Only builders will profit from Cameron's sub-prime homes

Simon Jenkins, The Guardian, 23/11/2011

After the SS British Economy hit an iceberg three years ago, survivors were hauled from the freezing sea aboard the good ship Cameron. They assumed he'd be a more reliable helmsman. So what should they make of their new captain deciding to hurl his vessel at full speed towards the self-same iceberg?
David Cameron announced on Monday that he wants to "revive people's hopes and dreams of homeownership". He intends to use up to £650m of public money to reflate what is by definition the sub-prime end of the mortgage market. Public money will this time bail out not reckless bank mortgage lending, but reckless sales to individuals by private housebuilders. It is called kickstart, which is coalition speak for bailout.

Magic gold dust is the stock in trade of the politics of housing. Cameron, like all leaders exhilarating in spending public money, accords the owning of a home (cosy word for house) the status his forebears gave the church. He speaks spiritually of "that magic moment when you get the key and walk into your own flat". It is a dream, he says, "which should be available for everyone, not just the better off". His government wants to meet that hope and realise that dream.

With ministers said to be panicking about growth, every lobby in the country is rushing to town waving bottles of snake oil. Few are as powerful or persuasive as the housebuilders, sharing with bankers a responsibility for the world's current woes. The Guardian on Monday listed six almost identical housing initiatives in recent years. This kickstart is eerily similar to Labour's explicit Kickstart Housing Delivery plan of 2009, with the same subsidies for undeveloped sites and the same £400m incentives package. On each occasion the lobbyists come away with money in their pockets – but with the housing market unmoved. The market tracks not Whitehall initiative but the level of demand in the economy, and this tracking is as constant as government's belief in its power to break it.

On Monday the eager-beaver housing minister, Grant Shapps, indulged in the usual mission creep. "It is not a multimillion-pound expense," he said, which is what it is. The policy is to be "industry-led", with housebuilders "buying into the scheme". This is no wonder when they wrote the rules to enable them to profit risk-free. It is a lobbyist's charter.

There is some new help for renovating existing and derelict properties and some welcome land disposals, but no sign of an end to tax discrimination against repairs and conversions, where big gains in housing capacity are to be found. There is just an incantation of the developers' slogan that 230,000 homes are "needed nationwide", as if a home were a unit in a Leninist housing pool, rather than a flexible concept in a market responding to demand and supply.

There is no shortage of houses in Britain, indeed there is a raw surplus. Many are just too expensive for those who want to live in them. This is hardly new. Every chart of housebuilding and prices suggests that both will start turning up soon, along with mortgage availability, irrespective of government subsidy. The one thing that will send prices into a speculative spiral is a reckless return to Thatcher-style mortgage subsidies and Blair-style sub-prime lending.

The proper use of public money on housing is on the very poor. Here the policy is mystifying. Shapps asserts a hitherto unknown "right" of social tenants to buy the houses they rent. He is offering a 50% discount on the estimated purchase price, thus giving away half the value of the public housing stock, regardless of whether its not-for-profit owners agree. So much for localism and the "big society". This will be exacerbated by a little noticed concession to the housebuilders, releasing them from past promises to supply social housing on already permitted sites. This astonishing capitulation makes a mockery of planning localism.

Social housing remains hopelessly ill-defined in Britain, where 60,000 of its beneficiaries reportedly have second homes and hundreds of thousands more are well-off. Shapps even asserts a social right to a subsidised house near where one's parents live. When the Victorian social reformer, Octavia Hill, launched "three percent philanthropy" to aid the urban poor, she too was aiming away from real need. As Gareth Stedman-Jones wrote in Outcast London, Hill was helping not the truly desperate but a politically emergent class of "deserving poor". The same applied to municipal housing. Only after the second world war was access to a subsidised house loaded in favour of real need.

Under Margaret Thatcher housing subsidy wheeled upmarket, to promote homeownership. Tax relief was explicitly deployed as a means of sucking wage earners into homeownership (and Tory voting). The memoirs of Tory chancellors Lord Howe and Lord Lawson blaze with arguments with Thatcher on this. To her, subsidies were not to relieve housing distress but to aid those heroes of stability and growth, the deserving poor and middling rich. Housing politics has been skewed upmarket ever since.

Today's constant reference to the plight of young people "struggling to get on the housing ladder" reflects the reckless politics of the sub-prime crisis. It humiliated renting, inflated house prices, impoverished young people and ruined thousands in a frenzy of the "homeownership" bubble. Home owning peaked at 70% of Britons, against between 40% and 55% in Germany, France and the Netherlands. It leached savings from the economy and made British workers starkly immobile, compared with Germans or Japanese.

Much could be done to raise the status and availability of renting. The balance of security of tenure has tilted too far from tenant to landlord. Tilting it back could be balanced by fiscal incentives for converting and subletting. The latest kickstart echoes the cliches and slogans of the 1990s and 2000s, inducing hundreds of thousands on both sides of the Atlantic to sink their savings in to properties they could not afford.

The message is toxic. Even if the government is underpinning the housebuilders' side of the bargain, and the
money would be better spent on housing the poor, people should not be encouraged to borrow beyond their means in another gamble on rising prices. Sub-prime was an error more grotesque in its consequence than any could have foreseen. No responsible government should head that way again.

Europe's top industrial firms have a cache of 240m pollution permits

European Commission estimates energy-intensive sector will have accumulated allowances worth €7-12bn by the end of 2012

Damian Carrington
guardian.co.uk, Sunday 19 June 2011 15.38 BST
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ArcelorMittal steel worker
Steel producer ArcelorMittal tops the list of firms with surplus of emissions trading permits, according to thinktank Sandbag. Photograph AP

Some of Europe's largest industrial companies gained billions of euros from the carbon emission rules they lobbied fiercely against, new analysis reveals today.

Ten steel and cement companies have amassed 240m carbon pollution permits from generous allocations, according to a report by Sandbag, the carbon trading thinktank, seen by the Guardian.

The free permits, granted to companies with a market value of €4bn (£3.5bn), can be sold or kept for future use. The European commission estimates that the entire energy-intensive sector will have accumulated allowances worth €7bn-€12bn by the end of 2012.

"More and more businesses see that Europe's future lies in a highly efficient economy with low pollution," Baroness Worthington, Sandbag's founding director, said. "But a small group of carbon fat-cat companies are trying to stop this, in spite of making billions from a windfall of free pollution permits."

The steelmaker ArcelorMittal leads the list of companies in the report, with a current surplus valued at €1.7bn, followed by Lafarge, the cement group.

Tata Steel, in third place with a surplus valued at €393m, last month announced 1,500 job losses at its plants in Lincolnshire and Teesside, blaming emissions regulations as well as the economic downturn. Karl-Ulrich Köhler, chief executive of Tata Steel Europe, said at the time: "EU carbon legislation threatens to impose huge additional costs on the steel industry." Tata Steel declined to comment on the report.

The European Union emissions trading scheme (ETS) puts a cap on the carbon pollution emitted by energy and industrial companies. Those reducing their emissions can sell their spare permits to those who do not. But a combination of initial over-allocation by national governments and the economic decline has left the steel, cement, chemical, ceramic and paper sectors with many more permits than they need. The industries have lobbied hard against calls from governments including the UK for the tightening of the ETS and other emissions targets.

Eurofer, the lobby group representing all of Europe's steelmakers, said last month: "To remain competitive in the free, global steel markets, European steel needs … legislation that does not harm its competitiveness. But we are gravely concerned that EU climate change policy will do precisely that."

Cembureau, which lobbies for the cement industry, takes a similar line, stating: "It would be irresponsible to shift the [emissions] goalposts."

In the UK, the government has proposed incentivising low-carbon innovation by setting a British floor price for carbon from 2013. But this is opposed by the CBI. John Cridland, the director general of the employers' group, said: "It risks tipping energy-intensive industries over the edge."

The government has made some concessions, promising to produce plans later in 2011 to compensate businesses for any competitive disadvantage.

However, independent analysis by Bloomberg New Energy Finance found that the carbon permits held by the steel industry would cover its emissions for the next 12 years. "If the steel sector [on aggregate] did not sell any of its surplus, it would not have a need to purchase emissions until 2023," said Guy Turner at Bloomberg NEF.

The Sandbag report, based on public data, also found that nine of the 10 "carbon fat cats" bought between them 24.4m permits from the cheaper international market, mainly from companies in China and India. These can be used within the EU's trading scheme, enabling companies to retain the more valuable European ETS permits. Furthermore, despite the European companies claiming that tougher emissions rules would drive business overseas, some were paying overseas steel and cement companies for their international carbon permits.

"Purchasing carbon offsets from foreign competitors would not seem to be the actions of businesses genuinely concerned that the ETS will drive business abroad," said Worthington.

Not all companies are resisting the tightening of the European ETS. Five major energy groups, including Britain's Scottish and Southern Energy, last week called for spare permits to be withdrawn, a proposal supported by Sandbag.

"Failure to do so could severely hamper business incentives to invest in low-carbon technologies, as the price signal will be skewed in favour of fossil-based solutions," their statement said.

The Guardian contacted all the companies named by Sandbag. Those who responded argued that the surplus permits arose from decreased production and might be needed when the economy recovered. They said that without protection, steel and cement making would be driven to countries with less CO2-efficient manufacturing practices. Many called for global regulation of emissions

A spokesperson for ArcelorMittal said: "As part of our corporate responsibility strategy, we have decided that any sale of such surplus allowances will be reinvested into projects aimed at the improvement of our energy efficiency footprint, as this will help to reduce our overall CO2 emissions."

Erwin Schneider, at the steelmaker ThyssenKrupp, said: "Companies make decisions based on expected future developments. Any earnings from the past will either have been reinvested already or paid out to shareholders. Therefore it seems to be very misleading to use historic numbers to address our future position."

Who Is Undermining Parliament? Civil Society or Government?

Who Is Undermining Parliament? Civil Society or Government?

By Tapas Ranjan Saha

19 June, 2011
Countercurrents.org

A debate is raging on the role of civil society and popular movements, and their impact on democracy. In a recent statement, Home Minister P Chidambaram said “Elected members cannot yield to civil society” since this might undermine “parliamentary democracy.” A beleaguered UPA Government is increasingly trying to discredit mass movements against corruption by declaring that civil society cannot usurp the right to legislate – a right which, in a democracy, is the exclusive preserve of elected representatives. This argument needs to be examined closely, because on the face of it, it seems to be premised on well-accepted principles of democracy. Are civil society activists and mass movements really holding Parliamentary democracy to ransom? Or is there a deeper, more shadowy threat to democracy that is kept hidden, with a skilful sleight of hand, by Chidambaram and his colleagues?

In the first place, the accusation that civil society activists are seeking to replace Parliament does not hold water. Civil society activists are seeking to shape the draft of laws, and they also seek to mobilise opinion on the content of the laws and hold elected representatives accountable to such opinion. In the process, common people are more closely informed and involved about specific clauses of laws and specific debates surrounding them, than ever before. But the actual task of enacting the laws still rests with MPs in Parliament; though it is true as a result of the civil society efforts at public participation, the debates within Parliament are more likely to be scrutinised intelligently and alertly by citizens.

Chidambaram and the Congress party seem to be uncomfortable with this continuous process of public participation and scrutiny of the trajectory of laws before they reach Parliament. In an article, Congress spokesperson Manish Tiwari warned against street protests, which he equated with ‘street coercion' and fascism. Chidambaram criticised civil society members for challenging the Finance Minister to a televised debate, saying that after all, Parliamentary debates are televised and “voters exercise their franchise from time-to-time.” What the Government seems to be suggesting is that democracy is restricted to voters' right to elect representatives “from time-to-time.” Once people cast their vote, do they cede away their policy-shaping rights for the next five years to the representatives they elect? In other words, is the government suggesting that democracy be available to the citizens only once in five years? Do the people have no right to tell those representatives, through street protests when necessary, exactly what kind of laws they want enacted, especially when those laws often tend to have irrevocable consequences on their lives?

It is strange that the Govt which does not want civil society to dictate to Parliament, has no qualms about corporate CEOs and lobbyists as well as foreign powers dictating laws, policies and even Ministerial appointments. A glaring example was the Radia tapes revelation of how Mukesh Ambani and his lobbyist could even manage to dictate what stand the chief Opposition party will take in Parliament on a key question of energy policy. Wikileaks revealed the close scrutiny and immense influence exerted on India 's parliamentary processes, choice of Ministers (remember the Wikileaks revelation that Murli Deora's appointment as Petroleum Minister was influenced by the US ), foreign policy stances, economic policies and laws by the US . How come the Government does not consider such influence to be a threat to the sovereignty of India 's parliamentary democracy, but resents the scrutiny and influence by India 's own citizens?

Interestingly, the Government, which is raising its eyebrows about the role of civil society activists on the Lokpal panel, is itself appointing un-elected individuals – almost always corporate CEOs - in extremely strategic policy-making positions in ways that seriously undermine Parliament as well as people's right to know. A crucial instance is that of the National Intelligence Grid (NATGRID) – which has recently secured “in-principle” approval from the Cabinet Committee on Security. NATGRID's CEO is one Captain Raghu Raman, former CEO of Mahindra Special Services Group. Through what parliamentary or democratic process was he appointed? People are in the dark about why he was hand-picked by the Home Minister. Moreover his views and stances are not known to the public.

Civil society activists are public figures, whose ideas are ever open to public scrutiny and debate. We may not agree with everything that Anna Hazare proposes – but his ideas are out there in the open for us to criticize or assess on our own. But things are very different with the likes of Captain Raghu Raman. How many people are aware, for instance, of his views on national security and India 's democracy? When he was the Mahindra SSG boss, he penned an article titled ‘ A Nation of Numb People' in which he opined, “Enterprises would need to raise their own protection units…The idea is to … have private protection units that can work in close cooperation with law enforcement agencies. Think of it as a private territorial army . If the commercial czars don't begin protecting their empires now, they may find the lines of control cutting across those very empires.”

Can Chidambaram tell us why a man who thinks of corporations as ‘czars' with private ‘territories' with the right to command ‘private armies' to wage war on India's citizens is heading the most sensitive, all-compassing intelligence institution in our country? Are India 's Parliament and people aware that NATGRID is headed by a man whose worldview matches those of the worst banana republics?

Another instance Parliament being undermined is in the case of the UID Project. The UID Authority of India headed by Nandan Nilekani – another former CEO - UIDAI came into being without approval in Parliament, let alone wider debate in civil society. The National Identification Authority of India (NIAI) Bill, 2010 has been introduced in the Rajya Sabha, but is yet to be debated or passed, and it is yet to have been placed in the Lok Sabha. With a mere Cabinet approval as its basis, UIDAI headed by Nilekani has already signed MOUs in most states with a range of private agencies and government ministries, and UID cards are already being distributed. Does this not undermine Parliamentary democracy?

What are the credentials of individuals like Raghu Raman or Nilekani? They are not elected parliamentarians. They are not even politicians, who at any rate have to face elections periodically? Neither are they bureaucrats, bound to certain regulations and obligations. They are simply corporate CEOs, accountable only to protecting the interests of corporate profits! Yet we see they are being chosen through sheer discretion and positioned in strategic places to make far-reaching critical changes in our country's policy – that bode disastrous and irreparable implications for country's democracy and citizens' rights.

In a debate on a TV channel, responding to the issue of India signing on the UN Convention on Corruption, Congress spokesperson Manish Tiwari declared piously that even a municipal law would take precedence over international laws if the former was contradicted by the latter. Such respect for India 's democratic institutions and sovereignty is commendable – but one wonders where it evaporates when it comes to economic policies dictated by the WTO? In those cases, why does the Indian Government argue that its hands are tied and it has no choice but to amend India 's laws in keeping with WTO directives? It seems the Government invokes the principles of Parliamentary democracy and sovereignty only according to convenience.

The processes initiated by mass movements and civil society activists – whether we agree with all their views or not – strengthen democracy. Citizens do have a right to tell their elected representatives what kind of laws they want enacted and what laws they want changed or scrapped. The SEZ Act was passed by Parliament without a word of dissent. But when implemented, it became clear that those citizens it would affect most – farmers – would not accept it. Would it not have been far more democratic that farmers should have had a right to scrutinise such a law before it was passed in Parliament? Now, farmers' mass protests against land grab are forcing governments to consider their opinions on existing laws on land acquisition and rehabilitation. Opinion is building in the country against the sedition law; earlier, mass protests have forced a debate on laws like AFSPA. These are all processes that are essential to a healthy democracy – and the Government only exposes its authoritarian impulse by trying to discredit such participative processes.

One reader's comment on the web page of a leading English daily that carried the news story – ‘Elected members cannot yield to civil society – Chidambaram' ( http://www.indianexpress.com/news/elected-members-cannot-yield-to-civil-society-chidambaram/800964/ ) hit the nail on the head. This reader has commented caustically, “Yes, they should yield only to corporates and plunderers of the nation.” It seems the UPA Government's bluster is able to convince fewer people every day, as the corporate-dictated corruption under its aegis becomes more and more obvious.

(The author teaches Economics at Sri Aurobindo College (Eve.), Delhi University )