I'd like to propose an experiment. You have to leave this country, but have a choice of two destinations. In each you will be provided with a home. Do you choose option A, or option B?
Option A: The average home is worth £600,000. Your new home is worth £300,000
Option B: The average home is worth £100,000. Your new home is worth £200,000
When we worry about poverty, we worry not just about low income in absolute terms in pounds and pence, but about low income compared to the average. Adam Smith, John Stuart Mill and Seebohm Rowntree all that recognised the comparison plays a role in the social meaning of poverty.
The idea of "relative poverty" has been widely used in social research for 50 years, and the Child Poverty Act 2010 bound the government to end relative child poverty by 2020. Meanwhile, social comparison and growing inequalities could explain the failure of late 20th income growth to improve wellbeing.
Housing is one of the most important items that people spend their income on and the main source of wealth for most UK households
Income is only interesting because it allows people to consume goods and services and to build wealth. Housing is one of the most important items that people spend their income on and the main source of wealth for most UK households.
Our worry about low housing consumption and wealth relative to averages is several decades overdue. In fact, this approach may be particularly important for housing. Economic analysis suggests homes are valued not just to live in and as investments, but also as "positional goods" with rarity or status value derived from comparison (anyone who answered B above provides support for this theory).
What would a relative approach mean for housing? Let's focus on a very basic aspect of housing consumption: the amount of space people have at home. Worry about overcrowding was one of the main motivating forces of 20th century housing policy in the UK. The traditional measure has been an absolute standard, in terms of rooms per person.
The census shows that the proportion of individuals in England and Wales living in homes with under one room per person (not counting small kitchens and bathrooms) fell from 48% in 1911 to 4% in 2001. Some appalling conditions remain, and some people have no space they can call their own.
Nonetheless, using this absolute standard the history of housing space in the 20th century is a story of housing problems vanquished, through the mobilisation of huge private and public, economic and social resources.
But if we apply the well-known Gini co-efficienct measure of inequality to census data, housing space inequality remains entirely unchanged across twentieth century.
By the start of the current century, 11% of people were in "space poverty"
Comparing the best housed tenth of the population with the worst housed, inequality fell for most of the century. But then started to rise, paralleling the trend in households income. By the start of the current century, 11% of people were in "space poverty", with less than 60% median space (the median is two rooms per person). The best housed tenth had almost four times as many rooms per person as the worst housed – a gap last seen in the age of Downton Abbey.
How did this come about? The worst housed tenth experienced steady improvements for most of the last century. It took until 1991 for them to get one room each, the national average back in the Downton Abbey days, so the defeat of overcrowding was actually rather slow and inefficient.
But from 1981 onward, this trickle-down from new development to the worst housed ceased entirely. Thousands of planning battles were fought, greenfield acres went under the bulldozer, billions of pounds were invested – and the result was even more inequality. People in the middle missed out too; during the 1990s, a third of all extra rooms built went to the most fortunate tenth.
Worrying about housing in relative terms means we need to look again at some of the oldest housing problems. Not only will current policies to restrict space for social tenants and housing benefit claimants worsen inequality further, but extra supply may be irrelevant for the worst off, and of limited benefit to those in the middle.