Time out with Nick Cohen

Why Kate Barker, the bogey woman, who wants to build over the green belt might just create a country

The basics any government has to provide if it hopes to be popular are food, water, security and shelter. Food is so cheap that obesity is common among the poor, while Marie Antoinettish fads for organic and against GM food insult the world's hungry while amusing the wealthy. As floods engulf the southern lowlands, water is hardly a problem at the moment, although the unpredictable effects of global warming may make it so one day. Whether you believe the fall in the official crime figures is genuine or not, no one, not even Daily Mail readers, believes that life is as insecure in Britain as it is in Iraq or South Africa. But the cost of shelter is so exorbitantly high that decent housing has switched from being an essential to a luxury.

It is a sign of how the middle-aged and middle class dominate public life that the house-price inflation of the past decade was celebrated for so long by the property sections of the press. Real prices have doubled to seven times the average wage since Labour came to power. The average first-time buyer is having 19 per cent of his or her income taken up with repayments - and in London and other hot spots he or she is spending far more. People have taken extraordinary gambles - borrowed six times their salary, committed themselves to 50-year mortgages and burdened themselves with "interest-only" loan payments that leave the capital untouched - simply to get into an apparently unstoppable market.

Many pressures have forced the Brown government to say "enough" - including the pressure on MPs from desperate constituents - but chief among them is the work of Kate Barker, a jolly economist with old-fashioned priorities, who more than anyone else has rammed home the scale of the crisis. To simplify in a manner that would appall her, Barker said that to get any kind of sanity back into the market Britain needs to build a minimum of 70,000 and a maximum of 120,000 additional homes a year. We must also build thousands more social homes - the number of which has actually declined by 9 per cent under a Labour government. If providing private and public housing means building on the green belt, so be it. If it means overriding local authorities and local objections, that's tough.

For a mild-mannered member of the Bank of England's Monetary Policy Committee, these are radical recommendations that will transform England, and Barker has come to terms with becoming a bogey woman. A strange alliance of environmentalists and Tories accuse her of wanting to concrete over flood plains and thus ensure a repeat of the misery of the past few days. She is getting used to receiving "a large and often rather aggressive postbag wrongly accusing me of bringing a destructiveness equal to the Luftwaffe".

We share a pot of coffee in the Bank and she reflects on her transformation from a backroom adviser to business and governments to a public figure. Her work itself was a transformation. Gordon Brown was worried about the housing market long before the media caught up with him, but the Treasury's original concern was about monetary not social policy. Brown's question to Barker was whether the national obsession with property and membership of the euro were incompatible. Changes in the price of mortgages set by central bankers could have vast and unintended effects on the British economy. Low interest rates in the eurozone could fuel asset bubbles and consumer spending splurges - of the type we have been living through. High interest rates could trigger a wider recession - of the type we may soon be living through.

Target of abuse

But the longer Barker looked at the housing market, the more she worried about the poor stuck on council house and housing association waiting lists, the families stuck in mean and cramped flats and couples who want to have children but can't afford the space to house them. "I decided we had to increase the housing supply," she says.

This simple and humane thought has made Barker the target of vitriolic abuse and not only from letter writers to Threadneedle Street. Friends of the Earth dressed up an essentially reactionary assault on her in the modish language of anti-corporatism. Barker was the tool of her old employer, the Confederation of British Industry, its officers alleged; blindly following the boss class's agenda to "elevate the needs of businesses and the goal of economic growth at the expense of the environment and the views of the public".

One of the myths of British politics is that there is a united "voluntary sector". In truth, there is an unbridgeable divide between supporters of social justice and supporters of the environment. Senior figures in homeless charities privately told me they saw Friends of the Earth as a club for selfish nimbies. But Barker gives me a more sophisticated argument against the environmentalists. They talk, she says, as if a large chunk of the population of England doesn't exist.

"We're going to have a rise over the next ten years in England's population," she explains. "If we build less than adequately, people will be forced to share houses, there will be more overcrowding in London and we will have to do something draconian about second homes. But whatever we do, people will still be there. My critics say that extra homes will create more rubbish and use more water. But actually people will still be using water and producing rubbish if we build more homes or not. The only real environmental question is whether we turn more land over to building."

Like Friends of the Earth, Conservative commentators, notably on the Daily Telegraph, are as keen as the nominally leftish environmentalists on stopping building on greenfield sites, and they, too, accuse Barker of following a rigged agenda: but this time the alleged fixing of the terms of reference hasn't been done by the CBI but by Gordon Brown. They ask why he ordered Barker to look at supply rather than demand. If she wanted to know why house prices have shot up, she should have examined the effects of immigration and family break up. Surely, his instructions were a transparent attempt to cover up the failure of Labour to control Britain's borders and protect marriage.

Upsetting the locals

Barker was born in Stoke-on-Trent and has spent most of her adult life as a Home Counties commuter. For all her political influence, she is not a political animal and is unused to the accusatory nature of metropolitan politics. "Well," she says, when I put the Conservative criticisms to her, "the biggest pressure on housing is the increasing demand of elderly people for homes because they're living so much longer." She pauses and shoots me a look which reads, "What do you want me to do, call for euthanasia?"

The one charge against her which is undeniable is that she will further weaken our enfeebled local government. It's not that she's against planning; on the contrary, she says her critics get her hopelessly wrong when they say that she hasn't thought about the danger of floods and global warming. She has. But the effect of Barker's recommendations will be that local people won't be able to stop developments on their doorsteps. Too many councils, she tells me, don't want to see their towns grow because they don't see the advantages of growth. To which the only reply is that, of course they don't, because 80 per cent of tax revenues are taken by central government. Councillors may as well support local objectors because newcomers won't provide them with the taxes to improve public services. As I listen to her, I realise that she is trapping local government in a spiral of decline. But apart from having less local freedom, I want to know how else the England Barker and Brown aim to create will look.

First, she says, its urban areas will grow at the edges. Her main advice to the Prime Minister is to expand existing towns and cities to allow people to live close to where they work - although, as she grimly admits, the housing shortage is so great we may have to expand cities and build new towns as well.

Second, after decades of councils selling off playing fields, she hopes urban England will be greener. "I feel very strongly that you must have usable green space in cities. I'm always rather distressed about bits of green space that say 'No ball games' on them. I realise ball games annoy people but kids have got to get out. I'm very troubled by the sight of children with nowhere to play. That, I think, is a real social evil."

She then turns the question back at me and asks what England will look like if we don't follow her recommendations. There's now every incentive for people who live in big houses to stay there. Because they think prices are going to keep on rising and the supply of housing will carry on being constrained, there is, indeed, every incentive for the wealthy to grab as much housing as they can, regardless of whether they need it or not. If nothing changes, young people with money will carry on throwing every penny they can raise at property because they fear being left behind, while vast numbers who can't match their borrowing will suffer. Many will be poor, but if the poor can get into council and housing association homes, they won't be so badly off. Working- and middle-class families, however, will be caught in an hourglass property market. Beneath them will be council tenants, who may be in reasonable accommodation, above them will be the wealthy, who will certainly be in reasonable accommodation. They, however, will feel the squeeze.

"So if we don't build, housing will be incredibly unfairly shared. If we do, I think England will be a nicer place to live. The feeling of congestion that we all have is partly because we all live quite uncomfortably. I hope we can find an easier feeling and a less congested feeling, and create towns and cities where there is green space and room to breathe."

For all the dampening of the spirit the weather has brought this summer, that seems to me to be a vision of a country worth living in.