Broke: Who Killed the Middle Classes?. David Boyle

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       2

       The first clue: the staggering house-price escalator

       ‘Every summer we can rent a cottage in the Isle of Wight,

       If it’s not too dear.

       We shall scrimp and save …’

      Paul McCartney, ‘When I’m Sixty-Four’, December 1966

      Spring 1979. No Internet. No mobile phones. No cash machines in the wall. No personal computers (or very few). Only three television channels. Orange street lights. Pirate radio stations. Electric fires. Flared trousers (occasionally). The Central Electricity Generating Board, British Rail, the Department of Health and Social Security and other huge bureaucracies running our lives. Grunwick. The National Front and the Anti-Nazi League. Tom Robinson and ‘Glad to be Gay’. Works to rule. Closed shops. Angela Rippon, Morecambe & Wise and Tinker, Tailor, Soldier, Spy on the TV. Brian Redhead and Jimmy Young on the radio. Prince Charles still unmarried. James Callaghan in his last few months, and his last few sessions of beer and sandwiches, at 10 Downing Street. Patrick Hutber’s The Decline and Fall of the Middle Class on the bookstalls.¹

      It was my middle year at university, shivering in a room with no central heating. I had long hair and dreamed of student revolts that – as it turned out – had long since disappeared. This was the generation caught between the certainties of the hippies and the certainties of the yuppies which the novelist A. S. Byatt writes about so sensitively (and I appreciate it because I was one of them). I had no idea at the time, nor for many years afterwards, what I wanted to do with my life, and couldn’t imagine anyone ever employing me – let alone paying me enough money to buy a house.

      We were already talking about house prices in those days, in training for a thousand middle-class dinner parties to come, but actually – compared with what came later – the average price of a home in the UK was very low: £18,000 (now worth about £74,500 at today’s values).² Despite that, there had already been a round of major house-price inflation during the so-called Barber Boom of the early 1970s. There was another flurry in 1977–8 when controls on lending mortgages were briefly loosened because of fears about the house builders. It was enough to get the tongues wagging.

      This was not quite the 1930s, the heyday of middle-class house buying, when a new semi-detached cost just over £500, available with a down payment of £50, and when mortgages cost about 10 per cent of a middle-class income and were paid off within sixteen years. But looking back, 1979 was actually the beginning of the extraordinary process which – over the next three decades – has goaded the rise in prices so brutally that it has ended the house-owning dream for many people, and which now, more than anything else, threatens the very existence of the middle classes.

      There is always an argument about why house prices rise, and why those prices accelerate. Politicians like to say that it is a shortage of homes, and there certainly is a shortage and it doesn’t help. But if it was only about housing shortage, you would expect massive price rises in the late 1940s, whereas – after a burst after the war – house prices stayed completely steady from 1949 to 1954. In our own day, planning permission has already been given for 400,000 unbuilt homes in the UK, yet prices still rise, as they do in places like Spain, where there is little or no planning restraint.

      Politicians get muddled about this because building houses sounds like a tangible thing they feel confident about tackling (though they usually don’t), whereas they don’t feel confident about mortgage supply at all. Yet that is the other side of the process: inflation is about too much money chasing too few goods, and the main reason for the extraordinary rise is that there has been too much money in property, both from speculation and from far too much mortgage lending.

      Sometimes this came from people’s rising incomes, which translated into rising home loans. Sometimes, more recently, it was bonuses and buy-to-let investors. But most of the time, it has been a catastrophic failure to control the amount of money available to lend, and which has fed into all the other trends to create a tumbling cascade of money, with its own upward pressure on incomes and debt until the acceleration now seems quite unbreakable. It was a roller coaster that terrified and thrilled the middle classes, as they saw the value of their homes rise so inexorably, but which ended – as we have seen – in undermining the very basis for their continued existence.

      So what happened? As so often, there is no smoking gun, no deliberate policy, but a series of decisions – taken for very good reasons and often in other areas of policy – by a close-knit group of people. Back in 1979, as they prepared for the historic election that swept Margaret Thatcher to power, there was an institution that was designed partly to prevent house-price inflation. It was called the ‘Corset’, which tripped off the tongue a little easier than its other name: the Special Supplementary Deposits Scheme. It worked by penalizing banks when they lent too much, and – although it was not always effective at limiting the money they lent – it did keep bankers out of the mortgage market.

      So travel back with me to the moment of the first clue in this book, the autumn СКАЧАТЬ