Funding the Future

Why has buying a home become so difficult for young people in Britain?
In this Funding the Future podcast, I talk to my son James about the extraordinary generational divide in housing.
When I was 25, I bought a three-bedroom flat in London for £28,500 with a deposit of just £250. Young people today can face house prices approaching £300,000 or considerably more, while being expected to find deposits of many tens of thousands of pounds.
At the same time, high rents make saving increasingly difficult. Student loan repayments reduce disposable income and can also affect mortgage affordability, and for those without access to the bank of mum and dad, home ownership can seem impossibly distant.
But this is about much more than house prices.
James argues that young people need permanence, independence and somewhere they can genuinely call home. Housing insecurity affects relationships, decisions about having children, careers and people’s ability to build independent lives.
We discuss social housing, affordable rents, shared ownership, rent controls and whether government should help provide long-term, predictable housing finance.
The housing market my generation entered no longer exists. Telling young people simply to work harder and save more does not address that reality.
If the market cannot provide affordable, secure homes, government must act, and we discussed what it might do. We hope Andy Burnham is listening.

In this latest video in my Understanding Economics series, I look at an idea economics has been missing for the last forty years, and it is one of the ideas that matters most: resilience. The big deal is not growth, nor efficiency. It is, instead, the ability to withstand shocks and adapt when things change.
Resilience means preparing for hard times while things are still going well.
It means knowing what to do when circumstances change, and having the resources ready when you need them.
Without it, income and wealth are temporary: they can evaporate within a day or two.
For individuals and companies, resilience is largely about money or savings, and access to borrowing. But for a country like the UK, which issues its own currency, money is not the problem. The government can always create it. The real constraint is physical, and is whether we actually have the resources, the spare capacity and the backup systems to solve a crisis when it arrives.
That is what "redundancy" means: the spare tyre in the boot, the generator in the hospital, the second water supply. It is keeping extra capacity available even when it feels wasteful in the good times, because that is what keeps things running when something goes wrong. And it is exactly what neoliberal “just-in-time" thinking destroys. Just-in-time is a trick to minimise cost, and it delivers systems that are completely unsustainable.
The US has just proved it. It burnt through vast stockpiles of missiles in its fight against Iran, and discovered the lead time for replacement is too long to sustain a war.
Governments have to invest in infrastructure, energy, skills and public services, and build in spare capacity before a crisis strikes. Without resilience, an unexpected problem becomes a full-blown crisis: supplies run out, systems fail, companies collapse, and people suffer. Resilience is not a luxury. It is the difference between weathering the storm and being destroyed by it.

October has an extraordinary history of sudden financial crashes.
Six of the eight largest falls in Dow Jones history happened in October, including 1929, 1987, 1997 and 2008.
Couple that fact with Bank of England Governor Andrew Bailey warning this week that markets face a high risk of a disorderly correction.
His concern is not abstract. Valuations are stretched, meaning markets are priced far above what fundamentals justify, and that correction is overdue.
The danger is amplified by debt. Bailey thinks too much borrowed money is being used to buy shares through Exchange Traded Funds and hedge funds, and so when sentiment turns, losses might intensify. 
Concentration makes this risk worse. Seven giant tech companies, above all those tied to frontier AI, now dominate valuations while cross-investment between AI models and data centres ties their fates together.
Bond markets are already in panic and stock markets are swinging sharply, and the upside for staying exposed is shrinking.
Bailey's message, echoed here, is to head for safety while you can. Choosing the safest option for your finances is not pessimism but prudence when stretched valuations, debt and concentration collide in the most dangerous month.
History shows October does not forgive stretched markets when debt and concentration have already made them fragile

Why should pensioners and people dependent on social security pay the price when bond investors demand higher returns?
That is the question raised by the latest turmoil in government bond markets.
The Financial Times argues that governments should heed the warning from bond investors, avoid interfering with market prices and confront rising pension and social-security costs instead, making the most vulnerable pay for a crisis not of their making.
I think precisely the opposite response is required.
Government exists to protect people, particularly when they are vulnerable. Its purpose is not to guarantee wealthy asset owners whatever return financial markets happen to demand.
And governments have far more power over bond markets than conventional economic commentary usually admits.
In this video, I explain how the UK could end quantitative tightening, reduce interest rates, stop unnecessary bond issuance, abandon the full-funding rule, reform interest payments to commercial banks, discourage financial speculation through taxation and increase taxes on those benefiting from higher interest rates.
These are political choices.
The deeper question is, therefore, not whether the bond markets have spoken.
It is whether democratic governments are prepared to say no to their demands. That's because if every economic crisis ends with wealth being protected while ordinary people pay the price, something has gone profoundly wrong with the relationship between markets and democracy.

Why are we never allowed to have enough?
Modern economies constantly encourage us to want more: more possessions, more consumption, more experiences and often more debt. Advertising tells us that something is always missing and that buying it might finally make us happier.
But does having more actually improve our lives?
In this video, I ask whether there comes a point when our material needs have been met, and additional consumption adds very little to our wellbeing. Food, housing, security, meaningful work, relationships and participation in society for both work and leisure matter enormously. But once those needs are satisfied, relationships, achievement and understanding may contribute far more to a good life than accumulating still more things.
This is not an argument for accepting poverty. Quite the opposite. Millions of people do not have enough, while others consume resources on an extraordinary scale. Inequality therefore matters not just because income and wealth are distributed unequally, but because consumption is too.
And there is a limit we cannot escape: the planet itself. Human lives are finite, natural resources are finite, and unlimited material consumption is, then, impossible.
Maybe learning what “enough” means is not about giving something up. Maybe it is about discovering what actually makes life worthwhile.

Britain’s economic rules are not laws of nature. They are political choices. And if those choices prevent us from tackling inequality, failing public services, inflation and climate change, then we need new rules.
In this video, I explain why the economic rulebook that dominates government policy is failing us.
Fiscal rules turn arbitrary accounting targets into supposed economic necessities, even when people, skills and resources are available to meet public need.
Inflation policy assumes that higher interest rates can solve price rises even when inflation is caused by shortages of energy, food and other essential resources.
Independent central banks make profoundly political decisions while claiming technical neutrality.
And the pursuit of GDP growth treats producing more as an end in itself, regardless of inequality, wellbeing or planetary limits.
There is another way.
Fiscal policy can focus on managing real resources and meeting public need.
Inflation policy can address the actual causes of rising prices.
Central banks can be democratically accountable.
Finance can serve society instead of dictating its choices.
And economic success can be measured by whether people thrive within planetary limits.
Economic rules were made by people. They can be changed by people.
The question is whether we have politicians willing to do it.

Money is not wealth. That single distinction is one of the most important things economics has to teach, and we have been getting it wrong.
Wealth is the stock of homes, land, businesses, infrastructure, knowledge, skills, health, natural resources and public institutions a society holds at a point in time.
Income is the flow; what we can consume over time.
But financial wealth, such as money, government bonds, and bank deposits, is something else entirely. It is a claim on real wealth, not real wealth itself.
Government bonds are wealth to their owner but a liability to the government. Bank deposits are wealth to the saver but a liability to the bank. Creating more of these claims does not create more houses, more hospitals, or more skills. It simply redistributes what already exists.
Take a house as an example. You can increase a home's value by taking out a bigger mortgage, and on paper your financial wealth has grown. But the house is the same house. No new bedrooms, no new kitchen, and no new real wealth has been created by increasing its price. What has changed is the claim on it, and the power that claim represents.
This matters. Partly that is because private wealth cannot exist without public wealth.  The roads, schools, hospitals and legal systems that make economic activity possible are public wealth, but poverty prevents some people from even having access to them.
At the same time, financial claims are now distributed so unequally that they distort the economy, push up the price of land and housing, and create real poverty without creating any new real wealth.
Tax and regulation are not theft from wealth creators. They are how a society restores balance, reduces excessive concentrations of financial claims, and makes sure the economy serves shared prosperity rather than a handful of balance sheets.

Britain’s charity shops are under pressure. Oxfam is reportedly considering closing up to 100 High Street stores, after other major charities have closed theirs. But this issue is about much more than charity shops.
For decades, charity shops have filled the gaps left as traditional retailers disappeared from town centres. They have provided affordable goods, opportunities for recycling, income for charities and, crucially, places where people volunteer, meet others and participate in their communities.
Now that model is under threat. More people are selling unwanted goods themselves through platforms such as eBay and Vinted. Charity shops are finding it harder to obtain the quality donations on which their profitability has depended. If they begin disappearing from our High Streets, what replaces them?
Another cafe? Another barber? Another vape shop? Or simply another empty building?
In this video, I argue that we need to think much more radically about what the High Street is for. Town centres do not have to be exclusively retail spaces. They could provide housing, leisure facilities, community spaces and the “third spaces” where people can meet without being required to spend significant amounts of money.
This is not just a property problem. It is a people problem.
If the High Street is going to survive, local authorities and government need to start reimagining it now.

Rent is not just the money you pay a landlord. In economics, it means something far bigger, and far more significant.
Economic rent is any payment above what is needed to keep a resource in use.
Land earns rent, because the land already exists and would be there whether or not anyone paid for it.
Risk-free interest on government bonds is rent, because the money already exists and the return is unearned.
And a large slice of what accountants call "profit" is not really profit at all: it is rent, extracted from workers, from customers, and from the planet. In a small business, profit genuinely rewards the owner's skill, knowledge and risk-taking. But in a large company, much of what is called profit is actually a return to monopoly power, brand dominance, or exploitation.
The difference matters, because rent is the hidden engine of inequality. It disguises the exploitation of employees, of people, and of the environment, and it means we overtax work while under-taxing extraction.
The answers to the problems created by economic rents are not complicated.
First, recognise rent. Second, reduce it, whether it comes from land, interest and excess profits.
Third, shift the tax burden away from earned income and onto rent.
Fourth, constrain rents on land and property, control excessive interest, eliminate monopoly profits, and protect workers with better minimum wages and union rights.
And finally, realise that when you tax rent instead of work, you stop rewarding value extraction and start rewarding the people who actually create value. That's what would happen in a just world. 

Nationalisation has become the word British politicians dare not say, and the reason they give is always the same: it is unaffordable.
They claim that just taking water back into public ownership would cost over £100 billion, but that claim is outright nonsense, and it is worth understanding exactly why.
The trick is in what "cost" means. When we nationalised industries in the 1940s, we did not hand over a mountain of cash. We paid with government bonds, typically at 3% interest, repayable over thirty years or more, and in practice then rolled into the national debt.
The real cost of nationalisation is, then, nothing more than the interest on those bonds, and a nationalised business bought at a fair price should always be able to cover that from its own surplus. There is, then, no cash payout, and no one is "buying" anything at a fantasy price.
What might that mean for the water industry? Private investors and lenders have sunk around £100 billion into it, but the industry is not worth that now. Its shares are often worthless, and a fair price would reflect its current, depreciated value. That means shareholders accept their losses and lenders would take a haircut, meaning they get back part of what they lent. They knew the risk when they invested in a privatised monopoly, and they should accept the consequence.
The case for doing this is straightforward. Nationalisation protects essential services that are too important to fail. It lets us invest in their future at the lowest possible cost, because government borrowing is cheaper than private borrowing. And it future-proofs water, rail, energy, and other sectors against a repeat of the calamities privatisation has already delivered.
Nationalisation is not the problem. The misinformation about its cost is.