London House Building To Pay Off National Debt.

Posted on: 04/01/2016

The UK Government has  been telling us since 2009 that austerity has been needed to restore the countries finances.

I beg to differ.

Some gestures towards austerity may have been needed for a year or two, to satisfy the worlds financial power brokers that the UK should not be included in the Financiers "skip" with Ireland, Greece and similar.

Actually, even this gesture was probably unnecessary. The UK is the worlds favourite place to live for the rich - it is unlikely they would have put Hotel UK in any skip.

In any event, if a gesture was needed, that gesture could have been discontinued by 2011 and normal service resumed.

Instead, Cameron & Osborne have left austerity in place. 

I am not a member of any political party, so I am free to note that I believe austerity has been imposed primarily for political reasons. Put simply, it has been a message to Labour voters; "see what happens to you when you put your lot in power". One of  the"happenings" has seen average UK wages fall by around 8% in the last few years. Of course, a Right Wing Government, elected by only 27% of those eligible to vote, doesn't give too much thought to those earning the average wage, other than trying to frighten them into never voting for the Left again.

Anyway, austerity was meant to lead to the National Debt being paid off. Instead, it has increased by more than a half  since 2009.

So the answer to paying off the National Debt is not to be found in an austerity policy.

What is the answer? How can we pay off the National Debt and perhaps even start building up a fund to support projects in the national interest, without running up more debt?

I have a positive suggestion, which deals with several different issues at the same time.

All London housing should be built under Public Private Investment (PPI) Schemes.

The figures are straightforward.

Average house prices in London are around £500,000- and rising.

House Builders work on the basis of one third of a house price for land, one third for building and one third for profit. So profit on an average London home is around £160,000.

In London, Government has a huge role to play in making land available for home building. Much land is actually owned by the State. The rest is dependent on Planning Permission and other administrative considerations, whether the land is Greenfield or Brownfield. In short, a significant element of the one third of home building costs attributable to land can be reduced through Government participation in PPI Schemes for house building. This should improve profits per home to around £200,000. The State would share that profit with the House Builders.

So a nice £100,000 profit for the State from one home.

That's £1 Billion for 10,000 homes. And London needs hundreds of thousands of new homes. NOW.

Of course, the State benefits from a home building programme will not be limited to the profits immediately derived through selling the buildings. 

Employment will increase in the housing sector, bringing income tax into the coffers of the Treasury. Then there is Stamp Duty...

I could go on - but no need.

Out goes austerity and in comes a home building scheme that will change London for the better, providing good living environments for the fast-increasing population of the Capital and swiftly eroding the National Debt.

Of course some on the Right might want to see all profits in Private hands ( or  bank accounts). Some on the Left will want to grab everything for the State.

Personally, I would not trust either the Private Sector or the State to do what is required on their own. PPI CAN work. 





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