Tuesday 23 November 2010

There's an app for that

There were two similar articles in The Metro this week, Tenants face being thrown out of their homes if they get richer and Council tenants could lose their homes if they get a job under new reforms.

From the first link:

New renters will be offered fixed-tenancy agreements of as little as two years and could be evicted after that period if they become better off, housing minister Grant Shapps said.

He insisted the reforms would be fairer than the existing system, which sees 5million people on the housing waiting list while others have homes for life which they can pass to their children without means testing. ‘When a tenant goes to renew their contract, they will have to let their local authority know if their financial circumstances have changed,’ Mr Shapps said.


[runs out of room screaming, calms down, returns to keyboard]

This can all be dealt with much more simply. Once we have adopted the MW patented system that welfare claimants and lower earners are paid their Citizen's Income in full, but are given a PAYE code without a personal allowance (i.e. a BR or 'emergency' tax code), so if they earn as much as the personal allowance, the extra tax paid and the CI received net off to nothing in cash terms, it would be a doddle to simply scrap the entire system of trying to collect rents, council tax and then overlayering those with means-tested Housing Benefit and Council Tax Benefit.

Because of the way the numbers work, it would be fiscally neutral to give social tenants who are low earners (or potentially low earners) a PAYE code saying that an extra 20% income tax has to be deducted (i.e. a K-code), which would then be channelled via HMRC back to local councils (this can't be rocket science, it's like Student Loan Deductions, only without any need for particular precision).

So non-earners pay nothing, low earners pay a bit, median earners pay a market rent and above-median earners would actually be paying more than a market rent.

It's up to these people themselves to decide whether they are happy to overpay in the good years as insurance against possible future bad years, or whether their income is so secure that they could save money by renting privately or buying their own place to live. Local councils in turn will have every incentive* to attract more employers to the area and instead of giving priority to the needocracy, they'll have every incentive to allocate social housing to people doing low-to-middle paid jobs.

* Assuming that the Tories really do implement the plans to allow local councils to keep the rents that they collect, rather than them being pooled in Whitehall and then dished out again.

PS, I know for a fact that all policy wonks read each others' manifestos, all this was explained in the UKIP Welfare Paper of earlier this year so they can't pretend they're not aware of the idea.

13 comments:

JuliaM said...

"It's up to these people themselves to decide..."

But there's the problem...

Scott Wright said...

JuliaM said...

"It's up to these people themselves to decide..."

But there's the problem..."


As in you see it as a problem or the "political elite" see it as a problem. It looks to me like a good proposal because it gives both personal choice and extra revenues based on choice not the highway robbery of the current tax system.

If several higher earners choose to stay in their council house as security against potential loss of earnings in later years and overpay, we can build more council houses. We need to stop bloody giving the nations assets away at knock down prices. We need to stop what is in effect giving the "better off poor" taxpayers money albeit not directly. Right-to-buy is an outrage which is glossed over because selling off council houses and not building more is "good" in the eyes of NIMBYs.

Scott Wright said...

"PS, I know for a fact that all policy wonks read each others' manifestos, all this was explained in the UKIP Welfare Paper of earlier this year so they can't pretend they're not aware of the idea."

Indeed I must admit that I have the pdf of each parties manifesto from May 2010 still saved on my laptop.

Slightly off topic but I have to ask. Why if the Green's favour a system of LVT in the long-term would they advocate such ridiculously economically damaging changes as 50% tax & 12% NI on £100,000+ but then they are hippy Green's and are probably high on something when writing policy (not wanting to stereotype or anything)

Mark Wadsworth said...

JM, sure, no system is perfect and there will always be little fiddles, but which particular 'problem' do you envisage?

SW, the Greens are like any other political party, they have the NIMBY wing, the libertarian wing, the populist wing and the socialist wing etc etc.

LVT/CI was a big thing with them until a few years ago, and the Scottish Greens are still in favour of replacing Council Tax, Business Rates with LVT, but they appear to have decided that there are more votes in having a 62% top rate of income tax on employment incomes. Ah well.

Bayard said...

This can all be dealt with much more simply.

But not as effectively politically. In the simplistic Tory mindset, social housing tenants vote Labour, therefore the fewer of them the better. Of course ministers will waffle on about "getting people off the waiting lists", it's what they are paid to do, but the main thrust of the policy is increase the number of Tory voters using taxpayers' money. It's not their (i.e. Tory Party) money, so why should they care how much it costs. If you they can keep their core vote happy at the same time, so much the better.

Umbongo said...

MW

As Shapps tried to make clear on Today yesterday this policy will only apply to future tenants, not those already in situ. Unfortunately for him the vox pop stuff broadcast before he came on was of existing tenants being encouraged (by the BBC - unbelievable - you'd think they have an agenda!) to moan how terrible life would have been without the prospect of permanent residence in council housing - after all life's bad enough with all those cuts the nasty coalition is(n't) implementing.

The upshot is that; initially very few people will be affected; Labour will reverse this at the earliest opportunity (2014 is my guess); your excellent scheme will never get off the ground for the usual reason - there's nothing in it for the politicians.

Mark Wadsworth said...

U, that's all well and good, but either:
a) Shappsy believes this to be a good policy (in which case, why not apply it to ALL tenants, which would make more sense, I could almost live with that) or
b) He knows it's a stupid policy (in which case why apply it to anybody at all).

More confusingly, the last say on this seems to be down to local councils/Housing Associations. They will be 'allowed' to charge higher rents if they agree to these two-year contracts.

Dude WTF?

If the idea is to get as much income out of council housing as possible, then the quickest win is to let them KEEP ALL THE RENT they collect and for central govt. to STOP SUBSIDISING it via Housing Benefit etc (I'd be perfectly happy with this, by the way). But then flogging off the stuff at undervalue is a way of MINIMISING income from council housing.

And so on and so forth, this policy is completely hare brained. It's not even clear what it's supposed to achieve, apart from suckering more people into Home-Owner-Ism. Maybe there's no more to it than that.

Bayard said...

"It's not even clear what it's supposed to achieve"

Buying votes for the Tories, kicking Labour supporters in the teeth, getting more people into debt, hence better for their employers and the banks, "selling off the family silver", keeping Daily Fail readers happy....What more do you want?

Mark Wadsworth said...

B, ta for both comments. To paraphrase Sherlock Holmes: "Once we have ruled out the economically rational, whatever we are left with must be down to crude politicking."

Anonymous said...

Many of those who exercise their right to buy go on to let out the property, or sell out to a buy to let landlord.
Result house still let to non tory voter and council has lost an asset and an income stream.
What a good system.

Umbongo said...

MW

I'm not defending Shapps - I'm just pointing out what he said. I agree with Bayard's comment and your comment as "quoted" from Sherlock Holmes. It's bollocks and will get the worst of all worlds for the "Conservatives": an ineffectual policy (how unusual from this lot!) which will just upset the 3 council house tenants who might have voted for them in 2014.

Mark Wadsworth said...

Anon, exactly.

U, I didn't get the impression that you agreed with him, I was just trying to think through the unintended consequences to add to B's list and what Anon says later on.

Derek said...

This is what gets me depressed with politics. It doesn't seem to matter who you vote for: the Idiot party always gets in. If only we could guarantee that what was in the manifesto would end up on the statute books.