The Journal of Lynton Charles, Fiduciary Secretary to the Treasury

Thursday We are an hour into the flight home to London, and I am writing this from the relative discomfort of the first-class compartment in a British Airways plane. All around me are either relieved Britons, glad to be safely en route for the certainties of home, or strange, rich Russians. And who knows what they are on their way to do?

Thinking about it, those Romanian beggars who have so exercised the Witchfinder General's department are the least of our problems. Almost by definition, a rich Russian - of whom plenty are on this flight, heading for mansions in Maidenhead and Highgate - is into something dodgy. It's just that he or she steals millions quietly, while these awkward beggars make pennies all too publicly.

In addition to this thought, I find myself with several other important and weighty matters to muse over. Like, did I make a fool of myself in front of the fabulous Petronella after the state banquet? I have no head whatsoever for alcohol, and they would keep making me drink those toasts in vodka (starting with "Our Wives!" and going on to "Beautiful Women!", I bowed out when it began to get anatomical), and Petronella poured me into a car and brought me back to the Mezhdunarodnaya. Where I may or may not have proposed congress to the lovely economics attache. She said nothing about it the next day - so here's hoping.

Then there is the case of Arkady Serafimovich Merkin, the head of Doshformin, the section of Gosprom (the economics ministry) that relates most closely to my duties in the fiduciary field. Arkady, a handsome man in his early fifties, with manicured nails and a Yamamoto suit, was my guide to Russian politics in the Putin era. Here are my notes:

"Is not like your party system," Arkady tells me over the caviar (by which time he is smiling too broadly). "If party name is 'Democratic', it means is run by fascist demagogue. If name is 'National', that is run by army. If name is 'Centre Party', is run from centre. If name is 'Bloc of Rightists', is equivalent of your new Labour Party. OK?"

I thank him. We then go on to discuss his sex life for half an hour, interrupted only by some unscheduled lap-dancing, which - as Arkady points out - is rarely an accompaniment to Treasury functions in the UK. Even if Mr Brown were to have a lap, it is hard to imagine anyone dancing in it.

When the dancer has perfunctorily straddled all of us - save Petronella - for a minute or so (where are you supposed to look?), Arkady gets down to business.

"We have little trade with you in Britain, and you are not important to us. We like your Dickens and your Shakespeare, but weather is better in California and Cyprus. And if you're going to be cold and eat bad food, you might as well be in Germany.

"But . . . " He pauses for effect, and stabs the table with his fish-knife. "But we do need financial aid from international institutions, where you have influence. Otherwise we have trouble meeting our obligations. There is the cost, for instance, of decommissioning old nuclear weapons. At this moment, hundreds are sitting rusting in old silos with mouses eating the command wires. And some of them pointing straight at . . . what part of Gampshire did you say you were from?"

I tell him I will convey his messages, and that's when the toasts start.

So now, on the plane, I think about communism and capitalism. I once quite liked the idea of communism, then realised it was a disaster in Russia. Then I was converted to capitalism. But that's a disaster in Russia, too. Perhaps Russia is just one of those places, like Liverpool, where nothing ever quite goes according to plan. I must share this thought with Peter Kilfoyle.

This article first appeared in the 10 April 2000 issue of the New Statesman, The long war against democracy

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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.