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Brown’s debt to society

Wednesday, 9th April 2008

The Spectator on Gordon Brown's mountain of debt

As for the bust, that is a different matter. The repossessed will have good reason to wonder whether Mr Brown has exacerbated their problems: with the housing market rising sharply in 2003, the then Chancellor switched the official inflation index, obliging the Bank of England’s monetary policy committee to track an index which excluded all housing costs. The result was interest rates lower than they otherwise would have been, and a continuation of the housing boom. Repeatedly, Mr Brown and the Financial Services Authority, the agency he set up in 2000 to oversee banks and building societies, ignored the many warnings of loose lending practices and, in the case of some inner-city apartment developments, outright fraud. Some of the inflated prices in new developments are the result of corrupt surveyors overvaluing properties to enable fraudsters to take out loans worth much more than the properties they are secured against.

For Mr Brown, these errors could prove electorally fatal. In contrast to what became known as the white-collar recession of the early 1990s, the most heavily mortgaged postcodes this time around have been revealed to be staunch Labour-voting districts including Glasgow, Manchester, Tyneside and the Welsh Valleys, together with marginal seats in North Kent, the East and the West Midlands. Taken together, these were the areas of Britain which appeared to be doing well from a decade of Labour government, where new, upmarket housing developments seemed to be the bricks-and-mortar proof of the economy’s rude good health. Only now are the voters discovering just how much of this was a precarious edifice built on fatal foundations of debt.

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CG

April 13th, 2008 10:40pm

Excellent article, of the thousands of articles published on housing over the past months so few have taken a measured and rational look at the downside to house price inflation

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Charles Moore's reflections on the week

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Glasgow East symbolises — as few other places in Britain can — the fact that the problem Labour faces is not just lack of leadership but lack of mission. What is to be seen in this constituency encapsulates and dramatises Labour’s abject failures to comprehend, let alone tackle, the nature of the poverty which grips our council estates.
For all the latest on the Glasgow East by-election, visit Coffee House