Wednesday, 30 April 2014

What has the EU ever done for us?

The opinion polls are shifting, and a UKIP or Conservative triumph at the European elections is now looking likely, thanks in a big part to the relentless anti-EU stories rolling out of the right-wing press.

So here is something you rarely see. A defence of what the EU brings for us.

And what has it brought?

Well, try:

..oh, and years of peace between European neighbours after centuries of bloodshed and the extraordinary political, social and economic transformation of 13 former dictatorships, now EU members, since 1980


So, let's have an honest debate.

The Tory-backing press, run by the likes of Rupert Murdoch, don't really care about UK sovereignty. They just know the EU is one of the sole entities large enough to regular global corporations.

Despite its flaws, that is the value of the EU for millions of people that value social, economic and environmental rights that EU membership protects.

And that is the real debate: between those that want to see a race toward ultra low taxes, the break up of social and welfare systems and a race to the bottom on workers' rights and laws to protect the environment.... and those on the other had who want to live in a world which values more than the narrow pursuit of profit for the few at the very top.

The EU has its faults. But it is worth fighting for.

Sunday, 6 April 2014

Boris Johnson will be known as the Mayor that priced out millions from London

Some political leaders leave office and are forgotten. Others are studied for decades. But almost all leave some kind of mark on the country or city they governed, for good or ill.

London's first Mayor, Ken Livingstone, had a term that was littered with achievements - and missteps - that came to define his tenure. His successes were numerous: creating the London Overground, pedestrianising Trafalgar Square, winning the Olympics and commissioning the London bike hire scheme. His best known legacy though is probably the Congestion Charge - a controversial scheme environmental scheme that has come to last well into a Tory Mayor's reign, albeit in a smaller form.

The current Mayor will have a quite different legacy, and one, ironically for a political leader known for inaction rather than action, will be far more dramatic and long-lasting than his predecessor's.

The statistics that pop up in the media with increasing regularity tell a story that we all know. London is unaffordable. It is the city of foreign billions, of buy-to-leave properties; of hedge fund millions and gleaming towers of global wealth. It is a city where three-quarters of new homes are sold to overseas investors, the majority with no inclination of ever living in it, of supporting its businesses or giving it life - a city where the most 'desirable' central boroughs are seeing a 40% rise in empty homes as a result. A city whose every new development reduces affordable housing and builds homes for the rich. It is a city whose housing and rent costs are driving its new residents to its peripheries and, for many more, away altogether.  

London is, as one estate agent put it, a city where "rich and poor can no longer live cheek by jowl". Mayor Boris Johnson, through ending a commitment to affordable housing and supporting endless developments aimed only at the rich, is destroying one of the defining characteristics of London - its social diversity - that set it apart from so many other global cities. He is ending the chances of millions of young (and not-so-young) people to live in the city in which they work. And in time, this will drive away the many businesses, cultural centres and organisations that give London its life.

All that will remain will be a soulless metropolis of glass towers and empty mansion blocks. And for that, Boris legacy should become known for the poisonous one it is: as the man who took a great cosmopolitan city of villages and turned it into the bank account of the super-rich. The man who will leave the city poorer in human terms, despite all the billions flowing around its properties. 

Sunday, 18 August 2013

As the property market in the UK becomes ever more divided, politicians begin to wake up

The last post on this blog covered the scandalous state of the housing market in the UK. In London, where the problem was already at its most acute, all indications are that things have recently got even worse.

In August it was announced that the Buy-to-let market has surged, pushing ever more of the limited supply of properties into the portfolios of investors. This segment of the market is now larger than it has been since the financial crash and represents a far higher percentage of overall mortgage approvals than a decade ago.

Meanwhile, recent report have suggested, variously, that 'super-prime' properties in the London cost 10% more than they did before the banking crisis and up-market estate agent Savills has highlighted the fact that the most 'desirable' central London areas have been price crisis of 18% in a single year

Prices of homes in central London are now over £1.4 million on average. A huge driver of this has been overseas money, with figures indicating that 70% of new homes in the London were bought by foreign investors in the last two years. The knock-on effect means prices have risen across the south-east, as buyers are forced out of the capital. 

This blog has suggested proposed five solutions to the crisis:
  • Build more houses
  • Ban buy-to-let, or restrict it new-build developments
  • Introduce higher taxes on second homes
  • Bring in charges on homes left empty in the capital - legislation that exists in other countries.
  • Restricting the sale of property based on residency criteria or citizenship
Labour-run Camden Council has, in a rare sign that politicians are waking up to the crisis, proposed to pursue a hybrid of the third and fourth options - pushing the Government for the right to introduce a levy on empty second homes.

Let's hope that the Coalition makes the right decision. Despite the gleeful tones in which the media reports rising house prices, the fact is, as Faisal Islam recently put it, that in creating a housing bubble, "we're condemning a whole generation to paying absurd prices for what is a basic human need".

If the Government doesn't grant the Council (and other councils) the right to pursue similar policies, then we can expect the UK to become more unequal; a whole generation - excluding the offspring of the very wealthy - will be locked out of home ownership and our capital city will resemble more and more a physical bank account for wealthy overseas buyers. 

Sunday, 7 July 2013

Our capital is becoming a playground for the super-rich - it's time to ban non-EU citizens from buying property in London

We know a number of facts about the London property market:

We also know what is driving this situation:
  • We know it is caused by a shortage of new housing, with a tiny and shrinking number of 'affordable' homes being built in London.
  • We know that it is driven in part by the buy-to-let market, which saw a 15% rise in activity in 2012 alone.
  • We also know it is being driven by overseas buyers - including the global super-rich; The facts here are stark:
    • 73% of prime central London new-build homes were bought by foreign buyers last year, according to Savills.
    • 60% of buyers in central London areas such as Kensington, Chelsea and Marylebone are from overseas and for 37% of these their London property is not their primary residence.
    • Many of these - as well as UK-based 'property investors' - leave their properties empty. Research by Camden Council in 2012 found that 1 in 16 homes were left empty by their owners in their borough.
    • The result, as the commentator Simon Jenkins has put it, is that parts of central and west London are becoming 'a ghost town — bought by overseas money, then left to rot'.
Finally, we  know that we have a Tory Mayor in Boris Johnson and a Tory-dominated Government that are not just reluctant to address these issues, but have a vested interest in accelerating the status quo. This can be seen in practice through the Mayor's early decision on winning in 2008 to scrap the target for a minimum proportion of affordable homes in new London developments and in his recent decision to rubber-stamp the new Earls Court development. 

The latter will see the demolition of large numbers of social homes in favour of houses for the super-rich - something recently described as "the Tories' biggest social engineering project.... demonstrating ideology and gerrymandering and corrupting local government as never before".

The fact that a right-wing think tank report, when previewed on Conservative Home, described the electoral disadvantages for Tories of social housing in marginal parliamentary seats, shouldn't surprise. Coupled with the bedroom tax, both Boris and Cameron know that London is moving from a politically-balanced city with a left-leaning core to a Tory-dominated one, and at huge speed

What will be left, as Revd Dr Giles Fraser, priest-in-charge at St Mary's Newington, put it, will be not the economically and socially diverse city that has made London so unique and successful, but 'a playground for the super rich'.

Given political will, the solutions are there

Despite the political ramifications, this isn't a left-right issue. In the last year or two, even right-leaning papers like the Standard have been getting increasingly concerned over property prices, presumably as the market has now become so expensive that even the upper middle-class homeowners that make up many of their editorial team are now realising that 'bank of mum and dad' might not be enough to help their children jump on the ladder.

At the same time, there is a reverse property-ladder effect occurring, with the traditional residents of Kensington and Chelsea priced out by the recipients of huge bank bonuses, by oligarchs and the other global super-wealthy. Members of the former social group are now populating boroughs such as Hammersmith, in turn making these ares unaffordable for the upper-middle class buyers who would have once bought there. And this effect continues, so that the middle and working classes are increasingly priced out of the city completely.

However, on the positive side, we don't just know the problems and their causes. We also know the solutions:
  • We need to build more homes, and re-introduce a minimum requirement for new developments to have affordable - and genuinely affordable (not £500,000 a flat) homes. 
  • We need to ban buy-to-let investments completely, or restrict them to new build developments, and in turn stop treating 'property investment' in the tax system as though it is somehow equivalent to productive hard work. That we have many thousands of people who have made more from rising house prices than through their working lives is bizarre and unsustainable.
  • We need to introduce higher taxes on second homes
  • We need to bring in charges on homes left empty in the capital - legislation that exists in other countries.
Finally, we need to consider something even more dramatic than these measures to tackle the near-unlimited supply of wealth pouring into 'safe investments' in the capital. This money is unlikely to be deterred by higher taxes on second homes or on charges for property left empty. Crucially, this wealth doesn't create significant numbers of jobs, but merely hollows-out districts in the capital. It sustains only businesses - high-end eateries, exclusive shops and clubs - that are of little use to the majority, whilst forcing other, less exclusive shops, bars and restaurants to close. Its negative effects are far more corrosive than any benefits it brings. 

Labour's chance to be different - and popular

If it wants to differentiate itself from a Tory-dominated government who are happy to see the capital of the UK become nothing more than an investment portfolio for City traders, hedge fund-owners, the landed gentry, billionaire oligarchs and Arab princes, then Labour should implement the four suggestions above.

But it should also champion a policy that would demonstrate it is concerned about the living standards of the vast majority of British people and that it is willing to stand up to the dominance of powerful wealthy, about whom hypocritical groups like UKIP are so deafeningly silent.

Labour should ban the sale of property in London to non-EU citizens. 

Sunday, 21 April 2013

With the cost of living in London spiralling, the capital will be a Tory city within a decade

In April, figures showed that private rents in London are at their highest ever level, having risen a staggering eight times as fast than wages in a single year.

A recent report from the housing charity Shelter found that in five London boroughs, average monthly rent for a 2-bed property is now 75% or more of local median take-home pay.

This is part of a trend that has been accelerating over recent years, as the prices of London's properties push people that would ordinarily buy into renting. Reports in March confirmed that the cost of buying a home in London is now higher than in 2007, prior to the banking crash. Halifax, in a recent survey, classified 100% of London boroughs as being 'unaffordable' for first-time buyers.

The price of buying property has been driven by a number of factors, including the lack of new house building, the malign influence of the booming buy-to-let sector and the vast bank accounts of the global super-rich.

These last two factors are rarely talked about, but tackling them is crucial to prevent the majority of new houses built in the capital merely being swallowed up into the ever-larger property portfolios of the wealthy - and changing the political character of a city that has tended to lean left, even now.

The global super-rich

The influence of the very rich on London's property market can't be overstated. As the commentator Carole Cadwalladr put it today, "their effect on London's housing market has been nothing less than catastrophic", as she highlighted a study that found that 73% of prime central London new-build homes were bought by foreign buyers last year.

This is backed-up by other recent studies. Last year, Savills announced that almost 60% of buyers in central London areas such as Kensington, Chelsea and Marylebone were from overseas and for 37% of these their London property is not their primary residence.

Research by Camden Council in 2012 found that 1 in 16 homes are left empty by their owners in their borough, many of which would be due to the fact that they are a second (or third, forth) 'home'.

And the trend is set to continue. The number of "prime residential" schemes aimed at the super-rich at planning rose 70% between 2011 and 2012. The effect on inequality in London is startling: a study found that, in 2012, the top 10% of households by property wealth in the capital account for 45% of all household wealth. The bottom 40% have no or almost no household wealth at all.

The journalist Simon Jenkins railed against this recently; the property market, he said, "is clearing streets of their residents. It is erecting tower blocks of luxury flats along the Thames, which will stand as “fiscal launderettes” that are empty of occupants...These properties are not sublet. They pump no money into the local economy. They are Midas properties, a banquet of solid gold that is uneatable by anyone. Boris Johnson’s theory that these people are “bringing wealth to London” is laughable. They are stashing it here, that is all".


But-to-let

Another key factor in the crisis in housing in London is the impact of buy-to-let. Despite a dismal set of lending figures by the banks to first-time buyers, 2012 saw a 15% rise in buy-to-let mortgage approvals.

Underlying this is the fact that many first-time buyers, often with a good income, are unable to afford the huge deposits required to buy a house in London. Recent figures showed that an average first time house buyer would need to save for 24 years to accumulate the deposit required to cover a home in the capital. And, the forecast is even bleaker for those seeking to get a home of their own: the average deposit for a house in the capital is set to rise to a jaw-dropping £100,000 by the end of the decade.

On the other hand, buy-to-let landlords have the capital - and access to the best bank rates. For many sellers, the stability offered by this group of people is attractive. And so first-time-buyers are disadvantaged yet further.

London: a true blue city?

There is an array of policy tools available to tackle this problem. To address the cost of house purchases, a government could tackle offshore companies acting for anonymous overseas buyers, allowing money gained in potentially the most toxic ways to flood the capital.

To help reduce and control the cost of private rents, there is the option of a New York-style cap on rents and there is the concept of a London Living Rent - both proposed by Ken Livingstone.

To tackle both issues there is the option to levy charges on empty homes, as Camden Council suggested. And there is, of course, the option of increasing taxes on second homes, thus making buy-to-let investment less attractive and reduce the influx of money by the wealthy into properties then left empty. It would also restore life where there is now eerie silence in parts of prime central London areas like Kensington at weekends - or the 'ghost town' effect, as Simon Jenkins recently put it.

So, what does London's Tory Mayor, Boris Johnson, propose to do?

Nothing - as his Deputy confirmed recently.

And yet, why would he do anything? For it this trend continues, London will be a 'true blue' city, populated only by the wealthy, the very wealthy and - just occasionally enough to qualify for non-dom tax breaks - the mega-rich.

It will be, as Giles Fraser, the priest-in-charge at St Mary's Newington, put it, 'a playground for the super rich'. The super-rich that, as another commentator concludes, already "exist in a separate space, behind their gated drives, ring-fenced from the rest, convinced everything is fine".

It will have little or none of the social diversity that has made London such an energetic city, locating as it has done wealthy Primrose Hill next to more down-at-heel Camden and Kentish Town, or, in 1990s and 2000s, trendy, arty Shoreditch next to the towers of the City. It won't have boroughs like Southwark or Wandsworth, that see the rich, the middle-class and the poor live mere moments from each other.

But it will almost certainly vote Tory. And what could be more important to Cameron or Boris than that?

Wednesday, 10 April 2013

ICM Thatcher poll: voters believe that privatising the utilities and cutting taxes for the rich were wrong

One of the big myths about the triumph of Conservatism is that its key tenets have been accepted wholesale by the majority of the British people.

So, as the Tory press will suggest, people support the neo-liberal consensus: deregulation, competition, a minimal state and low taxes. At the same time, 'old' social democratic values are now rejected.

Except, as polling demonstrates, this isn't quite true. The fact is, evidence points to what Blair always thought - the British people are middle of the road. The population, taken as a whole, hold a set of beliefs, that over time may adjust, but broadly can be described as centrist - although admittedly sometimes contradictory.  

So, on the one hand, voters of all hues tend to oppose immigration - Labour, Tory and Lib Dem alike. And there is no doubt that attitudes to welfare (arguably due in a large part to the 'drip drip' effect of right-leaning tabloid horror stories) aren't exactly supportive.

However, let's take the latest ICM poll on Margaret Thatcher. It polled a representative sample of voters on whether they thought, on balance, some of her key policies were good or bad in hindsight. On the one hand, taking on the unions and (despite the massive housing problems London in particular now faces) right-to-buy, are both seen in hindsight as positive.

However, key aspects of Conservatism are rejected - and by large margins. So, for example, privatisation of the utilities are seen as negative. This, of course, is unsurprising: energy companies, like their rail counterparts, haven't exactly endeared themselves to the British public.

At the same time, voters now overwhelmingly reject cutting taxes for the richest. Only 28% in the ICM poll agreed that the reductions in the top rate was a positive policy. No doubt the banking crisis has contributed to this, but equally two decades since Thatcher left office have demonstrated that 'trickle-down' economics doesn't work: average real wages haven't increased in the USA since the 1970's.    

Interestingly, a YouGov survey released today found a similar pattern, with voters seeing privatisation of utilities in negative terms.

Tory voters aren't really as conservative as you think 

We shouldn't be surprised about the ICM results. Previous surveys from some of the leading polling firms have segmented voters by party preference, and found that Tory voters support - in some cases by large margins - the following:


Wednesday, 6 March 2013

As the UK economy stagnates, a few people that can say "I told you so"

It is worth revisiting, in the wake of an abysmal set of figures for manufacturing and - yet again - dire data on UK construction, the views of the minority of economists that rejected the economic plans of Osborne in 2010.

The Chancellor's plans, backed by the Tory press, the Mayor of London, the Prime Minister and, shamefully, the Liberal Democrats, have brought the UK to the brink of a triple-dip recession. Even if the services sector saves him from the humiliation of another recession, by April, Osborne will still have presided over an economy that will have barely grown since he came to power.

Coupled with this, wages are now a real concern, with the average Briton's standard of living continuing to fall. It is entirely possible that, come 2015, any return to growth will mean little to millions of ordinary people.

As a result of this situation, opinion polls now demonstrate that voters are finally rejecting the Tory approach of cutting public spending in the midst of a stagnating economic climate, where private spending is lacking. 

In light of all of this, let's consider this set of experts, writing in 2010. They were dismissed at the time by the majority of 'mainstream' economists and yet, well, they have every right to feel vindicated. Take David Blanchflower:
"A Harvard economist said to me recently that the coalition government's fiscal deficit reduction programme is the biggest macroeconomic experiment in an advanced country in any of our lifetimes.... He argued that no government, unless forced to, would be dumb enough to take such unnecessary risks with the well-being of the nation".

Or Nobel prize-winning economist Paul Krugman, who has written on numerous occasions about Osborne's folly. After joining a minority of economists opposing the Tories' 1930's style economics in 2010, he wrote this around a year later:
"Slashing spending in the face of high unemployment is a mistake. Austerity advocates predicted that spending cuts would bring quick dividends in the form of rising confidence, and that there would be few, if any, adverse effects on growth and jobs; but they were wrong".

Well, now, as Tory cheerleaders in the press desperately call for more of the same medicine, this small group of commentators can justifiably say: "I told you so". Sad, though, that millions of people will suffer anyway as a result the triumph of right-wing ideology over pragmatism or common sense.