THE BUDGET - MORE OF THE SAME OLD DISASTER

22 March 2013

THE BUDGET - MORE OF THE SAME OLD DISASTER

THE ABSENCE OF HOUSING POLICY CONTINUES

The lack of coherent, affordable housing and land policies since the 1980s is at the heart of the UK’s social and economic woes. The late Professor Peter Ambrose wrote in 2005.

“We argue that there have been failures of vision, collective memory, strategy and regulation that have wasted many billions of taxpayers’ money. The deregulation of financial markets in the 1980s sparked off a flood of house purchase lending that has underpinned massive house price rises and consumed £600 billion of investment that could have found a better use renewing our infrastructure or in research and development to make Britain more competitive in a global market rather than in bolstering house and land prices. The increasing commitment, from 23% to 72% of GDP since 1980, to house purchase loans seems unsustainable; furthermore the increasing flow of demand side subsidies are working to enrich landlords and land vendors, not to stimulate more housing output. The analysis shows that more money has gone into housing but fewer houses have come out. Housing benefits and allowances have imposed a huge and increasing burden on state finances.” Zacchaeus 2000 Trust Memorandum to the Prime Minister on Unaffordable Housing. http://z2k.org/wp-content/uploads/2011/11/Memorandum-to-the-Prime-Minister-on-Unaffordable-Housing.pdf

He was one of the few who saw the 2008 disaster coming. The 2013 budget continues the same disaster prone and chaotic link between unregulated finance and land in limited supply. Overseas investors, fleeing their dodgy economies, and bankers spending their bonuses, flood London with money buying homes, forcing rents and prices to rise, so squeezing Londoners out of their homes, moving them away from their jobs and fuelling the London housing crisis.

Stephen Hill of the Pro-housing Alliance, http://www.prohousingalliance.com/ and Taxpayers Against Poverty commented on the budget.

“The Chancellor is doing all kinds of ‘business as usual’…stuffing the mouths of house builders, landowners, banks and building societies with gold, viz. fees to people, for doing what they are supposed to do anyway, and with the economic rent from land, to our national disbenefit…how depressing, and predictable. I wrote my latest quote of the month…my own…last night before the budget. I should have put money on it.

Quote of the month

“Artificially boosting the building of homes for market sale or rent in the UK is just one more example of the predatory capitalism that has created the current financial crisis. For every new construction related job it undoubtedly creates, the net effect of ‘getting the housing market moving again’ ie. 'values' going up, is to suck the life out of the productive economy and reduce GDP. Speculative extraction of the scarcity value of land by landowners, developers and providers of credit is at the rotten core of our zombie economy and divided society.” Stephen Hill, Director- C2O futureplanners

POLICY SHOULD COVER ALL TENURES

A coherent housing policy and budget would cover all tenures. But Osborne is obsessively attached to the promotion of a property owning democracy. He can only throw a few crumbs to first time buyers of new builds; but the crumbs will have to be regurgitated when the home is sold. He is fighting a trend.

We would all be better off if he could match his polices to present facts rather on dreams of the future “heaven” of a “perfect market”. Home ownership has begun to diminish and the private rented sector is overtaking social renters. Places and People estimate that there will be 5.5 million private rented households by 2016. Local Authorities are just coming to terms with the localisation of housing provision, and seeing the need for policies covering all tenures from Housing Association, RSL and Council Housing, but the Osborne cannot let go of central government endorsement of ownership.

THE ECONOMIC IMPACT OF HOUSING BENEFIT CAPS.

Housing Associations are concerned that the cocktail of direct payments, benefit cuts, housing benefit caps, under occupation penalty by central government, taxation of benefits by councils, rent and council tax arrears will inhibit HA’s ability to inflate and collect rents and so reduce their capacity to build homes. Angelo Sommariva, Public Affairs and Policy Manager of Moat, has also pointed to the total mismatch between the demand for one bedroom accommodation created by the bedroom tax and lack of one bedroomed properties in the South East.

SOME SOCIAL CONSIDERATIONS.

Among the many failures to match welfare policy to present facts is an expensive avoidance by Osborne of the economic, personal and social costs when incomes cannot buy adequate, food, fuel clothes, transport and other necessities.

Dr Steve Field, former Chairman of the BMA, is now charged with tackling health inequalities in the NHS. He says "The fact that the gap (in life expectancy between rich and poor) has widened is inexplicable" . Explanations should be sought beyond smoking and obesity.

The Department of Health has refused to discuss the impact of low incomes on health. In 2009 Labour ministers at the DWP sent research about the relationship between low birth weight, poor maternal nutrition and poverty incomes to Ministers at the DoH.

The Institute of Brain Chemistry and Human Nutrition has shown a link between poor maternal nutrition, low birth weight and the poor mental development of the offspring in the womb. Rowntree minimum income standards show that the £48 a week needed for a healthy diet competes for £71 a week JSA/ESA/IS with fuel, clothes, transport and other necessities.

The DoH sent it all to the Scientific Advisory Committee on Nutrition (SACN). The government changed in 2010, SACN was abolished and the DoH referred the question to the DWP.

There is a link between poverty incomes, debt and malnutrition. It was bad before the cuts, housing benefit caps and the new imposition of council tax, and is getting worse. That £48 a week needed for food also competes with rent, and with council tax from April. The Government Office for Science shows the link between debt and mental illness in its 2008 Foresight report "Mental Capital and Wellbeing".

The rapid emergence of food banks, which cannot provide a regular healthy diet, and the rise in fuel poverty, so increasing winter deaths among the poorest citizens, should stimulate discussion in the DoH about the impact on health inequalities of "welfare" policies at the DWP and the Treasury which reduce the lowest incomes. , and increase the costs to the tax payer in the NHS.

SOME ETHICAL CONSIDERATIONS.

Alice Thompson, writing in The Times on budget day, "A bedroom tax is just what families need", chose the wrong ethical polarity; “the real victims of the bedroom tax aren't those who will lose £14 a week housing benefit for having a spare bedroom but those who have no home”.

They are, however, both victims of the failures of the 1979, 1997 and 2010 governments to get to grips with poverty, inequality and the lack of a coherent affordable housing policy. It is better to contrast tenants hit by the caps and homeless people with the people flooding into London from southern European countries, the Middle East and China, or banker’s bonuses, buying second or third homes and leaving them empty. This property boom forces rents above the housing benefit caps creating spiralling insecurity of tenure and employment for increasing numbers of London families and disruption of the education of their children. Land should be used for the common good and all speculation in it regulated or abolished.

Rev Paul Nicolson 22/3/13

 


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