The Great Division
It even happened in Bath. Even in one of the richest corners of Britain – a city so posh that it refused a local organic dairy farm permission to open a boutique ice-cream concession in its expensive new shopping area in case it “lowered the tone” – there was an Occupy protest. A couple of dozen tents huddled together in Queen Square, a small green space in the middle of a busy traffic junction that’s more accustomed to hosting farmers’ markets and games of boules.
To be honest, I’m surprised there were that many. Bath’s housing, parking and public transport are all so cripplingly costly that poor people can barely get into the centre of town even for a visit. But still, like most of the Occupy protests nationwide (those that weren’t shut down, anyway), the numbers were pretty pitiful. At a time when the government has all but openly declared class war, when everyone from the Socialist Worker to the Daily Mail is furious at the greed of the wealthy, why weren’t there millions on the streets, rather than a few little pockets out camping in the cold?
The answer is obvious, but for some reason is never spoken aloud. Despite the Occupy movement’s catchy and evocative slogan, we aren’t the 99%. But that’s understandable, because “we are the 33%” doesn’t carry quite the same moral punch.
33% is approximately the proportion of the population of the UK that lives in rented accommodation, whether private or social. That third is the sector of Britain’s people which is truly going to bear the burden of austerity.
It includes a vastly disproportionate share of the unemployed and the sick. It contains the majority of public sector workers, part-time workers and the low-paid who survive on Working Tax Credits, Housing Benefit and other state “top-ups” designed to disguise the inadequacy of the minimum wage. It comprises people with no realistic hope of ever getting on the “housing ladder”, and who are therefore condemned to forever live on the wrong side of The Great Division.
The Thatcher governments of the 1980s (and the neo-Thatcherite ones which have followed ever since) are frequently held accountable for the “North-South Divide”, a phenomenon by which the UK’s wealth was steadily sucked down and concentrated in the south, and particularly the south-east, of the country.
Manufacturing industries in Scotland and the north of England were deliberately and systematically destroyed, replaced with service-industry jobs – characterised by low security and little if any union representation, aka “labour market flexibility” – and the “financial services” sector which blew up in everyone’s faces so spectacularly in 2008, and continues to do so.
But the North-South Divide was a symptom of a far more insidious bisection of the British people. Thatcher and her heirs had no inherent grudge against anyone because of their geographical origins – plenty of Scots and Northerners found places in the various Tory and Labour cabinets of the last 30 years. What took place in Britain between 1979 and the present day has instead been a sort of covert ideological coup, by which the broad social-democratic consensus of the post-war decades was quietly ousted and replaced by a self-sustaining oligarchy defined by house ownership.
Whereas those who live in social housing are in both narrow and broader senses part of a wider community, home-ownership is Thatcherism writ large: in home ownership there is no such thing as society, only individuals and families. (People only tend to quote the first part of Thatcher’s most infamous line, and in doing so miss its point.)
Owning the house you live in is a comparatively precarious business. If you fall on hard times as a tenant, the welfare state provides a safety net in the form of Housing Benefit and Council Tax Benefit, which in almost all cases will ensure you can stay in your home indefinitely until you can hopefully get back on your feet.
But with a mortgage, if your income drops significantly for even a relatively short period of time (through unemployment, illness or divorce, or if interest rates suddenly spike upwards, or some other form of bad luck), you’re going to be homeless.
Even redundancy-insurance schemes generally only pay out for a couple of years at the most, and after that the bank will descend on you without pity, repossess your house and throw you onto the street, where you’ll suddenly become acutely aware of the desperate shortage of social housing (there’s no point in councils building houses they’ll then have to sell off for peanuts) and the horrifying level of private rents.
(Astonishingly, average rents recently overtook average mortgage payments. It’s now cheaper in the short term as well as the long term to buy rather than rent, except banks won’t lend money to first-time buyers unless they put down a huge deposit, which is almost impossible to do as nobody can save up such a large sum of money because they’re spending half of their salary on rent.)
It’s entirely natural, then, that for the 65%-plus of British people living in that situation the prevailing mental state is terror, and the law of the jungle. With such high stakes, self-interest trumps any concern for wider society.
With insanely high house prices leading to mortgages of 10 times earnings (before Thatcher, almost no bank would lend first-time buyers more than 3x their annual salary), very few people exist on comfortable margins – so any tax increases or other redistribution of wealth that might push them over the fine line, from being able to afford their mortgage to not, must be resisted with a ferocity bordering on hysteria.
When your house is all that stands between you and the abyss, you defend it with your life, and to hell with anyone else. (Or as Thatcher put it in that same speech, “people must look to themselves first”.)
That’s why right-wing bodies like the self-styled Taxpayers’ Alliance can get away with shrieking endlessly about taxation, despite the basic rate of income tax having halved from 40% to 20% in the last 35 years, and the top rate being slashed from 83% to 45% in the same period. (And even that 45% rate is a recent and temporary measure constantly under threat of being cut even further.)
Regardless of their political leanings, homeowners – with wages barely rising above inflation but house prices soaring by five or ten times as much – need their tax burden constantly reduced in order to keep climbing the ladder, and therefore don’t protest when the TPA and its friendly middle-market press belabour the government of the day relentlessly to keep propping up the housing market by feeding it state money.
But how did this vicious dog-eat-dog world come to be the state of affairs in genteel Britain, that most civilised of nations, when it didn’t take hold elsewhere in Europe?
It came about because Thatcher and Blair alike managed to succeed in marketing self-interest as “aspiration”. The working class in particularly were cynically courted via the “right-to-buy” scheme, under which council tenants were offered colossal discounts of up to 80% to buy their homes at prices so cheap it would have been economic insanity to refuse.
(On the social-housing estate where I grew up, two-bedroom houses in excellent condition in a pleasant and well-located area were commonly sold off to their tenants in the mid-1980s for as little as £7,000.)
Many of them were so grateful to the Tories for this enormous apparent largesse – providing them with real, tangible benefit in a way successive Labour governments had never managed to do – that they voted Conservative and kept doing so even as unemployment rocketed past 3m and the economy imploded.
The Tories had in effect implemented a mass, neo-socialist redistribution of wealth – not from the rich to the poor, but from society to the individual. This, of course, is entirely in keeping with Conservative small-state philosophy. But the genius of the plan, and the true long-term triumph of Thatcherism, is that it’s a move that’s politically all but impossible to reverse.
Once “right to buy” was set in motion, Labour would have needed enormous courage to revoke it, and a party grotesquely scarred by almost 20 years of impotent opposition and traumatic infighting didn’t have the will to undo a policy of such obvious popularity among the very people it was supposed to represent. And so the die was cast.
The flood of cheap property had a predictable – indeed, inevitable – inflationary effect on prices, and those lucky enough to already be wealthy were able to move into property speculation, quickly gathering large portfolios. Even the modestly affluent could become buy-to-let agents, snapping up bargain homes and letting them out at inflated rents to the new generation of private tenants, because of course there was now a massive shortage of social rented accommodation. (As the councils had all had to flog off their stock at huge discounts.)
A bubble began to be inflated, and it was in the political interest of all parties to do everything possible to stop it from being burst, because it was full of votes. More importantly, it was full of votes which weren’t ideologically tied to any particular party, but were happy to float towards whichever one kept making the bubble bigger. When you’re doing well if you get a 3% annual pay rise, having the value of your main “asset” increase – or at least seem to – by 20% a year without you doing anything is a prize worth guarding jealously.
More than any other aspect of Thatcherism, “right to buy” permanently altered the UK’s balance of wealth, dividing the country into two unequal (in all senses) halves. As house prices soared, so too did rents – partly because the buy-to-let landlords had bigger mortgages to service, but mostly because there was a seemingly bottomless well of government money subsidising them.
Not only did buying-to-let attract huge tax breaks (which were routinely defended in the name of “regeneration”), but you could rack your rents up as high as you liked – if people couldn’t afford them, the state would pick up the tab, in the form of Housing Benefit. Once again, vast reservoirs of cash flowed from the state to individuals.
[The state has belatedly begun to notice and complain about this, but naturally blames the poor for it rather than its own actions. The country’s gigantic £21bn Housing Benefit bill could be slashed by the reintroduction of rent controls rather than by driving the poor out of cities and forcibly cramming them together in mini-ghettos, but that would impact on house prices and is therefore beyond contemplation.]
The problem, of course, was that those on the wrong side of The Great Division were both the poorest and now in the minority. They only had so much money to give, and it wasn’t anything like enough to feed the housing market’s insatiable hunger for growth, ie building ever-more swathes of homes at prices ordinary people couldn’t afford. And so the “sub-prime” mortgage was born, in order to sustain the bubble for a few more years with completely imaginary money, and the rest (thankfully for any of you who didn’t want to read another 3,000 words) is history.
Except that history is also the present, because there is no prospect of an end to The Great Division. Indeed, even now – in a move so politically brazen it’s close to breathtaking – the Tories are embarking on a second great wave of “right to buy”. And with staggering audacity, in the midst of the most savage peacetime austerity cuts the nation has ever seen, this time they’re also proposing to openly, directly subsidise and indemnify private property purchase with state money.
Why? Because even after Labour had bankrupted the nation (and waged an illegal war that brought millions onto the streets in a mass public outcry Occupy could only dream of), the Conservatives couldn’t win a majority. With their deficit-reduction plans failing so disastrously, they still need to bribe even more people with artificially-affordable houses to be sure of winning the next election.
(Not that it’ll matter either way to the electorate – because if Labour win they’ll do much the same thing only slightly more half-heartedly and less efficiently – but politicians exist only for power.)
And as ever, the poor will have to pay for it, because – outnumbered 2 to 1 by the homeowners and heavily concentrated into constituencies and areas long ago written off as unwinnable by the Tories anyway – their votes no longer have any significance, and thus they can be squeezed ever harder with complete electoral impunity.
The Great Division was Thatcher’s true victory, turning society into a minority unable to defend itself against millions of simultaneous individual assaults, like a mighty bear assailed by a cloud of wasps. With this terrible guerrilla weapon at its command, Thatcherism consumed and obliterated all meaningful political opposition in the United Kingdom, subverting the Labour and Liberal parties into hollow echoes of itself. It will live long after her death, and it will damn us all.
Of course, viewers in Scotland (which has, albeit by a small margin, the highest percentage of rented housing in the UK) have their own programmes. The SNP government is ending the right to buy, and also greatly increasing the building of new social housing. Unlike the British, we still have a choice. But time is running out.
As always Stu, a good article. Makes very interesting reading.
It’s worth remembering that the “right to buy” policy was also about stopping workers from being able to go on strike for any length of time that might prove effective in the achievement of their aims.
That’s why home ownership was encouraged in the US in the 30s – the boss class realised that it would severely reduce the power of organised labour if half the workers couldn’t afford to go on strike because they had mortgage payments to keep up.
I have asked this question before and having agreed with all that has been said above,why did the Scots Gov recently create a £30 million grant to help first time buyers? Having previously owned property with a running mortgage my own view on home ownership was with the belief that once I had retired my outgoings would simply drop as my income would also.Paying all those 10’s of 1000’s in interest soon became apparent to me to be nothing but a cop out for propping up the banks again.
If good quality housing can be built,rented and maintained at good rates of rent,people could then save towards retirement.Greed on private rent is horrendous,maintenance and general up keep badly managed yet here is the beauty of it all,these private rents are now becoming more expensive than mortgages themselves thus creating this catch 22 within the housing market.
Affordable rents must be created to break this lack of housing availability,the banks just want our money and it is they themselves who have encouraged this housing shortage as they simply threw monies at warm bodied objects that passed their front window.
By refusing right to buy and then building up affordable rental accomodation stock this in itself free’s up choice and openly challanges greedy private rentals and will slow the greed induced rise in private housing stock excluding London of course! But we all need a home and as has been proved relying on private home ownership still as an option should never be the only way ahead.
Agree with every word.
The ‘right to buy’ was a secret weapon that took years to take effect. I think it is the main reason you don’t see thousands take to the streets, as you see elsewhere in Eorope. Having to pay a mortgage to keep a roof over your head, is a powerful incentive not to take part in strikes and demonstrations.
Don’t forget, zcouncils were not allowed to use Housé Sale receipts got for building new houses.
The Tories were definitely intending o do away ith the Council house.
I’ll counter this by saying that I guaranteed a loan application for my grandparents to purchase their council house in early 80’s and their lifestyle improved immeasurably from that day on. He was a moulder to trade and was later a miner and retired at 60.
There was no more rent demands and that was enough to lift them out of what I’d say was the real poverty zone. They certainly were never rich but they were never so poor again that they struggled every single week.
As a lifelong communist my grandfather resisted the initial approach but he did come round. Personally I think its the best thing I ever did in my life given he got to live 30+ years rent free. He died at 93 in a nursing home after being there for a year. The bill was paid after his death from his assets…..
I agree that increased aspiration of home ownership drove demand for houses higher but only because people saw it as an aspirational position. I know that right to buy improved the overall environment where my grandparents lived. Town to west of Glasgow, due to people actually caring about what they felt they owned.
So yes there are downsides in the reduction of social housing but there were significant social improvements as well. Clearly though the ladder has been pulled up for a lot of folks.
“I agree that increased aspiration of home ownership drove demand for houses higher but only because people saw it as an aspirational position. I know that right to buy improved the overall environment where my grandparents lived. Town to west of Glasgow, due to people actually caring about what they felt they owned.”
There’s no doubt that right-to-buy had big benefits for those who took advantage of it. That’s the point – if you’re going to bribe someone, you have to give them something valuable. It’s the subsequent generations who pay the price, though.
I notice the article about the Scottish Government restricting right-to-buy is from 2010. It turns out there’s been a consultation on it even more recently, looking at either further restrictions, or simply ending it altogether.
link to snp.org
I was going to say “I bet I can guess what Maggie Lamont will say about this”, but there’s no need to guess, because the article you linked to tells us what she thinks about the SNP ending this most Thatcherite of Thatcherite policies:
Johann Lamont, Scottish Labour housing spokesman, added: “Nicola Sturgeon is behaving like she is stuck in a time warp.
“The SNP is completely missing the point on housing by trying to revisit the 1980s and tinkering with the right to buy instead of providing enough money to build more homes.”
Is this woman some sort of parody? She’s a menace to society.
Incidentally, I’ve always wondered – could we not suppress housing prices by simply making it illegal to offer mortgages for more than 3x a person’s salary? That way, either housing prices have to come down, or people start having to get paid more – win-win either way.
(Great article by the way, Stu.)
Great article Stu. I’m selling my flatat the moment and I’ve spent more time thinking about the wider housing issues. I have work colleagues who are in good jobs but are likely to be damned into never affording a house as a typical downpayment for a one-bedroom Edinburgh flat is likely to be far greater than a year’s wages. It would take decades to save for the desposit while forking out for excessive rents and all the time the house prices go up making it ever more harder to see the ladder never mind get on it.
I was stupid and stayed in one place for a decade, people I know who moved regularly before the slump made money every time they moved and sold up. What does that do to society when everyone is simply a transient in their own house. Passing through on the way to the next better home. No roots in the community or friends to your neighbours.
The irony is that the Tory voters who bleat on about the erosion of society and its breakdown into selfishness and self-interest while at the same time voting for a party that has, as you ably describe, done more harm in this regard than any other agent in the last 100 years.
“The irony is that the Tory voters who bleat on about the erosion of society ”
Yes, that irony is not lost on me either. You can’t build a society/nation by promoting an ‘every man for himself’ attitude. Makes me think of Maggie T saying her policies were ‘building one nation’ when in fact they were doing the exact opposite and were a big part of the reason we are where we are, i.e. GB breaking up.
This is the first time I’ve been ‘demographicked’ in a blog.
I work for the public sector, rent a flat and have no chance of ever getting on the property ladder. I totally missed the boat in the 90’s, I never wanted the ball and chain of a mortgage. Not sure i regret it now right enough.
I don’t think limiting what people can borrow will work, there seems to be enough people who don’t need to borrow so they’ll just get these cheaper properties much more cheaply. (Example, Pilrig Heights in Edinburgh, chunks of flats bought with Chinese money, entire floors bought to let.)
No idea what the answer is, one thing people do say is if you don’t own your own place and those aroud you don’t either then your neighbourhood will be a dump, while this is somewhat true (and dare I say, the type of people who end up in social housing may not be the most socially responsible.) These days, its not just the socially irresponsible dregs who can’t afford to buy a house, its perfectly decent, working folk who earn decent money who can’t afford to buy.
It seems to me, social housing would be ok if it was over-ran by the latter demographic instead of the former.
My parents also took advantage of the right to buy thing in the 80’s, ultimately, they fell down to what Stu alluded, my Dad lost his job. Neither of them own any property now and have nothing to show for the short while they struggled to do so.
Voting no in 2014 would be the actions of a Lemming.
This recording maybe a bit dated but the message of this song seems so now as it was then. Different era but same battle still going on. Let us try a different way.
link to youtu.be
link to bbc.co.uk
BBC opened a HYS for everyone in the UK to have a dig at the SNP giving out ‘freebies’. However, seems it’s not working out that way and the case for universal benefits is winning with support not just from north of the border.
Thing is, universal benefits do really equal being ‘all in it together’.
Douglas Fraser’s blog on BBC News, Scotland, Business is also allowing comments on the Robert Black story. Now’s yer chance!
I think your outlook is way too skewed. I would argue right to buy is one of the most successful policies in improving communities and reducing poverty over a wide strata of the less well off over 2 generations. Is the suggestion that it would have been better to do nothing just so no one got a chance to get out of the hole ?
I agree that house building should have kept up with this and if .gov had done this then house prices would not have risen so fast as demand was met. Instead they pumped money into private sector with building incentives and of course profit overcame the social aspect.
“I think your outlook is way too skewed. I would argue right to buy is one of the most successful policies in improving communities and reducing poverty over a wide strata of the less well off over 2 generations.”
The problem is, as the article explains, it’s reduced the poverty of those lucky enough to get cheap houses at the expense of their children, who now not only can’t afford to buy their own home, but can barely even afford to rent one. (If you’re childless you’re sorted. If not, all the “wealth” you’ve accrued from owning your house is going to vanish anyway when you have to give it to your kids because otherwise they have zero chance of ever affording a deposit.)
Just last month we learned that renting is actually more expensive than buying now, except that the option of buying isn’t available to the vast majority of people because the banks won’t lend them money unless they cough up a huge deposit, which they can’t save up for because they’re spending all their money on extortionate rents, concentrating all the money even more firmly in the hands of the already-wealthy.
RTB didn’t have to be evil. It could have been handled in a way that would have made it the boon you suggest. Instead, as you yourself acknowledge, it was a one-off bonanza for a lucky generation who immediately pulled the ladder up after them, condemning those left behind to permanent poverty. Or as I put it in the piece, The Great Division.
One thing that never ceases to amaze me is how some people are stupid enough to enthusiastically buy something that they already own, as per privatisation of state owned companies. The Tories certainly did a wonderful job of selling people their own family silver back in the 80’s. Quite incredible that Tory voters – who are supposed to be good with finances – fell for it.
Was essentially the same for right to buy. The council houses belonged to the public yet the Tories managed to sell them to the very people that already owned them; the public.
I’m a home owner (mortgage). However, on both occasions I have bought/moved, I have gone for a house which cost a lot less than I could theoretically afford. Likewise, both were old and in need of serious renovation, which I then carried out over the years, much of it myself. A house is place to live in first and foremost and the main benefit of owning one is you can make it your own. It is an investment yes, but for most people it should be considered only a very long term one as the result of the quick buck housing boom tells us.
Stuart,
Excellent piece and another reminder of the urgency with which we need to achieve independence. It’s worth digging a little deeper in to the economic and political events that you identify here as being significant.
Let’s remember that during Mrs Thatcher ‘decade’ in office (1979-1990), the Tories raised some £20 billion in revenue from council house sales (and a further £16 billion in the sale of government land and buildings). This was counted as ‘negative public spending’ in the national accounts (an early example of the creative accounting that we’ve come to associate with neo-liberalism). Let’s also not forget, though, that the cost of MIRAS in the 1980s was £39 billion. Effectively, under the Tories in the 1980s, with MIRAS, the taxpayer was subsidising the interest-payments of private home-owners (mortgagees) whilst undermining public housing and preventing local authorities from using the proceeds of council house sales to invest in their remaining housing stock.
The reason that the Tories were quite happy to subsidise the interest payments of private home-owners in the 1980s, was that the sale of council houses had numerous political and economic advantages for them. Politically, it gave many working class families a tangible stake in capitalism and gave many of these families a reason to be ‘grateful’ to the Tories for making this available. This was one of the factors underlying Mrs Thatcher’s increasing parliamentary majorities after 1979 (in England). It also had a disciplining effect in the workplace on those working class families who had mortgages. If you went on strike in the 1980s and you had a mortgage, your participation in a prolonged industrial dispute could result in you losing your home, given that, in the 1980s, working class families were dependent largely on their income for their expenditure (i.e. they had no savings to fall back on in difficult times and, in the first half of the 1980s, limited access to credit).
Economically, the sale of council houses relieved the pressure on the UK Treasury of financing public-goods provision. It created the ‘illusion’ of reduced public expenditure, it introduced marketisation into housing on a mass scale, it encouraged house-price inflation – generating a ‘wealth-effect’ as well as stimulating the boom phase of the British boom and bust cycle, and it created revenue for the UK Treasury. Most of all, it expanded the indebtedness of an increasing proportion of the British population and, after the ‘big bang’ in the 1980s and the deregulation of credit markets, it unleashed a consumer credit boom that was enthusiastically continued by New Labour when it came into office. It was all of this that created the conditions for the ‘financialisation’ of the British economy from the 1980s which, in turn, created the conditions for the present crisis under both Labour and Tory British governments.
We also need to remember that, in the decades leading up to the election of the Thatcher governments from 1979, a number of right-wing think-tanks – the Adam Smith Institute, the Centre for Policy Studies, the Institute of Economic Affairs and so on – were promoting their ‘minimalist state’ agenda, privatisation, reduced taxation, trade union reforms etc, which not only had a huge influence on the Thatcher governments in the 1980s but was an agenda that was enthusiastically adopted by the right-wing MSM in England. This, too, played a key role in Mrs Thatcher’s increasing parliamentary majorities (in England) in the 1980s. Again, one of the primary objectives here was to reduce the state’s role in the provision of public goods and to subject more and more areas of our lives to the anarchy of the market.
Your closing words in this chilling piece – “Unlike the British we still have a choice. But time is running out” – I believe sets out one of the key dividing lines in the independence referendum. I’d like to see the SNP take this on much more aggressively as an argument for independence. The choice before us in 2014 is to vote No and to be sucked in even further to the British neo-liberal agenda of the Labour and Tory coalition, or to elect a government that believes in financing the provision of public goods and that generally promotes the common good in Scotland.
Public goods aren’t just a reference to a National Health Service or a well-resourced state education system. They also include vital resources and services like well-maintained pavements and roads, infrastructure (sewage, clean water, clean air etc), a universal welfare system that neither penalises the poor nor alienates the better-off (driving the latter into the private sector and, in the process, reducing their willingness to contribute to universalism), affordable social housing, access to public spaces and the commons, including public ownership of common land etc.
And on the NHS, let’s stop referring back to Nye Bevan and the Attlee government. We need to be much more ambitious than that in an independent Scotland. Let’s remember, for example, that, as late as the 1960s – long after that Attlee government had been canonised in the mythology of Labour history – the British were still spending more on defence than they were on either health or education!
Finally, to return to the substance of your post, a few weeks ago on another thread, I drew attention to an article in The Economist that argued that England was divided into two countries. The Economist was referring to England itself here, not using ‘England’ as a proxy for Britain. The north of England is becoming a ‘foreign’ country to the south of England. No Westminster government in the coming decades will have the means or the political will to resolve this. It is a situation that will get a lot worse in the future before it has any prospect of getting better. Scotland has a choice in 2014. We can sink with the north of England and be sucked ever more deeply into the British neo-liberal agenda of the Labour and Tory coalition, or we can choose independence and an alternative path of development. It really is that simple.
House buying was blocked as an option to ~ 50% of the population in my town until I was about 25. I’m 46 and I was the first person in my family to ever have a cheque book that wasn’t provided by Provident. The only way for most of these folk to get out of the lifetime rent loop was through was via council house purchase Due to lack of means or lack of imagination.
Just because the government own it doesn’t mean the people have a right to it. When did .gov actually ever work like that. The houses were owned by the Burgh or by SSHA or the likes. These may be government entities but they were never seen as owned by the public or as actually theirs in anything other than in a theoretic way. They still evicted you if you didn’t pay rent.
The main problem with the right to buy was the that the proceeds were intended to go towards new social housing. It was also intended by the tories that making home owners of Scots would instantly transform them into Tory voters. Neither happened, the first was largely down to the incentives used in Scotland to get people to buy – a much more generous scheme than you would find in England. Even today if you became a secure tenant before various reforms to the housing (Scotland) act, you can achieve a discount of 70% from the price of a flat in a block of tenements or Tower block. Good for the tenants, but not so good if you wanted to soak councils with cash for house building. As for the latter, anecdotal evidence would suggest very few associated it with the tories – but taken in balance a lot of other tory policies at the time would undo what little good will the right buy had garnered them.
The tories do like to bring this up as much as possible as the one thing they did right in Scotland, but labour were already limiting access to new tenants from about 2001 onwards. We do face a housing crisis, not as severe as England, but it is there all the same. Selling council properties does not seem that good an idea if it’s not bringing in the cash to even front load a programme of new social housing.
Once it’s sold it’s no longer an asset the council controls – no more rent revenue – you have a 3 year ambargo on discounted securities but these are then removed when their time limit is reached. Councils lose out everytime a property is sold – probably why so many of them want to increase council tax – compensation for loss of rent revenues.
@Kenny Campbell,
I’m not arguing for a return to the mythical ‘golden age’ of the municipalism of the 1950s, 1960s and 1970s. Part of the problem with any discussion of public ownership and public goods is that much of our thinking is stuck in the model that existed in that period as if that was the only alternative that was available to us.
After a lengthy post, I don’t want to take up much more space on this thread, other than to say that I am not arguing for the resuscitation of that way of doing things. What I am trying to say is that if we want these well-resourced public goods, if we want to increase civic engagement and participation and promote the common good in Scotland, we need to be much more creative in our thinking about how we are going to provide them.
It isn’t just a question, IMHO, of independence offering Scotland savings on defence, or access to and control over oil resources, however welcome these and other things may be. The debate we need to have is what path of development do we want Scotland to follow in our lifetimes and what is the best means of achieving that. It’s this that I would like to see as the main dividing line in the referendum.
I’ve rarely seen the housing crisis put in more lucid terms, RevStu. Fantastic stuff.
I think the right to buy option has turned out to be a mixed bag of advantages and disadvantages.
My father-in-law rented from the council all of his life, worked hard and raised a large family and always voted Labour. He bought his council house after he retired and immediately began to make improvements to it, as did many others in the neighbourhood. Soon, most of the street was looking ten times better. He was so proud of it and had never dreamed he would ever own his own home.
My father-in-law’s previous concept of his home and his world was that the council, and by extension the Labour Party, more or less made all decisions and everthing was the council’s responsibility from a leaky tap to a replacement door handle. His sense of who he was and his role in the world changed fundamentally when he bought his house – he felt he was now allowed to make his own decisions and his self-confidence grew. The psychological benefit was far greater than the monetary one.
On the other hand, this took many houses out of the council’s housing stock, extended burgeoning housing lists and reduced choice of location as fewer houses became available in the the more desirable areas. The political decision to restrict further building of council houses was wrong, but you have to see this in the context of the times and ask the question as to whether local councils were actually good social landlords – did they act quickly on complaints, carry out proper repairs and maintenance, operate a good allocation system? Many council properties were very poor and, from what I remember, people were extremely dissatisfied with the councils as landlords.
We can’t go back in time and things are as they are, but for the future, we need not only increased, but also good social housing with good landlords. My mother lives in a sheltered flat, run by a housing association, and the standards of accommodation, maintenance, support and allocation are very high and the rent is reasonable. She lived in a similar complex previously and the rent was considerably higher with much less generous accommodation. It was fine, though, until they started to take in fewer old people and instead allowed in people with social problems. Evidently, some housing associations are good landlord and some are not.
Then there are private landlords. I have recently become a landlord myself since my son moved back home from university. I have been jumping through hoops to get all of the necessary permissions and registrations from the council, the insurance company the building society and from HMRC. I have carried out gas and electricity checks, installed integral fire alarms, carbon monoxide detectors, had all electrical appliances checked, repaired the intercom system, obtained a home energy report, which is now a legal requirement, redecorated and engaged a reputable agent. Renting out a property is an expensive business. I won’t make much money out of it and I’ll be taxed on any profit, anyway. I’m exhausted with it, but at least it will provide someone with a nice, safe home. I just hope they see it that way, too.
The agent says that social landlords are not actually required to come up to this standard, by the way. A little of the rent will come to me, but remember, everyone will have had a cut – the electrician, the gas engineer, the surveyor, the agent, the council, HMRC. And let’s not forget that landlords with a buy-to-let mortgage have to pay a higher interest rate, which is then passed on to the tenant. On the other hand, there are many irresponsible landlords who simply ignore these requirements and let out sub-standard properties without the necessary authorisations and safeguards and at exorbitant rents. Some of the old councils did exactly the same thing and that is partly why many of their tenants opted to buy their houses – not only because it made financial sense but also because it gave them a chance to exercise choice and control over their living conditions.
But that was then and this is now. The bottom line is that people need a roof over their heads, and not everyone can afford to buy, so we can’t continue to sell off council housing stock. But we do need to ensure that all landlords whether in the public or private sector ensure that the homes they offer for rent are safe, secure, affordable and comfortable to live in.
Phew! Rant over.
YYY@Kenney Campbell,
100% agree with your statement. We need to look at an alternative way to nurture a progressive society that embraces all the people of Scotland which will create a country and society that everyone is playing their part which also has equal opportunity and people willing to contribute to the wellbeing for the less fortunate of our nation. It’s called humanity.
I don’t understand how (a) very few people can afford to buy a house now and (b) houses are unaffordably expensive. The simple logic of supply and demand should force prices down to an affordable level as all those overpriced houses remain unsold. And yet I see houses being bought and sold. Who’s buying them?
People who already have money.
@Holebender
It’s not so much about affordability as ability to get a mortgage from the bank. The banks will give you a mortgage at a reasonable interest rate so long as you have the deposit they require. Unfortunately, this might mean they expect you to come up with 25% of the value of the house you want to buy. If you’ve built up this amount of equity in your current property or if you have it in savings (less likely) and you have a good credit history and secure employment, you’ll probably be able to buy. If you’re like my son, are employed, make a reasonable wage, have a good credit history, but can’t come up with the 25% deposit, you’re unlikely to get a mortgage at all, never mind at a decent rate, unless, of course, you wish to avail yourself of the government scheme for first time buyers where you can equity-share with the builder and the government guarantees some of the deposit. The only flaw is that the scheme only applies if you buy a new-build and I suspect this will be over-priced to begin with.
So if you have a high value/high equity property and want to move, it’s not too big a problem as the bank will lend you the money to do it, therefore, prices stay high at the top end of the market. However, there comes a point where this effect stops trickling down. At the lower value end of the housing market, first-time buyers can’t get a mortgage without a large deposit and sellers therefore may need to lower their asking price so that potential buyers can scrape together the required deposit so they can get the mortgage to buy the property. This depresses house prices at the lower end.
@holebender
You hit the nail on the head: in 1986 – 1988 there was a mini property boom in england, It didn’t last long as banks at that time were regulated quite strictly on what they could lend, buidling societies even more so. Prices rose beyond the ability of people to buy and the bubble burst, but because the banks were not exposed to this insanity to any great degree, the economy did not really feel the impact of the crash, the people who got burned were gazumpers and estate agents, and prices fell sharply to pre-boom levels.
Fast forward to 2001 and you see another asset bubble rise again, this time the banks are unregulated and they lending larger and larger amounts to buyers. The scale of the mortgages increased to 10 times the annual salary of the applicant. Even then prices just kept going upwards. Close to its collapse in 2007 Northern Rock plc had just announced the 100% mortgage package – no matter what your income was, no matter how costly the house, Northern Rock would give you the money to buy it. A lot of people played this game, thinking in a couple of years time, you could double the value of the house, sell it, clear the outstanding mortgage and with the rest by something outright. I have no doubt some people managed to do just that in the early days…some but not all.
There was also a strange situation were people forgot the difference between a liability and an asset. This led to people borrowing against the increased notional value of the property. I’m sure everyone remembers picture loans and their ilk giving secured loans up to £150k. All this debt is then sold off by banks in various financial instuments, credit default swaps and securitised debt – were they would borrow money secured against the money they were owed. Nothing could go wrong with this unles the credit spigot got turned off and that wasn’t likely to happen…right?
The rest is history as they say – but the housing market is still largely paralysed – in scotland in 2009 the property market had been worth something in the region of 5.2 billion, by the third quarter, ROS reported that this had dropped 50% and of this remainder it had observed that 40% of purchases were made without securing a mortgage. The average house drop was around 10% – so what you see is house prices not re-setting to pre boom levels. Also banks are less willing to lend, requiring deposits for the first time in many years. effectively pricing people out of the market altogether.
This situation is more marked down south, but its still an issue. The mortgage market is such a horribly dangerous thing with so many institutions merged or taken over all together with a lot liabilities still lurking out there, stacked clear up to the rafters. The situation to keep an eye on atm is Spain and its largest banking group Santander. It has bought into large sections of the mortgage market, not just the abbey national. If it goes down in Spain, it will be come here.
In closing, I’d like to add that I am amazed that people can still get mortgages on average earnings – your are looking at situations were most people will be paying a mortgage beyond retirement….and they tell us social spending is unsustainable.
House prices are still high as they are being artificially maintained by low interest rates and other levitation ‘schemes’ . A lot of people are also already on the ownership spaceship so as Stu says they create churn within a restricted market.
House prices need to come down to match wages. I’m not sure how you engineer that without massive social upheaval but it may eventually be taken out of government control anyway via the bond market forcing up interest rates.
That’s my point, Jeannie, at the very least the “starter” end of the market should remain reasonably priced otherwise sellers will be unable to sell to new buyers and will therefore be unable to move on. I see little evidence of this so either those “starter” houses are being sold to buy-to-let landlords or there are still people managing to scrape together the wherewithall to buy a house. Of course, another possibility is that retirees are selling their big houses and buying smaller “starter” houses. That sort of internal recycling of houses among existing owners can’t last long as there will come a point when there will be nobody available to sell to retirees as they themselves move up the ladder.
I’m not arguing that houses are not grossly over-priced, I’m just commenting that the market seems to be being sustained somehow.
@Holebender
Yup, good point. Downsizing retirees won’t need a mortgage and depending on how much equity they had in their original property, might be able to buy two properties – one to live in and one to rent out, for an income, or buy one and use the rest of the equity to provide deposits for offspring.
got quite emontional reading this article.
always remember my late father being appalled at the right-to-buy of council houses.
his arguement was: a council house goes back to the state, if the person dies and can be giving to someone in need.
i believe tenants of social housing should be entitled to a discount every 5 years.
@Peter.
I like your Dad’s argument, Peter.
[…] is about democracy. This is about asserting our distinction from the rest of the UK. This is about choosing for […]
We all agree that Thatcherism was appalling. But she played the anti-working class, nationalist card – isn’t the SNP doing the same?
Tedious trolling, one at least one other thread too.
‘We all agree that Thatcherism was appalling. But she played the anti-working class, nationalist card – isn’t the SNP doing the same?’
– Yes of course, the similarities are astonishing !!
Thatcher sold off social hosing – The SNP.. er… stopped the sale of social housing.
Thatcher introduced the horrific poll tax a year early in Scotland – the SNP were the first in the UK to freeze council tax
Thatcher sold off as many publicly owned assets as possible – the SNP will re-nationalise the mail service, keep Scottish Water public and protect the Scottish NHS from privatisation.
Hold on, something’s not right here…
Thatcher used oil money to pay dole to thousands of working class people whose industries she deliberately set out to destroy – the SNP want to use oil money to set up a national wealth fund that will benefit all in Scotland.
I’m beginning to think I’ve got this wrong…
Brotyboy, trolling is coming into a thread with something irrelevant. What I’m doing is disagreeing with you.
Tartanfever, Salmond backs finance capital. He praised Ireland’s debt-driven bubble. He wrote in The Times in 2007, “We are pledging a light-touch regulation suitable to a Scottish financial sector with its outstanding reputation for probity.” In 2008 he said, “Scottish banks are among the most stable financial institutions in the world.”
Salmond says he wants ‘independence to create jobs, … protect our society, and grow our economy’. But breaking away would destroy jobs, split and harm our society and shrink Scotland’s economy. Real life has proved the Scottish Constitutional Convention was wrong to say that devolution would bring a ‘Scottish economic renaissance’. Splitting away would harm Scotland even more.
Will
Evidence? Opinions are like arseholes. Everyone has one. Just give us your evidence with links so we can evaluate your view for ourselves
Opinions are also like minds. Everyone has one. You can Google for any of those quotations from Mr Salmond, or find them in David Torrance’s book “Against the odds”. For a reasonable presentation of the case that splitting the Union would not benefit Scotland, see Oxford Economics’ new report, “The potential implications of independence for
businesses in Scotland.”
” But breaking away would destroy jobs, split and harm our society and shrink Scotland’s economy. Real life has proved the Scottish Constitutional Convention was wrong to say that devolution would bring a ‘Scottish economic renaissance’. Splitting away would harm Scotland even more.”
Where is your evidence for the above statement? Scotlands economy is growing. The social indicators in Scotland have never been better. It stands to reason that Scottish independence will create an economic renaissance. The very act of unloading all the expense of sending politicians to Westminster with all their baggage, expenses, entitlements, offices et al, will in it’s wake create economic activity in and around Scotland to provide and support all the business of government and administration presently done on our behalf in London and for which we are billed excessive sums from our own money.
The child care package proposed by the SNP is one perfect example. It’s viability is totally dependent on women returning to the work place, and contributing taxes that fund the package. At present those taxes would go straight back to Westminster to be swallowed up in the sausage machine on our behalf, thus rendering the policy un viable.
The energy generation industry is another. At present our remaining shipyards and marine engineering, for which this country is internationally renowned, is almost totally dependent on orders for machines of war from the UK RN. The SNP are committed to a process of re balancing that and regenerating Scotland’s engineering prowess to provide for renewables, a potentially massive market, both here and internationally. Just as the off shore oil engineering is. Building for peace, as Scotland has no global ambitions to “punch above our weight” so creating enemies who want us gone. We also have defence requirements, not offence, that do not include spending billions on useless WMDs. Scotland will be a country based on relationships as equals, not waving phallic symbols at the world, whilst at home we see crushing child poverty.
One of Wing’s best columns this year – prophetic and timely.
Both my daughters are caught in the poverty trap described, yet they work hard, are not privileged, but simply cannot afford to buy their first home, and are forced to use sub-standard accommodation. One has three young children. I’m trying to build my own, slate by slate, stone by stone. It’s fair to judge the situation created by Thatcher’s neo-cons as ‘a crime’ on the nation.
I think this compliments the topic: link to wp.me
Plodmore economics: “The potential implications of independence for businesses in Scotland.”
Not a single Nobel economist, nor political leader, nor Darling, nor London School of Economics best professors stated self-determination would be ruinous to Scotland’s economic health. They all agreed, Scotland would most certainly be successful.
Only one key person stated otherwise.
Osborne, a millionaire, said it, threatened it, by the simple task of blocking Scotland from using the pound. He repeated the history of 1707.
Now, understand this, we are sick to the back teeth of fools and donkeys, particularly outsiders like yourself, telling this nation it is small and ineffectual, without skill or resources to look after itself.
You know exactly where you can stick that insult.
@Grouse Beater
One of Wings best columns from 2012!
I agree with you about the “best” part, well researched and well thought out argument against the sale of social housing.
Some of the comments BTL were no bad too 🙂