Wednesday, April 06, 2016

Profit and London’s housing crisis

Our candidate for the London Assembly for the South West (Hounslow, Kingston, Richmond) spoke at public meeting in Chiswick where he was able to present the Socialist Party case and make some pertinent observations upon our political rivals in the campaign.

All the candidates are making the extravagant promises that politicians usually do, particularly extravagant in this election because there are two constraints on what they can do. Not just the way the capitalist system works (and must work) to put profits before people, but the additional constraint that 93% of the Mayor’s income comes from central government and is , in this time of capitalism-imposed austerity, unlikely, in fact highly unlikely, to be increased.

The most extravagant promises are being made regarding housing, as with Sadiq Khan’s to “fix the Tory housing crisis”. Of course it’s not a “Tory” housing crisis but an ordinary, typical capitalist housing crisis. As we say in our leaflet “The problem is not the Tories … it’s capitalism”. It’s caused by demand exceeding supply, as has always tended to be the case in capital cities such as London which offer many jobs and so attract workers who need housing.

Where paying demand for housing exceeds supply, rents, house prices and land prices all go up, with capitalist firms which invest in housebuilding and housing letting for profit giving preference to housing for those who can pay the most, i.e on providing the type of housing that is “unaffordable” for many people. After all, in an economy involving production for profit why should, why would, capitalist firms producing housing for profit provide this for people who can’t afford to pay for it?

Here’s what the candidates are promising.
The Tory Goldsmith says he’ll double house-building to 50,000 a year by 2020 from the current 25,000 a year.
The Greens and the Liberals are both promising 200,000 by 2020, i.e  an average of 50,000 a year.
But the most extravagant is Labour’s Khan who is promising 80,000 a year.

A bit odd, you might think, that the Labour Party should be making a more extravagant promise than the Greens who, like all parties with no chance of winning, can promise what they like. Maybe the Greens realise that Khan won’t be able to deliver and think that (relative) honesty is a better policy for attracting votes. But they, in promising to “cap rent rises”, are still making a promise they can’t deliver on as the GLA has no power to do this.

Actually, their candidate Sian Berry in an interview with the local press has made a relevant point about the housing problem in London:
“It is just an enormous task that can’t be solved with a single silver bullet. The other parties will try to sign big deals with developers which is the model we have now, and it isn’t working.”

This model is based on the profit motive. The central government grants local councils, including Greater London, a sum of money to commission housebuilding by private profit-seeking developers on condition that they include some “affordable” housing in their project (defined as 80% of the going market rent, which of course is still unaffordable for most people). The private developers put in a bid, which includes an element for profit, for money for a particular development.

It’s easy to see why Berry sees a drawback in this scheme: the developers are only going to come up with a project and put in a bid if they think they can make a reasonable profit out of it. This is where Khan’s scheme comes unstuck. He has criticised Boris for not spending all the money the government has allocated the Mayor for affordable housing projects. One element in this will be the developers’ reluctance to bid when it’s not profitable enough.

Khan’s promises will make it even less profitable. He is proposing that 50% of all such contracted housebuilding should be “affordable”. That’s going to reduce profits considerably. As is his proposal to redefine “affordable” as one third of average local income rather than 80% of the market rate (which he calls a “Living Rent”).

I’m prepared to predict that if Khan wins he will not be able to commission 80,000 new homes a year on the terms he’s promising. The way the capitalist economic system works just won’t allow it. So this is just another example of a vote-catching politician’s promise.

So, what is the solution? There is not one within capitalism, and certainly not within the Greater London Authority. Since the housing problem is caused by capitalism and its production for sale with a view to profit, including housing, it’s not going to be solved as long as capitalism lasts.

Something much more radical is called for. A complete revolution in the basis of society, from the existing ownership by a few and production for profit to a society based on the common ownership and democratic control of productive resources (land, factories, transport, communications, etc). This will allow production to be directed towards people’s needs, not only for housing but across the board. Houses will be built for people to live in. Food for people to eat. Transport to get people from A to B. People won’t have to buy the things they need. Instead the principle “from each according to their ability, to each according to their needs” will apply, instead of distribution according to the amount of money you have (or don’t have).

Adam Buick
Socialist Party - (SP-GB)