Posts Tagged ‘Right to Buy’

Private Eye on Thatcher and the Housing Bubble

April 16, 2015

Private Eye in the issue of the 19th April – 2nd May 2013 marking the death of Margaret Thatcher published a piece on her legacy of failure and corruption. Among her other failed policies and their disastrous consequences, the Eye included in the piece ‘That Thatcher Legacy’ ‘Booms and Busts’. This was the housing bubble created by Thatcher’s ‘right-to-buy’ and the selling off of council houses. The Eye said

Right-to-buy helped fuel the Eighties housing bubble, which burst in the early Nineties, but this was quickly forgotten by politicians and regulators until it happened again. After the start of the longest bull market in 1982 came Black Monday 1987 – a record one-day Wall Street crash – which was also forgotten until the dotcom bust in 2000 and Lehman collapsed eight years later.

In last fortnight’s Eye, they warned that Osborne’s ‘Help-to-Buy’ ISAs would further inflate house prices, without doing anything to address need. This would create another housing bubble. And if they’re serious about extending right-to-buy into the Housing Associations, then it’s pretty certain that another housing bubble is on its way.

Still, at least it’ll keep the Daily Mail happy. They’ll be able to publish scare stories about negative equity, while trying to find some way to blame Labour.

The real culprit, however, is Maggie, and the politicians, who keep trying to repeat her mistakes for their own electoral advantage and the personal profit of themselves and their friends.

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Last Fortnight’s Private Eye on Dave Cameron’s ‘Right to Buy’ Policy

April 14, 2015

Cameron formally announced today his ‘right to buy’ scheme, which would see the remainder of Britain’s stock of social housing sold off. Tom Pride and Mike over at Vox Political have already posted pieces on this today. I’ve reblogged Mr Pride’s, in which he tells it like it is. It’s just a return of Thatcher’s ‘right to buy’ scheme from the 1980s.

He goes further, and describes Cameron as ‘a pound-shop Maggie Thatcher’. Which is pretty much exactly what he is. Though it does leave you feeling that we’ve been short-changed. Surely with his blue-blood and Eton education he could be something a bit more up-market. A Fortnum & Mason’s Maggie Thatcher, perhaps, or may be a Harrod’s Maggie Thatcher? Or perhaps something a little more popular, but still offering quality: a Sainsbury food hall Maggie Thatcher?

Mr Pride also points out that the beneficiaries of the original right-to-buy fiasco weren’t the ordinary tenants, but the private landlords who purchased them and then hoiked the rents up accordingly. People like Charles Gow, the son of the minister, who privatised them. Young master Gow is a multi-millionaire with forty of them.

Johnny Void also wrote a piece I’ve reblogged earlier last year, when IDS announced it as his big idea, pointing out, along with Mike, that it would lead to a complete absence of council houses, and that the affordable housing that’s supposed to replace it isn’t anything of the sort. It won’t solve the housing crisis. It will only make it worse.

Which was Private Eye’s view in their last issue a fortnight ago. In ‘Housing News’ they wrote

The wheels are falling off Tory housing policy as the desperate search for votes intensifies.

Chancellor George Osborne’s final budget saw yet another ineffective give-away to first-time buyers in the form of “Help to Buy ISAs” – up to £3,000 in taxpayer cash to top up savings for a deposit. Like umpteen other schemes designed to help those who can’t afford a mortgage, this one may just inflate prices further while failing to address shortage of supply.

Not to be outdone, the Iain Duncan Smith faction promptly leaked the latest version of its own pet idea: to extend the Right to Buy to Britain’s 2.5m housing association tenants. This sounds like music to Tory ears until one realises that, unlike the social homes owned by the councils, housing association assets are private property.

For decades, governments trying to keep the national debt down have restrained council borrowing by tying up council housing assets in ring-fenced housing revenue accounts (HRA) and making it almost impossible for councils to build. Housing associations, on the other hand, are independent charities so their £65 bn in borrowing is safely “off balance sheet”.

As the chancellor must be only too aware, compelling housing associations to sell to tenants and use the RTB discounts enjoyed by council tenants (up to £102, 700 in London and £77,000 elsewhere) would cost serious amounts of taxpayer money and bankrupt a few housing associations. Then again, as this is the eighth election in row where the Conservative party has said it will extend RTB to housing association tenants, will the vote-catcher fare any better than usual?

That isn’t the end of the TRB saga. Under localism, some councils have found a way round Treasury borrowing caps via public-private partnerships, using the new “general power of competence” to create their own “local housing companies” and build homes – for sale and for social rent – and keep them outside the HRA. Not only does this evade the borrowing caps, but it also means the new homes are not, er, subject to the Right to Buy. Housing minister Brandon Lewis is not happy, and has threatened councils with serious reprisals. So much for localism.

Now public-private partnerships, like the Private Finance Initiative, are by and large a colossal waste of money and a massive drain on the state, all in order to provide contracts to the Tories’ donors in private industry. But if local councils are using such schemes to build more social housing, then perhaps we could do with more of them in this specific instance.

As for Osbo and his Help-to-Buy ISAs, one of the commenters over at Tom Pride’s or Johnny Void’s blogs stated that the last thing the Tories wanted was for the price of housing to go down, as this would have a knock-on effect on the rest of the economy through the way mortgages are used to stimulate finances elsewhere. Hence in the short-term, I really don’t think Osbo would be at all worried about housing prices going up, so long as the bubble burst when someone other than the Tories were in power.

As for the ‘Right-to-Buy’ policy having now been wheeled out by the Tories in eight elections in a row, that shows that they have absolutely no intention of honouring it. Not if it’s been touted in the past, but obviously not been put it into practice, if they’re still claiming they’re going to do it this time.

This means that Mr Pride was probably being overgenerous in his description of Cameron as a ‘pound-shop Maggie Thatcher’. The stuff in pound shops is cheap, but it’s still good quality. This, however, is a decidedly shop-worn policy, that is definitely past it’s sell by date. This is the Arthur Daley, Trotters Independent Traders version of Maggie Thatcher. If the policy was an animal, it’d be the dead parrot in the Monty Python sketch, gone to join the ‘choir invisibule’.

The Bulgarian Peasant Party’s Solution to the Housing Problem

June 1, 2014

Last week I blogged on the several contemporary issues, which were similar to those tackled by the Bulgarian peasants’ party, BANU, nearly a hundred years ago. These were a local village power company, which was run as a co-operative by the whole community. It was thus similar to the idea of the Utopian British Socialist, Thomas Spence, for the communal ownership of land by the individual parishes, and also to the idea of the Bulgarian peasants’ party for the transformation of Bulgarian agricultural society through the formation of peasant cooperatives. I also remarked on the way the Bulgarians had also set up a policy of allowing the banks to provide loans on reasonable rates to credit cooperatives as a way of driving out the moneylenders. This is a problem that now besets British society, through the return of loan sharks and payday loan companies, like Wonga, that offer extortionate rates, because of wage freezes and cuts to welfare benefits.

Bulgaria, like modern Britain, also suffered from a housing crisis, made worse by the influx of thousands of refugees displaced by the First World War. They attempted to solve it through a mixture of policies, one of which was similar to the Bedroom Tax. They laid down the maximum amount of space that a family could occupy in a property, so that there would be more space available for the homeless. They also set about building cooperatively owned tenement blocks. R.J. Crampton describes these policies in A Short History of Modern Bulgaria (Cambridge: Cambridge University Press 1987) 90).

The principle of maximum holding was applied to urban as well as rural property. The post-war refugee invasion had placed severe strains upon the already hard-pressed housing resources of Bulgaria’s towns, particularly Sofia. According to Agrarian legislation no family was to occupy more than two rooms and a kitchen, with an extra room for every two children over fourteen. Office space was also subject to restriction, and in the case of both domestic and office accommodation commissioners acting on behalf of the ministry of the interior had extensive powers to enforce the new and widely resented regulations. A second and more popular response to the housing shortage, and one much in conformity with Agrarian philosophy, was to encourage the building of new apartment blocks cooperatively financed and thereafter owned by their inhabitants. This reform survived the fall of the Stamboliiski regime and cooperative building continued through the inter-war period.

The German radical Socialist party, the USPD, also had a similar policy in the same period, for the same reasons: to solve the shortage of housing caused by the First World War.

What’s needed isn’t the Bedroom Tax, which is really an excuse to cut Housing Benefit by pretending to withdraw a subsidy that never in fact existed, if tenants of supposedly under-occupied properties don’t move out to suitable homes, which also don’t existed. What is needed to solve the problem is simply building more social and genuinely affordable housing, which the Conservative actively seem to oppose. When the ‘right to buy’ legislation was passed, councils were forbidden from building more council houses, and ‘affordable’ properties are only pegged at 80 per cent of the market worth, which means that in many parts of the London houses are well out of the price range of the very poorest, who need them. It’s possible that cooperation schemes, like those enacted by the Bulgarians, might be part of the solution.

Something like the Bulgarians’ legislation limiting the maximum amount of space families can occupy could also be applied to private housing. The Bulgarian policy was based on the view that you should only possess what you can actually work yourself. Thus there was a maximum amount of land allowed to be cultivated by peasant farmers. Large landowners were forced to sell the excess land to the smaller peasants, so that each peasant farmer had just enough for his needs and those of wider Bulgarian society.

The great French anarchist, P.-J. Proudhon, had a similar view. Much of his Mutualist anarchist system was based on his experience of peasant society in the Jura, where he grew up. While he didn’t set the maximum amount of space people could occupy in their houses, he did recommend that people should lawfully own only what they could actually practically use themselves. Thus, landlords, who held multiple properties, which they rented out, should have all but the property they themselves lived in expropriated and given to the people, who needed them.

I believe a similar policy could be usefully implemented today. Perhaps we need the ‘right to buy’ principle extended to all the private tenants, now forced to rent homes at exorbitant rents because of the way available housing was bought up by people seeking to rent them out later in the housing boom of the 1990s. I also believe that there are many under-occupied private homes, with considerable space going without tenants, in certain parts of London, such as Knightsbridge, Kensington and Westminster.

And possibly Chipping Norton. I can’t see how Dave Cameron, whose government is responsible for the Bedroom Tax, and who has said repeatedly that ‘We’re all in it together’, would possibly object to having to share his home with a couple of crusties.

Another Angry Voice Critiques Osborne’s Budget

March 22, 2014

George Osborne predictions

The table of Osborne’s failed predications from Another Angry Voice, illustration just how inaccurate they are.

The Angry Yorkshireman has provided an excellent antidote for the approving hype surrounding Osborne’s ‘business friendly’ ‘worker’s budget’ on Wednesday. Simply entitled ‘Budget 2014: The AAV Analysis’, This succinctly describes it as ‘some pre-election bribes and some myopic tinkering with a fundamentally unstable economic system’. The Angry Yorkshireman begins by comparing Osborne’s figures now, with those he confidently gave at the start the present government. These show just how far from the reality his predications then were, and how the situation now is far, far worse than the optimistic view Osborne then had. This also effectively shows, even if this rest of the Angry One’s article didn’t, just how much worse off everyone now is under the Tories. Except the very rich, of course.

He then examines the immensely harmful effects Osborne’s budget has had on workers, pensioners and savers, before noting the way Osborne increased VAT from 17.5 to 20 per cent. He has a short paragraph stating that Osborne’s budget shows that even more privatisation is on the way, and criticises the way the education system is being sold off to ‘unaccountable pseudo-charities’, who pay their managers massive salaries while paying the actual teaching staff very little. He then critiques the government’s policy towards the banks, which consists in maintaining them, and their massive privileges for senior staff at the expense of the working population, who have to suffer wage restraint and cuts to welfare services.

He then attacks the government’s housing policy. This is the ‘right to buy’ scheme, which will further reduce government stocks of council housing as the government is making sure no more is being built. He then discusses the increases in government funding on flood defences and potholes. this is tacit recognition by the government that their earlier cuts to these services were wrong. However, he believes that for the government now to return some of the money they cut from flood defences after the floods have occurred is an insult to everyone, who had to leave their homes because of them.

He also devotes a paragraph to criticising Osborne’s optimistic and unrealistic economic forecasts in the budget, before concluding that

The only possible conclusion from the headline figures is that Osbornomics has failed in its own terms. The fact that by 2015, Osborne will have borrowed £207 billion more than he claimed he would, yet the economy will be £128 billion smaller too is absolutely damning stuff, but you won’t hear anything about this from the mainstream media.

Many of the measures in the 2014 budget can be seen as the pre-election bribes they are intended as, yet these modest pre-election gains the Tories are providing dwindle into insignificance in comparison to the huge losses the majority of people have suffered since 2010.

Perhaps the most damning thing of all is that in the very same week that the Bank of England admitted that the private banks run a money creation cartel, and a NASA backed study warned that continuation of the neoliberal economic orthodoxy threatens irreversible systemic collapse, the Tory party have once again offered no fundamental reform to the way the economic system works, in favour of shoring up the status quo, and protecting establishment interests.

Christmas Private on the Massive Increase in Homelessness

February 7, 2014

The Christmas edition of Private Eye, for the 21st December 2013 – 9 January 2014 also carried a story about the massive increase in homelessness under the Coalition, and the problems this poses for Grant Shapps’ policy of having local authorities house them in the private sector.

‘Room At The Inn

The housing charity Shelter has been telling anyone who will listen that around 80,000 children in England will spend this Christmas homeless and in temporary accommodation. Some 2,000 of those families with children are in bed breakfast hotels (for which local authorities pay through the nose), 790 of these families beyond the six-week legal limit.

In 2011 Grant Shapps, then housing minister and now Conservative Party chairman, announced the solution to this problem: give local authorities the flexibility to offer homeless families a tenancy in the private rented sector.

Alas, the number of families accepted as homeless since the election is up by 34 percent – a rise fuelled by the shortage of social housing, cut in housing benefit and, er, the high cost of private rents. The private rented sector is in fact the fastest growing source of homelessness. The number of families becoming homeless after losing a private assured shorthold tenancy has more than doubled in England in the past three years, and more than quadrupled in London.

With the supposed solution to homelessness itself fuelling homelessness, the effects of the coalition’s latest wheeze are likely to be bleak: an extra £100m announced in the autumn statement to spend on increasing Right to Buy sales – which will get rid of any remaining social housing even faster.’

But perhaps we shouldn’t expect anything less from Grant Shapps. This is the man, who has repeatedly shown his complete indifference and contempt for the poor, the homeless and the unemployed. He is only interested in them if a private company can make money out of them. And he doesn’t seem too scrupulous in the realm of business morals. He did, after all, set up one of his companies under a false identity, which constitutes fraud.