Tuesday, 17 January 2012

Pity for the propertied classes

Fresh from the triumph of his naked self-interest, Paul Uppal made another foray into grown-up politics yesterday. In a brave break from political orthodoxy, he's identified the true 'enemy within' as regards the housing market: first-time buyers.
To ask the Secretary of State for Communities and Local Government what steps his Department is taking to ensure that providing first time property buyers with a partial mortgage guarantee does not reduce access to the housing market for existing property owners.
OK, I accept that this is incredibly boring, but you should remember the phrase 'the banality of evil'. I think that Britain's housing market is distorted and dysfunctional, directly as a result of the Thatcherite belief that housing values should be seen as a personal piggy bank, which led to people remortgaging to buy bigger, or buy frivolous things.

But we're stuck with the system we've got, for now. The government is bringing in a system designed to help house builders - not homeowners - by guaranteeing mortgage payments if buyers fall behind. To Uppal, this appears to be a threat to the British Way Of Life. In a sense, I agree - why should corporations get these kinds of guarantee? - but I suspect he sees it differently. What I smell behind this little manoeuvre is another attempt to cosy up to the moneyed bourgeois whom he thinks will vote for him in 2015.

The people he speaks for aren't in need of protection from hordes of state-funded proles waving their new house keys at the suburbs. They have money and comfortable homes. The first-timers, on the other hand, are having to wait longer to buy a home (average age: 37), stump up a bigger deposit (20-40%, which means depending on parental help or years of living with parents to scrape it together) and higher interest rates. They're excluded from the market across wide swathes of the UK.

But what of Uppal's constituency itself? I picked a central postcode and drew on the ACORN analysis to see whether those already on the property ladder are somehow excluded from the market by these hordes of first-timers with their state guarantees. What do I find? Family incomes are 'low to medium' and mortgage holding is 'very low'.
Often, many of the people who live in this sort of postcode will be single elderly people living in council flats.
Over 40% of the population is over 60 and every other age group is under represented. Almost one in three people in this type is a single pensioner, and, unsurprisingly, levels of long-term illness are double the national average. For those of an economically active age, unemployment is relatively high and people tend to work in routine jobs in manufacturing and retail. The average household income levels for these areas are amongst the lowest in the whole country. Housing in these neighbourhoods is typically small, one or two bedroom, purpose built flats rented from the council or housing association. Very few people have access to a car and they rely on public transport, walking and occasional taxis to get around. These people have little discretionary spend. They are unlikely to go on holiday, but will go to bingo and buy lottery scratch cards. 
OK: there's no crisis outside Paul Uppal's head. What we find is a poor city in which the population is financially struggling. Certainly there are some very affluent suburbs, from which he draws his support (he has a majority of only 600, the result of a decline in Labour supporters voting, rather than a surge in Tory support), but most of us are excluded from Uppal's worldview.

Even Mr. Uppal's Tory comrades think he's off his head with this one: here's the minister's reply:

Grant Shapps (Minister of State (Housing and Local Government), Communities and Local Government; Welwyn Hatfield, Conservative)
My Department is supporting the industry-led new build mortgage indemnity scheme. The scheme will apply to new build properties from participating builders and will be available to all potential buyers, subject to appropriate underwriting and selection criteria. This will include existing property owners who want to move house and buy a new build property.
Approximately 14% of transactions in England in 2010 were for new build properties. The scheme is intended to help builders to build more new homes, and support people to buy them.
So a) the scheme isn't for first-time buyers only and b) it's about saving the construction industry, not helping citizens. Another triumph for Uppal!

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