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.

Photo: Getty
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The end of loyalty: why are we still surprised when politicians betray each other?

There was Labour’s attempted coup, now the cabinet is in civil war. Have British politicians always been so openly disloyal?

Politicians have always had a reputation for backstabbing, but recently Westminster has been a battleground of back, front and side-stabbing in all parties. The shadow cabinet trying to oust Jeremy Corbyn after the EU referendum; Michael Gove abandoning Boris Johnson to make his own Tory leadership bid; and now Johnson himself derailing Theresa May’s set-piece Brexit speech with his Telegraph essay on the subject – and rumours of a resignation threat.

On the surface, it seems Brexit has given politicians licence to flout cabinet collective responsibility – the convention that binds our ministers to showing a united front on government policy.

The doctrine of cabinet collective responsibility was outlined in the Ministerial Code in the early Nineties, but it became a convention in the late 19th century “the way in which we talk about it still today, in terms of people failing to adhere to it”, says the Institute for Government’s Dr Cath Haddon, an expert in the constitutional issues of Whitehall.

It even goes back earlier than that, when the cabinet would have to bond in the face of a more powerful monarch.

But are we witnessing the end of this convention? It looks like we could be living in a new age of disloyalty. After all, the shadow cabinet was allowed to say what it liked about its leader over nearly two years, and Johnson is still in a job.

An unfaithful history

“I think it’s nothing new,” says Michael Cockerell, who has been making political documentaries and profiles for the BBC since the Seventies. “If you think back in time to Julius Caesar and all the rest of it, this loyalty to the leader is not something that automatically happens or has been normal both in history and modern democracies – there have always been rebels, always been ambitious figures who all work out exactly how far they can go.”

He says the situation with Johnson reminds him of Tony Benn, who was an outspoken cabinet secretary under Harold Wilson and Jim Callaghan in 1974-79. “He knew exactly how far he could push it without being sacked, because of the old thing about having him inside the tent pissing out, rather than outside the tent, pissing in.”

Cockerell believes that Johnson, like past cabinet rebels, knows “how far” he can go in defying May because she’s in a precarious position.

“Often if a prime minister is weak, that’s when the ambitious members of the cabinet can parade their disloyalty while still claiming they’re still being loyal,” he says. “Most people who are disloyal always profess their loyalty.”

The peer and former Lib Dem leader Ming Campbell, who has been in politics since the early Seventies, also believes “it’s always been like this” in terms of disloyalty in British politics.

He gives Wilson’s governments as a past example. “There was a fair amount of disloyalty within the cabinet,” he says. “I remember it being suggested by someone that the cabinet meetings were often very, very quiet because people were so busy writing down things that they could put into print sometime later.”

“Fast-forward to John Major and the ‘bastards’,” he says, recalling the former Conservative prime minister’s battle with trouble-making Eurosceptic cabinet members in 1993.

Dr Haddon adds the examples of Margaret Thatcher being brought down by her cabinet (and tackling the “wets and dries” in her early years as PM), and Tony Blair and Gordon Brown’s teams briefing against each other.

She believes “nothing changes” regarding disloyalty because of the way British government works. “The UK system really provokes this sort of situation,” she says of Johnson. “Because we have empowered secretaries of state, we have a sort of federalist structure, and then we have the prime minister in the position of primus inter pares [first among equals].”

The idea of the prime minister being a fully empowered leader in control of a team is a “modern concept”, according to Dr Haddon. “If you go back into the nineteenth century, ministers were very much heads of their own little fiefdoms. We’ve always had this system that has enabled ministers to effectively have their own take, their own position in their particular roles, and able to speak publicly on their perspective.”

She says the same happens in the shadow cabinet because of the nature of opposition in the UK. Shadow ministers don’t receive tailored funding for their work, and are therefore “often very much reliant upon their own team” to develop policy proposals, “so they become quite autonomous”.

How disloyalty has changed

However, disloyalty plays out differently in modern politics. Campbell points out that with politics developing in real time online and through 24-hour news, there is a far greater journalistic focus on disloyalty. “Previously it would’ve been in the Sunday papers, now you get it 24 hours a day, seven days a week,” he says.

Dr Haddon believes pronouncements of disloyalty are more “overt” than they were because of the way we communicate on social media. Platforms like Twitter discourage the “coded messages” of past disloyal cabinet secretaries, and show infighting more starkly.

“There is this immediacy of reaction,” she says. “And that it’s constrained to 140 characters leads people to ever more brief, succinct declarations of their position. We are also living through a period in which, dare I say, hyperbole and strength of position are only exaggerated by that medium. There’s something in that which is very different.”

And even though British political history is littered with attempted coups, betrayals and outspoken ministers – particularly over Europe – there is a sense that the rulebook has been thrown out recently, perhaps as Brexit has defied the status quo.

Collective responsibility and the idea of the prime minister as primus inter pares are conventions, and conventions can be moulded or dropped completely.

“The constitution is open for discussion now to an extent that I can’t remember,” says Campbell. “You’ve got arguments about independence, constitutional arguments which arise out of Brexit, if we leave. In those circumstances, it’s perhaps not surprising that the constitutional convention about cabinet responsibility comes under strain as well.

“If you’ve got a constitution that depends upon the observance of convention, then of course it’s much easier to depart from these if you choose,” he adds. “And in the present, febrile atmosphere of constitutional change, maybe it’s hardly surprising that what is thought to be a centrepiece is simply being disregarded.”

Anoosh Chakelian is senior writer at the New Statesman.