1. National Statistics, 'UK worth £7.0 trillion', 28 October 2008, posted on www.statistics.gov.uk
2. Mick Hume, 'The property price crisis? Excuse me while I yawn', Thunderer, The Times, 30 October 2007, p 15, posted on www.timesonline.co.uk
3. 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
4. MP Yvette Cooper, Maiden Speech, Parliament, 2 July 1997, posted on www.yvettecooper.com accessed 18.09.06
5. Kate Barker, Barker Review of Housing Supply: Final Report - Delivering stability: securing our future housing needs. London, HMSO, 2004, posted on www.hm-treasury.gov.uk
6. Kate Barker, Barker Review of Land Use Planning: Final Report - Recommendations. London, HMSO, 2006, posted on www.hm-treasury.gov.uk
The Treasury increasingly directs planning policy...
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. (1) 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. As Mick Hume observed in The Times, just before the housing bubble burst with serious economic consequences throughout the global financial system and the highly financialised British economy:
'What is the big issue in UK politics now? Not how to build the Good Society, but house prices - and the inheritance tax that your children might pay.' (2)
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. (3) 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. A government that will inflate housing values is popular with mortgage lending institutions too.
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.
Ed Balls was appointed Economic Secretary to the Treasury on 5 May 2006. He clearly wants to run the Treasury. Instead he was appointed Secretary of State for Children, Schools and Families on 28 June 2007. In the week before the cabinet reshuffle of 5 June 2009 Ed's friend Prime Minister Gordon Brown attempted to make him Chancellor of the Exchequer. However the incumbent at the Treasury, Alistair Darling, had refused to give way and found support in a desperate internal New Labour struggle for power. Ed will try later to run the Treasury.
Ed is married to Yvette Cooper, herself appointed as Chief Secretary to the Treasury on 24 January 2008. She had helped Alistair Darling tackle the bursting of the 1994 to 2007 housing bubble. Prior to that she was responsible for housing and planning at the Office of the Deputy Prime Minister from 9 May 2005, itself replaced by the Communities and Local Government ministry on the day her husband got his last job at the Treasury. Yvette was appointed Housing and Planning Minister at the CLG, also on 28 June 2007, and has attended Cabinet since then.
On 5 June 2009 Yvette was reshuffled by Brown to be the Secretary of State for Work and Pensions, where her experience of the housing market and its importance to the economy will be applied. She will be struggling with the simple fact that British household incomes have become disconnected from the cost of housing, and that inflated house prices, essential to The City, are a poor substitute for a pension.
Ed was a teaching fellow at the Department of Economics, Harvard, from 1989 to 1990, and an Economics Leader writer and columnist for The Financial Times from 1990 to 1994. He became Secretary to the Labour Party Economic Policy Commission and Economic Adviser to the Shadow Chancellor Gordon Brown, until New Labour's election victory in 1997. Ed was Economic Adviser to the Chancellor of the Exchequer until 1999, and Chief Economic Adviser to HM Treasury after that to 2004. Between 2004 and 2005 he was a Research Fellow at the Adam Smith Institute.
Yvette was previously economics columnist and leader writer for The Independent. She worked as policy advisor to Labour's Treasury Team in opposition between 1990 and 1994, and as a policy advisor to Bill Clinton's Presidential Campaign in 1992.
Ed has been the Member of Parliament for the Normanton constituency in West Yorkshire since 2005, and Yvette has been MP for the neighbouring constituency of Pontefract and Castleford since 1997.
Mr and Mrs Balls have three children, and like any family, want the best for themselves, and their children's futures. That is part of their appeal to the electorate. 'I represent hard-working people who are proud of their strong communities and who have fought hard across generations to defend them,' said Yvette, in her Maiden Speech in Parliament in 1997. 'They are proud of their socialist traditions,' she said, ' and have fought for a better future for their children and their grandchildren.' (4)
Working hard is no guarantee of the wages needed to pay for even basic housing in Britain. Arguably it never has been, but at the start of the twenty-first century the dislocation between household income and the price of housing is evident. Homes are less valued for their usefulness, and more for how much they can be exchanged for. While land is available across Britain, both in previously developed areas, and in new locations, the scarcity value of planning approvals required to build on it is managed by government. The same government that insists upon wage restraint for those patronised as "key workers", while hoping to sustain the speculative property market.
The contradictions between housing affordability and speculation have become obsessions for both the Treasury and the Communities and Local Government ministry. That tension prompted the Treasury to commission reviews from Kate Barker at the Bank of England, in 2004 on housing supply, (5) and 2006 on land use planning. (6)
High in the government that promotes "a decent home for all", Ed and Yvette are among those who seem remarkably unwilling to ease an obvious political and economic predicament by allowing the building of many more homes. They fear to collapse a property market that might collapse anyway, and without the homes needed being built.
Ed and Yvette must be constantly surprised there is so little opposition to land use planning being subsumed into a Treasury project to sustain the unsustainable British love affair with inflating house prices. They both obviously know that "a better future" doesn't simply happen - it has to be fought for, sooner or later. An over-valued home and a lingering debt is no future worth anyone fighting for. Children have to grow up.
So... a better future for whom, and how will it be fought for? Ed and Yvette need to be held to account in the present.
Since Ed and Yvette are job sharing within the government, Ian Abley decided to write to them both...
He is still hopeful of a reply, sooner or later.
A reply might be surprising. No reply from Ed or Yvette requires us to draw our own conclusions.
... and if you have tried more or less successfully to engage in serious correspondence with either of them, please tell us at audacity.
Ian Abley, 8 College Close, Hackney, London, E9 6ER
Mobile: 07947 621 790
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