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Low Wage Economy Is Killing The Government's Austerity Plan

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http://uk.businessinsider.com/britains-low-wage-economy-is-killing-the-governments-austerity-plan-2014-11

The Coalition government's plan to cut social security spending over this parliament has failed to deliver the promised cost savings — mostly because of Britain's jobs-rich, but pay-poor, recovery.

And here's why: "the private rented sector has grown faster than expected, private rents have grown faster than expected, and earnings have grown more slowly than expected — all of which increase housing benefit spending".

So what is the money being spent on? Increased housing benefit is in effect a subsidy for the private rental sector rather than a cash benefit for the nominal recipient. The failure of successive governments to increase the social housing stock to meet higher demand coupled with weak wage growth for the lowest paid has effectively forced the state to increase this subsidy to private landlords.

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High rents makes both the productive people poor and the country poor...makes the unproductive land speculators, low interest borrowers, rent seekers and lenders rich.

Now it is possible to earn more doing nothing productive than doing something productive. ;)

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Perhaps we could pay some British tradesmen decent money to build a load of houses. No?

Dreamer

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So we stop paying so much HB what would happen?

I know when I got HB I went and rented the s*****iest pad I could within the parameters of the HB system as most of my rent above a certain basic level was picked up by the council. If I'd not had HB I would have been able to afford something much more modest but that would have been it, rents would probably have adjusted too.

hmm funny you can't use words like s*****y on HPC, the swear filter makes it look like I might have said shittiest rather than s*****iest.

Edited by davidg

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Over the last five years in London the average house has earned more than the average worker and the house does not pay any tax. In some areas a four bedroom house is earning £50,000 every year after tax (no tax payable). Piles of bricks generating wealth.

A home for a fad wad of the easing money?....new money has to find a home somewhere close to home of creation.

Couldn't they have been more imaginative and adventurous and made better use of it....do something with it where more people could benefit and make use of it......it is all rather selfish and one sided, special people in special places that own special bricks, deserve special treatment. :blink:

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About a quarter of Tory MP's are landlords- so at least some of those people denouncing 'scroungers' in the commons are pocketing taxpayer money for their rented properties via housing benefit.

The strange thing is that by becoming a 'flexible' low wage economy we were supposed to get richer- not sure quite how but whatever the plan it clearly is not working. After all you can't run the state on income tax if nobody has much of an income to tax

When the rich can no longer bleed the poor to maintain their lifestyle you know we are in serious trouble. :lol:

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Housing costs eat up serfs money to spend in wider economy shocker.... The govt appear in a catch 22, to lower the benefits bill means lower rents, which possible could trigger a BTL crash, triggering low house prices and trigger a banking crisis. Alternatively they can keep rents high, have a high benefits, keep high house prices but run the long term risk for fiscal collapse trigging a collapse in house prices and a banking crisis.

Obviously they hope they can keep kicking the can.

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Why the surprise at taxpayer funding of privatised renting? It is just a logical extension of an economy where increasing amounts of taxpayer funding subsidises the private sector as wages are no longer enough to pay for goods and services.

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Government payouts cause prices to rise shock...Evil Landlords take the money free on tap.

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Over the last five years in London the average house has earned more than the average worker and the house does not pay any tax. In some areas a four bedroom house is earning £50,000 every year after tax (no tax payable). Piles of bricks generating wealth.

Why invest in a risky new product, or operate a factory, when it's far less risk free to buy a BTL?

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Why invest in a risky new product, or operate a factory, when it's far less risk free to buy a BTL?

Is it because a pile of bricks produces nothing at all, and needs constant expenditure?

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Why invest in a risky new product, or operate a factory, when it's far less risk free to buy a BTL?

That's because it merely appears to be less risk free. Normality is currently it can only go up in value. At some point there will be a shock and it won't.

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Housing costs eat up serfs money to spend in wider economy shocker.... The govt appear in a catch 22, to lower the benefits bill means lower rents, which possible could trigger a BTL crash, triggering low house prices and trigger a banking crisis. Alternatively they can keep rents high, have a high benefits, keep high house prices but run the long term risk for fiscal collapse trigging a collapse in house prices and a banking crisis.

Obviously they hope they can keep kicking the can.

If the banks havn't sorted themselves out after 6 years of warning, time bought with the livelihoods of millions, then they deserve to go into the dustbin of history.

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