London Mayor’s Chief Economic Advisor calls for sky high interest rates of 5% or 6%

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Gerard Lyons, the Mayor’s Chief Economic Advisor, today called for interest rates to rise to 5 or 6 per cent, rather than the 2.5 per cent that the Governor of the Bank of England has suggested as the level to which  rates should return in normal times. With the average house price in London now standing at £492,000, a rate increase of this magnitude would more than double  the average London monthly mortgage payment from around £2,000 per month to £4,300 per month.

In response to questioning at today’s City Hall Economy Committee  from  Andrew Dismore AM, London Assembly member for Barnet and Camden, on what interest rates should return to when the economy returns to strength, Mr Lyons said “I’d sooner be five (or) six (per cent), than two (to) three (per cent)”. (Video link here )

After the Committee hearing  Mr Dismore said:

 

“The Mayor’s Chief Economic Advisor Gerard Lyons is a highly paid and respected individual in the City, so his comments and predictions must be treated very seriously.

“If Mr Lyons had his way and interest rates reached 6 per cent, while this would obviously be good for savers, it would be disastrous for those who have bought homes on variable mortgages at current low rates.

“These comments show just how out of touch are the Mayor and his team. If rates reached six per cent, there would be a serious risk of collapse in property values in London. Thousands of homeowners are barely able to afford their mortgage repayments as it is, because of the excessive  cost of a home  in the capital. Even moderate rate rises, far less than Mr Lyons predicts,  would force many hard working  families to default, or face the consequences of negative equity.  

“The Government may allege  that all is going well with the economic recovery, but it  is not reaching ordinary hard working people in their living standards. If a consequence of the recovery is interest rates at these levels, living standards will decline  for most people-  only the super-rich will benefit  as they profit from their  investments resulting in such  high rates of return.”

Notes

  • Lenders’ standard variable rate mortgages typically range from around 2% above the base rate (currently set at 0.5%) to 5% above it or even more.
  • This produces a range, currently, of 2.5% to 5.5% with a mid-point in this range of 4%.
  • 5% rise in the base rate would take the range to between 7% and 10%, with a mid-point of 8.5%.
  • The average London home is worth £492,000. If the  homeowner had paid a 20% deposit (which is a cautious estimate as many  often pay less than 20%), this equates  to £98,400, resulting in net mortgage borrowing of £393,600.
  • The rate increase would therefore take the average monthly mortgage payment in London from £2,099.59 per month up to £4,327.74 per month. These figures calculated using this mortgage repayment calculator.

 

 

·         The Resolution Foundation estimates that ‘if rates increase to 5 per cent by 2018…the number of households spending more than one-half of their disposable income on repaying debt could rise from 600,000 today to around 2 million’ and that the ‘the human and social cost of that would be huge’    Whittaker. M (2013), Closer to the edge? Debt repayments in 2018 under different household income and borrowing cost scenarios, The Resolution Foundation, p.3/4

Dismore slams TNT

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Andrew Dismore, Labour Parliamentary Candidate for Hendon and London Assembly member, speaking during the London Assembly plenary debate on the impact on postal services of TNT, criticised TNT and the threat it poses to the universal postal service.

Mr Dismore said:

“TNT have not provided a very good service in Barnet so far. In the early days of their contract, mail was found misdelivered and even a sack of post was dumped in a stream. Misdirected  post included important election poll cards, which TNT should not have been delivering in the first place, as well as bank statements and delayed hospital correspondence.

“TNT workers’ pay and conditions on zero hours contracts are far worse than Royal Mail staff receive, which may explain the desire to cut corners. For example, they are supposed to lock their mail panniers and not ride their bikes on the pavement, but the opposite  seems to me  to be the norm.

“TNT poses a real threat to the universal postal services they cherry pick the profitable areas and ignore the hard to deliver ones. Royal Mail, due to its statutory duty to deliver everywhere, cannot compete with TNT on what is not  a level playing field.

“There needs to be an urgent review by Ofcom of postal competition before it is too late to save the universal service.”

Dismore opposes Mayor’s Fire Authority Gerrymander

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In today’s City Hall Plenary  debate Andrew Dismore, Labour Parliamentary Candidate for Hendon, London Assembly member for Barnet and Camden and London Fire Authority (LFEPA) member  spoke against  the plans of Mayor Boris Johnson to rig the membership of the Fire Authority in his favour.

Mr Dismore said:

“The Mayor wants to remove elected Borough Councillors and Assembly members  from the Authority, and to replace them with his own unelected nominees, so that he will have a self appointed majority of his own supporters on LFEPA.

“The Fire Authority has done a good job standing up for  the Fire Brigade against the draconian cuts the Mayor imposed last year, which would have been far worse but for LFEPA’s resistance to him. As he could not get his own way on the Authority but was forced to use the threat of the courts to bulldoze through his cuts, the Mayor now wants to fiddle the membership of LFEPA so he can hide behind his ‘yes men’  and has someone else to blame.

“If Boris Johnson  gets his way, no doubt further cuts will follow, unopposed.

“Just like when Mrs Thatcher abolished the GLC as it refused to toe her line, so Boris Johnson wants to abolish  LFEPA altogether and to bring the Fire Brigade entirely under his control, using the Mayor’s Office for Policing and Crime (MOPAC) as its model.

“MOPAC has been a disaster. It is not transparent and is unresponsive to requests for information and explanations. It is unapproachable and distant from Londoners. This is not a model that should be followed.

“The Mayor should take his grubby hands off LFEPA and allow the Fire Authority to get on with its job without his day to day interference”.

Speaking up for London Archaeology

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In today’s City Hall Plenary  questions  session with  Munira Mirza, Boris Johnson’s Deputy Mayor for Education and Culture , Andrew Dismore, Labour Parliamentary Candidate for Hendon, London Assembly member for Barnet and Camden and honorary Chair of Trustees of the Council of British Archaeology (London) raised the lack of mention of Archaeology in the 2014 ‘Cultural Metropolis’  Mayor’s cultural strategy document.

Mr Dismore said:

“The Mayor’s Cultural Strategy is woefully inadequate in that it entirely ignores the Capital’s archaeological heritage. The word ‘archaeology’ does not appear anywhere in the document, as Ms Mirza was forced to concede.

“There is no  acknowledgement of the importance of the relationship between archaeology and tourism.

“There is no mention of the role of historic churches  in promoting music, art and architecture and contributing to tourism either.

“There is no  acknowledgement  of the  importance of archaeology  in planning policy. The Museum of London is where all commercially funded archaeology archives generated in London are deposited. These include records, artefacts and human remains which are used for research, learning activities, volunteer programmes both at the Museum and in the  Boroughs. The Museum of London’s Archaeological Archive and Centre Human Bioarchaeology is regarded as a role model for the rest of the country. There is not even a passing  mention of this in the new  Cultural Strategy.

“There is no mention of community archaeology, which is a recreation in which many Londoners participate and the Thames Discovery Programme which is vital to the disappearing archaeology of the river and which is badly in need of  funds.

“If the Mayor had consulted on his new strategy before publishing it, omissions such as these could have been rectified.

“I am pleased to have been able to use the opportunity of today’s plenary to highlight the important and valuable role archaeology plays in London’s cultural and commercial life”.

Dismore speaks up for British Library

MayorsQuestionTime In today’s City Hall Plenary  questions  session with  Munira Mirza, Boris Johnson’s Deputy Mayor for Education and Culture , Andrew Dismore, Labour London Assembly member for Barnet and Camden raised the lack of mention of the British  Library in the 2014 ‘Cultural Metropolis’  Mayor’s cultural strategy document.

 

Mr Dismore said:

“The British Library serves as a resource for researchers in all parts of the country and around the world. Whilst ‘Cultural Metropolis’  looks extensively at the contribution of London’s creative industries;  it fails to mention the role of the British Library as one of the richest resources for creative practitioners in the city. There are over 20,000 creative users of the Library’s Reading Rooms, including authors and writers, artists, film-makers, designers and those from the theatre and performing arts. The Library offers inspiration through its unparalleled collections of literature, journalism, art, sound, music and more, and also offers practical support, through its Business & IP Centre.

“The Library is actively involved with London schools to inspire children and young people and develop their skills, ranging  from hosting school visits to the Library to organising public outreach events aimed at disadvantaged groups. This spring it  held its Sciencetastic! discovery day and  is  proud to be hosting the launch of the 2014 Summer Reading Challenge.

“If the Mayor had consulted on his new strategy before publishing it, omissions such as these could have ben rectified.

“I am pleased to have been able to use the opportunity of today’s plenary to highlight this important  and valuable work”.