Britain - The working class and the housing crisis, from Thatcher to Blair

Sept/Oct 2001

That the lives of large sections of the working class should be plagued by housing problems is nothing new. As far back as 1872, Frederick Engels noted in his pamphlet "The Housing question" that this situation was a feature built into capitalism, which would only end with capitalist exploitation itself.

However, there have been up and downs in the housing crisis faced by the working class, depending on the balance of social forces in society. And, over the past two decades, with unemployment weighing heavily on the level of militancy, thereby increasing the arrogance and confidence of the capitalist class, housing conditions have deteriorated considerably.

But this was not the reason behind the repeated warnings in the press against a "looming" housing crisis over the past months. The media barons are not concerned in the least by the plight of working people. In fact the cause for this alarm was the sudden boom of house prices and the resulting discomfort felt by companies and certain sections of the middle class.

Indeed, it is now estimated that the average house price across the country is above the £110,000 mark, and well beyond this figure in many urban areas. This is about twice the level reached during the house price boom of the late 1980s. In London, the city most affected by the boom, house prices have increased by 37% over the last year alone.

So companies are having to fork out larger relocation bonuses for their senior staff. At the same time, the price boom is affecting professionals, who are finding it difficult to buy the comfortable homes they are used to and are worried by the prospect of being landed with negative equity, should this housing bubble burst.

Such are the "hardships" over which the media have been shedding tears, while Blair's government, following the same class logic, has started offering "golden handshakes" worth up to £25,000 or 20% of their mortgage to entice 10,000 "key workers" into jobs in the capital - meaning 10,000 hand-picked, top-notch teachers, nurses and.. senior police officers. Just as the media did not even bother to mention the dire consequences of this price boom for the poorest, Blair did not see fit to offer them any "emergency" funding to help them to see this new crisis through.

Never mind the fact that this price boom spells catastrophe for the millions of low-paid workers, pensioners and people living on benefits, who were already at the receiving end of totally inadequate and deeply unjust housing conditions. For them, the present situation means that they can no longer afford to buy even the shabbiest flat in London and other big cities, nor to pay the extortionate rents demanded by private landlords, even for the tiniest room in a shared house.

Given the constant ups and downs of the housing market, the shrinking level of social benefits, the job insecurity and wage cuts experienced by many workers over the past period, the only viable option for millions of working class households would be affordable (i.e. subsidised) social housing to rent. But this is precisely where the problem lies.

For the past two decades government policy - whether under the Tories or under Labour - has been to dump social housing in every possible way. Already this policy has forced many low-income families to become owner-occupiers. It has made their lives a misery as they had to meet unaffordable mortgage repayments. And hundreds of thousands of them have ended up losing everything when their houses were repossessed. But, in addition, in an ironic and cynical twist, by boosting artificially the demand for houses, this policy has been a factor in fuelling real estate speculation and paving the way for today's price bubble and the additional plight it imposes on the poorest.

On both accounts Blair's Labour government bears a heavy responsibility. Not only because it has continued the reactionary housing policy of the previous Tory governments, but above all because it is actually in the process of expanding the scope of this policy beyond the wildest dreams of the worst Tory fundamentalists, by effectively turning the clock back to the early days of the 20th century, when social housing was in the hands of so-called "non-profit" or "charitable" trusts.

Social housing... to subsidise profits

It must be stressed that, contrary to a common myth, there was never such a thing as a "home for all" policy in Britain.

Lloyd George's pledge of a "home fit for heroes to live in", in the aftermath of World War I, was a demagogic attempt at buying social peace. But it was also one of many devices used by the state to subsidise the profits of the capitalist class. The 1919 Addison Act granted local authorities new powers to build houses and the state subsidies to do it. But it also granted the same subsidies to private property developers. However, in 1921, at the peak of the postwar economic crisis, when the working class was most in need of cheap housing, public subsidies to local authorities were withdrawn, but not those to private developers, thereby exposing the main purpose of these subsidies - that of propping capitalist profits.

The Housing Act passed by the first Labour government, in 1924, was the first piece of legislation giving public housing a permanent role. Local authorities were given a subsidy proportional to their rates bill whose purpose was to fund a housing programme and keep rents low. And although Labour was soon ousted, the Act remained in force under the Tories, with somewhat reduced subsidies, for a whole decade, resulting in 500,000 council houses being built under its provisions. In these years of on-going economic crisis, even the most reactionary Tories considered such public funding as a necessary "evil" to keep the building industry's profits afloat.

When the 1924 Act was finally repealed by the National Government, in 1933, the only form of subsidised housing that remained was for re-housing those made homeless by slum clearance. Councils stopped building houses in any significant number (in fact although a statutory duty on councils, the extent of slum clearance remained very limited) and the number of private tenants rose dramatically.

The end of World War II brought back the same kind of demagogy resorted to in 1919. Except that this time, not only was Attlee's Labour government determined to put the building industry back on its feet, but it also needed to rebuild the 450,000 houses which had been destroyed during the war, mostly in working class areas. So this time, while public subsidies were still directed both at private developers and local authorities, the balance was tilted to the advantage of local authorities and the largest cities were encouraged to create direct labour organisations in order to carry out repairs and maintenance themselves. It was under this policy that the largest building programme of public houses ever seen in Britain was implemented. Ironically, though, most of it was actually carried out not under the post war Labour government but under the subsequent Tory governments, between 1951 and 1955.

By 1955, the shortage of houses had been reduced enough for the Tories to cancel the advantage given so far to local authorities over private developers. Public subsidies to local councils were once again restricted to specific programmes such as slum clearance and the low-interest loan facility they had enjoyed from the Public Works Board was ended. Local councils were forced to borrow from the money market - a change which was welcomed with glee by the big banks. Local authority building slowed down and within three years, for the first time since 1945, local councils were building fewer houses than private developers.

The same fundamental policy remained in place for the following 25 years, with various twists depending on circumstances. For instance whenever a drop in house prices threatened the profits of private developers, all governments, Labour or Tory, took measures to cut council building, regardless of the consequences for would-be tenants. This was one of the reasons why slum clearance, which was used as the official pretext for targeting subsidies rather than funding a permanent public building programme, was never achieved. The other reason was lack of funds. And especially when, from the early 1960s onwards, local finances became plagued by huge interest payments which swallowed a large part of their income (by 1969, for instance, 90% of the Greater London Council's rent income was taken by interest repayments).

To counter the rise of councils' indebtedness, Wilson's Labour government had introduced a "sweetener" in 1964. Under this legislation, the government paid part of the interest bill for all building projects which remained within tightly defined costs. Of course, there was never any question of reducing the profit margin of the building industry, nor the extortionate interest rates imposed on local authorities by the banks! The consequences, however, were predictable. As a result of extensive cost cutting, monstrous developments were built which did not even meet the most basic standards, neither in terms of comfort nor even of health and safety. So much so that a number of them (mostly high-rise towers) had to be demolished.

Behind the home-owner "dream"

When Thatcher came to power, in 1979, there were 6.5 million council homes in England. One of her first measures was to order a sharp increase in council rents (which doubled in most towns). Then, having made council rents less attractive, she proceeded to turn a little-used clause, introduced by the previous Labour government - the "right-to-buy" clause which allowed council tenants to buy their homes - into the instrument for the largest privatisation operation of her period in office.

Labour ministers had introduced this clause as a means of wooing better-off tenants. They went as far as to give councils a statutory duty to provide a mortgage to those tenants who could not find one. The problem, however, was that selling prices were too high for the overwhelming majority, being just slightly under market value, and sky-high interest rates made mortgage repayments unaffordable.

Thatcher got around this difficulty, firstly by introducing large cuts in council house selling prices based on length of tenancy, secondly, by offering generous tax relief on mortgage payments and thirdly, by relaxing the rules which defined the minimum down-payment necessary to secure a mortgage. For a family on a skilled worker's income with 15 to 20 years of tenancy, this made the mortgage affordable.

In doing this, Thatcher had an obvious political objective. By taking the credit for giving a large number of working class families the feeling that they were at last able to climb up the social ladder by becoming home-owners, Thatcher was hoping to win the electoral loyalty of a sizeable chunk of Labour's traditional electorate - and in this, she was successful, at least until the beginning of the 1990s.

But probably just as important was her economic objective. Far from allowing councils to use the receipts from the sales to build new houses or even to reduce their backlog of repairs, she forced them to use these funds to repay their housing debt. So the "right-to-buy" policy merely resulted in the privatisation of a sizeable chunk of the public debt by transferring it from the local councils to the former tenants. And since this operation amounted to paying back a loan to one lender and taking a mortgage from another at a higher interest rate, it meant substantial redemption and administrative fees as well as higher interest repayments - a big bonanza for financial firms and all kinds of parasitic businesses, such as surveyors, solicitors, etc..

The size of this transfer was huge. Over the Tories' 18 years in office, 1.9 million council homes were sold, most of them before 1989, for a total value of £26bn - far more than the proceeds of the biggest industrial privatisation carried out during these years.

As to the consequences for the new home-owners and remaining council tenants, they were sometimes drastic. Many council estates were soon split in two, between the new home-owners on the one hand and the old tenants on the other. Council officials proved keen to play on these divisions in order to break the tenants' resistance to rent rises, for instance. In the least run- down estates, where a significant proportion of tenants exercised their right-to-buy, remaining tenants came under enormous pressure to follow suit or leave. Every pretext was used to justify forcing the poorest tenants out, whether temporary rent arrears or being alleged "bad neighbours".

But in reality, the new home-owners were not treated much better by Thatcher or council officials. They soon discovered that while they were now able to carry out repairs on their own houses or flats, collective facilities in their estates still kept deteriorating due to the council's lack of funding - which made their homes unsaleable after the minimum 2 years waiting time required and meant they had to carry on living in the same squalid environment for much longer than they had hoped. Others found that they simply could not meet their mortgage payments. When they turned to the council for help, they were told that, according to Thatcher's rules, there was no going back for them. Many ended up having their homes repossessed and being forced to live for months or years in temporary accommodation while waiting for a council flat to rent.

Running down and dumping workers' estates

A complement to Thatcher's sell-off policy was the aim to reduce public spending on social housing as a whole. So housing subsidies to local councils were all but ended and councils were told to rely on their rent receipts to finance their housing policy.

However the drastic rent increases ordered by Thatcher and the steep increase of private rents in the subsequent years meant that more and more tenants on low incomes found themselves in long- term arrears, thereby threatening councils with bankruptcy and generating discontent among private landlords. This forced the Tories to create a new form of subsidy - housing benefit - designed to cover all or part of the rent payments of the poorest tenants, both in the public and the private sector. And as the poverty and numbers of the poorest tenants increased very fast with the general increase of inequality in society, so did the housing benefit bill. So that, ironically, over the second half of the Tories' rule, while annual housing expenditure was slashed by £2.6bn, the housing benefit bill increased by £5.5bn! However, there was a big difference between the two types of expenditure: the former went entirely to the local councils' housing budgets, whereas over a third of the latter went straight into the pockets of private landlords! For the Tories, subsidies were alright so long as they went to so-called "private enterprise".

With local authorities' housing budgets so drastically reduced, the number of new council homes built slowly but surely went down - from around 80,000 home completions in 1980 to 46,000 in 1996. But even more importantly, repairs and maintenance were cut even further. The backlog of repairs soared, estates became more and more derelict and an increasing number of council homes became un-lettable because they were unfit for human habitation according to the government's own criteria. This dereliction combined with rampant poverty produced the sort of crime and drug-ridden, degraded estates which are now the norm in many urban working class areas - places in which no-one except the poorest or the aged who could absolutely not afford to do otherwise, would ever live.

This state of affairs did not suit the Tories as it meant that, with time, their "right-to-buy" programme was less and less likely to attract new buyers. And indeed, by the late 1980s, the sales of council homes to tenants had virtually ground to a halt.

So the Tories found another ploy. The 1988 Housing Act opened the way for the voluntary transfer by local authorities of entire council estates and their tenants to so-called "not-for-profit organisations" called Housing Association Trusts or HATs. The theory behind these "Large Scale Voluntary Transfers" (LSVT) as they were called was that HATs would be free of the financial constraints imposed on local councils by the government's monetary discipline. Being able to borrow money as they needed from private lenders, they would be in a position to carry out the necessary repairs and improvements.

To make it all sound very attractive and "democratic", tenants were told that not only would they be given a choice (LSVTs were supposed to be "voluntary", i.e. agreed by way of a referendum among tenants) but they would be entitled to direct representation on the HATs' boards. But of course, what the Tories did not mention in this Act was the real cost of these transfers for tenants.

These HATs were to be selected among or modelled on the existing Housing Associations inherited from the days when social housing was almost exclusively in the hands of charitable organisations set up by church groups or philanthropic capitalists like Rowntree and Peabody. They would pay for the transferred estate by borrowing on the money market using the estate's value and future rent revenue as security. To pay for repairs they would have to borrow more money on the same security. Likewise, the building of new social housing would be entrusted to these organisations and would depend on their ability to borrow more money from private sources, with reduced assistance from the state (in fact the 1988 Act reduced the building subsidy granted so far to Housing Associations). Once again this amounted to a large-scale privatisation of the public debt by transferring it from the councils to these organisations.

The big changes for tenants in this process, however, was that future tenants would not enjoy the same security of tenure that council tenants had enjoyed so far (in particular they would lose part of their protection against eviction for rent arrears) and their rents would not be as tightly regulated as council rents were. In particular repairs and improvements would have to be "self- financing", meaning that the new estate owners would be entitled to increase rents to pay for these. And of course, under the pressure of interest bills to pay and lenders to please, they were more than likely to use this entitlement. In fact, within eight years of the Act, a survey showed that rents were already 25% higher in transferred estates than in equivalent council estates.

However, the Tories did not get very far with this policy. Only Tory-controlled shires showed any interest in taking advantage of the new legislation and the number of homes transferred under LSVT each year remained below the 30,000 mark. In fact, it took another eight years before two inner-city councils (both Labou-controlled) showed an interest and even then for only a small part of their stocks, bringing the total number of homes transferred to just under 250,000.

Labour relaunches LSVTs

LSVT was not, therefore, the great "success story" the Tories had wished for. In the last year of their rule, the then housing minister, David Curry, made a last-ditch attempt at bullying local councils into agreeing to transfer by threatening them with funding cuts unless an annual rate of 100,000 homes transferred was reached. At the time, the Labour party spokesman on housing, Nick Raynsford, exposed this threat as "the last desperate convulsion of a dying government" adding quite rightly that " simply transferring stock from one landlord to another does nothing to make up for the shortage of resources."

However, after Labour's return to power, in 1997, Raynsford's tune changed dramatically. Now he found LSVT not only acceptable but indispensable, because of the alleged impossibility for the government to fund the £20bn backlog of repairs without increasing the government's debt. As if this amount could not be generated by cutting extravagant expenditure on military hardware, for instance, or by increasing the tax on all private profits, instead of decreasing it, as Brown did, over the past years!

To sweeten this bitter pill for tenants, Labour used its usual method for implementing unpopular past Tory policies - it used a bit of repackaging. So HATs were renamed "Registered Social Landlords" (RSL) and required to display more "democracy" by ensuring that their boards were half made up of councillors and tenants.

But despite Raynsford's 1996 statement in the Commons that transfers cannot make up for the shortage of resources, there was now no question of increasing the resources available for building and repairs. Blair had endorsed the budget choices planned for the following two years by the previous Tory government, which, among other things, involved a cut in real terms of housing expenditure.

In other words, the "social" and "democratic" edge given by Labour to the Tories' LSVT policy left tenants to face the same blatant blackmail: they would have to choose between refusing the transfer, knowing that they could expect their estates to become even more derelict, or else agree to the transfer and to inevitable rent increases, in the hope that maybe there would be some repairs made.

The big difference between Blair's government and its predecessor, however, was that Labour controlled most large local councils and the government could therefore exercise real pressure on these councils. So it was hoped that a lot more councils would be likely to show interest in transferring their stock - all the more so, because Blair added an additional sweetener for the councils themselves, by promising that the government would take over at least some of the councils' housing debt, and in some cases all of it, depending on how much of their stock they were willing to transfer.

However, things did not work out quite so smoothly. There are many reasons for this, including resistance from the councils themselves. In all large councils there were always at least some honest councillors who were unhappy with the idea of dumping tenants into the hands of Blair's "social landlords" and they put up all kinds of legal obstacles to transfers. Besides, housing represented a large budget for local councils and losing control of their housing stock implied a significant reduction in their power of patronage, a prospect which no council leader liked, not even the most Blairite among them. Also there were councillors who feared, probably with good reason, that a "no" vote by tenants might result in a protest vote against the council's majority in the following local election.

But there were also financial reasons. Despite the implicit (but unofficial) guarantee given by the government to "social landlords", it was sometimes difficult to find a bank which was prepared to lend the money required for the transfer to the "social landlord", especially when the stock concerned was very derelict and half empty because of this. Half of Glasgow's stock of 94,000 homes, for instance, was considered beyond repair. Which bank would be prepared to lend money against the security of housing stock, half of which was due to be demolished?

For all these reasons, the transfer rate achieved by the Labour government was much lower than it had hoped. By January last year, for instance, only 110,000 homes had been transferred after 3 " years of Labour government - which was only slightly more than the average annual rate achieved by the Tories between 1988 and 1997.

The government's number game

Not that Labour ministers said anything about their failure. Blair loves setting "targets" and being able to proclaim that they have been reached. And since, in 1999, Nick Raynsford had announced an annual target of 140,000 homes transferred, the official number achieved just could not be less. In fact, in January 2000, without admitting that this target had not been reached, Prescott announced an even higher one (300,000 annually in average over ten years) aimed at disposing of the entire stock by 2010. And all of a sudden came the same old threat, which Nick Raynsford had described as "the last desperate convulsion of a dying government" four years before: to boost the rate of transfer, councils with "under-performing" housing departments would be forced to transfer their entire stock under threat of funding cuts. Here Labour is using the same recipe as in education: to privatise the school system, start by imposing it on the "bad" schools as a punishment, to make it look more acceptable and get public opinion used to the idea!

By April 2000, however, the official target had to be revised downward again to 200,000 - still twice as much as the Tory manifesto pledge in the 1997 general election and a lot more than the 90,000 figure which was eventually achieved in 2000. Of course, no reference was made to Prescott's previous target. But the Green Paper published at the time also contained an implicit recognition of Blair's problem.

Indeed, as a sop to reluctant councils, it announced that those of them which were "good performers" in housing management would be allowed to carry out a different type of transfer: they would have the possibility of setting up independent "arm's length companies", to use Labour's weird jargon, which would then manage their housing stock, while the councils would retain ownership. The legal status of these companies would allow them to borrow on the money market (although with much stricter constraints) without this increasing the public debt. On the other hand, in such transfers, there would be no write-offs of council housing debts. Unlike "social landlords", these companies would not be allowed to build new homes. Above all, councils would not have to organise a referendum among tenants before carrying out such a transfer, nor would the "arm's length companies" have to be overseen by a board including councillors and tenants.

For tenants, this new type of transfers would have exactly the same consequences, without the alleged "democracy" of straight LSVTs. For councils, most of the reasons for their hostility to transfers were addressed and resolved, at the cost to the government of allowing them to retain ownership.

Will all these twists and turns aimed at increasing transfer rates work? This remains to be seen. In any case, Blair is now more cautious. The DETR release published just after the June election proclaimed that "Tenants of more than 328,000 council homes will benefit from a programme of repairs and improvements to their homes over the next two years." This, of course, is Blair's way of describing transfers. Never mind the fact that these "repairs and improvements" will remain pie-in-the-sky until they are effectively carried out and that tenants will have to pay for them through increased rents! But by making this announcement apply over a two-year period (and announcements always overestimate actual achievements) the government is merely attempting to conceal the fact that even in the next two years the official annual target of 200,000 transferred homes will not be achieved.

At the latest official count, last June, 330,000 council homes had been transferred over Labour's four years, mostly by small local authorities - the equivalent of twice the annual rate achieved by the Tories but still a very far cry of the 2010 target for complete disposal set by Prescott (at this rate the deadline will have to be postponed until 2040!). Blair must be finding that his attempts to out-Tory the Tories are proving a lot more difficult than he expected.

Winners and losers

The biggest winners in the transfer game are finance companies. According to the government's own figures, £9.2bn has been borrowed to date to fund LSVTs. The brunt of this loan bonanza, and the interest repayments attached, are held by a tiny number of big banks and demutualised building societies, with NatWest/Royal Bank of Scotland, Nationwide and Halifax leading the pack. What is more, the fact that these finance giants have been the first movers in funding the initial transfers puts them in poll position to fund future investment by "social landlords". And this future investment may well prove quite substantial - although most of them will never benefit tenants.

The "social" part in the RSLs' name is indeed deliberately misleading in several respects. It implies that RSLs' only job is to manage social housing and that they do it not for profit but for the sole benefit of tenants. However tenants' organisations opposing transfers have exposed many cases in which top officials from the housing department had transferred to top positions in the RSL which was taking over the council's housing stock, winning huge salary increases and significant perks in the process. More generally, many of the larger RSLs tend to operate along the lines of private businesses by providing lots of top cushy jobs on high salaries that no council housing department would ever provide. And of course, this has to be financed one way or another from the RSLs' income.

Besides, despite the government's demagogic claim that repairs and improvements can be entirely self-financing, through rent increases, there are limits set to the rent increases that RSLs can enforce - and fortunately so, for the tenants.

To finance all these expenses, RSLs can only rely on their income from rents and some (shrinking) state funding. Otherwise they can borrow more funds from the banks, but this is costly and has limitations. The many smaller RSLs which manage just a few dozen or hundred homes have no other choice - they have to make do with what income they have.

But the bigger RSLs, and some of them are becoming very big indeed - like the North British Housing Association which manages 40,000 homes - more than the entire housing stock of Coventry and Tameside put together - turn to more profitable activities. Some have set up "for-profit" subsidiaries specialising in providing housing and planning advice to local authorities (including to help them to put together LSVT deals!) and smaller RSLs. Most have gone into the very lucrative property development business - all the more so because government rules actually encourage them to do so and even offer them subsidies, not only to build new homes for rent, but also to build homes for sale. So, for instance, the biggest "social landlord" in the South-East of England, which was originally set up as a charitable organisation by a bequest from the wealthy finance magnate Samuel Lewis, manages 30,000 rented homes and owns the leaseholds of 16,000 homes that it has built and sold over the years. Needless to say, with all their lucrative consultancies and property developments, these big RSLs cannot have too much time to devote to taking care of their tenants.

As to transferred tenants, they lose out in more than one way. Contrary to frequent claims, the issue here is not one of "democratic control" over the running of social housing estates. Under council management, council estates were never run democratically as is shown, for instance, by the numerous bitter fights over rent increases which took place in the past. Nor were councils ever particularly tenant-friendly - lax at times, yes, but in most cases coming down heavily against tenants in the most bureaucratic way, regardless of tenants' circumstances. In fact the only effective protection tenants ever had against their landlords - whether council or private -was their ability to organise and fight them. This remains unchanged with RSLs.

Where council tenants, and the working class as a whole, are losing out as a result of LSVTs, is in the fact that the disposal of council homes puts social housing in the hands of the banks and increases housing costs, while allowing the state to reduce even further the share of its resources which is devoted to building and maintaining social housing for low-income families. Like all of Blair's other social "programmes", this disposal is merely designed to increase the share of state funds that governments can use to subsidise the capitalists' profits.

The working class and the housing crisis

Labour's ludicrous claim that the disposal of council housing and its transfer to RSLs will help reduce the backlog of repairs is a cynical joke. The figures speak for themselves: since Blair was first elected, the backlog has increased from £18bn to £22bn!

Moreover, by freezing local councils' housing budgets, Labour has tilted the balance drastically in favour of "social landlords" with regard to the building of new affordable rented homes. While throughout the Tory years, local councils built the overwhelming majority of new council homes (although the number went down from 80,000 in the early 70s to just under 40,000 in 1996), under Labour, the number of new council homes fell to an appalling 500 last year, while the number of new rented homes built by "social landlords" stagnated, currently at 18,000 a year.

Compare these figures with those produced by the Shelter homeless group, which argues that in order to meet current and new needs, an average of 100,000 new social homes would need to be built every year, between now and 2011! If these figures are anything to go by, homelessness and overcrowding (which, at any one time, affected around 400,000 households in various forms throughout the 1990s), stand to increase significantly in the coming period and Blair's Labour government will bear a significant responsibility in this.

And there are damning consequences of such a policy - the bitterness and alienation generated in working class estates. This was illustrated by the series of riots which erupted between May and July this year, in the towns of Oldham, Burnley and Bradford, among others, not to mention the murder of a Kurdish refugee on a Glasgow estate, in August. In all these instances, poverty and derelict housing conditions played a major role in inflaming racist hatred. Blair's ministers were quick to lay the blame on the activity of far-right thugs. But why would their racist demagogy, which largely focuses on blaming immigrants for abusing housing and health facilities at the expense of British citizens, have any impact? Why, if not because there is a section of the white poor population in these areas, which is receptive to such demagogy because it lives in deprived estates where overcrowding is often the rule, and is squeezed out of decent health care?

The working class cannot allow its ranks to be split and weakened by the ugly spectre of racism. It cannot tolerate policies which threaten to confine its poorest section to derelict ghettoes on the margins of society.

It has often been argued, including by the Left, that the growth of home-ownership among the working class was creating yet another division in its ranks. If anything, in fact, the bosses' attacks against workers' living standards over the past decade and the rise in rents are increasingly blurring any distinction between working class tenants and home-owners.

Indeed renting is becoming more and more expensive, while more and more low-income home-owners have had to turn themselves into lifelong tenants of their building societies through successive remortgaging of their homes. It is not for nothing that the total stock of mortgages owed has almost trebled over the past decade, much more than it should have as a result of higher prices and increased sales. Part of this huge increase is due to the on-going remortgaging of homes by households who cannot afford their mortgage repayments.

The housing crisis is therefore a threat for the working class as a whole. It is an immediate material problem and, in the absence of another perspective, a fertile soil for the dangerous development of reactionary prejudices within its ranks. As such, policies like those currently implemented by Blair, which result in degrading housing conditions should be opposed.

But there should be no harking back to the "good old days" of council provisions or illusions about a "fair housing system". The fight against the housing crisis, like the fight against poverty and for an improvement of workers' standard of living, can only be part of a much more far-reaching struggle if it is to be effective.

Going back to the pamphlet already mentioned at the beginning of this article, Friedrich Engels argued, with regard to the housing crisis faced by the working class, "that it is a necessary product of the bourgeois social order; that it cannot fail to be present in a society in which the great labouring masses are exclusively dependent upon wages, that is to say, upon the quantity of the means of subsistence necessary for their existence and for the propagation of their kind; in which improvement in the machinery, etc.., continually throws masses of workers out of employment; in which violent and regularly recurring industrial fluctuations determine on the one hand the existence of a large reserve army of unemployed workers, and on the other hand drive the mass of the workers from time to time on to the streets unemployed; in which the workers are crowded together in masses in the big towns, at a quicker rate than dwellings come into existence for them under the prevailing conditions; in which, therefore, there must always be tenants in the most infamous pigsties(..) In such a society the housing shortage is no accident; it is a necessary institution and can be abolished with all its effects on health, etc.., only if the whole social order on which it springs is fundamentally refashioned."

Today nothing in Engels' assessment needs changing.

8 September 2001