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I see Will Hutton in today's Observer talking about housing "shortages" and the panic that's setting in. He takes extensive coverage from the initial report of Stephen Nickell's National Housing and Planning Advice Unit I covered earlier. Tim Worstall comments here on one aspect of Hutton's suggestions - that the Bank of England needs to target house price inflation.

I would add that there was a piece by Eddie, now Lord, George, Mervyn King's predecessor as Governor of the Bank of England back in March this year which I didn't see getting much comment at the time that "The Bank of England deliberately stoked the consumer boom that has led to record house prices and personal debt in order to avert a recession."

This tells you all you need to know about house prices in my opinion. For those of you who still labour under the misconception, common though it is, that house prices are driven primarily by supply and demand, what Eddie is saying here is that house prices are in fact primarily driven by the availability of money. And, whilst preventing a slump is no doubt a laudable aim, do you see how it has been done? Cheap money, secured against land values, is created by the lending banks, and while interests rates remain low this is less of an issue. But it's pay back time and the people who are squeezed are not the great and the good who made the decision to ramp up house prices with cheap money, but the poor sods who found they simply had to borrow more because everyone else could just in order to buy a house.

And in the meantime, the government has borrowed countless billions on things like PFI deals. Can any economist out there explain to me why it would have been any more inflationary than the chosen strategy of ramping up debt money for the government to have created, Keynes style, that PFI money to spend into the economy instead? As it stands, a whole generation more or less of house buyers will face straightened circumstances with their more expensive money as well as us all having to look forward to higher taxes to repay the debt on PFI deals.

But I really want to take Hutton to task on these other two aspects of his "solution". First, he says:

"The simple answer is to build more houses, especially social housing, but that means eroding the green belts and relaxing planning laws - unpopular ideas. "

Only up to a point. It is a commonplace scare tactic to say that building more housing will eat up some of the most precious parts of our green and pleasant land. Again, setting those who have (in this case a nice view) against those who don't have even a window from which to look out on a view. However, at current planning guidance densities of 40 dwellings per hectare (and I don't claim that this is appropriate in all places), even if every new house in the government's claimed requirement of 2,000,000 over the next two decades were built on previously undeveloped land it would require less than half of one per cent of the land currently classified as agricultural, grazing or woodland (and even this does not factor in land in upland non-agricultural uses such as moorland or undeveloped urban land - the "green lungs" and equivalent that Oxford is so proud of). You can get the spreadsheet from DEFRA if you want the figures for yourself.

However, according to the Department for Communities and Local Government, there is also enough land, at these densities, for 2,500,000 new homes on previously developed land now languishing at below its optimum use. And this does not take into account land currently developed as housing, largely from the inter-war years, that seriously underuses whole swathes of suburban land. So if Stephen Nickell has any job to do, it is to find a way to get this sort of quentity of already urbanised land into more productive housing uses. A point which Hutton begins to look at in the following paragraph:

"There are tougher measures, too. If housing faced higher taxes, either through inheritance tax, a wealth tax, lifting stamp duty, or limiting tax-free capital gains on housing, then house-price inflation would slow. And if Britain repealed its far too generous concession that non-residents and non-domiciled individuals can buy and hoard houses without paying tax, that would dent overseas demand. All have been ruled out because of a recoil at higher taxes."

And yes, you know what I'm going to say here don't you. Why faff around with these various taxes, all of which, you will notice, penalise investment in the capital value of dwellings rather than encouraging parsimonious use of land. They only attempt to cure one part of the problem - by knocking something off the overall price of existing housing. Not the whole problem by encouraging the bringing into more productive use of underused urban land assets.

Introducing a signficant Land Value Tax - one that would replace IHT, CGT, National Non-Domestic Rates and Council Tax at least - will bring down the capital value of land, but make it uneconomical to hold any land out of use or below its optimal use, or you'd be paying the rest of the community (in this case represented by the tax collecting government) for the privilege. It will of course mean that people have to borrow less to pay for their home. And this in turn will focus the monetary authorities on how to create a stable and equitable money supply to pursue their macro-economic aims without exploiting the poor sods at the bottom of the pile. They will need to find ways of getting new money into the economy when it's needed without forcing us all to take on more debt. And we will end up with an altogether fairer and less costly money supply if they do it right.

Technorati Tags: monetary reform, affordable housing, debt, Eddie George, Will Hutton, land value tax

Following hard on the heels of Chief Constable Fahy, the head of Oxfordshire area's police, Chief Superinendant Shaun Morley, demonstrates what I have come to expect from Oxfordshire's top policemen, a more generally liberal attitude whilst being mindful of the harm some people are inflicting on others and their communities with their irresponsible actions and attitudes.

He clearly talks sense, and from experience. It is utter nonsense to increase the age at which people may buy or consume alcohol. It's arbitrary and unfair to those who are able to enjoy a drink responsibly:

"I am not especially convinced that the answer is to raise the minimum age for drinking alcohol and in general I'm in favour of less regulation, and better self- management."

But the story highlights a few areas where improvements could be made:

Earlier this month, police also revealed one in ten licenced premises in Oxford sold alcohol to underage teenagers in a undercover operation.

I also read this week I think, but can't find it now, that there were a tiny number of operators losing their licenses for such things. 68 in a year in England was the figure that sticks in my mind. Perhaps if we got closer to a zero tolerance approach on sales of alcohol to under-18s people would be more circumspect about who they sell to - none of this namby-pamby fining and so on - let's go for license revocation first time out and so on.

Also, there needs to be a two-way discussion here - on-license holders need to be more responsible about not selling to people who are already too drunk. Many's a time here at halls when after closing time I have found people asleep or comatose in the middle of the road who should probably not have been sold another drink several hours previously. That said, I can't get too sanctimonious, as I for one have certainly had too much on occasion. Though I never get violent, drunk or not - I might start jibbering more than usual and then fall asleep midway through a sentence!

Also, dear to my heart, he singles out students:

"We certainly need a significant change in attitudes to alcohol, especially in the 18 to 24 age group, including students where wholly inappropriate behaviour fuelled by excess alcohol consumption is seen as acceptable by many of that peer group.

I have this pet theory that for "normal" local residents, one of the problems is the demise of the "local" in favour of an array of drinking sheds in city and town centres. Of course these came about as a way of making the throughput of alcohol sales more efficient for the brewers. But what they mean is that particularly for young people, they no longer learn to drink in the relatively safe surroundings of a local pub in a village or estate, where they have the friendly eye of a landlord who hopes and expects to see them again soon, and neighbours, friends and family who can take them to one side and point out when they are becoming a nuisance or worse. If that is true for people with their roots in a particular city it is even more of a challenge for our student residents.

Here at Brookes we are just about to initiate a discussion internally about enhancing the role of wardens in halls of residence such as myself, and I will be bringing this up as part of that. A couple of years ago many were scathing about the comments of the Vice-Chancellor at Brunel suggesting that universities had a parental type duty to teach social skills and personal responsibility to their students and, I have to say that over the past couple of years in particular when license times have been extended in Oxford and people roll into halls leery and noisy at all hours, I am beginning to agree.

I'm not a confrontational person so it would be a challenge to me to face up to some of the drunks that tear about the place after closing time, but I think we probably have to face up to doing that. We have a university disciplinary charge of "bringing the university into disrepute" which I suspect could be used here.

When I was done for driving under the influence fifteen years ago the police had to deliver me home to ensure that someone recognized me at the address I had given them. I wonder if the same applies to people who are arrested for alcohol related offenses in town? If so, perhaps wardens and college authorities should be the ones asked to vouch for such people when they are delivered back to university accommodations. If we had that heads up we could take action to show them that the university does not approve of our students bringing the university into disrepute by their actions out on the town at night.

I just picked this up on a BBC news piece. There's a new website by a group called Carbon Monitoring for Action (CARMA) which has what it calls a pretty comprehensive database of power stations and power companies from across the world showing CO2 outputs right down to individual power station levels.

It's worth a play with. I was astonished to see Australia has the worst record in terms of CO2 output per capita from power generation. Interesting too to note that France is way down the list with the greenest output of industrialized nations because of its preponderance of nuclear generation, and Brazil is way down because of its heavy use of hydro power.

More locally - Drax is rated as the 23rd most CO2 producing power station on the planet, but Didcot is about as clean as they come powered by fossil fuels: