SINCE Labour took office in 1997, house prices have gone up four times more quickly than workers’ pay, according to figures published by the Trades Union Congress (TUC) yesterday.
Using official government statistics, the TUC found that the average price of a house in 1997 was £60,000, whereas today it is £168,000. This is a rise of 180 per cent. In contrast, average pay 10 years ago was £17,000 per annum, compared with just over £24,000 today. This is an increase of only 43 per cent.
In 1997, the average price of a house was three-and-a half times annual pay, whereas today it is seven times yearly earnings.
Another report published yesterday by the Royal Institution of Chartered Surveyors (RICS) also highlighted the crisis facing people, particularly the young, who want to get accommodation by buying a house on a mortgage.
It found that, 11 years ago, a first-time buyer had to save 21 per cent of their annual salary to pay the deposit and stamp duty to buy a home on a mortgage.
Today the same costs amount to 90 per cent of a year’s wages and such a first-time buyer would expect to spend 44 per cent of their take-home pay on mortgage repayments.
In the last year, the Bank of England base rate has gone up from 4.5 per cent to 5.75 per cent. Banks and building societies have raised mortgage payments and more increases will kick in as two-year, fixed-rate mortgage repayments come to an end.
House price inflation and large-scale mortgage debts are already leading to more house repossession, because people are unable to keep up their mortgage payments.
Brendan Barber, the General Secretary of the TUC, commenting on the TUC report said: ‘Housing is by far and away the biggest cost for most people at work. These stark figures bring alive the housing crisis.
‘They show just how quickly buying your own home has gone out of the reach of many working people. It is striking that house prices seem to have gone up in line with the pay of top directors and the super-rich, rather than middle and low earners.’ ‘We desperately need more quality affordable homes to rent and to buy,’ he added.
Barber may not acknowledge it, but the fact that the major item in the cost of living for millions of workers and middle-class people, the cost of housing, has outstripped pay by so much (180 per cent as against 43 per cent) is an indictment of the trade union leaders.
Their main job is to ensure their members’ pay at least keeps up with inflation. The fact that the government has rigged the figures is no excuse – it has replaced the Retail Price Index (RPI), which includes housing costs, as a measure of inflation, with the Consumer Price Index (CPI), that excludes housing costs.
The issue of the government’s pay cuts dominates the agenda of the Trades Union Congress conference next week. The PCS civil servants’ trade union is calling upon the TUC to ‘deplore the government’s two-per-cent limit on public sector pay increases’.
The National Union of Teachers is calling on the conference ‘to coordinate as a joint campaign of opposition at national and local levels to the government’s unfair public sector pay limit, including coordinated joint industrial action’.
Workers must ensure their unions back these demands. In addition, the trade union movement must compile its own cost of living index and fight for a sliding scale of wages, where pay increases automatically in line with the real rate of inflation. This is a necessity in a situation in which inflation is taking off.
The housing crisis is caused by scarcity. There are not enough houses and flats being built. The government has forbidden local councils from building homes and property developers are only interested in selling properties at the inflated prices caused by speculation, not at prices workers can afford.
The trade union movement must mobilise to kick out the Brown government because it serves the interests of the City of London and the speculators.
Only a workers’ government that carries out socialist policies, including a state construction programme to build hundreds of thousands of council houses, can solve the housing crisis.