Class, housing and the economy

Lynsey Hanley, author of Estates: An Intimate History, was one of the speakers at the Festival of Economics in November. I just read her book, which is terrific. It restores to centre stage the key issue of class in understanding British society and the economy – and in thinking about the challenge of tackling embedded poverty, which is almost always located in these specific areas of housing we call estates. (Funny to think their name must have originally meant to evoke the arcadian idyll of country estates.)

I’ve long thought we talk too little about class in the policy debate. Take schooling, for example. Children at London’s schools on average now have higher attainment than the English average; but I’ve lost count of the number of middle-class London friends who claim to have opted for private schools for their children because they’re worried about their education. Nonsense (I think) – they’re actually more worried about the social contagion of mixing with working class children. Nobody is entitled to call themselves left-wing or progressive, in my view, if they opt out of their local state schools, that is opt out of their community. As Estates points out, they key failure of the education system has been the low expectations, on the part of teachers and politicians alike, of what children from low income families can achieve.

Lynsey is brilliant in writing about the effect of the physical environment of post-war council estates on their inhabitants. “It has insanity designed into it,” she writes of the example of the Wood estate in Birmingham, where she grew up. Estate inhabitants have worse health, including mental health, lower life-expectancy, higher risk of drug abuse and unemployment. The book describes the interaction of the dreadful design of the housing, using poor quality materials and not maintained, with the evolution of housing policy. In particular, the Thatcher era sale of council housing, with local authorities forbidden from using the proceeds to build new homes for rent, meant the rump of unattractive estates were quickly filled with the ‘problem’ families. They became isolated locations for one class only, the underclass. Their downward spiral was then inevitable – from the inner city slums of the Industrial Revolution to the ‘slums in the sky’ tower blocks, whose inhabitants above the 5th floor are likely to be on benefits and members of an ethnic minority.

As she notes, Thomas Sharp in his 1949 book Town Planning was clear about the danger of one-class communities – he described them as “social concentration camps: places in which one social class is concentrated to the exclusion of all others.” Add in the absence of amenities – shops, pubs, parks, buses – and they became the exact opposite of the Jane Jacobs ideal of a vibrant urban community (in The Death and Life of Great American Cities).

Of course, one challenge in post-war housing policy was the shortage of housing, given strong demand and planning restrictions. (I think that Lynsey en passant assumes too readily that all of the green belt has to stay sacrosanct – only 1.5% of the UK’s land area is built on, only 2.3% in England – see also Kate Barker’s excellent Review of Housing Supply and , and Edgelands by Paul Farley and Michael Symmons Roberts.) In the immediate post-war years the shortage was so acute that many returning servicemen had to live in prefabs – as my parents and aunties did for some years.

My auntie and uncle, cousin and big brother, outside the family prefab

The UK’s housing crisis is still acute, although now middle-class young people too cannot easily afford to buy a first home, and many middle-class as well as working-class families will struggle to pay their mortgage if interest rates ever go up. Despite the sluggish economy house prices in some areas have continued to rise, so pronounced is the shortage, while other areas have a surfeit of homes to buy and unmet demand to rent. This market does not work at all well. It also destabilizes the economy as a whole. One day, one of the political parties will see an opportunity in this. But it is a huge challenge too.

I highly recommend Estates. Good reading alongside Owen Hatherley’s A Guide to The New Ruins of Great Britain (I’ve not yet read his latest, A New Kind of Bleak: Journeys Through Urban Britain), as well as the other books referred to above. And I just bought Chavs: The Demonisation of the Working Class by Owen Jones, another book about the neglected and disparaged working class.

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13 thoughts on “Class, housing and the economy

  1. The education issue is interesting. I was chatting to a friend a couple of weeks ago. He chose to send his son to Charterhouse (£25,000 per annum) and when I asked him if it was worth the money, he said that it was because even if his son’s Oxbridge chances don’t improve (they will, of course) then the school friends he meets there will be more useful later in life, which I suppose supports your point about mixing with the right kind of people.

    • As an economist, I obviously believe the market for private education works so that the expected private benefits are at least as great as the private costs (although I’d tax private school fees, rather than VAT-exempting them, to reflect the large social costs of educational segregation). After all, it seems that if you want to get into the Cabinet, Eton is worth it.

  2. Housing and Class are two issues that deserve much more attention than they get.

    Diane, you talk a lot about how we need to rethink economics. Can I suggest that we have neglected the role of land, which the Classical economists considered a primary factor of production. Implicit in their writing, but popularised by Henry George in ‘Progress and Poverty’, was the idea that land values would be an excellent base for taxation – as land rents are unearned and can be taxed without distorting economic activity.

    I believe a sensible platform for progressive politics would be the introduction of a land value tax, reducing taxes on low- and middle-wage earners. Capturing land values certainly used to be part of the progressive parties’ platforms; but seems to have been forgotten by them in the last 40 years.

    • I agree with you. Only yesterday I was walking along Oxford Street looking at the ‘Grosvenor Estate’ brass plaques set into the tree gratings. The combination of land values/ownership patterns, and planning laws rigged to protect existing landowners, accounts for much of the wealth inequality in the UK. The old rates system wasn’t a bad substitute for land value taxation. And taxing in some way the value of plots/properties bought by Russian and Chinese oligarchs in central London seems an obvious way of rent extraction to assist the public purse. The influx of their money into those few square miles of territory is, after all, distorting the entire housing market and wider economy.

      I wonder why land value taxation is seen as an issue for obsessives, though? As a matter of practicality, I think it would have to be disguised as housing-related taxation, but then it’s tricky to avoid unintended distortions of the housing market. What do you think?

      • I’m not entirely sure why it’s so marginalised. I suspect part of it is vested interests. Consider changes in tenure. When Asquith, Lloyd-George and Churchill campaigned for land taxes pre-WW1, most people rented privately and the power of the landed aristocracy was more visible. Today we’re owner-occupiers and housing-related taxation is probably the ‘third rail’ of British politics (“You want to kick pensioners out of their homes!”, you can imagine the Daily Mail screaming if LVT was broached).

        But, as you say, so may problems flow from how much our economy is geared to rentier interests (big landowners, homeowners and the banks that lend to them). We just need public intellectuals of the stature of Smith, Ricardo, Mill and George to explain from first principles the benefits of LVT. As Keynes said, “I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. “

  3. “Lynsey is brilliant in writing about the effect of the physical environment of post-war council estates on their inhabitants. “It has insanity designed into it,” she writes of the example of the Wood estate in Birmingham, where she grew up. Estate inhabitants have worse health, including mental health, lower life-expectancy, higher risk of drug abuse and unemployment.”

    Does architecture and the quality of housing produce these outcomes? I have lived in Warsaw, a city that resembles one huge estate (I estimate that 75% of the buildings are tower blocks with rather small housing units), and the tower block I lived in was not in a very good condition but life actually was quite good there and my neighbours were normal middle-class people. Most middle-class people in Warsaw live in communist era tower blocks as there aren’t a lot of alternatives. Ironically, the poorest district of Warsaw with the most social problems is the Praga district, which has many low-rise buildings (because it is the only disctrict that was not destroyed during the Second World War). Isn’t it more about the kind of people you put in the estates? If they really had such a terrible influence on people, I would expect Eastern Europe to be in a much worse condition than it actually is.

    • I don’t think – and neither does the book say – that architecture is the only reason. As the review tried to explain, there was an interaction with housing policy and the concentration of people on benefits etc, so the estates ended up with only very low income and ‘problem’ inhabitants. I don’t know Warsaw but am sure there are other differences too – public transport links? Presence of shops and amenities? Maintenance of the buildings? Having said that, I do believe dismal architecture – with poor materials, wind tunnel effects, walkways and spaces with no-one overlooking them – makes a difference too.

  4. Good piece and good comments. I throw a further (somewhat related) question into the mix. Where does regional policy fit into all this? Does it make long-term economic sense to (for example) neglect the transport system and thus encourage an ever greater number of people to squeeze into one corner of the UK?

    A big part of the nationwide housing problem is that there’s a lot of stock in the wrong place. But given that land has limited water and sewage capacity, should we keep assuming that eventually everyone should live in the South East?

    • No! Part of the rebalancing the UK economy needs is rebalancing away from all economic growth being in London and the South East. There is nothing inevitable about this regional dysfunction. (I write as a Mancunian living in London…)

      • We absolutely need to rebalance geographically but that’s much more than transport policy (although hopefully HS2 & 3 may make a difference).

        As Diane points out, a century or so ago places like Manchester, Birmingham, Liverpool etc were on a much more equal footing with London and were responsible for a lot of economic output.

        My guess is the deindustrialisation and financialisation of our economy is the main culprit for the shift to our SE-centric economy, and this needs to be redressed.

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