29/01/2013 Newsnight Scotland


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to recognise that there are times when sensitivities have to be


Tonight on Newsnight Scotland: House prices have fallen slightly


over the last year. But should we hope they fall further and more


dramatically over the next few years? We hear the arguments for a


wholesale recasting of the housing market.


And "Vive l' Ecosse libre"? The Prime Minister of Quebec meets the


First Minister of Scotland. What were they chatting about? And why


was Alex Salmond keeping so quiet about it?


Good evening. The news that house prices in Scotland fell only


slightly over the past year is likely to be regarded as good news


by home owners, estate agents and politicians. A cornerstone of the


economic policy of all governments for more than 30 years has been


first to encourage people to get on the ladder and then help them stay


on it. But has the time come to rethink our attitudes to home


ownership and what housing is for? From the register house archives, a


tome that provides a snapshot of the early 20th century life. Select


an address and it provides all sorts of information. Who lived


there, their profession, and whether they are owned the property.


Together, the book's point towards a twin jet -- trend.


You do find a Scottish tell us that people were venting their tenement


flat. But there were owners and occupiers of the larger properties


in more middle-class areas. Even there, you would find people


tenting and moving on. These 1905 valuation provide a fascinating


insight into how the housing market looked in Scotland eight century


ago. There was a time when racing was the most popular option. Asthma


from renting. Today, it seems Pick up a newspaper or turn on the


TV at any time in recent years, and it will not take long to realise


that home ownership and house prices have become a national


obsession. The change from owner of his Asian -- occupation to the


current obsession was very quick. Partly it was because of the


mortgage market becoming more flexible so that people could


borrow money. Then we got up this culture of people wanting to be


owner-occupiers. But while the culture endures, the financial


crash ensured the days of generous lending are over. It is underlined


by today's figures for the housing market characterised by low sales


and stagnant prices. The banks are getting different


signals. Politically, it is difficult to allow many more


repossessed has to take place. A lot of people can't sell on the


properties they have got. So, for all of those reasons, the market is


quite stack at the moment. Prices are not falling, which is good for


people who owned properties. Not so good if you are trying to get onto


the property ladder. But the number of transactions remains low.


This changing an spake -- landscape changes the motives for home


ownership. That is the complexity of housing. It is both a financial


investment product and a use product. Over that time period from


the 1960s to now, we have seen it more as an investment product, not


necessarily as a use product. I think that is the change. We are


now going back to see it more as a use product. For Lynsey and her


partner Stephen, the priority was buying a home they could call their


own, I hope that was made possible by a government scheme that helped


him to overcome the hurdle of finding this posit. -- deposit.


were able to put down just a 5% deposit.


This initiative for new-build houses is welcomed by those in the


business of buying and selling property. But they would like more


to be done. They certainly help first-time buyers, but of course,


the new-build market is only a small percentage of the market --


market. The rest it left behind. What would we -- what we would like


to see his release in the cellar to rip up the ladder. -- to move up


the ladder. But some point to a cultural shift


already well under way. We are seeing an increase in the number of


people moving into the private rental sector. The age of under 35,


we are seeing a dramatic increase, which changes the number -- nature


of housing. Private renting is short, and the notion of security


within the house and the potential for people moving around regularly


has major implications for the way that we organise society. If you


have got kids, you can't move every six months. A change in trend that


begs the question, to what extent do the history books. Towards the


future for Scotland? -- do the history books point towards the


future for Scotland? I'm joined now in the studio by


Mark Stephens, professor of Public Policy at Heriot-Watt University.


And joining me from our Salford studio is Jonathan Davis, who runs


the housepricecrash.co.uk website. Dunnett then, the housing crash


which you thought was going to happen. -- Jonathan. It hasn't


really happened, has it? Prices nationally are lower than they were


at the peak of 2007, even though, as everyone knows, we have the


lowest interest rates in history. If you look to the West, not far


across the water, to Northern Ireland, house prices are down 53%.


And nationally, they are down a bit less because of London. There's no


doubt the market has collapsed, as indeed the piece just said. The


number of transactions is down about a half. I tell you, anybody


who knows about finance of the city or markets knows that when the


volume collapses, the price will follow. Sure, except it hasn't so


far. Northern Ireland was different, as was the US. When you look at


these markets, it looks as if some of the financial engineering that


was going on there was not going on in as extreme a way in the UK. We


are seeing what you would expect in a prolonged recession, aren't we?


There's no doubt the politicians have been doing everything they can


to avoid a collapse on the mainland, but they can't avoid it because the


economics at -- are clear. In comes are falling. The public sector cuts


have only scratched the surface. There's more to come. At some point


in the future, interest rates are going to rise. Do you think that is


true? I don't agree with the emphasis. I think when you get


rapidly falling house prices, as a result of forced sales, this is a


big difference on the early 1990s, when we saw protracted falls in


house prices, then you had a period of... Why are not -- we not getting


that? The principal reason is the low interest rate policy. That is


the big difference between now in the early 1990s. So what you get


instead is this reduction in transactions. That is where the


adjustments are taking place. A less there's a trigger setting


people into forced sales, then I think we have a relatively stable


house price outlook. But there may be longer term adjustment. Is there


anything that can be done about it? George Osborne would argue that low


interest rates are a result of his wonderful economic policies. A lot


of Economist's would say it is nothing to do with that. They would


just say it's because of a massive private sector surplus. It is not


at all clear that you could somehow engineer a rise in interest rates.


Well, no, but I don't think that is the point. The point is as long as


we can retain low interest rates, what we will get in the housing


market is a gradual adjustment. I think that would be desirable. What


would be undesirable would be at -- and attempts to stoke up the market


artificially. Jonathan, do you think that is enough? Or should we


seize the moment? Given the distortions in the housing market,


and how it is arguably going to be, a driver of inequality in this


country and how difficult it is for younger families to get on the


property in -- ladder, isn't now the time to force prices down?


Politicians, the people who lead the country's, they grew up in an


era of falling interest rates and rising loans and rising house


prices. It worked. So they are now hard-wired into believing that high


house prices is actually good for an economy without joining the dots.


It is dreadful for an economy! People can't buy, so they are


spending a lot of money on rent, which means they can't spend it in


the economy, and those who have taken out a mortgage, although the


cost comes down, the other chap is not right. Eventually, interest


rates will rise. They are at a 300 yellow. There's way that his -- no


way that is sustainable. Look at Northern Ireland. Look at America,


where we have much lower house prices now. People are spending


less on housing. They can actually put it into the economy. What do


It is a little bit hysterical. It is undesirable to have high house


prices in the long term. There was a belief that we were in this


position where house prices would continue to go up and up and be


maintained, and people could continue to borrow against the


value of their houses and put that money into the economy. Clearly


that was not sustainable. We had this big shock and we saw a fall in


house prices. We have now seen some kind of stabilisation. I think it


would be desirable long-term for there to be a gradual reduction in


house prices in relation to incomes. If you're going to engineer it,


politically it is very difficult. Everything in Britain is geared


towards buying a house because you do not have to pay capital gains


tax when you sell it. On the other hand, no political party will say


it would be more ahead is -- more sensible if we abolish that will


stop the politicians are hard-wired into believing that people want


high house prices. They are forgetting those under 35 who do


not have mortgages and are paying rent. They are forgetting and


retired people living in valuable properties which largely do not


have any debts. There is issued proportion of the electorate which


would be quite comfortable having much lower house prices. The reason


we have high house prices is the politicians think it is good, and


big business wants it, but that is no good for the real economy. That


is the multinationals. It is the multinationals laying people off,


the small companies taking people on. We will have to leave it there.


The First Minister had a meeting of minds. His guest in Edinburgh was


Pauline Marois, the Prime Minister of Quebec. They have twice held


referendums on whether to stop being a province and the, country.


There are 8 million people in Quebec, nearly a quarter of all


comedians. Pauline Marois is the premier of Quebec, she was greeted


at Holyrood by the Deputy presiding Thank you very much, it is a great


pleasure to meet you. This bottle is the official record of her


meeting with the First Minister of Scotland. Most people in Quebec


speak French and what political independence from Canada, but not


yet a majority. In 1980 and 1985 they had the chance to vote for it


and they did not. In 1995, the majority was wafer-thin. Pauline


Marois is careful not to intrude on the Scottish debate, but she does


have a device for Alex Salmond and the campaign. You have obligations


for the people of a Yes orientation and the no orientation. You need to


say to these groups, you have an amount of money you can invest, put


into publicity, marketing, in our case, the other provinces and the


federal government decided to put money into the process, and that


was not permitted, and has been very difficult for us. The party


which governs as a minority would like to see another referendum, but


Pauline Marois would not be drawn on when they would like that to be.


I am joined from Edinburgh by Annis May Timpson, director of Canadian


Studies at Edinburgh University. What I find extraordinary is you


have a nationalist Prime Minister meeting the First Minister of


Scotland. They would not let any TV cameras in. The Scottish Government


put out a press release about it in which they managed to misspell the


word Quebec throughout, and they had not even permitted on his


official website. While they been so quiet? It is interesting that


Alex Salmond is heading a majority government and looking forward in


his view to a referendum in 2014. He has had a diplomatic visit on


the way back from Davos from the premier of a minority government


which, although was wafer-thin, nonetheless lost its referendum. I


think it is quite interesting that many Alex Salmond does not want to


be associated directly with this process, even though historically,


he has always been clear politically that the party and the


SNP have a long historic relationship. Is there a mood music


thing here? People in Scotland and the rest of Britain have very warm


feelings about Canada, I'm not sure they have warm feelings about


Quebec in particular. There's a long relationship between Scotland


and Quebec, you only have to go to Montreal to see the influence.


Nonetheless, the point you're making is very good, because I


think Alex Salmond is probably playing a very important strategic


role in that he needs to gain and continue to gain the support of


Canada and the Canadian government, particularly in the run-up to the


Commonwealth Games next year, before his proposed referendum. In


some senses, he needs to play the nationalist card, to be welcoming


to Pauline Marois at some level, but nonetheless, he also needs to


keep that Canadian agenda up front as well because of his broader


objectives, and that also relates to homecoming issues that are


important. Is there some nervousness about Pauline Marois


herself? I'm not sure what the status is, but she was going to


introduce an identity act in Quebec, which was widely denounced by


people across Canada as being xenophobic. It is not entirely


clear that that is something Alex Salmond would want to be associated


with. That is a real problem that goes back much more historically to


the previous leader and a famous comments when they lost at the 1995


election. He said it was because of money in the ethnic vote, which was


an anti-Semitic comment at the time. I also think possibly because of


the difficulties Pauline Marois bases around trying to promote an


idea of civic nationalism, it might have been quite helpful for her in


Canada and in Quebec particularly to come here and be associated with


a party internationally that is actually trying to promote in


Scotland as we Sonya programme a very civic agenda, -- as we have


seen on your programme, one of inclusion. That might be very


important. The other thing that interested me is I think I am right


in saying in 1995 when they had a referendum, when the campaign


started, the pro-independence people were absolutely nowhere,


doing really badly. They almost turned it round. Presumably there


was political intelligence. Sure, that is going on all the time, but


actually at the time in the early 1990s, the Yes vote was doing quite


well, at 42%. That obviously changed, with 49%. I think one of


the things that is really crucial here... Very briefly, how did they


turn it round? I think that they turned it round because, and this


is very different from the situation here, the leader was


supported by performing of the official opposition in the Canadian


federal parliament -- supported by the official opposition. That


combination of factors reinforce something that was significant, and


that is so different from what is going on in the UK, where you


actually have 53 MPs from Scotland in the UK parliament actually


supportive of the Unionist agenda. We have to leave it there. Thank


you. Very quick look at the front pages, starting with the Scotsman.


It says UK government figures It says UK government figures


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