Poverty in UK

[Craig]

People can spout off about envy and jealousy and people being entitled to "do well for themselves" all they like but the indisputable fact is that the wealth divide has massively opened up in recent decades and the opportunity for business owners and "entrepreneurs" to enrich themselves at the expense of their employees and society in general has equally increased.

I grew up in a typical Manchester post-war 3 bed semi in the 70's. My dad was a blue collar worker (newspaper printer) and most of the neighbours on our street were also working class but, there were a couple of our neighbours who were local business owners.

Yes those business owners had slightly posher cars than the rest of the street and they enjoyed 'exotic' holidays to Marbella once a year, but their general standard of living wasn't really that different to that of their blue collar employees, in fact some of their employees actually lived on the same street in the same 3 bed semi's as their bosses.

These days it would be the case that those business owners would be living in an £800k pad in Wilmslow with matching his n hers £100k Range Rovers on the drive and a nice little holiday home and speedboat in Rhosneigr.

Meanwhile their employees will now be renting some scruffy 2 bed terrace in a rough part of town with their entire income going on essential living expenses.

Spot on

 

[Craig]

The good thing about this country is the ' down trodden ' employees can get off thier arses and they too are quite easily able, if so desired, to do exactly what their boss did .

You’re talking nonsense. What would you say to teachers and nurses in a few years then who without a hand out off Mum and Dad won’t be able to get on the property ladder? Will you say get off your arse and become an entrepreneur!

It is not an exaggeration to say that in a few years(10 max) teachers won’t be able to get on the property ladder in places like Manchester. Do you think that is a fair and just system in one of the strongest world economies? The money never disappears so where do you think it keeps going!

 

[Craig]

I think the post in question is pointing out some facts about structural change that have taken place in this country that has made it much more inequitable. Whether or not that is legitimate cause for complaint I suppose depends on what your vision for the country is.

Most societies tend to either the highly individualistic or very collectivist but Britain's modern history till recently has been this weird hybrid you don't see that much. In my view this broadly stood us in good stead and in many ways was a cause to be grateful for the luck of being British; but we have sleepwalked into a form of individualism that is shafting many people for the benefit of the few.

My small business took an investment risk on doing something innovative to grow but is struggling at the moment; but what's interesting is the number of people who have said to me why didn't you just pile the money into property and buy to lets it's a much safer bet? When I say I didn't want to because I think it exacerbates the housing problem they look at me like I'm a nutter. My sister in law genuinely can't fathom why I didn't just do the same as her and her husband and I think feels a bit sorry for me being feeble minded.

Unless your view is I'm only interested in my immediate family and screw everyone else (no law against it but short sighted in my view) then it's entirely legitimate to call out the road we are going down as a country cause it's just making us a more brutal, nastier place and people. I suspect that sounds naive but I don't give a fuck because I'm sick of the implied narrative that 'that's how it is' when everyday I see loads of people who don't think like that and are up for helping each other and giving a toss about their neighbour. It's only 'how it is' because a small proportion of people need to ram that narrative down our throat to try and protect their interests.

Sorry for randomly using your post for a bit of a rant !

Great post. The property issue is an absolute scandal and prices will rocket again within the next 18 months. A small apartment in Ancoats has gone up by £140k in 4 years. Good luck to any kid from Manchester who er,just needs to get off his arse and work harder to earn that.

 

[Craig]

Increasing poverty is not an accident, it is being done by design. The post WW2 social consensus, the creation of masses of Social housing, the NHS, the expansion of the welfare state, nationalisation and increased taxation all led to their being lower levels on inequality in society. Union power was at its zenith, political parties had enormous memberships and there were political giants striding the Parliament stage. We went from a situation where GDP was -256% to a country that was booming and built things, we were an industrial powerhouse, a country that built Concorde, had numerous car makers, steelworks, built ships and had prestige in the world.

What changed everything was Neo-Liberalism, Thatcher read a book at University by Hayek called The Road to Serfdom and it influenced her political thinking enormously. Hayek was a member of the Austrian school of economics which was heavily influenced by American libertarian thinkers such as Mises, they were viruently anti Socialist and believed in the freedom of markets. Keynes described Hayek's work "Prices and Production" as one of the most frightful muddles he had ever read with barely a sound proposition in it.

Unfortunately for us we got Hayek, not Keynes. Hayek believed in smaller government, whereas Keynes thought that expanding state investment was the correct way to run the economy. Keynes thought a Government should be austere in times of boom, Hayek thought we should be austere in times of bust. The austerity this country has endured now since Cameron and Osborne times has led to a huge rise in inequality and yes to poverty. The ideological addiction to Hayek and the proliferation of RW think tanks espousing Hayekian dogma is now so normal in UK political thinking that even the Labour party tips a hat to Hayek. UK life once based around community is now based on individualism, Union power is diminished and the power of the owners of capital has increased expotentially. We live in a society where the running of a country is commonly compared to running a household, we have maxed out credit cards, we have magic money trees, and as Alexei Sayle put it, the banking crash was caused by there being too many libraries in Wolverhampton. This is all designed to further enrich those with capital at the expense of those whose only asset is their labour, hence we have wage stagnation yet an ever increasing amount of millionaires. Public services are virtually non existant, our transport system is third world level, schools are falling down, hospitals are understaffed, the care sector is woeful, you cant see a dentist or a doctor, but people can have jet skis and maseratis at their holiday homes. We have record numbers of children who do not have a book at home, teachers have to buy text books, yet we have tax cuts that benefit those with most and offer those with least not enough to buy a book. We have parents going hungry so their kids can eat, whilst we have a government who wanted to stop school dinners.

Those with least have the highest propensity to spend, those with most spend on luxury items and have a higher propensity to save, this affects economic growth, it sucks out spending from local shops etc whilst multi nationals get tax breaks.

We need a total rethink about how this country works, it should work for everyone not just a select few.

Come off it mate. People just need to stop moaning and work harder;)

 

[I'm With Stupid]

You’re talking nonsense. What would you say to teachers and nurses in a few years then who without a hand out off Mum and Dad won’t be able to get on the property ladder? Will you say get off your arse and become an entrepreneur!

It is not an exaggeration to say that in a few years(10 max) teachers won’t be able to get on the property ladder in places like Manchester. Do you think that is a fair and just system in one of the strongest world economies? The money never disappears so where do you think it keeps going!

Exactly. "There's no automatic right to own a house" is the usual response, to which I ask "Why the fuck not?"

Why shouldn't somebody working full time in one of the richest countries in the world have the expectation of earning enough money to buy a house if they want? It was the case for a good chunk of the 20th century, give or take. There's million reasons why it's a good thing. For a start, people who own have a stake in society, which improves absolutely everything else. Landlords do the legal minimum. Imagine trying to deal with something like the climate crisis with a country full of houses with the least energy-efficient appliances, glazing and insulation, because the landlord doesn't give a shit how much the electricity bills are. I've rented most of my life, (not even in cheap places - my place has a gym and swimming pool), and I've never had anything other than the cheapest fridge in the shop.

As you point out, this is not just about a single-earner working in a supermarket not being able to buy a house. We're getting to the stage where professionals who've been to university for 4 or 5 years in a two-income household not being able to buy a house. I know one couple who managed it in London. They both have master's degrees and work full time. They first had to save for years and borrow a bit from her parents to get the first flat. They then got extremely lucky with a massive price increase, and he got a big payoff when the company he worked for was sold (he had shares as part of his pay without knowing it). They openly say that if either of those things didn't happen, they'd still be in the flat aged 40 with a new baby. Now they're in a small 2 up 2 down with an unfinished hall and bedroom. The sort of situation my parents were in in their mid-20s. And the increase in the mortgage has just wiped out their pay rises for this year. It's insanely difficult even for those lucky enough to be able to buy.

 

[KS55]

Exactly. "There's no automatic right to own a house" is the usual response, to which I ask "Why the fuck not?"

Why shouldn't somebody working full time in one of the richest countries in the world have the expectation of earning enough money to buy a house if they want? It was the case for a good chunk of the 20th century, give or take. There's million reasons why it's a good thing. For a start, people who own have a stake in society, which improves absolutely everything else. Landlords do the legal minimum. Imagine trying to deal with something like the climate crisis with a country full of houses with the least energy-efficient appliances, glazing and insulation, because the landlord doesn't give a shit how much the electricity bills are. I've rented most of my life, (not even in cheap places - my place has a gym and swimming pool), and I've never had anything other than the cheapest fridge in the shop.

As you point out, this is not just about a single-earner working in a supermarket not being able to buy a house. We're getting to the stage where professionals who've been to university for 4 or 5 years in a two-income household not being able to buy a house. I know one couple who managed it in London. They both have master's degrees and work full time. They first had to save for years and borrow a bit from her parents to get the first flat. They then got extremely lucky with a massive price increase, and he got a big payoff when the company he worked for was sold (he had shares as part of his pay without knowing it). They openly say that if either of those things didn't happen, they'd still be in the flat aged 40 with a new baby. Now they're in a small 2 up 2 down with an unfinished hall and bedroom. The sort of situation my parents were in in their mid-20s. And the increase in the mortgage has just wiped out their pay rises for this year. It's insanely difficult even for those lucky enough to be able to buy.

Yeah. Asset prices are ridiculously high, partly due to lack of supply in the case of houses. Quite different when I was young. I bought a decent house when in my first job after uni even though the pay was not great. Successive govs have totally failed to address the problem.

 

[I'm With Stupid]

Yeah. Asset prices are ridiculously high, partly due to lack of supply in the case of houses. Quite different when I was young. I bought a decent house when in my first job after uni even though the pay was not great. Successive govs have totally failed to address the problem.

Housing stock has increased faster than the population since the Tories got into power including in London. The idea that there's a lack of houses is a myth. The problem is the housing being monopolized by the already wealthy.

In the early 90s, around 9% of households were privately rented. Now it's around 20%. At the same time, social housing has gone down by even more. Around 37% of the housing in London is foreign-owned, and 33% of those are owned by foreign companies, not foreign individuals. Foreign ownership has tripled in the last ten years according to the Financial Times.

Buy-to-let investors represent 12.2% of all house purchases in 2022, which was the highest level for 6 years. In 2015, it was 15.5%, which was the highest ever, and then they introduced additional taxes to deal with it. 3% stamp duty on second homes, and reducing tax relief on second home mortgage interest. But unsurprisingly, such small measures only had a temporary effect. There are some awful statistics in this article. One thing it doesn't mention, which I'd be interested to know, is what percentage of these buy-to-let landlords are directly competing with first time buyers. Because I suspect they're mostly buying property at the cheap end of the scale.

And make no mistake, this is all a deliberate choice. You could easily implement a tax code and set of tenant rights that make it not a worthwhile financial investment. You could easily ban overseas individuals from buying houses in the UK (loads of countries do it), particularly companies based in tax havens. We have a tax code that punishes earned income and rewards unearned income. That rewards simply owning things. That should be opposite.

 

[KS55]

Housing stock has increased faster than the population since the Tories got into power including in London. The idea that there's a lack of houses is a myth. The problem is the housing being monopolized by the already wealthy.

In the early 90s, around 9% of households were privately rented. Now it's around 20%. At the same time, social housing has gone down by even more. Around 37% of the housing in London is foreign-owned, and 33% of those are owned by foreign companies, not foreign individuals. Foreign ownership has tripled in the last ten years according to the Financial Times.

Buy-to-let investors represent 12.2% of all house purchases in 2022, which was the highest level for 6 years. In 2015, it was 15.5%, which was the highest ever, and then they introduced additional taxes to deal with it. 3% stamp duty on second homes, and reducing tax relief on second home mortgage interest. But unsurprisingly, such small measures only had a temporary effect. There are some awful statistics in this article. One thing it doesn't mention, which I'd be interested to know, is what percentage of these buy-to-let landlords are directly competing with first time buyers. Because I suspect they're mostly buying property at the cheap end of the scale.

And make no mistake, this is all a deliberate choice. You could easily implement a tax code and set of tenant rights that make it not a worthwhile financial investment. You could easily ban overseas individuals from buying houses in the UK (loads of countries do it), particularly companies based in tax havens. We have a tax code that punishes earned income and rewards unearned income. That rewards simply owning things. That should be opposite.

It’s the lack of affordable houses that is the issue as your points imply. We took some measures against purchases by overseas companies such as levying stamp duty and requiring the beneficial owner to be named, but not enough. The tax code is part of the answer and needs urgent attention when Labour get in.

 

[ChicagoBlue]

Exactly. "There's no automatic right to own a house" is the usual response, to which I ask "Why the fuck not?"

Why shouldn't somebody working full time in one of the richest countries in the world have the expectation of earning enough money to buy a house if they want? It was the case for a good chunk of the 20th century, give or take. There's million reasons why it's a good thing. For a start, people who own have a stake in society, which improves absolutely everything else. Landlords do the legal minimum. Imagine trying to deal with something like the climate crisis with a country full of houses with the least energy-efficient appliances, glazing and insulation, because the landlord doesn't give a shit how much the electricity bills are. I've rented most of my life, (not even in cheap places - my place has a gym and swimming pool), and I've never had anything other than the cheapest fridge in the shop.

As you point out, this is not just about a single-earner working in a supermarket not being able to buy a house. We're getting to the stage where professionals who've been to university for 4 or 5 years in a two-income household not being able to buy a house. I know one couple who managed it in London. They both have master's degrees and work full time. They first had to save for years and borrow a bit from her parents to get the first flat. They then got extremely lucky with a massive price increase, and he got a big payoff when the company he worked for was sold (he had shares as part of his pay without knowing it). They openly say that if either of those things didn't happen, they'd still be in the flat aged 40 with a new baby. Now they're in a small 2 up 2 down with an unfinished hall and bedroom. The sort of situation my parents were in in their mid-20s. And the increase in the mortgage has just wiped out their pay rises for this year. It's insanely difficult even for those lucky enough to be able to buy.

I highlighted your interesting question.

Why do you say it is one of the richest countries in the world?

Surely, your own answer, given the rest of your post, would suggest it isn’t, would it not?

When you try to buy a house, who are you trying to buy it from? Is THAT person rich? How did THEY buy the house?

It seems that the MARKET has determined the price of a residential home, and that market is driven by workers.

Now, I understand that interest rates have made mortgages more expensive, and if the people trying to sell are getting the price they want, it makes the monthly payment more expensive. Got it. But that has always been the case!

Just wait, as interest rates come down, prices who go up quickly again, because you can now afford more house.

It might not be a popular opinion, but education level is often a predictor of future earnings, and those future earnings go up quicker because there are usually less qualified candidates and often higher demand for the jobs.

Simple example:
If I earn $50 and you earn $70. We both get 10% raises every year.
$55/77
$60/85…in just 2 yrs, the higher earner has increased their income by 50% MORE, even with the same raise!

Now, if there is higher demand than supply of decent homes, then prices go higher, and yet there are still enough people making the higher incomes to cover the higher cost of the homes.

And, not only does it drive up the prices of higher cost/quality homes, but the low supply of lower cost/quality homes also drives up the cost of those homes, making it harder to afford even less desirable homes.

So, what to do in the era of council houses being sold and prices increasing? It’s not the government driving up the prices…unless you agree that green space should be reduced to allow for significant levels of low cost owner-occupied housing, which does require government intervention via planning permissions and even the release of public lands.

Planning permission is a joke in Britain. Everyone wants to protect everything, yet everyone complains about land and home prices?!

I can buy land almost anywhere in the USA and build almost anything I want on it.

Can’t you just smell the freedom?!

 

[ChicagoBlue]

It’s the lack of affordable houses that is the issue as your points imply. We took some measures against purchases by overseas companies such as levying stamp duty and requiring the beneficial owner to be named, but not enough. The tax code is part of the answer and needs urgent attention when Labour get in.

Owner-occupied requirement is better than extra government fees/taxes, unless that money is used to develop and build homes, earn marginal profits and that money used for more development and building of homes, and on and on. Unlikely.