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Miliband takes on corporate power again… and this time it’s house-builders

Green plastic monopoly houses, by 123rf.comEd Miliband’s speech today targeting the ‘big four’ developers – Barratt, Berkley, Persimmon and Taylor Wimpey – for hoarding land and not building the houses that Britain desperately needs is a textbook for political strategy as the election fast approaches. The shortage of housing, particularly affordable housing, has been a public scandal for years. Up till 1970 more than half the houses constructed in Britain were built by local authorities. During the mid-1950s to the mid-1970s between 300,000 to 400,000 houses were built in the UK every year, including over 400,000 in one year at the end of the 1960s.

Last year it was 98,000, the lowest figure since 1923. Yet the need for new housing has been intense. There are 1.8m households currently on local authority waiting lists, and the number of houses required to be built to keep up with annual demand and to begin to clear the enormous backlog is at least 240,000 a year. As with the energy price freeze, Miliband identified a raw spot of acute social need and again pointed the finger at its cause – corporate power more interested in profiteering from land speculation than building homes.

The evidence is stark. Developers hold more than half a million plots which have planning permission, yet half the houses have not even been started because developers have calculated they will make more money from sitting on the land than building on it. And when families are crying out for homes, the ‘big four’ building companies, just like the energy companies, have been creaming off colossal gains – a staggering increase in profits of 550% since 2010. Another classic example of markets not working, distorted by the self-interest of the biggest players, at huge cost to the public in general.

But the message of Miliband’s latest initiative goes much wider. He is exposing the deep failure of dysfunctional markets which hugely benefit the holders of capital assets at the expense of human and social need. But he is also going further. He is challenging that corporate power which for the last 30 years has been allowed to run rampant over the landscape, egged on by a market-obsessed Tory party. It is this turbo-charged capitalism which today produces the fundamental political divide. On the one side are those who embrace the system wholeheartedly and espouse only superficial changes on the surface.

That is the position of the majority of politicians today – the great majority of the Tory party, the Orange Book section of the Lib Dems, and the still-large Blairite rump of the Labour party. The other, minority segment of the political spectrum are those who recognise that the system is so badly corrupted that nothing of any real importance will be achieved unless the structural fundamentals are quite radically reformed. Miliband, to his enormous credit, is steadily revealing himself as a leading exponent of the latter category, which is why, unlike any other political leader at this time, he is worth listening to and worth voting for.

One Comment

  1. botzarelli says:

    “And when families are crying out for homes, the ‘big four’ building companies, just like the energy companies, have been creaming off colossal gains – a staggering increase in profits of 550% since 2010. Another classic example of markets not working, distorted by the self-interest of the biggest players, at huge cost to the public in general.”

    That sounds terrible but it is a bit disingenuous. I had a look at Barratt’s results and indeed its profits are nearly 5 times greater in 12-13 than they were in 10-11. However, the total profits it made between 10-11 and 12-13 are less than half the losses it suffered in 08-09 and 09-10.

    Is it really so evil of housebuilders to increase their profits by building and selling more homes after suffering badly during the credit crash? Given that they make their profits by building and selling homes (and make losses by not being able to sell the homes they build) are they really “hoarding” land?

    Or is the aim to make it so that rain or shine housebuilders make a little profit? No more boom and bust.

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