UK cars & housing kaput

[james armstrong]

 Sometimes  a productive activity which once was founded
for the  most  rational purposes, and for a time highly
successful, grows into a white elephant. 
This can happen when an institution has national recognition  and iconic status.

Once Britain
manufactured shoddy cars in huge numbers. Now our chief manufacture is
‘financial assets’ based on a perverted housing market.

Both failed catastrophically.  

 

“Such in the
60’s was the  British Motor Corporation.  (BMC) a conglomerate of various formerly
independent  car manufacturers like
Morris and  Austin
, and itself it later merged with Leyland to
produce  British Leyland (BL)  which as late as1980 was selling its products
as emblematically ‘British’.

 Like the German manufacturers,  British carmakers laid the emphasis on selling
abroad, but there the similarities  ended.  

After the war
successive British governments urged BMC to sell every car they could
overseas.- as part of the desperate search for foreign currency to  offset the 
country’s huge war debts..  The
company duly and deliberately neglected quality control in favour of rapid
output. The resulting shoddy quality of British goods mattered little at first.
as  British firms had a captive market :
demand at home and abroad exceeded available supply. In 1949  the UK
produced more passenger cars than the rest of Europe
combined.  The reputation for poor
quality proved impossible to shake off.  European
buyers abandoned British cars. 

When they did  decide to 
update their fleets and modernize production  lines, 
British  car manufacturers had no
affiliated banks to turn to  for
investment cash and loans in the German manner. 
Under heavy political pressure 
they built plants and distribution centres  in uneconomic parts of the country- to conform
to regional policies  and to appease
local politicians and  unions.  After this economically  irrational strategy was abandoned  some consolidation  was undertaken ,  British automobile firms still remained  hopelessly atomized. ; in 1968  British Leyland  consisted 
of sixty different plants.

 Government 
actively encouraged the inefficiency of British  producers. 
After the war the authorities distributed  scarce supplies of steel  to manufacturers on the basis of  their prewar market sales.  Thus freezing this  major 
sector of the economy  in the mould
of the past  and decisively penalizing
the new. 

The oil crisis in
the 1970’s, entry into EEC and the  end of
UK’s protected
markets  in the dominions finally
destroyed the independent  British car
industry.

   The decline and disappearance of an
autonomous British automobile industry may stand for British economic
experience at large.

The UK’s
endemic balance of payments crisis  was
largely due to the  six year war against Germany.
and Japan and  the  cost of the enormous post war  defence establishment.  8.2 % of British   national income against a German  outlay of half that figure.

One of Britain’s
problems was the workforce, traditionally organized into  hundreds of long established trade unions –
248 of them  in British Leyland in 1968.”   *

But also the management was
chaotic.   When Michael Edwards was
parachuted into the failing BMC as CEO he startled the nation by announcing his
discovery that no-one in the company had any idea of the  production cost of the  iconic model, the Mini.

Back in 1930 Clement Atlee had
identified the British Economic malaise as 
a problem of underinvestment,  lack of innovation, labour immobility and  managerial  mediocrity.

 

The provision of housing in UK
is like the UK
car industry in 1960, no longer fit for purpose.  

In its way house provision on a
national scale is as complicated a structure as automobile manufacture. ..

Exclusive minority land ownership
and therefore control of use, already  
extremely high and continually upgraded 
building standards, restrictive and  rigorously and universally enforced town and
country planning laws,  prioritizing the
role of houses as property over that  for
home making  by occupiers and  manipulating house prices to out of reach
levels by government as part of a macro-economic policy to treat houses as
assets against which mortgages can be borrowed, thereby encouraging increased
borrowings (and the consequent rise in house prices) as a way of stimulating
credit and , in turn, boosting consumer spending- 

all these have contributed to
making the supply and the price of houses an inescapable  matrix  which excludes 
a large and growing  section of
the population from access to housing at prices they can afford. 

In addition the unlawful monopolizing
of scarce building sites with planning permission or with potential for
planning permission ensures that new house supply is severely restricted even
in times of economic growth. Restricting the supply , in the absence ofaccess
to ‘other ‘sites,  pushes up prices 

That millions are on waiting lists
for social housing and that the numbers of those in housing need , both in the
private  and social sectors  at a time when  the supply of new houses is at a record low –
these  show that  the housing industry does not meet the needs
of  consumers an has not done so for
twenty years.  

That the house manufacturers do not
fail, as did the car manufacturers is due to their second role as land
speculators.   The increase in the value
of land contributes more to their profits than the does the deliberately
restricted number of new houses they build. 

Monopolising scarce land , against
the background of  the severe restricted
availability of land with planning permission for house building, allows them
to benefit from windfall gains on both the houses  they produce (in restricted numbers) and on
the land they retain in their landbanks and advertise in their balance sheets.

       Governments ignore the unlawful monopoly
behaviour and government regulatory authorities (OFT) fail to act  because high house prices further government
and Bank of England  economic strategy of
stimulating growth through increasing credit based on high and ever rising house
prices – that’s all we can manufacture-not houses but the   financial products based on their high price..
We once manufactured motor cars for the world - and failed. 

In both instances,. cars in the
1960’s and houses in the present, the institutions , both public and private
are no longer rational, considered from the 
viewpoint of the public good. 
Ultimately it was the lack of trust that ditched BM and will ditch HMG. 

 

House provision in UK
is more than a white elephant, it is a raging tiger consuming   people s lives and  blighting the prospects of  the future generation.

 * Tony Judt…. “Postwar”

 

.     .    
   

James.   1 November 
2010 

 

 

 

 

 

 		 	   		  
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