Kevin GulliverLooking back to the 1974 Housing Act can help those who support the continuance and expansion of social housing to fashion a new vision, writes Kevin Gulliver. For one, looking back shows the relative success of directing the lion’s share of public subsidy into bricks and mortar rather than subsidising rents through the housing benefit system. 

The 31st July 2014 marked a significant anniversary for social housing in the UK: forty years had passed since royal assent was given to the Housing Act 1974. The Act is both important historically and in terms of contemporary debates about the nature and future role of social housing in this country.

In current housing policy discourse, the future of social housing is being hotly contested. Recent discussions have enabled identification of two broad schools of thought. The first, including many of the largest social landlords, accepts that growing commercialism alongside the current ‘marketisation’ of the housing association sector is inevitable and should even to be welcomed, with social housing portrayed as a ‘failed brand’. Others, such as the cross-party campaign group SHOUT (Social Housing Under Threat), are appealing to the historic success of social housing and calling for a return to greater rates of council house building. ‘Marketisation’ of social housing is also being challenged by those who wish to see a more tenant and community-controlled social housing sector.

The 1974 Act introduced significant state funding of housing associations (the so-called voluntary housing sector and housing’s ‘third arm’) for social housing development for the first time. In return for registration with a revamped Housing Corporation, the government quango charged with supervision of the voluntary housing sector, housing associations were allocated virtually the whole costs of housing construction and renovation of existing housing; quite different from today’s Affordable Rent Programme where the majority of funding is raised from private financial institutions.

The 1974 Housing Act was also significant since it signaled the beginnings of the eclipse of council housing by housing associations, which has continued to the present day, and was further enabled by the Housing Act 1988, which made housing associations the primary developers of social housing. Stock transfer from local councils and direction of public subsidies towards housing associations and away from council housing were also key drivers. The Right to Buy council housing, begun in 1980, reduced the number of council homes in England by 1.8 million between 1980 and 2013, leaving the field free for housing associations to oversee the majority of social homes.

For the previous eighty years, the housing association sector largely comprised the great endowed trusts such as Cadbury, Rowntree, Peabody and Sutton, about 400 small co-ownership and cost-rent societies created in the early 1960s, and about 600 housing trusts founded in the wake of the Shelter campaign and the Ken Loach documentary ‘Cathy Come Home’. It was to this last group of housing associations that state funding was channeled as part of the regeneration of inner city areas, where these housing associations primarily worked, in what the media termed ‘twilight zones’ or ‘stress areas’.

Social housing

The essential ‘hybridity’ of housing associations effectively began in 1974 involving a changed mission in juggling the diverse demands of state housing policy and regulation, and raising private finance while being answerable to tenants and communities. Such a role for housing associations – between state, market and community – has been their strength for four decades and is now at serious risk of erosion as commercialism becomes the key driver and social purpose increasingly takes a backseat.

Contrasting the social housing framework introduced by the 1974 Act with today’s operating environment enables some other interesting conclusions to be drawn. The first is the relative success of directing the lion’s share of public subsidy into bricks and mortar rather than subsidising rents through the housing benefit system. From 1975 to 1990, 233,000 social homes were completed by housing associations whereas the number for the last fifteen years is 321,000. While at first glance this seems to suggest that direct subsidy rather than greater levels of private finance was less successful, some context is needed.

The 1975 to 1990 housing association development programme represented an 80 per cent increase on the number of homes managed by housing associations in 1975 – at 280,000. Development from 1998 to 2013 saw only a 30 per cent increase on the base 1 million homes managed by associations in 1998. It is also important to remember that from 1975 to 1990, local councils provided 843,000 social homes while for 1998 to 2013, this fell to just 7,800. Direct subsidy plus housing associations and councils working together were more successful and cost-effective approaches to volume social housing development: over 1 million social homes were collectively provided between 1975 and 1990. This is more than three times the combined total of 329,000 from 1998 to 2013.

Falling grant rates for social housing from 1990 onwards, with private finance making up the shortfall, and reaching its apotheosis in today’s Affordable Rent Programme, have resulted in higher rents and the worsening of poverty traps for tenants. Back in the 1970s, housing association rents were ‘fair’ and set by an independent rent officer service, enabling greater numbers of tenants to work. Then, 69 per cent of working age tenants were in work, despite relatively higher unemployment than today, while now this has slumped to 51 per cent. At the same time, the proportion of housing associations tenants in receipt of housing benefit has increased from about half to two thirds, with a greater cost per claim as housing benefit has ‘taken the strain’.

A second conclusion, as the SHOUT campaign has observed, is that stock transfers and mergers have created some very large, unaccountable and undemocratic housing associations spread across dozens of local council boundaries, with tenant and community involvement withering on the vine. While the world of 1974 was far from perfect, housing associations were more rooted in recognisable communities and were small enough for those communities to exercise some influence. Tenants of today’s massive housing associations have almost no say in the fundamental decisions that affect their status and security despite the recent introduction of ‘scrutiny panels’ modelled upon consumerist approaches to service testing.

Thirdly, reductions in security of tenure have destabilised longstanding communities, making community governance more problematic. As observed by social housing historian Professor Peter Malpass, housing association governance should re-emphasise the value of links to local communities accompanied by a thorough stock rationalisation programme transferring “far-flung estates to associations based nearby and re-asserting the value of locality-based social housing organisations.”

So history can teach us some valuable lessons. In the social housing field, looking back to the 1974 Act can help those who support the continuance and, indeed, expansion of social housing, to fashion a new vision encompassing a return to the most positive elements of the past; especially lower rents, greater security of tenure and more community governance, lost in recent years.

rebalancing of public subsidies back to bricks and mortar investment and away from rental subsidies will provide more social homes as a vital asset for future generations, reduced welfare spending and help tenants to access work. A new vision should also involve housing associations and councils working in partnership to meet local housing needs and to fulfill community aspirations. Finally, a more democratic social housing, perhaps engineered by extending mutual models across the sector, and based around existing and emerging communities, would equally offer more than the present uninspiring and inadequate quasi-market framework.

Note: This article gives the views of the author, and not the position of the British Politics and Policy blog, nor of the London School of Economics. Please read our comments policy before posting. Image credit: Scott Wylie CC BY 2.0

About the Author

Kevin GulliverKevin Gulliver is Director of the Human City Institute (@HumanCityInst).


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