Heroes: Burning Down the House 

 

‘Hold tight 

We’re in for nasty weather 

There has got to be a way’ 

 

As I tried to explain to someone over lunch last Christmas this is a very middle-class recession. The third bottle of Barolo eroded my powers of persuasion. 

 
Buying a property – any property – in the UK is increasingly the preserve of the rich. Data from the ONS shows that the middle classes are increasingly squeezed, with only the cheapest 10% of houses now affordable (defined as being no more than 5x times a household’s income) to middle-income England. 

This actually has been coming for a while; it has been C.20-yrs since a household with the median income could afford a mid-range-price house in England. 

In 1999, a median house in England cost 4.4 times the median income, according to the ONS. The latest figures for 2022 show that the ratio had almost doubled to 8.4 times income in 2022. 

Within this there are regional distortions. 

In 2022, only the top 10% could afford the average home in the SE. London is even worse, with the average home now beyond the official measure of affordability even to households whose income is in the top 10%. 

The NE remains the most affordable region to buy a house in England, but the median house cost 5.3 times the median household income last year. 

A median-price home in Wales became unaffordable to the typical household in 2004: in 2022 that ratio stood at 6.4 times the median household income. 

The equivalent Scottish household stopped being able to afford a mid-priced home in 2006: in 2022 it was 5.3 times income.  

Northern Ireland became unaffordable again in 2017 after a brief stint of affordability, reaching 5.1 last year. 

The term ‘home owning democracy’ was used to describe Thatcher’s legacy, that is now increasingly becoming history.  The number of adults living at ‘home’ in England and Wales has risen by 700,000 since 2011; C.30% of 25- to 29-year-olds now live with their parents. The trend has meant that those who move out are also far more likely to be paying their salaries to landlords; the number of households renting has more than doubled since 2001. Unfortunately, in much of the country, renting is also becoming an unaffordable option. 
 

‘Buying a property – any property – in the UK is increasingly the preserve of the rich’

 
After Johnson’s swashbuckling ‘getting Brexit done’, his government was going to level-up the country. Anyone who believed that a Tory government would ever do that must have been delusional. Even from Johnson, this was a whooper! 

And, low and behold it hasn’t happened 

The IFS finds a widening geographical wage gap in the last 3-yrs – driven by income increases for well-paid workers in London which mask real wage cuts elsewhere. 

Mean wages for employees living in the capital had increased by 5%, after adjusting for inflation, to £4,400 a month before tax. This is almost double the average national increase of 2.7%. Those living in London’s commuter belt saw pay increases of 4.5%. But many workers were now between 1% and 4% worse off than they were before Covid-19 arrived.  

The brunt of this has been borne by the public sector where workers have suffered real pay cuts. The laws of supply and demand no longer apply; labour shortages have been most acute in low-paid sectors, such as health and social care where they are struggling to fill vacancies. Real pay growth there is just 2.5%, below the UK average rise.  

Some in London are thriving, E.G., workers in finance, professional services and IT. City workers, on average monthly wages of £7,425, have enjoyed a pay rise of 7.6% above inflation since February 2020. Meanwhile, employees in manufacturing, which is concentrated in the Midlands, the north of England and Wales, have seen real pay shrink.  

In truth we no longer make very much, in 1951 C. one-third of Britain’s workforce was employed in industry. Today the UK does not even have a share of good jobs in manufacturing comparable to our G7 peers, distributed around the country. 

Brexit promised to deliver a ‘high-skill, high-wage labour market’. High-skill jobs attract high-skill workers, which partly explains why graduates make up C.50% of the working-age population in London and Brighton, compared with less than 20% of working-age adults in the north and midlands. Given the reported lack of skills in regions outside London, it is therefore self-defeating to see spending on adult further education and apprenticeships set to be 25% lower in 2024/25 than in 2010/11. 
 

‘inequality allows companies to offer insecure, low-paid work where there is no alternative’

 
Our geographical inequality allows companies to offer insecure, low-paid work where there is no alternative, impacting many people’s work-life balance. Globalisation reduced the need for traditional skilled and middle-class jobs, especially in post-industrial regions.  

A government that intended to level-up would have had an industrial strategy enabling investments in businesses and infrastructure to offset the self-reinforcing advantages of the SE. That was never on this government’s agenda. 

Instead, income inequality has increased, a situation that has been further exacerbated by the cost-of-living crisis. Rather than dealing with this, the government is pretending it isn’t happening, and trying to distract the electorate by blaming the climate crisis. 

They are right to link them, but as Ed Miliband highlights linking the two can cut energy bills, create good jobs, delivering energy security and providing climate leadership for the country. 

Putin’s war has sent energy bills soaring, plunged countries into one of the worst cost of living crisis in memory, and led to increasing inflation. We have been worse hit than many, primarily due to the legacy of 13-yrs of failed Conservative governments energy policy. 
 

‘the government is pretending it isn’t happening, and trying to distract the electorate by blaming the climate crisis’

 
Cameron’s decision to dispense with the ‘green crap’ was, even by his high standards, a colossal error. Since then the costs of solar energy have fallen 89% and wind energy has dropped by 60%. Renewables, are now C.9x cheaper than fossil fuels. As a result of Tories’ ban on onshore wind in England in 2015 energy bills are now £180 higher for every family in the country. 

In addition, we have played our part in making the climate crisis substantially worse. As a UN scientists warned the ‘era of global boiling‘ has arrived. Economists at the OBR said delaying action by a decade doubles its costs, acting now is the economic, rational and blindingly obvious choice. 

The Tories are lurching desperately towards a culture war on climate, majoring on the cost of transitioning away from fossil. It is important that in effecting this transition that individuals or sectors should not be left to bear the transition costs on their own.  

Areas such as energy efficiency will not only benefit up to 19m homes by cutting their energy bills, it will create thousands jobs for construction workers and electricians, tackling fuel poverty and providing climate leadership. 
 

‘delaying action by a decade doubles its costs, acting now is the economic, rational and blindingly obvious choice’

 
Many of the beneficiaries will be the lower- and middle-income families that Brexit and levelling-up was supposed to help. The Tories have no plans to invest in order to make this transition in areas such as energy efficiency or helping to fund a car scrappage scheme in London. 

Once again the Tories are out-of-touch, polls show that a majority of the electorate want to see positive actions action on the climate crisis and action on the cost of living. 

Last week’s election in Spain saw Vox, the party of extremist climate deniers, punished at the ballot box, repeating a pattern seen in Australia where the rightwing government was kicked out of office when it abandoned the centre ground on climate change. Sunak should ignore his party’s siren voices if he is to avoid the same fate. When Margaret Thatcher found herself in choppy waters, she famously told her party: ‘There is no alternative.’ 

In 2021, the Tory mayoral candidate Shaun Bailey put cars at the heart of his doomed bid to become mayor, promising to oppose affordable housing built on car parks, cut congestion charges, block the Ulez expansion and spend more than £37m funding 30 minutes of free car-parking. He lost! 

In 2022, in London’s local elections, the Conservatives campaign heavily centred on removing low-traffic neighbourhoods, more Ulez opposition and 60 minutes of free car-parking. Result; >100 Tory councillors lost their seats, including Wandsworth. 

Does Sunak listen? No 
 

‘If [governments] are serious about the climate crisis, there can be no new investments in oil, gas and coal, from now – from this year.’ 

 
Today he announced the approval of new licences for drilling for oil and gas in the North Sea, which, he said were, ‘entirely consistent with our plan to get to net zero‘. 

Rishi Sunak said domestic oil and gas saves ‘two, three, four times the amount of carbon emissions’ than ‘shipping it from halfway around the world‘. 

Even the International Energy Agency disagrees; in 2021 executive director, Fatih Birol said: ‘If [governments] are serious about the climate crisis, there can be no new investments in oil, gas and coal, from now – from this year.’ 

If Sunak were really interested in freeing the UK from the influence of ‘hostile states’ and Vladimir Putin’s ‘weaponised energy’, which drive the extreme volatility of oil and gas prices, he would be pushing hard on the policies that could free the nation from fossil fuel addiction as discussed above 

Grant Shapps, the minister responsible, has tweeted 36 times since late May about Labour and Just Stop Oil, and zero times about net zero. The issue appears to have been relegated in Tory eyes to just another front in a culture war, as it stares electoral defeat in the face. 

‘The time to hesitate is through 

No time to wallow in the mire 

Try now we can only lose 

And our love become a funeral pyre.’ 

    
 
Some really pithy stats about the state of the housing market in the UK, and who can have anything but sympathy for young people; can’t afford to rent, can’t afford to buy. What to do.

If that is a results of ‘events dear boy’ just how much of a boot does the PM want to put in?

With rapidly increasing, irrefutable evidence of our planet being wracked by the climate emergency, dishing out North Sea oil and gas permits looks like swivel-eyed lunacy; however, apparently if you keep saying that the UK leads the world in environmental issues, it doesn’t actually count.

FMOB. 

What was he thinking?:

As the climate crisis worsens the government has found perverse ways of dealing with it. The latest being increased exploration licences for oil and gas in the North Sea.

They are trying to add the crisis to their culture wars, turning the electorate against it as if it was the latest communist plot!

In doing so, they are just highlighting how out-of-touch they are. The question is, after Uxbridge and Ulez will Labour have the courage to attack this, or will they just sit back and hope the Tories lose?

Both leaders lack understanding of the electorate and their naive way of dealing with things only goes to show how in-tune Nigel Farage is.

Whilst my dislike of him is well known, I do have a grudging admiration for him. As I have written before he is one of the most influential British politicians post WW2. Almost single-handedly he masterminded Brexit. As his biographer Michael Crick says, he is “one of the great communicators of our age”.

He rose by encouraging dissident Tories to drag the party down to his level. Ukip achieved nothing before he took over in 2006 and nothing after he left, following the 2016 EU referendum. In between times they made the Tories dance to Farage’s Little Englander tune, securing the referendum that his side won.

His skill is anointing blame on anyone and everyone; bureaucrats, the establishment, immigrants, Tories, Labour, and immigrants. The aftermath of the GFC saw a loss of confidence in globalism and political elites. The  left should have capitalised on their discontent, but it was Farage who saw the opportunity for right-wing anti-elites populism.

He became an unelected rabble-rouser or, as he prefers, “man of the people”.

By and large his stunts around immigration have failed, and it is noticeable that he has reined this in as the electorate focus on other issues.

Banks, like by few, have become an ideal target for him to reinvent himself. Coutts, with a background in offshore tax avoidance, and a symbol of elitism was ideal for him, especially after they closed his account because of his political beliefs.

What seemed to pass many by was that he was, and is a part of that elite; an ex-public schoolboy, one-time commodities trader and former Coutts client, who has nothing in common with the average person in the street.

Could this be his political comeback?

Lyrically we’re on fire. We start with Talking Heads and “Burning Down the House”, to finish the Door’s epic “Light my Fire”. Enjoy!

@coldwarsteve
 

 

Philip 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

Click on the link to see all Brexit Bulletins: