Disruptive Economics

Craig Dalzell

Sometimes, the system isn’t broken – it’s working precisely as intended.
The UK’s energy and political crisis of the last year is having substantial and long-term impacts on the wellbeing of too many. The rate of inflation appears to have peaked but it’s falling slower than expected and, of course, a lower rate of positive inflation just means prices are rising slower, not that they are coming back down. If your wages are rising more slowly than inflation – as is actively hoped for by the Bank of England – then your ability to live your life is still reducing. According to the bankers, you should just accept that you’re going to be poorer. This is going to be a major problem for an economy predicated entirely on infinite consumerism. When consumers can’t afford to consume, everything comes off the rails.
Meanwhile, your energy bills aren’t expected to start reducing in earnest for years, despite the cost to suppliers reducing rapidly – a move that will almost certainly see their record levels of profit rise even further.
If you own a home and still have an outstanding mortgage on it, you’re probably eyeing with trepidation the day that your current fixed rate comes to an end and you will see your monthly bill jump by an average of almost £500 per month. If you don’t, your dream of doing so – something that it is almost required to do in the UK as it has substituted capital investment for a liveable pension – then that dream is slipping further and further out of reach. It’s difficult to convince a bank that you can afford to spend £400 a month on a mortgage despite paying £800 a month on rent because you can’t save for a deposit on that mortgage because you’re spending £800 a month on rent instead of £400. Not that not buying will protect you from rent increases – they’re going up a record rates too despite promises of controls that increasingly look like they’ll come too late to help.

It’s a bleak picture but there are ways that Government could help if they had the will to do so – not just to ease this crisis but to prevent a similar one from biting so deep in the future.


The immediate task for the Scottish Government should be to accelerate and strengthen protections for tenants including a proper system of rent controls but an interesting idea is coming out of England at the moment that should be considered too. Skipton Building Society – based in North Yorkshire – has launched a 100% mortgage aimed at tenants. Unlike most mortgages that don’t require a deposit, this one also doesn’t require a guarantor so opens it up to those who cannot rely on family to help. All that is required is that the tenant can show that they have a 12 month track record of paying their rent.
Such mortgages are often viewed with suspicion – rightly so, given that 100%+ mortgages were a prime cause of the 2008 Financial Crisis – but limiting the scope of these mortgages to tenants rather than financial speculators should avert the worst of those risks.
However, this doesn’t do too much in the long term. We still need to disrupt the property market itself in order to protect everyone and ensure that everyone has, by right, a roof over their head and a warm place to sleep. Right now, the “Me First” housing policy in Scotland and in the UK is based on the idea that owning a home is the primary aspiration (more accurately…owning SEVERAL homes is the prime aspiration so that you can balance on the top of a financial pyramid scheme and retire and live off the wages of others), followed by privately renting and with social renting being the housing of last resort. We need to disrupt this market by giving people another, better option. We need to turn the social rented housing sector back into what it was designed to be – the housing option of FIRST resort. To do this, councils need to be empowered to build social housing on a demand-led basis and those houses need to be built at a quality and price that the private sector simply cannot match. Our blueprint Good Houses For All shows how this can be done – though the gap on quality is soon going to narrow once Scotland passes its PassivHaus Bill to force all newbuild housing to meet that same high standard but the paper shows that there is still a competitive advantage in this policy on price given that Councils can (or should be able to) build without a profit motive, with the advantage of buying land without paying speculator prices and can access cheap, stable and long term financing through the Public Works Loan Board or Scottish National Investment Bank. Building homes for people not profit will benefit everyone who needs a house to live in…which is All of Us.


My position on Scotland’s energy strategy should be no secret to any regular reader by now – it’d be great if there was one. Scotland urgently needs to start the process of bringing energy production and supply back into public ownership and to begin to run the sector at as close to not-for-profit as possible (or, at the very least, to ensure that the profits are retained within Scotland and not shipped overseas to foreign HQs, foreign shareholders or to subsidise foreign public services via their own public energy companies operating in Scotland).
It’s also key that we understand the purpose of the energy sector and how it fits into national energy strategy. As I said in my review of the strategy last week, the Scottish Government is focussing almost entirely on maximising energy supply in Scotland without considering energy demand. Work needs to be done across policy to determine how much energy Scotland will need – especially how much it will no longer need as efficiency savings kick in – before we can determine the “correct” amount to develop to meet that demand or, only then, to decide how best to match excess supply with exports elsewhere. It would do Scotland absolutely no good if we do with our renewables sector as was done with our fossil fuel sector where a country as energy rich as ours still saw rampant fuel poverty as folk could not afford to heat their inadequately built homes.

Borrow, Not Buy

As I mentioned at the start, what happens to a consumer economy that can’t afford to consume? It goes into a terminal recession. But what happens to a consumer economy that can afford to consume? It delivers inferior products, causes irreparable climate change, runs out of resources, makes us chronically unhappy and unfulfilled, destroys the planet and THEN goes into terminal recession.
I explained the concept of resource libraries and their place in the Circular Economy at a recent event hosted by Glasgow Tool Library – one of the largest, most established such libraries in Scotland. During it, I explained my delight that the Scottish Climate Assembly had called for these libraries to become a core part of the Scottish economy, and that the Scottish Government had responded by agreeing to expand the network. However, we’ve since learned that the expansion target is only for 100 Libraries across Scotland (up from approximately 24 at the time of the announcement). I’ve spoken to the Government about this and asked them if they thought that was enough to cause the disruption to the consumer market that they are designed to create. They admit that no, it wouldn’t be enough but that they hoped that the private sector would pick up the rest (Hint: it won’t – it’s like asking Amazon to replace book libraries). Further, and the reason that I was speaking at Glasgow Tool Library, we’ve learned that the Government has cut funding for many existing libraries – including GTL – and have provided only £300,000 of funding over three years to fund the expansion efforts (none of which is earmarked to directly fund libraries themselves).
Resources libraries are a means of getting us out of the poverty traps created by the cost of living crisis. They are a core part of the “15-minute neighbourhood” that the Scottish Government also wants to create. We desperately need more places in our society where we can go to exist without the expectation of spending money. But we need a push from Government that is more than a happy headline without any real effort behind it or – in this case – with active cuts to existing programmes hidden behind the headline.

The world is grim but I remain an optimist in the face of it, because the solutions are possible. It really only takes a bit of political will to make them happen. And that means that our biggest barrier to change is merely the people standing in our way. So please, if you want to see any of these things happen, write to those people and tell them that either they start doing it or, come election time, you’ll ask their replacement to do it instead. It’s time to make a new system and let’s make sure that it works precisely as intended too.

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