Wednesday, 15 April 2015

Ownership Matters: The Conservatives and Housing: First as tragedy Second Time as farce.

I always thought that Mrs Thatcher was a crude Marxist. She had a base and superstructure view of society the idea that the economic base determines the social, cultural and ultimately political shape of a society.  Her simply view was if you turned people into individual house owners they would become Tories.

The privatisation of publicly owned homes, the largest privatisation of all, had in some cases that desired effect. It didn’t with my parents they bought their council house, a brand new house when they moved into it for about a third of its value, but they never stopped voting Labour.

When you are on a modest income, however principled you are, it is hard to turndown a large gift of tens of thousands of pounds.  Of course the Tories never really wanted us to own our homes. If the Miners back in 84 had “owned their own homes” they would still be on strike now.

No they wanted us in hock to banks and building societies. Large debts make it more difficult for workers to take industrial action. Psychologically however it would be wrong to say this was not a vote winner for the Tories.

The long term effect has been a tragedy. Effectively they replaced a reasonably well regulated public social housing sector with an unregulated private rented sector causing a huge increase in rents and in the subsidy for private landlords in the form of housing benefit.

The data is interesting the peak for social renting was 1981 with 31.7% of households and about 11% private rented. However by 2013 social renting was down to 17% and private renting had overtaken it at 18%.

Interestingly there was as a result of the Tory policy an increase in home ownership from 57% in 1981 up to a peak of 71% in 2003. The decade since has seen the first generation of privatised council houses coming back into the market many have been snapped up by buy to let landlords and the ownership numbers shrunk back to 65% by 2013 and the falling trend seems set to continue despite government programs promoting home ownership.

Now we have the farce. Today the largest social rented sector is Housing Associations partly driven by organic growth and partly by large scale council house stock transfers.

Now the Tories want to destroy this sector too. It is worth noting that around 800,000 housing association tenants already have “the right to acquire” but at considerably lower subsidies than for Council tenants.  The long term implications of Associations being forced to sell property at a loss would be devastating.

The Tories seem to have forgotten that these are private organisations and secondly who is going to lend them money to develop new property if they have to sell it before recovering the cost?

As for accelerating the sale of Council homes, the trouble with privatisation is you cannot sell things twice.

Don’t think that because this policy, in terms of improving Britain’s chronic housing situation, is bonkers means that it does not make sense.

This policy is part of a wider pattern of unlocking assets that are held collectively. That is what George Osborne’s pension reforms are about, that is really what the original Council house privatisation was about; when you know that this is what is going on the pattern is clear.

With low economic growth capital needs to open up new assets that are owned collectively and bring them onto the market. This process began with an attack on state owned assets then it moved onto other collectively owned assets like the Building Societies and now Housing Associations.

This is ultimately about the transfer of assets from the poor to the rich.  Ultra low interest rates mean that investors are looking for more diversified returns. Look at the way they have moved into the private rented sector in London. Those same low interest rates mean however that the rich can borrow to buy assets cheaply whereas someone on a zero hour contract cannot even afford to save let alone get a mortgage.

Then they service the debt by kindly allowing us to rent the things we once owned back from them. Railways, energy, water, our homes, post and telecoms, higher education, next they will come for healthcare and schools.

James Meek’s detailed account of the disaster that is privatisation, Private Island, (Why Britain Now Belongs to Someone Else, Verso, 2014) is a well written book by someone previously known for fiction has now been shortlisted for the Orwell prize.

 Some of the things he uncovers sound like fiction like the fact that when Enron collapsed it owned Wessex water!

His key point however is one we should all remember in this coming election that tax can be kept low because as our national assets are sold, these private businesses become effectively tax gatherers. As we the ordinary citizens are handed over to these private tax-gatherers, the greatest burden of taxes shifts onto the poorest.

As Meek points out, “The essential public good that Margaret Thatcher, Tony Blair and now Cameron sell is not power stations, or trains, or hospitals. It’s the public itself. it’s us.”  No wonder we see income inequality reverting to the pattern before the First World War as the pattern of ownership in the economy heads that way too.