Gibraltar is just displacement activity for Spain

Trying to distract itself from the financial crisis.

Normally Spanish late night television is like Hello magazine in debate form. A group of journalists sit around and shout at each other about which Matador is dating which model. It’s light it’s fluffy and it goes on for hours.

Last week though it was all a little different as the debate turned from Spain’s equivalent of Katy Price to a large inhabited rock at the very tip of the country. In the UK the story of Gibraltar has been covered with a hint of incredulity and as the situation in Syria intensifies is less often in the news. But Spanish media continue to cover it, and with increasing levels of belligerence.

As an example in the four days up to August 28th Spanish television channel Telecinco, always slightly right leaning perhaps, had covered the story in its news coverage no less than 8 times. It’s got the attention of the Spanish populace in a way that it never has in the UK.

However almost everyone you speak to in the Spanish capital knows it’s all a smoke screen for the major problems in the country. In particular the word on the streets of Madrid is that a dispute with Gibraltar couldn’t come at a better time for the scandal hit government of Mariano Rajoy.

Rajoy and his party, the Partido Popular (PP,) have been accused of taking backhanders and general corruption in a story that just won’t go away. Worse he’s presiding over the worst financial crisis in the country’s democratic history. Perhaps it’s significant then that it is the central government that has complained the most vehemently over alleged damage to Spanish fishing. Raising what was effectively a local fishing dispute to a matter that could yet go before the United Nations.

Significant or not, suddenly the Spanish are talking about little else (well there is one other subject but more on that later.) Rarely now do you overhear conversations in Madrid about the "crisis" or the employment situations of their friends and children. And yet in the same breath Spaniards mention that they know it’s all a distraction. The Spanish wanted, no needed, something else to occupy their minds other than one in four being out of work, over half the youth unable to find employment and a government and monarchy deeply embroiled in corruption scandals.

For many though there was a sense of disappointment that the argument was being led by a beleaguered government and on a subject normally only beloved of the right. So when the national obsession came up with a new distraction the smiles spread.

To many outside of Spain the distraction of one club seeking to buy a talented welsh footballer for a rumoured £86 million seems hardly something that would grip a nation.

Except, for the Spanish the club in question, Real Madrid is not just a football team. It’s a national icon and football is a way of life. To many it seems insane in a crisis riven economy to spend so much on one man. But the debate in Spain about the cost of Gareth Bale lasted 5 minutes.

Because Spaniards on the whole, and Real fans in particular, didn’t see it as a waste of money, they saw it as a source of pride. The reason was for the Spanish the acquisition of Bale is a different type of distraction to Gibraltar. It’s one where Spain was no longer a nation in suffering but one where they could compete with, and beat, the rest of the world. It’s just the tonic the nation needed.

Now all of us should just hope Spain doesn’t think that the Gibraltar situation is another where they can take on the world and beat them. But then they already know it’s just one big distraction, and they’d probably prefer to watch the football anyway.

Mike Cobb is a reporter at Private Banker International

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As long as the Tories fail to solve the housing crisis, they will struggle to win

The fall in the number of homeowners leaves the Conservatives unable to sell capitalism to those with no capital. 

For the Conservatives, rising home ownership was once a reliable route to government. Former Labour voters still speak of their gratitude to Margaret Thatcher for the Right to Buy scheme. But as home ownership has plummeted, the Tories have struggled to sell capitalism to a generation without capital. 

In Britain, ownership has fallen to 63.5 per cent, the lowest rate since 1987 and the fourth-worst in the EU. The number of private renters now exceeds 11 million (a larger number than in the social sector). The same policies that initially promoted ownership acted to reverse it. A third of Right to Buy properties fell into the hands of private landlords. High rents left tenants unable to save for a deposit.

Rather than expanding supply, the Tories have focused on subsidising demand (since 2010, housebuilding has fallen to its lowest level since 1923). At a cabinet meeting in 2013, shortly after the launch of the government’s Help to Buy scheme, George Osborne declared: “Hopefully we will get a little housing boom and everyone will be happy as property values go up”. The then-chancellor’s remark epitomised his focus on homeowners. Conservative policy was consciously designed to enrich the propertied.

A new report from the Resolution Foundation, Home Affront: housing across the generations, shows the consequences of such short-termism. Based on recent trends, less than half of millennials will buy a home before the age of 45 compared to over 70 per cent of baby boomers. Four out of every ten 30-year-olds now live in private rented accommodation (often of substandard quality) in contrast to one in ten 50 years ago. And while the average family spent just 6 per cent of their income on housing costs in the early 1960s, this has trebled to 18 per cent. 

When Theresa May launched her Conservative leadership campaign, she vowed to break with David Cameron’s approach. "Unless we deal with the housing deficit, we will see house prices keep on rising," she warned. "The divide between those who inherit wealth and those who don’t will become more pronounced. And more and more of the country’s money will go into expensive housing instead of more productive investments that generate more economic growth."

The government has since banned letting agent fees and announced an additional £1.4bn for affordable housing – a sector entirely neglected by Cameron and Osborne (see graph below). Social housing, they believed, merely created more Labour voters. "They genuinely saw housing as a petri dish for voters," Nick Clegg later recalled. "It was unbelievable." 

But though housebuilding has risen to its highest levels since 2008, with 164,960 new homes started in the year to June 2017 and 153,000 completed, this remains far short of the 250,000 required merely to meet existing demand (let alone make up the deficit). In 2016/17, the government funded just 944 homes for social rent (down from 36,000 in 2010). 

In a little-noticed speech yesterday, Sajid Javid promised a "top-to-bottom" review of social housing following the Grenfell fire. But unless this includes a substantial increase in public funding, the housing crisis will endure. 

For the Conservatives, this would pose a great enough challenge in normal times. But the political energy absorbed by Brexit, and the £15bn a year it is forecast to cost the UK, makes it still greater.

At the 2017 general election, homeowners voted for the Tories over Labour by 55 per cent to 30 per cent (mortgage holders by 43-40). By contrast, private renters backed Labour by 54 per cent to 31 per cent. As long as the latter multiply in number, while the former fall, the Tories will struggle to build a majority-winning coalition. 

George Eaton is political editor of the New Statesman.