What have politicians got against home ownership?

This year marks the thirtieth anniversary of the election of Margaret Thatcher and the legislation that epitomised her premiership, the Right to Buy (RTB). Enabling tenants to buy their own home brought to an end the post war and disastrous social democratic consensus that had allowed local councils to build and manage the huge housing estates that continue to blight our towns and cities today.

With the introduction of Mortgage Interest Tax Relief at Source (MIRAS), millions of people who had previously been trapped in badly managed estates were helped into home ownership and in doing so, people took a direct stake in the homes and estates in which they lived. The number of homes in owner occupation increased from 11 million to 17 million (increasing the share of owner occupiers from 54 per cent in 1981 to 67 per cent ten years later).

RTB is probably the single most important reform of the post war years to improve social mobility. Enabling people to acquire a capital asset helped them to escape the clutches of state dependence into the ranks of the middle classes. It has certainly been more successful than the education reforms (such as the abolition of the grammar schools and increased university numbers) which were specifically introduced to encourage social mobility.

Yet since the mid 1990’s there has been virtually no increase in the proportion of home ownership and in recent years the figure has even fallen as excessive house prices have priced first time buyers out of the market. Speak to anyone in their late 20’s, and they are likely to tell you a familiar tale – I would love to buy but can’t afford it. In many parts of the UK, it is virtually impossible for a young person to buy a home unless they have parents prepared to pump in equity. From the position we had a few years ago when home ownership was a ticket to prosperity and economic freedom, today it once again reinforces class division.

You would have thought that our politicians would be concerned about this but they don’t appear to be. Virtually no politician of significance makes a noise about the matter. Government, Tory and Lib Dem policies talk warmly about giving tenant’s part ownership in housing, which is welcome but won’t bring about the transformation that is needed. Indeed, most housing associations (and even private developers) have products that do this in any case.

With house prices falling again, there is another opportunity to make home ownership more affordable and accessible. Two things are desperately needed.

The most immediate need is that people must be able to access mortgages again. While we don’t want a return to the reckless lending of the boom years, the pendulum has swung too far in the opposite direction meaning that first time buyers with small but reasonable deposits are unable to access competitive mortgage rates. You won’t normally read this blog calling for Government intervention, but addressing this issue should become a priority for the nationalised banks (in the same way that Roosevelt incentivised mortgages – through the establishment of Fannie Mae and Freddie Mac - as a vehicle out of the Great Depression).

Secondly, we need to build more homes. We don’t need government intervention to do this – we need less. The biggest obstacle to private investment in housing in the medium to long term is the restrictive planning system. Labour’s centrally imposed housing targets have failed to address the issue but the Tory’s localist plans will be a charter for NIMBY’s to say no. De-regulation of the planning system, with greater freedoms for developers and landowners, is desperately needed. We should explore Planning Free Zones, where developers can build what they want, as they did at Canary Wharf in London Docklands (which ironically is the best planned urban area in the capital and which boasts the lowest car use).

It is this reason why politicians are too scared to champion home ownership in the modern age. While Margaret Thatcher had to take on the vested interests of local councils, the modern day champion of home ownership will have to take on the vested interests of the NIMBY, and no politician seems willing to do this.

Does Rupert Murdoch get value for money from Michael Gove?

I like Michael Gove and unlike many, have no problem with him or any other politician having paid interests outside Parliament.

But it did interest me that whereas Gove bills The Times £1,250 an hour for his insightful copy, the Scotland on Sunday pays him just £250 an hour.

The publication of outside interests has come a bit too late though for the Editor of the Times to re-negotiate the contract – all Shadow Cabinet members have been told to wind up their outside interests by the end of the year.

A full copy of Shadow Cabinet members outside interests can be found here.

Death can do wonders for your reputation

WARNING: DO NOT READ THIS BLOG IF YOU ARE A MICHAEL JACKSON FAN

Were it not for his untimely death, Michael Jackson would have been in London in a couple of week’s time playing a series of sell-out gigs at the O2 (or Millennium Dome to give it its untrendy name).

I can’t help think that the media response to the visit would have been a mix of the following: ‘freak’, ‘oddball’, ‘weirdo’. And that’s if he’d shown up and done the shows. God knows what the response would have been in the the very likely event that they never went ahead.

Instead, today, people are mourning his passing and the News 24 programmes are showing back to back tributes of the great man and entertainer – the Mozart of his generation, whose music will be remembered in the centuries to come. I’m waiting for Gordon to come out of No.10 with a mug and an I-pod, with a tribute to the ‘people’s king of pop’; or has Cameron already beaten him to it?

Once again, it’s another example that in Rock and Roll, it’s better to die young (or at least not as an old man). Jackson will now follow Elvis, Lennon and Hendrix into Rock (and Pop’s) departed hall of fame.

His death will also trigger the conspiracy theories that his death wasn’t a natural one. Nearly forty years after Hendrix’s death, there was a story the other day that he’d been murdered by his manager who wanted to cash in on the life insurance. Given that Jackson was highly unlikely to make the London gigs, there will no doubt be some that will make the similar claims around Jackson.

And of course, the email jokes have started to circulate:

• Reports of Michael Jackson having a heart attack in hospital are incorrect. He was actually found in the children’s ward having a stroke
• Apparently his London dates have now been cancelled...they were called Tom (9) and Petey (8)
• McDonalds have announced the MJ memorial burger.... 50 year old meat in 12 year old buns
• It's to be a sea burial..... at his request to be strapped to two buoys
• Similarity between MJ and a Playstation 2 ? Both used to be black and were turned on by excited small boys....
• Some of these jokes are just Bad...
• Doctors say that One Bad Apple caused his death.....Gwyneth Paltrow is unavailable for comment
• Apparently while trying to revive him, one doctor turned to the other and said "So you wanna be starting something, so you wanna be starting something !"
• MJ died of food poisoning, it was the 13 year old nuts
• MJ is being cremated.....he is being melted down and made into plastic toys, its the first time kids can actually play with him for a change
• I bet the last time he was this stiff was when Mackauly Culkin stayed over...
• Farah Fawcett was at the Pearly Gates yesterday, God told her "You have one wish before you enter the Kingdom of Heaven"....Fawcett said "I wish all the children of the World could be safe".....
• LAPD have confirmed they have found Class A drugs in the kitchen, Class B drugs in the lounge and Class 3C in the bedroom…
• What’s the difference between MJ and Alex Ferguson? Ferguson will still be playing Giggs in August.

I’m off to see Springsteen on Sunday night. Bruce, please don’t open with ‘abc’.

BBC go one better than MPs

A brilliant piece of BBC spin in this morning’s newspapers. They briefed the media that in the interest of transparency they would be publishing the salaries and expenses of their key figures, although it wouldn’t be anything like the MPs scandal, because there would be nothing like second homes. In fact, they were also facing Freedom of Information requests.

Well there may not be second home allowances, but I have to say the published information is even worse:

- Fifty of the highest paid executives on £160,000 plus, with most on more than £200,000 – all paid more than the Prime Minister
- Over £2,000 for flying back the Director General and his family from holiday
- Claims from executives for bottles of champagne and flowers to be sent to the stars
- And to cap it all, a refusal to publish the salaries of their main presenters, who are earning up to £6 million a year each! - they've redacted the lot!

I would have no problem if the BBC paid these types of salaries if they had earned their revenue in a competitive market. But it really is unacceptable that these incomes are being paid when their revenue is being drawn from a poll tax (the licence fee) which we all have to pay regardless of our income or how much BBC programming we actually watch.

Mr & Mrs Expenses’ main residence

For those who don’t live in London, you may have missed the photograph that the Evening Standard published tonight of the main home of Labour MP’s Mr and Mrs Keen. Neighbours say that the house, which is in Mrs Keen’s Brentford constituency and well within commuting distance of Westminster, has not been lived in for a year – it looks like a squat.

But by declaring it as their main residence has enabled them to claim £140,000 over four years towards their £750,000 riverside flat in London’s South Bank.

Labour’s dishonest e-mail campaign backfires

Even Labour friends of mine are pulling their hair out at Gordon Brown’s dishonest line of “Labour investment vs Tory cuts.” A more honest approach would be “Labour cuts vs Tory cuts”.

One Labour colleague is so fed up, she has just forwarded me an email Liam Byrne has sent to Labour Party members.

I love the PS at the bottom.

Dear XXXX,

You may have seen in the news today that David Cameron’s Conservatives would make cuts to public services from day one of a Tory government.

Whatever he says about public services, it’s now clear that David Cameron can’t resist the Tory instinct for cuts to public services. The Tories are obviously hoping to hide the details of the cuts until after a general election but the fact is that they would cut our schools and police to pay for tax breaks - starting with £200,000 for Britain’s 3000 richest estates.

However warmly he talks about schools and hospitals there is no doubt David Cameron would invest less. He has said very clearly that “a Conservative government would spend less than Labour” and “some areas would be cut”. This year alone he would cut £5 billion from public services – that’s equivalent to a cutting 3,500 police immediately. And in the future, no matter what the economic landscape, he would cut public services by even more – cuts of 10 per cent according to the Shadow Health Secretary. That’s the equivalent of 15,000 police – equivalent to 30 bobbies off the beat in every constituency.

Under David Cameron’s plans the British people would have to expect less from public services. Not just because of the cuts his party would make. But because their approach to public services, like their approach to the economy, is not to stand by people but walk on by.

Liam

PS. You can always send a letter to your local paper to ask Conservative candidates “Which local schools will you see closed, and what streets are not going to be policed?” - I would love to hear the answers they give you.

If Labour members are despondent about this campaign, how’s this message going down with everyone else?

Expense scandal moves onto local government

How long will it be until the expense scandal tire’s of Westminster sleaze and moves onto local government? Not long if the Evening Standard is anything to go by.

Yesterday, the paper broke the news that Kensington & Chelsea Leader, Cllr Merrick Cockell, made two lavish trips to New York, flying first class and staying at 5-star hotels – all at local taxpayers’ expense.

Today, Boris Johnson’s Deputy Mayor, Ian Clement resigned over misusing his GLA City Hall credit card. He had claimed to be lunching some of London’s Council Leaders, including Enfield’s Michael Rye, Barnet’s Mike Freer and Kensington & Chelsea’s Merrick Cockell (his second mention in this sleaze drenched blog entry). In fact, those politicians had been nowhere near the restaurants in question. 44-year-old Clement was in fact entertaining his 23-year-old lover, Claire Dowson. What do these young girls see in old, powerful men with credit cards that are paid off by the taxpayer?

If you thought the Commons’ fees office incompetent, the GLA administrators seem to be even worse. The £72.50 claim for ‘lunch with Mike Freer at the Blue Olive restaurant in Barnet’ was accompanied by a credit card slip that was paid at 11.22pm. That’s a very long lunch.

At one level, you can understand Clements’s motives. If you’re paying for meals for your lover and it’s a question of whether you put it on your own credit card (and risk questions from the missus) or put it on the taxpayer (and get it rubber stamped by the GLA fees office), his actions seem understandable.

But it’s his lover, Claire, I feel for. How is she feeling today? That on the 31st October 2008, she enjoyed a £32.50 romantic meal at Pizza Express, paid for by us taxpayers. I guess she’s thinking: “you bastard, you were fiddling the system and all you could treat me to was a bloody Pizza Express. You could have at least taken me somewhere decent.” Of course, it is totally feasible that 23-year-old girls are rather impressed by a padana pizza, diet coke and banoffee pie.

Clements seems to be a bit of a serial claimer at Pizza Express, having enjoyed a series of dates with younger women at the establishment. One of his victims, Tory MP Justine Greening, (a date which generated a £35.10 claim), said; “I had no idea he would be charging our lunch to the taxpayer.” Really Justine?

On a more serious point, Clements’s claims are just the tip of the iceberg. Councillor’s allowances are now out of control, costing the taxpayer over £180 million a year.

I have written previously, about how some Councillors, like Brian Coleman, are close to earning a six figure sum for doing very little. By securing appointments to a wide range of local government committees and associated quango’s, you can start to build up quite significant expenses. Indeed, some council’s have got such generous allowances, it is now possible to be earning close to £50,000 while also holding down a full time job.

It is surely a matter of time before the media focus shifts to the expense abuses at our town halls.

Bercow: first ex-lobbyist to become Speaker

Congratulations to John Bercow on his appointment as Speaker. Looking at his biography, he certainly looks like the type of person with the depth of experience to clean up British politics.

The only problem is that his biography isn’t as comprehensive as it should be. He makes no mention of his spell in 1996-7 as a Westminster lobbyist, and who was that Chief Secretary to the Treasury who John served as Special Adviser in the mid 1990’s? That, I believe, was a certain Jonathan Aitken.

Gordon Brown to re-launch leadership on freak show

The Church of England has complained that the BBC treats religion like ‘a freak show.’ The Church is worried that the appointment of Aaqil Ahmed, from Channel 4, as head of religious programmes will lead to a new style of populist television such as ‘God’s got talent’ or ‘Abu Hamza’s total wipeout’.

In the meantime, the BBC has confirmed that Gordon Brown will appear in Songs of Praise next month in an attempt to ‘reconnect’ with churchy voters.

Are these two stories connected in anyway?

The nightmare scenario: an inflation fuelled recession

One of the curious features of this recession has been the way in which it has come in waves. The financial sector was the first to be hit; followed by commercial property, the residential property market and then the high street, the service sector and more traditional industry.

Geographically too, the downturn which griped London first has rippled out to other parts. About 18 months ago, some commentators were predicting that London would be disproportionally affected because of its over-reliance on financial services. There is no doubt that London has been severely impacted but it increasingly seems likely that areas that have traditionally suffered in economic slumps will suffer more once again.

As London and financial services were first into recession, so they will be the first out. But Labour supporters hoping for a political dividend on the back of economic recovery shouldn’t get too optimistic. Even if the green shoots start to appear in London later this year (and there were some positive signs until yesterday’s dismal data on the supply of credit), there will be a time lag before other areas start to see any pick up. Indeed, the sight of London’s investment bankers enjoying bonuses again while unemployment continues to creep up in other parts of the country could fuel even more resentment against Labour in their heartlands as well as those key marginal seats.

One of the most difficult issues to predict is what will happen to prices? The deflation vs inflation argument is splitting economists down the middle. Yesterday, David Blanchflower, a member of the Monetary Policy Committee until earlier this year, writing in the Telegraph, made a convincing case for deflation.

Yet, I remain firmly in the inflation camp. One of the factors that Blanchflower seems to have underestimated is the impact of globalisation. There was a time when recession in the West would have depressed prices across the globe. Not anymore. The economies of the East are becoming far more significant. China’s GDP is expected to overtake America’s in the next fifteen years or so and is already a major consumer of the world’s natural resources. India’s economy too, is likely to become larger than the States’ by the middle of the century. This is going to have profound implications on global politics, economics and military might, and marks a significant power shift from West to East.

Despite the global downturn, China’s economy is still expected to grow by 6.5% this year. Although well down on the double digit rates of recent years, this is still formidable growth and will fuel further demand for oil and other commodities. As a consequence, the cost of things like oil is rising, despite weaker demand in the West.

So we now face a period where higher petrol prices (which seem to be rising on a weekly basis by 2p a litre at the forecourt) will start to work their way through the UK economy. With wretched timing, Alistair Darling has two fiscal measures in the pipeline that will make matters worse. In September, his fuel levy duty kicks in, adding another 2p a litre to the price of petrol, and in December, the temporary cut in VAT comes to an end. Both will add to inflationary pressures.

If inflation does pick up, the Monetary Policy Committee will have the unenviable dilemma of deciding whether or not to continue with the monetary stimulus package (risking even higher inflation) or dampening inflation through higher interest rates (and thereby prolonging and deepening the recession). This would almost certainly generate even more conflict between the Bank of England, the Treasury and No10 and would bring more misery to the rest of us.

The nationalised banks don’t believe Brown’s inflation forecasts

Are you one of those mortgage payers fortunate enough to be on the Standard Variable Rate and currently enjoying repayments at record low levels? If so, you are probably wondering whether to fix your mortgage and when to do so?

The answer to that question mainly depends on whether you believe in the Treasury’s inflation forecasts for the next few years, which are currently predicting:

..................CPI.............RPI (excludes housing costs)
2009............1.6.............-1.3
2010............1.5.............1.7
2011............1.5.............2.3
2012............1.8.............2.9
2013............2.0.............2.5

If the Treasury is right, or if we move towards a period of deflation as some people suggest, you’d be better off sticking to the Variable Rate, as base rates are going to be low for a very long time. There are certainly deflationary pressures in the economy: consumers are being far shrewder on the high street, retailers are squeezing suppliers and employers are imposing wage restraint.

But if you believe the Treasury is way wide of the mark, and inflation will come back big time, fixing your mortgage becomes more attractive.

All the policy indicators point to a return of inflation - Bank of England lending rates at a 300 year low, the biggest public spending deficit since 1942 (we are running a wartime economy without a war) and quantative easing (the posh term for Robert Mugabe’s policy of printing money). Never in our history have we experienced a monetarist or Keynesian expansionist policy of these proportions and never has this monetarist and Keynesian expansionism been run in parallel.

On Monday, Northern Rock withdrew its 5 year fixed mortgage rate that it had been offering at the weekend. They clearly don’t buy the Treasury forecasts. By midnight tonight, most high street banks and building societies will have followed suit. A financial adviser friend of mine says the last two days have been manic as desperate consumers panic to fix rates while banks and building societies withdraw offers without notice.

Yesterday’s inflation figures showed that the CPI rate is stubbornly refusing to fall below the 2% mark (despite the fact that we are told we are in a period of deflation). With oil and commodity prices’ beginning to pick up, the prospect of significantly lower inflation in the short term looks unlikely.

But the prospect of high inflation in the medium term is now a real possibility and it seems the nationalised banks are beginning to agree.

My MP to stand down

Ian Taylor, the pro-European Conservative MP of Esher and Walton, has announced that he is to stand down at the next election.

Tim Montgomerie from Conservative Home has said that the decision has nothing to do with the expense scandal although other Conservatives have claimed otherwise.

I’ve been impressed by Ian Taylor and will be sorry to see him go. I don’t say that because of his European views – I take a far more sceptical view – but because he has been a good constituency MP with a strong independent streak who is prepared to speak his mind. He recently spoke out in favour of the expansion of Heathrow against the populist anti-aviation line taken by Theresa Villiers and the Conservative front-bench.

Yet, the response to the announcement on Conservative Home has been shocking:

"A Conservative gain"
"Good Riddance"
"Hoorah! Now things really ARE looking up."

No doubt we will end up with another Cameron clone and these people will be happy. Yet Parliament will be poorer for the loss of Ian Taylor. We need more independent minded MPs, not the sycophantic careerists that will now apply for this vacancy in droves.

Iran: Obama’s first foreign affairs error

Who would have thought ten years ago that a Democratic President of the US would refuse to condemn an Iranian Government’s attempt to rig an election and to clamp down on the subsequent protest marches calling for more western style freedom?

It’s unimaginable that Clinton would have acted in such a way. Prior to the 2000 election, most of Clinton’s republican critics were accusing him of being too interventionist while the liberal left’s initial criticism of George Bush was that he had never left US shores and had no interest in anything outside its borders. It was 9/11 that jolted the Bush administration out of its isolationism and the adoption of its interventionist neo-con approach.

Obama’s attempt to distance himself from his predecessor is understandable and his recent speech in Egypt offering an olive branch to the Muslim world is welcome. But I cannot help feeling that Obama's failure to make a stand on this issue is a step too far.

The Obama administration is obviously betting that President Ahmadinejad will survive his current difficulties and will have to deal with him when things settle down again in Iran. They may sadly be right, but his failure to support the reformers is deeply dispiriting and a first sign that Obama’s policy is less about Western-Islamic reconciliation and more about appeasing Islamic fundamentalists.

Prince Charles cannot be a monarch and political activist

Maybe it’s because I’m a republican, but I do find Prince Charles intervention into the Chelsea Barracks development controversy totally unacceptable.

The development scheme, which would have regenerated a derelict site, bringing huge community benefits and creating 5,000 construction jobs, was recommended for approval by Westminster Council planning officers. But the scheme has now been shelved because Prince Charles personally wrote to the scheme’s funders, Qatari Diar, the development arm of the Qatar royal family, saying he didn’t like Lord Rogers’ modern architecture.

There are people, including some of Chelsea’s local resident groups, which have welcomed Charles’ intervention. Maybe there are arguments against the scheme. But that should be for the democratic process to determine, not royal patronage.

Britain’s ceremonial monarchy enjoys its enormous privileges precisely because of the convention that it withdraws from political life, a practice the current Queen has consistently followed.

I have no problem if Prince Charles wants to take an active part in public affairs. But if he does, it should be for the public to decide through the ballot box, what powers he should exercise in our name.

Could oil bring down Brown?

Have you noticed that petrol costs have hit the £1 a litre price again at service stations? The wholesale price of crude oil has doubled in the last few weeks and is now close to the $80 a barrel mark. Most analysts feel the price can only go up as demand picks up in China.

You can’t blame Brown for that. But Labour’s problem is that Alistair Darling’s two pence fuel levy increase, which was announced but not implemented at the last budget, comes into force in September. If the retail price continues to go up in the meantime, the introduction of the levy could just provoke another fuel protest.

Could this be the catalyst for the Labour rebel’s last chance to remove Brown?

Public services and the dangers of populism

A few weeks ago, I had the privilege to listen to historian Niall Ferguson give a lecture on his book, The Ascent of Money, at the Hay Festival. It is now a good year since the book was published, and Ferguson used the talk to update his thesis.

One of the more fascinating parts of the discussion was his observation that the economic downturn would unleash a wave of ‘populist’ political movements across the globe. And he characterised populism as:

- Anti mainstream political parties
- Anti bankers/financiers
- Anti immigrant
- Anti globalisation/trade
- Pro inflation

It’s interesting that these characteristics apply to the BNP, UKIP and the Greens; the three major beneficiaries at the recent Euro-election.

More worryingly, yesterday’s reports on how there will be more pressures placed on public services at a time when public spending will need to be cut by 7-10% to address the country’s growing debt crisis, suggests that populists will have plenty of opportunities to exploit over the next few years.

Despite Labour’s claim that they offer ‘investment’ against the prospect of ‘Tory cuts’, the reality is that whatever party forms the next Government, spending will be cut by levels not seen since the late 1970s as a direct consequence of the public debt built up by this Labour administration.

Unless public services are radically reformed with more effective and efficient services that are responsive to individual needs, I fear the next decade could be a rewarding time for the populists such as the BNP.

Political posturing and the Equalities Bill

The Evening Standard reports this evening that the Government has confirmed that the Equalities Bill will stop the BNP from preventing black people and jews from joining the BNP party. Is there a black person or a Jew that wants to join this racist party? If so, they need their head examining.

More seriously, and on a more practical point, I wonder whether the Equalities Bill will take any action against state funded Church Schools that are allowed to discriminate against children of parents who refuse to practice Christianity? Somehow I doubt it. Faith schools will still be able to effectively ban non-believers despite the fact that it is non-believers that mainly fund such schools.

Personally I don’t like the BNP or church schools. But whereas I have to contribute to church schools through my taxes, at least I get a choice about whether or not to contribute to BNP funds. And bizarrely, while Jews will now enjoy my ‘right’ to join the BNP, we’d both be unable to send our children to our local school, because of our rejection of Christianity.