01/08/2013 Newsnight Scotland

supporters have a profound belief Tonight, what is housing for? Prices

here are showing some signs of recovery but is it good for the

wider economy? And we are looking at the row over

who is over Labour for independence and ask whether Labour's heartlands

could be persuaded to vote yes macro.

If you are a homeowner from East Rand Fuchsia, the value of your

property has increased. -- East Renfrewshire. There is only one

problem, wasn't it housing debt that crashed the economy in the first

House prices have long been used as a measure of how well the economy is

doing. Going by the latest information, it seems ins may

looking positive. According to figures from Registers of Scotland,

the total proportion of Scottish house sales increased by just over

8% between April and June this year. Over the same period, the average

house price fell slightly by 0.3%, to stand at just over �153,000. In

more affluent areas like East Renfrewshire, the average going rate

for a house is well above what it is nationally. Averages for properties

in this area have breached the �200,000 mark. What can we take from

the figures? The figures show that the volume of sales in Scotland has

increased by over 8% and the value has increased as well by 7%. The

average house price has produced very slightly across Scotland that

this is a trend we have seen over the last eight months, which is

encouraging. Encouraging is one way to look at it but it is also argued

that an upturn in the market does not always be quite to a good news

story. So many policymakers seem to learn no lessons whatsoever from the

2007 crisis. Housing transactions may be beginning to rise but the

fact is that housing supply, which is what we should really be

concerned about at this moment in time is not showing any sign of

rising at all. All the policy coming forward from a UK level seems

designed to increase prices and do nothing about supply. It is the

opposite of what needs to be happening. Nevertheless, governments

do drive aspirations for people in this country to own homes, like the

Chancellor's current scheme to help people onto the property ladder

through equity loans. But do these types of policies help the economy?

Remark it seems to be good for existing home owners but they are

simply pressing out the next generation of home owners. So you

have got to ask, is this really worthwhile? We did some research a

couple of years ago which suggests it is actually quite hard to find

evidence that either from a macro economic point of view or micro

economic that rising home ownership actually helps the economy in the

long term. Politically, it is H difficult to change the cultural

domination of home ownership. you look at countries like France,

Germany or Switzerland, they do not have the same home ownership rates

but there are economy is strong. how does it need to change? Many

have argued for many years for a restructuring of housing taxation to

make housing more like other assets so that when people are thinking

about saving and investing, Bayview housing like any other asset rather

than putting all their eggs in one basket, as many people do. That may

be a laudable aim but experts also warn it will not happen overnight

and of course, as the latest figures show, there is no shortage of people

wanting to buy homes. I am joined by Andy Kerr, who was until 2007 the

Labour finance minister in the Scottish executive, also joked

Armstrong of the Centre for Public Policy for Regions. Jo Armstrong,

this equity loan scheme that Andrew was referring to. No one has much of

a problem with that because it is specifically for new-build houses

but there is another one about to come in, mortgage guarantee scheme.

Is that a good idea? The issue is whether or not having higher house

prices gives people some sort of feel-good factor that makes them go

out and spend money and part of the recent... Specifically on the

mortgage guarantee scheme, I know one of the criticisms of it is all

it is going to do, because it guarantees a section of people's

mortgages, is encouraged them to go one rung up the ladder more than

they can afford. Some house-builders would argue in order for them to

sell their new properties they have to have the market up the ladder, so

part of it will help first-time wires and therefore help with the

construction sector. It will have some effect but I think the bubbly

most commentators would argue that the scheme that is coming in in

January has a higher probability of inflating prices rather than

actually helping. And potentially when it stops could depress prices?

The idea is that at that point the economy does on the up. -- is on the

up. The bigger point, have we got a wrong attitude to housing? We have

certainly taken on home ownership with gusto in the last 30 years.

60%, 70%. There is a wealth effect as your house price rises. People

have been using that wealth effect to release funds to buy household

goods. That in itself also helps... But when the film taught about

changing the structure, the main thing is the fact you do not have to

pay capital gains tax on any increase in the value of your house.

-- the film talked about. So people are not being irrational. The Lowe

the taxation regime for housing is definitely different to other

assets. That is a problem because as they form a politician but Mark --

as a former politician... It is almost impossible for any politician

of any party to say, look as the Professor and was arguing there, we

want to be more like Germany, so we are going to charge you capital

gains tax on any increase in the value of your house. The Government

makes many decisions which rigged markets. Energy, giving incentives

to businesses to relocate... This is another vehicle by which you can

stimulate economic growth in the building of more houses. That is a

good thing. The equity loans scheme was that. What I am saying is that

the refusal to charge tax on capital gains on housing, can you imagine

when he were a politician, if you were even whispered such a thing,

you can pretty much guarantee at a UK level or at a Scottish level you

would lose the election. A big outcry. Tough decisions have two be

made. We are not holding enough social housing in Scotland. I think

there is a place for measures which create demand for private housing,

getting that economic turnover moving and 4... But did you think

there is an argument for this eco-restructuring, which the

professor was arguing? Actually, I don't, but I would have to look into

it more fully. As long as we do not forget the mistakes of the past

around the easy access to mortgages which we had, if you prove you are

earning that much you can get seven times... It will be a lot easier

come January! There are still mechanisms around people's ability

to pay it back. It will not be as bad. It is not just the big issue of

restructuring the housing market. Some economists now are saying, OK,

we have a little economic growth but it is the wrong kind. The danger we

have, it is we need an economy which rebalances towards making things and

particularly exporting them. What we are going to get is an economy which

went again consumers will spend more because the values of their houses

have gone up and they feel richer, they go and spend things in the shop

and that is not what we need. we need a rebalancing all we need to

dig about restructuring. If we have jobs that are not where the houses

are, not having affordable housing or having your assets tied up in a

fairly liquid asset being you are going to make the Labour market less

taxable and that in itself will keep dampening... But that is becoming a

big room, isn't it? In a very odd way, this financial crisis, which

you might think would have affected London more, is accelerating the gap

between London and the rest of the UK. House prices fell here, as we

heard, have been falling here. They went up 13% in London over the last

year. That makes it ever more difficult for people from Scotland

or the regions of England to think about moving there. Scotland is a

more small place. We know we have a shortage of social housing. We need

a real hope for some of those young kids who need into housing but we

also need to provide access to mortgages in a stable fashion that

allows people to get on the ladder. It creates the economic multiplier.

It is not just the London effect. It is the fat that the South East of

England XL rate this pulling away. -- the fact. London, the citystate,

we are benefiting from some of the effects. We ignore that at art

pleasure -- at our peril. The private rented sector comes in.

There are issues about how to be make that an attractive option, not

a second-best option to home ownership? Who are Labour for

independence, a genuine movement of Labour activists who vote yes macro

next year and one two reviews -- want to persuade others to do so

next year? A series of articles suggest the group is not what it

seems. It was this article on the right of centre website Think

Scotland which started the furore. The Scotland on Sunday columnist

identifies several of the campaign is in the picture as SNP activists,

including the SNP leader on Ayrshire council. In the end of the piece, he

accuses Labour for Independence of being a sham, a tawdry little con in

which some of the party's most bitter rivals are complicit. Since

then, the campaign director of Better Together has tweeted this

picture, identifying three of the four men in it as SNP Midlothian

recall that we accompanied the leader of Labour For Independence,

Allan Grogan, two lusty's row independence rally in Edinburgh --

to last year's pro independence rally.

Are you an SNP double agent, a Labour person spying on the SNP?

number of times I have heard this SNP thing... I am a Labour Party

member and I have supported Labour all my life. I fundamentally

disagree with the policy of the Better Together campaign. I believe

that Scotland will be better as an independent Scotland. He hasn't

denied that the people in the pictures are SNP members, he says

Labour For Independence campaigns with other Yes Scotland supporters.

They have about 100 people signed up of him around half are Labour Party

members. Those are pretty small numbers but why shouldn't Labour For

Independence exist. A recent poll suggests that around 13% of Labour

voters plan to vote Yes. The question is whether this is more

than a fringe group whose numbers have been swelled by SNP members in

an attempt to exaggerate its who set up Labour For Independence

and Michael Kelly, long-standing Labour politician and activist joins

me in the studio. Allan Grogan, how long have you been a member of the

Labour Party? From when I was about 18 or 19 years of age. Until I left

the country in 2007 to work abroad. I then returned in 2010 and rejoined

about a week later and have been a member since then as well. So you

have been a member since 2010 which is not really quite... Since 2003, a

member. Have you had time to check how many Labour Party members you

actually have in your organisation? Our membership is still being

accounted for after a successful policy conference and some publicity

this week and it has been growing. We estimated to be about 40% of

Labour party members to be members of Labour For Independence. 40% of

your membership? How many members do you have? We have about 8200 -- 80 -

100. So that is about 30 members of the Labour Party? We have made no

bones about the fact we are a growing party. We have been growing

as a small organisation... We make no bones about that. Even according

to your own account, a majority of members are not members of the

Labour Party, why do you try to pass yourself off as a Labour Party

organisation? We with -- we work within the Labour Party and within

Yes Scotland, we do not to pass of that anything. What has been spoken

about this weekend or this week, lots of talk of about Labour Party

membership. In the last Scottish elections, 600,000 people voted for

Labour soap you are talking about a 2% vote of the lady leaderships, of

Labour leaderships. Michael Kelly, you are an ex-former politician.

Yes, former statesman columnist. It will be prosecuted under the trades

description act by the very figures that Allan Grogan has given us

tonight, this is not Labour For Independence, this is disgruntled

people with Labour sympathies voting for independence so he should change

the title immediately. It is certainly not working within the

Labour Party as he claims, but is working against Labour Party

policies. What should the Labour Party do about it? Ignore it. We are

talking about 80 people here. It is astonishing that an organisation

that small cannot give us a precise figure. Surely it should be 89, 92

or whatever. There is a vagueness about it. The fact these photographs

that are authenticated here show SNP members and suggest this is

something dreamt up by Allan Grogan, possibly. But it is fronting and

actively helped, not by Labour but by the SNP. Allan Grogan, what do

you say about the pictures? I take the points you have made that

obviously if you go on a Yes campaign demonstration, other people

who are not part of your organisation might jolly around with

you. But having SNP councillors enthusiastically hosting Labour

Party banners may say they are sympathetic. The picture you have

shown, we have never put that on our website or promoted it on our

Facebook page. We work with yes Scotland and we make no bones about

working with other organisations and one of those is working alongside

the SNP and for Michael to say that it is not a labour movement at all

is ridiculous. There seems to be an obsession about Labour members

when, as I said, a small minority and what is actually the case...

uses Labour Party colours and typeface on his banners but is

nothing to do so this is a deception. What about the broader

issue, Michael Kelly? A 30% of Labour voters said they would vote

for independence, is Allan Grogan on to something irrespective of whether

he is right about this organisation, is he on for something, that the Yes

campaign should be targeting Labour Party members and supporters?

Because they might find fertile ground. I think the SNP have to

target Labour voters because they simply weren't willing without

them. To the argument, well some people who vote Labour vote for

independence? Clearly they will. If the package we are being offered

involves abolishing the Queen, many left-wing voters would vote for that

package but that would be completely counterbalanced by the number of

people who voted SNP in the Holyrood elections, and would vote against

independence. He might be onto something then? Now, it is a

desperate ploy to sustain a staggeringly bad campaign. As a

matter of curiosity, Allan Grogan, are there any specifically Labour

policies that he would like to see adopted by the Yes campaign or put

forward in an independent Scotland? We believe the best thing for the

Labour Party as well as the people Scotland would be independence

because it would see us moving away from the ties of Westminster and

returning to what a real Labour Party would be based on the funding

principles. So you cannot cite any specific Labour Party policies you

prefer to SNP policies? We talked about the bedroom tax, NATO and have

the SNP government should be using the remaining budget from last year

to help impact on that without waiting until there is a referendum.

But I want to make a point on something Michael said... You still

have not cited any Labour policies you prefer to SNP ones. The funding

principles of Labour Party policy are true, universal health care,

free education, but to pick up on a point Michael made, he continually

says the SNP and this is the tribalism of Scottish politics, the

leader... We are a cross-party movement and we are proud to be...

Stillness of -- mystified by these policies. A quick look at the front

pages. The Scotsman, a picture of these two dead in chemical

incident, and the Edinburgh hotel thing in the Daily Mail. We will be

rain in the north and heat in the south-east, things will be a bit

more straightforward tomorrow, looks like there will be sunny spells and

scattered showers. The shower perhaps thundery in the central and

eastern areas first thing in the morning, but the afternoon it will

be a better day in Northern Ireland and Scotland compared to today. A

few showers, yes, but in between, some lovely, sunny spells and it

will feel pleasant. Some areas in the east staying dry. 19 - 22

Celsius. A few showers across northern England but some decent

breaks in the cloud and a pleasant feel. A bit fresher than today and

that might be welcome news. Still be cute into East Anglia and humidity

with a few showers to come -- still be humid into East Anglia. It will

feel a bit more pleasant in Wales. Towards the weekend, the risk of

showers increases and the showers chiefly to the west, it has to be

said, London may well stay dry with more sunshine around on Saturday

than Friday am a humid feel with sharper showers the further west you