For those who want to stop no deal, Jeremy Corbyn is the only hope

Many MPs are in denial, refusing to accept the Labour leader’s legitimacy. Yet he is the only one who can prevent Boris Johnson trashing Britain

Departing Tory leaders have developed an odd and presumptuous habit of demanding that the leader of the opposition resign too. “As a party leader who has accepted when her time was up,” Theresa May told Jeremy Corbyn in her final prime minister’s questions, preparing to leave her party to Boris Johnson and the country without a prayer, “perhaps the time has come for him to do the same.”

In 2016, David Cameron – who had called a referendum lost it, only to then break his promise and abandon the country in a moment of self-inflicted crisis – suggested Corbyn’s resignation would be a patriotic act. “It might be in my party’s interest for him to sit there. It’s not in the national interest. I would say, for heaven’s sake, man, go.”

Stranger still, many Labour parliamentarians agreed with them: Cameron’s speech took place in the middle of a full-blown, if woefully inept, coup.

The political and media establishments are still struggling with the choice the Labour party made in 2015. The fact that the decision was emphatic, had to be made twice following the failed coup, and was effectively endorsed by the electorate in 2017, has not been enough. On some level, that goes beyond the political to the psychological: they refuse to accept his tenure as legitimate.

This sense of denial runs deep – as though insisting he should not be the party leader in effect means he’s not. It is a delusion that recalls the author Doris Lessing’s observation of Blair’s declarative approach to politics: “He believes in magic. That if you say a thing it is true.”

Corbyn is the leader of the Labour party. He has a mandate. He represents something other than just himself. That is not a statement of opinion but of fact. One does not have to like it to accept it. But the failure to accept it will have material and strategic consequences. And, with a general election imminent and the future of the country’s relationship with Europe finely balanced, the moment of reckoning with that fact is long overdue. For there is no route to a second referendum without Labour; there is no means of defeating Johnson without Labour. The party remains the largest, and by far the most effective, electoral obstacle to most of the immediate crises that progressives wish to prevent. Once again that is not a case for Corbyn or for Labour, but for reality.

Jeremy Corbyn is congratulated on winning the Labour leadership in 2015.
‘The political and media establishments are still struggling with the choice that the Labour party made in 2015.’ Jeremy Corbyn is congratulated on winning the Labour leadership in 2015. Photograph: Stefan Wermuth/Reuters

Earlier this week, when asked which was worse, a no-deal Brexit or Corbyn as prime minister, the Liberal Democrats’ Scotland spokesman, Jamie Stone, said: “It may be that somebody else may emerge from the Labour party. I think the ball is very much in the Labour party’s court to see what alternatives they could find.”

That is not going to happen. Liberal Democrats don’t get to choose the Labour leader. Labour does. The Lib Dems have long struggled to understand this. In 2010 Nick Clegg said he could work with Labour, just not Gordon Brown. Two years later they said they could work with Labour but the shadow chancellor Ed Balls must go.

There is candour in this. It is effectively the position of his party and many others, including a few disgruntled Labour members, for whom a potential Labour government under Corbyn is somehow worse than the actual no-deal Brexit under Johnson that may soon happen. But there is a clear contradiction too. Some of those who have devoted the past few years to stopping any kind of Brexit now claim that the only thing worse than a no-deal Brexit – the worst kind of Brexit they could possibly imagine – is the leader of the only party that can stop a no-deal Brexit.

None of this is a reason to necessarily support Labour or Corbyn. There are all sorts of reasons, from antisemitism to an insufficiently pro-European stance, as to why progressives might decide not to back Labour at this moment; and the calculations are very different outside England and in those areas where tactical voting offers the best hope of getting rid of Conservatives. And given the redistributive agenda that Labour laid out at last week’s conference, there are all sorts of reasons why progressives might back it, too.

Political parties are not entitled to anyone’s support. They must earn it. The moment they start blaming voters for not supporting them, they are sunk. That’s as true for Labour under Corbyn as it was for the US Democrats under nominee Al Gore. But that does not absolve the voter from the strategic and moral responsibility of accounting for their vote.

In the second round of the French presidential elections in 2002, which pitted the conservative Jacques Chirac against the far-right candidate Jean-Marie Le Pen, a Communist party local councillor, François Giacalone, voted for the conservative. “When the house is on fire,” he said, “you don’t care too much if the water you put it out with is dirty.”

Right now, the house is on fire. Johnson’s first couple of months in office have illustrated that what’s at stake is not a contest between bad and worse. This is a leader who uses the police as props; breaks the law to undermine democracy; and stokes division with rhetoric that can and has been easily co-opted by the far right, pitting a section of the population against parliament and the judiciary. Johnson’s cabinet and its agenda, both with regards to Brexit and beyond, do not represent a mere shift to the right but a paradigmatic sea-change in British politics that, where Europe is concerned, may have irreversible consequences.

Those who last year were literally on the fringe of the Tory party conference have this week been running the show. The coming election will not just be about opposing Brexit – it’ll be about defending democratic norms. The key consequence of understanding that Corbyn is the legitimate leader of the Labour party is understanding that this fire cannot be extinguished without him.

Gary Younge is a Guardian columnist

Using housing wealth to fund social care: why the Care Act 2014 is unfair

Posted: 04 Feb 2015 06:30 AM PST

Nicholas HopkinsEmma Laurie

The Care Act 2014 reinforces the expectation of leaving housing wealth as an inheritance, which perpetuates inequalities across generations, argue Nicholas Hopkins and Emma Laurie. Intergenerational fairness requires homeowners to use a greater proportion of their housing wealth to fund social care rather than relying on the state.

The issue of funding social care costs is one that provokes strong feelings. Many homeowners resent the idea of having to sell the family home to pay for residential care costs. But with an ageing population, a real concern is raised over who should pay. The Commission on Funding of Care and Support (the Dilnot Commission) was an independent body tasked by government with reviewing the funding system for care and support in England. Its report, Fairer Care Funding, provided advice and recommendations to government and was subsequently enacted in the Care Act 2014.

The Dilnot Commission’s overriding objective was to make the system of funding adult social care fairer as well as sustainable. The Commission took the view that it was fair to limit the extent to which an individual is required to draw on their own wealth, including housing wealth, to pay for the costs of their care. It also recommended that the home should not have to be sold during the owner’s lifetime in order to pay for social care costs.

To achieve these two objectives, the Care Act 2014 places a cap on individual liability for care costs and provides a scheme of Universal Deferred Payment (UDP). UDP is intended to prevent ‘forced sales’ of the home. Despite its name, it is not intended to be available to everyone. We consider that the measure is justified and that its operation could be confined to those who would otherwise have to sell their home. This could be achieved by making UDP available only to those who could not pay the capped sum from non-housing assets.

Our concerns with the Care Act 2014

Our principal concern lies with the Act’s treatment of housing wealth through the cap. Its effect is to preserve individual wealth and, in practice housing wealth, at the expense of the public purse. Ultimately, it will benefit those who will inherit that wealth. The use of public funds to preserve an inheritance lies at the heart of our criticism.

By passing a greater proportion of the costs of social care to the state, the Act will inevitably have undesirable – and unfair – consequence for the younger generation of taxpayers. We therefore advocate a phased scheme which would aim to change the expectation of leaving housing wealth as inheritance and, instead, inculcate an expectation of using housing wealth to fund social care costs.

This will be a controversial argument for many people. We understand the sense of unfairness felt by current homeowners at having to use housing wealth to pay for their social care costs and the desire to leave housing wealth as an inheritance. The ability to provide an inheritance is one of the bases on which homeownership has been promoted. Equally, there is understandable confusion about the different funding models for health and social care. While health care is provided free at the point of delivery, social care is means-tested and incorporates an assessment of a person’s assets to determine eligibility for financial support from the state.

The need for intergenerational fairness

Nevertheless, the wider concern of intergenerational fairness requires homeowners to use a greater proportion of their housing wealth. There is a growing recognition that issues of intergenerational fairness must form part of the ‘social contract’ between individuals and the state. In the UK, life expectancy has been growing while the birth rate has been falling. The consequence is popularly referred to as a ‘demographic time-bomb’, and the phenomenon of an ageing population is a policy concern that has been taken up at international, European and national levels.

But government policy on the need for intergenerational fairness is inconsistent. On one hand, the government has taken steps to increase the age of eligibility for the old-age pension and further increases are planned. On the other hand, it has passed the Care Act 2014 which entails a greater proportion of the costs falling on the state and, inevitably, the younger generation.

Changing expectations

Inculcating an expectation of drawing on housing wealth to fund older age care can address our concerns of intergenerational fairness. Such a policy reflects the principle of asset-based welfare, which entails expanding asset holdings among low-income households as a means of reducing wealth inequalities and promoting wealth-creating behaviour among citizens.

Successive governments since the 1950s have consistently encouraged homeownership and, as a result, housing wealth now exceeds other forms of investment to become by far the largest element in personal disposable assets. Homeownership has spread wealth more widely than any other form of asset or investment. Despite doing so, housing wealth is unequally distributed. Many older property owners have seen large, tax-free capital gains over the past few decades due to the rising value of property. The proportion of housing wealth held by older people is forecast to grow, while the term ‘generation rent’ has been coined to refer to those younger people who have no realistic prospect of buying their home. Inculcating an expectation that people will look to their housing asset, rather than to the state, to fund their welfare can reduce those intergenerational disadvantages by requiring homeowners to use the wealth in their lifetime.

Homeownership has not been explicitly promoted with the idea that the wealth will be drawn upon to fund the owner’s older age. Combined with the lack of understanding of the difference between health and social care, it is perhaps unsurprising that a strong sense of unfairness is felt at the prospect of housing wealth accumulated over a lifetime being dissipated by the requirement to fund a few years of social care. However, rather than attempting to change expectations, the Dilnot Commission’s proposals, as implemented by the Care Act 2014, appear uncritically to accept the perception of unfairness. The Act reinforces the expectation of leaving housing wealth as an inheritance, which perpetuates inequalities across generations. As a result, the funding model provided by the Act is neither fair nor sustainable.

Austerity not so welcome when it hits the rich

by stevehilditch

Labour has run into a little local difficulty with its Mansion Tax proposal. Perhaps the biggest problem is that, although the proposal is very popular amongst the general public, many of the people affected by it have easy access to the media – notably journalists themselves, so-called ‘celebrities’, and other powerful people. There are also large clusters of them in some inner London marginal Labour seats. So they can raise a stink in a few hours while it took months of extremely hard slog by a lot of people to get some coverage for the abomination known as the bedroom tax, which hit much poorer people much harder.

The latest ‘celebrity’ to get acres of coverage was the unutterably unfunny Griff Rhys Jones, who said he would leave the country if it is introduced. ‘Goodbye’ was the common Twitter response. This man made much of his money from the BBC at our expense and, although it appears he has carried out major improvement works to his home, its value (assessed at £7m by Zoopla) has risen with the tide of the property market rather than through his own efforts. The media has been full of the notion that people owning very valuable properties do so because of their ‘hard work’ and ‘prudence’ rather than a taxpayer-subsidised and economically damaging inflation which has given them a windfall. And, unlike most people, Rhys Jones always has the option of living on his yacht.

Property taxation is in a mess. The exemption of primary residences from capital gains tax – the only major class of asset to be exempt – costs the Treasury an estimated £10bn a year and is the key ‘subsidy’ to home owners. Council tax stops rising on homes worth £320,000 and more, they are all banded together. It is not progressive, which creates the extraordinary outcome that tenants living in ordinary homes pay as much council tax as a Russian oligarch living in a £20m home in Chelsea. Not only is this unfair but the system as a whole feeds rather than manages house price inflation.

Mansion Tax is one effort to tackle extreme housing wealth inequality. It is aimed at tackling wealth that is largely unearned and, so far, untaxed. It is one way of demonstrating that we are ‘all in this together’ and the money will go towards saving the most popular British institution of them all, the NHS.

Labour has thought through how it might operate in practice to avoid some of the pitfalls that have been identified. The threshold will rise in line with the general increase in value of such properties so more and more properties should not become subject to the tax. It will be a banded system rather than depending on valuation of each individual property, making it easier to administer. Home owners who are asset-rich but cash-poor (incomes up to £42k) will be able to defer the charge until the property is sold. Paul Dimoldenberg, the Leader of the Labour Group on Westminster Council, has revealed that there are only 61 H-band council tax payers in the borough who currently receive Council Tax Benefit, so the size of the problem seems manageable and is significantly less than some of the scare stories.

Ed Balls has already made it clear that the tax will be applied progressively. Owners of properties worth £2-£3 million will pay around £3,000 a year but it will rise above that, so the biggest burden will be shouldered by those owning the most valuable properties. It seems that the rate for £2m-£3m properties will be close to what people would have to pay if the other alternative – adding extra bands to the Council Tax – were adopted instead.

My own preference would be for a more thorough-going reform of property and land taxation, as I have argued on Red Brick before. I would prefer to see a more progressive Council Tax regime with more bands, with the additional income being netted off the grant received by councils from central government (so the benefit could be applied nationally).

The argument that the Mansion Tax is unfair on London has been widely repeated. But I agree with Paul Wheeler on this point: ‘Yes the mansion tax is a ‘tax on London’ but only to the extent that Corporation Tax on Banks is a tax on London because that’s where the money is’. Labour should not resile from the principle that the owners of the greatest wealth and the most valuable properties should pay more tax. There is still room for debate about how it should be applied. For example, the £2m threshold could be re-set by apply the proposed inflation-link retrospectively. Mansion Tax was first mooted at £2m about 4-5 years ago. It could be raised to take account of inflation since, taking a significant number of the ‘just £2m’ properties out of the scope of the tax. This would reduce the initial tax take but I think it would be seen as fair and would take some of the sting out of the political debate.

Whilst of course welcoming the extra money for the NHS that will come from the Tax, I must admit to some disappointment that, as a property tax, it will not be reapplied to boost housing capital spending. Previous commitments to boost housing grant for affordable homes – a share of the 4G bandwidth sale and a share of the bankers bonus tax – have quietly disappeared. Labour’s only specific commitment to raising housing grant is to give housing higher priority within existing capital programmes. That just doesn’t seem robust enough to meet the party’s commitment to build 200,000 homes a year by 2020.

Britain’s housing crisis risks turning into catastrophe unless urgent action is taken

We have an endemic crisis of housing supply – caused primarily by policies, like Greenbelt, that constrain the supply of housing land precisely where it is most wanted. Paul Cheshire argues that nothing short of radical reform will improve housing affordability. But radical reform, like intelligently loosening restrictions on Greenbelt building, is frightening.  

The housing crisis – worst in London, but bad across Britain – is fundamentally driven by lack of supply. For the past five years, we have been building fewer houses than in any peacetime period since before World War One. But house building has been on a downwards trend since the 1960s. Reasonable estimates suggest the shortfall in England has been 1.6m to 2.3m houses between 1994 and 2012. Moreover, too many of those we have built have not been in locations where demand is highest. We persistently build houses where they are relatively least unaffordable and job prospects are relatively worst.

This is true from Lancashire (compare Preston with Ribble Valley) to Northants (Corby to Daventry), but is perfectly encapsulated in London. In the four biggest building boroughs; Tower Hamlets, Islington, Hackney, and Southwark, unemployment in 2012-13 averaged 11.35 per cent and the affordability ratio (median house prices to median earnings) was 9.98, we added an average of 14.57 per cent to the housing stock in 2004-2012. In the four slowest building borough; Merton, Bexley, Sutton, and Kensington & Chelsea, where the unemployment rate averaged 6.75 per cent and the affordability ratio 15.07, we added an average of just 2.11 per cent to the stock over the same period.

We may have 32,500 hectares of Greenbelt land within the GLA – including around at least two Tube stations – but we have concentrated new supply where prices relative to earnings are least unaffordable and job prospects worst. And we are not just building too few houses; those we have been building do not satisfy demand. We have an endemic crisis of housing supply – caused primarily by policies, like Greenbelt, that constrain the supply of housing land precisely where it is most wanted. No wonder house prices are rising at over 10 per cent a year.

Fundamental reform is needed, but this has to be informed by a clear understanding of how markets work. Land markets certainly suffer from problems of market failure, but they still provide vital information about where there are shortages and what there are shortages of. So while we ignore price distortions at our peril, we need to be guided by them, not blindly obey them. But what do our political parties offer? Grandstanding and baby kissing. From the Conservatives, we have Help to Buy; from Labour, policies to control rents and increase security of tenure. Neither addresses the fundamental problem of supply. Both will probably make housing just a tad less affordable.

Following the watering down of the coalition’s draft National Planning Policy Framework, the Tory policy for the housing market morphed into cynical electioneering with Help to Buy, announced in the 2013 Budget. There are two schemes, but even the less toxic Help to Buy 1 – restricted to buyers of new build – may be making housing less affordable. Remember (as the OBR told the Treasury Select Committee within days of the Budget) that the underlying problem is almost perfectly inelastic supply. Anything that increases demand mainly adds to pressure on prices. While a proportion of Help to Buy 1’s financial help will increase supply, there will be a displacement effect. Given how inelastic the supply of houses is because of constraints on land supply, it is possible that the adverse effects of the good scheme on affordability will more than offset any positive effects via increased supply. Help to Buy 2 – the purely bad one – just makes access to mortgages for housing easier. Insofar as it has any effect, it will be almost entirely to increase house prices. Oh – and help us, the taxpayers, take on some housing risk banks did not want to shoulder.

Labour has announced its own version of baby kissing: partial controls on rents, increased security of tenure, and elimination of agent’s fees for finding housing for renters. The best that can be said for these proposals are that there effects will be modest. If these policies have any effect, it would be to modestly decrease rental supply, since it would become less attractive to be a landlord. The abolition of fees to agents will, of course, just get transferred into rents (because costs to landlords will increase). All forms of tenure are in the end substitutes for each other, so the net adverse impact on housing affordability will be small – perhaps negligible. It will just reduce the rate of growth of the rental sector and maybe frighten a few institutional investors who might be considering entering the market.

As I explain in the book I have just co-authored, nothing short of radical reform will improve housing affordability. But radical reform, like intelligently loosening restrictions on Greenbelt building, is frightening. Even excellent reforms will probably only make a real difference over a period longer than five years. But if people were convinced that prices of land and housing were going to behave as they do in Germany in the future, not as they have in England in the past, there could be a step change in prices relative to incomes, because expectations are built into current prices.

But the other frightening thing is that radical reform will have to come because the present system is building up pressures that, over time, will cause more and more damage. The issue is not will we reform, but will we reform in time to avoid something like a catastrophic collapse? In the meantime, kissing babies is sadly much more attractive for politicians.

Paul Cheshire is co-author, with Max Nathan and Henry Overman, of Urban Economics and Urban Policy: Challenging Conventional Policy Wisdom (Edward Elgar, 2014). The  LSE/ Radio 4 debate “Where will we all live” , featuring Paul Cheshire will be broadcast on BBC Radio 4 on Wednesday 11 June at 8pm. A Storify of this event is available here.

Note: This article first appeared in City AM on Wednesday 4 June 2014 and gives the views of the author, and not the position of the British Politics and Policy blog, nor of the London School of Economics.

About the Author

Paul CheshireLondon School of Economics

Paul Cheshire is Professor of Economic Geography at the London School of Economics. He is co-author, with Max Nathan and Henry Overman, of Urban Economics and Urban Policy: Challenging Conventional Policy Wisdom (Edward Elgar, 2014).

How to bring down house prices in London

The London property market is potentially in bubble territory with demand clearly outstripping supply, causing prices to rise to eye-watering levels. What can be done to bring prices down? Kath Scanlon explores the possible policy routes in detail. She argues that local authorities can make it a condition of planning permission that dwellings remain in private rental for a specified period, encouraging the supply of new build housing that London desperately needs. But since new homes will only ever be a tiny proportion of transactions, she writes that we also need to persuade older ‘over-occupiers’ to downsize.

The jury is still out on whether there is a housing bubble in London, but we’re certainly approaching bubble territory in terms of the number of discussions, seminars and debates on the subject. The key issue is clear: London house prices have been rising fast—much faster than incomes. Why is this happening—and what can be done about it?

Let’s look at the basics; at supply and demand. Demand for housing in London has been growing but supply is stagnant. Demand is up because London’s permanent population is growing through natural increase and migration (from abroad and elsewhere in the UK) and there’s an increasing group of part-timers: wealthy foreigners who want a London base. Mortgage conditions, tightened in the wake of the Global Financial Crisis, have now begun to relax and loans covering 95 per cent of property value are again available. Underpinning these is London’s pre-eminent position as a national and global centre of governance, finance, education and culture.

There is less agreement about the reasons for the stagnation of supply. Discussions about supply can be confusing because in popular usage the term can mean two things: the net addition to the housing stock (that is, new construction), and the number of homes offered for sale at any given time—of which the vast majority are existing dwellings. Let’s take new construction first. The rate of new build has increased, but still doesn’t come close to match the number of new households in London—so in pure numbers term the housing deficit is growing, which tends to push up prices. There are many reasons for this, and each commentator has his or her favourite.  They include the greenbelt, NIMBYism and ‘land hoarding’ by developers.

In terms of housing transactions, though, the overwhelming bulk of supply is not new build but existing homes. And while house prices have risen strongly in the last five years, the number of transactions has risen much more slowly, and is still well below the peak reached in 2006—so in that sense, the supply response has been disappointing.

What can be done to bring prices down? There are three broad possibilities, alone or in combination: control prices administratively, increase supply or reduce demand. There are proponents of administrative control of prices in one part of the housing market, in the form of rent control. Interestingly, though perhaps not surprisingly, they never advocate capping house prices. There are, however, ways of exercising indirect influence on house prices through regulation. One is to limit the size of mortgage loans by capping loan-to-value or loan-to-income ratios, which would reduce effective demand.


Another possibility is to increase supply. In terms of new construction, there is a huge amount of housing in the pipeline in London. But even (or perhaps especially) on the biggest sites, new homes are produced very slowly—even though there are few technical barriers to faster production. One reason is that house builders have learned that putting many houses on the market at the same time reduces the price of individual homes. But that doesn’t seem to apply to rented housing—even if hundreds of properties are leased at once, it doesn’t affect rents much. This means that developers could be willing to build rental-only homes at a faster rate than homes for sale. This wouldn’t directly bring down the price of homes for purchase, but would have an indirect effect by increasing overall housing supply.

Why aren’t they doing so already? There are several reasons, but the most important has to do with the cost of land.  The price that developers can pay for land is the difference between the eventual sales value of the houses and the cost of development. Envision a block of two-bedroom flats—the kind of rented housing typically found in New York or Berlin. If the flats are sold individually to owner-occupiers, as normally happens in the UK, the sales price will be higher than if the developer sold the block as a whole to a landlord. That means that a developer building for owner-occupation or to individual buy-to-let investors will always be able to pay more for land than one who wants to build blocks for private rental—so the rental-only blocks just don’t get built.

There is a way around this. If the development has to be for private rental the overall value will be lower—and this brings down the price of the land. Under the British planning system there’s no special treatment of private rented housing—it doesn’t have a separate ‘use class’ or zoning. But the same effect can be achieved another way: local authorities can make it a condition of planning permission that dwellings remain in private rental for a specified period (say 10 or 20 years). This is known as ‘covenanted private rental’ and is one approach advocated in the Mayor’s Draft London Housing Strategy. Widespread adoption of this could help accelerate the supply of new build housing that London desperately needs.

But new homes will only ever be a tiny proportion of transactions. How could we increase the number of existing homes coming onto the market? If older ‘over-occupiers’—single people or couples living in family homes—could be persuaded to downsize, this would release their properties for younger families. Of course, not everyone agrees that this should be a policy goal: Mrs Thatcher famously campaigned for the poll tax by invoking the example of elderly widows unable to pay rates on their long-time homes. But we have to ask whether it is a sensible use of London’s housing stock to have older people living alone in large houses while families with small children are crammed into too-small flats.

One of the reasons that many older ‘over-occupiers’ remain in their large homes is that the alternatives are so grim.  Many would never move into a retirement home, however tidy and well-run, unless forced to do so by ill health or dementia. We need to create positive, attractive living arrangements for later life—homes that active older people would genuinely prefer to live in. There are some innovative projects that may suggest a way forward—for example, a new co-housing community for over-50s currently being created at Featherstone Lodge in South London could provide a model for that could be replicated elsewhere.

Finally, a few words about demand. The UK’s house-price surge is centred on London; north of Watford might as well be another country. Demand is strong in London in part because of the massive over-centralisation of the country’s economic and public life. In the USA, by contrast, New York is the country’s financial capital, Washington its political capital, Boston its capital of higher education and San Francisco its tech capital—but in the UK London plays all of those roles. Re-balancing this would reduce pressure on London house prices and contribute to a healthier country overall.

About the Author

Kathleen ScanlonLondon School of Economics

Kathleen Scanlon is a Research Fellow at LSE London. She has a wide range of research interests including comparative housing policy (across all tenures–social and private rented housing as well as owner-occupation), comparative mortgage finance, and migration.


“The rise in income and wealth inequality that began from the 1970s onwards has become a housing problem in the end”

What is the housing crisis in the UK?

The housing crisis is a crisis of affordability. The biggest part of the cost of living crisis isn’t gas bills or food bills, it’s your rent or your mortgage. Rents have increased, and prices have increased in the South-East. Elsewhere prices have fallen and people are in negative equity. It’s issues with housing that are probably going to keep people awake at night in worry more than anything else. Beyond the cost, it is also the unpredictability, the fear and lack of any certainty about what’s going to happen to you depending on how you’re housed. Many people are not particularly well housed. Many don’t have much of an idea of how they’re going to be housed in three or four or five years time.

What are the roots of the problem?

Housing was the one of the big three issues – the others being education and health – that the UK didn’t sort out in terms of having a decent state support; a control on the quality of what happened and a control on people profiteering. For instance we don’t allow people to make massive profits, or largely we haven’t, out of education. Private schools are non-profit making. Housing, on the other hand, is a massive source of profit-making.

The rise in income and wealth inequality that began from the 1970s onwards has become a housing problem in the end. If you have one part of society becoming wealthier and wealthier, and everybody else sees their average income drop and their wealth levels fall to a lower proportion of national, it gets expressed in housing.

The immediate crisis is what’s happened since 2008. And that’s quite an incredible one. We’ve seen a tremendous shift to private landlords. Huge profits; £245 billion in the last five years net gains for private landlords in Britain. Rent going up, homelessness going up and people becoming more precarious – all very rapidly. One in 4 children in Britain are now living in a house with a private landlord.

Can you elaborate on the connection between housing and economic inequality?

It becomes harder and harder to house a population when you got incomes going up at the top and incomes staying stagnant in the middle and going down at the bottom. The bottom half of the population simply cannot afford to be housed. They have no spare money or power to do much about housing. People at the very top of society, the richest 1%, have so much money now that they have a problem of where to put it. Which is why people end up buying houses in Kensington and leaving them empty. It’s hard to find any society on earth that manages to house itself well when it does this to its income structure. It’s an expression of widening income inequality, which is partly why the issue is quite hard to solve and why we have a massive housing benefit bill.

How have the Help to Buy policy, Quantitative Easing and low interest rates contributed to the housing crisis?

Help to Buy is all about holding house prices up. It’s getting banks to lend to people they would not otherwise lend to. The buyer guarantees the first 5% and the taxpayer then collectively guarantees the next 20%. So we’ve taken out a £130 billion liability on the housing market. The bulk of spending in the last budget was all about holding the housing market up to 2015. So it’s quite clever of Osborne to pretend he’s going to carry this thing on [to 2020].

Low interest rates are interesting, in a way they’ve helped landlords because landlords can now borrow easier than they could before. Landlords of course can claim tax relief on borrowing unlike buyers, so they’ve made it easier for landlords to get hold of money. So now if you’ve found yourself at the bottom end of the first-time buyer’s market in London you’re actually competing not just with other first-time buyers, but with landlords trying to buy exactly the same flat because they want to make money renting it to you rather than you slowly buying it.

QE is the elephant in the room when it comes to wealth polarisation. The Bank of England itself has shown how the benefits of QE have gone largely to the top 10% of the population.

Is housing an issue only in London or is it a nation-wide crisis?

It exists everywhere in one form or another. One problem with London being so expensive is that it makes what are actually really expensive prices elsewhere not look expensive. But people still cannot afford something that’s 5 times their income just because in London it’s 12 times. London makes it worse everywhere by stopping people realising it’s bad. You’ve also got areas where prices have fallen a long way from what they were in 2007; for instance, the whole of Wales. So you have people trapped in their homes with little sympathy for them because elsewhere prices are rising.

Is increasing the housing supply the solution? Should we simply build more?

If you just build on its own the houses will be bought by people who can afford to buy the houses, so it won’t solve the problem. We are becoming more and more unequally distributed in the housing stock we’ve got. If we simply added more quickly, more of it would just be bought by people from abroad and by people who need a second or third home. That’s the problem with just building. We do not need to build more for the people who are currently here. For the people who are currently here we need to make better use of what we already have.

However, London does need to be build. It’s ridiculously shaped for a world city; it needs to build upwards. But the main debate about supply we should be having is about immigration. There is one good reason to build in Britain: we should expect high rates of immigration for many years to come. At the moment everybody’s in favour of building while nobody’s in favour in immigration. We’ve managed to have this incredible debate where we don’t talk about the prime reason why you’d increase your housing supply, which is more people. It’s really quite incredible that we can talk about housing without talking about immigration. The main reason why I’m in favour of some building is I hope not to be living in an economic dustbin in future. You know you’re not in an economic dustbin when people keep on coming to live alongside you where you live. So I expect, I hope, net immigration to continue and we need to build for that. But which politicians is ever going to say we are partly needing to build new homes for the immigrants we are going to come if our economy is successful in future?

You mentioned that our housing stock is becoming more unequally distributed. How do we use our housing more efficiently?

We’ve made London housing the safest investment for people – often dodgy people with lots of money to hide. We need a decent property tax like so many other places in the world, including many states in the US, so that people in the most expensive properties are paying at least the same tax as other people. Ireland now as a property tax of 0.18% which rises to 0.25% of the value of your property a year if it worth over one million euros. To get towards that I would take the lid off council tax. You take the top band, and then for the people in the top-half of the top band, create another band. For people in the top half of that band, create another band, and so on. I get up to band N for the Sultan of Brunei (who has a large home in Kensington). In this way you’d raise a lot of money. If you still want to own a really expensive house you can – it’s not a Stalinist policy that I am advocating – but your property tax would at least be proportionate to the value of the property.

Barriers to policy? Why isn’t anything being done?

A lot of people, say in the top 20 or 25% of the wealth distribution in Britain think that housing is worth far more than it is. They haven’t worked out that there isn’t going to be anybody to buy at the values that they believe it’s headed. They think it’s their pension, they think it’s their children’s future inheritance. So nothing happens because of optimism at the top.

How is this going to play out?

We’ll get a crisis is the most likely thing. At some point property in Mayfair won’t go up. If you run it forward 10 years, we run out of super-rich people coming in. If you run it for 20 years you have to have aliens arrive in spaceships to buy at the super inflated prices carrying bars of platinum with them from their home planets! Just take the house prices and multiply them forward 10 or 20 years, and then say: ‘so who’s going to have that money?’ I don’t believe super-rich aliens from other planets will arrive to buy London homes at future vastly elevated prices so the most likely thing is the beginnings of a crisis turning into a disaster, sadly, because of our lack of organisation and because of our politics.

Note:  This article gives the views of the interviewee, and not the position of the British Politics and Policy blog, nor of the London School of Economics. Please read our comments policy before posting.

Danny Dorling is a British social geographer and is the Halford Mackinder Professor of Geography of the School of Geography and the Environment of the University of Oxford. He was previously a professor of Geography at the University of Sheffield. He has also worked in Newcastle, Bristol, Leeds and New Zealand, went to university in Newcastle upon Tyne, and to school in Oxford. Much of Danny’s work is available open access


Manchester is ranked in the top ten authorities worst hit by Government cuts, according to new figures.

Labour have accused the Government of targeting the country’s most deprived areas to reduce spending, while protecting affluent regions.

Analysis released by the party suggests that the north of England and inner-city parts of London are taking the brunt of the cuts to welfare and local councils.

The figures amount to an average of £508 cuts for every person in the North West, £566 in the North East, and £511 in the capital.

This is compared to just £292 in the South East outside London and £324 in the east of England.

Manchester is the seventh hardest hit authority in terms of cuts, despite being ranked fourth highest in the Government’s own deprivation figures, according to Labour’s figures.

The worst-hit area, Knowsley in Merseyside, sees a total loss of £850 per head – £515 per head in welfare cuts and £336 in local government cuts.

By contrast, the least-hit area, Mole Valley – which covers the towns of Dorking and Leatherhead and surrounding villages in Surrey – loses £182 per head, made up of £164 in welfare reductions and £18 in local government cuts.

The list of ten local authority areas hardest hit by the cuts includes seven out of the eight most disadvantaged parts of the country, according to the Government’s own deprivation index.

Knowsley, which ranks fifth in the index, is followed by Westminster (87th in the index, losing £824 per head), then Hackney in east London (second in the deprivation index, £821), Liverpool (first, £817), Blackpool (sixth, £792), Hartlepool (24th, £724), Manchester (fourth, £715), Newham in east London (third, £710) and Middlesbrough (eighth, £696).

Mole Valley is 310th out of 326 in the deprivation index, and the other areas on which the cuts are having least impact are equally well-off. Second least-affected is Waverley in Surrey (321st on the index, losing £187 a head), Wokingham in Berkshire (325th, £189), Hart in Hampshire (326th, £194) and Elmbridge in Surrey (320th, £196).

Shadow work and pensions secretary Liam Byrne said: “The Tories are zeroing in on areas in need and hitting them hard – twice.

“Communities facing the biggest hit to local government are also losing most from cuts to their tax credits and benefits, yet instead of helping working families the Tories are giving millionaires a tax cut. That tells you everything you need to know about this Government’s priorities.”

According to Labour’s figures, based on independent research conducted by Sheffield Hallam University and Newcastle City Council, the overall loss per head from welfare and local government cuts is £566 in the North-East, £511 in London, £508 in the North-West, £421 in Yorkshire and the Humber, £388 in the West Midlands, £364 in the East Midlands, £334 in the South-West, £324 in the East of England and £292 in the South-East.

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