The Housing Crisis in Neoliberal Britain: Free Market Think Tanks and the Production of Ignorance
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The Housing Crisis in Neoliberal Britain: Free Market Think Tanks and the Production of Ignorance by Tom Slater, University of Edinburgh ([email protected] ) Forthcoming in S. Springer, K. Birch and J. MacLeavy (Eds) The Routledge Handbook of Neoliberalism “What if that machinery were reversed? What if the habits, problems, actions, and decisions of the wealthy and powerful were daily scrutinized by a thousand systematic researchers, were hourly pried into, analysed, and cross referenced, tabulated and published in a hundred inexpensive mass-circulation journals and written so that even the fifteen-year-old high school drop-outs could understand it and predict the actions of their parents’ landlord, manipulate and control him?” Martin Nicolaus (1969) Unsettling supply and demand In late 2014 an important social movement, FOCUS E15 1, was born on the Carpenters Estate in the east London borough of Newham. Two young mothers, Sam Middleton and Jasmine Stone, occupied an empty flat on the Estate in late September that year. They were soon joined by several other young mothers who had all experienced the same trauma: being served eviction notices by an emergency hostel (or “sheltered accommodation”, as it is known in the UK) after the funding stream to that council-run hostel was cut. The Carpenters Estate is adjacent to the 2012 Olympic Park, and in 2010 it was cleared of its residents as Newham Council, affected by central government cuts to all local authority budgets, tried to sell the land to cash in on the rent seeking mega-event bonanza. The deal fell through, leaving more than 600 council homes empty for four years, and the Council wanted to send the families it had displaced into hostels to Birmingham or Manchester, where rents are considerably cheaper. The FOCUS E15 protest armed itself with a very simple message: “Social Housing, Not Social Cleansing”. Under the current Conservative government, the context for such a protest is not going to disappear any time soon: social housing all over the UK is being bought out by private developers, councils are trying to divest themselves of what sparse stock they have left, wages do not even cover social rents (let alone private sector rents), and, most galling of all, thousands of affordable homes lie empty “in preparation for the billions their destruction will bring in” (Williams, 2014). On October 2 nd , Newham Council failed in its attempt to use the draconian power of ‘interim possession order’ to evict and silence the mothers, who then left the homes they occupied on their terms whilst continuing their campaign. In December 2014 there was a significant victory for residents of another east London housing estate, New Era, when they successfully fought plans by US land investors to evict dozens of families and more than double rents. Westbrook Partners, under huge public pressure because of a campaign against its profiteering motives (again led by mothers on the estate), sold the land upon which the New Era estate sits to the Dolphin Square Charitable Foundation, an affordable housing charity committed to delivering low cost rents to Londoners on low to middle incomes. These protests in a capital city with grotesquely inflated housing costs across all tenures generated massive attention (helped by celebrity support on social media), and triggered a national debate on housing affordability and similar protests in other UK cities. 1 http://focuse15.org/ 1 Above all, the movements demonstrated that when too many people are unable to afford shelter, it becomes a political problem, and a major basis for social mobilization. Against this backdrop - and particularly against the 2015 General Election backdrop of the (since defeated) Labour Party taking high housing costs more seriously than in its recent history and proposing an upper limit on rent increases within tenancies in the private rented sector - the Institute of Economic Affairs (IEA), a free market think tank and a pivotal institution in the birth of neoliberal ideology in the UK and beyond, published a report entitled The Flaws in Rent Ceilings 2 (Bourne, 2014). A declamatory crusade against all forms of rent regulation anywhere, from what it called the “crude rent controls” of the (20 th century) inter-war period to “second-generation rent ceilings”, the report began by stating that there is a “rare consensus” among economists that rent control “leads to a fall in the quantity of rental property available and a reduction in the quality of the existing stock” (p.10). A quick inspection of a footnoted URL reveals that the source of this “consensus” is in fact a small survey of 40 neoclassical economists in the United States. Nonetheless, the report continued to argue that “under rent control there is less incentive for families to reduce their accommodation demands, therefore exacerbating the shortage of properties for others” (p.16). The tenor of the document reaches a crescendo a few pages later in the spectacular assertion that “the truth would appear to be that tenants are unwilling to pay for increased security” (p.25), leading to the conclusion that any “extra security” for tenants “comes at the expense of reduced economic efficiency” (p.35). Instead of rent regulation, the report calls for another round of deregulation in the form of “planning liberalisation”, which is described as a “welfare enhancing policy” (p.36) that would lead to the construction of new housing on land currently shielded from development government red tape. For the IEA, the housing crisis is a basic economic conundrum - too much demand and not enough supply – and its solution is thus to increase supply by stopping all government interference in the competitive housing market, which (true to neoclassical beliefs) must be allowed to operate free of cumbersome restrictions to provide incentives for producers and consumers to optimize their behavior and push the market towards equilibrium (so that there are no shortages of housing), whilst yielding the maximum amount of utility for the maximum number of people. The IEA immediately went about the task of circulating sound bites from the report as widely as possible. Its ‘solution’ certainly caught the attention of newspapers and commentators supporting a conservative agenda, one illustration being the The Daily Telegraph printing a feature under the headline, “Think-tank criticises ‘pointless’ Labour rent cap scheme” (6 th September 2014). It also caught the attention of the editors of Channel 4 News , a widely respected national television news programme, who invited the author of the report, Ryan Bourne (the IEA’s Head of Public Policy) to discuss the issue of rent control alongside Jasmine Stone 3. Even after Stone described her and her neighbours’ experiences of struggling to make rent due to various profiteering schemes, Bourne maintained that the “fundamental reason” for very high rents was not “greedy landlords”. According to Bourne, the “real” reason is that, “Over years and years we haven’t built new homes and have restricted supply artificially 4 through greenbelts and other planning restrictions.” When Stone answered positively to the 2 This is not the first time the IEA has waded into the debate on rent control. Founded in 1957 by Anthony Fisher, an ex-RAF pilot, wealthy chicken farmer and personal friend of Friedrich von Hayek, in 1972 the IEA published a savage tirade against state intervention housing markets entitled ‘Verdict on Rent Control’, co-authored by none other than Hayek himself with another archdeacon of neoliberalism, Milton Friedman. 3 Available to view here: http://t.co/ZLzoiHp2Su 4 The use of the word ‘artificially’ is revealing: neoclassical economists are especially prone to viewing a competitive market as a natural evolution that is best left alone if equilibrium and growth is to be achieved. 2 interviewer’s question of whether she would like to see rent controls introduced in London, Bourne immediately retorted that she was wrong because “economists agree” that such “crude” controls are “absolutely disastrous”. It did not appear to matter at all to Bourne that Stone was speaking from the experience of poverty, housing precarity and repeated evictions. If economists like him agree, then the debate over rent regulation should end. The Flaws in Rent Ceilings is a pure exemplar of the way in which free market think tanks function as footsoldiers of, and mouthpieces for, the neoliberal creed. When that creed is under scrutiny or being challenged directly, think tanks scramble to produce “evidence” (in the form of authoritative reports distilled into accessible soundbites) defending the free market and attacking state intervention in economic affairs. In this IEA case, structural causes of the housing crisis were swept out of sight by appeals to ‘sound economics’ and by recourse to the easily decipherable logics of supply and demand. Whether by intent or not, reports such The Flaws in Rent Ceilings serve to divert attention away from the harsh realities of the housing crisis which lay bare the catastrophic consequences of over three decades of neoliberal housing policies. There is no space here for a full portrait of these realities, merely some brief pictures 5: by 2014, for the first time since the late 1960s, there were more UK households renting homes privately than in social housing. Since 2000, the largely unregulated private rented sector has doubled in size to well over 4 million households. Buy-to-let mortgages soared during this period, facilitated by insecure “shorthold tenancies”: a get-rich-quick scheme for landlords, and until mid-2015, subsidised by the state via tax breaks. 1.8 million households (and counting) are on the waiting list for social housing. Homelessness is on the rise (there was a 31% increase in rough sleeping from 2010-2012), despite the existence of nearly 1 million empty homes in the UK.