It Ain’t Over ’Til It’s Over

See my comments on the US election campaign so far, at Irish Left Review.

Who is the most patriotic of them all?

Today, Ireland’s budget was the first to show what the economic crisis will mean for ordinary people. It was ‘a call to patriotic action’, according to Finance Minister Brian Lenihan, which of course is nonsense. To be more prosaic, it provided some information about the tax and public expenditure measures that other countries might also adopt to reduce their rapidly increasing deficits.

And there’s no doubt some of the proposals were shocking. The 1% levy on all wage earners, despite Lenihan’s attempt to contextualise it by stating that 36% of Irish workers pay no regular income tax. Means testing of medical cards for the over 70s and an increase in A&E fees (both of which, incidentally, will do more to ensure that the North remains in the UK than any unionist polemic). Larger class sizes in schools. Increases in student registration fees. On that basis, the most patriotic of the Irish will be the poor, the sick, the old, and those trying to get an education.

But there was increased spending too, although not exactly a Deal Nua. First, the housing market: increases in tax relief for first time buyers and more spent on social and affordable housing. The distribution of spending between tenures will help individual households who need social housing or who are trying to buy their first home, but as a package they will help the collapsing construction industry as well. Second, there were some increases in social welfare payments and health spending, although some will argue not enough. Third, energy: increase in the fuel allowance, more spent on the warmer homes scheme, more tax on bigger cars and an air travel tax. Perhaps a sop to the Greens, but more likely to be part of the restructuring of households budgets that we’ll all have to get used to.

The Prime Time debate illustrated the problem with opposing this budget, though. Richard Bruton for Fine Gael fell back on the old chestnut of efficiencies (i.e. cuts) in public spending, which took on a vicious edge as he was pushed by Miriam O’Callaghan to be more specific and began talking about bloated bureaucracies and no pay rises this year.

So is there another way? I wonder if Ireland could have held back more to see what other countries will do. With hindsight, it wasn’t best to rush into guaranteeing bank deposits without the kind of restrictions included in the UK scheme a couple of weeks later. And if every country in the ‘developed’ world ends up with problems balancing their books, then who knows what they might come up with to sort it out. Running a huge public spending deficit might end up being quite acceptable. After all, if you can nationalise your banks then anything could happen.

P.S. Here's a good basic explanation of what's happened to the world's economy over the past few weeks

Co-ownership: handle with care

A new private finance deal has made more money available for co-ownership, seven months after the waiting list was closed due to lack of funds. I’m not surprised that it’s back, only that it’s taken so long.

It’s understandable that people want to own their home, rather than rent. The UK and Ireland are two of the many countries in the world where home ownership is regarded as common sense – you get security of tenure, a capital gain, and the flexibility to move around. It doesn’t matter that there are constraints on all three of these benefits: security of tenure only as long as you can pay the mortgage; a capital gain in a rising market or over a long period of time but also the potential for negative equity; and a choice about where to live which is limited by price. People are prepared to take the risks of home ownership because the advantages can be – and usually have been – so much greater.

I have gained enormously from being a home owner, and therefore feel rather cautious about raining on anyone else’s parade. But I do have to point out that now might not be the best time to be considering it if you are on a low income.

The Semple Review recommended an increase in funds for co-ownership last year, but the evidence for this report was gathered when NI’s housing market was booming and first time buyers were being priced out. Since then, prices have fallen (although perhaps not to affordable levels), but it’s harder to get a mortgage, a larger deposit is required, and the interest rate will be higher.

Government policy has not caught up with the changes in the housing market and is still promoting home ownership whenever possible. The message continues to be ‘if you can’t afford a whole house, we’ll help you buy part of one’. There are a number of different types of these ‘intermediate’ or ‘affordable’ home ownership models currently available or under discussion in NI, for example the Own A Home pilot scheme in Portadown, the possible extension of the House Sales Scheme to allow part purchase, and now the return of co-ownership through the Co-ownership Housing Association. There’s also a consultation document out on a Mortgage Rescue Scheme including the option of selling part of your home to a housing association and becoming a co-owner.

These piecemeal initiatives need to be brought together into an integrated strategy on sustainable home ownership, which identifies the groups that would benefit from each of the schemes. Such a strategy should also recognise that some people will never be able to afford to buy, and that they should not be encouraged to do so. After all, isn’t that how the credit crunch started?

Co-ownership will be the right choice for some, and I’m sure the Co-ownership Housing Association will provide good advice to applicants. The important thing about co-ownership (sometimes known as shared ownership) is that you have to pay rent on the part of the house you don’t own. This rent is at a social housing level, but it’s still an extra cost on top of the mortgage repayment, rates, and repairs and maintenance costs. It’s a good deal for people in secure jobs who are likely to see their salary increase over time. But given that unemployment is likely to rise as a result of the economic situation, and that mortgages will continue to be expensive and harder to get, access to any kind of home ownership for those on low incomes should be treated with extreme caution at the moment.

City girl

I was brought up on the edge of a small town in Berkshire, but I’ve always been a city girl. I don’t think the world is divided into those who love cities and those who hate them. It’s divided into those of us who enjoy short periods in the country, but for whom cities are our lifeblood – and the rest. I just walk taller in the city.

The attraction of cities when you’re young is obvious. Things to do, people to meet, the anonymity which allows you to make mistakes without someone telling your parents (although by this definition Belfast is not a city), a sense of possibilities and of opportunities – along with the more scary options of loneliness and failure, of course: see Jonathan Raban’s Soft City.

As one gets older, the cultural aspects of city life begin to appeal rather more, along with the politics, the architecture and general ambience, and of course the shops. It’s also possible to start taking the city for granted. When in London, I got used to being able to catch world class art, music and theatre without making much of an effort. If there was a national political demonstration, I didn’t have to think about transport beyond hopping on the bus down to Trafalgar Square. And when I lived 15 minutes by Tube from Oxford Circus, my credit card got a lot more exercise than it does today.

But cities are great for older people too. In London, I always said I would retire to the Barbican and go to concerts in my slippers. For older people, cities offer convenience, good health care, public transport which means we can give up the car, and enough culture, education and politics to keep the brain alive. The trend of moving to a city apartment after the kids have left home is entirely positive, in my opinion.

Living in Belfast, a small city, is different again. There’s an element of sophistication, of course, but also a lack of diversity and not enough good theatre and art. Belfast is remaking itself in the post-Troubles (but not post-conflict) era, but hasn’t yet decided what kind of city it wants to be, and who it wants to be for. Our fragmented politics isn’t helping here.

So – favourite cities? London is growing on me again after eight years of living elsewhere. I’m becoming fonder of Dublin, Toronto and Glasgow on closer acquaintance. Chicago is a recent discovery and Venice is unique. I’ll be visiting Perth for the first time next month, along with returning to Adelaide, Hobart, Melbourne and Sydney by New Year. So at the moment I would say Chicago, Vancouver and Sydney are the favourites, in reverse order – but that may change!