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London’s city centre has long been a place where rich and poor live side by side, while so many other metropolitan equivalents – Paris, New York, San Francisco – remain the preserve of the rich. It maintains its mix today: in many inner London boroughs, between 20% and 40% of households live in social housing. A small but steady decline in social housing in these areas leaves many fearing that the city’s diversity is under threat.
What happens when cities become less socially mixed? The G15 group of housing associations, which provide social and affordable homes for about one in 10 Londoners, commissioned research recently on the economic contribution of those living in social housing. It found that they contributed £27.8bn to London’s economy in 2024, even after housing benefit was taken into account. Its methodology involved comparing the lives of people in social housing with those without a stable and affordable place to live. The conclusion was that stable and affordable housing reduces spend and demand on public services, promotes better physical and mental overall health, and results in a higher likelihood that tenants stay in work and contribute economically.
The idea that social housing is an economic investment is not new. England’s municipal housing was designed in recognition that a city could not function without healthy employees living nearby. Gordon Brown and Tony Blair revisited this idea in the early 2000s, arguing that England’s public services would deteriorate if hospital workers and police officers were pushed out of major urban centres. They framed social housing not as a charitable act, but as critical economic infrastructure.
The G15 report finds that key workers such as nurses and care and retail workers account for about 65% of London’s social housing population (compared with 40% of London’s population). Not so long ago, these same workers were clapped in the streets for keeping cities functioning during the Covid-19 pandemic; they were the reason that people could buy milk and elderly people remained cared for while others had to stay at home. But many such workers would not be able to afford to live in big cities without the help of social housing. Even moving to the outer bounds of the city would add thousands to their commuting bill, as well as hours to their working days, according to the research.
Viewed through that lens, housing that average-wage earners can afford becomes a vital asset for the country’s resilience. Social rents are proof that housing costs need not be a key driver of poverty – and yet our current building targets aren’t being pursued urgently enough to fix the problem. Housing charities say that 90,000 social homes a year are needed in England. No major party has plans for anything like that number.
Mr Blair shifted social housing from councils towards housing associations, and the coalition commercialised that model. Andy Burnham now appears to want to put councils back at the centre. In an interview with the London Review of Books in 2024, Mr Burnham said: “If you read Nye Bevan’s speeches, as I do, if you read his speech that was the postwar Housing Act, second reading, he talked about how housing needs to be thought of as a service, not a commodity to be traded and sold, a wealth creator. Everybody needs it, it’s an essential service. And it was interesting how he positioned it like the NHS. And so that’s the philosophy that we need.” Amen to that.
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