There is going to be a Parliamentary by-election in Rutherglen and Hamilton West following the recall of the SNP MP Margaret Ferrier. You may remember that she was suspended from the House of Commons over a serious breach of Covid regulations in 2020.
It will be a fairly clear fight between SNP and Labour, but as always it is very important that we field a credible candidate. The local party has selected Gloria Adebo, who lives in Rutherglen with her family.
Gloria was originally from Nigeria; she stood as a council candidate for Rutherglen Central and North in 2022 and works as a data analyst with a major financial institution.
We have this quote from her:
I am passionate about giving people right across Rutherglen and Hamilton West the representation they deserve.
For me, putting public service back into the beating heart of our politics is so important, and that is why I am standing as a candidate in this by-election.
The Rutherglen and Hamilton West by-election is a real chance for local people to deliver a judgement on the difficulties and disasters we have been landed in by incompetent, populist governments in London and Edinburgh.
It needn’t be like this. And it is the Liberal Democrats who, increasingly, are a growing and dynamic part of an alternative way forward– offering hope in place of despair, founded on a belief in individuals, in the rule of law, in equality of opportunity and the importance of human rights here and across the world.
In this by-election, I will be focussed on the issues that matter to local people. That means bringing down bills for households struggling with the cost of living and ensuring that people can access healthcare close to home and within a reasonable time.
It is time, in particular, for the government to accept Liberal Democrat demands to support people in difficulty with their mortgages, paid for by reversing Conservative tax cuts for banks, to protect families falling into arrears or facing repossession as a result of soaring interest rates.
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21 Comments
Good luck Gloria!
See the latest polling on rejoining the EU is 62 – 38 to rejoin.
Always thought if it reached 66% then it would be worthwhile the LIb Dems campaigning more strongly on the issue.
“It is time, in particular, for the government to accept Liberal Democrat demands to support people in difficulty with their mortgages, paid for by reversing Conservative tax cuts for banks, to protect families falling into arrears or facing repossession as a result of soaring interest rates.”
This is defeating the very object of the monetarist ideology which is subscribed to by the Lib Dems. The whole point of raising interest rates is to create the type of pain which is described.
If there is an inflation problem, the more sensible and fairer approach is to use the taxation system to regulate down the extent of aggregate demand. It a burden we’d all share rather than it all being heaped on those who are in the process of buying their own homes or perhaps setting up their own business. This would works by slowing down the economy rather than crashing it under a mountain of bad debt 2008 GFC style.
Of course there is no chance of any mainstream politician agreeing with this. They like the idea of blaming the BoE and the commercial banks when it all goes wrong.
The point of raising interest rates is to reign in lending to an housing market inflated by excess credit creation and slow down borrowing for consumption to bring down inflation. New firms setting up in business have always faced high interest rates even with bank base rates close to zero, if they could get bank loans at all. These days many will use peer to peer lenders like Funding direct as an alternative source. There is an ongoing need for smaller banks to be established in local communities focused on lending to local business. SME’s employ most of the people in the private sector (over half the total UK workforce) and are the principal drivers of economic growth and job creation.
High inflation and falling real wages together with historically high levels of taxation as a % of national income in the economy are already regulating down aggregate demand at a rapid pace.
The combined effects of inflation, falling real wages, taxes and interest rates has created a cost of living crisis and that has to be mitigated by providing financial support to people in difficulty with their mortgages and rents.
Liberal Democrats and Labour politicians like John McDonald understand this There’s only one way to tackle Britain’s mortgage meltdown – get the banks to cough up
“New firms setting up in business have always faced high interest rates even with bank base rates close to zero, if they could get bank loans at all.”
This isn’t true at all. When I set up a business, which is still going, some 20 years ago it was difficult to avoid all kinds of offers to be lent money by the banks. So when I asked to borrow about £25k I was told it wasn’t a problem at all. I explained it was for a business start up. Again no problem, but the suggestion was that it would be better if I applied for a home improvement loan. I think I might have said something about my wife wanting a new kitchen. There were just a few forms to sign and that was it. The loan was repaid in a couple of years and everyone was happy!
Sure, if we have the misguided notion that putting up everyone’s mortgage payments is an effective counter inflation policy when all we are doing is transferring spending power from borrowers to the lenders it is hardly surprising that some politicians like John McDonnell will say we have to get the banks to “cough up”.
A better solution is to not give them the money in the first place by deliberately hiking interest rates.
Small business lending has long been a problem in the UK highlighted by all those involved in the process such as accountants like myself.
“The market for business loans however has changed dramatically in recent years as banks, which once dominated the scene almost entirely, have shrunk away from the lending arena to leave alternative funding options emerging apace to meet rising demand and the needs of SMEs.” https://smallbusiness.co.uk/five-top-tips-for-those-looking-for-a-business-loan-2477747/
You are right that lending secured on property was readily available during the Blair/Brown years. Gordon Brown as Chancellor did not seek to reign it in as tax receipts were flowing in from the banks profits and stamp duty.
This is when the housing bubble took off. Inflation adjusted house price growth reached +173% over 11.75 years from Q4 1995 to Q3 2007 when the average effective mortgage rate sat between 5.0% and 7.0%. Assured Household Tenancies and Buy to Let mortgages fuelled the asset bubble further. Nominal annual house price growth peaked at 25% at the beginning of 2003 as prices increased by 87% in nominal terms over the period 2001 to 2004 alone. A final burst of house price growth in 2006 & 2007 brought us to the Northern Rock bank failure and the 2008 financial crisis. After the financial crisis the housing market was again reflated.
I agree a better solution is to not to create asset bubbles in the first place. The principal business of banks should be lending to business and providing digital payment systems.
Lending in the housing market should be left to non-banks and regulated building societies.
How effective increasing interest rates is as a counter inflation policy is dependent on what type of lending is reduced and what the banks do with the increased profits from higher interest rates. The evidence suggests that mortgage lending (and hence house price inflation) and consumption borrowing will reduce. Research suggests business lending and investment is driven largely by demand in the economy rather than bank interest rates.
The increased profits by banks are not transferring significant levels of spending power from borrowers to savers, as the big banks are not increasing interest on savings accounts by anywhere near the levels that interest rates have risen by.
They are increasing dividends which is a transfer of spending power to shareholders, but they are also effecting share buybacks which has the effect of increasing share prices but not consumer price inflation. It is CPI that is the target here.
Ed Davey and John McDonnell are right to argue that we have to get the banks to “cough up”. I would argue that this is best achieved by a Land Value Tax on interest earnings from mortgages and that this source of funding be utilised to both increase housing benefit and support people in difficulty with their mortgages.
@Peter Martin, @Joe Bourke: Very fascinating and important is this debate on economics, but it’s nothing to do with the topic of this article, which is the Lib Dem candidate for the forthcoming Rutherglen & Hamilton West. We can always trust you two to go off on a tangent from an incidental sentence in the article.
ObRutherglen & Hamilton West [as people would write on Usenet]: this is an interesting seat from the Lib Dem perspective, as an SNP~Labour marginal where the Tories are not in contention. Of course we (probably) aren’t going to win but we can safely campaign without fear that it’ll somehow let the Tories in. A strong showing would show that we are back and mean business in Scotland. The best (realistic) result for us would be to gain a respectable 3rd place and push the Tories into 4th (or maybe even lower?)
Alex,
the issues that Gloria Adebo has chosen to focus her campaign on are bringing down bills for households struggling with the cost of living and ensuring that people can access healthcare close to home and within a reasonable time.
Healthcare in Scotland is a devolved matter currently under the control of the SNP government. The cost of living is a UK wide issue falling within the remit of the Conservative government.
I think a focus on the mortgage support proposals made by Ed Davey is a good way to differentiate the LibDems from the other parties.
Ed Davey was the first to propose temporary support for Energy bill increases. That was soon taken up by Labour and subsequently implemented by the Conservative government. None of the main parties have yet followed Ed Davey calling for such support for mortgage holders facing foreclosure.
Ms Adebo sounds like a strong candidate with a clear focus.
Interesting that hear Joe Bourke advocates a focus on the mortgage support proposals made by Ed Davey as a good way to differentiate the LibDems from the other parties in the forthcoming Scottish by-election.
I don’t know what the average house price in Sir Edward’s constituency is. but I guess it’s something in excess of Lanarkshire. Sir Edward’s constituents are much more likely to gain from such a scheme.
According to Zoopla : “https://www.zoopla.co.uk › house-prices › South-Lanarkshire, The average sold house price in South Lanarkshire is £184882”.
David,
the local party will know the issues best and if they select cost of living and access to healthcare then that is likely what is on the minds of local people.
It would not surprise me if those who may be needing support or facing foreclosure were just as or more prevalent in South Lanarkshire as in Kingston and Surbiton. The ability to meet mortgage payments is relative to income after all. The median salary in Kingston is circa £36k compared to a UK average of about £33k. Property prices (flats and houses) average £640k in Surbiton and over £800k in Kingston. Few first time buyers/median income earners can buy a property in Kingston. They have to rent. South Lanarkshire prices sound like it might still be just about feasible for young couples on a median salary to buy a property and perhaps the area has a higher proportion of owner-occupiers versus renters as a consequence.
@ Alex,
” it’s nothing to do with the topic of this article” ? ? ?
The point at issue is the statement “It is time, in particular, for the government to accept Liberal Democrat demands to support people in difficulty with their mortgages”
Ms Adebo is ignoring the fact that they are only difficulties because Govt has deliberately created them! They have raised interest rates which mean the banks get a lot more money while borrowers end up with a lot less .
It wouldn’t be quite so bad if the banks passed on higher interest rates to their customers but they are ultra slow to do that – if they are doing it at all.
Good luck Gloria, won’t be easy with a straight fight between Lab and SNP. Hopefully you may be able to knock the Tories into a lower placing.
Rutherglen Councillor Robert Brown who leads the Liberal Democrat Group on South Lanarkshire Council, said Rutherglen and Hamilton West Liberal Democrats
“Thousands of families in Rutherglen, Cambuslang, East Kilbride, Hamilton and other areas of South Lanarkshire are worried sick about the steady rise in interest rates and mortgage charges. Many more will be increasingly concerned as their fixed rate mortgages come to end.
Families are facing rises in mortgage payments of £300, £500, £600 a month on top of the damage caused by energy crisis and the cost of living crisis.
Prime Minister Rishi and the Conservative Government have really sat on their hands whilst the mortgage crisis has ballooned – unlike Governments in other countries who have stepped in to help.
Polling from Savanta, commissioned by the Liberal Democrats, shows 46% of adults with a mortgage said they were worried about losing their home because of unpaid bills in June.
A staggering six in ten mortgage borrowers are worried about having to cut down on food bills because of higher housing costs. 45% were worried about having to borrow from a friend or family to cover a bill, while 48% were worried about having to cancel a holiday.
This is quite simply intolerable – urgent action must be taken.”
The Thatcher government brought in a windfall tax in the 1981 budget. It was a 2.5% levy on non-interest bearing deposits. It raised £400 million – equivalent to £3 billion in today’s money – according to the Institute for Government. That is the same amount as Ed Davey has proposed should be levied.
Could Joe please explain what assistance rent paying tenants can expect from Sir Ed Davey’s suggestion, given they are probably in a less secure financial situation than homeowners ?
>” The point of raising interest rates is to reign in lending to an housing market inflated by excess credit creation and slow down borrowing for consumption to bring down inflation.”
Shame inflation has been officially measured using CPI since 2011, which explicitly excludes mortgage and housing costs…
Interestingly, the massive increase in energy prices could be said to have achieved the same effect and due to the higher rate of tax and duties it could be argued has been more effective at returning monies to the government than the changes to the BoE base rate…
David Raw,
Basic Rental Income is a form of UBI. It would not be income-contingent and therefore does not have the same disincentive or perverse incentive (e.g. family break-up) effects as housing benefit and council tax credit. A Basic Rental Income based upon local market conditions could be granted to every qualifying individual who rented rather than owned a qualifying residential property.
The source of funding should be those who have gained the most from increases in housing equity. Philosophically, the justification for this has roots in Thomas Paine’s argument in favour of a ‘basic endowment’. The reason that there have been large gains for some in the housing market whilst others struggle is because our common institutions have failed to provide enough housing to enable affordable rents and housing. The introduction of a land value tax or similar to fund the Basic Rental Income is therefore justified on the basis of gains received by a few from the institutions of society and its collective action failures rather than through the individual’s endeavour.
A basic rental income could be based on the Local Housing Allowance (LHA) and funded by a Land Value Tax on residential housing – owner occupied, let and 2nd homes. The benefit of this approach over rent controls is that it does not constrain the supply of housing to the rental sector and acts to depress the land value component of housing and thus property prices generally. In fact by incentivising the rapid build out of undeveloped land that has been granted planning consent, it is anticipated that private housebuilding will be accelerated (cont).
(Cont) The LVT would be assessed on imputed rent at marginal income tax rates with an owner-occupier allowance equivalent to the LHA for the property assessed. A low rental value property (occupied by its owner) would pay no LVT while a high rental value property would pay LVT at the basic or higher rates of income tax of its owners.
One of the anticipated impacts of land value tax is the cooling of the housing market. LVT would establish a mechanism that would bring to an end the constant escalation of property prices – which principally benefits financial institutions lending on property at the expense of everybody else, forcing homeowners to expend a major part of their earnings on mortgage repayments, and putting home ownership beyond the reach of so many of the current generation of potential first time buyers.
To mitigate the impact of LVT assessments on mortgage holders. LVT assessments may be split between property owners and financial institutions that hold mortgages on residential property. These institutions would be assessed a proportionate share of LVT in accordance with the loan to value ratio’s pertaining at the start of the fiscal year and be assessed at their prevailing corporation tax rate on the imputed rents from their equity share.
As Sir William Beveridge made clear in his 1942 report – the framing of a satisfactory scheme of social security depends on the solution of other problems of economic and social organisation – including the problem of rents.
Thank you for your two very detailed responses, Joe.
My only queries are as to whether or not you could distill all of that into a thirty second conversation on the doorstep, or, equally, into a clear and snappy leaflet to be left with said Hamiltonian elector.
David Raw,
I will leave the Hamiltonian leaflet to those in the local party who know best.
For the election next year my suggested key manifesto pledges and leaflet would be:
– Minimum income guarantee
– Jobs and wages guarantee
– Fair council tax and business rates
– Fair and green energy costs
– Fair rents and mortgage support
– A minimum income guarantee of £100 per week for working age taxpayers
delivered by converting the tax and NI personal allowances to a tax reducer that gives relief at a 20% tax rate (not 40%) and increasing Universal credit basic allowance to £100 per claimant.
– A Jobs guarantee for the 350,000 long-term unemployed funded by a combination of benefit savings and Employer NI on large firms.
– Council tax reductions for owner occupiers and tenants paid for by increases on very high value properties, 2nd homeowners and landlords. Business rates will be shifted to landowners.
– Energy costs held down by wholesale energy market reforms and caps on the excess profits made by energy companies.
– Tenants and financially distressed homeowners with low equity in their homes will benefit from a basic rental income and mortgage support funded by a land value tax on banks, landlords, 2nd homeowners and higher value properties.
The tax reforms would capture much of the rents derived from land and natural resources and apply those rents for the public benefit
Good luck Gloria. How can we help your campaign?