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Wednesday, March 13, 2013

My 2013 Budget Proposals

Believe it or not, there are several strands of Conservatives.  Which is why you see the party pulling itself apart on a semi-regular basis over things the majority of the population don't care massively about like gay marriage or Europe, and why when as soon as David Cameron says the words 'wind farms', the Daily Mail will tell its readers to vote UKIP.

I am definitely at the more liberal side of things - to me free market rules rule.  That is the focus.  Minimal government, minimal tax, maximum market.  Let people choose their life.  And modernise society, the economy and the country at whole.

The free market capitalist system is the best system that we have available.  Look at North Korea if you don't believe me, or ask anyone from Eastern Europe old enough to remember the 1980's.  But by it's nature it is imperfect.  Maybe the internet will eventually bring us a better economic system in time but that is not for this article as I am focused on the upcoming 2013 UK budget.

It's major imperfection is that sometimes it implodes and we have recessions - or worse, depressions.  But if you are going to allow bubbles to be created unchecked, then this is going to happen, and the housing market bubble is what often does it, and did it spectacularly this time, along with the help, guidance and ignorance of other interested parties.

It is pretty clear that the economy is a major problem.  But we have one other major problem which is arguably affecting more lives in a negative way, and that is housing.  Rents are shooting up.  Property prices are so incredibly unaffordable to most people.  Prices in London, in particular, are astronomical.

It's relatively ok for me as I can just spend a higher proportion on rent in a shared property but there are others crammed into unsuitable housing, some people homeless or vulnerable people and so many young people who have just given up on owning their own home and just live for the weekend.  Thinking ahead - who is going to house all the property-less classes in 30-40 years time when we retire without a home of our own?  How the hell are we going to afford that?!

There is a massive shortage of housing in this country, mainly in the south-east and London.  It is a huge, huge, huge problem.  To me, it is the one thing that can guarantee a Labour re-election if they promise to build loads of houses (not that anyone should believe them) and my dear Tories need to take note.

The government has done good so far by relaxing planning laws, which I think comes into effect next month if I remember correctly, and the funding for lending scheme I hear is doing some limited good.  The spare room subsidy removal should help create some fairness, and certainly the housing benefit cap helps.  With a bit of luck some of the green belt may be removed (around 2%, don't panic country folk).

Private house-building is not enough.  We need to be building a minimum of 300,000 houses a year for a decade or more.  We will be waiting forever for the private sector to start building that many.

I am going to say something perhaps not naturally Tory - the government needs to build houses.  Social housing.

Call it an investment in the econony if you like.  It could repay itself in time.  Build the houses, and eventually those living in them may be able to take up the right to buy scheme.

Of course returning to the other major issue, the fuck-up of an economy, we need to fund the actual building.

We cannot borrow more.  Borrowing more, no matter what the interest rate is not going to help us.  Borrowing too much is what got us into the mess.  Yes we have very low interest rates on government bonds but going against the plan will only turn the markets against us and cost us in higher interest rates going forward.  And we need to borrow £100billion more every year, give or take a bit at the moment.  We really do not want higher interest rates!

So how to fund it?

I don't work in the Treasury or another suitable body, and do not have costings available so I cannot say which of these will save, or raise, to the equivalent of what amount of houses, so forgive me.

1. Reduce the housing benefit cap further.  £26,000.00 might be much lower than what it was under Labour but it is too ridiculously high.  Surely nobody needs £2,167.00 rent a month?  Especially up north, in Wales, the midlands and Scotland.
2. Reduce benefits to old people.  The older generation are doing fairly well out of this government (they do vote more...young people if you want the government to look after you instead, start voting!).  There are a lot of rich old folk - not all old people require winter fuel allowances or bus passes.  Why do we just blanket give out benefits to everyone whether they need them or not?  Not for a second am I saying we should remove such benefits from those that need it, but does Alan Sugar for example, really require his winter fuel allowance?
3. Middle class benefits.  Again why do so many well-off people get child benefit and such other delights?  Surely child benefit should be for those who could not otherwise feed and clothe their children?  Anyone with an LCD TV should not get child benefit.  And just because you struggle to balance the budget with your £2k a month mortage - well that shouldn't be our problem.  Life choices.
4. You'll love this one.  I think we should also consider a Mansion Tax.  I do not agree with it in principle, as why should someone who has worked hard, or inherited a very nice house, have to pay a further unexpected tax for doing so well?  However we need to fund a solution to the housing crisis.  Priorites I'm afraid, Herbert.

There will be other ways too.  My point is - reduce benefits or other expenditure, soak the rich a little bit, not too much and get houses built.

This is what a good budget would be, in my eyes.

Another repeat of last year and Mr Cameron will want to consider a reshuffle.  Sacking George Osborne would be popular.  David is more popular with the general public than his party as a whole - George is massively unpopular.  A 'sacking' at the right time towards the 2015 election should help re-election prospects, though it can only be done if there are further failed budget presentations.

Generally I think George is doing a fairly good job in incredibly difficult circumstances but now is the time to start doing much better.

BUILD HOUSES GIDEON.