Wednesday, 26 March 2014

LabourList blog: HS2 and Trident should not be grand projects when there is a grand housing crisis

Online at Labourlist here.

HS2 and Trident should not be grand projects when there is a grand housing crisis

MARCH 25, 2014 3:00 PM

“Follow the money”, they say in detective stories. Apply your inner Sherlock to the government’s grand projects in modern day Britain and you’ll see that the vainglorious too often trumps the vital. While there is nothing intrinsically wrong with HS2 (the same cannot be said of Trident), in these austere times, governmental largesse should be reserved for tackling genuine crises or meeting significant economic needs like housing. In much of the debate, the elephant in the room is the opportunity-cost of such spending.
The £50bn magicked out of austere air for HS2 has been justified variously as: needed to reduce wasted time for businesspeople on trains (until they said that mobile technology means this time is productive); vital to connect Britain to the European high-speed network (until the recent Higgins review killed the link to the Channel Tunnel); crucial to relieve pressure on existing lines; or to rebalance the economy in favour of the North of England (despite the clear need for immediate investment in the existing transport infrastructure there). That the government had to pay consultant KPMG to issue a report which unsurprisingly concurs with its argument, shows it’s on rusty tracks.
Another example of distorted priorities is Trident, a weapon of mass destruction designed to kill civilian populations, which can never be used, and is unnecessary given NATO’s doctrine of collective security. Some claim it’s the ultimate deterrent in a dangerous world, yet any attack warranting the use of Trident would by definition already have been fatal to the UK. It is argued that it justifies our seat at the “top table of international diplomacy”, and allows us to “punch above our weight”, yet this can be achieved by having more and better conventional forces which can actually be deployed. Instead, while engaging in savage cuts to conventional forces, the government began spending billions on submarine reactors while disingenuously stating that the final decision would be made after the General Election.
In both cases, there is neither an overwhelming need, nor decisive public support for the spending. What’s proposed isn’t the best use of resources, even to tackle the supposed need, which itself may be questionable. Other far more pressing problems exist which fare better under the scrutiny of opportunity-cost, yet the establishment issues the edict “make it so” and the arguments, finances, and politics are constructed accordingly. The question is not “why these particular projects?”, but rather, “why not others?” The answers show point to vested interests having become so entrenched as to have largely closed down debate about the real priorities of ordinary people.
There is no crisis in the rail network, yet in the case of housing, there is a very real crisis born of failure to meet an essential need. It’s multi-faceted: house prices and rents are too high, home-builders understandably seek to maximise profit rather than social good and the London market is fuelled by untaxed foreign wealth which distorts the entire country’s market. These complex problems have a single root cause: insufficient supply. Last year Labour boldly pledged to increase supply to two hundred thousand per year by 2020, while the Tories have predictably chosen to stimulate demand. No government since the 1950s has met or exceeded demand. In an age where Britain can help build double-decker airplanes, or invent graphene, why are we seemingly incapable of building sufficient homes?
Perhaps the reason is that the particular vested interests obstructing change are so powerful and have so much to lose?
  • First, current home-owners: the value of their homes would stagnate and possibly fall as supply increased hugely to meet the demand of hardworking people (even mortgage adverts admit this).
  • Second, house-builders: reforming the broken market in which they operate by giving preference to positive social outcomes will see a reduction in land-banking and a propensity to build the most profitable rather than affordable homes.
  • Third, land-lords who have massively benefited from the strangulated supply of new homes, will inevitably see their margins narrow, or in some cases, their market disappear.
  • Fourth, NIMBYs whose power over politicians is out of all proportion to their number, will find that as the balance is tipped in favour of the need of hardworking people for high quality housing, so their ability to frustrate new developments, including some on the green belt, will decline. Just as teachers in schools learn that the voices of stereotypical “pushy parents” aren’t the only ones of value, so the voices of the many will begin to be heard.
On opportunity-cost, politicians like Ed Balls seem to be contemplating a future in which these tens of billions could be used more productively or to improve the public finances. A simplistic example would be to imagine what could be done with the £100bn allocated for HS2 and Trident. At a £50,000 unit price per house, two million homes could be built. A party which had the courage to tackle these vested interests would of course pay a cost: an unprecedented media, establishment and political onslaught. But the opportunity, both for society, and electorally, would be immense. “The party of affordable homes for all” has a better ring to it than “the party of expensive nuclear weapons, defence cuts, a high speed train system that most people can’t afford and continually rising, unaffordable house prices and rents.” The opportunity outweighs the cost.
John Slinger is a strategic communications consultant and Chair of Pragmatic Radicalism