Will Hutton is, in our liberal society, entirely free to comment upon passing affairs as he sees fit. Just as we are free to catcall and lob peanuts from the gallery at him for those comments. But one of the rules of the game is that you’re not allowed to make up your own facts in these matters. Which is what Hutton is doing here. Concerning the housing market he insists that the following must be done:
I have argued for 25 years that the conventional free-market wisdom on finance – embraced by the Bank of England, Treasury, IMF, chancellor Lawson and chancellor Brown – has been wholly wrong. Interest-rate increases alone are not enough to manage the systemic proclivities of modern finance. Governments have to direct the amount of capital banks hold, regulate how much is lent to which category of borrower, cap the multiples of a homebuyer’s income that can be lent against and what proportion loans should represent of a home’s value.
In short, the country would be a better place if we would all just buck up and do what Hutton thinks we should be allowed to do. The reason why this is necessary is, as he says:
To tackle the bubble, there are two more Thatcherite follies that Osborne will have to abandon. Britain needs to build 250,000 homes a year to accommodate the new households that are being formed. Since 1918, the private sector has only for a few years in the 1960s ever built more than 150,000 homes in a year. It is fine to set aside brownfield sites and all the rest, but ultimately the state will have to build homes on a serious scale. No council house sale should now be allowed without a commitment to build a replacement.
The problem with this argument being that it’s ordure, stinking, smelly, ordure of the worst kind, the product of cows on curry. From his own newspaper:
How did the cheap-money policy stimulate the real economy? A very important channel was through development of new housing. The number of houses built by the private sector rose from 133,000 in 1931-32 to 293,000 in 1934-35 and 279,000 in 1935-36. Many of these dwellings are the famous 1930s semi-detacheds which proliferated around London and more generally across southern England. These figures are way ahead of any other year since the second world war.
Vince Cable, the business secretary, has been pressing cabinet colleagues to adopt the 1930s approach. He thinks house building is the way to get real demand into the economy quickly, and has championed the idea of government guarantees for housing associations. He said in a speech last year that there was a virtuous circle in the 1930s in which higher mortgage demand led to an increase in house building, which in turn led to lower prices and greater affordability, leading to still higher demand. “Houses built by the private sector rocketed from around 130,000 in 1931 to almost 300,000 in 1934 and it is estimated that house building contributed almost a third of all employment increases in this period.”
The apparatchiki controlling the financial system and the planning process is not necessary in order to provide the housing that the British desire. Rather, the liberation of both from said apparatchiki has worked in our past and would obviously work again. The way to build houses in places that people wish to live and at prices they wish to pay is to, as was true before the 1947 Town and Country Planning Act, allow people to purchase land and then build upon it. We have the evidence that this works.
And Hutton can only bolster his own argument by entirely wiping that fact from the collective memory.
Hutton’s entirely free to produce any argument that he wishes in futherance of anything at all, just as we are free to jeer at him as he does so. But when he starts inventing his own facts to mislead us all we really should be condemning him. Comment is free but facts are sacred.