CamdenNewJournal

The independent London newspaper

We can’t keep relying on the property market to bail us out

14 September, 2018

THE spectre of Brexit is beginning to focus minds on what comes next.

And here in Camden the question is, in some ways, highly significant (Brexit warning over Camden’s flagship investment programme).

To circumvent the government’s debilitating restrictions on local authority funding, the “front bench” of Camden Council decided to hoover up extra funds through the sale of new flats on redeveloped council-owned sites.

As the property game – the purchase and sale of property – has propped up the nation’s economy in the past decade or so, this probably made sense. Something had to be done within the law to maintain the financial muscle of Camden Council – and what better than this?

In terms of Britain’s future there isn’t any if that remains an essential part of economic planning. For nearly two centuries money used to be made out of manufacturing. Mrs Thatcher’s policies closed down much of our manufacturing sector. Money was to be made out of the City’s dealings instead. And ultimately, this also meant the property game.

The Conservatives, as well as the Liberal Democrats, do not appear to embrace any alternative.

That is why Shadow Chancellor John McDonnell’s giant investment plan for a new-look Britain built on an economy founded on industrial growth has grudgingly drawn support from parts of the Establish­ment – not to mention, of course, the electorate who can see sense in it. It’s a long-term approach – something Germany and other western European countries embarked on years ago.

Turning Camden Council into a kind of property developer has helped to keep it afloat. No doubt the council could have muddled along – quite successfully – for some time but Brexit may put a stop to it.

Already, though not necessarily reflective of Brexit, the property market in London is now much more uncertain than it was two or three years ago. Prices are beginning to fall. Land is in short supply in the capital so prices – unless there is a prolonged calamitous depression – should always remain pretty buoyant.

But government “fire-sale” inducements to help people onto the property ladder are likely to come unstuck once mortgage interest rates go up – which they are bound do. And this, plus the uncertainty caused by Brexit, could cause a deeper dip in property prices than thought possible – and, if so, the council’s Community Investment Programme may be badly affected.

This is why minds should be turned to a Plan B.
It was cogently argued that Community Investment Programme (CIP) was a necessity. That it would save the day. But it wasn’t economically a healthy step forward.

Just as a nation has to be more than a property dealer, so has a local authority.

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