Very occasionally I repost a comment made on this blog as a post in its own right. I felt this comment by a commentator who calls him or herself 'Rural Voter' is worthy of that because of the importance of the issues it tackles and the relevance of the commentary offered:
What puzzles me is why Corbyn et al and/or LDs don't go on the offensive, faced with actual Tory policies that defy ‘One Nation' claims? I haven't a clue why.
Look at some 20th.C political history, although it covers the period when baby boomers grew up. UK public debt in 1955 was 140% of GDP, well above today's. Harold Macmillan, then Housing Minister, later Prime Minister, was MP for Stockton, a working-class seat. Despite his posh/paternalistic background he was clearly a very one-nation Tory, with economic policies distinctly leftwards of today's Labour or L.D.s.
To be specific, the Harolds (Macmillan/Tory and Wilson/Labour) presided over a construction rate of over 300,000 homes per year. That's the sort of figure we need to solve today's homeless crisis. Yet since 1979, ‘Thatcher and Sons' [ref.: Simon Jenkins' book] haven't managed to build more than 150,000 to 200,000 homes per year. Few have been council flats or houses, which are what's most needed.
Finding the land? Easy; look at how Letchworth or Milton Keynes did it or at how councils in the Netherlands and Germany acquire land, give it planning permission and sell it to developers or self-builders. Paying for houses? Hardly rocket science either. Before any rental income comes in, issue 40 or 50 year government bonds. Rich pensioners who lend £500k to the government via NS&I could even bequeath these loan notes to their grandchildren. That approach could fix the payments on say £400 bn of spending until 2066, i.e., there is no problem if interest rates go up.
I'd rather see councils do the borrowing for however many rented houses and flats they need, though, so central government needs to return the power to issue bonds to local government. It's called local democracy;. Most countries have it, the UK doesn't seem to understand it.
The cost of each million council houses, done to very high specifications and decent space standards? My guesstimate = about £80bn.
Water companies already issue very long-dated bonds. The interest rate on some of their index-linked debt has been about 1% per year. Hardly crippling; at that rate it would cost about £3bn per year to repay £80 bn over 50 years.
The UK has too many deep-seated problems — three being the homelessness crisis, as discussed; missing vocational skills and a huge current account deficit — to spend years arguing about Brexit. The only way to reconcile 52% and 48% seems to be a Norway-like situation, meeting roughly in the middle; i.e., half in and half out of the EU [as Peter Hitchens said].
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Up until a few months ago, I was convinced that the solution to our housing problem was more supply. Then I recently read a really interesting paper that argued that thanks to globalism there is an enormous demand for prime UK property from a growing pool of wealthy Chinese/Arabs etc. which can effectively soak up any supply we provide. It made me wonder whether we might not be better off trying to curtail this demand from buy-to-let and foreign investors before investing billions in more supply.
So we build more social housing
That is what the article is suggesting
A definite need for that – I’m of a generation that has only ever known a shrink in pool of social housing. Just not sure more supply is the only solution to the problem.
Supply and demand, less stock can and will push the value of goods ( housing stock )
which is one reason why centre of right politics love about housing shortage, house owners love to see the value of their houses rise, its gives them a sense of wealth,
you can see them in the high street looking into windows of estate agents with a smile on their faces as they see prices of housing going up, its house Hardcore pornography.
The two surely do not have to be mutually exclusive. Other countries require some sort of residency period before being able to buy a property. We know that a large amount of new housing in London is prestigious apartments sold FIRST in Hong Kong to asian purchasers. This should be outlawed.
This MAY be possible after Brexit
I raised this issue in 2011 with the LibDems (Nick Clegg). It solves many problems, including unemployment and utilising the inert cash in contractor coffers and the land banks. And, yes, it has to be social housing, especially through housing associations. Simple!
Why is it not happening? I have a wild theory that it is all about having an experience of leadership. Attlee, Macmillan et al all were officers in WW2, many having had experienced WW1. If there is nothing else the military teaches you it is how to get things done – especially logistics. Right up to about the 1980s we had the Denis Healeys and Edward Heaths who had been staff officers. Not any more – a bunch of effete well educated theorists and ideologue whose practical thinking is limited to getting in and out of government vehicles and PR.
The really important failing is their utter lack of imagination, especially social and moral imagination, coupled with no sense of responsibility. They, especially the Tories, have a camp guard mentality, i.e. “I have no idea what is happening behind that barbed wire. Dead bodies? No idea how that could have happened.”
So this British public has the worst of all worlds and have lashed out, and will be the worse for it for years to come, unless there is a revolution and we get rid of this system.
Up until about 30 or 40 years ago local councils could issue bonds. Ipswich certainly did as my charity used to buy them. Why did they stop doing this? Was it by governmental decree?
Thatcher stopped it to control government borrowing
It was not just about controlling government borrowing, Richard. Indeed, far from it, though that became the excuse, which, as with austerity, was used to deflect attention from the real reason.
It was because the Tories – and Thatcher and her acolytes in particular – were scared that local authorities had the powers at that time to develop and implement policies across a range of policy domains (housing being only one, education and the delivery of many local services also) that ran counter to the neoliberal policies central government wanted to ram through. And you may remember that a variety of local authorities attempted to stand against central government policies of the time.
Indeed, if you read any of the text books on local government produced through the 1980s and early 1990s they contain a great deal of discussion on the different types of local authority that were emerging as a result of central government policy (note: I taught British Local Government to undergrad students in the mid and late 1990s having worked in and around local government from 1988). One of the features of these models was that it was assumed that even given the policies of the various Tory governments of the time local authrities would continue to posses considerable autonomy over certain policy areas. Sadly, this assumption was wrong as New Labour also implemented various policies to further control and neuter local government, rather than reverse those the Tories had spent many years implementing. And of course, along come Cameron and co and under the austerity banner double down even more.
In short, for approaching 40 years central government has done all it can to undermine and control local government to such an extent that in reality there’s very little that’s autonomous and local about anything much local authorities do nowadays. They are, in the main, the servants of central government. Were this not the case and we had a system such as exists in France, Germany, Italy or even the US I’ve no doubt we’d see a burst of innovation in many policy domains, housing being only one, and a reflowering of local democracy too. But by definitin that would expose central government policy for what it is – lame dogma – and also the lack of intellect and shallowness of most of the politicians who make it into government, and the self-serving nature of almost all senior civil servants. And shining a light on that aspect of our society would never do, would it.
This is another of your comments tbat’s becoming a blog in its own right
Thanks
Why didn’t the last Labour government reverse this, it had plenty of time in office? Or enable Councils to use all receipts from Right to Buy to fund new house buildings?
Because the urgency was not appreciated at the time
It’s called the limits of human understanding
Local community based schemes are a major way forward for sustainability. Take community energy as an exemplar. Schemes can make around 15% p.a. and offer share (or bond) holders 6% p.a. [1]. I like this scheme as there is 1 vote per holding, no matter how many shares you hold.
The debate on housing has been skewed, far to long, to wealth accumulation (Thatcher and greed — slake the thirst for the bank of “Bricks & Mortar”).
That debate must be turned to:
1. Affordable housing for our children’s generation.
2. Affordable rents.
3. Energy efficient housing e.g. Passivhaus standards [2].
4. Reduced levels of debt for citizens. Debt cancellation.
5. Progressive tax on properties e.g. empty, not owner occupied.
6. Community developed properties and community based solutions i.e. local money, labour and materials.
7. Care in the community property solutions.
8. Enforced improved design and engineering, for sustainable housing, not match-stick housing. Mitigating poorer building construction and materials commonly seen today.
9. Housing clusters with common/shared facilities e.g. energy.
10. Reduced travel requirements of the population.
11. Larger roomed housing.
[1] http://bit.ly/2e42WXK
[2] http://www.passivhaus.org.uk
https://www.youtube.com/watch?v=w3D6mHHaqF0
The whole community should benefit from rising land values, not just those fortunate enough to have savings.
@Carol. The 9% goes back into the community.
I agree with local bonds but given they are outlawed, I still think there is mileage in local currencies – at least when they are electronic and can be used to pay council tax which certainly some now can. If NHS trusts could get agreement for staff to accept some wages in local currency this could help to mitigate some of the local NHS cuts. Indeed, they could try subcontracting with payment to the subcontractors in local currency only. That would certainly be a contract to exclude offshore rentiers!
Local authority sponsored not for profit banking would also be a considerable help and give local authorities a much greater measure of independance. In this area Richard Werner seems to be successfully progressing his local bank
http://www.bankingtech.com/623412/new-challenger-bank-to-launch-in-uk-hampshire-community-bank/
I see all these as small steps to part of the necessary steps to undermine the disastrous dogmatic diktat for cuts from central government. Because I have grave doubts that the current government will be inclined to return bond issuing powers to local authorities anytime soon.
Local currencies that are pound equivalents help increase velocity of circulation but making local bonds legal would be a vastly easier solution
I agree. But as I understand it local currency, when endorsed by a local authority, can be used by them for expenditure on things that would not otherwise take place. Thus they are actually money creation on a local scale.
I think they have use
But I do not think them a panacea
Quite frankly it has been evident to all three of the main historical political parties for decades that the UK has a housing crisis and the only two reasons for them not responding is A) continuing to believe that the UK’s fiat currency should still continue to follow Gold Standard rules (i.e. no Functional Finance) and B) corruption with some politicians at both high and low levels within their parties operating a side-line of buy-to-let properties (Tony Blair is the most obvious poster-child for this – https://www.theguardian.com/money/2016/mar/14/tony-cherie-blair-property-empire-worth-estimated-27m-pounds).
Ivan Horrocks comments seemed factual and believable and indicate a need for change, but the comments about MPs lacking intellect and senior civil servants being self-serving are not helpful. What to do? The population elects the MPs, so whose fault is it if his assertion is true? What does he want Senior Civil Servants to do? Take illegal executive action?
Norman, from what I read, governments of both parties have thought it beneficial to bring in people from the “real world’ of private industry to make civil servants ‘more efficient’. That not only changed the culture but sent a warning to younger people that if they wanted promotion, they needed to talk the language of the corporate private sector.
The possibility of post civil service career, jobs in the private sector no doubt is another incentive.
Worth noting that Japan’s debt to GDP ratio (from memory) must be over 200% at present yet there is nor problem with bond purchases and no unsustainability issue because the Central bank can always step in and buy them.
The poster points out the debt/GDP ration was 140% in 1955 yet here was no problem with funding, though this might also be connected to the fact that British manufacturing was around 20-25% of the world market at the time which i suppose helped to maintain the currency peg.
Today there is no currency peg or gold standard, so there is no spending restraint other than inflation and available resources.
The housing situation remains an ongoing disaster with the only solution I can see being:
1) more severe credit controls
2) A ban on buy-to let
3) As the housing market collapses some sort of tapered bailout for those hardest hid and with the least assets to compensate them
4) Once things have evened out (rents/ house prices) bring in LVT.
Note: I’m naling these suggestions with 0 expertise, but just throw them in as thought experiments.
How odd that you do not see building houses as a solution when that is obviously needed
I think your extrem solutions all rather bizarre in that context
The building is necessary, of course, but that will not reduce prices on its own as rentier activity will continue (buy to lets, speculative purchases).
I think it is naive to believe that building ALONE is a solution.
I also find it rather bizarre that you should think LVT and credit controls and a negative equity tapered bail-out ‘extreme’. It all sounds rather reasonable to me. Don’t forget that it is housing that is one of the fundamental cripplers of social and economic life at present and will hamper anything else that is done to create improvements. Can’t see why more people don’t seem to see the obviousness of that.
let’s be clear: When Heath started loosening credit controls in the early 70’s there was the immediate unleashing of a housing bubble (or an early cycle of it). It’s THAT that was the extreme policy!
I think creating a banking crisis, an international trade crisis and requiring tax reform to solve a housing crisis which can be solved wi9th bricks is extreme
Worse, actually: utterly irresponsible I’d say
This is a great blog.
In 2010/11 – the Co-alition did it’s ‘Localism Bill’ – which just seemed to be a way by which the private sector could get its hands on public assets by encouraging citizens to become owners of buildings and services and basically being set up to fail.
The way in which the Tories stopped local bonds from being issued makes the Localism Bill look more stupid, ineffective and dishonest more than ever.
And when you also consider that Labour were talking about ‘double devolution’ but local bonds to my knowledge were never mentioned in this context you can then see once again the historic tendency in this country to over centralise power.
As I’ve said before, housing is strange beast – both an asset and a good and I think that house prices reflect the inabilty of the market to price it at the right level for ordinary people. You could build 500,000 more of them this year and I’m not sure it would bring the price down to more affordable levels because of some of the dynamics mentioned above.
On my brother in law’s street in Chiswick West London, most of those looking at for sale properties are not local people – they commonly come from Asia. This is not a bad thing in itself, but if the people concerned are wealthy, the price (upwards of £1 million + for a terraced house!) is being driven by that external driver – not local incomes.
So I agree that what we need is more social housing.
But also, let’s not forget that in order to reach the numbers required in post war Britain, we used a lot of pre-fab building to cut costs. And we did it badly – really bady in some cases – watch Adam Curtis’ ‘The Great British Housing Disaster’. We have offsite building capacity now where we can pre-fabricate a home and put it on a plot – but how good is it? How long will it last? I hope that we have learnt lessons.
The other thing that gets my goat is brownfield sites. In Nottingahm and Derby there are ex-LMS warehouses just sitting there doing nothing and rotting away yet this land could be put to good use. The Tories still aim to get rid of grants used to bring down the costs of brown field remediation by 2017 having reduced them from 2010. So all this land could be used and no-one wants to pay to have it cleaned up. Great. Until this is sorted out, how can we justify digging up any green space for the next excutive homes?
Finally – one of my objectives is to have my contribution to one of Richard’s blogs referenced by the great man himself too. I must try harder.
I see those warehouses when I go through Nottingham – as I will be on Wednesday
And I am sure it will happen…..