For reasons too complicated to explain, I was reading the international (i.e. US -orientated) edition of this week’s Economist.
That means I have to leaf through quite a lot of stuff that, however worthy, doesn’t have much impact for me. Except, I have to marvel that, in 2014, anyone can still get away with the phallic imagery and explicit sexism of this:
Finally, on page 57, I find this:
The screws on Britain’s housing market are being gently tightened. New figures published on June 17th showed that in the past year house prices in Britain increased by 10%. In London they rose by almost 19%. Such increases look unsustainable; so Mark Carney, governor of the Bank of England, has said he will “not hesitate” to quell the market if necessary. He had already hinted that interest rates might go up sooner than expected — perhaps suggesting a rise this year.
Having started so well, the piece becomes less focused, less conclusive:
What monetary policy cannot do is fix the deeper problem-which is that houses will remain least affordable in the places where most jobs are being created. Price increases in the capital are making lots of money for construction firms who own land: Berkeley Homes, a London-focused builder, increased its profits by 40% in the year to April. But they are not stimulating much supply, largely because planning restrictions are so tight. In St Albans, a southern commuter town, the price of greenfield land with planning permission has already eclipsed its heady pre-recession levels. Yet where there is actually plenty of land with permission to build, for example in the Thames estuary, house prices remain too low to entice builders.
George Osborne, the chancellor of the exchequer, at least understands the problem. “British people want our homes to go up in value, but also remain affordable,” he said in a recent speech. Yet he has offered no new solution to London’s unaffordable housing. The green belt surrounding the capital, on which building is banned, will remain intact. House-building will therefore be limited to former industrial sites which are expensive to build on.
Tick the boxes:
- a free market — ✔︎;
- screw the Green Belt — ✔︎;
- ignore social gain and don’t recycle Brown Lands — ✔︎;
- keep it all in the private sector — ✔︎;
and … err …
- beyond that, we haven’t a clue — ✘✘.
Hence the painful non-conclusion:
As a senior civil servant notes, Britain’s housing market is getting back to its pre-recession normal state: broken.
Well, Economist chappies, since you cannot voice the truth that dares not speak its name, allow me to assist.
The answer is there: do it as a public enterprise. Let local authorities, on sixty-year mortgage funding — the way they used to do it, acquire the Brown Land, clean it up (now there’s scope for employment), build on it (now there’s further scope to develop proper skills training) and house people.
What you don’t then do is flog off public assets at knock-down prices, in the expectation of buying votes.
Similarly, another what-you-don’t-do (and what-you-shouldn’t-have-done) is shovel out to your City friends, via various privatisations, those public lands acquired through the NHS, through nationalised utilities, through past generations’ investment in public education.
Having got bogged down, and thoroughly dis-chuffed by all that, only later did I catch up with the excellent demolition job (credited to “D.K.” in the Blighty blog) done on Iain Duncan Smith and his Department of Work and Pensions. This one has quite a spectacular ritardando [a rallentando to coasting to a stop in your car and a ritardando to braking to a stop]:
Such has been the ineffectiveness of more systematic reform that Gordon Brown’s tax credits system, so widely mocked by Conservatives when they came to power in 2010, now looks like a relatively successful intervention. For all that the policy has numerous intellectual flaws, at least it actually works.
Whichever party comes to power in 2015, the next parliament is going to require real welfare reform. Mostly, ministers will have to fix the problems that have been introduced into the system in the past few years, but they will also to find ways of saving money when they finally admit that Mr Duncan Smith’s promises will in all likelihood come to naught. As to the welfare secretary himself: whoever wins in 2015, he will have quite a fight to protect his reputation.
Not so much braking to a stop as a full-on, self-inflicted car-crash.