The Conservative Government under Margaret Thatcher gave more than five million council house tenants in Britain the right to buy their homes. Council tenants who had lived in their home for up to three years were given a 33% discount on the market value of their home, increasing in stages up to 50% for a tenancy of 20 years.
This was a controversial policy. The then government maintained that the measures would transform the social structure of Britain for good (the term ‘property owning democracy’ was used a lot) and Michael Heseltine, the then Secretary of State for the Environment, said: "This bill lays the foundations for one of the most important social revolutions of this century." Leaving aside these somewhat grandiose statements, the policy was a clear vote winner for the Conservatives.
However, the policy was fiercely criticised at the time with Shelter, the organisation for homeless people, insisting that the move would increase the number of homeless people and decrease the number of homes available to accommodate them.
Perhaps surprisingly the subsequent Labour Government accepted the right to buy as a given and made no attempt to reverse it – it would probably have cost them many votes among their core working-class vote.
Now this policy debate is to be reopened in Wales. The stock of council homes in Wales has fallen by nearly half since the scheme was introduced in the 1980s and there are more than 80,000 people are on waiting lists for social housing. Consequently, the Welsh Assembly Government intends to apply for powers from the UK government to suspend tenants' right to buy in some areas, such as in rural Wales as part of its bid to tackle the shortfall of affordable housing. The aim is to ensure that people on modest incomes can still find houses to rent in the areas where they live.
I’m not generally a fan of the policy actions taken by WAG, since too often they seem to be trying to do something different from England as a point of principle rather than practice. However, in the current fiscal climate and with huge reductions in public expenditure being planned, we might well ask why the state should be providing such large financial subsidies to enable people to buy their council house.
Given that the construction industry is in the doldrums, might it not be better to encourage council tenants who can afford to buy to purchase their own house on the private market. Possibly some small financial sweeteners could be used to facilitate this.
Unfortunately, in Wales, this change in policy might be a little too late since many local authorities have already undertaken (or plan to undertake) housing stock transfers to other agencies. In 1980, there were around 300,000 homes in council ownership, now, that is down to around 156,000. Thus the impact of the policy might not be as great as desired.
However, perhaps suspending the right to buy could be a policy for the Conservative/Liberal Democrat coalition to consider as a solution to the problems of homelessness and a dormant construction industry.
Malcolm Prowle is Professor of Business Performance at Nottingham Business School and a visiting professor at the Open University Business School. He can be contacted via his web page www.malcolmprowle.com
