Housing benefit to private landlords

mwpt

http://www.cityam.com/247918/housing-benefit-paid-private-landlords-has-doubled-93bn

The amount of housing benefits being paid to private landlords has doubled over the last 10 years, with the cost to taxpayers greatest in London and the South East, and housing associations blaming a shortfall in social housing.

According to figures from the National Housing Federation, almost one in three housing benefit recipients now live in a privately rented home, up from 25 per cent in 2008.

And the total benefits paid to landlords has doubled since 2006, climbing to £9.3bn.

I would prefer it if we tried a free market approach. There is no need for housing benefit. Let people move to where they can afford. If business can't afford to hire staff in a particular location, let them pay more or move to a cheaper location. Or let rent prices drop.

Housing benefit rates are around £1500 for a three bedroom property in Outer South West London.

System

Housing benefit should be set nationally not locally! Why should the taxpayer pay more for someone to live down south than up north? I recommend that you all watch Britain's Benefit Tenants on Channel 4 lol

There is no requirement for tax credits but that's a different story

Eric_the_half_a_bee

mwpt wrote: »

If business can't afford to hire staff in a particular location, let them pay more

The entire benefits and tax credits system is (inadvertently) designed to ensure that business does not pay above the minimum wage.

A business employs 5 people on minimum wage and is doing well, so it wants to invest 20% more on its staff costs. It can:

a) Raise each wage by 20%. But, as a result of the impact on housing benefit, tax credit, etc, each member of staff sees their take home pay rise by only 5%. At best a 5% increase in productivity?

b) Hire 1 more member of staff at minimum wage, increasing productivity by 20%

Which is it going to choose?

missbiggles1

mrlegend123 wrote: »

Housing benefit should be set nationally not locally! Why should the taxpayer pay more for someone to live down south than up north? I recommend that you all watch Britain's Benefit Tenants on Channel 4 lol

There is no requirement for tax credits but that's a different story

Perhaps because that's where the jobs are?

Eric_the_half_a_bee

missbiggles1 wrote: »

Perhaps because that's where the jobs are?

But, the distribution of jobs across the country is affected by the level of implicit subsidy. The jobs are in London, because the system grants the biggest subsidy (housing benefit) to jobs in London.

missbiggles1

Eric_the_half_a_bee wrote: »

But, the distribution of jobs across the country is affected by the level of implicit subsidy. The jobs are in London, because the system grants the biggest subsidy (housing benefit) to jobs in London.

The low paid jobs, whose workers tend to need HB, are in London because that's where more affluent people live who have enough income to afford to use service industries regularly.

Eric_the_half_a_bee

The low paid jobs, whose workers tend to need HB, are in London because that's where more affluent people live who have enough income to afford to use service industries regularly.

If they are affluent, they can afford to pay proper wages, not low wages. But they don't. Why is that?

kinger101

Eric_the_half_a_bee wrote: »

The entire benefits and tax credits system is (inadvertently) designed to ensure that business does not pay above the minimum wage.

A business employs 5 people on minimum wage and is doing well, so it wants to invest 20% more on its staff costs. It can:

a) Raise each wage by 20%. But, as a result of the impact on housing benefit, tax credit, etc, each member of staff sees their take home pay rise by only 5%. At best a 5% increase in productivity?

b) Hire 1 more member of staff at minimum wage, increasing productivity by 20%

Which is it going to choose?

Businesses generally don't pay more than the market wage anyway. They don't suddenly decide they need to spend more money on staff because they can. It's either they have an increased demand in workload (e.g., more orders), or need to increase staff benefits to retain staff. In the private sector, six people would generally get 20% more work done than five whereas giving five people a 20% rise for the sake of it doesn't improve productivity.

CLAPTON

missbiggles1 wrote: »

The low paid jobs, whose workers tend to need HB, are in London because that's where more affluent people live who have enough income to afford to use service industries regularly.

HB creates low paid jobs were otherwise they wouldn't exist.
If there was no HB then the unemployed, low skilled people would have to move out of London.
There place would be filled by working skilled people could then afford to live there.
Where is a need for basic services, cleaning, catering etc, then these services would be automated where possible and wages for those jobs would rise.

kinger101

Eric_the_half_a_bee wrote: »

If they are affluent, they can afford to pay proper wages, not low wages. But they don't. Why is that?

Not directly comparable in years but;

In 2013/2014, London collected £38.6B in Income Tax, meaning an average of £9,760 per taxpayer. In the East Mindlands, the figures were £8.9B and £4,140 respectively.

Looking at HB expenditure for 2011/2012, London spent £5.9B wheres the EM spent £1.2B. Therefore, IT receipts alone cover HB 6.5 fold in London, but 7.4 fold in the EM. So HB costs would seem higher in London on that basis.

Overall though, the total benefit bill in London was £19.5B and £11B in the EM. A large factor in the is the London is for the young folk, so it's state pension bill is quite low.

I guess the broader question is what percentage of the money generated by London and the SE should flow out to the regions? I'm not sure exporting all their unemployable to Stoke-on-Trent is the answer, or that we can blame private landlords for the lack of social alternatives.

Alice_Walker

CLAPTON wrote: »

HB creates low paid jobs were otherwise they wouldn't exist.
If there was no HB then the unemployed, low skilled people would have to move out of London.
There place would be filled by working skilled people could then afford to live there.
Where is a need for basic services, cleaning, catering etc, then these services would be automated where possible and wages for those jobs would rise.

Good in theory, useless in reality. I can't think of any economy where your model rings true. I can think of several where no state support is available and wages still remain low. People either travel for hours to work or live in slums. Rio/ Brazil is a prime example, the UAE another. Hardly what you would consider to be civilised societies.