Second homes: they do more damage than you realise

It’s hard to have a healthy community when locals can’t afford to live there anymore.

I like Oxfordshire - I like it very much. Other than my time at University, I’ve never lived anywhere else, but that’s never really bothered me. Despite the constant presence of David Cameron’s oddly soft looking face (he’s my MP you see, and he never pisses off), the Cotswolds are a fairly lovely place to be. The Hazell line that led to my existence has lived in the same chunk of West Oxfordshire for over three hundred years; it may not mean much in the grand scheme of things, but I do get to indulge in that mildly pretentious sense of rootedness that seems to be elusive for so many.

Obviously I’m not the only one who appreciates the appeal of thatched cottages and winding country lanes; an increasing number of well-off Londoners have warmed to the idea of a country retreat. Why faff about with renting holiday cottages when you can just buy your own? A lovely slice of pastoral bliss, reserved just for you.

An attractive prospect, I’m sure, but it results in what were once homes becoming vacant buildings. The owners contribute nothing to the local area; they spend a weekend enjoying the scenery before popping back off to London to earn some more money. The villages can often feel dead - it’s hard to have a healthy community when locals can’t afford to live there anymore. It’s becoming increasingly common too. The last census found that 165,000 people own a holiday home, 23,000 in Cornwall alone. Within the area of Richmondshire in North Yorkshire almost one-tenth of all properties were listed as second homes.

I don’t want to appear like a pitchfork-clasping yokel, muttering about outsiders - I’ve no problem with anyone integrating themselves wherever they may please. The source of my irritation is the attitude that Britain’s rural landscapes are just conveniently pretty backdrops to be gazed at admiringly, as if they are pre-prepared theme-parks.

The countryside does not exist to look nice for bankers and PR executives - it’s not a cute recreation of Frodo Baggins’s Shire, waiting patiently to be photographed. The countryside has been, and still is, home for communities with their own way of life. For rural Britain to become an empty vista of holiday homes would be a tragedy, one that would negatively affect us all.

Many of the features which holiday home owners find so endearing and quaint face uncertain futures if there’s nobody there to use them. The strain is already taking its toll. In the past year alone one-third of villages have seen a pub or shop close, and once these services are gone, it’s depressingly difficult to establish them again.

One of my favourite books is Lifting the Latch, the memoirs of Montague Abbott (1902–1989), a carter and shepherd who lived his entire life in the small village of Enstone, the same place that my Granddad was born. The book is written in a way that displays Mont’s old Oxfordshire accent, and paints a vivid picture of life as an agricultural worker experiencing the last days of ‘old England’ – the physical toil, the humbleness of personal aspiration, the closeness of the community.

It was a world where the hardness of everyday life required the constant presence of community, people rarely roamed far from the village, and so the place buzzed with activity. It was a hard life, but it was not without its rewards. In the closing pages of the book Mont reflects:

I’ve scratched old England on the back and her’s given me wealth untold. . . Our Enstone, our Oxfordsheer, this England take a lot of beating. ‘Blessed is the man that stoppeth where he be.

I am incredibly grateful that my world stretches infinitely further than Old Mont’s, but it still feels strange to walk through Enstone and barely see a soul. Surely it’s possible to make the transition into a service economy and still retain the essence of the community that used to thrive there? Many rural communities still do, but Enstone certainly feels like a lesser place than it once was. People seem less inclined to ‘scratch old England on the back’ and more disposed to park their sports car on it instead.

I asked the Campaign to Protect Rural England about the problem of overly concentrated second homes. They told me:

We very much support local authorities using the tools available to them, including the ability to charge up to 100 per cent Council Tax on second homes, to try and achieve the right balance in their areas.

Changes to the tax system would definitely be a positive shift, and there are already signs that the government is listening. It was recently announced that the Government’s ‘Help to Buy’ scheme would not include second homes, and the Cornish local authorities have voted to scrap a 10 per cent tax break on the council tax second home owners pay. 

Tax law, however, is not the source of the problem - we live in a society where we believe that we are entitled to ‘have it all’. We are taught that if you can afford it, then you possess the right to anything and everything.

A juicy pay packet does not remove one’s responsibility to wider society. The way we live our lives will always affect those around us. So please, assorted rich people, start viewing the countryside as more than just a pretty place to relax – you’re doing more damage than you know.

 

A view down the high street of Burford in the Cotswolds. Photo: Getty
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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation