Won’t Eric Pickles have abolished the district auditor by then?

Ethnic cleansing, hey. How nice.

Brownshirts are always looking for ways to make their area pure.

From a Cleggian perspective this seems like a very fair policy?
http://www.guardian.co.uk/commentisfree/2010/oct/25/charlie-brooker-nick-clegg

“If this isn’t about ideology, then it must surely be about base political advantage. Truckloads of Labour votes get dumped in areas where they weigh the Labour vote anyway.”

I think this particular argument is relatively easily debunked and as such is unhelpful.

People are going to be moving from inner London (where there are hardly any marginal seats) to places like Hastings (marginal), Watford (marginal), Reading (marginal x2), Luton (marginal) and so on. Outside of London, people will be moving from places like Oxford to Didcot, or Birmingham to smaller West Midlands towns which are more marginal.

The political aim of this policy isn’t Porteresque gerrymandering as such. The government is looking for cuts which most people support, and which fit their dividing lines of Labour being for the unemployed and immigrants, and big cuts to housing benefit are just about the most popular ways of saving significant amounts in welfare spending. It also taps into resentment by people who don’t qualify for assistance with their housing costs that other people are receiving help with paying their rent.

The consequences will be absolutely despicable, but we shouldn’t get diverted into an argument about whether the motivation is gerrymandering, instead we need to explain what the consequences will be and appeal to people’s decent instincts and desire to live in a civilised society rather than one where government policies leave thousands homeless.

“I think this particular argument is relatively easily debunked and as such is unhelpful.”

Well why don’t you debunk it then? because your crayon scribbling did no such thing.

As to it being unhelpful, well yes,, unhelpful to tories to have their policies revealed, but this is not a tory site so no won cares about tory bullshit .

“It also taps into resentment by people who don’t qualify for assistance with their housing costs that other people are receiving help with paying their rent.”

Especially if people who don’t qualify are forced to share or are unable to afford to live in flats where those qualifying for assistance are housed. The response is “why can’t they share?” and “why should they be housed in better accommodation than I can afford?”.

“Well why don’t you debunk it then?”

Sally, I’m on your side on this one!

The problem with claiming that the policy is a gerrymander is that it involves people moving from mostly non-marginal seats in inner London and other cities with high housing costs to smaller towns in the south east and west midlands which tend to include more marginal seats.

So, for example, there are reports that London housing officers are block booking accommodation in Hastings (won by the Tories from Labour in 2010), Watford (won by the Tories from Labour in 2010), Luton (target seat for Tories), Reading ((won by the Tories from Labour in 2005 and 2010) and so on. This is different from Porterism, which was specifically about moving people out of marginal wards in order to help win elections.

Instead, it is a more general kind of class warfare, animated by the absolutely vile belief that a popular way to reduce the amount of money which the government spends is by forcing families into low quality, unsuitable and overcrowded accommodation.

The thing people don’t seem to have realised is that the rents for *social* *housing* under measures announced in the Spending Review will exceed (or come very close to) the total per household benefits cap in numerous parts of the country.

The plan is to set rents for some/many/all new social tenancies at 80% of private rents. What exactly this means in detail hasn’t been explained yet.

What I can tell you as of now is that it does mean is that in quite a few parts of the country the rent for this ‘new tenure’ will exceed the benefits cap. In many places – not just London – it will come close enough to the cap to make it unlivable since there won’t be enough money left for living costs. Just how bad the effects will be depends how their “80%” is calculated, but it’s not looking good.

In summary, people who are benefit-dependent – such as single parents – will not be able to live in this new ‘affordable housing’. If people in it lose their jobs they will have to be evicted.

“nice middle class comp girls called Chloe get elected for English county towns”

Norwich is a city.

Las ttime I checked, the main part of this move was to cap housing benefit at 400p/w. That is 20.8k p/a pre tax. I supppose once you add all the other benefits in, that could easily be about 25k pre tax, so over 30k post tax.

Is it really fair that taxpayers should be paying what amounts to an above average worknig wage just so someone can live in a certain area of their choice. Most working people don’t necessarily get that choice – they are forced to live within their means.

As such all this ridiculous talk about ethnic cleansing is just that – ridiculous.

What’s interesting is that the coalition plans will probably cost the country more, unless they want to see families and kids on the streets – as councils have a statutory duty to house people if the rents are too high and there are no social/council homes then people will be put up in B&Bs etc (as they are now to great expense and much stress).
How long before the Mail runs its first “MUSLIM family of FIVE living in the HILTON on YOUR taxes” headline, I wonder?

the HB policy would make a bit more sense if complemented by investment in new council / social housing

@10

Most housing benefit claiments are in work.

@12

YES this. I keep saying it but the gov have made no plans to either invest more in social housing stock or tighten up rules and regs on private landlords, which means any sympathy I might have with this policy is quickly evaporated.

Just to throw a little grenade into the works.

The current value of a council tenancy on a 3 bed in Westminster is around £20k a year. That’s the difference between the social rent and the market rent.

This tenancy is inheritable. The NPV of such a lifetime tenancy is of the order of £1 million quid. (50 years times £20 grand subsidy….we can ignore interest roughly as the value is inflation protected.)

1) Why should anyone be able to inherit £1 million of the taxpayers’ money?

2) Why aren’t they charged inheritance tax on it when they do?

Tyler, maybe areas of high rent (London) are also the locations where there are plenty of good jobs. So an unemployed person may decide to take the advice of the tories and move to an area where there are jobs.

Also remember most HB recipients are in work. The reason rents (and HB) went so high isn’t entirely unrelated to the activities of your industry either…….

Tim

Because it’s an effin’ council flat and they don’t actually own it, perhaps?

@ 17….I’ve just calculated the value of the *tenancy*, not the value of the house. And they do own the tenancy, don’t they?

Perhaps the coalition’s exciting new housing policy should be represented by a human face – may I suggest this one?
http://www.aryanunion.org/www/porter.jpg

Not wholly convinced by that URL mind…..

The NPV of such a lifetime tenancy is of the order of £1 million quid. (50 years times £20 grand subsidy….we can ignore interest roughly as the value is inflation protected.)

1) Why should anyone be able to inherit £1 million of the taxpayers’ money?

2) Why aren’t they charged inheritance tax on it when they do?

Hang on a minute – there’s a whopping great assumption in there, namely how long the tenant is going to live. We don’t usually tax people upfront on anticipated future earnings for the rest of their goddamn lives. Besides, you’re confusing a saving (i.e. money not spent that might have been under other circumstances) with an asset. Not. The. Same. Thing. We don’t tax people on money they save by not spending it on other things as if it were income. Or even a capital gain.

You really are a mendacious bastard, aren’t you?

Would it ever occur to you to make a similar point about, say, the taxable NPV of the anticipated future earnings from all the money Sir Philip Green saved through tax avoidance, assuming that he had invested all of that money in the most advantageous way possible and was going to live to 100? No, of course not – and you’d be the first to complain if anybody else tried such an absurd thing.

@13 Phil

I understand that most HB claimaints are in work.

However;

1. the HB is just being capped, not abolished

2. why shouldn’t i receieve HB and have my own flat rather than sharing with 3 other people, as I have done to make my housing affordable?

((a good example of this is a place i used to live in between 2006-08. Nice enough area in west london. 4 of us in a house paying market rent and sharing living space…2 doors down marginally larger house, split into flats and none of the 4 council tennants paying any rent directly – all on HB))

Why am I paying for other people to have a *better* result than myself when it comes to housing?

@21….are you really trying to say that an inheritable tenancy at below market rents is *not* an asset?

Try telling that to someone with a free market tenancy at a peppercorn rent. You know, someone with decades left on a 99 year lease off the Grosevenor Estate in Belgravia.

And you’re damn right they have to pay inheritance tax on the value of that tenancy.

Dunc

you’re wrong on this one – if you own an asset that pays X, it doesn’t matter much if that comes in the form of a positive cash flow or as saving or discount on some expenditure. Tim is quite correct that the right to a sub-market rent is an asset and one ultimately funded by taxpayers (who could either be renting the property out at market rent, or sell it).

If Philip Green owned some right that entitled him to a x% discount on future taxes, that would be capitalized and regarded as an asset on his balance sheet, and if it was inheritable, treated as an asset too I imagine. Green may indulge in tax avoidance – he doesn’t own a “right” like an assured tenancy.

Tim’s objection rules out any intervention in housing markets to help poor people live in places they could not otherwise afford. It’s not obvious to me there’s never a case for taxpayers providing such a subsidy. That doesn’t mean you have to deny that it is a subsidy or never ask yourself whether the subsidy is too large to be justified or perhaps unfairly allocated.

“Tim’s objection rules out any intervention in housing markets to help poor people live in places they could not otherwise afford.”

No, that’s not it at all.

http://www.adamsmith.org/blog/welfare/when-waving-the-bloodied-shirt-doesn%27t-engender-the-desired-reaction/

“Now note, I’m entirely happy with the idea of subsidising housing for those who otherwise would not be able to afford housing, I am after all a bleeding heart liberal. It’s just that I’m a bleeding heart classical liberal and I want such subsidies to be out there in the open, not hidden as opportunity costs.”

Further, I’ve no problem at all with *temporary* subsidy to people who have reduced incomes but who live in expensive areas. But the idea that there should be a hidden £40 billion a year (a very rough number) subsidy seems insane to me.

Now, if you think having poor people living in expensive areas is a good enough cause to be worth the £40 billion hidden subsidy in social rents plus the HB that’s paid, well, fine, bring all that subsidy out into the open and make your case in the democratic market place. I think you’ll lose but if you win I’ll shut up about it.

£40 billion is, after all, the cost of raising the personal tax allowance to £17,000 or so (£4 billion per £1,000 roughly). What do you think the people will decide once all those numbers are out in the open?

I notice that neither of you are addressing the whole assumption-of-lifespan issue, which was actual my principle objection (which is why I put it first). Anything to say on that? If, as Luis proposes as an example, “Philip Green owned some right that entitled him to a x% discount on future taxes”, would you argue for taxing him on the full value for his entire assumed lifespan upfront?

The difference between “a 99 year lease off the Grosevenor Estate in Belgravia” and an assured council tenancy is that we know in advance how long the former will run for. I’m pretty sure you can also sell the former, but not the latter.

“I notice that neither of you are addressing the whole assumption-of-lifespan issue, ”

But we know how to value that, we do it all the time. The same way that annuities are calculated.

“The difference between “a 99 year lease off the Grosevenor Estate in Belgravia” and an assured council tenancy is that we know in advance how long the former will run for. I’m pretty sure you can also sell the former, but not the latter.”

Sure….but both have a large NPV, only one is taxed and only one is handed over by the taxpayers.

If we didn’t have this system at all then we wouldn’t have this problem. If you don’t currently have enough money to afford somewhere to live then the government will give you some money. I’ve no problem with that at all. But why should you needing money for a roof over your head for the next few months (as an example) mean your kids get to inherit £1 million of the taxpayers’ money?

@10 and @22

The main part of this is not the £400 cap. Very few people can currently receive that much.

The really nasty bit is reducing the limit for everybody to the 30th percentile rent, from the median.

The second most nasty bit is the raising of the shared room rate age to 35. This will mean single people under 35 being limited to about £60 a week, whatever their accomodation costs, whether in work or not etc.

Sorry to post again, but I forgot to add that even if not caught by the shared room rate, pensioners (who make up a large proportion of HB claimants) will also be subject to the 30th percentile limit.

IN this argument about inheriting a tenancy, I see no one has mentioned how you manage this. I will tell you. You do this by living int he property concerned, AND that eviction would make you homeless.

Thats not to say that some people have inherited council tenancies whilst having another property. Its just that they have done so illegally, and should be punished according to the law. But dont punish someone who has, for instance, stayed at home to look after a sick and elederly relative, instead of going out and getting a home of their own, and sending the relative to the council to look after.

I thought it would take 50 years to see the folly of selling off the council housing stock at a third of it’s true vale. In fact it has taken less than 30 years.

Talk about the something for nothing society.

@ tim worstall

If you don’t like benefit claimants and what they receive why do you support governments and neo-liberal economics that create these claimants?

Thatcher quadrupled unemployment to 4.5 million, and only got it down by changing the way the figures were calculated over thirty times.

Or perhaps you voted New Labour, who pursued the same neo-liberal philosophy, which explicitly requires high unemployment for it to function properly.

These ConDem policies are specifically designed to get a low paid, cowed work force were being on benefits means desistitution.

Somehow, I think you’ll be delighted with that. The inadequate always get off on someone else’s misery.

Oh and the Adam Smith Institute, those smart, neo-liberal, free marketeers that gave us the poll tax eh?

http://www.guardian.co.uk/politics/2010/oct/26/nick-clegg-benefit-changes-london

“Benefits overall will be capped at £500 a week to ensure the system does not serve as a disincentive to work.”

“We are simply suggesting there should be a cap for family homes of four bedrooms of £400 a week. That is £21,000 a year.”

My heart bleeds for those poor people who will only be given £26,000 per year, and £21,000 towards their rent.

If this isn’t about ideology, then it must surely be about base political advantage.

Turning this argument around, is housing benefit the reason Labour gets to control so may seats for its vote share?

@33, as I said above, the £400 cap will affect very few people; the main cut is limiting rent to the 30th percentile.

Clegg has proven himself utterly duplicitous by going along with the fantasy that the £400 is the main restriction. It is just there to distract from the real issue, as it is easier to understand.

@ ad

80% of housing benefits goes to those in low paid work and pensioners.

Private sector rents rose as a corollary of the unsustainable property price bubble, that has helped to add the damage to our economy. This bubble was supported by all three main parties.

Before this vile government got in the discussion was about ‘how do we create affordable housing for essential workers like the police, teachers and nurses?’

Now it’s ‘how do we shift the poor out of the inner cities?’

This thread has gone “B Ark”.
Make the leaf the currency and sell the forests.

Wasn’t Dame Shirley’s Westminster Council the one that good old Mr Pickles modelled his Bradford revolution on? Back to the future methinks!

I don’t understand how Tim Worstall applies NPV to housing subsidy and then projects it forward.

Assume that household X lives in a property for 50 years paying a rent £20K per annum below market rate. Each year, the household has been paid a subsidy of £20K but that is not necessarily money in the bank for them. There is a range of values for potential money in the bank, between £0 and £1,000,000. The value depends on the ability of the household to pay a market rate for renting.

Should the council authority have preferred to rent the property commercially, the council would have incurred an NPV loss of £1,000,000. But that is not the benefit for the tenant household. The NPV to the tenant could be £0.

If the citizen who has his/her name on the rent book keels over, tenancy can be transferred to another member of the household. That sounds civilised. And last year’s subsidy was something in the past. The successor to an inherited tenancy may not be the beneficiary in a will. Jo Y who “headed” household X may have banked £80,000 owing to a cheap rent, but we can’t assume that Sam Z, inheritor of the tenancy, gets the dosh.

One of the things that we do know is that long term council tenants get a very generous price if they are able to buy their home. I don’t know how “inheritance” works for long term tenancies if inheritors wish to purchase, and I don’t have the calculating capacity at this time of night. But home purchase is the only way that subsidised tenants can convert “latent” value of rents into capital. And that deserves to be discussed in a separate thread.

Is there really absolutely no chance that landlords won’t reduce their rents to stem this mass desertion of the inner city?

After all, once the housing benefit crowd have moved out, who’s going to occupy their flats?

They can’t really on the old staples: mass immigration and an endless number of benefits claimants anymore.

I want to get an affordable council flat in the World’s End estate in Chelsea, or one somewhere there abouts. In Fulham. Even Hammersmith if pushed.
It has to be better than darkest Croydon – where I used to live before I could stand it no more.
I always thought people living in inner city London estates were lucky buggers.

“Each year, the household has been paid a subsidy of £20K but that is not necessarily money in the bank for them.”

Of course: it’s been a rise in consumption for them. A rise in the consumption of housing they otherwise could not have afforded.

“The NPV to the tenant could be £0.”

While it’s true that the value to the tenant could be zero, for they would have been just as happy living in that cheaper accomodation that they could have afforded without the subsidy (possibly) that doesn’t really help the case at all. For what that means is that we, societally, have just paid a £1 million subsidy for absolutely no benefit whatsoever.

“And last year’s subsidy was something in the past. The successor to an inherited tenancy may not be the beneficiary in a will. Jo Y who “headed” household X may have banked £80,000 owing to a cheap rent, but we can’t assume that Sam Z, inheritor of the tenancy, gets the dosh.”

Sure, but the inheritor of that tenancy now has the right to the £20 k a year subsidy for the rest of their lifetimes. That subsidy to their consumption of housing: which is what gives us the NPV of £1 million again.

Let me put roughly the same point in a different manner.

So, when people are down on their luck we think it a good idea to give them money so that they won’t be destitute. Good, I agree.

This will include a subsidy to housing for people down on their luck. This might be temporary, for those between jobs say. Or with short term illnesses. This might be permanent for those with permanent disabilities. OK, good, still agreed.

However, what we have in social housing is permanent subsidy to people who, under the above logic, should really only be getting a temporary subsidy from the rest of us. They qualified for social housing at some point, couldn’t afford appropriate housing, and got the tenancy of a social place.

They’ve now got that tenancy whatever their circumstances in the future. From requiring a temporary subsidy of £20 k a year they’ve managed to luck into a permanent subsidy of £20k a year for the rest of their lives. That’s how Lee Jasper was paying £150 a week in rent when earning £100k a year off Ken’s London.

There’s something wrong with such a system: it would be like saying, OK, you’re unemployed, here’s your dole, now, we’ll keep sending the cheques whether you get a job or not. Or sick pay that continues when you get better.

Stick social rents up to market rents and this problem goes away. We can still, through HB, subsidise those down on their luck. But having been in need once doesn’t mean getting permanent subsidy: and of course all those NPV calculations then go away.

Oh, and, as above, we can now see what the total subsidy is and we can all make up our minds about whether it’s actually worth it.

On reading your post, I had a revelation:

Labour spent billions of tax payer’s money, via the housing benefit system, to move natural Labour supporters into expensive-to-live-in constituencies, to turn safe libdem and tory seats into marginals and thus subvert the democratic process!

Could this have been a big factor in how Labour is unfairly advantaged when it comes to FPTP?

It’s diabolical to consider.

Come back Shirley Porter – all is forgiven!

I tend to agree that this isn’t gerrymandering at all.

There is a bit of conspiracy but much more cock up in my view.

It is undeniable that housing policy is in a terrible mess. Even in an unprecedented housing boom, we managed to build far fewer houses than were required.Because of that, house prices (and rents) ran up and because of that, more and more people needed affordable housing.

A vast gulf opened between Council rents and open market rents to the point where, the average social rent is now 50% of a market rent (even less in London and the South, more elsewhere). Crucially, rents are far below the cost of constructing a new home so that each new home requires more and more subsidy to deliver. There wasn’t enough subsidy to expand supply appropriately in the good times and there certainly won’t be now.

Because of the shortfall in social housing, allocations are made according to need so more and more working households end up relying on HB in the private sector – envying the security granted to those needier than them. What makes it worse is that, the presence of a sector of the population who doesn’t have to pay market rents makes it possible for employers to pay wages that reflect the cost of these discounted rents rather than the private rents paid by many households shut out of the social sector. (Even on the London living wage you’d struggle to maintain a London rent in the private sector without HB)

There really isn’t a pain free way to reform this system and there certainly isn’t a cost-free way.

Various think tanks and commentators have, however spotted that we will never be able to expand supply while social rents are so low – relative to the market and relative to construction costs. In some parts of the country, there is so little left over after management costs that Councils and RSLs struggle even to maintain their stock properly – hence the massive investment in the Decent Homes programme.

Several people have therefore suggested that the rent on at least new lettings should rise. This would make new social housing less subsidy intensive and the increase in rents from new lettings of existing properties would raise money that social landlords could use to provide that reduced subsidy. Supply could thus be expanded – although not, in reality, fast enough to absorb the backlog. This is the route that the coalition is trying to go down by insisting that all new lettings will be made at 80% of the local housing allowance level – an increase of perhaps 50%.

However, they have failed to heed the corollary of this approach. Even its advocates admit that raising the rent of a proportion of new lettings would mean at least a short term increase in HB payments to those who could not afford the new levels. No such increase has been budgeted for in the CSR.

This implies that the coalition expects all new tenancies to be let in a completely new way – the increased subsidy required by those unable to pay even social rents will have to be balanced by an increasing number of lettings to people who can afford to pay the enhanced rent without HB. That fact is not acknowledged anywhere that I can find. This is significant because the implied change in allocations policy amounts to a revolution. A revolution which will probably require the consent of parliament.

Now, you could regard this as a stealthy and Machiavellian scheme to screw the poor. But, the point about Machiavelli is that his schemes are cunning. If you were doing this deliberately, you’d have an answer to the question, “what is the reform of allocations that you propose?” because it affects more people (250,000-300,000 households per annum) than any of the rest of the stuff you’re advocating in terms of housing policy. If this was deliberate, there’d be a a reference in the CSR saying what you expected the short term effect on the CSR to be and why it was going to pay for itself.

No such reference exists.

@43

Or could it be that the Labour government helped families stay in the areas they grew up in when house prices and rents sky rocketed?