ABSTRACT
One of the most notable and commented upon features of the Thatcher Government’s housing policy is the severity of the cutbacks in public expenditure. The housing programme as set out in the annual Public Expenditure Survey Committee (PESC) White Papers containing the Government’s spending plans has fallen in real terms from £6.6 billion in 1979/80 to a planned £2.1 billion in 1985/86 (at 1983/84 prices), (1) a reduction of 68%. Housing’s share of total public spending has fallen from 7% in the mid-1970s to an anticipated 2% in 1987/88. The housing programme has borne the lion’s share of public expenditure cutbacks overall and in 1980 the House of Commons Environment Committee noted that housing cutbacks accounted for 75% or more of all public spending reductions. (2) In 1983 O’Higgins noted:
Housing is not only the welfare programme suffering the largest cuts, it is also the only programme where cuts have been overachieved: by 1981/82 the estimated outturn cut was one and a half times the size the government had planned in 1980. (3)
Although there was some overspending against cash limits in 1983/84 and 1984/85, this picture remains basically correct and future spending plans show no indication of any reversal in this trend. However, our purpose in this chapter is to argue that a categorisation of Government housing finance policy as one based solely on cuts is both over-simple and misleading. More detailed examination of spending trends and outcomes suggests that the nature of the crisis in housing public expenditure is not only ex tremely complex but also poses more intractable problems than can be solved by the reversal of cuts in
existing spending programmes. We argue that on top of expenditure cuts there has also been a transfer in the balance of effective public expenditure away from the public sector and direct investment towards the support of owner occupation; and that much of this support has been based on the proceeds from the sale of public sector assets which in the longer term will have significant and adverse financial effects on the need for future investment.
