Assign the component VirtueMart to a menu item

Search (Editorial)

Wednesday, 21 August 2013 00:00

Free us from the parasites

Millions of people may be languishing on council housing waiting lists, but house-building companies Persimmon and Bovis profits are booming, so all is well with the housing market.

That is the message delivered by TV newsreaders whose features soften into smiles to indicate that such revelations are sunshine stories.

The same goes for news items indicating a rise in house prices - beneficial for those who already own their homes but less so for people looking to buy somewhere to live.

According to IHS Global Insight, average house prices will rise by 3 per cent over the rest of this year, possibly increasing next year by 7 per cent.

At the same time, average pay rises are stagnant at 1 per cent, with workers' incomes having fallen by 5.5 per cent in real terms since the Tories and Liberal Democrats took office in 2010.

Compare that miserable situation with the 40 per cent profits leap from £97 million to £135m in the first half of 2013 enjoyed by Persimmon and the 19 per cent jump to £18.6m for Bovis.

House prices have been boosted by government schemes such as Funding for Lending and Help to Buy, which effectively provide state aid to the housing industry.

But these mechanisms have also encouraged buy-to-let parasitism where speculators are helped to enrich themselves by private tenants paying the mortgages on the extra properties they take on.

Even former Bank of England governor Mervyn King has spotted the inflationary danger posed by Help to Buy and suggested that the scheme should be discontinued in 2017 when it is due for review.

Government ministers and the Bank of England have trumpeted the case for lower interest rates, asserting that this will encourage the private sector to invest.

But British private companies are already awash with cash, sitting on liquid assets of over three-quarters of a trillion pounds that they refuse to commit to boosting the economy.

Low interest, expressed in manageable mortgage rates, can provide some respite to working-class families who are buying their own homes while struggling to cope with higher living costs.

However, chastened by previous housing bubbles, far fewer homeowners are tempted to borrow against perceived equity in their properties to finance major expenditure on cars, household goods and so on.

But this is the government's only means of encouraging economic activity because of its obsession with cutting public expenditure.

Instead of appreciating the necessity of providing everyone with somewhere to live, ministers see housing as just another market in which there will be winners and losers and major profits to be gained by the big corporations that dominate the sector.

Housing charity Shelter's recent warning that fewer than half the houses necessary to tackle a "chronic shortage of homes" in England are being built each year has fallen on deaf ears.

The Labour opposition has spoken out against the exorbitant cost of letting fees imposed on tenants, but, as usual, it falls short of a pledge to end the practice.

Similar reticence to move away from the neoliberal consensus holds it back from pledging to tackle the 5 million-strong council housing waiting list through a determined campaign to drive up provision of local authority homes to rent.

This would put housing need before corporate greed and also stimulate economic activity by putting construction workers into long-term employment.

Search (Editorial)