English: The house where Margaret Thatcher was born (Grantham) Français : Maison natale de Margaret Thatcher (Grantham) (Photo credit: Wikipedia)
I thank Dr Alf for sharing two excellent articles on home ownership and housing. The first article was by Adam Posen and entitled “The cult of home ownership is dangerous and damaging” and published in the FT. The second article was by Will Hutton, published in the Observer entitled “Political cowardice stops us from solving our wretched housing crisis”. The cult refers to the obsession with home ownership which in the UK is now increasingly the preserve of the wealthy or young people with wealthy parents. The crisis refers to the huge number of young people who can neither afford to buy nor rent; this impacts their mobility, job prospects and future careers. I would like to dwell on the housing crisis in the UK and put it into historical context.
Will Hutton’s analysis is correct when he says that more houses need to be built but like too many commentators, he falls into the trap of demonizing landlords which the country cannot afford to do.
The housing crisis is about 70 years old and started in the 1950s, when Harold MacMillan promised to build the British people 3 million council houses and then found he could not because too few Englishmen wanted to make bricks.
Impoverished Italians from Southern Italy were brought into Bedfordshire to work the brick clay pits and make these bricks and a monument made in metal stands on the roundabout opposite Greyfriars police station in Bedford to their arrival.
Subsequently, a shortage of construction workers and skilled tradesmen caused by the desire of more and more school leavers to undertake white-collar jobs, become “Masters of the Universe ” in the City, to ride the dot-com boom and otherwise make easy money meant that there were not enough people to actually build the houses.
Similarly, the Wriston Doctrine which said “Countries don’t go bust” saw massive lending to countries like Argentina whilst mortgage finance was rationed in the UK by building society managers who acted like tin Gods and looked down on housewives, pregnant woman or anyone who did not dress like them.
Margaret Thatcher solved that problem by liberalizing the mortgage market and partially dealt with profligate local authorities by selling council houses, capping council taxes and refusing to allow councils to spend the proceeds derived from council house sales. Her own caution unfortunately prevented her from unleashing systems building via firms like Hof Haus which would have solved the housing crisis at a fraction of the cost and do away with the need for construction workers and such large mortgages.
By 1992, the housing shortage was 4.4 million houses, and we lacked the construction workers to build them.
New Labour’s solution was to look to Poland, “just 13,000 of them will come here” was the assurance given by the Labour Home Secretary, even though he knew the real figure was going to be 1 million.
This increased the shortage to 5.4 million because no-one had given any thought to where the Poles would live.
At the time, we were building 153,000 houses a year, when even with the later Gordon Brown target of 250,000 houses a year (a figure he never even came close to achieving), it was going to take 25 years to deal with the current shortfall.
Today, we have legal and illegal immigration running at about 250,000 a year and with Romanians and Bulgarians poised to come here that figure will rise further.
We know already from the number of notes and coins in circulation, the amount of food bought at supermarkets and the rise in school admissions to parents who have no documentation that there are 4.5 million illegal immigrants plus more coming brought in by Snakehead Chinese gangs, Eastern European gangs to do the below minimum wage and menial work which the indigenous population will not do.
The current shortage, worsened by local authority planning departments, restrictions on development, the refusal of insurers and mortgage finance providers to consider system building is now 10.5 million yet David Cameron wants the Ukraine and Turkey to join the EC, something one hopes the Germans will block long after David Cameron has moved on to his new UN role.
To clear, this backlog would take 50 years at 250,000 homes a year, or 100 years on present form, so on balance, I think it will never be resolved unless there is a massive hostel building programme for those who cannot afford to buy or rent or a war or some unknown pestilence thins out the population to a more manageable level.
John Gelmini
Dr Alf's Blog 