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The International Writers Magazine: Owner Paradise

Dear Dave
• Tom Kilcourse
I have just received a letter, addressed to Dear Tom, from David Cameron. I get these periodically, along with a million other people no doubt. In this letter, my mate Dave asks me to trust his government with the economy and not to threaten the remarkable economic progress being made. I feel obliged to reply.

Buy to Let

November 18th 2014
Dear Dave,
I might trust your government’s management of the economy if I were not in possession of an economics degree, a proper one gained in the sixties. Sadly, that qualification creates in me considerable scepticism regarding the direction you are taking, and with the direction taken by successive governments ever since one of your Conservative predecessors decided that she knew what was good for the man on the Clapham omnibus, and his ilk.

Prime Minister Thatcher was convinced that Fred and Ethel Punter were unhappy in their rented council house, and would be much better off if they owned it. So, the council were forced to flog the house to Fred and Ethel at a knock down price. Initially, Fred and Ethel failed to appreciate your predecessor’s magnanimity, but after a while and a little propaganda about what it is to be British, house owners, they trotted along to the bank, or the Bogsville Mutual Building Society as it then was, and borrowed the readies. Thus, they became house owners, and debtors.

After a year or two in their exalted status, they decided to better themselves further and move to a more ‘select’ area, the ex-council estate no longer thought suitable. So, they sold their home at a nice little profit to Arthur Smart, who already owned half the estate. Arthur re-let the property at a rent well above that charged by the council, but tenants did not complain because the excess was covered by ‘Housing Benefit’, a scheme also introduced by your predecessors. So, Arthur was happy, as were his tenants, and the taxpayers’ opinion was not solicited.

Meanwhile, Fred and Ethel settled in the more select area, having borrowed more heavily from Bogsville Bank, the former, demutualised, Bogsville Mutual Building society. Though raised to believe that getting into debt was not a clever thing to do, Fred and Ethel took the advice of their bank and accepted credit cards. Everything was so easy for them and their two children. Becoming accustomed to indebtedness they consumed to their hearts’ content until, in the nineties, Fred lost his job. No problem, he thought, we’ll downsize and make a few quid on the house. Sadly, the housing market had slumped and the Punters experienced what was called ‘negative equity’. In other words, the house was worth less than they owed on it.

Eventually, the housing market recovered sufficiently to allow the Punters to sell without loss, but also without gain. Stuck for a home, they turned to Arthur Smart, who was very happy to let an ex-council house to them as Fred was now eligible for housing benefit. There they remained, sharing their home with two offspring and their spouses, now in their late twenties. One of the offspring presented them with a grandchild. The younger couples were quite unable to afford to buy their own homes.

Such overcrowding was relieved recently when your government introduced its ‘help to buy’ scheme, allowing the couple with the baby to buy their own property. They appear to be quite happy, despite being heavily in debt, but the other young Punter, Lee, is less than enchanted as house prices have since rocketed beyond his means. He blames your government for that situation.

I have tried to explain to him that the hike in prices is not entirely down to your help to buy policy. In large part the fault lies with those banks that find lending on house mortgages preferable to the more risky loans to small businesses. Lee’s response to that advice was to blame those banks for his lack of success in getting a ‘proper’ job. When I mentioned that he was lucky to have any work, he is, after all, one of those contributing to the remarkable rise in employment figures, Lee became quite annoyed. He appeared not to appreciate his good fortune in having three jobs with different employers all, thanks to your ‘flexible labour market’ policy, on zero hours contracts. You just can’t please some people.

To be quite honest though, Dave, I have my own reservations about your policies. You see, though a house can be considered a capital asset, it isn’t a productive one. Once built, that’s it, so to speak. It provides shelter, but produces nothing else. True, when sold, its inflated price contributes to growth in GDP, for which your mate George is doubtless grateful, but it doesn’t contribute in any other way to the economy. Indeed, the funds that it attracts from the banks could be more usefully employed by investing in productive assets. Perhaps funds will be redirected to more productive use when the housing bubble that they create finally bursts.

Perhaps you would kindly pass on a word to George, who seems worried about the deficit. It might help him if the government ceased to subsidise employers’ wage bills and the rents charged by private landlords. Just a thought.

Well, Dave, I realise that I have rattled on a bit here, but it was you who wrote to me first. I know that you care greatly for the Punters’ predicament and it pains me to tell you that none of them feel sufficiently grateful to vote for you in future. Fred and Ethel have joined UKIP and young Lee is thinking of leaving for Syria.
Sadly, I too must disappoint you.
Yours sincerely,
Tom Kilcourse
BSc. (econ) Hon. Dip. PPE. Oxon.

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