Boris Johnson is confronted by Labour's Rupa Huq. Photo:Getty
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The war at home: the battle for Ealing Central & Acton

Anoosh Chakelian returns to the London bellwether where she grew up, and finds a fierce battle between Labour and the Conservatives.

You may only have heard of Ealing if you’ve been on a Central line train that terminates at Ealing Broadway. And even then, only if you are in that rare cohort of Londoners who pay attention on the Tube. But dangling from an overlooked branch of the Underground in the far reaches of west London is a place that could decide the outcome of the election. Ealing Central, and its grittier neighbour, Acton, make up the London constituency variously referred to as the “kingmaker”, “bellwether” and “barometer”. It is a classic Tory/Labour marginal, home to such a wide variety of people that it almost acts as a London within London.

Steve Cadman Flickr/Steve Cadman

The former London Assembly member and Tory A-List candidate, Angie Bray, won the seat for the Tories in 2010 by 3,716 votes. A boundary change in 2010 meant the constituency lost Labour-voting Shepherd’s Bush. The predecessor seat of Ealing, Acton & Shepherd’s Bush had been in Labour hands since 1997. I grew up in Acton. As a child, I was vaguely aware of living in a Labour borough run by smiley men with aggressive surnames (Andy Slaughter, Steve Pound). And even now under a Conservative MP, the Council is Labour-led.

"I don't foresee a time when this constituency would suddenly be rock solid for any particular party"

A London Labour source informs me that the target seat has taken on extra importance following the vote collapsing in Scotland. It’s always been one of the all-important Tory/Labour marginals that Ed Miliband must win for Labour to be the single largest party. Its candidate here, Rupa Huq, calls it “the tipping point”.

Tending to the melting pot

Ealing is the third most ethnically-diverse local authority in the country, with only 39 per cent of its population identifying as “white British”. This is evident whether you’re walking down Acton High Street – a juxtaposition of proud civic buildings with crumbling betting shops – or through Ealing Broadway, a town centre that combines the odd modern artisanal café with Polish foodstores and functional high street chains. Eastern European, Indian, Pakistani, Bangladeshi, Somali, Armenian, Australian, Tamil, Japanese, Irish – there is no migrant community you won’t find in the sprawling patchwork of Ealing and Acton. And the largest religious group here after Christians are Muslims, at 13.4 per cent of the population. Out campaigning with Huq, she adapts to whoever she meets on the doorstep, switching between Bengali, French, a smattering of Hindi, and even throws in a few sentences of Italian to one woman. “Salaam alaikum!” “Ciao!” Walpole Park in Ealing. Flickr/Karen Bryan

Walpole Park in Ealing. Flickr/Karen Bryan

Unsurprisingly, both Huq and Bray are rather down on their respective parties’ participation in the recent arms race of immigration rhetoric. How does Huq defend Labour’s proposal to delay benefits to migrants for two years, when it is an entirely useless policy? The hard facts show that both “benefits tourism” and “health tourism” are myths, after all. She looks doubtful. “I guess the old welfare state, cradle to grave, as was, is not sustainable. And I think people now expect a contributary-based system. So two years, I think, you know," she trails off. "It's there now. It is justifiable.” Bray too sounds unsure about getting “tough” on immigration. She has concentrated a lot of time on the Somali community, guiding them through the Home Office’s ban on khat (a herbal stimulant), and fighting against blocks to their remittances being sent back to Somalia.

“In London, our view is it would be crazy to say ‘no more immigrants’”

She has also worked closely with Acton’s mosques against radicalisation. Abdul Hadi Arwani, the Syrian preacher recently found shot dead in his car in west London, had been an imam at An-Noor Mosque in Acton. It was at the same mosque and community centre where the terror suspect Mohammed Ahmed Mohamed escaped disguised in a burka back in November 2013. “You only have to go into our hospitals, A&Es, cafés, care homes, schools, and you will see a large number of people from migrant communities who are now settled in this country and contributing an enormous amount to the running of London,” she says. “In London, our view is it would be crazy to say ‘no more immigrants’.” One 74-year-old man shopping with his wife tells me he settled in north Ealing after fleeing to Britain from Burma during the military coup. “It was downhill after that; that’s why we left.” Perversely, his biggest issue with the local area is immigration. He would vote Ukip if the Conservatives didn’t have such a good chance here. “It’s not to do with racism, it’s entirely to do with numbers – and the type of people coming in. Murderers and rapists.” He adds: “It’s nice to help people who are in trouble, like what happened to me. But there are people coming in now who aren’t loyal to the country. It’s difficult.”

"As a foreigner, I know Labour are better for foreigners than the Conservatives are"

A middle-aged man from Eritrea, who has lived here for eight years, has a different view. “I wish Labour would win,” he tells me on his lunchbreak from working in a clothes shop. “As a foreigner, I know they are better for foreigners than the Conservatives.”

Where bedroom tax meets mansion tax

Pockets of intense deprivation pepper the constituency. The dense tangle of Sixties concrete that makes up the council’s largest housing estate, the South Acton Estate (used as the setting for Del Boy’s Peckham in Only Fools and Horses), is one of many areas overlooked by the borough's somewhat fitful regeneration.

The South Acton estate. Flickr/Steve Cadman

The South Acton estate. Flickr/Steve Cadman

But smart 1920s mock Tudor estates are just around the corner in west Acton, and, further south, the suburban affluence of Ealing Common with its Victorian red brick houses. The constituency is number 13 in the list of the top 20 London boroughs that would be affected by Labour’s mansion tax. At the moment, below 1 per cent of its properties would be affected; by 2016, it is estimated that this would go up to 1.32 per cent.

"There's been a real warming on the doorstep, people are beginning to make up their minds"

“It is quite a complex mix,” grins Bray when we squeeze into a tiny room at the top corner of the Tories’ campaign base in Ealing – a semi at the end of a pretty terrace down the road from the townhall. “To an extent, that does make it complicated. It also makes it fascinating. It makes it a seat which I suspect will always be a marginal seat. I don't foresee a time when this constituency would suddenly be rock solid for any particular party. It's always been known as a bellwether seat!” For an incumbent running a white-knuckle race, Bray seems relaxed. She can’t stop smiling as she leans back in her chair, looking cosy in a big scarlet jumper. “It remains very close,” she nods. “But we have found, particularly, maybe in the last two months, that there's been a real warming on the doorstep, people are beginning to make up their minds. “We’re picking up concern about the prospect of the Scottish National Party driving policy in London. I think that is persuading some people who might have wanted to give us a bit of a bloody nose to think twice about that. “The good figures on the economy and jobs also play a part. People do recognise that this government has turned the corner – although it hasn’t entirely got us to where we want to be.”

"This campaign has been like my whole life flashing past me"

Huq is similarly finding the battle too close for comfort – in spite of Lord Ashcroft’s constituency poll at the end of last year putting Labour six points ahead of the Tories (40 per cent to 34 per cent). Yet, like Bray, she is embracing the challenge of representing such a diverse area. “It's a seat of contrasts and extremes,” she smiles as we sip coffee at a Japanese café in west Acton after canvassing. “That’s why it’s such a brilliant seat; you’ve got everything here. One minute it’s mansion tax, one minute it’s bedroom tax.” Huq, an academic and senior lecturer in sociology at Kingston University, grew up in Ealing. She says the campaign has been “like my whole life flashing past me”, bumping into old teachers when doorknocking, and visiting her old schools. Her campaign leaflet bears a photo of her in her primary school uniform alongside her younger sister, Konnie, who went on to become a Blue Peter presenter and still lives in the constituency.

"The subtleties of the mansion tax policy just hadn’t been made clear"

She feels her credentials as a public sector worker, a mother, a daughter of Bengali migrants, and a local should add up to a “typical experience” that Ealing and Acton residents can engage with. Although she repeats “we’re for the many” when discussing such Labour policies as cracking down on rent increases, she also wants to stand up for the interests of middle-class constituents, and is unapologetic about her own middle-class background. 

Only a handful of properties in the smartest areas of this seat would be affected, but Labour’s mansion tax policy is making it difficult for candidates fighting for London seats in general. Activists in these places are often warned not to mention the policy on the doorstep. But Huq is more direct. “There’s so much misinformation,” she says. “I think we should be more upfront. We have leaflets about the NHS, about all the other stuff – I think maybe if there was something to hand to people where the [mansion tax] policy was written, that would be useful.” The prospect of a mansion tax is playing on the minds of some locals. One elegant woman with cropped silver hair, wearing a pair of black Wayfarers, is sunning herself on a bench in Ealing town centre. She tells me of her initial concern about the tax. “My husband and I were self-employed artists. I’m 59 now. We do have a house now worth £2m that we bought 28 years ago, but we don’t have an income. I’m a Labour supporter, but I was worried it would affect us. But then I found out the facts about it, and now I feel I can vote Labour. The subtleties of the policy just hadn’t been made clear.” Indeed, many people don't realise that those in high-value homes who do not have high incomes – who do not pay the higher or top rate of tax, and earn less than £42,000 a year – would have the right to defer the mansion tax until the property changes hands, even if it doesn’t in their lifetime. So the horror story of grannies without a penny to their name living in houses that have just happened to rocket in value over the decades is a myth. They wouldn’t have to pay the monthly tax.

"The average first-time buyer is now 37. If the Conservatives stay in power, what will it be next? 50?"

Yet one family I meet are less sure. They have been trying to sell their house (which is just below the mansion tax threshold) for almost a year, and have found it an impossible task. “The market is just waiting to see whether or not Labour get in and what the mansion tax will do to house prices,” the father – a recent retiree – feels. “No one wants to buy – and anyway, how will Labour decide which houses have that value?”

Talkin’ ‘bout regeneration

The London riots hit Ealing hard in 2011. Shop fronts around Ealing Broadway shopping centre were smashed in, and a man who was attacked died. The national spotlight was on Ealing, and it was occasionally referred to in the press as “leafy”. Indeed, there has long been a smattering of liberal intelligentsia here, with a number of media figures living in the area – BBC Television Centre used to be in nearby White City – and a historic cohort of creatives who settled around Ealing Studios (the film production company behind the famous Ealing comedies).

Yet following recession-time shop closures, which coincided with Westfield Shepherd’s Bush’s rise to power, the shopping thoroughfares of Ealing and Acton became run-down and began to reflect the shabby housing stock of their numerous surrounding tower blocks. But things are looking up. “Houses are being repainted near my street,” a 68-year-old man from Mauritius who has been living in Acton for 40 years tells me. “The park is being done up. There are some new blocks of flats. The roads are clean, railings are being painted, dogs aren’t making a mess,” he laughs. So are the Tories successfully pulling Acton out of recession? “No, no,” he says. “It’s Julian Bell – he’s doing a good job.” Bell is leader of the Council. He was elected to the post for Labour in 2002 and is fairly well-known in the area, but I’m still impressed by this local knowledge. “I will be voting Labour again,” he adds. “I’m working-class. The Conservatives are for rich people.”

"I’m definitely Labour, but who knows? Ed Miliband is a bit of a weird guy"

One 55-year-old English man who works at a hardware store in Ealing Broadway – and has lived in Acton for 16 years – reflects on seeing “more restaurants” cropping up all over the place. He is not interested in voting. Why not? He simply shakes his head in response. A 25-year-old mother and her husband are taking their three-year-old and seven-month-old baby shopping. They live in the Acton council flat where the mother was born. Her parents are originally from Nigeria. “It’s definitely looking better round here,” she smiles. “It’s prettier, not as run-down, and not as boring.” Yet she is apprehensive about bringing her children up here. “There are loads of flats with no gardens, and we do have parks but they’re far away. We have everything we need, but there aren’t many activities.” She too supports Labour because she sees it as the party of the working-class. “I’m definitely Labour, but we’ll see who wins. Who knows? Ed Miliband is a bit of a weird guy.” [caption id="attachment_5357" align="alignnone" width="640"]Ealing Broadway circa 1900. Flickr/Peter McGowan Ealing Broadway circa 1900. Flickr/Peter McGowan[/caption] Both Huq and Bray cite housing as one of the area’s key concerns. As is the case everywhere in London, there simply aren’t enough properties to house everyone who wants to live here. “It’s a worry that the average first-time buyer is now 37. If the Conservatives stay in power, what will it be next? 50?” asks Huq, angrily. “They don’t acknowledge the problem.” She is proud of Labour’s policy to build 200,000 new homes by 2020, but also that half would be reserved for “local” first-time buyers – “so not for oligarchs,” she adds. “Because I do worry London will become a playground for oligarchs.” Huq is furious that the “definition of affordability” regarding affordable housing has changed (“affordable homes” have nothing to do with what people can actually afford; so-called affordability is simply a percentage of market rates, which in London can result in extremely high rents). This is in contrast to Bray, who champions Boris Johnson’s “100,000 new affordable homes” and the new housing coming to Old Oak Common – what she describes as “kind of like a new town in the West London area”. Bray adds: “We are at last getting the attention that housing needs, but I'm under no illusion that housing is not a major pressure.”

"I do worry London will become a playground for oligarchs"

However, the candidates are both concerned about Crossrail’s arrival driving up property prices, putting off young families who move to the area for its reasonable housing, green spaces, and good state schools. “Ealing is a popular place, and so I would be unbelievably disappointed if a Conservative Mayor of London wasn't recognising that places like Ealing are where the pressure's going to be because of things like Crossrail,” says Bray. Huq observes: “There's a lot of stuff happening – Crossrail, HS2. But we need these opportunities to go to local people. My worry is at the moment it's all stacked in favour of the super-rich, developers, all those people.”The Arcadia shopping centre, after the Ealing riots. Photo: Getty

The Arcadia shopping centre, after the Ealing riots. Photo: Getty

All to play for on the western front

So who will conquer London’s western front? Doorknocking on the streets around where I grew up produced more Labour supporters and undecideds than Conservative voters. Plus one Scottish man who expressed a preference for the SNP (“I know I'm biased, but I wish I could vote for Nicola.”) The closure of two crucial emergency services in the area (A&Es at Central Middlesex and Hammersmith Hospital) could swing it for Labour. A number of people express concern to me about their local hospitals, and Labour’s campaign has the NHS at its heart. But the Tories appear more laid back about their chances. Bray is in a playful mood when I leave her. She knows I used to be a constituent and is trying to wheedle my voting record out of me. “Are you a shy Tory?” she booms. “There must be some somewhere!”

Anoosh Chakelian is senior writer at the New Statesman.

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We're racing towards another private debt crisis - so why did no one see it coming?

The Office for Budget Responsibility failed to foresee the rise in household debt. 

This is a call for a public inquiry on the current situation regarding private debt.

For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. 

The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And - this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That's what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don't do something about it, the results will, inevitably, be another catastrophe.

The winners and losers of debt

These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. 

This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.”

As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. 

Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt.

We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened.

Now, if this seems to have very little to do with the way politicians talk about such matters, there's a simple reason: most politicians don’t actually know any of this. A recent survey showed 90 per cent of MPs don't even understand where money comes from (they think it's issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

But of course debt has to be owed to someone. These charts show who owes what to whom.

The crisis in private debt

Bearing all this in mind, let's look at those diagrams again - keeping our eye particularly on the dark blue that represents household debt. In the first, 2015 version, the OBR duly noted that there was a substantial build-up of household debt in the years leading up to the crash of 2008. This is significant because it was the first time in British history that total household debts were higher than total household savings, and therefore the household sector itself was in deficit territory. (Corporations, at the same time, were raking in enormous profits.) But it also predicted this wouldn't happen again.

True, the OBR observed, austerity and the reduction of government deficits meant private debt levels would have to go up. However, the OBR economists insisted this wouldn't be a problem because the burden would fall not on households but on corporations. Business-friendly Tory policies would, they insisted, inspire a boom in corporate expansion, which would mean frenzied corporate borrowing (that huge red bulge below the line in the first diagram, which was supposed to eventually replace government deficits entirely). Ordinary households would have little or nothing to worry about.

This was total fantasy. No such frenzied boom took place.

In the second diagram, two years later, the OBR is forced to acknowledge this. Corporations are just raking in the profits and sitting on them. The household sector, on the other hand, is a rolling catastrophe. Austerity has meant falling wages, less government spending on social services (or anything else), and higher de facto taxes. This puts the squeeze on household budgets and people are forced to borrow. As a result, not only are households in overall deficit for the second time in British history, the situation is actually worse than it was in the years leading up to 2008.

And remember: it was a mortgage crisis that set off the 2008 crash, which almost destroyed the world economy and plunged millions into penury. Not a crisis in public debt. A crisis in private debt.

An inquiry

In 2015, around the time the original OBR predictions came out, I wrote an essay in the Guardian predicting that austerity and budget-balancing would create a disastrous crisis in private debt. Now it's so clearly, unmistakably, happening that even the OBR cannot deny it.

I believe the time has come for there be a public investigation - a formal public inquiry, in fact - into how this could be allowed to happen. After the 2008 crash, at least the economists in Treasury and the Bank of England could plausibly claim they hadn't completely understood the relation between private debt and financial instability. Now they simply have no excuse.

What on earth is an institution called the “Office for Budget Responsibility” credulously imagining corporate borrowing binges in order to suggest the government will balance the budget to no ill effects? How responsible is that? Even the second chart is extremely odd. Up to 2017, the top and bottom of the diagram are exact mirrors of one another, as they ought to be. However, in the projected future after 2017, the section below the line is much smaller than the section above, apparently seriously understating the amount both of future government, and future private, debt. In other words, the numbers don't add up.

The OBR told the New Statesman ​that it was not aware of any errors in its 2015 forecast for corporate sector net lending, and that the forecast was based on the available data. It said the forecast for business investment has been revised down because of the uncertainty created by Brexit. 

Still, if the “Office of Budget Responsibility” was true to its name, it should be sounding off the alarm bells right about now. So far all we've got is one mention of private debt and a mild warning about the rise of personal debt from the Bank of England, which did not however connect the problem to austerity, and one fairly strong statement from a maverick columnist in the Daily Mail. Otherwise, silence. 

The only plausible explanation is that institutions like the Treasury, OBR, and to a degree as well the Bank of England can't, by definition, warn against the dangers of austerity, however alarming the situation, because they have been set up the way they have in order to justify austerity. It's important to emphasise that most professional economists have never supported Conservative policies in this regard. The policy was adopted because it was convenient to politicians; institutions were set up in order to support it; economists were hired in order to come up with arguments for austerity, rather than to judge whether it would be a good idea. At present, this situation has led us to the brink of disaster.

The last time there was a financial crash, the Queen famously asked: why was no one able to foresee this? We now have the tools. Perhaps the most important task for a public inquiry will be to finally ask: what is the real purpose of the institutions that are supposed to foresee such matters, to what degree have they been politicised, and what would it take to turn them back into institutions that can at least inform us if we're staring into the lights of an oncoming train?