Alan Crisp M.Litt Oxford Thesis 1998 Email
At the end of this thesis is an earlier piece produced for the Open University called



In the United Kingdom, housing policy in the modern sense was born after 1919 when central government began a movement to involve itself actively in the provision of housing for working-class people. Afterwards, ‘the role of council housing became one of the major pivots around which other aspects of policy were arranged as opposed to leaving matters to local authorities and private enterprise to determine (1). It was to be a housing programme to combat the problems of the unemployed and to assist with the difficulties of demobilization. It was born in a moment of crisis so that a major housing programme could be a social focal point around which the nation could unite; for in 1919 it was evident that the Government had been ‘remarkably successful for the whole length of the war in avoiding any direct considerations of the objects of social policy(2). However at the end of the war social not military matters assumed great importance with the voters. Lloyd George lectured his cabinet that ‘Great Britain would hold out against the alarming spread of Bolshevism only if the people were given a sense of confidence, and only if they were made to believe things were being done for them. We had promised them reforms, time and time again, but little has been done. We must give them now the conviction that this time we mean it, and we must give them the conviction quickly’.(3) This was what Swenarton called a “knee jerk” reaction and an ad hoc response to an immediate political crisis.(4) Orbach says that the government was less determined by the question of housing per se than by the uses to which housing could be put for wider political and ideological ends (5). Without financial costing the housing policy was indeed the knee jerk political response Swenarton called it.

This political initiative also required that the new houses had to be noticeably better than anything in the past. The political assumption was that the planned economy which had won the war could also provide good state housing which would be superior to that offered by the private sector. The new housing plan provided the perfect panacea, radical but painless as it was not detrimental to the interests of private enterprise nor the organised forces of labour. Against this background Christopher Addison’s Act was to be a new beginning in housing offering new homes in a planned manner. The Housing, Town Planning Act of 1919 offered a partnership between the state and local authorities in which was cast an absolute obligation on local authorities to provide new houses to rent (6). In turn the state guaranteed to meet all costs to the local authority above the product of a penny rate, an open-ended agreement soon to be regretted by the Exchequer.
There was a need for new houses in 1919 for various reasons. The majority of the existing housing stock, especially in the big cities, was old and many of the properties were in a poor state of repair not only because of their age but as a result of rent control which had limited the supply of income available to landlords to carry our repairs. Offer states that just prior to 1914 the cost of new houses rose as a result of higher building and interest costs. These increases would also effect the cost of repairs to existing properties and make the owning of rent-controlled investment properties unattractive. He takes the view that the housing market collapsed in 1905 and from that moment experienced permanent structural damage rather than a cyclical downturn (7). Daunton reports that ‘there was a famine of available empty houses in London, just 27 per 1,000, of which only a small proportion were working-class dwellings (8). The housing shortage was brought about by the collapse of the housing market, the age and state of repair of the existing stock available for letting and distortions brought about by rent control during the war. The majority of the houses available to rent by the lower-paid in 1919 were not only old but their designs and layout were dated. The older houses lacked damp-proof courses and the lathe and plaster used on walls and ceilings deteriorate when damp and provided a home for vermin. In future central government was to ‘be the guarantor of both quantity and quality in the housing market’ (9). Therefore state intervention was necessary for the continued provision of working-class homes, it was also to be a useful political rallying cry.

In the views of both hard-faced reactionaries and kind-hearted reformers the way forward was for the local authorities to build the majority of the new houses required funded by the Exchequer. Money would also be made available to private enterprise to construct homes to rent. However, there were two problems to be overcome before the 500,000 promised homes could be built. The first was that of finance, the second that of labour,-both commodities in short supply. In London in 1920 it was estimated that there were only half of the bricklayers and plasterers needed and materials were also not readily available (10). The provision of finance was equally difficult, as Addison revealed to the cabinet as early as April 1920. Local government was also facing difficulties raising money and in 1920 90% of the London County Council’s £7,000,000 Housing Bond had been left with the underwriters (11). A few weeks after Addison’s warnings, Austin Chamberlain was to tell the cabinet in May that ‘the whole scheme of building houses must come to a standstill for lack of finance’ (12). The abandonment of the housing programme in July 1921 when only 170,000 out of the 500,000 houses promised had been built was the end to this immediate post-war state led housing boom. The various housing acts which were to follow in the years after 1921 were designed to improve town planning standards, remove the worst of the slums and offer subsidies to builders and local authorities which would attempt to bridge the gap between the income produced by letting homes and the interest cost of building such dwellings.

The problem of housing the lower paid continued during the 1920s as it was found that building houses with subsidies led to the majority of such homes being let to the better off members of the working classes as only they were in a position to pay the high rents needed to meet the interest costs incurred buying land and building houses. During the 1920s interest rates were high and credit was tight. It was to be the severe crisis in the financial markets during the late 1920s and early 1930s and the governments decision to take the pound off the Gold Standard which finally reduced the cost of money. Bank Rate was reduced from 5% in February 1932 to 2% in April 1932 and the Bank of England enlarged the cash base of the banks by buying or converting gilts, £2,597 million worth of government securities were bought for cash or converted in 1932 compared with £8 million in 1931.

Low interest rates indirectly reduced building costs and the funding of land purchases. Land at this time had become cheaper to buy as a result of low agricultural prices and the lack of demand. A very important additional effect of low interest rates was to lower the margins of the building societies. By statute they had to hold their deposits in government securities, or the like, and the level of interest they were obliged to pay their depositors and the rates paid on gilts left a thin margin. In addition, the societies were reluctant to reduce the rates paid to investors for fear that subsequent rate rises would leave them unable to compete for funds. It became imperative that the societies encourage more people to purchase their own homes and therefore provide a good return on their deposits. This response by the societies was the main factor which started the speculative building boom after 1932. Interest rate changes have a limited effect upon the weekly cost of a mortgage, the size of the deposit and the length of the term are more important factors in reducing the weekly cost to the borrower; building costs and land values had started to fall after 1924 but that had not resulted in a building boom.

The failure of local authorities to provide housing for the lower-paid workers and the need for such workers in the new factories which were being built created an increased demand for low-priced houses in the suburbs of cities and especially around London. This would be the market which the building societies would seek to supply. Many of the senior members of the societies also believed that they had a moral duty to provide low-cost housing and so in one sense they were on a crusade to improve the lot of the working-classes.

The large numbers of builder/developers who started in the 1930s were eager for profits. They might sympathise with the plight of the working-classes but they ran commercial businesses. Low land costs, cheap money readily available and a lowering of the cost of materials meant that the builder/developers could construct houses more cheaply than before. This is why there was a housing boom in the 1930 and not in the 1920s. The index of building costs fell between 1925 and 1933 from 111.1 to 90.0 (13). Those speculative builders engaged in erecting the low-priced homes were further able to reduce the cost of the houses they were building by eliminating various aspects of design which were costly. They had low overheads and used unskilled labour, extended lines of credit from suppliers and the widespread piece work to reduce the purchase price of a house to less than £500. The low-cost houses they built incorporated many items which working classes wanted but which were often missing in municipal dwellings, such as parlours and bay windows. These differences were important to those members of the working-classes who bought these homes as their houses were noticeably different from council houses. As will be shown later, studies by Mass Observation and the Dudley Report after 1944 concluded that the council house planners did not pay attention to the needs and wishes of the lower paid when designing houses. The speculative builder was very sensitive to their needs in order to sell them houses. The low-cost speculatively built semi had design clichés which were derided by informed opinion but they were popular with those who bought them. The estates were seen as an urban environment to be lived in and not as a scene to be viewed.

But the co-operation of the building societies was necessary in order to allow the prospective purchaser to buy the house with the lowest possible deposit and the term of the loan needed to be extended to lower the weekly cost of the repayments. As a result of intense competition between the societies, stimulated by the builders, lower-paid workers were offered terms which enabled them to buy houses with 25 year term mortgages and minimal deposits. The financial interests of the speculative builders and building societies coincided with the needs of the lower-paid workers who desired to own their own homes. This desire came as a result of the extensive advertising of the building societies promoting home ownership and the failure of local authorities to provide houses which were available to rent at levels they could afford. Olechnowicz shows that the council estate was for the economic elite of the working class and even they faced financial difficulties. In the United Kingdom members of the working classes had never been house buyers in substantial numbers, 73 % of all houses built before 1914 were privately rented and traditionally lower-paid workers rented accommodation, often rooms or parts of houses, it was not usual for them to buy their own homes. Buying a home was a substantial departure from established custom as was the need, because of the employment situation, to move away from family roots and buy a house in a different part of the country. Between 1914 and 1938 the proportion of the population in privately rented accommodation fell to 53% from 73% and owner occupation rose to 34% from perhaps 6% to 10% (14). This was a dramatic change in a short period of time in the manner in which people were housed, especially the lower paid. Today the influences and effects of this vast movement of people into ‘unplanned suburbias of private enterprise’ are still working their way through the psyche of the people (15).

There had been proposals within the building society movement to allow them to channel their deposits to local authorities so that houses could be built for rent; the societies had in mind that the funds would be secured by government guarantees. The Housing (Financial Provisions) Act 1933 contained provisions whereby some guarantees were available but the societies and the local authorities did not work together to build large numbers of houses under the terms of the Act. This Act was the only original initiative taken by the government to involve the private sector in building large numbers of houses for rent without the provision of subsidies. The 1965 Milner Holland Report expressed the view that the British government had been less successful than the governments of other industrialised nations in meeting the needs of the lower-paid workers. Those ‘governments which had been most successful in maintaining order and justice within this sector of the housing market have been those which have accepted and incorporated private rented property among the instruments to be used in meeting housing needs’ (16). The rush into the state house-building programme disregarding all other ways of providing homes was another consequence of the political ‘knee jerk’ reaction referred to above.

The wide-ranging onslaught of the private builder across outer London in the later part of the 1920s and throughout the 1930s was little affected by the pitifully inadequate planning measures in place at the time. In the same way that there were few planning controls there were few statutory restrictions on the activities of the building societies. They were governed by small groups of people who appeared to have considerable powers. The larger societies became very competitive in the 1930s, partly perhaps due to the egos of their general secretaries, and established extensive networks of agents throughout the country. These agencies enabled them to obtain deposits from a wide range of sources and provided introductions to developers and potential home owners who required funding. The processing of mortgage applications was often carried out by the builders and loan offers were available very quickly from the societies. The process was made very painless for the working-class buyers who were persuaded to take on commitments for 25 years at a time when they were paid weekly and had limited financial horizons. Following so soon after the economic troubles of the late 1920s buying a new house in a recently developed suburb where life was so different from the inner cities, was a new experience for the working classes, previously accustomed to renting shared accommodation.

Most of the houses built in the pre-war period were small ones and the majority of those that were built to be sold were acquired by the lower-paid workers, members of the working class. This thesis contradicts the findings of Swenarton and Taylor and shows that large numbers of working class people were earning sufficient to meet the mortgage requirements of the time (17). Chapter four shows that during the 1930s proportionally more members of the working classes became owner occupiers than did members of the middle classes. Evidence is produced to show just how wide the earning range of working class people was at this time and how little some people were earning and yet still buying their homes with a mortgage. Various interviews were conducted with the original occupiers of the new houses and with those active in the building societies during the 1930s. Some of these interviews have been used to illustrate how easily working-class people with no experience of holding building society or bank accounts were able to obtain mortgages. An extensive examination of the New Survey of London shows how high household incomes were in 1930 in inner London for members of the working classes. Some young people in their twenties were seen to be earning £5 per week. These were the type of people who a few years later were to become owner-occupiers of houses on the new estates.

The new factories offered opportunities for regular employment, good wages and part-time work for women. Those with new skills such as driving, selling or electricians were able to earn wages considerably higher than those in older trades. Government statistics on earnings did not reflect the two Englands which were developing. Those with employment and living on the new estates were able to earn high wages from the new factories close by. But local authority housing was often built in the hope that the available pool of labour would attract industry. If the factories failed to materialise then those on the council estates had to meet the cost of travelling to find work (18).

The close co-operation of the building societies and the developers in the 1930s possibly did create an environment where in some cases the interests of the home owners were of less concern to the societies and the developers than their own expansion. The widespread use of the ‘builders pool’ and mortgage protection policies helped to created a situation where the societies felt they could not possibly lose money by granting mortgages and therefore they were not interested in the manner in which the houses were being built and designed by the developers. Doubtless there were also new home owners who were persuaded to take on mortgages which they could not afford but the level of foreclosures was very small in proportion to the numbers of mortgages granted. The preparation for war in 1937 increased wages in those areas of southern England where many of the new factories were situated, it was adjoining these factories that the new speculatively built estates had been erected. Without the increased prosperity caused by the pending hostilities the property boom of the 1930s may well have collapsed.

In England during the decades following the end of World War II the proportion of home ownership grew to a level of around two-thirds of all homes. The establishment of this home-owning bourgeoisie, a class which aspired to materialistic thought, was to become one of the most powerful economic and political forces in the country. The movement into home ownership which resulted in these changes was led in the 1930s by the members of the working classes.

(1). J.Yelling,Slums and Redevelopment: Policy and Practice in England, 1918-1945.(1992),p.2.
(2) P.Adam,The Failure of Social Reform, 1918-1920 Past and Present.,(1963),p.58.
(3) PRO, CAB 23/9 War Cabinet 539, 13 March 1919.
(4) M.Swenarton,Homes Fit for Heroes(1981), p.81.
(5) L.Orbach,Homes for Heroes:A Study of the Evolution of British Public Housing 1915-1921(1977).
(6) Housing, Town Planning Act 1919, 9 and 10 Geo.5,c.35.
(7) A. Offer,Property and Politics 1870-1914:Land Ownership,Law,Ideology and Urban Development in England,(1981).,p.271.
(8) M.Daughton(ed),Councillors and Tenants:Local Authority Housing in English Cities,1919-1939,(1984),p.2.
(9) M.Daunton,The House and Home in the Victorian City:Working-Class Housing.1850-1914,(1983),p.287
(10) A.Olechnowicz,Working-Class Housing in England between the Wars:The Becontree Estate(1997),p.29.
(11) PRO, CAB 24/104,CP1183 29 April 1920.Addison was complaining to the cabinet that on the day that the issue was floated the Treasury increased interest rates to 6.5% making it impossible for the L.C.C. to sell their Bonds at 6%.
(12) PRO,CAB 24/106.CP 1330.20 May 1920.
(13)M.Daunton,Housing in F.Thompson(ed), The Cambridge Social History of Britain 1750-1950,vol.2.(1990),p.243
(14) M.Daughton,Housing in F.Thompson (ed)The Cambridge Social History of Britain 1750-1950,(1990) vol 2, p.243.The figures of 6% to 10% for owner occupiers is an informed guess based on the best information available.
(15) A.Jackson,Semi-Detached London: Suburban Development, Life and Transport, 1900-39 (London,1973), p.259.
(16) Milner Holland,Report of the Committee on Housing in Greater London 1965, Cmnd 2605,pp. 214-218
(17) M.Swenarton, and S. Taylor,.The Scale and Nature of the Growth of Owner Occupation in Britain Between the Wars, Economic History Review London No.38, 1985.
(18) A.Olechnowich,Working-Class Housing in England between the Wars:The Becontree Estate(1997), p.15