We need to talk about the British property cult

Something should be done about the housing crisis before it's too late.

I was discussing the implications of the British Government’s recent spending review for housing associations when news of the civil unrest in Egypt started to come through. The housing crisis is much debated and its scale and significance are well recognised.We wondered whether the issue would ever lead to widespread protests. We started thinking about the poll tax riots of the 1990s which effectively put paid to Prime Minister Thatcher. Would the bedroom tax lead to similar unrest?

No: on the whole the people affected are either too old or too poor to protest with any force. More importantly the sentiment of the vocal masses is consumed by the UK’s one permitted greed: ownership.

But what will happen when a majority of people expecting to own a house find themselves not just priced out but physically excluded by a lack of available housing? These will be the children of the people with most influence over policy and public order and not just the weak, the poor and the vulnerable. This may offer a glimmer of hope to the CEOs of those housing associations that are neither too big to fail nor niche enough to be essential.

There are already indications some policy makers have seen that the demographics are shifting. As Janan Ganesh wrote in the Financial Times last week, it is inevitable that taxation’s focus will shift from income to assets. This has already started with increases to stamp duty on luxury houses and an end to the Council Tax discount on second homes. Income taxes are being reduced at both ends of the income scale.

Home ownership cuts to the heart of the conundrum facing the housing associations that provide the bulk of the UK’s social housing. Investors much prefer the yields achieved with privately owned housing to the lower, albeit steadier, returns offered by housing associations. Yes, this is changing but not quickly and not for all. The result is that few of the existing housing associations will be able to fund expansion and therefore few will survive the coming rigours of a mixed-economy market.

The obstacle is obvious. If the UK’s housing stock were to increase to meet demand then house prices would stop rising and the "investment" potential that drives almost every purchase and every single mortgage decision would be diminished. And no-one with a current investment, whether as a lender or an owner, will tolerate this. The success of the UK’s housing ladder is dependent on it being pulled up higher and higher with each generation. Like main-frame computers in the 1980s, residual values are always predicted to be far greater than the purchase price. This is a problem that has been known for decades, as David Miles points out in his Bank of England Report. The report also highlights that the problem gets worse as population density increases. Not only will house-price rises greatly outpace wage inflation, land availability will become even scarcer. Housing associations will have to fight for land, for financing and for affluent tenants able to afford the ever rising rents. Something has to give.

Will this really pave the way for a new levy on housing and an assault on the British property cult? If so perhaps the usual restraint will crumble and we will see waves of street protests, albeit more Glastonbury meets Glyndebourne rather than Tahrir Square meets Jarrow March.

Housing associations will have to fight for land, for financing and for affluent tenants able to afford the ever rising rents. Photograph: Getty Images

Spencer Neal is a reformed publisher who now advises on media and stakeholder relations at Keeble Brown. He writes about the ironies and hypocrisies that crop up in other peoples' businesses. He is also an optimist.

Photo: Getty Images
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The Fire Brigades Union reaffiliates to Labour - what does it mean?

Any union rejoining Labour will be welcomed by most in the party - but the impact on the party's internal politics will be smaller than you think.

The Fire Brigades Union (FBU) has voted to reaffiliate to the Labour party, in what is seen as a boost to Jeremy Corbyn. What does it mean for Labour’s internal politics?

Firstly, technically, the FBU has never affliated before as they are notionally part of the civil service - however, following the firefighters' strike in 2004, they decisively broke with Labour.

The main impact will be felt on the floor of Labour party conference. Although the FBU’s membership – at around 38,000 – is too small to have a material effect on the outcome of votes themselves, it will change the tenor of the motions put before party conference.

The FBU’s leadership is not only to the left of most unions in the Trades Union Congress (TUC), it is more inclined to bring motions relating to foreign affairs than other unions with similar politics (it is more internationalist in focus than, say, the PCS, another union that may affiliate due to Corbyn’s leadership). Motions on Israel/Palestine, the nuclear deterrent, and other issues, will find more support from FBU delegates than it has from other affiliated trade unions.

In terms of the balance of power between the affiliated unions themselves, the FBU’s re-entry into Labour politics is unlikely to be much of a gamechanger. Trade union positions, elected by trade union delegates at conference, are unlikely to be moved leftwards by the reaffiliation of the FBU. Unite, the GMB, Unison and Usdaw are all large enough to all-but-guarantee themselves a seat around the NEC. Community, a small centrist union, has already lost its place on the NEC in favour of the bakers’ union, which is more aligned to Tom Watson than Jeremy Corbyn.

Matt Wrack, the FBU’s General Secretary, will be a genuine ally to Corbyn and John McDonnell. Len McCluskey and Dave Prentis were both bounced into endorsing Corbyn by their executives and did so less than wholeheartedly. Tim Roache, the newly-elected General Secretary of the GMB, has publicly supported Corbyn but is seen as a more moderate voice at the TUC. Only Dave Ward of the Communication Workers’ Union, who lent staff and resources to both Corbyn’s campaign team and to the parliamentary staff of Corbyn and McDonnell, is truly on side.

The impact of reaffiliation may be felt more keenly in local parties. The FBU’s membership looks small in real terms compared Unite and Unison have memberships of over a million, while the GMB and Usdaw are around the half-a-million mark, but is much more impressive when you consider that there are just 48,000 firefighters in Britain. This may make them more likely to participate in internal elections than other affiliated trade unionists, just 60,000 of whom voted in the Labour leadership election in 2015. However, it is worth noting that it is statistically unlikely most firefighters are Corbynites - those that are will mostly have already joined themselves. The affiliation, while a morale boost for many in the Labour party, is unlikely to prove as significant to the direction of the party as the outcome of Unison’s general secretary election or the struggle for power at the top of Unite in 2018. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.