Consumers choose to be “free from”
With money in the bank, a trip to the supermarket becomes a simple example of the economics of consumer choice: Stroll down the aisles choosing what you can afford. Economist would say your choices are “maximising your utility” – within your budget.
Now even in the less-posh supermarkets, there are ”free from” aisles where the goods are free from gluten, dairy, nuts, refined sugar, meat or pesticides. Could there be “free from” neighbourhoods, which were free from neighbours with lifestyles we don’t like?
Here the law has a say. Certain types of “free-from” neighbourhoods are illegal. In England & Wales, when housing is being rented or sold, it is unlawful to discriminate on the grounds of disability, race, sex, sexual orientation, religion & etc. So, it may be difficult to choose to live in neighbourhoods “free from”, say, Methodists. Quite right too.
Choosing where to live: Public Good Theory
Communities either provide the goods which individuals wish – and do so efficiently – or individuals leave to other communities that provide public goods which are more in accord with their tastes and which provide these goods more efficiently.
Competition among communities is thus like competition among firms for customers, and just as the latter leads to efficient resource allocations, so too does the former.
In the USA there are villages of old people, with the services they need. There are neighbourhoods of young families with many local schools. The US Fair Housing Act has some restrictions by outlawing discrimination on the basis of disability, race & etc, but there are condominiums where existing residents interview possible new residents before they are allowed in.
Mixed communities in the UK
In the UK, the planning system restricts the creation of specialised neighbourhoods by mandating that mixed communities for mass housing.
An important influence on forming this policy has been Lord Best, who has had several influential positions, including Director of the British Churches Housing Trust, and later the Joseph Rowntree Foundation and Joseph Rowntree Housing Trust.
He advocates neighbourhoods of balanced communities, with affluent residents mixed with poorer ones to avoid “segregated ghettos of social housing for poorer households”.
He objected to proposed changes in the provision of affordable housing, which suggested developers should pay a levy rather than accommodate poorer residents. Lord Best said developers might simply pay the tariff and leave councils with responsibility for ensuring the funds were spent on social housing on a different site. i.e. He maintained that “affordable” housing for the less affluent should be fitted into developments for more affluent residents. This was to avoid the creation of ghettos of poorer people.
However, a policy of “affordable” housing, constrained to mixed developments, restricts the choices of the poor: They are limited to living where they have affluent neighbours.
It’s worth noting here the special meaning of “affordable”. In Affordable housing does not mean what you think it means, Colin Wiles commented:
In a move worthy of George Orwell’s Ministry of Truth, affordable rent will be higher than before, set at up to 80% of the local market rent. Across whole swathes of southern England affordable rented properties will simply not be affordable to people on low incomes.
“Free from” unfriendly posh neighbours
But are mixed developments the choice that less wealthy residents want? For example, in a comment on How the Joseph Rowntree Foundation could do more for the poor, Catherine Mallinson said :
I lived in an “affordable” house with my husband and two children. Both of us parents were on minimum wage. The housing was at The Croft, Heworth Green, not a JRHT development but it was meant to be affordable according to the conditions of the planning permission. We simply couldn’t afford the rents and the council tax (band E).
Of about 100 houses or flats only about 10 were social housing or part owned. Many of the other neighbours were wealthy. The people in social housing were friendly and we got on together. We did not get to know the wealthy ones and they seemed to look down on us.
We swapped with someone in Tang Hall. Where I live now it is affordable, social and a typical community. It is a neighbourhood where people are on lower incomes or they are students.
In the “free from” aisle of the of the supermarket of neighbourhoods, the neighbourhoods that are free from unfriendly posh neighbours are ones that many people, including myself, would choose rather than live in the “subsidised” pens deemed acceptable by moralistic do-gooders.
“Free from” planning gain
Note that the “subsidies” are not ones paid by government expenditure, they are simply restrictions on the enormous gains that go to landowners when planning permission is granted. This scandal is discussed elsewhere in this blog. They are summarised in
At agricultural prices the cost of a plot of land big enough to put a house on is about £500. In York, for example, once planning permission is given, it becomes worth nearly £200,000.
The increase is planning gain, which goes to the land owner. This planning gain is added to the price of new houses. It happens because supply exceeds demand. Existing house owners benefit because scarcity inflates the values of their properties.
Stripping out planning gain could mean new starter homes could cost £20,000 rather than the UK average of £200,000.
The poor should “free from” this planning gain.
“Free from” cars
In Public Good Theory there is wide choice of places to live, within personal budgets. A missing choice is the “free from” option of car-free neighbourhoods.
According to a report that the European Commission buried, living in a car-free city is between two and five time cheaper. I managed to get a copy so the report (in French) can be downloaded: Part 1, Part 2.
A more important consideration is climate change and the need for decarbonisation. The House of Commons Science and Technology Committee has noted:
In the long-term, widespread personal vehicle ownership does not appear to be compatible with significant decarbonisation.
As the climate worsens, sensible policies will greatly increase the cost of car ownership. So, for the less affluent, including me, “free from” cars should be an option.
On limited budgets, we need housing that is:
- Free from posh unfriendly neighbours
- Free from the planning gain
- Free from cars
P.S. Better for the climate too.
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