Government housing plans have dodged the real issue - Green Belt!

Compared to most other countries the UK has lots of green and pleasant bits you could build houses on and lots of other bits that are neither green nor pleasant but similarly lacking houses.  A great deal of this land without houses on is called "green belt".
In Swindon, for example a big chunk of greenbelt is bog land you can't even walk a dog over.  it certainly isn't suitable for growing crops or any kind of farming.  However, any plans to build on it are met with massive protests.  This position is mirrored country wide. 
The Adam Smith institute estimated 1,400,000 families could be housed if the UK lost 1.5% of the greenbelt. 
Yesterday's white paper was disappointing because the greenbelt issue was dodged.  The one chance for the government to insist that serious amounts of land were made available for new build wasn't taken.
Until we tackle the green belt issue we are never going to have enough houses.

can numbers tell you if someone is racist?

I was looking at some numbers last night (l am always looking at numbers I find them easier than people).  As you might guess I don't like the emotion in politics and like to stick to the numbers - even with all this fake news l trust my skill in making sense from the numbers more.
I came up with some figures on US foreign policy, that I can't make a lot of sense of.

According to the Guardian, (and it isn't very often that l quote the Guardian - I generally stick to the Financial Times), a total of 26,731 bombs were dropped by America on a certain 7 countries in 2016.  This was an increase of 3,000 on the 24,000 bombs dropped by Obama the year before.   (In fact former president Obama is the only Nobel peace prize winner to drop more than 100,000 bombs in a career.)  Taken as a whole president Obama 'achieved' an eye watering level of bombing in 8 years - equivalent to dropping one bomb every 20 minutes every hour of the day for the whole of his presidency.

In the context of what is being said about Trump at the moment l find it odd that President Obama dropped so many bombs killing so many people in Muslim countries and yet no one is calling him a racist when this charge is being levelled at Trump. 

A certain other president just imposes a 60 day TEMPORARY travel restriction on seven counties  Obama bombed extensively, while he reviews US security arrangements and there are people rioting in the streets about Trump's racist behavior and he faces world wide condemnation.  

How exactly does this work? drop bombs on people (Obama), no comment!  Delay their holidays for two months (Trump) - absolutely outrageous attack on human rights and rioting on US streets!  (Personally, to tell the truth l would prefer to have travel restrictions placed on me to being bombed).

I find the security argument for the directive made by Trump plausible because places like Somalia and Yemen refuse to provide information about their citizens to enable proper US security checks.  I note that Pakistan does provide this information.  Hence, Pakistan does not face travel restrictions from the US.  So next time someone says the US travel restrictions are racially driven against Muslims and not to do with security ask them why there is no ban on people coming to the US from Pakistan?

To me anyway, all the rhetoric at the moment sounds like playing to the crowd that does not seem too well thought out.  Perhaps it is the Democrat controlled media in the US trying to undemocratically dethrone a president?

The proof of the pudding as they say is in the eating.  Trump has said he would have never got involved in Syria, Iran or Iraq had he been in charge.  We will have to see how many bombs Trump drops over the next four years and how many people get killed compared to Obama's track record.  The cruel hard numbers will cut through all the emotion.  Then we can decide which of the two has a better track record of reducing global strife.

lies damm lies and methodological problems

There always used to be two inflation measures RPI and CPI.  Basically RPI is calculated differently, represents more of what inflation really feels like to ordinary people and generally comes out higher. 
It was always the quoted number on TV news and in the papers.  Public sector pensions were based on it and it was generally accepted as reality. 
CPI was a bit more obscure calculated differently and underestimated real inflation.  (I could bore you with the statistical theory because l studied this at University but I'd rather not.  It has to do with the CPI being based on geometric rather than arithmetical means and the difference between Paasche and Lasperes price indices).
At the moment CPI is 1.6% but RPI is 2.5%.  You generally expect around a 1% difference so a world without RPI is one with unions negotiating 1% smaller inflation proofing pay rises and the government paying out 1% less on pension increases.
Although drawing paralells with George Orwell's 1984 is going a bit far I now find that the RPI is no longer an official quoted statistic.  In statistical terms this is a bit like it has been 'rubbed out' in a mafia style hit.  It has been 'withdrawn' due to 'methodological problems'.
If you believed in conspiracies you would say the hatchet job on the RPI is now complete, the real rate of inflation is an inconvenient truth that has been eliminated.

Housing in the UK has been turned on its head - its official!

Last week some data came out that showed in certain parts of the country it was cheaper to pay off a repayment mortgage than rent a house!  This was proof, if any was needed that the housing market has gone completely on its head.
What this demonstrates is we have a broken rental model (too expensive) and a broken housing market (a buyers market for the few who can do so).
Bizarrely, there were moves last year with higher stamp duty on investment properties and tax changes that have made buy to let less attractive.  This might have helped make buying cheaper for non-investors, but at the same time it has stemmed the supply of new lettable properties. Hence higher rental prices.
However, although it might now be cheaper in absolute terms to buy, you have to be loaded to get the borrowing.  Lenders are saving the best rates for people with huge deposits and the lack of 100% mortgages and premium rates for small deposits makes borrowing unavailable to some and unaffordable to many.
The 2016 budget has contributed to and arguably caused this strange situation.
But where is the exit door from this problem?
That is very simple.  it is supply side.  there isn't enough.  Unless the UK addresses a supply side problem that has been around for 100 years we won't get out of this mess.  Irrespective of whether buying is cheaper than renting on the market one thing is irrefutable - whichever way it is housing is too expensive.  And until we have more homes built on a big scale that isn't going to change.

So what is wrong with a wall across the Mexican border exactly?

I don't get why people, especially in the UK, have a problem with Trump building a wall to protect the US boarder with Mexico, and are making out hence he must be an idiot?  This seems a bit like hypocrisy in the UK  especially because we have only the one land border and it is one of the most fortified tunnels in the world!

The idea that people could breeze their way back and forth through the channel tunnel would be utterly outrageous to most Brits. So why expect the Americans to allow people to wander in and out of the States?  Bearing in mind some of the slurs against Donald I don't understand why wanting to protect your borders makes anyone a racist.  Ask yourself now who are in the wrong , Trump supporters for wanting to make their country secure or the people who call them names?

If you remember the Brits are more paranoid about free movement than the rest of Europe.  We never signed up to free movement of people without the need for passports like the rest of Europe did and now we are leaving the EC because 52% of voters didn't want uncontrolled immigration from the 27 European countries making up the EC. As a nation l think we are the last people with a right to laugh at Trump and be holier than thou because he wants to build a wall.

I have heard Trump talking calmly about the wall.  He says we're going to build a wall to keep America safe.  What is wrong with that?  An easy way for a terrorist to get into the US would be to hop a plane to South America and work their way to Mexico and over the boarder at the moment.

Having said the wall is to keep the US safe he goes onto say in the middle of the wall, metaphorically speaking , there will be a beautiful door,  through the door people will be able to come and go safely and legally if they have a legal right to enter the US.  Again, utterly sensible and by contrast the argument against doing this are utterly stupid.

People laughed at Trump saying the Mexicans will pay for the wall. We have already seen that imports from Mexico will have higher tarrifs as a means of moving jobs back to the US.  So the Mexicans will pay the the wall in as much as it will be paid for by tarrifs on imported goods from Mexico.  Again to me the fools look like the people who did not understand how the financing could work.  

I always maintained as a younger man I would have been happier on a building site than in an office. Who knows perhaps one day l will get a bricklaying job afterall - they certainly will need a lot of them!

Sad end to Obama

President Obsma ended his presidency calling on people to get out and protest, protest what exactly? Democracy?

This to me was an ugly end to an ugly one hundred undignified days.  100!days when the old president is expected to shut up.

It has been a hundred days of democrats protesting the democratic process, backed by a president not doing enough to distance himself from violence and lawlessness.  For someone intent on an undignified crash and. BUrn he really excelled himself.  A self satisfied speech telling everyone what a great job he did.  Isn't that for someone else to do?  If you were a US cop feeling disrespected and unloved by the president,or an unemployed machine worker in the mid west looking forward to the jobs that Trump is already bringing aback to America you may well have Disagreed with him.

when literally doesn't mean literally

The other day they were talking about Donald Trump making things up and they cited a statement he made that "President Obama literally founded ISIS" as being a misstatement.  I wholeheartedly disagree!

This is only a misstatement  if he meant literally , Literally , in a literal sense.  If he meant literally in a metaphorical sense, as just a word that means literally nothing really but is used to emphasize a point he wasn't lieing.  If used in this way then the statement is entirely true.  This is because this use of literally is becoming common usage.  This is appropriate because after all Donald, although an educated man, is communicating with ordinary people not linguistic scholars.

I therefore take the statement to mean that he thought that Obama in his actions caused ISIS to come into being.  Pretty much in the same way historians say that the internment policy may have acted a recruitment  drive for the IRA in the 1970s.  

If you miss this point you literally must be barking up the wrong tree.  

I'm being monitored by robots!

watch out for puddings

On holiday my wife and l were eating with another couple one evening.  The guy was okay, he was another cyclist, but l didn't get on too well with his wife.
It got to the pudding stage and her cheesecake wasn't right.  There were a couple of specs of red on the plate, possibly someone had cut themselves in the kitchen.  She wasn't happy, which was fair enough. 
There was a bit of a conversation about this.  If it was blood some of it might have been on the plate before the cheesecake went on it.  Blood might have soaked into the biscuit base.  She could end up ingesting it.  She might catch something nasty.  With that in mind she was trying to attract a waiter. 
I asked her if she minded if l cut the cheesecake in half.  "No" she said, "I'm sending it back, l don't want you messing about with it.  That's rude." 
I shrugged but let it slide, "So is the way you have just talked to me" I thought.
The waiter took it away. 
"So you're still having the cheesecake?"
"Yes"
"Oh..."
"What do you mean by that?" She said.
"Well" I said.  "I've worked in kitchens.  If you're busy or don't care you just change the plate over and send the same thing out again.  Also, everything costs, you don't want to throw things away unless you have to."
"Oh," she said.  "They wouldn't do that sort of thing here."
A cheese cake / the cheese cake, came back out of the kitchen.  She looked at it.  She studied it HARD.  I could see her wracking her brains to remember what the last slice had looked like. 
For an uncomfortable 15 minutes the cheese cake remained on her plate, uneaten, with everyone pretending that they hadn't noticed.
I used to be an auditor.  You learn not to trust anyone.
I felt a bit bad about putting her off her pudding - but bearing in mind the cheesecake could have made her sick did l really have a choice?

Private sector rents are likely to rise - increasing demand for social tenancies

Politics seems to always be a victim to the law of unintended consequences.  In the summer the budget had measures to dampen down house price increases (to help people buy), but the consequences are likely to be making it more difficult to rent!

According to Savills, the estate agents, Britain will see steep rent rises over the next five years in rental prices.  This is due to the government campaign against buy-to-let investing in the budget.  Moves to put people off buying to let (to cut the demand for buying houses and thereby slow down house price rises) will constrain the supply of rental homes.

Savills, have said that London tenants face a 25 per cent increase to their rents over the next five years; renters elsewhere in the country will not fare much better, with a predicted 19 per cent rise!  The result is that rental growth is now set to far outstrip house price growth.  With the benefit of hindsight the moves to curb house prices probably were not needed any way.  Brexit uncertainty will probably do that all by itself.

“The rental growth is largely driven by the mismatch between supply and demand,” said Lucian Cook, director of residential research at Savills.  He added that moves to damp the buy-to-let market – which have included a stamp duty surcharge and plans to limit tax relief on mortgage interest payments – are pushing investors towards “higher yielding, lower demand markets”.  this means the areas of highest demand such as London, face tightening supply. 

What is worrying is that JLL, another estate agency group, also forecast steep rental growth, predicting a 17.6 per cent increase across the UK by 2021, with London rents rising 19.9 per cent, far outstripping predicted rates of inflation.

In a world where many cannot afford to buy anyway, renting looks like it is going to get harder too!

Mourinho has a special talent - but it has nothing to do with football

Jose has a talent he has learnt from the master - Sir Alex.  It has nothing to do with diamond shapes, 4-4-2, or playing three across the back.  it has to do with deflecting criticism.
They have a technique for what to do when they get things wrong that works very effectively.  (However, l don't think it works as well for mere mortals.)
The technique is very simple.  They get angry.  They get angry with the opposition, the referee, the fans, the players or the press.  On one occasion when beaten by Southampton Sir Alex got angry that the shirts were the wrong colour - he blamed the kit man.  It wasn't that they were complete rubbish, his players "couldn't see" each other!
On Sunday Jose got angry at the opposition boss for "humiliating" him.  I'm sat there shouting at the TV, "you humiliated yourself - you sent out an ill prepared team with the wrong tactics and you failed to sort it out at half time."
However, l have to acknowledged that the masterstroke worked yet again.  The press focus was on what he said in the other guy's ear - not on Jose's abject failings as a manager.

Bradley Wiggin's cough sweets, and the rules that don't apply to Team Sky.

There are rules in cycling that means the last riders to finish are out of the race if they are too slow.  On Spain's equivalent of the Tour de France last month some Colombians went off like a dose of salts and dumped Team Sky and a few minnows off the back and out of the race.
Following discussions over night the rules were changed and Team Sky were back in.  No surprise really one set of rules for Team Sky and one set for everyone else.
It didn't surprise me therefore that Team Sky were able to push the rules to the max and get Bradley Wiggins on the 'cough sweets'.  I must say, I took it with a pinch of salt when after keeping quiet about using corticosteroids for years, when challenged Bradley Wiggins said he took them for a pollen allergy to get him onto a level playing field with other riders.

For the uninitiated, we're talking about Triamcinolone.  It belongs to a powerful class of drugs called corticosteroids. It prevents the release of substances in the body that cause inflammation. We are not talking about an over the counter something or other for hay fever.  We are talking about something at the extreme end of treatment.

Bradley had medics administer him with the powerful corticosteroid triamcinolone in 2011, 2012 and 2013.  Following these 'boosters' he went on to win the tour de France and other big events.

When l say boosters, the impact of taking triamcinolone is potentially one hell of a booster!

The 'side effects' according to some former professional sports users are:

* better recovery after exercise - a really important benefit if you are in the tour de France cycling up to 150 miles a day for 3 weeks
*  quicker recovery from injury - a really important benefit if you are in the tour de France cycling up to 150 miles a day for 3 weeks
* and fat burning to get your weight down (for the same amount of muscle power the lighter you are on a bike the quicker you go)  - a really important benefit if you are in the tour de France cycling up to 150 miles a day for 3 weeks

In my view before his most important races of his life he gained himself an unfair advantage. Team Sky insist the drugs were medically necessary to deal with a pollen allergy that aggravates Wiggins’ asthma condition - however the medication he had was extreme, way beyond a bit of anti-histamine.  Also, why was there no medication needed for this allergy before 2013, and why did the problem go away when Bradley quit the top end racing and started to take it easy? 

Tongue in cheek, a couple of top cycle sprinters, tired of certain riders taking potentially performance enhancing drugs on the excuse of having allergies, have said if this is a 'disability' they should quit the pro-tour and try the Paralympics!

The killer question for me is that if Bradley felt there was nothing to be ashamed of why was there no mention of taking Triamcinolone in his 300 page plus autobiography that went into almost forensic detail about his health and diet?

I have been a bit of a cynic since Lance Amstrong.  Now days l think if someone is so good it is hard to believe, perhaps it is?

We are too busy avoiding failure to be successful

When I was 11 my teacher Mr O'Farrell started up a chess league table and put me at the top because l was the best player in the class.  I enjoyed playing and l liked playing fast and trying new things.  Every now and again I'd lose a game.  What l found was that no one l beat would give me another game.  They said openly it was because l was a better player and they didn't want to risk dropping down the table.  I ended up after a term of playing 6th in the league.  In fact the whole thing silted up in the end because no one would play anyone for fear of dropping down the table.  I gave up too because l couldn't play anyone half decent because they were refusing to play.  My form playing for the school nosedived from lack of practice.


It crossed my mind that this year l took part in half a dozen cycling events l had not much chance of finishing.  l wanted to push my limits and see how far round l could get distance wise or how many hours cycling l could put up with.  I gave up on a couple, narrowly missed the time limit on a couple, and just completed the other two within the time.  I could have looked back at the experience as failing 4 times out of 6.  l could even have avoided any kind of failure by going for less challenging events in the first place.  I am glad l didn't.  Having a go taught me far more about my limitations and where l needed to improve than playing safe.


As for the chess league, most of my class mates in the story didn't go on to much success.  You need to fail sometimes to learn and they didn't take those risks.  The one success they might be looking back on is where they finished in the chess league when they were 11.  Personally, I'd much prefer to fail now and again and achieve more success overall.  Sometimes we are too busy avoiding failure to be successful.

Likely inflation jump will hit the poorest 10% of the population twice as hard as the richest

Pre-Brexit things were just starting to look good.  For me as a local government employee l was pleased about a 1% per year pay deal that was going to provide a real terms pay rise to claw back losses since 2008.  a 1% pay rise looked pretty good in a world of 0.5% inflation.

The 12% drop in sterling post the brexit vote has already caused fuel costs to start rising and inflation is now expected to increase quite rapidly.  Forecasts of 3% inflation now by the end of 2017 are common.  This is coupled with a forecast drop in economic activity caused by businesses and consumers being nervous and worried about the future.

The two things combined have raised a spectre we haven't seen since the 1970s, "stagflation".  Stagflation is economic stagnation (recession) and rising inflation combined.

Workers won't have a lot of muscle to shift pay increases above the current 2% level if the economy is shrinking.  Inflation rates of potentially 3% per year by the end of next year will therefore hurt.  For public sector workers on a 1% for 2 years pay deal, this will really hurt.

Things will be worse for people on benefits - a number of benefits are to be frozen for four years.; other benefit changes will create real-terms cuts, e.g. the lowering of the benefits cap.  The IPPR think tank estimate that an inflation jump will hit the poorest 10% of the population twice as hard as the richest.  At the pre-brexit inflation rate of half a per cent the impact of benefit changes were mitigated.  A 3% inflation rate will cut a much bigger hole in the value of benefit payments in real terms.

The only group to be insulated is pensioners.  The triple lock guaranteeing them a minimum of wage inflation, price inflation or 2.5% would kick in.  However, Cameron did say the triple lock might be unaffordable in the aftermath of Brexit...The International Monetary Fund estimate that even in a good brexit scenario public borrowing will rise by 0.7%.  This implies that Brexit rather than saving the government £350M per week, will cost it £270M per week.  With these kinds of costs needing to be met Pensioners may need to watch out too.

The only scenario for lower inflation played out by the IMF in its latest forecasts is if economic activity crashes badly enough that it will dampen inflationary pressures!  However, this is hardly a good news story either.

If only people hadn't wanted to meddle with something which was actually working reasonably okay - but don't get me started on that one!

Economics, Donald Trump and the Pope

I was very interested to hear the attack on Donald Trump by the Pope.  The Pope is a man who lives in the Vatican - a country surrounded by a wall.  He singled Mr Trump out as a bad person for wanting to build a wall along a US border. 
A few hundred years ago an attack like this would have been serious stuff, a bit like the ex-communication of Henry VIII for having too many wives.


Donald isn't exactly one of my favourite people but l couldn't understand why a religious man like the Pope was targeting him so fiercely.  Surely, there were bigger fish to fry when it comes to 'bad' people, why was "the Donald" his target rather than Vladimir Putin, ISIS or President Assad for example?


With so many war crimes and human rights violations at the moment (e.g. Syria, and China) why was the Pope so angry about the idea of Donald building a wall to stop latinos illegally entering the US?  Afterall, isn't illegally entering the US a bit sinful? 


In any case, this is hardly the worst policy Donald has in mind, but most people would say Donald is hardly the most evil politician on the planet either.  I was mystified - why wasn't the Poop tweeting about the Russians bombing hospitals in Syria instead?


For me, a lot of life comes down to money statistics and numbers...so I had a look at the BBC website to look at the statistics:


"Latin America accounts for 483 million catholic church members, or 41.3% of the world total.  Of the 10 countries in the world with the most Catholics, four are in Latin America."


I then had a look at the Economist to follow the money: the Economist in 2012 estimated the Church had an income of $170 Billion per year.


Crudely speaking Latin America could be worth say, $50 Billion of the total annual pot, equivalent to a revenue of $1 Billion per week.


If a good few Latinos are pleased by the Pope's sound bite and decided to put an extra 10% in the collection on Sunday that would be a $100 million a revenue boost.  If they kept it up we could be talking $ Billions.


I'm not suggesting the Popes follows the money like I do.  I'm just noting there aren't as many putting into the collection plate each week in Syria or China as there are in, Mexico and a couple of other places south of the Mexican border.  It is a possible explanation for the Pope's interest in Mr Trump? 
I just do the numbers, l leave the drawing of conclusions to others.

If you want a lilac pen you deserve what you get!

Apparently Tesco charge twice as much for their standard pen if you buy it in lilac.  There were politicians on Radio 4 calling this discrimination against women.

I say two things - 1. Grow up!  2. Isn't it a bit sexist to assume only women like lilac pens?

What amazes me is that we have MPs who either naïve, or are attempting to patronise everyone by saying it is an issue.

It isn't an issue it is economics.

How does pricing work?

It is very simple, there is only one product that is remotely likely to be priced based on what it costs.  The standard product.  Examples are:

the economy / basic / family range in the supermarket.  This is a tin of beans for 18p or a can of soup for 24p etc.

a clear plastic biro (not a lilac one).

the first week of the season in a hotel

the small unglamorous small engine car,

a second hand car rather than a new one

and the best example - the most simple basic coffee in a coffee shop.

These are the basic items aimed at people who only want to pay what they have to.

What l want to go onto is something economist call signalling.  If l buy at the standard price I am signalling l don't want to pay extra.

The other prices, e.g. the prices for the seats at the front of the plane, the cruise berth with a balcony, the room with a view, the lilac coloured pen, the Heinz Beans, the Mercedes Benz or BMW, or the frothy mothy chocky locky coffee with marshmallows and yoghurt; are meant for people who want to signal something different.

These prices are for people who are signalling "I want something better and l am willing to pay for it."

By them paying double for their coffee just to get 2 marshmallows on the top, for example, they are enabling the shop to sell everyone else a coffee for half the price.

Is charging double for a lilac pen discrimination?  Not at all.  Some people choose to pay double.  There is a price if you want to feel special, and if you want to pay it go ahead - otherwise buy a clear plastic pen.

I think chasing debts is one of the most helpful things we do for tenants

Nobody likes debt chasing.  That's both the people doing it and the people being chased.


If ever l forget to pay a bill l am always worried someone thinks either:
(a) I did it on purpose or
(b) I am having trouble keeping up
Even if the above aren't true a call about an outstanding bill is always a bit uncomfortable.


To be honest, I've spent time in our call centre chasing debt and it's not always that great to be making the calls either.  Sometimes no matter how polite you are, people can get pretty irritable or upset. But, I think it is one of the most important things we do!  And we couldn't be doing it at a better time of year!


The trouble with debt is that it is easy to get out of control.  Also sometimes if you leave things too long sorting it out later could either become demoralising or even impossible. It's a bit like getting something repaired or putting off a visit to the doctors.  Leave it too long and it could end up too late to fix things.


Owing a few weeks' rent may not seem too bad, but bear in mind it is Christmas next month.  Heap on top of rent arrears a bill for Christmas presents and new year celebrations and it is easy to find yourself owing £1,000 + come January.


What we're trying to do with our arrears fortnight is very simple.  We're trying to keep people in their homes.  Ignoring a rent arrear now could mean you find yourself in so much debt come the new year that the problem will be much more difficult if not impossible to sort out.


In that respect debt is very much like grass.  Leave it too long and you can't cut it easily - as a worse case it gets simply too bad to cut at all.  Focusing on clearing your rent account now could save you from a mountain of problems later.


Here's to arrears fortnight and a Christmas with less worry about debt!  If you get a letter or a call please see it as an opportunity; our staff are focused and ready and waiting to keep on top of your rent.

Social Value Accounting doesn't always add up

I want to tell you a story about Doris and Dave.  Doris wanted to grab some bargains down the shops but she knew she wasn't that good at driving a hard bargain.  She usually got around £80 off the bill but she thought if she asked her friend Dave he'd do a better job.


Dave came with her and netted a £100 saving.


Dave was happy with his work and told everyone his personal input to help her with the shopping had generated a £100 saving.  Doris also told people that she'd saved £100 from the day too. 


If they'd both saved £100, that would be £200 - but clearly that would be double counting.  So who had generated what saving?


My view on it is as follows:


Doris was the person making the purchases.  Dave was her agent.  She would have saved £80 anyway.  Therefore the added value Dave had created was £20.


What is the importance of the above and how does it relate to social value accounting?


Well, it defines the commissioner / agent relationship - and how it should be accounted for.


Take an example where a service commissioner wants its agent to provide a service like day care.


At a naïve level you could say the agent is providing the service so it should be able to claim the social benefits for itself.


However, the commissioner is paying for the service so the social benefits should be scored against them.  The service provider is just the agent, what is really generating the social benefit ultimately is the investment being made by the commissioner.  The commissioner has every right to talk about this as the benefits generated by its investment.


If the agent is providing an element of social value it is like Dave's element not like Doris's.  In other words, if the agent is doing the job cheaper than the alternative provider then the social benefit is the cash value of the saving the commissioner is making that can be used on other things to create other social benefits.  Alternatively, if the commissioner maintains its spending overall the extra social benefit from the agent is the value of the extra units of care etc. that it is providing.


Ultimately for it to be credible social value accounting has to be sound accounting.  If everyone in the social supply chain is claiming the full social value of the service rather that simply the added value they add themselves have added, the result is just pure nonsense.


Although social value accounting is theoretical we need to be clear about what social value we are really adding from our involvement in the process.

how will 'social' market rents work?

how will 'social' market rents work?

Implementing market rents for social tenants will be a complex process.  There needs to be a consultation on how it will work and then  an implementation process that may well involve some complex computing issues.  l'd put money on the earliest start date being April 2017.  A go live date of April 2018 or later wouldn't surprise me though!

What are the issues?

Firstly, who is going to be affected - who could see their social rent move to a market rent?

What we don't know at the moment is whether we are talking about individuals (the main bread winner at the property) being the driver for triggering a market rent or not. 

Even if the scenario was the named tenant on the tenancy agreement the market rate trigger was based on, what if it was a joint tenancy?  Would it be both the named tenants or just one of them?  Would it be an average of the two?

Also what if the named tenant was not the main bread winner but someone else on a higher income lived at the property, either temporarily or permanently, what would happen then?

If l was having a punt, I'd speculate that it will be a concept of the two main incomes or total income coming into the property being the trigger for market rents.

This is on the basis that the whole idea of moving properties to market rents must be either to encourage right to buy or to get a better return on public assets or both.  So a model that sees more addresses impacted by the policy is likely to be the model of choice at the end of the day.

Consequently, l think the £30,000 income threshold will be based on either the 2 highest incomes or total household income.  The original consultation leading to council's having the discretion to introduce market rents for households with income over £60,000 included this 2 highest incomes as the trigger. 

To my mind, when a £30,000 income figure is quoted it makes you think of top end skilled manual workers and experienced teachers.  However the net for moving social tenants onto market rents could be much wider than this if we are talking about household incomes rather than individual incomes.  The model with the widest impact would be based on TOTAL household income.  It might surprise many to find that potentially it could lead to market rents being enforced for households on minimum wage.
The national living wage will be paid to all workers aged 25 and above. Initially, it will be set at £7.20 an hour from April 2016.  There is a target of it reaching more than £9 an hour by 2020. Both part-time and full-time workers will get it.  Pretty much any full time working couple in social housing would find themselves paying a market rent based on these figures.
When you think about it £30,000 / 2 is an income of £15,000 per year.  Based on a 50 week year this is £300 per week.  Two people working a 40 hour week on only £7.50 per hour would trigger a £30,000 market rent in this scenario.  Please remember the living wage will be £7.20 next year but it will move to £9 by 2020.  It wouldn't be an exaggeration to say any full time working couple could trigger a market rent if it were based on a combined income of £30,000.

Even with the current minimum wage, the national minimum wage for workers over 21 is £6.50 per hour.  If the market rent assessment is based on joint incomes it would impact on anyone earning £1 per hour over minimum wage based on these figures.
Even on current minimum wages the 'hard working' family working long hours, often spoken about by politicians, could easily top a family income of £30,000 per year.

But what are the logistics of implementing market rents?

...Huge!

Firstly, Council's and housing associations currently don't know what people earn.  so they couldn't implement this on their own or without changes.

The simple option would be self-assessment and declaration of income by tenants. It could be done by making tenants legally responsible for declaring if they earn over £30K either individually or jointly depending on whether the £30K is a joint / family figure or a top earner figure.  There would be a risk of non-disclosure people might be confused as to what they earn on an annual basis.  They could be confused about whether it is based for example on this year or last year or a rolling year or on how to allow for over time, contractual or otherwise and the timing of annual bonuses.  Then you have potentially a new cottage industry of identifying and prosecuting deliberate non-disclosure.  I don't think government will go down this route.

I see two options

Option 1

Option 1 or a variant on it, is the only option if the calculation has to be based on household rather than individual incomes rather than couples or families.
In this scenario the council / housing association supplies HMRC (the tax man) with details of who lives in all the properties, essentially their names and national insurance numbers. 
HMRC would then have to data match with income figures.  I think they'd then look at income in the last twelve months or for self-employed what it was on their last tax return.

Individuals / couples (depending on the rules) earning over £30K would then go on a list sent back to the council.

The council would notify people of higher charges, make the extra charge and then send the extra back to HMRC.

Obviously there would need to be national standards for software for the file transfers and software both for the housing providers and HMRC would need to be written.

An obvious problem would be people dipping in and out of the £30K limit.  When incomes changed I'd imagine this would have to be taken up with HMRC like a tax code query.  The housing provider would have to keep charging the higher rent until told to do otherwise by HMRC.  This would put financial pressure on people forced to pay the higher rent until the provider was authorised to make the adjustments.
Refunds may prove complicated.  it would be an overpayment of rent by the tenant, and an overpayment by the housing provider to the revenue.  Who would be responsible for sorting things out?
You could easily see people caused problems by this if their income dropped.  They could end up not paying the rent or not paying the extra until the mess was sorted out.  This would lead to arrears chasing and costs to tenants and housing providers.

Clearly there will be a whole new layer of rent changes having to be undertaken by providers, and extra admin work caused by the new system as people moved in and out of arrears?  If market rents aren't paid in full who would be deemed not to have been paid, the housing provider or the treasury?  We'll need rules to cover this too.

A simpler option, which probably only works if the £30K figure is applied to the main bread winner would be to do it through the tax code.  There could be a second suffix applied to the code.  For example rather than a code of 200L all codes could have a second suffix 'M', e.g. 200LM.  If someone has an 'M' after their code they pay the market rent rent.  However, without a national file transfer system letting the housing providers know the tax codes the system would have to rely on tenants telling providers if their tax code has changed. 

The Market Rent by default option

What about the option of putting everyone on a market rent unless they can prove that their income in the household is below £30k?

Historically, HMRC have always been reluctant to give up any information; there are around 60% to 70% of tenants on benefits so their income is known, that leaves a little under a million households nationally who could fall into the market rent category.  An option in legislative terms would be to put their rents up and let them prove whether or not they should not be charged.  HMRC could even calculate how much they expect from every council with an HRAs on a quarterly basis.  As for non-collection (see also below) HMRC could build a collection rent into the figures.  Failure to hit the target would then be a problem for the council not HMRC.  Councils could find themselves on the sharp end of a financial loss if they failed to collect as much as had been specified!

What will the market rents be?

Again this will require new work, new software and new link ups between local and national systems.  I'd imagine it would be the local valuations offices (District Valuer) who would have to make the calculations across the country.  There might be scope for appeals, which would be a new level of bureaucracy, as people contest market rents set against their homes.

Housing providers will need to provide the district valuer with lists of addresses.  The DV will have to carry out the valuations and inform the provider.  The provider will have to load the 'shadow' rents and then apply them based on the information from the revenue if a market rent was triggered.


All the above will require new software, new administrative processes and extra administration staff and legal action for non-payment of market rents across the country.

What happens with arrears?
Will housing providers be liable to pay HMRC when the debit is raised or when the rent is paid?  If it is the former the provider might be liable to hand money over to HMRC even if the tenant hasn't paid the rent!  Could we end up with credits going back and forth between providers and the HMRC.  Money could be paid over by providers, refunded by HMRC and then paid back by the provider if the rent is successfully chased at the end of the day.

Conclusions?
I think the conclusion is the execution of the idea will be way more complex than the idea itself, and having got to the end of this I've reached the following conclusions:

• If the £30K limit is applied to households rather than individuals it is likely to impact on a high proportion of all households with two full time earners
• Irrespective of all the housing and policy issues, I think it will generate masses of administrative work for social housing providers, the HMRC and the District Valuer
• tenants losing overtime or jobs will have the double blow of waiting for their rent to go back to social rent levels, adding to budgeting problems
• arrears are likely to go up as housing providers will have to chase higher rents

No wriggle room on rent settting following summer budget

I'm not convinced everyone is taking the 1% cut in rents year-on-year for social housing seriously enough.  I've heard people referring to revaluations, moving to target for new tenants etc. etc.


The plain answer is NO!  READ THE BILL, paragraph 19.

http://www.publications.parliament.uk/pa/bills/cbill/2015-2016/0051/16051.pdf

Whether or not you agree with the rent cuts the legislation is a masterpiece of tight drafting.  The key to it all is 8 July 2015.  Once you sift through the legal language what is it saying very simply is: the starting point is what rent you were charging on each and every property individually as at 8 July 2015.  You can't change that because it's been and gone.  It is a matter of history and record.  As this is the starting point rent from 1 April 2016 is the 8 July 2015 rent figure less 1%.  FULL STOP, END OF STORY!  There is no wriggle room!


Even if you have a new tenant the starting point for the new tenant is what the old tenant was paying...err... on 8 July 2015.  THERE IS NO MOVING THE RENT UP TO TARGET WITH NEW TENANTS!


The other old chestnut I've heard is "the Chancellor meant everyone has to set a rent increase 1% less than what they would have set", again, "Absolute Rubbish!"


Whether or not you agree with what the Chancellor's done, as far as the draft legislation goes it couldn't have been any clearer - or more tightly worded.