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Have the Conservatives really built twice as much council housing as Labour?

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Not for the first time, today’s Prime Minister’s Questions featured a Jeremy Corbyn question on housing.

Also not for the first time it was batted away by Theresa May with the Conservative’s favourite housing statistic, namely:

“Under the Conservatives we’ve seen more than twice as much council housing being built as under the last Labour government.”

Some variation on this line has been the go-to Tory response to Labour’s housing attacks for at least the past four years. It’s not hard to see why – it’s a surprising figure that shows them out-pointing the opposition on an area you would expect them to lose. So is it true?

The answer is yes, but it’s also an extremely misleading comparison.

Under Labour, between 1997 and 2010 there were 2,780 council homes built with a peak of 320 in 2010. Since then, there have been 10,310 homes built by councils, giving the Conservatives an even more handsome win than Ms May suggested.

council build record

Source: DCLG housebuilding, new build dwellings

Why, then, is this misleading?

Essentially because council housebuilding is an extremely fringe part of the UK housing market these days. Even at its recent peak of 2,200 in 2013/14 it made up just 1.6% of overall housebuilding. It usually sits below 1%.

So a comparative record of council housebuilding tells us nothing about which government delivers the most affordable housing, which is clearly what Ms May et al hope it suggests.

build stats

Source: DCLG housebuilding, new build dwellings

The Conservative dominance in the council housebuilding stakes is in fact a quirk of housing policy history. Council housebuilding dropped away as a significant part of country’s output under Margaret Thatcher’s government – falling from 55,200 in her first year in power to just 400 in John Major’s last. This was due to the introduction of the Right to Buy and spending restrictions which prevented councils from building at scale.

The incoming Labour government under Tony Blair did nothing to reverse this position initially. In fact, it took until 2009, under Gordon Brown’s government and then housing minister John Healey, to start any changes. They set in motion plans to give councils control of their own rental income rather than passing it to the Treasury under a model known as self-financing.

Unfortunately for the future comparisons, this was a long job and it wasn’t completed until 2012 – by which point the Conservatives were in power.

Timeline: the fall of council housebuilding

  • 1975 – Councils build 105,740, more than the 89,730 delivered by the private sector
  • 1979 – Margaret Thatcher comes to power, and introduces the Right to Buy in 1980
  • 1994 – As investment falls away and spending powers are restricted council house building falls below 1,000 in a year for the first time
  • 1997 – Blair comes to power with annual council house building at 400
  • 2009 – The Labour government proposes self-financing deal for councils to fund building
  • 2012 – Self-financing introduced, but with limits on borrowing. Right to Buy discounts are also dramatically increased, with councils allowed to keep some of the receipts to fund replacements

This self-financing power came into force in 2012 and has allowed councils to build more since, but three Conservative policies must also be born in mind.

First, the amount councils can borrow is tightly capped, meaning the ambitious local authorities can only operate fairly low-scale plans. Second, the rent cut – introduced in 2015 – wrecked the business plans drawn up under the self-financing model with a lot of planned building work going down the sink as a result. Third, the revamped Right to Buy, launched in 2012, has allowed councils to fund 10,644 new homes but has also seen 51,352 sold.

A better way, then, of comparing the records of the two governments is to look at affordable housebuilding overall. The below chart shows this comparison:

 

ALl affordable

Source: DCLG, affordable housing supply statistics

It shows there is actually little to choose between the two parties. The Conservative model – which involves less grant and more investment from housing associations – is arguably more cyclical, and would likely become even more so in a real market downturn. But its peak of 66,700 in 2014/15 beats anything Labour has delivered in recent years.

An important caveat to this, though, is that it includes anything which can be branded affordable and as a result includes shared ownership and ‘affordable’ rents which are up to 80% of market rates. In terms of what is traditionally meant by council housing – socially rented properties – the Conservatives completed divested from them in the 2010 Spending Review. This means the Labour governments of 1997 to 2010 delivered social housing at a far higher rate than the recent Tories.

social rent

Source: DCLG, affordable housing supply statistics

 


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