Thanks so much for this article, Tim. I am really pleased to have the debate and would also like to thank the people who commented on my article yesterday – as always, the contributions were of real quality and gave me a lot of food for thought. I am not suggesting there are any easy solutions to our dependence on the housing market and the last thing I would want to do is dampen aspiration. However I hope I made a reasonable case about the long term benefits of reducing our economic exposure to this sector. You make particularly powerful points about the sense of grievance felt amongst young people towards older generations. The young people working in my team never fail to highlight to me the benefits my generation have enjoyed and I am under no illusions about the desirability of home ownership – I have chosen it for myself and my family. I should say, however, that over the course of my decade in parliament I have consistently spoken out about the intergenerational conflict we have been storing up (even at a time when it was assumed Labour’s ‘economic miracle’ would persist long into the future) and you will find this is a common thread in my ConHome articles too. Before the financial crisis, there was a sense that everyone should do all in their power to clamber onto the housing ladder. This has often left later entrants to the market highly leveraged, dangerously exposed to changes in the wider economy and with an asset that may well depreciate in value or grow in value only sluggishly. These later entrants are normally younger people. I am asking whether it is wise to strive to exacerbate this trend towards ownership, which many liken to a Ponzi scheme, for if anyone is to benefit from a steady stream of new market participants it will not be young people but those who have been in the market longest (mostly older people). In some ways, the best method for a younger generation of renters to retrieve some power is to show the market a level of casual disinterest until it begins to bear some reflection to the reality of their means. You say rent currently outstrips many people’s mortgage payments. True, but what if these benign borrowing conditions cease? A lot of later market entrants may find that when their short term mortgage deals come to an end, even a small percentage increase in interest rates when they are so overleveraged will prove a tipping point. I am not convinced it is wise to continue to encourage younger people into such a market. In short, the uncomfortable truth is that the downsides of either an increase or decrease in house prices will hit younger people hardest (either by pushing young homeowners into negative equity or putting home ownership ever further out of reach for young renters). As I alluded yesterday, there are no simple routes out of this. But in essence my article was there to pose a longer term question about what we want our housing market to look like in the future both in terms of what would be good for the economy and what would be good for society as a whole. Turning to some of the comments made yesterday, a number of people said that they will continue to consider property a good investment so long as interest rates are so low and other investments show such poor returns. This is completely understandable particularly when today we are advised that inflation and interest rates are such that to leave money in a conventional savings account is to risk actually losing money. Over the long term, it has to be an aim of government to make conventional saving and pension schemes work again else we shall not only entrench the causes of the last financial crisis but sow seeds for new ones. Apologies for the length of this post!

TypePad HTML Email Yes, I agree. If you click on the link in my article, you will see that I supported such a separation in my Budget speech by suggesting legislation along the lines of Glass-Steagall, the Act repealed in the US in 1999 which distinguished retail from investment banking.

Thanks Malcolm for your kind words! Hope to meet you one day - will you be in Manchester? MARK

Fair point. This comment we received from another home educator is probably more appropriate: 'I've never voted Conservative before, but I did so in the recent European elections for the first time. This was for a number of reasons, but one of which was that I believe that the right to home educate would be safer under a Conservative government. Your words today helped to confirm this view.'