Sunday, October 31, 2010

Housing Benefit - Labour Hypocracy and Distorted Market

"Our goal is to make responsibility the cornerstone of our welfare state. Housing Benefit will be reformed to ensure that we do not subsidise people to live in the private sector on rents that other ordinary working families could not afford. And we will continue to crack down on those who try to cheat the benefit system."

(Labour Manifesto 2010 General Election, page 20.)

A colleague explained to me the other day that in many areas of the country the cost of rented accommodation matches the amount the government will pay in housing benefit..

As Brian Turner writes in Finance Markets,

"The truth is that landlords have been shafting councils for Housing Benefit for decades. And because the public sector has been forced to put so much taxpayer money into the market, it has artificially inflated rents for everyone. Let’s be clear – there is going to be no mass exodus of “the poor” from cities across Britain.The most likely reality is that landlords who leech the housing benefit system will be forced to cut rents."

I have suspected for some time that housing benefit was distorting the market, so perhaps we will not have ethnic cleansing of our inner cities after all, all that may happen is landlords will have to start charging rates that the market will stand as opposed to the rates the government will pay and working people without the luxury of housing benefit may be able to afford to live close to where they work once more.

Labour were right to put this in their manifesto, its a shame they are so caught up in coalition bashing to recognise the government implementing one of their own policies

No comments: