Published:

81 comments

Thatcher council houses2

Few of Margaret Thatcher’s reforms achieved such dramatic success as the sale of council houses. No measure conveyed more trenchantly her determination to set ordinary people free from state control and enable them to enjoy the independence conferred by ownership.

That last sentence sounds too dry. Before we consider the politics, it should be said that the policy of giving tenants the Right to Buy on advantageous terms their council houses gave immense pleasure to many who had never imagined being able to possess a place of their own and pass it on to their children. People were ecstatic.

Michael Heseltine, the Cabinet minister whose department implemented the policy, maintained that “next to the ‘Winter of Discontent’ itself”, the promise to make this reform was “the single most important contributory factor” to the Conservatives’ election victory in 1979.

By the time of the 1983 election, half a million families were living in houses they had bought from the local council. Tory canvassers could tell at a glance from the new doors and windows on these properties where their supporters lived.

Yet one of Labour’s suicidal policies in the 1983 election was to continue to oppose the Right to Buy. And although a couple of years later it abandoned this position, voters knew that at heart, Labour still yearned to halt the dismantling of municipal housing empires.

It fell to Tony Blair to try to educate his party in the folly of denying people’s natural desire to better themselves. In his leader’s speech at the party conference in 1996, he recalled the moment in 1992 at which he realised Labour was going to be defeated for the fourth time in a row by the Conservatives:

“I can vividly recall the exact moment that I knew the last election was lost. I was canvassing in the Midlands on an ordinary suburban estate. I met a man polishing his Ford Sierra, self-employed electrician, Dad always voted Labour. He used to vote Labour, he said, but he bought his own home, he had set up his own business, he was doing quite nicely, so he said I’ve become a Tory. He was not rich but he was doing better than he did, and as far as he was concerned, being better off meant being Tory too. In that moment the basis of our failure – the reason why a whole generation has grown up under the Tories – became plain to me. You see, people judge us on their instincts about what they believe our instincts to be. And that man polishing his car was clear: his instincts were to get on in life, and he thought our instincts were to stop him.”

In the 1950s, the Conservatives won three elections in a row in part by promising to build more houses than Labour, and by actually doing so. Harold Macmillan made his name by building over 300,000 houses a year: an achievement I examined last October on ConHome.

This piece was intended as a continuation of that story. But it soon became something rather different.  For although Thatcher’s name is attached to the Right to Buy policy, and her leadership was required for its implementation, she at first opposed it, and was only coerced into adopting it by of all people Edward Heath.

If I ever knew this, I had managed to forget it.  But the story starts a long time before Heath.  The place to begin is with Noel Skelton, the Unionist [i.e. Conservative] MP for Perth, who from 1923 called in The Spectator and elsewhere for the development of “a property-owing democracy” as “Conservatism’s true answer to Socialism”.

John Ramsden has described, in an essay published by the Conservative Political Centre in 1997, the climate of opinion which developed at this time:

“It was indeed at the diffusion of property that inter-war Tories aimed, as the pragmatic answer to the arrival of democracy and the challenge from Labour. There were even prophetic council house sales by local Tories in the drive to create voters with a Conservative political mentality. As a Tory councillor in Leeds defiantly told Labour opponents in 1926, ‘it is a good thing for people to buy their own houses. They turn Tory directly. We shall go on making Tories and you will be wiped out.’ There is much of the Party history of the twentieth century in that remark.”

Skelton died in 1935, but from 1946 his friend Anthony Eden set about popularising the idea of “the property-owning democracy”.  Rab Butler, in charge of reworking Tory policy after the Second World War, only narrowly failed to include a commitment to council house sales.

After 1951, Macmillan encouraged councils to build very large numbers of houses: he had no hesitation in using socialist methods to beat the socialists.

But the sweeping away of wartime controls and encouragement of private house-building were essential elements in reaching and then exceeding the target of 300,000 houses a year. And the idea of helping people to own their own houses was never forgotten. It was even included, in a convoluted form, in the 1959 Labour manifesto, though it was there applied to private rented accommodation which Labour proposed to get local councils to take over, unless tenants wished to buy it.

Towards the end of the 1960s, at Horace Cutler’s behest the Conservative-controlled Greater London Council encouraged council tenants to buy their houses.  The Tories’ 1970 general election manifesto promised: “We will encourage local authorities to sell council houses to those of their tenants who wish to buy them. Thus many council house tenants of today will become the owners of their own homes tomorrow. As a result, more money will be immediately available for the local authorities to provide housing for the aged, for the disabled, and for those on the housing lists.”

Peter Walker, generally thought of as a Left-wing Tory, was a great enthusiast for this policy, and promoted it with vigour as Secretary of State for the Environment in Heath’s government.  But as John Campbell says in his biography of Heath: “Not only Labour but Tory councils too were reluctant to relinquish their empires. By 1974 no more than seven per cent of the housing stock had been sold, and those were mainly the best houses to the wealthiest tenants; while continuing council building more than made up for the loss.This was another idea whose time had not yet come in the early 1970s.”

After Heath narrowly lost the February 1974 general election, he embarked on an anxious search for popular policies to carry into the second election which was expected soon to follow. Several of these were in the field of housing, and were imposed on Thatcher, who was now shadow Environment Secretary. In Campbell’s words, “Heath told her exactly what was expected of her: he had already determined on a triple package composed of a reduction in the burden of domestic rates, leading to their eventual abolition; mortgage subsidies; and an acceleration of council house sales. She argued initially against all three; but she soon gave in, accepted the hand dealt her and set to work.”

Thatcher was worried that Conservative voters who had paid in full for their houses would be annoyed if council tenants were able to buy at a discount: “What will they say on my Wates estates?” she asked. But she was prevailed upon to swallow this objection.

The Tory manifesto for the election of October 1974 promised “a new deal to every council tenant who has been in his home for three years or more. The tenants will have the right to purchase their homes at a price one third below market value. The community will no longer tolerate the attitude of councils which, for narrow partisan reasons, stand in the way of their tenants becoming homeowners. We will therefore place a duty on every council to sell homes on these terms – giving their tenants what amounts to a 100 per cent mortgage with no deposit.”

But Labour won in October 1974. Even under that Government, some sale of council houses continued, but there was no question of making it compulsory. That step was only taken after Thatcher led the Tories to victory in 1979. As Lord Lexden, the Conservative Party’s official historian, says:

“The sale of council houses is widely regarded as a classic example of radical Thatcherite ideology in successful practice. What it actually shows is that Mrs T knew how to draw effectively on long-standing Tory sentiment when she sensed that the time had arrived to base successful national policy on it. From the moment that local authorities first went seriously into the housing business after the First World War, there had been Conservatives calling for the rapid transfer of their homes into the ownership of those who occupied them. Councils could build and supply homes; they should not hang on to them. Tories knew that there would never be a more powerful way of giving effect to a fundamental Tory principle, the diffusion of property, than through housing. No one believed more strongly in the policy than Ted Heath. Mrs T came late to it—and reluctantly. Everyone now forgets that all Mrs T did was to put her stamp on a fully formed Heathite policy.”

Robin Harris, an ardent Thatcherite, points out in his biography of her that it was actually at Heseltine’s insistence that in the manifesto of 1979, “council tenants were offered very generous discounts” of “a third off the market price after three years’ tenure, with a sliding scale of reductions up to a half after 20 years”. The policy was a runaway success. By the time she left office in 1990, “almost 70 per cent of British housing stock was owner-occupied, compared with just over 50 per cent” in 1979.

This was a huge change, which did not of itself cause any diminution of the national housing stock. On the other hand, building by local councils, which for many years had run at a rate of about 100,000 dwellings a year, pretty much ceased. In May 1979, Nigel Lawson, Financial Secretary to the Treasury, wrote to Heseltine to warn: “It will make no sort of economic sense if stock sold at a discount is replaced by new building.”

This cessation of council building turned out to be bad news for smaller builders, who used to be kept going through bad times by their council work, and in good times could then build private developments too. We now have a concentrated industry consisting of a few very large building firms which see no reason to increase the supply of houses by a significant amount, for that would lead to a fall in prices.

Private builders have not stepped in to replace what the state used to do. The planning system has remained essentially socialist, which means there is an acute shortage of land in the parts of the country where the largest numbers of people actually want to live.

Here we see one of the causes of the present acute shortage of housing, leading to intolerably high prices in London and the South-East: intolerable, that is, to anyone who does not already possess a house, and is not very rich.

This state of affairs appeals to people who already own houses, for their property has increased in value by almost unbelievable amounts. A campaign group called PricedOut has calculated that if, since 1970, house prices had increased at the same rate as food prices, the average price of a house would now be about £30,000, instead of about £250,000. If, on the other hand, food had risen as fast as houses, a chicken would now cost over £50.

No wonder there is a cost of living crisis. To get a roof over one’s head is horrifically expensive.  The Tory ideal of a property-owning democracy has been forgotten. Insiders – those fortunate enough already to possess houses – profit at the expense of outsiders, who find themselves paying extortionate rents, many of which have to be subsidised through housing benefit by the state.

It is a mad system, and also a highly dangerous one. For it places us at risk of a series of increasingly serious financial heart attacks, with each successive property boom followed by a devastating slump.

I spoke to a man who served as a special adviser during the Thatcher years. He said we have to build on some of the green belt. Prosperous cities have to be allowed to grow, or we end up forcing people to live a very long way from where they can get jobs, and the green belt gets filled up anyhow with the roads and railways needed to get them to and from work.

The present policy known as Help to Buy is a feeble echo of Right to Buy, and as I warned on this site, is liable to become a way not just of stoking the latest property boom, but of persuading people to borrow more than they can afford, with disastrous consequences during the next slump. It is immoral because it encourages ordinary people to risk ruin.

How different to the sale of council houses, which raised so many people on modest incomes into the property-owning democracy.

81 comments for: How Thatcher sold council houses – and created a new generation of property owners

Leave a Reply

You must be logged in to post a comment.