Category Archives: Housing

Cameron-Osborne’s vendetta against the young could prove their downfall

Osborne really has got it in for young people – unless of course they are poised to inherit their grandparents’ £1 million home or will benefit from a higher inheritance tax threshold.   It will be young people who cop it from changes to universal credit that will deduct benefits faster as they earn more.   That will cost 3 million families an average of £1,000 a year according to the IFS.   Altogether some 13 million families, over half the population, will lose an average of £5 a week as a result of extending the freeze in working-age benefits, tax credits and local housing allowance, until 2020.

Then there’s unemployment.   The largest increase between 2008-13 was among 18-24 year olds, with 210,000 more out of work.   The latest figures show nearly half a million 16-24 year olds jobless, an unemployment rate of 13.7%, more than double the national average of 5.5%.   Even if they can find a job, Osborne’s over-hyped ‘national living wage’ won’t apply to those below 25 years of age.    The rate for 18-20 year olds will be a miserly £5.30 an hour, whilst for 16-17 year olds it will be slave rates of £3.87 an hour and and even £3.30 an hour for apprentices.

University fees are ending up putting poorer students into permanent debt.    When fees tripled to £9,000 a year, the maintenance loan was means-tested to target students from poorer families.   More than half a million students in England received the £3,387 maintenance grant last year, costing £1.6bn.   Now this grant is being turned by Osborne’s latest budget into another loan, of up to £8,200 a year.   So student debt will now rise to £51,000 after 3 years.   Unsurprisingly a report by the Joseph Rowntree Foundation has recently found that the largest increases in poverty in the last decade has been among younger adults of working age.

As for housing, anyone aged 18-21 will no longer be automatically able to claim housing benefit under the new rules.   The exclusion of young renters from any State support comes as young earners are increasingly locked out of home ownership as a result of soaring prices.   The average age of a first-time buyer has rocketed from 29 to 38 over the last decade.   Nor is further education a way out.   Further education colleges face some of the biggest cuts in the comprehensive spending review due in the autumn.   Indeed the further education sector, which provides the bulk of the UK’s post-secondary training, faces possible collapse and the loss of the invaluable source of technicians and mechanics.

What have young people done to deserve these successive kicks in the teeth?   In today’s volatile political climate this Tory campaign against the young will surely boomerang against its perpetrators.


Housing is now financialised, like the rest of market capitalism

The enforced sell-off of housing association homes, at the same enormous discounts as under Right to Buy (£70,000+ for a flat and up to £102,000 for a house, is driven by the two Tory goals, not only to act as bribes for voters at election time, but also to bring homes as an asset into play in the private market.   Implicit in that goal are two other Tory presumptions.   One is that rents should also be determined by the private market, and the euphemism of ‘affordable rents’ is simply a con to distract from the truth that such rents are a teeny-weeny bit below market rates on their way to reaching full market levels.   The other is that while tenancies are in principle inferior to ownership, Council tenancies which charge a ‘social’ rent of around half of market rates are anathema.   Council tenants, like scroungers in the Tory panoply of poisonous misrepresentation, are pampered, not taking responsibility for their housing, and needing to learn the benefits of individualism.
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However silly no-tax-increases is, there’s no excuse for not cutting tax reliefs to pay off deficit

Enforcing £12bn welfare cuts ( and a lot more beyond that if the deficit is really to be eliminated) is not only draconian and callous as a means of making the poor subsidise the rich so that the latter can walk away free of any liability, nevertheless no-tax-increases in this Parliament doesn’t end the matter.   It doesn’t preclude cutting back sharply on enormous and wasteful tax breaks which could make a huge contribution to paying down the deficit.   To take one example, the IMF, no less, has calculated that fossil fuel companies globally get £3,400bn a year subsidies, at a rate of £10m every minute of every day, more than the total health spend of all the world’s governments.  That is 6.5% of global GDP, and if the UK hands out fossil fuel subsidies proportionately to that, it would be spending £100bn a year subsidising oil, gas and coal.   The current UK budget deficit is £92bn a year.
Read more   “However silly no-tax-increases is, there’s no excuse for not cutting tax reliefs to pay off deficit” »

Lack of affordable housing is next unexploded timebomb

Of all the explosive issues facing the new government housing, or rather the lack of it, is near the top of the list.   A first-time buyer needs to earn £77,000 a year to get on the housing ladder in London, according to a report just published by the accountants KPMG, whereas the average annual wage in the capital is just £28,000.   Across the UK as a whole a first-time buyer needs a minimum income of £41,000 to get on the property ladder whilst the average wage is only £22,000.   What this shows is that housing affordability is no longer just a problem for lower wage-earners, but has become an issue for all except the top 5% and those coming into a significant inheritance.   Nor is this just a question about the affordability of home ownership since studies show genuine anxiety about wider affordability now including the private rented sector following the squeezing out of Council housing.
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Tory manifesto like Emmenthal – more holes than cheese

Tory policy over the last 3 years has been a desperate effort, against all the odds, to introduce a feel-good factor.   The sell-off of housing association homes, the hotspot in the Tory manifesto, was the latest attempt, seeking to regain the momentum of Thatcher’s Right to Buy when now the crisis in housing is not about ownership but about lack of house-building.    Another piece of chutzpah was Cameron’s seeking to rebrand the Nasty Party as the party of ‘working people’ whilst at the same time virtually prohibiting the capacity of trade unions to defend the living standards of their members by introducing a 50% minimum turnout threshold for strike ballots, a restriction imposed nowhere else in the world.   Then he announced that workers on the minimum wage of £6.50 an hour would pay no income tax, provided they worked less than 30 hours a week, whilst ignoring that they have been hit hard by higher VAT and tax credit cuts, let alone the huge £12bn welfare cuts still to come which are bound to hit low-paid workers because more than half of all households in poverty have a member in work.
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It’s Labour’s costed offers & long-term structural change v. Tory flash unfunded ‘giveaways’

Labour’s biggest handicap now is that still too few people on the doorstep realise the magnitude of what the party is offering either in terms of specific policy changes that will benefit the great majority of people or the longer-term structural changes that will turnaround a broken economy.   The immediate controls on the rip-offs of the ‘priced-out generation’ – the minimum wage to rise by a third from £6.50 an hour to more than £8, the freeze on energy bills till 2017 and the cap on rail fares, serious restrictions to zero-hours contracts, a new 10p starting rate of tax at the bottom matched by a rise in the top rate to 50p, etc. – are fairly well understood (though not yet by all).   But the more important proposed structural reforms are not.

That means transforming an economy from one where the richest always win and the poorest always lose to one based on recognition of mutual obligations. It includes controls on runaway corporate pay by requiring staff to have places on remuneration committees, shaking up the over-mighty Big 4 banks to ensure priority for British manufacturing and jobs, re-writing shareholder responsibilities to focus on building long-term market share rather than short-term profiteering, and much else.   But these are much less understood.   Yet these, and a host of related policies, are the key to reversing a failed economy. 
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The wheels are falling off Tory housing policy too

The desperate search for shrinking votes has pushed Iain Duncan Smith into yet another spectacular own goal.   His latest pet idea is to extend the Right to Buy to Britain’s 2.5m housing association tenants.   However, whilst social homes are owned by Councils, this latest Tory brainwave means selling off housing association assets which are private property because housing associations are independent charities so that their £65bn in borrowing is securely off the public accounts.   But as Osborne must know only too well, compelling housing associations to sell to tenants using the same Right to Buy discounts enjoyed by Council tenants (up to £102,000 in London and £77,000 elsewhere) would cost serious amounts of taxpayer money and bankrupt some housing associations.   This is yet another unfunded Tory commitment.
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This government is more class-ridden than Thatcher

Today’s report that the government has exempted developers who turn an empty building into private housing from having to build further affordable housing not only gives super-rich investors like the Abu Dhabi investment fund a free windfall of hundreds of millions of pounds, it also deprives some of the poorest families of the affordable housing they desperately need.   Under Thatcher social renting declined by 990,000, under Major by 226,000, and under Blair by 726,000 (according to Savills Residential Property Research).   It is now at the lowest level ever relative to demand since there are 1.4 million households on council waiting lists plus a further 80,000 homeless in temporary accommodation.   Now to shut off the flow of affordable housing further, grossly inadequate as it already was, and to give the green light to big foreign investors (when there are already more than 2 million foreign owners of property in Britain today) is gratuitously denying decent housing to hundreds of thousands of poor families cooped up in cold, damp, leaking, or inadequate housing for several years to come.   The same government that imposed the bedroom tax, but screams blue murder against the mansion tax.
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10 objectives for Labour for 2015

As the election comes into sight, what should be the 10 pledges that Labour should make to maximize its vote for 7 May 2015?   Here are some proposals which should certainly be included:

1  End austerity because the policy of endless spending cuts is clearly not working – deficit reduction (the ostensible purpose of the whole exercise) has ground to a halt and the deficit may even rise this year.   Adopt the obvious alternative policy, which would cut the deficit far more quickly, by expanding the economy, creating hundreds of thousands of real jobs, raising household incomes, and using the higher tax take to pay down the deficit faster.

2  Make the revival of British manufacturing industry the key objective of domestic economic policy as the only way to pay our way in the world and reverse the disastrous slide to the biggest balance of payments deficits in British history.

3  Make full employment equally a central objective of economic policy when  there are still today 2 million persons jobless and up to a further 5 million in short-term insecure jobs often dependent on zero hours contracts.
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