When official figures show that the number of new homes built for social renting has fallen by almost four-fifths in a decade, it should come as no surprise that more than a million families in England are stuck on council waiting lists.
The dramatic slide resulted in only 6,463 in social housing homes being built in England in 2017-18, down from almost 30,000 a decade earlier. High on the list of blame for this shameful situation are government cuts, both to local authority budgets and to housing associations’ spending power.
Another culprit is the Treasury’s desperate and unprecedented interventions in the private property market, which have boosted cash subsidies and indirect support to the nation’s homeowners. Government subsidies to homeowners now outstrip the benefits paid to social and private renters by some distance.
Earlier this year, the Chartered Institute of Housing (CIH) embarked on a broad analysis of government spending, taxation and regulation of the housing market, on the premise that government intervention in the housing market had dramatically increased in the post-crash era.
The report, which appeared last week, shows about £8bn of government a year going into the private housing sector over the five years to 2020-21 – with over half of that being spent specifically on supporting home ownership. Over the same five years, direct funding for new social housing amounts to less than £2bn annually.
Tragically, much of the subsidy for homeowners has found its way into the pockets of property developers. A report last year by JP Morgan established that what the £12bn spent by the government on the help-to-buy scheme since 2013 has mostly achieved is to allow builders to charge more for new homes.
If gains in wealth are the main criteria, everyone in the chain is a winner. While first-time buyers pay more initially, they profit over time as wave after wave of help-to-buy purchasers overpay for their homes, and thereby push up the prices of existing housing.
Tax acts as another subsidy. The CIH says that in 2016-17, the government charged homeowners £10bn in tax, mostly on stamp duty on house sales, and granted £39bn in tax relief. By contrast, private landlords paid net tax of around £8bn. Landlords effectively pass on that extra cost in higher rents, however. As the report points out, the benefit system picks up the slack, with around £15bn a year going to social housing tenants and £8.5bn to private renters.
The report makes the point that help to buy is now as embedded in the property system as the Bank of England’s low interest rates. It warns that chancellor Philip Hammond’s commitment to extend the scheme to 2023 shows that what should have been a temporary lift for first-time buyers and housebuilders has become a permanent and essential pillar for the sector. Successive cuts in stamp duty for first-time buyers are another subsidy that is becoming perennial.
The extent of government intervention in housing is such that it is not really a market any more – which should prompt a review by the Competition Commission. With homeowner subsidies rising alongside support for private and social renters, it is clear that the Treasury’s attempts to manipulate the housing market poses a huge and rising cost that should be reviewed by the National Audit Office.
Only when the costs in money and lost economic output are clear can reform be possible. The Mirrlees report showed in 2011 that Britain’s property tax system is not a system at all, but a hotch potch of poorly designed, expensive measures that harm the economy. It was ignored. That cannot be allowed to continue.
March of the robots will give women the best jobs
The gender bias in the labour market is well documented. Pay gaps, sexual harassment, glass ceilings, under-representation in the boardroom: barely a day goes by without some manifestation of male hegemony.
All of which makes a new piece of research from Nir Jaimovich, professor of economics at the University of Zurich, compelling. It’s a study of the growing demand for women’s social skills in high-paying jobs, and the title says it all: The End of Men.
That’s going a bit far, obviously. Men are not going to disappear from the workforce any time soon, and it will take decades, not years, for women to be fairly represented in the upper echelons of business. Fewer than one in three directors of FTSE 100 companies are women. The number of women chairing FTSE 350 companies has actually fallen, from 15 to 12.
But things are happening lower down organisations. Jaimovich looked at gender work patterns in the US since 1980 and found a significant fraction of the increase in the share of women in “good jobs” – high-skilled work involving cognitive ability – which he puts down to the rising importance of social skills. And it is not just that there are more women in good jobs; those good jobs are paying better because there has been a marked increase in the returns to social skills over time and across all jobs.
This trend is certain to intensify in the age of the robot. While there is still hot debate about whether artificial intelligence will create or destroy jobs, one thing is certain: there will be demand for skills that machines find it hard to replicate, such as empathy, communication, and recognition of emotions.
Social skills are already important but will become even more valuable in an AI world. The fourth industrial revolution will have a gender bias: in favour of women.
What does Virgin see in floundering Flybe?
Like the bumblebee, which apparently defies the laws of aerodynamics, Flybe has long tantalised observers, who wonder how this unwieldy entity somehow stays aloft.
True, it has amply demonstrated one dictum of modern commercial aviation: to make a million pounds, best start with two. And then some: an airline that floated with a notional value of £215m at the start of the decade is worth a tenth of that today. But Flybe, Exeter’s great purple conundrum, keeps going, through successive plans unveiled by management, even if the vaunted turnarounds have looked more like slow death spirals.
However, a week after it was put up for sale, a suitor has emerged in the form of Virgin Atlantic. While it might be possible to imagine Sir Richard Branson riding to the rescue of a British asset on the cheap – a kind of airborne Northern Rock – the tycoon no longer has a controlling interest in his airline, and it is not entirely clear why Delta and Air France, as Virgin’s majority stakeholders, would want more sputtering carriers to deal with. Its Heathrow slots will be of interest, while trying to channel more customers from the sticks to Manchester to fill up transatlantic planes could make Flybe an interesting proposition.
However, memories of Virgin’s tried-and-failed Little Red – the domestic air routes granted to Virgin as “remedy slots” after British Airways acquired BMI, to keep a modicum of competition – must loom large in the mind. Yes, Flybe’s turboprops are half the size of the half-full A320s Little Red plied in those brief, inglorious days. But the dampeners of air passenger duty, Brexit uncertainty and onerous aircraft leases won’t be wished away.
Subsidised routes from Heathrow for a regional carrier might be of some assistance, but even at £20m, investors would query whether Flybe is a Black Friday bargain. A Virgin aircraft still looks more likely in outer space than Exeter.
