Tag Archives: poverty

Nationalising housing rental

I argued in my last post that we should have a Citizen’s Income to guarantee a minimum amount for everyone in the drive to eliminate poverty. On top of that, the essentials for living need to be affordable. For example, I have previously argued that we should nationalise energy. Essential utilities should be publicly owned and provided by the state to ensure that they will always be affordable and profits won’t be siphoned off by for-profit companies.

Another basic requirement for living that needs to be reasonably priced to help rid ourselves of the poverty scandal is housing. Everyone needs somewhere affordable to live, but those who rent often do so at the whims of private landlords, who can charge what they like, and evict people for spurious reasons. For example, landlords can legally discriminate against those on benefits even if there have been no problems with their payments.

I also said in my last post that most people do not work in jobs that are directly related to making produce that is essential for our survival; we are a country that can easily produce above and beyond the survival essentials, and yet we still lack in these areas. More houses need to be built, and the government needs to commit money to spend on it. We need to concentrate on essentials before luxuries.

In some ways, the case for nationalising housing rental is stronger than the case for nationalising utilities such as gas, electricity and water. Making money simply by owning property is a perfect example of what is wrong in our society. Landlords make more wealth for themselves simply by passively having wealth in the first place. This creates a bigger gap between the wealthy and everyone else, fuelling inequality and poverty. We need to break this vicious circle. Not only that but they are subsidised by the state! They are also the biggest beneficiaries of housing benefit, so it is the public’s money – our money – being used to create a bigger gap between rich and poor.

Setting strict limits on what rent can be charged, as happens in some countries such as Germany and Canada, would be a good start, but nationalisation of housing rental should be the ultimate goal. Housing is a basic essential that should be provided by the state.

Of course, an outright ban on private tenancy might seem an extreme move. If someone has a spare room in their own house, it doesn’t seem unreasonable for them to have a paying lodger. And I wouldn’t be looking to stop this. It is houses that are purely owned for renting that I am concerned with. To start, the government needs to start building more houses and set its own rate for renting. This way, rent limit or not, landlords who charge high prices would simply be priced out of the market. But in the long term, houses that are owned purely for renting purposes could be compulsorily purchased by the government, and then let out by the government. Compulsory purchase orders are nothing new. They are often used to evict people from their own homes that they actually live in, for roads or other developments. Compulsory purchase of landlord’s rental houses is very minor in comparison as it would not force anyone out of their own home.

Is this illiberal? I would argue not. Land ownership more than any other sort of property ownership intrudes on the freedom of others. If I own some item, say a bike, then yes, it uses some the Earth’s natural resources (the material it is made of), but in the general scheme of things this is negligible, and it does not really mean that there is less stuff for other people. But land ownership is different. Land is limited in a much more obvious way, and I also think that there is on an intuitive level less of a right to claim ownership of it – to privately own part of the country. Often it has just been passed down through the generations, having initially been acquired through arguably dubious means. And the land ownership inequality we have in this country is enormous. According this article, 69% of the land in Britain is owned by 0.6% of the population. According to this article, 432 people own half the private rural land in Scotland. And according to this article, a third of the country still belongs to the aristocracy.

In any case, I’m not suggesting an outright ban on private land ownership. People who own houses that they live in would have nothing to worry about under my proposals. But people who own part of our country for no other reason than to passively make money from it should not be allowed to do so.

Introducing a Citizen’s Income

It is the Green Party’s policy to have a Citizen’s Income – an unconditional set allowance for all citizens. This is a policy that I agree with, and while I am standing against Paul Jeater from the Green Party in the General Election in May of this year, I think it is right for rival politicians to work together when they have similar views and not simply disagree for the sake of it. To quote from the Green Party’s website:

“Citizens’ Income

EC730 A Citizen’s Income sufficient to cover an individual’s basic needs will be introduced, which will replace tax-free allowances and most social security benefits (see EC711). A Citizen’s Income is an unconditional, non-withdrawable income payable to each individual as a right of citizenship. It will not be subject to means testing and there will be no requirement to be either working or actively seeking work.

EC731 The Citizens’ Income will eliminate the unemployment and poverty traps, as well as acting as a safety net to enable people to choose their own types and patterns of work (See EC400). The Citizens’ Income scheme will thus enable the welfare state to develop towards a welfare community, engaging people in personally satisfying and socially useful work.

EC732 When the Citizens’ Income is introduced it is intended that nobody will be in a position that they will receive less through the scheme than they were entitled to under the previous benefits system. Children will be entitled to a reduced amount which will be payable to a parent or legal guardian. People with disabilities or special needs, and single parents will receive a supplement.

EC733 Initially, the housing benefit system will remain in place alongside the Citizens’ Income and will be extended to cover contributions towards mortgage repayments (see HO602). This will subsequently be reviewed to establish how housing benefit could be incorporated into the Citizen’s Income, taking into account the differences in housing costs between different parts of the country and different types of housing.”

This Citizen’s Income would obviously go to the very rich as well as those who really need it, but readjusting the income tax brackets accordingly would effectively cancel this out. This would be simpler than means testing, and because everyone would receive it regardless of their personal circumstances, there would not be any stigma attached to receiving it.

But wouldn’t this encourage people not to work? I don’t think it would. People out of work do in most cases receive money from the state anyway, and the Citizen’s Income simply guarantees this and removes any uncertainty. More importantly, most people out of work do want a job, and not just because it means they wouldn’t have to make regular trips to the job centre. The lecturer in this video discusses and rebuts the potential problems such as the possibility that people might decide not to work. In summary, he says that most people are worried that other people would give up work, but that this worry is misplaced because very few would want to give up work themselves.

Since humans took up agriculture thousands of years ago and settled in permanent locations, we have been able to produce goods more effectively and haven’t all had to spend our lives simply hunting or foraging for food and making sure we have some sort of shelter for the night. This is why nowadays most people have jobs that seem to have no connection to making things that are essential to our survival. Given this excess, we should all be able to live with a certain amount of comfort and without every person having to be in work at any given time. And yet, many people still live in poverty.

On top of this, we’re told that people have been getting exponentially wealthier, so why is it then that people still have to work the same number of hours just to have enough to get by? Well, even if the average wealth per person has gone up, inequality has been increasing, so this means that many people haven’t seen any increase in their own personal wealth, while those at the top have taken more than their fair share.

The Citizen’s Income should go some way to addressing this by providing everyone with this basic minimum allowance. By having a Citizen’s Income, people would be able to pick where to work without being forced into undesirable and exploitative jobs through necessity, and they would be freer to choose their own paths in life. There is enough wealth in the country to allow for this, but it is currently very poorly distributed. It is time for this to change.

Reducing inequality and poverty

I stated in my last blog post that we need to tackle inequality in the UK. I suggested that we could start by increasing income tax for higher earners. There is a lot of disagreement as to whether this is the best way to raise funds without it backfiring in other ways, and there are other suggestions that could be worth considering such as a tax on land value along with a decrease in income tax and other taxes. Empirical research and comparisons between different countries is always required, rather than mere guesswork of course. There are two distinct problems: what we want to achieve, and how best to achieve it. What we need to achieve remains the same: reduce poverty and inequality. How best to achieve it is an open question, but my proposal last time was fairly conservative in that respect: a gradual increase in income tax for higher earners, starting with a 50% top rate on earnings over £150,000 a year, which we had until 2013 anyway. If this doesn’t have the desired effect, then of course we would have to look elsewhere. This isn’t about ideological policies; we need policies to achieve what they have been put in place for.

In any case, there is much more to reducing inequality than higher taxes for those on high income. We can start with an increase in the minimum wage. It has long been said that the minimum wage is not enough to live on. The minimum wage is currently £6.31 an hour for those aged 21 and over, £5.03 for those aged 18 to 20, £3.72 for those under 18 and £2.68 for an apprentice under 19 in the first year of level 2 or 3 apprenticeships. According to the Living Wage Foundation, the living wage is £8.80 an hour in London and £7.65 an hour for the rest of the UK. The minimum wage seems not to have kept up with increases in the cost of living. It should also be the same for everyone, regardless of age. Ageism is no more a valid prejudice than any other.

Obviously those on the minimum wage need enough to live on. If those on it can’t afford to live properly, they still have to claim benefits from the government. But rather than seeing these people as a burden on the state, arguably a more appropriate interpretation is that tight-fisted employers are effectively claiming off the state to subsidise the wages they have to pay. An increase in the minimum wage will go some way to prevent this. Those out of work also need enough to live on. I would argue that anyone out of work should automatically have the opportunity to work for at least the minimum wage by doing work in the community, which could include litter picking or visiting and helping elderly people who live on their own.

I would also look at a maximum ratio between the top and bottom earners in a company. Switzerland had a vote on a 12 to 1 ratio last year, and while it was rejected, I think it is a good idea in principle. It would root CEOs’ salaries in something meaningful. Instead of awarding themselves whatever they like, they would only be able to award themselves a certain percentage rise if the company could afford that percentage rise overall. This is something that could be written into legislation, although the exact ratio would need to be carefully considered. The wage ratio between those at the top of companies and typical workers has increased dramatically over the last few decades. According to a report by Bloomberg, the average ratio has gone from 20 to 1 in 1950 to 204 to 1 today. Wagemark is a not-for-profit organisation that certifies companies that have an 8:1 ratio or lower between the highest earners and the average earnings of the lowest 10%. This and the suggested Swiss 12 to 1 ratio are fairly close together and would probably be around the right ballpark to be looking at.

Increasing the wages at the lower end of the scale would reduce the need for the state to provide benefits. But there are also other ways. By providing housing benefits, the state is effectively paying money directly into the pockets of private landlords. This is why we need more state-owned accommodation, and/or proper enforceable pricing brackets for landlords based on considerations such as size of property and the facilities it has. This would save money in the long term. Furthermore, landlords can and do currently discriminate against those on benefits, whereas it could be made unlawful to do this.

We need proper government targets on poverty and inequality – targets that will be met.  And this means that politicians and the media would have a responsibility to report statistics relevant to these. Since the economic crisis started in about 2008, two of the main economic statistics we have about from politicians and the media ever since are the government spending deficit and economic growth. I’m going to briefly talk about these statistics.

The term “deficit” was not in everyday use by ordinary people in 2008, and most people probably didn’t know what it meant. It was never introduced to us properly, and politicians and the media bandied it about like we should know what they were talking about. The deficit is the annual shortfall between income and spending. This is distinct from the national debt, which is the overall amount that the government owes. So when the government says that it has halved the deficit, this doesn’t mean that things have improved. It just means that they are getting worse at a lower rate. It’s indicative of the obsession with rate of change of a thing rather than the thing itself.

This brings us nicely to the size of the economy. It rarely gets talked about in absolute terms; it’s all about whether it’s growing or shrinking. If it’s shrinking (specifically if it has shrunk for two consecutive three-month periods), then we’re in recession and apparently that’s a really bad thing. Intuitively, the absolute size would be more important. The economy could grow for ten consecutive years, and we’d be hearing about how great everything is. Then it might shrink to the level that it was after nine years (so one year previously) and we’d be in recession. But we’d be in the same position (by the seemingly relevant measure) as we were at a time when everything was considered to be really good. Of course, I am simplifying matters, but merely stating that these are the important statistics without any explanation is, to my mind, irresponsible and lazy.

In any case, I’m not saying that we should never hear about these statistics, but more important to us is surely wealth of individual citizens and households. Statistics such as median and mean wealth and how these have changed over the years (both the thing and rate of change of the thing) would be a good start. But I’m here to talk about poverty and inequality. So we need statistics relevant to these, and these statistics need to be as well publicised as the deficit and economic growth. It doesn’t help if the economy is growing if the extra wealth is just going to those who are already rich, further fuelling inequality.

We could use the average wealth of the poorest 5% as a figure for poverty. For inequality, I think it’s slightly more complex. There is the distribution of wealth by Gini coefficient, but we could also look at simple ratios such as average wealth of the richest 5% compared against average wealth of the bottom 5%. But whatever statistics are used, they need to be official government statistics with official targets, and they need as much coverage in the media and by politicians as economic growth and the deficit.

Meeting these targets would not simply be a case of handing out massive benefits to the poorest and leaving it at that. Doing this could encourage others to give up work on the basis that they too will get these massive benefits. And the less work that gets done, the less wealth there will be, which could ultimately lead to a reduction in the wealth of the bottom 5%. It would need to be a sustainable system. There would be long-term targets to stop self-defeating policies. We can’t know exactly what will work without experimentation, but the suggestions I have made here seem a reasonable start. We also need to be scientific and see what actually works. We can start by looking at inequality in other countries and what policies seem to reduce it. This is not just about wealth; people’s health is at stake.