have we had subprime lending on quite the same scale as the USA’s, with loans packaged to their lower-paid ‘middle classes’ in such a way that they could never be paid off. But we have some elements of that. Interest-only mortgages – a hefty segment of the UK market – are also mortgages which will never be paid off without a change in financial circumstances. Given that the last few years have seen interest rates at a historic low, this is bound to mean trouble in the future when they rise again, as they almost certainly will.
The British version of the vicious spiral has been lending against ever-greater multiples of salaries, which also feed into the cycle of higher prices. Until 1988, the limit was usually twice the salaries of the people buying. Loans of four times joint salaries were unheard of, but over the past decade loans for four times joint salaries came to outnumber those of twice joint salaries.
Here is the strange reverse alchemy of the house-price spiral. Victorian economists calculated that the average English peasant in 1495 needed to work for fifteen weeks to earn the money they needed to survive for the year, supported as they were by access to the common land. In 1564, it was forty weeks.29 Now, when GDP tells us we are incomparably richer, it is extremely difficult to buy a house in southern England and live a reasonable life without both partners working flat-out all year long. Even when both partners work, it is often simply not possible (certainly for twenty-first-century peasants, of course).
This aspect of the spiral has had some peculiar effects. When the 2001 census unexpectedly revealed that half the UK population now lives within half an hour of where they were born – not exactly globalization – it did cause some scratching of heads among policymakers. The real reason was that only working couples can now afford to buy homes. That means they need to live near their parents or in-laws to provide childcare during the day. Those who can’t rely on parents for whatever reason are thrown on the mercies of an expensive, understaffed childcare sector that often eats away most of the second household salary.
Hence the sad sight of exhausted mothers wheeling home exhausted toddlers in the dark at the end of a long day at the nursery, long after bedtime, finally picked up after another long day at the office.
The Blair government helped in 1998 by introducing Sure Start centres (124 of which have since closed down). But what they gave with one hand, they took away with the other, all but outlawing informal childcare – you can look after children for neighbours but they are not allowed pay you, even in biscuits – and by regulating the co-operative nurseries out of existence. This was important. Mutual nurseries are how the middle classes afford childcare in North America and Scandinavia, keeping costs right down in return for helping to run the nursery once or twice a month.
There are certainly some brilliant nurseries out there. There are also many less than brilliant ones. The columnist Lucy Mangan described herself as ‘aghast at apathetic children – one group in a nursery in a basement flat with no garden and virtually no natural light – or at childminders who reach for the paperwork to sign the child up without ever reaching for or engaging with the child’.30
The other aspect of the spiral which stands out in the UK is the phenomenon of the Incredible Shrinking Homes. This isn’t rocket science. You only have to look at the generous gardens of the semi-detached houses of the 1930s to see that something has gone wrong – all that space for hens and vegetable patches if need be, compared with the pinched and mean pocket handkerchiefs of turf and concrete in modern estates.
The famous Parker Morris space standards of the 1960s are now long gone, though the UK is the only European country not to set a minimum floor space, apparently unaware that the house-price spiral was almost bound them to make them smaller. New homes in Denmark are 80 per cent bigger than their equivalents in the UK. The design agency CABE lays the blame on the idea that houses are an investment – a financial commodity rather than homes. This ‘works against quality standards in house building’, they say.31
The Royal Institute of British Architects (RIBA) have tried to translate that lost space into more human terms. If the average new home in England is only 92 per cent of the recommended minimum size, as they say it is, this amounts to eight square metres missing for a three-bedroom house.32 That is the size of a single bedroom, the space for a new arrival to the family, the space for children to have a room of their own, or for a spare room for a guest to stay overnight. It is the space that could take the kitchen out of the sitting room and the sounds and smells that go with it.
The RIBA dubbed these new homes ‘shoebox houses’, and the BBC interviewed two sisters who had just moved into a new three-bedroom house in Devon.33 The largest double bedroom was 11 foot 2 inches by 8 foot 2 inches, just enough space for a double bed as long as nobody tries to squeeze into it. They had to give their book collection away to the local charity shops: ‘We are just on top of each other the whole time. We find we are arguing much more than we used to – simply because there’s not the space to get away from one another.’ Nearly half of those who replied to the RIBA survey of new home buyers in 2009 said that they had so little space that they were unable to entertain visitors.
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