Ooh, Matron!
This story has made me totally miserable at the direction our country's going in. Actually, I'm totally miserable about it most of the time, but that's all part of being a bit of an idealist.
Fundamentally, it shows just one thing: the government's Planning Policy is a failure. There is simply not enough housing in our cities, therefore the market price has gone up to absurd levels. This can be seen even outside the South-East.
Take for instance, Birmingham. In their recent draft residential development guidelines, "Mature Suburbs" (awful title, awful document, but more of that anon), section 3.1 gives themselves a big slap on the back for building 8,965 dwellings in the three year period 2001-3, exceeding the government's minimum target of 6,900 for that period by 29.9%. Well, as far as Birmingham isn't going backwards: well done, Birmingham (wish I could say the same for anywhere in Surrey)! What Birmingham City Council don't mention is that the government's minima are so low that even exceeding them by so much still results in massive house price inflation. In the first quarter of 2001, the average house price in Birmingham was £70,853. Three years later, it was £120,680, an increase of 70.3%, or 19.4% average annual inflation. Actually, let's be extra fair, £120,680 in 2004 Q1 is equivalent to £114,835 three years earlier, adjusting for the general rate of inflation. This makes it "only" 62.1% over three years, or 17.5% over the average annual general rate of inflation. Such hyperinflation points to a gross mismanagement of supply.
Now for Labour's key worker housing initiative. Margaret Thatcher famously is supposed to have said, "you can't buck the market". She may have got a lot of things wrong, but she was right here. Labour's scheme has only a limited number of places. There will therefore be deserving people excluded from the scheme. Furthermore, I don't have a lot of trust in some wannabe Sir Humphrey's definitions of what a key worker is (I thought they were people who worked in that factory near Wolverhampton High Level station, but that's another matter), resulting in more people undeservingly excluded from this scheme. So what of them? With what relief shall they be furnished? Labour's answer is a negative relief: by effectively removing a part of the housing market from circulation, they are limiting supply, and therefore merely adding to the inflationary pressures.
If there is any panacea for Britain's housing woes, it must be to increase supply to keep up with demand. There is too much luddism in British planning policy. On the most fundamental level, land is kept artificially scarce by Green Belts. The government would have you believe that Green Belts were an idea of the 20th Century (indeed that is claimed in PPG2 section 1.2). The actual first application of this approach were somewhat earlier: in 1580, Queen Elizabeth I decreed that no housing could be built within three miles of London. Needless to say, it didn't work then. There can only be three responses to artificially created scarcity:
1) defiance - people ignore the law and build anyway. This was the case in England in the 1580s, and can be seen in shanty-towns across the world to-day. Short of Mugabe-esque acts of wanton destruction, the authorities lose control of shaping development. The dubious legal standing of such quarters can also lead to them becoming unsavoury places. This response is now less common in the developed world due to institutional legalism verging on litigiousness.
2) inflation - property prices rise in the city, meaning that people's standard of living declines. In the modern era, the mediaeval responses of infill and multiple occupancy are actively discouraged, increasing the inflationary pressures and hastening the decline of the city.
3) development beyond the Green Belt - villages beyond the Green Belt become suburbanised with additional dwellings for people who do not play a part in the rural economy. This despoils rural England, creates car-oriented development, and increases congestion, especially on the radial routes from city centres.
The Green Belt is a blunt tool: it seeks to limit demand by limiting supply. It is not effective management of demand. Furthermore, people's natural responses to a Green Belt policy diminish the effectiveness of demand management policies.
The introduction of the present London Green Belt in 1955 was a reaction to the failure of demand management policies between the wars. There was a trend in the decades immediately beforehand for building new quarters of town in a sub-rural style. D.H. Lawrence put it well when he wrote:
"As a matter of fact, till 1800 the English people were strictly a rural people - very rural. England has had towns for centuries, but they have never been real towns, only clusters of village streets. Never the real urbs. The English character has failed to develop the real urban side of a man, the civic side. Siena is a bit of a place, but it is a real city, with citizens intimately connected with the city. Nottingham is a vast place sprawling towards a million, and it is nothing more than an amorphous agglomeration. There is no Nottingham, in the sense that there is Siena. The Englishman is stupidly un-developed, as a citizen. And it is partly due to his 'little home' stunt, and partly to his acceptance of hopeless paltriness in his surrounding. The new cities of America are much more genuine cities, in the Roman sense, than is London or Man-chester. Even Edinburgh used to be more of a true city than any town England ever produced.
"That silly little individualism of 'the Englishman's home is his castle' and 'my own little home' is out of date. It would work almost up to 1800, when every Englishman was still a villager, and a cottager. But the industrial system has brought a great change. The Englishman still likes to think of himself as a 'cottager' - 'my home, my garden'. But it is puerile. Even the farm labourer to-day is psychologically a town-bird. The English are town-birds through and through, today, as the inevitable result of their complete industrialisation. Yet they don't know how to build a city, how to think of one, or how to live in one. They are all suburban, pseudo-cottagy, and not one of them knows how to be truly urban - the citizens as the Romans were citizens - or the Athenians - or even the Parisians, till the war came.
"And this is because we have frustrated that instinct of community which would make us unite in pride and dignity in the bigger gesture of the citizen, not the cottager. The great city means beauty, dignity, and a certain splendour. This is the side of the Englishman that has been thwarted and shockingly betrayed. England is a mean and petty scrabble of paltry dwellings called 'homes'. I believe in their heart of hearts all Englishmen loathe their little homes - but not the women. What we want is a bigger gesture, a greater scope, a certain splendour, a certain grandeur, and beauty, big beauty. The American does far better than we, in this."
- D.H. Lawrence, 1929, "Nottingham and the Mining Country".
The solution is simple: we need to stop this mess and rebuild our cities properly, with straight streets and urban levels of development. Eventually, much of the sub-rural neo-slums that we have built since the end of the First World War will have to be torn down en masse and whole areas totally redeveloped.
We need to dispel the myth that house price inflation is good in any way. It may give speculators a nice return on doing no work. We should remember what speculators did to our economy in 1992. Meanwhile, honest British people's lives are being made worse by this inflation. Banks and Building Societies try to align people with these speculators: if people buy at an inflated price, they, not their mortgagors bear the risk of it. This has the perverse result of giving mortgagees an interest in their own impoverishment. The government must act to transfer the risk of house price fluctuation to mortgagors - they lend a proportion of a house's value: if the value falls, they deserve their share and nothing more. Those are the normal rules of investment: you can lose as well as win.
However, if money-lenders are forced to take responsibility, they will lend less. There must be a scheme to still allow honest working people to own their houses. One option would be a reform of the rental market. Tenants should have an absolute right to buy shares of the houses at market prices from their landlords, be they public or private sector, at any time. They would then only need to pay rent on the remaining share they did not own. Eventually, they would have the right to buy out any landlord. One particularly nice aspect of this option is that it would be acceptable to Muslims.
The need is inevitable: the choice is stark. We stand with a choice between economic growth and economic decline. We cannot fend off the crisis by population limitation: the immigrant is far from being the bogeyman. As Abraham Lincoln noted, "Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if Labor had not first existed. Labor is superior to capital, and deserves much the higher consideration". We need a labour force. A lot of our industries' problems with international competitivity are down to a fundamental labour shortage. Birmingham now welcomes Polish 'bus drivers. We need immigrant labour. Yet, we now struggle to house even our own. Housing therefore is our nation's greatest problem: we must solve it, for the benefit of our key workers, and for the benefit of Britain.
Fundamentally, it shows just one thing: the government's Planning Policy is a failure. There is simply not enough housing in our cities, therefore the market price has gone up to absurd levels. This can be seen even outside the South-East.
Take for instance, Birmingham. In their recent draft residential development guidelines, "Mature Suburbs" (awful title, awful document, but more of that anon), section 3.1 gives themselves a big slap on the back for building 8,965 dwellings in the three year period 2001-3, exceeding the government's minimum target of 6,900 for that period by 29.9%. Well, as far as Birmingham isn't going backwards: well done, Birmingham (wish I could say the same for anywhere in Surrey)! What Birmingham City Council don't mention is that the government's minima are so low that even exceeding them by so much still results in massive house price inflation. In the first quarter of 2001, the average house price in Birmingham was £70,853. Three years later, it was £120,680, an increase of 70.3%, or 19.4% average annual inflation. Actually, let's be extra fair, £120,680 in 2004 Q1 is equivalent to £114,835 three years earlier, adjusting for the general rate of inflation. This makes it "only" 62.1% over three years, or 17.5% over the average annual general rate of inflation. Such hyperinflation points to a gross mismanagement of supply.
Now for Labour's key worker housing initiative. Margaret Thatcher famously is supposed to have said, "you can't buck the market". She may have got a lot of things wrong, but she was right here. Labour's scheme has only a limited number of places. There will therefore be deserving people excluded from the scheme. Furthermore, I don't have a lot of trust in some wannabe Sir Humphrey's definitions of what a key worker is (I thought they were people who worked in that factory near Wolverhampton High Level station, but that's another matter), resulting in more people undeservingly excluded from this scheme. So what of them? With what relief shall they be furnished? Labour's answer is a negative relief: by effectively removing a part of the housing market from circulation, they are limiting supply, and therefore merely adding to the inflationary pressures.
If there is any panacea for Britain's housing woes, it must be to increase supply to keep up with demand. There is too much luddism in British planning policy. On the most fundamental level, land is kept artificially scarce by Green Belts. The government would have you believe that Green Belts were an idea of the 20th Century (indeed that is claimed in PPG2 section 1.2). The actual first application of this approach were somewhat earlier: in 1580, Queen Elizabeth I decreed that no housing could be built within three miles of London. Needless to say, it didn't work then. There can only be three responses to artificially created scarcity:
1) defiance - people ignore the law and build anyway. This was the case in England in the 1580s, and can be seen in shanty-towns across the world to-day. Short of Mugabe-esque acts of wanton destruction, the authorities lose control of shaping development. The dubious legal standing of such quarters can also lead to them becoming unsavoury places. This response is now less common in the developed world due to institutional legalism verging on litigiousness.
2) inflation - property prices rise in the city, meaning that people's standard of living declines. In the modern era, the mediaeval responses of infill and multiple occupancy are actively discouraged, increasing the inflationary pressures and hastening the decline of the city.
3) development beyond the Green Belt - villages beyond the Green Belt become suburbanised with additional dwellings for people who do not play a part in the rural economy. This despoils rural England, creates car-oriented development, and increases congestion, especially on the radial routes from city centres.
The Green Belt is a blunt tool: it seeks to limit demand by limiting supply. It is not effective management of demand. Furthermore, people's natural responses to a Green Belt policy diminish the effectiveness of demand management policies.
The introduction of the present London Green Belt in 1955 was a reaction to the failure of demand management policies between the wars. There was a trend in the decades immediately beforehand for building new quarters of town in a sub-rural style. D.H. Lawrence put it well when he wrote:
"As a matter of fact, till 1800 the English people were strictly a rural people - very rural. England has had towns for centuries, but they have never been real towns, only clusters of village streets. Never the real urbs. The English character has failed to develop the real urban side of a man, the civic side. Siena is a bit of a place, but it is a real city, with citizens intimately connected with the city. Nottingham is a vast place sprawling towards a million, and it is nothing more than an amorphous agglomeration. There is no Nottingham, in the sense that there is Siena. The Englishman is stupidly un-developed, as a citizen. And it is partly due to his 'little home' stunt, and partly to his acceptance of hopeless paltriness in his surrounding. The new cities of America are much more genuine cities, in the Roman sense, than is London or Man-chester. Even Edinburgh used to be more of a true city than any town England ever produced.
"That silly little individualism of 'the Englishman's home is his castle' and 'my own little home' is out of date. It would work almost up to 1800, when every Englishman was still a villager, and a cottager. But the industrial system has brought a great change. The Englishman still likes to think of himself as a 'cottager' - 'my home, my garden'. But it is puerile. Even the farm labourer to-day is psychologically a town-bird. The English are town-birds through and through, today, as the inevitable result of their complete industrialisation. Yet they don't know how to build a city, how to think of one, or how to live in one. They are all suburban, pseudo-cottagy, and not one of them knows how to be truly urban - the citizens as the Romans were citizens - or the Athenians - or even the Parisians, till the war came.
"And this is because we have frustrated that instinct of community which would make us unite in pride and dignity in the bigger gesture of the citizen, not the cottager. The great city means beauty, dignity, and a certain splendour. This is the side of the Englishman that has been thwarted and shockingly betrayed. England is a mean and petty scrabble of paltry dwellings called 'homes'. I believe in their heart of hearts all Englishmen loathe their little homes - but not the women. What we want is a bigger gesture, a greater scope, a certain splendour, a certain grandeur, and beauty, big beauty. The American does far better than we, in this."
- D.H. Lawrence, 1929, "Nottingham and the Mining Country".
The solution is simple: we need to stop this mess and rebuild our cities properly, with straight streets and urban levels of development. Eventually, much of the sub-rural neo-slums that we have built since the end of the First World War will have to be torn down en masse and whole areas totally redeveloped.
We need to dispel the myth that house price inflation is good in any way. It may give speculators a nice return on doing no work. We should remember what speculators did to our economy in 1992. Meanwhile, honest British people's lives are being made worse by this inflation. Banks and Building Societies try to align people with these speculators: if people buy at an inflated price, they, not their mortgagors bear the risk of it. This has the perverse result of giving mortgagees an interest in their own impoverishment. The government must act to transfer the risk of house price fluctuation to mortgagors - they lend a proportion of a house's value: if the value falls, they deserve their share and nothing more. Those are the normal rules of investment: you can lose as well as win.
However, if money-lenders are forced to take responsibility, they will lend less. There must be a scheme to still allow honest working people to own their houses. One option would be a reform of the rental market. Tenants should have an absolute right to buy shares of the houses at market prices from their landlords, be they public or private sector, at any time. They would then only need to pay rent on the remaining share they did not own. Eventually, they would have the right to buy out any landlord. One particularly nice aspect of this option is that it would be acceptable to Muslims.
The need is inevitable: the choice is stark. We stand with a choice between economic growth and economic decline. We cannot fend off the crisis by population limitation: the immigrant is far from being the bogeyman. As Abraham Lincoln noted, "Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if Labor had not first existed. Labor is superior to capital, and deserves much the higher consideration". We need a labour force. A lot of our industries' problems with international competitivity are down to a fundamental labour shortage. Birmingham now welcomes Polish 'bus drivers. We need immigrant labour. Yet, we now struggle to house even our own. Housing therefore is our nation's greatest problem: we must solve it, for the benefit of our key workers, and for the benefit of Britain.
posted by James von Dauden at 10:12 AM
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