:00:01. > :00:11.to recognise that there are times when sensitivities have to be
:00:11. > :00:13.
:00:13. > :00:17.Tonight on Newsnight Scotland: House prices have fallen slightly
:00:17. > :00:20.over the last year. But should we hope they fall further and more
:00:20. > :00:23.dramatically over the next few years? We hear the arguments for a
:00:23. > :00:27.wholesale recasting of the housing market.
:00:27. > :00:31.And "Vive l' Ecosse libre"? The Prime Minister of Quebec meets the
:00:31. > :00:34.First Minister of Scotland. What were they chatting about? And why
:00:34. > :00:38.was Alex Salmond keeping so quiet about it?
:00:38. > :00:41.Good evening. The news that house prices in Scotland fell only
:00:41. > :00:44.slightly over the past year is likely to be regarded as good news
:00:44. > :00:47.by home owners, estate agents and politicians. A cornerstone of the
:00:47. > :00:50.economic policy of all governments for more than 30 years has been
:00:50. > :00:54.first to encourage people to get on the ladder and then help them stay
:00:54. > :01:04.on it. But has the time come to rethink our attitudes to home
:01:04. > :01:10.
:01:10. > :01:16.ownership and what housing is for? From the register house archives, a
:01:16. > :01:24.tome that provides a snapshot of the early 20th century life. Select
:01:24. > :01:28.an address and it provides all sorts of information. Who lived
:01:28. > :01:34.there, their profession, and whether they are owned the property.
:01:34. > :01:38.Together, the book's point towards a twin jet -- trend.
:01:38. > :01:44.You do find a Scottish tell us that people were venting their tenement
:01:44. > :01:49.flat. But there were owners and occupiers of the larger properties
:01:49. > :01:57.in more middle-class areas. Even there, you would find people
:01:57. > :02:00.tenting and moving on. These 1905 valuation provide a fascinating
:02:00. > :02:06.insight into how the housing market looked in Scotland eight century
:02:06. > :02:15.ago. There was a time when racing was the most popular option. Asthma
:02:15. > :02:20.from renting. Today, it seems Pick up a newspaper or turn on the
:02:20. > :02:24.TV at any time in recent years, and it will not take long to realise
:02:24. > :02:33.that home ownership and house prices have become a national
:02:33. > :02:38.obsession. The change from owner of his Asian -- occupation to the
:02:38. > :02:41.current obsession was very quick. Partly it was because of the
:02:41. > :02:46.mortgage market becoming more flexible so that people could
:02:46. > :02:51.borrow money. Then we got up this culture of people wanting to be
:02:51. > :02:55.owner-occupiers. But while the culture endures, the financial
:02:55. > :03:01.crash ensured the days of generous lending are over. It is underlined
:03:01. > :03:05.by today's figures for the housing market characterised by low sales
:03:05. > :03:08.and stagnant prices. The banks are getting different
:03:08. > :03:12.signals. Politically, it is difficult to allow many more
:03:12. > :03:17.repossessed has to take place. A lot of people can't sell on the
:03:17. > :03:21.properties they have got. So, for all of those reasons, the market is
:03:21. > :03:25.quite stack at the moment. Prices are not falling, which is good for
:03:25. > :03:30.people who owned properties. Not so good if you are trying to get onto
:03:30. > :03:37.the property ladder. But the number of transactions remains low.
:03:37. > :03:45.This changing an spake -- landscape changes the motives for home
:03:45. > :03:50.ownership. That is the complexity of housing. It is both a financial
:03:50. > :03:58.investment product and a use product. Over that time period from
:03:58. > :04:02.the 1960s to now, we have seen it more as an investment product, not
:04:02. > :04:07.necessarily as a use product. I think that is the change. We are
:04:07. > :04:10.now going back to see it more as a use product. For Lynsey and her
:04:10. > :04:16.partner Stephen, the priority was buying a home they could call their
:04:16. > :04:23.own, I hope that was made possible by a government scheme that helped
:04:23. > :04:29.him to overcome the hurdle of finding this posit. -- deposit.
:04:29. > :04:33.were able to put down just a 5% deposit.
:04:33. > :04:36.This initiative for new-build houses is welcomed by those in the
:04:36. > :04:41.business of buying and selling property. But they would like more
:04:41. > :04:45.to be done. They certainly help first-time buyers, but of course,
:04:45. > :04:53.the new-build market is only a small percentage of the market --
:04:53. > :05:01.market. The rest it left behind. What would we -- what we would like
:05:01. > :05:06.to see his release in the cellar to rip up the ladder. -- to move up
:05:06. > :05:10.the ladder. But some point to a cultural shift
:05:10. > :05:15.already well under way. We are seeing an increase in the number of
:05:15. > :05:21.people moving into the private rental sector. The age of under 35,
:05:21. > :05:27.we are seeing a dramatic increase, which changes the number -- nature
:05:27. > :05:32.of housing. Private renting is short, and the notion of security
:05:32. > :05:35.within the house and the potential for people moving around regularly
:05:35. > :05:41.has major implications for the way that we organise society. If you
:05:41. > :05:46.have got kids, you can't move every six months. A change in trend that
:05:46. > :05:51.begs the question, to what extent do the history books. Towards the
:05:51. > :05:54.future for Scotland? -- do the history books point towards the
:05:54. > :05:56.future for Scotland? I'm joined now in the studio by
:05:56. > :05:59.Mark Stephens, professor of Public Policy at Heriot-Watt University.
:05:59. > :06:05.And joining me from our Salford studio is Jonathan Davis, who runs
:06:05. > :06:10.the housepricecrash.co.uk website. Dunnett then, the housing crash
:06:10. > :06:16.which you thought was going to happen. -- Jonathan. It hasn't
:06:16. > :06:21.really happened, has it? Prices nationally are lower than they were
:06:21. > :06:26.at the peak of 2007, even though, as everyone knows, we have the
:06:26. > :06:32.lowest interest rates in history. If you look to the West, not far
:06:33. > :06:39.across the water, to Northern Ireland, house prices are down 53%.
:06:39. > :06:44.And nationally, they are down a bit less because of London. There's no
:06:44. > :06:48.doubt the market has collapsed, as indeed the piece just said. The
:06:48. > :06:53.number of transactions is down about a half. I tell you, anybody
:06:53. > :06:58.who knows about finance of the city or markets knows that when the
:06:58. > :07:05.volume collapses, the price will follow. Sure, except it hasn't so
:07:05. > :07:10.far. Northern Ireland was different, as was the US. When you look at
:07:10. > :07:18.these markets, it looks as if some of the financial engineering that
:07:18. > :07:28.was going on there was not going on in as extreme a way in the UK. We
:07:28. > :07:28.
:07:28. > :07:32.are seeing what you would expect in a prolonged recession, aren't we?
:07:32. > :07:40.There's no doubt the politicians have been doing everything they can
:07:40. > :07:45.to avoid a collapse on the mainland, but they can't avoid it because the
:07:45. > :07:51.economics at -- are clear. In comes are falling. The public sector cuts
:07:51. > :07:55.have only scratched the surface. There's more to come. At some point
:07:55. > :08:03.in the future, interest rates are going to rise. Do you think that is
:08:03. > :08:09.true? I don't agree with the emphasis. I think when you get
:08:09. > :08:15.rapidly falling house prices, as a result of forced sales, this is a
:08:15. > :08:23.big difference on the early 1990s, when we saw protracted falls in
:08:23. > :08:30.house prices, then you had a period of... Why are not -- we not getting
:08:30. > :08:37.that? The principal reason is the low interest rate policy. That is
:08:37. > :08:42.the big difference between now in the early 1990s. So what you get
:08:42. > :08:47.instead is this reduction in transactions. That is where the
:08:47. > :08:53.adjustments are taking place. A less there's a trigger setting
:08:53. > :09:01.people into forced sales, then I think we have a relatively stable
:09:01. > :09:05.house price outlook. But there may be longer term adjustment. Is there
:09:05. > :09:11.anything that can be done about it? George Osborne would argue that low
:09:11. > :09:14.interest rates are a result of his wonderful economic policies. A lot
:09:14. > :09:19.of Economist's would say it is nothing to do with that. They would
:09:19. > :09:24.just say it's because of a massive private sector surplus. It is not
:09:24. > :09:30.at all clear that you could somehow engineer a rise in interest rates.
:09:30. > :09:33.Well, no, but I don't think that is the point. The point is as long as
:09:33. > :09:38.we can retain low interest rates, what we will get in the housing
:09:38. > :09:45.market is a gradual adjustment. I think that would be desirable. What
:09:45. > :09:51.would be undesirable would be at -- and attempts to stoke up the market
:09:51. > :09:56.artificially. Jonathan, do you think that is enough? Or should we
:09:56. > :10:00.seize the moment? Given the distortions in the housing market,
:10:00. > :10:05.and how it is arguably going to be, a driver of inequality in this
:10:05. > :10:12.country and how difficult it is for younger families to get on the
:10:12. > :10:17.property in -- ladder, isn't now the time to force prices down?
:10:17. > :10:21.Politicians, the people who lead the country's, they grew up in an
:10:21. > :10:26.era of falling interest rates and rising loans and rising house
:10:26. > :10:32.prices. It worked. So they are now hard-wired into believing that high
:10:32. > :10:38.house prices is actually good for an economy without joining the dots.
:10:38. > :10:43.It is dreadful for an economy! People can't buy, so they are
:10:43. > :10:48.spending a lot of money on rent, which means they can't spend it in
:10:48. > :10:54.the economy, and those who have taken out a mortgage, although the
:10:54. > :11:04.cost comes down, the other chap is not right. Eventually, interest
:11:04. > :11:06.
:11:06. > :11:11.rates will rise. They are at a 300 yellow. There's way that his -- no
:11:11. > :11:15.way that is sustainable. Look at Northern Ireland. Look at America,
:11:15. > :11:20.where we have much lower house prices now. People are spending
:11:20. > :11:30.less on housing. They can actually put it into the economy. What do
:11:30. > :11:39.
:11:39. > :11:43.It is a little bit hysterical. It is undesirable to have high house
:11:43. > :11:46.prices in the long term. There was a belief that we were in this
:11:46. > :11:50.position where house prices would continue to go up and up and be
:11:50. > :11:54.maintained, and people could continue to borrow against the
:11:54. > :11:59.value of their houses and put that money into the economy. Clearly
:11:59. > :12:05.that was not sustainable. We had this big shock and we saw a fall in
:12:05. > :12:09.house prices. We have now seen some kind of stabilisation. I think it
:12:09. > :12:15.would be desirable long-term for there to be a gradual reduction in
:12:15. > :12:19.house prices in relation to incomes. If you're going to engineer it,
:12:19. > :12:22.politically it is very difficult. Everything in Britain is geared
:12:22. > :12:27.towards buying a house because you do not have to pay capital gains
:12:27. > :12:33.tax when you sell it. On the other hand, no political party will say
:12:33. > :12:37.it would be more ahead is -- more sensible if we abolish that will
:12:37. > :12:43.stop the politicians are hard-wired into believing that people want
:12:43. > :12:48.high house prices. They are forgetting those under 35 who do
:12:48. > :12:53.not have mortgages and are paying rent. They are forgetting and
:12:53. > :12:57.retired people living in valuable properties which largely do not
:12:57. > :13:01.have any debts. There is issued proportion of the electorate which
:13:01. > :13:05.would be quite comfortable having much lower house prices. The reason
:13:05. > :13:10.we have high house prices is the politicians think it is good, and
:13:10. > :13:14.big business wants it, but that is no good for the real economy. That
:13:14. > :13:21.is the multinationals. It is the multinationals laying people off,
:13:21. > :13:25.the small companies taking people on. We will have to leave it there.
:13:25. > :13:30.The First Minister had a meeting of minds. His guest in Edinburgh was
:13:30. > :13:34.Pauline Marois, the Prime Minister of Quebec. They have twice held
:13:34. > :13:38.referendums on whether to stop being a province and the, country.
:13:38. > :13:45.There are 8 million people in Quebec, nearly a quarter of all
:13:45. > :13:54.comedians. Pauline Marois is the premier of Quebec, she was greeted
:13:54. > :14:02.at Holyrood by the Deputy presiding Thank you very much, it is a great
:14:02. > :14:08.pleasure to meet you. This bottle is the official record of her
:14:08. > :14:12.meeting with the First Minister of Scotland. Most people in Quebec
:14:12. > :14:18.speak French and what political independence from Canada, but not
:14:18. > :14:26.yet a majority. In 1980 and 1985 they had the chance to vote for it
:14:26. > :14:32.and they did not. In 1995, the majority was wafer-thin. Pauline
:14:32. > :14:35.Marois is careful not to intrude on the Scottish debate, but she does
:14:35. > :14:44.have a device for Alex Salmond and the campaign. You have obligations
:14:44. > :14:49.for the people of a Yes orientation and the no orientation. You need to
:14:49. > :14:57.say to these groups, you have an amount of money you can invest, put
:14:57. > :15:03.into publicity, marketing, in our case, the other provinces and the
:15:03. > :15:10.federal government decided to put money into the process, and that
:15:10. > :15:15.was not permitted, and has been very difficult for us. The party
:15:16. > :15:21.which governs as a minority would like to see another referendum, but
:15:21. > :15:27.Pauline Marois would not be drawn on when they would like that to be.
:15:27. > :15:33.I am joined from Edinburgh by Annis May Timpson, director of Canadian
:15:33. > :15:37.Studies at Edinburgh University. What I find extraordinary is you
:15:37. > :15:41.have a nationalist Prime Minister meeting the First Minister of
:15:41. > :15:45.Scotland. They would not let any TV cameras in. The Scottish Government
:15:45. > :15:51.put out a press release about it in which they managed to misspell the
:15:51. > :15:57.word Quebec throughout, and they had not even permitted on his
:15:57. > :16:01.official website. While they been so quiet? It is interesting that
:16:01. > :16:07.Alex Salmond is heading a majority government and looking forward in
:16:07. > :16:12.his view to a referendum in 2014. He has had a diplomatic visit on
:16:12. > :16:17.the way back from Davos from the premier of a minority government
:16:17. > :16:24.which, although was wafer-thin, nonetheless lost its referendum. I
:16:24. > :16:29.think it is quite interesting that many Alex Salmond does not want to
:16:29. > :16:36.be associated directly with this process, even though historically,
:16:36. > :16:42.he has always been clear politically that the party and the
:16:42. > :16:46.SNP have a long historic relationship. Is there a mood music
:16:46. > :16:50.thing here? People in Scotland and the rest of Britain have very warm
:16:50. > :16:54.feelings about Canada, I'm not sure they have warm feelings about
:16:54. > :16:59.Quebec in particular. There's a long relationship between Scotland
:16:59. > :17:03.and Quebec, you only have to go to Montreal to see the influence.
:17:03. > :17:09.Nonetheless, the point you're making is very good, because I
:17:09. > :17:14.think Alex Salmond is probably playing a very important strategic
:17:14. > :17:18.role in that he needs to gain and continue to gain the support of
:17:18. > :17:23.Canada and the Canadian government, particularly in the run-up to the
:17:23. > :17:31.Commonwealth Games next year, before his proposed referendum. In
:17:32. > :17:37.some senses, he needs to play the nationalist card, to be welcoming
:17:37. > :17:41.to Pauline Marois at some level, but nonetheless, he also needs to
:17:41. > :17:44.keep that Canadian agenda up front as well because of his broader
:17:44. > :17:49.objectives, and that also relates to homecoming issues that are
:17:49. > :17:54.important. Is there some nervousness about Pauline Marois
:17:54. > :18:00.herself? I'm not sure what the status is, but she was going to
:18:00. > :18:05.introduce an identity act in Quebec, which was widely denounced by
:18:05. > :18:09.people across Canada as being xenophobic. It is not entirely
:18:09. > :18:17.clear that that is something Alex Salmond would want to be associated
:18:17. > :18:23.with. That is a real problem that goes back much more historically to
:18:23. > :18:27.the previous leader and a famous comments when they lost at the 1995
:18:27. > :18:33.election. He said it was because of money in the ethnic vote, which was
:18:33. > :18:40.an anti-Semitic comment at the time. I also think possibly because of
:18:40. > :18:45.the difficulties Pauline Marois bases around trying to promote an
:18:45. > :18:51.idea of civic nationalism, it might have been quite helpful for her in
:18:51. > :18:56.Canada and in Quebec particularly to come here and be associated with
:18:56. > :19:01.a party internationally that is actually trying to promote in
:19:01. > :19:07.Scotland as we Sonya programme a very civic agenda, -- as we have
:19:07. > :19:13.seen on your programme, one of inclusion. That might be very
:19:13. > :19:17.important. The other thing that interested me is I think I am right
:19:17. > :19:22.in saying in 1995 when they had a referendum, when the campaign
:19:22. > :19:30.started, the pro-independence people were absolutely nowhere,
:19:30. > :19:39.doing really badly. They almost turned it round. Presumably there
:19:39. > :19:49.was political intelligence. Sure, that is going on all the time, but
:19:49. > :19:50.
:19:50. > :20:00.actually at the time in the early 1990s, the Yes vote was doing quite
:20:00. > :20:00.
:20:00. > :20:08.well, at 42%. That obviously changed, with 49%. I think one of
:20:08. > :20:13.the things that is really crucial here... Very briefly, how did they
:20:13. > :20:23.turn it round? I think that they turned it round because, and this
:20:23. > :20:26.
:20:26. > :20:29.is very different from the situation here, the leader was
:20:29. > :20:38.supported by performing of the official opposition in the Canadian
:20:38. > :20:41.federal parliament -- supported by the official opposition. That
:20:41. > :20:48.combination of factors reinforce something that was significant, and
:20:48. > :20:53.that is so different from what is going on in the UK, where you
:20:53. > :20:57.actually have 53 MPs from Scotland in the UK parliament actually
:20:57. > :21:05.supportive of the Unionist agenda. We have to leave it there. Thank
:21:05. > :21:15.you. Very quick look at the front pages, starting with the Scotsman.
:21:15. > :21:17.
:21:17. > :21:19.It says UK government figures It says UK government figures