Tuesday, 13 March 2012
London house prices point the way to the future
The news last week - that London house prices (above) are touching an all-time high in cash terms - was a depressing reminder that the forces making for the rich-get-richer crisis in our society are as strong as they've ever been.
Russian oligarchs. The Olympics. Bankers' bonuses. The sheer shortage of land near London on which to build homes. Together they mean that, while the rest of the nation's property-owners languish in what's likely to be a long stagnation, London householders are getting tens of thousands of pounds of free cash stuffed through their letterboxes on a monthly basis. Propertly prices that are already very high compared to other cities are the ones zooming upwards, which means that the cash bonuses are all the larger.
This at a time when more and more of London's property will be housing richer and richer people, due to the Government's benefit cap and housing benefit reforms. And at a time when it's clear that the rest of the country's housing market can't even scrape together a few first time buyers.
The last two years have been an instructive lesson in where our society is now going. For most of the 1990s and 2000s, we have been 'running up the down escalator'. Growing inequality in terms of life chances, and career options, has been masked by enormous prosperity, higher benefits, tax credits and labour market reforms. In summary, New Labour made sure that the rising tide of inequality flattened out for a decade or more. Certainly the mix was more progressive than the policies that existed in 1997 - even if it was hardly social democratic on the old model. Now that's all gone.
The overall impression? We are about to see a huge leap upwards in the overall level of relative income inequality. And a big boom in poverty - especially child poverty. Instead of running up the down escalator, the UK government has now decided to stand still and let the escalator take us downwards.
Downwards to the future! What a slogan.