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Housing gap UK’s biggest social inequality

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27 August 2003

Housing poverty is the most extreme form of social inequality in Britain, according to a report published today (Wednesday) by the Institute for Public Policy Research (ippr). It says successive governments have bowed to the pressure of nimbyism and ignored the consequences of growing inequality.

The report argues for dramatic changes to close the housing “equity gap” and increase choice. Despite increased consensus amongst experts and politicians on the need for radical measures and new homes, there is often strong resistance to local change. The polarisation of housing provision also has a negative effect on school standards, public services, crime and neighbourhoods: all public priorities.

The report shows that there has been a growing divide between people living in the north and in the South East and between the home owning majority and people who rent. The increase in the ‘equity divide’ has been the greatest cause of the growth of inequality: the value of the net equity of personally-owned housing increased from £36 billion in 1970 to £1,525 billion in 2001. Those who missed out are people who have not been able to buy. Tenants living on estates of poor housing have fared worst and the most dramatic evidence of the housing crisis is the number of homeless households in temporary accommodation, which has risen from 5,000 to 80,000 since 1980.

Recommendations include:

? Increasing choice for tenants and changing the pattern of housing tenure. This includes creating Regional Housing Executives to drive a far-reaching re-configuration of housing tenure, diversifying ownership on social housing estates and enabling social landlords to buy homes to rent in neighbourhoods of predominantly private housing. This should apply in suburbs, free-standing towns and rural areas. London local authorities should acquire as well as build more homes for rent in both outer London and the home counties and enable tenants who want to move to do so and free up accommodation for others. This will be more pressing if London succeeds in its Olympics bid.

? Closing the housing “equity gap”: consider reform of inheritance tax so it does not exempt most people's housing wealth; introducing higher tiers of council tax on more expensive properties; levying full rates of council tax on all second homes; reducing further discounts on right to buy and using levels of stamp duty to regulate the levels of house purchases and sales.

? The Government needs to reconcile the tension between the role of Regional Development Agencies - to maximise economic prosperity in their region – and Treasury targets for reducing the gap in growth between regions.

? The Communities Plan should integrate its housing proposals within wider strategies for regional economic development.

Chris Holmes, author of the report and ippr Visiting Research Fellow said:

“Housing equality has not been a shared national priority since the end of the second world war. If we are to tackle what has become the most extreme form of social inequality in Britain, we need to look to that level of mobilisation of public support and political will. The aim must be to create a better balance between people, homes and jobs. We need an overall national policy to increase territorial justice and a better balance between, people, homes and jobs, within which distinctive regional, sub-regional and local strategies can be developed.

“These changes are also very relevant to the reforms suggested in the Chancellor’s assessment that the UK housing market as it currently operates is a major barrier to entry into the single currency.”

Housing Equality and Choice is published by ippr on Wednesday 27 September 2003. Please contact Central Books on 0845 4589910 or ippr@centralbooks.com. ippr will be publishing a further report on regional economic policy in October. For more information contact John Adams, j.adams@ippr.org

Notes to Editors

? Chris Holmes is a Visiting Research Fellow with ippr and a member of the Youth Justice Board. He was formerly Director of Shelter.

? ippr’s research was funded by Genesis investments, Notting Hill Housing Trust, Prime Focus, Riverside Housing Association Limited and South Liverpool Housing Limited.

Contacts:

? Media: Rachel O'Brien, External Affairs, 020 7470 6106 / 07801 106920, r.obrien@ippr.org

? Other: Chris Holmes, ippr Visiting Research Fellow, christopherj.holmes@virgin.net

? All ippr news releases can be found at www.ippr.org