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Delusional taxation

The Guardian gave us a piece that is just too unequal for words (at https://www.theguardian.com/inequality/2018/jul/07/its-time-for-britains-millionaire-pensioners-to-pay-up). Not only is the stage wrongfully set by Phillip Inman, he hides behind the emotional drive and gives no consideration of the historical facts. So even as he ‘treated’ some people to ‘The Financial Crisis: How Did We Get Here‘, we need to see the right setting on how the inactivity of some got us to this place. He starts right of the bat with ‘The retired are having a great time at the expense of young families thanks to generous pensions and property wealth‘. You see, the property boom is fictive, artificial and pushed because some council’s needed to look good for investment, the prices are driven upwards. The fact that three governments have been totally ignorant of the housing situation and that is shown with an utter lack of social housing is one piece of this evidence. In addition, some of these places have been taxed again and again, in some cases up to four generations. Phillip does not notify the reader on that part. The bigger and even more deafening blow of injustice is given with: “A two-year investigation by the Intergenerational Commission, a group sponsored by the Resolution Foundation think-tank, has found that what it calls the “contract between the generations” is at breaking point. It warns that society risks dumping a disproportionate amount of the costs of an ageing population on their shoulders. It’s been going on for some time and now the situation is acute“, you see I was largely aware of that part in the 90’s, when I was not in the UK. Several people notified their governments of this danger (Netherlands, Germany, UK and Austria), yet those governments were all about sailing in good weather, it was not on their plate, so they ignored it. Several players in these places warned of the dangers and in the end too little was done, until it was too late and now everyone is crying on the hardship that comes. The largest portions of those people now getting a pension worked, they worked every day and more hours than ever compensated for. All the elected politicians who remained asleep, optionally on Viagra or at parties ignoring the long term effects as they would no longer be in office (which is a speculation on how they used their time). Now those in office are set in a stage where they cannot unset the rights that these people acquired. Now it is all about “54-year-olds and above – are making increasing demands on an economic and social system that, after the 2008 financial crash, can barely cope with existing commitments“, yet those are demands that they were entitled to. They were taxed, often taxed too high and whilst some politicians made really poor decisions on how to invest these surpluses, they never considered that the losses would remain to bite everyone and now there is almost quite literally hell to pay for these people, and in this case these people are not the retirees, they are the former elected politicians, the economic advisors and the consultants that were hired at a much too high overpriced setting.

When we see “subsidised deposits: that just sent house prices spiralling upwards“, we should take the home owners that live in their home, all paid off out of the equation, should we not? In that same setting “It’s because they have a generous occupational pension and property wealth beyond anything they might have considered when they bought their first home“, you see, as long as they live in that house, it is their home, not wealth, not something they eat. Those caught in the bubble should not get taxed because they merely want a roof over their heads. Yet, in the eyes of those economists that does not count. Yes, those economists who have been setting the stage in their own advantage for decades, they are all ignored in this, are they not?

I do however like the setting that Phillip gives with: “Baby boomers had no idea that the overly generous pensions, failure to deal with the overspill from dirty industries and nimbyism would build up costs for the young“, yet in all this, he does not mention that since 1996 certain changes were needed, because the greying population issue was already well within the scope of everyone (everyone with any level of intelligence that is).

So when we see: “The commission and IF say working pensioners should at the very least pay national insurance. We should go beyond this policy and force the retired to pay income tax under a separate regime. This would set the 40p rate at £20,000 (compared with £43,000 for workers) and the 45p rate at £40,000 (against £150,000 for workers). A new regime for property tax is also needed that taxes more wealth at a lower rate, spreading the load and making it less avoidable, capturing the rich and middle-income earners alike

We need to change the setting. We need to make it very clear that this is not just wrong; we should demand that these people come out in front of it all. Not hide behind the word ‘commission’, but we are entitled to know the people and they need to be held accountable for their actions in this.

So,

  1. David Willetts, Executive Chair of the Resolution Foundation (chair)
  2. Ben Page, Chief Executive of Ipsos MORI
  3. Carolyn Fairbairn, Director General of the CBI
  4. Frances O’Grady, General Secretary of the TUC
  5. Geoffrey Filkin, Chairman of the Centre for Ageing Better
  6. John Hills, Professor of Social Policy at the LSE
  7. Kate Barker, economist and former MPC member
  8. Nigel Wilson, Group Chief Executive of Legal & General
  9. Paul Johnson, Director of the IFS
  10. Sarah O’Connor, Employment Correspondent at the Financial Times
  11. Torsten Bell, Director of the Resolution Foundation
  12. Vidhya Alakeson, Chief Executive of Power to Change

All commissioners of the Intergenerational Commission (at https://www.intergencommission.org/), in addition to this, all the economic advisors where bad advice can be identified, those economists, need to get taxed for the losses that their advice caused out of their own pocket. You cannot tax one population twice over, whilst these people get richly rewarded for not doing their job correctly in the first place. The UK was far behind, when the BBC gave us in 2007: ‘The UK is going through the biggest pension shake-up in 50 years’, they were already a decade too late, this is not news, this issue has been slowly growing for over a decade and now we get highly priced think tanks giving out reports on how to solve stupidity and inaction. So when we see “In an attempt to improve the state pension prospects of women – who often take time out of work to look after children – the number of years of National Insurance Contributions (NICS) it takes to earn a full state pension will be cut from 44 to 30. This will mean millions more people, mainly women, will be entitled to a full state pension. The government has also tried to tackle the issue of vanishing workplace pension provision, as firms move to cut staff pensions” (at http://news.bbc.co.uk/2/hi/europe/6937301.stm), we see a level of inactions from a failing setting. Instead of giving a clear change of more payments into the pension system, we see a feigned ‘the number of years of National Insurance Contributions (NICS) it takes to earn a full state pension will be cut from 44 to 30‘, so not only is there an issue of shortage, the setting that a full pension could be earned was set to 68%, so 30% is close to gone, because all the late starters now suddenly get a full pension. When you realise those levels of close to insane stupidity, will the hearings show that economic advisors told them that it would work? So who were these consultants? We want full disclosure of these people. Should we not be allowed those facts? And when we confront these people will their reply be: ‘it was slightly more complex than I comprehended‘. So can we foreclose on these highly paid consultants and auction off their belongings to make up for the losses?

If that sounds unfair, consider the unfairness of taxing a group after a lifetime of service (or at least 68% of the time) again? Most these people had to bend over backwards to keep their place, keep their job and when it is finally retirement time, we hit them again. I think that this is beyond acceptable.

So when we see the end “The millionaire no longer just lives in the squire’s house. Times have changed. The retired teachers of Beverly in Yorkshire, and former BT engineers in Tunbridge Wells, are having a great time at the expense of young families” then my response is: ‘It is a fucking lie!‘ They are living of funds that they were taxed for their entire lives, the fact that they live in places that they made liveable is because they worked on it most of their live and suddenly that value is because no one was willing to contain the housing bubbles as it call in the foreign investors. That is the truth of the matter and whilst we all consider that truth, also consider the article (at https://www.theguardian.com/society/2018/feb/04/anger-over-glut-of-posh-ghost-towers-london), where we see “London councils have granted property developers planning permission to build more than 26,000 luxury flats priced at more than £1m each, despite fears that there are already too many half-empty “posh ghost towers” in the capital“, the Battersea Powerhouse, where social housing was cut after agreements were ‘adjusted’, and as we see in addition: “Politicians and housing campaigners said the figures show councils are prioritising the needs of the super-rich over those of hardworking young Londoners“, we start to see how the entire setting from Phillip Inman is just a load of bollocks, the flawed London setting is showing that the infrastructure will collapse sooner rather than later, it is a simple setting because empty places do not fuel the needs of groceries, butchers and supermarkets. They are merely empty plots that have only value for the investor and only for as long as profit can be made. Not only is the pension setting a travesty, when seen against the backdrop that David Lammy,  the Labour MP for Tottenham gives “Just 6,423 affordable homes were built in London during the 2016-2017 financial year (the latest figures available), a 5% decline on the previous year and a big drop from the 19,622 built in 2014-15“, labour is not innocent here either, the previous labour governments were no help in any way and whilst we see how 26,000 luxury flats are added to the London region driving prices even further up, the setting of: ‘to generous pensions and property wealth‘, is merely a facade on inflated egos and the need to find taxation for those houses to be vacated so that they get upgraded too. Some people should be ashamed of themselves and until those names are out in front in the open and those who failed get prosecuted, until that day is fact, there is not acceptable setting where the pensioners are to be taxed in any way.

It just ain’t cricket!

Oh and whilst we are at it, can someone please sack the entire Wandsworth council? When we need to set to the forefront “Only 9% of the homes will be affordable, far below London mayor Sadiq Khan’s 35% affordability target for all new large developments” again (I already did that last year), we need to make sure that those who allowed that drop will never be allowed to work anywhere in government ever again, let’s face it, they could still become barber or Uber driver.

In addition, in a flair of social justice when we see “The Coutts figures, compiled by housing data service LonRes, show that developers are pushing ahead with the vast number of expensive new flats despite failing to sell more than half of the 1,900 luxury homes they built in London last year“, these developers should not be allowed to continue, unless the unsold apartments are leased for social rentals to the council at £1 per year, whilst 80% of the rent goes to the pension funds fuelling it and 20% is for the developer (for their cooperative trouble). So, I solved the entire issue for the next 5 years without having to tax the pensioners and getting almost 1,000 additional social homes. There was not need to get 12 commissioners involved, we merely need Mayor Sadiq Khan to set the London legislation to that solution. I do believe that the lord mayor owes me a large cappuccino with two sugars and a warm blueberry muffin. That’s not too outrageous a fee, is it?

 

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Sex Driven Developers

There are always ways to find weaknesses in government; there is a decent chance that we find them on a daily basis. Yet, how must we react when the foundation of those making the decisions are now in a runt of enabling? What happens when the government first decides on cyber rules for the safety of all whilst opening a bordello around the corner so that those in dire need of affordable housing are getting screwed over?

This is what is on the goose feather of Julia Kollewe as she dipped it into the ink jar and gave us ‘Battersea Power Station developer slashes number of affordable homes‘ (at https://www.theguardian.com/uk-news/2017/jun/21/battersea-power-station-affordable-homes-almost-halved-by-developer). She is trying to wake up pretty much everyone with this and it should wake us all up. You see, the next decade is about the dire need of affordable housing, London is in danger of alienating the very population that is the means for its survival. You see, in my mind, greed is not a ‘technical issue‘. Greed merely is and never goes away. A technical issue is when you get the cement batter wrong in one shipment, a technical issue is when you are looking at a square and you calculated for 5 corners. When you have a £9 billion project and you have to redesign 40%, you are in my humble opinion screwing people over for your need of greed and profit whilst ‘putain‘ the 250 people now left outside in the cold (pardon my French). So as we see that someone clever from these Malaysian investors, are now trying to maximise profit by slashing the affordable housing part as we read: “The affordable home proposals amounted to 15% of the total 4,239 homes planned, which included luxury pads ranging from £800,000 for a studio atop the former power station to £4m for a four-bedroom flat (the three penthouses have yet to be priced).” there is no other option but to fight back. In this there are two options left to the government. One is to get the list of investors and they are to be banned from any other real estate investment in the UK for 5 years. The second option would be that if the apartments are uninhabited for over 40% of the time, there must be a large service surcharge to the building services. Once that these investors have to report these surcharges in the upcoming sales bill, they might have to let slip some of their expected profits. In all this, the ‘compensation‘ of mentioned “build the 386 affordable homes three years earlier than previously envisaged, which means residents will receive their keys in 2020. They will be located in apartment blocks near the power station“, is only a small band aid, because it is not just about time, it is about space and location, the space of 250 apartments is now gone! We sometimes state that no man is an island, but the UK kind of is, so that means that once the space is gone, it is definitively gone. We also get the quote “an assessment of the profits the developer expects to make. Independent adviser BNP Paribas advised the council that it is “very unlikely” that the 250 homes will materialise“. So when we see this ‘independent’ party. Have they been on this project from the very beginning? You see, if that is true than we see a feigned level of incompetence. From my point of view, BNP Paribas is not just the largest bank in France; it is one of the largest banks in the world, so when they make an £9B ‘oopsie’, something else is going on. From my speculated view is that they had made for whatever plan they could offer so that they could get the project, whilst down the track they adjusted the view to get the results their investors needed and submitted the new plans so that they end up getting what they wanted in the first place. I cannot tell how deep BNP Paribas is into this as ‘Independent adviser‘ implies that they could have been called in down the track, not initially. In support of this view the article also gives us: “Keith Garner, a local architect who has campaigned against the Battersea project for years, said: “Underlying it, the financial model is all wrong. A developer-led project to conserve, repair and bring back in to use a famous London landmark is turning in to a predictable disaster“. This now gives us two parts. The first is that this is not just coming to view and even as the lord Mayor Sadiq Khan is only now coming into view, his administration as well as the previous one, will now need to show clearly that due diligence was maintained throughout the project including the view and calculations before approval was given. This puts Boris Johnson equally on the hot chair as his team comes under scrutiny. If we are to maintain the push for affordable housing, we cannot accept screw ups of this magnitude. Because once the cashable buildings are gone, it is over and no other option remains. It is the curse of sitting on an island. Keith Garner has been vocal in the past, going back even before January 2015, yet from this point onwards we see Keybridge House in Vauxhall where only 4.5% became affordable (19 out of 419), it seems to me that when we tally that part the failure is a lot larger than most realise. Even then there was a list for the PowerStation with a setting of ‘3,444 new homes at the power station 560, or 16%, will be affordable‘, so the list got slashed before and it got slashed again. Actually, the numbers changed as 3,444 became 4239, so there has been more ‘revamping’ it seems that a project this much in flux implies that certain elements were either never set or set in a questionable way. Now, we get that things change, there are always details that need ‘alteration‘ yet when you ‘suddenly‘ add 795 apartments (which under normal conditions seem to be 2-4 additional towers, we should agree that ‘questionable‘ is very much the better word to use (without getting to rude and rely on the ‘putain’ word).

Another issue is seen in “Officers appreciate the level of stresses a scheme of this size and complexity has and that the main priorities of the scheme have been the conservation and redevelopment of the listed power station building, the delivery of the Northern Line extension and new underground station and the jobs to be created as part of the new town centre“, you see, as investors are always happy to sue the pants of any official, the mention of ‘delivery of the Northern Line extension and new underground station‘ is not a problem to the Malaysian investors, so if the UK government had impeded the development of an agreed project, the government get the invoice. So there is now the implied issue that there was a mere trade off and 250 affordable homes were scrapped. Is that not a view you would envision? In addition ‘jobs to be created as part of the new town centre‘ sounds nice, but how is that part of the powerhouse building project? So as this all comes to heads in “A report by the Wandsworth council planning officer recommends that the proposals be approved, ahead of a meeting of the planning committee on Thursday evening“, there is the speculated issue that the Wandsworth council made a right mess of things and they are trying to appease the situation so that they keep their jobs and possibly avoid the wrath of parliament, there was just the need to scrap housing for 250 people who desperately needed them.

So, feel free to object and oppose my way of thinking, but that is how I see it. I understand that the UK needs economy, it needs houses and it needs jobs, but when a limited resource is wasted to this degree we need to ask questions loudly and there needs to be the revision of policies to make certain that affordable housing remains at the top of the list, and remains the top priority of the list of achievements. Yet in the last 2-3 years, there is additional evidence growing that what was a desperate need is ignored by those, because it does not really impact them.

Yet the 2015 article also gives some opposition. We see this in “Tony Travers, director of the Greater London group at the London School of Economics, says: “In fairness, the developer is being required to pay for a lot of other things. The land has to be used very intensely to produce enough yield to pay for the things that the government used to pay for.”“. OK, this is fair enough. My response would be: ‘I agree, but that is the assessment of an investment opportunity. The numbers are done and in the end it is either feasible or it is not!‘ So the investor could have walked away from it. If the government had found the £9B, it has the option to do it themselves, with a very different balance, and perhaps with only one penthouse, the other 2 could have become 3 3-bedrooms apartment each. In addition, as it is now less about profit, there could have been 900 affordable houses instead of the 636 initially envisioned. As I read the articles over time and the sources given, it seems to me that orchestration might have been at the centre of things from the beginning. That feeling is gotten from ‘The land has to be used very intensely to produce enough yield to pay for the things that the government used to pay for‘, you see, like some naval projects, where voting for adjustments is often much better than being the messenger on a failed project, because those investors would sue, and the eagerness of the Wandsworth council implies to some degree that there would be a case and a court settlement of £9B might not be the best way to go forward. And as we see in the past “Many flats were sold off-plan and, still unbuilt, are back on the market at higher prices. Just before Christmas one unbuilt studio flat in the power station, which had sold for close to £1m, was back on the market for £1.4m. Last week, estate agent Chestertons was reported to have other unbuilt flats on the market for £865,000 – £150,000 more than their original asking price” implies that investors are getting rich fast, so the entire drop of 250 affordable apartments is becoming more and more of a debatable issue.

Yet the final issue not seen in the latter article is most damning on both the houses of Sadiq Khan and Boris Johnson. The quote “the lack of a master plan for the area” is damning because it implies that the area could lose its identity, and I am willing to buy either a coffee with a cream cheese bagel with Salmon if they can clearly oppose the drop of value for the loss of identity validity. Those who truly move to London want to be in an area. They want to be part of Islington, Hammersmith or Chelsea. Some will prefer Southwark because of Hay’s galleria, yet in reality they might just do it because the hookers give much better value in that borough. Whatever reason we hear the identity of the place matters. And this requires a clear master plan. to some degree when it is in the hands of foreign investors, things go into flux, yet a clear master plan is essential the prevent London of becoming an anonymous place of chaos.

In this we remain at minus 250 apartments. You see, no matter how grand it all looks, the immediate need for infrastructure is simple. When the people have to travel too far to work, the job will no longer be a feasible solution. Even as some are pointing to an extension of the Northern Line, the simple truth is that it is an additional 15 minutes, meaning that some people will travel 90 minutes each way to get to (or from) a place where they can afford to live, on top of that travel costs are rising too. So the new place ends up being a ghost town without infrastructure. How is that an interesting investment when some could go in and out of this ghost town to burglar it into heaven as they get to do that unopposed? How many paintings and electronics need to be removed before the investors seek another place to go to?

All elements that seem to have been missed, all part of a master plan not in place and all linked to investment and economic plans that might have been dubious from the beginning. As I personally see it, a lack of long term oversight, checks and balances all cast aside for the quick profit and the marketable view of mentioning, to merely look good. And now Lord Mayor Sadiq Khan has the mess on his plate and he gets to see what might be salvaged, because when I see ‘A report by the Wandsworth council planning officer recommends that the proposals be approved‘, I wonder what has not hit the light of day yet and what else has to be sacrificed (or additional costs received) in the next upcoming year. Would you not wonder (read: worry) about that very same thing?

 

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