Reader's Letter Of The Day

From The Evening Standard, page 57:

The arguments against rent caps ignore all the hard evidence.

For most of the twentieth century, the UK had quite strict rent controls and better tenant protection. Yes, the result was that rented accommodation was of lower quality - but landlords were no longer outbidding owner-occupiers, keeping a lid on house price inflation.

[This para was edited out: As a result, the number of households renting from private landlords fell from 90 per cent to 10 per cent between 1900 and 1990; and the number of owner-occupier households went up from 10 per cent to 70 per cent. Social housing took up the slack.]

The most worrying statistic is that among the under-35's, owner-occupation levels have fallen from two-thirds to one-third over the past ten years. So reintroducing strict rent caps is a core part of YPP's housing and economic policies.

It is not just about protecting tenants - to borrow some Tory slogans, it is about putting money back into people's pockets and having a property owning democracy.

Mark Wadsworth, Young People's Party PPC for Epping Forest.
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In response to the comments, replacing taxes on income with taxes on land is a much better way of doing everything and would sort out most so-called economic problems, but on the narrow issue of high rents/house prices and wealth inequality, a combination of mortgage restrictions and rent caps are a reasonably good second-best way of doing things - they largely solve these narrow issues (but not much else).

Life copies satire

The Daily Mash, 21 November 2014:

TACTICAL voters no longer have any idea who they are meant to be voting for or who they are trying to keep out, they have admitted...

Political blogger Susan Traherne said: “UKIP’s growing power, the Greens overtaking the Lib Dems and the willingness of every party to go into coalition with every other means tactical voting is over.

“Voters are now advised simply to cast their vote for the party they would most like to see actually running the county. Which admittedly doesn’t make the choice any easier.”

The Daily Mail, 30 April 2015:

Baffled voters are switching between all of the main parties or giving up on the election altogether, pollsters have warned...

Gideon Skinner, from IpsosMori, said: "Swing is a very useful concept, but never forget that it is now a misleadingly simple name for a very complex business. Most of the shift in votes these days is unlikely to involve many people who voted Conservative five years ago now having decided to vote Labour instead.

‘Today, most of the movement is between the two big parties and the smaller parties, of 2010 voters thinking they will not turn out this time (or vice versa), or people moving between the smaller parties. Rather than thinking of a swing, it is probably more useful to picture a roundabout - or as an overlapping flow of voters between multiple parties, as we show here."

It was the Sun what won it!..... by backing both sides

Fantastic double think from the Sun.

Labour-Conservative 'grand coalition' negotiations progressing smoothly.

From The Daily Mail:

David Cameron today announces a Tory promise not to increase VAT, income tax or national insurance over the next five years.

The Prime Minister says the tax-free personal allowance should rise to £12,500 by 2020 while the 40p tax threshold will increase to £50,000. The Conservatives have repeatedly accused Labour of leaving the door open to freezing or lowering the 40p threshold, trapping millions more into paying the tax rate created to hit the rich.

Today Mr Balls insisted he would ensure the threshold rose at least in line with inflation every year and 'would like to go further'.

Simon Jenkins on top form

From the Evening Standard:

I visited Brixton as a young reporter, to witness old residents fighting landlords who were winkling them out in order to turn their terraces over to West Indian multi-occupation. Resistance was so fierce that in the early Seventies Lambeth council went Tory. A local councillor by the name of John Major became housing chairman. Such was the turmoil that by the Eighties Brixton had become synonymous with riots.

The urban wheel keeps turning. Brixton is no different from Islington, North Kensington, Camden or Stoke Newington. Yesterday’s migrant is today’s gentrifier. Inner London has always been a place of change and renewal. When its economy lags, housing tenure tends to stabilise. When the economy booms, “gentrification” sweeps across the city like a hurricane…

Yet it is hard to see what anti-gentrification protesters hope to achieve. Subsidising housing for the genuinely poor is sound welfare. But the idea of “local people” as such being entitled to housing security [in one area] for life was a socialist whitewashing of anti-immigrant prejudice. Romantics may proclaim the need for rural villages to keep out “foreigners” but in a city this makes no sense. It is London’s role as a national melting pot.

Apprenticeships

There's a lot of talk about apprenticeships out there. They're the sort of thing that sound like a great idea. You know, the sort of thing where a young lad or lass come in, maybe not brilliant at school, but keen, hard-working, practical. Join a company and get a trade.

So, I thought I'd take a look at some of the apprenticeships out there by typing in a postcode in Northamptonshire into the Apprenticeships website and seeing what came up.

So, here's the first 2 pages I got:-

Apprentice Nursery Assistant required to work in an Ofsted grade 1 (outstanding) day nursery in Hunsbury, Northampton. 
Main Duties: 
• Caring for children. Ensuring that children are safe and relating well to each other. 
• Being creative and helping to plan activities for the children. 
• Enabling play and participating in play. 

No, that's a job. You hire someone who is good with kids, spend a little time sorting out activities.

Apprentice Teaching Assistant

That's a government job.

Apprentice Mechanical Engineer (Fork Lift Truck Maintenance)

That's an apprenticeship - lots of training needed. Good.

Apprentice Barber

That's "trainee hairdresser", something we've always had jobs in. The job even prefers standard hairdressing qualifications.

Apprentice Nursery Assistant

No, job.

Apprentice Office Administrator

With duties like "Organising and Management of various production paperwork forms for the running of day to day business" that's just an office junior job. Nothing in the job suggesting something more skilled other than that.

Apprentice Machinist Engineer

Some machining, learning some welding. That's an apprenticeship. Good.

Childminding Apprenticeship

Again. Job.

Apprentice Pizza Chef

At Pizza Hut. You're going to be putting toppings on some shipped-in pizza dough. Something a child can do in 30 minutes.

Business Administration Apprentice

"Generally assisting the MD" "filing scanning and photocopying". That's another "office junior".

It's really dispiriting. These are nearly all low-paid jobs, and jobs that require little training investment, which was always the problem - employers wouldn't train people because they could leave and go elsewhere. And a grant of £1500 isn't going to incentivise more advanced apprenticeships. It's just another jobs scheme where you get some money and the government picks up some low-grade training.

Moneyweek on top form

John Stepek nails it here, summing up Labour's latest bright idea, rent controls, and the government's (of whatever hue) attitude to house (land) prices generally:

But while it might be economic stupidity, it’s pretty smart politics – which sadly sums up the general tone of this election campaign nicely.

We all know that housing – specifically, house prices – is one of the most important issues to the British electorate. That’s why politicians like to make sure that they keep on rising.

If your average British homeowner sees that the price of their property is going up, then all must be well with the economy, and therefore they should vote for whoever is in power. That’s the simplistic – but I suspect, highly accurate – political calculus involved.

But there’s a twist this time around. Prices have been going up for so long that an ever-increasing group of people is feeling somewhat disenfranchised. In 2005, 70% of people owned their own homes. This year it’s down to less than 65%.

Those left at the foot of the ladder still aspire to own property. They still dream of the day when they too will benefit from an unearned, tax-free windfall resulting from a leveraged bet on house prices, as is every hardworking British family’s birthright.

Trouble is, they can’t see how they’ll ever get on to that ladder. And it’s clear that their parents are worried too. Apparently, 80% of the public believes Britain faces a housing crisis, says Mori.

Nigel Farage on top form

From the BBC:

Nigel Farage says he is "really rather bored" with the media's "obsession" that depicts UKIP as a racist party.

Shadow business secretary Chuka Umunna told the Independent on Sunday that a "virus of racism" runs through UKIP. But Mr Farage described the claim as "complete and utter rubbish".

Farage then sort of proves Umunna's point by quoting Hitler*:

He said the Labour votes in the north of England were "incredibly soft", like a "rotten window frame" that if UKIP pushed, would collapse.

* The original quote was of course “You have only to kick in the door and the whole rotten structure will come crashing down.”

The new Indian Bicycle meme: Doing X to fund Y

The Tories have taken this pre-election silliness to new levels today:

A Conservative government would use fines imposed on Deutsche Bank for its involvement in rigging interest rates to fund 50,000 apprenticeships, David Cameron has announced.

This reminded me of Labour's last desperate attempt to bribe Scottish voters:

Jim Murphy claims UK mansion tax will pay for extra nurses in Scotland

This is quite a popular meme actually, so I did a quick trawl. Here's a selection of all the silly "doing X to fund Y" proposals they have dreamed up over the past year.

First, they all had their ideas about scaling back subsidies for the City of London pension tax breaks:

The Liberal Democrat party "claims around £1 bn [extra NHS] funding for the following year (2016-17) could be found in a pension tax relief for the wealthiest and a dividend tax squeeze on those earning more than £150,000. Ending the Conservative "shares for rights" policy would also bring in extra revenue."


The Tories "have just announced that if they win the May election, main family homes worth up to £1million would escape inheritance tax if they were left to children or grandchildren. But the policy would be paid for by cutting back the amount higher earners are able to pay annually into their pension and still qualify for tax relief."


Labour leader Ed Miliband "has announced plans to take £2.7 billion from pension savers in order to fund a cut in student fees, if he wins the general election."

Greens and UKIP went a bit left field:

The Green Party "would introduce a new wealth tax, rigorously clamp down on tax avoidance and evasion and introduce a financial transaction tax - a Robin Hood Tax, and we are not ashamed to say that those on incomes above £100,000 should pay more income tax. Providing free social care for the over-65's means security and freedom from fear, suffering and loneliness for many, and it means 200,000 new jobs and training places."

UKIP of course have promised to spend the savings from leaving the EU and slashing the aid budget ten times over in various pre-election promises/giveaways.

One exception to the rule that these "doing X to fund Y" proposals have to be totally plucked out of the air and not in any way intellectually coherent is this one:

UKIP "is preparing a manifesto pledge to slash billions of pounds from Scotland’s budget to help to pay for tax cuts for English voters."

And as a nice book-end to the first one, here's how the Tories said they would fund all those extra apprenticeships last year:

The Conservatives "would cap benefits further to fund three million apprenticeships if they win the general election, the prime minister has said."

The missing homes conundrum; outright lies

Labour's timid ideas about modest rent controls/tenant protection have provoked the usual Homey backlash.

Top of the list of counter-arguments is the missing homes conundrum:

Labour was accused on Wednesday night of attempting to introduce rent controls like those blamed for damaging the property sector during the 1960s and 1970s.

The Conservatives said the policy had been tried unsuccessfully by Socialist governments in Venezuela and Vietnam, and would result in low quality accommodation and fewer homes being rented out.

What damage to the 'property sector'? We were building a lot more houses than now and a lot of people were buying them for affordable amounts. Rent controls simply made housing more attractive to owner-occupiers than to landlords, which is why the number of households renting privately fell from 90% to 10% between 1900 and 1990.

Unlike the author of The Telegraph article above, the Tory housing minister couldn't even be bothered to look up rent controls on Wikipedia comes out with this:

Conservative housing minister Brandon Lewis dismissed the plans, claiming only building more homes would lead to affordable rents. 'Rent controls never work - they force up rents and destroy investment in housing leading to fewer homes to rent and poorer quality accommodation,' he said.

For sure, the quality of rented accommodation might go down, but so what?

People are happy to put up with a few years of slumming it when they leave home, get their first job, go to Uni etc. What's really important here is reversing the decline in owner-occupation rates. Among the 24-35 age group, owner-occupation rates have collapsed from a two-thirds fifteen years ago to only one-third today.

To round this off, more bollocks from the end of the first article:

Grant Shapps, the Tory Party chairman, said: “Evidence from Britain and around the world conclusively demonstrates that rent controls lead to poorer quality accommodation, fewer homes being rented and ultimately higher rents – hurting those most in need.”

He is just making this up as he goes along. There is no real life evidence for any of this. We could present counter-evidence from Germany, which does have implicit and explicit rent controls and much better quality housing.

Sam Bowman of the Adam Smith Institute said: "Rent control is a stunningly bad idea that could devastate Britain’s cities and clobber renters. To paraphrase the socialist economist Assar Lindbeck: the only thing worse for cities than rent control is bombing them."

Rent controls do not 'clobber renters', they turn them into owner-occupiers, which I thought we all agreed was A Good Thing? Further, cities recover surprisingly quickly after being bombed or struck by an earthquake, provided the economic conditions are right. Even by his own admission, rent controls have a lot less impact than that.

Simon Walker, Director General of the Institute of Directors, said: "Basic economics tells us that if you artificially hold down the price of something, you get less of it in the market. This is as true for housing as it is for anything else. At a time when we appreciate there is a housing shortage, this policy is particularly short-sighted."

"Basic economics" tells us that there will indeed be less to rent, but the amount of housing is fixed, and there is no shortage in an absolute sense, so when landlords try to sell up, prices will fall to a level which former tenants can afford. Sorted.

(Obviously, shifting to LVT would sort this out much better, but that's not under discussion here).