Memorandum-to-the-Prime-Minister-on-Unaffordable-Housing

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They also argue: ‘...it is futile <strong>to</strong> improve affordability by increasing salaries or subsidising home buying...While each individual home buying grant - such as those under <strong>the</strong> Starter Homes Initiative - may help <strong>the</strong> recipient enter <strong>the</strong> housing market, <strong>the</strong> combined effect of such grants is <strong>to</strong> push <strong>the</strong> market up fur<strong>the</strong>r, making entry even harder for <strong>the</strong> next grant recipient.’ The link <strong>to</strong> income and wealth inequality The most recent edition of Social Trends (National Statistics 2005) presents evidence of <strong>the</strong> persistence of income inequality in <strong>the</strong> UK. Between 1994/5 and 2002/3 <strong>the</strong> real disposable incomes at <strong>the</strong> 90th decile and at <strong>the</strong> 10th decile grew at much <strong>the</strong> same rate leaving <strong>the</strong> degree of inequality unchanged (Figure 5.13). International comparisons show that <strong>the</strong> UK has <strong>the</strong> fifth highest proportion of children living in poor households of fifteen EU countries (Table 5.21). Meanwhile <strong>the</strong> incomes of <strong>the</strong> <strong>to</strong>p 1% of earners grew fastest of all. In <strong>the</strong> 2002/3 <strong>the</strong> <strong>to</strong>p decile had 28% of <strong>to</strong>tal income and <strong>the</strong> bot<strong>to</strong>m decile 3% (Figure 5.14). The Government has introduced many anti-poverty measures <strong>to</strong> supplement low incomes for families and pensioners since 1997, <strong>the</strong> year in which <strong>the</strong> numbers of children in households under <strong>the</strong> poverty threshold peaked. But inequality may well depend as much on <strong>the</strong> relative size of necessary outgoings as on adjustments of income.The proportion of income devoted <strong>to</strong> housing costs tends <strong>to</strong> rise <strong>to</strong>wards <strong>the</strong> bot<strong>to</strong>m of <strong>the</strong> income scale and this may well indicate that <strong>the</strong> lack of affordable housing is a fac<strong>to</strong>r in <strong>the</strong> persistence of inequality. Regressivity in housing support and Council Tax costs may be a fac<strong>to</strong>r partially negating <strong>the</strong> income-related anti-poverty measures (see Strategic Issue 7 in Appendix 1). It also seems clear that <strong>the</strong> Corry quote at <strong>the</strong> beginning of this Appendix was correct and that <strong>the</strong> housing market as it stands is an effective device for channelling wealth away from those who do not have it in<strong>to</strong> <strong>the</strong> hands of those who do, in o<strong>the</strong>r words it has a systemically regressive effect.This may help <strong>to</strong> explain why <strong>the</strong> share of <strong>to</strong>tal wealth held by <strong>the</strong> most wealthy 10% has risen from 52% in 1996 <strong>to</strong> 56% in 2002 and why <strong>the</strong> poorer half <strong>the</strong> population own only 6% of <strong>the</strong> <strong>to</strong>tal wealth (National Statistics 2005,Table 5.25). Structural reform depends on an admission that <strong>the</strong> housing market as it exists is inefficient, iniqui<strong>to</strong>us and ultimately unsustainable. It is necessary <strong>to</strong> s<strong>to</strong>p tinkering with <strong>the</strong> edges of <strong>the</strong> market and tackle <strong>the</strong> fundamental issues raised in Appendix 1. In particular it must be recognised that <strong>to</strong> make housing more affordable house prices have <strong>to</strong> come down, or at least be stabilised, in relation <strong>to</strong> incomes. The political barriers <strong>to</strong> reform All recent governments have shown <strong>the</strong>mselves <strong>to</strong> be wary of <strong>the</strong> perceived elec<strong>to</strong>ral sensitivities of <strong>the</strong> wealthy homeowners of middle England. In particular, negative equity is seen <strong>to</strong> be unacceptable in any form. However, <strong>the</strong> consequences of this position are unsustainable. For negative equity <strong>to</strong> be avoided, homeowners must be effectively subsidised in perpetuity.The current assumption appears <strong>to</strong> be that homeowners have a right <strong>to</strong> profit from rising prices but no corresponding duty <strong>to</strong> carry <strong>the</strong> risk of a price fall.This also implies that current owners have a right perpetually <strong>to</strong> extract wealth from first-time buyers, that specula<strong>to</strong>rs on <strong>the</strong> housing market have a right <strong>to</strong> keep all <strong>the</strong>ir winnings and a right also <strong>to</strong> state compensation if <strong>the</strong>y lose. It is hard <strong>to</strong> imagine how any o<strong>the</strong>r group demanding such a settlement would be treated. Zacchaeus 2000 Trust - <strong>Memorandum</strong> <strong>to</strong> <strong>the</strong> <strong>Prime</strong> <strong>Minister</strong> - May 2005 23
There may be some inconsistency in public attitudes.The British Social Attitudes Survey reported in <strong>the</strong> latest Social Trends (Table 5.15) indicates that 78% of all adults of 18+ think that <strong>the</strong> gap between high and low incomes is ‘<strong>to</strong>o large’. But this gap is probably not related in <strong>the</strong> public mind <strong>to</strong> housing policies and practices. 24 Zacchaeus 2000 Trust - <strong>Memorandum</strong> <strong>to</strong> <strong>the</strong> <strong>Prime</strong> <strong>Minister</strong> - May 2005
Page 1 and 2: Z2K ZACCHAEUS 2000 MEMORANDUM <stro
Page 3 and 4: First published in Britain in 2005
Page 5 and 6: Introduction The Prime</str
Page 7 and 8: 6 Zacchaeus 2000 Trust - Me
Page 9 and 10: 8 Zacchaeus 2000 Trust - Me
Page 11 and 12: Recommendation 2 Policy should buil
Page 13 and 14: Recommendation 10 Increased resourc
Page 15 and 16: The shaded boxes along the<
Page 17 and 18: RSLs have no direct electo<
Page 19 and 20: 4. Of the
Page 21 and 22: Similarly in urban regeneration sch
Page 23: 3. Increases in the</strong
Page 27 and 28: (a) producing units of a quality su
Page 29 and 30: 28 Zacchaeus 2000 Trust - M
Page 31 and 32: Fund they stress t
Page 33 and 34: homeless by local authorities (itse
Page 37 and 38: compared to 46% in
Page 39 and 40: approximately threefold rise in rea
Page 43 and 44: End of 1998 28,700 End of 2000 120,
Page 45 and 46: ‘...stock transf
Page 49 and 50: shown in Figure 3. (£ billions) 25
Page 51 and 52: Housing Association 3 Private Landl
Page 55 and 56: following the poli
Page 59 and 60: The evaluative comparison focused l
Page 61 and 62: costs (which would have included no
Page 65 and 66: more prone to asth
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Page 71 and 72: A sclerotic market Young people fac
Page 73 and 74: enters with no housing assets seems
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Europe, and that the</stron
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eason for not joining a strike. Eff
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78 Zacchaeus 2000 Trust - M
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is regarded as an essential step al
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82 Zacchaeus 2000 Trust - M
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provisions based upon partnership l
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Members could decide to</st
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The size of land value gains The ga
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For this reason, economists from Ad
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In the United Stat
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decline in Federal support for hous
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from stamp duty and council tax (Ll
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upward wage pressure and fewer recr
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So is there a way
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7. A show flat already exists <stro
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healthy living. Poverty happens und
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‘When was it that we saw you hung
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StanislasYassukovich, quoted earlie
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Bowley, M. (1945) Housing and <stro
Page 113 and 114:
Phibbs, P. and Young, P. (2005) Hou
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Memorandum-to-the-Prime-Minister-on-Unaffordable-Housing

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