The New Serfdom

by Angela Eagle

  The marketisation of higher education is, then, in those terms, a historic mistake. Angela campaigned against the introduction of tuition fees for that very reason. It was only when she, in co-operation with others, secured the introduction of a means-tested maintenance grant for the poorest pupils, no interest charges on repayments, the creation of the Office for Fair Access and a commitment that the fees would be capped for ten years at a maximum of £3,000 that, with much reluctance, she agreed to support the legislation. At least, she thought, the extra money raised actually went to universities, without any cuts in government funding. Then, however, the coalition and Tory governments abolished the £3,000 cap and tripled fees to £9,000, introduced interest on student loans, abolished maintenance grants for poorer pupils and, finally, completely cut government funding to universities, effectively marketising the entire system.

  The truth is that our universities are genuinely world-class. Oxford and Cambridge dominate international league tables, sure, but thirty-one of our universities were in the top 200 in the respected Times Higher Education World University Rankings 2018. Almost one in ten of the top 1,000 universities in the world were British. The reason for this is that we have a long-standing veneration of education. We were one of the first countries in the world to treat pedagogy with the importance it deserves. Our young people are taught to look at society, the world and our universe with wonder and the desire to both understand and make it better. That has always held Britain in good stead in competing internationally.

  There is a legitimate debate to be had on how best to fund our universities. If we look at universities solely as mechanisms by which to improve the marketability of individuals – the Hayekian view – then tuition fees make complete sense. But if we look at them as the means by which we enrich our own society, then it is easier to see them as a price that should be borne by all of society. The solution will inevitably be found somewhere in between – whereby funding is be shared by the individual, the state and business. There is an argument to be made that because our tax system is progressive and that graduates tend to earn more, they already pay more towards our education system. It is also clear that if we are to succeed in the knowledge-driven economies that will manifest after the Fourth Industrial Revolution – in which automation, artificial intelligence and algorithms will replace substantial numbers of human jobs – we will need to prioritise the intellectual development of our citizens. Collective funding of the drivers of our economic success is not a transfer of wealth from all to the richest; it is an investment in our own prosperity.

  Where our system breaks down, however, is in the options for those who don’t want to go down the path of a university education. Britain has very low levels of apprenticeships and people in further education than in comparable economies worldwide. Lord David Sainsbury – a former Labour science minister – was tasked with looking at the further education and apprenticeships system in the UK in 2017. He found that Britain had just over a quarter of the number of apprentices per total number of employees of Germany – a country with a far more successful manufacturing sector. The disparity is not circumstantial; if we are to have a coherent industrial strategy, we will need not only highly skilled conceptual specialists but also highly skilled operational and technical specialists. That will require a mix of three things: (1) companies investing into workforce education; and formal training and – most importantly as our technological development accelerates – retraining opportunities provided by the government through (2) apprenticeships and (3) further education. All of this is vital to kick-start wage growth in Britain, which has flatlined for a decade since the financial crisis. Productivity growth and wage growth go hand-in-hand, so it is vital we invest in our skills.

  The problem is that when it comes to all three goals, we’re doing poorly. Generally speaking, Britain has left skills and training to the market for some time now. The Hayekian mindset would tell us that lots of individual decisions on training by companies would create a coherent whole that is best for Britain. But it just isn’t true. The Institute for Public Policy Research, a left-wing think tank, has shown that British employers spend half as much as the EU average on vocational training and that investment fell in real terms in the past decade. The IPPR also found that one in three employees in the UK feel they are over-qualified for their jobs, which is the highest level in the EU. That means we have low demand for and low provision of skills training, which combine to devastating effect. It is clear that this is a space in which the state should intervene, to shape the outcomes we desire. But a Conservative Party held hostage by Hayekian hostility to the notion of government ‘interference’ will never take the actions required to encourage companies to utilise the skills of its workers and incentivise further investment in worker skills. They have masked their inaction behind the euphemism of ‘employer-led training’ and cut off any attempt to do so at the knees before it can get going.

  When it comes to apprenticeships and further education, the Conservative government has boasted that it has vastly increased the number of apprentices in the country. While this is true, there is considerable evidence that in doing so they have sacrificed quality for quantity. The 60 per cent fall in apprenticeships offered after legislation mandated the standards of training expected to be included in an apprenticeship demonstrates this fact. Furthermore, the overall participation in government-funded adult further education, including apprenticeships, has declined drastically. The participation rate dropped from just under 4 million in 2005/06 to 2.25 million in 2016/17. The IPPR reported in 2017 that ‘the vast majority of apprenticeships and further education courses are delivered at low level, many don’t lead on to further study and much of existing vocational provision has poor labour market returns for adults.’ They go on to explain that the government’s laconic attitude to skills and stubborn reticence in intervening means that ‘adults who could most benefit from participation in learning – including those who left school early and those with lower levels of qualification – are least likely currently to be taking part.’ This is a cruel irony and one that simply holds back our economy. If we are not bringing out the potential in everyone, we are failing in our duty and we are putting our economic prosperity at risk too.

  One of Labour’s greatest achievements in higher and further education was the Open University. It was founded by Harold Wilson’s government in 1969 but the bulk of the work to conceptualise it was done by the formidable Minister of State for Education, Jennie Lee. Wilson and Lee saw the Open University as a means to enhance social mobility, give opportunities to those who may have been failed by the school system and enhance Britain’s international competitiveness. It was a truly innovative solution to the question of how to both drive social mobility and meet the needs of our economy. In 2015/16, there were just under 175,000 enrolled students. In our technologically advanced society, there can be no barriers to expanding the provision of education to a broader range of society. It is dispiriting that most universities do not broadcast their lectures or have not sought ways to expand access to their research and insight. This is almost certainly a result of the marketisation of education, making it a privilege rather than a right.

  Perhaps, then, our age’s new Jennie Lee is Angela Rayner, a colleague on the Labour benches today. She proposes a National Education Service that would provide education from cradle to grave. As our industrial cycles shorten and the pace of technological innovation accelerates, we will need to ensure every citizen is given the chance to contribute to society in the way they feel is most appropriate. We will need to rediscover the spirit of Beveridge: to bring work closer to people, which is easier with the rise in remote working in fields as disparate as engineering to management consultancy to clinical surgery; and to ensure people are able to develop the knowledge, understanding and skillsets they need to prosper in the twenty-first century.

  CHAPTER SIX

  SQUALOR

  On the morning of 14 June 2017
, Britain awoke to one of the most horrific sights of recent years: the smouldering husk of Grenfell Tower. The news of dozens of deaths of men, women and children; of dozens more in hospital; images of firefighters blackened from soot, slumped on the grass outside with the thousand-yard stare of those who’ve experienced unbelievable horror. To some, the fire was viewed as an accident. For many, however, that blackened, ravaged shell was a terrible symbol of the austerity project. Kensington and Chelsea council, which was responsible for Grenfell Tower, was part of a gang of right-wing authorities in London, alongside others such as Westminster, Wandsworth, and Hammersmith and Fulham (pre-2014), which seemed to revel in cutting services and so-called ‘red tape’ while giving tax rebates to wealthy homeowners. These councils were the beating heart of Hayek’s conservatism in modern Britain: cut taxes, cut services, cut regulations, ignore poor communities and privatise to diminish the power of trade unions in the public sector.

  HOUSING

  The problems of housing today in Britain are not limited to social housing or estates. In fact, Labour’s Decent Homes Standard was instrumental in increasing the quality of social housing for millions of people. Politicians, who spend a significant amount of time knocking on doors, could see with their own eyes the rapid and quite extraordinary transformation over the Blair and Brown governments. In 1997, 69 per cent of the social housing in the Wirral, which contains Angela’s constituency of Wallasey, was classified as unfit. By the time the Labour government left office in 2010, this had fallen to 5 per cent. Today, the most appalling standards in housing are in fact most often found in homes rented privately by landlords (the private rented sector). Government figures show that 28.5 per cent of private rented homes did not meet the Decent Homes Standard in 2015, compared to 13 per cent of social homes.

  Beyond the specific issue of standards, all political parties agree that we have a housing crisis today. Quite simply, for a long time we’ve been building fewer houses than we need to match demand. As a result, young people and families are priced out of the market and those seeking to upgrade to larger homes to accommodate growing families are also stuck in smaller, increasingly cramped dwellings. There are those that would tell us that, to solve this housing crisis, all we need to do is stop migration. This is plainly untrue. The major components of growth in housing demand are (1) people living for longer and therefore not handing down homes to the next generation; (2) the increase in family breakdown leading to the creation of new households; and (3) population growth, including, in part, migration. If we cut migration to zero tomorrow, we’d still have a serious mismatch between supply and demand for new homes. Not all the problems we’ve seen in our housing market were visible in the 1990s and the first few years of the new millennium. Under Labour, house-building continued at a steady pace; it was the crash of 2008 that exposed the huge structural problems at the heart of housing in Britain today.

  The coalition government’s response when they first exploited widespread anger over the financial crisis to win power in 2010 was to cut the affordable housing budget while relaxing planning rules that private housing developers had to build affordable housing and community facilities in each development. The government has, by almost every measure of outcome, failed to meet its ambitious stated aims. Housing has continued to become more unaffordable and young people are increasingly locked out of the housing market. Meanwhile, those who own have continued to benefit from a purely technical bounce in the value of their housing.

  It’s impossible to overstate the extent to which housing has influenced politics and policies in recent decades. One of the most politically potent housing policies was Margaret Thatcher’s Right to Buy, which Labour initially welcomed. It was popular, ensuring that those who took part had a valuable asset, until its sheer success resulted in a diminishing social housing stock for those who could not afford to buy their own home. Those who own houses have done well out of them: since 1980, the ONS has found that, on average, house prices have increased by 7 per cent per year, far beyond the rate of inflation or wage growth. That has meant that houses are less and less affordable for new buyers but also that maintaining house-price growth has been a clear aim for Conservatives: any drops would be met, they fear, with a catastrophic decline in their vote. The ONS found that the unaffordability of housing has led to a decline in mortgage approvals. From the 1980s until the early 2000s, there were typically between 400,000 and 600,000 loans to first-time buyers each year. That went down to under 200,000 in the housing crash. This has led to a change in the composition of who owns houses in Britain. In 1991, 67 per cent of those aged 25–34 were homeowners. By the financial year ending 2014, this figure was down to 36 per cent. For the 16–24 age group, homeownership declined from 36 per cent in 1991 to 9 per cent in 2015. Meanwhile, for those aged over 65, the proportion of homeowners leapt from under 50 per cent to over 75 per cent.

  This has profound implications for the distribution of wealth in Britain. Lloyds Bank estimated that total British household wealth at the end of 2016 was £10.5 trillion (£10,500 billion). Of that, real estate company Savills estimated that the total value of all housing in the UK was £6.8 trillion. That means 68 per cent of all household wealth is held in homes – a classic asset bubble. Analysis by the Financial Times showed that ‘as well as rising sharply in nominal terms, housing wealth has grown in relation to the size of the economy: it was equivalent to 1.6 times Britain’s gross domestic product in 2001, rising to 3.3 times in 2007 and 3.7 times in 2016.’ Furthermore, when it comes to regional disparities, the FT found that

  the value of homes in London and south-east England has topped £3tn … meaning almost half the total is accounted for by a quarter of UK dwellings. This concentration of wealth is most evident in the richest London boroughs, Westminster and Kensington & Chelsea, where housing stock adds up to £232bn, more than all of the homes in Wales.

  Given this wealth is concentrated in older hands and will be passed on to their children and grandchildren, it shows how the vast majority of British capital is being concentrated into fewer and fewer hands and propagated not by any system of natural justice but by kinship. It is becoming more likely that you will own a home in your lifetime if your parents owned a home. And if you are poor, it is becoming more likely that you will be paying rent to a landlord who is further building their assets as well as enjoying generous tax advantages.

  The biggest issue with house-building is that there simply hasn’t been sufficient political will invested into changing the dynamics of this market. Over recent decades, the number of small- and medium-sized builders has dropped, and so we are over-reliant on large companies who have disproportionate power when dealing with councils and communities. We also have a serious problem in our planning system. Councils and residents refuse to authorise planning applications for local development in part because of NIMBYism (‘Not In My Back Yard’), in part because developers come up with unacceptable schemes that prioritise their profits over residents’ demands. One of the most remarkable and frustrating statistics around housing was that polling showed that a majority of respondents expressed worry about whether their children would be able to buy houses, but also said they didn’t want more house-building locally. This, accompanied with the fear that if house-building increased dramatically it might cause prices to go down and thus put a dent in the asset values of older voters, has led to a lack of political will to deal with this serious social problem. It is the imbalance between the rights of owners and those that don’t own – once again between capital and labour – that has seen our young citizens cramped in homes with multiple occupants, a resurgence of Rachmanite slum landlordism and, alongside policies like the bedroom tax, a profound redistribution in wealth from those who have little money to those who own property. While those with homes have seen massive, unearned increases in their wealth over recent decades,1 indebtedness is greater than it’s ever been, including unsecured debt, which is now at a higher level than it was before
the financial crisis.

  Labour conducted a serious review of housing in 2014. Commissioned by the then shadow Secretary of State for Communities and Local Government, Hilary Benn, and conducted by Sir Michael Lyons, it explicitly pointed blame at a dysfunctional land market that lacks transparency and has been used for speculative gain. Furthermore, because local communities do not trust developers to work hand-in-hand with them but rather in pursuit of their own interests and profits, many people feel they cannot get houses built where they think they should be built, such as on brownfield land or areas of low aesthetic or environmental value. Finally, in order to build good homes with the infrastructure – like schools, health facilities, green spaces, leisure facilities and transport – that turns a housing development into a community, we need a better system of planning and executing medium- and large-scale development. If Labour had won in 2015, the policies in its manifesto, which under the Salisbury Convention could not be refused outright by Conservative peers in the House of Lords, would undoubtedly have caused a major expansion of house-building. This government has never shown an iota of ambition on housing, despite endless pronouncements, initiatives and press releases. This one issue alone is a case for electing a Labour government right now.

  Bad housing damages the health of residents. Mould and damp are particular problems, and these have been getting worse since 2010. Labour had brought the number of houses with damp down from 2.6 million to just over 1 million by 2011. But this declining trend slowed and has now reversed as of 2015, according to the government’s own published figures. Children in bad, cramped housing have worse educational outcomes because they simply cannot find the space to study peacefully. It leads to family discord and there is compelling evidence about the connection between bad housing and mental health problems, which is a good reminder of the connection that quite different areas of government policy can have with each other. A House of Commons Library paper in 2011 stated that ‘poor housing conditions have a detrimental impact on health, costing the NHS at least £600 million per year’. That is a good reason for spending money on improving housing – a fixed investment now – to make big savings in the future.