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The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.
The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.

The IEA essay prize is looking at the wrong side of the housing equation.

This week, it was announced to big fanfare that: 'The UK's worsening housing crisis has led the Institute of Economic Affairs (IEA) to set up a £50,000 prize for anyone who can solve it – with Conservative MP Jacob Rees-Mogg as judge.' 'Competitors are being asked to propose a single policy initiative which would increase the number of houses built, increase the number and proportion of property owners in the UK, and be politically possible.'

Britain has a 'relative' housing problem - that many people cannot afford to buy or rent what they perceive is their 'right', especially when compared with their parents in previous years. This makes for political discontent. A quick look at the percentage of home ownership in the UK at 63% shows it within a perfectly 'normal' range for Western countries: Australia 65%, France 65%, Denmark 62%, Germany 52%, Hong Kong 51% An affordability issue can never be solved by building more housing, at the same expensive price, whatever politicians tell you. 

The real problem is the one that the politicians and the IEA do not want to talk about, the ever expanding population. The actual population of the UK, remains a matter of conjecture. By definition, people who are undocumented or illegal, do not put themselves on the census. 'Britain is home to more than a million illegal immigrants', David Wood a former home office head of immigration enforcement admitted in 2017. also suggested that additional 250,000 illegal people arrive each year. That is in addition to the 325,000 official net annual immigration or 650,000 gross migrants. numbers are from informal passenger surveys and may themselves, be massively underestimated. Together, they suggest that Britain could be adding some 600,000 new people each year, all of whom need to be housed. 

Given these vast numbers, it is not surprising that there is continual pressure on house prices and rents. Data in 2016 shows, that the UK had 92 million mobile phone subscriptions. Obviously many people and businesses double up on phones. But it is an extra-ordinary figure, considering that babies, children and many old people do not have a mobile. Likewise, supermarket food surveys, suggests the population of the UK is well above the official 66m. In any market, prices are a result of the balance between supply and demand. 

However much various groups like to suggest, Britain's housing issues are not supply side only. The truth of this is easy to demonstrate. A cursory look at areas, which for various reasons, have had major population losses, show the validity of the demand part of the equation. Detroit had a population of 1.8m in 1950, which by 2010 had declined to 700,000. prices dropped to a dollar each, yet still no one would buy them. Vast tracts of land reverted to grass within the city limits. There was so little demand for either building land or housing that the city suggested turning, formerly residential areas into urban farms. Remote, depopulating, Italian villages made headlines this year, when they announced that they were selling houses off for one euro each. areas of Northern England including Hull, Stoke-on-Trent, Liverpool and Middlesborough, have either had entire streets of unwanted, terrace housing bulldozed or sold for, a nominal one pound each. Have no doubt about it, demographics have a massive effect on house prices.

Britain's must tackle the demand side of the housing equation: The only way to stop the increasing demand is to start controlling immigration - one of the key reasons people voted for Brexit. No supply side solutions in the world will ever solve any problem, if the demand side is not looked at as well. We could cover every blade of grass in southern England with housing and concrete but it will do nothing if millions of new people continue arrive. By 2008, England already has the highest population density in Europe and this has continued to increase dramatically in the last ten years. Britain, like America is a prime target for migrants, who prefer English speaking countries with generous housing benefits. The levels of of immigration Britain has sustained since 2004/5 is neither economically nor politically sustainable for any part of the country's infrastructure. The pressure on transport, schools, hospitals and police may make the 'housing price crisis' look like a relative minor problem. 

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Monday, 27 May 2019
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