Archive for August, 2010

The Papal Visit

August 23, 2010 6 comments

Why is the Pope coming to The United Kingdom?

With the impending Papal visit I have come to consider why the Pope is coming here. This is the first papal visit in nearly three decades. Now while John Paul II, who was undoubtedly a bit of a rebel Pope was the previous Pope to visit, there has not been a papal visit since Henry VIII got angry because his wife was getting on a bit. Now while I understand that the Popes between Henry VIII and George IV may have feared being burnt, thankfully we have moved on since then.

There must have been a reason that from 1829 and the Catholic Emancipation Act that no Pope decided to come to our fabled shores. The UK would seem the perfect place to try conversion of other Christians, Christians who are born into a state religion as opposed to the ‘freedom’ of being a Catholic. It would seem that there is some other reason for the Popes of the past not coming here. Is it the fierce religious opposition of the population? I highly doubt it as a race 45% of us say that we have no religion. This would again seem a good reason for a Pope to visit the U.K. An adventurous Pope, which I know is a slightly oxymoronic, would I am sure wish not to travel to countries with large amounts of popular support but to seek out challenging areas where the message of Catholicism could be spread. So maybe this is the reason that Pope Benedict XVI is coming to our very un-catholic and unreligious land, but no he is coming to proclaim that a man who died in 1890 is someone who he believes, with great fervour I am sure, is in heaven and has the ear of god.

I am just going to take a little time here to have a sideways rant. While I myself am an atheist of the Dawkins breed, I am liberal enough to believe that anyone is free to believe in whatever they want even when I know they are wrong. On that note one of my main concerns with the incompatibility of religion and some sense of logic is this: Almost all religions claim that their deity is omnipotent and omniscient. This means that their deity is all powerful and all knowing. If that is true it means that the deity cannot change its mind because it already knows the path or choice it must take or make. Therefore why pray? Your deity has already decided whether or not they will do what you ask. This is just one of the logical fallacies that I believe help to disprove religion. Rant Over

Now I turn to the question of why the Pope is coming here or more specifically why is someone who has the same status as the leader of a country, not a large amount of misguided individuals, which I believe him to be, being invited on a state visit? Well Gordon Brown, who felt the need for a private audience with his holiness in February of 2009, extended a formal invitation for the Pope to visit the U.K. Gordon Brown, who as I have previously said was not even elected, invited a man who denies scientific fact to further the proliferation of Bronze Age myths to our country, for reasons that elude me. The leader of our country invited a high profile figure who speaks out directly against certain U.K. laws, notably gender equality, sexual freedom of the individual, as well as the condemnation of condoms in the fight against HIV/AIDs. Of course for any other world leader to say that the use of condoms helps the spread of HIV/AIDs would be deplored as ridiculous and dangerous, but because this man who was elected by fellow men not elevated by a deity claims that his deity would prefer it this way apparently that is ok. Just in case the Pope ever reads this, in the Glorious Revolution of 1688-1689 The United Kingdom began the ending of the Divine Rights of rulers and it is time the Papacy came forward by almost four hundred years. How can one be a moral leader when he believes people should be treated differently because of who they were born or choose to be?

Finally if you do not agree with my arguments of why the Pope should not be coming to our country, the majority of whose citizens he could not convert, because they have out grown the need for blinkers to understand the world they evolved in, do you agree that in this time when budgets are being cut left right and centre in the public sector, should the public be expected to foot the bill of a £15 million visit with the added security costs on top of that. The Pope has a plan for what happens after you die. No matter whom you voted for or even if you voted, at least the politicians we have are trying to solve the problems we have now and I hope none of them are praying for a solution because even if I were wrong it would not do them or more importantly us any good.


Housing Reform

August 5, 2010 Leave a comment

It was recently anounced by the Coalition Government to alter the new contracts for social housing tenants so that a Council House was no longer for life. This is, they claim, to increase the social mobility of tenants, to free up social housing for those that needed it most and make the housing applicable to the needs of the tenant. Gone are the days where lone tenants could occupy 3 bedroom houses because they were entitled to that particular house. The announcement is a start for much needed reform, however, it leaves a lot left undone and fails to address important issues such as the link to property ownership and economic instability.

The instability created by mortgages and property owning have been well documented by historians and economists a like – one of the more famous observers is Hyman Minsky or even Vince Cable. The selling of mortgages, especially to those who could not afford them, left, and is continuing to leave, the country unstable as the shortage in the supply of housing artificially inflates the price. This in turn restricts the economic activity of many earners in engaging with the sector even though the market is, on paper, healthy. The reality is that the market is unbalanced and even if the supply matched the demand there is far too much speculation and interest paid to the prices of housing. What does need to happen is a shift in attitude and culture from property owning to property renting. Note that the first Western countries out of the recession were France and Germany. Both countries have a thriving rental market and any economic instability derives from their banks investing in foreign mortgage and bond markets. One cannot stop the actions of the financial sector but one can seek to alter the societal perception towards rental markets.

The issue with social housing and what the Coalition wants to create is that it is lacking in one vital detail – supply of social housing.  The idea behind the announcement is to create social and economic mobility in an economic section of society that is traditionally immobile. Social Housing was originally created as a safeguard for those that could not afford to rent or buy – similar to the fixed term suggestion – and the inheritance of social housing was absent unless circumstances demanded it ie poverty (@GaryMcLachlan 2010).

One way to increase the construction of Social Housing is through giving tax breaks to property developers so that Social Housing is developed within and alongside existing or planned projects. Thiw will increase social mobility as Social Housing is not segregated and therefore ghettoised by the exclusion of Social Tenants from ‘normal’ society. However the removal of the Regional Spatial Strategies by the Coalition Government makes it a lot harder for development to happen without the consent of NIMBYist residents.

Another way of increasing the construction is through the creation of Social Bonds (SocBond) or a Social Responsibility Fund (SRF). The two are quite different so bear with me. A SocBond is floated on the markets in order to gain revenue for the construction of social housing. The problem with this is that return rates do not exist as Social Housing cannot be rented for profit. However if the funding for Social Housing is incorporated into Municipal Bonds (an avenue for local authorities to increase revenue) then it is an option to be explored. SRF can only be adminstered locally, so the whip might have to be used by central government, and requires businesses in the area to contribute to the SRF. Returns do not exist but it also acts as good publicity and potentially free advertising space. Such as plaque saying “This House was built by a large Supermarket brand” or similar. However, SRF is not just used for Social Housing but for any community based project or aide.

The last alternative, that the Project has explored, is syphoning off revenue gained from the increase in taxes towards the construction of Social Housing. The Oldfield-Pike Project predicts, by using government estimates, that amounts of £3bn in the first year, dwindling to £0.5bn in the fourth year will only extend the government’s prediction for an elimination of the structural deficit by 2 years. The costs may be large initially but the savings are potentially huge!

Increased construction of Social Housing will increase the social and economic mobility of social tenants and those that rely on the state in order to survive (another post on welfare reform is in the pipeline). However, in order for there to be economic stability the culture needs to shift from property owning to property renting. Not only will it end the stigmatism of Social Housing, but it will also be cheaper for the majority (too affluent to be Social Tenants but too poor to buy) and create a rapid upwardly mobile society. The start to this shift must be made through regulation of the rental market and ending the monopoly of estate agents. This can be done through the state creation of a market by using houses built with the intention for use as Social Housing but instead use them in the private market. This will ensure that prices reflect income and the creation of a fully functioning market. Empty properties, industrial or residential, can be seized, with the owners paid off with the true value (not market value) of the property, and turned into housing intended for the rental market thus increasing the supply so that is meets the demand. This shift in the culture is predicted to take at least a decade to settle in, but no more than a generation. By increasing the access to rental properties the economy will be more productive as people can move from one area to another easier than if they bought thus increasing the economic fluidity and dynamism that is needed in a developed country.

In conclusion the supply of housing, social and rental, needs to be increased so that it meets demand and thus creates a market which will, in time, produce economic stability and increase economic productivity through the increased mobility of individuals who are not reliant upon a housing market.

Categories: Analysis, Economy, Housing Tags: , ,

The Alternative Budget

August 1, 2010 2 comments

The Alternative Budget

£ million
2010-11 2011-12 2012-13 2013-14 2014-15

Tax measures announced at this Budget

1. Deficit Reduction

1 VAT: increase main rate to 20% from 4 January 2011 +2,850 +12,100 +12,500 +12,950 +13,450
2 Insurance Premium Tax: increase standard rate to 6% and higher rate to 20% from 4 January 2011 +115 +455 +445 +455 +455

2. Enterprise and growth

3 Corporation Tax: decrease to 27% in 2011-12, 26% in 2012-13, 25% in 2013-14 and 24% from 2014-15 -10 -400 -1,200 -2,100 -2,700
4 Small Profits Rate: decrease to 20% from 2011-12 0 -100 -1,000 -1,300 -1,400
5 Capital allowances: decrease main rate to 18% and special rate to 8% from 2012-13 0 0 +1,000 +1,900 +1,800
6 Annual Investment Allowance: decrease to £25,000 from 2012-13 0 0 +100 +1,200 +1,000
7 Social Housing Construction from 2011-12 0 -3,000 -2,000 -1,000 -500
8 Bank Levy: introduce from January 2011 0 +1,150 +2,320 +2,500 +2,400
9 Business rates: backdated bills in 2011-12 +30 -70 -15 -15 -15
10 Employer NICs: relief for new businesses in targeted regions -50 -320 -390 -180 0
11 NICs: increase threshold in 2011-12 0 -6,260 -6,300 -7,020 -7,440

3. Fair taxes

12 Income Tax Reform from 2011-12 0 +17,505 +17,505 +17,505 +17,505
13 Implementation of Tax Reform -3,000 0 0 0 0
14 Capital Gains Tax: increase rate for higher rate taxpayers to 28% and increase Entreprenuers’ Relief to £5 million from 23 June 2010 0 +725 +825 +850 +925
15 Council Tax: reduction to receipts due to a one year freeze in 2011-12 0 -625 -630 -635 -640
17 Cider duty: reverse increase -10 -15 -15 -15 -20
18 Furnished holiday lettings: reverse plans to repeal existing rules -5 -30 -15 -10 -10
19 Managed payment plans: not introduce 0 +140 0 0 0

Total tax policy decisions -160 +21,255 +23,130 +25,085 +24,810
Spending measures announced at this Budget

20 Changes to current spending +3,425 +6,610 +15,005 +21,115 +28,480
21 Changes to capital spending +1,780 +2,020 +2,070 +2,120 +2,160

Total spending policy decisions +5,205 +8,630 +17,075 +23,235 +30,640

Of which specific welfare measures +345 +1,490 +3,485 +6,560 +8,765
22 Benefits, tax credits and public service pensions: switch to CPI indexation from 2011-12 0 +1,170 +2,240 +3,900 +5,840
23 Disability Living Allowance:not introduce 0 0 0 0 0
24 Lone parent benefits: extend conditionality to those with children aged 5 and above from October 2011 0 0 +50 +150 +180
25 Support for Mortgage Interest: set payments at the average mortgage rate from October 2010 +15 -75 -10 +40 +65
26 Saving Gateway: not introduce in July 2010 +10 0 +75 +110 +115

Housing Benefit reform: 0 +220 +600 +1,640 +1,765
27 Local Housing Allowance: set at the 30th percentile of local rents from 2011-12 0 +65 +365 +415 +425
28 Deductions for non-dependents: reverse previous freezes on uprating and maintaining link with prices from 2011-12 0 +125 +225 +320 +340
29 Social sector: limit working age entitlements to reflect size of family from 2013-14 0 0 0 +490 +490
30 Switch to CPI indexation for Local Housing Allowance from 2013-14 0 0 0 +300 +390
31 Reduce awards to 90% after 12 months for claimants of Jobseekers Allowance 0 0 0 +100 +110
32 Additional bedroom for carers from 2011-12 0 -15 -15 -15 -15
33 Local Housing Allowance: caps on maximum rates for each property size, with 4-bed limit from 2011-12 0 +55 +65 +70 +65
34 Additional Discretionary Housing Payments from 2011-12 0 -10 -40 -40 -40

Tax credit reforms: 0 +885 +1,860 +2,105 +2,245
35 Tax credits second income threshold: reduce to £40,000 from 2011-12 0 +140 +145 +155 +145
36 First and second withdrawal rates: increase to 41% from 2011-12 0 +640 +710 +730 +765
37 Reduce the income disregard from £25,000 to £10,000 for two years in 2011-12 then to £5,000 from 2013-14 0 +105 +140 +340 +420
38 Introduce an income disregard of £2,500 for falls in income from 2012-13 0 0 +550 +560 +585
39 New claims and changes of circumstances: reduce backdating from 3 months to 1 month from 2012-13 0 0 +315 +320 +330
40 Child Tax Credit: increase the child element by £150 in 2011-12 and £60 in 2012-13 above indexation 0 -1,200 -1,845 -1,930 -1,995
41 Child Benefit: freeze rates for three years from 2011-12 0 +365 +695 +940 +975
42 Basic State Pension: introduce triple guarantee from 2011-12 0 0 -195 -420 -450
43 Pension Credit Minimum Income guarantee: matching basic State Pension cash increase in 2011-12 0 -415 -535 -535 -535
44 Child Trust Funds: phased abolition of Government contributions from 2010-11 +320 +540 +550 +560 +560

TOTAL POLICY DECISIONS +5,045 +29,885 +40,205 +48,320 +55,450
Categories: Uncategorized