The Tory plan to extend right-to-buy to housing associations combines Thatcherite economics and Soviet-style confiscation

Helping people to own their own home! Well, a few people. At least a couple. For definite. Image: Getty.

Here we go again. For months – years – I've been noisily arguing that the thing we most need to do if we're going to end the housing crisis, the single non-negotiable element of any solution, is to build more bloody houses.

Yet here comes the Tory manifesto, with its headline pledge to privatise more of what little social housing we still have left. You know, in my darker moments, I sometimes think that nobody in the upper echelons of the Conservative party is listening to me at all.

The plan would see England's 1.3m housing association tenants given the right to buy their own home on a similar basis as council tenants, at an enormous discount (up to £103,900 in London, up to £77,900 elsewhere). If you happen to be one of those tenants then this is obviously fantastic news.

But it's a terrible policy nonetheless. For one thing, housing associations (HAs) are charities, and while the government could force them to sell their homes at a discount, it still amounts to privatising stuff the state doesn't own in the first place. This policy is a bizarre combination of Thatcherite economics and Soviet-style confiscation.


For another thing, HAs as a class are probably the bodies most enthusiastic about the idea of building large numbers of new properties. It is not exactly clear how forcing them to sell their existing homes at a hefty discount will make this more likely to happen.

The Tories claim this won’t be a problem, because they have a plan to fund the gap: it involves selling off council homes in expensive areas, when they become vacant. Three thoughts about this present themselves:

1)   We’re losing two social homes for every right-to-buy tenant, not one, so that’s just great;

2)   Waiting lists, already long, will become visible from space;

3)   Social housing in expensive areas will, over time, cease to exist altogether, so the policy comes with a side order of social cleansing, too.

Just to be clear: this idea is awful.

So, it’s a bad policy. But what of the politics?

Those 1.3m HA tenants will probably be quite pleased with their free bung (most of us would be if the government chucked us £100,000). The Tories’ thinking is presumably that enough of them live in marginal constituencies for it to help swing a few seats.

But HA tenants are actually pretty well housed already: their rents are low, their rights are secure.

Another, rather larger, group suffers from high rents and no rights whatsoever. There are an estimated 10m people in private rented sector, and perhaps another couple of million young people living at home with their parents. The Tories have steadfastly refused to do anything for them. They’re not doing anything (longer tenancies, rent control) that might make renting a less soul-sucking experience. And they’re absolutely not planning to build enough houses to meet pent-up demand.

In other words there are roughly 1.3m voters who'll benefit from this bung, but perhaps ten times that number who are going to be understandably miffed that they’re not getting it.

These people, if they are rational economic actors, will desert the Tory party en masse.

The whole thing speaks of a kamikaze short termism at work in the Conservative party. Homeowners are disproportionately likely to vote Tory: that was the insight that led to the creation of right to buy in the first place, and whatever else that policy got wrong, that political instinct was sound.

And yet the party is doing none of the things it needs to do if it actually wants to arrest the long-term decline in the number of homeowners in Britain. It isn't making housing more affordable. It isn't making sure there's enough to go round. It's simply flinging a few crumbs down from the table, in the hope it'll win them just enough votes to keep Ed Miliband out of Downing Street.

It might work in 2015. But what happens in, say, 2025, when policies such as this mean that less than half the electorate owns their own home? How strong will the natural party of government be then, do you think?

 
 
 
 

The ATM is 50. Here’s how a hole in the wall changed the world

The olden days. Image Lloyds Banking Group Archives & Museum.

Next time you withdraw money from a hole in the wall, consider singing a rendition of happy birthday. For today, the Automated Teller Machine (or ATM) celebrates its half century.

Fifty years ago, the first cash machine was put to work at the Enfield branch of Barclays Bank in London. Two days later, a Swedish device known as the Bankomat was in operation in Uppsala. And a couple of weeks after that, another one built by Chubb and Smith Industries was inaugurated in London by Westminster Bank (today part of RBS Group).

These events fired the starting gun for today’s self-service banking culture – long before the widespread acceptance of debit and credit cards. The success of the cash machine enabled people to make impromptu purchases, spend more money on weekend and evening leisure, and demand banking services when and where they wanted them. The infrastructure, systems and knowledge they spawned also enabled bankers to offer their customers point of sale terminals, and telephone and internet banking.

There was substantial media attention when these “robot cashiers” were launched. Banks promised their customers that the cash machine would liberate them from the shackles of business hours and banking at a single branch. But customers had to learn how to use – and remember – a PIN, perform a self-service transaction and trust a machine with their money.

People take these things for granted today, but when cash machines first appeared many had never before been in contact with advanced electronics.

And the system was far from perfect. Despite widespread demand, only bank customers considered to have “better credit” were offered the service. The early machines were also clunky, heavy (and dangerous) to move, insecure, unreliable, and seldom conveniently located.

Indeed, unlike today’s machines, the first ATMs could do only one thing: dispense a fixed amount of cash when activated by a paper token or bespoke plastic card issued to customers at retail branches during business hours. Once used, tokens would be stored by the machine so that branch staff could retrieve them and debit the appropriate accounts. The plastic cards, meanwhile, would have to be sent back to the customer by post. Needless to say, it took banks and technology companies years to agree common standards and finally deliver on their promise of 24/7 access to cash.

The globalisation effect

Estimates by RBR London concur with my research, suggesting that by 1970, there were still fewer than 1,500 of the machines around the world, concentrated in Europe, North America and Japan. But there were 40,000 by 1980 and a million by 2000.

A number of factors made this ATM explosion possible. First, sharing locations created more transaction volume at individual ATMs. This gave incentives for small and medium-sized financial institutions to invest in this technology. At one point, for instance, there were some 200 shared ATM networks in the US and 80 shared networks in Japan.

They also became more popular once banks digitised their records, allowing the machines to perform a host of other tasks, such as bank transfers, balance requests and bill payments. Over the last five decades, a huge number of people have made the shift away from the cash economy and into the banking system. Consequently, ATMs became a key way of avoiding congestion at branches.

ATM design began to accommodate people with visual and mobility disabilities, too. And in recent decades, many countries have allowed non-bank companies, known as Independent ATM Deployers (IAD) to operate machines. The IAD were key to populating non-bank locations such as corner shops, petrol stations and casinos.

Indeed, while a large bank in the UK might own 4,000 devices and one in the US as many as 12,000, Cardtronics, the largest IAD, manages a fleet of 230,000 ATMs in 11 countries.


Bank to the future

The ATM has remained a relevant and convenient self-service channel for the last half century – and its history is one of invention and re-invention, evolution rather than revolution.

Self-service banking and ATMs continue to evolve. Instead of PIN authentication, some ATMS now use “tap and go” contactless payment technology using bank cards and mobile phones. Meanwhile, ATMs in Poland and Japan have used biometric recognition, which can identify a customer’s iris, fingerprint or voice, for some time, while banks in other countries are considering them.

So it’s a good time to consider what the history of cash dispensers can teach us. The ATM was not the result of a eureka moment of a single middle-aged man in a bath or garage, but from active collaboration between various groups of bankers and engineers to solve the significant challenges of a changing world. It took two decades for the ATM to mature and gain widespread, worldwide acceptance, but today there are 3.5m ATMs with another 500,000 expected by 2020.

Research I am currently undertaking suggests that ATMs may have reached saturation point in some Western countries. However, research by the ATM Industry Association suggests there is strong demand for them in China, India and the Middle East. In fact, while in the West people tend to use them for three self-service functions (cash withdrawal, balance enquiries, and purchasing mobile phone airtime), Chinese customers consumers regularly use them for as many as 100 different tasks.

Taken for granted?

Interestingly, people in most urban areas around the world tend to interact with the same five ATMs. But they shouldn’t be taken for granted. In many countries in Africa, Asia and South America, they offer services to millions of people otherwise excluded from the banking sector.

In most developed counties, meanwhile, the retail branch and the ATM are the only two channels over which financial institutions have 100 per cent control. This is important when you need to verify the authenticity of your customer. Banks do not control the make and model of their customers’ smart phones, tablets or personal computers, which are vulnerable to hacking and fraud. While ATMs are targeted by thieves, mass cybernetic attacks on them have yet to materialise.

The ConversationI am often asked whether the advent of a cashless, digital economy heralds the end of the ATM. My response is that while the world might do away with cash and call ATMs something else, the revolution of automated self-service banking that began 50 years ago is here to stay.

Bernardo Batiz-Lazo is professor of business history and bank management at Bangor University.

This article was originally published on The Conversation. Read the original article.