The world's most-read Scottish politics website

Wings Over Scotland

The true North-South divide

Posted on November 30, 2011 by

It’s even happening 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’s an Occupy protest. A couple of dozen tents huddle 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 are 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 still survive at all, anyway), the numbers are 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 aren’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 roughly the proportion of the UK population 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 it ever since) is 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 location – 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 or 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 (because there’s no point in councils building houses they’ll then have to sell off for peanuts) and the horrifying level of private rents.

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 (pre-Thatcher, almost no bank would lend first-time buyers more than 3x their annual salary), very few people exist on comfortable margins – 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 Tax Payers Alliance can get away with shrieking endlessly about taxation, despite the basic rate of income tax having almost halved from 40% to 22% in the last 35 years, and the top rate being slashed from 83% to 50% in the same period. (And even that 50% rate is a recent and temporary measure constantly under threat of being cut back to 40% again.) 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 done – 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 massive 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.

Print Friendly, PDF & Email

1 Trackbacks/Pingbacks

  1. 15 09 12 12:18

    Wings over Sealand | Guest post: The regional escalator

4 to “The true North-South divide”

  1. peter mccreadie

    excellent analysis

  2. DougtheDug

    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 aren't there millions on the streets, rather than a few little pockets out camping in the cold?

    I think there are probably several reasons on top of the breakdown of any cohesive sense of society.
    At the moment people in Britain aren't badly off enough to take to the streets. Benefit cuts haven't been implemented across the board yet, those in work are suffering from below inflation wage rises but not mass unemployment or direct wage cuts and the economy is ropy but it's not high inflation, a four day week and rolling power cuts like the early 70's.
    There's also the simple fact that people have learned that peaceful mass demonstrations mean nothing in political terms. They're a good way to blow of steam but whether it was anti-Iraq demonstrations or the Countryside Alliance they were simply ignored by the government. The only demonstrations that worked were the poll tax riots and that was because they were mass riots not peacful marches.
    The final problem is what do the occupy movement want? They're unhappy about the banks but there seems to be no cohesive political movement behind them or a strategy or a defined goal. It's difficult to get enthused about a movement which hasn't got a strategy much beyond pitching your tent in town and badmouthing the bankers.
    Sitting in tents shows you're unhappy but only a movement which threatens MP's and parties at the ballot box has any hope of traction. 

  3. RevStu

    "At the moment people in Britain aren't badly off enough to take to the streets."

    Yeah, that's the underlying point I'm making. The ones suffering the most are a minority, and will stay that way until such times as there are mass mortgage foreclosures, which any party in government will move heaven and earth to avoid (as we see from the Tories' new plan). So if the Occupy movement is waiting for mass support, it's probably got a long wait.

  4. Malc

    absolutely brilliant article.

Comment - please read this page for comment rules. HTML tags like <i> and <b> are permitted. Use paragraph breaks in long comments. DO NOT SIGN YOUR COMMENTS, either with a name or a slogan. If your comment does not appear immediately, DO NOT REPOST IT. Ignore these rules and I WILL KILL YOU WITH HAMMERS.

↑ Top