Policy Exchange Are Right on Social Housing, but Individual Local Authorities Cannot Go it Alone


Yesterday, think tank Policy Exchange (PX) launched a report calling for more social housing to be built in England.  The story has been picked up across the media and blogosphere, highlighting the call to sell off valuable property to finance the new builds.




Many look to Westminster as an obvious place where such a plan would have a high impact. With an average value on social housing stock of £290,000 and rising, you can see why. But in fact, as the report highlights, throughout the country 816,000 properties are worth more than the average house price for an area totalling 20% of the social housing stock. Those homes have a total value of £159bn, less than half (£71.9bn) of which is in London.

The core of the proposal is to sell social housing that is above average value as it becomes vacant in order to reinvest the funds. This could create the largest social house building programme since the 1970s. PX believes the sales could raise £4.5 billion annually which could be used to build 80,000-170,000 new social homes a year and reduce the housing waiting list by between 250,000 to 600,000 households in five years.


The report says that ending reinvesting the vast wealth tied up in expensive social housing:



  • Will generate growth and jobs. This reform should allow 80,000-170,000 new homes every year. This would create up to 340,000 jobs a year in the construction industry.
  • Is extremely popular with all sections of society. 73% of people including social tenants think that people should not be given council houses worth more than the average property in a local authority. By 2:1 voters agree people should not be given council houses in expensive areas.
  • Has no real effect on employment. More expensive areas do have slightly higher employment rates but these differences are very small. Since people commute to work – either by public transport or car – the only effect of moving tenants is reducing time spent travelling and travel costs. This is not a major driver of employment
  • Raises tenants’ standard of living. The majority of social tenants are either totally or largely reliant on benefits. Someone living on benefits in an expensive part of London will pay a 10-15% premium compared to someone living in a cheaper area.
  • Reduce the housing waiting list by between 250,000 to 600,000 households in five years. The overwhelming majority of people waiting for a council house will benefit from these reforms.


Under their proposals, no tenant would be required to move from their home, as high end properties would only be sold of as they become vacant.

This gives us a lot of food for thought, but these proposals by PX will not work in isolation, operated by one council alone. To succeed and make the most of the opportunity highlighted, any implementation would need to be achieved nationally, but councils – such as Westminster - with a significant range of properties with massive value variations would inevitably be at the centre of any such move.


In Westminster, we are already working innovatively to provide fairer and more affordable housing options to lower-earning individuals who do their fair share to support the economic life of the West End. This PX proposal would support that work. Rather than undermine access to central London for key workers as some commentators have suggested, it would actually help it – supporting mixed communities and providing vital accommodation to those with need and value to add.


In January, I announced a change in social housing provision in Westminster to trial a scheme which will give London’s workers a Fair Share. Workers who would not otherwise be prioritised for social housing are able to apply for affordable accommodation in the thriving centre of the capital, thanks to this pilot flagship scheme. The Fair Share scheme makes better use of existing housing stock to provide more accommodation for those making an economic contribution to central London.


One reason the Fair Share scheme came about is that Westminster faces social housing pressures more acute than elsewhere in the country, and we lack available land which is suitable for building new affordable homes. That is why no council can go it alone in reforming housing policy. However, with commitment to affordable housing for key workers and others as Westminster is demonstrating, sale of high value council housing - if applied nationally - could help provide for a renewal of social housing in a way that satisfies both the taxpayer and the growing waiting list for affordable homes. 

This entry was posted on Tuesday, 21 August 2012. You can follow any responses to this entry through the RSS 2.0. You can leave a response.

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