(This article develops ideas in an earlier article linking the parliamentary expenses scandal with the benefit system.)
Some people might think that the parliamentary expenses scandal is a sideshow, and not relevant to the good administration of the country. “What does it matter if MPs fiddle a few quid”, they might say, “as long as they run the country well?”. I argue that, on the contrary, MPs’ greed is instrumental in sub-optimal policies being pursued.
The average house price in the UK is £224,000 (as of May 2009). Median income is about £23,000, so house prices are almost 10 times income, which is clearly unaffordable. The area of the country with the cheapest house prices is Blaenau Gwent where the average price is £80,000, a multiple of almost 4 times income, which someone would be unlikely to get a mortgage for (and arguably it’s not in the interest of the economy for people to get mortgages of such a high propiortion of income that they may well default). And note that the average income in Blaenau Gwent is going to be a fair bit lower than in the whole of the UK.
So the average person cannot afford to buy the average house. Is this because houses are fantastically expensive to make, and affordability is thus constrained by humans’ inability to exploit nature to do our bidding (such as the inability of the average person to afford their own spaceship would be)? No: houses are in fact quite cheap to make. In this they are similar to other manufactured goods, which are cheap because of technological advances, and the global market economy.
For example the American company Por Fin Nuestra Casa are building homes for low-income Mexicans out of used shipping containers and selling them for $10,000 each. Note that’s an all-in price which includes transporting the container/home to the site and fitting it to utilities such as electricity and water.
$10,000 is about £6,500 which is easily affordable by just about anyone in Britain. Would it be of adequate quality, by British standards? A shipping container is 40 foot by 8 foot, which is arguably not a very big home. Two of them linked together would be compaible to the floor area of a UK home however. It might also be that the standards of insulation etc wouldn’t be adequate — adding £7,000 to the cost would surely fix that, and it’d still only cost £20,000.
So why can’t people buy a home for 20 grand? To put it another way, why haven’t MP’s looked into the situation, and fixed what needed to be fixed so that this is possible? (It can’t be that the idea hasn’t occurred to any of them: the UK government did consider building low-cost housing from containers in 2004, but nothing came of it.)
I suspect there are a number of reasons MPs/the government haven’t done this.
Partly it’s because lower house prices would be unpopular with some voters. Maybe politicians have decided that floating voters in marginal constituencies (the only sort of voter they care about) dislike lower pricres because it means homes they already own will be less valuable.
Or maybe politicians care more about maximisuing the expenses on their 2nd homes than ensuring that their constituents can afford a first home. Given that MPs have been claiming for things like 88p bathplug, 39p cans of dog food and £1.10 tampons, it’s clear that some MPs are keen to wring every last penny out of the expenses system, and they clearly have given more time, effort and concern to that than they have over housing affordability.
But I suspect the biggest reason is the 2nd home allowance system itself. This allows an MP outside London to buy a second home in London, have the taxpayer pay for the mortgage, and then the MP owns the house. It’s clear that in this instance MPs stand to gain personally from high house prices, and some of them (probably the vast majority) are going to put their own personal interest above that of their constituents, for example Michael “I did not come into politics not to take what is owed to me” Martin.
What can be done to fix this? MPs expenses need to be out in the open — all claims, all payments need to be itemised and put on the Internet as they occur. MPs whose constituency is inside the M25 shouldn’t get the 2nd home allowance: they can commute into central London like their constituents do (then maybe the trains would be better). While most MPs outside London need a London pied à terre to do their job properly — they can hardly be expected to commute from Yorkshire or Scotland every day — MPs shouldn’t benefit personally from the 2nd home. Instead, the government should build or buy a high-rise apartment block near the Palace of Westminster and allow MPs to live there rent-free.
MPs shouldn’t be allowed to vote on any matter in which they have a personal financial interest in the outcome (in the same way that councillors are not); perhaps more of these issues could be dealt with by a referendum. I’m thinking here particularly of electoral reform: the biggest single obstacle to getting proportional representation passed is that all the current MPs have been elected under the present system, and many will (rightly) fear that they might not be re-elected if the system changes.
A simple way to save money on MPs expenses is to have fewer MPs. We don’t really need 646 of them, 300-400 would be fine. As with electoral reform, this issue must be decided by the people, not the politicians.