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September 24, 2008

Comments

dsquared

[AFAIAC, they are social landlords]

No that's got to be wrong. Housing Associations are separate incorporated bodies. Councils can't just tell them how to set their rents and even if they could, many of them have substantial mortgage debt outstanding, so they couldn't set rents at 20% of income even if they wanted to.

The £100bn waste figure is not one that can form the basis for rational discussion, sorry.

Sam

[If you want to live somewhere that costs £120 a week with a £18 C Tax bill, then fine, maybe the Council will make you do a 40 hour a week workfare job for £138]

this is definitely going to create pinch points though, to say the least; how do you transition someone from this to 16 hours at minimum wage?

Dsquared: If one has a workfare model, one must also allow the partially employed to work at the workfare "job". So your hypothetical person could take a 16 hour minimum-wage job and then work 24 hours a week at the workfare job. No pinch point.

Will

I don't see how threatening someone with homelessness unless they agree to drive a lawnmower round the same patch of grass for 40 hours a week is politically neutral.

If the figures don't work for a universal income that people can actually live on, then maybe we're stuck with circumstantial benefits for the time being and should be looking instead at ways to reform the existing system sensibly. Raising the benefit withdrawal threshold to something like £50 a week instead of £5 would be a start, as would withdrawing them at 50p in the pound rather than 1:1. This would have similar effects at the bottom of the income scale, and probably be cheaper than also giving £60 a week extra to the already gainfully employed.

dsquared

[So your hypothetical person could take a 16 hour minimum-wage job and then work 24 hours a week at the workfare job. No pinch point.]

Such a person would be precisely £3.97 better off doing so compared to the 40 hours for £138 workfare job, with no compensation for the obvious difficulties of doing both jobs. That's pretty much the definition of a pinch point. Also, if this "workfare" is going to involve flexitime, it's going to have a murderous overhead cost.

Mark Wadsworth

@ Dsquared 5.06 pm, as a simple matter of fact Housing Associations are organs of the state, funded by the state with various tax exemptions (corporation tax and stamp duty). They are, in the jargon, 'registered social landlords'.

http://en.wikipedia.org/wiki/Housing_association

If you don't understand this you won't understand the discrepancy between your figure for 'HB claimants in social housing' (from ONS) and my figure (from DWP).

Plus your argument about mortgages applies just as much to local councils who also have borrowings.

@ Sam, thanks (I think).

@ Will, can we agree on the CI scheme as it applies to straight cash benefits? I sense that you are not happy with my two distinct and separate proposals for social tenants or for private tenants.

So what's your suggestion? And saying "Treble the CI" does not wash, that is far from politically or fiscally neutral.

And what's wrong with driving a lawnmower to pay the rent? That's what a lot of people do. If my wife and I didn't go out to work and stopped paying the rent, we'd be homeless pretty soon as well. I do not see a problem with that. That's why we go to work.

Will

It depends how long the grass is.

Without getting bogged down in the mud of that particular example, local authorities, or anyone else, are of course free to employ people at market rates to do any work they actually need done.

That's different from workfare, which is just an endless stream of repetitive tasks, self-esteem seminars and group exercises designed to fill the days of the unemployed so they can't wander off and do anything more interesting or profitable on the side.

I'd be in favour of a CI that guaranteed a minimum standard of living for everyone in the country, because I think that's a desirable goal of public policy. I'm not interested in having a substandard universal benefit just for the sake of having one; and if it's just going to be a way of cutting back existing benefits and passing on the savings to the rich, then to hell with it.

Will

Oh, and I did say:

If the figures don't work for a universal income that people can actually live on, then maybe we're stuck with circumstantial benefits for the time being and should be looking instead at ways to reform the existing system sensibly. Raising the benefit withdrawal threshold to something like £50 a week instead of £5 would be a start, as would withdrawing them at 50p in the pound rather than 1:1. This would have similar effects at the bottom of the income scale, and probably be cheaper than also giving £60 a week extra to the already gainfully employed.

dsquared

Mark, I know what a Housing Association is, which is why I know that you can't simply treat them as an arm of the state and mandate that they charge rents of 20% of pre-housing cost income. You'd have a load of bankrupt housing associations on your hands. Councils have other sources of income apart from rent but housing associations don't. Which is why you need to be looking at the split "LA tenant" versus rest rather than "Social Landlord" versus rest.

Jim

Legislating for a blanket 20%-of-income social rent would indeed entail having to effectively nationalise housing associations by drawing them into something like the current monstrously complex Housing Revenue Account system for redistributing rental income between councils. This would probably have the knock-on effect of shutting down housing associations' access to private finance since the state would be effectively running their accounts.

The 20%-of-income rule would presumably have some other odd effects. Since it would be independent of housing quality, housing size, area quality or management quality, you'd be making social housing even more insulated from market reality than it already is, and people in the nicest homes/areas would hit the jackpot because they'd be paying no more than people in the shittiest homes on equivalent incomes. So in the higher cost areas there would be very little incentive to move from your nice-but-cheap-as-chips social housing to the 'workfare or the workhouse' private rented sector.

Mark Wadsworth

@ Will, Jim, dsquared

Don't throw out the baby with the bathwater.

The CI Trust booklet shows that it would be perfectly affordable to pay £60 a week to all adults, with a withdrawal rate of 33% (i.e. the benefit is universal and all income is taxed). That is surely better than what we have got.

All the arguments that we are having are about Housing Benefit/Council Tax Benefit.

I get the drift that everybody hates my ideas. But can anybody come up with anything better that is affordable?

And Housing Associations are controlled by Statue and funded/subsidised by the taxpayer and owned, ultimately, by The State. How can anybody claim that they are not organs of the State?

Will

I've found this discussion useful because it's clarified in my mind that what I'm in favour of is a less punitive regime for the poor, however achieved, rather than universal benefits per se.

I think Mark and I just disagree on which of these is the baby.

As long as we're being challenged to come up with alternative systems, though, then why not abolish the DWP in its entirety and make benefits for non- and part-time workers part of the tax credit structure? Obviously this is off the top of my head, so I haven't run the numbers, but two likely effects spring to mind:

1) it would actually improve the extant tax credit system, because people moving into work would already be on the books, rather than caught in Basic Rate limbo until their claims get sorted out; and

2) it would address exactly the problem we started off talking about - the punitive level of benefit withdrawal for daring to work part-time. The current system of only paying tax credits for work over 24 hours a week just aggravates this; mashing the two systems together would allow a smoother progression.

Anyone care to do the math on this?

dsquared

[The CI Trust booklet shows that it would be perfectly affordable to pay £60 a week to all adults, with a withdrawal rate of 33% (i.e. the benefit is universal and all income is taxed). That is surely better than what we have got.]

Mark, my argument is that in isolation from the housing benefit system, this withdrawal rate of 33% is meaningless; the actual withdrawal rate faced by someone at the poorest level is the withdrawal rate of housing benefit.

Jim

I don't hate your ideas, in fact I'm sympathetic to the aims of the CBI. I'm just sceptical that we would ever get sufficient agreement on a solution that is (a) adequate to people's needs, (b) universal in that it treats people the same, and (c) affordable in relation to current taxation levels. IMHO the universality criterion is in direct conflict with the idea of housing poor people in higher cost areas so I would prefer to drop it, but for many CBI advocates it seems fairly central and in dropping it you end up tying yourself in some strange knots as in your proposed council/private tenants solutions.

Still, it might not be much worse than the current system. I just don't think it is obviously better *enough* to win sufficient support given the huge headaches and disruption involved in moving from one system to another. But I'm still open to being convinced either way.

Alex

There's a pony in the room (rather than the usual elephant), but nobody wants to talk about it.

The pony is to be found in the assumption of fiscal neutrality; we can get rid of all this bureaucracy, offer the poor a better deal, and do it without even spending any money! Pony.

All the fiddling around to get a proposal that is pony-compliant seems to be providing a range of equally horrible options *because there's not enough cash in the system*. Get your CBI but, ahem, lose your housing benny and hence house. Ah, the housing bennies aren't counted, so the plan is still as bad as before (and of course they aren't available to fund the CBI). Get your CBI but be forced to go and dig holes and fill them in again, which basically defeats the whole object of CBI.

As some guy called Davies said, many schemes to help the poor have been considered but the only one with a record of success is money. If you want a radical redistribution, soak the rich. If you don't, stop pretending you do.

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A Job Creator

WOW!!!! Negative wages are a great idea!!! I'm a brave, heroic, patriotic job creator. If I could create negative-wage jobs - I'd be able to employ EVERYONE!!! Negative wages would also accelerate the best allocation of capital by moving more money to job creators at a faster pace than positive wage jobs. With more capital, job creators could easily create more jobs. This upward spiral of wealth aggregation sounds like a permanent cure for all economic problems.

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