No to council housing, yes to housing benefit


That we have something of a housing problem in the UK is obvious. That we should be doing something about it equally so. However, those who tell us that we should be building more council houses are wrong. Yes, obviously, build more housing to bring the price down (by releasing more land to build upon) but housing on council tenancies is just the wrong way to go:

This paper provides new evidence on the effects of moving out of disadvantaged neighborhoods on the long-run economic outcomes of children. My empirical strategy is based on public housing demolitions in Chicago which forced households to relocate to private market housing using vouchers. Specifically, I compare adult outcomes of children displaced by demolition to their peers who lived in nearby public housing that was not demolished. Displaced children are 9 percent more likely to be employed and earn 16 percent more as adults. These results contrast with the Moving-to-Opportunity (MTO) relocation study, which detected effects only for children who were young when their families moved. To explore this discrepancy, this paper also examines a housing voucher lottery program (similar to MTO) conducted in Chicago. I find no measurable impact on labor market outcomes for children in households that won vouchers. The contrast between the lottery and demolition estimates remains even after re-weighting the demolition sample to adjust for differences in observed characteristics. Overall, this evidence suggests lottery volunteers are negatively selected on the magnitude of their children’s gains from relocation. This implies that moving from disadvantaged neighborhoods may have substantially larger impact on children than what is suggested by results from voucher experiments where parents elect to participate.

This is over and above the well known finding that labour immobility reduces employment levels. And in the British housing market there's nothing so immobile as a council tenancy.

We're always going to have some form of housing subsidy for those who simply cannot manage themselves. But it should be a subsidy simply paid out, not the creation of estates of immobile people.