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>From: "Hillary Shaw" <[log in to unmask]>
> Reply to Paul Redfern's letter (belatedly!)
> Looking at from an economic perspective, the problem with HB (Housing
> Benefit) is much wider than just Social sec spending. The Thatcher era saw
> an increase in job insecurity, which is global so we won't get rid of that,
> as any country that brings in better job security laws for employees will
> just drive the multinationals elsewhere. At the same time Thatcher boosted
> owner occupation, and shrank the council rented sector. But in cities with
> many in-migrants like London, and in smaller places like Lancaster where
> the economy is based on the University and the hospital ie there is a lot
> of short term employment, the demand for rental accom remained, so with
> less supply, the price ie the rents rose. There was a lot of fuss about
> sudsidised council rents but of course owner occupiers were being just as
> subsidised thru' mortgage tax relief. House prices also rose as suddenly
> owning was the "right thing to do". The govt benefitted at first as owners
> spent more on their own houses, so more tax paid, stamp duty also rose, and
> people were supposed to have more of a stake in their area.
> BUT now the govt has a problem - landlords, acting perfectly economically
> rationally, have raised rents where there is a demand, kmnowing the govt
> will largely pay if the tenant is not a wage earner, and as we have a lot
> of low wage jobs, even where the tenant does work, HB is needed to top up
> their wage. Again the UK can't force up wages as many jobs will then flee
> the country. In this situation HB has extended the poverty trap from the
> unemployed to low wage earners as well, as any wage rise they get comes off
> their HB. Landlords know that any rent rise they impose will be paid for by
> HB if the tenant can't afford it. So we have a system that encourages
> dishonesty, non declaration of income, bogus rents, not looking for better
> paid work etc. The only solution would appear to be the re-provision by the
> govt, as private landlords won't, of low-rent properties. But that would
> cost money, and would likely create ghettoes of deprivation and vandalism,
> unless more was spent on local law and order as well. So I can't see an
> answer, but would love to hear one, if one exists.
>
> Hillary Shaw
> P/G Research, Geog, Leeds University
>
>
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