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Good idea: Starting from scratch

As the jobless count continues to rise, it has been predicted that bank bonuses could reach £6bn. Is this the sign of recovery, or is there an alternative? According to The Great Transition, a report from the New Economics Foundation (, there is.

Making the case for nothing less than a complete restructuring of society and the economy, it expounds the numerous problems of the old system. We were producing too much CO2, consuming too much and working too hard, despite growing inequality. Tying together climate change and social inequality, it predicts that a return to "business as usual", or a finance-driven society, will come at great expense, with up to £2.5trn in costs related to climate change and £4.5trn to social problems by 2050.

This is where it gets utopian, outlining drastic measures by which we could achieve a more equal society and save the planet in the process. Policy proposals start with the "great revaluing": "we need to make 'good' things cheap and 'bad' things very expensive", bringing environmental value to the centre of all decisions.

There is also the "great redistribution": a plan to give everyone a £25,000 community endowment to ensure equal opportunities. Funding would come from taxing inheritance by up to 67 per cent, thus reducing inherited inequality in wealth. If that isn't socialist enough for you, there are distinctly Marxist overtones in the suggestion that "company shares are progressively transferred to employees in a resurgence of mutual and co-operative ownership forms". It argues that markets must reflect social and environmental costs and be rebalanced against the public sector, making the state into "'us' and not 'them'".

Emphasising local production and community life, it suggests that a four-day week should be instituted to allow people to spend more time in their communities and reduce job losses, which will be inevitable as society becomes less profit-driven.

It's nice to see a bit of optimism in these austere times. The Great Transition's proposals are extreme, but that should not detract from the value of its message, which is that to ignore the two ticking time bombs of climate change and global inequality is dangerous and wrong. The report sets out steps that can be taken straight away (in the event that policymakers aren't keen to restructure the entire economy) and recommends that the government agree a global deal on climate change, reduce working hours, and introduce an eco-friendly tax. Well, you've got to start somewhere.

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

This article first appeared in the 02 November 2009 issue of the New Statesman, Mob rule

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How can Britain become a nation of homeowners?

David Cameron must unlock the spirit of his postwar predecessors to get the housing market back on track. 

In the 1955 election, Anthony Eden described turning Britain into a “property-owning democracy” as his – and by extension, the Conservative Party’s – overarching mission.

60 years later, what’s changed? Then, as now, an Old Etonian sits in Downing Street. Then, as now, Labour are badly riven between left and right, with their last stay in government widely believed – by their activists at least – to have been a disappointment. Then as now, few commentators seriously believe the Tories will be out of power any time soon.

But as for a property-owning democracy? That’s going less well.

When Eden won in 1955, around a third of people owned their own homes. By the time the Conservative government gave way to Harold Wilson in 1964, 42 per cent of households were owner-occupiers.

That kicked off a long period – from the mid-50s right until the fall of the Berlin Wall – in which home ownership increased, before staying roughly flat at 70 per cent of the population from 1991 to 2001.

But over the course of the next decade, for the first time in over a hundred years, the proportion of owner-occupiers went to into reverse. Just 64 percent of households were owner-occupier in 2011. No-one seriously believes that number will have gone anywhere other than down by the time of the next census in 2021. Most troublingly, in London – which, for the most part, gives us a fairly accurate idea of what the demographics of Britain as a whole will be in 30 years’ time – more than half of households are now renters.

What’s gone wrong?

In short, property prices have shot out of reach of increasing numbers of people. The British housing market increasingly gets a failing grade at “Social Contract 101”: could someone, without a backstop of parental or family capital, entering the workforce today, working full-time, seriously hope to retire in 50 years in their own home with their mortgage paid off?

It’s useful to compare and contrast the policy levers of those two Old Etonians, Eden and Cameron. Cameron, so far, has favoured demand-side solutions: Help to Buy and the new Help to Buy ISA.

To take the second, newer of those two policy innovations first: the Help to Buy ISA. Does it work?

Well, if you are a pre-existing saver – you can’t use the Help to Buy ISA for another tax year. And you have to stop putting money into any existing ISAs. So anyone putting a little aside at the moment – not going to feel the benefit of a Help to Buy ISA.

And anyone solely reliant on a Help to Buy ISA – the most you can benefit from, if you are single, it is an extra three grand from the government. This is not going to shift any houses any time soon.

What it is is a bung for the only working-age demographic to have done well out of the Coalition: dual-earner couples with no children earning above average income.

What about Help to Buy itself? At the margins, Help to Buy is helping some people achieve completions – while driving up the big disincentive to home ownership in the shape of prices – and creating sub-prime style risks for the taxpayer in future.

Eden, in contrast, preferred supply-side policies: his government, like every peacetime government from Baldwin until Thatcher’s it was a housebuilding government.

Why are house prices so high? Because there aren’t enough of them. The sector is over-regulated, underprovided, there isn’t enough housing either for social lets or for buyers. And until today’s Conservatives rediscover the spirit of Eden, that is unlikely to change.

I was at a Conservative party fringe (I was on the far left, both in terms of seating and politics).This is what I said, minus the ums, the ahs, and the moment my screensaver kicked in.

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