executive of the Chartered Insititute of Housing. ‘Accepting that government intervention was needed to turn this situation around showed real leadership and state support at its best.’

At the last count 86 per cent of all social homes had met the standard, compared with less than half in 1997, and the government has agreed revised deadlines for the 8 per cent due to miss this year’s decent homes deadline. Less impressive, though, is Labour’s failure to help homeowners in the same way - what Ms Webb considers one of the missed opportunities of the past 13 years. ‘Some of the very worst conditions are in owned stock,’ she says.

The architect of Labour’s decent homes programme was Nick Raynsford, the second housing minister under Mr Blair. His blueprint for reform was the 2000 housing green paper, Quality and choice: a decent home for all. It was the first statement on housing policy by a Labour government since 1977, according to Mr Raynsford. ‘I was very conscious from the moment we came into government that the backlog of repairs was the overriding problem we needed to tackle,’ he recalls.

His paper set out plans to fund the refurbishment scheme. Councils could only qualify for state funding by setting up a new-style arm’s-length management organisation or signing up to complex private finance initiative deals. The only other fundraising alternative was to sell their homes to housing associations, which could borrow money on the private markets.

New arrivals

The strategy altered dramatically the social housing landscape. ALMOs now manage more than half of all council housing - more than 1 million homes across 65 local authority areas. Almost 1 million council homes have been sold to housing associations since 1997 - 80 per cent of all stock transfer sales since the Conservatives launched the right to buy programme in 1988. Housing associations have now overtaken local authorities as the main social housing providers. The official numbers show they manage 2.2 million homes in England, 400,000 more than councils.

Much of what came to define New Labour’s overall housing strategy for the next decade is also written on that green paper’s pages, according to Mike Gahagan, then director of housing at what was the Department of Environment, Transport and the Regions. The document paved the way for Labour’s flagship regeneration vehicles - the housing market renewal pathfinders - by highlighting the need to tackle housing markets in the north and the midlands, which were showing the first signs of collapse.

Other major reforms mooted in the paper included the introduction of social housing lettings schemes to give tenants greater choice over where they lived and a new ‘strategic housing’ role for local authorities. Councils should be concerned with private as well as social homes in their areas and they would be given new powers to help them monitor private landlords, the paper argued. Many of its reforms were introduced in the 2004 Housing Act.

An end to segregation

But for Mr Raynsford himself, the most important reform was the attack on social segregation - the decades-old tradition of keeping social and private housing apart. His green paper introduced planning rules which did away with monotenure development. ‘We made it absolutely clear that we were committed to mixed development. House builders were totally opposed to that change but in the long-term that would be the biggest achievement.’

Mr Raynsford is so passionate about mixed communities he lives in a flat in the Greenwich Millennium Village, which he describes as ‘an icon of Labour’s housing and regeneration’ policy. Social renters and homeowners live there side-by-side while just four miles away, the 1,900 homes of the 1960s Ferrier estate are being flattened - a testament, he says, to the failure of single tenure developments built as ‘oases of social housing’.

At a recent reunion with Mr Gahagan, the pair concluded they had got most things right in the green paper - apart from one glaring omission. ‘The one thing which we hadn’t anticipated was the very rapid increase in housing shortage,’ Mr Raynsford admits. ‘We knew there was a shortage in the south east but it wasn’t an overall shortage. Hindsight is a wonderful thing.’

And it didn’t take long to kick in. Norman Perry, chief executive of the Housing Corporation between 2000 and 2004, says the government initially did the ‘minimum necessary’ to tackle housing problems during his tenure. ‘But that changed because people became aware of something that they hadn’t wanted to address before: the pressing demand for more housing.’

The Treasury grabbed the housing undersupply nettle by commissioning the economist Kate Barker, a member of the Bank of England’s monetary policy committee, to carry out a major review of housing supply. Her conclusions, published in 2004, highlighted the link between housing and the economy. They urged planning reforms, a major increase in house supply and greater new social housing investment.

Build, build, build

The government agreed to an annual target of 200,000 homes the next year, but a month after Gordon Brown became prime minister in July 2007, the stakes were raised in a new green paper. A fresh target was set to accelerate annual house building rates to 240,000 homes a year by 2016, plus an ambition to see 3 million new homes created by 2020. A new superagency, the HCA, would be set up to lead the charge on social housing, and a network of new ‘eco-towns’ would create up to an extra 100,000 homes. The housebuilding stats for that year provided rocket fuel for Labour’s housing ambition: 224,680 homes were built in the UK across all sectors - the highest figure since 1981. It was also the first year for at least two decades in which the number of social homes built outstripped those lost through right to buy.

But hopes for a revolution in housing supply were soon dashed by the collapse of the global financial market. Banks stopped lending; developers stopped building; home building rates plunged to historically low levels. The HCA’s chief role became the housing market’s rescuer rather than accelerator. As UK development figures plummeted through 2008 to an all time low of just 37,380 completions in the first quarter of 2009, the HCA pumped an extra £1.5 billion of taxpayers’ money to kick-start stalled projects and help social landlords build through the credit crunch.

‘There’s still more to do’ became Labour’s new housing mantra. And as Labour’s third parliament headed into its dying days, the policy announcements continued (see box: Labour housing policy: is this the future?). The curtain call of Labour’s third term was perhaps its most significant reform: finally proposing plans to free councils from the shackles of the hated housing revenue account. The plans, out to consultation until July, would allow councils to spend tenants’ rents on new housing and keeping their existing homes up to scratch - rather than handing the cash to the Treasury through gritted teeth.

Labour has achieved what some thought was impossible, making social housing decent again through its focus on refurbishment and its efforts to end segregation. How that is kept up lies in the hands of the government voted into power yesterday. Let’s hope things can only get better.