The Labour Party’s pledge to build 1.5m new homes over this parliament risks being dominated by private equity in the Build to Rent sector, Common Wealth has warned in a new report.
Indeed, chancellor Rachel Reeves has tied herself to fiscal rules to embed the neoliberal market throughout government planning. In her budget, she pledged money for the Build to Rent sector in order to ‘crowd in’ private investment, rather than treating homes as necessary shelter provided publicly and mandated as affordable to all.
The Build to Rent scandal
Build to Rent properties in the UK have increased to 20% of all new builds in recent years – and 27% in London, the thinktank states. Investors know that renting out essentials is a guaranteed way to make the most money.
That is, you get regular, passive income on resources people automatically need while retaining ownership of the ‘asset’ itself. Investors can then use the ‘product’ as collateral or eventually sell it.
At the same time, housing is a risk free investment for the government to make through public ownership, which can be organised on the basis of need and affordability.
Another way the current system is far from adequate is inherited wealth. Common Wealth notes that that in 2023 the majority of first time house buyers (57%) received financial assistance from their parents. The lottery of birthright should surely not prevail over the fact that housing is is a commonality.
Nonetheless, the thinktank further points out that between the onset of the financial crash in 2008 and 2023 the global real estate ‘assets’ under the management of “institutional investors” increased by around 450% from $385bn to $1.7trn.
Rachel Reeves: making the situation even worse
In the UK, overseas investors believe the housing market system to be staying. In absolute terms, UK real estate was the largest housing market for foreign investment in the first quarter of 2024.
Private investors want to maximise their profits at every avenue. Common Wealth points out this is at odds with providing affordable and social housing. The thinktank notes that when asset managers Blackstone bought up and renovated homes in Stockholm, rents increased by a whopping 43%.
The report further shows that a “structural undersupply” of housing leads to year on year rent rises.
Instead of tackling the issue, Reeves seems intent on making the situation worse and diverting more resources away from public housing and towards private investment.
In 2020, Citizens Advice warned Ofgem about a loophole in its price regulation calculations. Instead, the energy regulator enabled the privately-owned energy supply network, which includes the National Grid, UK Power Networks (owned largely by a Hong Kong company), and Scottish Power, to make an extra £3.9bn in profit from the loophole over the last four years.
The loophole meant there was an overestimation of borrowing costs for the companies that own our energy infrastructure.
Citizens Advice pointed out:
During this time, the charity has helped a record nearly 700,000 people in England and Wales struggling to afford their energy bills, and five million currently live in households in debt to their supplier.
In response, Ofgem laughably claimed it didn’t ignore the loophole but chose not to act on it because of retroactive regulatory ‘financing’ costs. It’s unclear in what world that would amount to more than £3.9bn.
Ofgem and energy companies: quite the cosy set up
The revolving door between public sector regulators and the companies they are supposed to regulate may play a role here. From 2017-2022, nearly half the senior regulators (63 out of 146) who changed jobs went to work at companies they were previously regulating.
That includes the former lead executive of Ofgem joining Octopus Energy, the largest energy supplier in the UK at 23.7% of the market.
In 2022, a non-executive director at Ofgem, Christine Farnish, resigned over her view that the regulator put the interests of corporate suppliers above that of the public.
Indeed, the energy network is a clear cut natural monopoly whereby there simply cannot be any market competition. There is only one network of transmission lines, substations and other infrastructure. Instead of the public owning the grid, which would be cheaper for people and businesses throughout the country, we rent the grid from the private sector.
The monopoly service trumpets the innovation it’s bringing to the energy network. It’s cooperating with the University of Manchester to deliver more productive ways of maintaining the grid such as through AI, drones and software. That proves that innovation is not just a feature of private sector competition – given there is only one energy network. Here, the private sector is itself demonstrating that cooperation, not competition is effective in delivering innovation.
With regard to the recent £3.9bn additional profit extraction, Clare Moriarty, chief executive of Citizens Advice, said:
We now know that while households have struggled with sky-high energy bills, network companies have been making astronomical profits.
We’ve called out the billions of pounds of excess profits made by these companies before, and Ofgem said it would get tougher in subsequent price controls. The measures it put in place have clearly failed.
I’ve been struggling to write this column for a while now. Obviously there’s been the personal reasons and professional reasons – both of which become more and more blurred every day. This is especially true when you’re a disability rights columnist and activist who is juggling editing a book, supporting the disabled community, and mourning the loss of both your grandparents.
There’s also the fact that I’m very aware as someone who focuses on media ableism of the amount of vile rhetoric being pushed out by the government via the corporate media. This itself is having more of a toll on disabled people than the lack of policy announcements is.
For disabled people, the waters are muddy enough
It seems like every day a senior official is telling the papers that we don’t deserve to live, and I’m really ultra-aware that highlighting every instance of that will not only cause further distress to disabled people, but also put a huge strain on my mental health.
In a similar vein, whilst there aren’t any concrete policies out yet I’m really conscious that all of this shit-slinging is on purpose to muddy the waters and turn non-disabled people against us – whilst scaring disabled people into limiting their lives. So, I don’t want to add to the dis-and misinformation that’s being spread.
But I think more than anything the reason I’m really struggling to write at the moment is because I wanted to have hope. I, perhaps naively, wanted to have a glimmer of belief that life would become a tiny bit easier for disabled people once we got the Tories out. I now feel foolish for ever thinking that.
If they wanted to, they would’ve
Labour might’ve only been in power for seven months, but there’s so much they could’ve done in that time that they’ve purposefully delayed.
They could’ve called off the PIP consultation the very first week if they wanted to, but they let it run it’s course. Despite wanting to launch their own consultation in the spring, which will obviously be totally different, they said they would be paying attention to every response. The disability minister, somewhat patronisingly, even praised disabled people for giving them so many responses to read.
Labour could’ve done all manner of things to reassure disabled people that life won’t be harder under their governance, but it’s time to face facts that it will be, it already is.
Because whilst they haven’t given us any concrete plans, they have had plenty of time to tell the media that disabled people on benefits are “taking the mickey”, point out that loads of kids are claiming to have mental health problems now (wonder why), and conveniently reveal that 450,000 more people claimed PIP and DLA last year. And that’s just in the last week or so.
‘It’s only been seven months’, and we’ve got another five years of this shit
I know, historically, Labour has always been bad for disabled people (trust me I’ve just written a book about it) but I wanted to hope deep down that nothing could be worse than the last 14 years of the Tories.
But the Tories were only able to succeed because of the groundwork that Tony Blair had laid down. Now the people who supported Blair’s vile abuse of disabled people are in charge and there’s nobody to oppose them.
It was staggering to watch the Tories get worse and worse and worse over the years. But perhaps that’s also why this has been so soul-crushing, because Labour have been able to do this in such a short space of time.
So many people say ‘give them a chance, it’s only been seven months’. Whereas I can’t believe it’s only been seven months.
If they’ve created this hostile an environment for disabled people in just the first seven months – what do the next five years hold? And how many of us will still be here to tell the tale at the end of it?