Sunday, June 21, 2015
It's been just under a month and a half since the Conservatives were re-elected to power in the UK, and two months since I've posted here (apart from the mention in a post below about a night I promoted at The Macbeth). I came back from a week-long trip to Berlin on the day before the election in early May, vaguely hopeful that the UK may be on the cusp of change. Instead, the Conservatives swept to power without even needing to resort to a coalition Government via the anachronistic First-Past-The-Post (FPTP) voting system – one that most of the rest of Europe has seen the sense in avoiding in national elections.
At the same time as Berlin has voted through a rent cap law in the last few weeks, Tory voters have effectively voted to continue an economy tied to housing – a resource that, comparatively speaking to the UK's population, and like oil, is set to become more and more scarce (at least to much of the population). The housing crisis in the UK is somewhat symbolic of how housing has become the defining asset of the 21st century. While the UK, and London in particular, is one of the worst offenders, we are seeing the issue of unaffordable housing repeated in most of the world's desirable major cities – whether those be New York, Paris, Tokyo, or Sydney, as well as with smaller but densely populated and equally desirable cities in mainland Europe such as Copenhagen, Amsterdam, Oslo, and Stockholm.
The Tories' continued dominance is reflected in the fact that they remain the party of the property-owning class. What is obvious is that it's not the interests of the property-owing classes to see (a) new property built (unless that new property is obscenely expensive) and (b) rent caps imposed on existing property, as this would devalue their own portfolio.
To clarify, by 'property-owning' class, I do not mean those who are asset rich but cash poor (such as people like my parents, who own one house in an increasingly desirable area of London). Owning only one small property to rent out at a reasonable rate is not the target here. Rather, the 'property-owning' class refers to those who have multiple properties and derive their main income from it. Labour under Miliband would have introduced not only rent caps and a freeing up of empty land for new property but mansion taxes – all moves in their own way that would have harmed the interests of the property-owning class. Such a move who have also affected the international super-rich, the coterie of people with such extreme wealth that they have been able to indulge in the practice of buying up property in central London as an investment, and leaving it empty in order to benefit from the price rise. This practice has been a recurring feature of the last fifteen years – one that has led to a domino effect, in which families are consequently pushed out of an inner-city area, and forced as a result to relocate to a suburb, in turn pushing up the prices of housing there. The result of this practice has been that much of central London has turned into a ghost town, while the rest of the capital has surged in cost.
You can argue that this practice hypothetically should remain a self-defeating paradox for the Tories, as it leads to less of the general population able to penetrate the housing market – one of the main drivers of the nation's economy - and stymies the prospects of future generations. But that would ignore the fact that it has remained the objective of the Tories to see house prices and property remain as high as possible. This situation has been exacerbated by the UK's approach to new housing, one that has been geared towards constraining the supply of land for development, along with so-called attitudes of 'NIMBY'-ism ('Not In My Back Yard'), in contrast to Germany's 'right-to-build' approach (read here for more). This is precisely why it's not just London that is expensive to live in in the UK, but Oxford, Cambridge, Brighton, Bath, and certain other cities too (along with the fact that these cities are generally desirable to live in for a variety of reasons).
You could argue, of course, that the 'greenbelts' surrounding UK cities should be left alone, as they are there to preserve the countryside as opposed to seeing the entire country being 'paved over' – a chief defence from those who oppose new housing. However, there has to be a point at which some of that land is freed up. If managed correctly, such as with proposals for new housing placed in a 'snowflake' formation, the impact on the environment can be minimised.
It's worth asking where this all started. Thatcher's policy of 'right-to-buy' of Council property at the beginning of the 80s was one of the chief instigators, as it lead to a sharp depletion of pubic housing stock. But it was exacerbated by Labour too during their tenure in power. Running parallel to this, finance in the City was deregulated – a chain of events that ultimately led to the collapse of certain banks in the UK and their subsequent nationalisation in the global economic downturn in 2007/8. By this point, the UK's economy had shifted to becoming focused on a service economy and sustaining a housing bubble, in contrast to Germany and France, which, despite also having large banking sectors, had (and have) retained large manufacturing industries. There are exceptions, of course. But there's no doubt that much of the UK's manufacturing base has been drastically reduced.
In tying in their economy with their best pals, the property-owning class, the Tories have ensured that the nation's debt is shifted onto those who remain powerless to fight back – the young and those who cannot afford property, now forced to fork out astronomical amounts for rent. As a result, the UK has become one of the most unequal countries in Western Europe, despite other cities in the continent also commanding high rents, yet not racking up comparable levels of inequality. And London has seen that inequality become magnified as those on a modest income find themselves either priced out already or battling an ever-rising cost of living.
This is what has been voted in for the next five years. What will be the consequence for future generations?