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Letter to MPs

Although interest rates may have come down from the levels a few years ago the downside economically is that cheaper money fuels demands which pushes up prices and people can be back to square one so perhaps we need to look at the macro side of things, how the market works as a whole and what can be done to make things better? We want to start a debate rather than prescribe any particular way of regulating the market.
 
I am writing to ask if you might consider supporting the campaign. Might I also ask if it would be possible to copy this to people you know who might wish to be involved.  
 
News Release
 
 
date:25.1.05
 
Subject :As news reports stream in of house prices climbing beyond the reach of ordinary people a new personal finance campaign is launched today intended to influence the House Price debate.
 
The coordinator will be Bob Goodall who ran Save Our Building Societies and was national campaign worker and press officer for the 1997 tactical voting campaigns.
 
Storyline: The objective of the group will be very modest and attainable. It will be solely to put on the national news and political agenda that we need to regulate the house price mechanism rather than prescribe a particular way of doing it. It is to start a debate on what we might do to reduce house price inflation rather than increasing supply of housing to meet ever increasing demand.
 
How the campaign will develop
Bob will write to supporters of the Save Our Building Societies campaign and other campaigns he has coordinated. Bob says "It will be like throwing a stone into a pond and watching the ripples spread outwards". National and local media will be key to the success of the campaign.
 
He says "I think it is an idea that will appeal to people across the country. I really do not think it carries political risks for any MPs supporting the campaign as it merely suggests we need to look at it rather than advocate any particular way".
 
Bob continues " I feel very strongly that I can sell the idea to people who may feel they have something to lose. No one benefits from house price inflation. High house prices is an illusion of wealth that means higher costs such as insurance. A person only realises the wealth if they sell their home then the 'wealth' is gone when they buy another one unless thet move away. The house price bubble has spread out so it is harder to capitalise in this way.
 
Also a home owners children or wider family are affected by high house prices. They may need to move away from their parents to buy a home. Additionally  public services in areas with high house prices (where there may be the biggest vested interest against the idea of regulating the market) can be poorer than elsewhere because the workers may find it harder to live in the area. The way round this is not to raid other countries of their key workers. Anyhow such workers will also move to cheaper areas as soon as they can.
 
Also House price inflation undermines our economic performance and the competiveness of business in the global market place. House price inflation reduces the standard of living of people because they have to find more to pay for a home. They can also afford to buy less goods that dents demand for products.
 
He says "I think this can all be turned around. Regulation is a free tool for the government that costs nothing financially". 
 
"The price mechanism means that with limited supply of land and increasing demand through rising population or because people wish to live on their own the cost of houses will continue to rise. With one hand people work to raise their standard of living but lose with the other as the cost of finding a home increases. Also if people earn more and perhaps both partners work demand push increases and so do prices and people are back where they started."
 
"Also if we would like children to support their parents more in later life rather than rely totally on the state it becomes harder if children are forced to move away to be able to afford a home.
 
The best way of ratcheting up the standard of living of people in this country is to regulate the biggest cost in their lives -housing."
 
"Our nations competiveness in the global marketplace would be improved if people could be as well off or better than they are now but need to receive lower increases in salary to achieve this. ie to meet their costs." (One example The NHS I believe has boosted our standard of living by providing cheaper medical service than one that people would otherwise have to pay for privately)
 
"It is not about taking anything away from people merely regulating the future market through any number of ways. I do not wish to push for any particular only for a national consensus to be reached that we need to do this in some way, the alternative been to concrete over larges areas of our country".
 
I am absolutely convinced as I was with the Save our building Societies campaign that it is a campaign waiting to be fought.
 
"We protected cheaper mortgages through the Save our Building Societies campaign but to bring home the full benefit of this to the consumer perhaps we need to ensure that the cheaper money does not serve only to increase demand thus push prices up and negate the saving."
 
A related issue for the future
We also need to return to rent control. The housing benefit bill has gone up 4 fold to over 11 billion a year and a vast industry has grown up exploiting those who cannot afford a home of their own often at the expense of the taxpayer. Unfortunately housing assocations have been involved in this. A huge poverty trap has been created where people are financially worse off not working. The other nasty side to it is that rents have been greatly inflated by the housing benefit available. This has meant that people working have to pay far higher rents because the state has pushed up rent levels.