From the Evening Standard:
Sadiq Khan has ordered Transport for London to sell off surplus land to property developers at below market value to ease the housing crisis. The Mayor instructed transport chiefs to dispose of an unused site at Kidbrooke in Greenwich at a “financially disadvantageous” price where 400 new homes will be built. The move means that more land owned by TfL — equivalent to the size of 16 Hyde Parks — could be sold off at a cut price to house-builders.
We know that Khan is a big friend of the developers and so on, but is he mad?
No of course not, in reality he is not selling anything at undervalue:
Tories urged Mr Khan to drop his campaign promise that 50 per cent of new homes built on public land should be affordable because it would drive down the value of the land.
Making some developers sell houses cheaply to long-term residents or selling them to housing associations to let for slightly below market rents is one of those politically appealing ideas (nonsense in practice, but there we are).
So clearly, if the 'developer' can only make a killing on half the finished units and a normal commercial profit (cost-plus) on the other half, the amount he will bid for the land is halved. TfL's loss is the next owner's or tenant's gain. But as this is an auction - and again assuming that the Mayor holds them to their promise rather than quietly shelving it after a couple of years - those developers are in fact paying full market value.
So really, the Tories are challenging Khan's pledge for 50% affordable. The only way to get the maximum price when selling is to chuck the affordable homes idea straight in the bin. AFAICS, Khan was elected on the basis of these pledges, and he is perfectly entitled to stick to them. The Tories hate the poor, especially tenants, and want prices and rents to be as high as possible*. So the Tories are weaselly enough to waffle on about value for the taxpayer with higher prices and rents as an unfortunate side-effect.
* So does Labour, of course. The irony being that the Tories' own Mayoral candidate promised something similar:
So, if I’m Mayor, I will set a simple rule that any homes built on mayoral land – as many as 30,000 – will only be sold to Londoners – people who have lived or worked in London for at least three years and don’t already own a home. My “Londoners First” rule will be in force for the entire first year that the houses are on sale. It can be delivered because on mayoral land the Mayor sets the rules.
This policy is not quite as bold as Khan's but if actually enforced (ha!) would also have led to developers paying less for ex-TfL land.
Wednesday, 24 August 2016
From the Evening Standard:
From the BBC:
Women in the UK returning to work after having a baby fall even further behind men in earning power, a report by the Institute for Fiscal Studies has said. The gap between hourly earnings of the two sexes becomes steadily wider after women become mothers, the IFS says. Over the subsequent 12 years, women's hourly pay rate falls 33% behind men's.
The IFS says this is partly because women who return to work often do so in a part-time capacity and miss out on opportunities for promotion.
Robert Joyce, one of the IFS report's authors, said women who chose to cut their hours on returning to work were not penalised with an immediate cut in their hourly wages. However, he said: "Rather, women who work half-time lose out on subsequent wage progression, meaning that the hourly wages of men (and of women in full-time work) pull further and further ahead."
Which is what I have been saying for years - there is no real gender pay gap, it is a mothers vs everybody else pay gap. You do not need to be an economist, social scientist or statistician to suss this out, most people will have noticed this themselves first hand (my wife and I certainly have).
Ben Southwood of the ASI takes the more cheerfully libertarian view in City AM explaining why this is no biggie and the real reasons for the apparent residual ten per cent pay gap which cannot be explained by motherhood alone, worth a read in full.
Nonetheless, to the extent that we "should" do something about the gender pay gap*, this is the place to start. IMHO, a Citizen's Income and more generous Child Benefit** instead of the Child Tax Credit crap would more or less eliminate the pay gap in net terms.
* My view is 'big deal'; the total wage pot is what it is, if mothers were paid more, then everybody else would be paid less, so for most couples it evens out. Her Indoors earns barely a third as much as I do (she is underpaid and I am overpaid, by definition) but - like most women - she somehow gets to spend considerably more of our total net/discretionary income than I do.
** The IFS say that the pay gap increases steadily after a woman has had her first child. Other sources correlate this with the number of children - the more children, the bigger the gap (probably a bit of both). So a more generous Child Benefit per child, paid to the mother would fix this nicely, and scrapping means-tested Child Tax Credits increases the incentive to work, so that looks like a win-win to me.
Emailed in by Sackerson from Iceland Review:
"I thought my days were numbered,” stated María Jóhannsdóttir, cattle farmer at the farm Kúskerpi in Skagafjörður, North Iceland, after being attacked by a cow, which was about to calve, RÚV reports…
“I walked to her and then she started mooing loudly and threw me to the floor. She stepped on me and banged her head against me and held me there for about ten minutes while I tried to stand up,” María recounted.
Finally, María got to her feet, sore and in pain. “I was able to lean against a rail which is a meter up on a concrete wall, and I could hang on to it. She kept going and I was so overcome and exhausted that I thought my days were numbered, right there.” María held on to the rail for another ten minutes while the cow kept attacking and even bit her. She finally managed to get out of the stall.
“I was completely finished, and I had fainted there, where we feed the cows. I tried to stand up, but I couldn’t. Then my grandchild arrived… and asked if something was wrong. I told her to get help, to tell grandpa I was hurt.”
María was transported by ambulance to Akureyri. She considers herself lucky not to be seriously injured. No bones are broken, but she’s bruised all over. The cow has been calm since it calved. María reports that in her 33 years as a cattle farmer, such a thing has never occurred to her, although cows are known to act aggressively when they are close to calving, especially if they’re outdoors.
“No, I’ve never encountered such incredible wickedness, but then, again, the stable is brand new, and maybe the stable disturbed her, or these new surroundings,” María suggested.
Tuesday, 23 August 2016
As prompted by Graeme, here are the highlights from the last seven days.
Eurozone economic recovery picking up despite Brexit, PMIs show
Persimmon reports soaring profits and ‘robust’ demand despite Brexit
Brits Take to the Shops Despite Brexit
Hedge Funds Avoided Big Losses Despite ‘Brexit’ Shock
Car sales boom will continue despite Brexit, says one of Britain's biggest dealers
Demand for IT pros high, despite Brexit
Pound hovers at $1.30 as UK jobless claims unexpectedly fall despite Brexit shock
Mining sector outlook improves despite losses and Brexit
And my favourites, given the topic of this week's Fun Online Poll:
DFS shrugs off Brexit as it basks in Team GB glory
Team GB’s Olympic medal haul is a blissful break from Brexit blues
The results to last week's Fun Online Poll were as follows:
When do you think the UK government will trigger Article 50, if ever?
2016 - 1%
2017 - 42%
2018 - 5%
2019 - 5%
2020 - 5%
Later - 2%
Never - 39%
Let's hope that the (slim) majority for 2017 are correct. I'm not sure whether those who voted 'Never' were optimistic Bremainers or pessimistic Brexiteers.
A good turnout of 110 votes, thanks for taking part.
An lo, to this month's taxpayer funded propaganda fest aka the Olympics. Normally I pay no attention to these things, although the rest of my family likes it and watches a lot of it on the telly. After a few days, it the British team was doing rather well in the medals table and I kept tuning back in to see whether the inevitable had happened and we had collapsed down the table again. In the end I was hooked and amazingly, we did not snatch defeat from the jaws of victory, as is tradition with English/British national teams.
All of which prompted this article by the Daily Mash, "Man experiences strange patriotic feeling".
So that's this week's Fun Online Poll, what's your reaction. Vote here or use the widget in the sidebar.
Monday, 22 August 2016
From the BBC:
German carmaker Opel plans to cut its workers' hours this year because it expects Brexit to hurt its UK sales. A spokesman for Opel said about 5,000 workers at its Ruesselsheim and Eisenach factories would be affected. Opel is owned by US car giant GM.
It has been mentioned that the Germans, for whom exporting is the national religion, are keen to maintain free-ish trade with the UK after Brexit and that their car manufacturers are putting pressure on the government in that respect. So this story is actually just about plausible - in the long run. In the short term, nothing has happened or will happen for a long time, which means that the excuse is a little thin - unless this is the German car manufacturers' subtle way of putting political pressure on the government, in which case fair play to them.
The pound has weakened against the dollar and euro since the UK's 23 June vote to leave the EU, adding costs for firms exporting to the UK.
That also seems plausible at first sight, although falling GBP does not add to exporting costs, it reduces them if anything and is more likely to put downward pressure on selling prices. Car manufacturers face a strange 'kinked demand curve', have huge sunk costs and are tied to a certain fixed level of average-cost minimising output, which means that they are probably better off maintaining GBP prices (and accepting lower EUR income) than cutting production. We will see.
So in true Mythbusters' fashion, let's call that one plausible.
Another German car giant - Volkswagen - has also introduced short-time working ("Kurzarbeit") at several factories, but not because of Brexit. It has been hit by slow deliveries from some component firms, the German broadcaster ARD says.
Why was it necessary to add "but not because of Brexit"? They might as well say "but not because of the weather" or "but not because of Germany's poor showing at the Olympics" or anything else totally irrelevant.
Sunday, 21 August 2016
Emailed in by Ben Jamin', from The Guardian:
"Loatheallpoliticians: Your idea for LVT is shi*t. No one will go near it and it hasn't a hope due to the myriad of [sic] problems it would bring, most noticeably it's [sic] complete detachment from ability to pay.
Poor Widow Bogey yet again. Roll up and defer. Apart from that, most working households could afford to rent their own homes, by definition, and the LVT will always be less than the full market rent, especially if their other tax bills (income tax, NIC, VAT) were halved as a quid pro quo.
Ben countered with this: "The compensation (prices) we pay for other goods and services aren't set by ability to pay, incomes or profits."
If we are looking at an individual deciding what to spend his money on, this is quite clearly true, most suppliers don't give discounts for low income people, although where the price includes a large amount of rent/super profit and the goods or services supplied can't be re-sold, there is such a thing as price discrimination.
The moral being, why should LVT/rent be any different? The landlord/vendor rents/sells to the highest bidder and is indifferent where the tenant/purchaser gets his money from or whether he will have to live off baked beans to afford it. The same with LVT, you get what you pay for, even if you have to live off baked beans. The other point being that for once, higher earners, who will occupy the higher-LVT homes will be getting something specific in return for their tax payments, there will be no excuse for moaning about tax bills - just trade down if you don't like it.
LAP hits back with this nonsense:
"In reality they are, as without the ability to pay we don't purchase (or try to purchase). As the amount of people trying to purchase (demand) impacts upon the cost of a product and hence supply, how many people can afford a product is a major impact on price."
With freely traded goods and services, this is back to front. People will invent and produce new stuff if it is cheaper and/or better than what it supersedes (radio - black and white TV - colour TV - flat screens - HD TV etc). Production costs can be predicted in advance, it is up to the producer to work out whether the likely price (i.e. the price of similar but inferior products) is sufficient to cover production costs plus reasonable profit margin. If a reasonable profit margin is unlikely, those things don't get produced, this is a binary thing, yes/no.
So LAP has now gone round the clock and contradicted himself. The only thing where price is set solely by ability to pay is in fact rent, rent is set by the ability/willingness of the highest bidder to pay. There is no real 'cost', the landlord's price is the tenant's cost. Whether to build a new home is a binary decision, yes/no, but the land does not need to be produced and output is fixed.*
Most homes in most areas are fairly homogeneous and the average rent is set by average incomes in that area. Any surplus over the cost of bricks and mortar goes to rent. Average incomes are dictated by how well the economy is doing generally and landowners - in their capacity as landowners - contribute nothing to the economy.
So the LVT in any area is set entirely by ability to pay, it is not "completely detached" from ability to pay, it is 100% dictated by ability to pay. What it means is that lower income people will end up in smaller/cheaper homes and higher earners will end up in nicer homes - which is exactly what we have anyway, a few Poor Widows aside.
* This touches on another twattish KLN, "The supply of useable land is not fixed. We can get house prices/rents down by building more homes." Firstly, LVT is not just about the narrow issue of getting rents down, it is about untaxing production. Secondly, you can't. Thirdly, even if you could, the total amount going to land rent stays the same i.e. larger number of units each worth a smaller amount of rent.
Saturday, 20 August 2016
From the BBC:
Private landlords in the UK received twice as much in housing benefit last year - £9.3bn - as they did a decade ago, a report says. The National Housing Federation (NHF) study said the increase was due to a big rise in the number of private tenants claiming housing benefit. The NHF said this particular group of people had grown by 42% since 2008…
A government spokesman said it had been taking action to bring the housing benefit bill under control. He said: "Since 2012 the amount going to private sector landlords has actually been falling - something which the National Housing Federation fails to recognise."
That is probably true, the total bill has been hovering around £10 bn for quite a few years.
"We are also committed to building the homes this country needs and investing £8bn to build 400,000 more affordable homes."
That is a lie, or at best a dishonest use of the word "committed", he does not say over how many years. Make a note of the numbers though. They claim they will spend £8 bn (over an unspecified number of years) on building 400,000 homes = £200,000 per home, thus they are vastly overpaying for the land, this is less than what they firehose at landlords each year. Not only that, for every £1 they spend on building new council houses, they will save more than £1 in future because they will have more rental income and/or lower HB bills, so it is not really a cost, it is an investment in the truest sense of the word.
Here comes the stomach churning bit:
Chris Norris, head of policy at the National Landlords Association, said the private rented sector was responding to the increasing demand for homes from a growing proportion of tenants who are being failed by the social housing sector and housing associations.
"The NHF is clearly still reeling from the news that its members have been ordered by government to reduce spending over the next four years, so it comes as no surprise that they are looking to shift the emphasis and point the finger elsewhere.
"However, the private rented sector plays a pivotal role in providing much-needed homes for tenants so there seems no real purpose in the NHF taking a cheap shot at landlords for what is a failure on behalf of successive governments to adequately allocate its housing budget and to incentivise the building of new homes."
That misallocation is precisely what is benefitting his members, every penny spent on HB for private landlords is a penny wasted and a penny not invested in bricks and mortar.
Thursday, 18 August 2016
Of course, there will always be those who seek to circumvent such rules. But that's isn't a legitimate argument, else we wouldn't have any rules or regulations. Making donations anonymous by law would draw a line, which people would then have to carefully weigh up the pros and cons before deciding stepping over.
My post about the insane bribes for taxi drivers in Queensland turned into a jumbled slugfest about employment vs self-employment status.
In economic terms, there are people who are clearly employees at one end (where the employer needs the same people to come in and do a set job at pre-arranged times everyday - school teachers, bus drivers, shop assistants etc) via those who are self-employed at the other (plumbers, electricians etc who are called in when needed), all the way to (small) business owners. But there are massive grey areas where that can be reasonable room for debate whether somebody is actually an employee or self-employed in economic terms.
The distinction is important for at least three quite separate topics.
1. Vicarious and employer liability
An employer is more likely to be found vicariously liable for the acts of an employee and is also more likely to be liable for injuries etc suffered by an employee.
So if an employee in a restaurante deliberately ignores food safety measures and diners fall ill, the restaurateur is liable. And if the wiring in the kitchen is faulty and an employee is electrocuted, the employer is liable.
Conversely, if the restaurant orders ingredients which turn out to the poisonous and the same evening, diners fall ill, the restaurateur might (or might not) be able to escape liability and the self-employed supplier of the ingredients would be liable to the diners instead (he would be liable to the restaurateur anyway. And if the wiring in the kitchen is faulty and a self-employed electrician who is called to fix it manages to electrocute himself while doing so, then that is his tough luck.
An employee must turn up and be available for work whether there is anything to do or not; similarly, an employee expects to be paid whether he actually did anything or just sat around. If a role is redundant, then special rules apply, weighted in favour of the employee (fair enough up to a point - it is the employer's job to drum up business and he can be expected to plan ahead).
A self-employed person is only called and paid when needed and is usually paid by results (although a lot of rent-seeking businesses charge hourly rates whether they succeed or not). There are other rules to ensure that workers on zero-hours contracts are treated as employees, even though they would be self-employed under this test alone.
The government then messes things up by having the National Minimum Wage and Employer Pension contributions (a hidden tax and a massive subsidy to the pensions companies). The NMW simply does not apply to the self-employed, if you want to mow lawns or deliver parcels or drive a mini cab for £3 an hour as a self-employed person you are free to do so, and there is clearly no bar to the self-employed or small business owners making a loss, i.e. a negative effective hourly wage.
Instead of taxing the least mobile and most highly visible source/flow of wealth (i.e. land and monopoly rights), most governments in their infinite wisdom tax the second least mobile factor of production - labour - at the highest rates. The effective rate on a basic rate employee, even ignoring VAT is about 40%, they just dress this up and split it into half income tax and the other half is split up into Employee's and Employer's National Insurance Contributions.
So there is every incentive for people to tweak things and present what is actually employment under the teal tests 1. and 2. as self-employment. HMRC has exactly the opposite incentive. Shiney gave the example of HMRC reclassifying partners in an LLP as employees. I could give the example of the extra 7.5% income tax on dividends to reduce the incentive for small business/limited company owners to pay themselves dividends instead of salary.
This is insane of course, to the extent that we have to tax incomes at all, it would be far better to tax all sources of income at the same rate to save arguments, rather than punishing employment status and then dreaming up endless anti-avoidance measures.
There, that is my non-partisan crash course in the topic. The problem is that most people start with the answer they want and then work backwards to the justification, for example saying that XYZ delivery company pays less than the NMW, thus automatically assuming that their delivery drivers are actually employed not self-employed.