Downing Street Years - Margaret Thatcher [374]
At the end of July 1990 I asked Chris Patten and Michael Spicer, the Housing minister, to come in and discuss with me the whole of our housing policy — both about where we stood on existing initiatives and where we should go from here. I pinpointed three specific areas — what to do about improving the condition of council estates, whether to extend ‘flexi-ownership’ (or ‘Rents to Mortgages’) in England, and the timetable for getting ‘roofless’ people off the streets and into decent accommodation. In September Chris Patten duly submitted a paper containing his latest thinking. It was immediately clear to me that there were some important differences between his — or more accurately the DoE’s — approach and mine; this was confirmed when he and Michael Spicer came in to see me later that month.
The extension of home ownership over the last decade had been one of the Government’s greatest successes. It had (in England) risen from 57 to 68 per cent of the housing stock. ‘Right to Buy’ sales were still running at about 80,000 a year. Councils had almost completely stopped building new houses and were now concentrating on renovation, a trend which would be accelerated by the new housing finance system. Nine councils had transferred all or part of their housing stock to housing associations — though not in the major urban areas. What was clear, however, was that the DoE saw all this as raising more problems than it solved. In their view — something, indeed, which never seemed to alter — there was a ‘housing shortage’ which required the public sector to provide more new low-cost homes to meet the ‘demand’ from a growing number of households. Consequently, measures to increase home ownership — such as the ‘flexi-ownership’ proposal which would be particularly attractive to poorer families — were considered undesirable because they would reduce the supply of cheap local authority housing to rent. This analysis failed to grasp that selling a house to a tenant reduced the demand for as well as the supply of rented housing and that more home ownership — even partial ownership with a small equity stake — would make even quite bad estates that much more tolerable, as the pride of ownership improved the neighbourhood. More seriously, it also assumed that the ‘demand’ for housing was finite, which was not true if housing was subsidized. Indeed, perverse incentives were operating to encourage the break up of large households and the formation of new smaller ones, for instance in the treatment of the housing needs of unmarried pregnant mothers. To analyse demand and supply without considering the effect of price was a perfect prescription for policy failure.
The other difference of analysis lay in our opposing views of the role of local authorities. The DoE envisaged the main thrust of renovation coming from the extension of the Estate Action programme — which worked through local authorities — under which money was provided to improve the worst estates. Many of these individual schemes were good and imaginative. Indeed, I went further than the DoE in believing that the design of estates was crucial to their success and to reducing the amount of crime. I was a great admirer of the work of Professor Alice Coleman in this area and I had her made an adviser to the DoE, to their dismay. But what I did not believe was that local authorities should be the main agents for improvement. My Policy Unit was working on an interesting alternative route which would have combined a new QUANGO — at arms length from the DoE and not in collusion with the local authorities — which would have backed