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Price us in

The problem with property

One of the ideas that Tony Blair originally built his platform on is one that was quickly abandoned, but that I felt a profound empathy for – the stakeholder society. I think it’s something from Labour’s 1997-2001 term that really needs resurrecting as a notion.

So I was glad to read Laurie Penny’s latest NS blog post, in which she talks about the dearth of accommodation for young people.Being a young bloke of an overdraft persuasion, I have also seen a lot of the stuff she is talking about. I have luckily until this point just managed to escape it myself, though at one point this involved living in a guy’s loft, complete with spiders and old books. She is being accurate.

One of the commenters raises the point that house prices tend always to rise above inflation, and that property is concentrating in the hands of the older generation, but also in the hands of extortionist buy-to-let landlords, consolidating an ever greater number of properties and amount of space within an ever smaller group of hands.

In essence, these people are using Thatcher’s principle of freedom of exchange to the exact opposite of what Thatcher’s declared ends where. They are creating a no-property owning democracy in which few people have a stake in where they live, but landlords have ever greater power coupled with a disinclination to actually spend any money on providing decent accommodation for their tenants.

Some might see this as a throwback to a 1970s situation, where we all rent rather than buying. That’s OK, isn’t it?

This idea is very unhelpful. The system of rent as existed in the 1970s took place against a context, one of enormous investment in housing and urban planning, begun by Bevan in the late 1940s and continued by both Labour and Tory governments in their Butskellite, pro-Beveridge incarnations. This was capped with the often correctly derided brutalise tenement and tower block builds of the Wilson government – but it is worth remembering that these usually replaced slums or similar housing.

And the large amount of people living in council property at least had a democratic recourse – someone to take responsibility, whether they did it well or not.

These conditions mean that the situation now is actually quite different from a move back to 1970s style housing allocation. It is actually much more like the 19th century, and I don’t really need to explain why.

The point that I’m making is that the concentration of property in fewer hands is leading to higher pricing in both the rented and owned sectors, and that it is leading to worsening conditions in the rented sector, held back only when government regulates properly and efficiently – something that cuts to local authority grants and rate capping is going to severely impair. Ownership is important. The slums are gradually returning.

What for those of us who want to escape this by buying? Well, there is a general shortfall of supply, and a legacy of thirty years which makes things difficult. Take, for example, the fact that the government is now to look at CPI rather than RPI when making decisions on fiscal and monetary policy, excluding house prices. Their inflation will now make no difference to any judgements the government makes about wider economics. Gordon Brown was just as guilty of this particular convenience,  failing to allow the Bank of England to take house prices and rents into account when making decisions about interest rates.

Consequently, as a result of these benign political conditions set against the economic fact – that our country is highly dependent on property transactions – two classes are emerging outside the traditional distinctions we base on our relationships with production. We are building a rigid class system which is also based on our ownership of dwellings or tenures.

Potential answers

One of the things that impressed me about Ken Livingstone was his earlier commitment that all new build housing in London should be subject to a 50% affordability quota. I am glad that Oona King has also backed this commitment. That’s all very well to do locally, but there also needs to be market motivation for building houses, i.e. demand. If we’re talking about private builds, the demand has to be what I, being a pedant and non-economist, call ‘substantive demand’*.

Investment in the private sector is at historically low levels, and it was a long time prior to the crash that anyone influential realised or conceded that there wasn’t enough housing about. Cynically, I would suggest that perhaps the middle classes weren’t too hot on there being enough housing, as it would reduce desperation and leave the market at a natural balance, rather than inflating it. This would create a middle-class anti-feel-good factor.

If the conundrum is to be solved, at a certain level, public housing needs building, not just in London but in most towns, beyond the level of demand that those on lower income scales can realise.

Plenty of other things can be done to tackle rising house prices as evidenced by the new Priced Out campaign. Another excellent idea (yet again from Ken Livingstone) is that of local authorities or devolved bodies regulating limits to rents in certain properties. This could be done on the basis of council tax brackets or mosaic codes, as an example. It has to be admitted though that this is a remedy  and not a cure – the only cure is more houses. One of the things that has annoyed me about Oona King’s platform is that she seems to see no reason as to why public investment in housing is necessary. Perhaps she would need to be mayor to find out that very few firms are interested in investing at the moment, 50% affordability target or not. More would be great, and I would certainly not oppose it. But we live in the here and now.

The housing crisis in London would remain while she blankly stares on in illogical and profoundly ideological distaste for anything financed through democracy and taxation. Instead she should be fighting rate capping and seeking to provide managed public investment as an incentive for local building businesses to get something done while employing people at the same time. This also applies in other urban and suburban environments, not just London.

*Demand as conventionally understood by neoliberal/Chicago School economists, i.e. private demand backed up by capital, rather than actionable by social need or backed by state capital.

A way out? Price us in

Would middle class property owners be able to soak all this up?

Truth be told, not initially. But as Laurie’s article points out, there will only be so much their kids will put up with – people of my generation. And as for the parents themselves, it is surely they who suffer most from a generation of people who basically can’t afford to move out unless they can also afford to get married (also unlikely). With better wages for young people this would work out (i.e. if they kept up with house prices and rent). But I have already explained above why this won’t happen. Further, the coalition’s program of cuts will significantly cheapen Labour as the ration of jobs to people goes down, especially in the those economic areas where young people work.

The result?

A once in a century situation where many parents live comfortable in home ownership (especially if they work in the private sector), but they have to live with their 29 years old kids who won’t get off the Xbox or meet a nice young man.

Does that really work for anybody?

Despite being a left-winger, I see now problem with home ownership and think Margaret Thatcher was right to promote it. It is preferable for people of all social classes to own housing, take pride in it and maintain it themselves, not be subject to whims and evictions of landlords etc. etc.

I could go on for ever. I also see no problem with the thoroughly natural urge of all human beings to better their circumstances, and think this needs nurturing, not squashing.

My problem is that the current market operates without any regard to community responsibility, or sustainability. Many markets do this if natural, geographical or political conditions promote monopolisation or imbalance. Moreover, it is not the fault of markets, and essentially abstract entity, if they want to eat everything. By their very nature, they want more and better, as soon as possible.

But they want all this at the price of any consequence, like a bullying, obese child, who sees in his friends a lifetime supply of lunch money if he can only devour the entire contents of their shared canteen fast enough.

Politicians of both parties have felt trapped by aspirant middle class people, especially in the South East, into turning a blind eye to the kid. The kid needs regulating.

Many property owners’ sense of self-worth links heavily to the value of their properties. Their worries are at one with the market.

This is pessimistic, but there is a way out. By the time their kids are in their thirties, still live at home and still can’t afford anything, it will be time to think twice. These kids will also have essentially middle class morals, and will feel intensely frustrated by the collective political efforts of their parents’ generation to cut them out of aspiration.

Frustration is at the root of all progress.

Politicians might as well realise this now and get to work on the solutions. There was some good stuff talked about with regard to this when I was on the exec of the Young Fabians, but the truth is that nobody has turned it into a really big issue, and there is significant disagreement within the Labour movement about what needs to be done.

Like most solutions, the policies that end up being adopted by everybody, just like council housing, equal pay, the NHS, right through to gay marriage, will in all likelihood first be suggested by those people in the Labour Party who are widely regarded as nutters.

Disablist implications of that term not endorsed or encouraged, by the way.

Let’s start a conversation.

Len Duvall responds to Oona’s freedom pass wriggling

On of the most important things about Ken Livingstone’s bid to become London Mayor is that he has the overwhelming backing of the city’s Assembly Members.

There has been some concern about what seemed to be Oona’s plan to means test the Freedom Pass, citing Prince Charles as an example of a pensioner who would not need one provided by the state. Now I would welcome it if I did, but I don’t see Mr Wales on the bus much these days.

In the following days Ken’s campaign has highlighted the view she put forward, and perhaps as a result, she is now emphasising that her views were ‘hypothetical’, adding on some extra direness in attacking Ken as a liar.

Which is basically nonsense, firstly because how Ken’s campaign has portrayed this will be how any reasonable person would have interpreted her statements, and secondly because it’s worth wondering why any mayoral candidate would bother setting out ‘hypothetical’ scenarios for the Tories to cut public services with. If she is selected, expect them to use the line “but you said you were OK with this then!”.

Perhaps Ken just assumes that she has more smarts than that?

In my own view, that in itself is a mistake. During hustings she has preferred to talk about vague notions of ‘connecting people to things’ and unrelated parochial stuff like making sure people can afford fridges (we demand freezers!), as opposed to substantial policy.

Global slowdown fridges – connecting people to things in an effort to wipe out knife crime.

Back to my point: Len Duvall has sent out an email pulling her freedom pass behaviour to bits. Not looking good for her campaign:

Dear colleague

Last week I sent out an email setting out the choices that had opened up in the Mayoral selection over the issue of the Freedom Pass.

I said I was concerned that, asked about means testing the Freedom Pass, Oona King had said that there were circumstances in which she would support means testing.

Oona has now written to London Labour councillors describing this assertion as an example of ‘making up stories’ and ‘fibs’.

That’s not true. If we are going to have this debate we should let the facts speak for themselves.

Set out below are the verbatim answers that Oona gave in two hustings that led me to set in writing out the real choice in this selection.

  • 23rd July, Croydon hustings
    Question: The Government is threatening to means test the Freedom Pass. Do you believe it should be means tested?

    Oona King – ‘I don’t want to, but if budgets are tight, money is short, you need to prioritise. I want to help the poorest. That’s why we are in politics, to help the poorest, like my bus policy.. If there is a choice, then I want the money to go to the poorest, not to pay for the richest.. like Prince Charles to go free. My priority is for bus fares to be cut if possible paid for by money from the western extension, congestion charge…’

  • 29th July, Brent hustings
    Question: There has been some talk that the Freedom Pass may be means tested. Are there any circumstances in which you would accept this?

    Oona: ‘There are some circumstances that I would accept saying to someone like Prince Philip or other extremely rich pensioners in London that you can no longer have free travel in London, the average not the poorest pensioner. I think we should extend it onto train companies for example… We have to recognise priorities, for example, the childcare tax credit, I don’t get the same childcare tax credit as someone who earn less than me… I’m a progressive, I’m a socialist, you should be helped, I think you should pay according to your ability to pay and you should be helped according to your needs.

    ‘Ken and I support the freedom pass, he will tell you he never expected to get it… we need to recognise it is an equality issue – if you are rich you get about, if you are poor you don’t. We have to make sure pensioners can get around London and have that dignity in retirement, they need to enjoy life.’

    ‘We have to be more realistic, in this environment when everything is being cut by abolishing, through ideologically driven ways… I will fight tooth and nail against those cuts.’

    ‘But if you are the mayor and you have got less money coming in you need to ensure the average pensioner can have the same experience or better than those richer ones you need to accept means testing.’

    Oona also returned to the issue in the next question: ‘Look at working families tax credit, we couldn’t afford to give it to everyone, it was right we didn’t give it to everyone, we couldn’t give it to Prince Philip or people like me. It was right to do that, no one says it was wrong to do that. Everyone says it was good to have lifted those half a million children out of poverty.’

    ‘Well you can only do that, we don’t have money growing on trees. You can only do that if you target money and people just need to recognise that is the real world. And I would always rather we got money to the people who need it most – and if we don’t we are betraying working people.’

It’s there in answers to ordinary members of the party who asked their questions in the party’s hustings.

We have to be clear in this debate. It simply does not help Labour to have arguments in favour of means testing the Freedom Pass being mobilised in this way.

I welcome the fact that Oona now wishes to change the position she took in these hustings. But London Labour cannot afford to have ambiguity on such important issues when they come up.

Some press reports suggest that the Tory government may be considering a means test for the national pensioners’ travel concession. So we cannot afford to have arguments in London that help that case either.

And if we are not going to do it, why make the case for means testing?

Ken’s position on the Freedom Pass is tried, tested and straightforward. For the right reasons, he will not entertain ideas about means testing it and he won’t concede the territory now that only makes it easier for our opponents in the future. He will work with the boroughs who administer and pay for the scheme to ensure it remains a success. And he will not support a two-tier Freedom Pass where some modes of transport are means-tested and others are not.

The reason I am supporting Ken is because he’s the right person to deal with the politics of the 21st Century, of how we campaign to stop the policies of the Conservatives and LibDems and how we protect Londoners in difficult times.

I’m backing Ken because London needs a tough negotiator, who knows clearly what position to take in London’s interests, who gets the detail and who can be relied on to stand up for Londoners.

Yours sincerely

Len Duvall AM
London Assembly member for Greenwich and Lewisham

Accuse me of spin-doctory, but I think the best thing that Oona could do is admit she has got it wrong, and move on. This just looks absurd.