Housing in Crisis : A Clear Failure of Free Market Policy

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Housing in Crisis:

By Henry Stewart : @happyhenry

If councils had continued to build homes at the rate they did from 1974 to 1979, we would by 2014 have had 4.1 million extra dwellings.

That fact perhaps on its own explains the current housing crisis. Now it might not have been possible to build that many homes. Perhaps, due to available land, they would only have built half that, or a quarter of that, number. But even just a quarter would have meant we would not have the same level of housing shortage or, probably, prices as unaffordable as we face today.

The decision to stop local authorities building houses was a political one, taken by the government of Margaret Thatcher. It was based on a belief in the market. Surely, the argument went, if the housing market was not “crowded out” by public construction then the free market would respond and provide the homes that were needed.

Restrictions on council house building were not only continued by her successors, but further tightened. The average 32,000 council houses built each year from 1979 to 1990 was well down on Labour’s 152,000 from 1974-79. However under John Major it fell to an average 3,500 from 1990 to 1997. Under Tony Blair, from 1997 to 2007, just 357 council homes were built each year on average.

house-chart

 

Local authority Housing Association Private Total
Labour, 1974-79 151,678 21,978 144,240 295,920
Thatcher, 1980-90 31,905 14,684 166,417 211,147
Major, 1990-97 3,584 33,052 147,114 183,323
Blair, 1997-07 357 23,712 180,657 202,738
Brown, 2007-10 680 29,847 123,437 153,963
Cameron, 2010-14 2,830 27,158 106,345 140,335

Source: Table 208 House building: permanent dwellings started, by tenure¹ and country2

https://www.gov.uk/government/statistical-data-sets/live-tables-on-house-building

 

The number of dwellings built by housing associations during Blair’s years in office also fell, to 10,000 less per year than under Major. We know from Nick Clegg’s memoirs that, for Cameron and Osborne, there were clear political reasons not to increase social housing. He remembers one of them saying “I don’t understand why you keep going on about the need for more social housing – it just creates Labour voters”

 

Why Labour did remove the ban on councils building more homes is more of a mystery. Owen Jones has said that he once asked Hazel Blears, who had been Secretary of State for Local Government, why Labour did not ensure more public housing was built. The reply: “None of us knew anybody in social housing so we weren’t aware of the scale of the problem.”

Private sector house building did rise. But the 22,000 extra houses built each year from 1979 to 1990 did not come near to making up for the 120,000 annual shortfall in council houses. Neither was a shift made to housing associations, which built an average 7,000 homes a year less during the Thatcher years than under the previous Labour government.

Free market advocates would probably claim that the failure of the private sector to bridge the gap was down to market flaws, such as a shortage of land and planning restrictions. However a successful free market creates a balance of supply and demand, but there is no reason to suggest it will meet a public need for affordable housing.

Faced with a choice between using a piece of land for a £20 million mansion or 90 affordable homes at £200,000 each, it is always going to be the mansion that is more profitable. That is an extreme example. But the choice between 45 expensive home or 90 affordable ones is probably more common. It is clear that, without planning intervention, private developers will tend to build for the more affluent part of the market.

“Subsidised” housing? Or efficient housing?

David Cameron liked to describe social housing as “subsidised”, suggesting that the lower prices faced by council or housing association tenants was due to public subsidy. However social housing in the UK receives no such subsidy.

Cameron’s description was a recognition that social housing provides more affordable homes. It is also a recognition that the public sector can provide homes, without subsidy, at a better price (and often better quality) than the private sector. It is simply more efficiently provided housing.

The housing sector is a clear example that the free market cannot provide the solutions to all our public needs and indeed that it is often the public sector that can do so more efficiently and at lower cost.

Jeremy Corbyn has pledged to build 100,000 council house a year if elected. It does seem to be a policy that makes simple sense. It does not even need an increase in central government expenditure or in taxation, but only a removal of the restrictions on local authorities securing loans to build homes.

During the 2015 election the Green Party leader had difficulty explaining where the money would come from for public house building. Evan Davis on Newsnight explained it very simply: all that is needed is for councils to borrow the money on the public bond markets, and then to to use the resulting rent to pay both the loans and the interest. No extra public expenditure is required.

The housing crisis is a problem created by political ideology being put ahead of what was society needs. But it is also a problem that can start to be solved very easily by a return to public housing.

priced-out-graph

http://www.pricedout.org.uk/why

 

What makes a Leader?

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WHAT MAKES A LEADER?

by Rhys Jolley previously published here

“Jeremy Corbyn is not a leader”, the cry goes out, “he’ll destroy the Labour Party. Replace him!” Media pundits and plants repeat this mantra daily. Even the left leaning Mirror blasted out its front page demand “for the sake of your party and for the sake of your country, Go now!” It is one thing to have to face up to your opposition, but another level of challenge altogether when your supposed friends turn on you so viciously.

There are many qualities a leader needs: intelligence, toughness, determination, clear objectives and vision. But a leader with responsibility for the lives and welfare of an entire nation must also demonstrate exceptional moral fibre, standing up for clearly stated principles, even when under sustained attack from opponents, with dignity. That rather sounds like Jeremy to me.

Owen Smith, says all the things expected of a challenger, but little is new. An end to austerity and the Tory nationalisation of private debt. “That’s the kind of revolution I’ll deliver,“ he passionately declares. Fine words, but will he have the guts to do what is necessary to achieve it should he be given the chance? Such courage doesn’t come easily.

The great leaders of the past had to go through decades of preparation. Mahatma Ghandi underwent an extended initiation in South Africa where he first employed nonviolent civil disobedience as an expatriate lawyer involved in the resident Indian community’s struggle for civil rights. He was imprisoned many times. On returning home, he was called to stand up to the full force of the British Raj. He and his small army of ordinary people were able to face them down because he had honed the necessary moral stature and did not budge from his objective.

The Labour Party faces an enemy with an incredible determination to destroy what is left of the socialist structure in this country for its own ends. Already the multi-national corporate agenda has reached deeply into the fabric of our society with its network of CEO’s quietly strengthening their hold on the levers of power by employing devious and complex tactics while claiming the best of intentions. They enable the notorious 1% to profit from these hard times, promoting austerity, though not for themselves, of course, while herding the sick and the disabled to their deaths from neglect. Over 50% of the wealth of this country is seemingly not enough for them. They want it all and are willing to engineer the destruction of the much loved NHS and bring the profit motive into our education system by economic sleight of hand. The Tory party and many of its elected politicians are firmly in their pocket.

David Cameron’s “Big Society” followed Tony Blair’s “Third Way” into oblivion. The country is more unequal then when they began. Theresa May recently said that she will bring about “a fairer society”, but unless she is willing to stand up to this hidden enemy, her efforts will be largely cosmetic. Equal rights for women is certainly a passion of hers, but there will be no fundamental change to the other basic inequalities. Her corporate paymasters won’t allow it.

The right wing press did direct some moral outrage at the bankers, but it was short-lived and little changed. They are still raking in their millions. The current scapegoat, Philip Green, is only one very visible and especially greedy example of his ilk. He broke no laws, so why have the laws not been changed? Something very easy to do, I would have thought. Many big multi-nationals pay little tax. Is Mrs May racing to close the loopholes. I don’t see it.

So, it is up to Labour to push for the changes that will bring about Owen Smith’s equally lofty vision of a ‘more equal society’. But does he actually know what it will require? A cleansing of the corporate lobbyists who have such a hold behind the scenes on the philosophy and actions of so many in Westminster, for one thing.

Donnachadh McCarthy’s excellent book, “The Prostitute State” clearly shows the extent to which many in the Labour Party have also been corrupted, through their directorships and other links to the companies they are there to regulate, gradually watering down the principles that Labour was set up to promote.

A true leader cannot be bought. That’s Jeremy Corbyn again. His earnest challenger has not yet shown any resilience and courageous action in exposing the mechanisms behind the corruption embedded deep within our political and financial systems. You can’t change what you don’t entirely understand.

To become a true leader, Owen needs to go through his personal baptism of fire, requiring him to withstand ridicule and the inevitable personal attacks that will start when the establishment bigwigs see that he is a serious threat to their power base. Until then, he will cave in to the very first challenge from those ruthless corporates and water down his resolve in crucial ways.

So, Owen, I implore you, ‘for the sake of your party and for the sake of your country, withdraw now!’ and do your advanced moral endurance training. Generalities are not enough. Ideas are two a penny. Go onto the front line of the revolution you say you want to lead, and forensically expose the neoliberal agenda with redistributive policies that will be gunned down by the right wing press. Show them that you cannot be swayed by their threats or their bribery. Earn your stripes and then we may embrace you as our leader.

Jeremy has already proven he has what it takes to shepherd the Labour party into the next phase of its mission to achieve a much more balanced and integrated society. He should be wholeheartedly supported.

From

THE NAIVE CORRESPONDENTS

info@naivecorrespondent.org.uk

 

Emily Thornberry’s support for Labour Party Democracy

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Posted below is the Shadow Foreign Secretary, Emily Thornberry’s letter to her constituents which paints a very different picture to that presented by former members of the shadow cabinet who took part in the staged walkout of the coup.  The most significant aspect is her disgust at the way that the party hierarchy have done their best to stop Jeremy – first from getting on the ballot, then by excluding 130k new members from voting and then by the £25 ‘voting tax’ for supporters.  It is so heartening to know that some MPs have a sense of what is democratic … and are prepared to stand up for what is morally ‘right’ not what is (apparently) politically expedient.

Emily is absolutely on the money with her plea:

‘I do not understand why anyone in the Labour party would want to turn their back on that membership, in the way that the party hierarchy have tried to do this summer.

Instead, it is time to unite as a party – the membership and the elected representatives alike – and together take our fight into the only contest that matters: getting this dreadful Tory government out of office, and punishing them for the mess into which they have plunged our country.

That is what we should have spent our summer doing – uniting, facing outwards, taking on the Tories, and energising the public to our cause – and that is again why I regret so much the chaos and distraction that this attempted coup against Jeremy has caused.’

Emily Thornberry’s full letter to her constituents:

What had begun as the necessary modernisation of the Labour party in 1994, showing how a belief in a dynamic market economy could be combined with the drive for social justice and the transformation of public services, had become distorted into an agenda where the test of every new policy from the leadership was how much it would antagonise the Labour party’s core membership.

Tuition fees, the attempt to marketise the NHS, the careless disregard of long cherished civil liberties and the drive to war in Iraq were being imposed by a leadership who convinced themselves that, if the members hated it, they were doing something right.

When I walked through the voting lobbies against the attempt to impose 90 days’ detention without charge in 2005, Tom Watson –then one of Tony Blair’s whips – growled at me that I was a ‘traitor’. But a traitor to who?

Not to the country, when this was a draconian measure designed to look tough on terrorism, but one that would undermine the cohesion of communities like ours, alienate people and actually undermine our security. My members knew this and I remember when Compass polled party members – at my instigation – it was clear this was the national view as well.

So who exactly was I betraying? Just a party hierarchy and a party leadership who were trying to shore up their relationship with the right-wing press by ‘taking on’ their members, and trying to out-flank the Tories on security.

When Jeremy stood for the leadership after the disaster of the 2015 election, the difference was palpable. Here finally was a candidate interested in listening to the party’s members, reflecting their views, and promising to represent them. As a result, hundreds of thousands more joined, including huge numbers who had left because of Iraq, tuition fees, and other issues.

Here we are now, less than a year after Jeremy’s overwhelming victory, and the party hierarchy – through decisions of the National Executive Committee – is attempting to overturn that result, quash Jeremy’s mandate, and put the party’s members back in their box. And they are doing so in the most naked way.

I was disgusted to see the attempts to try to stop Jeremy from getting on the ballot. And then, if that wasn’t bad enough, hundreds of thousands of fully paid-up Labour party members were excluded from taking part in the election, having been told the opposite when they joined. Third, your membership fees were spent on securing that decision through the courts. And then lastly, registered supporters, who had been told they could be involved in the Leadership election, were then told that they must increase their donation to £25 within two days to remain eligible for a vote.

Indeed, you should probably know that even to put on the social events we have held for local members in the last two months – occasions that have been really important to welcome in our new members – we have been forced to seek permission for each event from the party hierarchy.

In short, some people have done their level best to deny the party’s full membership a fair and equal vote in this contest, or even the chance to make their voices heard. Instead of welcoming the enthusiasm of our new members, instead of celebrating the strength of our mass membership, they have been behaving as if it is something to be afraid of.

As someone who spent nearly 30 years as a grass roots activist before becoming your MP, I cannot accept this.

But even more important, as someone who believes our party and our country are best served when our elected representatives and the party membership work together, I fundamentally disagree with this attempt to take us back to the years when our members were deliberately antagonised, alienated and ignored by the people who they helped to put in power.

Islington South and Finsbury Labour Party has a proud reputation for being one of the great campaigning local parties and our election results in the past 11 years have shown what can be done when the membership and its elected representatives work together with respect.

We now have the potential to replicate this success across the country, creating a national activist base that could be unlike anything else in modern British politics, taking our message into the street and onto the doorstep, and turning the activism of thousands into the support of millions.

I do not understand why anyone in the Labour party would want to turn their back on that membership, in the way that the party hierarchy have tried to do this summer.

Instead, it is time to unite as a party – the membership and the elected representatives alike – and together take our fight into the only contest that matters: getting this dreadful Tory government out of office, and punishing them for the mess into which they have plunged our country.

That is what we should have spent our summer doing – uniting, facing outwards, taking on the Tories, and energising the public to our cause – and that is again why I regret so much the chaos and distraction that this attempted coup against Jeremy has caused.

So my plea to all members, and one I will make to my fellow MPs, is this: whatever the outcome of this leadership election, we should stop the internal division, unite as a party, and take the fight to the Tories together.

And I would like my local party to know that I will remain totally loyal to the leader of our party, whoever he shall be.

In the meantime, you all know that I have a very full in-tray with constituency business, and with representing the party on Brexit, foreign affairs, and – together with Clive Lewis – our future defence policies.

I will be concentrating on this vital work in the run up to 24 September, rather than this unnecessary and divisive leadership contest. And when that is over, I hope we can all start focusing on those bigger issues on which Britain needs an effective, united opposition.

I know that not everyone will agree with the conclusions I have reached, but I am completely confident that in Islington South and Finsbury, we will continue to debate this and other issues in an atmosphere of mutual trust and respect.

Best wishes, and please as ever, let me know your views. Looking forward to seeing you on a doorstep with me soon!

Emily