Category Archives: Politics

Party politics, elections and so on.

Ranty McRanterson

The election is making me ranty. Today, the Tories announced their manifesto, the most newsworthy bit of which is about extending Right to Buy – from tenants in council-owned properties, to those in Housing Association-owned properties.

Now, the ways in which is this is stupid, badly thought through, unworkable, and probably illegal, are many and varied. Allow me to summarize:

  1. I’m not sure the Tories have a very clear idea of just what a Housing Association is. They are independent businesses. Social businesses, sure, not-for-profit organisations, but that doesn’t mean they’re allowed to make a loss, and since they are not owned or controlled by either the local councils, nor central government, it seems very odd to make an announcement like this which will essentially put them in a position of being legally obliged to sell their assets at a loss. Because,
  2. Right to Buy, as I understand it, entitles tenants who have lived in one property for five years or more to choose to purchase that property at 2/3 of its market value. Now, if a housing association happened to receive that property for nothing, or as near to nothing as makes no odds, in an asset handover from the local council, one could argue that they have made a significant profit, even if they’ve spent some money on maintenance or renovation in between times. But if they built that house themselves, having borrowed money to do so, on the assumption that it would represent an income-generating asset for the foreseeable future, then they run the risk of making a significant loss. Whether that loss is enough to send them bust is entirely dependent on the balance of their property portfolio – whether the tenants who want to buy happen to be living in properties that won’t make a loss if sold, in enough numbers. No-one saw this announcement coming, so no housing association is going to have a contingency for it. There are no reserves funds sitting in the bank, to insulate against this eventuality. They will just go under.
  3. The idiocy of declaring that the shortfall will be made up by councils selling their “more expensive” council houses and passing the money to housing associations, rather beggars belief. My council owns no houses. None. They passed them ALL to a housing association, years ago, and therefore have nothing to sell, expensive or otherwise. Even if they did have some, the chances of them being anything other than the cheapest properties, in the worst states of repair, in the dodgiest neighbourhood, are slim in the extreme. Unless your council happens to be Westminster, I suppose.
  4. Since this sets a precedent for central government placing a legal obligation on private organisations to sell their property assets at a loss, if I were a private landlord, of any scale, I would be looking distinctly anxiously at this development. Because, what is to stop them subsequently applying the same rules to me? My tenants have the right to buy my house, and at a price I wouldn’t normally accept, but I have no choice. That sounds ludicrously unlikely, on the one hand, but on the other, what’s the difference? My desire to make profit? Isn’t a tenant just a tenant, irrespective of the landlord’s business model?
  5. And finally, what is to become of social housing in the UK? There is already a massive shortage of decent, affordable rental properties in many parts of the country, which is largely attributed to the policy decision NOT to spend any money brought in through Right to Buy on replacement housing stock. Which is the obvious thing to do. By consistently diminishing the available stock of social housing, we have made a general housing shortage, which has brought private landlords in a lucratively desperate marketplace, where rents can soar to meet insatiable demand. When rent is high, property value also goes up – since even expensive property stands a good chance of being profitable – which then means that even owner-occupiers are affected by the sale of council houses they may never have used. But since Thatcher’s government was essentially driven by an ideological desire to get the state out of housing altogether, one can only assume that the extraordinary housing bubble that has characterised most of the last 30 years, was the point. If you own property, you win. If you want to buy property (and that includes up-shifting for the extra bedroom/big garden/better school catchment area, which is proportionally more expensive, and therefore out of reach of your fairly ordinary salary), you lose. It’s the Haves pulling the ladder up behind them, against the Have Nots. Unless you’re one of the lucky few Have Nots who are in social housing, because you can get a house for 35% off, for no apparent reason.

The thing is, I’m not necessarily against Right to Buy, as a principle. I believe in wealth equality, and the idea of putting a system in place that could, within a generation or so, give almost everyone the option of owning their own home, seems, as even David Cameron said today, an ultimately democratic redistribution of wealth. But only if you treat it as a policy for a generation – not a one-off sale of the family silver (and how overused that phrase was of Thatcher’s government), but an on-going philosophy of investing in new, affordable homes, for people to rent, or rent with a view to later buying. If you take the money you make, and use it to build new houses. If you are prepared to invest some actual government money into making up the shortfall, so you can continue to maintain social housing stock at a certain level. If you regard the job of government to make the world fairer, more even, to spend a little in order to reduce the inequality, and actually lift people out of poverty. Imagine a world where everyone who wants a house can have one. Imagine a world where no-one lives in low-quality rented housing because it’s the best they can manage, but where only people who have actively chosen the convenience of renting (of calling the landlord when things break, or of being able to move around frequently) are doing so. Not everyone wants to own their own home, but the basic security of doing so should be available to anyone, surely?

If you replace the sold social housing, then the private rental market doesn’t explode. The former council houses don’t end up in the hands of private landlords, because the market is so much less buoyant. No-one pays over the odds to live in a house, if they can still get the identical one next door for a reasonable rent. Private landlords have to up their game in terms of housing quality and customer service, if social landlords are in the marketplace, offering more for less. The housing market is ripe, nay, desperate, for disruption, and social housing is the way to do it. Offer the right to buy, by all means, but invest in making the scheme sustainable – don’t just sell all the houses until they’re gone.

MPs pay: get the facts right, please

If you like it would appear most MPs don’t have the time / inclination to read the Independent Parliamentary Standards Authority (IPSA) report into MPs pay, you should at least get an idea of what it (not the press) says.

It’s not 11% pay rise it’s 9.26% yes it’s high but lets get the number right – the pay rise happens in 2015 – and between now and then MPs are getting a 1% pay rise a year anyway – so in 2015 values they go from £67,731 to £74,000

The recommendations are cost neutral to the taxpayer (so overall they are not getting more money) – while the headline pay is going up, MPs will lose out on the payments they get when they leave parliament, what they can claim (they won’t be able to claim evening meals for example) and their pensions is being downgraded significantly to be more normal.

Once it’s implemented MPs pay will be linked to average earnings – So this shouldn’t happen again.

IPSA were asked to fix a problem and they have – they have looked at where MPs wages should sit in relation to other jobs, removed some of the rouge payments around the edge and have set out a way for this to remain fixed into the future.

You can agree or disagree with the levels and how but you should probably understand how they reached the numbers they did.

The biggest argument I can see for not paying MPs this money – most of them blatantly haven’t read or understood these reports and that in my opinion raises competency issues.

Fixing economics

Now, before I go ahead and start trying to fix economics, I feel it only fair to point out that I know almost nothing about economics. Kevin tells me that most economic theory is dependent on the assumption that the planet’s resources will never run out, enabling economic growth to continue ad infinitum. That sounds like nonsense, to me, but what do I know? I’m no economist. What follows is an unscientific economic proposal, based on almost no cited evidence whatsoever. It’s foundation, instead, is largely the floaty stuff in the back of my head, which I don’t really remember reading, but must have picked up from somewhere. Caveat over.

I have been thinking quite a bit recently about the multi-generationally unemployed, and other long-term benefit-dependent groups, who have had a lot of negative media attention, recently, on the back of (I think it’s on the back of, not resulting in, though one can’t always tell) equally negative political attention.

It’s not new rhetoric. They talk ceaselessly about people who “won’t” work, rather than can’t, how unacceptable it is for people to live on benefits if it’s remotely possible for them to do otherwise, about “making work pay” (a phrase they find much easier to say than to do, it seems), about obliging parents to leave ever-younger children in child-care while they work. And the media dutifully regurgitate it all, emphasising the exceptional cases to make scrounging look like a norm, creating an underclass of “other” for us all to resent.

I have a lot of problems with this, which you possibly detected, perceptive creature that you are, from the tone of the previous paragraph. But it has lately occurred to me that the imagined solution to these imagined problems is going to solve nothing.

The government agencies working in this area, and, indeed, lots of the non-government agencies, are fixated with the idea that getting people jobs is the ultimate goal. That with jobs, people will have independence from the state, freedom from poverty, and will generally become the sorts of people we can approve of. Their children will achieve more at school, get jobs of their own, and all will be set on an upward trajectory of joy.

The problem, as I see it, is that jobs do not give independence. Very few jobs of ANY sort give independence, but the sort of low-paid jobs for which most of the long-term unemployed would be destined, so much less so. It’s a straight swap – instead of going to government, or, perhaps, charity, and hoping to able to jump through sufficient hoops for a handout that will enable them to survive until the next handout, they are going to an employer, hoping that they, rather than the next person, will be offered the job, so that they can jump through a different set of hoops, to get a wage with which to survive until the next one.

It’s not actually any different. The hoops are different – an employer’s hoops will have more to do with the requirements of a business, presumably, and less to do with bureaucracy and appearing to deserve the money in some way, but ultimately, it’s the same. If anything, it’s more precarious – employers, particularly employers of the low-paid, are rather more likely to dismiss on a whim, and rather more likely to get away with it. Fire a rich person without due process, and expect to get sued. Fire a poor person, and expect no noticeable repercussions at all.

My point is, that the government is trying to solve the wrong problem. The problem is not joblessness. The problem is a culture of dependence. Changing on whom people depend is just moving deckchairs around on the Titanic. People will have a much better chance of raising THEMSELVES out of poverty if they are in control of the process. Being raised by someone else will always lack the commitment and investment of the individual concerned, which is, at best, a shocking waste of an obvious resource of effort. At worst, it’s doomed to failure. Today, someone pointed me towards this blog post by Kester Brewin, and this line caught my eye:

They simply await their welfare payment, and that’s it, and the huge amount of charitable money that has been put into this demographic group has done little to really change the core problem of zero positive engagement with education or labour.

Because money IS poured into trying to get poor people to get jobs, and it doesn’t work. It’s money down the drain. The defining principle behind all this financial investment is the goal of getting people into jobs. But jobs don’t pay much more, they are even less dependable than the benefits system, and most importantly, they don’t offer any direct connection between the performance of the individual and the amount of money in their pocket at the end of the day. A cleaner or a checkout assistant only has to achieve enough to avoid being fired. If by cleaning harder, or smiling at customers more, they manage to increase the profits of the organisation, they’re never going to see the benefit of that. There is a disconnect between the quality of their work, and the reward.

The two key exceptions to this rule which occur to me, are the self-employed, and members of the John Lewis Partnership. Self-employment reconnects the link between the work and profits. It also, as an aside, offers direct control of what the work is like – work for yourself, and you get to decide what is worth doing, and what isn’t. How far you will travel, which jobs are too dirty, which hours are too unsocial – when you’re in direct control, you’re more able to make choices. It’s empowering. It’s the opposite of dependence.

The John Lewis Partnership takes this concept to a mammoth scale. Every member of staff is a partner, and partners get an annual bonus which is a share of the profits. They are directly invested in the success of the business, because they are directly rewarded out of that success. Some of that disconnect presumably remains – it’s such a large organisation, it must make it harder to make the direct link between the size of the profits, and the quality of one person’s work. But it still seems to work – John Lewis continue to make money, to expand, to build massive new shops, even as other retailers are going to the wall. The concept of the workers’ co-operative is much less exceptional in parts of the US, and their experience, too, is that staff are personally invested, so work harder, causing the business to do better.

So my proposition is that, if we are going to pour gazillions of pounds into getting poor people into a situation of financial independence, let’s do it properly. Let’s ACTUALLY work towards helping them be independent. Let’s stop mandatory training on how to get through a job interview, and replace it with proper support for the starting of small businesses, of partnerships, of workers’ co-operatives.

Let’s stop trying to generate fodder for the existing captains of industry, so they can carry on getting richer. Let’s start giving people the chance to make their own money.

I might start buying real books again

It saddens my little heart when I pickup a book and see my Kindle lying unloved next to the bed, but until some quite fundamental things change, I think I will be do that more often in the future.

A Kindle, they're very good.

Don’t get me wrong, the Kindle is an amazing reading device, it really is one of the best thing to read on, ever. I prefer reading on it to books by quite a long way, but the efforts of the publishing industry and the reluctance of government to move with the times is beginning to get in the way of what should really be a pleasurable experience.

At the moment there are 4 main reasons why I am turning back to real books

  1. Tax: in the UK there is no VAT on real books, because sometime ago we decided books are a necessity for society to function and flourish, ebooks however are an electronic service, and we tax them – so all ebooks have a 20% VAT on them.
  2. Publishers: The net book agreement was broken sometime ago; mainly because it was price fixing, but that hasn’t stopped publishers putting a ‘pricing agreement in’ that means the publishers are setting the price of ebooks. (The EU are looking in to this)

    That is why eBooks are sometimes more expensive than the print ones! – Why? It can’t possibly cost more for me to download something; compared to it being printed on paper, stuck in a van, sent to a warehouse, put on a shelf, taken of a shelf, put in a package, put on a van, sent to a sorting office, put in a bag, carried to my house and shoved through my letter box!

  3. Publishers don’t like eBooks: That can be the only reason they are still not putting half the books they print out as ebooks.
  4. Copyright law: Copyright law is stifling ebooks. Now I am a firm believer in copyright as a principle, but the current law is way too aggressive. Copyright remains on a literary works for 70 years after the author dies, even if the book goes out of print! 

    Books: these a very good also.

    For the ebook world this means there are loads of books, that you can just not get, because they are out of print and no one can legally scan them in and sell them to you, and because of point 3 the publishers won’t let this slip.

    This to me is a bit of an economic nonsense, you are a publisher / author your 30 year old book is out of print, someone wants to without expense to you, digitise your book, then sell it online and give you some money – where previously you had none.

    This (oversimplified) is what the publishers and authors don’t want Google to do with it’s Google books library project.

The net effect of all this is:

  1. Books that cost more as ebooks , for example Freakenomics (paperback £5.51, eBook £7.99)
  2. Classic Books you cannot get eBook copies of for example Catcher in the Rye
  3. Books that have just fallen out of print, that can’t be revitalized online.
  4. Books you can’t share because publishers are scared of that too.

And I am being driven to put down my kindle and start buying real books again.