Rachel Reeves goes after the poorest to pay to build more housing!

Right, so Rachel Reeves is about to screw up the housing mix of this country even more than it already has been by the Tories, and she’s going to take us all for fools by implying what she’s going to do is all about making housing more affordable. We need more social housing not less, yet less is exactly what she’s going for, as she seeks to functionally wipe out the notion of social housing by, over the next ten years, raising the rents of those living in them to the higher rate of so-called affordable homes, which are themselves all too often unaffordable and her reason for doing that, is so she can build more affordable homes! Housebuilding off the backs of some of the poorest people to build housing they might not be able to afford, by pricing them out of the housing they can afford. All to avoid taxing the rich, which I suppose she’ll still claim she can’t see the point of. Rachel Reeves is an economic idiot, who appears to get off on picking on the poor. She’ll be tougher than the Tories on benefits she once said, well, she’s making good on that and making these people pay to build more housing!
Right, so I can’t quite get over the sheer combined cruelty and stupidity of Rachel Reeves this morning as the Financial Times have broken the story overnight of some of Rachel Reeves plans on housing and the standout one is that over the next 10 years, instead of building more social housing, more housing that is genuinely affordable and not affordable in the same sense as so-called affordable housing, which often isn’t; Reeves is instead going to wipe social housing out in effect, by hiking the rents on social housing above inflation, essentially working to level up the rent of social housing to the point it ends up – albeit we’re yet to see the figures to precisely confirm this – but it seems reasonable to conclude that they would end up classed as affordable. Rachel Reeves is effectively going to make more housing unaffordable so that she can build more homes that will also be unaffordable. If you take this story and combine it with Keir Starmer blocking Sadiq Khan from introducing rent caps, it seems clear that Starmer’s Labour are kissing landlord backside big time here with this policy, because who do you think will have the money to buy the affordable homes, or rent them if not on the open market? Are wages going to go up above inflation? I doubt it.
This is just heaping cruelty on those not just on benefits, but lowest earners too, so many people cannot get on the housing ladder themselves because they don’t earn enough, so many people are screwed over by rents that take too big a chunk of their earnings, that they can never save for that deposit. That is now going to be rolled out to social housing providers ie local council and housing associations, allegedly so they can be freed up to build more affordable housing, which is all many of them build anyway, very, very little social housing is built anymore, yet it those living in the most stable and truly affordable social housing that are going to have to pay for it. The optics are perverse.
Of the affordable housing put on the open market, most will get bought up as buy to lets – I appreciate Labour have ended no fault evictions and the like to help renters, this is good, I can’t fault that – but when rents are going to be driven up from council and housing associations closer to open market rents, with their waiting lists, people are going less inclined to wait, a lot more people will just accept what might be a not too indifferent monthly rent – those that can afford that anyway. Other’s who may be on the waiting list might end up being confronted with rising rents for housing they’ve waited a long time to bid on, to apply for, that is now no longer affordable, but therein lies another problem Reeves is creating here.
I certainly don’t believe that Rachel Reeves wants people to be homeless, to drive that up, she just doesn’t want to tax the rich, she enjoys punching down on people at the bottom of the income scale and appears to blame them for being there. Her husband Nick Joicey was for years involved at the DWP, you can’t help but wonder where her desire to attack those on benefits particularly comes from, but if you’ve lived on that system, then you know that’s exactly what the DWP has done and you can’t but wonder if there is some sort of connection there.
But for as much as Reeves might desire to punch down on those who’s job doesn’t pay enough, or might be disabled, whatever the reason might be that someone is in social housing, their housing costs will have to rise with the rent, which will see a rise in the benefits bill, up to the point the benefit cap kicks in anyway, which of course has itself always been a postcode lottery, but this move will drive the benefit bill up to meet the cap in more places, driving more people into debt and that would result in more homelessness. And I remind you that Reeves justification for all of this, is to build more affordable homes. How, if the benefit bill ends up being certain to rise as a result of higher housing costs, is this freeing up cash to build more housing?
Well whilst you might bemoan stories coming down the line of the benefits bill rising, though of course Reeves has plans to slash benefits yet too, so this could yet end up being a double edged sword for those living in social housing, the higher rent is exactly what some councils and housing associations want to be able to build their housing. With all that extra cash coming in, they might be able to do that, and with Labour’s plans to relax planning rules to get houses built it might deliver the buildings, but not necessarily people who can afford to live in them.
The other aspect to this, is that, in typical Rachel Reeves fashion, this isn’t even a new idea, it’s another one of George Osborne’s – does she actually have any ideas of her own, or did he just giver his notes from his time in office? It makes you wonder.
The fact is the Tories discovered they couldn’t sustainably keep hiking social rents and its that rent increase versus housing benefit costs balance that made it so.
David Cameron during the coalition years tried this, an annual rent settlement scheme was introduced in 2012, where rents would increase by the rate of the retail price index plus 0.5%. By 2015, George Osborne was forced to row back on this and for the next 4 years, rent increases rose by below the rate of inflation, because the housing benefit bill skyrocketed. The Tories tried again in 2020, because the pandemic presumably provided the perfect cover for them to try out repeating a mistake by doing the same thing and hoping it would work, but then Bozo the Clown opened the country up too fast after the pandemic, which led to inflation shooting up to 11%, so rent increases were capped again at below that rate, though still high, at 7%. Over the last 14 years, this has been tried twice, and Rachel Reeves, so averse to tax changes that would make the wealthiest in society pay a tiny fraction more, is going for third times the charm and going harder than the Tories ever did – a 10 year plan with rent increases equivalent to the consumer price index, this time plus 1%. Taxing the rich would offset very cheap to borrow, around 1% at the moment, government spending to build housing instead, or inject that cash into local councils build, or housing associations, given they are in the main non profit organisations. It would free up a lot more money too and go a lot further to deal with our housing crisis meaningfully and to a greater degree without inflicting more hardship on those with the least.
For the temerity, for the nerve of wanting to live in state owned, subsidised housing which matches their incomes, those lucky enough to still live in a proper social house, because they are thin on the ground these days as it is, has decided these people deserve to punished instead. The Tories have already demonstrated this doesn’t work, it is social and economic insanity to do this and the reputational damage to Labour will be off the charts. The party that is supposed to be on the side of ordinary working class people, the party of workers, of trade unions – and I hope they are spitting rivets, any credible one worth it’s salt and led properly should be – has instead positioned itself on the side of the landlords and the rentier class and whilst they claim more money will be freed up to build with, with the housing benefit and universal credit housing element bound to increase, will that even be true? I doubt it. The party that rebuilt Britain, that did away with the slums and embarked on a major housebuilding campaign after World War II when the public finances were so much worse, that created social housing, is now going to kill it off. It simply isn’t a Labour Party, they aren’t helping ordinary workers, those lowest paid in sociality, they’ve decided to punish them for being poor instead and this is just one policy area, Reeves hates benefit claimants, many of whom will be in work, others who cannot possibly and we’ve still to see what cuts she has planned there.
Social media has of course had a say on all of this news that broke overnight.
James Nelson wrote:
‘Labour: "we shall make housing more affordable by building more homes"
everyone: "so how will you fund this"
Rachel Reeves: "by making housing less affordable of course"
I wish I was making this up’
Fundamentally, that is exactly what is happening.
Neil Schofield-Hughes wrote:
‘The sheer utter abject stupidity of making a dire housing crisis worse in the short-to medium term, and impoverishing further many who are already in dire need, in the vague aspiration of longer-term building. All in the name of arbitrary fiscal rules. Utterly clueless.’
Completely right, I hadn’t brought up the fiscal rules, but that is Rachel Reeves choosing to tie her own hands and not borrow to invest, leaving her to make stupid choices such as the one she has made here. If Labour want fiscal credibility, they’ll be ditching her ASAP, but of course they won’t Starmer is even more economically ignorant and needs her to hide behind.
And Bill Cruickshank had one of the best sum ups of this:
‘So have I got this right? Reeves is planning to raise the rents of those already in social housing who are already struggling, to pay for more social housing.
So she is going to tax the poor to help the poor? The UK is now a dystopian nightmare.’
Not social housing Bill affordable, but that isn’t affordable either. For reference, affordable housing can be anything up to 90% of full market rate, so not much of a gap as I alluded to earlier and as I keep saying, not necessarily affordable either, but social housing is around 50% of market rate, so the damage being done to people who can afford that, but not significant hikes without either more housing benefit or equivalent or a significant wage rise, but that requires economic growth and the only thing growing in this Labour government sadly is cruelty combined with idiocy.
This policy actually benefits absolutely nobody. It will cost more in housing benefit, so there is no saving. Tenants can’t save as they’ll pay more rent, local economies will suffer due to people simply having less money to spend, so there goes Reeves’ much vaunted growth and while Housing Associations might laud this, local councils who’s funding has been cut across a wide swathe of services will be using any cash raised to block more funding gaps.
Where millionaires and billionaires are ripe to be taxed their due on their vast amounts of hoarded wealth and would make a real, meaningful difference in dealing with this housing crisis if they were, instead a small number of the worst off, will be hammered for a tiny return, which won’t put a dent in matters by a truly nasty bunch of red Tories.
Meanwhile if you want to get into Rachel Reeves’ head a bit more to try and understand why she’s making abjectly stupid policy decisions like this, will which no doubt serve to see Labour’s approval ratings plummet hard and fast, she does like to make reference to the national finances being just like a household budget, which clearly isn’t true, the nation can print any money it needs, we can’t do that at all. But a rather clever economist, tired of Reeves making this comparison as well as plenty of other Chancellors over the years, decided to conduct a thought experiment supposing the national finances actually were like a household budget. And he discovered Reeves is still failing in her policy choices on that measure too! Get the details of how worried we should be that this person is in charge of the nations pursestrings in this video recommendation here and I’ll hopefully catch you on the next vid. Cheers folks.