Unaffordable Housing

Continuing my new series taking issue with Sunday Telegraph columnists, this week it is the turn of Jeremy Warner, who yesterday wrote some very strange things under the heading ‘Unaffordable housing’.

Now to be fair his diagnosis was spot on. He reported that average real house prices in London have soared by almost 40% since the beginning of 2013, and concluded that the three primary causes of this are under-supply, intense overseas buying and virtually unbridled immigration. So far so good.

It is with his prescription that he goes belly up, writing “I’m all in favour of free movement of labour, and on high levels of inward investment, but if you are to have these things it is incumbent on the Government to ensure adequate supply and the infrastructure to service it.”

Let’s take these factors in order. Since 2004, when the immigration floodgates opened, our average real standard of living has fallen by over 20% (see ONS statistics). Indeed if you factor out an annual one percent for productivity growth, that is a fall of over 30%. Of course some of this is due to the banking crisis, but on another page Liam Halligan helpfully tells us that “our economy endured a 7.2% peak-to-trough drop after the banking crisis”. He doesn’t tell us where he got this figure from, and I suspect it is a tad understated, but let us accept it for the time being. That means that a fall of over 20% was due entirely to immigration (unless you can think of any other possible factor commencing in 2004?).

Now at first sight this conclusion might seem counter-intuitive. After all most immigrants do work hard and pay their taxes, and we are constantly being told that the NHS would collapse without them. But you know you can argue the whys and wherefores until the cows come home. I was always taught to judge by results. And those results, particularly in the week following the Paris atrocities, are unequivocal. Immigration is hugely damaging to our standard of living as well as to our security, our environment, our infrastructure and our housing provision. At these levels it also results in cultural swamping. I have no difficulty with cultural diversity, nor with our historic commitment to taking in refugees from persecution, but when the numbers and population density reach these levels we are in a completely different ball game.

Then there is the question of inward investment. For decades successive governments have preached the benefits of inward investment and have done all they can to encourage it. But again I say judge by results. Where are all these benefits? I don’t see any. What I do see is a record balance of payments deficit in excess of 5% GDP, which of course exports jobs and undermines employment. Inward investment has the effect of pushing up our exchange rate and making our currency uncompetitive.
We should stop encouraging it forthwith.
I have no difficulty with foreign ownership as all who invest here must obey our laws, but there is plenty of money sloshing around the money markets, especially post QE, and corporate savings are at high levels. Domestically sourced investment will naturally follow an increase in consumer demand.

Finally there is Jeremy’s frustration at our planning laws. Jeremy, those planning laws are there for a reason. They are there to protect our heritage, our habitat and our environment. Once these things are destroyed they cannot be recovered. I do accept that there may be insufficient brown field sites to provide the housing necessary to make good the current shortfall, particularly if mixed development is provided as of course it should be. I would also favour the creation of a new planning category for what I would call, for want of a better name, scrub land, ie undeveloped land of no particular alternative merit. I would certainly favour a big increase in stamp duty for foreign buyers of UK domestic property.

But even if we do all these things we have no chance of keeping up with ‘virtually unbridled immigration’. Balanced migration has to be the starting point, and of course that can only be achieved by leaving the EU.


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