The Housing Crisis and How to Solve It

Gavin Barwell, Croydon Central MP and grandly titled Minister for Planning and Housing is not expected to solve the housing crisis with the government’s White Paper due later this week. In all probability, he will follow the pattern of neglect and naked electioneering set by successive New Labour, Coalition and Tory governments and just make things worse. The crisis is, nevertheless, extreme. Social housing is disappearing into government coffers and buying is unaffordable except for a privileged few – house prices in 122 local authorities are now ten times local median earnings (Source: ONS figures quoted in the Guardian) while the briefest of tests on the money advice service affordability calculator will confirm that lenders won’t lend much above three times earnings. This leaves most young people facing the prospect of never leaving home, a lifetime renting on short-term contacts in the unregulated private sector, a job in the armed forces or a life on the streets. This is a somewhat restricted set of choices from a government that says it believes in choice.

The housing crisis can, of course, be solved, but not in ways that would be agreeable to Mr Barwell and his paymasters. Instead of nibbling away at the green belt and further inducements to speculative builders, we need

  • an immediate extension of council tax banding upwards as a prelude to introducing a comprehensive Land Value Tax.
  • appropriate taxation of second homes, holiday homes and empty commercial property
  • Councils to be empowered to borrow to finance such social (council) housing and compulsory purchase of existing properties as are needed to meet all their local needs.
  • an end to the bedroom tax.
  • mortgagors to be entitled to convert mortgages into affordable rents rather than face eviction
  • recognition that housing has a central role to play in the environment and the fight against global warming
  • proper regulation of the private rented sector, with an end to short-term tenancies, rent control where appropriate and certification of “good” tenants by landlords and “good” landlords by tenants, this certification being required for continued participation in the sector. I have been told that this approach is successfully applied in Germany, but if anyone knows more about it, please let us all know.

These are not revolutionary demands. They are the minimum reforms needed to alleviate the current crisis. If they are beyond the capacity or imagination of our ruling class to implement, the sooner we overturn them the better.

AGM and discussion on LVT

Croydon Communist Party held its AGM on Thursday, 19 January. Routine business was swiftly despatched, including the confirmation of Martin Graham as Branch Secretary, leaving the rest of the meeting for the political report and discussion, including a discussion of Land Value Tax (LVT) and the response earlier that week by London Mayor Sadiq Khan to the report A Land Value Tax for London? published by the London Assembly Planning Committee.

The London Assembly Planning Committee report, published in February last year, appears largely to be the work of Tom Copley, a Labour Assembly Member with some progressive ideas – he is, for example a republican – but who has been opposing and undermining Jeremy Corbyn’s leadership of the Labour Party to the extent even of accusing him of lying. It was therefore unsurprising that the report adopted a timid and unimaginative approach to LVT, seeing it as little more than a device to bring forward land for development in London. Mayor Khan’s response was equally limited: he welcomed the report but cautioned that he lacked powers even to undertake a pilot scheme. He would “hold talks with the Treasury”. but as the last thing the  Tories want to do is tax the people who bankroll them, don’t hold your breath!

LVT has significantly greater potential than simply a means of accelerating property development in London. As the Economics Commission of the Communist Party argued in the pamphlet From Each According to their Means, it has a part to play in creating a truly progressive national tax regime. You can read this report here or order a printed copy for £2.50 postage paid from the Communist Party here.

Note of our meeting on 20 October

Discussion on Housing

The meeting reviewed Jeremy Corbyn’s Housing Policy, published as part of his Labour leadership campaign, and concluded that it had much to commend it. In particular, the aims of building one million new homes during the next five year parliament and providing new safeguards for tenants in the private rented sector in the form of three year tenancies and blocks on “unreasonable rent increases” were welcome and politically attractive. The CP should certainly maintain its support for Corbyn and endorse these proposals. The meeting did, however, conclude that they would ameliorate but not eliminate the housing crisis. For this the fundamental problems with UK housing had to be addressed. It needed to be recognise that treating homes as investments benefitted home owners – those already on the so-called housing ladder, but Marxists understood that, outside the productive process, asset ownership and exchange was a zero sum game. The gains accruing to home owners from owning property – essentially land value – didn’t materialise out of the ether: they were transfers of value  from those who who didn’t own their homes to those who did. One solution would be a Land Value Tax. It also had to be recognised that land and houses were currently over-valued when they couldn’t be afforded by working people. A fall in prices should be encouraged and welcomed, not feared – but it had to be matched with restrictions on banks’ rights to foreclose and requirements on them to write down the amounts they could recover from mortgage loans. For too long banks had made essentially speculative loans secured on land and buildings. passing on the risk associated with these speculative loans to the borrower. The aim of housing policy, the meeting concluded, should be to separate the provision of homes – a basic human need – from the creation of speculative investment.

The anomaly of allowing home owners to build up a capital gain which was then appropriated by the private sector providers of care homes was also discussed.

The meeting went on to discuss how to support the Axe the Act Campaign and their wish to expose Gavin Barwell, the Tory MP for Croydon Central and newly appointed Housing Minister, for having no intention of addressing the housing crisis. Barwell had a majority of only 165 at the last general election having spent almost up to the statutory limit according to his election expenses returns. There were allegations that he had falsified these returns, but the police had now concluded their investigations without bringing a prosecution. The meeting was not impressed with this outcome. Barwell also had a poor record as a Labour Councillor on housing matters, appearing to be keener on sweetening his constituents than pressing ahead with housing development in the south of the borough. It was also noted that the Nestle Building in Central Croydon had stood empty for four years, mostly under his watch, and was not now scheduled for redevelopment until 2018 – probably for luxury flats. The similarity with Centre Point in Central London, left empty for decades while its value increased, was pointed out. The problems of empty property and second homes both needed to be addressed in any comprehensive policy on housing.

Other Business

Ben Stevenson was appointed our delegate to Party Congress on the weekend of 19-20 November at Ruskin House. Members were encouraged to attend as visitors, volunteer as stewards and offer beds for delegates on the nights of Friday 18th and Saturday 19th November. Please make offers to office@communist-party.org.uk

The Party’s Big Red Appeal is up and running. Members are encouraged to donate what you can – cheques made out to CPB and mailed to the Party at Ruskin House or by credit transfer to the Party account – details from the acting branch secretary.

Members were encouraged to attend the Croydon Assembly at Ruskin House on Saturday, 26 November

Next meeting

7 pm at Party Centre on Thursday ,17 November –our usual third Thursday of the month.

 

DODGY DAVE

Revelations that David Cameron “has done nothing wrong” by avoiding tax are reminiscent of the debacle at the end of the last Tory government. Tories, Dodgy Dave included, think everyone is out to feather their own nests and really don’t see what all the fuss is about.

Taxation policy has played a significant part in bringing us to our current state and it’s abundantly clear that the current tax system in this country is deeply dysfunctional as successive governments shift the tax “burden” from those most able to pay tax to those least able to pay. As the late Ken Gill said: “You pay tax and you buy civilisation.” Most people, but not, it appears, Tory politicians understand that taxes are a price we pay for a decent society.

Even under capitalism it is possible to devise a tax structure that does not place the entire burden of taxation on ordinary working people and their families, but it requires an unapologetically class-based analysis such as that employed by the Party’s Economics Commission in arriving at the Party Pamphlet From each According to their Means, available from the Communist Party Shop or from Communist Party, Ruskin House, 23 Coombe Road, Croydon CR0 1BD, (020) 8686-1659.

The criteria employed by the Economics Commission were that taxes should be redistributive, capable of promoting “social justice,” reflective of the ability to pay, simple to understand, predictable, unavoidable, compatible with each other, objective to assess, transparent and free from interference by those hostile to the interests of the working class, including Tories, parliamentary lobbyists, senior civil servants and the judiciary.

The detailed proposals, included:

  • Tackling the estimated £120 billion lost to Britain through tax avoidance and evasion via introduction of a robust, general anti-avoidance rule which actually “does what it says on the tin” and which includes serious financial or other penalties for those found to have broken the law — giving HMRC the resources it needs to do the job properly along with an end to its current big business-friendly mode of operation; and radical proposals to clamp down on tax havens and the transnational corporations that use them.
  • Unilateral action to end the special tax status of all tax havens under British control
  • Restoration of corporation tax to between 30 per cent and 40 per cent, linked to restoration of a form of advance corporation tax to reduce the incentive for corporations to pursue tax avoidance strategies and windfall taxes on corporations’ recent super-profits.
  • Introduction of new 60 per cent rate of tax for earned income over £60,000 a year, and a 70 per cent rate for unearned income over £60,000 a year.
  • Innovative proposals for the abolition of all current property taxes and replacement with a land value tax (LVT), with the aim of shifting the burden of taxation away from earned income and reducing the scope for tax evasion. This would return to society the value of land that society itself creates and help tackle the evident social injustice generated by the concentration of land ownership in the hands of small elite.
  • Tackling the growing gap between rich and poor with the introduction of an annual wealth tax of 2 per cent and higher rates for the “mega rich,” ending “non-resident” and “non-domiciled” exemption from British income and wealth taxes; and steps to prevent capital flight by implementation of robust exchange controls.
  • Reforming current environmental taxation — which has an important role to play in changing behaviour as well as raising revenue, with the aim of promoting sustainable economic development — by moving to a “tax-and-dividend” approach for addressing the problem of global warming — with Britain acting unilaterally, if necessary, by way of example, with the introduction of standardised carbon tariffs on imports.
  • Support for a financial transaction tax (Tobin tax) on trade in currencies to give Britain greater control of its economic policy and introduction of a financial activities tax (a levy on banks’ profits and remuneration packages).

Now those really would give Dodgy Dave some sleepless nights.

Right to Buy or Just Plain Wrong?

It was disappointing that, while Ed Miliband was prepared in the BBC leaders’ debate last night to oppose the new Tory wheeze to grant housing association tenants the right to buy, supposedly financed by further syphoning from the dwindling council housing stock, he was not prepared to condemn the original Tory rip-off or its continuation under Tory and Labour governments. A recent study found that a third of ex-council homes sold in the 1980s under Margaret Thatcher are now owned by private landlords, many of them resident in off-shore tax havens. Another study found that in one London borough almost half of ex-council properties are now sub-let to tenants.  Anyone gullible enough to think that Tory politicians do not feather their own nests should reflect on the fact that Charles Gow, son of Mrs Thatcher’s Housing Minister who drove through the policy, now owns with his wife at least 40 ex-council houses. As Paul Kenny, General Secretary of the GMB, said about this outcome: “You couldn’t make it up”.

Neither Labour nor the Tories has any coherent idea on how to address the housing crisis. While both speak about building more houses, both would lack the means to ensure this actually happens. Instead of direct public investment in housing, the government spent £35 billion in 2012-14 on Housing Benefit, a subsidy paid directly to landlords which ensures that house prices stay high. The cost of this support has risen a third under the coalition and will continue to rise as our kids increasingly find that the choice facing them is staying with Mum and Dad into middle age or renting in the private sector. Yet neither party has an alternative. Not so the Communists. Only we appear to be clear sighted enough to recognise that there is a need to de-couple people’s need for a secure home from their desire to invest and accumulate even when this accumulation tends to be at the expense of those who do not own their homes and tends to benefit the banks even more than the borrowers. What would communists do? Invest in council housing, albeit with more democratic control than has applied in the past – for example no more bedroom taxes! Our Economic Commission has called for the implementation of Land Value Tax, initially at a low level so that it simply replaced Council Tax, but with a view to raising the rate over time so that, in effect, land would become a socially owned asset. Communists would end the scandal of 80,000 young people experiencing homelessness every year when there are one million empty or second homes out there.

Impracticable? We don’t think so. Visionary? Unapologetically!

Six Reasons Why Labour’s New Wheeze on Public Schools is Wrong

Tristam Hunt, the Labour shadow Education Secretary, announced this week Labour’s new wheeze on public schools. He wants to amend the 1988 Local Government Act to make the 80% relief from business rates that public schools now enjoy as charities conditional on them signing a “partnership agreement” to help local state schools. Here are six things wrong with this idea:

1. It is patronising to state schools. In terms of added value and cost efficiency, the state sector out-performs the public schools. They have nothing to learn from them.

2. As Professor Danny Dorland has pointed out, it is not a coincidence that the UK is one of the most unequal developed economies in the world and it spends more on private education than almost any other country. The Labour proposal will do nothing to change this.

3. The major tax break enjoyed by fee paying schools at present isn’t business rate relief, which costs taxpayers £160 million a year, it is their charitable status which enables them to avoid all the other taxes they should be paying as de facto commercial enterprises. Labour has backed down from making charitable status dependent on a public benefit test following a court case brought by the Independent Schools Council, mouthpiece for the public schools, in 2011.Have Labour not heard of parliamentary sovereignty?

4. It ignores the experience of other countries. In Finland 99.2% of all education is state funded. Finland routinely tops international education league tables and its public education system is recognised as contributing to its prosperity and social equality.

5. Business Rates are an inefficient tax and should, as will be argued in the forthcoming discussion paper from the Communist Party, be replaced by a Land Value Tax. Such a tax would tax the playing fields of Eton, but not public services such as state schools.

6. The Labour proposal might hit the more mediocre institutions but not the really powerful public schools which educate the children of the 1% elite. These could easily afford the £160 million a year they would lose under Labour’s proposal.

Labour’s proposal can therefore be dismissed as both irrelevant and inadequate. A headline in the Daily Telegraph this week did, however, provide this writer with some wry amusement. Above an article describing Hunt’s idea was the banner:

“Public school children will be forced to play football with state school pupils”

So that’s how Labour’s reign of terror will begin!

EDUCATION NOT FOR SALE?

Much publicity has been given recently to reported Lib Dem disquiet over what Education Secretary Michael Gove has been up to at the Education Department. After four years silent complicity, this is a little rich.

In another development, the TUC has just published an 85 page report entitled Education Not for Sale. It’s presumably unrelated to the Lib Dems concern as they are generally as uninterested in what the TUC has to say as the Tories and Labour. The TUC report concludes that the continuing marketization of education through Gove’s academy and free school programme is moving England’s schools system from democratic, local authority control to a more fragmented, less democratic structure. The TUC report is also concerned that the power to take major decisions over the direction of both individual schools and of the education system as a whole now rests with a few individuals: the Secretary of State and those who own academy chains. As the report observes, free schools were supposed to be locally developed by parents, teachers and community groups, but are now more likely to be handed to academy chains.

The TUC report is notable for the cautious and tentative nature of its conclusions. Yet the Anti-Academy Alliance, the NUT and the Communist Party have all campaigned vigorously against academies since they were introduced by New Labour under cover of the Education, Education, Education mantra.

Democratic control and accountability of state education depended crucially on Local Education Authorities (LEAs). These bodies of experts and administrators provided training, expertise, advice and funding to state schools and were accountable to the electorate through council elections. Their undermining began under New Labour. The Tories under Gove’s direction, and with the supine Lib Dems carried along in their wake, have simply finished off the job.

Comments by Labour candidates in the forthcoming local government elections confirm the impression that they have no appreciation or understanding of the problem their party has helped cause and of what must be done to remedy the situation. The Communist Party solution is to kick the profiteers out of education and return it all to democratic control. We also need to start trusting teachers and stop telling them in minute detail what to teach and how. We should pay them properly, give them job security through a local authority contract and we should tax private education institutions, the so called public schools, until they go out of business. A Land Value Tax and a Wealth Tax on individuals would be most effective in this respect. Finally, we need to provide the incentive to school students of guaranteed financial support when they progress to colleges of further education and universities, not saddle them with student loans. Further and higher education must not become once more the preserve of the rich. We don’t expect anything from the Lib Dems, but, if the TUC won’t speak up for working people in this way, the Communist Party will.

Martin Graham

Labour Backbone Needed on Tax Reform

As the LibDems show all the signs of being toast at the next election, it’s easy to take some pleasure from their discomfort as they thrash about trying to put some ‘yellow’ water between themselves and their Coalition partners through vague talk of higher council taxes for larger properties and a crackdown on tax evasion.

But these are limited measures, whose real purpose is to act as a smokescreen. If they were serious, they would be considering the sort of wealth taxes seen in France, Norway and even parts of Switzerland, where taxes are levied on total assets, including property, investments and bank deposits, above a defined threshold. They might also consider a land value tax. Such measures would not only tackle the far greater disparities seen in wealth than in income, but also allow a shift from regressive indirect taxes as well as a more productive use of assets (the ‘use it or lose it’ principle). And while they’re about it, why not restore HMRC staff levels so they can really get to grips with corporate as well as individual tax avoidance and evasion, and do something about the many tax havens controlled by the UK.

But I’m forgetting this a party fully signed up to the austerity agenda and the attack on the welfare state! More interesting will be the extent to which Labour at its party conference next week start to show some backbone on these issues.

Chris Guiton

TEN POLICIES FOR LOCAL GOVERNMENT DEMOCRACY

In his talk to the Communist University in South London on 7 August, Dr Peter Latham, author of the book Local Government Democracy (Manifesto Press 2011) proposed ten policies to resuscitate local government democracy and assert working class interests. They were:

1)    Repeal of the Localism Act (except the provisions giving councils the right to return to the committee system and all councillors the right to make policy again in England and Wales, which should be an immediate campaigning priority for the Left).

2)    Abolition of US-style executive local government mayors and police and crime commissioners (PCCs). The Police Reform and Social Responsibility Act 2011 – under which elections for 41 US-style PCCs with salaries between £65,000 and £100,000 per year depending on the scale of the police force area being overseen and regional pay variations) in England and Wales outside Greater London will be held in November 2012 – should be repealed because the abolition of police authorities is a centralising measure, which further downgrades the role of councillors. Turnout is also likely to be too low to give the bodies legitimacy. Moreover, elected PCC’s, according to West Yorkshire Chief Constable Sir Norman Bettison, with the power to hire and fire chief constables, set the police force’s budget and “strategic direction” could undermine operational independence and also “be the door that unlocks corruption”.

3)    Smaller councils, more councillors.England, Wales and Scotland now have fewer and larger ‘local’ authorities than any other Western advanced capitalist country.

4)    Direct provision by councils of locally administered services. Most public spending is now controlled by the unelected ‘quango state’ with local councillors responsible for only five per cent of the total public spending in their areas. In addition, where this is in accordance with the wishes and needs of their electors, local authorities should be able to expand their functions under the “general power of competence” to run many things now owned and controlled by the private sector, such as local industry, some types of retail and wholesale distribution and a broad range of cultural facilities.

5)    The ending of all forms of marketisation, privatisation and profiteering in central and local government. Over a third of local government services are already marketised and privatised. However, there is no evidence to support the claims of the dominant neoliberal wings of the three main parties that the marketisation and privatisation of public services is value for money, either for taxpayers or for the users of services.

6)    Abolition of the council tax, stamp duty land tax and national non-domestic rates to be replaced by a system of annual land value tax plus progressive taxation of income and wealth. In Britain — where 0.3 per cent of the adult population own 69 per cent of the land worth an estimated £5 trillion — a land value tax (LVT) instead of the regressive council tax, stamp duty land tax and national non-domestic rates levied at one per cent could raise £50 billion a year (i.e. twice the estimated amount raised by the council tax in 2009/10). Only freeholders and landlords, moreover, would pay LVT; and the owners of large estates would pay more because their acreage is greater than a semi and they often own valuable sites in town and city centres. In addition, LVT would avoid the main shortcomings of a local income tax (LIT): which would be more complex and costly to collect, especially if it included unearned income not covered by PAYE, due to so many people living in a local jurisdiction different from where they work; and LIT would also be inequitable because of the large difference between mean or average income in more affluent areas and in poor areas.

7)    Ending the City of London Corporation. The anomaly of the City of London – which is a tax haven for the super rich – and retaining the non-residential business vote – which was actually extended in 2002 – is a travesty of democracy that should be resolved by abolishing the City of London Corporation and reconstituting it as the 33rd London borough.

8)    All councillors should only receive the average backbench annual allowance. The replacement of the traditional committee system with the systems of leader-cabinet or US-style directly-elected mayors has created a brigade of full-time career politicians. The working class have been removed from this layer of local democracy; and the average salary for directly-elected US-style executive mayors is now over seven times that of the average backbench councillor’s allowance).

9)    The Single Transferable Voting (STV) System should be used for all elections.  The first-past-the-post system to elect councillors not only fails to reflect fairly the votes cast, but also discourages participation in local democracy. STV, used for the first time in the 2007 local government elections in Scotland, is preferable, and would enhance local democracy. Moreover, the Supplementary Vote system – currently used in mayoral elections and continued by the Localism Act 2011 – in which voters record their first and second choice, should be abolished: since a large number of voters may be denied any say in the second round, sometimes exceeding in number the eventual majority of the winning candidate.

10)   Short-term deposits by councils should only be in publicly owned banks

In addition, Dr Latham identified an alternative economic and political strategy (AEPS) as a  pre-condition for carrying out the above. The 2011 TUC adopted an Alternative Economic Strategy, although it did not contain the anti-privatisation and public ownership policies contained in the People’s Charter adopted by the TUC in 2009. In addition, the Communist Party has called for:

  • a two per cent wealth tax on the richest 10 per cent of the population who own 44 per cent of Britain’s wealth, including private pension wealth, estimated to be £9 trillion (revenue £78 billion a year);
  • a 20 per cent windfall tax on the super-profits of banking, energy, retail, arms and drug monopolies (revenue £16 billion);
    • a ‘Robin Hood’ tax on City transactions (revenue £20 billion a year);
    • ending tax dodging by the super-rich and big business (revenue £70 billion a year);
    • repayment of money owed by bailed-out banks (£131 billion).

Such measures, if implemented, would not only close the deficit within five years: but also enable expenditure on public services to be increased – not slashed. N.B. only 10% of the cuts have so far been made and more are in the pipeline.

Do you agree? Are there any policies Dr Latham overlooked? Let us know what you think. Dr Latham’s complete paper may be read at  http://communistuniversity.wordpress.com