Michael Collins: All huddled together under one roof

It was Labour who demolished a fair letting system for council houses

In a recent BBC interview, I asked the Housing minister, Grant Shapps, if our housing situation today was as critical as it was around 1900. He said "crisis" was the only word to describe it both then and now. The solution then was council houses. Legislation after the First World War resulted in 170,000 new homes. Yesterday the Prime Minister attempted to deal with our own crisis; the emphasis was on home ownership, but council housing has its part. There were initiatives to correct misuse of the system and issues around tenure, in a bid to make council housing a springboard for social mobility – which is what it once was (notably in the post-war New Towns).

But rather than a means test to decide if people with high incomes should stay in council housing, the Government should clarify who the houses are for. In the past it was clear who was entitled. Long before the Ministry for Housing, state housing fell under the remit of Health. The working classes were the priority – not necessarily the poorest, but those in insanitary homes condemned as slums.

Nye Bevan removed the term "working classes" from the 1949 Housing Act in a bid to make council housing for all. But it was entirely cosmetic: the middle classes opted for home ownership and the working class took priority because their needs were greater. Allocation was by a points system, weighted for those with local connections. A "sons and daughters" scheme ensured extended families remained on the same estates, in the expectation that further generations would remain locally.

Although a Tory government brought council housing as we knew it to an end in 1979 with the great sell-off, it was Labour who demolished a fair letting system. In 1977, the homeless were made a priority and a system of "need" was introduced that was open to abuse. Unsurprisingly, a lot of "homeless" people appeared, to the annoyance of locals who had waited patiently for years on the housing lists.

Today rented housing in the public sector is dominated by sub-lets, in many cases occupied by those with other homes. The criteria for letting needs to be rethought. Once the working class and homeless topped the list; in the current climate housing need has widened to all classes – those unable to get on the property ladder, those that can't afford the high rents of the private sector, those whose homes have been repossessed. These all add to those heavily laden waiting lists. In order to create a system that allocates homes to those most entitled, this idea of "need" must be redefined.

The Coalition in part addresses this, by preventing those with suitable homes already from seeking social housing and granting local authorities more freedom in allocation. But prioritising working households, as proposed, may simply reverse the situation Labour created in 1977 and ghettoise the jobless in poor housing, private and public.

Michael Collins made the BBC film "The Great Estate: The Rise and Fall of the Council House"