Labour and Housing – Part 11.
The funding of housing provision: from 1851 to 1890
By Eamon Dyas
The relationship of housing provision to land and land value was examined in parts nine and ten of this investigation. What is proposed at this stage is to look at the history of local authority funding in the context of modern housing provision and its relationship with central government. Because this is a complex question it will require the issue to be addressed in two parts. The first part will take us from the mid-nineteenth century when the impact of industrialisation and urban living began to occupy a central part of local and central government politics up to the point when the Housing of the Working Class Act of 1890 provided local authorities with the means by which they could begin to evolve as independent providers of local housing. The second part will cover the period from that point onwards.
Rates, grants-in-aid, loans, and assigned revenues
These were the main means by which local authorities have traditionally funded their housing provision activities. But these sources of funding did not emerge at the same time. They evolved as ‘add-ons’ to local authority funding in ways that reflected the evolving relationship of local government to central government and the relationship of housing to the wider economy.
To begin with it is important to understand a basic characteristic of local government in early Victorian Britain. That characteristic was defined by the way in which local responsibilities were financed and the main influence over the decisions on how that finance was utilised. The source of income that funded the decisions of local authorities was for the most part the local rates (the same means by which the early Poor Law Commissioners funded their responsibilities). The electorate that voted for, and provided legitimacy to, the local authority, was restricted to those who paid the rates and those who paid the rates came predominantly from the landed and business community. At the same time the people that made up the local authority and who, in effect made the decisions over how its finances were used were also almost exclusively from that same business and landed community. It was this triangle of electorate, funding source, and local authority that determined the decision-making on which local communities relied to maintain some kind of balance between their immediate world and the world being literally manufactured in the wider economy. But that triangle, while capable of operating somewhat effectively in situations of relative social equilibrium, proved to be an unstable structure (at least as it had originally emerged) as that equilibrium became increasingly disturbed by the social demands of industrialisation.
That industrialisation and the growing urbanisation that went with it generated an increasing demand for local authorities to provide an ever-growing number of functions in the areas of sanitation, housing, health, transport, education and civic legal functions. Initially, these functions had been performed by separate bodies but as the demands of urbanisation generated an increasing overlap between them, they began to be undertaken by over-arching local authorities. In order to perform these functions, the local authority was obliged to increase its source of funding and this meant applying greater pressure on the rates. But the rates were paid by the same people who had the power to set them and there was a limit to the willingness of these ratepayers to increasingly sustain the cost of these local authority responsibilities (rates had more than doubled between 1841 and 1868). This meant that there was now an inbuilt inhibition that militated against a local authority being able to perform the functions necessary to maintain social harmony in increasingly urbanised settings.
Aware of the dangers of this, by the mid-century, central government sought to alleviate the plight of the landed and business communities by supplementing the rate-based income of local authorities. The result was a growing number of areas where central government grants-in-aid became the means of sustaining these activities.
However, as the range of these grants-in-aid began to expand there arose a growing concern at the way in which they were generating an over-reliance on such grants by local authorities and a commensurate over-burdening on the Treasure. These concerns began in the early 1870s but remained largely unaddressed until 1881 when Gladstone’s Cabinet set up an inter-departmental committee to examine local government finances with a view to alleviating the ongoing reliance of local authority activities on the Treasury. What it came up with was a proposal that the income from certain taxes should be designated in whole or in part to local authorities. Specifically, the 1881 Committee named the revenue from the carriage tax to be designated in full to local authorities alongside the allocation of a proportion of the local income taxes collected by central government. This was meant to compensate local authorities for the additional expenditure on things that were acknowledged to have a national as well as a local function, an example being the maintenance costs incurred by local authorities on the local road system in response to the demands of growing industrialisation. Although the Committee’s proposals never reached the statute book, they did establish the principle of what came to be known as “assigned revenue” as part of local government income.
The idea was revived in a government Bill in 1885 which proposed to allocate to local authorities the proceeds from the duty on alcohol sales and house sales in their respective jurisdictions. However, like the suggestions of the 1881 Committee this too never reached the point of actual legislation. Things changed in 1886 when the Chamberlain Unionists defected to the Salisbury Conservatives and helped buttress the Conservative minority government. This arrangement brought with it the arrival of George Goschen, to Salisbury’s reforming Cabinet. Goschen had previously held positions in the Board of Trade and been President of the Poor Law Board under Gladstone and had in 1872 attempted a reform of local government finances. So, when this acknowledged expert on local government finance was made Chancellor of the Exchequer in 1887 he was immediately set the task of looking at this issue once more.
“Goschen firmly supported the idea of assigned revenues by replacing the majority of grants-in-aid to local governments that had accrued in England, Wales and Scotland with the revenue from excise licences that previously had gone to the Exchequer, in addition to a new tax on horses-and-carts and half of all probate duties. The tax on transport was withdrawn, after much opposition, but the other two taxes were carried and became a principal source of local income.” (Explaining Local Government: Local Government in Britain since 1800, by J.A. Chandler. Published by Manchester University Press, Manchester, 2007, p.103).
Goschen’s policies didn’t signal the end of central government grants-in-aid but they did provide the means by which local authority finances were rebalanced in the light of the introduction of assigned revenues. The result was that this arrangement of rates, grants-in-aid and assigned revenue established in the 1880s became the model for local government finance from then on.
Local authorities, ‘model housing’ companies, charities and company housing
Lord Shaftesbury understood the problems of the slums. He understood the implications for public health that arose from their lack of sanitation, and prevalence of disease. And he understood all of this through his evangelical Christianity. To Lord Shaftesbury, the slums were all of these things but primarily they were the source of vice and immorality. So, it should not be surprising that it was this friend of chimney-sweeps, lunatics and the cause of a Jewish return to the Holy Land who was responsible for what is considered the earliest legislation defining a role for local authorities in urban housing provision. The Labouring Classes Lodging Houses Act of 1851 (also known as the Shaftesbury Act) provided local boroughs with the authority to raise funds through the local rates for the purpose of building lodging houses for unmarried workers. However, true to the sensibilities of its sponsor, women were not permitted to enter these houses for fear of the temptation of prostitution. And, as the title of the legislation suggests, the remit it gave local authorities was very limited and did not go far in alleviating the wider working class housing problem in the urban areas of England.
The Shaftesbury Act was followed by several more Acts of Parliament during the second half of the century that served to invest local authorities with more powers in the area of housing. Notable among these was the Artisans’ and Labourers’ Dwellings Act (also known as the Torrens Act) of 1868 which gave the local authority the power to compel owners of individual houses to institute repairs or, as a last resort, to demolish houses deemed dangerous or unfit for habitation. This represented the earliest legislation that provided local authorities with such authority on a national level. Its efficacy however was impaired by the complex legal and appeal procedures involved and the compensation that had to be paid to the landlords. This meant that the effect of the legislation was minimal. In fact, according to The British Medical Association, the Torrens Act in 1868 and all the other associated private and public schemes designed to encourage the construction of dwellings for the artisan and labouring classes had, by 1874 only helped to accommodate around 30,000 individuals. Put alongside the 40,000 members of that class which, in the same period, the BMJ estimated to have been added to those in need of decent housing, the scale of the growing problem was obvious (see: Artisans’ Dwelling Bill, The British Medical Journal, February 13, 1875, pp.214-215).
The above article in The British Medical Journal was a commentary on a Bill then going through Parliament. That Bill became the The Artisans’ and Labourers’ Dwellings Improvement Act (also known as the Cross Act) of 1875 which was meant to address the shortcomings of earlier legislation in a number of areas.
The 1875 Act extended the power of local authorities to compulsorily purchase entire areas that were deemed to be “areas unfit for human habitation”. This was an improvement on the house-by-house approach evident in the earlier legislation. The idea was to facilitate the clearing of wider problem areas in order to ensure that subsequent house-building would be undertaken according to designs that allowed for a healthier urban landscape with the eradication of narrow lanes, constrained squares and cul-de-sacs where squalor, damp and unclean air was deemed to provide the breeding ground not only for diseases of the body but diseases of the soul.
This facility in the 1875 Act was also designed to overcome the drawback of earlier legislation where local authorities had been encouraged to undertake slum clearances without providing them with the means of rehousing the human beings who had been living in those slums and who then found themselves homeless after their habitats had been ‘cleared’. The effect of the earlier legislation had been to drive such displaced people into the adjacent areas which both exacerbated the over-crowding in those areas as well as causing an upward pressure on rents. The 1875 Act was meant to address this issue as it:
“placed a duty on local authorities to arrange for new dwellings to be built on or near the cleared site sufficient to rehouse all the displaced persons – later reduced to 50% – but placed severe restrictions on building by local authorities. The land cleared at ‘public’ expense, had to be sold to philanthropic, ‘model dwelling’ housing associations. However, compensation to slum landlords was at full market value and some owners packed their houses with temporary lodgers to claim maximum compensation. The land cost, when passed on to the associations, meant that the building on the cleared site was expensive so rehousing obligations were often ignored.” (Housing Politics in the United Kingdom: Power, planning and protest, by Brian Lund. Published by Policy Press, University of Bristol, 2016, p.66).
Another failure of the 1875 Act, and one which it had in common with earlier legislation, was highlighted in The British Medical Journal. This was something that had been spoken about by Sir James Kay-Shuttleworth during the course of the 1875 Bill’s transit through Parliament. Kay-Shuttleworth’s was a socially conscious Liberal whose 1832 work on the plight of the working class in the Manchester cotton industry was cited by Friedrich Engels in his own investigation into the condition of the English working class published in 1845. In his assessment of the 1875 legislation, Kay-Shuttleworth had drawn attention to the problems associated with the central role assigned to local authority Chief Medical Officers under the terms of the Act. As in previous legislation the Chief Medical Officer was allocated the position of the main designator of houses deemed to be subject for improvement or demolition orders. Kay-Shuttleworth pointed to the problems this created due to the position of Chief Medical Officers being fixed-term appointees of the local authorities (on repeatable contracts varying from one to five years). The local authorities responsible for these appointments were in most cases composed of persons who themselves were described by Kay-Shuttleworth as “owners of property against which the medical men would have to report” and the “members of the Local Boards are frequently great offenders against the sanitary laws” with the result that “a medical officer desiring to do his duty in this matter must occasionally be sorely beset.” (See British Medical Journal of February 13, 1875 cited above). In other words, there existed a serious conflict of interest inherent in the relationship between the local authority and the Chief Medical Officer which would inevitably hinder the efficient operation of the 1875 Act.
These issues combined with the fact that, like previous legislation, the powers under it were permissive rather than obligatory (i.e., local authorities had the choice of opting into the operation of the Act or remaining outside it) meant that the Act didn’t lead to any significant improvement in the national slum clearance and re-housing situation.
Birmingham and the limitations of private enterprise
Birmingham provides a practical example of the limitations of the 1875 Act despite the positive way in which it was implemented under Joseph Chamberlain. It was Joseph Chamberlain’s ingenuity and business acumen that ensured that the city was among the first to begin the process of operating the Act and it did so on a scale unmatched by any other local authority. The first point to be made is the length of time it took for a local authority to complete the cumbersome process from the point when a decision was made to utilise the opportunities offered under the Act to the point where the results were realised on the ground.
On 27 July, 1875, Birmingham became one of the earliest local authorities to start the process of initiating the 1875 Act when it submitted its plan for a large scale town redevelopment scheme. This involved the demolition of an area consisting of a total of 3,744 existing buildings. Those building housed a population of 16,596 and of those buildings 3,054 housed a working class population of 13,538. The scheme was costed by Birmingham Corporation at £550,000. The Birmingham scheme having completed the cumbersome preliminary process was given the necessary Parliamentary approval and signed into law on 15 August 1876. However, this was merely the opening stage of the process as it merely provided Birmingham Corporation with the authority to begin the procurement (by voluntary and compulsory purchase) of the buildings within the area designated in its scheme.
It was here that the real obstacles faced by Birmingham began. Before the procurement stage could start the Act required the appointment of an Official Arbitrator. This appointment had to be made by the Local Government Board (a body that operated under the authority of central government). The role of the Official Arbitrator was to establish a fair market valuation to be offered to landlords whose properties were to be taken over by the local authority – the hope being that the landlords would voluntarily agree to sell their properties to the local authority at that rate. In instances where the local authority was compelled to resort to compulsory purchase the role of the Official Arbitrator was to officiate and make recommendations taking into account the arguments of the landlord.
In the case of Birmingham, it took until early 1879 for the Local Government Board to find a suitably qualified Official Arbitrator in the person of Sir Henry Hunt and it took him until 23 March 1880 to make his provisional valuation. The Act then permitted the right of appeal by either parties should they find that valuation unacceptable and after receiving several such appeals from the landlords the Official Arbitrator then made his ‘Final Award’ on 16 June 1880. But even then, the Act allowed any dissenting landlord the right to appeal to a Jury presided over by the Under-Sherriff – a facility that resulted in several such appeals by landlords to the Jury-decision process. The results of this cumbersome procedure combined with the need to procure funding meant that the scheme initiated by Birmingham Corporation in July 1875 could only proceed piecemeal with the initial part of the construction work beginning in August 1878 and the bulk of the building process completed in September 1886.
Birmingham Corporation initially funded the scheme through loans principally from the Public Works Loan Commissioners on the basis of a repayment rate of 3.5% over 30 years. But under the arrangements by which the Local Government Board had sanctioned the Birmingham scheme the city was permitted to enter into any loan arrangement that could be repaid over 60 years if it could find a source of such funding payable over that time span. In order to take advantage of this much longer repayment period Birmingham Corporation subsequently issued its own Corporation Stock and on that basis consolidated the debt and paid off the Public Works Loan Commissioners loan.
The monetary outlay incurred by Birmingham Corporation was also alleviated by the financial returns from its Corporation Street development. Birmingham had, under its redevelopment scheme, acquired the freeholds to six hundred buildings in the area of what became the Corporation Street redevelopment. A decision was made to sell individual sites along the line of the proposed Corporation Street development on a 75-year lease to those developers willing to rebuild the area according to Birmingham Corporation’s plans. As this area was deemed to be a prime commercial area the Corporation had little difficulty in finding purchasers but it did so in the clear knowledge that the sale of the sites in this particular area would result in a commercial rather than a housing development.
Birmingham Corporation had been able to procure its initial loan for its redevelopment scheme under the 1870 Public Works Loan Act. The loans advanced by the Public Works Loan Commissioners to local authorities under that Act were meant to facilitate the procurement of the buildings designated for demolition and to fund the consequent building of replacement artisans’ and labourers’ dwellings. As the purchase of the unsanitary buildings in many cases would initially lead to their demolition what in effect the local authority was purchasing in such circumstances was the land. As stated above, under the terms of the 1875 Act, the land cleared at public expense had to be sold to philanthropic or ‘model dwelling’ companies who would then take on the responsibility for constructing the replacement houses. But it seems that Birmingham found it difficult to enlist sufficient interest from these organisations and companies on the scale that its development scheme demanded. However, because Birmingham paid off its Public Works Loan at an early stage it was freed from the constraints associated with that loan. This meant that it could, alongside the philanthropic and “model housing’ companies also attempt to entice private developers to taking on the responsibility for constructing the replacement housing. Despite this the Corporation continued to experience difficulties in finding partners. As the Manager of Birmingham Corporation himself admitted:
“Considerable attention has been given by the Committee, from time to time, to the question of the erection of suitable dwellings for the working classes, and while they would have been glad to secure the provision of such houses by private enterprise, they have been unsuccessful, except in the case of the Summer Lane site, before referred to, in letting any land for the purpose.” (A Short History of the Birmingham Improvement Scheme, by Arthur H. Davis, Manager, Improvement Department, Council House. Birmingham, February, 1890).
This was the case because any commercial developer likely to agree to the outlay of the cost of the construction of such dwellings (to be allocated to artisans and labourers) would only do so on the basis that the rental income would be sufficient to meet its business needs. Given that the rent capacity of the artisan and labouring tenants of these new homes was limited this was always going to be seen as onerous by most commercial builders. But it wasn’t only the low returns that such an investment offered to developers that inhibited their commitment to such schemes. There was also the problem of location. As the success of the Corporation Street development showed, if the location could be viewed as an asset by a commercial developer it would result in a more positive outcome.
The problem from the commercial developer’s perspective was that under the terms of the 1875 Artisans’ and Labourers’ Act there was an obligation that replacement housing be erected on, or in close proximity to, the site of the original demolished houses. This was always likely to prove a barrier to the involvement of commercial developers when it came to the construction of artisans’ and labourers’ dwellings despite the potential attraction of the central location of the land involved.
The growing awareness of this in governing circles began to generate a re-think on this issue. As the unsanitary and unfit housing was often located in central urban locations the land, freed from the obligation of replacing working class homes on the site of the demolished slums would be viewed as far more valuable by commercial developers. In other words, if the replacement housing was permitted to be built in areas away from the central sites on which the demolished houses were located it would free the developers to use that land in ways that guaranteed a sufficiently attractive return to justify their involvement. This, combined with the fact that the replacement housing could then be constructed on cheaper land away from the town centres, would enable the developer to charge a lower rent to the tenant while at the same time ensuring that the developer’s outlay-to-rental income from the resultant artisans and labourers dwellings was viewed as less onerous. By providing that kind of inducement it was hoped to encourage the commitment of more commercial developers to the wider plans of the local authorities.
This aspect of local property dynamics helped influence the architects of the 1879 modifications to the 1875 Act and was welcomed as such by The British Medical Journal when in its assessment of these modifications it said:
“There is one clause (the twenty-eighth) which seems to sanction the erection of new buildings for the poor on other sites than those on which the old buildings stood; and if so, this would remove one of the great obstacles in carrying out the Act of 1875. (The Artisans’ Dwellings Act (1875) and Bill (1879), The British Medical Journal, January 25, 1879, p.117).
Aside from this, certain other measures were introduced in 1879 which addressed the previous abuse of the system by unscrupulous landlords seeking to exploit the compensation features of the earlier legislation.
The failure of philanthropy, charity and company housing
But aside from the manner in which previous legislation had inhibited the involvement of private enterprise in rehousing there was also a separate factor which prevented a more robust involvement by the philanthropic ‘model housing’ companies and the charitable housing institutions. When it came to the construction of artisans’ and labourers’ dwellings the problem wasn’t the absence of such bodies. By 1879 there were many such organisations providing working class housing. The Metropolitan Association for Improving the Dwellings of the Industrial Classes was an early provider of such homes. As was the Society for Improving the Condition of the Labouring Classes, the Peabody Trust, the Improved Industrial Dwellings Company, the Metropolitan Artisans’ and Labourers’ Dwellings Association, which became the Victoria Dwellings Association (incidentally in 1877 its chairman was John Walter, the owner of The Times newspaper) and many more. By the late 1870s these bodies had been responsible for the provision of many thousands of artisans’ and labourers’ homes.
However, their relative success in this area disguised an issue that militated against these bodies ever being able to solve the deeper issues arising from the housing needs of the poor. The problem was that these philanthropic and ‘model housing’ companies operated to a selection process that ensured their tenants came from the better off section of the working class. Only those capable of paying rents on a regular and punctual basis and willing to abide by their strict morality-based rules (for instance, the Peabody Trust homes imposed a night-time curfew) were accepted as tenants. These requirements were obviously not compatible with the majority of the people who required rehousing as a result of slum-clearing schemes. It was the application of their strict admission rules that ensured that many of these philanthropic and ‘model homes’ companies could keep their books in order. For example, by the early 1880s the Peabody Trust could boast to having over 800 dwellings in London producing a rental revenue of over £1,000 per week. The fact that in 1883 its annual rent arrears only amounted to £100 was seen as a vindication of its admission policy and one that was considered critical to the Trust’s capacity to continue to generate the funds for it to persist in the construction of homes for the working class. In such circumstances bodies like the Peabody Trust were not easily shifted from admission policies that continued to exclude the most needful from the homes they were building.
Also, although ‘model housing’ companies were deemed to be philanthropic in the sense that their objective was narrowly defined as the suppliers of working class homes at reasonable rents, they operated on commercial lines (usually providing a 5% dividend for investors). This meant that they chose their projects on the likelihood of that project guaranteeing a return on their investment and the extent of those investments were constrained by their capital reserves. A similar constraint operated on the charitable housing associations where their philanthropic status, although not requiring the payment of dividends, also meant that they also could not extend investments beyond their capital reserves.
It was in an attempt to address this financial constraint on companies and charities that the Government introduced its Public Works Loans Act of 1879. The hope held out by this legislation was that in opening up an official loan facility to these companies and institutions the Government could induce them to get more involved in the local authority slum-clearing schemes. In furtherance of that objective the 1879 Act extended the loan facilities previously restricted to local authorities to now include these philanthropic and ‘model homes’ companies and others.
“The Public Works Loans Act, 1879, under sections 5 and 6 whereof the commissioners have power to lend to the Peabody Trustees in London, and to labourers, dwellings companies, etc. in London and elsewhere, for housing purposes.” (The Law and Practice with Regard to Housing in England and Wales, by Sir Kingsley Wood. Published by Hodder and Stoughton, London, 1921, p.215).
The Act went further in providing the opportunity for “any railway company or dock or harbour company, or any other company, society or association established for the purpose of constructing or improving, or of facilitating or encouraging the construction or improvement of dwellings for the working classes” (ibid).
The result of the two pieces of legislation introduced in 1879 meant that the Government had now:
- provided a greater freedom for commercial interests to utilise the land cleared by local authority slum-clearance schemes,
- while at the same time extending the availability of official loans to a whole raft of philanthropic, ‘model housing’ companies and other organisations committed to the construction of homes for the working classes.
By these means the Government sought to generate the incentive for these companies and organisations to take an increasing role in the rebuilding operations of local authorities and thereby increase the rate of supplying replacement homes for those cleared as a result of slum-clearance schemes.
Aside from the actual homes provided to the working class in this way the idea was that homes located on cheaper land away from the town and city centres were likely to command a cheaper rent than if those homes had been built in their original locations. However, as the tendency at this time was for the working class to reside close to their places of employment this created the challenge of getting them to these places of employment from the areas in which their new homes were located.
As a result, there arose the demand that railway companies provide cheap fare arrangements to enable workers to get from the new places of housing to their places of work. The thinking behind this demand was that it was unreasonable to expect workers to move to new areas of accommodation on the promise of cheaper rent if the gains from that were eroded or surpassed by the expense of getting to their places of employment. Undoubtedly there was also an awareness among the employing class that if such a situation persisted it would lead to increased wage demands. As a result of this the existing transport system became embroiled in the issue of re-housing in ways that it has continued to be to this day.
An investigation by the Select Committee on the Artisans’ and Labourers’ Acts in 1882 offered the suggestion that “the cheap train system in operation on the Great Eastern Railway could be extended to other railways running out of London”. Although acknowledging that this did not constitute an overall solution to the problem of overcrowding the Select Committee argued that such cheap travel would provide an incentive for the builders of working class homes to build in areas of London other than those blighted by population concentrations. The existence of cheap rail travel would also provide the necessary incentive for the potential tenants of these home to move from the concentrations of population around their places of employment. With this argument in mind The British Medical Journal suggested at the time:
“as occasion offers, the system of cheap trains for workmen should be extended to other lines running in and out of London. The Press Association states that the promoters of the Regent’s Canal Railway have agreed to run upon their line cheap workmen’s trains to the North of London, on terms similar to those already provided by the Great Eastern Railway. (Artisans’ Dwellings, British Medical Journal, June 24, 1882, p.952).
A year later, Lord Salisbury added his voice to the growing demand in an article published in the National Review where he suggested, among other things:
“the establishment, on all the railways having termini in London, of a train-service to the suburbs at suitable hours, with weekly shilling tickets; which would, he points out, withdraw many thousands from London houses, and from the competition by which their rents are raised.” (As reported in:, The British Medical Journal, November 3, 1883, pp.885-886).
This was the sentiment that gave rise to the Cheap Trains Act of 1883 which required the railway companies to operate inexpensive “workmen’s trains”. Many rail companies appear to have ignored this lightly policed requirement but a sufficient number did and, in the process helped over time to disperse the population of some overcrowded areas.
However, as the 1880s progressed, these attempts to solve the housing issue, although bringing some results, failed to keep pace with the housing requirements of the increasing numbers of the urban working class. A Royal Commission on the Housing of the Working Classes which sat from 1884-5 under the chairmanship of Sir Charles Dilke produced vast evidence identifying the three main problems of the time as poverty, squalor and bad housing.
Then, in 1890, in a veiled acknowledgement of the failure of the previous attempts, the Government introduced its latest idea for a solution in the form of the Housing of the Working Class Act. This represented a definite step forward from what had gone before. Part I and II of the Act provided local authorities with the power to rebuild on cleared unsanitary sites (slums) without having to navigate previous levels of bureaucratic procedures and Part III permitted the authorities to take the initiative in undertaking further housing projects independent of slum-clearance programmes and funded in part from the rates. However, like some aspects of earlier housing-related Acts of Parliament, Part III of the 1890 Act was permissive rather than obligatory and its provisions were only activated if the local authority chose to take advantage of them. This meant that many local councils failed to take up the options offered under the 1890 Act with the result that the impact on the housing problem remained sporadic and stunted.
Nonetheless, some councils did take advantage. London County Council, which had been created two years earlier when it replaced the Metropolitan Board of Works under the terms of the 1888 Local Government Act was an early exploiter of the powers vested in local government by the 1890 Act. In order to take advantage of the possibilities:
“Within the LCC’s Architect’s Department a ‘Housing of the Working Classes Branch’ was set up and a Works Department was formed as an alternative to the use of private contractors. The earliest schemes used Parts I and II of the Act: they were for blocks of flat on cleared sites in Limehouse and Poplar, and the largest comprised 19 block dwellings at the Boundary Street redevelopment area of Bethnal Green.” (Town Planning in Britain Since 1900, by Gordon E. Cherry. Published by Blackwell, 1996, p.7).
By the early 1890s it could be said that the combination of facilitating legislation, the emergence of revenue streams other than the rates (as gone into earlier), and access to loan facilities, set the ground for local authorities to engage more directly with local housing issues and with more independence than they previously possessed. In that context, the housing projects built directly by the LCC’s own Works Department in Limehouse, Poplar and Bethnal Green could claim to be the first manifestation of this emerging situation. What happened afterwards will be gone into in the next part of the series.