inequality“I’m not on the make, I just need a break 
What do I get?” 

 

As Labour’s first 6-months in office comes to an end, I thought we might consider what their priorities are,? What they should be? And, how might they execute them? 

 

One issue that should be a priority is compensation for postmasters; sadly that doesn’t seem to be high on PM Starmer’s agenda, but then it might not be a significant vote winner, and it will cost money. This reminds me of the Tories and priorities which we covered most recently in “Priorities” and “Priorities, dear boy, priorities”. 

Immigration, we are consistently told, is a priority. Which, according to the ever further right Tories and Reform, would, if reduced, or better still stopped, cure all our problems. A seemingly magical solution. 

Immigration was one of the key drivers for Brexit, even though most Brexiters were squeamish about being seen as racists. Immigration was out-of-control due to the EUs open border policy. To prove their point, they cited net migration in the 3-years leading up the referendum of 865,000. 

Eight years on from that fateful vote, the past the past 3-years have seen net migration of C.2.4 million! Putting aside one-off factors such as war in Ukraine, the OBR expects net migration to average 350,000 p.a. over the next five years.  

There are several significant arguments in favour of immigration. 

We have an aging population, further exacerbated by declining birthrate and a large pool of working-age adults who are long-term sick.  
 

‘We have an aging population, further exacerbated by declining birthrate and a large pool of working-age adults who are long-term sick’

 
Certain sectors of the economy, such as hospitality, would suffer greatly without foreign-born workers. 

There is housebuilding, a key priority of the government, who are targeting building 1.5m new homes in England during this current parliament. To achieve this the construction industry estimates an additional 251,000 skilled workers will be required and there aren’t enough UK-born builders to meet this requirement. 

The same applies to the NHS. If we are to meet the target of 92% of patients in England waiting no longer than 18-weeks for elective treatment, who will deliver this? There is not the time to train more staff, therefore the NHS needs to recruit from overseas. 

Conversely, all these necessary overseas workers need to live somewhere, which deepens the housing crisis, and puts added strain on public services. 

Statistically, these high levels of net migration haven’t made us noticeably more prosperous; the previous high point was Q1 2008 when GDP per head was 7634, a the end of Q2 this year it was 7903. However, during this period there were to very significant black swan events; the GFC and Covid.   

Source: https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/mwb6/ukea 

There is also the fact that easy access to foreign labour could have discouraged private businesses from investing fully, and allowed successive tory governments to fund health and social care on the cheap.  

As the above highlights, there are pro’s and con’s to immigration. No matter what the right say, zero immigration would cause more issues than it solves, however, the current level of net migration isn’t sustainable. 
 

‘the current level of net migration isn’t sustainable’

 
What is becoming clear is that all too often government has used migrant workers to paper over the cracks. There has been no long-term strategy to train the domestic workforce to fill in the gaps and preventing the need to poach medical and care staff from overseas. 

The private sector is little better, finding it cheaper to exploit migrant workers rather than recruiting from the domestic workforce.  

Steve Fothergill, an economics professor at Sheffield Hallam University, has studied what happened post-Thatcher’s deindustrialisation of the old industrial heartlands of England and Wales. When he looked at employment in these communities between 2011 and 2021 he found that on average 40% of the new jobs had gone to non-UK citizens. Which speaks volumes for our failure to regenerate these towns. 

Many of these towns are the ones that voted for Brexit, that deserted a Labour party they felt was too “trendy” and London-centric in support of Johnson’s promise to level-up. Whilst they returned to Labour in this years election, there is a feeling that there votes are on-loan. Should Labour disappoint, and it appears they will, these constituencies will look to Reform, and a Farage that talks to them and empathises with them.  

As was mentioned above, one of the issues with immigration is the need for more housing, something we have struggled with post Thatcher’s right-to-buy. 
 

‘Should Labour disappoint, and it appears they will, these constituencies will look to Reform’

 
Housing and immigration are something of a double-edged sword; we need migrant workers to make up our shortfall in builders, but each of those migrant workers adds to the housing shortage! 

As a result, we have what appears to be another back of the fag packet policy, as PM Starmer said local plans to reach the targeted 370,000 home a year were the starting point, but that the government would “absolutely” push development through if the plans did not work. 

The target for the total number of new homes per year breaks down as; 87,992 (24%) in London, 70,681 (19%) are in the south-east and 45,429 (12%) are in eastern England. 

The updated national planning policy framework (NPPF) commits to a “brownfield first” strategy, with disused sites that have already been developed in the past prioritised for new building, meaning that developers will always get a “yes” when proposing building on brownfield sites. 

As there are sufficient of these, councils will be ordered to review their green belt boundaries to meet targets by identifying lower quality “grey belt” land that could be built on. 

Grey belt is defined as “does not strongly contribute to green belt purposes”. The housing minister, Matthew Pennycook, gave examples of grey belt sites as “disused petrol stations, abandoned car parks, but also just low-value scrub land”. 
 

‘we need migrant workers to make up our shortfall in builders, but each of those migrant workers adds to the housing shortage!’

 
Councils are expected to consider releasing higher-quality green belt land for development if they exhaust their supply of brownfield and grey belt, and could face consequences should their plans fail to deliver the required developments. 

Starmer made his intentions very clear, saying: “But are we going to push it through if those plans don’t work? Yes we absolutely are. Are we going to push away the planning rules and make them clearer, as we have done today, get away the blockers that are stopping the houses being built? Yes, we are absolutely intent.” 

Any development on green belt land must comply with new “golden rules”, which require developers to provide infrastructure for local communities, such as nurseries, GP surgeries and transport, as well as a higher level of social and affordable housing. 

These draconian measures from central government risk destroying local democracy. Currently, local people  enjoy “the freedom to order the environs of where they and their families live”. The governments new planning rules drive a cart and horses through this, and will prevent people exercising their democratic rights who the PM and housing minister see as nimbys, reactionaries, blockers, bureaucrats, declinists and newt-lovers. 

Councils in England will, in effect, be nullified, with all planning being “regionalised”, although it might, more accurately, be described as “centralised”. Algorithmic housing targets are to be imposed on rural communities and any proper control over a development’s location, scale and appearance removed.  
 

‘housing targets are to be imposed on rural communities and any proper control over a development’s location, scale and appearance removed’

 
Not only will these proposals destroy local democracy, it would appear that the housing plan are missing those they should be helping, the homeless and those in poverty. Instead, as the government strives to reach their 1.5m target, thy are relying on the “volume housing” developers of executive homes.  

There is no regional policy for deindustrialised towns which are rich in brownfield sites. Rayner’s harsh, ill-conceived legislation smacks of socialist jealousy, picking on easy targets such as the private rented sector who are blamed for the sufferings of the extreme poor, for the housing crisis. Rayner’s sprawling new estates does nothing to address this. 

There is also nothing in the new planning regulations to restrict developers building, what has been described as a new generation of “slum” homes by converting office blocks into flats without planning permission. 

In April 2019, John Healey, the then shadow housing secretary who is now in charge of defence, pledged that Labour would scrap permitted development rules that bypassed the usual planning process. 

Conservative-permitted development rules have created a get-out clause for developers to dodge affordable homes requirements and build slum housing,” he warned. “To fix the housing crisis, we need more genuinely affordable, high-quality homes. Labour will give local people control over the housing that gets built in their area.” 
 

‘delivering “rabbit-hutch” homes, with some flats built without windows’

 
A number of projects have been expsed as delivering “rabbit-hutch” homes, with some flats built without windows. Others only offered the space of a typical bedroom. Residents at one scheme, Newbury House in Ilford, east London, were described as being packed in “like sardines” in flats measuring as little as 3.6 metres by 3.6 metres (12ft x 12ft). They also complained of poor ventilation. 

Ian Fletcher, policy director at the British Property Federation, said: “Conversions done well are not always a cheap option. Calls for affordable housing requirements are understandable but they need to be tempered with what is viable. Otherwise, empty buildings will just continue to sit empty, blighting local neighbourhoods.” 

As I have tried to highlight, there are considerable issues with the government’s proposals, and it was amusing to see how inept the Tories were at voicing them. Proving that anti-immigration is the raison d’etre, the shadow housing secretary, Kevin Hollinrake, claimed the “majority” of homes built to reach the government’s new targets would go to migrants: 

Due to the loosening of restrictions on the visa requirements, such as the salary threshold, and the scrapping of the Rwanda deterrent, the majority of the homes they deliver will be required for people coming in to this country rather than for British citizens.” 

Florence Eshalomi, the chair of the housing committee, criticised the remarks, saying: “For the shadow secretary of state to reduce this about immigration is wrong. Think about those many children who will be sleeping rough this Christmas.” 
 

‘the average property will require a mortgage of 8x times their joint earnings. Or 7x, if they put down 10%. It’s unaffordable’

 
What seems to have escaped the government’s attention is affordability. 

The average annual salary for Londoners is £44,370 across all age groups, according to the latest data available for 2023 from the ONS.  The average price for a property in London is £687,196 over the last year, according to “Rightmove”. 

Therefore, if we have a couple both earning the average wage, the average property will require a mortgage of 8x times their joint earnings. Or 7x, if they put down 10%. It’s unaffordable. 

We could assume that 370,000 new homes coming onto the market each year will reduce prices, after all that’s basic supply and demand.  

Can you imagine any government surviving a government induced fall in house prices? Not to mention, all the recent buyers who would be faced with negative equity.    

I will admit to being somewhat mystified as to why 43% of the new homes will be in London and SE. What has happened to regenerating deindustrialised areas, to levelling-up? This is light-blue Kier being light-blue Kier. 

But, now I know; The chancellor has called the UK’s financial services sector “the crown jewel in our economy” and has claimed that regulations imposed after the global financial crisis have “gone too far”. 

In response, Fifty economists and policy experts are warning that encouraging the City to expand could threaten financial stability and jeopardise growth. 

Signatories including the Nobel laureate Joseph Stiglitz, the Labour peer and anti-poverty campaigner Ruth Lister, claim that allowing the financial services sector to expand further risked “undermining the government’s efforts to grow the economy,” and also posed “particular risks to the government’s wider industrial strategy and missions”. 

They continued, saying: “The wealth of empirical evidence showing that, beyond a certain threshold, financial sector growth harms the wider economy,” their statement said, adding: “History has shown time and time again that beyond a certain point, the financial sector can only continue to grow by taking excessive risks and increasing the economy’s debt burden until the inevitable collapse.” 

It could be said that Labour knows where it wants to go but it doesn’t know how to get there. As a result, everything they propose, no matter how well intentioned, looks wrong. And, as I wrote in “TikTok, TikTok, “X”, Is There Any Point?”, their messaging and constant morose attitude only exacerbates their problems. 
 

“But now I see with my own two eyes
The problem was all right down to you”

 

‘This week we look at what the government’s priorities are and aren’t.

One that clearly on the “isn’t a priority” list is compensation for wrongly accused postmasters. I find it strange that after the shock and horror created by the excellent “Mr Bates vs The Post Office”, we have settled back into doing nothing. There are mealymouthed excuses about enquiries, but the world knows these people were wronged and are due compensation.

I had hoped that labour would be a breath of fresh air, but it’s already stale. Just more of the same, expenses scandals, excuses, can’t afford, with added misery. At least Johnson was a laugh!

Immigration is a difficult problem, not just for the UK but for many overseas governments.

Established economies have major demographic issues caused by aging populations, and immigration can help overcome this. But, all too often they just become cheap labour for both public and private sectors, as a result little is ever done to redress the imbalances in society.

These imbalances, the result of deindustrialisation, create inequality and poverty. Areas become ghost towns, and these “left behind” people become cannon fodder for hard-right politicians, happy to demonise immigrants for years of failed economic policy.

The housing crisis is another result of failed economic policy; right-to-buy wasn’t a bad idea but it was badly executed as no provisions were made to replace all the council homes that were sold off.

Labour’s policy to right this looks to be equally poorly executed. Irrespective of the rights and wrongs of their planning proposals and emasculation of local government, there is the issue of affordability, especially in London and the SE. If the net result sees property prices fall you can expect Labour to be in opposition forever and a day.

Starmer gives the impression of knowing where he wants to go, but he clearly doesn’t know how to get there. If we are on a road, it looks like a road to nowhere. If I had to say a destination, it’s Farage in No.10.

Lyrically, we start with the Buzzcocks classic, “What Do I Get”? As the song says, “ I get nothing at all, at all, at all”.    We finish with Wah and “Hope (I wish you’d believe me)”.

Enjoy!

Philip.’

 
@coldwarsteve
 


 

 

Philip Gilbert 2Philip Gilbert is a city-based corporate financier, and former investment banker.

Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s

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