Has Parliament become an irrelevancy?

Is it merely a debating chamber for politicians to preen their egos while the rest us get on with the important matters affecting our day to day lives?

When was there a political outcome that had any bearing on the well-being of the electorate? I can’t think of any.

Yesterday in the Houses of Parliament, the SNP squandered an opportunity to address many of the issues affecting Scotland, but after PM Questions, chose to become mired in a futile exercise of seeking an unconditional ceasefire in Gaza that will have no effect whatsoever.

  The main duties of any government are simple:

(a) Control of its sovereign borders.

(b) Defence of its citizens from foreign belligerents.

(c) Retention of freedoms, democracy, liberty, law, and order, culture and national values.

(d) Governance of a sound market-led economic system.

(e) Provision for its citizens a home, three meals a day, clothing, and education for its children.

Why is it then, for example, after the huge restoration measures taken after World War II, do we still fail to have a practical solution to a growing Housing Crisis?

Governments have failed over half a century.

How would you scope out the financial dynamics required to resolve the problem of a 4,3m housing accumulated shortage and the imperative each year to address the population growth of 0.39% per annum, all within a flexible framework?

And how would such financial dynamics fit into a national strategy to include the parameters of GDP Growth, Energy Sourcing, Mass Migration, NHS Rationalisation, Productivity, Defence etc? Those are broader subjects, but a strategic linkage nevertheless is needed so all can hang logically together.

To eliminate the housing deficit of 4,3m within 25 years, a generation, and allow the time for the upskill training required for the extra building trades would require building each year a whopping 172,000 homes.

In addition, the population growth means the equivalent of another 264,000 souls each year that must be housed in addition to the backlog. Assuming half the houses were 3-bedroom, and the other half were 2-bedroom, it would need the equivalent of an extra 106,000 per annum new homes (264,000 divided by say 2,5).

A grand annual total to be sustained of 278,000 versus the government’s stated target of 300,000. At least the government target seems about right, but where is the delivery?

There has been a failure in the social economy for housing ever since the 1950’s.

Normally in an advanced modern economy housing needs would be accommodated in the private economy and local councils.

As a first base, let us assume the private and existing social sectors can deal with the increase in demand from population growth.

Assuming the national average cost of each of the homes would be £400,000 for a two-bedroom house and £450,000 for a three-bedroom house, that means a total funding requirement for the backlog of £1,8tr! This is when the deep breathing starts!

It is doubtful such a challenge of this magnitude for both private and social housing could purely be met in the private sector or local government, even if aided by attractive tax or other incentives.

Perhaps, once and for all to resolve this primary duty, the government must lead from the front, put in place a funding programme for over a generation and eradicate the stop/start problem governed by parliamentary cycles.

The total funding could be via an international 25-year government guaranteed property bond at a fixed interest of 3,5% drawn in 5-yearly tranches each of £365bn. The government would not provide the funds, just the guarantee any shortfall between bond repayments and contributions by private and social householders. Any utilisation of monies would build a property asset base.

The objective would be not only to ensure a constant supply of funds to where it is most needed but also gradual rebuilding of the national housing stock free of short-term market influences.

All properties bought within a 25-year timescale would, whatever the changes in ownership or tenancy, carry with it the obligations and conditions of the government property bond.

Those tenants who wish to avail themselves of eventual ownership would pay a market rental for at least 10 years to avail themselves of a purchase option, whilst those wishing to remain in social housing with no option to convert would enjoy a rent at 50% of the market rate.

The market rent for those opting for private ownership fixed option value would be £1,350 per month for three-bedroom house and £1,200 per month for a two-bedroom house. Social housing would be at 50% of these rates. As the years progressed social houses would in the future be transferable at fixed values to local councils to secure an income stream for them.

No person would be able to rent or buy more than one dwelling.

Assuming none of the funding was covered in the private sector the financial profile and benefits for the first block averaged annually over the first five years of 860,000 houses would cost £365,5bn (£73,1bn per annum).

After annual repayment of capital and interest of £22,17bn, less all rentals of £19,74bn would mean that the government would only have to guarantee £2,43bn knowing this would be covered by increases in property values of at least 3,3%! 

Benefits –      Private Tenant

Guaranteed Rent of minimum 3,5% of cost.

Increases linked to Government indices not to the market fluctuations.

Purchase Option after 15 years.                    

Social Tenant

Guaranteed Rent of minimum discounted by 50%.

Increases linked to Government indices.

            Tenancy for life.                                                 

                       Local Councils  

Solution to Local Social Housing.          

Increase in Housing Stock.

Secure Rent Roll.

Transfer of Property Assets after 25 years at Zero Value.

Overall  

Eradication of market fluctuations.

            Social Tenants      Rents fixed between £600pm to £675pm.

             Private Tenants    Rents fixed between £1,200pm to £1,350pm.

Government Net Funding Exposure Maximum over first five years limited to £12,15bn, covered by increase in property values and the backlog started to be solved.  

The scheme could be flexed as demanded.

If the scheme was twinned with an NHS restructuring, based on a continental model, having the potential of saving to the public purse £50bn a year for better outcomes, the overall national debt could reduce by £38bn within five years.

These are the dynamics at play.

The figures are illustrative and would differ by region, but the principle is sound.

Next issue on the list please!