There’s a reason the expression ‘money makes the world go round’ works, but the economist’s version ‘hypothetical cost values encourage upwards growth’ doesn’t. Take up of an astonishing story by the broadsheets (and not the red tops) exemplifies why…
Last week (26 April 2016) the Financial Times published an article that was based on the research of social policy think-think, Resolution Foundation. The think-tank’s new findings offer up some hard-hitting evidence concluding that rising housing costs have had the same impact on disposable income as adding 10 pence to the basic rate of income tax. The news that, “in 1995 the average two-income household with one child spent 17 per cent of their income on housing costs, by 2015 that had risen to 21 per cent… equating to £1,500 a year or 10p on the basic income tax rate” paints the current housing crisis in a stark and relatable light, one which arguably we have yet to be exposed to.
It is somewhat remarkable that one of the most revealing pieces of evidence produced of late to demonstrate that spiralling housing costs are having a direct and detrimental impact on the average 20-something renter (and beyond), is tucked away in the Financial Times and Telegraph.
There is no doubt now that, as a nation, we acknowledge the housing crisis as an accelerating socio-economic disaster. Politicians speak of it often, with vague and forgettable promises of increased housebuilding dripping habitually through the media (the London mayoral campaign as a recent testament to this). Actually, in a perverse way, the amount of coverage the housing shortage receives is enabling a normalising effect to take hold. The fact that we have all come to accept it is a crisis is one thing. Whether this new evidence will mean there is greater incentive for change is another.
The housing crisis is a threat that we all recognise and, for the most part, are fearful of. Yet it has been, and continues to be, accepted by the multitudes, with no far-reaching steps taken to combat it and limited effective policy implemented with conviction by our political leaders. In the first instance, what is needed to rectify any trend towards apathy by the general public, to encourage decisive action and to rally politicians to substantially bolster housebuilding numbers, is for people to understand actual, cold facts. Facts, like the ones outlined in the Financial Times, that they can relate to and which get them where it hurts most… in the pocket.
For too long the housing shortage has been explained via ‘implicit’ and ‘notional’ cost values, described by numbers which have no actual existence. With microeconomics not being renowned for being particularly accessible, the Resolution Foundation’s conclusions are refreshing. This sort of analysis, which focuses on the ‘real’ cost of the housing crisis and which talks about the genuine loss of people’s earnings, is needed if we wish to incite a national sense of urgency, to further encourage politicians and tackle the nationwide housing shortage.
If ‘money talks’ then it should be used to speak to those that hold the power of change, those who determine national appetite and can influence policy. That’s me, you and the rest of the 60 million here.