More random thoughts on the Credit Crunch. This morning’s news that the government is buying huge stakes in RBS and HBOS seems like a very sensible idea, given the general air of panic that seems to have engulfed our financial system. Effectively, it says, these businesses cannot go bust and that money invested in them is gilt-edged.
It also changes the way the market will be seen to work for the foreseeable future. If the government can take stakes in banks, why not lots of other ventures? And why not people’s homes?
Suddenly a new vista opens up. Having spent much of the summer worrying about how to green the existing stock, and not really getting very far with my thoughts, now a new possibility rears its head.
The government demands that every home must reduce its carbon emissions to a set level, to align itself with the requirement for a national reduction of 60% or whatever the goal is. An assessment of each house will be made (rather more thorough than our current EPCs), and a plan of remedial action drawn up. The homeowner is then free to carry out the works at their own cost, but if they cannot or will not pay, then the government will undertake the work anyway and, in exchange, take an equity stake in the house equivalent to the value of the work done. Various tax incentives will be made available to those who undertake the work quickly (such as lower council tax banding, stamp duty rebates, soft mortgage deals): or put another way, there will be penalties for those who have to be dragged kicking and screaming to the table. It would be a lengthy programme lasting maybe 25 years, which would mean doing a million homes a year. The building trade would be very busy. In fact, such is the level of work involved, that it could even be cast as a depression-busting New Deal.
A month ago, this would have been politically unthinkable. The bank bail-out has changed that. Now shared ownership with the government can become an engine of transformation. Afterall, no one can say it’s too expensive.