The Promotion of Public and Private Investment in Housing Production
To what extent can the relatively better American performance with respect to housing supply and production be attributed to differences in public policy? Public policy can be intended to increase housing supply directly, through public-sector housebuilding, and indirectly, through subsidies to the private sector. Indirect mechanisms include both explicit subsidies to encourage private-sector house-building and private-sector management and implicit subsidies, largely through the tax system, to increase the flow of capital into the housing sector.
Public policy in Britain has relied much more heavily on direct public provision, while in the United States much greater emphasis has been placed on indirect mechanisms. However, as we shall see, British policy has shifted somewhat towards the American model, with a growing emphasis on encouraging private investment (where necessary through public-sector 'pump-priming'), and the United States, under Reagan, started to move away from using public investment or tax subsidies to encourage rental production, turning towards unaided private production, assisted by a limited system of housing vouchers to help tenants with their rents.
We will therefore need to ask ourselves at the end of this book whether the directions that housing policies are taking in the two countries are likely to sustain or to undermine the achievements of the past, particularly in terms of the quantity and quality of production, the cost to the consumer, the ease of access for lowerincome groups, and the equity of distribution, and whether they are likely to narrow or to widen the differences between the two countries.
Public-sector housing in Britain has largely been constructed and owned by local authorities. None the less, while the decision to