Do we actually want to be a society of homeowners?

High rates of home ownership have large negative effects on the labour market. Why are we trying to boost it?

It is widely understood that Britain's housing market is (how to put this delicately) sub-par.

Nearly everyone agrees that there are problems which need fixing. We have a society built around homeowning, in which the average age of a first time buyer is inexorably rising. We have a social housing system which involves the state paying rents to private sector landlords, even as private sector rents are rising faster than inflation. We have a planning regime which is slow enough to deliver judgments that it encourages developers to create "banks" of property with permission, just in case the time comes to build. And widespread as these problems are, they are an order of magnitude worse in London and the South East.

But while there's agreement on the problems – and much discussion about what policies might ease them – there's far less examination of what the ideal housing market would look like.

Would homes be owned by individuals, companies or the state? Would multifamily accommodation (blocks of flats, in other words) make up a higher proportion of the housing mix, or is our love affair with the house permanent? How acceptable is flat sharing? What about room sharing? What are the minimum standards we should accept from new builds? Is the problem that mortgages aren't available, or that house prices are too high? Is the solution to insecure tenancies more secure tenancies or fewer tenancies full stop?

These questions seem uncomfortably micro-level to be discussing, but at least some of them are crucial to answer before we can make a real stab at implementing effective reforms to housing policy. And the most important one of all is the one which no-one wants to address: why do we want to own our own homes?

Obviously, given current policy, the answer is clear. The last two decades have been about shoring up the housing market, guaranteeing house prices will never fall, and making it easier to buy in. Conversely, renting has remained as insecure as ever, but with more and more people renting more and more houses, it's a landlord's market.

But if policy could be reformed to make it harder to buy a house but in a way which made renting a far better choice, should it?

One way to answer the question is to look at the wider effects of owning or renting your home. A paper from our own David Blanchflower and the University of Warwick's Andrew Oswald does just that, examining the effects of high rates of home-ownership on one aspect of the economy: the labour market.

Oswald argued twenty years ago that a lot of people owning their own houses would result in higher rates of unemployment. The reasoning is intuitive: a home is a burden, keeping you tied to one place; and a mortgage keeps you tied to a minimum salary. Insofar as it is easier to move out of a rental property than it is to sell a house and buy a new one, we would then expect people who own homes (all else being equal) to be less flexible about the sort of work they can take – and so we'd expect them to be more likely to be unemployed.

Aggregate it up, and we would expect economies with higher levels of home-ownership to have higher unemployment rates. And that's what Blanchflower and Oswald have found:

We find that rises in the home-ownership rate in a US state are a precursor to eventual sharp rises in unemployment in that state… A doubling of the rate of home-ownership in a US state is followed in the long-run by more than a doubling of the later unemployment rate.

Oswald's 1990s argument is backed up by the fact that areas with higher ownership have lower mobility – as we would expect – but there are two further effects that the authors find.

The first is that high home-ownership areas have longer commute-to-work times. That could be because home-ownership tends to promote less dense housing, due to the difficulties in selling rather than renting multifamily accommodation, and the contrary difficulties in renting rather than selling single houses.

The second is that high home-ownership areas have lower rates of business formation. The authors speculate that "this may be due to zoning or NIMBY effects", and offer it as a point for future research.

The conclusion, that "the housing market can generate important negative externalities upon the labor market", poses some tricky questions for nearly everyone discussing housing policy in Britain today. We may still want to build more, lower rents, and improve quality of life for tenants; but this research suggests that, rather than making it so that more people can buy their homes, we should make it so that more people don't feel like they have to buy their own homes. In short, make renting fairer, not buying easier.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Staying in the EU would make it easier to tackle concerns about immigration, not less

Brexit is not only unlikely to deliver the control people want, it may actually undermine people’s faith in the system even further.

As Theresa May prepares to set out her latest plan for Brexit in Florence on Friday, those on all sides of the debate will wait to see if there are answers to fundamental questions about Britain’s future outside of the EU. Principle among those is how the UK immigration system will work. How can we respond to Leave voters’ concerns, while at the same time ensuring our economy isn’t badly damaged?

We must challenge the basic premise of the Vote Leave campaign: that dealing with public’s concern about immigration means we have to leave the EU and Single Market.

In fact the opposite is true. Our study into the options available to the UK shows that we are more likely to be able to restore faith in the system by staying within Europe and reforming free movement, than by leaving.

First, there are ways to exercise greater control over EU migration without needing to change the rules. It is not true that the current system of free movement is "unconditional", as recently claimed in a leaked Home Office paper. In fact, there is already considerable scope under existing EU rules to limit free movement.

EU rules state that in order to be given a right to reside, EU migrants must be able to demonstrate proof that they are either working, actively seeking work, or self-sufficient, otherwise they can be proactively removed after three months.

But unlike other continental systems, the UK has chosen not to operate a worker registration system for EU nationals and thus has no way of tracking where they are or what they’re doing. This could be changed tomorrow, if the government were so minded.

Other reforms being discussed at the highest levels within Europe would help deal with the sense that those coming to the UK drive down wages and conditions. The UK could make common cause with President Macron in France, who is pushing for reform of the so-called "Posted Workers Directive", so that companies seeking to bring in workers from abroad have to pay those workers at the same rate as local staff. It could also follow the advice of the TUC and implement domestic reforms of our labour market to prevent exploitation and undercutting.

Instead, the UK government has chosen to oppose reform of the Posted Workers Directive and made it clear that it has no interest in labour market reform.

Second, achieving more substantive change to free movement rules is not as implausible as often portrayed. Specifically, allowing member states to enact safeguards to slow the pace of change in local communities is not unrealistic. While the principle of free movement is a cornerstone of the European project, how it is applied in practice has evolved. And given that other countries, such as France, have expressed concern and called for reform, it is likely to evolve further.

The reforms to free movement negotiated by David Cameron in 2016 illustrate that the EU Commission can be realistic. Cameron’s agreement (which focused primarily on benefits) also provides an important legal and political precedent, with the Commission having agreed to introduce "safeguards" to respond to "situations of inflow of workers from other Member States of an exceptional magnitude over an extended period of time".

Similar precedents can be found within a number of other EU agreements, including the Acts of Accession of new Member States, the European Economic Area (EEA) Agreement and the Treaty on the Functioning of the European Union (TFEU). The UK should seek a strengthened version of Cameron’s "emergency brake", which could be activated in the event of "exceptional inflows" from within the EU. We are not the first to argue this.

Of course some will say that it is unrealistic to expect the UK to be able to get more than Cameron achieved in 2016. But put yourself if in the shoes of the EU. If you believe in a project and want it to succeed, moral imperative is balanced with realism and it hardly needs pointing out that the political context has radically shifted since Cameron’s negotiation.

In contrast, a "hard Brexit" will not deliver the "control of our borders" that Brexiteers have promised. As our report makes clear, the hospitality, food, manufacturing and social care sectors heavily depend on EU workers. Given current employment rates, this means huge labour shortages.

These shortages cannot be wished away with vague assertions about "rejoining the world" by the ultra free-market Brexiteers. This is about looking after our elderly and putting food on our tables. If the UK leaves in April 2019, it is likely that the government will continue to want most categories of EU migration to continue. And whatever controls are introduced post-Brexit are unlikely to be enforced at the border (doing so would cause havoc, given our continued commitment to visa-free travel).  Instead we would be likely to see an upsurge in illegal migration from within the EU, with people arriving at the border as "visitors" but then staying on to seek work. This is likely to worsen problems around integration, whereby migrants come and go in large numbers, without putting down roots.

We can do this a different way. The important issues that most drive public concern about EU migration - lack of control, undercutting, pace of change - can be dealt with either within current rules or by seeking reform within the EU.

The harsh truth is that Brexit is not only unlikely to deliver the control people want, it may actually undermine people’s faith in the system even further.

Some will say that the entire line of argument contained here is dangerous, since it risks playing into an anti-immigrant narrative, rather than emphasising migration’s benefits. This is an argument for the ivory tower, not the real world.

There is a world of difference between pandering to prejudice and acknowledging that whilst EU migration has brought economic benefits to the UK, it has also created pressures, for example, relating to population churn within local communities.

The best way to secure public consent for free movement, in particular, and immigration in general, is to be clear about where those pressures manifest and find ways of dealing with them, consistent with keeping the UK within the EU.

This is neither an attempt at triangulation nor impractical idealism. It’s about making sure we understand the consequences of one of the biggest decisions this country has ever taken, and considering a different course.

Harvey Redgrave is a senior policy fellow at the Tony Blair Institute for Global Change and director of strategy at Crest Advisory.