But Why Spend £3.6 Million On Each Affordable Home? Shouldn’t They Be Cheap?

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Here’s a complaint which rather highlights the absurdity of the manner in which we deal with housing in Britain. We’ve a development of very expensive houses in a very expensive part of a very expensive city on very expensive land. Hmm, perhaps overdoing the expensive there but that’s what Kensington and Chelsea is. The complaint being that we’re not insisting upon enough affordable houses in this very expensive development. But the insistence on housing poor people in a £3.6 million two bedroom flat is an absurdity in itself. It’s a gross misallocation of resouces.

Sure, we want poor people to have a roof over the heads. We’re even willing to agree that at least for some there’s a societal injunction to put our hands in our pockets and make sure of this. But seriously? £3.6 million of resources to house one poor household? And a small one at that?

But yes, this is the insistence:

The Royal Borough of Kensington and Chelsea has approved plans for a half-billion pound luxury retirement complex that includes just five affordable homes at a time when 14 families who survived the Grenfell Tower fire are still living in hotels 18 months on. The Conservative controlled council granted consent for the scheme on a prime site in the south of the borough that includes 142 homes, some of which will be let for up to £10,000 a month. Dubbed “caviar care”, the scheme is designed to appeal to multi-millionaire downsizers and includes three town houses expected to sell for about £12m apiece.

No, this isn’t about us insisting that the poor should be housed well away from the rich. However much said rich might like that. Rather, this is about resource allocation. We do – and this is the heart of economics – have scarce resources. We also need to allocate them in some manner.

So, great, we’ve £3.6 million of resources. We have families needing housing. How should we allocate that £3.6 million to gain housing for poor families? Spend all £3.6 million on one two bed flat for one household? Stick the poor three streets away and gain three flats for poor people for our £3.6 million? Put them in Gravesend and gain 10 flats? Or perhaps Burnley and gain three streets of houses?

That we’re insisting the developers – for which read the other buyers – carry this cost doesn’t change the fact that we’re still allocating resources. And to insist upon £3.6 million to house one poor family is an inefficient allocation.

We can even say that we shouldn’t have social apartheid and that we shouldn’t just be housing poor people elsewhere. Or at least not too far elsewhere. Absolutely no one is going to suggest that the Nash terraces in Regent’s Park become council houses now are they? £30 million for one poor household is too much even for the class warriors. So, we’re talking about a spectrum here, not some hard and fast divide. Which leaves us asking how far along that spectrum we’d like to be.

Around here our answer is somewhere between the Gravesend and Burnley solutions simply because we think that we should really try to gain rooves over the heads of poor people. We’ve limited resources with which to provide them so let’s do this efficiently. Others will differ – but it’s still ludicrous to be demanding a societal spend of £3.6 million to house one poor household. Just because doing so means we have fewer resources to house other ones.