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April 24, 2012


Luis Enrique

I wonder how applicable that threshold model of collective behaviour would be to, say, the investment decisions of firms.


One major effect of "encouraging" someone to move from Newham to Stoke is that you are "encouraging" them to move from a zone of relative economic opportunity (there are some jobs are only a tube/bus ride away) to a zone where unemployment is even higher and there are no jobs nearby.

So in essence you are taking away what little social capital they may have had in the first place.

I come from a different part of the North, but I've seen sink estates on smaller scales. There's no evidence that turning Stoke into a mega-sink-estate is going to do anything but destroy economic value, unless someone is prepared to put a lot of money in regenerating Stoke.

Hard to see that as a net win for the country. Big win for the developers gentrifying Newham, of course...

Colin Hall

I shouldn't waste too much thought on the subject, as I'm assuming that the press will continue to highlight the hard luck stories and eventually the government will back down.

Personally I think it's a long time coming. How long can landlords get away with raising rents and we, the tax payers, make them rich. I think that this scheme was meant to result in lower rents in London, not the present chaos.


@ Metatone - that was my immediate reaction. Checking the data, though, it turns out that unemployment is higher in East & West Ham than it is in Stoke:
Sure, there are jobs available in neighbouring areas, but it's moot just how much of an advantage this is, as there might also be more people chasing them from around London.


Are we to assume that only the unemployed will be 'forced' to move?


I think the problem with this comes in one of your premises (no pun intended..) - housing benefit claimants don't necessarily value any particular house less than someone who can afford it without HB. They just lack the means (money) to express how much they value it.

And I don't think it's right to say here that the state is allocating housing willy-nilly - people on housing benefit choose their own house (to whatever extent we all do) and thus express their preference.

I think it's right to criticise housing benefit though - clearly not having a price floor does inevitably drive rents up. But then, we have housing benefit for a reason, because we've collectively agreed that there's no need in a wealthy for society for someone to go without a home.

That principle seems, as the 'no price floor' problem illustrates, to be incompatible with market provision. We didn't have this problem with a largely centrally planned system - council housing.

PS the no price floor problem seems to happen everywhere - Pell grants an means tested scolarships in the US seem to drive up university tuition fees, hugely inflating costs for those still struggling to afford university but not eligible for the grants(as with housing here). Yet in Europe, where systems have either been centrally planned (free) or have price caps (the UK) this problem does not exist.

Account Deleted

A low minimum wage, a failure to build council houses, and continued high demand for property in London will inevitably lead to more of the working poor having to rely on housing benefit.

It doesn't take a genius to see that, having now accepted the principle of a cap, councils will be "encouraged" to push the cap lower in real terms over the years, thus capturing more families in this trap.

The suggestion that the cap will "encourage" landlords to lower prices doesn't stand up to scrutiny. The lack of new builds and the generational impact of property hoarding mean that the private rental sector in London will continue to be robust. It isn't dependent on benefit claimants. Today's problem isn't Rachmanism and slums but new build buy-to-let.

The term "social cleansing" is causing some people offence, but it is an accurate description of what is going on. We are discriminating against a specific group on the basis of their perceived failure. Forget the Balkans, this is more akin to housing policy in Northern Ireland in the 50s and 60s.

The best bet for the people of Newham is to squat Boris's Island, if it ever appears.


So if we don't know what effect a policy will have, relative to an alternative, why not just choose the cheaper?


You seem to forget that low paid workers also get HB. Ever higher rents from the abandonment of Council house building and sell offs combined with low pay will impoverish a growing number of people both those who work and those who do not. This policy and the former refusal to build and renovate to supply homes is driving down real incomes and producing poverty. In one of the richest countries in the world. How shameful. And what a poor set of priorities, tax cuts for the wealthy in the budget and poverty increasing housing and welfare cuts. Shameful. And so little opposition from the so called opposition! Why not tax some of the retained profits firms do not want to use for investment and build or renovate some houses ?

Chris Purnell

Housing Benfit distorts the housing market and as a result managing that distortion is an example of downgrading expectations. Housing as a 'human right' is now part of our political and social DNA and has ceased to be subject to normal economic constraints. The government is quite right to wish to correct this distortion but is running in the face of a position which began with 'Homes for Heroes' circa 1920. They have a political challenge which they have too little political capital to see through.


"Houses should be occupied by the people who value them the most."

That's the homeless, then.

bamboo investment

Chris Purnell above has got it spot on really. Housing has indeed become a "right" and there is no way to backtrack on this. Unfortunately, the number of "rights" (usually at the expense of taxpayers) has exploded, whilst "responsibility" has pretty much collapsed. And then we wonder why so many are on the dole?


I see tories, above do not believe in human rights; I am not surprised!

They have finally admitted they are the party of greed and injustice. We would not want people to have rights! never vote for these backward jerks!! You vote for the reversal of human progress when you do.


It occurred to me thinking about this a few hours ago that the last time British people were turned into refugees in their own country was in 1940/41. Then at least it was the work of a foreign enemy Mr. Adolf Hitler. Now it is our own countrymen who are happy to do it. May be Mr.Purnell is an admirer of the fuhrers opposition to human rights and values. Sounds right.

It is unfortunate that Voltaire is not around any more so we could send our refugees to his country estate at Ferney as he was well known for his providing refuge to those persecuted by religious fanaticss!


I see that not only was Jim Callahan better at running the economy than the Con Dems but Neville Chamberlain was too.

"Now here's another chart that everyone is tweeting, and which Paul Krugman has just posted. The UK recovery is now doing WORSE than the great depression." Sixteen quarters with no rebound.

Chamberlain also built not a few houses for heroes to live in; so he must be a bad fish in Mr. Purnells' eyes. May be we could try a voodo rite to raise Harold Wilson and callaghan from the dead and put THEM in charge of the economy?

Paul Hillyard

"Homes for heroes"

Now that they don't need us to fight their wars or keep their empire or even fill their factories because they've gone to China or defend them from the Russians, we are no use to them.
Put them up north with the rest of the thieving scum, I don't want to see them near me when I get back from the tax haven.

That's what they really mean.

Paul H

In addition to the human issues (which are many), the Newham / Stoke story distills in a nutshell housing market failure in the UK and its link to regional economic policy. On the one hand you have the dysfunctional London market, which includes Newham (but affects every London borough) and is marked by a lack of supply of affordable homes. Then you have Stoke, which in recent years (including during the housing boom) saw a complete collapse in demand for homes (stories of homes passing hands for a few hundred quid in places like Stoke). This lack of demand in Stoke (and other places in the midlands and north) is contingent on a lack of jobs and prospects in these areas and an incentive for those who are able, to move out. It's symptomatic of the UK economy's skewered south east dominance.


@Chris - but should we ever get out of this recession (right now chances of finding a job are low everywhere) then Newham residents will have more of a chance than Stoke residents.

And that's a big part of the issue, it seems to me, the social engineering is occurring in the down times with an eye to the future.

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