Flashback to 2008: Building work stalls as financial crash hits
The economy was going into a nosedive, the cost of living was going up, and people were feeling the pinch.
And yet compared with the crisis of today the banking crisis of 2008 was the good times. In the very different circumstances of the coronavirus pandemic, Britain's economy shrank by 20.4 per cent in April, the largest monthly contraction on record, and three times greater than the decline seen during the whole of the 2008 and 2009 economic downturn.
But 2008 wasn't exactly a picnic, and the banking crisis led to years of austerity and hardship.
It was the year that the financial world fell in. After years of living on credit, it suddenly became apparent that there was no money to pay the bills.
Major banks which had projected an image of financial competence and security were humbled and shown to have feet of clay.
Their shares went into meltdown and the Government had to come to their rescue in the biggest humiliation of the British banking sector in history. The unthinkable happened – some British banks were effectively nationalised.
With everybody suddenly hanging on desperately to their money, the upshot was a global economic downturn, job losses, and firms going to the wall. The FTSE fell to a five-year low.
The banking crisis impacted widely across the sectors, but for today let's highlight how it hit the local housebuilding scene.
The mortgage market was stagnating, which meant it was difficult for buyers to raise the capital to buy new homes.
On June 20, 2008, we reported that the brakes had been applied on building work at two of Shropshire’s biggest housing developments, including a 3,300-property flagship project being constructed in Telford.
All three of the firms at Ironstone in Lawley – the biggest expansion of any town in the UK – had been forced to slow the multi-million pound development.
They blamed the lack of people buying new homes for the decision. The Ironstone Development Group was made up of George Wimpey, Persimmon and Barratt Homes.
Building work was still continuing, but homes were no longer expected to be completed as soon as first planned.
Contractors had cleared the former opencast mining area of Lawley to transform it into a £500 million development of 3,300 homes with offices, restaurants, bars, shops and a school. People had already moved into homes on part of the site.
The building of 800 homes in Lightmoor, between Horsehay and Ironbridge, had also changed pace.
Peter Murray, area director of English Partnerships, the national regeneration agency, said at the time: “English Partnerships is in close contact with our development partners, actively assessing the impact of the current market conditions.
“On-site activity is continuing at both Lightmoor and Ironstone but at a pace to reflect the developers’ revised build programmes.”
Persimmon Homes had already halted construction on The Pastures in Ironstone, along with its other projects in the county.
It was a similar story at other places. Already it had been announced in May that work on hundreds of homes by Persimmon Homes at Lawley and Ditherington had been put on hold until the market improved. Work on a 106-home estate at the old Bridgnorth College of Further Education site had not started and an 188-home development at Spring Gardens, Shrewsbury, was put on hold.
Yet things were progressing as planned at some sites, such as George Wimpey’s Castle Meadows development off Britannia Way, Hadley, and the show home was being fast tracked for completion.
At The Village, Telford’s Millennium Community in Ketley, development was continuing on the first phase.
Transport minister Tom Harris' attempts to put a positive spin on things did not go down well. He said that despite the credit squeeze, with house prices falling and the cost of living heading upwards, people in Britain had never been so wealthy and knew how to spend their spare cash on luxuries and treats.
He asked why people were being "so bloody miserable" and complained that they seemed to be afflicted by "crippling levels of cynicism and pessimism."
High definition televisions were flying off the shelves at Tesco quicker than they could be imported, and eating out, which was a rare treat when he was a child, was as commonplace as going shopping, he said.
His comments came hard on the heels of the Bank of England Governor Mervyn King's bleakest assessment yet of the economic outlook, so unsurprisingly Mr Harris found himself under political attack for "living on a different planet."