Goodwill to all men: why we should be astonished by the UK welfare state

Having read a good amount recently on food banks in the UK this week, I had a little wander around the benefits system. I looked at a postcode in the southeast of England to see just how much you get from the welfare state in the UK if you aren’t working at all.

I started with a couple with two children and added up their housing benefit, jobseeker’s allowance, tax credits and child benefit. The result? A tax-free income of £24,269. That’s the equivalent of an earned (and hence taxable) income of £32,000. That’s very significantly more than the number we are always given as the UK’s average wage.

Then I looked at a single mother with two kids. Her payments come out to just under £24,000, so again an earned income equivalent of just under £32,000.

Finally, I looked at a single unemployed man of working age. His benefit payments in the same area come to a tax-free total of £12,300 with £7,600 of that being housing benefit. I then looked up the accommodation available to rent at that price or less in the area. Rightmove provided 68 pages of possibilities.

Now, none of these amounts add up to fortunes. But they don’t add up to anything approaching absolute poverty either.  Live frugally and stay out of debt, and things should be fine. Not exactly luxurious, but fine.

So what of the food banks, you will say? “They prove we don’t pay enough in benefits.” But they don’t really prove anything of the sort.

They prove that sometimes the state messes up benefit payments and leaves nasty delays. They prove that people aren’t good at managing money. They suggest that not everyone puts rent and food before fags and booze (but we don’t want to get into a discussion about the deserving and the undeserving here). They confirm that supply creates its own demand.

They might prove that some landlords are unscrupulous or that some families have more financial emergencies than others. They might confirm that we have a problem with mental illness in the UK. And they certainly prove that debt is a major problem in the UK: once you are in debt at high interest rates very few incomes are ever high enough – and £24,000 really isn’t. See my column from yesterday on this matter of debt here.

But are any of these things really a good argument for paying more in welfare? We’ve heard a lot about the misery of “the cuts” and the horrors of food banks recently. But wouldn’t it be nice if just sometimes commentators focused not on the occasional failures of our welfare machine, but on how astonishing it is to live in a country where the taxpayer via the state is prepared to pay up for what is a effectively a guaranteed minimum income for every person in the country (just over £12k a head, it seems) alongside state funded education and healthcare, with very little asked in return?

Because in an age when we are all said to be individualistic and endlessly selfish, it seems to me that on the goodwill to all men front, it really is quite something.

PS Please don’t comment here that it is not possible for me to know anything of poverty/welfare/living on a low income. Class based assumptions are not welcome on the Moneyweek website.

  • Rear Admiral Sir Vincent Smyth

    No class based assumption from me Merryn. But you are highly selective with your information. Why not choose as examples a 90 year old with Alzheimers, a Blind person with a carer or an Afghan veteran with PTS?
    Your figures are wrong as you mean an income of £31,000.
    Citing wages is pointless as people live off income which in the UK is now £34,000 per person per year.
    Plus you don’t tell us which SE postcode you use to suit your agenda. Why not use Porthcawl or Rutherglen?

    • Rear Admiral Sir Vincent Smyth

      As £15,000 of this is housing benefit as a result of no council homes being built,your couple gets only £9,400 for four people. That is only £45 a week each. Their BTL landlord gets most of it as a direct government subsidy. What I call socialism for the rich.

      • Rear Admiral Sir Vincent Smyth

        Plus Merryn. A tax free income of £12k per head as you assume would give your family £48,000,not £24,469.
        I get the feeling your astonishment is not of the how astobnishingly kind we are type, but more it is astonishing that we provide so much to those who we generally hold in contempt. Or have I misread the sneering?

    • quisical

      Why do you call yourself Rear Admiral Sir Vincent Smyth, Is there a joke here that I have missed?

      • Rear Admiral Sir Vincent Smyth

        Rear Admiral Sir Vincent Smyth Obleson is the polar explorer who gives a dull talk to the boys of Greybridge school in The Ripping Yarn, Tomkinson’s Schooldays. MWs titles do not show my full name sadly.

  • CB

    With regard to ‘the cuts’, I laugh anytime I see/hear mention of ‘austerity’. Funny kind of austerity that, rather than seeing the country living within its means, sees us continuing to borrow £100bn per year. Perhaps historians will be able to determine when in our history a large percentage of the population decided that rather than educate/work themselves into a better life, all they had to do was put their hand out and have ‘the rich’ (whoever they are, but certainly not me) pay for their lifestyle.

    • David Stuart

      Well said CB, couldn’t agree more!

  • Ellen

    Looks like the buy to let sector are the biggest beneficiaries of the welfare state and taxes paid to said welfare state are propping up house prices and driving up rents. So yes, I think we have an over generous welfare system but not in the way you are talking about in your article.

  • A Frith

    That’s interesting Merryn, I wonder how the figures would look in say, the North West?

  • A Frith

    Incidentally, my unmarried, childless daughter, who owns her own home, has a little job paying £400 per month, and she is entitled to – nothing at all.!

    • David Stuart

      Join the club! I NEVER earned what the average salary is said to be when working full-time! Welfare is bankrupting this country and as has been said housing benefit, benefits only landlords which the rest of us, whether renting or not pay for, it’s barmy! The problem is of course that if housing benefit were cut, house prices would fall, people would fell less well off and spend less, the economy would go into recession, welfare payments and government expediture would rise etc.etc!

    • Les

      She’s done it all wrong! Those who benefit most are those who have squandered every penny, never saved, never invested and then had a kid or two without being able to afford them.

  • Merryn

    Porthcawl for two adults, two children comes out just under £22,000 in net income (no tax payable so the equiv of an income around £28,000). And of course living costs will be lower in the north. It doesn’t matter where you choose, there’s plenty of taxpayer goodwill to all men.

    • Rear Admiral Sir Vincent Smyth

      But two adults working would only need a combined wage of £23,000 to take home £22,000. Of this almost half is a direct subsidy to a BTL landlord to house them .Leaving barely £50 per week per person to live on. Do we begrudge our fellow citizens this basic standard of living while tolerating excess at the other extreme?

      • keithoverton

        Dear Backside Admiral, you miss the point that I am still paying for these people to have a higher income than I have. B******s, let them work for it.

    • David

      Porthcawl is in South Wales, on the coast, between Port Talbot and Bridgend, not “the north” as you state. Buy yourself a map of the UK I suggest.

    • Ellen

      I’m really disappointed with this ‘Let them eat cake’ attitude. And the assumption that those claiming benefits are not working is largely inaccurate – with the exception of the BTL industry that take so much of the country’s ‘wages and benefits’. Its the abuse of land and housing by the lazy classes that has caused civil unrest in many countries that were occupied by former colonies. I find it hard to believe you have visited a food bank at all. Justin Welby, Archbishop of Canterbury, is one of the few public figures who understands hunger in the UK today is an issue. http://www.archbishopofcanterbury.org/articles.php/5459/archbishop-of-canterbury-on-hunger-in-britain

    • David Stuart

      which is totally unsustainable! The sooner our politicians admit this AND do something about it, the better!

  • CB

    Recently I tried to read Engel’s “The condition of the working class in England in 1844” (failed, dreary book, but it was cheap !). Anyway, it described how poor families often lived in a single room of a house with absolutely no furniture (using straw for bedding), and shared the house with other families. Poverty in its worse sense.

    Luckily those days are gone. I support the idea of a welfare state. We should not have people homeless or literally starving or unable to clothe themselves, but it strikes me we’ve gone way too far in the other direction. People can choose not to work and have a lifestyle that others – who work – struggle to get. I know people who choose to work limited hours so they continue to get benefits and enjoy a lifestyle that doesn’t involve full-time work.

    Our system is simply ridiculous and I’m sure it’s part of the reason productivity in this country lags the US.

    • David Stuart

      Again well said, CB!

  • Greg

    Much of this money goes to Buy-To-Let landlords, funding their mortgages and lifestyles. The massive welfare bill is due to failures of the neoliberal economic model with BTL driving up house and rental prices, social housing being sold off and not replaced by the ill-thought-through Right-To-Buy.

    We have a situation, particularly in London, where you need massive benefits just to survive. Our public transport system is largely owned and run by foreign Governments who profit at our expense. We have a minimum wage that does not cover the cost of living.

    It ‘s not ‘tax-free’ money as all of it is spent and much is subject to regressive VAT at 20%, however the BTL landlords benefit from huge unfair tax advantages.

    Neoliberalism has failed and society is broken. The political elite are out-of-touch, the rich are getting richer and the poor poorer. Capitalism has been shown to breed selfishness and greed – the more you have the more you want. We need a new economic model and to change attitudes of people and society. We need a more caring, ethical Government that considers humans, democracy, equality, fairness, the environment, animals and sustainability for the benefit of us all.

    • eduardo

      There is merit in both sides of the argument but surely a system (however flowery you label it) that provides a minimum standard of living helps prop up the rest of society?
      No matter how hard we work, do we need a replacement car every 5 years, a second Sky box, 3 or 4 TVs, and various versions of Apple’s finest? No, not at all.
      Our whole sytem is skewed from top-to-bottom but those at the very top benefit much, much more than those at the bottom. It is just easier to picture the indolent wretches we all see and tag the weaker, less able people in with them. The rest, the middle, are nicely programmed to work and consume in pursuit of the next version of much the same thing.
      As for those who work their socks off to scrape by day-to-day, if I am to demonise those on welfare, why should I care about you?

    • John Osborne

      Agree with you about effects of BTL and foreign ownership of utilities, but all your political prejudice and clichés are out of place here. There are many ordinary people here who’s views you would consider capitalist but still disagree with the present system.

    • Ben Jamin’

      Capitalised land rent poisons free market capitalism.

      If that didn’t happen (LVT) all the things capitalism gets a bad rap for, would no longer be a problem.

    • BoiledCabbage

      We need a new economic model

      Agreed.

      Lets call it ‘Get a Job’

      ?

      • Rear Admiral Sir Vincent Smyth

        I have a better model. Called let’s pay a living wage.

  • Nigel Henson

    Stop demonising buy-to-letters. most of them have been forced into the property market as a direct result of the Government and the Bank of England colluding in their incontinent QE binge and the suppression of interest rates to historic lows

    • Land Of Confusion

      The BTL’ers I’ve encountered are mostly people who have failed to save for their retirement but who, being born at the right time, have been able to use the unearned equity built up in their house to sponge off the community.

      It’s an astonishing kind of socialism, more so than paying an unemployed couple with kids ~£32k a year.

      • Rear Admiral Sir Vincent Smyth

        Correct .It is Socislism for the rich,just like the socialised debts of the banks.

      • Les

        Sponge?
        I know quite a few people in the UK who have invested as property as it’s safer and offers a better return than private pensions.
        The real problem is that your state pension is so low – a lifetime of contributions counts for nothing. In most countries, you retire much earlier and you get paid according to how long and how much you paid in. The minimum contributions here is 7 years and you get like $700 a month if you worked for 7 years on minimum wage, you will get probably $50k a year if you were a lifelong contributor on an average wage, because what we call social security (and you call pensions) are kept in a separate growth fund. Same pretty much everywhere else I can think of. Only the UK and Mexico have a universal pension, that’s why they have the lousiest pensions in the world.

        • Land Of Confusion

          I’ve had discussions with other people who, being near retirement have complained that those who didn’t work during their “working” years still get a basic pension like the rest of us. My counter-argument to that is the same as my counter-argument to you: Over the decades they’ve had the right to vote and to fix all these problems, so why now is it an issue?

          And it doesn’t matter how you try to justify or spin it, the fact is many of those retiring or nearing retirement have found that not only have they failed to save for their own retirement but so have the governments that they have elected. So faced with a self-created future of relative poverty they turn to sponging off the wealth produced by others to support the lifestyle they have become accustomed to.

        • Rear Admiral Sir Vincent Smyth

          Strange post. In the UK one must contribute for 35 years to get the full pension and 9 years to get the very minimum which is 25% of £110 per week, so not sure where you get $700 from. As for any brit getting $50,000 that is ludicruous. That would be £615 a week. I assume when you say we you mean Yanks as you do not say where you hail from.

    • Greg

      It is not ‘demonising’ them – I can understand why many do it, because of flawed Government policies which do not provide for the future, because people can (via BTL mortgages and largely unearned equity in their primary residence), and because there are vast sums of money to be made due to Government policies to prop up house prices, tax incentives to do so, limited supply of land and housing, and FIAT money.

      However it is ultimately greed and selfishness that leads to the ‘housing market’ becoming a way of accruing easy wealth, and the desire to own a second home, at the expense of those who are less fortunate and simply want one of life’s basic needs: an affordable roof over their head.

      • Les

        Less fortunate?
        I know someone in the UK who made good money and spent every penny of it on partying until she decided to get pregnant at 45 (“while she still could”), now works just enough to claim full benefits. She takes home about £17k a year from her job and the state pays her £22,000 tax free on top. She now takes home the equivalent of £60,000 a year before tax doing as little as possible, lives in a nice 2 bed in a posh part of London with her kid, drives a nice car and takes nice holidays and still has loads of cash to spare, thanks to her childless, home-owning, full-time working colleagues, none of whom get a penny from the state.

        • Rear Admiral Sir Vincent Smyth

          And your point is what? To take home £17,000 in the UK one must earn £22,500pa which is close to median wage. Please explain how the state then gives her £425 a week extra. Do you think a civilised nation should not support its children?

    • David Stuart

      I agree with your comments about the incontinent QE binge and the artificially low interest rates but BTL’s get tax relief on their mortgage payments whereas owner/occupiers don’t! This is a taxpayer subsidy which distorts the market!

      • Sean Howard

        You can’t compare BTL mortgages with owner occupier mortgages. BTL is a small business and, like any other small business, expenses can be offset against income for tax purposes. Only the interest portion of the payments are deductible. Many BTL business owners are not FAT CATS and make limited income from these businesses. They certainly do not deserve the culture of envy comments through this thread.

        • Rear Admiral Sir Vincent Smyth

          BTL is not a small business. It is a heavily taxpayer subsidised, get rich quick scheme for the realtively well off. BTL landlords get £15 billion a year in direct subsidies from the taxpayer due to a dogmatic refusal to provide social housing at a fraction of the cost.

          • Sean Howard

            BTL is a small business with all the risks and benefits that go with that – try recovering after an absconding tenant has trashed the house. I would be interested to hear your view on where these direct taxpayer subsidies come from. As most BTL mortgages specificly forbid landlords from letting their properties to anyone in receipt of DSS benefits like Housing Benefit we compete with all landlords for good tenants. I look forward to hearing how I get my hands on some of that £15B.

            • marcus

              I agree with you Sean – I have fallen into managing several rental properties by accident – death of a parent & partner moving in with me, so I rent out her thee bed terrace. I have seen the state of a variety of council run property – some very good, especially sheltered accommodation for the elderly and inferm – but a lot of it is pretty scummy. I obtain a good rent for the two properties that I rent out as they are maintained to a very high, safe standard. There are costs everywhere to maintain these houses and pretty much every time someone moves out, they withhold their last month’s rent if not two and leave the place to be tidied and cleaned and often redecorated before it can be relet – most times the terms of the rental contract are severely breached. And yet, each time a new tenant arrives, we treat them like good customers and make the assumption that they will be good tenants who will adhere to the terms of the contract. If the UK wants rents to be reduced, the government (local and national) need to massively increase supply of affordable housing and reduce the demand – but that doesn’t happen – for many reasons – this is not the fault of BTL landlords – under usual cicumstances, the cost of living in a flat or house is similar over the long term whether one rents or pays a mortgage – then there are the costs of maintenance and upkeep, which of course tenants have no responsibility for – There was a big reason why councils chose to sell off all or most of their housing stock years ago! If it were hugely profitable, they would have kept their stock! People’s expectations are just so ridiculously high too – when I was 25 years old, I expected, along with my friends, to rent until the age of perhaps 30 or 35 – now, every 20+ year old complains that they can’t afford to buy a house – as if it was a divine right! This is hilarious – I saved 15 years for a deposit for my first bought property, never inherited anything and when I did buy, I always ensured I had a spare room so I could share my house with a lodger – providing, again, cheap pleasant accommodation to share my home with someone else and treat them like family – this helped me pay my mortgage and get on the property ladder – I hear of people claiming poverty with spare bedrooms, but they would never dream of sharing their home or renting out a spare room to a lodger – all unrealistic expectations, whilst the Erast (Europe and Far) will put up with far more basic living conditions to us in the West with lower wages, but they are undercutting (fairly enough) the wages that we’ve been used to in the West – this is the way of the world – time for us all to adapt to the new reality of a global economy and of course we will find it harder to compete and stay “ahead” of the East whilst they catch up with us – we’ve got away with exploiting these poorer countries for years – the UK has got away with its imperialistic ways for so long, we shouldn’t complain about anything – we’re so bloody lucky what we’ve amassed as a nation, through some pretty unethical ways over the centuries.

            • Rear Admiral Sir Vincent Smyth

              BTL stands for Big Tax Let-off as private landlords set off £14 billion a year against tax. Including; legal and professional fees, insurances , ground rent, wear and tear allowances of 10%, furniture, repairs and renewals and no CG on the last 3 years .This is a tax saving of £5.5 billion+ a year Private rentals have doubled since 2002 to over 4 million and 1.7 million get to share the £9.5 billion out of the total £25 housing benefit that goes to private landlords. I make that a subsidy of £15 billion per year or £4,000 per landlord.

              • Sean Howard

                I’m sorry Vincent, I gave tried to be measured and logical with you but you appear so bitter and twisted about BTL that your judgement and logic are warped, not to mention your terrible mathematics. Small businesses offset expenses against earned income and pay tax on any profit. You have added up all the offset expenses and called them tax handouts – you have ignored the fact that these expenses are incurred in providing a service, accommodation, for which payment is paid by the tenant. Straight forward small business.

                I presume from your warped point of view you would expect landlords to effectively pay tenants to occupy their properties which would be the case if we had to pay the expenses and pay tax on the whole rent received which, on average, usually exceeds expenses by about 5%. Tax on full rent would far exceed that.

                Private landlords can let their fully paid for property to whoever they like and some of these tenants may well be in receipt of Housing Benefit. Most BTL landlords, who you vilify, have BTL mortgages which state quite clearly that the property may not be let to people in receipt of DSS benefits which includes Housing Benefit, rental property insurance often has the same clause. So you need to get your facts sorted – BTL does not eat up housing benefit.

                • Rear Admiral Sir Vincent Smyth

                  BTL is shorthand for private rented. There are 4.3 million private rented houses. But only 1.8 million BTL mortgages. Meaning only 42% of have such mortgages. The subsidy is to the sector, a subsidy which should not exist. Socialism for the rich.

                  • Sean Howard

                    I rest my case. Buy To Let is specifically purchasing a property with the intention of renting it out. No matter what YOU think it is NOT shorthand for the whole private rented sector. BTL is pure capitalistic small business without any mythical subsidy. I suppose in your crazy world a taxi driver shouldn’t be able to offset the cost of his car loan and maintenance against the fares he collects or doesn’t he fit the envy culture you support.
                    Although this may be difficult for tunnel vision socialists to accept BTL provides a real source of housing for hard working families without costing the government a penny.
                    Over and Out.

                    • Rear Admiral Sir Vincent Smyth

                      My world is not “crazy” ,I have no tunnel vision and i do not have any “envy”. I simply have a better grasp of the real world than those fixated on short term profit. FYI the private rented sector costs our government over £20 billion a year. Making you a parasite. A parasite without humility or empathy.

                    • Anthony Garrett

                      Sir Vincent,

                      Is it not up to others to decide those things? If you have tunnel vision, after all, you will not see it… because you have tunnel vision!

                    • Rear Admiral Sir Vincent Smyth

                      Good point but the blinkers would help one to focus on the £20 billion cost of the private rented sector.

                    • GeoffMSmith

                      Well said Sean, thanks for explaining it so well – all these envious types made me think I was missing out somewhere! It’s a pity that some people cannot see past there envy and prejudice.

                    • Rear Admiral Sir Vincent Smyth

                      While others only see £££ signs and smugness.

  • CB

    I wonder if the problem is that we’re trying to solve the impossible. Little thought experiment. Let’s say we multiply the income of the poorest 10% by 2, multiply the income of the next poorest 10% by 1.9, etc to try and level things out a bit. I’m conveniently skipping over how we might fund that, but that’s not the aspect of interest to me.

    Initially we congratulate ourselves – job done, we’ve now ensured the poorest have enough to live on and maybe even a little spare cash. But – and here’s the crunch – we all know that the more money you have in circulation, the more prices will rise. Shopkeepers etc might try and keep price rises to a minimum if their customers are struggling, they aren’t going to do that if they know those customers now have double their previous income.

    So, how long until all that extra money is consumed by price rises ? Imo, few years at most. We already know the house market would adjust almost instantly.

    I would go further and suggest this isn’t just a thought experiment, it’s where we are now. The poorest in our society are very wealthy by world standards, they’re probably better off than 90% of the world population, which is why people are willing to risk crossing seas (literally) to get to Europe and especially to the UK.

  • Le Brit

    The answer is simple benefits max should equal tax free max (£10k), to be fair to working people.

    • Greg

      But that would not address the causes of the problem nor provide sufficient to live on.

      One of the primary causes is the reluctancy to tax land values – an LVT would be the fairest form of taxation to replace many other unfair and easy to evade and avoid taxes.

      An LVT would help to increase the supply of new housing by deterring land banking by developers, whilst providing a check for house price increases. The Government should have introduced such a tax to replace Council Tax and Stamp Duty (in the first instance) whilst using QE, funding for lending and low interest rates in order to prevent the resultant house price inflation created by such policies.

      A universal income to replace the current benefit system, a Living Wage, a Land Value Tax, replacing FIAT money with Sovereign Money, and scrapping Buy-To-Let mortgages would help to address the current problems of growing inequality, rapidly rising housing costs and welfare payments and result in balancing our economy.

      • Ben Jamin’

        Not sure that banks would have such a thing as BLT mortgage under LVT. Infact, it would then become a straight business loan, at a higher rate.

        It’s called a level playing field 😉

    • Phil Logie

      Buy to Let rent controls should be set, it should equate to what the average living wage can afford in the area the property resides. This would reduce rents and property prices which has caused this debacle in the first place!

      When will people wake up and see the smoke screen for what it is…. IMO the government is attempting to turn the average worker against the poor to hide the real truth out there.

      • Les

        All over people buy property and let it out. Although some US cities have rent control the only difference is tenancies in the US tend to be longer term, so the rent control applies to annual rent increases during an existing tenancy. I know people who are long-term renters in the UK who have had NO rent increases in 5 or 10 years – in L.A. the rent may go up 10% a year. As far as new tenancies go, sky’s the limit, and why shouldn’t they be?

        If a tenant wants a cheap apartment then move to a smaller apartment or a cheaper area. That is how it works. When I was young I rented cheap apartments in cheap areas and worked three jobs to save for a deposit on a house. That is what lots of people do. Other people work as little as possible, blow all their money then have to spend the rest of their lives renting. You make your choices, and I chose to work my azz off in my late teens and 20s, eat saltine crackers and canned vegetables, drive an old banger, not have the latest clothes or gadgets and own a home.

        • Phil Logie

          Housing Benefit has increased dramatically, why? Because rents have risen dramatically due to an increase in Buy to Let coupled with a fall in social housing construct. My friends and I have rented for years and have seen our rents increase by 10% and more every time we are forced to relocate due to unstable work contracts and redundancy. I’ve yet to meet anybody who has been in a long term let without rent increases, it would help the discussion if submitters would substantiate comments with facts and figures…

          • Les

            I can only speak of some people I know who have remained in the same rented accommodation for several years in the UK. Here, your rent increases annually, but if you live in a rent control area the increase is capped.

            I don’t understand the “social housing construct” in the UK. It’s a throwback to the 40s. In other countries, the type and dispensation of social housing took a very different course. For example, the US built a lot of “garden cities” and high rise urban developments during the 50s and 60s, but simply put, nobody wanted to live in them.

            The rent controls you so love were introduced during the Reagan administration, and HOPE IV was introduced by the Bush (41) administration. The latter demolished poor quality housing and replaced it with low-rise, mixed income developments. It was in the wake of incidents of people dying in unsafe tenements. One of the main differences between public housing policy in the US and UK is that “slum lords” in the US do not receive any rent subsidies. However, some would argue that “slum lords”, although exploiters of people, at least provide a roof over the heads of those who are ineligible for, or too poor to even afford, social housing.

            Part of what Banfield wrote about the poor rings true. The poor who remain poor, who do not climb the social ladder, may just lack ambition. While the goal of the “middle class” is to improve their lot through hard work and delayed gratification, the goal of the “lower class” is immediate gratification.

            The UK has the most patriarchal welfare system in the world – it may be due to your deeply entrenched class system which associates “working class” with “lower class”. In countries with contributory benefits systems (pretty much all of them), the “working class” is the “middle class”, or aspires to middle class values – in my day we used the cookie jar analogy, with mom and dad putting money aside to finance college educations. They also encourage their children to take after-school and summer jobs all through high school and college. Whereas you appear to subscribe to the “lower class mentality” which keeps the poor “in their place”, relying on the government (see “taxpayer”) providing for them, which is ultimately self-defeating.

            Part of the reason you don’t have security of tenure is, by your own admission, your lack of security in employment. Landlords in the UK seem to be responsible for more and the tenant less. For example if you rent in France, even in government-owned accommodation, you are more likely to have to provide everything inside and out and pay for its maintenance, and then remove it when you move. In the US as well as France, I had to buy and install a stove/oven, refrigerator and washing machine, and if those broke down I had to pay myself to get them fixed or replaced. If it had a lawn I would have to buy a lawnmower. If I didn’t like the wall color MAYBE I could change it, but I would have to repaint when I left. And of course furnished lets in the US and France only exist in the executive (high end) sector.

            • Rear Admiral Sir Vincent Smyth

              Americans don’t understand fairness. Americans have appalling inequality, 47 million on food stamps, 5 million in jail or on parole, a stagant economy for the 99% and a deep misconception that they ” make it” on their own.

    • Rear Admiral Sir Vincent Smyth

      The tax free max from April will be £10,600 .So the couple in Merryns Porthcawl example would get just the same ad now.

      • DickyJim

        The benefit received by the couple with children would not automatically become equal to double the personal tax allowance. It might amount to that but probably not.

        • Rear Admiral Sir Vincent Smyth

          The benefit received would be much less. The vast amount of it will go directly to the fatcat landlord.

    • Rear Admiral Sir Vincent Smyth

      So the maximum anyone would have is £187 a week regardless of disability or number of children. Not tenable.

  • Nigel Henson

    Please anyone who is interested/puzzled please ignore my earlier post. It was not finished and should not have gone up since it does not make sense as is. but I can’t seem to edit or delete now so have given up…!

    • fauntifixit

      Nigel, Just copy and paste onto a new comment box and complete your comments.

      • Rãvî

        At last! A useful, helpful and knowledgeable comment/advice.

        • Rear Admiral Sir Vincent Smyth

          If the height of your ambition is useful comments on computer usage you need to get out more.

          • Rãvî

            I see you voted for yourself. Another Champagne Socialist no doubt. I trust you are young enough still to gain some insight and wisdom. Seasons Greetings.

            • Rear Admiral Sir Vincent Smyth

              I voted for you too. I prefer Prosecco and I am no socialist.

  • stephenson1958 .

    Support from the state should only be for the physically and mentally disabled, the elderly and single parent with children; everyone else no matter their circumstances should be outside this support network. For the able-bodied Financial assistance should be fiscally neutral, being directly linked to their tax contributions over a given period of time. This financial assistance could give them 100% tax rebate for six months and six months at 65% and then it should end until this tax is returned to the system. Asylum seekers who are not supported by their Family or friends, should be held in Government run hostels that can cater for their needs, outside of any monetary system. These hostels would be cheaper to build and maintain measured against the extortionate rents landlords charge, and at the same time discourage people from coming to the UK to access benefits. For the last 20 years I have been involved in helping people enter the benefits system, for those who have never worked entering a support network undermines their self-confidence to support themselves! and in many cases fosters an attitude of why should I work when I don’t need to! And once such negative attitudes are embedded these individuals learn to manipulate the system in order to maintain their lifestyle and never enter the work environment.

    • David Stuart

      Totally agree with your first 2 sentences.

    • b ward

      Fantastic thoughts and if ever the political elite allow us a democratic vote on the subject we all know the result a resounding yes to firm implementation.
      Ironically those against usually suffer the most from the status quo, and those that continually gain the most are the rich and internationally mobile.

  • John Harris

    I can’t understand why we pay unemployed people not to work. If no useful work can be found, they should be given make-work such as digging holes and filling them in. If someone is getting taxpayers’ money, being on the dole must be made more unpleasant than working. Let’s face it, not working is a lot more pleasant than working. When I inherited half of my father’s wealth, I gave up work. I don’t blame scroungers for exploiting the rules – the rules should be changed.

    • Rear Admiral Sir Vincent Smyth

      If you pay people to work,then they are not unemployed. We pay people because being unemployed means little or no income or dignity. Your suggestions are crass. Like saying we should make illness or old age more unpleaant. Perhaps bankers lives should be more miserable, after all they got £114 billion of our money

      • John Harris

        I don’t think you have understood my suggestion. You seem to imply that all “unemployed” people actually want work. Some of them don’t, as they can get handouts for no effort. It is impossible to tell the genuine unemployed from the scroungers. By making claimants work, we could eliminate most of the scroungers because they would now prefer a “proper” job. As claimants would now be performing work, they would all have more dignity as no-one could accuse any of them of being scroungers.

        • Alick Munro

          Workfare is awfully expensive to run, and demotivated people need a lot of supervision. It also reduces the number of “proper” jobs.
          We could have compulsary purchase orders for councils to buy and develop brownfield sites that are not needed for industrial or retail use. Once the amenities are in place, the council could sell them at a profit as housing feus. This model of development works well in Germany and Holland.
          Council tenants enjoy lower rents and longer tenure than private tenants. Perhaps they should be means tested and those who can afford it be asked to pay more in order that more social housing can be built. We’re dealing with a 30 year backlog of underinvestment in social housing. It’s going to be a long haul.
          Britain needs to build about a quarter of a million homes per year to meet population prospects. About a quarter of a million homes are unoccupied in UK – mainly in places where there are no employment prospects. Perhaps more could be done to encourage elderly and disabled to move there – and thus create job prospects in service industries for younger people and free up housing in economically active areas.
          BTL landlords could be subject to higher capital gains tax. That would reduce the flow of money into housing, and make houses more affordable for those who need them. It would also cut the deficit.
          Extending into higher bands of council tax will lead to more subdivision of large properties into units for singles and couples.
          Raising pension age for each child a person fathers or mothers may help reduce birth rate without causing hardship during childhood, and thus reduce population growth.
          The problem of displaced people needs a worldwide approach. Let’s strengthen the UN. Let’s build replacements for incompetent dictatorships.

          • John Harris

            You have started several new topics here – I am not criticising by the way.
            I stand by what I said about workfare. Regarding the housing shortage, surely this is due to overpopulation resulting from excessive immigration.
            Regarding your idea of raising the pension age for each child a person produces, surely you mean raising the pension age for the parent, not the child?
            With regard to building “replacements for incompetent dictatorships” – isn’t this precisely what Western governments do? As a result of this interference, we bomb innocent civilians and occupy their countries, thus giving them a reason to fear and hate us. The fear leads to an arms race, often involving nuclear, chemical and biological weapons. The hatred leads to terrorism in western countries, exacerbated by immigration policies.

            • Rear Admiral Sir Vincent Smyth

              Please explain how the UK;
              a) is overpopulated.
              b) has excessive immigration.

              • John Harris

                I admit that these assertions are highly subjective, depending on what sort of society one wants and on one’s own preferences. As large numbers of people emigrate each year, some immigration is necessary to try to maintain an appropriate population (“appropriate” again being subjective).
                New housebuilding would “solve” the housing shortage, but at the cost of defacing/destroying much of our countryside and historic towns/villages. This obviously does not bother everyone, but beautiful places give pleasure (usually free of charge) to millions of people.
                I could also mention road congestion, pollution,etc.

                • steve3005

                  And electricity generation on the edge – welcome to blackouts coming to a place near you this winter.

            • Les

              As I see it the biggest problem with housing in the UK is not that there isn’t enough of it, but that people expect the state to provide it for them and to pay the rent, too!

              • Rear Admiral Sir Vincent Smyth

                …… and why not? Isn’t that the whole point of a state?

        • Rear Admiral Sir Vincent Smyth

          Where on Earth do you get the idea that any welfare recipients are “scroungers”.Protestant work ethic or Daily Mail?

          • John Harris

            Are you implying that no welfare recipients are welfare scroungers? My post states that “some” of them are and that “It is impossible to tell the genuine unemployed from the scroungers”. Nowhere do I claim that the majority of claimants are scroungers. Argue with me by all means, but putting words into my mouth simply makes you look foolish.

            • Rear Admiral Sir Vincent Smyth

              Yes. I am implying that no welfare recipients are scroungers. Banks are.

    • David Stuart

      absolutely John!

  • Lee

    My sons 25 and has been looking for a job ever since he left school,when he does manage get one,it’s near Christmas,on zero contracts and minimum wages,the work is heavy and laborious there are NO health and safety protocols,you lift or you leave,can’t complain because your let go,if and when he signs on for these so called “state benefits” he is hounded by the staff to be on time,show and prove his actively seeking work and if he’s a minute late as can often happen as he has to travel 8 miles to get there without any income it has to be by foot, he’s sanctioned,meaning NO MONEY for at least 2 months,which leads to arrears of council tax,who take him to county court where an orders made for bailiffs to attend and remove goods adding more costs and putting him in a quagmire from which he will forever be stuck in,so it’s not that people want to be on benefits but that this government has twisted legislation to make it look as if the people of this country are lazy and good for nothing,when in actual fact the elite of this society do not care about THE PEOPLE OF THIS REALM,the working class,this has always been the case from time immemorial.

    • steve3005

      I’m struggling to understand why your son has spent the last 9? years failing to get or hold a job. Does he have any qualifications?

      • Lee

        No he does not,and it’s not an issue of weather you understand as to why he can’t get or hold a job but to reply to comments or articles written by individuals who can never be able to understand the social divide,and by the way my lad is not the only one but there are over a million of these kids who have the same obstacles,he took a government run course in bricklaying,got a certificate but still does not know how to lay a brick,while at college he was given a troul and shown the pile of bricks and throughout the course no instructions were ever given.what you see,read or hear is no where near the actual reality,just like Blairs WMDs

        • steve3005

          Lee, you seem to be quite bitter, but this looks to be a case of your son’s personal failings, not the State failing your son. He has failed to take advantage of the free schooling system, then failed to take advantage of free courses to provide him with a trade. (I’m afraid I simply do not believe what you say about the bricklaying course). I have first hand experience of being really poor and I have relatives who are justifiably bitter that they work full time and get less than others get on benefits. I think your son needs to take a step back and have a good hard look at himself.

          • Rear Admiral Sir Vincent Smyth

            ….but no first hand experience of empathy. Lee is correct the elite in the Uk do not give a tinkers for ordinary folk.

            • steve3005

              The ‘elite’ never have and never will. But let’s face it, the ‘ordinary folk’ don’t give a tinkers for the problems of other ‘ordinary folk’ either. And tell me, how can you say I have no empathy when I have relatives on the breadline (but not taking handouts from food banks)?

              • Rear Admiral Sir Vincent Smyth

                Your post lacks empathy.It accuses Lee’s son of failing to succeed at school.

                • steve3005

                  What can I say? Without stupid people we would have no one to laugh at. I would like to take time to thank you for your contribution.

                  • Rear Admiral Sir Vincent Smyth

                    If i am laughing, does that make you stupid?

                    • steve3005

                      It would appear you are lacking in basic comprehension skills. Never mind.

          • Lee

            I’m a always weary of people who seem to think just because they have had a lucky break that it’s the same for everyone,if my son had availed his FREE EDUCATION,received a DEGREE He might have landed a decent job,but what you don’t understand is that the company I mentioned that he has recently worked for is not the only one in the country taking advantage of people,there are lots of them and here’s the the punchline,if everyone had a degree like you and had a good job,who would make profits for these companies,by the way there are people/young adults who do hold a decent education/degree and can’t find DECENT jobs and have to work for these companies,plus have a think about this” over a million unemployed people in this country”what does that say about the FREE EDUCATION SYSTEM????

            • steve3005

              Some people will always take advantage of other people – that’s the human race I’m afraid. I don’t have a degree but I have worked all my life, and if it wasn’t working out for me I just did something else, with not as penny in benefits claimed. Just give some advice to your son – get out there and do something, anything.

        • Les

          What I don’t understand is why you and your wife/husband haven’t helped him out, and why a jobless 25 year old has to have his own place. I had four roommates sleeping in two bedrooms when I was his age.

  • Sean Howard

    As a fairly new BTL owner I think some of the comments are a bit out of date. There are almost NO BTL mortgages available that allow tenants who receive Housing Benefit. Comments from my working tenants, some of whom could receive a small topup Housing Benefit, are that they would rather pay the whole rent themselves than raise their children on an estate where “not working” was a way of life.

    • Greg

      If BTL landlords were not competing with First Time Buyers demand and hence price of housing would be lower, more would-be first time buyers would be able to afford to purchase a home and the taxpayer would not need to subsidise rent via housing benefit.

      I can totally understand why people are buying places to let out as savings and pensions earn a pittance, but clearly the current situation does not help first time buyers, affordability of housing nor the spiralling budget deficit.

  • PeterB

    There have been many comments about BTL and the lack of Council housing, but no-one has mentioned the fact that one of the reasons for the lack of Council housing stock is that a lot of it was sold off to the incumbent tenants back in the 80’s at huge discounts (which many then re-sold at a significant profit to move up the famous ‘ladder’). Council housing should NEVER have been sold – its purpose was to provide affordable, controlled rental accommodation to those who could not afford to rent privately or buy, and yet even today, this still happens. To re-build the sold-off council houses cost significantly more than the
    money received for them, so once again, the tax payer gets to foot the
    bill for what started as a political move by the Thatcher government

    We are fixated with home ownership but mostly as a means of cheap (or unearned as some have refereed to it as) capital acquisition rather than simply a guaranteed place to live. This and BTL is what has fueled the property boom as everyone fancies themselves as a ‘developer’ (not that much ‘development’ usually takes place) Fact is there has always been private rented accommodation, in fact this was the norm before the current welfare state system which only dates from the 50’s.. People have always been landlords for profit and current yields are probably no greater than they ever were. The problem is that the housing bubble has caused purchase prices to rise out of proportion to anything else and rents have to rise to cover those rising costs. I don’t own a BTL but I do own my own house but that’s to live in.

    As for the level of benefits available, like CB I too know of people who restrict their working hours to fall inside the benefit net. I also know of people living in large council houses funded entirely by housing benefit to which they are no longer entitled because the numerous children have left home (and they have a reasonable income form paid employment as well).

    • Greg

      The present Government recently increased discount for Council House tenants to purchase their own homes. Sadly much ex-council house stock is now owned by private sector landlords and the rent payable by the tenants is significantly higher and often topped up by housing benefit (funded by tax-payers).

      The Green Party run council in Brighton and Hove has moved to abolish the government’s controversial right to buy policy. The council will now ask central government for permission to scrap the policy in the city.

      http://www.24dash.com/news/housing/2014-12-16-Brighton-moves-to-abolish-right-to-buy#.VJHlF0fzRRE.facebook

      • PeterB

        I wasn’t aware about the recent increase to discounts but it underlines my point nicely. Not that impressed by Brighton’s Green’s – many friends living there say their various initiatives have caused havoc to residents, but if they really are trying to abolish the RTB policy they go up in my estimation.

    • Alick Munro

      Reply to John Harris

      Net immigration is dwarfed by births within UK and by longer life expectancy as a reason for UK population growth. Most of those who arrive want to be economically active. We already make it very difficult for new arrivals to access benefits.
      Pressure on incompetent dictatorships can take the form of peaceful persuasion and financial isolation for the dictators – by UN sanctions. Democracy and liberal government are best built by gradual internal progress and publicity about outrages – but this is ineffective against very nasty governments. For them curtailing access to arms helps – but it’s difficult. UN support to develop governments in exile is an essential preliminary to revolution. There is no easy answer – but there is plenty scope for more effort.

    • Les

      Not to mention incumbent renters and “inherited” rentals.
      I know a guy who heads an ad agency, drives an Aston Martin and still lives in a council house in Chelsea – the flat he grew up in and “inherited” when his mother died. He won’t move because he is too cheap to buy his own place and too “posh” to leave Chelsea.

      I know another guy who was in a popular rock band in the 70s and 80s and he lives in a 3 BR council-owned mansion flat in Mayfair with his wife.

      LOTS of “entitled” people in the UK.

  • Warun Boofit

    If you think UK benefits are generous take a look at the Irish Republic, in both places it depends on the majority who are in low paying jobs not realising they could get the same on benefits, thankfully most workers dont think about this too much and keep on grinding away otherwise the whole system would grind to a halt. I believe in benefits for people in genuine need but these people normally do not have the excellent acting skills of the minority of genuine scroungers who have finely honed skills fakeing back ache and whiplash. We dont even have any deterrent for the scroungers, those cases reported in the media would to my mind serve more to encourage anyone minded to fiddle the system. We would be doing a favour for everyone both those genuinely in need and low paid workers if we made the penalties for fraud something that would genuinely hurt the scammers. I also feel the same way about company directors commiting fraud, they should be locked up for long periods and stripped of all their assets. Back in the real world this is never going to happen so we will continue on our journey down the financial plughole until China rules the world, they will sort out the benefits system for us, at the moment its a golden age for European benefit claimants.

    • Rear Admiral Sir Vincent Smyth

      Finally a banker did get jailed this week.Not for the credit crunch failings but for dodging his rail fare. Meanwhile over 250 have been jailed since 2009 for benfit frauds averaging less than £15,000 each.

      • steve3005

        Benefit fraud = a crime
        Reckless banking = reckless banking (not a crime)
        Simples.

        • Rear Admiral Sir Vincent Smyth

          Ridiculous. Desperate mother lies about number of kids to get a bit extra is a crime but lieing about PPI or Libor fixing is not.

          • steve3005

            Correct – ridiculous. Stealing benefit money deserves to be punished – it is my money, I object to it being stolen.

            Keep up with the news – two ‘bankers’ will stand trial together in September 2015 for Libor fixing (a fraud). The date is late as the SFO is investigating as many as 22 other individuals, with charges expected.

            • Rear Admiral Sir Vincent Smyth

              So 2 out of about 4,000 after nearly 8 years. The benefit money is not yours. Most of it is borrowed by the incompetent government.

              • steve3005

                If you can list the Statute and the evidence for the crimes you allege have been committed, with the names of some of the 4000 perpetrators you say exist, then you will truly have put your money where your mouth is, as libel laws are draconian. However I will refrain from holding my breath.

                As to your other point, all government money belongs to the taxpayer and those self same taxpayers are required to pay back borrowings made on their behalf. So money fraudulently claimed by benefit scroungers is my money, and maybe yours, although I somehow doubt it.

                Do you have anything useful, less boring, and not repetitive to say – or is that it?

                • Rear Admiral Sir Vincent Smyth

                  The crime is to saddle the taxpayer with £1 trillion of debt to allow the bank snouts to stay in the trough. Punishing the little people is more your thing.

                  • steve3005

                    Silly billy – come on, list the crimes, name the guilty. Oh how boring you are.

                  • steve3005

                    Still waiting for you to list the crimes, name the guilty. Still waiting……………..

                  • steve3005

                    Still waiting for you to list the crimes, name the guilty. Still waiting……………….

                    • Rear Admiral Sir Vincent Smyth

                      Pathetic. In your desperate bid to justify selfish greed you ask an impossible question. Can you name the individual benefit fraudsters?

                    • steve3005

                      Melissa Ross; Nicola Chin; Albert Mashindi; Frank Logan; Javad Khan ; Paul Fox……you can look up the other couple of hundred yourself. Still waiting for your list….still waiting & waiting & waiting……..

                • Sean Howard

                  Steve, Don’t waste your time with this guy, he is so blinkered with envy that you will never get through to him. I wonder which Navy gave him a flag – or is his Nom de Plume just more envy.

                  Its a very long time since I heard the old chant that the Government has its own money and stealing from the State is a victimless crime!! I suppose you could see it that way if you paid no tax in and only took money out.

                  Perhaps we should all stop paying taxes and just let the Government get its own money by borrowing.

                  Perhaps the logical conclusion is to all stop work as well and let the Government borrow enough of its own money to keep us all on benefits. That would make a fair society.

        • Rear Admiral Sir Vincent Smyth

          Under the Theft Act exists the crime of theft by deception. This applies to all bankers bonuses

          • steve3005

            Very good – now for your next assignment, provide the evidence that an offence was committed under the Theft Act, and by whom. Write clearly as marks will be deducted for poor handwriting. POP.

  • GeoffMSmith

    Why all the snide comments about buy to let landlords? What is wrong with someone investing surplus capital in property and letting it for income and potential capital gain? By doing so they are placing property on the market, providing homes for those who cannot afford to buy their own, and helping to stabilise prices. Plenty of tenants are not on benefits, and many landlords actually refuse to accept those who are. Without them rents would be much higher. What are these generous subsidies that some of you speak of?

    • steve3005

      Yes I don’t get the reason for all the snide comments either. There are no subsidies for BTL. It’s a business where you pay tax on the profits (rent less expenses) and make around 5% return on your investment. Personally I would rather stick my money into high quality corporate bonds where the return is higher and I know I’m not going to suffer negative equity when the property market comes crashing down. But each to their own.

    • Greg

      BTL does not increase the supply of affordable housing nor does it stabilise prices – it does the complete opposite and results in the need for housing benefit.

      The reason Buy To Let is wrong is because it results in more investors competing with first time buyers which drives up the cost of housing, forces more would-be first time buyers into short term rented accommodation, driving up rents which drives up housing benefit which supports and drives up rents, the national and private debt – as the welfare bill goes up and private purchasers are often taking equity out of their principle residence to fund the deposit.

      Another reason is that Assured Shorthold rented accommodation provides little security of tenure for the tenant making it often difficult to make a house a home. Also BTL is often abused and used to fund development projects and holiday homes.

      There are many generous tax advantages for Buy To Let Landlords which are also grossly unfair as mentioned in other comments.

      • steve3005

        List the tax advantages please.

        • Rear Admiral Sir Vincent Smyth

          I already have. Stop seeking to defend the indefensible.

          • steve3005

            No, you haven’t. List the tax advantages.

            • Greg
              • Rear Admiral Sir Vincent Smyth

                Nice one Greg. Even the DM agrees with me.

              • steve3005

                http://www.ft.com/cms/s/0/f543deb2-584d-11e3-9da6-00144feabdc0.html#axzz3MZZD4cdr

                An excellent reply – so no point in repeating it myself. You two are so funny. Quoting a daily Mail article as proof of your assertions. You couldn’t make it up.

                • Greg

                  Did you not read the similar article in the FT (below), Steve?!

                  • steve3005

                    Yes i did – did you not read it was quoting from the same source? The DM is a dreadful scandal rag. The FT is not, but it isn’t immune from lazy journalism.

                • Greg

                  The tax advantages are widely acknowledged so there’s little point in trying to deny that they exist.

                  Hopefully the next Government will introduce some form of rent control and greater security of tenure for tenants, and lenders will base their loans on the purchaser’s income rather than projected yield – many current BTL loans are arguably as risky as the self-cert sub-prime lending that was banned.

                  Many landlords could get into serious difficulty if/when the market eventually crashes.

                  • steve3005

                    Basic lesson no. 1 (sigh). The so called tax advantages are there for all businesses not just BTL. OMG this is so repetitive. I suppose it will sink in eventually.

                    Basic lesson no. 2 (sigh). The pressure for rent control comes from those who consider only its imagined short-run benefits to one group in the population. But when we consider its long-ran effects on everybody, including the tenants themselves, we recognize that rent control is not only increasingly futile, but increasingly destructive the more severe it is, and the longer it remains in effect. http://steshaw.org/economics-in-one-lesson/chap18p1.html.

                    Did you get past basic economics in your studies?

                    • Greg

                      There is no need for sarcastic rude remarks, Steve.

                      BTL should not be regarded as a business – it is an investment. BTL should not have tax advantages over purchasing a house to live in – that is simply unfair.

                      BTL results in a higher housing benefit bill for the country and higher national debt.

                      Whilst we have BTL which drives up the price of housing for everyone (due to way it’s funded) we will need some form of rent control – not just to protect tenants but to ultimately control the BTL market and reduce the amount of Buy To Let private rented accommodation, reducing demand for housing and thus allowing would-be first time buyers to be able to afford to purchase a home.

                      A Land Value Tax would assist in this too. However I would prefer that Buy To Let was completely scrapped – instead we should be encouraging companies to invest pensions in long term rented accommodation and for local authorities/Government to build more council houses – in order that tenants can have peace of mind, put down roots and make a house a home.

                    • steve3005

                      Rubbish, absolute complete and utter rubbish. Do you have even a simple grasp of how business works? Go to Lisbon (as I did recently) and see how the rent controls work there – plenty of property available, all empty because the rent controls make it uneconomic, and no-one in their right mind is going to provide a property to rent at a loss. Your ideas are just stupid pie-in-the-sky socialist ramblings, the sort that has put this country into such dire straights we are in danger of going broke – and you want more of the same. madness.

                    • Greg

                      Is it not possible to debate without resorting to rude patronising remarks? – They are not necessary.

                      Precisely – we need to reduce the demand for rented accommodation and BTL investment which will reduce the cost of housing – they are not stupid ideas – only in the eyes of a BTL investor.

                      One of the reasons the country is in ‘dire straights’ and in danger of ‘going broke’ is the policies pursued by this and previous Governments such as BTL, failure to tax land, and failure to have a living wage, which have resulted in such high housing costs and reliance on benefits – housing benefit subsidising private landlords and other benefits subsidising companies who have been getting away with paying workers (often low paid migrant workers) a minimal wage which is not enough to live on. That is the madness and until we change the neoliberal economic model, replace FIAT money with sovereign money, have a Land Value Tax and stop the nations obsession with making money out of a basic human need (housing) we will certainly go broke.

                    • steve3005

                      BTL does not influence house prices other than in a marginal way. The main driver of house prices (as well as any other asset you may care to think of such as stocks and bonds, classic cars, rare wines etc) is the enormous amount of liquidity pumped into the economies of the world by the central banks. If you bandy about phrases such as ‘neoliberal economic model’ ‘sovereign money’ and ‘fiat money’ you really should know that.

                      Tell me, how is the ‘nation’ (what does that mean?) obsessed with making money out of housing? I suppose nobody took advantage of being able to buy their council house very cheaply when offered, to show solidarity with others who needed to rent?

                      However, we are in agreement on one point – I agree the minimum wage should be the living wage, as I have no interest in increasing company profits through my tax payments, by paying benefits to those in employment.

                    • Greg

                      BTL adds to the demand for housing – you have investors (often in a superior position in terms of deposit and tax advantages – which I know you dispute) competing against first time buyers for the same housing – that means there is more demand than there would otherwise be – often several times more demand – so not in a marginal way.

                      That combined with the fact that we don’t have a LVT and tenants are responsible for Council Tax, and we have leveraging for the BTL, equity taken out of homes, and banks creating money by issuing loans, savings and other investments providing a poor return – they all fuel the demand for housing.

                      We have a nation obsessed with houses – many who believe themselves to be ‘property developers’ and ‘investors’. Right to Buy was ill thought through and simply a vote-winning exercise for the Conservative Government of the time and was embraced by New Labour – it was wrong – social housing should have remained social housing for those who needed it – not sold off for well below market value.

                    • steve3005

                      Yes, massive effect – c£150million BTL mortgages; c£19billion residential mortgages. Mmmmm, not marginal at all. It’s time for you to admit BTL isn’t the big thing you say it is.

                    • CB

                      Found this interesting http://www.ons.gov.uk/ons/rel/census/2011-census-analysis/a-century-of-home-ownership-and-renting-in-england-and-wales/short-story-on-housing.html

                      Says that private rentals increased in 2001-2011. Suggests causes as high prices, tighter lending restrictions, low wage growth and “The fall in people buying their homes and the subsequent rise in people privately renting has seen schemes such as ‘Buy-to-Let’ flourish over the decade”

                      i.e. it suggests it was the increase in the number of renters that drove the increase in BTL, not vice versa as many are suggesting.

                    • Greg

                      That is because would-be first time buyers cannot afford to buy – the BTL landlords are able to outbid them as they’re able to raise much larger deposits. They are forced into rented accommodation i.e. the increased prices ultimately increase demand for rented accommodation and rents… and housing benefit…

                    • steve3005

                      Thanks – I find statistics fsacinating, and the Internet such a useful source of information to shoot down ideologues such as dear old ‘I’m never wrong’ Greg.

                    • Greg

                      Rather selective with your stats though, aren’t you Steve? ..and incapable of making a comment without being rude to people you disagree with.

                    • steve3005

                      OK, here’s a challenge. Provide some empirical evidence to back up your assertions. I can wait. Off you go.

                    • Rear Admiral Sir Vincent Smyth

                      Not selective. Just wrong. I fear he only believes what he wants to hear as the truth hurts.

                    • Rear Admiral Sir Vincent Smyth

                      You seem intent on presenting yourself as an ignoramous. That is your choice.

                    • steve3005

                      Ah, back from the benefits office at last – long queue was it?

                    • Greg

                      I talking about small starter-home type properties which are in demand by both FTBs and BTL landlords – you are quoting the entire property market! The demand for these homes affects the value of all the other homes up the ‘property ladder’. I have worked in residential lettings and sales and other areas of the housing – I have also sold houses which have often had many BTL investors fighting over and often going to sealed bids – outbidding the sole FTB – I have seen first hand how BTL has affected the market and resulted in the ‘bubble’ that we currently have.

                    • steve3005

                      Yes Greg, of course you have.

                    • Rear Admiral Sir Vincent Smyth

                      That is a lie. The UK has nearly £2 billion in BTL mortgages handed out by criminal banks.

                    • Rear Admiral Sir Vincent Smyth

                      My mistake meant 2 million BTL mortgsges worth £240 billion. Tax deductible interest at £10 billion.

                    • steve3005

                      Evidence please.POP POP POP

                    • steve3005

                      Evidence please…POP!

                    • Rear Admiral Sir Vincent Smyth

                      What are you on? The UK has 10 million mortgages valued at £1,270 billion. 21% or 2 billion are BTL.

                    • steve3005

                      Quote your source…POP!

                    • Rear Admiral Sir Vincent Smyth

                      That would be the ONS, the CML and HMRC. What is yours? The Beano or Alice in Wonderland?

                    • Rear Admiral Sir Vincent Smyth

                      The UK has £1,300 billion of mortgages. Not £19 billion. 20% of them are BTL according to the CML and ONS.Your figures are out by over 98%. If you seek to mislrad at least use accurate stats or folk will come to see you as an untrustworthy charlatan or more likely a knucklehead.

                    • Rear Admiral Sir Vincent Smyth

                      Your own “grasp” is sadly lacking. What is funny though is your accusation of madness.

                    • steve3005

                      POP…POP!

            • Greg
              • steve3005
                • Greg

                  Did you not read my comments further up the page? Yes, it is law – you asked what the tax advantages were!

                  • steve3005

                    Basic lesson no. 1 (sigh). The so called tax advantages are there for all businesses not just BTL. OMG this is so repetitive. I suppose it will sink in eventually.

                    • Rear Admiral Sir Vincent Smyth

                      BTL is not a business. It is an immoral lining of middle class pockets

                    • steve3005

                      POP POP POP ..again. Weeee. Such fun.

                    • Emailonly

                      It won’t, these clowns have been peddling their wealth envy as economic insight (ignorance) for as long as I have been reading these blogs.

      • GeoffMSmith

        Well Greg, I wish you’d tell me how I can get my hands on those tax advantages, because I’m certainly not getting any. The young lady who rents my property for approximately £100 per month below market rates and £250 below the cost of my mortgage payments has been very happy with the arrangement for the last six years. MIRAS was stopped years ago. Please send details of this new scheme.

        • Greg

          Geoff – it isn’t a new scheme – please read the articles above which demonstrate with examples how it’s possible to avoid and offset tax. Perhaps you should sell up Geoff as it doesn’t sound a particularly good investment?

    • Rear Admiral Sir Vincent Smyth

      Why not?

  • pabaker13

    What a thorny issue. This has evoked lots of comment. As well as benefits at the lower end I often look at the other benefits that should be reduced in these times of Austerity!
    Remove tax relief at 40% and 50% on pension contributions. Foreign aid slash it, if we are borrowing to pay it out, we are impoverishing future generations.
    Austerity should mean living within our means, if we do not do it now today when interest rates begin to rise again this country is in a lot of trouble.
    There are certain benefits at all ends of the spectrum that should be scrapped or reduced. Why are we paying child benefit for children not even living in this country?
    India and Pakistan foreign aid yet they spend fortunes on less than essential items.
    We can live within our budget as a country and if that means, cuts that hurt, no transgender operation on the NHS, then lets do it lets start today.
    Cut where it hurts least, at the top. Then cut non essentials. Last of all if we are still not in balance, review what we can afford and make cuts that hurt.
    A surplus now, is better than a crashing currency, and an impoverished nation, where benefits will not help anyone as no one will be able to feed themselves.

    • Greg

      Austerity is not the answer – we should be taxing those can afford to pay more, making sure those who should pay tax do – like Vodafone, Starbucks and Amazon. We should be taxing land not buildings with a Land Value Tax which would be impossible to evade or avoid. The wealthy have benefitted the most from QE, funding for lending and low interest rates, enjoying asset price inflation and capital growth whilst having much more disposable income left each month, due to reduced interest payments and larger salary increases – they can afford to and should be paying more tax.

  • Sean

    Just for the record…

    I have worked all my life, 45 years in total, and am now receiving

    92 comments

    Comments

    ESA as I need 2 knee replacements…

    I receive the grand sum of £71 per week…

    The same as a single person that has never worked in their life…

    Hardly generous imo…

    • Rear Admiral Sir Vincent Smyth

      Surely you sleep, eat and relax. surely you had a childhood. You have not worked all your life.

  • Emailonly

    OK, so if we all think the housing market is broken and needs reform, why hasn’t a political party offered a solution. I’m sure Red Ed would love to tax BTL and, for that matter, capital gains on owner occupiers, up the ying yang but he won’t because that would make him unelectable. Greed starts at the bottom and the rich are just better at it.

  • CB

    I don’t believe that suppressing BTL would have any (positive) impact on peoples income in the short term. If people are willing/able to spend £x/week while renting, then they’d be able to spend that same amount if purchasing a house (that had become available because we’d got rid of those nasty landlords). History shows us that house prices rise to the maximum of what people are able to afford. Might help people in the long term though, as they’d get the benefit of the house price rise.

    Basic problem with house prices is the same it’s always been, we’re simply not building enough.

    • Greg

      They are not nasty landlords – it’s the Housing Act that needs reforming – reforming ASTs and scrapping BTL and Help To Buy, controlling the supply of money, rationing mortgages and restricting second homes. Yes we need to build more homes – a Land Value Tax and changes to the planning system would see to that. We need to end a system where taxpayers are propping up house prices and providing property owners with massive unearned windfall capital gains.

  • I think Merryn’s article missed the point by assuming that everyone who uses a Food bank is on benefits. If you come into the benefits system you should be able to get enough money to live on but people on low wages and with high rents (as they are in the South) are often the ones struggling to survive. I am a pensioner and a widow with a handicapped son. He only gets £8,000 a year to live on and therefore I have to subsidise his living costs and pay for his medicines and dental treatment. Our rent for a two bedroom house is £1250 pm which is average for our town and I can only pay for it by spending my savings

    • Rear Admiral Sir Vincent Smyth

      Merryn deliberately misses the point to make a political snipe on behalf of the Establishment.

  • BoiledCabbage

    Utterly amazed to read these comments – basically in support of ‘benefits’, moans that Capitalism has Failed, neo-marxism – the same tripe you can find in the Guardian. On Moneyweek!

  • keithoverton

    A bit of common sense. Please stand for PM, Merryn, and you’ll get my vote.