Neoliberalism is a con, a fraud, and Britain’s housing crisis vividly illustrates why. The populist promise of neoliberalism has always been about extending choice for the individual. In a properly functioning society – which sadly we do not have – young Britons would be able to choose between a comfortable council house on a secure tenancy, a privately rented home with an affordable rent and security, and home ownership. All of these options have been trashed.

Hundreds of thousands languish on social housing waiting lists because new stock isn’t being built. An unregulated private rented sector means both rip-off rents and a lack of security, depriving tenants of the ability to set down roots in communities. And as new research from the Institute for Fiscal Studies demonstrates, home ownership for middle-income young adults has more than halved in just two decades.

The Tories built this system of endemic insecurity, so no wonder the working-age population punished them at the ballot box in favour of Labour’s promise to rip up a broken status quo. In the 1980s, Margaret Thatcher’s “right to buy” was seen as a stroke of political genius: it forced Labour on the defensive, and looked set to create an entire generation of Tory-voting homeowners.

Over the long term, though, this policy helped sow the seeds for the Tories’ present crisis. Four in 10 of the homes that were flogged off are now owned by private landlords; their tenants pay twice the rent of a social tenant. The depleted council stock wasn’t replaced, and house prices were set soaring. And so, hey presto, home ownership is now back where it was in the 1980s. Short-term advantage in exchange for long-term crisis: a pithy summary of the entire Tory philosophy.

If the Tories wanted to seriously claw back political support among younger voters, they would all wake up in the middle of the night, drenched in sweat and panicking about how they address the housing crisis. But that would mean a serious council house building programme, and the Tory fear – summed up by either George Osborne or David Cameron to Nick Clegg – was that social housing “just creates Labour voters”. The Tories also fear any measure which might topple the house prices of their core vote, and anti-new build nimby-ism is rampant in the Tory shires.

What freedom for an individual whose pay packet is devoured by rent and who lacks security?

That’s why radical measures are desperately needed. The lowest level of peacetime housebuilding since the 1920s must come to an end: it’s time to build, build, build. The post-war Labour government committed to building council housing to a higher standard than private housing: that pledge must be revived. Local authority-backed mortgages should be promoted on a mass scale; and both stamp duty and an unjust council tax system should both be abolished in favour of a progressive land value tax.

In the private sector, Labour is right to commit to an inflation cap on rent rises and three-year tenancies: but local authorities should be granted the power to impose rent controls, too. Homes which are left empty should face compulsory purchase orders, and then be transformed into council housing. Companies and trusts that aren’t based in Britain should be banned from buying up homes, too.

The Tories are incapable of introducing such measures, because their ideology forbids it. They are not the party of home ownership: they are the party of housing crisis. And again, what a con their whole philosophy is. They don’t widen choice in housing: they restrict it. They bleat about the promise of individual freedom: what freedom for an individual whose pay packet is devoured by rent and who lacks security? The bankruptcy of Toryism is summed up by a housing crisis that did not land out the sky: it was consciously created. And that is why the crumbling social order which governs Britain can’t be tweaked or tinkered with – it has to be replaced altogether.

• Owen Jones is a Guardian columnist