Labour’s first Act on housing 100 years on

Posted: August 13, 2024 | Author: julesbirch | Filed under: Council housing |Leave a comment

Originally written as a column for Inside Housing.

This month marks the centenary of one of the most important pieces of legislation in housing history. 

The Housing (Financial Provisions) Act 1924 – better known as the Wheatley Act – was introduced by the UK’s  first-ever Labour government, a minority administration headed by Ramsay MacDonald that only lasted for 10 months.

A century later, with Keir Starmer only the fourth Labour prime minister to win an overall majority, are there lessons to be learned?

The legislation was the brainchild of health minister John Wheatley, a veteran of Red Clydeside who had played a leading role in the war-time Glasgow rent strikes that led to the introduction of rent control. 

He built on the legacy of the Addison Act of 1919 (named after Liberal health minister Christoper Addison) that established the principles of council housing but was derailed by soaring building costs and abruptly scrapped two years later. 

That was succeeded by the Conservative (Neville) Chamberlain Act of 1923 that reserved most subsidy for private housebuilding and only funded council housing where the private sector could not meet identified need. 

The Wheatley Act was the major achievement of that first Labour government but it was born out of pragmatic agreement with building employers and unions rather than ideology. A long-term council house building programme backed by more generous subsidies would guarantee long-term work for builders as well as providing homes for skilled workers. 

The Act set subsidy of £9 a year per house, with more in rural areas. This was 50 per cent more generous than the Chamberlain Act but not the open-ended subsidy of the Addison Act and the contribution from the rates was capped at £4.50 per house. 

Wheatley himself described his legislation as ‘anything but socialistic’ and said it retained Chamberlain’s subsidy of private housing for sale on the grounds that it was producing homes. 

But he also argued that it was ‘private enterprise that is killing private enterprise’ as suppliers put up their prices to achieve higher profits in a process that ‘chokes off the little builder who relies on cheap production’. 

He went on: ‘By promoting a larger market for houses, I am creating a field for private enterprise that it could not possibly have in anything but these proposals. It required Labour proposals, Socialist proposals if you like, in order that private enterprise could get going again.’ 

The Labour government did not last long in that first term and the Act never met Wheatley’s original target of 2.5 million new homes over 15 years. However, it still produced more than half a million council homes – half of those completed between the wars – by the time it was cancelled in 1933. By comparison, the Addison Act produced 170,000 and the slum clearance of the 1930s led to 265,000 homes of lower quality. 

The Wheatley Act laid the foundations for the inter-war boom in housebuilding and set the standard model for housing subsidy for the next 40 years. Wheatley himself is remembered in the name of Scotland’s biggest housing association.

Against that, subsidies and space standards were less generous than under the Addison Act and rents were only affordable by the better paid in regular work rather than the poorest tenants living in the worst housing.

However, in an echo of the case now sometimes made for building expensive homes for sale, the argument was that tenants would vacate their current private rented homes that would filter down to others as increased supply reduced rents overall. 

So what lessons can be drawn from what happened a century ago?

Circumstances are obviously very different: for all the multiple housing crises we face now, housing conditions were much worse for far more people 100 years ago.

But so too was the imperative for political action in the wake of the First World War, the threat of revolution and the unfulfilled promise of ‘homes fit for heroes’.

It’s significant that the ideas behind council housing – well-designed homes based on central government subsidy and a contribution from the rates developed and managed and managed by local authorities -were able to survive in a period dominated by Conservative-led governments and marked by two rounds of severe cuts in public spending.

A determined minister like Wheatley could make a difference even in a short-lived Labour government without a majority. 

It’s easy to forget what’s been lost in the last 45 years, not just in terms of the Right to Buy but also the clarity of the idea of council housing as a way of meeting the housing needs of millions of families who the market has failed.

A century later we have another Labour government, this time with the second biggest majority in the party’s history.

Will it remain wedded to market-led solutions or will the party take inspiration from what Wheatley achieved 100 years ago? 

---