The happy habit

We may be £1 trillion in debt, but we are addicted to the property market, writes Paul Barker

When James Baker was the US Treasury Secretary, he fended off the constant demands for federal funds. "A billion dollars here, a billion dollars there," he fretted, "and pretty soon you're talking serious money." The headlines about household debt in Britain last week were even more anxious-sounding: "£1 trillion in the red, and still spending"; and "Economists' verdict - 'Britain is living in a bit of a fool's paradise.'" Fools or not, the British seem to find things pretty cosy.

When James Baker was the US Treasury Secretary, he fended off the constant demands for federal funds. "A billion dollars here, a billion dollars there," he fretted, "and pretty soon you're talking serious money." The headlines about household debt in Britain last week were even more anxious-sounding: "£1 trillion in the red, and still spending"; and "Economists' verdict - 'Britain is living in a bit of a fool's paradise.'" Fools or not, the British seem to find things pretty cosy.

Once upon a time, widespread indebtedness was perceived as an American habit. In Britain, the pawnshop, the grocer who let you pay "on tick", the visiting door-to-door tallyman offering small loans: this was as far as it got for most people. But that's a long time ago. It evokes a world almost as distant as that of the 19th-century Boston Unitarian family in Henry James's charming early novel The Europeans, where their "great standard of morality" included the precept that no man should ever "play billiards for money". (I first learnt how to rack the red balls at snooker in a West Yorkshire church hall where my father played, which still held to precisely that rule.)

Credit cards - that is, loan cards - arrived in Britain in 1966, under Harold Wilson's Labour government, with the launch of the Barclaycard. There are now about 63 million of these tempting slivers of plastic in circulation here, far more than one card per adult.

Forty years on, we live irretrievably in a money culture. Average incomes have risen by 50 per cent, in real terms, since the mid-Eighties. A survey for the authoritative British Social Attitudes survey found that younger people, who had grown up with this expectancy of more money in the wallet (and more debt at the bank), were "more materialistic than their predecessors". You could call them Thatcher's children. When it came to job-hunting, the survey found that the "Sixties generation" - recently so much derided by Tony Blair - was "the most likely to give high priority to interesting work". But the younger that people were, the more they gave "high priority to pay".

Money culture means that company matters are no longer always tucked away on the inside pages of newspapers, like some shameful Brontë-esque family secret. On BBC television, one of the stars of the ten o'clock news is Jeff Randall, the business editor, snapping out wisecracks like a Jack Russell terrier as he explains the latest takeover-bid battle or the sad decline of Sainsbury's and Marks & Spencer.

But more news isn't always good news. Though more people may be, in a general sense, money-minded, not many have the conceptual grasp of how to handle money - and make it grow. Few have prospered, for example, like John Ritblat,chairman of British Land, which is reported to be the largest property company listed on the stock market. When the Abbey bank last week decided to turn itself into Abbey Hispanic, the chief operating officer, Stephen Hester, jumped ship and took an immediate £600,000 a year job with Ritblat.

Wise man, you might say. But financial triumphs like Ritblat's only re-emphasise the widespread British suspicion that the only lasting way to make money in this country is though bricks and mortar. There's nothing novel about this preoccupation. History is not mocked. Even "new money" in Britain has always striven to build itself into the social hierarchy by buying land (see any Trollope novel).

American plutocrats, by contrast, are often happy enough with stocks and shares. Self-exiled in New York, John Lennon, former rebel, took his un-American preoccupations with him as he and his wife set about trying to buy up all the apartments in the prestigious Dakota Building, where they lived. That was a dream of real grandeur. A lesson in how to lord it.

Much of our £1,000,000,000,000 hasn't gone into credit card debt. A lot of it has gone into buying property, as in the old Abbey National building society's logo of a couple striding happily along, with a little roof poised over their heads, like an eternal umbrella. This British preoccupation is routinely deplored. Some of the hand-wringing, as always, is covert snobbery. Even George Orwell was guilty of this in his Thirties novel Coming Up for Air, in which every suburban avenue, every building society mortgage, was derided as an assault on the England he knew and loved. The same attitudes continue, expressed just as often among those who dress on the left politically as among those who dress on the right. Why, they mutter, can't all these people be happy enough with smaller places, preferably rented and built on inner-city "brownfield" land, as laid down by so many teams of planning advisers?

Well, why should they be content with less? No one else is. And also, what better way is there for them to erect a defence against the sharkish side of the money culture?

All the other defences are full of holes. People were - and still are, by the Government - advised to put money into pension schemes. But the experience of actual pensions schemes is dire. At one time it seemed as if the old "mutual" companies like Equitable Life and Standard Life - supposedly run on high ethical principles, with faint echoes of the co-operative movement's Rochdale Pioneers - were the best guardians of the future. Not so. It turned out they were run all too much like the Co-op. Equitable Life crashed spectacularly. Standard Life is sinking slowly: two days ago, it announced further cuts in policy pay-outs. Acting on advice, I'd put money in both. But the best investment I ever made was to follow my wife's insistence - not any financial adviser's - that we should buy a bigger, better house. It's now worth more than I've ever made in my life from any other activity. Not all that trillion is ill-spent.

The money culture makes you wary of any kind of forecasting. Writing about Hollywood film-making, the ultimate capitalist enterprise, the scriptwriter William Goldman said: "Nobody knows anything" - meaning there's no way to tell which film will hit the jackpot. Most other forecasting is just as dubious. You constantly read, for example, about a pensions "black hole". Supposedly, there won't be enough working people in the population to pay benefits to the increasing numbers of the elderly. But one thing is indisputable in the murky world of social statistics: all demographic forecasts are wrong. The birth rate, especially, has a track record of unpredictability. The most important social decisions are made by two people alone (or usually alone) together in bed. There may be far more employed adults around than the gloom-mongers say. Consider the recent history of London. Hospital beds and school places were cut because there would allegedly be no demand. No one foresaw London's current population rise. Back to the drawing board.

Fortunately, we're not Stepford wives, pre-programmed to behave as we're forecast to. Even money culture is uncertain in its workings. Who can blame anyone for ignoring the crystal-ball merchants and thinking: "What we have we hold"? The Englishman's home is his future.