Andrew Wilson: Housing policy of past comes home to roost

Picture: TSPL
Picture: TSPL
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UNLESS you have been asleep for the past six years you will have noticed that individually rational decisions can combine to form collective irrationality.

Over time as well, what seems sensible and logical today can become tomorrow’s lunacy when seen with the crystal clarity of that rarest of assets, hindsight. I knew someone once who possessed it – what a gift. But what bruises he carried from the new walls he kept bumping into.

One of the most obvious examples is in housing markets. Once upon a time there was an era of unending boom and conquered bust, when money was free (literally in some countries where inflation was higher than interest rates) and house prices only went up.

For many people real incomes were flat or falling because company profits were taking the growing share of the economy as wealth divided unevenly and the tax burden rose.

In such times, not borrowing to get a foot on the housing ladder and riding the wave of growth would have been stupid. That is until it wasn’t.

Because boom in fact turned to bust, not just in housing but for companies and countries too. It turned out money wasn’t free and markets could go down as well as up.

With this knowledge it is, of course, hard enough for any individual to navigate life and its challenges and choices, especially when we have the myriad sources of “sound advice” coming our way from family, friends, experts, government and moral guardians. What to do in a storm? For that matter, what to do in times of calm?

So if it is hard enough for us, spare a thought for our leaders in all of their forms. You know the ones I mean? Those selfish, self-centred fat-cats in business who are responsible for employing millions, bearing risk and investing the savings of today’s and tomorrow’s pensioners. Can’t stand them, eh? “Move over and let someone good do the job”.

And don’t forget those “all in it for themselves” politicians who carry the hopes of today’s and future generations. Don’t you hate them? What an easy life they have.

Not only are leaders required to make the right choices today with the benefit of history and evidence to call upon, we also need them to have a degree of foresight to match the twenty-twenty hindsight we demand.

All of which combines to tell me that when I hear a leader anywhere who seems to have combined guts, foresight, evidence and hindsight in a decision I should take notice. And I did last week, with Deputy First Minister Nicola Sturgeon’s announcement of the planned end of council tenants right to buy at a discount in Scotland.

What at first glance might seem bad politics is certainly, on the evidence, good policy and therefore if we give ourselves any credit as a population, should eventually be seen as good politics.

It may seem bad politics because it takes away a right from people affecting two profoundly personal things: money and home. It was unquestionably one of Thatcherism’s greatest economic and political successes because it gave swathes of the population the pride of owning their home and an inheritable asset and improved their lives immeasurably as a result.

Like so much of the economic policy of the era however (North Sea Oil stewardship the exemplar), the future was plundered for short-term consumption and votes. Rather than invest the proceeds of sales in social housing stock, it was spent leaving an ever widening chasm between haves and have-nots that has relentlessly grown to this day.

The British obsession with housing, married to gross under supply and outdated planning restrictions, has added to the problem. A growing number of today’s young people are unable to access the market while millions of others and their kids reap the benefits of an entirely unproductive boom further up the market and spend proceeds they have not earned.

We all know, or are, people who have lucked out on the housing boom and enjoyed living standards our labours have not earned. Now, collectivise that across the economy and ask yourself if that has made the country more or less competitive compared to the rest of the world market?

Not for the first time Nicola Sturgeon has shown some foresight and leadership and for that we should be grateful. I don’t think her decision will change the world. But it might free up a little more space in homes for people who really need it, like the 400,000 currently on Scottish social housing waiting lists.

The Conservative response was understandably critical which is their right and an argument to be heard. However, their suggestion that the proceeds of sales be spent on new social housing would carry some credence if they had ever practised the same. They didn’t, but that’s our friend hindsight once again. «

Twitter: @AndrewWilsonAJW