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by Sanya Naqvi Daniel Béland and Alex Waddan
12th April 2022

As the cost-of living crisis in the wake of the COVID-19 pandemic has demonstrated, UK households are facing an increasing economic burden. In the early months of 2022, the immediate focus was on how wage rises had fallen below inflation, with a particular concern about increasing energy prices.

While understandable, the attention paid to these matters was a distraction from longer-term inflationary pressures that have squeezed younger families and households for a generation. In particular, rising house prices have long outstripped wage increases and made it increasingly difficult for people to get onto the housing ladder. Government initiatives have concentrated on the demand side of the housing market equation through efforts such as the Help to Buy scheme, but this has not addressed the shortage of affordable housing. One reason for the shortage has been the decline in the stock of newly built social housing.

In order to understand these problems, it is important to trace housing policy initiatives over time. There is no single cause of the UK’s housing crisis, but it is time to reassess the impact of one of the most celebrated – in all senses of the word – housing initiatives of the late 20th century. In our recent journal article, Thatcher’s ‘Right to Buy’ reform at 40, we provide a policy feedback analysis of UK social housing policies. In this paper we examine the influence that Thatcherism had on the evolution of the UK’s social housing sector, particularly the Right to Buy (RtB) scheme.

Using a policy-feedback approach, we offer a temporal examination of how the passage of the scheme in 1980, which allowed social housing tenants to purchase their homes at reduced rates, continues to impact how the public and private housing markets operate in the UK today. When she became prime minister in 1979, Thatcher capitalised on the capacity pressures the housing sector had been experiencing due to demographic change and post-war reconstruction. Over two million council houses have been sold since RtB was introduced as the Labour governments of Tony Blair continued the practice. Furthermore, fewer than 8,000 new council houses were built while Labour was in power through the 2000s. This contributed to a 13 per cent reduction in social housing properties between 1981 and 2011, as well as a concurrent increase in private tenure. By 2020, there were approximately 1.4 million fewer households accommodated in social housing than had been the case 40 years before.

Despite the stated intention of allowing residents the ability to purchase a home that they previously could not have afforded, the actual impact of the scheme looks very different today. We identified two main policy effects in the article: first, interest-group feedback mechanisms that assisted in expanding and reinforcing a ‘landlord class’ and, second, privatisation feedback mechanisms that placed additional burdens on local councils to fund and maintain their role in social housing provision.

The first finding stems from the idea present in the policy literature that interest-group feedback mechanisms occur when policies generate constituent interest groups that then go on to shape and influence future policy action. In the case of RtB, a landlord class was generated. This was because although initially, home ownership rates rose, this housing stock was eventually sold off to private and social landlords in the following decades, generating a new cohort within the housing tenure mix. Private landlordism began to rise in 2000, and by 2012, two million private landlords were operating in the UK compared to 500,000 in 1991. The group was then able to further encourage this interest-group feedback mechanism by pushing for the enactment of the buy-to-let scheme, where landlords were encouraged to purchase properties with the specific goal of renting them out as smaller properties and securing low property taxes to do so. The path that Thatcher’s RtB laid out and its reinforcement by private landlord associations culminated in large portions of social housing stock becoming smaller privately rented dwellings over a few decades.

The second finding refers to privatisation feedback mechanisms, whereby privatisation programmes such as RtB set off a path-dependent trajectory that shapes the relationship between public and private sectors for years to come. In this case, as the social housing market was becoming increasingly privatised, councils previously responsible for providing housing were now expected to work alongside private bodies and become enablers of housing instead. This, paired with general budget cuts from central government, led to a reduction in the role of councils in social housing welfare, altering the balance of private and public bodies in the sector.

This discussion and our recent journal article argue that the policy decisions implemented during the early Thatcher years four decades ago continue to shape today’s pressing issue of housing affordability and security. In housing policy as elsewhere, history matters, and the concept of policy feedback helps us understand how and why.

Sanya Naqvi is an MSc student at the London School of Economics and Political Science.

Daniel Béland is James McGill Professor in the Department of Political Science at McGill University.

Alex Waddan is Associate Professor in the Department of Politics and International Relations at the University of Leicester.

Cover of the 'Journal of Poverty and Social Justice'

Read more from the authors in their Journal of Poverty and Social Justice article ‘Thatcher’s ‘Right to Buy’ reform at 40: a policy feedback analysis of UK social housing policies’

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Image credit: Mary and Angus Hogg