Labour and the Housing Crisis – part 2.

The removal of the citizen from political discourse.

By Eamon Dyas

When Tony Blair embarked on his New Labour project from the mid-1990s his ambition was not only to get into Downing Street but to change the Labour Party for good – in fact he saw both these things as intrinsically linked. The changes he initiated in terms of policy, process and procedure were designed to, in effect, create a new direction for the party – one that would shed its old lodestones and traditional political yardsticks that no longer had any legitimacy. Only by doing that, he believed, could the party once more be fit to challenge the Conservatives on the grounds of the new political landscape of the 21st century.

The political landscape to which Blair sought to adopt Labour was the creation of Margaret Thatcher. So, in order to understand Blair’s New Labour we have to understand what it was that Thatcher’s political landscape actually represented. 

The election of the Thatcher government in 1979 is usually described as representing a move to the right by British society but that is an over-simplification that doesn’t really help us understand the actual dynamics of what Thatcher represented. It also avoids the culpability of the labour movement in creating the conditions in which someone like Thatcher could thrive. A more accurate description would be that she represented the reaction of the electorate to the political and economic future that the labour movement had threatened to create through its irresponsible behaviour in the 1970s. At that time the trade union movement had shown by its actions that it was in control of most aspects of civil society from the disposal of the dead to the people’s access to energy and light. The question that dominated the concerns of civil society was how that power was to be used in the future. Up to then that power had been seen to assert itself as a disruptive power used in a sectional interest. What remained to be seen was whether it could be used responsibly by putting it to a more constructive use in the wider society.

In many ways the answer was given in the rejection of the 1977 Bullock Report on industrial democracy. That rejection came about through the dominant influence of a narrow sectional mindset among most of the trade union leadership and an ideologically constrained left-wing in politics. Those in the leadership of Labour politics who saw the problem in clear electoral terms, being unable to bring these elements into line, were then deemed to be an ineffective element in an evolving situation that could not be sustained indefinitely. The electorate was confronted with a Labour leadership that was unable to influence the way in which the enormous power of the trade union movement was being used. Consequently, the Labour Party was seen to offer no alternative to the ongoing prospect of continued industrial strife and anarchy. 

On the other hand, the Tory party under Thatcher was seen to represent the only escape from that unthinkable future. After winning the 1979 election and bedding in her administration, Thatcher set out, through a series of legislative actions, to meet the challenge that the trade union movement had laid down and although it fought back the trade union movement now found themselves no longer able to rely on the support, or even the passive acquiescence, of civil society. She also embarked on economic policies that had the effect of diminishing the importance of that sector of the economy that had provided the main centre of trade union power – policies that witnessed the acceleration of the move of the British economy away from manufacturing in favour of the service and financial sectors.  

However, Thatcher’s success in changing the political and economic landscape relied on more than policies that diminished the trade union movement. Her objectives could not have been achieved without the positive commitment of a significant element among the citizenship to her agenda – something that she sought to positively encourage in her wider reforms.

But, there was a paradox at the centre of Thatcher’s policies. While her election can be seen as a reaction of those citizens to the position that the labour movement created in the 1970s the policies that she pursued as part of her solution emerged from a viewpoint that effectively marginalised the reality of the citizen. Traditionally the idea of the citizen is a legal idea based on the relationship of the individual to the state. The citizen offers allegiance to the state in return for the state’s protection of his or her wellbeing. But it is not a relationship that is confined to one generation. It is a relationship that extends across the generations in perpetuity. From that it follows that what is understood by the state protecting the welfare of the citizen is reliant on the norms established by each generation – something that in turn is often described as the outcome of “progress”. By the time Thatcher arrived on the scene that “progress” had taken the form of a higher degree of state involvement in the welfare of the citizen than at any other stage of peacetime in history. This not only involved the emergence of the NHS, and the supply of housing and social care for those most in need but also indirect protection from the vagaries of the market through a high degree of state ownership of significant parts of the economy as well as an evolving regulatory framework that served to keep the worst excesses of the market in check. Of course, the measures that represent “progress” are not written in stone and, in liberal democracies they remain vulnerable to changes in government. However, those measures, insofar as they relate to the welfare of the citizenry, are usually viewed as something that can command the protection of what are called “progressive” politics. 

Thatcher’s policies had the effect of dismantling this “progress” and in its place she created an unstable arrangement whereby the electorate found itself more fully reliant on the market to fulfil many of the areas of needs for the welfare of the citizen that had previously been undertaken by the state.

The role of housing in Thatcher’s project

The re-arrangement of the relationship of the citizen with the state were consistent with Thatcher’s belief that there was no such thing as society. If there was no such thing as society then the idea of the citizen became problematic as the citizen had an intrinsic relationship with the state and the state could only exist as the expression of some form of societal arrangement. Of course, while marginalising the idea of the citizen Thatcher could not deny the existence of the state. She had, after all, assumed the leadership of the most successful state in history. Something else had to be identified which possessed the kind of societal arrangement that explained the existence of the state over which she had assumed leadership. Like the state, capitalism also requires a societal arrangement to exist and in Thatcher’s ideal world the market was to be the exclusive provider of the societal arrangement that gave legitimacy to the state. She therefore set about the task of de-legitimising anything that did not have a direct relationship with the market. That she never fully succeeded with this task was because the citizenship proved to have too strong an affinity with certain arrangements which had evolved outside the market and so things like the NHS and the Post Office, at least for the time being, proved too hard to prise free politically. 

But utilities and housing proved to be different. It was here that she managed to weld the citizenry to her political agenda for privatisation and it is in these arenas that her legacy remains over a quarter of a century later despite the interlude of three Labour administrations in the meantime. 

As far as Thatcher was concerned, the problem for Britain was that the citizen had become too far separated from the operation of the market. This separation had created a gap that had been filled by the influence of the trade unionism and socialistic thinking that was responsible for the descent into the anarchy of the trade union power of the 1970s. Thatcher saw her role as someone who would eradicate once and for all the conditions which had resulted in such anarchy by redefining in practical terms the electorate as investors rather than citizens. Thus, any cross-generational public ownership in things like public utilities and transport (and in fact any resource that possessed a value as the public property of citizens) was also viewed as the result of this separation of the citizens from the market. 

The solution, from her perspective, was to sell off as much of the public resources as it was deemed politically possible to do. Shares from the proceeds resulting from these sales were distributed among those who could afford the discounted prices after big business was allocated the lion’s share. That this was certain to deny future generations of citizens the benefits of these public resources was deemed to be of no concern as the sale was supposed to provide the means by which the citizenry could become investors not only in the fate of their specific shares but also in the movements of the market. The future lay in the emergence of a property-owning democracy – a future that had no place for the idea of society or of the traditional concept of the citizen.

However, the sale of public resources could only be relied upon to ensnare a small proportion of the citizenry in the property-owning democracy. After all, most people did not have the disposable income to procure even the discounted shares and those that did, sold them on to bigger investors within a short space of time. A far more potent leverage was available through the sale of council homes.

Thatcher lost no time in implementing her housing policy with the flagship “Right to Buy” scheme that was introduced through the 1980 Housing Act. This gave council tenants the right to buy their home with huge discounts. Further acts in 1984 and 1986 added to the momentum of these sales until by 1990 20% of all local authority housing stock that had been built for those in need had been sold at a discount. An indication of the importance of the “Right to Buy” scheme in Thatcher’s project to re-mould Britain into a property-owning democracy was the financial reforms initiated under her premiership. Until 1986, the mutually-owned building societies held a monopoly in mortgage lending. This had ensured that the bodies doing the lending were owned by their members. Because they did not have to take account of shareholder interests this helped to keep the lid on the cost of mortgage repayments as well as ensuring a cautious approach to those they lent to. But Thatcher’s project could not have succeeded with such a cautious approach to mortgage lending and she decided to open up the mortgage market. The result was the 1986 Building Societies Act. Under the terms of this act mortgage lending was opened up to the banks – something that in turn led to a lending frenzy as competition between mortgage lenders increased. This, together with the newly emerged demand instigated by those seeking mortgages to purchase their discounted council homes, created a boom in the housing market the likes of which had not been seen before (house prices rose by 28% in 1988 alone!).

But it was an unsustainable situation. The housing bubble was dependent upon a continuance of low interest rates, growing prosperity, and the easier access to mortgage credit facilities initiated by the financial reforms. It was a situation that changed very quickly. In 1988, the Chancellor of the Exchequer, Norman Lamont, initiated a series of interest rate rises which culminated in a 15.4% interest rate in February 1990. This represented a 60% increase over the interest rate in 1988 and it resulted in many new mortgage holders being unable to pay their monthly instalments. With so many then forced to sell their homes the resultant flood of properties created a collapse in the housing market.

So it was that the end of the Thatcher years witnessed the worst housing slump since the 1950s. Under normal circumstances, this should have led to a re-think of those policies by the new incoming government under John Major which arrived in November 1990. But instead, he made the decision to consolidate the Thatcher project and viewing the housing aspect of it as a critical ingredient, left it alone with the result that by 1993 the annual number of repossessions had increased five-fold over those of a “normal year” prior to the crisis. 

Yet Major, due to a growing discomfort with Thatcher’s policies, felt obligated to give the appearance of moving the government in a different direction. He therefore set out to rescue the idea of the citizen as a means of providing that appearance. Within eight months after he assumed office Major introduced the idea of the “Citizen’s Charter”. This was formally launched on 22 July 1991 but Major’s “Citizen’s Charter” was based on the idea of the citizen that was just as alien to the needs of actual citizens as was Thatcher’s project. 

The next instalment of this investigation will look in more detail at John Major’s “Citizen’s Charter” and the role it played in introducing the idea of performance targets into our political vocabulary. It will also look at the way in which the concept of the “stakeholder” emerged under New Labour and how it became an effective obstacle to the emergence of actual solutions to social problems particularly in the arena of social housing provision.

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