The Brockley Budget

Beyond the Brockley bubble, there is a momentous budget going on. Please feel free to use this thread to discuss it!

81 comments:

Monkeyboy said...

Excellent, we need some sober nuanced debate. I'll be wearing childrens clothes from January.

Welcome to 2010 said...

well at least Crossrail's safe I think

Anonymous said...

also living off Jaffa Cakes...

Westsider said...

Does this mean that Lewisham Council will have to make bigger savings than the 60m they were trying to find? Council tax frozen for two years?

Anonymous said...

Mung beans to go up 10p in the pound

Wendy said...

Is the Gordonbrock money going to be safe?

Monkeyboy said...

Some good news, you can now create folders on your iPhone and there are new levels available for Angry Birds.

Benefits to increase inline with CPI (i think?)...so a real term cut going forward?

Also 'helping the leasure industry' by removing some taxes on 'furnished holiday homes' or second homes that you may rent for a couple of weeks in the summer. Nothing wrong with owning property but I doubt your short of a few quid if you do.

Not a economist so someone correct me if I'm wrong.

Brockley Nick said...

Housing benefit cuts and public sector pay freeze will hurt a lot of people in Brockley.

Monkeyboy said...

he used that old political trick of picking a few aberrant claims to suggest that claiments are obviously on the make.

Paddyom said...

Its about time we started to live within our means.

A dogger's bank said...

Will this effect the cost of etchings and lithographs?

Brockley Kiwi said...

Capping housing allowances at 400 per week for a 4 bed property seems pretty sensible if not slightly generous.

I just had a quick look and found 10+ 4 bed or more properties currently available in SE4, most looked rather tidy that I'd happily be able to live in.

Matt-Z said...

Darling's increase on cider duty revoked. White Lightning all round!

Anonymous said...

It maybe entirely coincidental but I've noticed quite a few flats for sale, on my road, which is second home/tenantville - in C- Area.

Anonymous said...

I wish I could afford £400 a week rent.

Name said...

It's sad but it's not like people didn't know this was coming if a Tory govt got elected, that's why people who were a bit disillusioned with labour voted Lib Dem, only to see them betray their principles do a volte face and stab the electorate in the back.

http://img.metro.co.uk/i/pix/2010/04/12/article-1271078671475-090C4EBB000005DC-966857_568x355.jpg

Sevenoakser said...

Looks like that new Aladdin's Cave cafe on Brockley Rd in Crofton Park a victim of the recession already ... inside was being gutted today.

Blue sky said...

Oh dear. I must say, based on my one experience of eating there, I'm really not surprised. Heart in the right place but clueless about food.

Anonymous said...

20% VAT????? Bloody hell.

Now Then said...

@name Did not labour jettison all credibility when it chose to accept the thatcherite settlement and continue it for an afterlife of thirteen years? just asking like.

Anonymous said...

Wasn't 17.5% just a temporary thing anyway ?

Anonymous said...

No, it was always 17.5%. It went down to 15% on a temp basis.

Bob the Builder said...

VAT used to be 15% and was initially only introduced for 'luxury items'. It soon crept onto almost all purchases. In the mid 1990's it was raised to 17.5% and it stayed at that rate until Labour dropped it again to 15% for a year to lessen the impact of the Credit Crunch and to keep the economy moving.
It was put back up to 17.5% once the worst was over and now we have a rate of 20%. Alistair Darling and George Osbourne refused to say whether he would raise the rate of VAT before the election.
The writing was on the wallfrom there on.
Builders and hairdressers and other such occupations-whose main overheads are manual labour-could be hit pretty hard by this increase. They only use minimal materials and the majority of what you are payin for is labour. Unlike their materials and products they don't buy-in the labour with VAT on it and then reclaim it-they just charge VAT on your final bill. This 2.5% increase will make it difficult for them to increase their prices inline with inflation and will squeeze their margins considerably. Clothes shops, food shops etc buy their merchandise in with VAT on it-sell it with VAT on and reclaim the VAT every quarter. With labour you charge VAt on the bill but don't reclaim VAT for the labour-times will be tough for those industries.

Polstar* said...

Who's up for a Swishing party then? Freecycle will be going mad.

name said...

It's funny you should mention this prior to this VAT increase announcement, my hairdresser who I've been with for nearly 10 years, decided to shut up shop, and work on a freelance basis. I was shocked, she had a gorgeous salon. She told 'she can't take it anymore'; people aren't spending as they were and the costs just keep increasing. She was paying a a grand for gas, 750 for electricity, monthly.

As for Labour betraying its principles, it was elected as New Labour, it ruled as such, furthermore post 1997 election they delivered on their pledges, remember the pledge card.

To have bold posters decrying a potential Tory policy and then to get into a coaltion with that same party, and to be nodding and applauding a budget which endorses the very thing you were decrying just weeks earlier is a much different order of things.

Anonymous said...

wow, that is a lot of gas consumption.

Was she using a blow torch to do perms?

A Nonny Mouse said...

I don't recall New Labour pledging to increase the disparity between Rich and Poor but they certainly achieved it.

That and Tony Blair being responsible for the death of more people than any other Prime Minister since Winston Churchill.

Case rested

Headhunter said...

I agree that 20% VAT seems excessive but it wasn't long ago that New Lab put VAT down to 15% and everyone was whinging that a piffling 2.5% reduction would make no difference to life during the crunch. Now it's gone up 2.5% everyone is moaning about expense etc

Brockley Nick said...

@HH- yes, the same thought occurred to me! ;)

drakefell debaser said...

Personally I think increasing VAT is a good way of rasing revenue and 20% is pretty much what most of Europe pays anyway. Except Sweden and Denmark of course, who pay 25% VAT and up to 60% income tax. Ouch.

Anyway, almost time for kick off. 2-1 to England I reckon.

Headhunter said...

Although in Scandinavia they do seem to get fantastic value for money for their tax, real cradle to grave care for everyone. Here we seem to pay enormous levels of tax but don't really seem to get much to show for it.

My Japanese mate who lives here is constantly asking me where the tax he pays goes... I have no answer. His granmother who just died in her mid 90s was on a Japanese state pension of about £15000 per year and VAT out there is about 5% I think.

Tim said...

Headhunter - Japan have been consistently spending more than they can afford for the last twenty years. There is a fiscal time bomb set to off there, which will make the whole country substantially poorer. Believe me, Japan is not a good example for us to be following.

name said...

That's the point, she didn't feel she was using that much power, yet she was paying out such enormous bills.


A £400 week cap on housing benefit, on the surface appears reasonable, "why should the unemployed get such palatial sums pay etc etc?" but what's more than likely to happen, is that people on low incomes will be pushed out of the more expensive parts of town Westminster, Kensingston & Chelsea and into to less expensive areas like Lewisham, this is economic gerrymandering, not so reasonable!

And of course VAT is a great way to raise revenue, that's not the point. Labour spent all that money on schemes such as; car scrappage, loans, and the reduction of VAT to 15%, not because they were profligate but as part of emergency fiscal stimulus plain to aid an economy that was brought to the brink because of bank failure*, Keynesian economics. Brown and Darling took that approach because they didn't want to see people unemployed or people in hardship. For Osborne aided and abetted by the Lib Dems, the priority is not people, it is to to reduce the deficit. Meanwhile investment in students, the very young- in pregnancy in care grants, goes to wall. Thanks Lib Dems another key pledge broken, the shafting of students.

I don't know how members of that party look at themselves in the mirror. At least when new Labour went to war there was some dissent in the party.

Headhunter said...

I have to say I still don't see why the taxpayer should stump up extortionate rates of rent simply so that those on benefit can afford to live in Notting Hill and Westminster. The only argument I'm hearing is that it maintains some kind of social balance. It's certainly good if areas like these host a cross section of members of society and not simply the wealthy but I don't think it's worth throwing sackloads of taxpayers cash at. In fact a move like this by government may actually help bring down rental costs as taxpayer funded residents move out of these areas and demand falls.

Anonymous said...

So...if we sort out the 'big immigrant family living in a luxurious house of many bedrooms in a posh part of town all paid by the state' scandal...

The money saved from that means there will be hardly any need to make any cuts at all in the welfare bill?

Tosh! The problem is exaggerated and this is a nothing more than a crowd pleaser from the blue rinse brigade.

This is a small issue in the great scheme of things.

All welfare systems have problems with big families with lots of children. The rules passed on to local authorities will just restrict their room to manouevre and sweep the problem under the carpet. Soon enough you will find stories about little children living in overcrowded squalor and people saying something should be done about it.

Then there will be another pronouncment by a politician providing an instant answer.

This has very little bearing on the huge changes that will be neccessary to straighten out the public finances.

Headhunter said...

I don't think anyone is saying that removing the "immigrant family" from their large house in Notting Hill is going to miraculously save the nation's finances, but it's one element of broader cuts to public spending. A short while ago some argued that the MPs expense scandal only cost the taxpayer something piffling like 5p per taxpayer per year, royalists argue that the Queen and Royal Family barely cost the taxpayer anything (20p a year was it the Daily Mail cited?), however all these costs rolled into 1 make a dirty great whack of public cash. Unfortunately there's no quick 'n' easy "we cut this huge, single cost and all our problems go away" solution and don't think we can afford to put people on social benefit up in large houses in expensive parts of town anymore.

Anonymous said...

I think it is a mistake to think simple pronouncements like this will result in any saving.

The reason we get these anomalies is because there is a national shortage of a housing of a size suitable for a large family.

The government does not finance the building such housing and the private sector is focussed on providing ever more compact studio sized flats.

These cases usually have households of several small children and maybe elderly relatives.

If the alternative is to let them suffer eviction, spilt them up, let them endure overcrowding or move them away to another part of town.

I do not think that this has been thought out. There will clearly be unintended consequences rather than a straightforward saving.

It is political posturing.

Headhunter said...

Where do you suggest the savings are made? What's the catch all silver bullet that's going to save us enough to protect the economy in years to come?

It's certainly regrettable that people may have to move and regrettable that certain areas of town, Lewisham for example, may see people and families on benefit forced into clusters (where rent is affordable) rather than spread evenly through the city, but unfortunately we all have a price to pay.

At least people who can't afford to support themselves for whatever reason will still have roofs over their heads, albeit not in Westminster, Holland Park or the Royal Borough of Kensington and Chelsea or other such select spots.

Name said...

The issue shouldn't be about shrinking the state; cut backs. it should be about growing the economy. This is what is not being talked about. The UK has had sluggish growth for the past 20 years or so. This is the real source of many of the current problems that and the elephant in room issue, of the UK's GDP being over reliant on the financial sector.

Anonymous said...

Too many people too much breeding.....

Limit families to no more than two children

fatlass said...

On the contrary, cuts are required and Labour would have been forced to make various cuts to our public services, had they still been allowed to carry on in power.

To believe otherwise is daft.

Name said...

We have an ageing population, kids are needed as well as wanted to keep things balanced and healty.

fatlass you moving the conversation backwards its a given cuts were on the way, but the issue is the speed and focus on cuts rather than growing the economy.

Headhunter said...

Name - I think views on the way forwards depends on who you speak to. If you speak to Labour/Keynsian economists, they will say that government injections of cash into the public sector will create wealth and growth whereas Tory/right wing economics dictate that the state shrinks and public sector funding is slashed as a way to decrease taxes and put money in people's pockets, as well as reduce tax on business leading to private sector growth, investment and employment creation, wealth etc.

The Tories are in power, so the latter philosphy is dominant whether you like it or not. I'm afraid whichever way you cut it, the public sector, bloated on Labour cash injections is now in for a rough ride.

As for reliance on the financial sector, I'm afraid that's the way things are now. For whatever reason (unions, overseas competition or Maggie Thatcher - depending on who you ask), the UK is no longer an industrial powerhouse but at least we still have enormous revenues from the financial sector. We can only punish the financial sector so far before it buggers off to Geneva and sets up camp there leaving us with nothing.

Brockley Nick said...

Manufacturing represents a bigger proportion of the UK's GDP than financial services.

Headhunter said...

Yes but we'd probably miss revenue and jobs provided by the financial sector if it weren't there.

Anonymous said...

Looks like restricting housing benefit from families in expensive areas will save some £65million over the course of the parliament, so £13m or so a year. Small potatoes.

The big target, however is 900,000 people on housing benefit who face cuts of up to 40% in housing allowance.

I expect any landlord who has tenants who claim these benefits is in for an interesting time. The tenants will be obliged to move to cheaper areas or face eviction.

I foresee a great gnashing of teeth in the buy to let sector.

drakefell debaser said...

In many cases local authorities, and housing associations, pay above market rents as an incentive for private landlords to take their tennats on.

So there is scope to renegotiate the tenancy onto a lower rent if it comes to it becuase local authorities offer long term security via their long term rental agreements, something the landlord would not get very often in the private sector.

Anonymous said...

My friend's housing assoc neighbour is sub-letting. It was reported but nothing has been done. Another housing assoc resident who gets free accommodation has just splashed out on a 42in plasma tv. Lucky old them.

Headhunter said...

I used to live in Islington in an ex council flat (right to buy) on a nice estate and there was soooo much sub letting it was unbelievable. All around us the flats were occupied by 20 and 30 somethings looking for cheap rent in Islington who were paying the council tenants who were making some nice little earner....

Anonymous said...

Yes, it does annoy me. They claim they're cracking down on it but my friend's experience is that nothing is done about it. There are people out there - and plenty of them - who have a very real need for these flats and would respect them and be grateful for the provision. Instead it is being abused (in these specific cases).

Anonymous said...

http://www.nlgn.org.uk/public/wp-content/uploads/Dont-Let-On.pdf

Unlawful subletting in numbers 9
Average cost per year of housing a family in temporary
accommodation – £11,000

No. of families in temporary accommodation – 64,000
Estimated % of social housing in London that is unlawfully sub-let –
between 2.5% – 5%

Estimated number of unlawfully sub-let properties nationally –
50,000

No. of families on the social housing waiting list – 1.76 million

Estimated cost of a sublet property over 3 years – £75,000
Income per year of a sub-let property in London – £12-20,000

Estimated minimum cost of recovering an unlawfully sub-let
property - £4,000

Cost of building a new socially rented house – £67,000-100,000+

Estimated asset value of all unlawfully sub-let properties – £2bn

Ker-ching!

Of course this would require teams of specially trained council winklers to decend on the social housing stock of London which would not be without some cost.

TM said...

My view is the right to buy policy was one of the worst bits of legislation ever enacted.

It appears to be a very slow news day today or is the server not working?

TM said...

No the Server is working so everyone is either at Wimbledon or Glastonbury!

;-)

Now Then said...

Or afraid to open the laptop in case of getting sand in it. Eerily quiet alright TM

TM said...

Talbot tonight NT?

Now Then said...

This is like speaking in an empty House of Commons. Think I'll nip round the corner to a more sport and refreshment orientated thread before answering that one TM.

neanderthal d said...

It's just like the Talbot in the old days round here today.

They're up to something i tell you - it's too quiet.

Anonymous said...

Who "they"?

Hugh said...

Interesting thread. Some thoughts:

1. The housing benefit thing isn't just a crowd-pleaser when we spend more on housing benefit than we do on the police. Nor when housing benefit costs have mushroomed in real terms during Labour's time in power.

2. I imagine all the bleeding hearts here are happy to see that large house on sale for 450K (true market value surely nearer 750K) on Harefield Road, with sitting tenants. Said tenants get the lease for life then get to pass it on, still at a controlled rent, to their offspring when they die. How do I know? The auctioneer told me.

3. The entire VAT debate is risible. Let's start with the maths, which seems to defeat everyone. An increase to 20% implies a real price increase of 2.1%. How often do you decide not to buy something because its price has gone up by 2%, if indeed you even notice? Such a small difference is anyway likely to be swamped by differences in the prices charged by different retailers when you do an online price comparison.

Anonymous said...

VAT hits the poorest more than any other Tax. Same old Tories tax the poor to help the rich...

Hugh said...

I doubt VAT hits the poor more. It's a tax on voluntary expenditure. The poor can choose not to buy things they don't need. The things they do need are generally zero-rated or rated at a discount. The rich can buy more luxuries and thereby funnel money into the exchequer to enure for the benefit of welfare claimants across the land.

Anonymous said...

There are always two sides to the coin with respect to tenancies.

Anonymous said...

Absolutely. It's dead easy to avoid VAT. Just never buy any clothes, furniture, cleaning products or toiletries ever again. Give away your pets so you don't have to buy food for them or pay vets' bills. Obviously no alcohol, chocolate or snacks either, but then they are luxuries intended for the rich.

rogered roger said...

Now you are just being silly. A 2.5% increase in VAT is small beer. 10% + increase, fine, riots ahoy. But 2.5%?

Anonymous said...

Hugh - the poor spend a much higher proportion of their income on VAT than the well off. It's a regressive tax as currently structured.

C Dickens said...

As Mr Micawber said: "Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery."

A 2.5% rise in VAT could easily push thousands of families into the red.

neanderthal d said...

The rate at which VAT is going to increase is just over 14%.

That is quite steep.

rewardtheresponsible said...

Can anyone tell me what exactly classifies one as rich and when is one deemed poor?

Most of us simply work for a living, pay our taxes and get on with it, are we therefore 'rich' and one of the people the Tories are accused of helping? If so, then should we not be encouraged or rewarded for paying for the country to run? If not then who are the 'rich' that we hear so much about?

There are plenty of people on the dole/DLA who are capable but simply too lazy to work, fact. Are they deemed 'poor' even though its a choice?

Then there are what I would see as the genuinely poor, often immigrants or families with poor education, addictions, social problems etc... people who should be helped but certainly not living in 5 bed houses in the Conservation areas like some seem to.

Anyone know whos what in this rich versus poor debate?

Hugh said...

'Hugh - the poor spend a much higher proportion of their income on VAT than the well off. It's a regressive tax as currently structured.'


I've already dealt with that. They can stop spending on stuff they don't need. Or do you want to exempt the poor from tax altogether?

Brockley Nick said...

No Hugh, you haven't "dealt with that", unless you think that the rich can avoid income tax, simply by stopping earning.

VAT is regressive - everyone knows that. Not as regressive as sometimes it's made out to be, but regressive nonetheless. If you are poor, you spend pretty much every penny you earn. As you get wealthier, you can save or invest it. And VAT is the same on every item (with some exemptions) so if a rich person and a poor person were to spend all their money on goods with VAT imposed, the rich person would pay the same proportion of their income on tax as the poor person, which most people would consider unfair, if not regressive.

Brockley Nick said...

RTR - if you have a household income of over £73,000 or so, you are in the top 20% of UK households by income. I suppose the top 20% of any population ought reasonably to be considered "rich", especially in an economy with a fairly uneven distribution of income, like ours.

http://tinyurl.com/cxbnaw

Rewardtheresponsible said...

Great! I am poor! Bring on the benefits.

Anonymous said...

Hugh apparently thinks poor people can simply choose not to pay for VAT-able goods and services. If this leaves them sitting ragged and filthy in an empty room then so be it.

Makes you realise how great it is that most people don't think like him.

Now Then said...

In any society with yawning gulfs in earnings, and simply not enough jobs to go round, benefits amongst other things, stem social unrest.

Anonymous said...

Don't agree with "Now then" one iota.

Gainful employment where the employee works for a decent wage and the employer receives a decent amount of work in return, stems social unrest.

The agument in favour of benefits has nothing to do with socal unrest. In previous centuries with much lower "charity" as it was then called, social unrest equally was much lower. I would suggest this was becuase the aim of the criminal justice system in those days was punishment as opposed to the massive shift to today's desire to rehabilitate peopel whose lvies and backgrounds have unfortuantely made almost beyound help. The money should be spent on helping other families bring up their children properly.

Anyway I digress.

VAT is clearly regressive and therefore to me,a bad thing. However, there is significant economical argument in favour of taxes on consumption not income and all the think-tanks buy into it so newly elected politicians think it's awfully clever.

I think it's a good thing to take people out of the tax net - to incentivise working - but a lot of my friends disagree on the basis it lessens people's involvement in society. Any thoughts on that one?

Monkeyboy said...

Utter bilge. Before the welfare state kicked in proper if you were destitute you starved or if you were lucky ended up in a workhouse. Do you really think the street s of London in the 1800's were safer? Read a bit of Orwell or Dickens. In a rich society, which we are, decent housing, food in your mouth, health care etc should be a right not left to charity

Hugh said...

Glad to see we have so many experts on VAT here.

Anyone care to tell me what essential services and goods are that the poor need and carry full-rate VAT?

It's no good waving hands and muttering about tax being regressive. It isn't news that a large flatscreen TV costs a poor person more of his take-home than a rich person. The issue is: so?

Monkeyboy said...

Anaon @17:52... Think I misread your post, appologies.

Now Then said...

@ Anon 17:52, you obviously dont take my 'not enough jobs to go around' line either though if you had read that central bit of my sentence long post, you wouldn't perhaps have started with your hymn to gainful employment.

A better place to start might be a book called 'The End of Work, The Decline of the Global Labour Force' by Jeremy Rifkin whose conclusions might be called into quetion, but I havn't seen his figures being.

I take it by previous centuries, you mean the 19th (people often do),and in that one I seem to remember hearing something about Chartist riots. Would that society have been as outwardly placid without the twin sanctions of corporal punishment and transportation. To restore order in your ideal society, whatever about hanging, I would forget about transportation...colonies wont stand for it.

Now Then said...

Oh and because of its 'conumption choice' element, I think that VAT is the 'least bad ' way of sharing out the pain. The fact that newly elected M.P.'s like that approach might not be enough to change that.

Anonymous said...

@Hugh - clothing, bedding, soap, shampoo, sofa, table, chairs, washing powder, washing machine, fridge, cooker, plates, cups, cutlery, kitchen utensils, saucepans, carpets, curtains, cleaning materials...that's just a quick start for you.

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