Deborah Orr: Is council housing the answer to our problems?

Te construction industry was the first part of the real economy to feel the consequences of recession. People who had been earning good money for years just woke up one morning to find that their work had vanished. For some individuals, there was an advantage in achieving clarity about the paucity of their medium-term prospects so early on. They were able to get themselves some other sort of income before unemployment began to bite more generally.

That's a blessing for them, of course. But it is also an object lesson in how skills can quickly be lost in recessions. It's not in anyone's interest, whatever form the recovery eventually takes, for Britain to greet it with a shortage of skilled builders. But unless efforts are made to support the construction industry now, that is what will happen.

The underlying demand for housing has not gone away, even if construction programmes have ground to a halt for lack of finance. Far from it. Practically unrealistic as his target may be, Gordon Brown's goal of 3 million new homes by 2020 remains an accurate reflection of the scale of the need for new housing stock. Certainly, when mortgage lending picks up, many people will benefit from the drop in housing prices. But unless supply is increased, renewed activity will simply reflate the housing bubble, the very thing that exacerbated so many of our present problems for so long.

The need to build new homes has not been quite so screamingly apparent since the end of the Second World War, when Nye Bevan's Housing Bill promised a huge investment in council housing that would create a "living tapestry" of mixed communities. The idea was not just to create accommodation for the poor, but also to ensure that the most vulnerable stayed in the mainstream and had a secure base from which to secure work.

Sixty years on, and social housing, or anti-social housing as Richard Reeves of Demos calls it, is stigmatised because it does the opposite of what Bevan wanted it to do. Council tenants are viewed as desperate and reckless, closeted in communities that are no-go areas for wider society, with seven out of 10 tenant families in the bottom two-fifths of the population, in terms of income.

Professor John Hills, a leading housing expert based at the London School of Economics, has pointed out how different things were in 1979, when 20 per cent of council tenants were in the top 10 per cent of earners. Now, it beggars belief that anyone who could so easily avoid it, especially in the inner cities, would subject themselves to council-estate life.

Further, because of long-running shortages that have become more entrenched under Labour than under the last Conservative government, allocation policies have become distorted so that homes are available to only those in the greatest need. Some of the ugly consequences of this are plain. Local people can become resentful, for example, when immigrant families are housed, and their own children are not.

But despite the dreadful reputation that council housing now has, demand for it continues to rise. Waiting lists for council accommodation are huge, and climbing. It is estimated that by 2010, numbers awaiting social housing will have reached 5 million. Further, over many years, all over the country, tenants have organised to resist the transfer of council estates into private ownership. A concerted 30-year attempt to contain or even eradicate council-rented accommodation has not succeeded.

There is now, for the first time in decades, political will to reinvigorate and expand council housing. The advantages of doing so are clear. It is already acknowledged that such an intervention would offer support to the beleaguered construction industry, boosting the economy and guarding against the emergence of another housing bubble. But there would be huge social benefits too, in returning at least to a semblance of Bevin's "living tapestry". Only 12 per cent of the population live in council accommodation now, compared to 42 per cent in 1979, and the living tapestry has become notoriously thin.

One consequence of the right to buy has been that a good deal of former council stock, especially in more challenging areas, has been taken over not by owner-occupiers but by private landlords who overcrowd accommodation with people on short leases, adding little to community cohesion. In that respect, at least, the contention that right to buy would promote owner responsibility has been utterly undermined.

The economist Kate Barker, who has been advising Brown on housing for years now, and has become used to her good advice being feted, then ignored, has called for a £6bn investment in a new generation of council housing. The pressure group Defend Council Housing, which has been slogging away for years, is now finding that the political mainstream has opened up to its ideas and arguments. Brown declares that he will "put aside anything that stands in the way" of council plans. But the trouble is that resistance to the idea of investing in council property is so entrenched now that its rebirth is more easily announced than achieved.

One obvious move is to lift the restrictions that have demanded since 1980 that councils hand over 75 per cent of receipts from rent or sales to the Treasury. This would not only allow them to invest directing in building, but would also free councils to borrow against the future income stream provided by rents. Brown was not too keen on that when he was Chancellor in the boom, and Alistair Darling, with pressure on the public purse now at unprecedented levels, is reported as being even less enamoured of the wheeze than his predecessor. His reluctance has to be overcome.

Yet that is not the only problem with unleashing new council building. Over the past 30 years, councils have lost skills too, and few have much experience any more of running construction programmes. (Fewer then 300 council homes were built last year.) There is talk of allowing councils to form their own construction companies. Yet the follies of the 1960s and 1970s, when so much sub-standard stock was built, cannot be repeated.

The Housing and Regeneration Bill, now making its way through Parliament, aims to tackle this problem, by creating a new homes agency, reforming social housing regulations and ensuring that social housing is "a modern and flexible public service". Yet Defend Council Housing has only just won its battle to strike out a clause defining social housing as being governed by "rules for eligibility designed to ensure that it is occupied by people who cannot afford to buy or rent at market rate".

The group still argues that the watchdog being set up under the new legislation will allow the Government to use it as a political tool. The real trouble is that the provision of social housing has been a political tool for so long, that common-sense approaches are almost impossible to enact. So much effort has been expended on blocking the ability of councils to invest in social housing that a positive response to the recession that should be quick and easy, is frustratingly long-winded and complex.

d.orr@independent.co.uk