John Hemming's Web Log John's Reference Website
Thursday, October 30, 2008
  Gordon Brown's Boom and Bust
It is relatively straightforward to find the budget speeches of the past decade. They speak for themselves.


Gordon Brown 1997
For most people the acquisition of a house is the biggest single investment they will make. Homeowners rightly expect their investment to be protected by sensible policies pursued by Government.

I am determined that as a country we never return to the instability, speculation, and negative equity that characterised the housing market in the 1980s and 1990s.

Volatility is damaging both to the housing market and to the economy as a whole.

So stability will be central to our policy to help homeowners. And we must be prepared to take the action necessary to secure it.

I will not allow house prices to get out of control and put at risk the sustainability of the recovery.

Gordon Brown 1998
Section 2: Stability and prudence
First, stability.

By spring last year, with consumer demand already rising by 5 per cent and the money supply by 11 per cent but industrial production up only 1½ per cent, the economy was exhibiting the same symptoms of instability from policy errors that produced the boom-bust economy of the late eighties.

To avoid a lurch backwards towards the kind of boom-bust instability that brought interest rates as high as 15 per cent in the late 80s, the Government, and then the Bank of England, took action to ensure stability. And I followed this tightening of monetary policy by putting in place a tough five year deficit reduction plan.

Gordon Brown 1999
Today's Budget is a Budget for Britain to succeed in the new economy and lead in the new century: a Budget that builds on a strong foundation of economic stability, advances a modern framework of efficient public services and encourages a dynamic Britain of enterprise and fairness.

Gordon Brown 2000
Amid the risks of an uncertain and often unstable global economy, we are determined to maintain our disciplined approach: determined not to make the old British mistakes of paying ourselves too much today at the cost of higher interest rates and fewer jobs tomorrow, determined not to make the old mistake of putting consumption before investment, the short term before the long term. Britain does not want a return to boom and bust.

Gordon Brown 2001
A prudent and responsible approach to the public finances has seen the Government reduce borrowing, while releasing substantial resources for key public services. It is determined to avoid a return to the cycle of boom and bust that has characterised the economy in recent decades.

Gordon Brown 2002
In the early 1990s imprudent assumptions about debt and related mistakes in fiscal policy contributed to the boom and bust that did so much damage.

Gordon Brown 2003
I turn to the housing market. I can now report that since 1997 an additional 1.1 million British families have become homeowners for the first time – home ownership benefiting from the lowest mortgage rates for forty years and rising in all parts of the UK and to 70 per cent of all households, the highest level in our history, higher than in America and Europe.
But while most mortgages elsewhere are fixed rate, most UK mortgages – 64 per cent of new mortgages – are at short term variable rates with most of the rest fixed for just one to five years.
And with housing demand at historically high levels, housing supply has remained low.
And this has contributed not just to, over thirty years, a rate of growth in house prices three times that of Germany and France, but to the volatility and inflexibility of the housing market as a whole – an issue on which we will publish a background study as part of the Treasury’s five tests assessment on the euro.
Indeed, most stop-go problems that Britain has suffered in the last fifty years have been led or influenced by the more highly cyclical and often more volatile nature of our housing market.
Housing finance needs to become more certain and planning more flexible. So I have asked David Miles – Professor of Finance at Imperial College – to examine the case for, and how, Britain can develop a market for long-term fixed rate mortgages – something that is important to the UK in or out of the euro, and more important in a single currency area.
The Deputy Prime Minister and I are asking Kate Barker, formerly of the CBI, to examine and report on how we can reduce barriers to increased housing supply. Backing up his decision to double public investment in new homes and the renovation of housing estates, and to speed up planning decisions, the Deputy Prime Minister is announcing that he will intervene where planning authorities fail to prepare proper plans or deliver an adequate supply of new housing; if necessary call in proposed major housing developments; and consider the case for binding local plans to increase certainty and ensure the stability of the housing market.

Gordon Brown 2004
Last week Professor David Miles recommended a more transparent and competitive market in mortgage finance, a set of recommendations that will now be considered by the Government and the Financial Services Authority. The report by Kate Barker published today concludes that the supply of new homes consistently lags behind demand and that the numbers of houses built in Britain – currently 175,000 a year – must rise substantially if we are to reduce house price inflation and increase the number of affordable homes for people wishing to buy and rent.
The Government today accepts the Barker recommendations for British real estate investment trusts to improve the supply of rented property; for the release of more public sector land; for – in each region – one body responsible for housing and planning; and, in principle, for extending the contaminated land credit in brownfield areas. And the Deputy Prime Minister will now consult on how we can increase the supply and affordability of housing, and what goals we should set, while striking the right balance between the economic and social case for development and environmental and housing needs.

Gordon Brown 2005
Those in this House who have forecast recession and those who have called our spending unaffordable have been consistently wrong and with the most recent figures published today for both economic growth and receipts, they are wrong again.

Gordon Brown 2006
As I have said before Mr Deputy Speaker: No return to boom and bust.

Gordon Brown 2007
And by holding firm to our commitment to maintain discipline in public sector pay, we will not only secure our 2 per cent inflation target but create the conditions for maintaining the low interest and mortgage rates that since 1997 have been half the 11 per cent average of the previous twenty years. And we will never return to the old boom and bust.

Alistair Darling 2008
Mr Deputy Speaker, the core purpose of this Budget is stability - now and in the future.
And its core values are fairness and opportunity, founded on stability and strength.
 
Comments:
Indeed. And you can chart a similar trail by searching for the phrase "sustainable economic growth".
 
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