1. Jon Land, 'Housing Minister Margaret Beckett to leave Government', 5 June 2009, posted on www.24dash.com
2. Britain will win with Labour, Labour Party Manifesto, October 1974, with foreword by Harold Wilson, posted on www.ukpolitical.info, accessed 08.10.08
3. Caroline Flint, 'Biography', posted on www.carolineflint.co.uk
4. Caroline Flint, 'The Green Home', speech at the Building Research Establishment Innovation Park, Watford, 15 May 2008
5. David Orr, quoted by Jon Land, 'John Healey named as new Housing Minister', 5 June 2009, posted on www.24dash.com
6. National Statistics, 'UK worth £7.0 trillion', 28 October 2008, posted on www.statistics.gov.uk
7. Alan Holmans, Prospects for UK Housing Wealth and Inheritance, Cambridge, Cambridge Centre for Housing and Planning Research, 2008, research carried out for the Council of Mortgage Lenders, posted on www.cml.org.uk
8. Ian Abley, We are witnessing a British built "housing crisis" that Government is powerless to resolve, 23 July 2008, posted on this website here
On 5 June 2009 a desperate but patently irreplaceable Gordon Brown reshuffled the New Labour Cabinet, perhaps not for the last time. There are two new Cabinet Ministers at the Communities and Local Government department responsible for housing and planning.
The new Ministers may last longer than their predecessors, leading up to a General Election. New Labour will hope that house price inflation will have strengthened by that time, to give them a chance of winning.
Margaret Beckett lasted little over 7 months as New Labour Housing Minister in the middle of a burst housing bubble. Beckett was reported to be hoping for a promotion to a full Cabinet position, but handed in her resignation when she was not offered another role. (1) She had been made Housing Minister in October 2008 when Caroline Flint could no longer cope with the job. Not that Beckett was going to achieve anything except hold office until house price inflation could be revived. By the first Quarter of 2009 the return of house price inflation was in evidence. An Old Labour to New Labour convert Beckett had been happily saying for the last 35 years that '... everybody is entitled to a decent home at a price they can afford.' (2) With average house prices at £150,000 after the housing bubble has stopped deflating Beckett was still talking nonsense. That is 5 times the average household income, or 6 times the average individual income. She will not be missed by anyone wanting to see much more housing production in place of another financialised housing bubble.
Caroline Flint resigned as Europe Minister at the Foreign and Commonwealth Office before the reshuffle, whining about bad manners in Gordon Brown's useless Cabinet. Flint had done nothing to improve New Labour's appeal in the European elections after she had abandoned the position of Housing Minister to Beckett. Flint was evidently powerless during a dramatic phase in the long decline in new house building. This has caused a painful "consolidation" of the construction products and materials manufacturing "supply chain", and the full extent of that is not yet apparent. Flint had taken over as Housing Minister from Yvette Cooper in January 2008, and had managed to last one month longer than Beckett. Flint is vain. On her MP's website she boasts of having '... shortlisted 15 locations for future eco-towns the future of low carbon living in Britain.' (3) Don't expect to be able to buy a home in a single eco-town any time soon. Flint was expert in self-congratulatory delusion:
'It's no exaggeration to say that England is now a world leader in green building. While climate change threatens countries around the world, we are the first to seize the initiative, transforming the way that we plan, design and build... with historically low interest rates and high employment, the conditions are right for a healthy housebuilding industry over the long term.' (4)
Flint and Beckett could not cope with the deflating housing market. They could only offer talk of a "green" future. John Healey has been made Housing Minister just as house price inflation returns. However while the government needs an inflating housing market, which low interest rates certainly ensure, it does not follow that a "healthy" house building industry will be interpreted to mean volume housing production. The "volume" achieved in 2007 was 200,000 homes a year, while Britain needed at least 500,000. In 2008 house building is likely to have been about 100,000 homes. Healey will find, perhaps to his satisfaction, that house builders have shifted from attempting volume to addressing a smaller luxury "eco" market. That may mean healthy profits for house builders in planning, but it will mean a permanently reduced size of market for the construction products and materials manufacturing "supply chain".
Healey was Financial Secretary to the Treasury from May 2005 until June 2007, when he was appointed as a Minister of State to work alongside the Housing Minster at Communities and Local Government. (5) He supported Cooper, Flint, and Beckett at the CLG. Now he has the Housing Minster's job. Healey knows that New Labour needs another housing bubble, not the production of housing. He may make the right noises to satisfy the multitude of middle class housing managers that parasitically earn a living from the planning system as Registered Social Landlords. The "eco" house builders will accept sharing "planning gain" with housing associations and local authorities as house price inflation returns. That is the price of planning approval. Hoping for more public funding for RSLs the National Housing Federation chief executive David Orr said:
'We warmly welcome the appointment of John Healey and look forward to working closely with him... The country is facing an unprecedented housing crisis. The number of new homes being built this year is expected to slump to an 88-year low, while waiting lists for affordable homes have hit record levels.' (5)
The RSLs serve as a middle class housing management job creation scheme, and are not a means for producing spacious housing at low cost. The financial action is in owner occupation. Healey will know well that after deducting Northern Ireland, Britain had nearly a £7 trillion total net worth at the end of 2007. Much of that is the value of the housing stock, against which all residential mortgage lending is "secured". The financial valuation of that stock of 26 million homes is maintained by the 1947 denial of development rights, which legally prevents the building of new housing on cheap farmland for the cost of construction.
At the end of 2007 the UK's value was £6,998,000,000,000, with the most valuable asset category being residential property, valued at a total of £4,314 billion. The value of all housing was 62% of the nation's wealth, and up 10% on 2006. (6) Nearly £4 trillion was considered to be the collective "wealth" of owner occupiers in the aggregated value of their homes. The British are obssessed with inflated house prices.
Healey is Housing Minister to John Denham as Secretary of State for Communities and Local Government. Denham replaced Hazel Blears, who resigned over the embarrasment of MP's Expenses before Gordon Brown could sack her in the reshuffle of 5 June 2009. Denham was appointed to Gordon Browns first Cabinet as Secretary of State for Innovation, Universities and Skills in 2007. He will be innovating "green" ways to ensure the planning system frustrates housing production, so as not to undermine the financial basis of the housing market. This should be obvious.
Alan Holmans estimates the value of housing "equity" owned by households aged 60 and over stood at about £1 trillion in 2006, after allowing for the relatively small amount of mortgage debt still held, mainly among those aged between 60 and 64 years. (7) Households under 60 held £3 trillion in "equity" with over £1 trillion of mortgage debt "secured" against it, and were looking forward to the day when they too had paid off their mortgage. Over 70% of all British households are in owner occupation with some share of nearly £3 trillion in "equity", or around 40% of the total net worth of the country. That is a considerable constituency for any government, and New Labour needs that support.
British politicians know this. The careers of Ed Balls and Yvette Cooper in particular show how the attempt by Parliament to run the British economy is bound up with maintaining the 1947 planning system. This effort at constant institutional and legal reform in the development sector intersects with policymaking on wages, pensions, and education.
The concerns of the Treasury increasingly direct planning policy. All planners around Britain are effectively working in support of mortgage lenders in The City, whether they know it or not. Most don't know that they are instruments of the Treasury. Most planners think they negotiate planning approvals to recover "planning gain" for the "community", and are helping Britain to be "a world leader in green building".
Britain innovated planning in 1909, but this had little effect after the First World War. Land owners with freehold rights could resist government plans. After the Second World War only the development rights of land owning freeholders were nationalised. To give up their right to sell land for development farmers obtained the 1948 Agricultural Act guarantee of prices. By 1952 developers were allowed to keep the value that came from winning a development right or planning approval. This betterment as it was known in 1947, or planning gain as it is known today, is legally shared by developers with government in planning negotiations to pay for infrastructure and services. That is the inflationary legal "partnership" of development that Hazel Blears sustained from June 2007. Until her political reputation was destroyed by the sort of mundane speculation that many owner occupiers engage in. Only not on expenses.
Houses that cost £800/m2 to build, and which tend to be smaller than 100m2, are crammed into land with planning approval to realise a share of planning gain for public and private interests. Households are not free to avoid paying planning gain. It is illegal to build a house on any cheap farmland bought without planning approval. People have to buy a new home in the planning approved housing market, which after housing bubbles since the 1970s reflects the inflationary effect of the denial of development rights on 90% of Britain. (8) Britain is only 10% developed.
After the recent housing bubble burst Britains average house prices of £150,000 are 5 times average household income, or 6 times average individual income. House price inflation is returning in 2009 and the reshuffle puts Healey and Denham in Cabinet as New Labour encourage a new housing bubble. Whether they remain in office at the next election the damage is done. The 1947 denial of development rights ensures that housing bubbles can be encouraged by government, even though the manufacturing capacity of the construction industry is reduced.
The planning law of 1947 must be broken. People must set about building on farmland without planning approval. That means taking on anti-industrial "greens" in every political party in Parliament, with Healey and Denham responsible for housing and planning in the Cabinet.
Ian Abley 10.06.2009
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