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Source: (consider it) Thread: Two speeches
Dafyd
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# 5549

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quote:
Originally posted by Sarah G:
So it's back to tax and spend; needlessly nationalising all sorts of things where the money could be better spent; regulating markets and intervening in the economy, heavy investment that creates insufficient growth...70s stuff.

High taxation of all sorts of things leading to stagnant growth, heavy spending leading to inflation. Then the strikes will begin.

The thing is that all of that is 60s stuff as well. And the 60s delivered more prosperity than the 80s and 90s did. Or at least, they delivered more evenly distributed prosperity. The 80s, 90s and 00s delivered rather a lot of prosperity to property-owners, and rather less to everyone else.
Furthermore, there's an argument to be made that the Thatcher-Blair years purchased the prosperity at the expense of structural problems: under-investment, allowing manufacturing to wither, and so on.

Blair certainly humanised the system a little; he did get the crumbs falling from the table to land up where they were most needed. But he and Brown didn't do anything about the problems at the centre, which is why his humanising influence could be so swiftly reversed by Cameron and Osborne.

It looks to me as if the strong economy that helps the most vulnerable is what Corbyn is taking us back to.

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we remain, thanks to original sin, much in love with talking about, rather than with, one another. Rowan Williams

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Doc Tor
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quote:
Originally posted by Sarah G:
Reading on in the article-

quote:
Of the nine members of the European Economic Community (EEC), the Netherlands faced a complete embargo, the UK and France received almost uninterrupted supplies (having refused to allow America to use their airfields and embargoed arms and supplies to both the Arabs and the Israelis)...Despite being relatively unaffected by the embargo, the UK nonetheless faced an oil crisis of its own—a series of strikes by coal miners and railroad workers over the winter of 1973–74 became a major factor in the change of government.

So the embargo's not the thing to blame for the economic crises of the 70s. In fact the main problem appears to be the unions, and here Corbyn's Labour are vulnerable. He's already said he wants to see union strike rights restored, and he owes the unions for keeping him in power.

Since the £312 billion or whatever investment will likely create noticeable inflation again, strikes could once more become a serious problem.

Those bright eyed 20 year old Corbynistas will think again when their electricity/wifi/phone usage gets cut off for hours every day.
[Devil]

There are lots of things to blame for the industrial problems of the 70s. Some were external influences (most industrial economies being dependent on a single cartel for oil), some were internal influences (poor investment in manufacturing and communications infrastructure). The unions were just one factor in this - and had there been proper investment in both skills and jobs, they would have had little cause for complaint.

But we still have the same problems - we have external pressures (falling pound causing rising inflation, Brexit), and internal pressure (we still haven't invested sufficient in jobs, skills, infrastructure, and now housing). The Tories have run up absolutely massive debts. More in the last two parliaments than every single Labour government before it. And we have absolutely nothing to show for it. Nothing. Unless you think foodbanks, homelessness, stagnant wages, falling productivity and a crisis in the health service are somehow achievements.

The Tories have to go. Now.

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Forward the New Republic

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Sioni Sais
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quote:
Originally posted by Sarah G:
I think my problem is more the whole JC package. As JC put it:

quote:
That’s what we fought for in the election and that’s what’s needed to replace the broken model forged by Margaret Thatcher many years ago.

I get and share the intense dislike for Thatcher, but at most she did save us from the economy of the 70s.

This model, improved and humanised by Blair, is what he wants to ditch. So it's back to tax and spend; needlessly nationalising all sorts of things where the money could be better spent; regulating markets and intervening in the economy, heavy investment that creates insufficient growth...70s stuff.

High taxation of all sorts of things leading to stagnant growth, heavy spending leading to inflation. Then the strikes will begin.

We don't need to abandon the market economy consensus that has delivered prosperity since the 80s. A strong economy is the best way to help the most vulnerable.

A strong economy will only benefit the most vulnerable if the prosperity delivered by that economy is distributed fairly. One of the consequences of Thatcherite policies, (continued under Blair) was that wage and wealth inequality increased so that, in particular, the poor got poorer and are still getting poorer.
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L'organist
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Maybe this is a rare instance in politics when you have to look behind the parties, the slogans and the leaders, and see what influences on the leaders' own lives might be brought to bear if ever they come to power.

This is where it gets interesting, because everything in Mrs May's background points to her being far more of a person interested in social justice without fear or favour than does the hinterland of Mr Corbyn, which shows that he is resistant to people questioning his positions, beliefs and principles, and that he is intolerant of opposition. Furthermore, he shows a dangerous refusal to look at the lessons of history, and an unwillingness to acknowledge fault in those whom he deems to be right - see his continued support for Maduro in Venezuela.

May is a plodder, lacks any charisma, and is patently uncomfortable in the limelight - not really what one expects in a PM - but that doesn't mean she can't make a good fist of being leader. Her biggest problem is her party and a left-leaning news media which is remorseless in heckling and barracking everything they decide is "weakness".

Corbyn hides his failings very well, but is intolerant of views at variance with his own, disloyal to anyone he sees as being less old Labour or less "socialist" than himself, and yet has a fatal charisma which could lead him to number 10. The news media are inclined to give him an easy ride that is ill-deserved and the chattering luvvies are, as ever, all too keen to parade their own views and discount the genuine misgivings of those who see that electing Mr Corbyn as PM could make the 1970s seem like a walk in the park.

Maybe now is the time to buy an island and retreat from the world????

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Rara temporum felicitate ubi sentire quae velis et quae sentias dicere licet

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Doc Tor
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quote:
Originally posted by L'organist:
... a left-leaning news media ...

I'm sorry. We have the most consistently right-wing media in Europe, if not the entire western world.

The only reason Corbyn came within sniffing distance of No 10 last election was by out-flanking the traditional media both via twitter/facebook, and old-school public rallies. The mainstream press was universally hostile to Corbyn, and gave May a ridiculously easy ride.

You're really going to have to do better. May isn't being monstered in the press in any meaningful way.

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Forward the New Republic

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Alan Cresswell

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quote:
Originally posted by Sioni Sais:
A strong economy will only benefit the most vulnerable if the prosperity delivered by that economy is distributed fairly. One of the consequences of Thatcherite policies, (continued under Blair) was that wage and wealth inequality increased so that, in particular, the poor got poorer and are still getting poorer.

And, some policies were very significant in increasing inequality. Right-to-buy decimated council housing stocks, and without any significant replacement social and affordable housing has contributed to the greater cost of housing - which hits the poorer real hard.

The cutting of union powers has almost totally destroyed their role in employee-employer relations, without a powerful union to support them workers get screwed, the working poor in particular.

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Don't Brexit if you haven't a scooby how to fix it.

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Dafyd
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quote:
Originally posted by L'organist:
This is where it gets interesting, because everything in Mrs May's background points to her being far more of a person interested in social justice without fear or favour

If by social justice you mean creating a hostile environment for immigrants?
She's had a year to show that her commitment to social justice as the rest of us understand it goes beyond rhetoric. All she has shown is that she refuses to shake the magic money tree except for party political advantage.

quote:
Her biggest problem is her party and a left-leaning news media which is remorseless in heckling and barracking everything they decide is "weakness".
The Daily Mail was positively hailing her as the second coming of Thatcher until after the election. The Telegraph and The Express weren't far behind, and the Times not far behind them.

quote:
Corbyn hides his failings very well
What a difference five months makes.

I was not Corbyn's biggest fan. I am still not Corbyn's biggest fan. But the idea that Corbyn's riding high because the Telegraph and the Express have been giving him an easy ride is ludicrous.

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we remain, thanks to original sin, much in love with talking about, rather than with, one another. Rowan Williams

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Ricardus
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quote:
Originally posted by Arethosemyfeet:
Restoring strike rights won't give unions the power they had in the 70s because industries aren't organised on the same scale.

Also I thought Labour policy was just to reverse the restrictions that Mr Cameron had brought in? Which would bring us back to the 2000s, not the 1970s.

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Then the dog ran before, and coming as if he had brought the news, shewed his joy by his fawning and wagging his tail. -- Tobit 11:9 (Douai-Rheims)

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Arethosemyfeet
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The idea that Corbyn is doing well because he has had an easy ride from the media is palpable nonsense, as is the idea that May has any interest in social justice.
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chris stiles
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quote:
Originally posted by L'organist:

This is where it gets interesting, because everything in Mrs May's background points to her being far more of a person interested in social justice without fear or favour

Please feel free to advance any evidence for this thesis.
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Marvin the Martian

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quote:
Originally posted by Dafyd:
The 80s, 90s and 00s delivered rather a lot of prosperity to property-owners, and rather less to everyone else.

The 80s also increased the number of property owners by a considerable amount.

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Hail Gallaxhar

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Sioni Sais
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quote:
Originally posted by Marvin the Martian:
quote:
Originally posted by Dafyd:
The 80s, 90s and 00s delivered rather a lot of prosperity to property-owners, and rather less to everyone else.

The 80s also increased the number of property owners by a considerable amount.
And if you were paying for it with a mortgage c 1990 with our own Stormin' Norman (Lamont) in the Treasury, you would be shitting yourself. Not to mention the endowment mortgage shortfall (aka, a Ponzi scheme) which made things worse.

If it wasn't great for housebuyers then it was probably worse for renters because local authorities didn't have the proceeds from the discounted sales of council housing - that went straight to the Treasury where it contributed to lower taxation - and guess who benefits from that!

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Ricardus
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Besides which - assuming we are talking about the right to buy - I don't see how selling subsidised assets at below the market price tells us anything about free market economics.

Insofar as the long term cost is picked up by future generations, in the shape of a lack of affordable housing, istm a classic case of the magical money tree ...

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Then the dog ran before, and coming as if he had brought the news, shewed his joy by his fawning and wagging his tail. -- Tobit 11:9 (Douai-Rheims)

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Doc Tor
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# 9748

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quote:
Originally posted by Marvin the Martian:
quote:
Originally posted by Dafyd:
The 80s, 90s and 00s delivered rather a lot of prosperity to property-owners, and rather less to everyone else.

The 80s also increased the number of property owners by a considerable amount.
By transferring public assets at below market cost to private individuals and institutions.

And by so doing, denying the public both the income and the capital of the asset in perpetuity.

Thus making a few people richer, and literally everyone else poorer.

Which isn't a pattern, is it?

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Forward the New Republic

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Karl: Liberal Backslider
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quote:
Originally posted by Doc Tor:
quote:
Originally posted by Marvin the Martian:
quote:
Originally posted by Dafyd:
The 80s, 90s and 00s delivered rather a lot of prosperity to property-owners, and rather less to everyone else.

The 80s also increased the number of property owners by a considerable amount.
By transferring public assets at below market cost to private individuals and institutions.

And by so doing, denying the public both the income and the capital of the asset in perpetuity.

Thus making a few people richer, and literally everyone else poorer.

Which isn't a pattern, is it?

Moreover, it's still being paid for - by people on low incomes stuck in expensive private lets because of a lack of social housing. Those landlords are the winners now, with their high rents paid for out of housing benefit. Funny how when we talk about "benefit recipients" the focus is on the poor sods trying to make ends meet rather than the private landlords, isn't it?

Who are often the children (well, grandchildren now) of the people who shut the door on my father canvassing for Labour in the 1980s because "we're voting Tory now, because we're home owners".

If you believed in children paying for the sins of the parents it'd be a kind of justice, but I don't, so it ain't.

[ 09. October 2017, 11:51: Message edited by: Karl: Liberal Backslider ]

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Might as well ask the bloody cat.

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Arethosemyfeet
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There is a pattern whereby the last 30 years have involved liquidating publicly owned assets to maintain artificially low taxation levels and funnel those assets into buying votes and rewarding big donors. That's how the profits of North Sea oil were pissed away; that's how the sales of council houses and the public utilities were engineered. We've seen it again recently with the sale of Royal Mail.
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Eirenist
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Not to mention turning Building Societies (which did fulfil a social need) into banks.

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L'organist
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It wasn't a government that turned Building Societies into banks, it was a decision made by the institutions themselves.

In most cases, anyone with any type of account with the society was given free shares when these institutions changed. The exception was Cheltenham & Gloucester which didn't give shares to those with a mortgage, only to those who saved with them (guess who my mortgage was with).

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Rara temporum felicitate ubi sentire quae velis et quae sentias dicere licet

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Arethosemyfeet
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And Bristol & West, who gave big payouts to mortgage holders and adult savers, but gave piddling amounts to under 18s who held member accounts. Bitter after 20 years? Me? No...
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Jane R
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L'organist:
quote:
It wasn't a government that turned Building Societies into banks, it was a decision made by the institutions themselves.
...after a (Conservative) government removed the regulations preventing building societies from de-mutualising.
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Doc Tor
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quote:
Originally posted by L'organist:
It wasn't a government that turned Building Societies into banks, it was a decision made by the institutions themselves.

This is rewriting history, as if you'd never heard of carpetbagging.

It was simply a Conservative government's way of destroying mutual savings-and-loans companies, again privatising assets and allowing predatory finance to swallow the part of the market they didn't already own.

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Forward the New Republic

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Baptist Trainfan
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quote:
Originally posted by Karl: Liberal Backslider:
Moreover, it's still being paid for - by people on low incomes stuck in expensive private lets because of a lack of social housing. Those landlords are the winners now, with their high rents paid for out of housing benefit. Funny how when we talk about "benefit recipients" the focus is on the poor sods trying to make ends meet rather than the private landlords, isn't it?

Who are often the children (well, grandchildren now) of the people who shut the door on my father canvassing for Labour in the 1980s because "we're voting Tory now, because we're home owners".

This article from my paper today may be of interest.
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chris stiles
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quote:
Originally posted by Baptist Trainfan:
This article from my paper today may be of interest.

Yes, and the wider issues this relates to have been written up elsewhere:

http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2017/10/the-tories-structural-crisis.html

"They no longer have any idea how to administer capitalism. No viable long-term growth strategy avails. They can't address the financial sector without hurting their allies in the City. They can't address the crisis of productivity and investment without more state intervention than they're willing to accept. They can't address the housing crisis or the precarious debt-driven economy without harming the interests of home owners."

Also see here for specifics on housing:

http://www.harrowell.org.uk/blog/2017/09/30/weak-sauce/

The description of the Tories as the Assured Shorthold Tenancy Party is - at least on housing - devastatingly accurate.

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Boogie

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More and more people in Bristol have taken to living in vans.

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quetzalcoatl
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quote:
Originally posted by chris stiles:
quote:
Originally posted by Baptist Trainfan:
This article from my paper today may be of interest.

Yes, and the wider issues this relates to have been written up elsewhere:

http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2017/10/the-tories-structural-crisis.html

"They no longer have any idea how to administer capitalism. No viable long-term growth strategy avails. They can't address the financial sector without hurting their allies in the City. They can't address the crisis of productivity and investment without more state intervention than they're willing to accept. They can't address the housing crisis or the precarious debt-driven economy without harming the interests of home owners."

Also see here for specifics on housing:

http://www.harrowell.org.uk/blog/2017/09/30/weak-sauce/

The description of the Tories as the Assured Shorthold Tenancy Party is - at least on housing - devastatingly accurate.

What is interesting about this is that Mrs May has made some references to injustice and the left behind, but as that article indicates, seems to have no solutions. I think neo-liberalism has got everybody by the short and curlies now, since in that scheme, governments rarely intervene, and profit drives all. Hence, in my area of London, the police station, the library and the post office have closed, because they are not profitable.

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no path

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Dafyd
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# 5549

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quote:
Originally posted by Marvin the Martian:
quote:
Originally posted by Dafyd:
The 80s, 90s and 00s delivered rather a lot of prosperity to property-owners, and rather less to everyone else.

The 80s also increased the number of property owners by a considerable amount.
It doesn't appear to have been a permanent increase: the number of owners has been dropping, to the levels of the mid-1980s.
Grauniad.
That's still a lot more than when Thatcher introduced the policy, but less than even the point at which the policy slowed down.
According to wikipedia, a third of the properties sold under Right to Buy have ended up in the hands of private landlords, in some cases being rented out by the council who originally sold them.

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we remain, thanks to original sin, much in love with talking about, rather than with, one another. Rowan Williams

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leo
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# 1458

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quote:
Originally posted by Marvin the Martian:
quote:
Originally posted by Dafyd:
The 80s, 90s and 00s delivered rather a lot of prosperity to property-owners, and rather less to everyone else.

The 80s also increased the number of property owners by a considerable amount.
and there were more homeless people begging on the streets.

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My reviews at http://layreadersbookreviews.wordpress.com

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Alan Cresswell

Mad Scientist 先生
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quote:
Originally posted by Karl: Liberal Backslider:
quote:
Originally posted by Doc Tor:
By transferring public assets at below market cost to private individuals and institutions.

And by so doing, denying the public both the income and the capital of the asset in perpetuity.

Thus making a few people richer, and literally everyone else poorer.

Which isn't a pattern, is it?

Moreover, it's still being paid for - by people on low incomes stuck in expensive private lets because of a lack of social housing. Those landlords are the winners now, with their high rents paid for out of housing benefit. Funny how when we talk about "benefit recipients" the focus is on the poor sods trying to make ends meet rather than the private landlords, isn't it?

I've often wondered what would happen if right to buy was applied equally across all markets - the same qualification criteria and prices, for people renting council houses and from private landlords. If the private landlords don't squeal about being robbed of their assets and income then I'll accept that the right to buy council housing isn't a stupid idea (as actually implemented).

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Don't Brexit if you haven't a scooby how to fix it.

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Marvin the Martian

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quote:
Originally posted by Alan Cresswell:
I've often wondered what would happen if right to buy was applied equally across all markets - the same qualification criteria and prices, for people renting council houses and from private landlords. If the private landlords don't squeal about being robbed of their assets and income then I'll accept that the right to buy council housing isn't a stupid idea (as actually implemented).

The big difference is that the government owned the houses it sold during right to buy, and doesn't own the ones that are in the hands of private landlords.

It's a bit like the difference between me deciding to sell my own car in order to gain some quick cash and me taking your car and selling it off so I can gain some quick cash. Somehow I think you'd react differently to one than the other.

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Hail Gallaxhar

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Alan Cresswell

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quote:
Originally posted by Marvin the Martian:
quote:
Originally posted by Alan Cresswell:
I've often wondered what would happen if right to buy was applied equally across all markets - the same qualification criteria and prices, for people renting council houses and from private landlords. If the private landlords don't squeal about being robbed of their assets and income then I'll accept that the right to buy council housing isn't a stupid idea (as actually implemented).

The big difference is that the government owned the houses it sold during right to buy, and doesn't own the ones that are in the hands of private landlords.

It's a bit like the difference between me deciding to sell my own car in order to gain some quick cash and me taking your car and selling it off so I can gain some quick cash. Somehow I think you'd react differently to one than the other.

No, the government didn't own the houses sold off. They were owned by local authorities, who didn't have any option about whether or not to sell their property.

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Don't Brexit if you haven't a scooby how to fix it.

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Doc Tor
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Neither could they then use the proceeds to built replacement houses.

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Forward the New Republic

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Leorning Cniht
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quote:
Originally posted by Alan Cresswell:
If the private landlords don't squeal about being robbed of their assets and income then I'll accept that the right to buy council housing isn't a stupid idea (as actually implemented).

That's a pretty stupid statement.

Whilst I'm not a fan of RTB, there is a rather obvious difference between the landlord being the government and the landlord being a private individual. The government (and national government and local government are not very independent, so we can lump them together as one thing for this discussion - local governments are not self-funding, self-governing entities, but are tied to national government by a web of mandates, bulk funding and subsidies) has all kinds of interests in the general wellbeing of the population, in street sweeping and maintenance, in the wider economy and so on that a private individual just doesn't have.

So it doesn't follow at all that an irrational decision for a private property owner must also be an irrational decision for a state property owner.

I'm not particularly arguing with your conclusion - I tend to agree with it - but with your logic.

[ 09. October 2017, 20:30: Message edited by: Leorning Cniht ]

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Dafyd
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quote:
Originally posted by Leorning Cniht:
Whilst I'm not a fan of RTB, there is a rather obvious difference between the landlord being the government and the landlord being a private individual. The government (and national government and local government are not very independent, so we can lump them together as one thing for this discussion - local governments are not self-funding, self-governing entities, but are tied to national government by a web of mandates, bulk funding and subsidies) has all kinds of interests in the general wellbeing of the population, in street sweeping and maintenance, in the wider economy and so on that a private individual just doesn't have.

Cameron thought that the right to buy could apply to Housing Associations - I don't know whether May has done anything with the plan. If that's not crossing the dividing line between public and private actors it's coming within a hair's breadth of it. The Government's already intervening in the market with Help to Buy (or Help to Keep Up Property Values as it might be called).

Local government and national government may not be very independent, but they're not the same thing. Moreover there is some value in keeping them distinct, as there is in encouraging a layer of public non-governmental actors: charities, churches, unions, and so on, between the market and the state.

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we remain, thanks to original sin, much in love with talking about, rather than with, one another. Rowan Williams

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Alan Cresswell

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quote:
Originally posted by Leorning Cniht:
national government and local government are not very independent, so we can lump them together as one thing for this discussion - local governments are not self-funding, self-governing entities, but are tied to national government by a web of mandates, bulk funding and subsidies

No, local governments are not entirely self-funding - income from council taxes, business taxes, housing rents etc are insufficient, and the money from central government is essential to maintaining local services. Which gives central government a powerful stick to keep councils in line with their policy. It's a very one-sided arrangement; Westminster government can dictate policy to councils (in this case, the right to buy council houses) and use their funding to enforce compliance, but local governments have no input into that policy decision (council leaders don't get to contribute to Cabinet discussions, council members don't get votes in Westminster etc). Councillors are elected to serve their local community, but to a large extent their hands are tied by central government without any opportunity to influence central government policy. The UK has a severe democratic deficit at local level - a very small number of councillors, and those councillors having no effective power over much of what their constituents want to see happen.

If every local authority had the powers to enact right to buy (or, not) as they see best you might have a point. But, councils can't decide whether or not they want to sell any of their housing stock, if they do can't set the price and qualifying criteria for people to buy, can't decide how to spend the money raised from sale etc. While they don't have that power then we can't consider them a form of government.

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Don't Brexit if you haven't a scooby how to fix it.

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Leorning Cniht
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quote:
Originally posted by Alan Cresswell:
Which gives central government a powerful stick to keep councils in line with their policy. It's a very one-sided arrangement; Westminster government can dictate policy to councils

Yes, we agree - local governments are slightly more than field offices implementing national policy, but not much more.

quote:
While they don't have that power then we can't consider them a form of government.
They're not a true form of government in their own right - we have to consider them as a somewhat erratic subsidiary of the national government. Hence my lumping them together.
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Arethosemyfeet
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If funding is the issue, you could tie claiming tax relief on buy-to-let related expenses to the right to buy i.e. if the government gives you tax relief on interest payments, repairs etc then your tenants might have the right to buy the house. Possibly there should be a system where each full year of rent paid results in a 1% stake in the rented property. There's no particular reason rents should be collectable in perpetuity. Rent for 10 years and you've got a deposit. However you do it, I'm coming to the conclusion that private property ownership other than of your own dwelling house is pretty broken.
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L'organist
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Could we please stop seeing all private landlords as latter day Rachmanns? Not all private landlords are bad - and I'm not just saying that because I have rental property.

If anyone cares to know what is involved in being a good landlord I'm more than happy to oblige. I leave a lot of it to my lettings agents but within strict lines laid down by me on things like level of rent, policy towards arrears, paying for credit checks, etc.

And please take off the rose-tinted spectacles about tenants: yes, many are fine but there are some (I've had a few) who are an absolute nightmare. I could give you chapter and verse, but suffice to say that a 60-something organist didn't expect to gain intimate knowledge of how to set-up a cannabis farm, using internet access to the Land Registry to steal property, benefit fraud, identity theft (not to mention actual theft), setting up of illegal HMOs, etc, etc, etc.

Why do I still have the property? Because I cannot sell and buy an annuity that will give me the same money on which to live - in other words, the property is my pension. Those of us not fortunate to have worked for government, in a school or for a major charity (or similar) have had to make our own pension arrangements - no employers' contributions for us to add to our pension pot - and the best way to do it if you've been on a modest income has been through rental property.

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Rara temporum felicitate ubi sentire quae velis et quae sentias dicere licet

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Arethosemyfeet
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I also have a property I rent out, and have experienced awful tenants. That doesn't stop me seeing a system where someone can live off rent in perpetuity as being fundamentally flawed. That doesn't make all landlords villains, but it does need fixing.
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Boogie

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Yep.

I’m a private landlord and, this year, most of the rent which came in has been spent on putting in a new kitchen, new boiler and new oven.

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Garden. Room. Walk

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Baptist Trainfan
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This article, by a Baptist Minister who is also a landlord, may be of interest.

[ 10. October 2017, 09:49: Message edited by: Baptist Trainfan ]

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Doc Tor
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quote:
Originally posted by L'organist:
Could we please stop seeing all private landlords as latter day Rachmanns?

[citation needed]

There's been virtually no criticism of private landlords here - just past and present government policy.

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mr cheesy
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I understood that buy-to-let only works if house prices increase and that rents only cover repairs and mortgage costs. Maybe that's wrong.

It seems to me that putting saved money into property as an investment has been the favoured savings method for the middle classes for some time - as other investments have become more risky and returns have fallen.

I can't see that there is anything wrong with it per say - and can't really believe that it is really any worse than doing it (by proxy) via a building society.

On the other hand, I think it is hard to argue that this is a good state of affairs - where people feel like they have no alternative but to make money by selling housing services to other people.

I don't criticise anyone who has made this decision for the sake of their own financial stability, but I find it hard to believe that the property bubble and mountains of personal debt built upon it are a sustainable way for people to save for retirement.

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arse

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Doc Tor
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I see it differently, that buy-to-let doesn't work while buying outright does.

Scenario 1: I have £250k. I buy a house. I rent it out. To get a 5% return on my investment, I have to charge (roughly) £1000 pcm in rent for the property.

Scenario 2: I have £25k. I borrow £225k from a mortgage provider based on my 10% deposit. They charge me 5% interest. I now have to charge (roughly) £1000 pcm just to make the interest payments. But I want a return on my investment too. I need to be able to pay for repairs, and some more on top to replace the £25k I've sunk into the property, so I can buy another BTL. So I'm going to charge £1250pcm. £1500pcm. Maybe more.

Buy-to-let simply pushes the price to renters up. The money they pay goes not into the economy, but into the banks. The banks don't need that capital to loan to other people. They can, and do, just magic it out of thin air.

I think the BTL 'craze' has been one of the main driving factors of the house-price bubble, the stratospheric rise in rents, the cost of housing benefit (tax payer's money, siphoned straight into the banks), and ultimately a cause of homelessness. I would reign it in. Hard.

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mr cheesy
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I don't think there is very much difference between those scenarios. Even if one has bought outright, one has to allow for repairs before considering any net returns on the investment.

The point you are missing is the increase in the value of the investment. With a small amount of capital invested in a buy-to-let mortgage, one hopes that the house will increase in value so that when one sells it again there is a profit.

The interesting thing to me is that countries like France and Germany have very many more rented properties - even though rents are kept low and property prices are not, overall, rapidly increasing.

Which suggests that German property owners are not looking for as quick a return on their investment as British buy-to-let owners.

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arse

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Leorning Cniht
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quote:
Originally posted by Arethosemyfeet:
If funding is the issue, you could tie claiming tax relief on buy-to-let related expenses to the right to buy i.e. if the government gives you tax relief on interest payments, repairs etc then your tenants might have the right to buy the house.

Landlords pay tax on their business profits just the same as any other business. It's not a special landlord tax relief - it's exactly the same as any other business operation.
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Doc Tor
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# 9748

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I'm not missing it. That part - what is rightly called speculation - is simply the driver for BTL. If you're renting, you don't care about that, just how much you have to pay pcm. And I think it's a given that someone who gains an income through renting a property vs someone whose gains are entirely speculative and on the never-never are going to approach their pricing models differently.

The BoE are looking to double interest rates in November. Double. (Yes, it's from 0.25% to 0.5%, but it's still double). Variable rate mortgages will increase by more than 0.25%, guaranteed. All those BTL will have to put up the rent just to make their new, higher, interest payments. Those who own their properties outright won't have to.

But they still will, all the same.

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Boogie

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# 13538

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quote:
Originally posted by mr cheesy:
I don't think there is very much difference between those scenarios. Even if one has bought outright, one has to allow for repairs before considering any net returns on the investment.

The point you are missing is the increase in the value of the investment. With a small amount of capital invested in a buy-to-let mortgage, one hopes that the house will increase in value so that when one sells it again there is a profit.

The interesting thing to me is that countries like France and Germany have very many more rented properties - even though rents are kept low and property prices are not, overall, rapidly increasing.

Which suggests that German property owners are not looking for as quick a return on their investment as British buy-to-let owners.

Renters have many more rights in Germany, it’s not as easy to be a landlord there. Once a person is in situ you can’t get rid of them. There is no ‘six months notice’ or any other notice. They stay as long as they want. My friend wanted to turn her extra flat into an air b&b - she had to wait until the tenant chose to leave. There are also many rules about not having an empty place too, so that all property is used, not just bought and sat upon.

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Arethosemyfeet
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quote:
Originally posted by Leorning Cniht:
Landlords pay tax on their business profits just the same as any other business. It's not a special landlord tax relief - it's exactly the same as any other business operation.

The difference is that it's non-productive rent seeking rather than a productive business. It's solely a way for money to make money. Not all business operations are equal, and the effects of the private rental market are largely negative, particularly without the moderating effect of a decent public sector option. The "business" model of residential letting is an artefact of the legal situation, not just tax law but tenancy law, how loans are secured on property and so on. Tweaking those laws could tame the private rental market. And once you stop investment money being sucked into the inflation of asset prices there might be more to invest in productive enterprises.
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chris stiles
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quote:
Originally posted by Baptist Trainfan:
This article, by a Baptist Minister who is also a landlord, may be of interest.

There are a number of things I'd take issue with in that article. It is true that sudden hikes in interest rates have hurt people who have bought in the past - especially when they had stretched to the limit to finance houses. On the other hand, on a generational level the accompanying high inflation rates during the 80s/90s meant that the average person who bought saw the value of their debt erode away faster than is the case at the present.

Further, in terms of BTL squeezing first time buyers - this is the case even if BTL landlords are buying in different places than first time buyers. BTL buying has had effect that developers can make returns purely by developing apartment units in city centres for the rental market, while keeping the large tracts of land elsewhere undeveloped and off the market.

Some would also take issue with his reasoning in "Buy-To-Let pushes up prices?" it is true that there is an overall shortage - but the idea that simply because someone is renting that they've been removed as a buyer and therefore landlord purchases are neutral is very suspect.

[ 10. October 2017, 12:26: Message edited by: chris stiles ]

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Ricardus
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Surely the reason why btl mortgages drive up prices is because they increase demand but not supply.

Without the option of a btl mortgage, demand is limited to people who want a home to live in, and people with enough capital to buy a house for rent outright.

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Then the dog ran before, and coming as if he had brought the news, shewed his joy by his fawning and wagging his tail. -- Tobit 11:9 (Douai-Rheims)

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