Renting to reduce unemployment?

There is little doubt that two of the major problems facing Wales today are the ability of local people to afford housing and the large number of people who are economically inactive.

The way that the Assembly Government intends to deal with the housing problem is mainly through building more of what are called affordable houses; houses that lower paid workers are able to buy. But a member of the Bank of England's monetary policy committee suggested last night that this sort of policy might actually be counterproductive to tackling unemployment.

In a speech in London yesterday Professor Danny Blanchflower said that there is a correlation between high levels of home ownership and long dole queues and that the answer to both unemployment and housing problems might be encouraging more of us to rent rather than buy. Of the major industrial nations Spain has the highest unemployment and the highest rates of home ownership and Switzerland the lowest unemployment and the lowest rate of home ownership

Professor Blanchflower suggests that a possible reason why higher own ownership raises unemployment is because it reduces labour market mobility. Because it is too difficult and too costly to move to where jobs are because of the ties of an owned home, fewer of us are willing to try for jobs that might necessitate moving home.

Not being an economist like Prof Blanchflower our own Prof Dylan J-E, I can't comment on the validity of these arguments, but they sound interesting and I would suggest that looking at significantly increasing the number of decent homes built for the rental market might be something that the Assembly should seriously consider as an alternative to adding to the number of homes to buy.