Impact of Neoliberalism on UK Housing Policy

This essay examines the impact of neoliberalism on housing policy in the UK since the 1980's. It explores the shift towards market-based approaches and the decline of social housing. The essay discusses the role of the state, housing finance, and subsidy policies in shaping the housing sector.

Running head: HOUSING POLICY
Housing Policy
Name of the Student
Name of the University
Author Note

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Topic – EXAMINE THE IMPACT OF NEOLIBERALISMSM ON
HOUSING POLICY IN THE UK SINCE THE 1980'S.
The Neo-Liberalism can be defined as an era of neoconservatism, pure capitalism, neo-
classicism in the history of Britain. The term is used for a set of principles. In the year 1776, sir
Adam Smith coined the idea of a liberal economy in the book "The Wealth of Nations". It is also
seen as the 19th-century variation when the British rulers, along with other imperialist rulers,
utilized their ideology for justifying the colonialism and expansion (Adams and Saks 2018). By
the early 1930s, the workers revolted, and the classical –liberalism got replaced by the new
termed ‘Keynsianism’. It implied that the state has a dominant role to play in almost every corner
of the development. The neo-liberalism was an ideology that existed as a paradigm along with
other factors in the development economics since the year 1940. In simple words, the
Neoliberalismm emerged in the scenario, when all the countries were walking towards
development, rather global growth (Alvesson and Spicer 2019). It generated out of the
realization that the state is unable to deliver something significant and improve the lives of the
poor. The state intervention resulted in a negative impact, which was highlighted by the neo-
liberalism activists such as Bela Balassa, Ian Little and Deepak Lal in their writings. Through the
early part of the 1980s, the political opinions correlated with the shift in the political views
across the nations and the established institutions such as IMF and World Bank (Boothman,
Craig and Sommerville 2018).
In the year 1980, the underlying philosophy of the neo-liberalism proposed a
restructuring of the relationship between the market and the state. As per the agenda, the country
was given the role to play of facilitator rather than the controller. The state was bound to pave

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the way for the markets to deliver the necessary. At this stage, the sectoral policy reforms and
the economic reforms were considered to be the pre-requisites to conduct smooth operations. At
the same time, there were several measures too, which were advocated. The steps were the
exchange rates, the elimination of the price distortions, liberalization of the government controls,
market open for the foreign capitals, the competition by removing the protective tariffs along
with the import quotas. The agenda had a significant impact on housing. By the later part of the
1970s, it became apparent that the housing provision models were idealized as a result of the
failure of the direct intervention policies. Hence, the supporters of neo-liberalism argued that
excessive regulations of land decreased the investment quality available and also decreased the
affordability rates have led to the subsidies (Jacobs and Manzi 2017). The affordability of the
ordinary people was dominated under public housing schemes. It was suggested that the private
markets should take the functions of distributing the housing stock and the excessive land usage
regulations along with the rent controls should also be eliminated for enabling the housing
markets to operate effectively. As per the neo-liberalism ideology, the subsidies were
unaccountable, monopolistic to the users and provided proper services with least investment.
In the United Kingdom, the price of the homes have doubled over the past ten years, and
since the year 1924, the housing building is at the lowest level. In Britain, it has been estimated
that by the year 2022, there will be a shortage of almost one million homes. Britain is a nation
where 70 % of the adult citizens are habituated to own their own homes, the lack of homes at
affordable prices is frustrating the salary earners. Britain has experienced the housing shortage
at the end of the world war 2nd, and the deficit is leaving the citizens in desperation and
inconvenience (Alvesson and Spicer 2019). The government has been blamed with having slow
planning, which is making the lives of the community people disadvantageous and difficult. It is

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also an issue for the employers of the organizations who are failing to recruit new people due to
the inability to provide the employees with proper accommodation. Moreover, the market prices
of the house are unaligned with the wages paid by the employers to the employees. The gap of
income and consumption is widening due to the house prices and disposable incomes.
Since this essay focuses on the housing policies, the housing policy evolution of England
since the year 1975, needs to be reviewed over here. The United Kingdom, over the past 30
years, has experienced various changes. There is a significant evolution of the housing policies
between the years 1975- 2000. The weak housing conditions became highly problematic due to
being a social threat and the nation's moral threat too (Jacobs and Manzi 2017). In the later part
of the 19th century, housing storage had been recognized for understanding the ways of
overcoming the scarcity. Through the interwar periods, the council housing and the home
ownership developed rapidly. The housing policy was also dominated between the years 1945
and 1977 by the number game. The political parties also attempted to overtake each other based
on the number of houses they produced. On the other hand, the labour governments also tried to
tackle the housing-related issues, having promoted the subsidies of the local people for their
general needs. In the beginning period, the conservative party tried to maintain a council house
building program but switched to the building for the public needs.
The issue of poor housing transformed into a social problem. The rapid growth of
urbanization resulted in the short distance moves seeking for work and freedom from the village
norms. The migrants were usually of teenage or young adults. As a result, they became the
reason for population growth in the city. The population growth overpowered the sewage,
drainage systems along with the dwelling supplies.

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Consequently, it led to unsanitary accommodation. Although poor housing is not such a
problem, the shelter had to be eradicated to be a social problem. A new group of experts for the
public good considered it to be necessary to control the externalities which were influencing to
secure a wholesome nation. The "Report on the sanitary condition of the labouring population of
Great Britain” by Edwin Chadwick is possibly the first piece of work that assembled a variety of
the opinions and the statistics for demonstrating the sanitary arrangements. It suggested that
epidemics and other diseases are responsible for increasing the population pressure. The younger
population that is generating is inferior in terms of general and physical health. The society that
is making is less susceptible and more exposed, and the educational effects are more transient
than a healthy population. These are the adverse circumstances which tend to produce a short-
lived, reckless, extravagant and intemperate population with sensual gratifications. These are the
habits which lead to the abandonment of conveniences and decencies of life.
The most significant impact of the neo-liberalism on the housing sectors was a kind of
recognition of the fact that the housing sector was not an area of policy development but an area
of extending the role of the market and home ownership. It especially implies that the demand
should be the basis of house production, not the need of people. The liberalized markets focused
on providing higher incomes to the lower-income groups as an outcome of investments, savings
and productivity. The aim was to reduce the number of households below the poverty line.
Subsequently, it was expected that the poor quality dwellings, pavement dwellings and squatter
settlements would be reduced too. It was also expected that the competitive markets would be in
such a position for providing access to give shelter to the lower-income people. Hence, as
evident from the expectations, the 1980s in Britain has marked to evidence a shift in the housing
policies. The reformation was based on few significant aspects such as the deregulations of the

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interest rates, the development of the finance capital markets, the curbs on the public expenditure
growth away from the regulations of the state.
It is to be noted that the primary concern of the 1980s was on the expansion of housing
finance. In this era, it was also recognized that housing is a field that is wholly connected with
the macro-economic conditions, and there was a need for the creation and usage of the housing
credit institutions (Freeman 2018). The house loan systems started being considered as more
effective in influencing the housing targets than the projects which were geographically
delineated. The housing fiancé systems started being implemented rapidly in the developing
nations along with Britain, and it was a good initiative towards the housing development. The
housing policy of the 1980s also focused on the scaling down and rationalization of the subsidies
to the maximum (Cullen 2017). It was also proclaimed that the subsidies should be narrowed
down to the needy people only, and not everyone should be able to achieve that. Some groups
claimed that the government should perceive the subsidies to be either ‘transitional or as a last
resort'.
Apart from Britain, in other countries too, few changes were being undertaken that
required a significant number of reforms such as the capital market developments and public
spending curbs. It left the housing sector subsidies on the verge of being reviewed and controlled
with respect to the overall capital market. The focus gradually shifted to the savings mobilization
through the enlargement of the housing credits (Dellepiane-Avellaneda and Hardiman 2015). It
was expected to improve the economic conditions, the households and subsequently reduce the
pressure on the governments that were in the form of subsidies designed for the lower-income
groups.

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In the context of the United Kingdom, the changes of the 1980s redesigned the subsidy
policies. The new housing benefits systems of the year 1982 became a part of the strategy where
there was a significant shift towards the individualized subsidies in place of the ‘brick and
mortar' subsidies. The individual subsidies were based on the levels of income in households.
As mentioned in the previous paragraph, the governments were advised to shed off their earlier
roles as the housing producers and pave the way for the private sectors to deliver the necessary.
As a consequence, in the United Kingdom, it was perceived as a shift of tenure status that is
away from the rental housing to the subsidized ones. It also led to the growth of the owner-
occupation along with the decline in the council housing (Hilber 2015). The east European
countries also could not stay away from the neo-liberal patterns and became open to the concept
of privatization. The forms of privatization included a reduction in the prices for ensuring the
quick disposals.
As far as the British Social Rented Housing is concerned, the historical context suggests
that since the year 1919, the social rented sector had expanded to encompass more than 5 million
homes in the year 1980 that is equal to almost one –third of the total housing stock. In a
particular sector, the LAs were more critical than the HAs. Although it was not universally true,
most of the council housings were established in the years between 1945- 70 which were
constructed to poor standards that led to the legacy of the structure and the design defects. Such
problems were attributed to the ‘number game' of the post-war period. Traditionally, the council
started to decline in the mid of 1970s during investing in new construction.
The British social Housing sector is considered to stay in comparison to others in
Western Europe. The trend of the contraction is not different from the social rented sector in a
few of the other countries. The British Social rented industry is one of the most distinctive

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authorities having played a significant role historically (Lombard 2019). One of the most unique
features of the British social housing is the correspondence it has with the distribution of income.
However, the social landlords are subjected towards the immense market pressure when the
reconfiguration of social housing is shaped substantially by the central government (Lund 2017).
In the post-war period, social housing was considered to be the most desired commodity having
relatively short supplies in every part of Britain. In few areas too, the social landlords are finding
it difficult to search for the tenants to the empty homes (McKee, Muir and Moore 2017). It
somewhere reflects the regional economic change in certain cities where the former mining areas
have resulted in the population contraction.
Hence, the housing policy of the 1980s was beyond the focus on the project level and the
housing sector level. It was more confined to the reforms related to the finance but left the
construction industries, the land policies, the town planning and the deregulations related to the
infrastructure (Morris 2016). Apart from this, the structural adjustments also had been just the
beginning in the housing sector. The adjustment policies resulted in considerable deterioration of
the living conditions of people below the poverty line. It also resulted in unemployment and
wage reduction (Stephens and McCrone 2017). The urban poor people were considered to be the
most vulnerable groups suffering from unemployment, subsidy cutting, lack of transport and
shelter, scarcity of water, currency devaluation and many other issues. As a result, the squatter
settlements increased instead of the expected decrease. Among the poor, homeownership also
faced a decline. This is because the rates of interests on the housing loans hiked along with the
hike in the building costs (Taylor 2018). As an outcome, the policy document of 1992, stressed
on the development of the housing finance systems, the infrastructure improvement, the property
right development, regulatory audit establishment, appropriate institutionally loaded reforms.

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