House prices/rents versus business rates

TruckerT

Loughton_Monkey wrote: »

The only other suggestion I've ever heard that came anything like as close to being ludicrous is that of expecting house prices to fall by 70%, and forming a club to 'enjoy' it happening.

I look forward to the next cunning plan....

You seem to have forgotten the OBR report of a few weeks ago which suggested that the best way to deal with the looming pensions shortfall is to allow unlimited immigration (or something like that, anyway...)!

TruckerT

Loughton_Monkey

TruckerT wrote: »

You seem to have forgotten the OBR report of a few weeks ago which suggested that the best way to deal with the looming pensions shortfall is to allow unlimited immigration (or something like that, anyway...)!

TruckerT

Brilliant!

Sort of suggestion Mrs LM might make. Can't afford to fly to Bali this Christmas..... But if we spend an extra £120,000 on our Amex, that will get us just about the right number of air miles....

The best ever real thing, though, was Brown's utter 100% conviction that giving £100 extra to every person on benefits was "putting an extra £100 into the economy", when in fact it could only come from taxation of the equivalent £100 taken out of the economy.

Personally, I think we could solve all the problems by charging £10K per annum "school fees" for each child age 5 to 18. So they would start work with £130K of debt, plus (say) another £30K from University. That way, they wouldn't gripe about University fees, because they would be used to it.

The personal debt thus created would be an asset for the government to use to offset the national debt. Us boomers are already accused of 'milking' the younger generations. We didn't, but if we have that reputation anyway, then we might as well do it in trumps.

TruckerT

Loughton_Monkey wrote: »

The best ever real thing, though, was Brown's utter 100% conviction that giving £100 extra to every person on benefits was "putting an extra £100 into the economy", when in fact it could only come from taxation of the equivalent £100 taken out of the economy

That sounds a bit like quantitative easing for the masses

TruckerT

chewmylegoff

Loughton_Monkey wrote: »

I don't think you did miss anything.

The whole idea is ludicrous, and nothing really to do with business rates. He points out that halving the rates for a business gives them only £5K. Correct, but then he assumes, for some reason, the business would use that money to recruit more staff. But that's apparently not the point.

He then moves on to a different idea altogether. He seems to want a magic wand raised to halve the private rent that the employees of a firm pay. In practice, some employees would have bought a house. Others would rent - some from council, some privately....

Then we get to an absolutely weird analysis that says what the employer could do with half the rental value of employees' rents. I can just see this now. "Now look here Mr Jones. You work here and we pay you £25K, and you use £12,000 of that to pay your rent. I have had a word with your landlord who has agreed to reduce it to £6,000. Hence I will be paying you £7.5K less so that you get £6K net less and use it to employ more people....."

In a nutshell, this is a concept of every landlord in the country halving the rent they receive voluntarily. Through some sleight of hand, the tenant would not benefit at all, because the rent he has now saved would be kept by his employer. The only other suggestion I've ever heard that came anything like as close to being ludicrous is that of expecting house prices to fall by 70%, and forming a club to 'enjoy' it happening.

I look forward to the next cunning plan....

Ah I see. I thought that the problem was that I had drunk eight pints of lager before reading his post so I was unable to understand the clear logic therein. It turns out I should have smoked some waccy baccy instead.

macaque_2

Loughton_Monkey wrote: »

I don't think you did miss anything.

The whole idea is ludicrous, and nothing really to do with business rates. He points out that halving the rates for a business gives them only £5K. Correct, but then he assumes, for some reason, the business would use that money to recruit more staff. But that's apparently not the point.

He then moves on to a different idea altogether. He seems to want a magic wand raised to halve the private rent that the employees of a firm pay. In practice, some employees would have bought a house. Others would rent - some from council, some privately....

Then we get to an absolutely weird analysis that says what the employer could do with half the rental value of employees' rents. I can just see this now. "Now look here Mr Jones. You work here and we pay you £25K, and you use £12,000 of that to pay your rent. I have had a word with your landlord who has agreed to reduce it to £6,000. Hence I will be paying you £7.5K less so that you get £6K net less and use it to employ more people....."

In a nutshell, this is a concept of every landlord in the country halving the rent they receive voluntarily. Through some sleight of hand, the tenant would not benefit at all, because the rent he has now saved would be kept by his employer. The only other suggestion I've ever heard that came anything like as close to being ludicrous is that of expecting house prices to fall by 70%, and forming a club to 'enjoy' it happening.

I look forward to the next cunning plan....

Mr Loughton, you seem to have missed the point. The reference to halving rents was illustrative. Wages form a high proportion of many company's' operating costs and the net saving of halving employee housing costs is 24 times greater than halving business rates. Clearly a reduction in rents would not trigger an immediate and commensurate reduction in salaries but, over time lower rents would make a much bigger contribution to the competitive position of UK companies than lower business rates.

The UK has become addicted to high housing costs which damages productivity and growth and is most keenly felt by growing companies with high development costs and those employing younger people.

daveyjp

As you haven't answered my first question, i'll try another.

What are the effects of reducing rents by 50%?

Loughton_Monkey

macaque wrote: »

Mr Loughton, you seem to have missed the point. The reference to halving rents was illustrative. Wages form a high proportion of many company's' operating costs and the net saving of halving employee housing costs is 24 times greater than halving business rates. Clearly a reduction in rents would not trigger an immediate and commensurate reduction in salaries but, over time lower rents would make a much bigger contribution to the competitive position of UK companies than lower business rates.

The UK has become addicted to high housing costs which damages productivity and growth and is most keenly felt by growing companies with high development costs and those employing younger people.

Well I'm sure renters would all enjoy their rents halved. Owners would like their interest rates halved. And while we're at it, lets halve the cost of fuel, food, energy, insurance, taxation, cigars, alcohol, software, and those little yellow post-it notes....

... but it ain't going to happen. Only a communist country could do this. I do not want to live in a communist country.

leveller2911

Just my penneth worth. My workshop (B1 use) is around 1050sq feet for which I pay £6 per sq foot so £6,300-00 rent. Rateable value is £3,500-00 and we did get 50% relief so that was a cost of £1,750-00 per year. For the last few years we have 100% relief so nothing to currently pay.

The money saved I use for buying new machinery so soon the workshop will conform to all H&S regs and I would like to employ an apprentice or two. My problem with business rates is the fact that we receive nothing for them.My council tax on my house pays for some services but for paying business rates we don't even get our rubbish cleared. I know a smallish company down the road whos rates were £50k a year employing no more than 15 people but rates were set on workshop size etc.

Business rates do stifle small business badly.Local to me the small Market town of 4,000 people the high street shops last no longer than 6 months partly due to business rates. A small shop of say 500 sq feet will still be paying £1,500 a year rates after SBRR so on top of rents,power,insurances etc its just too much and as such employment has suffered and less people visit the town due to lack of shops. Encourage small businesses and they will produce and employ staff so they in turn can pay their rent instead of relying on state handouts. Its not that difficult to sort out ,politicians make it difficult because none of them have owned/run a business.

chewmylegoff

daveyjp wrote: »

As you haven't answered my first question, i'll try another.

What are the effects of reducing rents by 50%?

Is the answer that it is a solution to a complex problem which is simple, clear and wrong?

Loughton_Monkey

daveyjp wrote: »

What are the effects of reducing rents by 50%?

chewmylegoff wrote: »

Is the answer that it is a solution to a complex problem which is simple, clear and wrong?

No. The answer was cunningly hidden in the original unintelligable post and was: "If rents were halved, the minimum wage might just become a living wage and the competitive position of UK PLC would be transformed."

But you do go home with a Pointless Trophy and the jackpot rolls over to tomorrow, when we will be playing for £4,750.:T