Category Archives: housing

New generation QE could stimulate the economy, boost employment and tackle climate change

The Times reports that Howard Archer, chief economist at IHS Global Insight, predicts that quantitative easing, which has been on hold since 2012, will be revived in August, with an extension of the Funding for Lending Scheme, which provides cheap finance for major lenders in an attempt to get credit flowing.

QE – as currently administered – sees the Bank pumping money into the financial system by buying bonds from financial institutions. Adam Marshall, acting director general of the British Chambers of Commerce, said the employers’ group would support more QE in principle “given the exceptional circumstances of the Brexit vote”. However, he called for QE to be overhauled and “aimed at injecting money into corporates and small and medium-sized companies”.

Others would advocate more widely beneficial applications; a new-generation quantitative easing programme could stimulate the economy, boost employment and tackle climate change instead of – as before – simply adding more cash to bank balance sheets and inflating asset prices.

The latest policy proposal is Green Infrastructure Quantitative Easing (GIQE). Last year, economist Richard Murphy addressed the Convention of Scottish Local Authorities to present this in detail as a programme that would buy bonds issued by the Green Investment Bank to fund making every building in the UK energy efficient, and, where feasible, fitted with solar panels, which would reduce energy bills and in the process tackle fuel poverty and cut greenhouse gas emissions. In addition, it would fund sustainable energy projects and enable local authorities to pay for new houses, NHS trusts to build new hospitals and education authorities to build schools.

gnd coverThis concept of directing quantitative easing to fund the greening of the UK’s infrastructure was first included in the 2013 report ‘A National Plan for the UK’, issued by the Green New Deal Group, convened by Colin Hines.

The new economics foundation also published a substantial 2013 report ‘Strategic quantitative easing’, apparently targeted at the banking world, with an extensive analysis of the current monetary system and applications of quantitative easing and a reference to its role in increasing exports in addition to the Green Deal and housebuilding references.

MP Caroline Lucas persuasively summarised the proposal in the New Statesman:

“GIQE could contribute to strengthening the UK economy via a carefully costed, nationwide programme to train and employ a ‘carbon army’. This army would be at the frontline of the fight against cold homes by making all of the UK’s 30 million buildings energy efficient, and, where feasible, fitted with solar panels. This would, in the first instance, dramatically reduce energy bills and fuel poverty, whilst also cutting greenhouse gas emission and cutting current dependence on imported energy.

“Secondly, a GIQE programme could also help tackle the housing crisis by financing the construction of new affordable housing that’s highly energy efficient and built predominantly on brownfield sites.

“Thirdly, GIQE could help finance improved regional public transport networks to help revitalise local and regional economies. That’s more and better buses, trains and coaches, helping people to get around their communities and stay connected . . .

“It’s time that both the Government and the Opposition, rather than continuing to hand money over to the banks as they have done since the financial crisis, will seriously consider this plan to build a resilient economy, protect our shared environment and create thousands of new well paid jobs.”

 

 

 

Making housing available and affordable for local people

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The northern Cornish seaside resort of St Ives voted overwhelmingly, in a recent referendum, to prevent property developers from selling new homes to non-residents. Over 80% of people voted in favour of the “neighbourhood plan”. More information on the restriction can be found here. The turnout was just over 47%.

St Ives parish, which includes the nearby towns of Carbis Bay and Lelant, already has in place a target for at least 50% of new homes to be “affordable”.

The FT reports that prices had risen sharply in the past 15 years, after an influx of holiday home buyers. Average house prices are now about £400,000, 18 times typical local salaries, according to data from the Office for National Statistics and Rightmove — more than double the national average. Many locals also struggle to find affordable rented accommodation. The tourism boom has led to landlords choosing to maximise revenue during the summer months.

Mayor Linda Taylor has been fielding calls from her counterparts across the country, and from journalists as far away as Canada and New Zealand. This measure has clearly “struck a nerve” in some communities, she says.

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Similar measures have been introduced to make housing available and affordable for ‘local occupants’ in Exmoor, Peak District, Yorkshire Dales, Snowdonia, Dartmoor, Brecon Beacons, Pembrokeshire Coast and further afield in Singapore.

Business reaction

“The problem is so much bigger than any neighbourhood plan is going to address,” commented James Berwick, a local estate agent. “It doesn’t matter where you are in the country — home prices are out of sync with salaries.”

Noble Francis, economist at the Construction Products Association said that what they’re trying to do is restrict demand when the problem is chronic undersupply and that is not going to solve the problem.

Developers also warn that the plan and the affordability target will make construction in St Ives unviable and have threatened to halt new homebuilding. Dan Potter of Underwild believes the result will have a negative effect on the economy as builders look for projects outside the parish borders.

Will a judicial review get the St Ives Neighbourhood Plan overturned?

Cornwall Council confirmed that it had received notice that RLT Built Environment Limited is seeking permission for a judicial review. In a statement it said: “Following the positive result of the referendum we will be carefully considering the grounds on which the claim for the judicial review has been made and seeking further legal advice if required. We are confident that the correct process has been followed in this case and will be fully defending this claim.”

Localism?

Mebyon Kernow, the party for Cornwall asks what has happened to the government’s localism policy, as parliament is said to be rushing through a bill to prevent people from deciding how their communities will develop.

MK ends: “St. Ives Council have bravely grasped the nettle and said enough is enough. No more second homes until there are enough affordable homes for local people especially youngsters. They have done this by a strictly legal process via a neighbourhood plan and a referendum and gained overwhelming support. Many other Cornish Town and Parish Councils now want to join in”.

 

Government collaboration can effectively address the housing crisis

tony croft stonesfield housing trust

Tony Crofts, has a noteworthy record in setting up housing  via the Stonesfield Community Trust in 1983. It now owns 15 dwellings for letting at affordable rents to young working couples, and single people of all ages, including single parents, the village Post Office and the village pre-school premises, and is celebrated as the first successful community land trust set up in Britain since Letchworth Garden City in 1903.

“The free market free-for-all in housing has failed” according to Labour leadership candidate Jeremy Corbyn. He continues, “ We need to be clear what we mean by ‘affordable’ – no longer should ‘affordable’ mean near-market levels under the doublespeak the government has promoted. Social rents in high-demand areas are typically a third to half the market rate, while so-called ‘affordable’ rents are up to 80% of private rents”.

He wrote in the Friend, 7 August 2015, “government is not going to solve the housing crisis because it clings to its market philosophy. When they talk about ‘affordable homes’, they are only talking about selling houses”. Crofts points out that a large section of the population can’t afford mortgages; what is needed is a large supply of community owned, permanently-affordable homes to rent. Housing associations were initially set up to provide decent homes for people in need, but many are developing into businesses that sell or rent at market levels. Jeremy Corbyn advocates returning them to their original purpose.

Both of criticise the Right to Buy legislation introduced in 1979 – since when over a million council houses have been sold at a discount. Corbyn points out that a third of these have ended up in the hands of buy-to-let landlords who relet them at higher rents.

He adds that even in areas of acute housing shortage there is land that has planning permission but is not being developed: “This is known as landbanking – a practice that Conservative London Mayor Boris Johnson has described as ‘pernicious’. We should consider introducing a Land Value Tax on undeveloped land that has planning permission, and ‘use it or lose it’ measures on other brownfield sites, to act as a disincentive to landbanking and to raise public funds for house-building. Councils should also be allowed to compulsorily purchase (CPO) sites at a fair value if their owners are not developing them”.]

Jeremy Corbyn writes in his Housing Policy document:

jc housing cover“Over 3.5 million people in Britain live in fuel poverty. Excess winter deaths are 23% higher than in Sweden, despite our milder winters. Retrofitting homes will reduce this toll of ill-health, unnecessary deaths and avoidable carbon emissions.

“Britain needs more energy efficient housing – both in current housing stock and new build. It means ensuring all homes are properly insulated. The model for this should be the Warm Zones approach of Kirklees council (between 2007-2010) which installed loft and cavity wall insulation across the Borough, for free.

french roofs plants“We also need new incentives – and obligations – to raise housing standards in the worst parts of the private rented sector. . . Zero carbon homes should become the norm. France now requires even commercial buildings to have roofs covered in either plants or solar panels. Germany uses its equivalent of the Green Investment Bank to drive (and de-risk) high energy efficiency standards. Denmark will not accept planning applications for new buildings dependant on fossil fuels. The Netherlands requires buildings to be flood-resistant. Britain needs to future-proof its housing standards.

“As with so many other policy areas, housing requires joined up policy between government departments, working with devolved government and local councils. The free market free-for-all in housing has failed. Only the government is able to play the strategic, co-ordinating role to tackle the housing crisis.

‘The homes we need’: safeguard social housing, build on brownfield sites

“A civilised society should be so ordered that every person has secure housing”

The FT reports that the Scottish parliament has voted to “safeguard Scotland’s social housing stock for the benefit of citizens today and for our future generations”. Its local authorities own over 300,000 social housing units.

Scotland had already restricted the right to buy in areas where social housing shortages were acute and in 2001 reduced the discount to houses’ market price to £15,000 or less.

margaret burgess msp housingHowever, the prohibition on using the purchase price to fund the building of new social housing made it more difficult for local authorities to provide suitable homes for disadvantaged groups and later generations of tenants.

Margaret Burgess, housing minister [far right] therefore said earlier this year: “With 185,000 people on waiting lists for council and housing association houses, we can no longer afford to see the social sector lose badly needed homes”.

In May, Shaun Spiers, Chief Executive of the Campaign to Protect Rural England (CPRE) wrote to the FT pointing out that successive major reforms in recent years have not led to an increase in housing output. He criticised the political corporate reluctance to build on brownfield sites because they believe that ‘no one wants to live on them’. He continued:

Edinburgh“Our most successful cities (Edinburgh, number one above) are full of people happily living on “old industrial sites” whose reclamation makes life better for everyone. But brownfield development is more likely to involve small-scale infill or the regeneration of existing housing estates or high streets than “old industrial sites”. CPRE’s research shows there is suitable brownfield land for at least a million new homes in England, most of it in London and the wider south east: let’s use it”.

He then raises the question of who is going to build the homes we need, saying: “There is absolutely no evidence that the industry is either willing or able to build on the scale promised by the political parties. When we consistently built more than 200,000 houses a year, the state built more than half of them”.

His conclusion? “Unless governments — and distinguished newspapers — focus on who is going to build and pay for the homes we need, the result will be the same as it was after the last round of planning reforms: too few homes built, too much countryside lost”.

In a civilised country there would not be 3.4 million people – c13.5% of its population* – on the housing list

Bearing in mind the tenet that a civilised society should be so ordered that every person has secure housing, it is disturbing to see local councils robbed of their housing stock by political devotion to the corporate sector which favours the landlord interest and delights builders of ugly, expensive, yet ‘poky’ housing.

Having failed to induce charities to take over social care at low prices (Big Society agenda to increase the sector’s role in public service provision), government has reduced their funding and is now attempting to break up the housing trusts set up by philanthropists. Government proposals will eventually benefit the landlord and corporate building sector by destroying the cherished legacies of philanthropic groups and individuals, the Guinness Partnership, the Fry Housing trust, Aster, B3Living, Midland Heart, Orbit, Poplar HARCA, Riverside, Sovereign, SpectrumTrafford Housing Trust, the Haig Housing Trust and the Bournville Village Trust (below).

bournville social housingFurther questions:

  • Will they hand over the sort of unsaleable accommodation provided by the Church Housing Trust to Serco or G4S?
  • Will much of the Peabody Group’s huge social housing provision pass eventually into the hands of private landlords?

Deplorable case history in brief:

About 800,000 housing association tenants already have a “right to acquire” their homes. Phoenix Community Housing, in south-east London, retains only a small proportion of the proceeds from each right-to-buy sale under current legislation. One of its homes valued at £205,000 in 2014 was sold through right to buy for £105,000, so the housing association only received £27,332 – far short of the amount needed to build a replacement. Those who cannot afford the ‘right to buy’ housing will be driven to the expensive private renting sector which will happily receive the extra taxpayer subsidy.

The government states that every house purchased will be replaced “on a one-for-one basis”

Sadly, their track record does not instil confidence; Patrick Collinson records an admission by the Department for Communities and Local Government that, though 1.88m council homes in England have been sold since right to buy was introduced – which is 37% of the total stock of council homes – local authorities have built just 345,000 homes over the same period. They were hamstrung by central government restrictions on the use of money derived from the right to buy sales of local council housing.

If government means to keep its word this time, profit-driven building corporations will demand subsidies – taxpayers’ money – to induce them to build the social housing needed and promised by government.

Whilst these proposals will not unduly disturb government grandees with second and third homes inherited, acquired or bestowed [latest taxpayer funded stately home in the Cotswolds ironically for unelected minister for social equality], they will give no help to the 3.4 million people now on the national waiting list for social housing in England.

*!3.5% derived from: http://worldpopulationreview.com/countries/en152feggland-population/

For background information: http://www.theguardian.com/society/2015/apr/14/right-to-buy-housing-associations-your-questions-answered

Will Government consider new tools for the Bank of England?

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The first proposal has been made by Mark Blyth, Eastman Professor of Political Economy at Brown University; Eric Lonergan, Fund manager, M&G Investments; and Simon Wren-­Lewis, Professor of Economic Policy at the Blavaynik School of Government, Oxford University.

Stimulating demand – QE for the people

They note that government policy is based upon a belief that now the crisis is over, the private sector will flourish and interest rates gradually normalise. But rather than relying on policy-­making based on hope, the writers propose that the government legislates to enable the Bank of England to make payments directly to the household sector – quantitative easing [QE] for the people. They refer to evidence that transfers to the household sector have a great impact on demand; consumers appear to spend between a third and a half of any cash windfalls.

Funding job creation

Positive Money adds to this, “When new money is created, it should be used to fund vital public services or provide finance to businesses, creating jobs where they’re needed, instead of being used to push up house prices or speculate on the financial markets . . .”. This proposal would enable the increased household demand to be met by domestic suppliers, reducing the trade deficit.

And transforming Britain’s buildings and energy supply

The Green New Deal Group advocates that a programme of ‘green quantitative easing,’ rather than propping up failing banks, could help to reduce the public debt and kick-start the transformation of the UK’s energy supply and housing stock, creating thousands of new green-collar jobs.

bank england logo

Will government expand the Bank’s mission: “Promoting the good of the people of the United Kingdom by maintaining monetary and financial stability” by adding purposeful work for all, including the building of an environmentally sustainable housing and energy supply?