Nick Clegg: charlatan minor

The Deputy Prime Minister's speech on growth was empty waffle.

I have had emails from several readers asking me for my views on Nick Clegg's speech on growth. It was 2,460 words long and free of content. All in the week when my friend Polly Toynbee in her Guardian column yesterday called David Cameron "the great charlatan". I guess that makes Clegg "charlatan minor".

The speech followed what is becoming a common theme in declarations about the economy from Cameron, Osborne and Clegg.

First, blame Labour for the mess. "They left us well and truly in the red." And then emphasise how large interest payments are and give examples of what alternatives the money could have been spent on. "We could buy a new Chinook helicopter every day," he said -- although why we would want to do that, he didn't make clear. He probably wants one to fly around the country in so he can avoid talking to people who want to question him on his various U-turns.

Second, claim that this is creating a crisis for our children and that morality is on their side. And ludicrously claim that what is going on is "theft", by emphasising only the liabilities side of the balance sheet while ignoring the asset side. From Clegg's speech:

There is a moral dimension to this question too. I have never understood those who say it's more "progressive" to delay tackling the deficit, so that we shuffle off responsibility for our debts to the next generation to deal with. This strikes me as little short of intergenerational theft. It is the equivalent of loading up our credit card with debt and then expecting our kids to pay it off.

Yet he fails to mention that our kids also have to suffer from an intergenerational transfer of assets including roads, hospitals, airports, schools, public health and our entire infrastructure.

Third, say there is no alternative to the the government's fiscal plans and repeat several times how sincere and determined the government is to see this thing through to the end. For example: "The coalition government is determined to eliminate the deficit," and, "We are determined on our course of action to tackle the deficit," plus "As a government, we are determined to get this right". Really?

Fourth, trot out as many mindless platitudes as possible that sound good but don't actually mean anything. Waffle is the watchword.

"We seek nothing less than a new model of sustainable growth."

"We are in government to lay the foundations for a better, stronger economy. People want their politicians to be leaders, not accountants."

"A sound economy is built on diverse, strong regions and diverse, strong sectors".

"We need, in short, a grown-up approach to growth, based on hard-headed analysis -- in place of the "pick-and-mix" approach that has characterised too much recent government activity, grabbing at instant initiatives rather than taking the big decisions that really count."

I have no clue what that means.

Finally, talk in broad terms only and provide no concrete proposals. Clegg even went as far as to say: "I do not think we should apologise for treating this issue with the utmost seriousness." We would prefer you to have a plan -- any plan -- than this empty-headed nonsense.

"We need to be clear about the fundamental factors that drive economy growth; clear about the areas in which government can effectively play a role; and clear about the interventions than make the most difference."

Never fear, by Budget time at the end of March they will have worked all that out! Believe that and you will believe anything.

Clegg claimed there are "four important steps needed to take to build a new economy":

* Weaning ourselves off debt-financed growth, and onto investment-led prosperity;
* Investing in the 'hard' infrastructure that underpins growth, such as transport;
* Cultivating the 'soft' infrastructure made up of knowledge, skills and education that businesses need;
* Balancing regions and sectors, instead of putting all our economic eggs in one basket.

OK, so we need to invest in the infrastructure and people and move to a new model of growth which doesn't exist currently, plus do some stuff for the regions and manufacturing and help chicken farmers. And don't borrow but invest a lot.

And all of this by next Thursday. You must be joking.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

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The tale of Battersea power station shows how affordable housing is lost

Initially, the developers promised 636 affordable homes. Now, they have reduced the number to 386. 

It’s the most predictable trick in the big book of property development. A developer signs an agreement with a local council promising to provide a barely acceptable level of barely affordable housing, then slashes these commitments at the first, second and third signs of trouble. It’s happened all over the country, from Hastings to Cumbria. But it happens most often in London, and most recently of all at Battersea power station, the Thames landmark and long-time London ruin which I wrote about in my 2016 book, Up In Smoke: The Failed Dreams of Battersea Power Station. For decades, the power station was one of London’s most popular buildings but now it represents some of the most depressing aspects of the capital’s attempts at regeneration. Almost in shame, the building itself has started to disappear from view behind a curtain of ugly gold-and-glass apartments aimed squarely at the international rich. The Battersea power station development is costing around £9bn. There will be around 4,200 flats, an office for Apple and a new Tube station. But only 386 of the new flats will be considered affordable

What makes the Battersea power station development worse is the developer’s argument for why there are so few affordable homes, which runs something like this. The bottom is falling out of the luxury homes market because too many are being built, which means developers can no longer afford to build the sort of homes that people actually want. It’s yet another sign of the failure of the housing market to provide what is most needed. But it also highlights the delusion of politicians who still seem to believe that property developers are going to provide the answers to one of the most pressing problems in politics.

A Malaysian consortium acquired the power station in 2012 and initially promised to build 517 affordable units, which then rose to 636. This was pretty meagre, but with four developers having already failed to develop the site, it was enough to satisfy Wandsworth council. By the time I wrote Up In Smoke, this had been reduced back to 565 units – around 15 per cent of the total number of new flats. Now the developers want to build only 386 affordable homes – around 9 per cent of the final residential offering, which includes expensive flats bought by the likes of Sting and Bear Grylls. 

The developers say this is because of escalating costs and the technical challenges of restoring the power station – but it’s also the case that the entire Nine Elms area between Battersea and Vauxhall is experiencing a glut of similar property, which is driving down prices. They want to focus instead on paying for the new Northern Line extension that joins the power station to Kennington. The slashing of affordable housing can be done without need for a new planning application or public consultation by using a “deed of variation”. It also means Mayor Sadiq Khan can’t do much more than write to Wandsworth urging the council to reject the new scheme. There’s little chance of that. Conservative Wandsworth has been committed to a developer-led solution to the power station for three decades and in that time has perfected the art of rolling over, despite several excruciating, and occasionally hilarious, disappointments.

The Battersea power station situation also highlights the sophistry developers will use to excuse any decision. When I interviewed Rob Tincknell, the developer’s chief executive, in 2014, he boasted it was the developer’s commitment to paying for the Northern Line extension (NLE) that was allowing the already limited amount of affordable housing to be built in the first place. Without the NLE, he insisted, they would never be able to build this number of affordable units. “The important point to note is that the NLE project allows the development density in the district of Nine Elms to nearly double,” he said. “Therefore, without the NLE the density at Battersea would be about half and even if there was a higher level of affordable, say 30 per cent, it would be a percentage of a lower figure and therefore the city wouldn’t get any more affordable than they do now.”

Now the argument is reversed. Because the developer has to pay for the transport infrastructure, they can’t afford to build as much affordable housing. Smart hey?

It’s not entirely hopeless. Wandsworth may yet reject the plan, while the developers say they hope to restore the missing 250 units at the end of the build.

But I wouldn’t hold your breath.

This is a version of a blog post which originally appeared here.

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