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Solving The Housing Crisis: A Fairer Deal For All

Summary: Successive governments have been grossly negligent in their approach to providing adequate levels of housing within the UK. A radical programme of investment in new housing managed by local government will allow us to catch up with the backlog. It would involve training and employing many new skilled construction workers. We must plan to use advanced construction techniques wherever possible such as the widespread use of high quality, modern prefabricated buildings. As a major infrastructure programme this will have an important role in boosting activity rapidly in the British economy.

The collapse in British housebuilding since 2008 exacerbated the shortages that had already accumulated by then. Since 2010 the number of social rent homes being built has dropped by 97%. Affordable home completions in the current year are running at around half that of the previous year. One of the big problems in building affordable homes is that many developers accept a requirement from the planners of a good percentage of affordable homes. These might typically be around 40%. However it is almost routine that the developers go back to the planners and ask for a reduction in the affordable home percentage. In the Cambridge area recently 40% requirement was reduced to around 6%. Shortly afterwards the developers marketed these properties energetically in China.

Most agree that we need to build about 250,000 new homes each year just to keep up with demand. Annual completions are running at under half that level. Approximately 80% of completions (about 90,000 per annum) come from the private sector which is dominated by eight or nine big housebuilders who currently hold enough land for about 600,000 new homes.

They deny they are hoarding land to allow scarcity to keep prices high but they do have enough land for over six years supply at their present building rate. The rate of granting detailed planning permission is currently running in excess of 250,000 homes per annum so at more than twice the current construction rate. Since 2008 the number of small builders has dropped substantially.

Claims that planning delays are limiting construction seem to be greatly exaggerated. Indeed an increased housing programme would probably need boosting the size of planning departments to keep delays to a minimum in future. In order to accelerate a housebuilding programme it may be necessary to acquire land with planning permission on a “use it or lose it” basis. An appropriate valuation might be at the time the most recent planning permission was granted.

Since Margaret Thatcher introduced the right-to-buy over 30 years ago around 2 million social houses have been sold by local authorities who are currently forbidden from replacing them. Most new social housing is provided by Housing Associations, and their rate of construction would increase radically if the regulation of Housing Associations was relaxed.

There are over 200,000 homes in England empty for more than six months (the usual definition of an empty home). This does not count second homes or holiday homes. First-time buyers are finding it increasingly difficult to get on the housing ladder. In the past, house price inflation was made more manageable as salaries rose but median salary increases are running way below median house price increases.

A typical first-time buyer today who cannot afford to get on the housing ladder will be even further from achieving that next year. The construction of low-cost affordable housing is now down at very low levels indeed. In essence, if you cannot afford to buy a house today you will be even less able to afford it tomorrow. That has gone on now for nearly 10 years and is a direct consequence of austerity and public sector pay squeezes.

It is estimated that there are 1.8 million people today on the social housing waiting register in England. In order to catch up with the backlog as well as keeping up with demand we need to target a building rate of between 350,000 and 400,000 new homes per annum. This is an enormous increase on current rate of about 120,000 per annum and will be difficult to achieve without a substantial effort.

There are genuine problems in simply turning on such a dramatic increase in building rate. Simply scaling present construction methods will require a tripling of brick production, difficult as many brick factories were mothballed following 2008 and the collapse in the construction industry. It is thought that many of these mothballed factories would be too decayed and inefficient to restart.

Current statistics show that it takes about 6.6 construction workers one year to build one house. Hundreds of thousands of new skilled bricklayers, plumbers, carpenters and even architects would need to be trained. Finding such people to train will be difficult particularly as the demand for new housing is concentrated in the relatively low unemployment areas in the south of England.

And then there is the small matter of funding. The obsession of the Cameron government with austerity would make this funding impossible but most economists agree that housebuilding is a genuine investment in infrastructure that must be accounted for outside the day-to-day economy. Now that George Osborne has been deposed even the Conservative government seems to accept that rampant austerity is fundamentally damaging to the whole of our economy.

The British government can borrow money at present at ridiculously low interest rates for long periods. So raising the funds for an ambitious programme is practical in the present economic climate. This would best be done by the Local Authorities who would be required to manage this dramatic increase in housebuilding. Clearly a number of radical changes in our approach to housebuilding will be needed for this to be achievable.

It does seem odd in the 21st-century that most houses in the UK are still built by taking tens of thousands of bricks, mixing up cement and sticking them altogether. In much of Europe many buildings are prefabricated, built in modular form such as walls with windows, doors, electricity and plumbing already built in that can be assembled in just a few days.

The construction site must be prepared in advance but this is a relatively quick procedure compared with the business of conventional house construction in the UK. Modern European prefabricated houses are designed and built to a high standard, often much better than conventional low-cost UK housing standards.  Prefabricated designs and construction procedures are well established and could be duplicated in the UK leading to substantial employment opportunities that could easily be in unemployment blackspots in the UK.

The cost of these properties are, if anything, cheaper than conventional houses and dramatically quicker to construct. Above all they would reduce greatly the need to train as many skilled individuals close to where the houses are needed, though many would still be required.

The extraordinary cost of houses in many parts of the country is a very poor guide to the actual cost of building a new property.  There is no such thing as a standard house. The needs of single people right through to those of large families need to be addressed. One of the most helpful metrics is the typical floor area per person that we find in modern houses today. Our standards must not be the minimum but provide for appropriate storage space and space for the equipment and facilities most of us would take for granted.

In the UK, typical house floor areas work out to be approximately 33 m² per head although this is on the low side when compared with houses in the rest of Europe (40 m² for Sweden, 43 m² for France and 55 m² in Germany). Conventional construction works out at about £1200/ m² in Greater London, £1050 in the south-east of England and perhaps £900 in the Midlands. Building to a high standard would add between £150 and £200 per square metre to this cost.

This makes conventional construction roughly at the £120,000 level for four people in three bedrooms and to which must be added the cost of land. Most developments try to get to about 12 houses per acre which adds between £30,000 and £60,000 to the cost for a single property for land already zoned for residential development in our close to urban areas. In rural areas land prices can be significantly less particularly for land currently used for farming on the margins of existing developments. So even for a good quality three-bedroom house construction costs are well under £200,000.

How much do prefabricated houses actually cost? We are not thinking here of the sort of prefabs that were built after the second war as emergency short-term accommodation. Modern prefabricated houses are designed to last, to provide high standards of comfort and to be in no way inferior to houses built with thousands of bricks and buckets of cement. Good examples of high quality prefabricated homes come from SvenskHomes come out to be almost identical to conventional construction costs.

In practice, setting up major facilities in the UK to carry out the prefabrication would lead to highly significant economies. Prefabrication does not mean every house the same. Prefabrication uses modular components which are combined in different ways to give very different shapes and sizes of properties. They may be tailored to the requirements locally and provide anything from highly affordable properties up to some that would be quite luxurious by any standards.

The mixture on one site can be whatever suits the local requirement. We would need to insist on a wide mix of different styles and sizes of housing within a single development. The creation of ghettos or gated communities would be completely unacceptable! Managing the ground works and site construction as a large site will bring costs down quite markedly.

Each property needs a flat concrete plinth on which it is constructed. The site plan establishes the sizes, orientations and positions of each plinth. The site is developed by creating access roads and pavements with all the utilities in place right up to the individual properties. In planning the site it is important to include community centres, shops, GP surgeries and school as part of the total plan if we are to produce genuine integrated communities rather than anonymous dormitory villages.

And how much are we talking about for this program? It would take time to ramp up such a substantial scheme but it is incremental nature allows a lot to be achieved on relatively short timescales. The funding that would need to be available for this sort of programme would probably be in the range of £40 billion-£60 billion over 10 years, so less than half the cost of Trident over the same period, and unlike Trident we still have most of the money at the end of 10 years.

Remember that as properties are built they are sold to Local Authorities, Housing Associations, private landlords and conventional house-owners in whatever mixture seems appropriate. The sale of these properties would be close to cost of construction for the first two categories but very much what the market might bear for the other two. Funds raised from sales are remitted directly back into the program. Unlike Trident, the programme would produce good quality housing for vast numbers of people desperately in need of accommodation.

There are enormous constraints at present on local government raising funding but they should in future be allowed to raise funds to manage a major increase in building houses in their own area. Each local government area should be allocated a specific number of houses to be built each year over a 10 year forward look. Each area should establish a Local Government Housing Authority (LGHA) to manage the local plan. The LGHA should fund additional planning officers and fund the necessary training programs, free of student fees, at local technical colleges providing trainees with appropriate certification.

They should identify suitable sites and where local opposition is strong, that opposition should be required to locate sites in their area on which their share of new houses should be built. It is always been possible to build on greenbelt sites in special circumstances but it is expected that a significant amount of new houses will need to be built on greenfield sites such as farmland.

Building on greenbelt land is something that must be considered. There are nearly 4 million acres of greenbelt designated land in the UK. Even building 250,000 homes on greenbelt land would only cover under 1% of greenbelt area. It may therefore be necessary to change planning procedures so that these do not become a significant blockage to completing the programme. Every town, village or hamlet must take its share. If any region resorts to nimbyism then they must be left to sort it out if they don’t want it imposed more centrally. If they cannot sort out it will be imposed!

At present housebuilding can be a very profitable business. The LGHA program would combine a good portion of affordable housing, some of it for social rented housing but always intermixed with housing for commercial sale with the profits going back into the scheme. The construction of low-cost ghettos must always be resisted with good attention given to the quality of the development.

All developments would, of course, need to address community issues such as schools, community centres, GP surgeries, access to public transport etc. At the bottom end of the price range, houses could be sold with minimum profit but with clear covenants so that if they were sold within a certain timeframe commercially then a significant part of the profit would return to the LGHA.

Building large numbers of houses priced at the bottom end of the market would have a major effect in slowing the general rise in house prices that is distorting economic growth in much of the UK. Planners should only reduce the agreed percentage of affordable homes in exceptional circumstances. A developer that got a reduced percentage would then be required to accept a larger percentage on any subsequent developments they sponsored.

Such a program would be a very substantial investment in the UK. It would inject a very great boost to the economy, provide opportunities to train young people in valuable skills but above all make a serious attempt to recover the many years lost while governments wrung their hands about the difficulty of building houses.

Most of the efforts by the LGHAs would bypass the current big housebuilders who could be left to get on with building expensive houses for those that can afford them. This scheme would finally offer hope to millions of young and less well-off people in the UK that they might actually be able to find a home to live in and possibly own.

References: a brief list of articles and sources of information that the reader might care to follow-up.

  1. Dwellings by tenure in England, information on number of homes built in England and many other general housing statistics: http://england.shelter.org.uk/campaigns_/why_we_campaign/housing_facts_and_figures/subsection?section=housing_supply
  2. Article in the Guardian newspaper dated 12 January 2015 by Hilary Osborne and Paddy Allen entitled “The Housing Crisis in Charts”. See: https://www.theguardian.com/money/2015/jan/12/the-housing-crisis-in-charts
  3. BBC article on housebuilding entitled “Why Can’t The UK Build 240,000 Houses a Year?”. See: http://www.bbc.co.uk/news/magazine-30776306
  4. Building cost calculator: a number of companies provide this sort of capability that you can worse start with http://www.jewson.co.uk/working-with-you/for-self-builders/preliminary-planning/calculators/build-cost-calculator/
  5. There are many European manufacturers of prefabricated homes. Many of them look absolutely fabulous. Start by looking at: http://houses4you.net/
  6. This is a 4 year-old article about the effect of British planning restrictions on the cost of the average house. See: http://ralphanomics.blogspot.co.uk/2012/07/british-planning-restrictions-boost.html
  7. Guardian article dated 20/12/15 by Graham Ruddick entitled “Revealed: Housebuilders Sitting on 600,000 Plots of Land”. See: https://www.theguardian.com/society/2015/dec/30/revealed-housebuilders-sitting-on-450000-plots-of-undeveloped-land
  8. Guardian article dated 4/1/16 by Dawn Foster entitled “What Will It Take to Build George Osborne’s 400,000 Homes?” It gives a lot of basic statistics about bricks, bricklayers and every other part of the construction chain. See: https://www.theguardian.com/housing-network/2016/jan/04/george-osborne-400000-homes-housebuilding-bricks
  9. Article on Politics Home website, dated 20 June 2017, by Emilio Casalicchio  entitled “Labour fury as new social rent homes plummet by 97%”. See: https://www.politicshome.com/news/uk/communities/housing/news/86856/labour-fury-new-social-rent-homes-plummet-97

 

Democratic Lies.

Summary: We are told repeatedly that the referendum result represents the “Democratic Will of the People”. It does not. A close majority was obtained on the basis of the most outrageous lies. As the Brexit negotiations progress more and more of these lies will be revealed for what they are. We should stop pretending there is any merit in them at all and steel ourselves to say that the UK simply got it wrong and that we should stay in the EU. Yes there will be considerable loss of face, and we have already lost a great deal of respect for the nonsense of the referendum and now for the collapse of the Tory party at the recent election. We’ve screwed up, we should admit it and get on with trying to put the UK back together again.

Imagine you bought a new television set. You have been told in the shop of all the wonderful features it had and you are looking forward to using them. You have just unpacked it and you find that what you have bought is nothing like you were promised. You would be very upset and expect to get a full refund. Indeed, if it was serious enough, you might report them to Trading Standards. Telling lies to get someone to buy something is a crime.

The UK voted to leave the EU on a very narrow 52:48 majority. Increasingly people are realising just how dishonest the whole Leave campaign was and groups such as farmers, business people and many others are turning against Brexit as interpreted by the right-wing, fiercely anti-EU Tories and the right-wing media.

Tom Smith on a Labourlist comment pointed out that vote disenfranchised the more than 1 million Brits living and working in the EU, together with 3 million EU citizens who have lived in the UK in many cases for decades, pay taxes and have an enormous investment in the future of the UK.  The overwhelming majority of these would undoubtedly have voted to Remain.

The British government has just started the Brexit negotiations. Already the tough positioning that Theresa May thought was going to win her a general election has turned to dust. The EU are making it clear that expectations of a brilliant deal from the EU giving us all the advantages and none of the costs of being members is simply make-believe.

We will see over the next few months just how far the Leave campaign’s claims are at variance with the reality. Then we have to address the fundamental problem. The referendum was won for Leave on the basis of lies. We must stop pretending that it is the Democratic Will of the People. It simply is not.

The last election showed just how little trust there is in those Conservative politicians who lied to us so brilliantly during the referendum campaign. Those same politicians are now in charge of negotiating Brexit, negotiations that they are deeply unsuited to carrying out. The Tories are always going to have big problems with the extreme right and no doubt Theresa May hoped she would be able to deal with them given a large majority. She did not get it and the country increasingly realises that so much of what the Tories want is simply increasing the inequality in the country.

We have to keep repeating again and again that we are being led away from EU on the basis of outrageous lies. We should also stop accepting that, notwithstanding those lies, that leaving the EU is the Democratic Will of the People. In fact there is no mandate of any sort for leaving the EU and we should simply stop this nonsense as soon as we can.

The whole business of the referendum has damaged our reputation worldwide and particularly with our EU partners. There will be a considerable loss of face if we do a U-turn. However in this case it is what we should do. Our brilliant democratic system screwed up during the referendum. It did a much better job in the general election and now we must get on with trying to put the UK back together again after the deeply damaging seven years of Tory austerity.

Where Next for Labour?

Summary: The Labour promise to end austerity and to invest in the UK has breached the neoliberal consensus of the last 40 years brilliantly. Labour is in an exceptionally strong position to win another election whenever that might happen. However there are many pitfalls along the way and Labour must not be complacent. The Tories unsuccessful attack agenda will no doubt be reformed and re-targeted for any future election but Labour now has an important opportunity to repair the gaps and weaknesses in its own manifesto in good time for the next election.

It may be true that Labour did not win the June 2017 general election, but it has opened up a critical front in the battle against the neoliberal consensus of the last 40 years (see: http://outsidethebubble.net/2016/09/22/neoliberalism-a-beginners-guide/ ). Along with many others Outsidethebubble.net completely misjudged Jeremy Corbyn’s capacity to lead a remarkably coherent and competent election campaign. Many are now convinced that he would make a credible Prime Minister.

The Tories certainly do not want another general election soon, and unless there is a dramatic change in Theresa May’s management style they will also want a new leader first. Those familiar with her on government over the last seven years think such a change in style most unlikely (see: http://outsidethebubble.net/2017/05/30/theresa-may-exposed-as-a-fraud/ and https://order-order.com/2016/07/02/read-full-article-pulled-telegraph-pressure-may-campaign/ ). Labour are certainly keen to get into power. The prospect for the Tory/DUP coalition are not good. The DUP are probably the most extreme right wing political grouping in the UK today. Many of their MPs have a track record of quite strange and eccentric views!

With a Tory/DUP coalition it is going to be extraordinarily difficult to make any serious progress with the Northern Ireland assembly rebuilding. Indeed the risks of unravelling the progress of the last 20 years since the Good Friday Agreement are very concerning.

Labour shouldn’t imagine that leading a minority government would be easy. The difficulties of that would be exploited mercilessly by a Tory party which has to rebuild if it is to have any prospect of winning back power.

Labour also must have concerns about its capacity to run another general election campaign soon if only because of its financial resources. Donations may well come in now that Corbyn is revealed as being a very promising bet, but Labour simply don’t have access to the deep pockets that have funded the Tories over the years.

The most likely scenario is that there will be a fairly advanced Tory/DUP “coalition of chaos”. The chaos will centre on Brexit and the fact that those closest to Theresa May are at the entire opposite ends of the Brexit spectrum. David Davis is a hard core Brexiteer, while Damien Green, her Deputy Prime Minister, is an enthusiastic Remainer.  David Davis has already signalled that the May government will press ahead with a hard Brexit. To outsiders it is seems that he and she have learned nothing from this election. That will exacerbate tensions within the Tory party further.

Consolidating and Strengthening Labour for the Next Election.

From the Labour point of view it really needs to bring back some of the big hitters from the Labour Party that deserted Jeremy Corbyn, believing he had no chance of leading a successful campaign. Loyalty to those already in the Shadow Cabinet is important but always remember Lyndon Johnson’s quote about J Edgar Hoover. “It’s probably better to have him inside the tent pissing out, than outside the tent pissing in”. People like Chuka Umuuna , Clive Lewis and Yvette Cooper are important and valuable resources of the party. Much better to have them working within the party.

The next few months will see a markedly faster reduction in real wages for most. Inflation today has risen to its highest level for four years (2.9%) while wage stagnation, particularly in the public sector, is rampant. The Tories may well take the brake off their austerity programme but that would take some time to have any noticeable effect. It is highly unlikely the Tories would introduce serious tax increases for the better off while the coalition is such a fragile creature. This would make their claims about ending the deficit within finite time ridiculous.

It seems likely is that another general election will happen in the autumn, most likely in September. That would give Labour a chance to address some of the issues that arose during the campaign which they would now have the capacity to rework.

Strengthening The Labour Manifesto.

The Labour manifesto was generally thought to be rather weak about it support for business. This is important. Building business confidence in the potential of Labour to produce a strongly growing and more forward-looking and expanding economy could be critical for a successful campaign. If Chuka Umunnu was brought back into the inner circle as shadow business secretary he would be well placed to help here. He is undoubtedly a big beast in the Labour firmament, and his return would be very helpful in broadening the appeal of the party more widely.

Defence and security were raised regularly as issues by the Tories. The increasing evidence of under resourcing (as well as marked incompetence) with the security services is already working against the Tories. On defence, Trident was used by the Tories yet Labour managed to get away with their agreed position plus accepting that there is a diversity of view within the party.

However defence is certainly something where the Tories can be attacked. A great deal has made of the fact that the UK spends 2% of its GDP on defence. Unfortunately, the way this is spent is totally laughable. There are major problems with substantial parts of the British military, including the aircraft procurement for its too-short aircraft carriers, the way that all Type 45 destroyers as well as all our attack submarines are currently in port makes us fairly well defenceless (see: http://outsidethebubble.net/2017/03/16/britain-defenceless-in-the-21st-century/ and what should be our policies in the future, see: http://outsidethebubble.net/2017/04/10/defence-in-the-21st-century/ ).

One Tory attack point was the history Jeremy Corbyn of being prepared to talk with terrorists such as Hamas and the IRA. Corbyn successfully countered by essentially using Churchill’s line that “jaw, jaw is better than war, war”. Otherwise, the rejoinder here is simply a matter of pointing out that Theresa May is now climbing into bed with the DUP, undoubtedly the political wing of the Ulster loyalist paramilitaries. Several of the DUP MPs have met with leaders of these paramilitary groups very recently.

Claims That Sums in the Labour Manifesto Simply Don’t Add up.

Another area that needs to be addressed is the criticism that came from the Institute for Financial Studies about aspects of the Labour manifesto costings. The IFS concentrates very much on taxation and expenditure ignoring macroeconomics almost entirely. In criticising Labour’s spending plans they completely ignore what effect those plans would have on the size of the economy. As the economy grows, receipts from taxation also grow. The IFS simply ignores this and claims that the sums do not add up.

This has been looked at in detail by Simon Wren-Lewis of Oxford University. To quote from his blog dated 30 May 2017 “….according to Larry Elliott, Oxford Economics estimate that “the economy would be 1.9% bigger under the Lib Dem plans and 1% bigger under Labour’s plans than under Conservative plans.” The argument that this cannot be done because it would involve some more borrowing is rightly dismissed as pre-Keynesian nonsense. It is for this reason that the IFS approach of ignoring macro is so helpful for the Conservatives. “ . Labour must find a way of articulating this problem in its manifesto.

The claim often made by Tories during the election campaign is that Labour forever turned to the “Magic Money Tree” to fund their programme. It is essential that the Labour manifesto addresses this head on by explaining that the Tories have already used the same Magic Money Tree that Labour will use. The Tories have used it to the extent of nearly £500 billion, dramatically more than the amount that the Bank of England will generate for Labour’s plans for investment in the UK. There is more about this here: http://outsidethebubble.net/2017/06/13/under-the-shade-of-the-magic-money-tree/ .

Campaign Strategy for the Next General Election.

In planning for the next general election Labour will no doubt build on its experience of recent weeks. One important aspect has been the way that the younger generations were energised by the Labour campaign.

It is critical that Labour must not take this for granted. The young are much less likely to be deluded by spin and simply rehashing what has been done already will not be enough. The young need to see progress and development of ideas which they all can identify with and feel to be good for their own future and the future of the country.

And finally Labour needs to make a very articulate argument for the middle-aged and elderly who voted strongly for the Tories. A very recent poll suggests people in the 35-44 age group voted very strongly Labour against predictions. The older age groups need to be help to feel comfortable that Labour is not, to quote the Economist, the party of the loony-left, but actually is proposing policies which are widely copied from other much more successful and growing Western economies around the world.

Under the Shade of the Magic Money Tree.

Summary: The Tories criticism of the Labour manifesto as depending on a “Magic Money Tree” shows just how little they understand of basic economics. The austerity programme of George Osborne and the Tories has led to unremitting damage to our economy that people are now waking up to. The realisation that money can sensibly be borrowed to invest in the future of the economy is sound. It is this approach that underpins much of the appeal of the Labour election manifesto. It is the Tory lack of understanding of this is why they keep talking about it. However there is no doubt that they just don’t understand these arguments. Most economists are convinced that the Tories are simply wrong on this.

Many spending commitments in Labour’s election manifesto were dismissed by the Tories as depending on a “Magic Money Tree” to pay for all sorts of investments in the UK. This criticism show a remarkable ignorance of basic economics. Most Tories appear to be unaware that they have depended heavily in recent times on the same Magic Money Tree. They have used it over the last seven years to produce nearly £500 billion worth of new money to inject into the economy.

This program was led by the Bank of England and called “Quantitative Easing”. As the British recession advanced, worsened by the Tory austerity programme, spending and investment fell to a degree that there simply wasn’t enough money in circulation to support a strong, growing economy. Too much was being hoarded and spending needed to increase if the economy was ever to grow.

The idea was that if the Bank of England purchased assets from organisations such as pension funds and large companies, those organisations would reinvest it in the UK. In fact it was much less effective than intended because a great deal of that money ended up simply shoring up the balance sheets of the British banks to meet new regulations. Companies hoarded the money rather than use it for investment so again growth was not effectively stimulated.

Much of the apparent growth in the UK economy recently is not a consequence of quantitative easing. It is principally because individuals are allowing their outstanding credit card bills to increase. It is those increases that allow increased spending to make it look as if the economy is growing. Unfortunately all this extra borrowing has to be repaid by individuals. As soon as money becomes tighter there is likely to be a major drop in spending with damaging consequences for personal standards of living as well as for growth.

Labour’s spending plans are in two parts. One is to increase expenditure on things like social services, the NHS and education. Labour propose funding this by increasing taxation on the wealthy and on profitable corporations. The other part involves buying key assets such as the railways and the Royal Mail as well as raising money to invest in infrastructure projects ranging from simple road repairs right up to a nationwide housing programme (see: http://outsidethebubble.net/2016/09/27/a-fairer-deal-solving-the-housing-crisis/ ).

All these investments will produce a positive return. By borrowing and paying the remarkably low interest rates being charged at present on such borrowings, typically 1.5% on a 30-or 50-year loan, the boost to the economy and to our society would be substantially greater leading to a wise and effective investment. As the economy grows more rapidly, taxation receipts will increase.

This is exactly the same as many of us manage to buy a house. We borrow to provide a mortgage on the property. For most of us this is the only way we could afford to buy our own home. We pay interest on that mortgage and gradually pay back the loan. We end up owning a property, a good investment.

At the same time our day-to-day living expenses are balanced against our income from all sources. That is what we do with our personal finance and Labour is simply proposing doing that with the nation’s finance in exactly the same way.

The big mistake that the Tories, and particularly George Osborne made was to try to pay for things that were genuine investments out of taxation. They obsessively wanted to “balance the budget” because they felt that was the proper thing to do. Within the Eurozone it is an obsession particularly of the German Economics Minister, Wolfgang Schauble,  that pushed countries such as Greece, Ireland and Portugal to the brink of economic collapse and indeed nearly forced Greece out of the Eurozone altogether.

Economists quickly realised obsessive austerity was simply nonsense. Countries that are growing fastest now are the ones that have abandoned austerity if they ever tried to implement it. The UK is one of the last countries still pushing austerity. That is why our growth rates are so moribund. On average people in the UK are less well off in real terms than they were before the recession started nearly 10 years ago.

Fortunately the British public now understand just how inappropriate austerity is and have voted for a change. The change that Labour want to implement will rebalance substantially our economy by increasing taxation on the wealthy, both individuals and corporations, and then using that income to fund the NHS, social services, education, welfare and so many other areas.

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