Ed Miliband's recent announcement that the Labour Party intend to table an Opposition Day
Motion in support of the Lib Dem's 'Mansion Tax' proposal will not have been well received in Lib Dem HQ. However, when looked into in more detail, it appears to be a case of high politics taking precedence over the proposal of a well thought out economic policy.
The Labour Party have said that the 'Mansion Tax' - basically a tax on property valued at over £2 million - would pay for the re-introduction of the 10p tax rate which was introduced and subsequently scrapped by New Labour when they were in power. Exactly what form the tax would take seems to be up for debate, although reports have been made of a 1% levy on the value of each property valued at over £2m.
There are two distinct considerations at play here. Firstly, whether the concept of a 'Mansion Tax' is a sensible one. Secondly, whether the way that Miliband Jr. has introduced the Labour version of the concept has been well handled.
So - is the 'Mansion Tax' an economic runner? Superficially, it seems so - for those in society who have been hard working and fortunate enough to own a high value property to contribute more to the
Exchequer seems fair. It would certainly be less onerous to implement than the much-maligned 'Bedroom Tax', as there are far fewer potential properties to value for the 'Mansion Tax' proposal. However, the criticism is that any tax which is based on the asset value rather than the income of an individual can lead to them being unable to afford the levy owed. This, in turn, could impact disproportionately on those who for whatever reason live in an expensive home but live on a subsistence income. An example of this could be an elderly person living on her old age pension, in the family home which has become far more valuable due to other properties in the neighbourhood being sold for increasing values. Is it just that this person should have to sell and move to a smaller property if she does not have family to assist her in making the (annual, one would assume) tax payments? Certainly, with the population of the UK increasing, there is greater population pressure and as such one could make a case for this. However it is not an entirely palatable situation.
In terms of the Labour announcement, this again could be seen to be well handled. Superficially so, at least. The threat to the Coalition is predominantly symbolic, as an Opposition Day Motion has only ever been won once - that being on settlement rights for Gurkha veterans. However, the challenge to the Coalition is both real and fairly immediate, in that if the Government do not give Parliamentary time to the ODM Labour have said that they will table an amendment to the Finance Bill for the next budget. The political fallout for the embattled Lib Dems could be quite substantial, however, as it has been designed to drive a wedge between them and their senior coalition partners. Whatever the form of the vote on the 'Mansion Tax', it is likely to widen the rift between the Tories and Lib Dems - and this will prove problematic for the Lib Dem whips in particular.
Following the introduction of mandatory licensing of all landlords in Scotland, a second English Council has announced an intention to follow their lead. The London Borough of Newham has already introduced a mandatory landlord licensing scheme. Now Liverpool City Council is about to commence a consultation period with a view to introducing it in the city early next year. In addition to this, the Welsh Government has stated that it would like to follow suit.
There is no doubt that the varying quality of private landlords is a complex issue. As such, there are unlikely to be any 'silver bullet' solutions to it. Some landlords are excellent, and take their responsibilities to their tenants seriously. Others, conversely, are content to sit back and take rent from their tenants and will do the least possible in return for this. It is estimated that there are around one million landlords in the UK, of which a vast majority only own one property and nearly all own fewer than five properties. Well, that's according to the Private Landlords Survey 2010
However, it is too simplistic to paint a picture of private landlords as being the cause of all problems when the landlord/tenant relationship breaks down. In areas of the country where the property is less expensive (and therefore where rental prices are lower) it is not unusual for a landlord to find that the damage done to a property is far in excess of that which the tenant's bond is able to cover. In fact, in areas such as the South Wales valleys, it is quite easy to envisage a situation where a tenant absconds at the end of a six month tenancy with two months of rent arrears and leaving behind a property which needs extensive remedial work. As the average rental price of around £400 per month, this means that the tenant would only need to have caused £1,600 of damage (including 'normal wear and tear' of any property let, which is acceptable under UK law) for the landlord to be left out of pocket. And that's not taking into account the court expenses which may be incurred from seeking to recoup the rent owed.
Furthermore, the landlord/tenant relationship is often further muddied by the existence of a lettings agent (often unregulated), whose primary objective is to maximise their profits. Basically, by doing is little as possible for as much remuneration as possible. Now, I'm far from an anti-capitalist, but surely there is a need to have a system of regulation in this area of the market to prevent any unscrupulous agencies from playing fast and loose with people's lives?
As a landlord myself, I am quite happy to sign up to a voluntary code of conduct. For that matter, I'm also willing to adhere to minimum quality standards. These could include an undertaking to respond to tenant concerns within a timely manner (obviously, the more urgent the concern the more rapidly it needs addressing). It could also include a minimum standard of cleanliness, and an undertaking to join a registered body (for example the National Landlord's Association). However this does not, in my opinion, address the underlying concern. That is dealing with those private landlords who are not going to adhere to voluntary standards, as they are more concerned with maximizing their yield rather than discharging their responsibilities.
This is only going to be solved by making it more attractive to these people to meet their responsibilities rather than not to do so. Whereas the concept of compulsory licensing provides some benefits, it will be a case of managing those who are already quite good landlords, rather than dealing with those who are the problem ones. Furthermore, it could result in a number of the less desirable landlords 'going underground', thereby creating a system similar to that which occurred during early twentieth century prohibition in the USA. The only long-term solution is to persuade landlords to improve by hitting us where it most hurts us - through our pockets!
I've just been interviewed for the 'We Are Cardiff' documentary film. I've been thinking for a while about what it is that makes a place unique, and the best answer that I can come up with is that it's a combination of its environment, history, and future direction.
Take Cardiff, for example. Cardiff is a product of it's location - on the mouth of the river Taff, where it enters the Severn Estuary. It grew throughout the Industrial Revolution from a small settlement to become one of the world's key export centres. Cardiff Docks exploded in size following the completion of the Glamorganshire Canal in 1794, allowing the connection of Merthyr to Cardiff. It was further expanded when it came under competition from newer docks in Penarth and Barry. This later expansion comprised the opening of the Roath Dock in 1887 and the Queen Victoria Dock in 1907. The docks were a driving force in making Cardiff into the place it is today, bringing huge numbers of people from different cultures to the settlement, and creating 'Tiger Bay'.In terms of history, it became a City in 1907 following mass expansion of the population during the Industrial Revolution, and was subsequently made the Capital City of Wales in 1955. Between these dates the City had acquired it's first and only FA Cup (Cardiff City beating Arsenal in 1927, 20 years after renaming themselves as Cardiff City and 17 years after moving into Ninian Park). Throughout the ninteenth and twentieth century the City became a regional manufacturing centre, synonymous with shipbuilding and iron and steel making. Later in the century, the emphasis shifted towards the tertiary economy, with a reduction in manufacturing output being made up for by the increase in employment by service sector organisations. There has also been a noticeable increase in academic employment. Cardiff now has three Universities and a number of private 'Sixth Form' colleges.This economic shift is potentially challenging, though. Whereas with manufacturing there is a fairly strict limit to the number of potential competitors, when dealing with the service sector there are few such limits. All that a company such as Admiral Insurance needs to carry out its business is excellent communications infrastructure, an educated workforce, and a favourable business climate. So far, Cardiff is proving to be fairly resilient, but will come under increasing competition from countries like Brazil, Russia, India and China as well as from
the rest of the English speaking world. Cardiff is now competing
t just Newport, but also Newcastle, New York and New Delhi.
There are certainly opportunities here, as well as the more obvious threats. If the City is able to differentiate itself as being a first-class place to live, then there is a far greater chance that the entrepreneurs and job-creators of the future will choose to invest in the City-region of Cardiff, rather than anywhere else. However, if the City does not invest in both communications and transport infrastructure, then it may well begin to stagnate.