Monday, Dec 08, 2008
The peculiar case of middle-class benefits
The peculiar case of middle-class benefits: Sunday Times
"When is a scrounger not a scrounger? Answer: when his state benefits are helping to keep him in a nice house with a £400,000 mortgage."
It's getting late so apologies if this has been posted already.
Posted by becky @ 12:03 AM (1089 views) Add Comment
14 Comments
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1. becky said...
I know it's bad form to comment on your own post's but I'd like to highlight the following from the article:
"Trying to prop up house prices by letting over-stretched homeowners defer payments is cheating frustrated first-time buyers who sensibly refused to pay inflated prices. The Government now expects them to pay for others' irresponsibility twice over: once through their taxes and again by depriving them of the cheap properties that would flow on to the market if repossession is allowed to run its course."
2. little professor said...
Just came on to post this - great article.
3. it_is_going_with_a_bang said...
The answer being that Gordon is desperate not to win a war but to win a battle - that battle being elected as a PM.
The wider issue of everything else that has gone on and will go on means nothing to someone who's prudence has gone out of the window.
4. drewster said...
Becky,
Brilliant post, thanks. Don't worry about re-posts. The system will automatically warn you if you try to post an article that has previously been posted.
The government can't afford to bail out everyone. A lot of this is just spin, it's about being seen to help rather than actually helping. Their own figures show only 9,000 people will be helped. (That's a cost of £111,111 per mortgage saved - are those figures right?)
"Middle-class fecklessness derives from the same greed and impatience as does working-class fecklessness."
Absolutely. The same ridiculous sense of entitlement covers both layabouts on the dole and debt-enslaved middle classes. At least the people on the dole are more honest about it!
5. plato said...
This is an extremely complex issue all round. The only possible solution that I can come up with is for government via local councils to pay the lenders a 'fair price'. This means the lender agrees a 'compulsory' settlement figure, obviously taking some loss in many cases.
The homeowner becomes a tenant, must work where able and repays the new loan on new terms to the council.
The homeowners remain housed, contribute and the banks make a fractional loss which will be a far better alternative than repossession.
No matter how many times I look at this I cannot see any other social or fiscal remedy. The important thing is get these silly prices down once and for all,serious regulation back in the industry and most importantly of all stop these complex,desperate 'schemes'.
Sorry I can't get into a discussion on this really important issue tonight as it's very late for me. Perhaps we can continue some other time.
Good post and deserves a lot of thought.
6. Watchingthewheels2 said...
This article must surely prove to all who ever doubted how far the labour party have moved,not only to cover the 'Centre Ground',but the Right of the House.The wool has been pulled right over our eyes,"the parking on the left is now parking on the right,and their beards have all grown longer overnight"-(to quote a lyric by one of my favorite bands-The Who-"Won't get fooled again").The poor get poorer and are made to feel guilty for every penny whilst the "middle classes",or those who have borrowed to "aspire to be" the middle classes are propped up by this"Wolf in Sheeps Clothing" Government.Bring back the True Labour party and the values it stood for.
7. Loneranger said...
Excellent post Becky! I have forwarded the link to many of my friends, we were discussing these points of views in the pub the other night and it was interesting to see the same discussion taking place. This could really split the country in my opinion as I witnessed friends at each other's throat during our bebate, there is some real anger out there, one 'friend; even had the audacity to say that the government was doing him a favour as he can now afford to finance his second palatial home in the south of the country! This coming from the same 'friend' who called me a loser two years ago for renting property!
I am a saver and a renter who is now subsidising the rich to continue their lifestyles and dinner party boastings of their assets, whilst looking down their nose at me. This whole thing is insane!
8. inbreda said...
And they are planning to extend the scheme to BTL mortgages. This, I am afraid, is the point at which I am willing to riot.
9. matt_the_hat said...
7. Loneranger - maybe you need to get some new friends.
The country and possibly the world in my opinion is on the brink of civil unrest. Who in there right mind as a potential FTB is going to work to support 1/2 a retired baby boomer when they can't afford a house of their own. The greedy generation in 4-5 years away from retirement and soon they will start to pull resources out of stock/bond markets to flourish their lifestyle. The only generation in a long while that has lived with continual peace and prosperity, their legacy: war, famine and poverty. This will be the next flash point of the 21st century
10. str 2007 said...
Can I just make the comment - where does the 9000 homes come from.
I think there are a lot more homes than that.
Has anyone actually considered the situation of 100,000 households claiming under this scheme.
In fact unemployment is set to rocket by at least 1 million.
As far as I've read, you don't have to be unemployed to claim this, just have reduced income due to the recession.
So that is virtually every single self employed person for a start.
I believe a reduction in overtime/bonus also qualifies - so that includes everyone else.
And as has been pointed out £400k mortgages have been taken out not just for primary residence but to fund BTL portfolios and 2nd and 3rd houses.
Is there actually anything that can be done to stop a government spending money that isn't theirs before an election ?
The Conservatives (or any other opposition for the matter) are no good as they don't want to upset the Sheeple who's heads are in the sand either.
It quite literally is like saying we won't have a recession as we'll simply print more money (or borrow it from the children).
For goodness sake we've just come through a credit induced boom to find our country and it's population up to their eyeballs in debt. The answer is more debt ?
How on earth are we likely to pay this back. The good times will never come if we cut back enough to pay back all this extra borrowing.
11. goweresque said...
I suspect the scheme will prove unworkable. Firstly the banks haven't signed up for it yet as there are no details or legal documents available from the govt to show who would qualify and for how much etc etc. Once you get into the detail I think it will become obvious that you can either set up a scheme that is lenient in its rules, in which case there will be massive take up, huge cost and potentially huge fraud as well, or you can have a scheme that has very stringent rules, in which case very few,if any, people will qualify.
I would hope even this govt would not agree to the first option as there will not be the money even under the current massive spending splurge to pay for it. If its the second then the scheme will have little impact beyond the headlines, and will be derided by the broad mass of the population who don't qualify.
A few issues that would have to be assessed for example - what assets are taken into account (cash, shares, pension funds, second homes (possibly abroad), other expensive personal items (Rolexes, jewellery, antiques, paintings, 2nd/3rd cars). Will the total household income be assessed, rather than just the mortgage holder? Will you have to be in arrears before qualifying for the scheme? If so how will they stop people going into arrears voluntarily, who actaully have the money to pay? What about credit card debt, and the practice of the CC companies now putting charges on the house? How will they prevent people getting a free 2 year payment holiday who have no intention of continuing to pay the mortgage after the free period is up? Will fraudsters be prosecuted? Will the govt persue people who default for the extra money they rolled up? Will thay bankrupt people if they cannot pay?
12. str 2007 said...
goweresque
As you quite rightly point out very complicated. How many more civil servants would be employed to oversee it ?
And as we all know on here the bottom of the market is probably about 2-3 years away. Therefore could a bank of repo'd now and got say £250k for a £400k house only to find in 3 years time when time really has run out that that home will only fetch £150k.
Who picks up the bill for £100k.
Will the ex homeowner be able to claim they were mis sold a bailout by the government and get them to pick up the £100k (extra) shortfall ?
How they can hang a £1billion price tag on this bailout without clearly releasing all the details and showing the scheme stress tested properly is beyond belief.
13. mdmick said...
Maybe the plan is to be deliberately vague - to make a wide pool of people believe that they have a safety net.
Broadly stated principles is a standard way of attracting voters.
14. bertywooster said...
Gordon is covering all the bases in preparation for the election.