"Right to Buy" Is to Blame!

The "Right to Buy" policy introduced in the late 1980s (early 1990s?), or rather the implementation of this policy, has a lot to answer for. I argue it is the single biggest reason for the terrible state of housing provision in England.

Here's why;

Let's build a house in the year 1995, maybe it cost £40K to acquire the land, build the house and allowing profit for the builder.

Public Ownership

The 1ocal council (or another non-profit organisation but government should be able to borrow cheaply) borrows the money to purchase the house and it remains in their ownership.

Interest on the loan is 5% so the public body has to pay £2K a year to service the debt. Maybe the rent is £2.5K a year to allow for maintenance, etc. Other than inflationary increases in the cost of maintenance this level of rent can remain unchanged indefinitely.

Private Ownership

If the same house is owned privately things start off much the same except the landlord would expect some margin, let's say they have to charge a rent of £3K a year.

After some time, let's say 5 years, the landlord wishes to cash in the increase in the property value. To keep things simple we will assume the value also grows at 5%. The property is now worth approximately £51K. The new owner has to borrow £51K, and now the rent must rise significantly.

Indeed, even without selling the original owner might look at the property market and raise the rent accordingly - unless there's sufficient supply of publicly owned properties going at a much lower rent.

In the Big Picture

There problem with "Right to Buy" is that it altered the balance between the number of private and public rental properties. Over time, private landlords have been free to charge higher and higher rents without the "brake" effect of public competition.

The general principle behind "Right to Buy" seems reasonable and indeed popular. The problem with the implementation is that the public owners were forced to sell at a discount, and the proceeds were not re-invested. All very well to give the right to purchase the home you have lived in for years but why was done at a discount? Other then to cynically buy votes!

GM Foods

1. Is GM Safe?

The question "is GM food safe" is a meaningless question. Each genentic modification will have it's own impact on the species in question and also on the whole environment around it - the effects is far too complex for us to be able to predict so we will only know the full effects over time. Some modifications might well turn out to be fine, especially those that could have been achieved using selective breeding over a longer time frame. The most extreme modifications are clearly not safe and might have a catastrophic impact on the environment.

2. Who Controls GM?

Large companies invest a lot of money into genetic modifications and as a business it's important for them to make a profit. To prevent competitors using their research they apply for a patent on their modification. Once a farmer goes down the GM route they may find they are locked into buying certain fertilizers or pest control chemicals from the same company in order to get the best from their new crop. Or the supplier of GM will tie them into a contract. Some farmers have been treatened with legal action when the genetic pattern is identified on their land. There are also concerns about the fertility of some GM pigs, no-one is sure whether this is to make sure that the farmer always has to buy from the GM company.

3. Genetic Modification vs Selective Breeding

Some GM supports compare GM to an accelerated form of selected breeding. For a long time man has picked the best individuals, whether it be pigs, cows, wheat or corn and bred them together. Over a relatively long period certain characteristics can be developed such as beef cows with less fat or corn plants with shorter stalks. However, each generation of selected breeding is exposed to the effects of nature and so there is time to observe any undesirable side effects. With genetic modifications we can leap forward by adding genetic patterns from alien species. We will always run the risk of accidentally releasing a modification that has disasterous consequences - we are not always as smart as we think we are!

4. Better Safe than Sorry

Once the genie is out of the bottle it's not going to be easy to every put it back. Time and again mankind has created problems by introducing non-native species, whether it be rats in the Galapagos, rabbits in Australia or Japanese knotweed in the UK.

5. Agriculture in the Ecosystem

In the densely populated UK the vast majority of our land is used for agriculture. This means that our farms and plantation forests are very important to our ecosystem. If GM were successful in elimating weeds (a weed is just a plant growing in the wrong place) and pests (just another species trying to survive) then all the creatures up the food chain will decline. Everyone likes to see butterflys but the caterpillers are not so popular and caterpillers often need weeds such as nettles - unfortunately you can't have one without the other. Of course, it is incredibly important that we produce enough food for the UK to be reasonably independant on basic foods but we must take our fair share and allow nature her fair share too.

6. GM Can't Eradicate Hunger; Education Can

GM supporters point to the need to increase food production to feed the Third World. Two problems with GM as a solution to this; firstly there is already enough food grown worldwide it just a question of getting it in the right place without destroying local markets, secondly GM technology is expensive and very high tech. We can not solve the food problems of the Third World by getting them addicted to technology that has to be purchased from us. Education is the key; through education farmers can find their own solutions using more traditional approaches, education also has a very significant effect on population so we can avoid the vicious cycle of more food leading directly to an increased population, leading to demand for more food - especially if this food can only be grown using western technology. This will inevitably lead to disaster.

National Insurance & Person Tax

Surely the government is making a mistake by increasing National Insurance contributions. As energy and other raw materials become scarce and therefore expensive it is going to be increasingly important to make it cheaper to employ people (especially in the developed world). A healthy economy has a high level of employment, with just enough slack (unemployment) to allow for some flexibility.

Since public services employ a very significant percentage of the population it makes little sense to take with one hand and give straight back with the other (in increased employers contributions).

I would reduce National Insurance with the aim of eliminating it altogether. NI was designed as a tax that everyone pays at a similar level and everyone takes a pension, health care and employment cover. The reasons for the way NI works are long since lost in the mists of time and are not well understood. High earns may complain about the way Income Tax increases on higher earnings but you don't often hear that NI actually works the other way around. If you model the total personal tax it comes out at about 25% across the board.

Maybe the first step would be to bring it down to 10% but eventually I would like to simplify the personal tax regime by having single direct tax based on Income;

First £8,000 tax free - this needs to be sufficiently higher than the level of benefits available to the unemployed to maintain an incentive to work
Further £20,000 at 25% - medium level earners are significantly better off
All additional income at 50% - those earning over £100K might be penalised slightly

Alternatively it would be interesting to model what happens if a flat tax rate of, say, 30% would work. There is an argument that capturing 30% from everyone is better than taking 50% for the few rich people not employing a good accountant.

It would also be necessary to recover the tax income handed back to employers by reducing or eliminating their NI contributions. We want businesses to employ people, indeed it needs to be efficient to employ a person instead of purchasing an energy intensive machine. Additional Corporation Tax might penalise good businesses but we could take a tax off energy intensive businesses in the form of a steep Carbon Tax.

Population & Housing

Having seen David Attenborough present the Horizon special the other night it seem obvious that the UK government needs to set a target population for the country to work towards. Somewhere between 50 - 60 million seems about right. Achieving the target might take a generation but policy should be bent towards the goal starting with a look at tax and benefits that relate to children other than the first.

Further efforts need to be made toward addressing our high levels of teenage pregnancy, indeed education towards making it the norm for couples to wait until at least the age of 25 would almost certainly lead to better parenting.

The overall population target should be adopted at regional level by adopting the current policy towards new housing development. Instead of expanding the housing stock a mechanism should be developed to promote the building of new energy efficient houses while simultaneously redeveloping older houses where it is not economical to bring them up to modern building standards. Maybe there is an opportunity to resolve the inequity of Stamp Duty at the same time?

Q: how to make it economically desirable to demolish old energy-inefficient houses?

Proposal to Reform TV License Fee

Objectives;

1. Reduce beauracracy
2. Reduce costs of issuing, policing and prosecuting

Proposal;

Fixed fee per household to be added to Council Tax, eliminate TV License
Re-employ those currently working in the TV License system into tax or benefit frauds
BBC receives index linked fee based on revenue collected = fee * # of households

Proposal to Reform Road Tax

Objectives;

1. Reduce beauracracy

Proposal;

Road tax to be collected by Insurance company
Insurance company pay money collected to Treasury
New combined Tax + Insurance certificate to be issued by DVLA on (electronic) instruction from Insurer, cross reference with MOT database
Does not change car registration system in any way

Proposal for Child Benefit Reform

Objectives;

1. Remove any financial incentive to have more than 2 children
2. Contribute to drive for lower UK population (~45 million)
3. Maintain overall cost of child benefit
4. Focus benefit where most needed

Proposal;

Child benefit for first child only
Double current payment

How Objectives Are Achieved;

• Objective 1&2 are obvious - double benefit allows for 2 children but gives some incentive to stop at 1
  
• Child benefit currently paid for 2 children - check this - therefore overall cost should be slightly lower
  
• Poor families will receive existing means tested benefits
• No longer paying benefit for third child to those who can afford it