Friday, 8 February 2013

Another important Home-Owner-Ist milestone!

From the DCLG's English Housing Survey 2011-12:

1.3 Owner occupation remained the largest tenure group with 14.4 million households, comprising around two-thirds (65%) of all households. There has been a downward trend in the proportion of owner occupiers since the peak of 71% in 2003 but the proportion in 2011/12 was very similar to that in 2010-11, Figure 1.

1.4 As Figure 1 shows, the difference between the number of social renters and private renters, which was over 3 million in 1980, has been narrowing steadily. The numbers and proportion of households living in the private rented sector have been rising in recent years, and in 2011-12 were at the same level as in the social sector, 3.8 million households or 17% of the total...

• Average weekly rents in the private rented sector continued to be well above those in the social rented sector (£164 per week compared with £83). While mean rents have increased in both sectors since 2008-09, private rented sector rents showed no significant change from 2010-11.

• Almost two-thirds (64%) of households in the social rented sector were in receipt of Housing Benefit, compared with around a quarter (26%) of those in the private rented sector.

I think that is a pretty significant achievement, to have more people renting privately than from the council or a Housing Association. The bonus is that the percentage of owner-occupiers is back to 1987 levels (the highest level was 71% in 2003). So Home-Owner-Ism is achieving its underlying and understated aim of concentrating land ownership in ever fewer hands, especially if you include banks' indirect land ownership via mortgages.
Let's crunch some numbers:

We know that "Housing Benefit" is slightly over £21 billion a year; let's knock off 14% to get the England-only figure = over £18 billion, and let's assume for sake of argument that it is an all or nothing benefit.

Therefore: 2.4 million social sector tenants are "receiving" HB of £4,300 per year = £10 billion; and 1.0 million "private sector" tenants are "receiving" HB of £8,500 per year = £8.5 billion. £10 billion + £8.5 billion = £18.5 billion, looks about right.

Why all the "speech marks", you may ask?

I always find it useful to look at things from the point of view of the taxpayer, in cash terms.

a) The £10 billion which the DWP pays to local councils to subsidise rents goes into the tin for rent receipts, and rather bizarrely, that is all pooled nationally and paid back to Whitehall, whence it is dished out again to local councils... So it is all pure bookkeeping entries, it does not affect the cash amount of tax you pay; they could eliminate all these transfers to and fro by simply reducing social rents to what people are willing and able to pay (i.e. the market rent), which would average out at £1,500 a year or something (£4,300 x 36%). This could easily be collected 100% by docking it from people's welfare or pensions payments.

b) The £8.5 billion paid to private tenants actually ends up in the pockets of private landlords, that is a real cost to the taxpayer and also pushes up the rents which the 74% of non-claimants have to pay. For consistency, the average real market rent is 74% x £8,500 = £6,300 a year.

In other words, if the UK government had continued with its policy of building social housing from the late 1970s onwards instead of selling them off, the taxpayer would be saving £8.5 billion a year in Housing Benefit; and those people who are now private tenants would be paying lower average rents and the government would be receiving about £24 billion a year in rental income.

The taxpayer would be £32 billion a year better off (private tenants would benefit from lower taxes and from lower rents). And the economy would be better off, because what what isn't taken in taxes on earnings, rent or mortgage interest is spent on goods and services. And don't give me that crap about landlords spending their income on goods and services; the point is that they are consuming them without producing or providing any; so 'everybody else' has to make do with a smaller share of a smaller total amount.

What's not to like?


Bayard said...

"In other words, if the UK government had continued with its policy of building social housing from the late 1970s onwards instead of selling them off,"

fewer people would have voted Tory in the subsequent elections and think of the mess that we'd be in now if that had happened.

Mark Wadsworth said...

B, AFAIAA, NuLabour flogged off just as much social housing as the Tories did; NuLabour were far more Home-Owner-Ist than any previous Tory government.

And why would living in a council house make people stop people voting Tory?

Bayard said...

I suppose that was because once RTB had become government policy, it remained Government Policy, in the way that things do, as your next post highlights. Also RTB is effectively a bribe to the electorate to vote for the party in power. It worked under the Tories, so Labour thought they'd try it as well, which shows how far their Labour principles mattered to that bunch of shits.

The council estates were seen as Labour fiefdoms by the Tories. It was probably an illusion, as so many things in politics are.

Mark Wadsworth said...

B, oh yes, the only political alternative to an HO government is an even more HO government.

The current shower of shit are even more HO-ist than Labour, only they are cutting out the middleman and openly subsidising banks, landowners and landlords, rather than dressing it up as "helping people onto the ladder".

DBC Reed said...

Dunno how general this is but the, near Northampton, Daventry District Council (outrageously Conservative) is building houses to let.

Mark Wadsworth said...

DBC, isn't that what we call "council housing"?