For those in need of housing in the UK, many low-income and disadvantaged people and families have turned to the Government for assistance in the form of public housing. However, there has been any number of challenges in terms of providing the right quantity and, most importantly, quality of public housing to meet the needs of various UK communities. In the Thatcher era of the 1980s, the Government decided that residualisation of council housing would be the best solution, thereby shifting the responsibility to provide needs and services away from the state and onto the individual and family.

In order to further investigate the causes and long-term consequences of the residualisation policy of the 1980s, the context for council housing will first be examined in order to understand the need for this type of public housing, including its social composition and why a shift toward residualisation occurred. It is also important to examine some of the economic, political, and social forces that may have also led to this shift, including globalisation and industrialisation, the new anti-state ideology of Thatcherism, the policies that were created during this time such as the Housing Act 1980, and the growing problems within the UK that led to the reliance on council housing.

Lastly, in looking at the long-term consequences of residualisation, it would seem that this shift only led to greater problems rather than solutions. Various consequences will be explored, including the increase in poor housing stock, neighbourhood instability, greater inequality between the classes, and the poor perception of council housing. However, one long-term consequence that can be seen as positive is the overall increase in home ownership during the 1980s and beyond, which has provided a new way for many individuals and families to establish a better economic stature.

The Context for Residualisation

In order to better understand the causes of residualisation, it is important to first set the context for this shift. At one time, the public housing sector was the fastest growing aspect of the UK housing system and was favoured by the Labour government as a way to house individuals and families after World War II. In 1945, Aneurin Bevam, the Minister of Health, told the House of Commons;

We shall ask the local authorities to be the main instruments for the housing programme. It is a principle of the first importance that the local authorities must be looked as the organizations and the source for the building of the main bulk of the housing programme. The local authorities are admirable suite for this purpose. (House of Commons 1945: 1).

This was seen as a way to better service everyone within society and create a more equal playing field between classes. It was seen as a way of housing working people, regardless of their income, and there was no stigma of failure attached to those that did choose this option during its early years (Cowan and Maclennan 2008: 11). Council housing was viewed as an investment structure that would allow the UK to offer affordable housing, and this system was found to be capable of “sustaining new building programmes on cost balanced rents, well within the affordability of people on average incomes” (Ready 2007: 2).

In analysing council housing during this period, the belief was that “the emphasis was on breaking down the barriers and distinctions between groups in society, opening up public services to all on the basis of need, without investigation of ability to pay” (Malpass, 1990: 74). This time period was known as Welfare Capitalism, focusing on the common good and equality through the development of public services and social protection (Scanlon and Whitehead 2008: 17). The term, “working classes” was even removed from the 1949 Housing Act as a way to establish council housing as a new mixed community that broke new ground on removing the class and income barriers that had previously existed. This meant higher quality standards for council housing, thereby producing a positive viewpoint on council housing up until the 1980s.

At that point, there was a definitive shift in how council housing was viewed with a rapidly depleted housing stock that only offered small flats for the neediest groups. The public housing sector stock essentially peaked at 6.5 million in 1979 but, by December 1986, the figure had fallen to under 5.9 million (CIPFA, 1986: 1). As of 2007, the council housing stock has fallen to 3.8 million (Housing and Dependency Working Group 2008: 14). Figure 1.1 also shows the decline in council housing from a peak of 31.7 per cent in the late 1970s to 26.7 per cent in 1986, illustrating how the residualisation policy altered the availability of quality council housing. The latter section will discuss the causes of the decline of council housing.

Causes: Shifting Policies, Political Ideologies, and Economics

In the early 1970s, Titmuss linked the residual model of social welfare to the idea and beliefs of right-wing economists, such as Hayek, Friedman, and followers of the Institute of Economic Affairs, who were to become so influential with the government a decade later (Forrest and Williams, 1984: 1165). The residual model of social welfare is based on the view that the market and the family should be the main provider of all needs and services.

This was part of the Post-Industrial perspective, which was a reaction by the Governments after the 1970s because they feared that they would be unable to manage their national economies in the face of globalisation (Scanlon and Whitehead 2008: 17). As such, the state has a minimal role to play in direct provision, catering only for those who truly have proved that they cannot support themselves. This approach measures a person’s welfare against their position in the labour market so that the state would be sure to only complement the market rather than to compete with it.


Within the realm of globalisation, the UK housing market has become integrated into the global flow of financial markets where money moves freely and rapidly through countries and uses (Waters, 1995: 64), changing how the country has viewed its housing stock. To participate in the global markets, the British economy was then restructured in an attempt to better handle their labour markets, taxation policies and public expenditures in a way that would keep tighter control over what was doled out to its citizens in the form of public assistance.

The result was then to reconsider where the country would invest its money in terms of programmes for public assistance, thereby shifting the focus away from council housing and onto investing in private housing that could be financed through the global market system. The policy has shifted to “right to buy” in public rented housing, leading to a shortage of investment funds for public housing and influencing the stock transfer to housing associations that use private borrowing to stretch what public money is received (Forrest and Murie 1988: 131).

Political factors

When the conservative party won the 1979 general election, it considered that its housing policies, including the ‘Right to Buy’ scheme that became part of the Housing Act 1980, had contributed to its electoral success, so the political movement was geared toward the concept of home ownership for as many citizens as possible. This philosophy was inherent in the politics of the day that was geared toward a capitalist approach to society in which there would be an expanded access to capital assets beyond just what was supplied on a public assistance basis.

The political movement during the Thatcher administration believed that the state would be freer to help the country become more competitive in terms of its industries and financial prowess if it no longer had to be lumbered with the infrastructure that is involved in operating a welfare state. The British New Right’s welfare policies absolve the Government of taking any responsibility in terms of adhering to a certain standard of living for all, thereby choosing to redistribute income from the poor to the rich (Smith 1995: 189). This would mean that those that exist at the bottom of society must be “disciplined and wrenched from its dependence on social welfare” (Wheelan 1999: 5). Hence, the idea of residualisation was led by the political forces during that time period.

Policy changes

Policy changes, including the Right to Buy scheme under the Housing Act 1980, were also one of the primary causes of residualisation. During this time, there was more of a concern about area renewal rather than public assistance (Stephens and Lynch 2005: 6), so providing for home ownership was one way in which area renewal could take place without a major investment by the Government. Michael Heseltine set out specific objectives to increase the opportunities for home ownership, improve housing quality, provide greater value for money and more effectively use resources where the needs are more severe. The solutions were seen in privatising the housing market, which meant reducing the existence of council housing stock, restricting capital investments by local authorities, and changing the terms of tenants’ rental rights (Stephens et al., 2005: 4).

Those within council houses were then given the right to buy at a discount up to a maximum of 50 per cent after twenty years and would receive a mortgage from their local authority, taking away incentives for staying in council houses except for those that could not financially purchase a home or take out a mortgage (Stephens et al. 2005: 4). As the figure below indicates, 1980-1984 sales of council homes exceeded new building by private developers, indicating that residualisation was well underway.

Thatcher believed that establishing a Right to Buy programme that would replace the state-issued council housing was a way to free many in society from what she saw as the “deadening grip of municipal landlordism” and a way to create a “new cadre of housing consumers” (Houghton 2009: 2). And, this plan did work remarkably well for those that had the means to participate whilst the rest were left to compete for a “diminishing pool of subsidised homes” whilst the worst of the council homes-mostly those ugly block buildings of the 1960s and 1970s-were deserted or left to decay with no funding for refurbishment (Houghton 2009: 2).

Stock transfer

Stock transfer was one of the primary ways that residualisation was enacted because this policy severely reduced the council housing stock. Stock transfer had a much more significant impact than the Right to Buy policy with the government permitting the transfer of some 200,000 council houses per annum under stock as compared to 50,000 Right to Buy sales in 1999 (Stone 2003: 10).

During this time, there were numerous measures that facilitated the transfer of the public stock to alternative landlords through the Tenants’ Choice and Housing Action Trust. The Large-scale Voluntary Stock Transfer (LSVT) also played a key role in which LSVTs were involved the sale of the local authority’s entire stock of rented houses and the transfer of its staff to a newly-formed housing association set up for the purpose (Stone 2003: 11). By April 1997, 54 councils had divested themselves of their housing stock via an LSVT, leading to more than one quarter of a million homes being transferred (Stone 2003: 11). Overall, it has been estimated that this aspect of residualisation led to over fifty per cent growth in the owner-occupied sector (Stone 2003: 11).

Long-Term Consequences of Residualisation

Due to these various factors, the causes of residualisation have led to some long-term consequences. Some of these consequences relate to what is now viewed as persistent market instability in terms of housing prices since the low-cost rented sector that was at its peak before the residualisation process of the 1980s has now all but disappeared whilst there has also been more significant changes in the UK’s social structure as mentioned below (Ready 2007: 4).

Depletion of quality housing stock and homelessness

The Right to Buy scheme and the large-scale stock transfer to housing associations meant that most of the quality housing was now sold, leaving available council housing for the needy that was in disrepair and in desperate need of modernisation (Cantle, 1986: 58). The prices of available homes grew at a major faster pace than wages and there were very few rental options available (Cowans and Maclennan 2008: 11). Despite the fact that most of the structures were built prior to World War II and were traditionally constructed to a higher standard, the 1980s saw these structures begin to disintegrate with estimates of £19 billion to make repairs and modernise them (Cantle, 1986: 61). Since the Government was unwilling or unable to make these repairs, the existing stock of council housing disintegrated further, further marring the reputation of council housing (Cantle, 1986: 62).

This depletion of council housing stock and the inability of certain groups to either qualify for what is available or wait on a list has led the numbers of homeless in the UK to rise, illustrating that the residualisation process has created new problems rather than solving old ones (Smith 1995: 196). Despite the increasing homelessness problem, the New Right in Britain continues to view increased public housing as a mean to continue creating dependency on a welfare state amongst the poor and unemployed (Smith 1995: 199).

Negative perspectives, stigmatisation, and reduction of the council sector

Since the residualisation process seemed to help out those that were willing and capable to support themselves with minimal assistance from the state, which left only the disadvantaged to remain in the council sector, reducing the size of the sector whilst also stigmatising those that remained a part of this public assistance programme (Burrows, 1999: 31). The statistics of those within the council housing system further substantiated stigmatism of certain groups of individuals, creating prejudice, inequality in home ownership, and leading to instability in neighbourhoods. For example, the London Housing Survey, 1986-7 showed that 4% of all households in London were headed by single parents but 9% in the council sector, and nearly half of all Afro-Caribbean households lived in council housing but were underrepresented in the owner occupation sector (London Research Centre 1988: Tables 1, 2, and 4).

Additionally, Forrest and Murie (1988: 68) stated that, by 1984, more than half of households in council housing were headed by an economically inactive person and that nearly two-thirds of council housing head of households were not working. Those that do work have incomes in the bottom 40%, as compared to the early 1980s when council tenants had average income that was 73% of the national average (Housing and Dependency Working Group 2008: 14). Table 1.1 shows how the elderly and younger age groups have also become significantly over-represented in council housing since the early 1970s.

The result has led to a long-term system that geographically contains and stigmatises those living in council housing as bad places in which those seeking public assistance are looked down upon and excluded by society (Social Exclusion Unit 1999: 2). The general perspective that council housing is welfare housing for those on welfare has been ingrained into the overall society, in large measure, by the residualisation processes that have occurred over the last fifty years (Somerville 2004: 2). The lines between poverty and crime have become so blurred that the Government now uses the council estates as an example of how those within the bottom of society are “responsible for their own wretched existence” (Wheelan 1999: 5), so that the rest of society takes the same negative viewpoint of council housing and those that live there.

The New Labour rationale continues that of the Thatcher era in terms of destroying the UK’s culture of a welfare state by threatening to demolish all council housing, regardless of whether people living there now need this shelter or not, if these areas continue to “retain high numbers of the unemployed and welfare dependent” (Wheelan 1999: 4-5), proving that the long-term effect of residualisation will continue. However, at the same time, it is interesting to note that, despite the efforts of residualisation to help those in need, the number of people in the UK living in poverty doubled from ten million in 1978-1980 to twenty million by 1998-1999 (Stephens and Lynch 2005: 27). It seems as though the intentions of this process actually continued to create more negative consequences than it was able to solve.

Neighbourhood instability and lack of community cohesion

The residualisation of the council housing segment has led to a constant churning and rotation of people within neighbourhoods, creating the long-term effect of instability and a lack of community cohesion (Holman and Simpson, 1999: 23). Leaving just less affluent older people and younger people within the council housing segment has created constant change with the older generations dying and the younger generations growing restless and changing their residences more often than families or other demographic groups (Holman and Simpson, 1999: 24). For example, the majority of people moving out of council housing had lived at their previous address for less than five years and 31% have moved after less than two years, indicating that “those entering council housing in the recent past are increasingly unlikely to anticipate a long-term future as local authority tenants” (Pawson and Bramley, 2000: 1257).

The instability will be further enabled by the polarisation between available quality homes and poor homes. As one building society noted, “Prices for quality homes will continue to rise, while prices for poor homes continue to fall as the market increasingly polarises” (Wheelan 1999: 4).

Growth in home ownership

This is not to say that the long-term consequences are all negative as the growth of home ownership since the 1980s, making the UK as “home-owning society,” can only be viewed as a positive. As of 1995, the rate of home ownership was 66%, up from 55% in 1979 (Smith 1995: 190). Owning a home has been shown to be a means of raising one’s social status as well as improving one’s economic footing and long-term stability (Smith 1995: 191). Home ownership also helps many communities regenerate and improve the overall social cohesion. The fact that council housing has not lived up to the promises of fifty years ago may push the Government to strike the entire programme and develop innovative solutions for social housing needs or devise new ways of helping the poor to help themselves (Wheelan 1999: 5).

The only problematic aspect of this overall advantageous consequence is the continued inequality in class in terms of home ownership and the discrepancy amongst demographic groups in terms of who can afford home ownership and who cannot. There continues to be a severe shortage of quality housing stock for everyone, including those who would like to purchase homes. And, while the globalisation of financial markets did allow for greater housing finance options, the recent credit crunch has also shown that participating in globalisation has its price too as funding for mortgages has all but disappeared.


In looking at the present state of council housing and public assistance, it seems as though the primary causes of residualisation from the 1980s in terms of the globalised financial and lending system and the political perspective of measured spending on social programmes will continue in the same manner going forward. The recent global credit crunch further impacts the ongoing lack of focus on providing social housing due to reduced financing sources and budgetary cuts to Government funded programmes.

The future brings the need for new strategies that offer community housing rather than council housing under a new umbrella of what is being called mixed tenure to ensure the right stock of affordable social and private housing that is intended to better balance the ability to make quality housing within the grasp of all levels within society. Whilst residualisation was one attempt at breaking free of a welfare state but also one that continues to keep certain groups stuck without any upward mobility, there are other types of social processes that can be explored to better balance and sustain local communities.

In the end, it may not be the council housing or public assistance that is creating a vicious cycle for the disadvantaged since the residualisation process has actually led to greater poverty, homelessness, and other social issues. The real issue may be the need to fix other programmes that do not involve public assistance in terms of providing more job opportunities, education and training, and strategies that improve the internal infrastructure of the UK rather than trying to put a plaster on the problem and hoping it just gets better on its own or transferring income over to those that are already sustaining themselves.

The issues involved have seemingly been exacerbated by the residualisation process rather than solved the issue of a welfare state. This is the time when the UK Government must look inwards on how to provide more assistance that allows people to help themselves and invest in what is already available to refurbish and renew areas so that more citizens can enjoy a better quality of life.


  1. Burrows, R. (1999). Residential mobility and residualization in social housing in England. Journal of Social Policy, 27-52.
  2. Cantle, T. (1986). The deterioration of public sector housing in Malpass, P (Ed.) The Housing Crisis. London: Croom Helm.
  3. Chartered Institute of Public Finance and Accountancy (CIPA). (1986). Housing statistics, Part 1: Rents, rebates and allowances at April 1976 and housing rents statistics.
  4. Cowans, J. and Maclennan, D. (2008). Visions for social housing: international perspectives. The Smith Institute, 1-100.
  5. Forrest, R. and Murie, A. (1988). Selling the Welfare State. London: Routledge.
  6. Forrest, R. and Williams, P. (1984). Commodificaton and housing: emerging issues and contradictions. Environment and Planning, 1163-80.
  7. HMSO. (1988). Annual abstract of statistics.
  8. Holman, A.E. and Simpson, M. (1999). Low Demand: Separating Fact from Fiction. Coventry: Chartered Institute of Housing in England.
  9. Houghton, J. (2009). The ideological importance of housing, 1-9.
  10. House of Commons. (1945). House of Commons Debates, Vol. 414, Col. 1222.
  11. Housing and Dependency Working Group. (2008). Housing poverty: From social breakdown to social mobility. Centre for Social Justice, 1-132.
  12. London Research Centre. (1988). Council tenants in London.
  13. Malpass, P. (1990). Reshaping Housing Policy: Subsidies, Rents, and Residualisation. London: Routledge.
  14. Pawson, H. and Bramley , G. (2000). Understanding recent trends in residential mobility in council housing in England. Urban Studies, 37(8), 1231-59.
  15. Ready, B. (2007). Homes for the future: more affordable, more sustainable. UK Housing Green Paper. Available at: www.thereadyfamily.com/housing/archive/submission.htm.
  16. Scanlon, K. and Whitehead, C. (2008). Social Housing in Europe II. London: London School of Economics and Political Science.
  17. Smith, J. (1995). ‘Class war conservatism’: Housing policy, homelessness and the ‘underclass.’ The Socialist Register, 188-206.
  18. Social Exclusion Unit (SEU). (1999). Bringing Britain together: A national strategy for neighbourhood renewal.
  19. Somerville, P. (2004). Transforming council housing. Housing Studies Association Conference, 1-13.
  20. Stephens, M. and Lynch, E. (2005). The cost, quantity, and quality of housing consumption in the UK: Comparisons with other European countries, 1-90.
  21. Stephens, M., Whitehead, C., and Munro, M, (2005). Lessons from the past, challenges for the future for housing policy: an evaluation of English housing policy 1975-2000. London: Office of the Deputy Prime Minister.
  22. Stone, M.E. (2003). Social housing in the UK and US: Evolution, issues and prospects, 1-90.
  23. Waters, M. (1995). Globalization. London: Routledge.
  24. Wheelan, S. (1999). The impact of globalisation on urban development. The World Socialist Web Site. Available at: www.wsws.org.