Sunday, 18 June 2017

GRENFELL TOWER AND THE HOUSING CRISIS

The privatised management company that 'ran' the Grenfell Tower estate on behalf of the cash-strapped Royal Borough of Kensington and Chelsea saved themselves £5,000 by using flammable cladding on the building instead of the flame-proof stuff. This small but venal illustration of the subordination of people to profit will be talked over much, as well as repeated refusals by Parliament to legislate for safety in rented accommodation. These questions should be more important than whether Theresa May lacks the bottle to face the public she appears to fear, when she thinks about them at all. She is the head croupier in a system designed to drain the poor for the benefit of the rich, and Kensington and Chelsea just happens to be one of those boroughs where the extremes of rich and poor meet, if not rub shoulders.

There are eight bands of poll tax, sorry council tax, in the borough. They are based on valuations set in 1991. The lowest is for houses (or flats, I will use the term houses here) up to £40,000; the highest for all properties over £320,000. The value of the cheapest property in the highest band is eight times the value of the most expensive in the lowest band. The tax paid in the highest band, however (£2124) is only three times as high as the lowest band (£708). An incentive to buy high.

But the average house price in Kensington and Chelsea right now is £1,371,000. It was $1.2 million in 2014, when the London average was £400,000 and the national average £200,000. The median in London has increased from £87,000 in 1996 to £462,000.

Two things are obvious. Property is a great investment. Those empty luxury buildings that are unoccupied are owned by (often foreign) investors, many of those from countries where personal wealth can be, shall we say, volatile; they are appreciating steadily and rapidly, while the property taxes on them are negligible.

Second, because those taxes are negligible, local council revenues are far less than they ought to be, even taking into account cuts instituted by national government starting in the Thatcher years. Councils rush to privatise services they've already cut back, and get out from the 'burden' of paying employees and giving them pensions. They close libraries, they turn off street lights (at least out here in Tory-controlled Waverly), they ignore safety concerns in high-rise buildings and try to clad them to stop offending the good taste of the wealthy who are forced to look at the buildings each day.

In the election campaign, one of the Labour party's proposals was to tax off-shore assets and income. When they costed their manifesto, they estimated the income from this tax, then cut that estimate in half, to allow for the idea people right re-patriate their money rather than face the tax. When the Institute for Fiscal Studies did their costing of the manifesto, they allowed zero income from this tax (thus creating a spending deficit) by assuming all the off-shore money would be repatriated.  Which of course would increase normal tax revenue, but no matter.

A starting point on treating the residents of social housing fairly might be to indulge in a re-rating of council tax, increasing the number of upper bands to make the tax much more progressive. It might include the imposition of an abandonment tax for buildings left empty. It might also reconsider (though this would be a decision for Parliament) placing the responsibility for property tax on the owner, not the renter, of a property.

Some of that revenue might be dedicated to building new social housing, on a more human scale. British city planners ought to be studying Jane Jacobs, not Andreas Gursky. The starting point for the housing crisis in this country was the Thatcher government's decisions to sell council houses, without provision for replacing them, while making it easier and cheaper to own multiple properties, and rent them out.

A rethink of housing policy is not really complicated. This is not a problem without a solution; it is a problem lacking a will to enact the solution. The part that will be made to sound complicated will be where the money will come from to enact such policies. The answer is that the money is staring residents of Kensington and Chelsea in the face, in the shape of empty properties owned for investment, in the shape of buy-to-let properties, and in the shape of owners getting a huge break on property taxation from local and national governments who are their friends, and don't really have time for those on the other side of the tracks. Or the Westway.


3 comments :

Mark Radley said...

One of the more egregious policies in recent years has been Quantitative Easing, hundreds of billions printed which largely flowed to the wealthiest 5%, no doubt some of which made its way into the 'Land Banking' in Kensington. That magic money tree for the elites has probably served to exacerbate the housing crisis you refer to, and all that while austerity was being imposed on the rest of us. It makes my blood boil.

Michael Carlson said...

Agreed. Mrs. May lied when she said there is no money tree. It's just a question of who's allowed to pick it. The money appeared (under Labour but with Tory support) when wars needed to be waged, or banks needed to be bailed out).

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