World events rumble on and we must focus on the problems we can fix. Jeremy Corbyn is right that radical action is needed to resolve the housing crisis, but his plan to print money will drag us back to the 1970s
We live in uncertain times.
This is forefront of my mind right now as I am expected to plan our office’s targets and budgets for next year. Out comes the crystal ball but it all looks a bit murky. Fundamentally the euro has not been repaired and we could see a catastrophic collapse. Greece has just kicked its problem down the road a bit as it has agreed to terms it cannot meet and Italy and Spain have mountains of debt and broken economies. We too have a mountain of debt. The banks may be fixed, the debt isn’t. Then we have the UK EU referendum, which could have us leaving our biggest trading partner for some notion of a free and noble independent Britain.
Then there is the Middle East. The toppling of nasty dictators has unleashed mayhem and a monstrously well organised IS, which combines medieval values and barbarism with 21st-century technology. The resulting migration from terror is truly epic. A real test of our compassion and our ingenuity to solve a problem which could put massive strain on our resources, economy and social fabric.
Economically, US fracking has crashed the price of oil so Saudi Arabia is losing $40bn a year and is shutting down its investment and construction programmes, which many UK firms benefit from. In China the dragon has caught a cold as demand falters and the Chinese find that Thatcher was right when she said that you can’t “buck the markets”. Not even the Chinese government with its massive resources could stabilise the stock market and so investors lost 40% of their money.
And then, in the UK we get Jeremy Corbyn right out of the blue. The Labour Party lost the election because it was too left wing and let the Tories occupy the centre right, successfully gambling on not losing too much to UKIP. So in response Labour goes more left? Seems crazy; Blair won three elections in a row for Labour by creating a centre-left party, but he’s such a demon now because of Iraq that Labour won’t go there again. Corbyn caught the imagination of a disillusioned party.
We build like the Romans did, brick on brick and tiles on the roof; it’s too expensive and too slow
And he’s caught a lot of architects’ imaginations too, the architectural press is full of respected names welcoming his policies. It seems so easy; tax the rich and greedy companies, bring essential infrastructure (railways, energy companies) back into public ownership, take control of the Bank of England, build a national investment bank and fund it through “people’s quantitative easing” to invest in housing and other good things. Job done.
But hold on, haven’t we been there before? Isn’t this the 1970s when state-run industries were appallingly inefficient, high taxes drove wealth makers abroad (as in France now)and printing money drove the pound down and inflation through the roof? Haven’t we just spent 35 years trying to get this stuff under control?
The trouble is we do have real problems and no currently credible way of addressing them. Housing would be at the top of my list.
Even 10 years ago, when I was president at the RIBA and dealing with New Labour, it was clear that we needed to build more housing and the cost of housing was too high. I thought we should be building, say, 700,000 units a year to catch up and John Prescott (a politician who I rate highly) promoted the £60,000 house. The problems have only got worse. Land supply is too slow; we need to release more public land. Planning permission is slow and unpredictable, making funding difficult. The large housebuilders play the system, land bank and control supply like De Beers eking out diamonds to keep the price up; we need to sell more land with pre-packaged permissions (to lower risk and make it fundable) in smaller lots to encourage new entrants, even self-build groups to the market. We build like the Romans did, brick on brick and tiles on the roof; it’s too expensive and too slow. We need beautiful industrialised solutions. And we need to fund it. Conventional quantitative easing works because the bank is investing in assets that will repay the debt - government bonds. Printing money to invest in high-cost housing for tenants that cannot afford to service the debt does not work economically.
Rogers Stirk Harbour’s prefabricated YMCA housing is a great attempt at a low-cost solution. If we can get a fundable land supply and mass low-cost, high-quality housing, we might approach a way to solve the problem.
Corbyn is not a fairy godfather who can cure our problems with a wave of old Labour’s wand. But we do need real answers to our real problems.
So, what am I to budget for next year at Pringle Brandon Perkins + Will? Feast or famine?
Jack Pringle is principal, managing director EMEA at Pringle Brandon Perkins + Will