The criminalising of squatters in Britain is part of a Europe-wide backlash. But with at least 10% of the world population squatting, can they really be a menace to society?

On 26 September, Alex Haigh became the first person to be jailed under section 144 of the Legal Aid, Sentencing and Punishment of Offenders Act. His crime was one of which countless thousands of people could now be guilty: squatting. A 21-year-old from Plymouth, Haigh was arrested for living in a house in Pimlico that had been empty for over a year. He had come to London seeking work as a bricklayer; now he has a criminal record.

When section 144, which makes it an offence to squat in a residential building in England and Wales, came into effect at the beginning of September, many people agreed with it, including 52% of Guardian readers in an online poll. But is squatting really a menace or a burden to society? Might it even be beneficial? And when we talk about squatting, what do we really mean anyway? Those questions are raised again this week, albeit belatedly, by a surprising new adjudicator: Richard Madeley. In Madeley Meets The Squatters, the former breakfast TV maestro turns investigative reporter, visiting squatters and anti-squatters alike, and bringing more nuance to the subject than the current administration did when it drafted section 144.

Grant Shapps, co-chair of the Conservative party, has a very clear idea of what squatters are: they are people who come and steal your home while you are on holiday. Justifying the law change in this paper, Shapps cited some well-publicised recent incidents of homes stolen by squatters, including that of Oliver Cockerell, a Harley Street doctor, which was occupied during renovation work while his wife was pregnant. Dr Cockerell blamed "gangs of anarchists and eastern Europeans". Shapps went on to describe squats as "death traps of despair" and spoke of squatters' lives as "characterised by gloom and anguish". "The gentle and romantic image of communal harmony and a counter-cultural lifestyle is an illusion," he declared.

These negative stories have dismayed many long-term squatters. Take Joe Blake and Reuben Taylor, two squatters in their 20s who live in an abandoned plant nursery near Heathrow airport. Their set-up, Grow Heathrow, is far closer to Shapps' illusory harmonious community than a death trap of despair. In fact, you could call it a squat-topia. Blake and Taylor's group – now numbering 17 or so – cleared their site of 30 tonnes of waste and repaired derelict greenhouses to live in. They grow organic vegetables, which they sell via the local grocer. They hold bicycle workshops, arts and crafts sessions and gardening workshops for the local community. They even do the gardening for the local constituency office. They have displaced no one and the neighbourhood wants them there, since they campaign against the proposed third runway.

It's a frugal existence, mind you. The only electricity is via a wind turbine and solar panels – just enough for music and the internet. It gets bitterly cold in winter. The "shower" is a Heath Robinson-like contraption consisting of a water butt on top of some scaffolding, with pipes leading to an old radiator with a fire underneath it. "We're building a roof for it so we don't get rained on while we're showering," says Blake. It would be very difficult to paint these squatters as a burden to society. They don't even have a carbon footprint.

Grow Heathrow was set up in an abandoned plant nursery near the airport. Photograph: Martin Godwin for the Guardian.

Blake and Taylor are also members of Squatters' Action for Secure Homes, or Squash, a voluntary group that has been leading the campaign against section 144. Most of the governments' arguments for criminalising squatting they can instantly rebut. They say the well-publicised examples of squatters stealing people's homes represent an insignificant proportion of the estimated 20,000 to 50,000 people squatting in the UK, most of whom live in long-term abandoned properties (the government has done no research of its own since 1986). Last month, 160 experts on housing law wrote an open letter complaining that "media and politicians are misleading about law on squatters" and that the existing law was adequate to protect homeowners like Cockerell. In the government's own consultation last year, 96% of respondents agreed that the law did not need changing, including most homeless charities, the Metropolitan Police, the Criminal Bar Association and the Law Society.

"They completely overplayed it," says Blake over a cup of tea in Grow Heathrow's greenhouse kitchen. Shapps and co whipped up a moral panic, aided by sections of the media, then section 144 was "sneaked" through parliament during the bill's last three days, he says. "Squatters aren't very well represented in the media, so you just hear these horror stories in the papers. But most squatters want to stay somewhere for a long time. They don't want to take someone else's home."

"What you don't get is the story about the pregnant squatter who's kicked out on the street," adds Taylor. "Many squatters are homeless and vulnerable."

"From our point of view," Blake continues, "the only people this law protects are property speculators and unscrupulous landlords who are keeping properties empty."

'They're not mafias. They are law-abiding citizens, workers' ... squatters in the Dharavi slum in Mumbai. Photograph: Bethany Clarke/Getty Images

Moral panic over squatting is not difficult to engineer, says Dr Hans Pruijt of the Erasmus University, Rotterdam, who has studied squatting across Europe. In the Netherlands, a country with a formerly enlightened squatting tradition, it was outlawed in October 2010, by a very similar process to the UK. In Spain, in the mid-1990s, squatting was tenuously linked to terrorism before being outlawed. It is invariably rightwing governments that push through the laws, Dr Pruijt observes, often on the basis of spurious arguments. "I think it's part of a revanchist mood in politics," he says. "Everything that people hate is blamed on soft, leftwing politics from the 1960s and 70s – migration, squatting, Muslims. So it's revenge against what happened in the past."

Pruijt has identified five basic reasons why people squat: out of deprivation and an immediate need for shelter; as a strategy for pursuing an alternative lifestyle (often by the middle classes); for entrepreneurial reasons, such as setting up a community centre or small business; for conservation reasons; and what he calls "political squatting" – as an arena for confrontation with the state. The categories often overlap, as with Grow Heathrow, but none of them are intrinsically harmful to society, Pruijt says.

Some forms of squatting are demonstrably beneficial. In Dutch there is a word krakers – literally "crackers" – to describe the type of constructive squatter who fixes up damaged buildings. "Squatters quietly restore house" is a story that rarely makes the papers, although in the 70s in Amsterdam, hundreds of squatters moved into and repaired dilapidated buildings in the historic Nieuwmarkt area, and fought to save the neighbourhood from large-scale demolition and redevelopment. It was the beginning of a successful conservation movement in the city. Furthermore, squatters are often involved in activities that bring little financial reward but are often beneficial, Pruijt points out, such as music or art or community projects. In the UK that category now includes teaching, nursing and studying at university.

Some would say all squatting was political, though. Property equals power, and squatting has been historically linked with the struggle of the dispossessed, anti-establishment movements, and the control of space. The practice is as old as the notion of property itself. The origins of "squatters' rights" lie in the ancient, unwritten law that if you could erect a dwelling overnight on a piece of land, it had the right to stay there – similar laws can be found around the world. As such, squatting was one of the processes by which European and even American cities grew, as makeshift settlements became permanent communities, which were often then appropriated by landowners and replaced with something more profitable. Particularly talismanic in the political context was Gerrard Winstanley and his Diggers, who provoked a wave of shortlived Christian communes in the 1640s. Winstanley questioned the very foundations of property ownership, and the class structure that resulted from it.

Those sentiments run through the major postwar squatting movements: communist, anarchist, hippie, environmental. As a student, I squatted for three years in the early 1990s in the Leytonstone area of east London. Even in the halcyon days of student grants, London was expensive and squatting was a cheap option – with countercultural credentials to compensate for the lack of glamour, or hygiene. But there was also a political slant: this was along the route of the proposed M11 link road, which became a flashpoint in the movement against the conservative government's road-building agenda – as personified by celebrity crusty Swampy. We were getting a free place to live, but we were also fighting against the destruction of the community. Events came to a head on my former street, Claremont Road, which became the last, stubborn stronghold against eviction. In December 1994 (when I no longer lived there), it took several hundred police officers several days to remove the non-violent squatter-protesters. The appropriation of space is still a protest tactic, as shown by the Occupy movement today, but their gestures are largely symbolic forms of squatting rather than a long-term strategy.

Squatting as politics ... protesters against The M11 In Claremont Road, east London in the early 90s. Photograph: Glenn Copus/Associated Newspapers/Rex Features

But if squatting is on the retreat in Europe, it has exploded in the rest of the world. According to a recent UN estimate, some 800 to 900 million people around the world are technically squatters – over 10% of the world's population. The socio-economic conditions are different: these are overwhelmingly rural migrants settling on the outskirts of cities. But these are still people occupying land they do not own, without permission. Questions of whether or not squatting benefits society are redundant here; squatting is society. In Mumbai, India, for example, slum-dwellers represent roughly 60% of the population. In Turkish cities, it is roughly 50%, Brazilian cities, 20%.

These squat neighbourhoods are often referred to as slums, shanty towns, favelas or bidonvilles. They are often characterised as grim places, with poor sanitation, high crime rates, drug gangs, and other problems. But it's often a misconception, says Robert Neuwirth, author of Shadow Cities: A Billion Squatters. He spent two years living in slums in four of the world's largest cities: Mumbai, Nairobi, Istanbul and Rio de Janeiro. "They're not criminal enterprises. They're not mafias," he says. "These are people, law-abiding citizens, workers. People who wait on the tables and clean the rooms in the tourist hotels. People help each other and take care of each other. These were wonderful places to live, once you step beyond the fact that they don't have a sewer system."

In many cases, slum squatters are literally second-class citizens, with no power to improve their neighbourhood, and vulnerable to exploitation. In Rio de Janeiro for example, favelas are being razed in preparation for the 2014 World Cup and the 2016 Olympics. But in other cases temporary dwellings have evolved into more permanent neighbourhoods, just as they did in pre-industrial Europe. Rio's Rocinha district, for example, is technically a favela but is no longer recognisable as such; it has multi-storey concrete dwellings, plumbing and electricity. "Where they can, you find people rebuilding their homes over 20 or 30 years, one wall at a time," says Neuwirth. "From mud to cardboard, to wood, to brick, to reinforced concrete, as they save."

The 'vertical slum' ... Torre David in Caracas is a 45-storey tower block that houses some 2,500 squatters. Photograph: Daniel Schwartz/Urban-Think Tank

Is this entirely different to the European understanding of squatting? For one thing, the two are beginning to overlap. In the centre of Caracas, for example, stands the Torre David, a 45-storey bank tower that was abandoned halfway through construction. It is now home to some 2,500 squatters, who moved in, completed the building and divided its spaces using found materials. It has been called a "vertical slum" – with its own shops, amenities, water and electricity (there are still no lifts).

In the broader sense, what ties together these disparate instances of squatting is human beings' capacity to organise and provide for themselves. "Wherever you go in the developing world, and, I would argue with most of the squatters in the UK and the US, you're talking about a notable act of self reliance by people facing a system that does not provide housing they can afford," says Neuwirth. "This is something we should be saluting, rather than looking at it as some kind of horrific, criminal approach."

"It's the basic paradigm of our time: we shouldn't trust so much in the state. We shouldn't trust so much in big companies, we should take responsibility ourselves," says Pruijt. "Squatters have pioneered this."

It is difficult to see how outlawing squatting will benefit the British taxpayer. Squash predicts section 144 will cost the public purse an extra £790m in the first five years, due to greater demands on homeless rehabilitation, housing benefit and other government services. Plus police resources diverted to protecting properties and evicting squatters, and judicial resources diverted to processing and convicting them. "The legal aid bill was supposed to be a cost-cutting bill, but this one clause will wipe out the entire expected saving," says Blake.

One phenomenon that has taken hold in Holland that's likely to come our way is anti-squatting – in which a handful of occupants are officially permitted to occupy an empty property, thereby preventing real squatters moving in. Anti-squatters usually pay a nominal rent, but forfeit basic property rights: prospective buyers can visit at any time and they can be evicted at a moment's notice. So technically, anti-squatters are second-class citizens, not far removed from developing-world slum-dwellers. Still, that's a better option than the alternative housing strategy the coalition is offering Alex Haigh: prison.

The Rocinha favela in Rio de Janeiro ... squatters have installed plumbing and electricity. Photograph: Christophe Simon/AFP/Getty Images)

What the squatting dispute boils down to is a split between those who consider private property to be sacred, and those who would prioritise the right to shelter. Few people would happily forfeit a second home to squatters, but nor does it feel morally justifiable for a nation to have an estimated 930,000 empty homes while people sleep on the streets.

"We're facing one of the worst housing crises we've ever faced," says Blake. "They're cutting housing benefits, cutting provision to homeless charities, there's massive youth unemployment and property prices are unaffordable." Those conditions are not likely to change any time soon. Nor do continual promises of new, affordable homes look likely to bear fruit in the near future.

Grow Heathrow is safe for the time being, since section 144 only applies to residential properties, but they are in no doubt the law will be extended to include commercial properties, including their community. Like all long-term squatters, they are now wondering how long they have got before they are thrown out and reclassified as criminals. Shapps' proclamation that squatters' lives were "characterised by gloom and anguish" now looks more like a self-fulfilling prophesy.

"People are really scared at the moment," says Reuben Taylor. "There's a lot of fear and anxiety. Some people will end up on the streets, some will end up on housing benefits, some will find other places to stay, and some might go to jail. It's a big unknown."