On Monday I read reports of the coalition government’s brand-new housing initiative, which David Cameron himself announced from a building site somewhere. Surrounded by people wearing hard-hats and hi-vis jackets (Nick Clegg was also in attendance, wearing his customary gold tie), Cameron announced the mortgage indemnity scheme, which will allow first-time buyers to borrow 95% of a property’s value, meaning that they will need to scrape together just 5% for a deposit. That’s down from the 20% that banks are currently demanding in exchange for loans.
‘One of the reasons why house-building has been so low is because of the credit crunch,’ said Cameron. (What caused that again? Can’t remember. Labour over-spending, probably. Or the Eurozone.) The banks don’t want to lend so the builders can’t build and the buyers can’t buy.’
And how has the government convinced the banks to renew their lending? By offering to underwrite loans. The risk banks take in handing out the mortgages will therefore be part-shared by UK taxpayers. If all goes to plan, financial institutions will profit from interest rates. If not, public money will cover their losses.
‘But Dave,’ you might have said, if you were in attendance on the construction site wearing a hi-vis jacket and a hard hat. ‘Dave, Dave – if the financial crisis was in part caused by banks giving out these kinds of loans, a crisis which for some reason resulted in us having to give them our money to keep them afloat, is it a good idea to revive those insane banking practices by offering further bailout money should things go wrong?’
He’d have ignored you of course, ploughing on with his sales pitch in that odd way that’s something like a Modernist stream-of-consciousness monologue in which sentences merge into one another and pausing to draw breath isn’t necessary. ‘It’s not just about the economy it’s also about people’s hopes and dreams you always remember that moment when you get that key and you walk into your first flat it’s a magic moment and it’s a moment I want everyone in this country to have not just better off people the dream of home ownership is something that should be available to everyone…’
‘But Dave!’ you might have yelped if you were determined to break this disconcerting performance of a man pretending to talk to people. ‘If our taxes are going towards paying off the deficit rather than funding things we want like healthcare, education, decent pensions and a functioning public infrastructure, why are you now encouraging us to once again take on massive amounts of unsustainable personal debt?’
At this point, unused to interruptions or genuine engagement, Cameron might have started to simply repeat ‘the dream of home ownership’ again and again like a malfunctioning robot parrot, until they stopped filming.
Actually, many people aren’t dreaming about owning their own homes right now; they’re dreaming about simply having somewhere to call home in the first place. According to Empty Homes, a charity campaigning to raise awareness of the vast number of vacant properties in the UK, there are 1.7 million families on housing waiting lists. Building decent social housing and bringing back into use the quarter of a million empty homes is the answer to solving this crisis.
Instead, the government is introducing a 50% discount on right-to-buy (another part of the initiative), allowing people to purchase their council houses for even less. According to Cameron, the coalition will put money made from right-to-buy ‘into more affordable homes’. Yes, because selling off social housing for far less than it’s worth will allow the government to somehow provide even more affordable housing than existed before the discount was brought in. Of course.
Cameron doesn’t expand on exactly how this money will be used to create ‘more affordable homes’, but it may have something to do with the £400 million fund the government is making available to house builders. Not only is taxpayers’ money going to be made available to bail out banks (again), it’s also going to be given to builders who can’t build without bank loans. In return, house builders have committed to making 3,200 of the hoped-for 16,000 new houses ‘affordable’ – just 20%. That’s £400 million of public money, then, going on new houses of which 80% are not affordable.
We need to stop using the housing market as a way of boosting a failing economic system and once again think about housing in its primary function: that of providing people with a place to live. Although an extra £50 million has been added to the project of refurbishing empty homes (perhaps the initiative’s sole positive), it is relatively little compared to the hundreds of millions of pounds the government is willing to put into private hands that will do nothing to make housing more affordable or available.
