Housing Crisis: Brown has no answers
Socialist policies are needed
“Home owners need to know that we will do everything we can to keep the housing market moving forward”, promised Gordon Brown last week. But will the small measures he has announced make much difference?
Paula Mitchell, London Socialist Party
Britain is facing potentially its worst economic crisis in decades and the housing crisis is a central part of it. As a result of the credit crunch, it is now almost impossible for first-time buyers to get a mortgage. The banks and mortgage lenders have virtually locked their doors.
Even if you have saved enough for a 5% deposit, mortgage consultants say there are only two mortgage deals available in the whole country, compared to a choice of 600 previously! There were only 33,000 mortgage approvals in July, down 71% from July 2007.
Masses of working people face huge bills and fears about housing, so need help from the government. But Brown’s new measures are a mere sticking plaster.
His announced one-year break from stamp duty (a 1% tax on house purchases) on any house purchase under £175,000 will only help around 10,000 first-time buyers. Brown chose to launch his big plan in Ealing in west London, where only four properties are currently available below £175,000!
According to the London Evening Standard, only 8% of properties on sale in London will qualify.
But in any case, who would advise buying a house when its value is about to plummet further? The 11% wiped off property prices so far, dwarfs any stamp duty savings of £1,750 per property, and prices are set to fall further.
Extra money has been allocated to prevent house repossessions, but this will only help 6,000 people, while the newly announced loan of a 30% deposit for 10,000 first-time buyers is simply a helping hand for the mortgage companies – it doesn’t relieve the buyers of any debt.
Most people think: ‘Is that it?’ Rather than save Brown’s prime ministerial career, these paltry proposals are another nail in its coffin. To add to the insult, Brown has now changed his mind about a one-off payment to families to help with fuel bills.
It took Brown and New Labour months of dithering before they finally stepped in to nationalise Northern Rock. Even then, it wasn’t done in the interests of the bank’s workers or of mortgage holders, but in order to prevent an escalating banking crisis affecting the entire economy.
Now, after months of trying to avoid the inevitable, the US government has taken the historic step of nationalising the US mortgage giants ‘Fannie Mae’ and ‘Freddie Mac’ [see editorial on page 2].
This is also not being done to help the mortgage companies’ employees or ordinary Americans who are losing their homes, but to prevent the consequences of their collapse for the capitalist economy, which would be enormous.
Nationalisation of large mortgage companies is necessary, but it should be a different type of nationalisation, in the interests of working people, to provide cheap mortgages for all who need them and the conversion of mortgages to rents if people are struggling.
The government could begin to do this through Northern Rock, which it now owns, but instead the Rock is sacking staff and carrying out more house repossessions than most.
Also needed, is a large-scale council house-building programme and an end to the privatisation of council estates, so that decent family homes are available at affordable rents, with secure tenancies, and democratically accountable managers.
But there’s no point waiting for New Labour to deliver these policies. We need a new workers’ party to inscribe these demands on its banner. And we need united working class action to fight for them.