Thread: Two speeches Board: Purgatory / Ship of Fools.
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Posted by PaulTH* (# 320) on
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I have a dilemma. I think our present government led by Theresa May[well sort of) is one of the most bungling incompetent governments of my lifetime. I wouldn't trust them to boil an egg, let alone run a country. The last time I felt that way about a government was in the mid 90's when John Major was Prime Minister. But then I looked at how Neil Kinnock and John Smith had transformed the Labour Party from the Marxist rabble it was in the early 80's, into a credible opposition, and I joined many others in giving Mr Major his marching orders in 1997. I was euphoric for weeks with the slogan "things can only get better." Today's Labour Party is a very different animal. While there's nothing illogical about having real socialists at the helm of the socialist party, it's a form of socialism I could never embrace.
During his conference speech on Wednesday of this week, Jeremy Corbyn made pledges estimated to be worth £312 billion in extra spending commitments, while sticking to his mantra that the rich may have to pay "a little bit more" in tax. Such a huge burden added to the £2 trillion of debt the country already has, would require massive hikes in taxation all round and a huge extra borrowing commitment. He also hinted that in his massive nationalisation plan, private assets and properties may be seized, a plan worthy of Robert Mugabe. No wonder shadow chancellor John McDonnell is planning for a massive flight of capital and run on sterling. The global economy which controls so much, would run a million miles from such statist excess.
The next day, Theresa May made a speech at the Bank of England, in which she said that billions of people have been lifted out of the darkness of poverty through capitalism and that managed capitalism is the only sustainable way of ensuring long term raising of living standards. While Mrs May has thoroughly proved her incompetence at achieving this, I agree with the basic principles of what she said much more than I agree with Mr Corbyn's massive, bloated state. He's extremely popular especially among young voters who can't remember the 1970's. Britain with banana republic inflation. Chancellor Dennis Healy's urgent appeal to the International Monetary Fund for a £4 billion bail out because the pound was sinking like a stone. They don't remember bully boy trade unionism where the government and industry was paralysed by outdated working practices. How it was an achievement to travel into London by train for a full week without there being a strike by either drivers, guards, signalmen or carriage cleaners. And how in the end rubbish piled up on the streets and bodies didn't get buried. We were the laughing stock of the world.
President Trump said on Monday of this week, in reference to Venezuela, "where socialism grows, misery follows." There is ample evidence over the last hundred years from all around the world of the truth of this. Misery would follow such levels of state intervention here. So what to do when caught between a government with no ability to govern and an alternative political movement whose principles I despise?
Posted by Arethosemyfeet (# 17047) on
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We don't need to remember the 70s having been lectured extensively on them every time successive wanted to justify the latest extremity of workplace exploitation, wage cuts for workers and tax cuts for the wealthy.
The oil crisis of the 70s was the problem, and the right did their usual trick of exploiting a crisis to impose their ideology and have been dining out on it ever since. What those who can remember the 70s often don't remember is that prior to that the post-war consensus delivered massive economic growth, rising living standards and the smallest levels of inequality ever seen in this country. You don't have to long for the days of Comintern to see that the pendulum has swung too far in the opposite direction.
Maybe if you approach Corbyn's policies with an open mind, rather than accepting the dogma that borrowing automatically results in higher tax rates (it doesn't if spent well, e.g. on nationalising profitable utilities or stimulating job creation, or indeed putting money in the pockets of the least well off), and that a state far smaller than it was in 1990 would be "bloated".
Posted by Arethosemyfeet (# 17047) on
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to add:
State intervention takes place in many ways, in many places that aren't Venezuela, Cuba, or the USSR. State-owned water is doing very well in Socialist Scotland, and many nations in Europe manage to maintain efficient and cheap nationalised rail networks. Publicly owned power companies seem to work well in most places in the developed world. This market fetishisation is not based on "what works" but on ideology. The only country suffering worse from this is the USA. Corbyn is proposing nationalising natural monopolies, and assets constructed under PFI that should never have been in the private sector in the first place. That's not even radical, that's just common sense and utterly mainstream throughout Europe, Canada, South America, Australia and New Zealand. If you want to look at socialism in South America, look at Bolivia doing quietly and for real what Venezuela did loudly and half-arsed.
Posted by Leorning Cniht (# 17564) on
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quote:
Originally posted by Arethosemyfeet:
Corbyn is proposing nationalising natural monopolies, and assets constructed under PFI that should never have been in the private sector in the first place. That's not even radical, that's just common sense and utterly mainstream
There is something of a difference between having these monopolies in public ownership, and forcibly acquiring them from their owners at below market price, which is what Corbyn and McDonnell are suggesting.
Posted by Arethosemyfeet (# 17047) on
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quote:
Originally posted by Leorning Cniht:
There is something of a difference between having these monopolies in public ownership, and forcibly acquiring them from their owners at below market price, which is what Corbyn and McDonnell are suggesting.
That's what the press have read into it. What they actually said was that parliament would decide the price. You obviously can't promise to pay the "market price" because that will influence the price before it is fixed. Likewise parliament can't set an unreasonably low price without a very good reason. That parliament would need to set the price (as with any other compulsory purchase) is blindingly obvious. Interpreting that as a plot to pay way below the value is a deliberately mendacious interpretation on behalf of the press. Exactly how the price will be determined is open to discussion, but one obvious way would be to pay the average of the closing prices in the year up to the passage of the legislation or the purchase price of the shares, whichever is the lower.
[ 29. September 2017, 20:48: Message edited by: Arethosemyfeet ]
Posted by Rocinante (# 18541) on
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There were economic problems all over the world in the mid 1970's, caused by the OPEC oil embargo of 1973 which quadrupled the price of oil.
The "winter of discontent" was not caused by excessive government spending (a bizarre idea which seems to have become part of our national mythology), but was a reaction against the government's attempt to control inflation by imposing a limit on pay rises in the public (and private) sectors. This was torpedoed by the public sector unions, and by private employers, who ignored it.
The Thatcher government tried an entirely different approach to controlling wage inflation: drastic constriction of the money supply causing a severe recession with consequent mass unemployment. Worked a treat.
The IMF crisis was triggered by a set of excessively pessimistic treasury figures which lead Callaghan and Healey to seek a bailout which subsequently proved to be unnecessary. This contributed to Blair and Brown's decision to make the Bank of England independent, and try to de-politicise monetary policy.
I'm no starry-eyed Corbyn fan, but if the 1970's and Venezuela are the best his opponents can do, he's a shoo-in at the next election. The British economy is desperately in need of investment, and Brexit is only going to make things worse.
Posted by Alan Cresswell (# 31) on
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quote:
Originally posted by Leorning Cniht:
quote:
Originally posted by Arethosemyfeet:
Corbyn is proposing nationalising natural monopolies, and assets constructed under PFI that should never have been in the private sector in the first place. That's not even radical, that's just common sense and utterly mainstream
There is something of a difference between having these monopolies in public ownership, and forcibly acquiring them from their owners at below market price, which is what Corbyn and McDonnell are suggesting.
On the other hand, apparently it's perfectly acceptable to sell public assets below market price. If it's acceptable to defraud the owners of public utilities by flogging off our possessions on the cheap, why is it so wrong to do the same to those who benefitted from getting our property on the cheap in the first place?
Posted by Leorning Cniht (# 17564) on
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quote:
Originally posted by Arethosemyfeet:
That's what the press have read into it. What they actually said was that parliament would decide the price.
I listened to McDonnell say it. Did you? Listen to his tone of voice, look at his mannerisms. That's not a man promising to take monopolies back into public ownership for an honest price - that's a man crowing that the "rich" are going to be made to pay.
It may well be that McDonnell would end up treating the owners of the companies he wants to nationalize fairly, but he feels under no obligation to do so.
Posted by Leorning Cniht (# 17564) on
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quote:
Originally posted by Alan Cresswell:
On the other hand, apparently it's perfectly acceptable to sell public assets below market price. If it's acceptable to defraud the owners of public utilities by flogging off our possessions on the cheap, why is it so wrong to do the same to those who benefitted from getting our property on the cheap in the first place?
1. The current owners are not the people who bought the utilities on the cheap.
2. The government "owns" the public assets in trust for the public. As the owner of a piece of property, it can sell it for whatever price it can get. It does not currently own the property in question - the situations aren't even slightly symmetric.
3. Similarly, Gordon Brown was perfectly entitled to sell gold at the point that the market hit absolute rock bottom. It may well have been stupid, but he was free to do so. It would be equally wrong to levy a windfall tax on the people who bought our cheap gold.
Posted by Arethosemyfeet (# 17047) on
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quote:
Originally posted by Leorning Cniht:
I listened to McDonnell say it. Did you? Listen to his tone of voice, look at his mannerisms. That's not a man promising to take monopolies back into public ownership for an honest price - that's a man crowing that the "rich" are going to be made to pay.
It may well be that McDonnell would end up treating the owners of the companies he wants to nationalize fairly, but he feels under no obligation to do so.
Yes, I listened. I just don't share your paranoid interpretation. I trust Corbyn and McDonnell rather more than I trust the big utility companies. "Fair" is very much open to interpretation in any case. RBS shareholders thought they were hard done by after nationalisation too.
[ 29. September 2017, 21:07: Message edited by: Arethosemyfeet ]
Posted by PaulTH* (# 320) on
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I fully expect a Corbyn led government to be in power within two years, and the present administration only have themselves to blame for it. And it may well turn into a damp squib like President Hollande's socialism in France. But I think that young voters will support Corbyn because they don't have the advantages we had when we were young. I bought a modest property at the age of 24, in 1978. I had the advantage even then of bank of mum and dad to help with the deposit, but I wasn't a big wage earner, it was quite normal for those on a steady wage to get onto the property ladder that young. I didn't go to university, but my friends who did all went free.
But if we're going to blame the atrocious economic conditions of the 1970's on the massive hike in oil price, we can realistically blame the problems of today on the financial crash. Incidently while I supported the privatisations of British Airways and British Telecom, I opposed it for the railways and the utilities. I just doubt our ability as a nation to afford re-nationalisation without adding to the debt burden we bequeath to future generations.
Posted by Arethosemyfeet (# 17047) on
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Well rail nationalisation needn't cost anything if it is done by taking the franchises back into public ownership as they are due for renewal. Increased debt is only a problem if it doesn't lead to increased growth and increased revenues over the long term. Electricity companies would still make money after being nationalised, as would Royal Mail (as it did before privatisation).
Posted by Ricardus (# 8757) on
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quote:
Originally posted by PaulTH*:
President Trump said on Monday of this week, in reference to Venezuela, "where socialism grows, misery follows." There is ample evidence over the last hundred years from all around the world of the truth of this.
The problem with this sort of argument is that you can put the cut off points wherever you like to prove a point.
ISTM that ordinary people were a lot better off in 1970 compared to 1870, and in 1870 compared to 1770, and this has much to do with the increase of state intervention, the welfare state, workers' rights, and an abandonment of the idea that the market will provide. Ergo, where socialism grows, happiness triumphs.
[ 29. September 2017, 21:36: Message edited by: Ricardus ]
Posted by Ricardus (# 8757) on
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There was a rather interesting article in the Guardian recently, arguing that Tory radicalism in the shape of Brexit has given Labour a licence to be radical as well.
quote:
It is an extraordinary feature of British politics that two years ago there was no revolutionary party in the mainstream, and today revolution is the only item on the menu. Tory Brexiters and Corbynites face in opposite directions but are held together by mutually reinforcing dynamics. Fear of a Labour government keeps moderate Conservatives from breaking ranks and disrupting May’s plans, lest they end up triggering an election. And Labour has all the permission it needs to be radically unbound, because Brexiters have incinerated the rulebook on economic prudence and moderation. May has deployed the full capacity of government to make revolution respectable, which gives Corbyn and McDonnell their chance to make revolution permanent.
To put it another way: the Tories used to argue that Old Labour had lost the economic argument, and people generally accepted this. But if the new mantra is that people have had enough of experts, then it follows that any perceived expert consensus that Old Labour doesn't work has also lost its power.
(Yes, I know that consensus probably never existed in the first place among genuine economic experts. But people thought it did.)
Posted by Alan Cresswell (# 31) on
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quote:
Originally posted by Leorning Cniht:
1. The current owners are not the people who bought the utilities on the cheap.
Not relevant. If you buy stolen goods that hasn't changed the fact that they're stolen, and if the true owners locate them then they have rights over that property. Not that public assets that have been stolen in the normal sense of the word.
quote:
2. The government "owns" the public assets in trust for the public. As the owner of a piece of property, it can sell it for whatever price it can get.
The government is steward of public assets, the owner is the public. I'm sure there's a technical term to describe the actions of a tenant who sells property belonging to his landlord, regardless of how fair the price.
Posted by Doc Tor (# 9748) on
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If we're looking at things to tax, I'd settle on two, relatively simple issues.
1. Income through wealth is taxed at a vastly lower rate than income through labour. If we're going to argue that work should pay, then equalising the tax rates should be a priority.
2. Introduce a land tax. Freeholders of land enjoy benefits of infrastructure, utility and geography they have neither worked for nor paid for. Consequently, the value of land needs to be taxed fairly so that the country benefits as a whole.
Posted by Dafyd (# 5549) on
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quote:
Originally posted by PaulTH*:
But if we're going to blame the atrocious economic conditions of the 1970's on the massive hike in oil price, we can realistically blame the problems of today on the financial crash.
Most of us on the left do blame the problems of today on the financial crash. It's just that the cause of the financial crash had nothing to do with Gordon Brown's spending plans, which were perfectly sound. They were largely due to the deregulation of the banking sector by Clinton's government, not helped by Brown following in Clinton's wake.
As overspending is the wrong diagnosis, so austerity is the wrong solution and far from solving the problem has been making the problem worse. It's as if once you've suffered food poisoning from dodgy chicken you've accepted the chicken manufacturer's diagnosis that the problem is caused by too much health and safety.
Posted by Alan Cresswell (# 31) on
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quote:
Originally posted by PaulTH*:
I just doubt our ability as a nation to afford re-nationalisation without adding to the debt burden we bequeath to future generations.
There are different sorts of debts. We have already bequeathed a burden of insufficient council housing, a fragmented and expensive rail network etc. Renationalisation could be a redistribution of that debt, could even be a reduction in debt assuming we're willing to assess debt in more than just the bottom line of the balance book.
Posted by Callan (# 525) on
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I have, with the greatest reluctance, come to the conclusion that as, what the young people call a centrist dad, that my obligation at the next election is to vote for Jeremy Corbyn.
I'm not a fan but he's now viable in my constituency, which was previously such a safe Tory seat that the incumbent survived the 1997 Tsunami and I prefer, on balance, a socialist administration held in check by the likes of Ben Bradshaw and Liz Kendall to a Powellite Tribute Act held in check by, er, um, we'll get back to you on that one.
The objection to the hard left, historically, was that they would wreck the economy and undermine the western alliance. I think that argument's salience has been undermined somewhat, of late.
Posted by Leorning Cniht (# 17564) on
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quote:
Originally posted by Alan Cresswell:
Not that public assets that have been stolen in the normal sense of the word.
Quite. The government of the day is entitled to dispose of public assets. Just like they are allowed to take more tax from you than you would like to pay without being thieves.
quote:
The government is steward of public assets, the owner is the public. I'm sure there's a technical term to describe the actions of a tenant who sells property belonging to his landlord, regardless of how fair the price.
I don't know why you're talking about tenants here (that'd either be theft, fraudulent conversion, or both...). The government of the day is not the tenant of the public. As you say, it is the steward of the public assets. The trustee. The body given responsibility for them, and empowered to make decisions about them.
If you employ a steward to take care of your property and he does a bad job, you fire him. Selling off your property at an unwisely low price may well be stupid, but probably isn't fraudulent.
Posted by Dafyd (# 5549) on
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quote:
Originally posted by Doc Tor:
Introduce a land tax. Freeholders of land enjoy benefits of infrastructure, utility and geography they have neither worked for nor paid for. Consequently, the value of land needs to be taxed fairly so that the country benefits as a whole.
The thing is that we would like to encourage holders of land not to exploit their land to pay tax on it.
A tax on wealth on the other hand is probably a good idea. As I understand it, it's bad for an economy to have too much money floating around. It clogs up the works. (Neoclassical economics assumes that there's no such thing as uninvested money, which is false, since investments are not liquid.)
Posted by Leorning Cniht (# 17564) on
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quote:
Originally posted by Doc Tor:
If we're looking at things to tax, I'd settle on two, relatively simple issues.
1. Income through wealth is taxed at a vastly lower rate than income through labour. If we're going to argue that work should pay, then equalising the tax rates should be a priority.
2. Introduce a land tax. Freeholders of land enjoy benefits of infrastructure, utility and geography they have neither worked for nor paid for. Consequently, the value of land needs to be taxed fairly so that the country benefits as a whole.
I'd agree with both of these. The philosophical case for a land value tax is a complete no-brainer. As long as it really is a "land value" tax, and not a political boondoggle riddled with exceptions and loopholes to benefit the government's friends, or those who have bought them off (ie. what usually happens to tax legislation.)
It also needs to be a "land value" tax and not a "house value" tax. If we own identical plots of land, and one of us builds a cheap house on it, and the other builds an expensive house on it, we should be paying the same tax on the value of our land.
Posted by Alan Cresswell (# 31) on
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quote:
Originally posted by Leorning Cniht:
If you employ a steward to take care of your property and he does a bad job, you fire him. Selling off your property at an unwisely low price may well be stupid, but probably isn't fraudulent.
A man once planted a vineyard, and let it out to tenants. When it was time for harvest, he sent his servants to collect his share of the harvest. The tenants threw out and murdered the servants. When the man returns, will he not throw out the evil tenants, and install new tenants who will pay what is due to him?
If the government is doing a bad job of taking care of the country then they get thrown out, and a new government is put in their place. Fortunately in a democracy we can do that without a revolution. We can even install a new government that will do it's best to correct the mistakes of the past.
Posted by Ricardus (# 8757) on
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I think the point is that the governments who embarked on privatisation sprees were elected on platforms that made it clear that that was the sort of thing they were likely to do, so insofar as the public voted for them on those terms, the stewards were in fact acting on the instructions of the landlord.
They may have done a poor job but that is not actually a crime.
Posted by Alan Cresswell (# 31) on
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True. Though the usual problem of whether in an election the voters vote for everything in a manifesto still applies. But, we do elect representatives and trust them to act in our best interests (foolish mugs that we are).
And, there are times when governments engage in policies that they were not elected to enact.
Posted by rufiki (# 11165) on
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quote:
Originally posted by Leorning Cniht:
quote:
Originally posted by Doc Tor:
2. Introduce a land tax. Freeholders of land enjoy benefits of infrastructure, utility and geography they have neither worked for nor paid for. Consequently, the value of land needs to be taxed fairly so that the country benefits as a whole.
I'd agree with both of these. The philosophical case for a land value tax is a complete no-brainer. As long as it really is a "land value" tax, and not a political boondoggle riddled with exceptions and loopholes to benefit the government's friends, or those who have bought them off (ie. what usually happens to tax legislation.)
I'm not convinced it's a no-brainer. There are a lot of farmers out there who are struggling to make ends meet because the supermarkets have pushed prices down so much. Their land is very valuable, but they can only realise that value if they sell up and stop producing food for all our stomachs.
Posted by chris stiles (# 12641) on
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quote:
Originally posted by rufiki:
I'm not convinced it's a no-brainer. There are a lot of farmers out there who are struggling to make ends meet because the supermarkets have pushed prices down so much. Their land is very valuable,
Their land is only valuable if it has an alternate use - in the best case it's right next to a town and can easily be built on (there is already existing infrastructure and the local council is minded to grant planning permission), very little farmland will fall into this category.
The issue with making ends meet is that extreme levels of automation have increased the amount of land you need to make a farm viable as a going concern.
Posted by Ricardus (# 8757) on
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Fwiw i'm a big fan of land tax but the effect on farming is the part I've never been sure of.
Presumably the problem is to an extent self-correcting? AIUI land would be taxed purely on the market value, and the market value would be determined by free market economics rather than Government fiat. No-one is going to pay for land that isn't profitable, and therefore no-one is going to pay a price for land that is so high that the tax on the land makes it unprofitable. Therefore, the price of land should always fall to a level whereby the tax incurred is low enough that the profitability of the land is sustainable.
The difficulty would be in implementation of course ...
Posted by Doc Tor (# 9748) on
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Land zoned for agricultural use can only be used for agricultural use. Its value will therefore be low. If it's rezoned as residential land, its value suddenly increases. This will attract (a) capital gains tax and (b) a higher rate of land tax.
Those builders intent on artificially inflating house prices by land banking are either going to have to develop the land faster (or sell it to someone who will) or develop very deep pockets.
Posted by Dafyd (# 5549) on
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quote:
Originally posted by Doc Tor:
Land zoned for agricultural use can only be used for agricultural use. Its value will therefore be low. If it's rezoned as residential land, its value suddenly increases. This will attract (a) capital gains tax and (b) a higher rate of land tax.
I can certainly see the merits of a land tax that only applies to residential or commercial land. But the status of land as residential or commercial would then be at the discretion of the local council which might look arbitrary.
The problems as I see it with a general land tax is that: public access land not in commercial use (woodlands, nature reserves, etc) would want to be exempt. You'd also want to lower the tax on land that is being used for less intensive farming, especially where there are public rights of way.
[ 30. September 2017, 14:00: Message edited by: Dafyd ]
Posted by Martin60 (# 368) on
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quote:
Originally posted by Doc Tor:
If we're looking at things to tax, I'd settle on two, relatively simple issues.
1. Income through wealth is taxed at a vastly lower rate than income through labour. If we're going to argue that work should pay, then equalising the tax rates should be a priority.
2. Introduce a land tax. Freeholders of land enjoy benefits of infrastructure, utility and geography they have neither worked for nor paid for. Consequently, the value of land needs to be taxed fairly so that the country benefits as a whole.
I'm ASTOUNDED at 1. Basic rate labour income subsidizes basic rate capital dividend income by 12.5% from HMCE's figures.
Tax equality NOW! Why don't we hear Jeremy saying this?
Posted by Doc Tor (# 9748) on
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quote:
Originally posted by Dafyd:
The problems as I see it with a general land tax is that: public access land not in commercial use (woodlands, nature reserves, etc) would want to be exempt. You'd also want to lower the tax on land that is being used for less intensive farming, especially where there are public rights of way.
Yes and no.
The idea that woodland and nature reserves are 'not in commercial use' is often not true. Most woodland is managed and owned by large estates or the Forestry Commission and is expected to turn a decent profit. They are not public amenities, even if we treat them as such.
Nature reserves are often run by charitable or state organisations, and will consequently either be exempt or attract a large rebate. Such exemptions will be have to be shown to benefit the public and/or conservation work.
And we would, of course, have to take the Land Registry back in house.
Posted by Martin60 (# 368) on
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quote:
Originally posted by Martin60:
quote:
Originally posted by Doc Tor:
If we're looking at things to tax, I'd settle on two, relatively simple issues.
1. Income through wealth is taxed at a vastly lower rate than income through labour. If we're going to argue that work should pay, then equalising the tax rates should be a priority.
2. Introduce a land tax. Freeholders of land enjoy benefits of infrastructure, utility and geography they have neither worked for nor paid for. Consequently, the value of land needs to be taxed fairly so that the country benefits as a whole.
I'm ASTOUNDED at 1. Basic rate labour income subsidizes basic rate capital dividend income by 12.5% from HMCE's figures.
Tax equality NOW! Why don't we hear Jeremy saying this?
In fact a basic rate worker pays nearly THREE TIMES as much tax as a basic rate shareholder.
I'm bound to be missing something here, I mean that has to be WRONG surely?
Posted by Doc Tor (# 9748) on
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You have to remember that those who get their income through investments, are the sort of people who have enormous lobbying power, and are very influential in government (and certainly, in the unreformed House of Lords, the majority). Most of the current front bench are millionaires, whose government pay is merely ancillary to their investment income. Those who work - the vast majority of us - have less influence altogether than those few.
There are arguments for maintaining the differential, as there are for softening rules on Inheritance Tax and Capital Gains Tax. But all of those arguments favour already-rich people far more than they help the always poor. To the extent that those benefit (or will benefit) me, I'd trade them in a heartbeat for a fairer, more equal system.
Posted by Martin60 (# 368) on
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So I'm right?! WHAT?! I don't understand. I can't be. Why hasn't there been a bloody revolution? Why doesn't John McDonnell demand tax equality? How can there be any arguments? How come I've NEVER HEARD THEM. Can you direct me to any? I've NEVER HEARD of this particular massive subsidy of capital by labour before. Why not? It can't be true, I must be pitifully misunderstanding.
Posted by chris stiles (# 12641) on
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quote:
Originally posted by Martin60:
So I'm right?! WHAT?! I don't understand. I can't be. Why hasn't there been a bloody revolution? Why doesn't John McDonnell demand tax equality? How can there be any arguments? How come I've NEVER HEARD THEM.
Because any argument to the contrary gets put down to the 'politics of envy' by a commentariat who believe that the average worker earns at least 60K.
Posted by Martin60 (# 368) on
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No chris! It CAN'T be true?! It CAN'T be that simple!!!
Posted by Dafyd (# 5549) on
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quote:
Originally posted by Doc Tor:
The idea that woodland and nature reserves are 'not in commercial use' is often not true. Most woodland is managed and owned by large estates or the Forestry Commission and is expected to turn a decent profit. They are not public amenities, even if we treat them as such.
Most woods are managed. But where the Forestry Commission is all out dedicated to turning a profit you get monocultures of some conifer.
quote:
And we would, of course, have to take the Land Registry back in house.
There's quite a lot we need to take back in house.
[ 30. September 2017, 18:40: Message edited by: Dafyd ]
Posted by Anglican't (# 15292) on
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quote:
Originally posted by Dafyd:
quote:
And we would, of course, have to take the Land Registry back in house.
There's quite a lot we need to take back in house.
It hasn't been privatised (if I've understood the use of 'in house' here correctly.)
Posted by Doc Tor (# 9748) on
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quote:
Originally posted by Anglican't:
quote:
Originally posted by Dafyd:
quote:
And we would, of course, have to take the Land Registry back in house.
There's quite a lot we need to take back in house.
It hasn't been privatised (if I've understood the use of 'in house' here correctly.)
The plans to privatise it were shelved so quietly back in 2016, I had just assumed they'd gone ahead and privatised it.
I am corrected, and gladly so.
Posted by chris stiles (# 12641) on
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quote:
Originally posted by Doc Tor:
The plans to privatise it were shelved so quietly back in 2016, I had just assumed they'd gone ahead and privatised it.
I assume it was because it was easier to guarantee that land ownership data would continue to be opaque if it was kept under direct control.
Posted by Anglican't (# 15292) on
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quote:
Originally posted by chris stiles:
quote:
Originally posted by Doc Tor:
The plans to privatise it were shelved so quietly back in 2016, I had just assumed they'd gone ahead and privatised it.
I assume it was because it was easier to guarantee that land ownership data would continue to be opaque if it was kept under direct control.
Land ownership data is presumably quite clear, provided the land is registered? (I don't know how much is these days, but I'm guessing that the vast majority must be by now.) Were HM Land Registry to be privatised, it would mean that information about land (including its value) would be handled by a private company, which could raise one or two issues.
Posted by Leorning Cniht (# 17564) on
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quote:
Originally posted by Doc Tor:
Nature reserves are often run by charitable or state organisations, and will consequently either be exempt or attract a large rebate. Such exemptions will be have to be shown to benefit the public and/or conservation work.
Don't do it that way - you open up an enormous loophole for boondoggle "public interest" projects favoured by politicians.
Write a binding covenant into the land registry documents preventing building on the land, and the land automatically has low economic value, and so will attract low taxes. One system, no loopholes.
Posted by Ricardus (# 8757) on
:
[Reply to Anglican't]
Private Eye had a feature on this a few years ago. A lot of British land is owned by some complex web of trusts registered in such beacons of transparency as the British Virgin Isles. Over 10% of the City of London, for example.
Full report here for the curious.
[ 30. September 2017, 21:19: Message edited by: Ricardus ]
Posted by Alan Cresswell (# 31) on
:
quote:
Originally posted by chris stiles:
quote:
Originally posted by Doc Tor:
The plans to privatise it were shelved so quietly back in 2016, I had just assumed they'd gone ahead and privatised it.
I assume it was because it was easier to guarantee that land ownership data would continue to be opaque if it was kept under direct control.
Not enough opportunity for the chums of senior Tories to make lots of money, nor enough detriment to the rest of us.
Posted by chris stiles (# 12641) on
:
quote:
Originally posted by Anglican't:
Land ownership data is presumably quite clear, provided the land is registered? (I don't know how much is these days, but I'm guessing that the vast majority must be by now.)
You presume wrong. In addition to the issues raised by Ricardus, there are numerous ways in which the current records are incomplete - for a start about 15% is still completely unregistered.
Posted by Anglican't (# 15292) on
:
quote:
Originally posted by chris stiles:
quote:
Originally posted by Anglican't:
(I don't know how much [land is registered] these days, but I'm guessing that the vast majority must be by now.)
You presume wrong...for a start about 15% is still completely unregistered.
So the vast majority is...? I'll read the Private Eye thing with interest, though, when I have a moment.
Posted by no prophet's flag is set so... (# 15560) on
:
Capitalism in its current form provides wonderful and cheap consumer goods while wrecking the planet. Capitalism is responsible for destruction of the world's forests and oceans, and is the forcs behind the mass extinction of species. Unless we force companies and governments to factor in the environment to their costs of doing business, we're dooming future generation and guaranteeing wars.
The idea that private ownership of basic public services when they are natural monopolies is better than public is simply false. I live in Saskatchewan where we still have most public services owned by the government. Which results in cheaper cost and better service. We see the comparison every year. Public ownership includes: auto and home insurance, water, electric, natural gas, landline telephones, cellular telephones, home security alarm systems, internet, cable TV, liquor distribution. We had a rural bus service until 6 months ago when the rightwing gov't turfed it. They are trying to do it with liquor just now, but were forced back on some others including phones, internet and cable TV. The private corps are in the province but they cherry-pick urban markets and abandon rural. Why would we want to buy anything from companies which overprice and take the money out of the community? And don't invest profit in service upgrades. Well regulated public ownership is the best way. If it wasn't why have highways from taxes or an NHS?
At the same time we have all this, small business is the largest employer.
My point is that when turkeys like May and trumpy talk about the evils of socialism, they are putting up strawman and really talking about totalitarian communists, which isn't valid. They are making things up, trying to convince people to support things against their own interests.
Not sure about this Corbyn fellow, is he a limosine socialist? rich himself? trumpy certainly is arich thug, and he looks more bananas, bozo and Berlusconi every day. The news here seems to just report what he says without comment any more.
Posted by Rocinante (# 18541) on
:
Corbyn owns a house in Islington, has his salary as leader of the opposition and is drawing his parliamentary pension, so I think we can assume he isn't looking for coins down the back of the sofa at the end of the month.
However his personal lifestyle has always been modest, going on frugal, and he has never waivered from his commitment to old-school socialism all through the Thatcher & Blair years. It's hard to make a hypocrisy charge stick (one reason why the gutter press hate him so much), and he is no populist opportunist.
Posted by chris stiles (# 12641) on
:
quote:
Originally posted by Anglican't:
So the vast majority is...? I'll read the Private Eye thing with interest, though, when I have a moment.
15% is percentage of completely unregistered land - about 20-30% on top of that either has incomplete, old, inaccurate or misleading information. That's before you get to the ones where the registration is meaningless for all practical purposes - for the reasons Private Eye cites.
Also note that the properties they cover in their report would be a subset of the properties sold in a period of 9-15 years.
Land registration in this country is a mess - so you can't really pronounce on the 'vast majority'.
[ 01. October 2017, 07:50: Message edited by: chris stiles ]
Posted by Arethosemyfeet (# 17047) on
:
quote:
Originally posted by Rocinante:
Corbyn owns a house in Islington, has his salary as leader of the opposition and is drawing his parliamentary pension, so I think we can assume he isn't looking for coins down the back of the sofa at the end of the month.
However his personal lifestyle has always been modest, going on frugal, and he has never waivered from his commitment to old-school socialism all through the Thatcher & Blair years. It's hard to make a hypocrisy charge stick (one reason why the gutter press hate him so much), and he is no populist opportunist.
I've often wondered what Corbyn does with his money. He's not exactly an ascetic but he doesn't have the lifestyle of someone who has paid of the mortgage and has earned 3 times the average for decades and now earns even more. He could be stashing it under the mattress or spending it on his children, but I wouldn't be surprised if he is giving a fair chunk of it away.
Posted by Martin60 (# 368) on
:
Please, put me out of my misery, tell me I'm laughably, stupidly wrong, that I don't understand and couldn't possibly?
The turkeys are paying for Christmas.
Posted by Doc Tor (# 9748) on
:
quote:
Originally posted by Arethosemyfeet:
He's not exactly an ascetic but he doesn't have the lifestyle of someone who has paid of the mortgage and has earned 3 times the average for decades and now earns even more. He could be stashing it under the mattress or spending it on his children, but I wouldn't be surprised if he is giving a fair chunk of it away.
As far as I understand it, he both gives away a significant amount, and he doesn't claim anywhere near his full entitlement of expenses for his parliamentary work.
Perhaps he thinks he earns enough.
Posted by Doc Tor (# 9748) on
:
quote:
Originally posted by Martin60:
Please, put me out of my misery, tell me I'm laughably, stupidly wrong, that I don't understand and couldn't possibly?
The turkeys are paying for Christmas.
AFAIUI, the argument goes like this:
Investments are made with taxed income. Therefore to tax the profits of investments would be to tax the income twice. This applies to both Capital Gains Tax and dividends.
(Note that this argument does not apply to VAT, which is absolutely a double tax, and it impacts the poor disproportionately.)
Posted by Martin60 (# 368) on
:
Thanks Doc, that matches my understanding. I knew someone clever would come along and explain it. But it's bollocks isn't it? The investment has been taxed. So? The return hasn't. The return on investment isn't the investment. The same applies to savings interest.
Posted by Martin60 (# 368) on
:
And I bet you there are people who invest untaxed income, income they haven't paid a penny's tax on. Legally.
So, if taxing dividend income from taxed investment principle is croo-ell, robbing the rich, why do we do it at all? On what moral basis? None that Russ could adduce I'm sure.
Posted by Doc Tor (# 9748) on
:
Of course, inheriting wealth (mostly tax free) from which I get income (mostly tax free) is fine too, just as long as you don't examine the "taxing my investment twice" argument very hard.
Posted by no prophet's flag is set so... (# 15560) on
:
That's the interesting pile of money for tax fairness isn't it? Family fortunes which descendents haven't earned. Passive investments which provide income for no actual work performed. The Liberal gov't in Canada proposes to tax this invested money the same as earned income, effectively increasing tax rates of ~15 up about 70% for amounts above some to be determined amount. Probably needs to happen. Money which is directed into a business to develop business is to be treated differently and taxed at a lower rate. Basically saying that living off a family fortune without contributing actively to the economy is to be discouraged as parasitic.
I do think there is an additional question of shell companies created in places like Ireland, Panama and Switzerland which take money out of country to shield it from tax must be brought into the same tax level as other money. Apple is an international tax cheat. In Canada, Cameco is in court over billions of evaded tax.
Posted by Martin60 (# 368) on
:
That's good to know no...
Phew Doc! I'm glad NOBODY'S noticed here. John McDonnell for one.
Posted by Arethosemyfeet (# 17047) on
:
quote:
Originally posted by Doc Tor:
AFAIUI, the argument goes like this:
Investments are made with taxed income. Therefore to tax the profits of investments would be to tax the income twice. This applies to both Capital Gains Tax and dividends.
(Note that this argument does not apply to VAT, which is absolutely a double tax, and it impacts the poor disproportionately.)
And council tax, which certainly comes from my "post-tax" income.
Posted by Martin60 (# 368) on
:
Back to the two speeches, party conferences, leaders if I May.
I see an apophenic pattern in Theresa May's now tepidly championing students and first time buyers after shooting herself in the head, not just the foot to become a lame duck, but a dead in the water zombie one. In announcing the dementia tax before the election, she somehow thought she'd actually win over the squeezed middle which especially includes the parents of students and stay at home none-time buyers.
That by saving billions in social care by making the demented pay for it and disinheriting the squeezed middle that would ... and then she didn't actually join up the dots to show the squeezed middle and their kids how they would benefit.
Utterly staggering political incompetence. Only now eclipsed by Spain.
Posted by Sarah G (# 11669) on
:
quote:
Originally posted by Rocinante:
There were economic problems all over the world in the mid 1970's, caused by the OPEC oil embargo of 1973 which quadrupled the price of oil.
This is wrong.
It wasn't France who decided things were so bad that they had to get the largest ever loan from the IMF. It was the UK. France were doing just fine.
It wasn't Germany who had the IMF telling us how to run our country because we'd messed it up and a dramatic run on the pound was imminent. It was the UK. National archives.
It wasn't Belgium that was called the sick man of Europe. It was the UK.
Everywhere else coped fine. It was the Corbynite policies that nearly destroyed the UK. Corbyn was about the only person in the UK who didn't accept that reality, and this is why older voters won't touch him with a barge pole.
I was watching the superb 70s drama Smiley's People a little while ago. There's a lovely line where his German counterpart offers to buy him lunch, on the grounds that British people have no money, because their country is so poor.
Let's not go there again.
Posted by Doc Tor (# 9748) on
:
quote:
Originally posted by Sarah G:
This is wrong.
It wasn't France who decided things were so bad that they had to get the largest ever loan from the IMF. It was the UK. France were doing just fine.
It wasn't Germany who had the IMF telling us how to run our country because we'd messed it up and a dramatic run on the pound was imminent. It was the UK. National archives.
It wasn't Belgium that was called the sick man of Europe. It was the UK.
Everywhere else coped fine. It was the Corbynite policies that nearly destroyed the UK. Corbyn was about the only person in the UK who didn't accept that reality, and this is why older voters won't touch him with a barge pole.
I was watching the superb 70s drama Smiley's People a little while ago. There's a lovely line where his German counterpart offers to buy him lunch, on the grounds that British people have no money, because their country is so poor.
Let's not go there again.
quote:
The 1973 oil crisis began in October 1973 when the members of the Organization of Arab Petroleum Exporting Countries proclaimed an oil embargo. The embargo was targeted at nations perceived as supporting Israel during the Yom Kippur War. The initial nations targeted were Canada, Japan, the Netherlands, the United Kingdom and the United States with the embargo also later extended to Portugal, Rhodesia and South Africa.
(opening paragraph on wiki 1973 oil crisis)
Neither Belgium or Germany were subjected to an oil embargo.
(eta)
So unless Corbyn is planning to declare war on oil-producing Middle Eastern states, I think we're good here.
[ 04. October 2017, 10:29: Message edited by: Doc Tor ]
Posted by quetzalcoatl (# 16740) on
:
Sarah G wrote:
quote:
Everywhere else coped fine. It was the Corbynite policies that nearly destroyed the UK. Corbyn was about the only person in the UK who didn't accept that reality, and this is why older voters won't touch him with a barge pole.
I'm curious which Corbynite policies you are referring to, and which reality Corbyn did not accept at that time. I think he became a Labour councillor in 1974, so presumably, you are saying that he was formulating Labour policy then?
The PMs in the 1970s were Wilson and Callaghan, the latter who famously criticized Keynesian policies, and recommended a form of neo-liberalism. But plenty of Labour politicians were critical of that.
Posted by Alan Cresswell (# 31) on
:
Come the next general election (whether as scheduled or called early by Mrs May) it will be obvious to all just how unbelievably incompetant the Tories are, and the proverbial donkey with a red rosette would walk into Downing Street.
That's when Corbyns problems will start. He'll inherit a country heading inexorably towards the plug hole as a result of the totally idiotic Tory approach to Brexit (Brexit, of course, is a totally stupid idea anyway, the current government have managed to find a way to make it even more idiotic). The worst of those Brexit consequences are likely to hit on his watch, and he'll get the blame for a mess that wasn't of his making.
Posted by quetzalcoatl (# 16740) on
:
That should read, plenty of Labour politicians were critical of neo-liberalism.
Posted by quetzalcoatl (# 16740) on
:
quote:
Originally posted by Alan Cresswell:
Come the next general election (whether as scheduled or called early by Mrs May) it will be obvious to all just how unbelievably incompetant the Tories are, and the proverbial donkey with a red rosette would walk into Downing Street.
That's when Corbyns problems will start. He'll inherit a country heading inexorably towards the plug hole as a result of the totally idiotic Tory approach to Brexit (Brexit, of course, is a totally stupid idea anyway, the current government have managed to find a way to make it even more idiotic). The worst of those Brexit consequences are likely to hit on his watch, and he'll get the blame for a mess that wasn't of his making.
Yes, there is a sense in which watching the Tories mess up most things must be enjoyable for Labour politicians right now, and probably they might want to enjoy it a bit longer. Against that, they also want to win an election.
Brexit will probably sink everybody in political terms, since it is unmanageable. I imagine that Starmer is trying to steer Labour towards the single market, with what success, I don't know, and it may be too late if the Tories have gone for no-deal. Well, my allotment is looking good right now, plenty of winter vegetables, purely for our own use, not for a soup kitchen, sorry.
[ 04. October 2017, 12:54: Message edited by: quetzalcoatl ]
Posted by betjemaniac (# 17618) on
:
quote:
Originally posted by quetzalcoatl:
Brexit will probably sink everybody in political terms, since it is unmanageable.
In a totally Gramscian way, that might be one of the few upsides of the coming disaster. If we got genuine pr, and the break-up of the rotten cartels that are the Tory and Labour parties, then, well it wouldn't go nearly far enough to make it all worth it, but I'd allow myself a wry smile and look forward to the opportunity to vote for a party more closely reflecting what I want for the country -and for everyone else to be able to do the same.
Posted by quetzalcoatl (# 16740) on
:
It's very pleasant to see a reference to Gramsci. I wonder what dazzling aphorisms he would produce in the present situation, well, at least, we always have, 'The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.'
Posted by betjemaniac (# 17618) on
:
quote:
Originally posted by quetzalcoatl:
It's very pleasant to see a reference to Gramsci. I wonder what dazzling aphorisms he would produce in the present situation, well, at least, we always have, 'The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.'
Which was exactly what I had in mind.
Posted by quetzalcoatl (# 16740) on
:
One of the interesting ideas in Gramsci is a critique of a rigid economic determinism, presumably, as characterized at the time by the Stalinists.
But this also hinged on a view of Marx and Engels as narrow determinists, or as embracing a wider view of history, including cultural, personal, social, moral factors.
I wonder what Corbyn makes of this? It's a bit esoteric, I suppose, but the new left has definitely been pro-Gramsci and anti-Stalinist, and I have heard people criticize Corbyn/McDonnell as being too quasi-Stalinist.
Posted by Sighthound (# 15185) on
:
The problem is the Tories have dug themselves into a massive hole and keep digging.
They need to dump their doctrinaire attachment to failed 19th Century economic theory, kick out the bigots and racists in their numbers and become a 21st Century European conservative party. They might ask Frau Merkel for some tips. Then they might broaden their appeal, instead of losing a vote with nearly every funeral.
Posted by Baptist Trainfan (# 15128) on
:
quote:
Originally posted by Alan Cresswell:
Come the next general election (whether as scheduled or called early by Mrs May) it will be obvious to all just how unbelievably incompetant the Tories are, and the proverbial donkey with a red rosette would walk into Downing Street.
But is that necessarily true? As Alastair Campbell writes in this recent cautionary article, a Tory implosion doesn't automatically give victory to Labour, and the euphoria of the Labour Conference does not necessarily translate into support from the British population at large. And - though he doesn't say it - there's also the "elephant" of the SNP to be kicked out of the room if Labour are to win.
Posted by Higgs Bosun (# 16582) on
:
quote:
Originally posted by quetzalcoatl:
The PMs in the 1970s were Wilson and Callaghan, the latter who famously criticized Keynesian policies, and recommended a form of neo-liberalism. But plenty of Labour politicians were critical of that.
Don't forget Edward Heath (19 June 1970 to 4 March 1974).
When was the oil crisis? Oh, yes, it started in October 1973 and ended in March 1974. The three day week? Oh, yes, that was from 1 January to 7 March 1974.
The economic problems of the UK in the 1970's seem to have been mainly during a Tory PM's term of office.
Posted by Bishops Finger (# 5430) on
:
Poor Tee-May - koffing her way through her speech (P45 and all), with Bo-Jo The Clown joking about the corpses in Sirte (not to mention selling 'clinky-clinky' bottles of booze to Sikhs a few weeks ago)... ![[Disappointed]](graemlins/disappointed.gif)
The Tories are not being helped either, by a local-ish MP, Craig McKinlay (Cee-Mac?) urging jobless youngsters from Glasgow to come south on their bikes to work at fruit-picking with 'gorgeous EU women'. And there's me thinking that the Tories wanted to get rid of the EU fruit-pickers, and send them home... ![[Confused]](confused.gif)
How the f**k did we end up with this gang of losers in government ? ![[Mad]](angryfire.gif)
Come on, Jay-Cor - come and save us!
IJ
Posted by quetzalcoatl (# 16740) on
:
quote:
Originally posted by Higgs Bosun:
quote:
Originally posted by quetzalcoatl:
The PMs in the 1970s were Wilson and Callaghan, the latter who famously criticized Keynesian policies, and recommended a form of neo-liberalism. But plenty of Labour politicians were critical of that.
Don't forget Edward Heath (19 June 1970 to 4 March 1974).
When was the oil crisis? Oh, yes, it started in October 1973 and ended in March 1974. The three day week? Oh, yes, that was from 1 January to 7 March 1974.
The economic problems of the UK in the 1970's seem to have been mainly during a Tory PM's term of office.
I think Callaghan went through various problems, and brought in wage restraint. But 1978 was supposed to be quite a good year in economic terms, but then of course, the unions began to kick back against wage retraint.
But I wasn't sure which policies were being labelled Corbynite - surely not Callaghan's, who famously was one of the first to advocate neo-liberalism, of a kind.
'You can't spend your way out of a recession' was his well-known pronouncement. Austerity, instead, I suppose.
Posted by Bishops Finger (# 5430) on
:
Watching a clip of Mrs. May's speech just now, I did wonder why someone (NOT Bo-Jo The Idiot Clown, please) didn't offer to deliver it for her. The poor lass obviously wasn't at all well - not her fault, of course, but it'll be used against her, which IMHO ain't fair.
I vote Green (or Labour, strategically), BTW...
IJ
Posted by quetzalcoatl (# 16740) on
:
Quite a funny joke really - Mrs T's speech was a ucking disaster. You have to see the speech, and the letters sliding off the background. Prosperity or everyone, votes or women!
Still, you have to admire her phlegm.
[ 04. October 2017, 18:20: Message edited by: quetzalcoatl ]
Posted by Bishops Finger (# 5430) on
:
![[Killing me]](graemlins/killingme.gif)
IJ
Posted by Arethosemyfeet (# 17047) on
:
Some interesting rewriting of history here. Benn's faction, which advocated the Alternative Economic Strategy, is the tradition of which Corbyn is heir, though moderated by time and experience. It was the right of the party, the Liz Kendall's of their era, that went to the IMF. Whether you think the Labour left's ideas would have worked, they're not to blame for the winter of discontent. Ironically those ideas included withdrawal from the common market as then was.
Posted by quetzalcoatl (# 16740) on
:
quote:
Originally posted by Arethosemyfeet:
Some interesting rewriting of history here. Benn's faction, which advocated the Alternative Economic Strategy, is the tradition of which Corbyn is heir, though moderated by time and experience. It was the right of the party, the Liz Kendall's of their era, that went to the IMF. Whether you think the Labour left's ideas would have worked, they're not to blame for the winter of discontent. Ironically those ideas included withdrawal from the common market as then was.
Well, yes, although I was willing to give Sarah G credit if she meant that the strikes in 1979, were Corbynite in nature, although that would be rather anachronistic. But as you say, to say that the Labour government was Corbynite, is turning history upside down. In fact, Callaghan introduced a form of monetarism, I thought. Ah, the good old days, when right wing Labour was cock of the walk.
Posted by quetzalcoatl (# 16740) on
:
Ironic though, that the left are getting blamed for the bollocks made by the right wing.
Posted by Rocinante (# 18541) on
:
I think the main folk memories of the 70s in this country are of unions and strikes (and terrible clothes). Any serious analysis of that decade reveals a much more nuanced picture; often the strikers had good reason for their dissatisfaction - many industries were appallingly mismanaged, many public servants subsisted on meagre wages. The oil shock caused rampant inflation throughout the western world.
But it was all the lefties' fault.
Posted by quetzalcoatl (# 16740) on
:
One weird aspect of the current situation is that the Brexit vote has triggered plenty of rage and discontent, hence the mordant joke, you won, get over it. For some people this is focused on the EU, but there is a widespread feeling of being fed up with low wages and food banks, that some firms are ripping us off, and there are no houses for young people. Labour are moving back to Keynes and Beveridge, unless my eyes deceive me.
If Cameron had won the referendum, he would still be PM, and a Tory government would be papering over the cracks.
In a strange way, Brexit has opened up the cracks. This is not to say that it will inevitably benefit Labour - not at all. It could sink them as well.
Posted by betjemaniac (# 17618) on
:
quote:
Originally posted by Rocinante:
I think the main folk memories of the 70s in this country are of unions and strikes (and terrible clothes). Any serious analysis of that decade reveals a much more nuanced picture; often the strikers had good reason for their dissatisfaction - many industries were appallingly mismanaged, many public servants subsisted on meagre wages. The oil shock caused rampant inflation throughout the western world.
But it was all the lefties' fault.
It's because (aside from closed factories) it's difficult to create an image narrative of mismanagement whereas you can much more easily picture a strike getting out of hand.
Can't remember who it was that said the besetting sin of UK labour relations was the participants... Essentially, other countries seem to manage with unions who work *with* the bosses, and bosses who *trust* the unions. The fact that it isn't like that here is the fault of idiocy (and idiots) on both sides.
Moreover, it comes back to the war (doesn't everything?). Germany, and to an extent France, having been bombed flat used their international aid money to rebuild their industrial capacity and modern road/rail networks. Britain (led by Labour on this one) blued it on defence capability and (AIUI) essentially paying for national service). Result? Late 1940s/1950s boom time through a combination of imperial preference and lack of competitors in the smoking continental European rubble, followed in the 1960s by said continental types waving gaily as they overtook.
In all seriousness, postwar commonwealth immigration was about (amongst other things) providing manpower to operate Victorian machinery in Victorian mills at a time when the rest of the (western continent) was investing in mechanisation.
I can think of at least one factory still operating in northern England that hasn't updated it's production line since the 1930s - and they're a household name brand...
Not sure what the answer is, but post WW2 Britain is a litany of poor choices.
Posted by Martin60 (# 368) on
:
I'm getting a welcome frisson of cognitive dissonance over the 70s.
Posted by chris stiles (# 12641) on
:
quote:
Originally posted by betjemaniac:
Essentially, other countries seem to manage with unions who work *with* the bosses, and bosses who *trust* the unions. The fact that it isn't like that here is the fault of idiocy (and idiots) on both sides.
Not sure what the answer is, but post WW2 Britain is a litany of poor choices.
I think it's mostly a class issue - any form of restructuring of which has been tamped down on, and that is reflected in the policy choices of both the right and the left when they got into government. Buttressed by most of the major institutions in the UK.
The result of this is that industrial relations are seen as a zero sum game.
Posted by Doc Tor (# 9748) on
:
quote:
Originally posted by betjemaniac:
Britain (led by Labour on this one) blued it on defence capability and (AIUI) essentially paying for national service).
You seem to be forgetting the NHS, the welfare state, the massive housebuilding program, all of which happened post-war. Private enterprise didn't invest - a failure of capital, if you will.
Posted by betjemaniac (# 17618) on
:
quote:
Originally posted by Doc Tor:
quote:
Originally posted by betjemaniac:
Britain (led by Labour on this one) blued it on defence capability and (AIUI) essentially paying for national service).
You seem to be forgetting the NHS, the welfare state, the massive housebuilding program, all of which happened post-war. Private enterprise didn't invest - a failure of capital, if you will.
I'm not forgetting it in the slightest, I'm just pointing out that we had choices between armaments and a welfare state on the one hand, and rebuilding the economy to pay for those on the other. Germany took a different route with less money loaned and starting from more of a position of need.
From the BBC
[ 05. October 2017, 11:57: Message edited by: betjemaniac ]
Posted by chris stiles (# 12641) on
:
quote:
Originally posted by Doc Tor:
quote:
Originally posted by betjemaniac:
Britain (led by Labour on this one) blued it on defence capability and (AIUI) essentially paying for national service).
You seem to be forgetting the NHS, the welfare state, the massive housebuilding program, all of which happened post-war. Private enterprise didn't invest - a failure of capital, if you will.
Yep, and ironically underscored by what betjemaniac goes on to describe:
"postwar commonwealth immigration was about(amongst other things) providing manpower to operate Victorian machinery in Victorian mills at a time when the rest of the (western continent) was investing in mechanisation."
Rather than invest in improving productivity, the capital class chose the political measures that allowed them to drive down their costs via other means.
The finger of blame points fairly clearly at the more powerful, who prevented the sorts of social and economic change that would have been necessary to properly modernise the country - at the expense perhaps of their own social standing. The Thatcher era mainly undercut the - historically anomalous - power gained by organised labour, financialised the economy of the South-East and left the rest of the country in a similar state to the south of Italy.
Posted by Doc Tor (# 9748) on
:
What were the loyal opposition saying at this point? That we should retreat from our colonies and reduce our international influence?
I'm certainly not arguing that the money wouldn't have been better off spent at home, rebuilding infrastructure and communications, but private capital should have been shouldering at least part of the burden of modernisation.
That should certainly be identified as part of the "British disease".
Posted by betjemaniac (# 17618) on
:
quote:
Originally posted by Doc Tor:
I'm certainly not arguing that the money wouldn't have been better off spent at home, rebuilding infrastructure and communications, but private capital should have been shouldering at least part of the burden of modernisation.
the unfortunate truth is that private capital in the UK was left to shoulder *more* of the burden of modernisation than in France or Germany.
Every Chancellor from Sir Stafford Cripps onwards basically kept the govt almost entirely out of the non nationalised industries. Over the Channel, they were literally handing out cash to their boss class to improve private businesses. Over here, not to anything like the same extent.
Posted by betjemaniac (# 17618) on
:
Read the damning statements on the German and French submissions for Marshall Aid vs the Boris Johnson like ramble through British history (seriously, is it the government that sends them mad or do they start like this?) that Cripps sent in.
[ 05. October 2017, 12:10: Message edited by: betjemaniac ]
Posted by betjemaniac (# 17618) on
:
For clarity, I'm not saying that it isn't a mark of shame that private capital didn't just deal with it by itself, but then I'm more of a social democrat anyway so I'd not expect them to behave purely virtuously by themselves!
Posted by Bishops Finger (# 5430) on
:
O, I think Bo-Jo The Clown started off mad, but being in 'government' has just made him worse...
The same applies to others, no doubt, but he's the most prominent swivel-eyed loon at the moment.
IJ
Posted by Doc Tor (# 9748) on
:
quote:
Originally posted by betjemaniac:
For clarity, I'm not saying that it isn't a mark of shame that private capital didn't just deal with it by itself, but then I'm more of a social democrat anyway so I'd not expect them to behave purely virtuously by themselves!
I think we're more or less agreed on this. Perhaps it's indeed true, that we're lions led by donkeys.
Posted by Bishops Finger (# 5430) on
:
That is a gross libel on that most sagacious of animals, the Donkey.
![[Two face]](graemlins/scot_twoface.gif)
IJ
Posted by Sarah G (# 11669) on
:
quote:
Originally posted by Doc Tor:
quote:
The 1973 oil crisis began in October 1973 when the members of the Organization of Arab Petroleum Exporting Countries proclaimed an oil embargo. The embargo was targeted at nations perceived as supporting Israel during the Yom Kippur War. The initial nations targeted were Canada, Japan, the Netherlands, the United Kingdom and the United States with the embargo also later extended to Portugal, Rhodesia and South Africa.
(opening paragraph on wiki 1973 oil crisis)
Neither Belgium or Germany were subjected to an oil embargo.
(eta)
So unless Corbyn is planning to declare war on oil-producing Middle Eastern states, I think we're good here.
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]](graemlins/devil.gif)
Posted by Sarah G (# 11669) on
:
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.
Posted by Arethosemyfeet (# 17047) on
:
The problem is that Thatcherism doesn't provide a strong economy, does it? If it did Corbyn wouldn't be in the position he is. Thatcherite ideas caused the 2008 crisis, and the utterly counterproductive austerity that arose from it. Besides, nationalising things was the 40s and 50s, not the 70s. Restoring strike rights won't give unions the power they had in the 70s because industries aren't organised on the same scale.
Posted by Dafyd (# 5549) on
:
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.
Posted by Doc Tor (# 9748) on
:
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.
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.
Posted by Sioni Sais (# 5713) on
:
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.
Posted by L'organist (# 17338) on
:
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????
Posted by Doc Tor (# 9748) on
:
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.
Posted by Alan Cresswell (# 31) on
:
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.
Posted by Dafyd (# 5549) on
:
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.
Posted by Ricardus (# 8757) on
:
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.
Posted by Arethosemyfeet (# 17047) on
:
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.
Posted by chris stiles (# 12641) on
:
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.
Posted by Marvin the Martian (# 4360) on
:
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.
Posted by Sioni Sais (# 5713) on
:
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!
Posted by Ricardus (# 8757) on
:
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 ...
Posted by Doc Tor (# 9748) on
:
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?
Posted by Karl: Liberal Backslider (# 76) on
:
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 ]
Posted by Arethosemyfeet (# 17047) on
:
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.
Posted by Eirenist (# 13343) on
:
Not to mention turning Building Societies (which did fulfil a social need) into banks.
Posted by L'organist (# 17338) on
:
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).
Posted by Arethosemyfeet (# 17047) on
:
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...
Posted by Jane R (# 331) on
:
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.
Posted by Doc Tor (# 9748) on
:
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.
Posted by Baptist Trainfan (# 15128) on
:
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.
Posted by chris stiles (# 12641) on
:
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.
Posted by Boogie (# 13538) on
:
More and more people in Bristol have taken to living in vans.
Posted by quetzalcoatl (# 16740) on
:
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.
Posted by Dafyd (# 5549) on
:
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.
Posted by leo (# 1458) on
:
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.
Posted by Alan Cresswell (# 31) on
:
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).
Posted by Marvin the Martian (# 4360) on
:
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.
Posted by Alan Cresswell (# 31) on
:
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.
Posted by Doc Tor (# 9748) on
:
Neither could they then use the proceeds to built replacement houses.
Posted by Leorning Cniht (# 17564) on
:
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 ]
Posted by Dafyd (# 5549) on
:
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.
Posted by Alan Cresswell (# 31) on
:
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.
Posted by Leorning Cniht (# 17564) on
:
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.
Posted by Arethosemyfeet (# 17047) on
:
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.
Posted by L'organist (# 17338) on
:
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.
Posted by Arethosemyfeet (# 17047) on
:
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.
Posted by Boogie (# 13538) on
:
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.
Posted by Baptist Trainfan (# 15128) on
:
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 ]
Posted by Doc Tor (# 9748) on
:
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.
Posted by mr cheesy (# 3330) on
:
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.
Posted by Doc Tor (# 9748) on
:
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.
Posted by mr cheesy (# 3330) on
:
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.
Posted by Leorning Cniht (# 17564) on
:
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.
Posted by Doc Tor (# 9748) on
:
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.
Posted by Boogie (# 13538) on
:
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.
Posted by Arethosemyfeet (# 17047) on
:
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.
Posted by chris stiles (# 12641) on
:
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 ]
Posted by Ricardus (# 8757) on
:
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.
Posted by chris stiles (# 12641) on
:
quote:
Originally posted by Ricardus:
Surely the reason why btl mortgages drive up prices is because they increase demand but not supply.
Yeah precisely.
Posted by betjemaniac (# 17618) on
:
quote:
Originally posted by Ricardus:
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.
True, but that doesn't deal with what (judging by my friends who, like me, are in their mid 30s) is a growing category - multiple property ownership that isn't buy-to-let. People are living longer, marrying later, and living alone for longer.
Not that any of them set out to be landlords, but if you get to your thirties single and don't live in London then you might have bought a house. Then when you do settle down with someone and they've got a house too, the pressure to keep both as investment/insurance against the relationship breaking down is immense - not least because it has often been a matter of struggle and pride to buy it solo in the first place.
Perfectly possible for an couple to end up with 2-3 mortgages (1 joint and 2 solo) in that scenario without any mortgage being BTL.
Posted by Doc Tor (# 9748) on
:
quote:
Originally posted by betjemaniac:
Perfectly possible for an couple to end up with 2-3 mortgages (1 joint and 2 solo) in that scenario without any mortgage being BTL.
It is perfectly possible. But the couple will, if they're being honest, then have to tell their mortgage providers that they aren't resident at their previous property. At that moment, the options are (a) the property remains unoccupied or (b) the property is rented out. AFAIK, at that point, the mortgage will be ported into a btl product, and they become btl landlords, by accident or otherwise.
Posted by Baptist Trainfan (# 15128) on
:
Surely, too, low interest rates on mortgages drive up prices as people feel they are able to borrow more. The problem comes (as has been pointed up) when the rates subsequently rise.
Posted by Leorning Cniht (# 17564) on
:
quote:
Originally posted by Arethosemyfeet:
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.
So are car rental companies, construction equipment rental companies, and so on. That doesn't make them parasites.
There are basically two reasons why people rent things. The first is that they have a short-term need for it - that's basically all car rentals, tool rentals from local hardware store, but also some home rentals: if you need temporary housing for a year or two (temp job posting, study, whatever) or you're not sure whether you want to live in a particular area long-term, then you don't want the risks and frictional costs of home ownership, so you rent.
The second is that you can't afford the purchase. That'll be the companies that hire out TVs and other consumer goods, long-term tenancies, social housing etc.
And perhaps a variant of this is that you could afford to buy, but don't want to take on the risks and obligations. Maybe this is really the first point - you want the freedom to be able to walk away at any point.
Landlords provide a useful function in all these cases, and that useful function has a value.
Certainly the buy-to-let phenomenon has pushed up house prices a bit, but it is by no means the main house price driver.
And let me be very clear - house price inflation is a bad thing. It's not the income from renting a home that's the problem, it's the ridiculous capital gain from owning a plot of land.
A Land Value Tax should fix most of that.
Posted by Arethosemyfeet (# 17047) on
:
The difference is that houses last more or less indefinitely, while the other forms of rental business require regular purchases, cleaning and maintenance. Renting a property requires little effort, little time and little risk. Houses don't really depreciate. Houses are also a necessity all the time, and the rent seeking directly affects the ability to make a purchase, whereas car rentals can even make purchasing cheaper once they hit the 2nd hand market.
Posted by Leorning Cniht (# 17564) on
:
quote:
Originally posted by Doc Tor:
But the couple will, if they're being honest, then have to tell their mortgage providers that they aren't resident at their previous property. At that moment, the options are (a) the property remains unoccupied or (b) the property is rented out. AFAIK, at that point, the mortgage will be ported into a btl product, and they become btl landlords, by accident or otherwise.
That's not my experience. We rented out our flat for a couple of years while we were temporarily abroad. We duly notified our lender, who I think wanted to verify that we held suitable insurance, but the terms of the mortgage did not change.
Perhaps the fact that house price appreciation meant that it was no longer a 95% LTV mortgage at that point was important - I can't remember.
(Then our temporary stint abroad became longer-term, and we sold the flat.)
Posted by mr cheesy (# 3330) on
:
quote:
Originally posted by Leorning Cniht:
Landlords provide a useful function in all these cases, and that useful function has a value.
They do - I suppose the problem is not when people get a decent deal but when prices are jacked up by private landlords.
quote:
Certainly the buy-to-let phenomenon has pushed up house prices a bit, but it is by no means the main house price driver.
Dunno, how can you assess that? High demand for housing caused by people wanting to buy into the market because of the perceived returns seems to me like a good candidate for the property price bubble.
Posted by Doc Tor (# 9748) on
:
quote:
Originally posted by Leorning Cniht:
Certainly the buy-to-let phenomenon has pushed up house prices a bit, but it is by no means the main house price driver.
That, however, is not my main argument, which is that it pushes rents up as btl borrowers attempt to service their debts.
So I withdraw the word 'main'. It is a driver, certainly, but one factor amongst many.
Posted by mr cheesy (# 3330) on
:
quote:
Originally posted by Arethosemyfeet:
The difference is that houses last more or less indefinitely, while the other forms of rental business require regular purchases, cleaning and maintenance. Renting a property requires little effort, little time and little risk.
Um, I don't think this is really true. Whilst some landlords clearly want to spend as little time and effort as possible on their investment, it is hard to say that in general it requires little effort, time or risk. The latter point seems to me to be particularly unsafe - a tenant who refuses to pay, causes damage and refuses to leave can easily wipe out any monies taken in any given year.
quote:
Houses don't really depreciate.
Actually they do. We owned a house and sold it after 4 or 5 years for 20% less than we paid for it.
Generally speaking houses increase in value, but that's not an absolute unshakable law.
In fact, I suspect that houses will start falling quite quickly in value in some parts of the country.
quote:
Houses are also a necessity all the time, and the rent seeking directly affects the ability to make a purchase, whereas car rentals can even make purchasing cheaper once they hit the 2nd hand market.
Not sure what point you are making here.
Posted by betjemaniac (# 17618) on
:
quote:
Originally posted by Doc Tor:
quote:
Originally posted by betjemaniac:
Perfectly possible for an couple to end up with 2-3 mortgages (1 joint and 2 solo) in that scenario without any mortgage being BTL.
It is perfectly possible. But the couple will, if they're being honest, then have to tell their mortgage providers that they aren't resident at their previous property. At that moment, the options are (a) the property remains unoccupied or (b) the property is rented out. AFAIK, at that point, the mortgage will be ported into a btl product, and they become btl landlords, by accident or otherwise.
No, there's apparently c)
you get a Permission to Let from your lender and carry on as before - varies from bank to bank but if you've lived at the address 2-3 years then it doesn't count as BTL because in the banks' view you didn't buy with the intention of letting, so much as are now letting a house that you bought to live in. There does actually appear to be an Accidental Landlord category.
Posted by Doc Tor (# 9748) on
:
quote:
Originally posted by Leorning Cniht:
quote:
Originally posted by Doc Tor:
But the couple will, if they're being honest, then have to tell their mortgage providers that they aren't resident at their previous property. At that moment, the options are (a) the property remains unoccupied or (b) the property is rented out. AFAIK, at that point, the mortgage will be ported into a btl product, and they become btl landlords, by accident or otherwise.
That's not my experience. We rented out our flat for a couple of years while we were temporarily abroad. We duly notified our lender, who I think wanted to verify that we held suitable insurance, but the terms of the mortgage did not change.
Perhaps the fact that house price appreciation meant that it was no longer a 95% LTV mortgage at that point was important - I can't remember.
(Then our temporary stint abroad became longer-term, and we sold the flat.)
It was your sole property. That you were renting it out while you were abroad was fine.
Your experience would have been significantly different had you tried to buy another property while owning that one.
Posted by mr cheesy (# 3330) on
:
I generally (and genuinely) feel sorry for people who have invested in property for the long-term returns. I suspect many have been sold a pup which is going to come back and haunt in older age.
Posted by Leorning Cniht (# 17564) on
:
quote:
Originally posted by Arethosemyfeet:
Houses don't really depreciate.
Yes, they really do.
Houses last quite a lot longer than cars - partly because they are sturdier structures, and partly because there isn't rapid technological advance in home construction, but the value of the building certainly depreciates, albeit much slower than most other things (unless you own something with rarity value).
The thing that doesn't depreciate is the land that your house sits on. That's the thing that has all the unusual economics attached to it, and that's the thing that should be taxed accordingly.
Posted by chris stiles (# 12641) on
:
quote:
Originally posted by Leorning Cniht:
That's not my experience. We rented out our flat for a couple of years while we were temporarily abroad. We duly notified our lender, who I think wanted to verify that we held suitable insurance, but the terms of the mortgage did not change.
Yeah, but in this case the original situation was temporary, and you weren't - I presume - simultaneously trying to buy another property.
Posted by Doc Tor (# 9748) on
:
quote:
Originally posted by betjemaniac:
quote:
Originally posted by Doc Tor:
quote:
Originally posted by betjemaniac:
Perfectly possible for an couple to end up with 2-3 mortgages (1 joint and 2 solo) in that scenario without any mortgage being BTL.
It is perfectly possible. But the couple will, if they're being honest, then have to tell their mortgage providers that they aren't resident at their previous property. At that moment, the options are (a) the property remains unoccupied or (b) the property is rented out. AFAIK, at that point, the mortgage will be ported into a btl product, and they become btl landlords, by accident or otherwise.
No, there's apparently c)
you get a Permission to Let from your lender and carry on as before - varies from bank to bank but if you've lived at the address 2-3 years then it doesn't count as BTL because in the banks' view you didn't buy with the intention of letting, so much as are now letting a house that you bought to live in. There does actually appear to be an Accidental Landlord category.
Fairy nuff. A lot of my knowledge is now twenty years out of date, hence the AFAIK.
Posted by Leorning Cniht (# 17564) on
:
quote:
Originally posted by chris stiles:
Yeah, but in this case the original situation was temporary, and you weren't - I presume - simultaneously trying to buy another property.
We did ask our lender what would happen if we moved back to a different city (change of job and all that), and what they told us matches betjemaniac's comment: first mortgage doesn't change. They'd offer us a second normal residential mortgage on a home that we were going to move in to, but would include the first home (income and liability) in their affordability calculations. We didn't actually do that, but it was a possibility, so we asked.
Posted by chris stiles (# 12641) on
:
quote:
Originally posted by Leorning Cniht:
We did ask our lender what would happen if we moved back to a different city (change of job and all that), and what they told us matches betjemaniac's comment: first mortgage doesn't change. They'd offer us a second normal residential mortgage on a home that we were going to move in to, but would include the first home (income and liability) in their affordability calculations. We didn't actually do that, but it was a possibility, so we asked.
Different lenders will handle 'Consent to Let' differently, depending on a number of factors including whether your subsequent loan is also from them (in which case the affordability calculation takes care of the BTL loading). They are sometimes time limited - and often stipulate the minimum rent and minimum rental term on the property.
Posted by Boogie (# 13538) on
:
quote:
Originally posted by Arethosemyfeet:
The difference is that houses last more or less indefinitely, while the other forms of rental business require regular purchases, cleaning and maintenance. Renting a property requires little effort, little time and little risk. Houses don't really depreciate. Houses are also a necessity all the time, and the rent seeking directly affects the ability to make a purchase, whereas car rentals can even make purchasing cheaper once they hit the 2nd hand market.
There is a risk. It’s the balance between what comes in and what needs to be spent on the place. Just the new boiler for the property we rent out cost four months rent, but we still had to pay tax on the income. Then a new kitchen and new cooker virtually wiped out this year’s profit.
Posted by Arethosemyfeet (# 17047) on
:
quote:
Originally posted by Leorning Cniht:
quote:
Originally posted by Arethosemyfeet:
Houses don't really depreciate.
Yes, they really do.
Houses last quite a lot longer than cars - partly because they are sturdier structures, and partly because there isn't rapid technological advance in home construction, but the value of the building certainly depreciates, albeit much slower than most other things (unless you own something with rarity value).
The thing that doesn't depreciate is the land that your house sits on. That's the thing that has all the unusual economics attached to it, and that's the thing that should be taxed accordingly.
A well maintained house will last indefinitely. The house we rent out was built over a century ago and will last at least that long again with reasonable care. It's worth less than when we bought it (which is the reason we still have it) but not because of depreciation in the usual sense but simply because we bought in 2007 and prices haven't recovered.
Posted by Alan Cresswell (# 31) on
:
quote:
Originally posted by chris stiles:
quote:
Originally posted by Leorning Cniht:
That's not my experience. We rented out our flat for a couple of years while we were temporarily abroad. We duly notified our lender, who I think wanted to verify that we held suitable insurance, but the terms of the mortgage did not change.
Yeah, but in this case the original situation was temporary, and you weren't - I presume - simultaneously trying to buy another property.
I used to own a two bed flat, which I owned outright without any mortgage. When we decided that it was too small for a family with one child and another on the way we explored options for holding onto it. The advice we got was that we could hold onto it and let it out, but the best mortgage deals (lowest interest rates, minimum deposit required etc) wouldn't be open to us because by holding a property to let and buying another property to live in was effectively to buy a house to let out the flat, and hence a BTL. So, the flat was sold allowing us to rapidly overpay the mortgage and do some home improvements on the proceeds.
But, that was shortly after the 2008 crisis and lenders at that point may have been more cautious, and interpreting the rules more conservatively.
Posted by Leorning Cniht (# 17564) on
:
quote:
Originally posted by Arethosemyfeet:
A well maintained house will last indefinitely. The house we rent out was built over a century ago and will last at least that long again with reasonable care.
Sure - you repair and replace parts as they wear out. New roof. New windows. Whatever. That's just another way of looking at depreciation.
A standard US shingle roof has an expected lifetime of about 25 years. The value of your roof depreciates over that time, and at some point at the end of that period, when your roof is failing and basically worthless, you buy another one.
Windows, doors, electrics, heating/cooling, major appliances - they all depreciate and need replacing.
The structure itself? Sure, if you take care of it, it'll last a long time, so that part doesn't depreciate much. But most of the price of the house isn't the basic structure.
Posted by Alan Cresswell (# 31) on
:
Anyone who buys a house with the expectation of having a return (much less a substantial return) on the investment is a fool. The costs of mortgage interest, repairs and upkeep, insurance etc will eat into anything that might be gained - even if the resale price increases above inflation. If let then the costs could be recovered, and so a small profit gained ... but, no guarantee. If owned to live in then those costs may be less than renting, and you still have that initial investment available.
Posted by Baptist Trainfan (# 15128) on
:
Surely this has something to do with where you live. A house in a "desirable" area may well go up in value appreciably; while an identical house in a deprived area could go down.
The real "pay off" comes if you downsize or move from an expensive area to a cheaper one. The house I bought 9 months ago has allegedly increased in value by £9000, however that is immaterial as I bought it to live in long-term.
Posted by Leorning Cniht (# 17564) on
:
quote:
Originally posted by Alan Cresswell:
Anyone who buys a house with the expectation of having a return (much less a substantial return) on the investment is a fool.
But probably quite a wealthy fool if he bought the house at the right time. Here are UK house prices in real terms over the last 40 years.
Here in blue is the FTSE all-share index in real terms, over about the same time period. (Muliply the FTSE numbers by about 2 to re-baseline to the period after the 1973-1974 crash, to get an exact match to the house price data.
Posted by Alan Cresswell (# 31) on
:
quote:
Originally posted by Leorning Cniht:
quote:
Originally posted by Alan Cresswell:
Anyone who buys a house with the expectation of having a return (much less a substantial return) on the investment is a fool.
But probably quite a wealthy fool if he bought the house at the right time. Here are UK house prices in real terms over the last 40 years.
Yes, there has been a trend to increasing house prices, in real terms. Buying at the right time, and a bit of luck, and there's opportunity to turn a profit. If you get the chance to buy below that trend line. Or, short term if you can get a bargain and have the ability to renovate well, but inexpensively, you can add more value than it costs.
But, prices staying anywhere near that trend line offers little in the way of return unless you have the cash to buy without a mortgage. Most of the gain in the trend line will be taken up in mortgage interest, even more in upkeep costs.
Added to which, if the government was to engage in a sensible and intelligent approach to housing (yeah, OK, not much chance of this government engaging in a sensible and intelligent approach to anything) and we conduct a major programme of building quality and genuinely affordable housing (I would want most of that to be council housing) then the fall in demand will bring prices back under some form of control.
Posted by Doc Tor (# 9748) on
:
Which, of course, will cause its own problems.
Banks have a considerable amount of property-backed mortgages as assets. If the value of the collateral falls, so does the value of their assets.
Home-owners will simply refuse to sell, so they don't solidify their losses.
Buyers will not buy in a deflationary market.
I think you're right, Alan, that if there's going to be any substantial house-building program, the majority of houses will have to be council/housing association property for rent. Otherwise the bursting of the bubble will have potentially disastrous consequences.
Posted by Leorning Cniht (# 17564) on
:
quote:
Originally posted by Alan Cresswell:
But, prices staying anywhere near that trend line offers little in the way of return unless you have the cash to buy without a mortgage.
You know how leverage works, Alan.
If you buy the average UK house, which is apparently £223,000 for cash, and its value grows at the average 2.3% above inflation, that's your return.
If, on the other hand, you bought that same house with a 95% mortgage, you could apparently get a 3 year fix at 2.8% right now. So you put down £11,200 and pay £5,930 in interest per year. Let's assume that inflation is running at the 2% target. (It's not. It's more like 3% now.)
So after a year your house has grown 2.3% in real terms, and is now worth £232,692 (inc. 2% inflation) - an additional £9,692. But you paid £5,930 in interest, so you're £3,762 better off, which we'll deflate back to today's money and call £3,688 in real terms.
For sure, that's less than the £5,129 in real terms that the cash buyer made, but you've made it on an investment of £11,200, so it's a 33% real-terms return on investment. The cash buyer only made 2.3%.
This works because it's cheap to borrow money at the moment. In fact, when you consider that inflation is running at about 3%, borrowing money to buy a house is currently free, in real terms.
Posted by Ricardus (# 8757) on
:
quote:
Originally posted by Leorning Cniht:
The second is that you can't afford the purchase. That'll be the companies that hire out TVs and other consumer goods, long-term tenancies, social housing etc. [...] Landlords provide a useful function in all these cases, and that useful function has a value.
Although I'm not sure I'd accept that by (in effect) providing finance to allow people to live in a house, landlords are really providing a service, if the prevalence of landlording is what made those houses unaffordable in the first place.
Posted by Alan Cresswell (# 31) on
:
quote:
Originally posted by Leorning Cniht:
If you buy the average UK house, which is apparently £223,000 for cash, and its value grows at the average 2.3% above inflation, that's your return.
If, on the other hand, you bought that same house with a 95% mortgage, you could apparently get a 3 year fix at 2.8% right now. So you put down £11,200 and pay £5,930 in interest per year. Let's assume that inflation is running at the 2% target. (It's not. It's more like 3% now.)
So after a year your house has grown 2.3% in real terms, and is now worth £232,692 (inc. 2% inflation) - an additional £9,692. But you paid £5,930 in interest, so you're £3,762 better off, which we'll deflate back to today's money and call £3,688 in real terms.
Of course, as you later note, your calculation is based on historic low interest rates. I'd like to know where to get a 2.8% rate, especially with just 5% deposit. I've just remortgaged, loan less than 50% the property value, and couldn't get a rate less than 3%. Put in a more realistic interest rate and that £3k per year drops. Add in maintenance costs and it falls even further. Assuming replacing windows, bathroom and kitchen every 15y at £5k each, that £1k less per year. Replacing the roof will cost at least £10k, every 25y (your estimate) will cost another £500 per year. Add in boiler service & replacement, painting & decorating, replacing flooring, keeping the garden tidy ... and I'd be surprised at anything less than £2k per year to maintain the house, and it's value - and it could easily be a lot more. Even at your very favorable interest rate that's not a substantial net increase in value, at more realistic interest rates that would be a net decrease in value ... unless you put a lot more than 5% cash in at the front end.
Posted by Alan Cresswell (# 31) on
:
quote:
Originally posted by Leorning Cniht:
If you buy the average UK house, which is apparently £223,000 for cash, and its value grows at the average 2.3% above inflation, that's your return.
If, on the other hand, you bought that same house with a 95% mortgage, you could apparently get a 3 year fix at 2.8% right now. So you put down £11,200 and pay £5,930 in interest per year. Let's assume that inflation is running at the 2% target. (It's not. It's more like 3% now.)
So after a year your house has grown 2.3% in real terms, and is now worth £232,692 (inc. 2% inflation) - an additional £9,692. But you paid £5,930 in interest, so you're £3,762 better off, which we'll deflate back to today's money and call £3,688 in real terms.
Of course, as you later note, your calculation is based on historic low interest rates. I'd like to know where to get a 2.8% rate, especially with just 5% deposit. I've just remortgaged, loan less than 50% the property value, and couldn't get a rate less than 3%. Put in a more realistic interest rate and that £3k per year drops. Add in maintenance costs and it falls even further. Assuming replacing windows, bathroom and kitchen every 15y at £5k each, that £1k less per year. Replacing the roof will cost at least £10k, every 25y (your estimate) will cost another £500 per year. Add in boiler service & replacement, painting & decorating, replacing flooring, keeping the garden tidy ... and I'd be surprised at anything less than £2k per year to maintain the house, and it's value - and it could easily be a lot more. Even at your very favorable interest rate that's not a substantial net increase in value, at more realistic interest rates that would be a net decrease in value ... unless you put a lot more than 5% cash in at the front end.
Posted by betjemaniac (# 17618) on
:
quote:
Originally posted by Alan Cresswell:
I've just remortgaged, loan less than 50% the property value, and couldn't get a rate less than 3%.
As you say, there's got to be more to this than the headline figures. I've got LTV of more than 50% and have just (September) remortgaged at five years fixed at 1.9%....
Posted by Doc Tor (# 9748) on
:
Y'all weak. We remortgaged in 2006 at less than 75% LTV, product for the lifetime of the mortgage (another 12 years).
Base rate + 0.3%
(Yes, we lucked out on that front, and it has, in small part, made up for the fact that Mrs Tor hasn't had a pay rise in 10 years.)
Posted by Jane R (# 331) on
:
Leorning Cniht: quote:
A standard US shingle roof has an expected lifetime of about 25 years.
A roof made from hard Welsh slate, on the other hand, will last anything from 75 to 200 years before requiring replacement. Heck, even *thatch* lasts longer than 25 years. You need better roofing materials on your side of the pond.
[ 11. October 2017, 09:00: Message edited by: Jane R ]
Posted by Arethosemyfeet (# 17047) on
:
Yeah, we've bought a nearly derelict house, part of which has a roof of Ballachulish slate. We know it used to have thatch but the slate roof could be anything up to 130 years old and is only now needing serious repair work because it's not been maintained for a long time (that and the regular storm force winds we get).
Posted by Baptist Trainfan (# 15128) on
:
I knew a church in London which rebuilt in around 1980 and used shingles on its roof. Sadly the builder, who was facing financial problem and went bust after the project was completed, used inferior shingles.
These only lasted 10 years. The entire roof had then to be rebuilt as, by using lighter shingles than specified, he'd got away with skimping on the structure. This meant that additional rafters had to be put in and the whole job cost £30k even then. One wonders where the architect - who's supposed to keep an eye on things - had got to while this was happening.
Posted by L'organist (# 17338) on
:
It isn't up to the architect to sort out this sort of mess, even if they're being paid to manage the project. Yes, a decent architect would/should spot it but that isn't, strictly speaking, their job.
Getting the size of the roof timbers wrong is down to a choice of 2: either the structural engineer who did the calculations or the Building Control Officer who should have been supervising the build and signed off on the roof structure - and the shingles, come to that.
Posted by Baptist Trainfan (# 15128) on
:
My understanding is that the builders simply omitted half the timbers, which had to be added later.
Posted by Leorning Cniht (# 17564) on
:
quote:
Originally posted by Alan Cresswell:
Of course, as you later note, your calculation is based on historic low interest rates. I'd like to know where to get a 2.8% rate, especially with just 5% deposit.
I shoved the numbers into probably moneysupermarket, and the first hit was Barclays at 2.8% fixed for 3 years, with 95% LTV. That was probably a new purchase rather than a remortgage.
Posted by Leorning Cniht (# 17564) on
:
quote:
Originally posted by Jane R:
Heck, even *thatch* lasts longer than 25 years. You need better roofing materials on your side of the pond.
We do have better roofing materials. Occasionally, someone uses them, but mostly they don't, because asphalt shingles are cheap and easy, and last longer than that person expects to live in the house.
Posted by Arethosemyfeet (# 17047) on
:
quote:
Originally posted by Leorning Cniht:
quote:
Originally posted by Alan Cresswell:
Of course, as you later note, your calculation is based on historic low interest rates. I'd like to know where to get a 2.8% rate, especially with just 5% deposit.
I shoved the numbers into probably moneysupermarket, and the first hit was Barclays at 2.8% fixed for 3 years, with 95% LTV. That was probably a new purchase rather than a remortgage.
And more importantly was almost certainly a residential rather than BTL mortgage.
Posted by mr cheesy (# 3330) on
:
I'm still trying and failing to see why the detail of potential mortgages are relevant. As I said above, the point is not about making money from the rent, which everyone involved in By-to-Let seems to agree is ridiculous, but trying to gain from the increase in the value of the investment.
Of course, there are some who try to burn the candle at both ends, but I don't think this is the objective even of landlords who buy properties with the idea to lend them out.
Surely the point is that if you can get a mortgage with a low deposit and a manageable payment, then you're hoping that the increase in value of the property will be greater than inflation, purchase fees and better than other forms of investment.
In a lot of cases that has been the case over the years.
Posted by Alan Cresswell (# 31) on
:
The discussion started with a question about buying property as an investment, buying with the intention of a return when you sell, rather than specifically to let it out. Adding all costs (including mortgage interest) together will IMO leave you no significant gain unless you can either put in a lot of upfront cash or get a very low mortgage rate (the two often go together, and both mean that those most likely to gain in property speculation are those who are already wealthy with cash to invest).
Though, the argument is similar for renting, if the rent covers all the costs (mortgage interest payments, maintenance, insurance, marketing etc) then on resale you will gain on any real-term increase in property value. Rent in excess of that is an effective income (which can, of course, be invested in the property by paying off some of the capital), which is helped by reduced costs, including lower interest rates.
Posted by Baptist Trainfan (# 15128) on
:
quote:
Originally posted by Alan Cresswell:
The discussion started with a question about buying property as an investment, buying with the intention of a return when you sell.
Surely, for many people, they buy a house to protect the level of their investment. Hence, when they need to move, they can buy another house (possibly, if their income has increased meanwhile, enhancing their mortgage so they can get something a bit bigger/nicer).
As I suggested above, the real "pay off" comes if they later "downsize", thus releasing their equity. But they can only do that once.
Posted by Alan Cresswell (# 31) on
:
Yes, the attraction of buying over renting is that some of the money you spend on housing is retained. Whereas when renting the landlord gets it all.
But, it's still very likely that the amount invested will be less than the gain on house price alone. If you add everything together, final sale price will almost always be less than purchase price plus all the maintenance work you'll have done on the property - ie: negative equity is the normal status for home owners. Over the course of a mortgage (assuming not interest only) the pot of capital you have for the next house increases, but you're not actually making money unless you're very lucky (cheap mortgage, house in area where values have increased significantly, bought cheap and done a lot of work on the property at cost).
Posted by Jane R (# 331) on
:
...in short, the only way to make money out of the housing market is to be either (a) a developer or (b) a mortgage provider.
Or (c) an unscrupulous landlord who doesn't bother spending money on maintaining the property. I'm sure everyone on this thread who's confessed to being a landlord is not like that, but I know they exist; when I was renting my accommodation, before I scraped enough money together to buy a house, I met a few of them.
[ 12. October 2017, 08:36: Message edited by: Jane R ]
Posted by Golden Key (# 1468) on
:
I used to listen to a financial radio show. The host said that a house isn't an investment, because you have to keep spending money on it.
FWIW.
Posted by Baptist Trainfan (# 15128) on
:
quote:
Originally posted by Jane R:
Or (c) an unscrupulous landlord .
And I think the fear of that is probably the biggest factor that persuades people to buy.
[ 12. October 2017, 09:08: Message edited by: Baptist Trainfan ]
Posted by chris stiles (# 12641) on
:
quote:
Originally posted by Alan Cresswell:
Over the course of a mortgage (assuming not interest only) the pot of capital you have for the next house increases
Which of course is a valid source of anxiety, wrt 'getting on the housing ladder', as after you have children you may well need more house than you currently have.
Posted by Sioni Sais (# 5713) on
:
quote:
Originally posted by Baptist Trainfan:
quote:
Originally posted by Jane R:
Or (c) an unscrupulous landlord .
And I think the fear of that is probably the biggest factor that persuades people to buy.
It's more subtle than that. Private renting is now so insecure that it is hardly a worthwhile option, especially for the "hard working families" this government goes on about. If, for one reason or another, you can't get credit, or enough credit, you're stuffed.
Posted by Marvin the Martian (# 4360) on
:
quote:
Originally posted by Baptist Trainfan:
quote:
Originally posted by Jane R:
Or (c) an unscrupulous landlord .
And I think the fear of that is probably the biggest factor that persuades people to buy.
Financial security in old age is a significant factor as well. Most pensions aren't enough to cover continuing rent payments, but if you've paid off the mortgage by the time you retire then the house is yours for no monthly cost. And if you then choose to downsize you can gain a nice profit to cover any future costs.
If you rent for your whole working life then you either have to have an amazing pension plan (very rare indeed) or an extra savings account that will cover the rent once you retire (which few people can afford). Otherwise, once you finally stop working it's going to be off to the old folks' home for you. And not even a nice old folks' home, given that most of the good ones are either as expensive as renting (if not more) or require your house as security.
Posted by Baptist Trainfan (# 15128) on
:
This has been a particular concern for us, as for most of my adult life I have lived in church manses. However by dint of careful husbandry, a couple of family legacies and my wife's pension lump sum, we were able to buy a house for the very first time at the beginning of this year. If nothing else it means that, when I retire, we can either stay put and not be forced to move to whatever church property might be available at the time; or think through our long-term options calmly and clearly. It also provides security for my wife "should anything happen to me".
[ 12. October 2017, 09:26: Message edited by: Baptist Trainfan ]
Posted by Doublethink. (# 1984) on
:
quote:
Originally posted by Marvin the Martian:
quote:
Originally posted by Baptist Trainfan:
quote:
Originally posted by Jane R:
Or (c) an unscrupulous landlord .
And I think the fear of that is probably the biggest factor that persuades people to buy.
Financial security in old age is a significant factor as well. Most pensions aren't enough to cover continuing rent payments, but if you've paid off the mortgage by the time you retire then the house is yours for no monthly cost. And if you then choose to downsize you can gain a nice profit to cover any future costs.
If you rent for your whole working life then you either have to have an amazing pension plan (very rare indeed) or an extra savings account that will cover the rent once you retire (which few people can afford). Otherwise, once you finally stop working it's going to be off to the old folks' home for you. And not even a nice old folks' home, given that most of the good ones are either as expensive as renting (if not more) or require your house as security.
Once upon a time there was decent social housing, and rent control so this was a less omnipresent fear.
Posted by Leorning Cniht (# 17564) on
:
quote:
Originally posted by Alan Cresswell:
But, it's still very likely that the amount invested will be less than the gain on house price alone. If you add everything together, final sale price will almost always be less than purchase price plus all the maintenance work you'll have done on the property - ie: negative equity is the normal status for home owners.
If you're keeping accounts properly, you would have to put all the rent you didn't pay on the credit side, which would leave you rather better off than your assumption here.
You seem to be comparing owning a house with living rent-free under a bridge or something.
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