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The government must overcome the divide between the public and private sector in housing if we are to provide good quality accommodation for both the low waged and the well off, writes Conrad Russell.

As a place to be born, there is something to be said for a manger - provided it isn't in present-day Bethlehem. Cattle are a good deal more predictable, and probably gentler, than some of the more despairing denizens of bed and breakfast accommodation. There is crawling room in a manger. It does not produce cases like the one that puzzled doctors recently, when they saw a child of 18 months who could not crawl. They assumed a serious physical problem, but could not find it. It turned out that there was no space between the bed and wall in which the child could have learned to crawl.

Where B&B means what it says, there is usually a problem of hunger. Income support is not designed to finance eating out for two meals a day, and 20 people queuing for three gas rings, with toddlers trying to pull things off stoves, is a prescription for scalded children and empty stomachs. In 1992, the House of Lords voted for an extra supplement on income support to allow those in B&B to eat. Because the suggestion came from the Lords, the government ignored it. And because many children in B&B do not have a school place, they do not even receive free school dinners.

It is, as usual, much easier to identify a problem than it is to offer a solution. We could put right some of the more obvious things the Major government did to make the situation worse, though there is little sign of this happening. We could, for example, reverse its decision that income support for mortgages is not available for the first nine months. This change would do much to reduce homelessness. So would serious help with deposits through the social fund.

Yet all these are palliatives for a general failure of housing policy. It is tempting to ascribe the failure of British housing policy to population density, yet it is not an adequate answer. I am not aware that Belgium or the Netherlands, which have similar population densities, have housing problems equivalent to ours. Our failure is essentially a failure to make a success of the private rented sector, which has been shrinking in size since 1919, the extent of which is unparalleled anywhere in Europe. That failure is peculiarly British, and results, I think, from the distinct class-based structure of British party politics. That has made the role of the market in housing provision a battleground in a way most European countries do not understand, and has meant that every successive government policy has been dismantled by its successor before we had a chance to find out whether it would work.

There are features in the subject of housing that point both ways. If we assume that public and private sectors are good at different things, housing demands the abilities of both. The private sector demands, and tends to produce, adaptability, flexibility, and the crucial commodity of supply. Landlords who do not make a profit are unlikely to continue to absorb the problems involved in renting property.

The private sector in London is capable of supplying housing to a global market. For example, it can provide accommodation to enable a banker from Osaka to come to London and work.

Yet when we look at need, we see other things that the private sector is not suited to supplying. We see a need for universality that the private sector is not equipped to meet. It is the nature of the private sector to cherry-pick, and it is the Osaka banker, not the Cockney waiter, who gets the cherries. Asking a market to supply a universal service is about as appropriate as asking pigs to have wings. It is not its nature, and if it does, it is no longer a market.

Equally, it is not the nature of a market to make less money than it could. If there is a market for high rent luxury accommodation, it is no use expecting the market to supply cheap accommodation for people on low wages. Markets are by their nature undependable; how else could they supply their major virtue of adaptability?

How do we cope with this mixture of needs? There are two possible approaches. One is that we could sit down and do some hard and serious thinking until we come up with a public-private mix that meets this illogical combination. This may be possible, but it is extremely difficult. The other, which is more often the continental way, is simply to forget about the ideology, and let the system evolve until it comes up with some remotely possible blend of systems. What is not the solution is to engage in an ideological struggle for supremacy between the service and the market visions of housing in which both sides press for a complete victory, which will always be a pipe dream. That should have been pulled down with the Berlin Wall.

Conrad Russell is Liberal Democrat social security spokesperson and professor of British history, King's College, London.