Britain - Labour's empty promises on housing

Jan/Feb 2008

Soon after Brown took over from Blair, the government "discovered" that there was a housing crisis in Britain. At the September Labour party conference, for instance, Brown's speech included much hand-wringing over the "young couples who've told me - we work hard, we save, we play by the rules, we want to get on and yet we can't afford to buy or even rent our first home."

As if the present shortage of cheap, decent housing had not been an on-going problem for working class households for years! But, while Brown claims to have discovered it only now, the situation has been getting much worse over the past decade. The supply of rented social housing has been dwindling while house prices were rocketing. Working class households were hit all the more severely as low pay and casualisation kept eroding their standard of living. Many found themselves stuck in a situation where they had neither the chance of getting a council home, nor the means of affording a mortgage or a sky-high private rent.

The government's response was to promise 3 million new homes between now and 2020 - including 10 brand new "eco" towns. But it did not take long for Brown's own advisers on housing to state - in a report published at the end of November - that this level of house-building will fall short of future demand. So the present shortage of housing is on course to get worse, not better.

As for the "social" housing included in Brown's plans, not only is it less "social" than is officially claimed, but it represents a tiny proportion of Labour's planned housing. While Brown did promise to increase investment in social housing by 50%, to £8bn - this investment will be made over the next 3 years, meaning less than £3bn a year, when almost 2m households are on the waiting lists at present!

But then these plans are not aimed at resolving the housing problems of the working class. They are actually designed to protect very different social interests from the danger of the present explosive combination of a speculative bubble in housing prices and an unpredictable credit crunch. These social interests are partly those of the better-off petty-bourgeois home owners, who include a significant section of Labour's electorate and partly those of middle-class "buy-to-let" landlords, but mainly those of big business, especially in construction, real estate and banking.

The dire state of social housing

While the government champions home-ownership, this is not even an option for a large section of the working population. Nearly a third of all households live in rented accommodation, and two-thirds of these are in housing provided by councils or housing associations. But the demand for social rented housing far outstrips the supply. In England and Scotland, 1.8 million households are on local authorities' housing waiting lists. In some areas, the waiting lists are larger than the entire social housing stock. But these figures probably still understate real needs: how many people do not bother to apply in the first place, knowing that they do not have the slightest hope of being offered a council house within their lifetime, since people in greater need will always be ahead of them on the list?

Councils are legally obliged to house people who are registered as homeless and in "priority need", including categories such as pregnant women, those with dependent children, the disabled, young people leaving care, those leaving prison or the armed forces. Labour claims that its initiatives for tackling homelessness have begun to bear fruit in recent years. It is true that the number of households accepted by councils as being homeless, which had been rising every year until 2004, started to go down in 2005. But what is the explanation for this? The housing shortage has certainly not eased, nor has housing become more affordable. The odds are, therefore, that the drop in numbers actually reflects the fact that it is becoming increasingly difficult to register as homeless. After all, with so much demand for so little accommodation, it would not be surprising if councils were trying to square the circle by finding excuses to disqualify people - which they can do, according to surveys conducted by the housing charity, Shelter, by accusing applicants of having made themselves "intentionally homeless", for instance!

Even if an applicant is accepted as being actually homeless and in urgent need of somewhere to live, there is no guarantee of a decent home. People can find themselves dumped in so-called "temporary accommodation" - sometimes for years on end - while they wait for the council to find them a suitable home. And this has become more frequent, as is shown by the fact that the number of households in temporary accommodation in England has doubled, to 100,000, since Labour came to power.

This "temporary accommodation" may be a hostel, a B&B, or a cramped flat, without even cooking facilities. Shelter has documented many cases of families enduring appalling living conditions in such "temporary accommodation" - for instance flats which were declared unfit for human habitation, but which families cannot leave for fear of losing any chance of eventually being re-housed by the council.

Permanent social housing is not necessarily much better. Despite the government's much-vaunted refurbishment programme, there are still plenty of dilapidated estates and the housing is often unsuitable for tenants' needs. Shelter lists cases like a pregnant mother of three, who lives with her children in a one-bedroom flat and that of a family of six living in a two-bedroom flat. The Guardian recently reported other examples, including that of a disabled woman with two children who had been waiting for 11 years for the council to move her to another council home in which she could use a wheelchair. These examples are not just rare exceptions. Nearly 10% of all children live in over-crowded accommodation, according to Shelter. And their situation is not anywhere close to improving. Indeed, 260,000 households with children in England are on waiting lists for houses with three or more bedrooms, yet only 5,000 social homes for rent of this size are being built each year. At that rate, it will take 52 years just to meet the current demand for such homes.

No-one can deny the fact that councils are caught in a catch-22 situation, between their legal duties, the lack of available council homes and the government's policy to stop them from building new homes or even spending money on repairing the existing stock. However, the way homeless households, and often council tenants, are treated, especially in the big towns, is nothing short of obscene compared to the huge expenditure made on so many prestige projects, not to mention direct or indirect subsidies to business, like building business parks, for instance.

Probably the most shocking example in this respect is the London Olympics. Not only is this project promising to be the largest financial black hole ever, in local government - and the biggest bonanza ever for a few dozen big companies - but it has already resulted in the destruction of perfectly viable social housing in East London. And while, for the time being, the displaced tenants have been rehoused - although quite far away, sometimes - this will mean longer waiting lists for the homeless in greater London!

Forced into the hands of the profiteers

The unavailability of social housing means that growing numbers of people are left with only two options - renting privately, or getting a mortgage. The private rented sector represents around one-third of rented accommodation. Half the housing provided by private landlords does not meet official standards, but it is hard for private tenants to complain, if they are worried about being evicted. Private rents have been rising faster than real income.

Brown himself, when Chancellor, helped the expansion of private renting, by giving "buy-to-let" owners tax relief on their mortgage interest - today there are almost 1 million "buy-to-let" properties, compared with fewer than 30,000 a decade ago. In addition, the state subsidises the profits of a good proportion of private landlords, by paying them the housing benefit owed to their low-income tenants. In fact, this is also a factor which pushes rents up, since the government makes no attempt to limit rent levels. Instead, housing benefit levels are based on "market rent" - which amounts to giving landlords a license to charge extortionate rents. As a result, between 1997 and 2006, the average housing benefit for a non-council household has increased by 36%, while the total subsidies paid in this way to non-council landlords has reached £7.8bn a year - or the equivalent of one-third of the government's total budget for housing and the environment!

Housing minister, Yvette Cooper, boasts about the rise of home-ownership thanks to Labour's famous "economic stability". Home-ownership may well have increased under Labour, but what does it really mean? Today, two thirds of the so-called "home-owners" are actually repaying a mortgage. And just how many of these took on a mortgage simply because they had no other choice? Having done so, they still found that their life was ruled by a landlord - the bank - and sometimes two, if a freeholder was thrown in, into the bargain. Worse, home-owners are individually responsible for repairs and maintenance, which can be as costly, if not more costly, than their mortgage repayments. Unlike council tenants, they cannot benefit from the savings made possible by organising and planning repair work for entire estates.

When people are taking out mortgages of five to eight times their income, the repayments gobble up most of their wages. Shelter calculated that someone in Scotland on the average wage, who bought a house at today's average price, would end up with less than £120 per month, after their mortgage repayments, national and council tax, and water rates had been paid. And this is without taking into account what has now become the usual case for the majority of home-owning working class families - remortgaging, to meet the cost of mortgage repayments and basic necessities for the poorest, or to pay for repair work and unexpected expenses for others. The result is, that over the years, the banks pocket the original price of the house several times over, without the household ever repaying its mortgage in full and, therefore, becoming real home-owners. And this is assuming that the house is not repossessed following a workplace closure or an accident on the job. Indeed, today, repossessions are on the rise - there were 30,000 in 2007 and this number is predicted to rise to 45,000 in 2008, which may still be well below the 75,000 reached in 1991, but that is without taking into account the risk of explosion of the speculative bubble.

Blair picks up Thatcher's baton

Both Blair and Brown, readily endorsed the wholesale transfer of council homes to the private sector, which had been initiated by the past Tory governments. This transfer hinged on two policies. On the one hand, the "Right to Buy" policy offered large discounts on market prices to council tenants who bought their own homes. Nearly one-third of the council housing stock was off-loaded through "Right to Buy", but councils were prevented from using the money raised this way to replace the homes which had been sold, or even to improve their remaining housing stock. On the other hand, various mechanisms were to be put in place in order to engineer the mass transfer of the remaining council stock to private, supposedly "not-for-profit" bodies - i.e. Housing Associations, or Registered Social Landlords (RSLs), as they were dubbed.

Under Labour, both policies were pursued, with only cosmetic changes. "Right to Buy" discounts were progressively reduced and the rules tightened up to recoup some of the proceeds from early resale, but this was probably to increase state revenue, rather than to preserve the stock of social housing still available for renting. As to Labour's move to make it easier for councils to buy back homes which had been sold to tenants, it did not indicate a change of policy either, but rather an acknowledgement of the fact that a significant proportion of those who had been enticed into buying their homes just could not afford it, which did nothing to improve Labour's image.

As to council stock transfers to private RSLs, they became, in Labour's hands, instruments of blackmail against council tenants. Many council estates were in a serious state of disrepair, thanks to councils being starved of funds to carry out basic maintenance. So much so, that the backlog of repairs was estimated by the government itself to cost £19bn. But instead of providing councils with the means to carry out these repairs, Labour's ministers told tenants on dilapidated estates that the only way to get the long-overdue refurbishments was by transferring the ownership of their homes from the council to an RSL.

In some cases, tenants who feared the loss of their security of tenure and (relatively) protected rents, reacted to this blatant blackmail by mounting successful campaigns to get a no vote in the ballots which had to be organised legally over stock transfers. To get over this, but also to overcome the reluctance of councillors (including Labour ones) to relinquish control of housing budgets, Blair's government came up with a weirdly-named beast - the ALMO, or Arms Length Management Organisation. These were formed from the Housing Departments of local authorities, which were separated from the council. While local authorities were to retain nominal ownership of their housing stock, it was to be managed by the ALMOs, which, like housing associations, were allowed to borrow money and, therefore, on paper at least, finance repairs. This thinly-disguised step towards privatising council homes by another route could not reassure tenants - but, this time, they were not given a vote!

Of course, another way remained open to councils in order to access money for council house refurbishment - by entering into some PFI agreements with private companies, which would be in charge of delivering the work. However, the so-called "fourth option" - i.e. to give councils the funds they needed without having to finance the existence (or even the profits) of some third party - was stubbornly rejected by both Blair and Brown, despite being adopted by three Labour party conferences.

Labour claims that, over the 10 years since 1997, £20bn was spent on bringing 1 million homes up to the Decent Homes Standard (which is, in fact, a very minimal standard). Such a claim is obviously impossible to verify, nor is it possible to say which part of these £20bn were actually spent on repairs and which went straight into the pockets of construction and management firms.

The fact that what is claimed on paper and what is done in reality does not always coincide, is illustrated by some of the stock transfers to ALMOs or RSLs. For instance, in 2003, Glasgow council transferred over 90,000 homes to the Glasgow Housing Association (GHA). However, two years later, it was revealed that the GHA did not have the £1.5 billion funding required to bring these houses up to standard - so the slums remain. In Wales, an Audit Office report gave the followng assessment of the RSL in charge of running Bridgend's council homes: "Stock condition is poor; performance for the completion of repairs is weak and deteriorating; (...) the association is not answerable to residents for the quality of services provided."

While stock transfers did not deliver on repairs, they did deliver higher rents. Initially Labour had claimed that council rents and RSL rents would "converge". In fact, the opposite has happened. Not only are average RSL rents in England higher than average council rents, but RSL rents are increasing faster, so that the gap is growing. For instance, official figures show that in the 20 fastest-rising RSL rent areas, RSL rents registered increases ranging between 50% and 68% over the period 1997-2005.

As for building new social housing, Labour's record is even more dismal than that of the Tories. Under Conservative governments between 1979 and 1997, an average of 46,600 social homes were built per year (while an average of 48,300 council homes were sold per year). Under Blair, the average number of social homes built per year plummeted to only 17,300. In 2005, for instance, a paltry 239 council homes were built and RSLs built another 19,600 social homes - a total of less than 20,000 new social homes, which can be compared, for instance, with the 74,835 which were built in 1980!

Labour's bubble threatens to burst

Ironically, the fact that nothing was done about the scandalous lack of decent, affordable housing for the working class, has contributed to today's housing price "bubble", as the growing number of households forced to take a mortgage at the cheaper end of the market and the shortage of houses in this bracket, has pushed prices up.

This was one factor in the build-up of today's housing price bubble. But there was another more general factor. Until the late 1990s, financial investors were mainly attracted by speculation on the Stock Exchange. Ill-fated investment in projects like Docklands and the Millenium Dome dampened whatever potential enthusiasm may have remained for real estate. This resulted in a slump in construction as a whole and a growing shortage on the housing market - which, in turn, primed a housing price bubble in the late 1990s.

When the so-called "dotcom crash" took place, investors were scared away from the Stock Market. As they were looking for new sources of easy profits, they discovered the housing market and the promises of rich pickings resulting from its fast rising prices. Soon, they began to apply their speculative skills to real estate and the housing price bubble developed at an increased speed. The number of house starts bottomed out in 2001. However, after that, despite the increase of capital available in house building, there was no construction boom, contrary to what many commentators have claimed since. Thus, in 2006, only 167,000 homes were completed, that is just 15% more than in 2001. Even more ominously, this figure represented only about 40% of the number of houses completed each year during the first half of the 1960s!

What happened was simply that huge amounts of investment went into real estate for short-term speculative purposes. The on-going housing price increase became a self-feeding mechanism for speculation, which did not need the housing market to significantly increase in size in order to generate more profits - in fact, rather the opposite.

Posh housing projects were built at the top end of the market, but significantly, a lot of them were rehabilitation - meaning that construction costs were comparatively low and builders could claim regeneration subsidies, although home prices in these projects were simply beyond anything ordinary wage-earners could afford. There was also a mushrooming of buy-to-let landlords at the lower end of the market. Individuals, as well as companies, went into the business of buying houses to rent them out. The idea was that while the rent covered mortgage repayments, the rapid rise of prices would make them a quick buck. But then, as house prices went up, buy-to-let rents had to go up in order to cover the cost of the investment, thereby pushing all private sector rents up as well.

In other cases, the properties were not even rented out - companies just bought up houses and hung on to them, waiting for their value to rise. Assuming prices kept rising at the same rate as before, they were guaranteed a 30%-plus return on investment per year, without having to bother with rent management - a higher and, or so they thought, safer return than share trading, for instance. This contributed to building up the huge stock of houses which stand empty today - an estimated 670,000 homes.

Among the other forms of real estate speculation, there were companies snapping up houses in areas earmarked for demolition and regeneration, thereby forcing prices up and costing the state many times more in compulsory purchases. There was similar speculation in land - land with planning permission was bought but not developed for housing, as companies expected a greater return in the future. Today, it is estimated that developers are sitting on 14,000 acres of land for speculative purposes - enough to build 225,000 homes.

Labour never intervened to prevent the build up of this speculative bubble, despite its drastic consequences for large sections of the population. Instead, the government helped to expand opportunities for real estate speculation - for example, by releasing public sector land to developers and construction companies and failing either to demand guarantees as to what was to be done with this land or to enforce these conditions. Likewise ministers turned a blind eye on Scrooge landlords, by choosing to ignore the often appalling quality of the accommodation they provided, while allowing, or even subsidising, their exorbitant "market" rents. Other than that, the government sat on its hands, keeping interest rates high, which was a bonanza for the banks and a source of despair for many working class families as mortgage repayments and rents kept rising faster than wages.

Today, faced with the possibility that the price bubble might burst at some point, the government's strategy is to introduce even more enticements to home-ownership. For instance, they plan to relax the rules governing how mortgage lenders can raise money on the financial markets and allow them to offer longer term mortgages.

The possibility that the speculative bubble might burst obviously terrifies ministers. However, what worries them is not the impact it would have on the population as a whole, even from an electoral point of view, but the risk that the banking industry - the flagship of British capital - might seize up as a result. However, in this field, the government is merely groping in the dark. What it does may prevent a hard landing of the housing market, but it may also precipitate it. No-one can be sure. Hence its extraordinary bail-out of Northern Rock, at an enormous cost, which is likely to be met entirely by public funds. Because, since Northern Rock happens to be operating on the critical border region between mortgage lending and credit speculation, its bankruptcy could potentially endanger the speculative housing bubble, the money markets and the banking system.

Homes for the future: more...of the same

Leaving aside what will happen when the speculative bubble finally bursts in its hands, the government is confronted with a more immediate problem. Rocketing housing prices have led to a situation where a whole section of the petty bourgeoisie is unable to buy a house. Today's average house price is £218,000 - 8 times official "average income" - and there is no sign of prices going down so far. Young first-time buyers in London have to put down deposits of £57,000 on average. Where would anyone find that kind of money, unless they came from a very well-heeled background? And the phenomenon is no longer restricted to London and the South East. A report for Halifax-HBOS, in March 2007, found that the 5 main categories of "key-workers" (generally middle-income public sector workers, like teachers, police, etc), were unable to afford a house in 70% of local authority areas (as opposed to 36% in 2002) and a flat in 30% of these areas (as opposed to 11% in 2002). This puts Brown's immediate problem in a nutshell. Not only could this section of the petty bourgeois electorate turn against Labour as a result of this situation, but the fact that it is being squeezed out of the housing market could also become a danger for this market.

It was in this general context that the housing Green paper entitled "Homes for the future: more affordable, more sustainable" was published in July 2007, followed by the housing bill currently going through parliament. This Green Paper began with the statement by Yvette Cooper that "This Government believes that everyone deserves a place they can be proud to call home, at a price they can afford". But despite the grandiose language, the content was no more than a continuation of Prescott's old housing plans, including the development of particular regional "growth" areas, like the Thames Gateway.

It is worth remembering Prescott's foray into "affordable" housing. Two years ago, he launched a high-profile competition, inviting builders to come up with designs for homes which could be built for £60,000, on public sector land. Now that some of these schemes have come to completion, it turns out that the developers aren't selling these homes for £60,000 after all - but for at least 3 times this amount. In other words, they made as much money out of them as they could, as with any other development.

Since Brown took over, more lip service has been paid to the fact that the market does not meet everyone's housing needs - which is putting it mildly! As Cooper warned, "without further action, housing could become one of the greatest sources of social inequality in the next twenty years". Nevertheless, Labour's objective remained unchanged: to create a "nation of home-owners". So, while Cooper boasts that there are 1 million more home-owners now than in 1997, Brown wants another 1 million before another 2 years are up!

Labour's promise of 3 million new houses by 2020 (2 million of those by 2016) is not as ambitious a target as they pretend - certainly not compared with other periods, when many more houses were built, such as after the second world war, or even during the thirties. However, whether even that modest number of new homes will actually be built, except on paper, is doubtful, given Labour's record of missing its own housing targets. The 167,000 new homes completed in 2006 were already significantly below target and very far from the new objective which has now been introduced by Brown, of 240,000 homes per year. Worse, house starts fell by 8% in the first half of 2007 compared to the same period in 2006. If this indicates something, it is that the number of house completions in 2007 and 2008 is more likely to be lower than in 2006, than the reverse!

The government's plans are duly wrapped in fashionable language, like "sustainability" and "mixed development". But the 10 new "eco-towns" which are planned, are merely green window dressing, amounting to, at most, only 100,000 "zero-carbon" homes in total. Besides, so far, only one has even made it onto the drawing board - an eco-village of 200 homes to be built by Barratt!

As for "mixed development", it does not mean that the rich will have to make space for the poor in their expensive areas. But it does mean that councils are being urged to make their "surplus" land available for expensive developments. This can mean bulldozing council housing to make way for private developments, or, as in Lewisham's Pepys housing estate, featured in the BBC documentary series "The Tower", selling off a tower block to a property developer. In the latter case, after the council got rid of the 144 households which occupied the block, it was turned into expensive apartments for sale (including 14 "penthouses" with "stunning river views", 5 minutes by river taxi from Canary Wharf) - in stark contrast to the derelict state of the rest of the surrounding estate. So "mixed" development only means handing over council property to the real estate sharks, boosting housing prices and leaving less room for working class households, but certainly not more.

Behind all this packaging, Brown's policy has two contradictory aims. On the one hand, it aims at countering the consequences of the housing price bubble, by preventing a whole section of the petty-bourgeoisie - including a significant part of Labour's traditional electorate - from being completely priced out of the housing market. But at the same time, Brown also aim at preventing a substantial drop of housing prices, for fear that it might cut the pickings of the section of the middle-class which has gone into amateur property development and the profits of the big developers and bankers.

What is "affordable" and to whom?

Who is going to have the means to buy these new homes anyway, with prices at their current levels? Labour's answer to this is to say that a proportion of the promised new housing will be "affordable". This will either be subsidised social housing, to rent or buy, or "affordable"homes that private developers will be obliged to build as a condition of planning permission

Quite apart from the fact that developers have a knack for finding ways around this sort of obligation, what exactly is meant by "affordable" and for whom? Official definitions are vague on that point. But what is meant can be judged by looking at the state-sponsored shared equity schemes, which are Labour's favoured method of making house prices "affordable".

Under such schemes, people buy a percentage of a house, whether from social housing stock or on the open market, and pay rent on the remaining portion of the property which is still owned by the social landlord (usually a housing association). They are generally restricted to certain categories of key-workers (teachers, firemen, nurses, etc..) or sometimes to first-time buyers who meet similar income qualifications. This kind of scheme is aimed at households with annual incomes of up to £60,000 - and those on much lower incomes would struggle to afford them. In any case, they are designed as a "leg-up" for people who wouldn't be able to get a mortgage for the full cost of a house, rather than to make the cost of buying a house more affordable in the long run.

The trouble for the government is that the whole idea has not proved very popular and since Labour came to power, only 77,000 sales have been made this way. Maybe this is because these schemes remain far too expensive for a large section of the households at which they are targeted. Or is it because people have come to realise that the schemes they were offered combined the disadvantages of renting and of owning? Or maybe because the better-off social layers at whom these schemes are aimed have now been convinced, thanks to Brown, that home-ownership is the be-all and end-all, and they do not want to share it, neither with the state nor with a social landlord.

In any case, these schemes certainly do not provide a way of plugging the gap between what people on average incomes can afford, and prices which are way beyond this. Nor, of course, can they resolve the drastic housing crisis experienced by low-income households.

As regards "social housing", Labour muddies the water by using this term to cover both houses to rent and houses to buy. Behind their headline figure of 70,000 new social homes per year, it turns out that only 45,000 of these will be for rent. And this is not even their target for now, as a matter of urgency, but for 2010! In theory they are supposed to increase this target to 50,000 after that - which would, on its own, represent a hefty increase of 172% on what was actually achieved in 2005/6! However, since it is estimated that 40,000 new households will need social housing each year (in addition to existing waiting lists), even this new target, assuming it is achieved, would only reduce waiting lists by 10,000 a year at best - in other words, the current backlog of demand on council waiting lists would take 180 years to disappear!

Capital's parasitism versus workers' control

The Green paper spells out who stand to be the real beneficiaries of Labour's plans - and funding - and, predictably, they are first and foremost the profit sharks.

True, it does say that councils may have a "direct" role in building homes, but only to add: "in most cases, we would expect models which offer access to private finance to provide better value for money." In fact, councils will only be able to bid for subsidies through an ALMO (and only 10 currently qualify) or in partnership with a private company. However, private companies will bid directly for subsidies without having to be associated with a council.

The housing associations/RSLs will still be responsible for the bulk of new rented social housing and in receipt of the corresponding government subsidies. But the dividing line between these RSLs and profit sharks is getting dimmer. Collectively housing associations "weigh" £8bn in annual turnover and £74bn in assets, which is huge. They are supposed to be not-for-profit, but some have found ways of bending the rules, effectively turning their "surpluses" into profits - not least because, due to Labour's privatising logic, in order for an RSL to take on new social projects, it must build up large enough surpluses, which it can only do by absorbing smaller RSLs to boost its assets and by operating more or less like private property developers do.

The consequences of this can be seen in the metamorphosis of the biggest housing associations in recent years. The biggest, Places for People (PFP), styles itself as "one of the largest property management and development companies in the UK". Headed by the former housing director of Birmingham council, on a salary of £258,000, PFP has an annual turnover of £338m and operates nationally, under its own name and via subsidiaries - including a land-trading business, a commercial development company, a private house-builder, five smaller housing associations, a company offering homes for market rents, another offering financial services, another running child care centres. It still oversees 40,000 social homes, but these cannot be exactly central to its commercially driven activity.

However, the biggest beneficiaries, by far, both of the housing price bubble and of Labour's housing policy, are a small number of very big private companies.

First, of course, there are a few big banks - less than a dozen of them - which have already made enormous gains as a result of the speculative bubble, thanks to their parasitic profiteering on the back of the population's housing needs, and which stand to make even more whatever happens. The higher the house prices, the more money house-buyers have to borrow from banks and the more interest payments they receive. In so far as the government's schemes to give a "leg-up" to first time buyers will really be a way of subsidising high prices, they will also give an indirect "leg-up" to banking profits - as if they needed such help! And should the speculative bubble finally burst, the banks can hope that the state will be there to bail them out, as the Northern Rock episode has indicated.

Then, there are the real estate and construction giants. Four years ago, ten companies dominated building. Today, the ten have merged into six and, between them, they have a hand in more than 60% of all new residential building. After the large profits they made in the housing bubble, they stand to get most of the subsidies provided by Brown's plans. No-one knows how many decent homes for working class families they will deliver in return, but one thing is certain - the profits of their shareholders will take priority, whatever happens.

Remove the shareholders, their greed and their market, one can still see emerging the embryo of a rapid solution to the most urgent aspects of the housing crisis faced by the working population, and this, regardless of the current housing bubble.

Building space is obviously not an issue: with between 80 and 90% of British land which is non-built, there is plenty that can still be used without any risk of overcrowding!

Is the scarcity of state resources a problem, then? If so, this government's budget includes many items, from the next generation nuclear "deterrent" to Labour's wars in the Middle East, or the Queen's civil list, which could be easily dispensed of.

Would such an effort be "unbearable for the economy" as some claim, then? To put things into perspective, it should be recalled that the British economy was able to build 400,000 homes a year in the early 1960s, half of which by the state. Today, when productivity is 10 to 20 times higher than in the 1960s, would it be such an "unbearable effort" for the economy to build or find, in one year, the 1.8m decent social homes necessary to deal with the waiting lists, for a start? Certainly not! Besides, far from being "unbearable" for the economy, building on such a scale and developing the corresponding transport, education, health and other facilities, would help to cut unemployment and boost other industries.

The only real obstacle which stands in the way of resolving the housing crisis faced by the working class, is whether the future of housing will be left once again to a greed-driven market, as has been the case under Labour and every other past government.

However, there is another way. This would need that workers start exercising a direct control over housing funding, planning and maintenance. At the same time, the hundreds of thousands of good quality empty houses would need to be found and taken over for the benefit of the homeless. The accounts of all the tools of capitalist parasitism, such as "PPPs", "PFIs", etc..would need to be scrutinised. The veil of "commercial secrecy" would have to be removed to find those who get fat on what, and ensure that every penny of public money is spent to meet the most urgent needs of the majority of the population. If the working class did all these things - which it could, by using its collective resources - then the immediate consequences of the housing crisis for the working class could be resolved at last.