"If you are young in Britain today, you are being taken for a ride"

Via HPC Survivor's Group, from The New Statesman:

The young are discriminated against in ways in which it would be illegal to differentiate between men and women, or between more and less disabled people, or on the basis of race or religion…

Concluding with this:

It is the very poorest of the young who are suffering most, but the living standards of the average young person in Britain are also deteriorating and young people’s hopes are evaporating. Young people who do comparatively well are also being hit hard. The £9,000-a-year university tuition fee looks very similar to a 49 per cent marginal rate of tax for future graduates, a rate being held in reserve, ready for when they achieve a modest income in the future. However, unlike a general tax that can be used for the common good, their 9 per cent top-up tax rate will go to the rich who buy the loan book.

Finally, what of the most successful of university graduates, the ones who go on to get a starter job in the City, and look to buy that tiny flat close to work? What will happen when they take out their 95 per cent mortgage and start repaying one-twenty-fifth of the borrowed capital out of what they take home after tax? For a few years they might be able to do it, just – until interest rates rise.

The vast majority of our young people are being ripped off. Have we taught them so badly that they do not know it?

Friday meet-up

Same time, same place.

i.e. Friday evening (8 November) from about 5.20 pm onwards at The Brewmaster pub near Leicester Square Tube station.

Reader's Letter Of The Day

From the FT:

 

Queen Bess was the first Georgist (1)

 

Sir, In your report Taxpayers to lose out over 'Crossrail effect' on property" (October 29) you quote transport expert Christian Wolmar as saying: "In the UK we've never developed a sophisticated way of capturing that added value."

 

The system was developed and introduced hundreds of years ago by Queen Elizabeth I and was known as Poor Rates, an early or simplified form of land value tax and the direct precursor of Agricultural Rates, Domestic Rates (both phased out long ago) and Business Rates (still in existence).

 

It is worth noting that Poor Rates were used to finance a very basic welfare system, thus making her the first Georgist!

 

The beauty of land value tax is that there is no need to establish exactly why rental values go up or down or to correlate it to particular amenities, whether provided by the government, natural features or the general benefits of "location, location, location".

 

But in the case of Crossrail, it is worth noting that the resulting rental value uplift on the eastern end of Oxford Street alone, if captured by land value tax, would be sufficient to cover a half the costs of the entire Crossrail project.(2)

 

Mark Wadsworth, Treasurer, Young People's Party, Buckhurst Hill, Essex

 

1) They accompanied the letter with a picture of Henry George, with the caption "Henry George was an American writer, politician and political economist"

 

2) Workings here.

Reader's Letter Of The Day

In today's Evening Standard (page 49, 16 October 2013):

The read scandal about school places for me is that homeowners and landlords near sought-after schools can charge so much for access to a public service, without contributing towards its funding.

Joe Momber, Young People's Party

You are scum: official

Via HPC, from The Spectator:

When people my age (I’m in my early twenties) hear that I work in Westminster there are two common reactions: either their eyes glaze over or I get an earful about uni fees, wages or once from an artist, during an otherwise pleasant dinner, an hour-long rant about cuts to the arts. But this time, Sam was excited by a politics that was speaking his language and a policy [Help To Buy] that would help him get out of the room he rents for £600 a month somewhere in Zone 2.

The scheme gives an incentive to save, keep a good credit rating and stay abreast of the news in politics and finance. This is a big shift for ‘Generation Rent’. Interest rates (and salaries) have been so low while we’ve been earners that there’s no been no point in saving, and when you’re not saving or paying a mortgage you’re unlikely to take an interest in the key issues that decide elections.

Surely, this change in attitudes should be welcomed and it presents an electoral advantage for the Conservatives. Renters are less likely to vote and they are less likely to vote Conservative.

With the usual Home-Owner-Ist dexterity, the author deftly conflates "savers" with "mortgage borrowers" as if their interests were aligned.

For a start, "saving" and "borrowing" are exact opposites, and the interests of the two groups are in fact directly opposed. Savers want high interest rates and low inflation and low house prices; borrowers (80% of borrowing is to buy land) want low interest rates and high inflation and high house prices.

And the author doesn't even dispute that interest rates and salaries are too low, or that rents and house prices are too high, but she is still cheerleading for a short term sticking plaster policy (Help To Buy) which will just make things worse.

The really depressing thing is that, according to YouGov (see page 4), half of people actually think this is a good policy.

"Quick! Pour more accelerant on the fire!"

Via Ennui at HPC.

It must be clear to everybody that the Conservatives' re-election hopes are largely pinned on stoking a nice house price bubble before 2015 to create the "feel good factor" which has been key to winning more or less every UK General Election for the past few decades.

But oh no, what's this?

The August data from Land Registry's House Price Index shows an annual price increase of 1.3% which takes the average property value in England and Wales to £164,654. The monthly change from July to August shows an increase of 0.1%...

The region in England and Wales which experienced the greatest increase in its average property value over the last 12 months is London with a movement of 7.1% and the North West experienced the greatest monthly rise with a movement of 1.3%. The region with the greatest annual price fall is the North East with a decrease of 2.2%. Wales saw the most significant monthly price fall with a decrease of 2.1%.

So their votes might be looking pretty safe in London/South East for the time being, but it's ebbing away elsewhere.

But fear not, help is at hand:

Polling since Mr Miliband’s speech last Tuesday suggests that his policies are popular with voters, who have seen their energy bills rise sharply, while average wages have stalled. Mr Cameron believes that too many young professionals are being priced out of the property market because they cannot raise enough money for a deposit.

The Help to Buy mortgage guarantee scheme will be brought forward from January 2014 to next week.

Under the three-year scheme, the Government will provide up to £12 billion of “guarantees” to encourage mortgage lenders to offer more loans worth 95 per cent of the price of a property. The government guarantees are needed to reassure banks and building societies because of the risk that mortgage holders with such high loan-to-value deals will default.

The scheme is expected to enable banks to release £130 billion of loans for buyers of properties worth up to £600,000 who could not raise a larger mortgage deposit on their own. A smaller government loan scheme for people buying newly built properties began in April.

To cut a long story, the very same people can't afford to scrape together a decent deposit on an over-priced house are being expected to be able to repay a mortgage on a house where the price has been pumped up by yet another fifteen per cent or so?

Friday meet-up

Same time, same place.

i.e. this evening (20 September) from about 5.20 pm onwards at The Brewmaster pub near Leicester Square Tube station.