One of the questions on Debate Night was on the Edinburgh housing crisis (which is much the same as that in most big cities). The BBC shared this response from me:
“We need to look at whether we should tax the capital gains people have made on their homes”
Political economist @RichardJMurphy proposes a radical suggestion to increase available housing stock #bbcdn https://t.co/VMihf6vgsN pic.twitter.com/WA7zlFLPRZ
— BBC Debate Night (@bbcdebatenight) October 18, 2023
I am afraid you will need to go to Twitter or X to play it.
I also took the opportunity to have a go at Bank of England interest rate policy.
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Well said, you certainly held the audiences attention.
I appreciate that you had very little time and a complicated issue to explain.
On the other side of the equation, what about controlling the amount of mortgage lending which undoubtedly first restrained then fuelled house price inflation and – and I appreciate that its probably not your department, who is allowed to own UK land and property and for what purpose so no absentee foreign owners, Buy to Lets, Air BnB etc
Much more could have been said – I picked targets
Has it been suggested that “Right to Buy Council Houses” is one of the a major causes of the housing problem. Did I miss it?
That was not mentioned last night
Socia, housing was, in a big way
Wouldn’t this result in people living in fear in case at some unforeseen point for reasons entirely beyond their control the value of their much-loved and cared for home goes up so they have to abandon it?
Only when they die or cease to use it, as I have made clear in the Taxing Wealth Report
Hmmm…………….
In a world of less work, less pay, less financial security and dubious pension pots your proposal is indeed radical bordering on daylight robbery to those who see landlordism as a secure future.
Time was obviously at a premium as these programmes pack too much in for any real debate.
I think the housing problem needs to be tackled from a 360 perspective, looking at income through to supply, rent controls and indeed tax and everything else in between. There are so many dynamics contributing to the problem.
The fundamental is that housing’s asset value (it’s income stream worth) has overtaken it’s actual use value (shelter, an address from which to access services, a job etc).
Housing numbers/need are distorted by asset considerations. If you make more of a good (widgets), the price comes down; but if you make more of an asset, the prices tend to go up anyway as people want to dip into the asset benefits. The lenders know this, the developers know this, the estate agents know this and their behaviour exploits it cynically. A house is both a good and an asset is this economy. That is a fact.
Private builders apparently underbuild to raise prices, distorting prices too (see BBC’s recent 2 part ‘Britain’s Housing Crisis on iPlayer which in my opinion does not get all the juice out of the orange). But it’s not just that.
Everyone is banging on about building more but not asking how the existing stock is actually used fairly or not. Your item about capital gains tax touches on this for sure and that is welcome but only as part of a lot of other issues that need dealing with such as:
How can we promote home ownership when income is actually dropping, and there will be less work to pay for it (or why do politicians continue to lie to us about home ownership when it is not practicable anymore?).
Why do we continue to insist on low income for labour, at the same time as advocating home ownership? It does not add up.
Why are pensions so poor, necessitating or encouraging landlordism?
Why has social/affordable housing not kept up with demand?
Why do we still encourage and facilitate right to buy on social housing?
Why do we encourage people on low incomes to buy houses that after the mortgage payment, they cannot afford to look after and maintain? Thus contributing to poor, badly maintained housing stock at a national level and even holding back urgently needed net zero improvements as well as being unhealthy to live in and costly to run?
Why is subsidy for housing costs aimed at consumption and not development (80% markets rents – full market rents)?
Why is brownfield development so overlooked? Why is its remediation such a problem to developers?
Why are rent controls so lax in the private sector, and why are housing standards not maintained or policed effectively, promoting people who should never ever be landlords in the first place?
Why do private tenants have so little security that we have things like ‘Assured shorthold’ tenancies – an oxymoron because there are more easier ways to end these tenancies on the whim of a landlord?
And then there is how we manage and fund social housing itself which I’ve gone through before and described as FUBAR.
When you add in the housing market issues above , you go beyond FUBAR and into what can only be described as a system of pure exploitation, making many of us salviate in order to suffer and striving to obtain that which is increasingly unobtainable. It’s tantamount to slavery and the pain and suffering causes is unparalleled.
Currently in social housing where I work, I’m working up schemes using a model that Blair’s fake Labour party put forward in agreement with Tory scum of 80% market rents for our new build. Those market rents are now making us at 80% hit our rent caps laid down by government who cannot be bothered to adjust the rent caps up. So we are developing at a loss – or not developing at all – in a housing crises wrongly and narrowly defined by lack of numbers only in my view. The crises is much deeper than the numbers of homes required.
FUBAR eh? Our housing system is actually a wealth extraction system ,with ‘investment’ used to initiate income streams upwards or run down social housing systems.
What we need is real investment – money / debt and law making/regulation to address some of these issues delivered by the State.
Excellent
Thank you
From the Guardian UK: “The levelling up secretary, Michael Gove, had been planning to rip up EU-derived laws on nutrient neutrality that force developers to pay to offset pollution from new developments. It was believed he had Sunak’s support, and the government claimed removing these rules for housebuilders could unlock more than 100,000 homes.”
This is the biggest pile of ___________________(fill in the blank with your favorite explexitive), I have ever read. Is Michael Gove really stupid enough to believe the voting public will fall for this ________________(fill in the blank with your favorite explexitive).
Getting rid of Nutrient Neutrality regulations is NOTHING but a GIFT to developers. The “Government” knows absolutely nothing about residential development. If you remove costs, (and I mean any costs whatsoever), from developers and the resulting developments, the only thing that will happen is that developer’s profit margins will increase. The selling price of a house will not decrease nor will more new homes be “unlocked”.
Why were new homes locked up to begin with??? It has NOTHING to do with Nutrient Neutrality regulations.
The weird thing is they gave given up on this deregulation
I cannot quite work out why
“they gave given up”
should it not be “they gave for giving up”????
Then again, maybe I do not speak British English??? LOL! LOL!
Typo…
Sorry to bang on about it , but Danny Dorling was quite strong on this at the LSE on Monday. https://www.lse.ac.uk/Events/2023/10/202310161830/nation
We probably have enough houses but too many are standing empty. Too many second or third homes, too many holiday lets or Airbnbs, too many owned by overseas investors and left vacant. A large part of his answer was tax – make it expensive and unattractive.
He made similar points about health and education. The distribution is horribly skewed and inefficient. We probably have enough doctors and nurses and hospitals but too many of them are private, outside the NHS.
We probably have enough schools and teachers, but much more than 7% of the resources are in the private sector teaching a small fraction of the children, in lovely buildings that are not falling down but underused much of the time. So much for charity!
We have plenty of resources in this country – people, and goods, and money – but they badly allocated and are not being used well. The poorly regulated market has made a few people increasingly rich and failed the many.
Danny was horribly, horribly wrong on Covid.
I lost faith in him after that.
He is right about the importance of the £25 payment in Scotland but wrong about available rooms – unless you support the idea of imposing lodgers on the people who have them. Do you?
And only if you also want to end the tourist economy by ending rental properties. That’s really going to help the UK coast that is already in crisis. It will also force people to fly abroad. Not clever.
Buy I agree there are real problems with second homes.
And as for having enough doctors and nurses – wow, where did that come from? Do you know how few there are in the private sector?
Again re teachers. This suggestion is so way off it is crazy. Teachers in then private sector too teach. The excess capacity may be 3% – which is no way sufficient to solve the UK schools crisis.
You are normally a voice of reason Andrew. These comments are miles out.
But as I say, a man who assured me very strongly that Covid would be over for good (he literally meant forever) by September 2020 and was nothing to worry about – as Danny did to me in repeated private mails that summer – cannot be relied on to read stats or understand the real world. I have up correspondence with him when it was so apparent that he was so wrong.
I don’t recall what Danny said about coronavirus. Everyone is entitled to a view, as long as it lines up with the evidence, but I don’t ask geographers for advice about healthcare.
In case there is any doubt, I was just passing on what I recall I heard. I’ve not double checked and he may be wrong, or I may have misheard or misunderstood what he was saying. I’m also not an education or healthcare expert so I may be wrong.
On rooms, his main point is that the housing stock we have is not being used well. For example, many older people choose to live in the family home long after it is suitable for their needs. It is not really about forcing people to do anything necessarily, just about putting incentives in a better place.
In teachers, the stats I’ve found say we have about 625,000 teachers. Of whom 75,000 work in private schools. 12% of the teachers for 7% of the pupils. So that suggests there is something like 30,000 teachers who could be redeployed if the education system was less polarised.
https://www.besa.org.uk/key-uk-education-statistics/
But on the numbers of doctors, for example, obviously more would be better, but are we really very far out of line with comparable countries? Per 1000 of population, the UK (3.1) is a bit better than the US (2.7) or Korea (2.6), a bit worse than New Zealand (3.6) or France (3.4), and well below Germany (4.5) or Australia (4.0). https://data.oecd.org/healthres/doctors.htm
What is the right number to aim for, and how do we get there?
The correspondence wtih Danny was private, I admit: it’s long enough ago to talk about now. He has published widely on medical stats and informed my wife during the discussion on nCovid that as a doctor she knew nothing about death, or its causes. It was not his finest moment. He was just about 100% wrong – and wholly on the ‘throw it open and let it spread side’.
I agree re rooms – but what are the incentives?
And re schools – as I say, a few % when that will have almost no imnpact on a profession being draiunemd of talent.
And as for doctors – I’d ignore US and SK comparisions – and not the diffeential with 0thers in % terms is massive – and why we are in crisis.
I really think he’s losing the plot.
Andrew
We probably have enough doctors and nurses and hospitals but too many of them are private, outside the NHS.
Have you any idea how many doctors in the UK are ‘private, outside the NHS’? The private sector exploits a number of low paid, usually overseas trained, junior doctors who work exclusively in the private sector on 24 hour shifts. The vast majority of doctors who actually carry out procedures in the private sector are NHS doctors who do private work in addition.
Adding to Cyndy Hodgson’s point – this is one of the reasons I have very little confidence in Wes Streeting’s approach to cutting through NHS backlogs.
The US approach to more Doctors, nurses and certified medical personnel for the NHS would be to increase health care admission places for education/training/certification and give them a scholarship (do not know the UK term??/ bursary???) for free education (all cost included). Then make them contractually obligated to work for the NHS full time for ten years or the cost of the education must be paid back at market interest rate.
David Byrne writes:
Although not strictly related to the post, the issue concerning NHS resourcing is of equal importance.
I remember a statistic from the dim and distant past relating to NHS consultant’s contracts. Is it still the case that the contract requires only 20 hours per week to be worked, leaving a great opportunity for (permissible) private enterprise to flourish with a massive, free resource input from the NHS.
Follow the money!
I think it is much tighter than that, an always was