It will come as no surprise that the latest house price stats from the ONS shows that property is still the numero uno investment when it comes to where you put your cash.
It will also come as no surprise that London and the South East, once again, top the house price, and house price rise, charts and the gap is further widening with the rest of the country. The capital is now looking at an average price of, near as dammit, half a million quid. Meanwhile, head up the M1 and M6 and over in the north west, you would be looking at just £151k for an average house price. In other words – three times cheaper to get a rung on the ladder oop norf than darn sarf.
That means that whilst people bemoan the ‘house price crisis’ it is more like one that affects just the bottom right hand corner of the country. The other parts of Britain have must less a ‘house price crisis’ as a ‘lack of suitable or any employment opportunities that could to get the necessary capital to put a deposit down on a property crisis’. Not a terribly catchy name, but there you go.
So what can be done to sort this? For years, policy wonks have talked of getting the private sector to build more, reinstating council house building programmes, increasing social housing, encouraging more right to buy etc etc. Yet that has both failed to happen and still fails to deal with the underlying issue – that London has all the jobs and therefore people have to go there to live and work.
Government has just two levers at their disposal – those that control supply and those that control demand. Controlling demand has generally been thought of as using interest rates as a tool to adjust the mortgage costs, and therefore willingness to get into debt with banks to buy a home. Bung up interest rates you quell demand and cut prices. Yet the first trouble is that rates are now set by an independent Bank of England whose only requirement is to keep inflation hovering around two percent and have no desire to manipulate the housing market. The second is that, even if government told the BoE to use interest rates to slow house buying demand, it would also cause demand to slump right across the country – not just in the capital – therefore failing to narrow the gap between the regions.
The second would be to stimulate supply – build more houses through either public sector construction, requiring housebuilders to do more work on land they already own or freeing up more crap land by railway lines for more social housing to be built on. Trouble is, that has been tried, and failed, over and over again. There are never enough houses built to dent the ever spiralling London housing costs and still fails to encourage people to live and work in anywhere but the capital.
So here is my ten pence worth into solving this conundrum. Move Parliament and Whitehall to Leeds. Hear me out.
The House of Commons, is crumbling and is going to cost £4bn to renovate. Ten Downing Street is a house, nothing more. As is number 11. All three are completely impractical for 21st century politics. Whitehall and the surrounds are prime real estate which is ripe for business, tourism and rich people to buy and could be sold of for billions of revenue for a public purse that is still riddled with debt from the banking crash of 2008.
Meanwhile, transferring the functions of government to the north would bring politics closer to the very people who have felt so disenfranchised over recent years.Not only that, but the relocation of the 80,000 odd civil servants, 10,000 employees of the crown who work in Parliament, MPs, Ministers, lobbying outfits, quangos, servicing staff and journalists would free up housing stock and reduce demand for property in London and cut long term expenditure on wages and expenses for the taxpayer.
Building a new fit-for-purpose Parliament and ministries would stimulate a northern economy – a powerhouse if you will – with tens of thousands of new jobs created and boost property demand, and therefore the value, of property prices right across Yorkshire, Lancaster and Humberside. All the while this would send a powerful message that London no longer was the bullying big brother of Britain.
There is precedent for such massive infrastructure projects to improve an area and also for moving massive institutions out of the capital. The London Olympics cost £10 billion to transform a small pocket of east London – which is now coincidentally seeing the largest house price rises in the UK. And Auntie Beeb not long ago shifted huge chunks of her workforce up to Salford for almost identical reasons of long term affordability, becoming more in touch with a wider section of the population and because their facilities were old and outdated.
Many other nations also show that not only is this possible, but it is also desirable. Splitting the business centre from the political one allows a larger chunk of a country to benefit from economic stimulus. Whilst Britain has just London, America has New York and Washington and LA and San Fran. Australia has Sydney and Canberra and Melbourne and Perth and Brizzie. New Zealand Auckland and Wellington. China Beijing and Shanghai. Spain, Madrid and Barcelona. Brazil, Rio de Janeiro and Brasilia. Canada has Ottawa, Vancouver and Toronto. I could go on.
There would be opposition. There always is. And it would come from vested interests – like civil servants and MPs – who do stuff to others but never want stuff done to them. Yet it would stand a real chance of equalising the ever growing social and economic discrepancies facing the UK. At a time when Brexit and Inderef2 are threatening the very fabric of the United Kingdom of Great Britain and Northern Ireland it would send a powerful message that the country was thinking about the future and not the past whilst benefiting so many of those who have missed out on the economic boom that London has lapped up for so long.