Tuesday, September 6, 2016

Let’s Rename Housing Benefit more fairly as “Landlord Bonus”.

Craig Murray is an interesting guy and some day I will do a post on him. In the UK rented housing is often subsidized by the government but this distorts the market, greatly inflates house prices, and is a con to line the pockets of the rich, says Craig Murray.   

Reprinted in full.
So-called “Housing benefit” is of zero benefit to tenants. It is a massive flow of taxpayer cash to landlords – an incredible £25 billion per year. It plays a pivotal role in the growth of landlordism and the bubbling of house prices to well beyond the pockets of most young people.
 It is argued on the right of politics that rent controls would be an unwarranted interference that would distort the housing market and prevent it operating efficiently. Yet housing benefit is itself a massive distortion, allowing landlords to charge rents far beyond what the market would ordinarily bear. If the state is to pay or top-up rents in this way, the state must also have a right to interfere in the level of rents.
For the sake of clarity of argument, I do not regard “Housing Associations” as anything but part of the landlord class, especially given the high salaries they pay their executives.Both Jeremy Corbyn and Owen Smith have recently argued for a rent control solution – and in Jeremy Corbyn’s case he believes it. That would certainly be a vast improvement on the present situation. But my own view is that it is illogical to boost rents by a massive transfer of taxpayer cash to landlords by housing benefit, and then seek a second mechanism to control them.
 Housing benefit should simply be abolished. The results would be the collapse of the buy to let market and the bankruptcy of some of the least lovely people in the country, a crash in rents, and the pricking of the UK’s property bubble, where homes are priced in much of the UK at 8 to 12 times average salary.
The abolition would need to be accompanied by a one year moratorium on all evictions until the market settles down and rents can be renegotiated. I do not rule out rent controls as part of the new arrangements to govern the market.
It is worth pointing out that as housing benefit is taken from general taxation, and as London accounts for an obscenely disproportionate percentage of housing benefit paid, it represents yet another hidden area where London sucks the wealth from the rest of the country.
 Housing benefit is not actually a “benefit” to the needy at all. Have you ever wondered why the Tories make zero concerted efforts to cut this “benefit”, when they are so keen on driving disabled people to suicide and sanctioning the unemployed?
It is because housing “benefit” is the UK’s biggest con, a direct subsidy from the taxpayers to the very wealthy. 


Neil Wilson said...


And Tax Credits is a massive flow of taxpayer cash to private business profits - causing wage compression from the median towards the minimum wage..

And of course a Universal Basic Income that is less than is sufficient to live on is just Tax Credits with a tax based withdrawal mechanism that triggers unnecessary loss aversion in the majority of the population.

TofuNFiatRGood4U said...

Mr Wilson,

1st paragraph: great and illuminating--thanks.

2nd paragraph: 'tax based withdrawal mechanism'--you mean, a phase out of the UBI as income increases? And, 'triggers unnecessary loss aversion'--you mean, encourages the population to avoid earning income?

Thanks for the clarification.

Neil Wilson said...

Psychological loss aversion is the well studied effect that losing something is considered about twice as bad as gaining something.

So if you give somebody $100 and then take it away again, the person will feel as though they have lost something and get upset about it.

But if you don't give them it in the first place, they won't.

That's why 'tax cuts' always win out in political contests. It stops the perceived loss, even though it also removes the income gain you get in the first place - aka a job.

Neil Wilson said...

Tax credits currently have a withdrawal mechanism built into the payment. So as you work more you get less tax credits paid to you. The withdrawal is direct before the payment is made

The alternative is to pay you the Tax credits regardless, and do the withdrawal via the taxation system instead. The problem there is that you see the money, and then it is taken away from you - triggering loss aversion even more.

Ignacio said...

In the UK rented housing is often subsidized by the government but this distorts the market, greatly inflates house prices, and is a con to line the pockets of the rich

Look, it's not just the rich. Until we get rid of this idea nothign will change.

Politicians have a base of enablers which are not 'rich' (unless you defined the top 20 centiles of the population as 'rich'), they need their votes and support (moral, economic and social). The rich are not the most powerful yielding individuals in our corrupt democracies, the enablers are, because without the enablers the rich wouldn't be able to get shit done (this is what happened during the 'golden' years as the people demanded retribution due to having fought two world wars for the elites as well as having to keep an eye on the 'Big Red Scare').

The enablers of the status quo are people like the urban professional class, those are the ones who vote for neolibs and neocons like Clinton or Blair, or Bush or Cameron because they are promised high real estate prices and stock bubbles. Yeah sure, they will time to time complain about some identity politics issue, or drive a Prius and feel good about themselves (those on the 'left' spectrum), but no real action or will to change jackshit. The world has come accustomed (specially developed nations) to bubblenomics pushed by neolibs since the 90's and specially last decade. So people is empowering idiotic politicians hoping that 'all will be good'.

You know a collapsing society when you see one, and this is exactly how a slow motion collapsing society looks like, at this rate we will find out ourselves in a new 'dark ages' in a couple centuries and will wonder how it happened. It's happening now, and it started 30 or 40 years ago after the oil shocks of the 70's. All can be traced back to then. Until the old cohorts wielding political power stop being relevant and/or people inside those cohorts wakes ups as they move downwards any meaningful change will be very hard.

I know this discourse won't make me popular, but is the truth, and people has to start to see beyond the veil if we want to avoid this trend of crapification and incoming neo-feudalism.