The federation says that in areas where rents are already high, such as the London boroughs of Camden, Hackney and Haringey, many tenants moving into new social homes would face bills of £340 per week for a three-bedroom property. Even if people could get a job, their earnings would disappear in high rent repayments.
This would mean they “would have to earn at least £54,000 before they could get off housing benefit and be in a position where they could keep the bulk of their additional salary and find themselves better off in work”.
Think of what is actually being said here. Currently there’s some subsidy (hidden in the opportunity costs of below market rents) to social housing. This change, of charging near market rents and then subsidising those who need such subsidy through housing benefit won’t in fact change….or at least won’t increase….the subsidy being paid.
It will almost certainly decrease the subsidy….as not all those in social housing are unable to afford their rents. For we’ve this crazed system whereby if at one point in your life you need a housing subsidy then you get that subsidy for all your life. To take just one example. At some point Lee Jasper qualified for a council house in London. Yet, when he was earning £100,000 a year as an advisor to Ken Livingstone he was still in that council house and still getting that subsidy. As has Baroness Uddin, even as she bought a flat outside London and built a villa out in Bangladesh. There is no justification for such to be receiving housing subsidies and moving from a system where all social housing is subsidised to one where only housing for those who actually need subsidy, whether in hte social or private sectors, is subsidised will cure the system of this affliction.
What it will also do is clarify the subsidy being paid: instead of being hidden as an opportunity cost, something that most don’t understand (and given what we know about people, that they hate losing something they don’t have much more than not getting something they’ve never had), we’ll now have the total amount of housing subsidy there as a line item in the budget.
Now my number is a very rough one indeed. But if there are 4 million social housing units, and the average subsidy to each is £200 a week (drawn from a Guardian article and certainly wrong but I invite more accurate calculations of the total difference between market and social rents for the entire stock) then that’s a £40 billion a year subsidy. Add the £20 billion a year HB bill and we’ve £60 billion a year, 10% of government spending and near 5% of the entire economy, being spent upon housing subsidies.
If we actually see that number then we might in fact get off our arses and do something about it. £60 billion is enough to raise the personal allowance up to around £20,000 a year for example (a rough guide is that it costs £4 billion to raise it £1,000).
Setting the income tax level at around and about median earnings would be a suitable reward for sorting out the planning system which makes the land upon which you can build housing (for it is the land with permission that costs, not the house) so damned expensive would be a suitable reward, don’t you think?
I do, so here’s hoping. Liberate the planning system, drive the cost of housing down and alleviate much of the tax burden on the working man and woman. Sounds like a plan to me.