Tuesday, November 02, 2010

Housing benefit

I am not normally a Sun reader, but they seem to have caught out the BBC in an open piece of propaganda based on a lie. Last Thursday the BBC's News at Ten painted a James Van-Cliff as a hard-working individual whose desperate attempt to get back on his feet was being scuppered by an uncaring coalition government. My wife felt quite sympathetic towards him. If they cut housing benefit, young men like that will be living on the street in cardboard boxes.

In fact, it was all a lie. James Lansdale, the BBC Deputy political editor, had contacted a housing charity for a good example of someone who would illustrate a piece he was doing to demonstrate how unpleasant the the government cuts would be. Lansdale was not looking for evidence, just an illustration. He knows the power of anecdotes and he had already made up his mind what the effects of the cuts would be.

James Van-Cliff told the BBC he faced eviction from his council flat and a life on the streets because David Cameron's housing benefit reforms will leave him unable to pay his rent and bills. He told the BBC he "worked his butt off" to get the flat.

It was all untrue. Van-Cliff has now admitted he quit his last job because the £93 weekly pay was not good enough. I agree that £93 a week is not good enough, but even if he were earning no more than the minimum wage, it only amounts to 16 hours work a week - the maximum amount you can do without losing your benefits. So, even when he was working, he was not working all the hours he could. His job was cleaning an office and there are plenty of such jobs in London. My sister-in-law works as a cleaner. But she does three cleaning jobs to ensure that she makes enough to have a family income with my brother of more than the average. Their taxes pay Mr Van-Cliff's benefit payments. They are not best pleased.

He said: "I'm better off on benefits to tell the truth. I'm not going to work on minimum wage for sh*t money. That won't keep me going." The Sun comments "Art school dropout Van-Cliff confessed when The Sun visited him at his £9-a-week flat, where he and jobless girlfriend Charlotte, 18, were idling away the hours by chain-smoking and watching daytime TV."

I can't believe that you can get a flat in London for £9 a week; perhaps it is a misprint for £90? Even that would be cheap, though perhaps a one bed flat in a tower block in Bethnal Green might go for as little as £360 a calender month.

The BBC report claimed the cuts would reduce his benefits by £9 a week - half his food bill - or about a quarter of his cigarette bill. The report failed to reveal Van-Cliff walked out of his job as an office cleaner more than a year ago. He has not had a job since and has worked only four months since leaving school.

He gets a Jobseeker's Allowance of about £51 a week and has applied for £93 a month housing benefit for the flat, which he moved into days before the BBC report.

A BBC spokesman said: ‘We approached a reputable housing association to help us identify someone who might affected by proposed changes to benefit regulations and we interviewed the tenant in good faith. ‘Regardless of his employment status, the individual concerned will be subject to those changes.’ The BBC trying to tough it out.

We are still suffering from a housing bubble. On the back of the miss-selling of subprime mortgages, house prices rose to ridiculous levels. The house that we bought 35 years ago for £26000 was valued at over £600,000. Inflation has eaten away at the value of money over those years, but not by that much. First time buyers were squeezed out of the market and many, apparently rich house-owners took equity out of their property. The wiser among them used the money to put their children in houses, other spent on Chinese consumer goods. Some bought second properties to rent out to those too poor to buy.

This buy-to-let bandwagon was soon giving annual returns of 16% and since mortgage lending rates have fallen to a new low many returns are even higher. Housing prices are beginning to fall,but the banks are not lending and they clearly have some way to go. People are going to have to take a hit over negative equity. At the same time, withdrawal of housing benefit ought to put a brake on rents. Getting the unemployable out of high rent districts will enhance the process. After all, If you won't work, then you might as well not work in Hull or Middlesboro as central London.

A driver for house price inflation has been an increasing population and no new social housing built. In the last year of Gordon Brown, only 16,000 units of social housing was built; back in the 1950s they were building over 300,000. Yet there is plenty of unused property in the UK and at a cost of less than £25000 a unit, most could be turned into affordable homes. Not many would be in central London, though, And if they are not next door to a Fleet Street pub, how would the journalists ever find out about it?

1 comment:

jennifer said...

Bonjour Professor Hamblin,
We bought our first house in Bromley in 1967 for £4,500 and sold it in 1978 for £17,500. We then bought our next house in Lewisham for £23,000. We had it valued in 1987 at ten times that amount, then the market stalled, but we did indeed sell it for £230,000 in 1990. Nowadays that same house is valued at about £750,000. So it's clear that houses in London multipled in price much more in the eighties than they have recently. In 1990 we bought a chateau in France for £80,000 and are now hoping to sell it for for seven or eight times that amount. One of the most important factors in British house prices has been the massive distribution of wealth to the working classes by the sale of council houses for a fraction of their value and the allocation of housing benefit to cover the mortgages to buy those council houses, which was in fact an extremely socialist policy of wealth distribution dreamt up by Mrs. Thatcher. This was supposed to produce a mass conversion of the working classes to the Conservative Party and thereby a permanent one-party government in GB. However it just didn't work that way and Labour got a landslide victory in 1997. Low interest rates for the past 10 years have allowed many people to borrow in order to buy homes to let to those who have no hope whatsoever of getting a council house but can get housing benefit in order to pay a private rent. It's a bit pointless for councils to build houses if they are then obliged to sell them to their tenants at a fraction of their cost or value. I think it is not an easy problem to solve and I really don't know how councils are going to cope if they are faced with an increase of homeless families.
I do hope you are doing well with your treatment, all best wishes, Jennifer.