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Grant Shapps and the problem with politics

September 4, 2012 12:39 pm

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Emma Burnell

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Churchill famously said “Democracy is the worst form of government, except for all those other forms that have been”. The career of Grant Shapps is a clear example of everything that is wrong with the way politics works.

Let’s forget this week’s astonishing revelations about his extra-curricular activity - clearly it doesn’t bother Cameron enough to give him pause before promoting Shapps.

Since the election Grant Shapps has been the Housing Minister. Since the election, house building has collapsed dragging the country back into recession. At a time when waiting lists for social housing top 5 million, social housing has collapsed with a drop of 91% in building starts in the last year. Some Tory councils will build fewer than 20 new social homes over the course of this government. Shapp’s own constituency is likely to build just one new social home a year. In fact, construction data has today dropped again to the lowest levels since the height of the crash.

At a time when there should be a single-minded focus on housing provision, Shapp’s last audition piece was an interview with the Telegraph where he took one last swipe at those who live in social housing trying to re-brand this as “taxpayer supported” housing.

Let’s look at this for a moment, because it emphasises everything that is wrong with Shapps approach to this job. Firstly, it’s a simplistic and frankly wrong. Anyone who ever collected mortgage interest tax relief on their privately owned home could be described as living in taxpayer supported housing. Secondly, the key thing Grant Shapps has been trying to push – harder than anything else – is the reinvigoration of the “right to buy”, with discounts being offered of up to £75,000. What is that if not taxpayer-supported housing? But as these homes would no longer be social stock, under Shapps’ new whim they would not be branded as such. If this announcement had been about housing it would have been yet another stupid, muddled and grossly offensive move. It is of course all those things.

But it was not about housing. Shapps’ behaviour in government has never been about housing. It has been about Shapps and the promotion of his brand as the new leader of the right.

No one with an interest in housing can – with a straight face – call Grant Shapps a success. He has failed utterly in his brief. Yes this is a man constantly hailed by Tories as an up and comer, and spoken of regularly as a future leader. And this is precisely the problem. Shapps has the kind of brief where the needs of the policy agenda diverge significantly from the desires of his party grassroots.

Shapps spent his whole time in office tickling the Tory sweet-spot. What Shapps was saying in a interview last week was not aimed at a housing audience. Little that he’s done in the brief has been about raising the profile of housing, but all has been about raising the profile of Grant Shapps particularly within the Tory Party. His failure to do anything other than greatly exacerbate the housing crisis is simply not considered as significant as the symbolism of bringing back the Thatcher’s favourite policy (though with far less success and take up) and bashing social tenants and providers.

Grant Shapps has never been the minister for housing. He has only ever been the Minister for the future prospects of Grant Shapps. He’s clearly succeeded in that job just as magnificently as he has failed in housing. I can only hope his replacement is an unambitious technocrat. Housing desperately needs someone who knows what they are doing and knows that what they should be doing is building more bloody houses.

I called this post Grant Shapps and the problem with politics. The problem is wider than just Shapps or his party. Labour were not just as bad, but we were far, far, far from perfect. Our approach to the housing brief was different, but equally affected by internal politics.

We treated the role of Housing Minister as an audition slot just as much as Grant Shapps did, but in a different way. It was a ministry where a junior politician on their way up could go and prove that they are a safe pair of hands. This meant proving that they wouldn’t listen to the grassroots. Social housing is a huge issue for Labour members, but was unloved by New Labour. Until the very end of our time in Government, this was a role to prove your strength to Party leaders by not pleasing the grassroots. I get a strong sense from both Ed Miliband and Jack Dromey that this is no longer the case. I hope that remains when we get back into government.

So Shapps is now Party Chairman. Well that works for me. His ambition will perhaps work better for the Tories there, but actually, I suspect his desire to lead the Tories to and from the right will do them little good in the country at large. I look forward to his being as much a success in getting the Tory Party ready for the next election as he has had in solving the housing crisis.

This was originally posted at Scarlet Standard

http://twitter.com/Ariel_Adam Ariel Adam

As housing minister, his job was to protect people who OWN houses, not people who need or want them. He was extremely successful and deserves his promotion.
- markfergusonuk
  
  So the role of housing minister is to help those who already have houses, in your opinion?
  –
  Mark Ferguson
- John_Dore
  
  Housing minister = ensuring their is an adequate supply of housing for all. Its a strategic role, everyone who has done it for years has failed. It doesn’t carry the authority required to do the job.
- Serbitar
  
  Using similar looking-glass logic you could say that it’s the job of the Secretary of State for Health to protect people who ARE healthy, not people who need or want good health. Or that it’s the job of the Secretary of State for Work and Pensions to protect people who HAVE work and pensions, not people who need or want work or a pension. What planet do you come from? Bizzaro?
Hugh

“Since the election, house building has collapsed dragging the country back into recession. ”

And from the article you link to: “the figures also show that seasonally adjusted starts are now
27% above the trough in the March quarter 2009″

The “collapse” in house building took place before the election, with starts slumping by two-thirds from late 07 to March 09. And even Jack Dromey seems to appreciate that the disappointing figures recently are a symptom of the economy, not the cause of it.

“Firstly, it’s a simplistic and frankly wrong.”

No, it’s not. It is tax-payer supported.

“Anyone who ever collected
mortgage interest tax relief on their privately owned home could be
described as living in taxpayer supported housing.”

‘Good point,’ said Gordon Brown circa 1999. ‘It’s just become a middle class perk. Let’s abolish it.’

“Secondly, the key thing Grant Shapps has been trying to pushharder than anything else – is the reinvigoration of the “right to buy”, with discounts being offered of up to £75,000. What is that if not taxpayer-supported housing?”

Perhaps a response to the insanity of providing social housing for life, regardless of a person’s changing means. And perhaps a way to find money for more social housing – again, according to the report you link to:

“The money raised from sales will go towards building more social housing”
- trotters1957
  
  I live in a council house built in the 1930′s. I’d assume it cost about £1000 to build then at most.
  I pay £3000 per annum.
  The council have had their investment back over the last 80 years probably forty times over. A pretty good and continuing investment for the council.
  How am I being subsidised by you hard working taxpayers ?
  - http://pulse.yahoo.com/_ZPXYLRVP4XOIGGDJWAL6HUO7U4 David
    
    Your basis for comparison is skewed: on that basis (contemporaneous cost of construction) a castle would cost only a few thousand pounds at most, for example.
    
    A better/fairer way of looking at it is as an investment which is relative to the cost of creating an equivalent house today, since that is what another person in the same circumstances as you would be faced with: that cost rises over time (potentially exponentially, in the circumstances where it becomes increasingly difficult to find land at any price in an equivalent area).
    
    Since the best measure for this is therefore market value, the equivalent is therefore asking whether someone else can afford to live in the area or not: if £3000 p.a. were a central London cost, for example, that is a large disconnect with average rental/mortgage prices (which I believe are around the £5000-6000 p.a. mark as an average, but do not have access to the information to hand) and so the “subsidy” is the difference.
    - trotters1957
      
      See my reply above.
      - http://pulse.yahoo.com/_ZPXYLRVP4XOIGGDJWAL6HUO7U4 David
        
        Re: do I have a car – no
        Re: not knowing your personal circumstances – correct, but my point was not personally specific, and I believe stands regardless of circumstances
        Re: buying the property losing the council money – can you explain to me how paying a council hundreds of thousands will result in them writing off thousands, and not just making the hundreds of thousands which can be invested in new affordable properties or council housing?
    - williamtheconker
      
      To rent a 1 bedroom flat in ‘Upper’ Holloway costs £1100 a month. That’s the market rent. You’re doing well there trotters1957. If your house had 3 bedrooms the rent would be £2000 a month. The difference between the rent you pay and the market rent is the amount by which the council is subsidising you.
  - Hugh
    
    Because if you’re paying less than the market rent, there’s an opportunity cost of having you live there. You’ll notice that property investors don’t calculate yields and make investment decisions according to prices in the 1930s.
    - trotters1957
      
      But you don’t know the price of my property, the market yield or my personal circumstances.
      If I bought the property the council would write off tens of thousands and would lose the rent.
      The taxpayer would be completely ripped off.
    - trotters1957
      
      I don’t have a car, I assume you do.
      Can I have the subsidy that you receive please that this hardworking pays to you ?
    - Alexwilliamz
      
      But if the rent is covering the costs of the property plus enough money being put aside for future repairs/maintenance, whether it is at the ‘market rent’ is kind of irrelevant. Provided their is enough council housing so that no one is denied access to it, I see no reason why people should have to pay more to live there just because they earn more. I have a friend who rents a house and he calculates the rent based upon what he believes is required to support it and give him what he considers a reasonable return. After this the figure is below the market rent, but as a consequence he has had a trustworthy and reliable tenant. From what I can gather the tenant is sufficiently well of to buy their own property (with associated mortgage) but due to the rent and relationship they prefer to continue to rent. I cannot for the life of me see what is wrong with this arrangement and cannot see what the problem with this happening with council housing. The difference in agreement is probably therefore down to political beliefs rather than one about housing arrangements. It sits perfectly comfortably for socialists for there to be a large proportion of the housing rental stocks to be in state hands with rents subsequently calculated in relation to costs rather than by a belief that the ‘market’ should be used to determine the rents.
      - Hugh
        
        ”Provided their is enough council housing so that no one is denied access
        to it, I see no reason why people should have to pay more to live there
        just because they earn more.”
        
        Er, because if those that could afford to paid more, there’d be more money to build council houses.
        
        “I have a friend who rents a house and he
        calculates the rent based upon what he believes is required to support
        it and give him what he considers a reasonable return”
        
        You’ll notice your friend seems to want a reasonable return. He does so for a good, reliable tenant – in much the same way as people invest in bonds rather than shares (well, used to, before the government debt crisis, anyway; are these things related at any level, I wonder?).
        
        That’s not the same thing as covering costs.
  - jaime taurosangastre candelas
    
    Clearly, I do not know anything of your own financial circumstances, so please forgive me if I generalise to some fictional person who is not_trotters1957, but living in an exactly equivalent house.
    
    The rent is £250 a month, payable to a council who have statutory duties in regards to housing, a list of waiting tenants, and as a management solution to not enough houses and too many tenant demands, pay private sector landlords additional sums to place their waiting tenants in private rented accommodation.
    
    The difference in between not_trotters1957′s rent and the council top up to a private landlord may be £500 monthly. If not_trotters1957 can afford to spend £500 a month extra on private housing housing (rent or mortgage), then he could move out and the tenant in private rented accommodation move in. The council saves £500 a month, which let us not forget is everyone’s money.
    
    The question is therefore why are the council tax payers subsidising not_trotters1957 by £500 a month, when he can afford to provide his own shelter?
    
    (The situation with some council tax tenants being on £130,000 or more per year illustrates this to a ridiculous degree, and they exist as exemplified by the disgusting Bob Crowe, but I make no case that they are anything under a tiny minority, so ignorable. But anyone who earns over the national average wage should to my mind consider themselves very lucky indeed if they live in a council house and receive a rent-to-market subsidy, and examine their own morals for continuing to live there when there are so many families on lesser incomes who live in temporary and council funded accommodation).
  - John_Dore
    
    and the left wonder why they are viewed with such disdain.
- Brumanuensis
  
  “The money raised from sales will go towards building more social housing”
  
  There is absolutely no way that the average value of a sale, post-discount, will be sufficient to replace housing on a like-for-like basis. I would bet my flat on the prediction that the government will have to invest additional money to make the scheme work.
  
  ”Perhaps a response to the insanity of providing social housing for life, regardless of a person’s changing means”.
  
  Social housing has gone into decline precisely because the government turned it into a last resort for the most deprived and desperate. It creates a disincentive to invest. Moreover, it was never intended that social housing would end up this way. As Aneurin Bevan put it: “”[The] lovely feature of the English and Welsh village, where the doctor, the grocer, the butcher and the farm labourer all lived in the same street… the living tapestry of a mixed community” was the aim of post-war social housing.
  - Hugh
    
    I’ve nothing against keeping doctors in social housing – as long as they are charged market rents.
    
    As for whether the money raised would be enough, it really depends on the market value of the property doesn’t?
    - Brumanuensis
      
      If they’re being charged market rents, they aren’t living in social housing anymore, which defeats the purpose of building social housing in the first place.
      
      Re. revenue, that’s why I used ‘average value’. As a whole, I doubt the stock would yield enough to make the plan financially viable.
      - Hugh
        
        Subsidizing a random group of people earning £100k+ on the basis that they once earned less or through an accident of birth seems a curious price to pay for trying to achieve something that is plainly not being achieved.
        
        It’s even more curious that it finds support among people who are usually pretty opposed to advantages conferred through inheritance.
      - Brumanuensis
        
        The subsidy for their housing will be more than repaid through their contributions to the tax system, so they will not be receiving a subsidy in net terms. It is precisely because we have this relatively new-found notion that no-one ’decent’ ought to live in a council house, that we have such a dilapidated and depleted stock – courtesy also of Ms Thatcher’s fire-sales during the ’80s.
        
        I said nothing about inheritance. I don’t believe council homes should be inherited either.
      - Hugh
        
        “The subsidy for their housing will be more than repaid through their contributions to the tax system,so they will not be receiving a subsidy in net terms.”
        
        So what? Does that stop the left arguing for getting rid of the charitable status of private schools or opposing tax cuts for the rich?
        
        “new-found notion that no-one ’decent’ ought to live in a council house,”
        
        As I’ve said, I’ve no problem with those in decent jobs living in a council house; I object to giving them a discount on the rent. If removing that discount prompts them to move, the logical conclusion would be that they’re not quite so committed to Aneurin Bevanan’s vision as you, and are more interested in pocketing a few quid.
        
        Why don’t you believe council houses should be inherited, incidentally?
      - Brumanuensis
        
        “So what? Does that stop the left arguing for getting rid of the charitable status of private schools or opposing tax cuts for the rich?”
        
        Because qualitatively not all subsidies are equally meritious, which is why we don’t offer blanket support for all subsidies.
        
        Re. the rent, you’re missing the point. The subsidy predominantly favours low-income households, but if high-income households want to keep living in their local area, in a council house they started renting prior to become wealthy, I don’t see the point of altering the basis of social housing to disadvantage them. They should be praised for helping to resist the ghettoisation of our local communities. And if there are too few houses, build more. Given that housing has a high multiplier, it’s a classic example of a productive investment.
        
        Re. inheritance, obviously a surviving spouse or civil partner should be allowed to continue living at the property, but as public property, I don’t believe social housing should be sold off or passed on, except in extremis.
      - Hugh
        
        “They should be praised for helping to resist the
        ghettoisation of our local communities.”
        
        No, if you charge them market rents, then they’re doing something conceivably worthy of praise. If not, as I said, you’ve no way of knowing it that’s their motivation.
        
        “as public property, I don’t believe social housing should be sold off or passed on, except in extremis.”
        
        But you do believe as public property it should be used to subsidise the living costs of very wealthy people; and you believe that while they shouldn’t inherit the property, inheriting the right to live in it at a subsidised rate is fine.
      - Brumanuensis
        
        Whatever their precise motivation, I am largely indifferent to it. We can work on making them more virtuous later on. Besides, rent is not the only consideration in play here. They are also, most likely, living in areas with higher levels of crime and with lower standards of living, relative to their income. They do get a rent discount, but they have also suffered a cost-of-living loss in the process, in some cases.
        
        As for your second point, exactly the same argument could be made about the NHS – I’m sure someone has. It is healthy and beneficial that mixed communities be encouraged. If one of the happy side-effects of lower social housing rents is that people who grew up in a poorer area do not up sticks the moment they grow rich, then I’d say social housing is highly successful in that regard. Like Richard Titmuss said, services for the poor will inevitably become poor services. Restrict social housing the most destitute and desperate and it will rot away from lack of investment and public concern.
      - geraldallen69
        
        Who are the random group of people who are earning £IOOk. and living in social housing? That is the problem with people like Hugh. No experience of life outside cosseted middle class circles, university, then into a good lucrative profession.No idea what life is like in the real world,millions of people on waiting lists because they have no access to a mortgage, if they are lucky enough to have a job, most of their income,severely restricted in this double dip recession, so if they can’t afford a mortgage, and have to rely on the private sector because there is so little social housing, they have to fork out exorbitant rents, more than likely owned by such as doctors, solicitors, barristers, accountants investing in buy to let properties, usually purchased at auctions for a song. A new breed of parasite nurtured to its eternal shame by New Labour.
    - Alexwilliamz
      
      Why? Or perhaps the logical conclusion is to create enough social housing for everyone to make the choice of living in social housing or privately rented or homeowner? Then there could be no complaint? the only argument that makes sense to me in the present situation is if the doctor is living in social housing when another is unable to take up this advantage, something which I’m not sure is the case. There seem to be very few high earners complaining that they can’t get into social housing, at least it’s not part of the debate I’ve heard. I have heard people wanting existing social housing to be turned into private housing so they could buy in to it, but that seems a slightly different issue.
      - Hugh
        
        ”the only argument that makes sense to me in the present situation is if
        the doctor is living in social housing when another is unable to take up
        this advantage, something which I’m not sure is the case.”
        
        a: there is not enough social housing to meet the demand.
        b: there are some earning doctors wages living in social housing.
        
        QED.
        
        “There seem to be very few high earners complaining that they can’t get
        into social housing, at least it’s not part of the debate I’ve heard. ”
        
        Perhaps because most high earners sort of take it as read that they’re not really entitled to it. There are, however, high and average earners who are currently unhappy that people earning more than them are in social housing.
      - Alexwilliamz
        
        Sorry I did not make it clear. My point was that the issue was that there was insufficient social housing, not that it was wrong that someone earning decent money was in it. The latter only becomes a problem because we have allowed a scarcity of social housing to exist if it did not then I see no problem with the subsidy existing.
        
        In traditional tory rhetorically terms I might say the problem has been created by a lack of choice in the housing market. We need more social housing so that all those who wish to live in it can choose to do so. In such a situation all objections fall away surely?!
  - williamtheconker
    
    The misconception here is that the ‘replacement cost’ of a house that is sold is the retail market value. The replacement cost is the actual cost of the land and the building cost that needs to be covered.
    Your flat please – kerching!
http://twitter.com/all_thats_left_ All Thats Left

If a reshuffle aims to (1) root out the incompetent and unhelpful ministers; (2) correct bad departmental policy; (3) promote talent from the backbenches; (4) show the PM to be a strong and energetic leader – has this this reshuffle achieved anything? Read on for our analysis: http://www.allthatsleft.co.uk/2012/09/camerons-sh…
Report
Serbitar

Was anything better when Yvette Cooper was Minister for Housing?
- John_Dore
  
  Nope.
AlanGiles

Cracking good news that Lansley has left Health, though Jeremy Hunt is hardly an improvement – no doubt business as usual. What a marvelous opportunity it would have been to get rid of both Hunt and Lansley, or demote them to the point of humiliation where they would have felt forced to resign (though perhaps they really are that thick-skinned these days?), both come over as especially shify individuals. Lansley for Sport and Hunt to Welsh affairs or something (no disrespect to Wales)

I wouldn’t trust Schapps if I were Cameron to do much to help, though he may well hinder. Chair? not even a foot-stool.

A good article BTW Emma. When you say ” Yes this is a man constantly hailed by Tories as an up and comer, and spoken of regularly as a future leader.”

Unfortunately it comes back to people having no experience, or even sympathy for, their portfolio. Even with a lack of experience a keen interest can help cancel out the blind spots in knowledge. If you are interested, you can learn (true for any job) But as you say, it is just a stepping stone. On the point abou being hailed as a future leader, I think this is the tragedy of so many politicians, they start to believe in the soft-soap and gushing of their friends on the same benches, they become like soap opera actors, to believe they are the role they are playing rather than themselves. I am sure, for example, David Willetts relishes his “Two Brains” soubriquet, having heard him on live radio interviews and discussion programmes such as Any Questions, I have never noticed any great brillance, He is by no means the most obnoxious MP I have ever heard, but he really doesn’t live up to his PR image.
williamtheconker

Dear Emma,
Please illuminate the discussion by stating the number of new social housing starts there were under Blair/Brown. You could even provide a chart showing the remarkable increase they achieved?And no doubt you’ll tell us why banks and building societies have restricted the supply of mortgages to the point where it is the most difficult time in the last 20 years to actually buy a house. Nothing to do with the banking system being bust and the government coffers being drained by Brown’s remarkable acuity in managing the nation’s finances.And of course you’ll be pointing out the benefit of increasing stamp duty and it’s dramatic impact on increasing house sales.
Please.
trotters1957

The housing market is of course a political and economic construct.
Since 2008 it has been propped up by QE to the tune of £350 billion, interest rates at virtually zero, subsidised schemes for first time buyers and shared equity schemes.

Labour fed the debt and asset bubble which led to the massive growth in house prices and the Tories are desperate to avoid a crash in prices that real market logic dictates.

But Tories think it’s a free market because they want it to be, complete nonsense.
markfergusonuk

Please try to be more respectful of other posts than this in future.
- Serbitar
  
  Probably not going to happen but you can always ban me at will.
  - markfergusonuk
    
    You’re right, I can, so please bear that in mind if you’re going to make a habit of being rude to other posters
    - Serbitar
      
      If you ban me I won’t lose any sleep over it and still be left-wing in the morning. If it gratifies you go for it!
markfergusonuk

That entirely depends on where you mean by Upper Holloway – Finsbury Park, Archway, Holloway Road, Tuffnell Park.

Each would give a totally different price…
- williamtheconker
  
  Well Mark, Upper Holloway, apart from being the Pooter hunting-ground, covers the upper end of Holloway Road and its hinterland. Tufnell Park dwellers might not be charmed for you to describe their location as Holloway. Tufnell Park would of course be even more expensive and Finsbury Park cheaper.
  The point is not local variances though, merely the difference between social and private housing rentals and who, if anyone, subsidises whom. Tax relief on mortgage interest was canned by Brown years ago, although to be fair remember that it was the Tories in the early 90′s who actually reduced it to a lower rate than was previously allowable.
  And as domestic circumstances change – hopefully for the better – should council tenancies be perpetuated when income reaches X% over the national average wage, or when a household owns 2 cars, or if there are say 2 or 3 wage-earners in the household but the tenancy may originally have been granted when the residents domestic circumstances were poor?
  I don’t have a particular view but surely a range of tenants perpetually immobile cannot be a good thing to encourage job mobility? I have always moved with my employment, starting in London, moved to rural Derbyshire then Nottinghamshire, down to Somerset, Wiltshire and Bath, and then back to London.
Alexwilliamz

So really the title should have been Grant Shapps: the problem with politics.
Alexwilliamz

It is only subsidising you by that amount if a) we believe that the council should be renting housing as part of a profit maximising exercise b) the market represents and actual absolute ‘value’ for these things. The latter may actually depend upon other considerations as to how we ‘value’ things. There may also be other considerations that also make the ‘subsidy’ actually beneficial.
Personally I think the way housing is going it is going to demand more state intervention to control rents either directly by rent controls or indirectly by creating more council housing. Otherwise we will find ourselves with difficulty in filling roles within certain areas, as commuting becomes too expensive for those doing vital but less well paid jobs and living in those areas becomes impossible. Add to that the continual erosion of community/ family groups as children cannot afford to live in the areas they were brought up in and we suddenly see that maybe allowing the ‘market’ to dictate all valuation will leave us with something of very little value in the end.
- williamtheconker
  
  Perfectly reasonable points but the editor has chosen not to publish my subsequent post so I am disadvantaged in our discussion.
- Hugh
  
  ”It is only subsidising you by that amount if a) we believe that the
  council should be renting housing as part of a profit maximising
  exercise”
  
  No, it’s subsidizing the rent full stop. That questions simply relates to whether it should be.
  
  “b) whether the market represents and actual absolute ‘value’ for these things”
  
  Again, that’s simply not true. The market value, properly defined, is what they could get; it is therefore the sensible measue for calculating the subsidy.
  - Alexwilliamz
    
    Ok Hugh. This is merely reducing the discussion to semantics and if you define a subsidy as anything below the ‘market’ value (which since it is in a constant flux could then mean that all rents may be ‘subsidising’ or overcharging at any given moment) then fine you are correct. However that really leaves the discussion no where. However I was taking the idea of a ‘subsidy’ in this case to indicate some wider objection around the idea of unfairness, or what should someone have to pay. Eg. you earn more money you don’t deserve to pay the same rent as this other chap earning less.
    
    Ironically in this case we are almost switching positions when arguing around taxation!
    - Hugh
      
      I’m really reducing it to economics, and far from leaving the discussion nowhere, it leaves it accepting the facts, which then allows for a sensible debate about the politics – is this subsidy a good use of government finances? Social housing rents are, as far as I know, consistently below market value.
      
      And, speaking for myself, I don’t switch positions when arguing about taxation: I believe that people with the same wealth and income should as far as possible pay the same tax; I also believe rich people should pay more than poor people. That seems fair to me.
Alexwilliamz

Hmmm but even then the discount etc will almost certainly push the cost of land (if you can find it) and building cost into the red. One of the reasons I believe there is a slump in construction is that the big companies a holding out until they reckon they can make a decent profit on a house build. That suggests that the current retail market value of houses isn’t going to be that much above the costs associated with building it. Otherwise surely with the apparent housing shortage the big companies would be falling over themselves to build?
- williamtheconker
  
  I must confess to being a builder (cut those boos out at the back there!) and I can assure you that the major difficulties in this industry sector are these:
  1. People are fearful and don’t want to spend money if they think their employment prospects are not stable;
  2. Mortgages are difficult to get as the banks have trousered vast sums of public subsidy and are hanging on to it, not lending it;
  3. Stamp Duty is now a large factor in buying decisions;
  4. VAT at 20% is a real killer.
  But apart from these, all bad enough taken separately end even worse together, the building cost versus the market price of a dwelling can be simply illustrated. Look at the insurance valuation for the rebuilding cost of a property vs. the market value and that is the raw difference.
  Discount the market value by the council discount and that is the sum foregone when selling to a tenant. It could be argued that all a council had to do was wait for house price inflation to generate this notional ‘profit’.
  I always thought it was madness that a council was not allowed to spend these receipts on building new council housing – even Blair/Brown held to this insane view.
  Chickens – roost spring to mind.
Alexwilliamz

Land tax!
- Brumanuensis
  
  Indeed, the solution everyone agrees upon, but no-one seems to have got round to implementing.
Brumanuensis

I wasn’t arguing that it was. No dice.
Hugh

Hence the word “if”. And “if” you are paying less than market yield, then no, the council would not write of tens of thousands and lose rent, since it could, if it chose, take the capital released from the house and invest it in another property charging higher rent (or invest it in any other way). And, no, I don’t know your personal circumstances – and I didn’t comment on them.
Hugh

I bought my car; I don’t rent it at a discount from the state’s car pool.

I have nothing against social housing. I don’t begrudge those that need it any more than I begrudge those who can’t get work and need benefits. However, you seem to want to argue that providing discounted accommodation has no cost to the tax payer. It plainly does.
Alexwilliamz

Can I applaud your profession. How big is your company, as I had in mind the really big developers for whom I am pretty sure may have a slightly different agenda.
I am absolutely with you on point 4. I think a slash to at most 10% for things like actual labour costs would really help those people who actually work in the sector. However I did not think it applied to new builds??
Also absoute agreement on the mistake in not using receipts to build new council housing which has long been something I have argued for.
- williamtheconker
  
  My company could be described as a pimple on a boil on a backside! Dependent on workload the workforce can range between 3 and 20, so a dip in sales has an immediate effect on employment, income tax, National Insurance deductions and VAT payments to HMRC.
  Our turnover is over 50% down on last year so we are helping to be part of the decline in business activity.
Alexwilliamz

The difference between a rough valuation for my house and what the rebuilding costs are calculated would I fear struggle to cover the cost of the land it is built on. But then I don’t live in the South East where the difference may be higher at a sufficient rate to overcome initial land costs.
PeterBarnard

William the Conk,

Between 1999-00 and 2009-10 (inclusive), Labour averaged* 18,200 Housing Association starts per year, and about 200 (!) Local Authority starts per year. In Labour’s last year, there were 18,300 HA starts and 24,740 HA completions.

* England only ; from DCLG website.
PeterBarnard

William the Conk,

Between 1999-00 and 2009-10 (inclusive), Labour averaged* 18,200 Housing Association starts per year, and about 200 (!) Local Authority starts per year. In Labour’s last year, there were 18,300 HA starts and 24,740 HA completions.

* England only ; from DCLG website.
PeterBarnard

William the Conk,

Between 1999-00 and 2009-10 (inclusive), Labour averaged* 18,200 Housing Association starts per year, and about 200 (!) Local Authority starts per year. In Labour’s last year, there were 18,300 HA starts and 24,740 HA completions.

* England only ; from DCLG website.

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More evidence of that slick Downing Street media operation…

Where are the women over 50 on our TV screens?

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We do not stigmatise your country, Deputy Prime Minister. It is you and your party we find distasteful

Watson urges investigation of “supressed” Leveson evidence – Media roundup: May 21st, 2013

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