Policy & Ideas

2007 - 2021

Our Housing Crisis

Nothing will make up for the tragedy of Grenfell. What the millions of us who are angry can do is, to coin Theresa May, say ‘enough is enough’ – we won’t stop until the unbearable injustice of the modern UK housing system is overhauled and replaced by something humane. But first we need to understand the problem. Specifically, we need to understand the ways in which changes in housing over the past 40 years have changed the class structure of our society and, consequently, shaped political power, argues Ben Wray. What follows is some basic notes on housing, class and power in Scotland and the UK today as a starting point for analysis.

Housing is not just one of many problems of modern British capitalism. It is right at the heart of the problem. Since the late 70s/early 80’s, banks have transformed to primarily become mortgage lenders as housing has been financialised (social goods turned into financial assets). That is the main function of British banking today – not to lend to businesses, but to be a direct source of housing debt to workers.

The relationship between a finite supply of land and an infinite supply of mortgage loans (as when banks create a loan they are creating new money) underpinned by a neoliberal regulatory regime has sparked an explosion in house prices, one that has been a major determining factor in shaping our towns and cities in that time, and is the major driver of inequality. It´s not possible to even start understanding London without understanding what has happened with housing.

This is very important for those of us who begin by seeing class as the major dividing line in capitalist society. It is not sufficient in the modern capitalist era to understand that class division purely with reference to the division of labour. It is a dated explanation, not because it´s wrong in itself, but because it´s insufficient.

For instance, there is now perhaps hundreds of thousands of workers who sell their labour for profit but who also extract income from other workers through rent, e.g. the explosion of buy-to-let homes since the turn of the century. They may do this for very understandable reasons, such as attempting to ensure security in retirement. This is not a moral judgement. It is to say that the turning of homes into financial assets has made the class divide between those with and without property increasingly important.

Furthermore, it´s not possible to understand the decline in trade union power in this country without understanding the financialisation of housing. Your income is a meaningless reference point of your means to strike without reference to your immediate housing costs, whether through rent or mortgage payments. The instability and expensiveness of the modern housing market versus the relative stability of 1960’s council housing surely affects the bargaining power of labour.

Financialisation of housing also ties working class material interests to rising property value; that is, the same interest as property developers and bankers in asset price inflation. This creates real cleavages in the working class between those with and without property, up to and including gentrification, neoliberal ‘regeneration’, local planning decisions and all the other battles of urban geography which all have an effect on the value of assets.

The major finding of Thomas Piketty’s groundbreaking work Capital in the Twentieth-First Century was that more wealth could be accrued in the modern economy from rising asset values than from productive investment. This should have profound implications for our understanding of the sociology of class in the 21st century. Either we understand class through the prism of the financialisation of housing, or we don´t understand it at all.

Political Class

The rise of housing as financial assets has a major bearing on how we understand politics, in a very material way. Not many politicians own big businesses, at least in Scotland – but many are landlords. An analysis of SNP MP’s after the 2015 General Election found 16 were landlords.

This was struck home to me when, at the SNP conference in Aberdeen in 2015, we were promoting a joint Common Weal and Living Rent report advocating a living rent policy in the private-rented sector. I was shocked by the amount of SNP MSPs and MPs who said to me, “you know I am a landlord”.

This isn’t a moral criticism of those people, neither is it a partisan political point (Labour is likely to be very similar in this respect) – it is to say that like many people in their 40’s and 50’s who have been earning middle class incomes for some time, politicians have become part of the rentier class. They have a direct material interest in high rents, high house prices and low property taxes.

“Why have we not had proper rent controls introduced in the Scottish Parliament despite widespread agreement that the cost of rent relative to income has gotten out of control and that wealth inequality is a problem we need to tackle now? These political questions can’t be divorced from material interest. The political class is a rentier class in Scotland.”

Why has reform of local taxation in Scotland proved so elusive, despite the fact that we have a system introduced by the Tories (because the poll tax had become too toxic) based on 1991 property valuations, when housing inequality has went through the roof over that time? We even had a government commission on local tax reform in which the main finding was that council tax in its present form must be scrapped. The result has only been very minor tweaking?

Why have we not had proper rent controls introduced in the Scottish Parliament despite widespread agreement that the cost of rent relative to income has gotten out of control and that wealth inequality is a problem we need to tackle now?

These political questions can’t be divorced from material interest. The political class is a rentier class in Scotland.

Voting patterns

We can understand the class dynamics of modern voting patterns best through housing.

There is an argument that has been doing the rounds that class isn’t important to voting now, age is. That analysis is based on an outdated model of understanding social class using a grading system that has, for instance, professional service workers like a social worker or a graphic designer in a higher social grade than skilled manual workers like plumbers or engineers. The reality is that the plumber and engineer are probably much more likely to be able to afford a mortgage and the professional service worker more likely to be suffering rentier exploitation.

Age has indeed become an even greater correlator with voting patterns than twenty years ago, but that is animated by housing inequality which takes on a strong intergenerational dimension. I have written about this in detail here. The point is that confusion about class and politics is driven primarily by an outdated understanding of class, one that in particular does not take cognisance of the role of housing in the class system.

Beyond public v private

Housing isn´t just a public v private issue. If the answer of the left is simply “build council housing like we did after the second world war”, we are doing ourselves a disservice. We need to move forward, not back. Yes, publicly controlled housing, but also directly and democratically run housing by the people who live there.

There are numerous examples across Scotland and the UK of how this form of tenant-run housing can work very effectively in practise. We should support this in the community-owned or state-owned form.

The argument for tenant democracy has now been made very simple: if Grenfell Action Group had been running Grenfell Tower and could have made the changes they needed to make themselves rather than write blogs about it, this tragedy almost certainly would not have happened. Class division still exists in the old top-down, Keynesian economic model. The left needs to go beyond that, whilst using elements of that critique against the neoliberal regime.

Comments (8)

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  1. Willie says:

    Yes we all know what the issue is. Thatcher started it, and successive governments, including Messrs Blair and Brown industrialised it.

    So where do we go now that the SNP’s devolved administration is being fingers.

  2. Bill Weir says:

    A good piece but, can we really see ANY government “fixing” the housing problem ? Building enough houses to meet the demand would drive house prices down leaving many homeowners and landlords stuck with a mortgage bigger than the value of the property or the rental return.

    With so many home owners in this country I can’t see that being a popular policy.

    In my view you are right about debt. Thatcher pushed the sale of housing as part of a policy to drive the working family into debt allowing a raft of changes to be made to the country which subsequent governments would find great difficulty reversing due to the nature of the debt.

    I’m not smart enough to see a clean way out of the debt issue. I’m hoping some of our leaders are.

  3. jack elliot says:

    Piketty is right that capital must take a greater share of the social wealth. The rich must get richer and fewer and the poor poorer and more numerous. Society must be reduced to the two great classes, bourgeoisie and proletariat, confronting each other in a life and death struggle for power. Of course growth has prevented this up to now paying for a divide and rule policy that kept the tiny global elite safe but there can be no more of that. So concentrated is capital today that there is nobody left to buy its shit. In the past many things have been tried to prevent the inevitable showdown from philanthropy to welfarism to the New Deal, the Marshall Plan and finally the greatest Ponzi scheme the world has ever seen but now the end is nigh. No more tools are available. It is necessary to hold phenomenal amounts of capital to make a return on it. Corporations and billionaires can no longer even afford to pay tax without fear of slipping out of the super rich and ending up who knows where.


  4. Ann says:

    Perhaps starting in Scotland would be a good idea. There are whole families profiting immensely from homeless accommodation..basically supplying slum like conditions for people and earning £millions a week from councils. They also own flats and houses..again in bad condition which they rent out.
    The councils fete them as they have created a monopoly, driving out competition by using nefarious means

  5. jack elliot says:

    The estimate is that there are approximately 600 high-rise buildings with that similar flammable cladding

    Only on the buildings for poor people that have their council houses in rich areas

    Health and Safety inspectors were discontinued by the politicians

    Corporate laws to prosecute the business men ignored and not pursued.


    1. David Allan says:

      I wonder how many ” High Rise Office Buildings ” are clad with the defective cladding? . Schools and Hospitals as well ?

  6. Derek says:

    You don’t need rent controls if there’s enough council housing to go round.

  7. Mach1 says:

    Have Scotland’s local authorities really fire-tested the cladding on all tower blocks? Is there an air of complacency at Holyrood?

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