Simply put, the UK suffers from a large and fundamental housing crisis. It is estimated that the UK needs to build around 230,000 houses per year to just keep pace with demand (let alone alleviate the six-decade under supply) but we have only managed this figure once in 31 years (1988).
Yesterday, Ed Miliband delivered a speech at the British Chambers of Commerce conference and committed Labour to form a new tier of banking in the form of regional banks. Regular readers to this blog will understand the pleasure this has given me as you would have read this and this. So what exactly is he suggesting?
Well, let’s start at the beginning.
So the Autumn Statement comes and goes with the usual media hype and the typical lack of detail. If you wanted an even briefer summary than the following article it would be: poor economic performance, fudged borrowing targets, mostly ineffective headline-grabbing policies and a lack of demand stimulation.
Vince Cable valiantly announced his flagship, financial policy of the Small Business Bank at the Lib Dem conference. The positive way to look at this would be see the appetite and potential for trying something different, or, dare I say it, a ‘Plan B, C, D or maybe Z’.
How times have changed.
The story that was sold to the public in 2010 was that dramatic cuts were needed, due to a ‘profligate’ Labour Party, and ‘red tape’ needed to be hacked away which would appease the financial markets and boost business growth.
The financial crisis and slowing economy has brought the topic of housing back to the frontline of policy debates, yet the problems within this market started many decades before.
High house prices are not a new phenomenon – although the recent decade’s increase in credit availability had accentuated it.
As Duncan Weldon highlighted in his article on Shifting Grounds, No end to the ‘squeeze’ in sight, the recent fall in the headline rate of unemployment has largely been driven by an increase in part-time employment. Whilst a part-time or temporary job is better than no job, the instability these jobs can bring signifies a problem for long term growth.
Economic democracy is about creating the opportunity and ability for people to influence decisions that affect their personal economy. This could range from worker representation within a firm, through shareholder decisions on bonuses, to a government’s representatives being given first-hand understanding of how austerity will affect its people.
According to George Osborne, the strength of an economy is reflected in its bond yields. Textbook theory tells us that if a sovereign state can borrow cheaply on the open market, it is considered less of a risk for investors.
Not since the 1930s have we lived in such economically precarious times, and not since then has capitalism been subjected to such intense and hostile scrutiny.