Evan Davis answers Natalie Bennett’s question for her (and for everyone else)

One of my favourite pastimes is raging at the TV, especially when Newcastle United are on, but mainly at political shows.

As I’m a BBC person, I idle my way through the Daily Politics (Andrew Neil is the best interviewer on TV but I find the programme’s topic selection highly anti-Labour and his mocking attitude to Ed Miliband unprofessional), Question Time (the selection of panellists is a disgrace and it is so badly chaired that I might join those who have given it up for Lent) and Newsnight (much improved since the retirement of the infuriatingly smug Paxman). The latter has many of the best reporters, especially on international matters.

So it was joyous, amongst the dross, to come across a wonderful little lecture on housing economics from Evan Davis on newsnight on Tuesday. It was an interlude between pieces about Natalie Bennett’s bad day trying to answer questions about how the Greens would finance their promised 500,000 new social homes.

evan davisPhoto by Peter Searle (peter@petersearle.com).

Davis is of course an economist. His Wikipaedia entry shows him to be no lefty. Like so many people in the Establishment, he did PPE at Oxford (getting the mandatory first). He was the BBC’s main economics editor before going to the Today programme on radio and then on to Newsnight. He also does a business programme for Radio 4 and fronts Dragon’s Den, the programme that proves that success in business is mainly random.

Anyway, enough of the intro. This is what he said:

It is possible by the way to answer the question Natalie Bennett was struggling with as to how you finance half a million councils houses.

You get the land cheaply by buying without permission to build on it. Once you’ve acquired it you give it building permission. Half a million homes at a hundred thousand pounds each costs £50 bn, chuck in another £50 bn for infrastructure around the homes, and all you need to borrow is £100 bn and at current government borrowing rates that’s about £2 bn a year.

You finance that by the rents you make on the homes. You’ll be fine if the rents are £400 a month for each home.

Property development can be a profitable business which is why so many rich people do it. Anyway that is not the answer Natalie Bennett gave.

Simple, isn’t it? The BBC normally seems to operate on the complete assumption that ‘austerity’ is the only available economic policy, ‘the deficit’ is the biggest economic issue, and ‘public borrowing’ is an evil activity. So it was wonderful to see someone knowledgeable make the case for good borrowing – building capital assets, paying for itself, and meeting community needs for generations to come.

Thanks Evan, I’ll watch again.




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7 Responses to Evan Davis answers Natalie Bennett’s question for her (and for everyone else)

  1. Phil Taylor says:

    I just saw it as totally uncalled-for duffing up by a macho male showing off his ability to use an autocue. He should know better.

  2. Pingback: The "cost" bias | Homines Economici

  3. Jenny Jacobs says:

    I can see a problem (to say the least) with “You get the land cheaply by buying without permission to build on it.”. Although Councils do have CPO powers, they still have to pay for the land assuming it would have permission for whatever they want to put on it. We’d need new legislation to be able to buy at Current Use Value. Better still and more acceptable might be what they do in some places abroad and pay CUV plus a modest premium. Although the Greens might well have the stomach for this legislation, they are unlikely to get buy-in from enough other parties for it to get through Parliament (all those vested interests…). But CPO at CUV or CUV plus a small premium would definitely be the answer, as would borrowing to invest in housing – which should be regarded as essential infrastructure. But we don’t have those powers at the moment. And the current Government is ideologically opposed to borrowing even to build houses – even though home ownership seems to be their panacea for the rest of us!

  4. I agree ( and I am a lefty Conservative ) that there needs to be a massive program of housebuilding for affordable homes . Natalie Bennet came across as a complete numbskull and those who support the Greens ( probably because they are fed up of the other parties ) should think twice about voting for someone who is so ill informed . I take issue with your figures . I am about to build 20 affordable houses for a housing association on a rural exception site , cost for the 20 units ( four are flats ) . This excludes the land that is very cheap . Thus average £150,000 a unit without the funding costs and project management costs of the housing association . 5000 @150k each is £750,000,000, 000. With construction costs going through the roof due to labour shortages , it will be even more .
    The solution is to allow building on the Green Belt , with a minimum of 35% affordable housing . where it is in highly sustainable locations ( huge tracts are within 10 minutes walk of a transport node , where developers have to provide the land serviced and build at a modest construction profit as we all do outside of London. The land is free issue with infrastructure , such that with HCA subsidy , it can be easily funded from rental income over 40 years . I am sorry but Labour have missed a trick on housing and never mind climate change bring back two jags , when he was minister 170,000 houses were being built every year .

  5. Steve Barwick says:

    Nice one

    Ps did you get the liverpool architecture request for a blog?

    Steve Barwick Connect Communications

    Office address: Third floor, Millbank Tower, 21-24 Millbank, London SW1P 4QP; Tel: 020 7592 9592

    Connect Communications is a trading name of Connect Public Affairs Ltd, registered in England: 03449749; registered office: First Floor, Thavies Inn House, 3-4 Holborn Circus, London EC1N 2HA

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