Easing does it?

Not all that tempts your wand’ring eyes
And heedless hearts, is lawful prize
Nor all that glitters, gold

So we’ve got some Quantitative Easing. You know, where the Government pumps some more money into the economy in order to get it moving again. Hurrah. Except all this extra money has been used to buy gilts.

Now a lot of this happens at a level above my economics-comfort-zone so I’m not entirely sure that I know exactly what gilts are. What I do know though is that there have been a number of very well thought of commentators who think that it should have been spent on something else entirely.

They have argued that, instead of gilts, the Government should pump the QE into something that the country desperately needs. Something that would create jobs in a wide range of complementary sectors. Something that would start to solve a huge and mounting problem.


It’s been a cry in the construction sector for some time, but it was heartening to see a couple of weeks ago pieces in both the Guardian and Financial Times, calling for a new round of QE to be targeted at the housebuilding sector.

In FT Opinion Occupy London says that housing is increasingly unaffordable and the social costs of homelessness are enormous. The Bank of England should use quantitative easing, not to buy gilts in the forlorn hope it will stimulate the economy but to fund housebuilding. This could serve the triple purpose of easing the housing problem, boosting construction and raising confidence in the economy.

The Guardian meanwhile, suggested that next month’s Budget could be used to announce some serious measures to boost the economy. Cutting national insurance contributions to encourage firms to hire more young workers would be a start – especially if allied to measures directing QE money into building social housing.

Closer to home, industry-wise there is Brian Green, author of the splendid brickonomics blog in Building who has been banging on about the need to QE to be directed at housebuilding for some time.

Even this blog has highlighted the call from Anthony Hilton for money to be targeted where it can do the most good – there is something which is badly needed, which creates jobs, which benefits the regions as much as the South-East, and where the benefits all stay in this country with no leakage overseas. That something is house-building.

What would money pumped into housebuilding create? – jobs for start, but also a way of bringing housebuilding levels up from the pitiful point they have reached.

Housing Minister Grant Shapps promised that his Government would build more homes than Labour. Well he’d better get a move on and come up with something better than the Get Britain Building Fund which will only go so far in house building.

And, as the CPA’s economics director Noble Francis – also an advocate for using QE to boost housebuilding – pointed out on Twitter, if we continue to build half the number of homes we need, then we are just storing up more and more social problems for the nation.

We’ve had QE before and what, exactly has it done? Last time, the politicians swore blind that it would channel money to small firms through part-nationalised banks, which of course the Government controls (cough). Yet we heard last week that lending to private businesses is at an all-time low and that the banks have missed their lending targets. So what happened to all that money then? It seems to have vanished.

We needed a solid investment in housebuilding. We got gilts. You know sometimes, I think Government just isn’t listening to us.

By the way, if anyone out there is on Twitter and not following @MarkOliver_ @brickonomics and @NobleFrancis then you are missing out – they can explain all this stuff far better than I can.

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

Check Also


Again? Really?

When sorrows come, they come not as single spies, but in battalions. I just watched …