The “housing crisis” is the result of a failed economic experiment: I know, I’m from Hull
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In Westminster, politicians on all sides agree on two facts: first, the UK is experiencing a “housing crisis”; second, it can be solved by building more houses. It’s supply and demand: too few houses, too many people who need housing.
It’s the kind of oversimplified problem that the free market loves. The government certainly believes that if it just gets rid of a few pesky planning laws, private enterprise will “build, build, build” us out of the crisis.
Currently, Labor’s strongest response is to quibble over who goes first in the queue to buy new homes, presumably after they’ve been built on the greenbelt, to great profit for developers .
But the housing crisis is not just a lack of houses, nor even a lack of land. It will not be fixed by deregulation. This is the result of an experiment that began 45 years ago, when politicians gave up managing the economy. Instead, they gave control of the country to a radical, anti-human force: the market.
This experience was disastrous for the city where I grew up: Hull.
Hull seems an unlikely choice of venue to discuss the UK housing crisis. It has one of the most affordable housing markets in the country. I now live in one of the least affordable: London. A house in Hull costs around 5.5 times the average annual income; a house in London costs 16.5 times the average annual salary.
Clearly, as the Center for Cities points out, “there is not just one national housing crisis.” But why is housing so cheap in Hull? Because it’s only cheap if you have a job.
Hull is one of the most economically disadvantaged cities in the UK, with persistently high unemployment. This keeps its property prices low and increases property prices elsewhere as former residents (like me) flee to more prosperous parts of the country in search of work. The city has seen a net outflow of residents to internal migration (within the UK) each year from 2011 to 2021.
High unemployment is a symptom of an economic crisis that has plagued Hull and the former industrial centers of the UK for more than 40 years.
Effects of deregulation
Moreover, Hull’s economic decline was not inevitable or natural. This was the result of decisions made by successive British governments.
The town’s working-class population was historically divided between West Hull, based around the trawler fishing community of Hessle Road, and East Hull, based around the dockworker community of Holderness Road.
West Hull’s economy has been devastated by the Third Cod War, the latest in a series of naval clashes between Iceland and the UK over Iceland’s unilateral cancellation of rights to British fishing.
Britain finally granted these rights in 1976. This ended West Hull’s fishing industry. This represented a conscious decision by the government: its relations with other members of NATO and the EEC were more important than the livelihoods of the inhabitants of Hull. It is not forgotten. In the EU referendum, Hull voted overwhelmingly for “leave” and against international cooperation.
1976 was also the year of the IMF crisis: the final defeat of the then orthodox Keynesian economy.
Since World War II, government has sought to manage the economy to produce certain desirable ends, such as high employment. But in 1976, under the terms of an IMF loan necessitated by an ongoing oil crisis, Britain abandoned that effort. From 1976, governments adopted a Chicago School economic approach: low public spending, low inflation, deregulated free market.
This destroyed East Hull’s economy. By the early 1980s, its public docks had been privatized. Its factories and mills had been bought up by asset strippers and closed. Many of its workers have been laid off.
A typical story is that of my father’s first employer: the Spiller Mill. Its parent company was the subject of a hostile takeover, stripped of its assets and closed. The mill closed in the early 1980s and stood abandoned, an imposing concrete tomb, until it was finally demolished in 2007.
Throughout my childhood in the 1990s and 2000s, downtown Hull was surrounded by a strange area of abandoned mills, factories and warehouses: dried concrete shells whose market had sucked the life.
Industry throughout the North of England has been plundered by new markets without restriction. The wealth from the sale flowed into the London-based financial sector. This has contributed to grossly inflated property prices in the Southeast.
In 1977, three Labor MPs jointly asked for help to remedy the “desperate” unemployment situation in the city. The (Labour) government refused to intervene. Today, in percentage terms, Hull’s unemployment figures are almost unchanged from that “desperate” level, as shown by ONS data on benefit claimants out of work. The market has decided that a large part of the city’s population is surplus to requirements.
These days, we’re used to the idea that free market forces might suddenly declare us redundant. As political theorist Jodi Dean has pointed out, both the right and the left are now eyeing a laborless future, whether through “fully automated luxury communism” or self-driving Amazon drones and Tesla trucks. . The rich fantasize about a complete redundancy of work. This ignores all the workers that would be needed in these digital utopias to maintain the robots, provide childcare, and field tech support calls.
However, in the 1970s and 1980s, the mass layoffs that emptied the factories of Hull were a further destruction of the Fordist contract between capital and labor that had prevailed since the turn of the 20th century.
Of course, it was up to the public sector to house those left behind by the market. In Hull, as elsewhere, newly unemployed communities are funneled into the city’s vast social housing developments. However, thanks to Thatcher’s right to buy legislation, stocks of social housing, nationally, have been reduced. This has now resulted in the annual payment of £23.4 billion of public money directly to private landlords in the form of housing allowances.
What housing does the market offer for all this public money? And how does it house workers lucky enough to keep their jobs, or those who move across the country to find one?
In the private rental sector, the market treats the tenant, like the worker, as a disposable inconvenience: 29,000 UK households faced no-fault eviction in 2021.
In addition, the industry frequently exhibits the phenomenon of “market Stalinism” identified by Mark Fisher: what your landlord rents to you is only technically a one-bedroom apartment: it is not really suitable for living. According to the National Audit Office, a quarter of private accommodation in England is “undecent” and 13% poses serious health risks.
Anecdotally, even privately leased properties that aren’t actively dangerous to human life often don’t appear intended for occupancy. In 2020, during a long apartment search in London, my companion came up with a game to play when visiting a new apartment: open a cupboard door in each room and see how many hinges fall off. The whole apartment hunt was reminiscent of a prescient sketch by Armando Iannucci, from 2001, in which a couple discovers that the property they are visiting is made entirely of paper, crudely colored to look like a house by children pretending to be for real estate agents (also a familiar experience of real estate agents).
It is no coincidence that in the area with the highest house prices in the UK, Kensington and Chelsea, a large number of houses are left permanently empty by their owners. The market prefers an empty house to an inhabited house, just as it prefers an empty factory to a working factory.
No one else can use the empty homes in Kensington, as the squat was criminalized in 2012. It’s part of a wider attempt over the past decade to make it illegal to live without fueling financial markets.
Furthermore, recent government attempts to solve the “housing crisis” have been entirely pro-market and anti-human. The purchase aid inflated prices and mainly helped the wealthy. A House of Lords cross-party committee concluded the money would have been better spent on social housing. Public money spent on the government’s “race to the top” program will mainly benefit the owners of the land served by the new infrastructure projects.
To solve the housing crisis, we don’t need deregulation. We don’t need more money shoveling into the hands of the rich. We need precisely the opposite: an end to a long failed economic experiment and to the running of the country for the benefit of the people, rather than the market.
Hull now has some hope of regeneration, from a sustainable industry (attracted long before the ‘upgrading’ programme). The city is now the largest manufacturer of offshore wind turbines in the country. I hope this is a small step between an economy that treats the worker as disposable (in COVID-era lingo, “non-essential”) and an economy where the worker is indispensable.