Wednesday, 8 February 2012

The Victoria Voice has Woken

After a 3 month hiatus, it would appear that a recent post of mine has helped the author of Victoria Voice, Cllr Ian Gilbert, to find his blogging voice again.

To some on the left, it would appear that the proposed benefits cap is like a red rag to a bull. The idea that no household should get more than £26,000 in benefits – equivalent to a pre-tax salary of £35,000 – is overwhelmingly popular.

British voters subscribe to a strong idea of fairness, particularly when it comes to the idea that working should be more rewarding than not working but it astounds me when some on the left, like Cllr Gilbert, bleat on about equality and fairness and standing up for the working man but fail yet fail to back the Welfare Reform Bill.

Cllr Gilbert's assumption that capping benefits at £26,000 will force people to move out of central London is fatally flawed because socialist economics fails to recognise that the economy is dynamic.

The truth is that some of the main beneficiaries of overly high benefits are private landlords. They may not get payments from the DWP direct, but they reap the cash anyway through inflated rents, secure in the knowledge that every time they put the price up, benefits levels are raised to pay them. This is a racket, exploiting the foolishness of officials in pumping more and more money out and the absence of taxpayer power to rein in this behaviour.

If rents were fixed then yes, some would be affected by capping benefits but rents aren’t fixed, they are fluid. If you remove a large amount of cash from the system then prices will fall. By arguing for the system to remain as it currently is, rather than accept a cap, this supposed “progressive” is effectively fighting the corner of benefit-farming landlords.

There are knock-on benefits to removing the artificial inflation in rents, too. If renting property out becomes less profitable, the desire and the financial means to buy-to-let will be reduced, helping to address the shortage of affordable housing that is so often highlighted as a problem.

1 comment:

Julian Ware-Lane said...

Your argument is so flawed that I do not know where to begin. You want rents controlled, but are not advocating any method of doing this. You believe that the high rents in central London will fall because benefit recipients will be forced out. This ignores the reason why the rents are so high in the first place – demand. By advocating a market-based solution one would hope that the laws of supply and demand would come to your assistance. Instead, the reality of long waiting lists and sought-after areas will mean that landlords will not have to modify their behaviour at all.