How the BBC and others fail to understand housing benefit


10:55 am - October 31st 2011

by Mary Tracy    


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Last Thursday night I had the unenviable experience of watching ‘The Future of the Welfare State‘, with John Humphrys.

If you haven’t seen it, do yourself a favour: don’t. Watch Tory propaganda instead; the two are barely indistinguishable.

I want to use a small point made during the programme to make my own point on a topic I know too well: housing benefit, and the Tory plan to push poor people out of London.

Humphrys and his production crew managed to find one of those Daily Mail benefit cases that tick all the boxes. An Ecuadorian family, all of them with brown skin, living in a big-ish flat in Islington, apparently unable to utter a single word of English.

The father and sole earner of the family was a cleaner. His wages wouldn’t have been enough to pay the rent for such a ‘palace’, so, as a person on low income, he is entitled to housing benefit to help him bridge the gap between what his employers feel like paying him and what he actually needs to live.

Humphrys asked the man something along the lines of ‘whether he feels the state should subsidise his flat’.

But here is where Humphrys gets it wrong. The state isn’t subsidising Mr Housing Benefit Recipient: the state is actually subsidising Mr Cleaning Company Who Employs Mr Housing Benefit Recipient because he cannot cough up the wages that his employee would need to live on.

This is an unashamed transfer of public funds into private landlord’s and private companies pockets.

It is up to employers to pay enough for employees to live, that is what wages are all about. If employers don’t feel generous enough, then employees need to go somewhere else. Low wages, no employees. At least that’s what would happen in a functioning ‘free market’.

Instead, the state steps in and gives Mr Housing Benefit Recipient enough money to pay his rent.

Notice that neither him nor his family get to ‘enjoy’ this wealth, for having a roof above their heads is non negotiable; it is a pre requisite for any worker to go and do their jobs.

If private companies were to pay living wages, it would make their profits sink. See? Housing benefit neatly translates into private profit.

This is the reason why the Welfare State doesn’t “work”. Benefits are supposed to be there to provide workers with a safety net; they were never meant to compensate for low wages simply because employers cannot be bothered to pay more.

But don’t expect Humphrys to tell you that. I suspect he’s too educated.

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About the author
Mary is an occasional contributor to Liberal Conspiracy, and co-editor of Women's Views on News. She blogs here.
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Reader comments


You say Tory it’s also a new labour plan as well, welfare reforms was new labour with the son of Thatcher. I did not watch it we have another program coming up about benefit scroungers cheats with Panorma , seem the Tories are using the New Labour idea of using the media.

Hell I was hoping New labour and the Tories would open up holiday camps for the disabled with a nice big sign saying holidays are great please take a shower first.

Socialism is dead long Live Blair

So the only difference between your interpretation and that of BBC is in whose pocket public funds go, landlord’s or benefit recipient’s one? Apparently you agree that just giving money away is wrong as those in need can simply find a better job?

I’m not telling either way is right or wrong, I just don’t get your point.

The state isn’t subsidising Mr Housing Benefit Recipient: the state is actually subsidising Mr Cleaning Company Who Employs Mr Housing Benefit Recipient because he cannot cough up the wages that his employee would need to live on.

Actually I’d argue that this doesnn’t go far enough. The state is subsidising Mr Humphreys and Mr Central London Multinational etc etc who want their houses/offices cleaned but aren’t prepared to pay Mr Cleaning Company Who Employs Mr Housing Benefit Recipient enough to pay Mr Housing Benefit Recipient a living wage.

@3 That’s pretty much the nail on the head there. They want nice clean offices and toilets, but ain’t too keen on paying a cleaner enough to be able to live close enough to perform this function.

@Yuriy #2:

I’m not telling either way is right or wrong, I just don’t get your point.

I’m not the original poster; but perhaps the point is that policy shouldn’t be directed at squeezing HB to prevent the “undeserving” getting it, but at preventing companies and individuals externalising their costs; by, for example, strengthening minimum wage legislation so that a minimum wage actually allows the worker to live without reliance upon benefit.

Alternatively, if they aren’t prepared to do that, perhaps stop whining about “undeserving benefit recipients living in the lap of luxury at taxpayer expense”.

6. ManonClaphamOmnibus

What do you expect from State sponsored media! You should check out Breakfast TV .. an endless stream of light weight rightwing drivel largely presented by light weights who would be better employed on jackanory . Sadly I understand its very popular.

I saw the programme. The situation with the Ecuadorian family was a bit odd.
They were Spanish citizens and had moved from Spain to England. The father was ”an engineer” – but couldn’t work in that profession because of his lack of English, so he worked as a cleaner instead. The rent was several hundreds of pounds a week. It was one of those smart Islington town houses that that are so loved by the urban elite.

I’m sure there’s a reason why the minimum wage can’t be £15 an hour, but I don’t know why that is because I don’t understand economics well enough.

Mary Tracy: “It is up to employers to pay enough for employees to live, that is what wages are all about. If employers don’t feel generous enough, then employees need to go somewhere else. Low wages, no employees. At least that’s what would happen in a functioning ‘free market’.”

I’m afraid the free market does not respect a minimum reasonable standard of living conditions. They’d still absolutely get the cleaner, with or without the housing subsidy – he’d just live with his family in one insanitary unheated room in an illegally built backyard shack in Newham or Southall instead. In all likelihood he wouldn’t have much choice.

What housing benefit does is it inflates the purchasing power of the poor relative to the rich in the housing market, meaning they (as a group) are able to take up a greater percentage of the housing space available. The benefit cuts will simply result in poorer people having their purchasing power reduced, so overall they take up less space. They will be outbid by richer people to a greater extent than today. This means less space per head for them, and more space per head for those on higher incomes. Look at what landlords are doing in London: they are not cutting their rents (as the government assumed they would) – they are redeveloping into larger units to aim at the luxury market – and so average rents are rising rapidly, right across London and beyond.

Families living in one room and fraudulently claiming housing benefit (since you can’t claim for a bedsit if the Council says you need a two bedroom house) is the absolutely inevitable result of the policy. Huge numbers of people are trying to move to Outer London to escape this fate – and rents around here are skyrocketing as a result, way beyond the benefit caps imposed (not the much-hyped £400pw cap for Kensington & Chelsea residents, the much lower ones actually imposed in Outer London). Private rents aren’t monitored officially, though, so the press release dependent media probably won’t notice for a while…

“If private companies were to pay living wages,”

Quite fascinating.

So, here we have the example of a single earner trying to support a (large?) family in one of the most exoensive cities in the world. And you think that working as a cleaner should provide enough to support a large family in one of the most expensive cities in the world?

So, umm, what happens if there’s a single person who wants to work as a cleaner and a married person trying to support an entire family who wants to work as a cleaner? Does the single person get paid less because their required “living wage” is less?

If so, what happens to all of those married people trying to support a family who go looking for jobs? They’re not going to get jobs at all are they? The single people will have them all.

“It is up to employers to pay enough for employees to live”

Just to make an obvious point: it can’t, surely, be up to employers to pay every employee enough for them *and however many dependents they happen to have* to live on. So even in the case of perfectly well-paid individuals with dependents, the state is inevitably going to have to get involved and ‘subsidise’ their wages.

@Robin #6:

That was my first thought but then there is a “free market” bit. Anyway what I’m driving to is that it’s a double-edged sword poster withdraws. There is no any reason (apart from personal beliefs and generosity of the owners) for employer to pay more if there are plenty of people ready to work for the current wage 🙁

So that’s the problem which benefits were supposed to resolve. The only alternative to subsidising a recipient directly is I’m afraid forcing the employers to pay more with a power of law, not in taxes but in direct wages – which would be much more damaging to the future employees, I suppose.

And all that makes sense only if we all agree that “roof over one’s head” means a townhouse in London. I know that the case discussed if very far from being typical (obviously, that’s why it was picked up by Humphrys to attack) but while it’d be very desirable to provide everybody everything we have limited (artificially or naturally, doesn’t matter) resources here, don’t we?

Tim W @ 9

I think you have missed the point being made. The OP has quite rightly pointed out that the person at the end of Humphrey’s scorn was a cleaner on a modest income, attempting to make ends meet.

The most obvious conclusion of this programme was that the ‘poor’ were fucking up a system for the rest of us.

However, that little family in a subsidised house in Islington are not actually to blame for Western capitalism, are they? They only want somewhere reasonable to live and Western Capitalism is fundamentally failing to provide that, without the State horsing out huge subsidies to private landlords and indirectly subsiding large conglomerates in the process.

Spot on Tim – The left have never understood how sensible post war housing Policy has changed into a vast injustice whereby tax payers buy accommodation for low earners they cannot afford themselves,(not to say pensions for public sector parasites they no longer have themselves )
I know on my own estate a family whose earner stacks shelves in Tescos. Meanwhile my wife and I (like most) struggle and juggle with a job a small business, child care and a have little or nothing left over to live in a slightly worse house.
The left think that anyone seeking to be better than anyone else is wrong , but for real people he sight of life`s rewards being handed out to the losers at their expense makes a joke of everything they have tried to achieve.
It is bitterly resented and all the more so when the givers pat themselves on the back for their fine feelings.

FFS the rent on this cleaner’s flat was more than £2000 per month.

Plenty of families find accommodation at a fraction of that cost. Humphrys point was that some taxpayers might feel pissed-off that they were supporting someone to live for free in a beautiful Georgian property in Islington that they could never dream of affording themselves. Perfectly reasonable point.

There is a big difference between ‘driving the poor out of London’ and nudging benefit recipients out of Belgravia and Islington.

First the state prevents new housing from being developed, then it pays existing protected landlords to house those on low incomes. Two types of landlord welfare. So the solution is:

1. Deregulate housing construction to make shelter cheaper.

2. Pay a basic income to all regardless of employment status with a fairly generous withdrawal rate as earned income rises (or think of it as a negative income tax).

16. patricia roche

Well said Mary. The BBC is no longer reporting news that will challenge the coalition no doubt due to fear of further cuts to money and Tory Patten in charge. For example they are not reporting the dire cuts in nhs, safe in our our hands, as cameron said.

Paul Newman @ 13

Meanwhile my wife and I (like most) struggle and juggle with a job a small business, child care and a have little or nothing left over to live in a slightly worse house.

Good enough for you, Tory vermin. Anyone who uses the phrase:

public sector parasites

Is getting all the deserve out of life in my book. If you are lucky, your wife will leave you for someone with a better outlook in life.

OK Paul, so now someone with a job in a supermarket doing unpleasant work for very little money is a ‘loser’. Nice to see your nasty little colours nailed firmly to the flag.

Good piece Mary.

I have to point out though that this has been the policy of British governments since the 19th century.

In fact, it’s what the repeal of the Corn Laws was all about. British wheat was more expensive, and British farmers were unable to compete with North American producers on production costs.

The repeal of the Corn Laws was effectively a subsidy to the factory owners, allowing them to pay lower wages – at the expense of the rural labourers who got laid off – yet, amazingly, the repeal of the laws is seen as some kind of victory for ordianary people by many progressives.

As usual, the British government run the country for the benefit of the square mile, rather than for the population as a whole.

If you look closely, pretty much every aspect of our society is geared up to privatise the profits, and socialise the costs. From Housing Benefit systems to the university system which is now geared up to providing training that used to be provided by empoyers.

It’s not capitalism – you can’t really use that term for a system that doesn’t allow for failure and pays out inflated bonuses to company bosses whose campanies have fallen in value – it is plutarchy.

No change there then!

20. Robin Levett

@Yuriy #11:

That was my first thought but then there is a “free market” bit.

Employers can appeal to the “free market” when they stop being parasites on public money externalising their costs to HB and other benefits.

And all that makes sense only if we all agree that “roof over one’s head” means a townhouse in London. I know that the case discussed if very far from being typical (obviously, that’s why it was picked up by Humphrys to attack) but while it’d be very desirable to provide everybody everything we have limited (artificially or naturally, doesn’t matter) resources here, don’t we?

We do indeed; but the problem here is that the majority of cleaners – specifically office cleaners – work at night; offices tend to be full of people during the day. There is limited public transport at night. So cleaners must live close to their place of work; so if work is in Central London, they have to live close to Central London. One option is to pay a wage that woudl enable a cleaner to pay a Central London rent. Another is to provide accommodation close to the place of work. Another option is to externalise accommodation costs to the benefit system so you can pare your prices to the bone and get the Shell Centre cleaning contract.

Why exactly do the cleaners got the blame for the economic choices made by their employers?

21. Robin Levett

@FlowerPower #14:

FFS the rent on this cleaner’s flat was more than £2000 per month.

And how much of that was covered by HB? Even if this were a 4-bed property, HB would be hundreds of pounds short.

22. Robin Levett

@Flowerpower #14:

FFS the rent on this cleaner’s flat was more than £2000 per month.

Really? You do know that HB is capped nowadays, don’t you? Even if the cleaner was entitled to a 4-bedroom rate, and even if the 30th percentile was at or above the LHA cap, he’d still be paying out hundreds of pounds a month in rent.

23. Paul Newman

Its called differentials.The effort to better yourself is not confined to Conservatives. Labour don`t exist outside their housing empires in London, in the South. That is because working class support has been lost primarily.
Labour feel you should get nowhere and nothing for your work and skills most of that lost vote disagrees and the left simply don`t understand, as we see .
They think they all get out of bed every day so someone else can enjoy whatever they achieve ,in competition.

Its the classic ex Labour voter, self employed home owning upper working class not unionised, and no-one hates the hand wringing cant vendors more.The sight of houses simply handed to people for which others have spent a lifetime striving to obtain is a standing insult and an injustice.

“Last Thursday night I had the unenviable experience of watching ‘The Future of the Welfare State‘, with John Humphrys.

“If you haven’t seen it, do yourself a favour: don’t. Watch Tory propaganda instead; the two are barely indistinguishable.”

Indeed; I nearly coughed up a lung, and watching Humphrys squat on the moral high ground was deeply unpleasant. Almost all of the case studies the producers managed to dredge up served only to reinforce stereotypes about ‘scroungers’ and the work-shy – no mention of the statistical majority.

And I watched this trash having just read Sue Marsh’s piece on here (last week): the gulf between what is real and what is imagined by crooked BBC meedja luvvies is really quite astonishing.

25. gastro george

Paul, I suggest you go round to your shelf-stacker and tell him your views. You might be enlightened by his.

Or go and join the BNP if you want a more comfortable life.

26. Flowerpower

Robin Levett @ 22

Really? You do know that HB is capped nowadays, don’t you?

The £400 per week cap will apply to existing claimants from January 2012.

The terrible inconvenience of having to move from a £500+ per week flat in an Islington townhouse to a £400 apartment, perhaps a few streets away, perhaps across the border in (horror…) Hackney was all rather the point of this segment in Humphrys film.

Is it really so unreasonable for people living on benefits to be asked to occupy properties in the cheapest 30% of those available, rather than luxury properties most people in quite well paid work cannot afford?

“Labour feel you should get nowhere and nothing for your work and skills”

I know. I remember when Tony Blair gave that famous speech in the 1990s when he said his priority for government was “scroungers, scroungers and scroungers”. We all thought he was just saying it to get elected, but when his first act on taking office was to announce a rise in income tax to 80% we realised he was serious. Despite this we gave him a second term and he adopted an even bolder agenda of on the spot fines for people using words with more than 2 syllables and a windfall tax on libraries.

Thankfully his successor Gordon Brown was too weak a leader to introduce his controversial “get a job, lose your council tax” proposal, and he was voted out of office once we got sick of the anti-work and anti-skills ideology.

It’s a good thing we now have a government committed to financially supporting people as they learn skills, building new libraries, and keeping people in employment. They’ve even pledged to ensure people in council houses get to keep their homes if they get a well-paid job, in a dramatic turnaround from the climate of the brown years.

28. Robin Levett

@Flowerpower #26:

Is it really so unreasonable for people living on benefits to be asked to occupy properties in the cheapest 30% of those available, rather than luxury properties most people in quite well paid work cannot afford?

You have a strange definition of “luxury”. I would reserve that term for maybe the top 10% of properties on the market. I certainly wouldn’t use that description for a property commanding the median rent in a market; or did you think that the 30th percentile restriction was entirely new, rather than simply a drop from the 50th?

29. Robin Levett

@Flowerpower #26:

Oh, and it may have escaped your attention, but the subject of the programme was in work, as are the huge majority of HB claimants.

30. Paul Newman

Planeshift – Educational standards have not improved one iota,says the OECD despite the money thrown at it.Good job. Tony Blair promised a lot, an end to “Sleaze” for example, what is your point ?
If Brown had thought he could actually collect any money by raising income taxes he would have raised them every year,as it is, he only did it to embarrass the Coalition and ost the country money in his last bunker days. Aces
Your subsequent remarks seem to be attempting a sort of diffuse satire best termed whimsy if you have something to say I `d recommend saying it.

Meanwhile it remains the case that perverse incentives are so huge when we start throwing free houses around after years of housing inflation and young people unable to buy.The social injustice and damage is incalculable. Shame on New Labour for failing to take on their vested interests and reform this obviously rotting system.

“Is it really so unreasonable for people living on benefits to be asked to occupy properties in the cheapest 30% of those available, rather than luxury properties most people in quite well paid work cannot afford?”

I’ll re-frame the question.

Do you think it is a good idea that areas with low quality housing contain a mixture of people – working and non-working, or do you think it would be better if such areas were exclusively occupied by people who didn’t work?

32. Robin Levett

@Flowerpower #26:

…and how many 4-bed properties are there available in Hackney for £400? To HB claimants?

“and how many 4-bed properties are there available in Hackney for £400? To HB claimants?”

How many people think that a cleaner’s job should be able to pay for a four bedroom house anywhere?

“we start throwing free houses around after years of housing inflation and young people unable to buy.”

We started “throwing free houses” at people following the second world war when the modern-welfare state was created. If you want to talk about peverse incentives then how about the idea – currently being floated by Cameron and supported by the bloggertarians – that people in council houses should lose their tenancies if they get jobs with a decent salary? I can’t think of a better example of penalising people for working hard.

Why is the counter-factual that, absent HB, the cleaner would simply be paid enough by his employer to continue to live in a townhouse in Islington (or whatever)?

I doubt that people who are getting the top amounts of HB, like the Ecuadorian family in the programme, would continue to live there and hand that amount of cash over to the landlord every week even if they could just about afford it through their work and weren’t getting the benefit.
Because they are from a much poorer country it would seem too much of a waste (I would guess).
Although the programme might have been a bit crass, it was the ”poverty trap” that Humphreys was trying to get at. Like the family in Middlesborough, where the father said that working forty hours a week for just a few quid extra wasn’t worth the hassle.
And he prefered to see his kids grow up (he said).

Also, we can’t solve this problem just in Britain. If we started paying hugely higer wages in this country, people from Eastern Europe would come here to take those jobs too.

37. Robin Levett

@Tim Worstall #31:

How many people think that a cleaner’s job should be able to pay for a four bedroom house anywhere?

1. I see what you did there; I said “property”, you said “house”.

2. If you don’t think that, then don’t whinge about HB making up the difference; and since everyone, even a cleaner, has to live somewhere within reach of their workplace, accept that the ultimate employer is thereby receiving a subsidy just as much, if not more than, the claimant.

Or is your point that no-one who requires a 4-bed property should be allowed to work as a cleaner?

If you don’t think that, then don’t whinge about HB making up the difference;

I’m not. I’m addressing those above who insist that HB is a subsidy to employers. It isn’t.

It’s a subsidy (and quite rightly so) to those whose value of labour isn’t sufficient to afford the lifestyle we think all should have.

I do think a nice Georgian flat in Islington is a little above that lifestyle that we should all have to dig into our pockets to pay for, yes, but I’ve no problem at all with the idea and basic aim of HB.

Indeed, I’ve argued that we should abolish social housing altogether and simply pay HB.

“Indeed, I’ve argued that we should abolish social housing altogether and simply pay HB.”

Isn’t that what has effectively happened (at least for younger people not in priority need ) over the past decade with a negligable amount of new builds, transfer of stock to housing associations, and HB extended to cover rents through introduction of the LHA?

If you don’t think that, then don’t whinge about HB making up the difference; and since everyone, even a cleaner, has to live somewhere within reach of their workplace, accept that the ultimate employer is thereby receiving a subsidy just as much, if not more than, the claimant.

The implicit assumption here is that without housing benefit, the cleaner’s employer would be unable to find anyone to employ, unless he paid the difference. Of course, that’s possible, but it hardly seems certain. Perhaps he just hires someone else, with a lower cost of living. Or maybe Dad gets a second job.

It’s also easy to see that, whatever your counter-factual, pace the OP, it’s not unfair to say that the recipient of housing benefit gets welfare from it, and thus the claimant really does receive a subsidy from the state.

@Jim
Woah! Steady on there. Comments like that give the left a bad name. It’s not civilised and it’s not called for. Wind your neck in and get a sense of perspective.

Perhaps I’ll rephrase the comment you responded to as a question:

Is it fair that a family which works two jobs, is not entitled to HB, and as a result has poorer quality housing? Looking at it in that way, is it actually fair for the government to support one more than the other?

It’s not a shortage of funds, it’s a shortage of houses. Money on their own can’t resolve that issue whatever policy of their redistribution you prefer. Abolishing council housing and replacing them with monetary support will only result in increased prices.

Basically, every person owning or renting a flat is depriving someone else from the same or, in the best case, making them to pay more than they could have. There is simply no solution that would hurt nobody. If we look at the problem from that angle, everybody is more or less guilty.

That’s why the whole article doesn’t make much sense – even if everybody is paid a living wage (defined here as a wage big enough to afford a 4-bedroom flat), there are much less 4-bedroom flats than families dreaming about them.

Beveridge must be spinning in his grave, all those benefits paid to people who work, that is not what the Welfare State was supposed to do.
The real problem is the (now lack) of social housing, jobs which don’t pay a living wage and weak unions. When you see people like Tim Worstall supporting the notion of H.B., you know that there is something seriously wrong.

44. Flowerpower

Robin Levett @ 28…..29

You have a strange definition of “luxury”

No. But I suspect I have the advantage on you of having actually watched the film and thereby seeing both interior and exterior shots. It would not only be spivvy estate agents who would call that ‘luxury’ – and for > 2 grand a month ‘luxury’ is what one would expect, given that would represent the mortgage payments on a loan of somewhere around £250,000……. Which is more than most working people borrow.

did you think that the 30th percentile restriction was entirely new, rather than simply a drop from the 50th?

… a restriction frequently ignored in the past by left wing councils.

it may have escaped your attention, but the subject of the programme was in work

It hadn’t escaped my attention. That’s why I described him as a cleaner.

“the mortgage payments on a loan of somewhere around £250,000”

In london and the south east, that is largely going to get you fuck all.

Interesting comments.

It’s amazing the number of people who believe that a man earning (probably) the lowest wages is not entitled to have a life and a family.

Turning this argument around, what this means is that, theoretically, we collectively agree with there being a number of jobs which can only be performed by single people in shared or cheap accommodation.

And before anyone agrees with that proposition, keep in mind that it was this idea that has led to the current situation faced by a whole generation, stuck in part time jobs on the high street, with not a chance of ever living on their own or being able to afford a family.

Apart from anything else, this attitude shows a huge downfall in the aspirations of the Left. After the war it was well accepted that a low paid worker should earn enough to support his family.

Remember, everyone: the better off those at the bottom are, the better off those above them will be.

47. Leon Wolfson

@9 – And soon, since HB is completely unlinked from rents, the immigrant willing to live in poor, cheap, overcrowded accommodation and spend very little to save to take back home will take all those jobs. They’ll be the only ones who can AFFORD to.

It’s not 30%. The Tories already excluded the highest rent properties from the calculation. It’s more like 25%…and now it’s completely unlinked from actual rent, this is dropping rapidly since rents have been rising well above inflation for over a decade. Everywhere. The bottom end of the market is unfit for human habitation as well… if you think I’m going to live somewhere with mould on the kitchen walls and a leak in the bedroom roof…

(I’m NOT kidding. Seen several of those in London, and they still wanted upwards of £100/week!)

No, we need rent caps, and we need them NOW. And a hefty tax on empty brownfield land and empty houses.

Which reminds me of an old episode of Dispatches: a kindly looking doctor or administrator from the NHS is explaining that, since the wages of nurses and NHS support staff are so low, British people do not want to work there, and so a constant stream of migrant labour is required to keep the institution in new staff.

You’ve got to laugh, ain’t ya!

“Apart from anything else, this attitude shows a huge downfall in the aspirations of the Left. After the war it was well accepted that a low paid worker should earn enough to support his family. ”

Quite possibly but I doubt very much that there has ever been a time when the British left insisted that a low paid worker should be able to afford a four bed Georgian flat in Islington.

We don’t know where his cleaning job is. But if anyone in Islington wants a cleaner, then they had best want affordable housing for a cleaner and their family within reasonable distance.

Humphrys mentioned that there was a lack of social housing in Islington, maybe that should be seen as the problem.

51. Leon Wolfson

@50 – If you want it, soon you’ll be needing to offer the basement flat of the mansion. Upstairs/downstairs in a very literal sense.

What is happening (and has been happening for years) is that taxpayers are being required to subsidise bad employers and bad landlords.

In the instance cited by the OP, you have someone trying to feed and house his family who has to claim HB because of high rents set by the landlord (because the landlord no doubt knows that he can charge more or less what he likes within a certain band because the taxpayer will foot the bill), and who works for an employer who won’t pay a living wage because the employer no doubt also knows that the taxpayer will subsidise his parsimony with various tax credits.

Yet another transfer of wealth upwards.

This is an argument that I see the left increasingly make and it makes no sense to me. The argument is explicitly arguing against their own policies. The implicit assumption appears to be that if all welfare support and benefits were removed wages would adjust up because employers are being subsidised by the amount of welfare benefits. That may happen at the margin, as absent the welfare bill all taxes would be lower and some of that would lead to higher wages. However, in general it is highly implausible for all workers especially those workers who are being supported in work with benefits.. If it did not happen for the workers enjoying in-work benefits, then it can’t be employers who are enjoying the implicit subsidy. All public spending is a subsidy for someone, who captures the subsidy is the interesting point.

Wages are set in an amoral labour market. You are not paid because you are a nice person or the job is more ‘worthy’ than another job. How many bills you have and how many children you are responsible for is completely divorced from the wage. The wage pays what the job is expected to produce. Now, we apply our morality to the labour market and say that people should have a minimum income. That is fine because we believe in a decent society. However, it is our morality and not the morality of the labour market because that is amoral. There is no reason to suppose that an amoral labour market should conform to our invented morals. Moreover, there is no model that one can apply that would translate wishful thinking into reality. So we the raise the incomes of some labour in a myriad of ways, paid for by other labour and captured primarily by the recipient.

Housing benefit is public spending so it must be a subsidy for someone. It has been known since the 19th century and we are now in the 21st century and the left has still not grasped the point that all public spending ends up in land prices. Someone receiving HB is getting some benefit in terms of welfare from living in a house that they would otherwise find unaffordable. However, the HB raises land prices and as a consequence rents in the first place. Therefore, the welfare benefit goes to the recipient and the monetary subsidy goes to the landowner as they capture the rise in the land price through no effort on their part. What is happening is that the landowner enjoys an unearned increase in their wealth through state spending on the poor. Employers only capture part of the HB subsidy if they are landowners. If not it costs them in terns of higher rents. The solution to the whole mess is a land value tax.

@ 19 Ranter,

“In fact, it’s what the repeal of the Corn Laws was all about. British wheat was more expensive, and British farmers were unable to compete with North American producers on production costs.

The repeal of the Corn Laws was effectively a subsidy to the factory owners, allowing them to pay lower wages – at the expense of the rural labourers who got laid off – yet, amazingly, the repeal of the laws is seen as some kind of victory for ordianary people by many progressives.”

Prior to the repeal of the Corn Laws, the price of wheat was artificially high, and so everyone in the land was subsidising a cartel of land-owners. The repeal brought down the price for everyone. Of course this was a victory for ordinary people.

53
The idea of the welfare state was to target the subsidy, and as far as social housing was concerned, the rents were returned to the public purse. Giving HB to line the pockets of private landlords means that public funds are being wasted.
And this is always forgotton, rents from social housing created an income plus they were a fixed asset.
The market for private rentals is now a miserable failure.

56. Robin Levett

@Tim Worstall #38 & #49:

I’m not. I’m addressing those above who insist that HB is a subsidy to employers. It isn’t.

It’s a subsidy (and quite rightly so) to those whose value of labour isn’t sufficient to afford the lifestyle we think all should have.

If HB were withdrawn, the workers wouldn’t be able to afford to live within travelling distance of their place of work. No cleaners. No barstaff. No chambermaids. The relevant business owners would have three choices; close down, pay higher wages so that their staff can afford to live close enough to work for them, or provide accommodation. The HB means that they don’t need to make that choice. How is this not a subsidy to them?

I do think a nice Georgian flat in Islington is a little above that lifestyle that we should all have to dig into our pockets to pay for, yes, but I’ve no problem at all with the idea and basic aim of HB.

What you’re missing is that for the cleaner to be able to afford it out of his HB, that “nice Georgian flat” is going to be let at, at the highest, a median rent (since that’s what LHA is limited to at present). If he qualifies for HB at 4 bedroom rate, he definitely needs it. Either he’s got an incredibly good bargain, or that “nice Georgian flat” is in fact not, by the standards of the area in which he has to live, particularly luxurious.

<blockquote.Quite possibly but I doubt very much that there has ever been a time when the British left insisted that a low paid worker should be able to afford a four bed Georgian flat in Islington.

Indeed, but leave that strawman alone, we’re over here. Granted he has to live in or around Islington for this work; how does he do so without HB?

57. Robin Levett

@Flowpower #44:

But I suspect I have the advantage on you of having actually watched the film and thereby seeing both interior and exterior shots. It would not only be spivvy estate agents who would call that ‘luxury’ – and for > 2 grand a month ‘luxury’ is what one would expect, given that would represent the mortgage payments on a loan of somewhere around £250,000……. Which is more than most working people borrow.

And he’s not going to be living there for much longer, is he? Are there any 4-bed properties in the area for less than £400 per week? Whether in Islington or Hackney?

Quite apart from the fact that you are still describing as “luxury” property that at best still costs less than 50% (now) or 70% (in the future) of similarly sized properties in the area; which was the point of my comment.

it may have escaped your attention, but the subject of the programme was in work

It hadn’t escaped my attention. That’s why I described him as a cleaner.

I was responding to your description of people on HB as “living on benefits”. I note that you cut off the quote from my post to which you were responding; in full it read:

Oh, and it may have escaped your attention, but the subject of the programme was in work, as are the huge majority of HB claimants.

Let em repeat that; the huge majority of HB claimants are in work. They are not “living on benefits”.

Surely this is a simple case of government intervention leading to predictable unwanted consequences by distorting the market?

Cut the benefit. Let the housing market and the wage market adjust to the new reality. Problem solved!

59. Leon Wolfson

@56 – ” a median rent (since that’s what LHA is limited to at present”

No, it’s not any more. It was recalibrated at the start of October to 30% of the measured properties, which ignores the top rents and is hence about 25% of the properties actually being rented. And it’s now unlinked from rents, rising instead with CPI, which massively under-tracks actual rent growth.

So that 25% will shrink rapidly, especially if the Tories follow through with their threat to increase LHA by less than CPI.

60. Leon Wolfson

@58 – Great, and how will you deal with millions of people made homeless? How will you cope with essential services in cities only being able to hire people willing to live a dozen to a house, in squalor?

@8. jungle: “I’m afraid the free market does not respect a minimum reasonable standard of living conditions. They’d still absolutely get the cleaner, with or without the housing subsidy – he’d just live with his family in one insanitary unheated room in an illegally built backyard shack in Newham or Southall instead.”

A very good argument. However it is more likely that the hypothetical cleaner would live in a dump well outside London and come to work daily on a coach service established explicitly to transport such workers. After all, if a cleaner is willing to work for £8 an hour, her/his commuting time isn’t worth very much.

So this man and his family were deemed suitable to live in the UK because????

Oh right…Just because. Please, bring your entire brood, donl’ speak English thus have no way to properly work and we’ll provide all you need.
Because you give us back so fucking much!!!
How thankful we are you and your brood graced us with your mighty presence!

Fuck them back on the soonest plane out!

63. Leon Wolfson

The Little Englanders have arrived I see.

@ 60,

“Great, and how will you deal with millions of people made homeless?”

The free market will provide. If millions are made homeless, there will suddenly be millions of empty properties, with landlords wishing to get them rented. They will have to drop the rent.

“How will you cope with essential services in cities only being able to hire people willing to live a dozen to a house, in squalor?”

Happily again the free market will ride to the rescue. With the reduction in tax made possible by the cut in benefit, wages will be able to rise.

The Spanish engineer and his family presented themselves as respectable hardworking (children as well as parents), keen to do the best they can for themselves and for their adopted country (he would like to get a job in his profession when his English is good enough), wearing their best clothes and in an immaculately clean and tidy flat for the interview – they could have been carefully selected as an example of the old-fashioned concept of the “deserving poor”. I almost expected to hear a studio audience of old-fashioned Conservatives give them a round of applause.
It seemed to me that Humphrys was using them as a contrast to the handful of unemployed people who didn’t want to work, not as an example of “scroungers”. Yes, he found a couple who didn’t want to work but the implication that 20% of Middlesbrough is out of work from choice is really offensive as well as being ridiculous: they get hundreds of applicants for every job.
There was one point that Humphrys got totally wrong – there is in fact a vast amount of social housing in Islington both council-owned* and charitable (Peabody Estates). There are acres of council estates as you go north from City Road. So #32 – I don’t know exactly how many 4-bedroom houses there are in Islington which people on HB could let but *lots and lots* of them. Of course, most of them are occupied by people earning far more than him but I don’t want to get into that argument today.
*Maybe housing-association by now but there is no real difference

From my time in Islington I recall that roughly half of its household were in social housing of some sort and 70% of that were on benefits including pensioners. Sub -letting council housing was common ( our neighbours did it ) and the waiting list did not go down when more housing was made available if anything it went up.
If you give away free bananas you get a long queue of monkeys
Something we have left out entirely is the multi-generational work less effect of social housing and the closely related disincentive to move away. I should also mention that the hatred of right to buyers amongst the London housing mafia was epic and they were on the recie9ving of a vicious campaign to service charge them out of existence

From my time in Islington I recall that roughly half of its household were in social housing of some sort and 70% of that were on benefits including pensioners. Sub -letting council housing was common ( our neighbours did it ) and the waiting list did not go down when more housing was made available if anything it went up.
If you give away free bananas you get a long queue of monkeys
Something we have left out entirely is the multi-generational work less effect of social housing and the closely related disincentive to move away. I should also mention that the hatred of right to buyers amongst the London housing mafia was epic and they were on the recieving of a vicious campaign to service charge them out of existence

From my time in Islington I recall that roughly half of its household were in social housing of some sort and 70% of that were on benefits including pensioners. Sub -letting council housing was common ( our neighbours did it ) and the waiting list did not go down when more housing was made available if anything it went up.
If you give away free bananas you get a long queue of monkeys
Something we have left out entirely is the multi-generational work less effect of social housing and the closely related disincentive to move away. I should also mention that the hatred of right to buyers amongst the London housing mafia was epic and they were on the recieving of a vicious campaign to service charge them, out of existence

BBC has done the right thing to point out the housing benefit issue. Not only the housing benefit but the programme did try to cover all the benefits (atleast benefits that cost the state a lot). In case of the housing benefit case, it is totally unfair and wrong living in that sort of house and letting the state to pay about £2000/month and the spouse did accept they get other benefits like child care etc.. It is totally unfair when people coming here and within just 18 months expecting and feeling the sense of entitlement from the state.

There are thousands of family trying to make ends meet, working hard. He doesn’t speak English and that’s not state fault. I am strongly against people coming here and immediately expecting the state to pay for them and their kids. Btw I am not british, I don’t live on state benefits of any kind and never did.

70. So Much For Subtlety

But here is where Humphrys gets it wrong. The state isn’t subsidising Mr Housing Benefit Recipient: the state is actually subsidising Mr Cleaning Company Who Employs Mr Housing Benefit Recipient because he cannot cough up the wages that his employee would need to live on.

Sorry but that is not true. The Cleaning Company could do so. It would just have to charge its clients more. But it can’t because it doesn’t have to. There are any number of people in London who will work as cleaners for the wages that are on offer. So regardless of whether this man gets housing benefits or not, cleaners will be paid about the same. If you abolished housing benefit altogether, it may have some small impact on cleaning wages, but I doubt it would do much.

This is an unashamed transfer of public funds into private landlord’s and private companies pockets.

No it isn’t. The landlord may get marginally more for his apartment, but he will get what it is worth no matter what. Someone will want to rent it. There is a bit of a housing shortage. There is no transfer of funds to the landlord either.

The benefit is going to the Latin American engineer. He is the one with the really nice house to live in. He is the only one getting an unusual benefit out of this subsidy. This is a perfect case of welfare doing what it is supposed to – helping the poor. Unfortunately it is a disaster.

It is up to employers to pay enough for employees to live, that is what wages are all about. If employers don’t feel generous enough, then employees need to go somewhere else. Low wages, no employees. At least that’s what would happen in a functioning ‘free market’.

Indeed. And that is what is happening here. Remember that this man is competing with single women, with older women who have paid off their houses, with people who have a spouse that works. Why should they all get the same wage? The obvious answer is that they don’t. That is the market for you. It is not up to this employer, or any other, to consider the special needs of any one employee – they used to back in the day when they paid married men more than single men, but that was discrimination wasn’t it?

Notice that neither him nor his family get to ‘enjoy’ this wealth, for having a roof above their heads is non negotiable; it is a pre requisite for any worker to go and do their jobs.

Except he does. He gets a fabulous house to live in instead of some dump miles out from the city. It is precisely this man and his family who are benefiting from this wealth. No one else. Just them.

“Granted he has to live in or around Islington for this work; how does he do so without HB?”

Stupid boy.

Look up. I support HB.

Stupid, ignorant, boy.

72. Robin Levett

@Leon Wolfson #59:

No, it’s not any more. It was recalibrated at the start of October to 30%

It’s still median for existing claimants; they get hit by the reduction to 30% from the end of the year.

73. Robin Levett

@Tim Worstall #71:

Stupid boy.

Look up. I support HB.

Stupid, ignorant, boy.

Indeed you say you do; but you don’t want it spent on what’s available where the claimant needs to live; stupid, ignorant man.

Ehmmm… Surely the answer is to give people no benefits while they are at work while handing out generously while they are unemployed? That way there’s no incentive for them to take low paying jobs, which will push wages up.

75. Robin Levett

@John77 #65:

There was one point that Humphrys got totally wrong – there is in fact a vast amount of social housing in Islington both council-owned* and charitable (Peabody Estates). There are acres of council estates as you go north from City Road. So #32 – I don’t know exactly how many 4-bedroom houses there are in Islington which people on HB could let but *lots and lots* of them.

Really? Social housing gets allocated according to a scheme set according to the the priorities in Part VI of the Act. Social Housing accounts for 44% of Islington’s properties – 39,000 tenancies. In 2010 it had 12,000 households seeking social housing accommodation. In 2009/10, of 1,393 social housing properties let, 44 were 4+ bed.

So no, there aren’t “lots” of 4-bedroom properties available to let in the social housing sector.

74
Good idea, and at the same time withdraw tax-credits.

@ 75 Robin Levett
Thank you for the numbers but if you would care to actually read the whole of my post before criticising it: I said “Of course, most of them are occupied by people earning far more than him but I don’t want to get into that argument today.”
However, saying I don’t want to divert this thread into the separate argument as to whether the house-specific subsidy should be available only to those on lower incomes does not mean that I am ignoring the reduced availability to those most in need of social housing due to large number of tenants who choose to continue to occupy properties although they could afford to buy or rent in the private sector.
You are quoting the 44 4-bedroom tenancies that changed hands to compare with my comment about the stock of 4-bedroom houses. You may not be aware that 4- and 5-bedroom houses have the slowest turnover because families relatively frequently seek to move out of 1- and 2-bedroom flats/houses when they need extra bedrooms for children, so the stock of 4-bedroom can reasonably be assumed to be more than 30 times the turnover and 1320 would justify the phrase “lots and lots”.
To rephrase my point in simple language: the family is living in a private flat not because Islington Council have no 4-bedroom houses but because they have no *empty* 4-bedroom houses. John Humphrys or his editor gave the impression that Islington had no council houses. This has led some people to assume that there were no people in the area who could work for a cleaner’s wage, which just is not so. I have known people who did.

@74
Have you noticed the near-extinction of the British textile industry and the sharp rise in unemployment since the introduction of the National Minimum Wage? There is always a trade-off between wage rates and employment levels. See Cylux’s comment (which is valid if applied to Mayfair & Kensington instead of Islington). But that is off-topic

79. Mark Redwood

@Richard W

“Wages are set in an amoral labour market. You are not paid because you are a nice person or the job is more ‘worthy’ than another job. How many bills you have and how many children you are responsible for is completely divorced from the wage. The wage pays what the job is expected to produce. Now, we apply our morality to the labour market and say that people should have a minimum income. That is fine because we believe in a decent society. However, it is our morality and not the morality of the labour market because that is amoral. There is no reason to suppose that an amoral labour market should conform to our invented morals. Moreover, there is no model that one can apply that would translate wishful thinking into reality. So we the raise the incomes of some labour in a myriad of ways, paid for by other labour and captured primarily by the recipient.”

The Living Wage Foundation would disagree with you. They have managed to persuade around 100 employers including organisations like KPMG and Barclays to pay their workers the benchmark wage set by GLA. Some have been persuaded to negotiate contracts with the companies that supply them with services such as cleaning to also pay a living wage.

This amoral market you speak of is composed of people. These people do not have to be amoral. I think rather it is very convenient to be amoral, as it enables a person to make decisions without considering the consequences. Selfish sounds like a good word to describe such a person. Is a selfish person amoral, or immoral?

Mark,

The amoral I speak about are amoral numbers. One number can’t be any more moral than another number. Six is just as amoral as eight. We give numbers a moral dimension because we want to believe that a wage of 10 is more moral than a wage of 8. However, an amoral labour market operates completely indifferent to the moral dimensions that we place on numbers. The labour market certainly consists of people, however, what drives it is numbers and they are amoral. It may well be that a wage of 10 is more moral than a wage of 8. However, we should not expect labour markets to respond to our appeals to morality when those concepts exist only in our heads.

Good on the LVF, I am sure they are filled with the best intentions. It makes them feel that they are doing something for some workers and firms get good PR. However, any econ. 101 student will know that it will make absolutely no difference to total wages. Some wages will rise and some could fall to compensate. More likely hourly wages will rise and hours demanded will fall.

Paul Krugman had a good article about the living wages arguments a few years ago.

http://www.pkarchive.org/cranks/LivingWage.html

@73. Sorry, playing devil’s advocate – why does he need to live in a £500pw four bed Georgian house in Islington? This is London – he could have a £400pw 4 bed flat in Hackney and catch the bus to work. He could have a £350pw 4 bed in Walthamstow and get the Victoria Line to Highbury. I could even say he could get a £390pw 4 bed in Enfield and get a train to Tottenham Hale, Victoria from there. Millions of Londoners make similar commutes every day.

Also, I didn’t watch this film: how many kids did they have? If it’s three, did that mean four bedrooms? Whatever happened to bunk beds?

I’m not surprised to hear Humphrys was wrong about the amount of social housing in Islington.

Housing isn’t really my area but throughout the programme he was making claims, or someone was shown to be making claims without correction, about things I do know about which were utterly and obviously untrue.

I submitted a complaint on the BBC website about the programme and asked for them to provide a transcript because such was the concentration of untruths that I believe it requires a line-by-line rebuttal. What this demonstrates is that there was absolutely no rigour in research for the programme (researchers are not even credited, but the Scottish Daily Mail, Express Circulation and Solo Circulation are credited for ‘archives’) and there wasn’t the slightest care for factual accuracy.

It’s only available on the iPlayer for a few more days and if the BBC haven’t got a transcript published by then I’ll turn the subtitles on and type one myself.

83. Leon Wolfson

@64 – “The free market will provide”

Ah right, build morgues and poorhouses. Got it. What part of “housing shortage” don’t you understand? And why would they raise what they offer? If anything, it’s yet *another* reason to race to the bottom and ONLY hire temporary staff, willing to work for minimum wage and live in overcrowded squalor. See: Not at full employment.

Thanks for advocating lower wages and mass homelessness though, it has nothing to do with the free market and everything to do with corporatist capitalism.

@72 – For existing claims, yes, but those are the rules for new claims, and after that? The second you’re reassessed for any reason then your maximum claim goes down to the new cap. For those out of work, it’s a major perverse inventive not to take temporary work. That’s kind of a cherry on top of the social cleansing effects.

@78 – Ah, that would explain why Australia is doing so badly with it’s £10/hour minimum wage. Oh wait, Australia’s doing well. Your theory seems to be…er…flawed. To put it mildly.

84. Leon Wolfson

@81 – Did you actually look at the price of the train from Enfield? That makes it MORE expensive than either the Hackney or Walthamstow options, and is far more likely to end up making him late to work some days.

And people will be pushed out *repeatedly* under these changes, to places absolutely cheaper to live. The cost to the NHS, for instance, is going to be nasty. (Kids in houses with rot and mould…)

“Ehmmm… Surely the answer is to give people no benefits while they are at work while handing out generously while they are unemployed? That way there’s no incentive for them to take low paying jobs, which will push wages up.”

That’s as interesting a use of the lump of labour fallacy as I’ve ever seen.

You seem to think that there are some things called “jobs”, of which there are some fixed number which just absolutely must be done.

There ain’t. If wages rise then the employer has three choices: pay the higher wages, automate the job or just not have the job done at all. The higher the wages rise the more they will do one of the two latter rather than the first.

In other words, higher wages leads to higher unemployment, all other things being equal.

86. Robin Levett

@john77 #77:

No, there are not “lots” of 4-bedroom properties that someone on HB could let; someone on HB cannot let a property that already has someone living in it..That was the point of the letting stats; they come on the market so rarely that to all intents and purposes there are very few available to an HB claimant, and pretty much no social housing properties.

87. Robin Levett

@test #81:

He’s a cleaner; they don’t work office hours, normally.

And where will he find a four-bed in Hackney at £400 per week (or at £300, that being the relevant LHA, in Waltham Forest, for that matter)?

And where will he find a four-bed in Hackney at £400 per week (or at £300, that being the relevant LHA, in Waltham Forest, for that matter)?

Rightmove has a 3/4 bed house at £1,250 a month in Capworth St. E10.

@ 86
Yes, there *are* *lots* of 4-bedroom properties in Islington that someone on HB *could* let, just hardly any that he *can* let.
As I said, twice.
Do you really not know the difference between “can” and “could”?

90. Mark Redwood

@Richard W

I rather like the way you make the point I was trying to make.

I agree that there is no inherent morality in the mathematical models used to describe how market forces work. However I think you confuse (as do many people) the model with being the underlying reality, rather than merely a representation of it.

There is a lot of evidence that suggests that many of the models used to describe economic behaviour are wrong. e.g. evidence from standard gambles show that one thing people don’t do is to maximise utility. Put more simply I can build a model house out of lego. In many respects this model will have properties similar to a real house, however what it isn’t is a house.

Confusing a model with being the underlying reality allows a contradiction to appear

1) a cleaner shouldn’t be able to live in a luxury house, it’s not fair. Sounds like a moral argument to me.

2) An employer can amorally set wages to the market rate – it’s just the market afterall. It does not matter that his/her actions will consign his employees to living in squalor, that isn’t his/her concern.

Either you have to argue that in any system there are winners and losers, or you argue that our decisions have moral consequences which we need to take into account. (I am not suggesting you are arguing for this, however it would appear from many of the comments above that this what is being argued).

1) and 2) are positions very much taken by our government. So we have people on benefits are scroungers, and we have employers should be allowed to sack people whenever they want to make a profit.

91. Mark Redwood

@Mark

“(I am not suggesting you are arguing for this, however it would appear from many of the comments above that this what is being argued).”

This doesn’t make sense – I mean arguing for both points 1) and 2) to be true.

“Fuck them back on the soonest plane out!”

It’s a disgrace isn’t it, all these foreigners coming over here and not being able to use correct grammar and construct proper sentences.

Mary

what this means is that, theoretically, we collectively agree with there being a number of jobs which can only be performed by single people in shared or cheap accommodation.

Yes. I don’t see what’s wrong with that. I’d guess that most people now in quite well paid professional or managerial jobs spent at least three or four years renting a room in a multiply occupied flat before setting up their own household. And when they did, it was probably with a partner who was also working.

So, if entry level jobs in the white collar sector (e.g. teaching) are unlikely to sustain an independent household, then one should hardly expect unskilled work to do so.

After the war it was well accepted that a low paid worker should earn enough to support his family.

David Willettts was unfairly attacked and mis-represented recently when he observed that ditching that notion was the inevitable price society paid for opening up the workplace to women.

TT @ 64

The free market will provide. If millions are made homeless, there will suddenly be millions of empty properties, with landlords wishing to get them rented. They will have to drop the rent.

Have you ever been to any of the major cities around the World? What you tend to find in cities where the ‘free market’ provides houses is that the ‘free market’ provides sprawling slums, squatter camps and the like orbiting opulent centres. Seriously dude, try the continent of Africa, South America (and a fair part of North America for that matter), most of Asia as a model. For most decent people, it is not a good look.

You Libertarians seem to thing that we are living in a matrix style simulation that was switched on circa 1997, with the entire elements that form a reasonable life in place, only for New Labour and the State to fuck up everything a fortnight later, via a virus in the system.

Try and get this concept into your head. We have been here before. We have tried free market housing solutions before throughout our history and many, if not most of us lived in squalid conditions. Victorian London was not some kind of utopia, you know. It was for many people a fucking hell hole.

We did not invent council housing to tackle a non existent problem that the free market was well on the way to clearing up anyway. We were not blocking the introduction of running water and inside toilets that private landlords were desperate to install, only to be thwarted, by the evil, interfering state and their insidious need to ‘control everything’. Had we left this to the free market, we would STILL be living with inside toilets and stand pipes.

Tim @ 85

In other words, higher wages leads to higher unemployment, all other things being equal.

So that would mean that areas of the Country/World that had higher average wages would have higher unemployment and the places with lowest average wages would have low/full employment?

How does unemployment stack up in say London vs Manchester, Or Spain vs Germany.

In fact what is the minimum wage in Portugal? Lower than England? So what jobs are being done in Lisbon that are simply not worth the effort in Liverpool?

@95 Jim
“All other things being equal”
So you deliberately choose examples where other things are massively unequal – the Industrial Revolution didn’t start in Portugal.
When my father-in-law lived in Spain after retiring, he employed a cleaner; I am still working and I don’t.

@ 93

Flowerpower, I don’t know of a single “boomer” who was living in shared accomodation til their 30s. Now, for my generation, it’s common place.

The “entry level jobs” that don’t pay enough to sustain a family are becoming more and more the “norm”. Which is why young people have it so difficult nowadays.

98. Robin Levett

@John77:

I do apologise; I was living in the real world, where the issue is whether the HB claimant can go into the letting agents office, plonk down his (LBI’s) money and walk out with a tenancy agreement; not whether if he waits for long enough on the street with his 4-bed size household, one of the 4-bed properties present in the borough becomes available for less than £400 a week.

The “entry-level” monthly rent for a 4-bed property in Islington in 2008 was £2004 (LBI’s Housing Needs Survey), by the way; and that figure is for proeprty in the cheaper north of the borough. Across the whole borough, the lower quartile rent was £3,100.

As it happens; you will find that very few indeed of the social housing properties are 4-bed+. The Housing Needs Survey referenced above:

http://www.islington.gov.uk/DownloadableDocuments/Housing/Pdf/Housing_Needs_Survey_2008.pdf

shows that there is a surplus of 4-bed properties, but it is entirely in the private-rented sector. In social housing, there is a substantial deficiency of such property.

John77 @96

So you deliberately choose examples where other things are massively unequal –

No, in what way are these examples massively unequal, relevant to the point that Tim was (and has been attempting to make for as long as I can remember) attempting to make?

In what way is Portugal’s alleged lack of industrial revolution relevant here? Surely Tim’s point still stands, irrespective of the industrial landscape of the Country, and lower labour costs should create jobs. Not only that, but they should be creating jobs that are simply not done in higher labour cost Countries.

Tim’s ‘all things being equal’ is simply a rather crude ‘get out of jail card’ that can exclude any comparison at will.

When my father-in-law lived in Spain after retiring, he employed a cleaner; I am still working and I don’t.

I am not sure why you added this little piece of information, nice though it was. My best bet is you are attempting to suggest that English people don’t employ cleaners, is that so? Don’t British people employ cleaners in this Country? I think you will find that many do, even if you don’t.

So what are the relevant numbers here? How many Spanish people employ cleaners as opposed to British people who employ cleaners?

“Surely Tim’s point still stands, irrespective of the industrial landscape of the Country, and lower labour costs should create jobs. Not only that, but they should be creating jobs that are simply not done in higher labour cost Countries.”

They do. Ever seen those films of kids living on the rubbish heaps in the Third World?

That’s exactly what those are. Jobs that are done in low wage places which are not done in high wage places. Picking through the rubbish to earn $2 a day sort of jobs.

I think it’s absolutely fabulous that no one in hte rich world has to do those srots of things to survive: but you did ask for what sort of jobs high wages destroy.

flowerpower @ 93

So, if entry level jobs in the white collar sector (e.g. teaching) are unlikely to sustain an independent household, then one should hardly expect unskilled work to do so.

Come on, FP, that can’t be right, surely? You cannot be suggesting that people on anything less than a combined income of sixty grand can expect to live in their parents home until they die? That cannot be right.

Surely that tells us that the supply of housing in this Country is broken, if people on modest incomes cannot afford a home?

To simply say, ‘ah well people further up the economic ladder are in the same boat’ is pretty glib.

What we need is a reasonably sized public sector, social housing, programme.

Are we really saying that people on modest incomes should live in squatter camps on the edge of our cities?

102. So Much For Subtlety

94. Jim

Have you ever been to any of the major cities around the World? What you tend to find in cities where the ‘free market’ provides houses is that the ‘free market’ provides sprawling slums, squatter camps and the like orbiting opulent centres. Seriously dude, try the continent of Africa, South America (and a fair part of North America for that matter), most of Asia as a model. For most decent people, it is not a good look.

I take it you have never been to the Third World. First of all, such slums are usually the rest of State interference. The State does not want all those poor people messing up their nice European-style city and so they try to prevent them moving to the cities. Their housing is informal. The State will not recognise their land titles or anything. Second, despite this, many of these neighbourhoods are actually really nice. They are not slums. They are substantial middle class areas. It usually depends on how long they have existed for, but go and look at them. If they have been around for a while, they are actually usually nice places to live. Because if left to themselves, people do not live in slums. They work on their homes. They improve them.

Victorian London was not some kind of utopia, you know. It was for many people a fucking hell hole.

No it wasn’t. What is more it was poor. No matter what sort of government you have, if you’re poor, you’re poor. The Soviets had coal miners living in holes in the ground into the 1980s. Didn’t help that their housing was state owned.

We did not invent council housing to tackle a non existent problem that the free market was well on the way to clearing up anyway.

Actually we did. The private housing market was well on its way to solving this non-existent problem whipped by by urban middle class intellectuals who wanted to destroy working class neighbourhoods. So they started building council houses so that they could bully the workers into the types of home the State preferred. Not the type the workers preferred. That is why Islington is full of some of the ugliest, most violent, and crime-prone skyscrapers in London. That is why Council Estate is synonymous with feral youth. The tragedy is that it was all so unnecessary. At no time in the last 90 years has the state ever managed to build as many homes as were being built by the private sector in the last years of the free market in housing. This is an area where the State has comprehensively failed.

We were not blocking the introduction of running water and inside toilets that private landlords were desperate to install, only to be thwarted, by the evil, interfering state and their insidious need to ‘control everything’. Had we left this to the free market, we would STILL be living with inside toilets and stand pipes.

Really? And without road rules no doubt we would still have steam-powered automobiles. I earn a reasonable amount of money. My family may have grown up with an outside toilet connected to nothing much and no running water, but there is no way that I would live in such a house now. Few British people earn so little they would put up with it. Although, ironically, we do seem to have a lot more of it now with the informal housing that many illegals and new immigrants have to live in. Because of the state’s interference.

SMFS

I take it you have never been to the Third World. First of all, such slums are usually the rest of State interference.

I have seen third World Poverty first hand it is not a pretty sight I can tell you. The idea that slums in Rio, San Paulo, India or Africa is down to State interference is simply breathtaking. This what decent people are up against dealing with Tories, you cunts just get to make things up just to suit whatever you want to put forward.

It is people like you that stifle debates on this board. Most of the rest of us follow the convention that we stick, broadly, to the truth (however we define it) and perhaps we argue about how we interpret ‘the truth’, but there is simply no value in attempting to debate with backward fuckwits. There are plenty of people on the Right who I respect, even if I disagree with them, but who the fuck could seriously argue that slums on the edge of New Delhi are largely the result of authorise deliberately excluding people from houses?

Jim, I agree with you, but using bad language may not be the best way to go.

Some people do not get it because they do not want to get it. It’s not because they don’t know the facts, or because their rationality is impeded. It’s because they don’t like the truth, or because they can’t deal with the truth, or… who knows. The point is, they will never “get it”, so there’s no point in arguing with them.

Our energy is best spent talking to people who actually want to know the truth.

102
Clearly you haven’t heard of the massive post-war clearance of city slums (working-class neighbourhoods), this was the private market, back to backs, crumbling buildings, damp, partial bomb damage, smoke ridden etc, etc.
Agree that tower blocks for families are insane and especially if they are ghettoized with only poor people.
There has been a massive rejeneration of a couple of hated tower blocks in Sheffield recently, people are now queuing to rent there.
As far as I am aware, no miners in the UK have had to live in holes.

partial bomb damage

I think that one’s definitely State action, isn’t it?

107. Robin Levett

@SMFS:

You are entitled to your own opinions; you are not entitled to your own facts.

108. Robin Levett

@SMFS #102:

At no time in the last 90 years has the state ever managed to build as many homes as were being built by the private sector in the last years of the free market in housing.

The last years of the free market in housing being the 1960s, peaking in 1968? Or are you talking about what the state alone builds, as opposed to what is built by the state and private contractors alone built?

Both rent restrictions and Council housing were introduced immediately after WW1; so at no point in the last 90 years has there been a “free market in housing”. Before then, housebuilding peaked at just over 150k in 1904; a peak that would be a trough at any time since WW2.

@ 90. Mark Redwood

I don’t confuse models with underlying reality. Models are certainly a useful way of understanding and explaining how things work. I agree that it is wrong to think that a model always holds in all circumstances in something as dynamic as an economy. What I am criticising is the idea that when a market such as the labour market leads to outcomes that we do not like, that is somehow evidence of immorality. I just see no reason that we should expect outcomes to be the same as what we construct as fair and moral. Therefore, if we think that it is fair and just that workers should have a minimum income, that would be us applying a moral dimension to labour. My belief is that is best done through after-market interventions rather than government decree. So it is not that I am confusing a model with underlying reality. I am just sceptical that asking firms or passing legislation compelling them actually does any good when we consider the entirety of labour. We are applying our morals in the wrong place and wonder why reality does not conform.

” It does not matter that his/her actions will consign his employees to living in squalor, that isn’t his/her concern. ”

You accept without question that it should be the concern of an employer the living conditions of an employee. Should an employer also concern themselves with what kind of diet an employee eats? How their kids are doing in school? I suppose a good employer would take some degree of interest in the latter. However, do we really expect that it is their responsibility. The government as in wider society should care if people are living in squalor. The government certainly takes a keen interest in how kids are doing at school. If an employees kids attendance at school is not specifically an employers responsibility: why are their living conditions an employers concerns? Again we are applying legitimate concerns onto the wrong people.

You mention utility and I find utilitarianism a useful way to think about things. Not relentlessly so, just a useful benchmark. To give an example of how our ideas of applying morality to labour does not always make logical or utilitarian sense. We accept without question that a surgeon should be better paid than a train driver. Surgeons help to heal people and we associate that with good that should be rewarded. Train drivers just drive a train.

A surgeon turns up for work and does a good job and a few people are helped. A train driver turns up for work and does a good job and thousands are helped. If the surgeon does not do a good job one person could die. The train driver does not do a good job and hundreds could die. Therefore, the train driver is providing more utility for society. Tell people that surgeons are overpaid in relation to the useful work that they do for society and people will be outraged. Especially surgeons. The reason is that the morality that they apply to that form of labour is really sentimentality. Moreover, sentimentality is rife in our society and it clouds most social policy.

106
Yep, it was the German state’s damage, probably outside of your own experience, but the enemy air attack strategy was to focus on industrial areas, places like Liverpool, Newcastle, Coventry, Sheffield etc. and, of course, working-class neighbourhoods were built around those industrial areas, not surprisingly. This was an artefact of the industrial revolution, those Victorians knew a thing or two about containing the mess and the working-classes away from polite society.

“probably outside of your own experience,”

You poncey objectionable git.

I grew up in Bath. Ever heard of the Baedeker raids?

When I looked out of my bedroom window as a child I could see the effects of a strip of German bombs. To the left, to the right, strings of Edwardian/Victorian housing. With, as with an implant on a line of teeth, post war houses about 50 yards up the road, to right and left. 40 yards was Victorian, 70 was Victorian, but that strip is where the bombs fell and where there was post WWII houses.

Heck, when my parents converted what had been my bedroom into a second bathroom two years ago the builders pointed out that the entire window frames were still blown in by the shock of those bombs that killed a woman and her children outside that very window.

I’ll not go on about the ashtray I am using at my desk as I type this….the ashtray given to my grandfather as a little memento of his having been one of the pilots on the test programme for Seafire and Spitfire…..for that would be to make me too angry.

But you really can f’off n’all.

As the author points out, the social security system is there as a safety net.

As he had watched the programme he must be aware one of the familiesinterviewed had 2 children, and was getting almost £1,600 a month. To earn that amount in your hand after tax and NI you would have to earn say £24,000. The average salary in this country earns slightly less. If you take London out of the statistics it wwoukd be much less. So this family earns more than most workers. When asked if he would work, he said he couldnt afford to. If you think about it, if you are getting the equivalent of £24k without working, why would you work for £24k? The result is this person, who is probably unqualified, will never work.

There are two further factors that increase the inequity of these payments. Immigrants who have never contributed to the system at all. Secondly there are families where they have not worked for generations.

Your point about increasing salaries is interesting, and would be valid if the UK was isolated from the rest of the planet. However with communications, the internet, containerisation and container ships, a British companies and therefore the worker is often competing not only with local workers, but with workers elsewhere. Any radical increase in salary, would lead to many industries which provide employment and taxes, being transferred abroad.

I find the author’s analysis to be that of a 16 year old – idealistic but lacking in real world experience.

111
Wtf, don’t get testy with me when you posted a comment suggesting that maybe you didn’t understand my reference to bomb damage. I merely explained what it was and why. From your response I assume that your reply was supposed to be humourous but that doesn’t always come over when posting on a blog site.
Not everyone is aware of the WW2 blitz on industrial areas in certain cities, I doubt if SMFS even gave that a thought.

112
The welfare state includes much more than benefits payments, it involves health and education. The whole point is that some will pay more than they take out and others will take out more than they pay in.
For example, some couples won’t have children or certain individuals will become ill and require very expensive medical care, others will only ever need to see a GP occasionally. If we take your example of average salary, if we included the cost of the education for two children, the cost of medical care for their birth, perhaps a member of the family becoming ill, then the average salary would not cover those costs. Benefit payments are meant to be a safety net but let’s not forget that there are few people who do not get benefit from the welfare state.

@ 112

“Any radical increase in salary, would lead to many industries which provide employment and taxes, being transferred abroad”

As opposed to what happens now, with all the industries being here in Britain…

@ 112

“Any radical increase in salary, would lead to many industries which provide employment and taxes, being transferred abroad”

As opposed to what happens now, with all the industries being here in Britain…

Very trite, but not very clever.

While you probably don’t even realise it, you are arguing against yourself.

The fact that industries have left the UK (and other high wage economies) with minimum wage at £6 an hour, how many more would leave if the minimum was was £10 an hour?

It is impossible for us to compete in certain industries with developing economies. The only way that we can keep employment here is to supply goods and services that they cannot. This requires us to have better education, better communication systems and just be smarter. The problem is that it has become politically correct in the UK to reduce educational standards and to reduce discipline in the schools. The result is falling standards, and has led, and will continue to lead to a slowly dwindling industrial sector, and large numbers of the less skilled and less educated being supported by the welfare state.

Rusty @ 116

Hold on though. The average wage in this Country thirty grand a year, which is double what the minimum wage would bring in. The trick is and will be in future is not to Dutch auction ourselves to compete with the Third World, but to expand the sectors of the economy that can sustain a reasonable level of income for this Country. A minimum wage is not likely to put Tesco out of business; nor are they likely to transfer their shelves to China every night to get filled, are they? Nor are people likely to go to India for a haircut, either.

Those industries that moved to the Far East did not move because Westerners have so much money, they moved because their own workforces were earning so much money. If the West retools their entire economy to the extent that we are all earning fifty pence an hour then Sony and Apple have problems, because as much as they resent paying staff £10 an hour, they need their customers to be earning enough to be buying their products. Sony et al are ultimate parasites, because they cannot live without the Western values, they just resent paying their staff Western wages.

@Jim 117

A thoughtful reply.

Rusty @ 116

However

“The average wage in this Country thirty grand a year,”

The median salary in the UK is £25k. I suspect that you live in the south, where it is much higher. However industries which would be in danger of transferring abroad are generally located away from the SE where industrial wages are often more like £16k a year.

While certain industries cannot be moved out of the UK, how can you have 2 minimum wages – one for jobs that may move and one for jobs that cannot?

“The trick is and will be in future is not to Dutch auction ourselves to compete with the Third World, but to expand the sectors of the economy that can sustain a reasonable level of income for this Country. ”

This is exactly the point I was making. The only way to sustain a first world way of life is to have an industrial sector which is making stuff that the Chinese of this world cannot. The only way to do this in my opinion is to have a better education sector.

Sony etc are not parasites. There products are sold all over the world – in China as well as the West. They are manufacturing the cheapest locations to keep the prices down so they can sell more – to us and everywhere else. If they had to produce here as you seem to suggest it would mean mass unemployment in the East, lower numbers of ipods being sold and overall lower happiness for us all.

On the minimum wage problem – it is clear by any normal view of economics (which would regard demand for employees as elastic) that raising the price of employing someone will cut employment (by how much is unclear), and that some industries will move as a result.

That might however be a legitimate political aim – you may want to drive out industries which only pay low amounts to the majority of their workforce. But this has to be accepted as a possibility of advocating the policy – you cannot advocate the policy and then deny that the possible economic outcomes might happen.

@Watchman

Driving up minimum wage will push some industry and employment out. The result will higher unemployment. It will not bring in new industry.

What we want is a better education sector, and ease of establishing new dynamic companies in potentially high wage sectors – for instance genetic engineering, software design etc.

There will still remain the problem of the under-skilled, the under-educated and the under-smart. If you take away their jobs by driving up wages, they are not going to become genetic engineers. These people are competing with low wage economies, and I don’t see there is much we can do about it.

Rusty @ 118

I live in Scotland, I think you are correct about the median wage (a more meaningful figure than the ‘average wage, which is pretty crude), still the point stands.

With regard to Sony et al. There was never anything to stop the Chinese or huge Western (inc Japan as ‘Westerners’) companies opening up factories to service the Chinese market. Given that China has three times the population of Europe, it was surely going to be a popular and lucrative move. However, given that Chinese labour is worth a bowl of rice, I doubt they would have sold too many TVs an PCs to people without running water. No, it wasn’t access to a huge population they wanted, it was access to a RICH population they wanted. Richness created by Western labour laws, labour unions, Western Welfare States and Western regulations as well. However, although they desperately want all of the above to exist, they do not want any of those things to apply to them. A bit like the guy who watches others get the round in and goes home when eyes fall on him.

Parasites.

Rusty @ 120

As the economy advances on and people upskill, there will be some that cannot compete. That has always been true and nothing will change that. That is true in medieval England and modern China or North America, in fact whenever you have an economy you will have people leaving and entering the workforce. Attempting to keep everybody else’s wages down to prevent people with least skills in work are doomed to failure. We need to deal with the low/unskilled as humanely as possible.

We no longer hand weave cloth, we have moved on. Nor has farming remained in the twelfth centaury. Sure we could do away with combine harvesters and get everyone back on the soil, but it is not going to happen. The economy evolves, so must we.

122. Leon Wolfson

@120 – And the government has effectively purged a major sector of Software design of any companies above “tiny” in this country for ideological reasons (that’d be “games).

That kind of thing is why we’re screwed at this stage, since a major program of investment to draw high-skill companies to the UK is the only way to avoid double-dipping, and this government are a broken record on plan A.

“Austerity…austerity…austerity…”

@122 Explain how any government cuts have effected the Games industry or software design industry in the UK!
———————-
@120 – And the government has effectively purged a major sector of Software design of any companies above “tiny” in this country for ideological reasons (that’d be “games).

That kind of thing is why we’re screwed at this stage, since a major program of investment to draw high-skill companies to the UK is the only way to avoid double-dipping, and this government are a broken record on plan A.

“Austerity…austerity…austerity…”

@ 99 Jim
You asked for an example of what jobs are not done thanks to NMW “So what jobs are being done in Lisbon that are simply not worth the effort in Liverpool?” and I give you one – the cost (and hassle) of employing a cleaner in England exceeds the value thereof to me. Some people in England employ cleaners but fewer than would do so without the high cost and hassle.
“In what way is Portugal’s alleged lack of industrial revolution relevant here? Surely Tim’s point still stands, irrespective of the industrial landscape of the Country, and lower labour costs should create jobs.”
Don’t talk soft – are you suggesting that Diageo could build a whisky distillery in the Sahara? Of course unemployment is higher in Portugal because it doesn’t have the natural resources such as coal and iron ore to support a massive steel and engineering industry nor the same quantity and quality of farmland as England. Tim understands that which is why he says “other things being equal”.

John77 @ 124

You gave me one job!!!!!!!!! You gave me one job in which you cannot be bothered to hire a cleaner, big fucking deal. How many cleaners are hired in this Country, Nationwide compared to Spain? That is the issue not whether you could be arsed.

You still miss the point regarding Portugal, though. By a Country mile as well. It has been Tim W’s & your contention that lower labour costs create jobs and higher wages means higher unemployment. Fair enough, but this post of yours (#124) lets the cat out of the bag. The very fact that Portugal has little in the way of heavy industy means we can truly see what having an economy based on low skill, low wage, low productive economy looks like.

It has nothing to do with labour costs, what drives employment is demand for goods and services. The UK has higher demand and therefore higher employment rates and higher wages. Portugal on the other hand has lower demand for labour and as a result their wage rates are lower, significantly lower as well.

So why are businesses not exploiting that source of cheap labour? Given that the alleged equation is lower wages= higher employment, then surely there would be a steady line of people eagerly attempting to exploit lower wage costs. Alas for you and Tim, the exact opposite is true. Few businesses want to start up in backwater areas because wages are so low. Low wages mean less demand and so there is little point in setting up a pizza delivery place where no-one can afford a pizza delivered to your door. Few people want nail bars because no-one can afford nail extensions. the local economies have stagnated because of the fact that there are few industries to prop them up.

That is the point. Tim’s contention that lower wages create jobs is in tatters in the Country he has adopted as his home.

What Portugal needs is a steady influx of higher skill, higher wages so that people will demand goods and services all over the Country.

“It has been Tim W’s & your contention that lower labour costs create jobs and higher wages means higher unemployment. ”

No, that is not my contention, has not been my contention, will not be my contention and will never be my contention.

OK? Get that straw man argument out of your head.

Wages need to be measured against productivity. Not purely as some cash number.

Productivity depends on a huge number of things other than just the worker. How much capital is being added to the labour is one. How much capital will, in part, determine what sort of machinery, how much of it, is available to be used by said worker. More usually (but not always) means that the worker will be more productive.

There’s also the quality of the management to consider (often crap), whatever restrictive rules that unions might impose (those decades long fights between the boliermakers and the rivetters in shipyards for example).

What’s the education system like? How much work at home (carrying water, stacking firewood etc) does the worker have to do before coming to their job?

All of these and many other things affect productivity.

“Labour costs” are when we add productivity and wages together. If we’re paying £30 an hour and one worker makes 1,000 widgets in an hour because they’ve lots and lots of machines to help, and over here we’re paying £1 an hour but the poor sod needs to do everything himself and so makes only 10 an hour…..

Well, in one case we’ve got high wages and high productivity and so we’ve low labour costs. In the other we’ve low wages, low productivity and thus high labour costs.

My contention is that high labour costs cause unemployment, that low labour costs reduce it. But labour costs are composed of both labour pay and labour productivity. If labour productivity rises then wages can rise without increasing unemployment. If labour productivity falls them either wages must fall or unemployment must rise.

Which is where we’re able to start making comparisons across countries. The UK is a high capital, high labour productivity economy. Portugal is a low capital, low labour productivity one. In which case, wages can be higher in the UK than they are in Portugal without there being more unemployment in hte UK than there is in Portugal.

Because while labour pay is higher, labour costs are lower.

125. Jim

” It has nothing to do with labour costs, what drives employment is demand for goods and services.”

Jim, that really is a silly statement. No one is saying that low wages drive prosperity. The most prosperous nations in the world are all high wage economies. However, what drives wages is productivity not wishful thinking. It is when unit labour costs get out of line with productivity that some degree of unemployment is inevitable. Continue with the costs out of line i.e. disequilibrium and firms will go bust or be unable to compete in international markets.

To give you an example how the likes of the eurozone has caused low productivity and high labour costs in the EZ periphery to result in lost competitiveness. Fiat build cars in Italy and their productivity there sees an Italian worker producing the equivalent of 30 cars per year. Fiat also build cars in Poland and their workers are producing the equivalent of 100 cars per year. However, the Italian worker wants 3 times the wage of the Polish worker for only producing a third of the output. Can you seriously believe that labour costs will not impact on future Fiat investment decisions?

@ Jim
Do I have to spoon-feed you every single drop of your baby rice?
You ask for an example and I give you an example so you insult me because you’ve lost the argument.
“So why are businesses not exploiting that source of cheap labour?”
Twit – they are. Portugal has lower wages than the UK and more than 200,000 people employed in the textile industry – as you seem to be too lazy to do your own research I suppose I need to give you a link http://www.prlog.org/10007895-profile-of-the-textile-and-clothing-industry-in-portugal.html – which is labour-intensive while the UK has people employed in capital-intensive sectors because it has accumulated massive amounts of capital in the three centuries since the Industrial Revolution.
So you are wrong again.
Many industries will relocate if the labour cost benefit outweighs the transport cost disadvantage but some cannot, so the China Clay industry has to be based in Cornwall and Port, and most cork, production in Portugal. English China Clays generates massive Value-added per head thanks to its massive capital employed per head so can pay workers a lot more than the Portuguese can earn picking grapes. Higher skills for grape-pickers or cork harvesters? Don’t be so condescending – they are highly skilled but their earnings are limited by the value of the amount they can pick harvest in a day. So Portugal has thriving ceramic and textile industries because labour costs are low because they can pay more than those for alternative jobs locally available but still be far less than Leicester or Stoke-on-Trent.
You seem to think that the only business start-ups are those like pizza delivery who rely solely on customers within cycling distance – wake up to the modern age with internet and the internal combustion engine and Silicon Valley and international trade in craft products sold over the internet!

@ 98 Robin Levett
“shows that there is a surplus of 4-bed properties, but it is entirely in the private-rented sector”
Table 4.14 states there are 7924 4+ bedroom properties including more than 4400* underoccupied (5892 if you include all the 2262 who require a 3-bedroom property and are living in a 4+ bedroom property) compared a total of 3279 needed. It states further down that 9% of privately-rented properties are 4+ bedroom as are 9% of other tenures. There are 21,512 privately rented properties out of 88,000. So there are c.1936 privately-rented 4+ bedroom properties
In my real world 1936 is less than 4400 and a lot less than 5892.
If you assumed that every single privately-rented property is under-occupied, you would still get a surplus of 4+ bedroom properties in the rest of the market (3956 against 3279 needed). In fact you cannot do so because there are only 1747 under-occupied privately rented properties in total according to para 4.30 and 4.33
Para 4.33 states there are 2648 under-occupied (i.e. more than one spare bedroom) social housing properties – there are a total of 1246 families needing 4+ bedrooms in smaller properties.
*compare para 4.30 with table data
This report shows that there is not a shortage of 4+ bedroom properties in Islington so much as a misallocation and that overall the misallocation of housing stock is actually greater, albeit proportionately marginally less, in the social housing sector than the privately rented sector.

130. Robin Levett

@John 77 #129:

Even accepting that you have correctly analysed all relevant figures (and I have reservations), you are still ignoring the fact that a misallocated proeprty (as you characterise it) has someone in it. It is not, in the real world, available to let to someone else – unless you are advocating complete social control of housing such that even those in privately-rented (and even -owned) housing can be moved out to let someone who needs more bedrooms move in.

My reference was to table 10.1, which looks at supply and demand of available accommodation by tenure and bed-size. To quote paragraph 10.18 The table below shows a demand across all tenures, and all sizes with the exception of four bedroom properties where there is a small surplus, this is mainly due to a surplus in the private rented sector.

Unfortunately, it is in the private sector that market rents for 4+bed property dramatically exceed the LHA, making private sector property virtually unobtainable for those (working or otherwise) on HB.

@ 130 Robin Levett
I have reservation on some conclusions that could be drawn because the survey omits to report a couple of data points (but my analysis, as far as it goes, is correct). I suspect, but don’t have enough data to be sure, that the most of the under-occupied 4-bedroom properties are in the owner-occupied sector. Nevertheless, it is hard to doubt that there are enough socially-rented 4+ bedroom properties occupied by those who only need 3 or fewer bedrooms to cope with overcrowding among families needing them.
I am *not* saying that you should force these tenants to downsize, but gently – and I mean gently not “gently” – encouraging them to do so could ease the problem.
Para 10.18 refers to a table which doesn’t actually tell you anything about the size categories, and is *not* about the stock of housing but about those wishing to move (in 2007 actually). The para says there is a surplus for 4-bedroom properties because 184 more households wanted to move out of 4-bedroom privately rented properties than to move into them – basically they wanted to move into cheaper social housing and at those rents who canblame them for wanting to do so. 181 households wanted to move into 4-bedroom social housing, but there was an overall surplus of 4,645 4+ bedroom properties in islington.
“Unfortunately, it is in the private sector that market rents for 4+bed property dramatically exceed the LHA, making private sector property virtually unobtainable for those (working or otherwise) on HB.”
The market rents have gone up because demand exceeds supply because an *overall majority* of potential supply is occupied by people who don’t need a 4+ bedroom property. This is also the reason why the nice, hardworking Ecuadorian family cannot rent social housing or find anywhere at a reasonable rent.


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    How the BBC and others fail to understand housing benefit http://t.co/UDjaG2Et

  10. Mary Tracy

    New Post for @libcon http://t.co/6KLVMvhR On housing benefit. IMPORTANT! If you care about the welfare state, you need to understand this.

  11. Mary Tracy

    How the BBC and others fail to understand housing benefit http://t.co/brh6BDdf

  12. John Meldrum

    RT @libcon: How the BBC and others fail to understand housing benefit http://t.co/Ai8Qpzq2

  13. Sharon Crossland

    RT @libcon: How the BBC and others fail to understand housing benefit http://t.co/Ai8Qpzq2

  14. Mary Tracy

    Lots of people posting clever and stupid comments on my piece on housing benefit. http://t.co/6KLVMvhR I feel flattered.

  15. eva destruktion

    How the BBC and others fail to understand housing benefit | Liberal Conspiracy http://t.co/ckhQq2xq via @libcon





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