"Fuel issues persist in south but 'over' elsewhere"

Says the BBC.

That's hardly surprising. We in the South East are the most inconsiderate and irrational people in England, from which I do not exclude myself :-)

I think I beat The Daily Mash by a few hours.

You can see why people assume London is full of pretentious wankers.

From the Evening Standard:

[Re-elected London Mayor Sadiq Khan] vowed to “work day and night” to deliver “safer streets” saying: “On crime – we’ll continue to be both tough on crime and tough on the causes of crime. This includes putting even more police officers on the streets at the same time as investing record amounts in new opportunities for young Londoners.”

This is especially bitter - he's the one who took the police officers off the streets in the first place.

"The key thing is to make sure our city recovers. It’s the biggest challenge our city has faced since the Second World War, and that’s what Let’s Do London is about - getting our city back on its feet after the awful 15 months we have had, and try to bring our city together and our country together.

"We have got to avoid this culture war which is tearing our country apart. We have got to make sure we have the Brexit scars healing and we ought to try to bring people together. My mission in the second term is to bring our city together.

"Next Monday restaurants will reopen, many theatres will reopen. On June 21, fingers crossed, our city will return to a semblance of normality. It’s going to be an amazing summer."

... he insisted he had a "decent mandate" overall, having secured more than 1.2m votes. "I didn’t realise I secured the biggest vote ever received by a candidate, other than myself, of course, in 2016," he said. "But also I discovered I have got the biggest majority, other than myself in 2016. Quite a decent mandate, if I say so myself."

City Hall promised “the biggest domestic tourism campaign the capital has ever seen” to help London’s economy get back on its feet as Covid restrictions are eased. There will be a series of one-off events, outdoor film screenings and late-night openings under the London Lates initiative to ease social distancing.

None of that really means anything to a normal voter, does it?

As contrast, from Politics Home:

[Re-elected Manchester Mayor Andy Burnham] used his victory speech to accuse the Prime Minister of failing to deliver on his promises to areas like Greater Manchester... He pointed to a perceived "widespread cluelessness" in government as to what "levelling up", and offered to spell it out for Johnson.

"Here is where I can help you, Prime Minister. Let me define it," Burnham said. "It can't be achieved by scattering funds across a few favoured places.

"It can be achieved when you give millions of people in a city region like this one a modern, affordable public transport system, when it costs the same to catch a bus in Harpurhey as it does is Haringey. £1.55, not £4 or more that people pay here".

He continued: "Levelling up is achieved when you give all people the dignity of decent work and wages that don't have to be topped up by visits to the food bank, and when you have the kind of jobs here which mean our young people don't have to move south to get on in life, which I had to do 30 years ago."

I've no strong opinion on Andy Burnham one way or another, but at least he says real things that actually mean something and are within his remit as Mayor.

Homeys and Faux Libs talking crap, as per usual.

From City AM:

To combat the problem of housing affordability, the mayor will advocate creating a private rental commission to implement and oversee rent controls and to establish a register of landlords to "name and shame rogue landlords".

However, free market think tanks and London's house builders have thoroughly rubbished the idea, with many arguing that increasing housing supply is the only way to deal with unaffordable rents.

Rico Wojtulewicz, head of housing at the National Federation of Builders's House Building Association, said a cap on rents could hurt the construction industry.

Clearly nonsense.

Let's say Khan caps London rents at half current levels, so rents in London are now the same as in and around (say) Leeds. Is there new construction happening in and around Leeds?

Yes. There is still a profit to be made at Leeds rent levels, and land with planning in
Leeds still has value. So there will still be profits to made by building in London.

Rent caps would only reduce new construction if the cap was so low as to make construction unprofitable, even if land with planning were free.

"[House builders] with projects in the pipeline could suffer, as rent caps may push down land prices, leaving many who have already purchased land, with unviable projects," he said.

Tough, what they paid for land, or what it was worth before the cap is irrelevant to future decision making, it is a sunk cost. They would only slam on the brakes if they had a reasonable expectation that the caps would be scrapped (and in the UK, that is a reasonable expectation).

And as he says himself, land prices would fall, which would encourage construction.

Dr Kristian Niemietz, head of political economy at the Institute of Economic Affairs, labelled Khan's stance "Trump-style knee-jerk populism".

"Rent controls have never worked anywhere," he said, "If Sadiq Khan had any interest in solving London's housing crisis, he would focus on the supply side."

He's a floppy haired Faux Lib who is too stupid to accept that agglomeration benefits will cancel out added supply. In the absence of a total ban on people moving to London, we'll have X more homes and X more households and they cancel out. London just gets a bit bigger (and more expensive), as it has been doing for centuries.

And rent controls clearly do work - see below.

Chris Norris, director of policy at the National Landlords Association, said implementing rent controls would crimp investment within the housing sector.

"Rent controls cap the price a landlord can charge, but not the costs they will incur meaning that as the cost of providing homes increases so will the losses landlords are expected to make," he said, "Landlords will have no choice but to take their investment elsewhere, making it harder still for households to access the housing they need."

Clearly nonsense.

The only significant cost that landlords have is mortgage interest, and that's only some of them. They did leveraged speculation and lost the gamble. That's life. All other landlords will still be earning money, just less than before - or else there would be no landlords in Leeds.

Whether or not Khan realises this, the effect of rent controls (in the UK at least) is that landlords sell up to first time buyers-cum-former tenants, or people buying new homes to live in, not to rent out. That makes it *easier* for households to access the housing they need, i.e. homes to own.

Rent caps are a crude form of land redistribution, but clearly it worked in the UK for most of the 20th century when such controls were in place. The result was a huge rise in owner-occupation levels and we were all happier for it.

Killer Arguments Against LVT, Not (477)

From City AM:

Transport for London (TfL) is considering funding the £3.1bn Bakerloo line extension with a tax on landowners. The proposed works would extend the line from Elephant and Castle to Lewisham via stations on Old Kent Road and New Cross Gate. 

However, the project has been left unfunded with no indication from central government that it will foot the bill. It was revealed today by New Civil Engineer that TfL is considering taxing landowners along the proposed route to pay for the line as they would likely benefit from increased property values from the extension...

The Centre for London and the Adam Smith Institute think tanks said the landowner levy would make sense. 

Adam Smith institute research associate Charlie Paice said: "Rather than relying upon central government handouts for infrastructure investment this land levy will mean that those paying are the ones who stand to benefit as the value of their properties go up.

"If land owners aren't prepared to pay for a project which will further increase their property values – then why should they expect taxpayers from the rest of the country to stump up their cash?"

Good arguments FOR. Now let's see the KLN:

However, the low-tax lobby group the Taxpayers' Alliance (TPA) took a drastically different view.

Harry Fone, TPA grassroots campaign manager, said: "Imposing levies on homeowners who had no idea of the proposal when they bought would be deeply unfair."

OK, let's rephrase that: "Income tax hikes on people who had no idea that their taxes would be used to subsidise landowners elsewhere in the country when they started their current jobs are perfectly fair and reasonable."

Gloriously missing the point about housing supply and demand in London

Shaun Bailey in City AM:

We need a bold new approach to tackle London’s housing crisis...

Since 2000, London has added over two million people, but has built fewer than 400,000 properties. Add in the surge of foreign money into our housing stock, plus more people living on their own, and you have an expensive – and exclusionary – mix.

The only way out of our current mess is to build, but politicians have promised to do that for years. While some have done better than others, every single one of them has failed to meet London’s actual needs.

The lack of self-awareness is staggering.

Those two million extra people moved to London from somewhere else, quite voluntarily, mainly attracted by the higher wages. For a given supply of housing, people will continue to move there until rents have risen to a level where the higher wages are cancelled out by higher rents.

If housing supply increases, rents might fall, very briefly. People who were previously deterred by the higher rents will move to London. Rents will increase to their previous level, probably within days or weeks.

Fair play to the lad, he seems to be recommending that London builds a lot more council housing for fixed rents. Let's assume they give priority to people who already live in London, this frees up private rented accommodation and people from elsewhere will move in to them, it makes no difference to the new arrivals.

'Cause London taxi drivers care so much about reducing pollution, innit?

From the BBC:

The mayor of London has urged the government to follow New York's example and allow a cap on the number of minicabs in the capital. Sadiq Khan said an increase in private hire cabs needed to be halted to combat congestion and improve air quality...

In 2010-11, TfL counted 61,200 private hire drivers and 50,663 private hire licensed vehicles in London. This went up to 113,645 drivers and 87,921 vehicles in 2017-18 - an increase Mr Khan described as "massive" and "unsustainable".

Blatant protectionism of course. For some reason, London mayors - of whichever political party or none - always kow tow to the London cabbie lobby.

Steve Wright, chairman of the LPHCA, said a cap would only push up prices, make it harder for companies to recruit drivers and leave minicab users stranded: "This is a ridiculous proposal. It's just a draconian thing from years gone by. It's protecting the black cab industry and will be detrimental to consumers."

Nailed it.

The final insult is hurled from the parapets of the cosy protected cartel, from the FT:

Steve McNamara, general secretary of the Licensed Taxi Drivers’ Association, said: “We support the mayor in calling for a cap in private hire vehicles in London. With the number of PHVs on London roads nearly doubling in recent years, Londoners have seen a rise in congestion and a negative impact on air quality.” There are 23,800 licensed London taxi drivers.

Funnily enough, official London taxi drivers all drive diesel vehicles and leave their engines running while in the taxi ranks.

Innumerate fuckwits of the week.

From the Evening Standard, friend of rent seekers everywhere:

40 cab firms go out of business just months after 5,000% rise in fees

1. There are 2,400 cab firms in London, as the TfL lady says, 40 shutting down in a few months is not statistically significant.

2. The 5,000% rise is nonsense. The point is, TfL put the fees up from a token amount to 'real money' (average about £100 per car/driver per year, it would seem).The percentage increase is irrelevant if the starting figure is tiny.

3. TfL's new system is fundamentally flawed of course. The charge per year per cab/driver seems way too high as it can all be automated. Worse than that, they have a banding system:

Those with between 101 and 500 cars will see their licence fee leap by 5,200 per cent from £2,826 to what the LPHCA calls an “extortionate” £150,000. Operators with between 501 and 1,000 cars could see their bill jump from £2,826 to £350,000 over five years.

Clearly, if you are running exactly 500 cabs, the average cost per cab/driver is £60/year, chump change. But increase that to 501 and the average cost is £140, which is clearly a barrier to growth, and will encourage businesses to merge into larger entities which are just below the upper limits, or for businesses which are just above the limit to scale back. See the example of Greyhound cars in the article.

What's wrong with a flat annual charge per cab/driver? That's what the cab people should be campaigning for, not against charges in general. As I explained before, divide £100 per cab/driver per year by thousands of journeys per year, and the added cost per journey is a few pence.

4. A TfL spokeswoman said... the fee rises were “proportionate” after a dramatic rise in the size of the industry over the last five years had greatly increased the costs of overseeing them. The fees will fund extra compliance officers “who do a crucial job in driving up standards and ensuring passengers remain safe”

That's bollocks. For sure, TfL's costs double if the number of cabs doubles, but the cost per cab is unaffected. Is that really the best justification that this multi billion turnover organisation has dreamed up over the past few months?

More London taxi-based rent-seeking fun

From The Daily Mail:

The number of Uber drivers in London should be capped to ensure 'healthy competition and consumer choice', the boss of a rival minicab app has claimed. Kabbee chief executive Justin Peters called for a limit on the proportion of minicab drivers overseen by one company if Uber overturns a decision not to renew its operating licence.

'Nuff said.

From The Evening Standard:

An "extortionate" rise in licensing fees for private hire car operators in London will force thousands of drivers out of work and close hundreds of cab firms, it was claimed today. Transport for London has approved increases that will see five-year fees leap from less than £3,000 to £700,000 for some operators.

The charges, which last rose in April 2013, depend on the number of cars run by firms. Those with between 101 and 500 will see their licence fee jump from £2,826 to £150,000. Operators with 501 to 1,000 cars will see their bill jump from £2,826 to £350,000 over five years, while those with 1,001 to 10,000 cars will see their fee go from £2,826 to £700,000.

1. TfL is doing a bit of bureaucratic rent-seeking here. It's budget is about £200 for each driver and each car per year for monitoring, which is of course way too high.

2. If it really cost this much (which it doesn't), it would seem reasonable to charge £200 per driver and per car a year. So if anything the charges are too low.

3. A minicab business with 10,000 drivers is only paying £14 per driver per year (£700,000 ÷ 5 years ÷ 10,000 drivers). This is a slap in the face for a business with 1,001 drivers, which has to pay £140 per driver per year (the same calculation applies in every band) and acts as a sort of barrier to entry/growth. The marginal hit from going from 999 to 1,001 drivers is more or less infinity for those last two drivers.

4. Nonetheless, those charges aren't huge, absolute maximum about £3 per driver per week, divide that by a few dozen journeys and it's next to nothing. If they add that to their fares, it is not going to make a measurable difference to quantity demanded, so the claim that this "will force thousands of drivers out of work and close hundreds of cab firms" is complete and utter bollocks.

Reader's Letter Of The Day

From The Metro:

Regarding the axing of the £200 million London Garden Bridge [MetroTalk, Wed]. We have lots of bridges. Stick some of those giant plant pots on them and, hey presto, you have a Garden Bridge* at a fraction of the cost.

Elle, London.

Should read "several Garden Bridges", but the point stands.

Readers' Letters Of This Week

From The Evening Standard (Thursday):

WHY is no mention made about the thousands of brilliant nurses from Commonwealth countries who staffed our hospitals in the Eighties and Nineties?

Most of these professionals were forced to return home when their two-year visas ran out. They were replaced by nurses from the EU, many of whom struggled with working English for quite some time.

If there are sensible working visas that encourage medical and nursing staff to come over here - from the Commonwealth, the EU and further afield - Brexit will not be a problem for the NHS.

Sophie Clement-Jones

From The Evening Standard (Friday):

Contrary to your headline ["Brexit fears of NHS staff crisis", July 25], the real crisis is one of retention of NHS staff who cannot afford to live in the capital. NHS nurses in London typically work a 12-hour shift but if they live outside the capital they have to travel for two or more hours a day. This is unsustainable.

Looking to Europe for a solution to a British-made problem seems an off move, especially as there is a shortage of nurses in Europe at present.

Dr Kate Brown.

There are inherent logical flaws in both letters, but they appear to be based on facts/experience and both are asking the right questions.

Stockbroker LOLZ

From City AM:

Sports Direct has split from three of its brokers, announcing today that Liberum Capital would be its sole broker from hereon.

The controversial retailer's former collection of brokers was made up of City heavyweights Goldman Sachs, Citi and Haitong.

Haitong and Citi are both neutral on the company's shares, while, last May, Goldman Sachs stopped recommending investors snap up shares and then later slashed its full-year profit forecasts.

By contrast, Liberum is one of the few brokers with a “buy” recommendation for the retailer.

Reader's Letter Of The Day

From today's Evening Standard:

Regarding your article on business rates, there is hope for London's retail and office tenants. There is plenty of evidence to show that increases in rates are offset by equal and opposite reductions in rents, therefore the only losers from this in the long run will be landowners.

They have enjoyed substantial capital gains and increases in rents over the past seven years [i.e. since the last revaluation], so few will shed a tear for them.

Joe Momberg

A pity that either Joe or ES didn't add the 'Young People's Party' sign off.

Or to put it another way, Business Rates is just a super-tax on rents; total London rents have risen by £5 - £10 billion a year over the past seven years, and the government has finally got round to increasing this super-tax to what everybody with a little foresight expected it would be anyway.

Stupid Idea Of The Day

From the BBC:

Thousands of lorries could be banned from London to make the roads safer for cyclists, under plans proposed by London Mayor Sadiq Khan.

He wants a rating system from zero to five stars for heavy goods vehicles based on the driver's level of vision from the cab. The 35,000 zero star-rated HGVs currently operating in London would be banned by 2020 under the proposals...

Nine cyclists and 66 pedestrians were killed in the capital last year, according to Transport for London. The mayor's office said that over the past two years HGVs were involved in 23% of pedestrian fatalities and 58% of cyclist deaths in London, despite accounting for just 4% of the miles driven in the city.

Motor vehicles, bicycles and pedestrians just do not mix. Motor vehicles go on roads, pedestrians go on pavements and unfortunately there isn't really space for a decent network of cycle paths. It would be lovely if we had them, they are a joy to use, but we don't and that is the end of the matter.

Lorries only make up 4% of miles driven? So what? They bring in 90% of all the goods consumed in London and take 100% of the rubbish. Far more relevant to point out that only 1% of commuter journeys are by bicycle. London would manage just fine if nobody ever used a bicycle again, ban lorries and we're screwed. If politicians really cared about cyclists being killed and injured, they'd do a far better job by banning bicycles.

Further, for every one large lorry they ban, they will have to use a dozen smaller vans, so that will increase traffic volume by forty or fifty per cent, and I don't think anybody wants that, not even cyclists. Except all the people selling and driving the vans, I suppose.

Rant over.

Each side of this building is in a different postcode district*

* Or more accurately, the west side is in WC2, the north side is in W1, the east side is in WC2 (again) and the south side is in SW1.

Reader's letter of the day

From yesterday's Evening Standard:

It seems that the British Property Federation is salivating at the concept of "build to rent" (Letters, April 18) and misinterpreting Simon Jenkins's article (April 15).

All the evidence shows that builf-to-rent will not make any difference to the housing crisis - over the past 20 years, the stock of landlord-owned homes has increased by more than the number of new homes built.

The BPF regularly speaks out against higher property-based taxes - the very idea Mr Jenkins suggests would lead to a far more efficient allocation of housing.

Mark Wadsworth, Young People's Party.

Simon Jenkins on top form

Ever keen to annoy as many people as possible, the main thrust of his article in yesterday's Evening Standard was that homes in the private rented sector are probably used more efficiently than owner-occupied or social housing. Which is probably true.

He redeems himself with this though:

Rich cities such as London should stop moaning that “my children can find nothing affordable in Camden” and think of less fortunate parts of the country — or indeed London. The capital keeps demanding and winning ever higher subsidies for trains, runways, academies, museums and garden bridges. More ridiculous, it demands and wins subsidies for “first-time buyers”. These subsidise demand rather than supply, driving prices even higher.

Some ancient Whitehall statistician, constantly quoted, says London “needs to build” 50,000 new houses a year “to meet demand”. This is illiterate. Londoners probably demand a million houses, or two million. Demand for space in a city is infinite and impossible to satisfy. Everyone always wants somewhere better to live — and if asked will “demand” it…

What role is there for government in all this? One is to keep the property market as open and flexible as possible. Taxation should do everything to induce empty space into use. But government should also care for those in acute housing distress. Neither role is being performed in London…

London’s curse, geographer Danny Dorling has written, is “space hoarding”. Whether the so-called bedroom tax is the answer — or perhaps a more steeply graduated council tax — all surplus living space should be taxed. London’s hidden and least expensive housing surplus is in houses already built, not unbuilt…

The Government’s current attempt to extend right-to-buy to housing associations should increase, not decrease, rental supply. There is nothing wrong in right-to-buy but there is everything wrong in the proposal to discount prices and subsidise them from social housing budgets. It is a cross-subsidy from poor to rich and indefensible.

Which I have been saying for years.

Either they are terrible at maths or they are terrible liars.

Exhibit One

From The Evening Standard:

Zac Goldsmith claims Sadiq Khan would fund fares freeze with 59% rise in council tax

The row between the mayoral candidates over transport fares intensified today as Zac Goldsmith claimed his Labour rival would be forced to increase council tax by £175 a year for families to pay for a freeze.

Woah! Average Council Tax in London is £1,050 a year, slightly lower than the rest of the country (despite rental values and local per capita spending being about twice as high). That looks more like 17% to me…

Tory analysis of the figures suggests Mr Khan would have to increase City Hall’s council tax by 59 per cent — £175 a year for a typical household.

Sneaky! Technically, a London Council Tax bill is split into £850 for the local borough and a precept of £300 for the LGA (not many people notice this). £175 divided by £300 is of course something like 59%.

It's not even clear where the £175 comes from. TfL fare income is £3.8 billion a year (page 118 of their annual report, the other half of their budget is subsidies from the taxpayer), so if the normal price increase is 3% a year, a freeze means that TfL is foregoing £114 million a year, divided by 3.5 million homes = an average increase in Council Tax of £33 for each year that the freeze is in place.

Which seems like a perfectly sensible way of doing it to me, especially if the Council Tax increases were focused on Zones 1 and 2, who benefit most from TfL but pay the least towards it in fares, and especially if this meant that general taxpayer subsidies to TfL were reduced.
-------------------
Exhibit Two

From The Nuffield Foundation (who are otherwise decent chaps):

Public sector employers, such as the NHS and schools, will need to find more than £3 billion a year from 2016–17 to pay higher National Insurance contributions.

Aren't we always told that National Insurance is there to pay for the NHS?* Total NIC revenues are around £110 billion, the NHS costs a bit more than that, so it's not far off. A tax is not a real cost to the NHS, because the NHS is taxpayer funded (a point which Lola has made about a million times).

* Cognitive dissonance being what it is, pensioners also claim that they have paid for their current state pensions (just under £100 billion a year) with their past NI contributions. When challenged, they refuse to accept that National Insurance is not a magical tax which can be spent four times over (for both the NHS and other people's pensions in the past, as well as the current cost of the NHS with a surplus built up being used to pay current pensions). I have actually seen pensioner propaganda saying that pensions are too low because their past NI contributions were squandered on something else, meaning it is spent five times over or some such accounting bullshit.

Vote buying? Who? Us?

From yesterday's Evening Standard:

GEORGE OSBORNE’S new Help to Buy London mortgage scheme could reduce first-time buyers’ monthly repayments by up to half, a top broker said today.



New buyers with a five per cent deposit can apply for government zero-interest equity loans of up to 40 per cent of the value of the property from today. Only having to find a mortgage for 55 per cent of the property will allow young buyers to access more attractive mortgage offers, said Ray Boulger, technical director at broker John Charcol.

On a £500,000 home, buyers with a five per cent deposit will need a £275,000 mortgage, compared with £475,000 without government backing. The Government’s equity loan is interest-free for five years and then has a rate of 1.75 per cent, rising by the level of RPI inflation plus one per cent each year. Help to Buy is available on new-build properties inside the M25 worth up to £600,000.

So even by their own admission, it will push up prices quite significantly; prices being the inverse of the effective interest rate.

And what a coincidence that Conservative mayoral candidate Zac rocks up for a photo shoot on the very day that the Conservative national government put this wizard wheeze into effect.

The London Green Party's "fair fares" idea.

This idea has some appeal:

Our three key measures are:
* the phased introduction of a flat fare structure, making zones a thing of the past, with the immediate abolition of zones 6 and 4,
* justice for part-time workers, with a daily cap that matches the rates paid by monthly season ticket holders
* a new 'ONE Ticket' allowing changes across all modes to close the gaps for people who currently pay twice when changing from bus or train to the Tube as well as ensuring that people changing buses pay only once for their journey.

"It's not fair that people in outer London pay so much more to get to work in the centre of the city - especially as it's also easier for people in the centre of town to use even cheaper or free alternatives such as hire bikes, cycling or walking," says Sian Berry, the Green candidate for Mayor of London.

Instinctively, it makes sense to make people pay more if they travel longer distances, but with local transport, people aren't paying for the distance as such, they are paying to get to work, mainly in Zone 1 or 2, or to get into Zone 1 for an evening out or to go shopping.

Currently, annual season tickets cost this much:

Zone 1 only - £1,296
Zones 1-2 £1,296
Zones 1-3 £1,520
Zones 1-4 £1,860
Zones 1-5 £2,208
Zones 1-6 £2,364

That's pretty flat already - a journey within Zone 1 is probably less than a mile, from the outer reaches of Zone 6 into Zone 1 is about fifteen miles, but it only costs twice as much.

But people don't pay to sit or stand on a train or a bus. It's a burden rather than a pleasure.

You could easily argue that Zone 1-2 prices should be higher than Zone 1-6 prices. If Journey A gets a commuter into town in five or ten minutes, then that's a much better service that Journey B which takes three-quarters of an hour to get you into town. That's exactly the same as rents being higher nearer the middle of town - people are paying their landlord for shorter commute times; why not have them pay the body actually providing the transport?

But it would be interesting to see what happens if there were a flat season ticket price of averaged out £1,860 or something. I strongly suspect that the behaviour of people in Zones 2 to 3 would not change that much, they would just pay the extra £300 or £600. Perhaps a few people in Zone 1 would walk to work instead? I also doubt that a £350 or £500 annual saving would encourage many more people to commute in from Zone 5 or 6. The only way to find out is to do it.

Another thing worth mentioning is that Transport for London's income is roughly half ticket sales and half subsidies. Rental values are a function of ticket prices, so a subsidy to travel is a subsidy to landlords. If the subsidies were abolished, an annual season ticket would cost around £3,500 a year (wild guess).

That would push down rental values by the same amount, i.e. instead of a working couple paying £18,000 a year rent and £3,500 for two annual season tickets, they would end up paying £14,500 rent and £7,000 for tickets. This effect would be stronger near the centre and less so on the outskirts, so abolishing the subsidies would be an indirect and slightly crude form of Land Value Tax on London landowners, as well as being a corresponding saving for taxpayers everywhere else in the country. So win-win, I think.

Reader's Letter Of The Day

Sent in by Carol Wilcox to the FT:

Sir,

I have just learned from a session of the House of Lords enquiry into the housing market that since 1951 the population of London has increased by 5 per cent. I don’t know whether its housing stock has kept pace*, but the real price of London houses has increased sixfold.

This does not seem to support Professor Muellbauer's assertion, in his letter of 21 December, that the main cause of exorbitant house price inflation is supply not keeping up with income and population growth.

I would say that it has more to do with the fact that the owners of £multi million homes in Westminster pay just £1,345.48 Council Tax, less than that paid by tenants of a £599 per month flat in Weymouth.**

* It has far more than kept pace, of course.

** While relevant to the regressive nature of Council Tax, that is not the relevant comparison here, the point is that current Council Tax in London is very low compared to what Domestic Rates would be if they had been indexed up in line with rental values since 1951. And the abandonment of rent controls and mortgage-to-income caps in the 1980s had a much bigger influence.