Capital Expenditure (2018)

Book Review from the November 2018 issue of the Socialist Standard

‘Big Capital: Who Is London For?’ by Anna Minton (Penguin, £8.99)

Though written before Grenfell, this is a devastating analysis of the housing situation in London, with implications for other places too. Housing, Minton says, is a safety deposit box and a cash cow, with the rate of return on land and property far exceeding economic growth, let alone rises in wages.

At one end of the market are the super-luxury flats owned by Russian billionaires and Chinese investors, the transnational elites who are described as Ultra High Net Worth Individuals. At the other end are the ‘beds in sheds’, unauthorised dwellings in back gardens, and rented bed spaces, where someone may sleep in a bunk, with four people sharing the front room of a terraced house. There are also the ‘hidden homeless’, some of whom actually sleep on buses.

Most people, of course, are in between these extremes, either renting or owning and often suffering from the inflated cost of housing. One example given is of a woman who earns nearly £40,000 a year; her partner also works full-time and they have two children, a boy and a girl, but live in a two-bedroom flat. It is better than their previous place because the heating works. She describes her life as ‘middle class poverty’. Many people could afford a mortgage but, because of the high level of rents, cannot save enough for a deposit to buy their own place.

The pressure on housing in London means that many homeless families are rehoused outside the capital. One recent report (Observer 2 September) noted that people who buy houses in Bath to avoid the costs of London are pushing up rents and house prices for locals. Thus developments in London have impacts on other towns and cities too. Forcing those on lower wages into the outer areas of London may give rise to something along the lines of the banlieues in Paris.

Minton traces various reasons behind this appalling situation. The virtual abandonment of new-build council or social housing means a drastic reduction in the availability of lower-priced homes, while the ‘affordable housing’ required in new developments is in reality affordable for very few. Thatcher’s ‘Right to Buy’ policy increased the number of homeowners, but in fact they were leaseholders rather than freeholders and so vulnerable to compulsory purchase schemes. People bought out in this way are rarely given the real market value of their home and so have to move further out, away from friends and family.

There are many other factors involved, including the system of housing benefit, but the basic cause is that under capitalism housing is part of the market system and exists to provide profits for the few rather than decent homes for the many. What may help to bring the whole edifice to an end is the fact that companies are becoming increasingly worried that most of their workers will simply not be able to afford to live in London, and the Fifty Thousand Homes campaign is designed to address this. When business groups state that ‘The pricing out of young talent and the London workers who keep our city moving hurts all levels of society, and threatens London’s status as a beacon for creativity and enterprise’ (londonfirst.co.uk), it is clear that the housing problem affects capitalists as well as workers, though in different ways.

Paul Bennett