Right to Buy extended. Last week the Prime Minister gave a speech announcing plans to help 1.5m housing association tenants buy their social housing through an extension of Right to Buy (RtB). Tenants will be given a 35%-70% discount on their mortgage deposits depending on how long they have lived in the property and the £6,000 savings limit (where Universal Credit payments begin to taper) altered to encourage claimants to save without it impacting their benefit entitlement. The PM also announced a mortgage review (due to report back in the Autumn) which could see the return of 100% or 98% mortgages, according to the Spectator.
Will it work? The success of the proposal relies on the ability of Universal Credit claimants to save enough to take up the mortgages, and on the ability of government to deliver increased supply of social housing. However, housing associations are not directly controlled by governments and demand-side stimulus alone will further fuel house price inflation, making home ownership even more unaffordable for those not yet on the housing ladder.
Political maneuvering. The proposal has been widely interpreted as a piece of desperate political maneuvering from the Prime Minister after winning his vote of no confidence last week. The move to stimulate demand for home-ownership (and further increase house prices) could be seen as an emergent electoral strategy from the government; read Christine Berry and Laurie MacFarlane’s recent piece on the economic and electoral strategy of ‘Johnsonism’: ‘catering to their new voters in the so-called ‘Red Wall’ with promises of a more activist state, whilst also seeking to reassure and protect their core constituency – rentier capital.’
Proposals for a better housing system. Housing charity Shelter proposes that 3.1 million homes should be built over the next 20 years. While local authorities now have the power to borrow, the reality of their funding situation means they will need support from national government to deliver on that kind of ambition.
The cost of net zero for future generations. The Social Market Foundation has published a report on the intergenerational issues that arise from paying for the net zero transition. They argue that the UK should reduce the ‘discount rate’ and spend much more on climate mitigation now to avert future costs to the Treasury.
PM under pressure to cut taxes after confidence vote. Boris Johnson has been under pressure to cut taxes after he survived his vote of no confidence last week, though the PM argued this was more of a longer term goal as dealing with the cost of living crisis took priority. Backbench Conservative MPs are promoting the renewal of Conservative Way Forward (a pressure group linked to Steve Baker) to lobby for lower taxes.
How much taxpayer money ends up in tax havens? The Fair Tax Foundation analysed public procurement contracts and found £37.5bn of public money was spent by local councils on companies with links to tax havens in 2014-19. Tax Justice UK has created a tool for people to message local councils encouraging them to sign up to the Councils for Fair Tax Declaration which commits their use of public money to better tax practices.
What is the link between taxes on individual wealth and market power? IPPR’s George Dibb explains how tax could be used alongside competition policy to tackle market power and wealth inequality, comparing four options: raising income tax on excessively high salaries (often a reward for monopoly power), reforming capital gains tax, annual wealth taxes and taxing a companies market cap.
UK stagflation update. The OECD reports that UK GDP fell in April 2022 for the second month in a row and is forecast to stagnate to zero growth in 2023 as the UK became the worst affected economy from the Russian war in Ukraine (apart from Russia). Laurence Boone, their Chief Economist, clarified that the UK’s comparatively lower growth rate with otherEuropean countries is due to our higher rate of inflation, faster tightening of monetary policy, faster fiscal consolidation, and international trade frictions.
#StopThePlane. The first of the government’s planned flights sending migrants to Rwanda was stopped this week. JCWI credits a wide variety of supporters and campaigning actions against the ‘Cash for Humans’ scheme.
Private debt, BNPL and the cost of living crisis. PEF’s James Meadways suggests that the struggles of Klarna, the largest player in the Buy Now, Pay Later (BNPL) market are a sign of the coming recession and debt relief and write-offs should form part of a response: “the BNPL offer to spread payments could offer some temporary relief for households squeezed by the cost-of-living crisis. But as long as inflation remains well above growth in household incomes – whether from wages and salaries, pensions or welfare payments – this is not a sustainable solution.”
The Case for a £15/hour Minimum Wage. A report from the Progressive Economy Forum made the case for increasing the minimum wage to £15 an hour to protect living standards being eroded by high inflation. Their modeling showed that the National Living Wage would be at £15 an hour in 2024 if average pay were compensated for from the ‘lost decade’ of earnings growth since 2008. PEF’s James Meadway summarised the findings for OpenDemocracy and explained why it wouldn’t lead to a wage-price spiral, as the Prime Minister has been warning would happen.
Ban on gas boilers. Chairman of the National Infrastructure Commission, Sir John Armitt, has called on the government to ban gas boilers, replicating the ban on new petrol and diesel cars by 2030. In the University of Birmingham’s Energy Institute report ‘Pathways for Local Heat Delivery’, Sir John argues that “unless we replace 24 million gas boilers, we will never reach net zero”.
“All-out” energy efficiency. The Director General of the CBI, Tony Danker, has called for “all-out” action on energy efficiency measures to combat the cost of living crisis. Danker advocated for a “new normal of energy efficiency” instead of a “new normal of billion-pound bailouts every quarter”. He argued that £5.2 billion was needed annually to insulate homes (with £1 billion dedicated to retrofitting) which he compared to the £22 billion worth of cost of living support announced in Spring by the Chancellor and further £15 billion in May.
Energy and renters. Citizens Advice has called on the government to ensure that tenants have the option to take control of their energy bills in order to access support and buy products that meet their needs as research finds that one in eight renters could miss out on the Government’s energy bill support. Energy researcher Tom Crisp explains further why renters so often get a raw energy deal.
Privatisation of gas storage. Centrica has applied to reopen Rough, Britain’s biggest natural gas storage site, having previously decided it was unprofitable and closed it down. The IPPR’s George Dibb argues that the private ownership of gas storage has led to the UK’s particularly low energy storage capacity (for example, Germany has 16 times more capacity and the Netherlands has 9 times more) and has therefore exacerbated high energy prices.
Updating the Energy Charter Treaty. E3G proposes how the Energy Charter Treaty (ECT) can be modernised, providing seven ‘tests’ that it will measure in June. Tests include only protecting reliable and proven energy solutions and ensuring consistency with climate and environmental agreements.