Month: August 2011

 

                There were 738,414 empty homes in the UK in 2010 – there will be around the same number today.  Yet I read we are short of houses, and need to build more houses. I wish today to deal with some of the myths in the housing debate.

   Myth One: The south-east is selfish, with Nimby Councils refusing to build the homes we need

             Some argue  that the selfish south and London refuse to grant permissions and build more homes where  they are needed.  If you look at Quarter II 2011 figures you will find that London built the most new homes – 6831, and the South East the second most at 5833. These figures are well up on a year earlier.  The whole of Wales managed only 613, well down. Also falling were  the North East at 806, Yorkshire and Humberside at 1903 and East Midlands at 1941.

                 My own constituency is proof that the south-east has been far from seflish and Nimby like – a combination of willing Councillors and Councils, and pressure from government plans and Inspectors, has seen largescale new development of homes over the last twenty years. In Wokingham Borough there is no evidence that the new accent on localism is going to change this drive for more building. The Council has signed up to four major areas for housing growth, and is planning substantial new settlements in each.

Myth Two  House prices rose too fast because there was insufficent new build

              House prices are mainly determined by the price of second hand houses. 300,000 houses move from empty to use each year aside from any new developments, and many occupied homes change hands. The main reason homes became so expensive in the period 2001-8 was the huge surge in mortgage finance, with companies like Northern Rock falling over themselves to lend higher multiples of earnings, bigger proportions of the purchase price, and to accept ever higher valuations. The mood was very different from when I  bought a house in 1993. Then the Building Society would not accept the valuation I had agreed to pay, despite it being around 25% below the previous peak. They worked the mortgage out on a lower figure to protect themselves in a falling market.

                It would not have been possible to keep house prices down by any possible increase in the new build rate. In places like Wokingham where the build rate was very high it did not have any impact on relative house prices. They joined in the general boom. The authorities should have restrained bank lending by calling for more banking cash and capital against loans. That would have worked.

Myth Three  All the empty houses are in the wrong place, so they cannot answer the problem

                 If you accept that most development has to take place in the crowded south-east and London, the figures show there are still plenty of empty homes even in these popular areas. In 2010 there were 650 empty homes in Southwark 586 in Harlow, 508 in Bristol, 485 in Greenwich.  The South-east as a whole had 99,000 empty properties, and London another 80,000.  These numbers compare with 63,832 new homes built in the first half of 2011 nationwide.

Myth Four Most of the new homes need to be built in London and the south-east

              The government has said it wishes to establish greater economic balance in the UK. That will require the provision of more homes for energetic and mobile people to go to Wales or the North to set up businesses , or to expand businesses already established there. Places that have been down on their luck need to build homes for the more prosperous and upwardly mobile, so they can move in with their enterprise and spending power, to help move the local economy forward.  The presence of large numbers of empty homes in places like Leeds (1433), Sheffield (874) and Nottingham (838) should be an advantage, as this should allow more homes to be made available at sensible prices quite quickly, with suitable repair and decoration.

                 Many of you write to me about the high level of house prices. It is certainly true that house prices in the hotspots are very high. It is also true that there are now much cheaper properties available in other locations well away from London. If the government means what it says about bringing new life and jobs to less successful areas it should be possible to bring these cheaper properties into use. With the current chill on bank balance sheets I would not expect further house price inflation. Gradually house prices and incomes will get into better balance. The government and Councils could speed this process up by selling more of their empty properties and development land at realistic prices for an early sale. House prices have fallen by almost a fifth from the 2007 peak overall, at a time of continuing price inflation generally.

 

       Many of you want a simple solution. You say you just want the Uk to pull out. You say we just need an In/Out referendum, and the public will do the rest. If it were that easy it would have happened by now. You need to ask not what do you want, but what can you  get, to start to push matters in the direction we want.

       The Uk electorate have never voted into office any party running on a Come out platform. They have  never elected a single representative of UKIP or English democrats or other pull out parties to Westminster. It is not a question of one more heave and they will. There is not a shred of polling evidence to suggest that in a Westminster election, as opposed to a European election, they are about to.

          Nor could you guarantee that  the Uk electors would vote for out of the EU if we  were treated to an In/Out referendum. As in 1975 all the main poltical parties would  line up to tell us we should stay in. I have supported referenda, but have always thought it better to ask a question like “Would you support further powers passing to the EU under this proposed Treaty?” or “Would you back a thorough going renegotiation of our relationship to bring powers back?” or “Do you agree we should accept the renegotiated terms the Uk government  has secured?”

       The proposal I have put to colleagues is designed to try and build more support for a change of direction, a move away from more and more power flowing to Brussels. Of course it is not as much as pull outers would like. The problem with it is not that, but probably it still goes further than  the bulk of the Uk political establishment wishes to go. I want to see a wider consensus constructed to make use of this unique time when the EU needs UK support for a major strengthening of Euroland powers which we cannot possibly accept for ourselves. The mixed response to it on this site is symptomatic of continuing Eurosceptic splits which has always left majority opinion in this country on the EU with much reduced power to influence events and turn them in a sensible direction.

     If you do wish to help build a consensus for a different direction, then write to your own  MP asking him or her  to support demands for a renegotiation for the Uk to run alongside the building of Euroland economic governance. This should apply to Labour and Lib Dem as well as to Conservative MPs – they all need to know the strength of Eurosceptic feeling on this crucial matter.

 

                  The Sunday Telegraph and ConservativeHome published this week-end an important ConservativeHome survey of Conservative members’ opinions. There were 1348 replies to the survey, which included MPs and MEPs as well as Association members and volunteers. (There is a link to the ConservativeHome website on this blog’s links for those interested – http://t.co/pxGZBgm)

                The survey showed that there is very strong support for making getting the deficit down the main task of the government.  Cutting welfare bills by boosting employment is seen as one of the prime ways of doing this, and these two aims  are close to controlling the deficit in people’s minds.

                           Members want the government to go further and faster in cutting the rate of growth in public spending. They recommend by a margin of 4 to 1 freezing overseas aid instead of putting through large increases. This is despite the obvious big push recently to explain some of the purpose of overseas aid and to highlight the best examples of its work. It looks as if the more Mr Mitchell highlights it, the more it reminds Conservative members that this is spending which could be better controlled with increases delayed. The survey is also against spending money on HS2, the new railway.

                              59% do not want to send  UK troops to Libya, partly for political and partly for financial reasons.  72% are strongly against dearer energy. This probably reflects the prime concern many voters have about their own surging energy bills, and a realisation that more manufacturing jobs whcih we need will be made more difficult by a dear energy policy. I expect many think we could make more rapid progress in cutting welfare bills, with getting more people into jobs the best way of doing this. Conservatives want more action to create jobs, and more action to ensure people living here in benefits get those jobs. The survey did not ask about the course and conduct of immigration policy.

                            The strongest support of all came for two policies which the goverment is not following. 93% want powers back from the EU, instead of seeing more and more power drift to the EU as we have done under this government as well as under its predecessor. A similar 93% want the UK to abolish the Human Rights legislation, and presumably our entanglement with the European Court of Human Rights in its current form and guise, replacing them with domestic arrangements to uphold our human rights.

                           I am also publishing today a copy  of a letter I am sending  to George Eustice, who has announced he is forming a new group of Eurosceptic MPs, with an emphasis on those elected for the first time in 2010. They will be most welcome allies in getting powers back and establishing a more suitable relationship for the UK with emerging Euroland. This letter explores what we should be asking of the government as it negotiates over the future construction of the EU and Euroland.

            I welcome your establishment of a new group dedicated to reversing ever closer union. We need new thinking, new energy and new names in the cause. I also understand your wish to define new language and a new position for a new Parliament.

 

           It seems to me this will in part be done for us by the rapid rush of events. We can indeed say we have a new cause for new circumstances. Never has the drive towards ever closer union been so fast or so furious, so desperate or so necessary, as the 17 battle to save their single currency. We can with George Osborne say we see their need to dash helter skelter for full economic and fiscal union. They in turn must understand that we as  non members of the Euro cannot possibly join in such a move. We will need a different relationship with the emerging unified economic government of Euroland.

 

             They need our support and approval to use mechanisms, money and people involved in the EU to run their tighter and more controlled  central core. We in turn want more than a simple opt out from the more intrusive new measures they require. We need powers back to govern ourselves more fully, and this is  the time and the chance to gain them.

 

              Those of us who have urged a looser relationship for us for many years in Parliament have had two important victories on which we can now draw. The first was to keep the UK out of the Euro. This is fundamental to our current position, and is the origin of our need for a new relationship now they need to mend the Euro by stronger central controls. The second was persuading our party to oppose Nice, Amsterdam and Lisbon in Parliament. In the case of each Treaty we strongly opposed the transfer of powers, the accretions of  more areas to the acquis, and the surrender of  a large number of vetoes.

 

             My suggestion is we should make a very modest proposal to the EU, urging our government to use this moment to negotiate a long term solution to the UK’s problem. The proposal would be that we will happily allow the other members to do whatever they like without our seeking to block or veto it. In return we will be given the right to opt out of anything that the EU has agreed or may agree in the future, as Parliament sees fit. The rest of the EU would be spared the UK acting as the brake on the train, the wrecker at the unification party. The UK would be spared having  law and regulation forced upon us with which we did not agree.

 

           Normally we would go along with new and old EU legal proposals. We would still sit down to negotiate and draft with the others. We often  might reach collective agreement with them and happily implement what was decided. We would not however, be able to hold them up  or resist if they were determined to do something, and they would not be able to force us to do it. We would need to be able to go back over past agreements, but would do so sparingly and only after raising it with them to see if all EU members might like to repeal or amend the offending law.

 

          The UK would be a democracy again, where one Parliament could not bind another in perpetuity by including the measure as an EU law. Moderate Eurosceptics would no longer feel oppressed by EU measures, as extreme ones could be suspended in the UK. Pro Europeans could relax that we have not tried to withdrawn from the EU – they are still in and they can try to persuade us to accept more not less. Those who want to come out completely can press for less, seeking to use Parliamentary channels to remove blocks of EU law which they do not like. It seems to me to be the best way to let us all have our views on how much Europe we want, and to channel them within a UK Parliamentary framework.

 

          Is this negotiable? I think in the extreme circumstances of Euroland today it is. It can be presented accurately as the permanent solution to the British problem. The EU could be shown that it still means we make financial contributions and trade under most of  their rules, advantages for them. What better offer could there be, when UK opinion is now so sceptical about our relationship with the EU?

 

 

              The Bernanke speech on friday was not so much nuanced as non existent. The guts of it came down to the statement that the Fed would have a longer meeting to think it all through again on 20-21 September. The conclusion was:

          “The Committee will continue to assess the economic outlook in the light of incoming information (i.e. do what it is paid to do and always does) and is prepared to employ its tools as appropriate to promote a stronger recovery in a context of price stability”

          Of course. But how? When? What can it do? Which tools might work? Which tools might just create more inflation?

          The Chairman did also have some interesting sideswipes at others involved in economic policy. It was a humble address, underplaying the importance of monetary policy. Mr Bernanke passed the two bad balls of high unemployment and a weak housing market swiftly back the politicians. They needed to fix those things,then we can have a great recovery. You don’t say!

           The media found the most interesting thing about the speech was the implied criticism of the politicians on both sides of the Atalntic. Whilst Mr Bernanke expressed the assurance that Euroland leaders would sort out their own mess, he did not suggest they had already done so or were not in a mess at the moment. 

               He was bolder nearer at home.  He stated baldly for a grand official:  “The negotiations which took place over the summer (about the US debt and deficit) disrupted financisal markets and probably the economy as well”. In a genuflection to his ultimate boss, the President, he said the US could make itself fiscally prudent over the longer term with a suitable deficit plan, but did not need to do so in the short term as long as the intended cuts were clearly set out for the future.

              That’s alright then. Mr Obama can carry on spending until the election. Euroland will get out its magic wand after a long period of keeping  it in hibernation. US policymakers will suddenly fix the broken housing market. The long term unemployed will come streaming back into work as a result of trying  that well know Obama recovery spell one more time.

                      The BBC Today programme kindly invited me on to discuss whether this all means the politicians are to blame after all, and the Central bankers are off the hook. I tried to explain that there is no such thing as an independent central bank in a democracy. The elected officials are ultimately resposnible, they set up and change the system, and they intervene in extreme circumstances or when there is strong pressure for them to do so. I agreed that the lack of political direction on the debt and deficit in the US over the summer had been unhelpful. I confirmed that in Euroland the absence of an economic sovereign with authority and wisdom was causing serious damage. I pointed out that in the UK the promise of easy money  from the Bank and tight fiscal policy from the Treasury has so far been delivered by neither side. We have tight money and large borrowings.

 

 

 

 

                 Jealousy is a mean minded emotion. There is too much of it about in the UK debate. So many participants think the answer to our problems is to find people with more, and take it off them.

                  Many politicians belong to this school of thought. Councillors usually put up the Council Tax. When the government makes it worthwhile for them to keep the Tax down – or difficult for them to put it up – they usually raid us in other ways. Putting up car parking and other fees and charges is often popular with those who rule  locally.

                 National politicians spent many hours devising new taxes, and seeking to identify ways old taxes can bring in more money.

                   A country which is too preoccupied with distributing wealth will find it more difficult to create it. The government says it wants to lead an industrial revival. Who are the role models to lead it? Why should they make things here? Will the government start buying more UK made product?  Will the successful be praised and rewarded, or will they just face demands to pay more tax?

                    The UK seems to quite like Richard Branson, and  James Dyson. Most other successful business people  keep a low profile, fearing the jealousy their incomes may arouse. If government sets a tone of hostility to financial success, it makes a revival of manufacturing a bit more difficult.

                      If the UK government decides to buy its trains from Germany, and to import cars from around the world, it does not send out a great message that is better made in Britain. If the BBC transports its guests in Mercedes rather than UK made cars, it is  not doing its bit for a UK manufacturing revival. I do not imagine for one moment that German Ministers or guests of German broadcasting are chauffered around in Jaguars made in Birmingham. They would naturally go by Mercedes. So do people here.

                        If the government truly wants a manufacturing revival it needs to get on with helping make it cheaper and better to make things in Britain. The delayed deregulation initiative started with shops, not factories. It semed to reflect continuing preoccupations with distributing the fruits of enterprise rather than concentrating on making the fruits.

                         When we send overseas aid abroad we often buy products made overseas to send to the recipients. There is no drive in much of the UK to buy British product, to demand British product, to make it easier to make things in the UK or to be proud of those who do make things.  Germany has an engineering and manufacturing culture, and buys much of its own product.

                              The Uk puts dear energy before helping manufacturing. It shows more enthusiasm for big increases in regulation, than trying to find the right balance that yields more sensibly regulated industry here at home. If government really wants  a manufacturing led revival, it needs to be a bigger and more informed customer of UK industry instead of buying so much from abroad. It needs to look again at the regulatory regimes and dear energy. It needs to enthuse our schools and Colleges with more passion for manufacturing.

                      In many countries Ministers have their national flags in their rooms or on display close by. In the UK this is thought to be too nationalistic, to be in bad taste. If any Minister did break the unwritten rule, the flag in his room would probably have “Made in China” on it.

 

            The pictures from Tripoli are bitter sweet. For every picture of someone happy that the dictator has been pulled down and his cruelty limited, there is a picture of lawlessness. We see  more deaths and injuries, and  apparently indiscriminate firing of a wide range of weapons.

             The sooner the transitional government establishes some kind of control the better. The sooner the people can be disarmed and well trained forces of order can be in charge, the better. It is not going to be an easy task. It is one best carried out by those directly involved, not by UK  or US forces. If the new state is to have a chance of winning hearts and minds, and enjoying the full loyalty of most of the people most of the time, it must not be a puppet regime of Nato. There needs to be support for a new system and form of government and constitution across the spectrum, including  from most of those who backed the previous regime.

             Nato’s task was to prevent civilian casualties where it could do so by precision intervention from the air. Nato must avoid mission creep. The heavy exchanges of fire street to street that we now witness cannot be stopped by the kind of interventions NATO is good at.

             The sooner order is established by some group of forces in Tripoli, the sooner the new government  can get on with re-establishing power supplies, water, and the other basics. Living in Tripoli in recent days must have been fraught with danger and difficulty. We all, I am sure,  wish the Lilbyan people well in re-establishing a governing authority. We hope they will choose one which is kinder to them, but it will also need to be one which exerts enough power to curb the various armed groups and individuals who are currently trying to establish their own positions in a very fluid situation.

 

              Amidst all the talk of billions and trillions the truth is often a casualty. Few in the public debate seem to grasp the overall numbers, or see how the adjustment to lower borrowing will in due course be made by forecast higher tax revenue. It might be helpful to set out the Uk figures expressed as  so much per head. I have based all these numbers on a UK population of 62 million. The numbers beneath are the averages for every man, woman and child in the country.

            The UK this year is estimated to earn or produce £22,984 of  income per person, before public borrowing and associated spending  is added on.

            The public sector will account for half of this , or £11,451 spent per head.

            We will pay £9065 of  tax on average.

             £1968 of public spending  will be paid for by borrowing. The balance is paid for from other receipts.

           The current debts, unfunded public sector pension liabilities, and bank liabilities owned by the government amount to more than £50,000 each.

             The additional debt of £1968 each adds another 8.5% to total Uk spending, and an additional 17.2% to public spending. In  other words, if the government manages to get borrowing down to the target level this year  it will be borrowing one pound out of every six it spends.

              This will be an improvement on 2010-11, when the government borrowed one pound in every five it spent.

              Tax rises from  £7,900 in 2009-10, the last Labour year, to a forecast £10,677 in 2014-15. That’s an increase of  35%.