Six hundred high rise blocks in the UK may be unsafe. That may be 60,000 homes and, in all likelihood, 150,000 or more people who might need a new home. Last night Jon Snow asked on Channel 4 News how these new homes might be paid for. So let me answer the question, because the answer is easy to provide. There are a number of ways to achieve this goal, and any combination is also possible.
First, let's make clear that savings from elsewhere could pay for this housing. We could, for example, stay in the EU and save the divorce settlement that is coming our way. How much will that save? No one seems think this sum will be much less than £30 billion. That might pay for many of those new houses. Or we could stop Trident. Or Hinkley Point, which is going to cost £30 billion. The point is money is available when politicians want it.
Second, we could let local authorities issue bonds to fund the new housing. Bonds are, of course, debt. But, as I have argued, this country needs more government debt. And what is more, it wants that debt. Remember government debt simply provides people with an incredibly safe way to save, which is what they want. So there is almost no doubt that these bonds would be bought. Offer a competitive interest rate and wrap them in a social housing ISA wrapper and they'd be going like hot cakes.
Third, as I have also long suggested, UK pension funds could be required as a consequence of being offered beneficial tax reliefs to invest 20 per cent of all the contributions they receive in new job creating projects. Under EU rules these could not be directed to the UK alone or even to local funds. But, if the pension fund offered this option to those contributing and those contributors chose to take advantage of that option then that little problem could be circumvented. This could generate more than £15 billion a year.
Then, fourthly we could, course, accept that if none of these options appeal that a government doesn't actually need to raise money to spend it. As I have, again long explained, money can be created out of thin air by the Bank of England on behalf of the government. We know this is true because over the last eight years £435 billion of new money has been created in this way, much of which has eventually led to asset price inflation, including of housing stock in London and the south east of England. There is no reason why new money could not be created in his way to pay for social housing: this was the whole basis of People's QE that Corbyn adopted a couple of years ago.
So money is not an issue. Let me be absolutely clear about that.
A shortage of building materials may be.
A shortage of skills might be as well.
And both will be constrained by our desperately conventional view of how houses must be built.
But let's be clear: if you asked me for the money to build these houses and if I was in the Treasury I promise I could deliver it. And so too could anyone else if only they had the understanding and the political will. And in a nutshell it's those last two things that really define this problem. And as result they're the issues needing most attention.
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Let me start by saying I voted remain but, I was wondering how remaining would square with the want and need to take back into public ownership such things as rail and energy? It would seem that to be ‘in’ the EU requires private ownership (in part at least)of these things allegedly to avoid monopolisation. This is a genuine question and concern as it has been puzzling me for some time.
German railways are nationalised
So are Dutch railways
Both own part of our railways
Sp, yes it is entirely possible to have nationalised rail services
And utilities
Not for much longer.
I don’t have the link to hand but I believe the EU has a protocol called something like Track 4, which will involve the privatisation of much if not all the remaining State-owned railway companies in the EU, to be implemented IIRC, in 2018 or 2019.
And it just won’t happen
Of that you can be absolutely sure
But those were ALREADY nationalised and remained so.
BUT EU law forces them to be acting like limited companies open to competition. DB is known as DB Aktion Gesellschaft which is the German equivalent of a Limited Company, although all its shares are Government owned it is still open to competition as EU law demands>
here’s Kate Hoey on the subject:
“Undoubtedly EU law will be a huge obstacle to any renationalisation scheme — especially one that aims to do away with competition and markets. The EU is clear that its objective is “Opening up national freight and passenger markets to cross-border competition”. Its directives and regulations have created what can only be described as a legal quagmire.
The main EU law in this area was the First Railway Directive (which was replaced and upgraded in 2012 with a new version). This was the original law that gave the Tories the excuse they needed to introduce their privatisation agenda in the nineties. That law enshrined the role of the private sector by making it a legal requirement for independent companies to be able to apply for non-discriminatory track access on a member state’s track, calling for:
“separating [of] the management of railway operation and infrastructure from the provision of railway transport services, separation of accounts being compulsory and organizational or institutional separation being optional.”
So EU law, at present, can be seen as an obstacle, or , at best, a law that has to be fudged in order to pretend you are following it.
Of course, the EU appraoch that obliges these ‘nationalised’ companies to pretend to be private encourages them to gobble up entities in other countries like the UK:
‘Yet many of Britain’s rail franchises are already owned and operated by state-owned companies — from Germany, the Netherlands and France.
Through a complex web of international subsidiaries, both state-owned and majority state-owned railway companies are operating millions of rail journeys across Britain.(see:http://www.huffingtonpost.co.uk/2015/08/18/foreign-state-owned-railway-british-train-companies-revenue_n_8003970.html)’
This situation is a farce and Labour should be making it clear that leaving the EU helps the UK in this respect so their is no more obeisance before flawed market fundamentalist bollocks like that. That’s what ‘taking back control’ should mean instead of stupid flag waiving and racist garbage plus union Jack underpants.
‘And it just won’t happen
Of that you can be absolutely sure’
I agree; but as I point out in my other post, the EU obliges nationalised companies to pretend they are not in order to leap over the legal hurdles and promote market fundamentalist nonsense. Of course the Eurozone which separates monetary from fiscal operations automatically obliges nationalised companies like DB to operate like private companies to raise capital.
Obviously I hope you are right!
Re the EU, I think the best way to understand it is as a sack full of cats pulling in multiple directions all at the same time. The neoliberal cat is pulling one way while the social justice cat pulls back.
Still better to be in the sack than getting crushed on the outside.
‘a sack full of cats pulling in multiple directions’
Don’t want to hijack this thread, I’d just say to Charles that the whole sack is neo-liberal with the ‘fat cat’ of rentier economics pulling the whole shebang. Not sure what you mean about getting crushed on the outside when the ‘inside’ IS the crusher mechanism (Portugal/Spain/Ireland/Latvia and a Greece that is being ground into dust.) Not to mention the Harz Laws in Germany that implemented internal devaluation which was then copied here….crock of the proverbial…
We can form links across Europe for social change…much better option as Corbyn has suggested.
Simon, I think we agree, only that to me “links across Europe for social change” looks like getting into the sack and fighting rather than sitting on the outside. Although it does not always seem so, the peoples of Europe are our strongest allies in the fight for social justice.
I can see the attraction of going it alone but I fear we will not have the leadership or strength to take on the monopoly power of multinationals, and will settle as nothing more than an income stream for overseas corporations.
‘we could let local authorities issue bonds to fund the new housing. Bonds are, of course, debt. But, as I have argued, this country needs more government debt.’
In the case of local authorities issuing their own bonds for use in their defined geographical and fiscal zone then that IS debt which could only be financed by revenue-so that needs to be distinguished form Government bonds which aren’t really debt but safe savings accounts; so, Richard did you mean the former or latter, if the latter then go straight to option 4 and simply spend the money using the accounting trick of buying back bonds.
Unfortunately May is still repeating the nonsense about ‘intergenerational debt’ that spending creates so the Tories are still using this gold-standard guff as an attack weapon.
If LG debt is government guaranteed it is government debt
and if a bank is too big to fail that bank debt is government debt too!
We should not forget who underwrites the system of money, i.e., all of us. Consequently we need to make it work for all of us which means a government that delivers on what people need to survive and function.
Money is not the constraint. Time to find some politicians that are able to step up to the task.
Agreed
Jon Snow also followed on from asking how “we” could pay for it, by declaring in anguished tones, “We’re bankrupt!”
Which made me despair.
Channel 4 News is about the only TV News programme that’s watchable (barely) these days, and Snow’s heart appears to be, more or less, in the right place, but this economic misrepresentation by one of country’s major news anchors is really unforgivable.
I agree, that made me despair as well
Since Snow’s remark was aimed at a tory, I consider he was just throwing back the word to those who use it.
Good point Carol, perhaps Snow was using it in quotation marks and slightly ironically?
We could use some of the £16.94bn we spend on housing benefit to private landlords and build some social housing!, perhaps Mr. Jon Snow should visit the taxresearch site.
I rent below the LHA in a lot of cases. Might be that the LHA rates are too high?
I have no idea what you are saying
“Under EU rules these could not be directed to the UK alone or even to local funds.”
But as the UK is leaving the EU, this option could presumably then be implemented?
Along with other direct government measures to stimulate the economy to mitigate any post-Brexit slump, which are currently prohibited under EU treaties?
If we leave, no problem
Isn’t the vast lion’s share of the EU divorce payments intended to cover existing commitments that we would have had to pay if we remain? These include commitments to grant programmes, pensions, etc.
If so, how would we save by remaining? We’d have to pay those amounts anyway.
Have I missed something?
But we’d get time to pay
And quite likely rather more benefit from doing so
But isn’t the divorce deal (and the figures bandied about) to be staggered over time? (Or if not, the NPV of the payments, effectively the same thing).
Surely we don’t pay it all up front (eg pension costs) – we pay it at the time.
We don’t know.
But this is something of a side issue: I am merely pointing out that money can be found when required. The suggestion was more metaphorical that practical
The real point was in the remaining suggestions because I can’t see the government giving up Trident either, for example
I’ve no problems with any of this but since we now have a very weak Tory mal-administration and a remote possibility of them taking their foot off the throat of the economy there are some other questions that need to be put to the new ‘caring, sharing’ Theresa and her Chancellor:
1) Are you going to remove the 1% rent income reduction you have imposed on local authority landlords that currently eats into their surpluses that could be used to fund new home building?
2) Are you going to get rid of the stupid rule that makes local authorities give back their right to buy receipts to central government if they do not spend them or at least extend the time they do have to spend them by a considerable amount?
3) Are you going to restore the grant system for remediating brown field sites that would increase the amount of developable land and protect the green belt but also ring fence a newly restored grant for social housing only?
4) Are you going to get rid of the stupid and callous single shared room rate rent for the U35’s that makes even the smallest traditional council flat too expensive for them to rent and also limits what homes landlords can invest and build for this age group because the rents are so low?
5) Are you going to get rid of the benefit rent cap which will eventually mean that the housing part of benefit will be so low as to make even the smallest council house too expensive and could see the end of council housing as it effectively prices itself out of provision?
6) Are you going to repeal the Bedroom Tax which rather than resulting in a more efficient allocation of stock just adds pressure to the already stretched supply of the existing stock?
If none of the answers are yes, then I propose that we march on Parliament, grab the Tories by the scruff of the neck and expel them from the premises.
We can then lock the door and get on with doing what should be done.
If only!
Indeed, if only
Anyway you look at an enhanced housing programme it must be counted as an important investment in infrastructure and not in any sense money that produces no useful output. There are lots of challenges as you mention and many of them are listed here: http://outsidethebubble.net/2017/06/22/solving-the-housing-crisis-a-fairer-deal-for-all/ .
However the biggest problem is getting a Tory government to take any of this seriously. It is traditional for all British governments to wring their hands energetically for a few days or maybe a week or two about the housing problem and then do utterly nothing about it. I do believe that Labour might actually take this all a bit more seriously. Let’s hope so!
Solution 5: Impose a high LVT rate on owners of income generating residential property, enabling local authorities to buy up on the cheap most of those rented homes in the private sector which no longer earn a (in)decent return, and relet them as council houses, saving a massive housing benefit bill. (Of course we need more new council houses, but this will take longer.)
Solution 6: Introduce LVT on all land; identify suitable sites for new towns/garden cities. With change of permitted use, LVT bills will force owners to develop themselves or sell, enabling local authorities to control the development, which will include plenty of council houses, built to high standards, including environmental ones. This will also force developers with landbanks to get on and build or else sell up.
solution 7.
Allow all local authorities to invest and build market rent property in places like central London (lots of State owned land is being sold off cheap to private builders which is insane). Then use the proceeds to buy farm land at agricultural prices and then grant themselves planning permission. Naturally both would be castigated by some Tories as Communism gone mad, but plenty of sensible Tories already agree in principle.
I think that there should be a massive programme of social housebuilding and also I think that all of the ways that you suggest are good ways to fund it. However I think that we should be very careful in calling for the demolition of 600 (or indeed any) high rise blocks, which I think as far as I can tell is what you are suggesting.
I work in social housing – estate regeneration to be precise (and hence have changed my usual username for professional reasons). Some of the points I’m going to make are more general points about the process of estate regeneration, but they will all apply to any programme that knocks down and rebuilds housing estates.
Firstly, there is a massive amount of disruption and uncertainty involved when you come along and knock down (redevelop, regenerate however you wish to call it) someone’s home. The actual process takes years, often more than a decade, so it involves years of uncertainty – uncertainty in the planning stages, uncertainty as to whether the economy changes or the government changes and then the scheme might have to be put on hold, or changed in someway to make it viable again.(eg. increasing density, height of buildings, reducing the number of social homes).
And also there is the uncertainty of whether you are going to be granted reasonable and appropriate rights – do residents get rehoused in the new scheme, do they get rehoused in the general area, how are leaseholders recompensed – can they afford to buy a new home. If someone is living in a 3 bedroom house and their two children are away at university, will they then be eligible for a 3 bed house or will they only get a one bedroom. If the previous homes were spacious, and above the planning guidance, will the new homes be the same size or smaller. This might seem like a small thing, but if you are told you are going to be moved, through no fault of your own to a new home that is 5% or 10% smaller, then you probably wouldn’t appreciate it.
And don’t forget the people involved are often elderly, from poorer households or from ethnic minority groups, maybe not speaking english well or understanding how the system works, so they are often the people in society who are either individually or collectively able to exercise power.
Secondly, there is the issue of community. We’ve seen from Grenfell that there is a significant amount of community capital (social capital) in such areas. Generally speaking, estate regeneration as happened when terraced houses were knocked down in the 50s and 60s destroys communities and the bonds that exist within them. And we should be very careful when suggesting that a community should be broken up, because it is a living, valuable thing.
And don’t forget, that many people living in housing estates, like where they live and like their homes. So I get very worried for many of the reasons above when I see public figures as I’ve seen in a couple of recent articles, and like Lord Adonis has done consistently, advocating that housing estates should be knocked down and rebuilt, as I’ve seen the disruption it causes to people’s lives and their communities.
That’s not to say that knocking down tower blocks is never appropriate, but only when it is the residents who live there who want it to happen. I don’t believe in coming along and knocking down peoples home unless they collectively think it is for the best.
I’m sure many of the tower blocks are unsafe at the moment, in which case lets refurbish them properly so that they are safe to live in. But lets also be very careful about calling for 60,000 to lose their homes because in all my time working in estate regeneration I don’t think I’ve ever seen a scheme that has truly had the best interests of the existing residents at heart.
So I would say yes to funding new houses, yes to refurbishing these blocks but lets be careful about calling for people’s homes to be taken down and rebuilt, because it isn’t a neutral process it involves ordinary people coming into contact with highly dysfunctional council bureaucracies and it can have very many consequences on precisely the people that we think we might be helping.
I have never asked for pulling down
Insulating, yes
And solar panels, yes
And new windows, yes
But homes are communities
‘Miles’
The nettle that has to be grasped is the fitting of sprinklers – even during regeneration projects this could be done. They can be retrofitted. My org’ does this often.
The cash injection into the economy would also boost jobs, suppliers etc. Yes, there might be some inflation too but good tendering processes might lessen the effects of that.