The shame of Austerity Britain

What really did annoy me, though, was them being 'relaxed' about the filthy rich.
I've never really understood why GB sold off half of our gold reserves at a then rock-bottom price either, which drove the price down even further.

It's always puzzled me, too ilovecheese. If it hadn't been for the prompt injection of QE into the economy the international banking crisis could have seen the UK go under (I emphasise the 'international' bit for the benefit of those who persist in thinking that the banking crisis was all Gordon Brown's fault). Why Labour never defended their record, and the fact that the economy was growing again pre 2010, is a complete mystery.

What really did annoy me, though, was them being 'relaxed' about the filthy rich. But, they had bought into the 'maxed out credit card' myth, too. (And it is so well embedded in the popular consciousness that I don't think they dared suggest that there was any other way to run the economy. The rightwing press would have torn them to shreds.) They really believed that if they didn't scratch rich backs they would pack up and leave the UK.

Of course, the EU Anti-Tax Avoidance Directive comes into force on 1st April 2019. That couldn't have had anything to do with May's haste to set a 'leaving date' of 31st March 2019, could it?

You are absolutely correct maizie but somehow this message never gets through. The "maxed out credit card" nonsense seems to have stuck.

This was another thing that annoyed me about New Labour, before the 2010 election, they never seemed to challenge the narrative put forward by the Conservatives.

I like John McDonnell's idea of a National Investment Bank that would lend money to small and medium sized businesses and to small and medium sized builders.

So maizie how do you think should the economy should be kickstarted?
Or perhaps it doesn’t matter where you start?

Austerity is not a political decision it is an economic one. It's like one of us living high on the hog on our credit cards, then borrowing to consolidate and still using the credit cards.....it's then either Bankruptcy or some serious austerity measure to save us from economic disaster.

Your analogy is completely false, Allyg. National economies are not like household or personal economies. This is just a myth promulgated by one set of economic theorists which has gained traction because it's an analogy which resonates with most people and has proved useful to our governments when they wish to shrink the state in favour of private enterprise. Though, as mostlyharmless is pointing out, it doesn't really seem to work as cutting spending in one area, housing provision, has just increased spending on welfare, housing benefits.

Households and individuals have a finite amount of money. They cannot spend more than they have unless they are prepared to take on debt which they very likely cannot afford to repay (or even service in many cases). Governments which control their own sovereign currency are not confined to a finite amount of money. They were in the old days of currency being pegged to the gold standard but that was abolished in the early 1970s. They are not confined to a finite amount now. Nor are they actually obliged to borrow from anyone to finance their spending (though they still do to a certain extent by issuing government bonds). The past decade has seen quite extensive use of Quantitative Easing (QE) whereby some £340+ billion has been created by the Bank of England, initially to cushion the economy against the international banking crisis of 2007/8 and latterly to prop up the pound when it fell sharply after the Brexit vote. The objective of QE was to put money into the economy to keep it 'working'. Unfortunately it went mostly into the 'wrong' economy. Instead of going into the 'real', everyday economy (the one that you and I and most people exist in) through investment in infrastructure and new businesses (creating jobs and purchases which keep money moving around the economy and eventually returning to the treasury through taxation) much of it ended up in the financial markets, inflating bond and equity prices and making a lot of already wealthy people even wealthier.

We know that 'trickle down' doesn't really work. Wealthy people tend, on the whole, to put their money to work in the financial markets to make more money and then aim to pay as little tax on it as possible by squirrelling it away in tax havens. They may spend a bit more on high end goods and services but not enough to make a difference for most workers or businesses.

I know that the argument against putting more money into the economy is the danger of inflation but some causes of inflation, such as increased cost of oil and raw materials, are beyond the control of any government as they are sold in the global market. There comes a point where restricting the money available in the 'real' market puts the cost of goods and services dependent on global market prices beyond the reach of 'ordinary' people and the businesses supplying these to the domestic market suffer loss of income which leads to cutting jobs and lessening the tax take from people's earnings and taxes on profits. Which makes no sense whatsoever.

I appreciate the move to pay housing benefit directly to claimants can be seen as treating people with respect. My main worry is its a recipe for increasing homelessness. The cuts to benefits are leaving many families worse off. If its a question of feeding the family and hoping to find a magic money tree with which to pay the rent at a later date, it isn't difficult to know what will happen.

Some benefit claimants will be long term unemployed. No disrespect to anybody but the low skilled work available in the past is rare these days. This adds to social isolation and the problems that go with it. Paying the rent direct without support may be beyond some, whether because of substance, mental health or learning issues.

It is an interesting issue about the many reasons housing benefit has gone up during this period, although it’s not the point that I was making. My point was why not put money into building social housing rather than subsidise rent through housing benefits.
Perhaps I didn’t make this point clearly enough.
Austerity policies, such as NO investment since 2010 in building social housing as such, (some money for “affordable” housing which is different), are costing the government money to the tune of £26 billion a year in housing benefit.

"mostlyharmless Sun 03-Jun-18 20:55:39
allyg your figures for housing benefit over a random twenty years don’t take inflation into account so are meaningless."

Back to your figures Mh. If when you thought these figures were mine, they were "meaningless" without taking "inflation into account" can you make them meaningful by taking inflation into account for us?

Mh This is your post in it's entirety:
"mostlyharmless Sun 03-Jun-18 17:22:04
You can’t help thinking that £26 billion housing benefit dwarfs the amount invested in social housing each year endre.
Surely building more social housing with some of that housing benefit would be a better use. Social housing means secure long term tenancies with fairer rents, which must be good for tenants and their families.
I know it’s out of fashion to build big council estates (quite rightly) but small social housing developments could be fitted in.
Housing benefit is being absorbed into the Universal Credit system. This could cause problems for tenants who find it hard to budget or who have debts. Under the old system, housing benefit could be paid directly to the landlord if the tenants was struggling to keep up with rent payments.

The National Housing Federation report highlights how money spent on housing benefit rose from £16.6bn in the mid-1990s to £25.1bn in 2015-16.
www.bbc.co.uk/news/education-41309316
It added that since 2011, no government money has been made available to build homes in England for low paid people to rent"

Mh This was my response to part of your post:
"Mostlyharmless:The National Housing Federation report highlights how money spent on housing benefit rose from £16.6bn in the mid-1990s to £25.1bn in 2015-16."

"Mh, there will be multiple reasons for this increase, one of which will be that there are more single adults living alone, rather than couples. I will research the causes of this increase, not tonight though."

This does not seem out of context to me. I am merely looking to the reasons for such an increase in housing benefits as per the figures you quoted.

Aaah I see what you’ve done. You’ve taken those housing benefit figures totally out of context. I was saying that over that twenty years while housing benefit went up the amount of money going into building social housing has dropped to virtually nothing in the last few years.
I find it difficult to follow your argument.

mostlyharmless Sun 03-Jun-18 20:55:39
"allyg your figures for housing benefit over a random twenty years don’t take inflation into account so are meaningless."

The only figures in my post are the ones you quoted in yours Mostly. Not posted any others.

As for the poorer generations:

“One of the author's of the study, Andrew Hood, said: "Since the Second World War, successive cohorts have enjoyed higher incomes and living standards than their parents.
"Yet the incomes and wealth of those born in the 1960s and 1970s look no higher than the cohorts who came before them.
"As a result, younger cohorts are likely to have to rely on inheritances to be better off in retirement than their predecessors.”
www.bbc.co.uk/news/uk-25411181

The economics of austerity specifically caused since 2008 yes, I have read a lot about it outside of Gransnet.

Mostlyh, you are also talking about building more homes.

What is this rent settlement?

We were talking about Housing Benefit being absorbed into Universal Credit.

Parliamentary Briefing Paper 01090, 13, November 2017. Rent setting: social housing (England)
"Chartered Institute of Housing CEO, Terrie Alafat said:
This new rent settlement is good news for social housing-it provides the stability and certainty landlords need to build more desperately=needed new homes and to invest in their existing homes and services for tenants".

allyg your figures for housing benefit over a random twenty years don’t take inflation into account so are meaningless.

Since we have been in the EU each generation has become poorer than the previous one
Where is official the evidence for this?

Have you read this whole thread explaining about the economics of austerity?

ONS figures 2017

Gross household income before tax:

Poorest 20% households have income of £7,000 p.a.
Next 20% £14,000 p.a
Middle earning 20% £27,000
Next 20% £43,000
Top 20% £84,000

The top 1% earn approx £200,000 upwards.

That's right lemongrove. The building industry is having a real upturn.

mostlyharmless Sun 03-Jun-18 17:22:04
"Housing benefit is being absorbed into the Universal Credit system. This could cause problems for tenants who find it hard to budget or who have debts. Under the old system, housing benefit could be paid directly to the landlord if the tenants was struggling to keep up with rent payments."

Mh I have a problem with this. There is a lot to be said for people being treated as grown ups and receiving their housing benefits and other benefits directly into their own hands. That is the proper way to treat people with dignity and expectation that they can handle their own money.

However, I do know that some vulnerable adults in receipt of housing benefit, simply have dysfunctional lives and the rent get's spent, placing them in a more vulnerable situation.

My instinct is that there has to be some "assessment " made in the best interests of some vulnerable people and the rent paid directly to the Landlord, who might be a Housing association. I am always uncomfortable with 'assessment" but I can't right now think of another way.

Whilst I am very much against two tier systems in general, this might be an area of such concern where it is the only solution to protect vulnerable adults with dysfunctional lives.

"Mostlyharmless:The National Housing Federation report highlights how money spent on housing benefit rose from £16.6bn in the mid-1990s to £25.1bn in 2015-16."

Mh, there will be multiple reasons for this increase, one of which will be that there are more single adults living alone, rather than couples. I will research the causes of this increase, not tonight though.

Endrel do you mean £200,000 ( not £20,000) ?

Not many earn the larger figure, but a lot earn between them £100,000 a year.

The building industry is booming btw not shrinking.We are starting to witness a building boom akin to the 1960’s.

Gerispringer Tue 29-May-18 19:04:39
"Yes austerity is a political choice. Many Brexit voters voted as a protest against austerity believing the line that they would be better off outside the EU. Now it appears that austerity isn’t going to end anytime soon."

That would not have been it Geri, the electorate voted to leave the EU for lots of reasons, but above all to free ourselves of the EU restrictions, enormous cost's and continuing "moving ever closer together". The leave voters realise that the EU is a failing system, the Eurozone is collapsing, and in fact had a lot to do with the need for Austerity measure, many of which were placed upon us by the EU from 2008 onward.

Austerity is not a political decision it is an economic one. It's like one of us living high on the hog on our credit cards, then borrowing to consolidate and still using the credit cards.....it's then either Bankruptcy or some serious austerity measure to save us from economic disaster.

This Country is doing better now than it has for a long, long, time. Do you know that every year up until the 1973 when joining with the EU, in what we were told was a 'common market' nothing else, each generation was better off than the previous one.

Since 1973 that has not been the case. Since we have been in the EU each generation has become poorer than the previous one. This has not been the effect of any particular Government, it has been throughout all Governments, the common denominator being our increasing economic obligations and control by the EU.

The building industry has shrunk, developers and councils have other plans for development land. There should be some regulation of rents. Bad landlords are passing overhead costs over to tenants by putting up rents.

You can’t help thinking that £26 billion housing benefit dwarfs the amount invested in social housing each year endre.
Surely building more social housing with some of that housing benefit would be a better use. Social housing means secure long term tenancies with fairer rents, which must be good for tenants and their families.
I know it’s out of fashion to build big council estates (quite rightly) but small social housing developments could be fitted in.
Housing benefit is being absorbed into the Universal Credit system. This could cause problems for tenants who find it hard to budget or who have debts. Under the old system, housing benefit could be paid directly to the landlord if the tenants was struggling to keep up with rent payments.

The National Housing Federation report highlights how money spent on housing benefit rose from £16.6bn in the mid-1990s to £25.1bn in 2015-16.
www.bbc.co.uk/news/education-41309316
It added that since 2011, no government money has been made available to build homes in England for low paid people to rent

Mostlyharmless:
With the new Universal Credit many are no longer eligible for housing benefit. I think in 2015 the figure for housing benefit going to private landlords was 26.7 billions. A huge amount of public money. There was a figure of 11 million private landlords. People on good salaries can never hope to buy their own home because of high rents.

Jalima
"Do you have any statistics on what is spent by the Government on stately home grants please endre?
Is it more or is it less than the tax on the £1+ billion generated by tourism from visitors to these homes? Or if, indeed, these grants exist?"

The Government refuses to publish the statistics. It is grim. Everything is being run to the ground, the NHS, schools, police. We really need to know the truth about what is going on

"then who are those who are shopping, visiting restaurants with families, going to theme parks , going on holidays abroad? They are not all so-called 'baby boomers', these are families with children out and about and spending on goods and entertainment."

There are a lot of families earning in excess of 200k a year. They are enjoying themselves, they can afford it. The problem is the wealth gap where the majority of families earn less that 20K.