Mortgage repayments could double for some London homeowners if rates rise. Photo: Wikimedia
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Homeowners beware: Boris’s vision for the London economy

What would a rate rise mean for Londoners? London Labour Assembly member Andrew Dismore warns homeowners of soaring mortgage repayments, defaults and repossessions.

With speculation rife on the timing of interest rate rises, the Resolution Foundation’s paper yesterday on how indebted households will fare once the base rate goes up was timely. The report will make for a sobering read for Mark Carney and fellow inhabitants of the Old Lady. As many as two million mortgage payers could struggle once interest rates climb from 0.5 per cent to 3 per cent, the thinktank said. Without a state-backed plan to alleviate the pain for over-leveraged households, many will be forced to hand back the keys to their homes.

For Labour London Assembly members, this is a particularly hot topic. Last week, at the Assembly’s Economy Committee, I asked the Mayor’s Economic Adviser, Dr Gerard Lyons, what he meant when he disagreed with the Governor of the Bank of England’s assessment  that the Bank’s “new normal” rate level is likely to be 2.5 per cent. Lyons said “the level at which UK interest rates need to eventually peak should be high, not low…I would sooner have them at 5 per cent or 6 per cent than 2 per cent or 3 per cent.”

Lyons, a distinguished City economist by trade, may not have realised the political implications of his honestly expressed view. I immediately crunched the numbers, calculating how, given that the average price of a London property now stands at £492,000, a rate of 6 per cent would double the average London monthly mortgage payment from around £2,000 to £4,300 per month.

At Mayor’s Question Time, I asked Boris Johnson if he agreed with Lyons. Despite obfuscation, the Mayor eventually endorsed the Lyons view that a base rate of 5-6 per cent would be appropriate at the end of the economic cycle.

Doubling of mortgage repayments would spell disaster for those who bought homes on variable mortgages at low rates. Even a moderate rate rise would result in defaults and repossessions, set against the background of rising cost of living and stagnant wages.

The Resolution Foundation’s report highlights how the problem is exacerbated in London. Around a third of mortgaged households are predicted to be “highly geared” by 2018. The thinktank notes how this is “particularly worrying, as such households are least likely to have spare resources to fall back on in the event of an increase in mortgage costs”.

Boris Johnson argues that even if things became this severe, defaults and repossessions would cool the housing market and halt house price inflation – which would surely be welcomed. The Mayor knows full well this is simplistic. Having re-inflated the economy on the back of an asset bubble, such a tightening of monetary policy would not merely reduce upward pressure on house prices, but by diverting more household income to servicing debt, would reduce aggregate demand and undermine economic recovery.

Lyons and Johnson do not sit on the Monetary Policy Committee nor set interest rates, so does this matter? If you believe that Johnson is set on becoming Conservative leader (and probably taking Gerard Lyons with him), then yes, these views give a valuable insight into his economic outlook.

Boris Johnson is content to stand by and watch vulnerable London homeowners squeezed till the pips squeak so as to cool inflation in the wider economy. Those who remember struggling with mortgage repayments in the Thatcher-era of high interest rates will find this alarming.

The challenge for a 2015 Labour government will be to inject stability in the over-heated London housing market without wrecking the recovery in the wider economy. This is why Labour’s proposals to level the playing field with an active industrial strategy, investment in chronically-underfunded infrastructure, and further devolution to local government are an attractive offer to the electorate.

Andrew Dismore is Labour London Assembly member for Barnet and Camden and the party's parliamentary candidate for Hendon

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What it’s like to fall victim to the Mail Online’s aggregation machine

I recently travelled to Iraq at my own expense to write a piece about war graves. Within five hours of the story's publication by the Times, huge chunks of it appeared on Mail Online – under someone else's byline.

I recently returned from a trip to Iraq, and wrote an article for the Times on the desecration of Commonwealth war cemeteries in the southern cities of Amara and Basra. It appeared in Monday’s paper, and began:

“‘Their name liveth for evermore’, the engraving reads, but the words ring hollow. The stone on which they appear lies shattered in a foreign field that should forever be England, but patently is anything but.”

By 6am, less than five hours after the Times put it online, a remarkably similar story had appeared on Mail Online, the world’s biggest and most successful English-language website with 200 million unique visitors a month.

It began: “Despite being etched with the immortal line: ‘Their name liveth for evermore’, the truth could not be further from the sentiment for the memorials in the Commonwealth War Cemetery in Amara.”

The article ran under the byline of someone called Euan McLelland, who describes himself on his personal website as a “driven, proactive and reliable multi-media reporter”. Alas, he was not driven or proactive enough to visit Iraq himself. His story was lifted straight from mine – every fact, every quote, every observation, the only significant difference being the introduction of a few errors and some lyrical flights of fancy. McLelland’s journalistic research extended to discovering the name of a Victoria Cross winner buried in one of the cemeteries – then getting it wrong.

Within the trade, lifting quotes and other material without proper acknowledgement is called plagiarism. In the wider world it is called theft. As a freelance, I had financed my trip to Iraq (though I should eventually recoup my expenses of nearly £1,000). I had arranged a guide and transport. I had expended considerable time and energy on the travel and research, and had taken the risk of visiting a notoriously unstable country. Yet McLelland had seen fit not only to filch my work but put his name on it. In doing so, he also precluded the possibility of me selling the story to any other publication.

I’m being unfair, of course. McLelland is merely a lackey. His job is to repackage and regurgitate. He has no time to do what proper journalists do – investigate, find things out, speak to real people, check facts. As the astute media blog SubScribe pointed out, on the same day that he “exposed” the state of Iraq’s cemeteries McLelland also wrote stories about the junior doctors’ strike, British special forces fighting Isis in Iraq, a policeman’s killer enjoying supervised outings from prison, methods of teaching children to read, the development of odourless garlic, a book by Lee Rigby’s mother serialised in the rival Mirror, and Michael Gove’s warning of an immigration free-for-all if Britain brexits. That’s some workload.

Last year James King published a damning insider’s account of working at Mail Online for the website Gawker. “I saw basic journalism standards and ethics casually and routinely ignored. I saw other publications’ work lifted wholesale. I watched editors...publish information they knew to be inaccurate,” he wrote. “The Mail’s editorial model depends on little more than dishonesty, theft of copyrighted material, and sensationalism so absurd that it crosses into fabrication.”

Mail Online strenuously denied the charges, but there is plenty of evidence to support them. In 2014, for example, it was famously forced to apologise to George Clooney for publishing what the actor described as a bogus, baseless and “premeditated lie” about his future mother-in-law opposing his marriage to Amal Alamuddin.

That same year it had to pay a “sizeable amount” to a freelance journalist named Jonathan Krohn for stealing his exclusive account in the Sunday Telegraph of being besieged with the Yazidis on northern Iraq’s Mount Sinjar by Islamic State fighters. It had to compensate another freelance, Ali Kefford, for ripping off her exclusive interview for the Mirror with Sarah West, the first female commander of a Navy warship.

Incensed by the theft of my own story, I emailed Martin Clarke, publisher of Mail Online, attaching an invoice for several hundred pounds. I heard nothing, so emailed McLelland to ask if he intended to pay me for using my work. Again I heard nothing, so I posted both emails on Facebook and Twitter.

I was astonished by the support I received, especially from my fellow journalists, some of them household names, including several victims of Mail Online themselves. They clearly loathed the website and the way it tarnishes and debases their profession. “Keep pestering and shaming them till you get a response,” one urged me. Take legal action, others exhorted me. “Could a groundswell from working journalists develop into a concerted effort to stop the theft?” SubScribe asked hopefully.

Then, as pressure from social media grew, Mail Online capitulated. Scott Langham, its deputy managing editor, emailed to say it would pay my invoice – but “with no admission of liability”. He even asked if it could keep the offending article up online, only with my byline instead of McLelland’s. I declined that generous offer and demanded its removal.

When I announced my little victory on Facebook some journalistic colleagues expressed disappointment, not satisfaction. They had hoped this would be a test case, they said. They wanted Mail Online’s brand of “journalism” exposed for what it is. “I was spoiling for a long war of attrition,” one well-known television correspondent lamented. Instead, they complained, a website widely seen as the model for future online journalism had simply bought off yet another of its victims.