CHAPTER XXIII

Effect on

EFFECT ON PRIVATE ENTERPRISE

Quite 90 per cent. of the money needed to develop housing estates and to build houses for the working classes has been provided by private enterprise in one form or another, Private Enterprise. e.g., by solicitors (acting for clients), banks, syndicates of builders, landowners and land developers, building societies, public utility societies and employers of labour.

The purchasers of this description of property fall into two classes first those who purchase for occupation, and secondly those, the larger class, who do so for investment purposes. Alternative and more attractive investments (as has been seen) affect both, although the latter are more influenced by the desire to obtain rents higher than has been customary in a particular neighbourhood. Although wages have risen, the cost and standard of living has risen also, and the tendency is for the working-class population to be satisfied with inferior accommodation rather than to spend a larger proportion of their wages in the form of rent to meet the increased cost of dwellings.

The business of providing housing accommodation for the poorer classes does not, therefore, give a sufficiently large return for the money invested. In justice to the good builder it must be said that, now that building materials are so much more expensive, it is. practically impossible to build houses at cheap rents without at the same time infringing local by-laws. The increased cost of building has more to do with the house famine in suburban and rural districts than the cost of the land.

The cost of land has, however, an important bearing upon the matter. Whatever the cause, the ill effects of this serious scarcity of dwellings are the same. Families which, under normal conditions, would be living in two or three rooms, have to be content with one, and that all too small for the varied needs of its inmates. Workers, who should rightly be occupying a four-roomed house or cottage-flat, have to live in a two or three-roomed tenement, and

so on right through the scale, for the house famine affects the whole of the working classes, from the well-to-do artisan to the poorest of the poor.

This scarcity in house accommodation lies at the root of the whole housing question. It is not enough to improve existing property; we must increase the effective supply of houses. In the inner ring of London this is one vast problem which directly affects the life of the people, and this applies in other large cities. This point is very clearly emphasized in the following extract from T. H. Marr's Housing Conditions in Manchester and Salford, 1904

We are forced to the conclusion that there is a deficiency in house accommodation at rents within the reach of the working classes. To provide houses simply for those who are at present overcrowded would necessitate the building of thousands of houses. But, as we have endeavoured to show in our account of selected areas, many of the existing houses are unfit for human habitation. The Town Councils are fully aware of this, and they are continually weeding out the worst houses. So long as there is a deficiency of house room, however, they cannot do much... Private enterprise . . . has failed to supply the deficiency, and there is no evidence forthcoming that in the near future, under present conditions, it will make up. Year by year the natural increase of the population makes matters worse. Apparently the ordinary builder hesitates to sink his capital in erecting houses for those whose expenditure in rent can only be small. He finds apparently the risk too great for the return he could get, and, if he builds workmen's dwellings, builds for the better-paid artisans.

And the conditions in the industrial north are also in evidence in the south and west

Very few people seem to recognize the main feature of the housing problem, which is, that there are not enough good houses for the people to live in, and the only remedy for that, of course, is to build more good houses. We want 10,000 four-roomed and five-roomed cottages built in the three towns, to let at rents of 5s. and 6s. 6d. per week respectively. . . These 10,000 houses would be inhabited largely by the artisan class, who are now sharing a six roomed house with one or more other families. 1

Scarcity of supply in a case like this is bound to mean monopoly value, and high rents are the result. Before the war an average rent of 7s. 6d. per week was charged for three rooms in suburban London, while as much as 6s. 6d. a week could be got for one room in central London, which means a yearly rental of over £16 per room. Until the supply is restored to its normal level, it will be impossible

1 A Review of the Housing Conditions in Plymouth, Stonehouse, and Devonport published by the Three Towns Association, 1906.

658,050 663,633 669,243 674,912 680,628 686,332 707,027a 710,874 714,743 721,8646 726,100

1907

1908

1909

1910

1911

1912

1913

1914

1915

1916

1917

2,892.

to check the upward trend of rents, or to cope with the evils of overcrowding.

The effect on private enterprise may be further emphasized by the statistical table on page 191 of the houses erected in Liverpool from 1896 to 1917. This table, which is taken from the Reports of the Housing Committee and of the medical officer of health, shows that since 1906, with the exception of the year 1909, there has been a steady decline in the number of houses erected. It must be remembered that during this period the Liverpool Corporation were engaged in re-housing the dispossessed under their various improvement schemes, and as these figures include the dwellings erected by the Corporation the effect of private enterprise, especially in the erection of houses of small rental, becomes more marked.

If we consider also the growth of the population during these years, the serious position due to the shortage of supply of houses will be further emphasized.

Nor is this condition of affairs confined to our cities. Even in the rural districts, where population is either stationary or diminishing, the supply has been unequal to the demand. In 1897 an investigation was made into housing conditions in nearly 400 villages in various parts of England on behalf of the Land Law Reform Association; this revealed the fact that in half the villages the cottages were "unsatisfactory" or very "bad," and that "in over a quarter of these villages there were not enough houses for the people."

CHAPTER XXIV

COMPENSATION AND BETTERMENT

THE question of compensation for the compulsory sale or alteration of existing premises, whilst not coming directly within the category of matters which can be effected by the ' Special action of private individuals, has, however, a Provision as to Compensation. very important bearing upon these matters. One of the first considerations arising in connection with compulsory purchase is that of the price to be paid for the property taken. Until some fairly correct estimate is formed as to what price will be paid, it is impossible to find out whether dwellings of a certain class and let at a given rental will pay as a commercial undertaking.

Hitherto, one of the greatest difficulties attending the actual working of the Acts has been the enormous amounts which it has been necessary to pay to owners for their property and for the supposed loss attending a compulsory sale. It is possible that this need not have been so if the law had been rightly understood and rigidly applied; be that as it may, there can be no doubt that much good work was stopped by the fear of excessive compensation. It is particularly important to notice that Parliament has appreciated the existence of this difficulty, and has taken measures with the express purpose of getting rid of it. As the law stands, it may be said that what justice demands the law awards.

The Special Provisions as to Compensation under Part I of the Housing of the Working Classes Act, 1890, in respect of the acquisition of land are as follows

(1) Whenever the compensation payable in respect of any lands or of any interests in any lands proposed to be taken compulsorily in pursuance of this part of this Act requires to be assessed—

(a) The estimate of the value of such lands or interests shall be based upon the fair market value, as estimated at the time of the valuation being made of such lands, and of the several interests in such lands, due regard being had to the nature and then condition of the property, and the probable duration of the buildings in their existing state, and to the state of repair thereof, without any additional allowance in respect of the compulsory purchase of an area or any part of an area in respect of which an official representation has been made, or of any lands included in a scheme which, in the opinion of the arbitrator, have been so included as falling under 1 Sec. 21.

13-(1752)