For once, this year’s Labour conference seems to have made a difference in policy. Usually, the gathering of the faithful is so heavily stage-managed by the leadership that there are no surprises.
However, this time an important vote that could have widespread implications for local authorities was carried against the wishes of the party bosses. Labour activists had long been bemused by the party’s absolute antipathy towards council housing which meant that major investment and renewal schemes could only be delivered through non-traditional mechanisms. The option of remaining in conventional council housing with the local authority funding the improvements through subsidised borrowing was simply not on offer.
Tenants and local authorities have, until now, been presented with three alternatives: the transfer of the stock to a private housing company or to an arms-length management organisation (ALMO), or raising money through the Private Finance Initiative.
The origins of this policy lie in New Labour’s disenchantment with its own past. Big local councils owning thousands of homes with poor management and without a scheduled maintenance programme are certainly not in line with the party’s current thinking of an enabling state that does not run things itself. The policy has been influenced, too, by John Prescott’s own local knowledge. His seat is in Hull where the council squandered vast amounts of money obtained in a windfall through the sale of its telecommunications company on ill-thought out improvements schemes.
But the government’s policy seems to have been based on such anecdotal evidence rather than any thorough appraisal of the advantages or disadvantages of councils as landlords. Sure, there are no shortages of examples of badly run estates, decaying under the weight of a multitude of problems. The 80 year history of council housing has been chequered, to say the least. But it seems the form of tenure is often blamed for the deprivation and the poverty, rather than the social conditions that the creation of state-owned cheap housing was supposed to address. There are, too, examples of heroic work by local councils in improving run down estates. I went recently to Broadwater Farm in Tottenham, made infamous by the murder of PC Keith Blakelock in a riot 20 years ago, which is no paradise but provides good quality housing in reasonable conditions for hundreds of families.
While it was understandable that Labour was keen to develop alternative forms of tenure, it is amazing that ministers have steadfastly refuse to consider giving councils extra money for investment, even if that is what local people clearly wanted. That was the case in Camden where the suggestion of an ALMO was rejected by a large majority of tenants leaving the council in a state of limbo. It could not have access to promised funds to refurbish estates because tenants had rejected the mechanism through which that money would be delivered but they would not be given the money directly.
The case for what has become known as the fourth option was strengthened by the fact that Camden is widely recognised to be a well-run authority, not some basket case like nearby Hackney. Therefore, concerted lobbying by tenants’ activists, trade unions and some local authority politicians paid off with a motion at the Labour party conference suggesting that local authorities should be able to retain their housing and obtain the investment to improve it. There is, too, a strong financial argument underpinning the Defend Council Housing Campaign. The legacy of neglect and bad management has left the government facing a £20bn bill to bring council housing up to scratch. However, private is not necessarily cheaper. According to the National Audit Office, transferring stock cost £1,300 more per unit than direct investment. Moreover, the rents tend to be higher which then have to be reimbursed through housing benefit and exacerbating the poverty trap for tenants. Campaigners point out that council housing has made a profit of £1.5bn per year which could be used to fund the required improvements.
Of course, the Treasury disputes these figures and argues that these various private or semi-private initiatives are better offer better long term prospects. There is, too, the argument that private management skills are superior, but Tony Blair’s public line has always been ‘what works’ rather than private is best. However, local authorities suspect that the real policy is the latter. In fact there is no hard evidence to back up suggestions that tenants fare best under private landlords. Indeed, there are good councils and bad ones, but there are also some lousy housing associations – or RSLs as we now have to call them.
The policy on council housing investment is now under review but it is clear that John Prescott will not dare just to ignore the conference resolution. He may, though, try to make it as difficult as possible for councils to retain their housing and obtain the investment. However, behind the posturing at the Labour party conference and in Parliament, one can detect signs that new Labour’s hard line on privatisation is softening. This is not only the case with council housing, but with railways and buses and even the NHS where John Reid recently commented that one of the problems with cleaning hospitals is that all the work had been contracted out by the Tories. Therefore the motion in support of retaining council housing captured a wider mood and may, in retrospect, be far more significant than anyone at the time realised.