For those that can be bothered to read it, the Government has just published:-
“Laying the Foundations: A Housing Strategy for England”
I’m sure that anyone and everyone involved in the housing building sector will (covertly or not) regard this with a huge degree of scepticism.
In the Foreword...
... Cameron & Clegg write, inter alia, that:-
“A new mortgage indemnity scheme will give help to tens of thousands of buyers currently frozen out of the market. We will invite local authorities to come forward with proposals for locally planned large scale development. There will also be a new £400 million funding pot to kick-start construction where it has stalled. Cash rewards will incentivise councils to bring empty homes back into use. A new deal on housing for older people will help them to adapt their homes and stay independent should they wish to. We’ll provide help to people and communities who want to design and build their own homes, and we’ll improve fairness in council housing by increasing rents for the most well-off, recycling the income into new housing”
In my view this and the following 88 pages either (deliberately) misunderstands and/or obfuscates the real issues, all wrapped up in the piteous general cry for ‘Affordable Housing’.
In summary I see it as overall, ‘Bunkum and Balderdash’
All House Building is ‘Affordable’
… but the land required to put them on is not.
The price of this has (intentionally or not) been forced up by ‘rationing’ its supply via the planning system.
Government Policy has caused the ‘Affordable Homes” Crisis
My contention, voiced to various incredulous forums over the last few years, is that this was deliberate policy to create specific house price inflation in order to ‘float off’ the negative equity crises from the early 90’s.
Planning was (and is) a tool to do this without causing general inflation.
However, if a great deal more land were now brought forward and released for housing, this could undermine the value of developer land holdings and thereby the worth of these companies, plus to some extent, all house prices.
We Need High House Prices
I say ‘to some extent’ because new house building only accounted for 0.75% of national stock until 2007 (now it is more like 0.4% – 0.5%) so on its own would not necessarily make a huge difference to house prices.
BUT the risk of creating another negative equity crisis – and the knock on effects for lenders, house owners, landlords, builders and the economy at large, by releasing enough building land to address the crisis - is just too great for Government (or any of us for that matter) to take.
Policies Aim to Keep House Prices High
Put simply, it is not in our economic interests for house prices to fall.
Therefore measures will be taken to maintain their value.
Indeed, arguably it is in all our interests to see house prices rise, so creating more of the ‘feel good’ factor needed to encourage people to spend and thus ‘revive’ the economy.
As for the sop that ‘children won’t be able to grow up near their families in a place to call their own’, and housing being ‘crucial to social mobility’, like the rest this ‘Housing Strategy’ it is all political posturing claptrap.
Low cost mass mobility has done most to undermine the former, and ownership per se does nothing for the outward appearance of being upwardly – or downwardly – socially mobile (as we all know – and was also well known by many former aristocratic ‘renters’).
Building as an Economic Lever
While building has always been a lever to control national economic performance (I recall my father often speaking of this since I was 16), the £400m “Get Britain Building” investment fund is paltry.
It merely signals Government’s forlorn wish and takes no cognisance of the way the financial sector in general, and Banks in particular, continue to massage the figures to create the illusion that they are ‘lending to business’.
An actual example of this is of a bank ‘foreclosing’ on a loan, rolling up the interests, then sending out a new, apparently unrelated (Bank Group) offer of a new short term loan sufficient to cover the engrossed foreclosure.
The illusion, of course, is that this is 'new lending' to the small business sector.
The reality is that in this case this bank has used Government demands that they make more business loans, to convert a 'bad loan' (although this is arguable) into an improved position for themselves.
Although Business Secretary Vince Cable was supposed to be keeping a control on these things – it seems he is actually not 'invincible'. On the contrary, he is in fact being hoodwinked just as badly as Gordon Brown was by ‘The City’.
While his origins were, I believe, big business related, like most in Government he lacks the ‘Street Wise’ knowledge and grasp of your average small business man or woman.
Public –v- Private – Let’s Strike for Fairness
This brings me to the topic of Private –v- Public pensions, salaries and strikes.
How about organising a national ‘strike’ of all those engaged in the private sector?
What on earth is George Osborne and the ConDem Government doing:-
- setting 1% salary caps when many in the private sector, particularly small business owners and the self-employed, are still taking cuts?
- continuing unaffordable pensions (index linked in many cases) which hardly anyone in the private sector can even aspire to?
- doing both of these things while keeping the State Pension at well below the ‘poverty’ level?
Who Earns the Money?
Where will the Chancellor get the money for the Public sector from, if not from the Private sector wealth creators?
And – picking up on the collective Unions’ present call for ‘fairness’ – how about redistributing some of the benefits they are already locked into, to the rest of us?
As with this new "Strategy", these days one of the main tasks of Government – and much of what, unfortunately, is increasingly called the ‘Political Class’ in general - seems to be finding ways to keep a lid on social unrest.
And to do that it appears they must resort to at least obfuscation, if not actual deceit.
Their involvement in several recent crises - in the media, bank bonuses and other chicanery, and members fiddling expenses - more than underscores their ability for both.