Across the UK and beyond, politicians talk endlessly about affordability — yet nothing improves.
Why?
Because they are blaming inflation when the real issue is structural income extraction. Rent, mortgage interest, utilities, subscriptions, fees, and financial add-ons are permanently draining household income, leaving people with no real choice over how they live.
In this video, I explain how weakened regulation, captured competition policy, and financialisation created a system designed to extract income, and why mainstream politics refuses to confront it.
Affordability is collapsing by design. That is why politicians won't talk honestly about it.
This is the audio version:
This is the transcript:
Affordability has become one of the most powerful political issues of our time.
Keir Starmer is talking about it here in the UK.
Zohran Mamdani is talking about it in New York and is forcing Donald Trump to talk about it in his rallies, and everywhere it is shaping how people understand their own lives and futures.
It is influencing elections and political alignments, but the way affordability is being discussed is fundamentally wrong, and that misunderstanding is what this video is all about.
The dominant narrative on affordability comes down to inflation as far as most of these political commentators are concerned. They're talking about affordability as if it is a problem of rising prices, and food, energy, transport, and housing costs are usually blamed. But alongside that, there's also inflation in global supply chains that is said to be the cause, and that is terribly convenient for the politicians in question because they can point to causes outside their borders and therefore say, "Don't blame me."
They're saying instead that consumers must shop around and cut back, and all of this framing is misleading, and there's a good reason for that.
Inflation has, in fact, eased in many places. It is in the UK, and yet affordability has not returned. People still feel financially trapped. This tells us that prices are not the real driver of the affordability crisis that is going on; something deeper is happening.
In this real affordability crisis, it is not pricing that is the issue. The reality is that it is the extraction of income that is the issue. People are actually losing most of their net income after tax before they can choose how to live, because imposed costs on so many households are so high that those households are effectively losing control over their finances. That is the centre of the affordability crisis.
Income extraction happens in all sorts of ways.
Excessive rent drains income immediately. Mortgage interest that is locking households into long-term payments over which they have literally no control are another aspect of this, whilst interest costs are also embedded in many everyday prices and fees, and charges are unavoidable, whilst essential services are demanding payments which are increasing very often at rates above inflation, regardless of a person's income.
This is not ordinary inflation, then, because inflation is usually temporary. That is one of the ways in which we identify it. There's a period when prices rise excessively, and then they drop back to normal, and we can say, we understand as a consequence that inflation is a phenomenon that passes, as history proves.
But what is going on now is a form of permanent extraction, which is why living standards are not rising. Charges rise, but very rarely fall. Payments have become unavoidable for many things that are essential, or as we see them are essential in life, and people cannot opt out.
All of this is the consequence of policy choice. Remember, the economic policy has shifted power towards capital inside our society and capital is owned by wealthy people. Income is, as a consequence, flowing upwards through rents and interest.
Fees and subscriptions are also proliferating. Once upon a time, you bought your software, and it was yours for life; now you rent it.
Once upon a time, you paid a television licence fee for a year, and that was it. Now you have to pay multiple fees to multiple companies to get access to channels because that is the way the market's been divided, and we pay a great deal more as a result.
These outcomes were chosen; they're not accidental.
Housing is a clear example of this; housing costs dominate many household budgets. Rent is moving upwards; it is something that many people obviously have no choice about. You must have a roof over your head, and mortgage interest is an approximator to rent, of course, and interest transfers are moving wealth from those who have to borrow to buy a home to those who are lending. That provides the banks with power, and it also provides those who deposit with banks and who get interest as a result with power.
Supply, at the same time, is being constrained by design; in other words, there aren't enough houses in the marketplace, and this is deliberate, and we can see it because we know that so many builders have so many plots of land they can build on, but won't, and housing reveals, as a consequence, the true structure of extraction from people by design.
Housing is not unique. Our phones are subject to this lack of competition as well. There are only a few players in the market, and prices are remarkably similar. You can play around a bit at the edges, but fundamentally, we pay a great deal for something that used to be rather ordinary.
And our utility companies operate as if they are regulated monopolies precisely because, well, that is exactly what they are. They are regulated monopolies, and what is more, the regulation is designed to make sure that prices are maximised and not minimised, whilst banking fees are difficult to avoid, and everywhere we go when we buy new products and services, we find we're either having to rent the facility that we want to use, or we are offered add-ons that are effectively ways of extracting more income from us. The warranty, or insurance, or whatever else it might be: all of those are services designed to extract profit from us.
This is not about protecting us. Competition doesn't do that. In fact, it's doing the exact opposite. Regulation is making it harder, rather than easier, in many cases, to switch providers, and that is often costly or impossible because even if the regulator says we should be able to move, our contracts don't. We sign up for 24 months or something like that to get the best offer, and as a result, we can't get out, and we are penalised for exiting.
Market power is concentrated as a result by limiting the alternatives, and genuine competition disappears as a consequence. Consumers are being kept captive by contract, which avoids regulation, and as a result, prices are rising without justification.
Firms raise prices because they can, not because costs have increased, and market power is enabling this, weak regulation is allowing it, and consumers are bearing the burden.
As I've already mentioned, this is happening with increased financialisation. I particularly dislike this aspect of this part of the market. Products are bundled with financial add-ons; you might not see them in that way, but that's exactly what they are. Warranties and insurance are just financial services products. They are there supposedly to sell you protection, but they're packaged with fear. These products are rarely used and are highly profitable. In fact, they are most of the way in which people who sell phones, cars, white goods, software, and other subscriptions make their money. It is really quite extraordinary how much money is taken from us in this way, and it is, I stress, deliberate; it's by design: these things are embedded in the business models of the companies that sell them.
They are trying to maximise their revenue per customer exactly as economics says they should. This is what people are taught to do at business school, at universities, doing economics courses, and everything else, but they rely on behavioural pressure on us as consumers, and they extract value continuously.
Consumers have no counterpower against this situation. Inflation shocks may pass, but rent and profit extraction continue.
That is the true nature of the affordability crisis we face.
That is why it is not an inflation crisis.
This is what politicians aren't talking about.
They aren't saying that charges, these impositions upon us, are becoming permanent, and household budgets are becoming perpetually squeezed.
Affordability is collapsing structurally, and this is a political failure, which is why our politicians aren't referring to it.
Governments allowed this structure to develop. Regulation was weakened or captured to ensure that it happened. Oversight for investors was prioritised over consumer protection, and public interest was sidelined.
The result is that competition policy has fallen away, but once upon a time, we had it, we had competition policy in the UK.
We had price regulation, and it worked.
We had public utilities that were owned by the state to protect us from harm, and essential services were affordable by design as a consequence.
These were the conscious policy choices that existed when I was growing up and for a long time afterwards, all of which were abandoned from the 1990s onwards.
The fact that we have an affordability crisis is entirely predictable. It is what antisocial neoliberalism was designed to deliver. And we've got it as a consequence.
We could change policy now.
We could make affordability a policy objective again.
We could control rents.
We could bring down interest rates.
All of those things are within the power of government, and market power can be challenged.
In particular, regulation should be used to do that, and the place to start is with power because power - literally, in this case, electricity and gas - are price-regulated by the government, and the prices that they permit are the maximum to ensure that companies are profitable rather than the minimum to guarantee supply for the benefit of consumers. Power must then be rebalanced.
This isn't really radical. It's just about going back to a world that already existed, using tools that have been proven to work and which are technically feasible.
It's all about talking about economic soundness and rejecting the radicalism, which is the refusal to act to deal with this problem.
We could deliver affordability.
We could prevent the profit extraction that is going on.
We could restructure power within our society and deliver it to people.
The solutions are well known. What is missing is the political will.
Zohran Mamdani might understand this, but does Keir Starmer? I doubt it.
Does Donald Trump? I doubt it.
Do most of our politicians? I doubt it.
Do the Greens? Maybe.
Do the SNP? Probably.
Do Plaid Cymru? I suspect so.
We've got to look elsewhere for answers to this because the mainstream is failing us. Until the power of capital is addressed, affordability will not return. We're in crisis, but it's a crisis of choice, of choice by politicians who want us to be in crisis and who have no answers to the problems we face.
This is the crisis of 2026. Affordability is going to be a major issue this year, but it's one that we can change, but not when we have people like Keir Starmer in charge.
What do you think? There's a poll down below.
Poll
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“Firms raise prices because they cannot, because”? Typo?
Firms raise prices because they can, not because costs have increased.
Now edited. Thanks
Very good.
Starmer and his minions want things to get worse (in terms of rent extraction). Extract from UK gov propaganda site: (https://www.gov.uk/government/news/former-amazon-boss-named-interim-chair-of-cma)
Doug Gurr (ex-head of Amazon UK) will lead the CMA on its mission to support growth for the UK
New leadership will continue Government’s push for growth under the Plan for Change
Keep in mind that this is the Amazon that has its workers/drivers pissing into bottles @ work (saves them going to the toilet).
Growth? one supposed more Amazon warehouses.
Rent extraction will continue & increase. Pay up UK serfs, you know you love it (& coming soon to Scotland & Wales – a chance to express your views via voting).
Why this love affair with Amazon? I’ve never knowingly used them for at least 20 years and have never been prevented from getting what I want. Occasionally I have my eye on something but find that the seller only works through Amazon so I look for alternative products. Unfortunately the same doesn’t apply to electricity because although I can switch suppliers I still have to pay the excessive prices government dictates.
Worth making the point that housebuilding costs have risen roughly in line with inflation since the end of WW2
Needless to say house prices have not
If as George Monbiot has we look at house prices/energy/rents etc as Taxes – private taxes then why dont Politicians take action over them?
A good question.
And yet everyone is horrified by my suggestion that captial gains on houses should be taxed, and I only suggested it happen on the death of the second partner in a relationship, when the need for housing is over.
Yet again, loud thanks to you and your team for an apposite analytical article!
Might THorstein Veblen’s distinction between Business and Industry be relevant/helpful here?
Business = the pursuit of profit, monopolisationand and the consequent abuse of society
Industry = the production of useful goods and services which benefit society
https://www.google.com/search?q=thorstein+veblen+onbusiness+competition&oq=&gs_lcrp=EgZjaHJvbWUqCQgBECMYJxjqAjIJCAAQIx
Yes…
It is also seen in the distinction of the corporate entity (the tool for profit extraction) and the firm (productive activity).
apologies for posting twice. Came across this:
https://www.theguardian.com/commentisfree/2025/dec/24/labour-british-economy-2026-worse
Larry Elliot did not offer any ideas/reasons/solutions. However, this blog does offer reasons – people are tired of being shafted – but LINO/Starmer don’t understand this (reflected in their non-policies = groff innit) – why would they – they are totally isolated from ordinary people (who, I am certain, McSwine despises).
Thanks
Very well put. As a single person on a fairly low income my basic costs have gone up considerably in the last 10 years and I thankfully don’t rent or have a mortgage. These are fixed costs like standing charges over which I have no control and in my opinion are disproportionate in relation to my usage. Council tax goes up every year and I’m in a band B property and is a hefty charge relative to my income and my usage of services. My water bill has more then doubled this year thanks to the government removing the subsidy we used to get for SWW being very expensive. Phone and broadband costs, which are essential as I work from home have shot up, though I’ve moved to Ecotalk who are much cheaper than EE. Food inflation is an issue but I can and do chose to eat a low meat diet and cook from scratch. I have no choice with the fixed costs.
Most of these costs are government choice not to regulate virtual monopolies not inflation. In particular Council Tax should be a local income tax not a fixed price. And it does feel like governments of all persuasions are totally out of touch with the reality. They all talk of reducing inflation and work being the way out. But they chose to load a lot of costs onto the electricity standing charge that hit single occupiers/low users disproportionately. And the regulators are weak and ineefective.
I do believe the Green Party does believe in a fairer society and more nationalisation. At the moment we are being sold the lie that competition brings prices down, but often we either have an effective cartel, or a virtual monopoly. We certainly need a politics of care and much fairer charging systems for essential utilities.
Thanks
When looking into what voters see in Reform, I kept coming back to their policy of tax cuts, to put “more money in working people’s pockets”. That’s it. That’s their offer. More money available for extraction, plus austerity required to “balance the books” afterwards. No extra money generated, just existing money made available to transfer from one hand to another.
One issue that results in high rents along with poor property maintenance, is the highly leveraged end of the buy-to-let residential property market. If interest rates go up, then rents go up, profit margins on income are low and proprties are not maintained. It’s extractive, with a high social cost. The tenant is unimportant in this model, they are disposable, and can be replaced with other tenants paying a higher rent, or the landlord can simply sell up and take their profit leaving the tenant homeless.
This probably also affects commercial property too, rented by small local businesses and affecting their commercial viability, but I know nothing about that.
A landlord who lets out property without this leverage constraint, can put issues like tenant security, rent affordability and property maintenance, top of their list, as well as paying fair taxes on both income and capital gains. If government fails in its redistributive duty (which is the case right now), such landlords can take on the responsibiliy voluntarily.
Does any party have proposals to restrain the highly leveraged end of the buy-to-let property market, while encouraging those who genuinely want to put their tenants first and paying fair taxes on income and capital gains?
There are a considerable number of tenants, with caring landlords, who would be either homeless, or in the hands of cash-strapped failing non-compliant local housing authorities (unable to look after their current housing portfolios due to central government refusal to properly fund housing), if simplistic and ideologically dominated solutions are adopted.
I agree that massive reform is required. But that reform must ensure that people come first, today, tomorrow and in ten years time. Putting a restraint on the leveraging of buy-to-let purchases, seems to be worth doing as part of that process, and I don’t mean by the blunt instrument of high base interest rates.
You’re right that high leverage is a core problem. Buy-to-let financed on thin margins is inherently extractive. Rising interest rates are passed straight through to rents; maintenance is deferred; tenant security is minimal; and the exit option is always sale, with the social cost dumped on tenants and local authorities. In that model, the tenant is not a stakeholder, but a revenue stream. This is antisocial neoliberalism in plain sight.
Commercial property often works the same way. Small businesses end up paying rents inflated by leverage and asset valuations rather than by the underlying productivity of the premises. That squeezes viability and local economic resilience.
You’re also right that not all landlords behave this way. Low- or no-leverage landlords have far more room to prioritise maintenance, stability and affordability, and many do so. Any reform that ignores that distinction risks creating harm in the short and medium term, especially given the fragility of local authority housing provision after years of underfunding.
As for policy, very few parties are addressing leverage directly, which is striking. The obvious tools, which would properly be described as capital controls, would include:
• stricter loan-to-value and interest-coverage limits for buy-to-let,
• limits on interest deductibility tied to leverage levels,
• differential taxation favouring long-term, low-leverage rental provision,
• and expanded public and non-profit housing to reduce dependence on the private rented sector.
Crucially, as you say, this should be about reshaping incentives, not using blunt interest-rate rises that punish tenants. Reform has to be sequenced and humane. Putting people first means dealing with leverage and power, not just ownership labels.
[…] By Richard Murphy, Emeritus Professor of Accounting Practice at Sheffield University Management School and a director of Tax Research LLP. Originally published at Funding the Future […]
Doggerel is sometimes appropriate –
WE THE PEOPLE FEEL THE SQUEEZE
You may have heard it said,
And this is more than a rumour
That the City of London and the mega rich
Act like a cancerous tumour
They suck our blood
Which does us no good
They act like a parasitic worm
Does that make you squirm?
They have influence and persuasion
Money offshore and tax evasion
Private yachts and Private jets
How loathsome their self indulgence gets?
Huge contribution to global warming
They sound ghastly and revolting.
We, the people, feel the squeeze
Polluted rivers and polluted seas
Crumbling schools. Failing NHS
Hungry children. Failing services
Unaffordable rents and houses
Unmended potholes in our roads
Time we were protesting.
Time we were revolting.
The government won’t act to clean up this mess
Because they are in the pockets of the rightwing press
Because they are “brain washed” by investment banks
Influenced by antisocial neoliberal rightwing think-tanks
Directorships, consultancies, lucrative bungs as thanks.
It’s time to legislate a change
It’s time for an economic rearrange
Government get off your grubby self-interest knees
Please, please, please, please listen to our pleas
Release us from this inequality economic wheeze
Do something about this economic sleaze
Because we the people feel the squeeze.
Very good
Your work?
Richard – Ref. doggerel – “All your own work?” – Yes, I’m afraid so. Been working on it for a few days. This is the first time it has seen the light of day. Could be improved.
I like it
Can I post it?
Why ?
Because politicians put party before people, LINO are controlled opposition, self-serving cowards, do what their controllers bid.
My view is that the affordability crises is being used deliberately to dis-aggregate dissent/common purpose about the fundamental problems that harry everyday life.
This was the response to delaying/forestalling the epiphany that was the 2008 crash. Finance loves chaos and knows it gives good returns. The U.S. and the U.K. political systems are corrupted by private finance. As long as electorates are at each other’s throats, capital will make hay. The whole thing is diversion – but a real one having an immense impact for sure.
Big question: I keep hearing – in one recent Reith lecture – that it is up to the public to get behind courageous politicians and that if Starmer felt that the public were behind him, he would be more bold? So, with this model, how does it work folks? I thought leadership was about boldness and making an offer and being steadfast. It was not about capitulation. It was not something that placed responsibility solely at the the feet of the voter. It was not about asking people to give you the benefit of the doubt when ‘taking life as you find it’. It was about change was it not? It was about knowing how the people who give you the votes to get into power live. I see too little of that these days. It was also about patience being exerted by the electorate. If only the electorate was more patient! All our fault then for wanting too much too soon – buyers regret and all that.
The last argument has some traction – our lack of faith in politicians – but when you weigh up the resources deployed in terms of money, the velocity and scale of misinformation and corruption by bad actors, you have to ask again if our democracy is fit for purpose at all at a time when so many Neo-liberal chickens are coming home to roost.
To paraphrase Gill Scott-Heron – the revolution will not be realised, brother. Because democracy itself is weak and that has to be addressed first and foremost.
We know it is not fit for purpose.
That is why it is our job to rethink it.
Correct! Couldn’t agree more.
But no – apparently, the other view out here is that we must bow and scrape and get what we can and nothing more. It’s OK to lift 425,000 children out of poverty this April with the end of the two child cap, but lifting closer to 700,000 kids out of poverty with a wider ranging change in local housing allowances and universal credit – no that is not allowed for some reason – that will – apparently – upset someone. And we don’t even know if that upset ‘someone’ has been voted in or not. Who are these people making Labour scared? They should tell us and then maybe we could go and talk to them and sort it all out.
Agreed!
I don’t understand how inflation cannot be an issue. Prices don’t come down when inflation comes back down from say 5% to 3%, they simply go up by 3% instead of 5%. Prices coming down is deflation which we don’t have on many goods and services at the minute. Inflation is not a problem unless wages rise at similar or higher amounts and this is what is not happening and, it seems, why people are feeling trapped. UK wages have stagnated for years, with real pay below 2008 levels in about two-thirds of local authorities and the country-wide gap between actual earnings and pre-crisis growth running into tens of thousands of pounds, signaling a prolonged decline in living standards. What am I not understanding? Great blog BTW, I read it every day.
Thanks
Varoufakis is talking in similar terms now, although he’s yet to really set out what ‘freedom from extraction by others’ entails for him in practice. Hope he’s signed in to F the F.
If affordability is collapsing because extraction has become the organising principle of the economy, then the obvious place to start is with a strategic response to deprivation. Deprivation is the point where every form of extraction bites hardest — housing, utilities, transport, debt, insecure work, and the sheer lack of alternatives. It’s also where the political consequences are most corrosive, because people who are deprived of economic agency are deprived of democratic agency too.
A politics of care has to begin where the harm is concentrated. That means mapping deprivation properly, not through the flawed indices we’ve relied on, but through a clear-eyed understanding of what people actually lack: secure housing, affordable essentials, decent incomes, reliable public services, and the ability to plan their lives. Once you see deprivation as a structural condition rather than a personal failing, the policy priorities become obvious: lower unavoidable costs, rebuild local capacity, strengthen public provision, and break the power of extractive business models.
Affordability isn’t just about prices. It’s about whether people have enough stability to live without fear. A strategic response to deprivation is the foundation for that — and without it, everything else is just firefighting.
I agree with your conclusion.
Me with my broken record again 😛 We should abolish rent…. ownership should transfer anytime payment is made for land or buildings…. In my opinion, the legitimacy of the ‘rent payer – rent receiver’ relationship in any economy provides a permanent incentive to become a rentier. Even for people who can afford to buy, the ability to extract rent if you are a property owner means that homes/land/factories/shops etc will always cost as much as it is possible for people to pay for them because any lower priced property risks not going to a person who wants to use it… it will likely be bought for just a bit more than the potential user can afford/borrow and will then be rented to them for more than a mortgage would have cost. Rent controls come and go and repeatedly battling asset concentration and accumulation in small wealthy elites is like the task of Sisyphus…. I see no permanent solution other than entirely reforming rent out of the system – ‘post rent economics’. Adam Smith said that Landlords will always act as monopolists extracting all of someone’s wages apart from the bare minimum the tenant needs to survive and buy seed for next year’s harvest…. he didn’t seem to have a problem with that… which strikes me as strange because he also said there should be low barriers to entry to ensure well functioning markets… Presumably he meant low barriers to entry for the property owning class…. the workers and rent-payers are just some kind of ‘factor of production’ like the cost of machinery or energy prices….. I have detailed thoughts on mechanisms for permanently abolishing rent, pitfalls etc…but I’m wary of clogging up Richard’s extremely interesting blog with discussions on this pet obsession of mine more than I already do so I’ll leave it there for now…. 🙂
We are going to disagree on this.
Rental relationships need not be abusive.
Ending them most definitely could be. I have explained situations where this could be the case.
And to characterise all landlords as similar is wrong, as Robert J has linked out – and I am not convinced Smith did.
I think this argument is now becoming repetitive and is not adding vainer any more, so thanks for agreeing to draw it to a close.