Evening Standard: Another U-turn? Boris Johnson hit by care backlash

You’ll have to fold on cap when Bill comes back from Lords, PM warned www.standard.co.uk 

Has Simon backed the wrong horse again? – Owl

Boris Johnson’s social care reforms are grossly unfair

Editorial www.independent.co.uk 

Ever been to Peppa Pig World?” the prime minister asked the bemused delegates at the CBI conference. Not many had, it seems, not least because of the Covid-19 lockdowns over the past 20 months or so, the imposition of which not being aided by Boris Johnson’s disastrous prevarications and confusions.

It was a low point, but perhaps a mercy to the assembled business folk that he got the pages of his speech mixed up, and stopped jabbering. At least the silence was comprehensible, punctuated only by some utterances of “forgive me”. Despite a vague commitment to “levelling up” as a “moral mission”, Mr Johnson was wise to avoid any reference at all to the government’s latest evolution of its social care policy. Which could easily be labelled it’s social “don’t care” policy.

It is effectively a tax policy reversed and turned upside down. It is eye wateringly, heartrendingly unfair. Rather than richer people (and their descendants) paying proportionately more for their care in old age or disability, or even the same as poorer families, it means that they will pay proportionally less. In its way, it is quite an achievement for an administration to come up with such a regressive policy and yet market it as a fair and equitable package of reforms. Flawed as it was before, it is now unacceptable.

It doesn’t do much for “levelling up” or social justice. Given the concentration of personal wealth in the south, the policy will exacerbate the north-south divide. The even more skewed cascade of unearned wealth down the generations will also increase the gap between rich and poor within every region. The financial impact of the social care policy is to entrench disadvantage and widen existing economic divisions. The property that the children of the already wealthy inherit will be rented out to the children of those who have seen their inheritance disappear in social care home fees. The final insult is that the new social care levy, as a form of national insurance, will be paid by the low paid, but not by the landlords living off their newly protected riches.

The new social care policy is nothing less than a powerful engine of inequality. According to Andrew Dilnot, who produced the original and best report on funding social care a decade ago, the less well off will derive little benefit from these changes, and the Treasury will save £900m, a small sum in the wider context.

It is policy being made on the hoof, and in the wrong direction. Having gifted the Labour Party sleaze to run with, now the prime minister has opened another early window on the advent calendar with the most obscenely unfair policy in decades.

Given the disquiet voiced by many Conservatives, precisely because of the potential electoral repercussions, the policy may yet have to be revised once again, and it would certainly not survive a change of prime minister or party of government, as Jeremy Hunt is hinting. It has unhappy echoes of the poll tax of the late 1980s – a well-meaning reform of an outdated and unpopular system, but one that somehow managed to make things more complex and more unfair.

Few noticed the implications of a complex new way of financing local government, naturally, but opposition grew as the details became clear, and then came the riots. The poll tax also inflicted huge political damage on the then Conservative government, and contributed to the fall of Margaret Thatcher (that and relations with Europe and an imperious style of government).

Mr Johnson should heed history, and perform one of his celebrated U-turns before his policy does any more capricious harm to older people and their families, and indeed himself as prime minister. Otherwise he’ll have all the time he wishes to spend at Peppa Pig World.

MPs should not use personal companies to avoid tax, says Starmer

Keir Starmer has indicated he would bar MPs from using personal companies to reduce the tax they pay on second jobs, saying he would stop any Labour MPs from doing so straight away.

Peter Walker www.theguardian.com 

Starmer’s comments came after it emerged that at least 10 MPs, one of them Labour, had channelled income from additional work through their own companies, which is legal but reduces the amount of tax they need to pay.

An investigation by the Times found the MPs were paid in total about £1m via such arrangements. Sir Alastair Graham, former chairman of the committee on standards in public life, told the paper this “should be stopped as soon as possible”.

“MPs should not be avoiding paying the taxes they’ve decided that the rest of the population should pay,” Graham said.

Asked on Monday if any Labour MPs found to have put any outside earnings through a personal company should stop doing so, Keir Starmer said they should.

“The answer to the question is very easy: yes,” he said during a media Q&A following a speech by the Labour leader to the CBI annual conference in Birmingham.

“The whole point of the registration and declaration scheme is that anybody can see transparently what is happening in relation to any income or donations.”

Instead of paying income tax at a rate of up to 45%, the personal company will pay corporation tax at 19%. Further tax is then due when owners draw money out of the company, either via income tax or a tax on dividends, the higher rate of which is 32.5%.

Starmer has already said that in power Labour would prevent MPs from carrying out any outside work, beyond a few exceptions for public interest reasons, such as MPs who are police or army reservists, or medical staff.

The Labour leader, who was director of public prosecutions before entering parliament, has in the past given paid legal advice while an MP. Allies of Jeremy Corbyn have said Starmer was instructed in 2017 to not take a second job with law firm Mishcon de Reya. Starmer’s spokesman insisted Starmer turned it down himself.

The investigation over tax minimisation comes less than a week after the Commons backed a plan to limit MPs’ scope to take on second jobs. While the plans are yet to be worked out, the focus is likely to be on political consulting, and on jobs which take up too much of an MP’s time.

The vote, which saw the government amend a Labour motion, followed days of outcry after ministers decided to change the system by which MPs are disciplined to protect then-Tory backbencher Owen Paterson from punishment for what an official investigation said was a serious breach of lobbying rules.

The government U-turned the next day, and Paterson resigned from parliament.

Revealed: first-time homes have grown less affordable under the Tories

First-time buyers have seen the gap between their wages and house prices grow in the vast majority of councils in England and Wales, casting doubt on Boris Johnson’s promise to “turn generation rent into generation buy”.

Tobi Thomas www.theguardian.com 

Just over a year ago, the prime minister said he wanted to give people “the fundamental life-affirming power of home ownership” and “spread that opportunity to every part of the country”.

Guardian analysis of prices paid by first-time buyers, however, shows that the affordability gap has grown in 98% of England’s local authorities since 2015, and in every part of Wales.

The traditional benchmark for mortgage affordability is that the amount required from a lender – the property price minus a 10% deposit – should not exceed 4.5 times the buyer’s wage or the combined wage of a couple.

But that target is unachievable for single first-time buyers – who are typically aged 32 – in 95% of local authorities in England, based on the median earnings for people in their 30s.

Single first-time buyers in Wales would not be able to afford a home in 86% of local authorities in the country. Although couples fare better, they would struggle to stay within 4.5 times their wage in almost a third (31%) of council areas in England.

The analysis looked at what has happened to affordability in the six years since the Conservatives won a majority government. The party’s 2015 manifesto said “everyone who works hard should be able to own a home of their own” and outlined schemes for cut-price starter homes and a help-to-buy Isa.

In the run-up to the 2019 election, the party said: “For the UK to unleash its potential, young people need the security of knowing that home ownership is within their reach.”

Since then the help-to-buy loan scheme has been extended, and this year a scheme to guarantee 95% mortgages was introduced. But the analysis shows homes have become less affordable over that period.

“Home ownership is now almost completely out of reach for most people on average or low incomes – with house prices continuing to soar, most people can’t scrape together a sky-high deposit to buy and so are stuck paying extortionate private rents,” Polly Neate, the chief executive of Shelter, said.

“The government has ploughed money into a series of expensive home ownership schemes that most people can never hope to benefit from, as they still require a sizeable deposit when most renters don’t have any savings.”

House prices increased by the largest proportion in Salford, in the north-west of England, where the average house price for a first-time buyer increased by 58% over the six-year period.

*Cost in average salaries is calculated by the multiple of the median salary needed to make up the cost of the average first-time buyer’s home

This is despite the fact that Salford is within the top 20 most deprived local authorities in England in terms of deprivation.

In 2015, a single first-time buyer would have needed 4.4 times an individual’s wage to afford a typical mortgage, within the affordability criteria generally sought by lenders.

Today, a buyer on the median wage for a person in their 30s in the region would require 6.4 times the average salary.

In Bristol, while a property was affordable for couples seeking to get on the property ladder in 2015, the increase in prices has not kept pace with wages, rising from four times their joint wage in 2015 to 5.1 times their combined salary in 2021.

Two-thirds of London boroughs remain outside the reach of couples seeking to buy their first property in the capital.

In Wales, the biggest proportional increase in house prices between 2015 and 2021 was in Blaenau Gwent, where prices rose by 52.7% across that period, but the area remains affordable for a buyer in their 30s earning the local median wage.

Conversely, while prices haven’t risen as fast, the gap between a first-time buyer’s wage and the average property price was within the 4.5 times limit in 2015 but has since risen to beyond 5.5 times the average salary in Caerphilly, Torfaen and Carmarthenshire.

The analysis is based on Office for National Statistics data showing the median gross annual wage for the 30-39 age group for 2015 and 2020 at regional level compared with house price data for August 2015 and August 2021 as recorded by the Land Registry.

Affordability is defined as 4.5 times a person’s salary or couple’s combined salary compared with a typical mortgage required for a first-time buyer in each council area. Because the typical deposit is 10% of the house price, this calculation was based on 90% of the average property listed by the Land Registry.

Dan Wilson Craw, the deputy director of the campaign group Generation Rent, said: “It is already a struggle to save the deposit to buy your first home, and as prices have shot up home ownership has become even harder … The government has intervened to encourage banks to lend at higher loan-to-value ratios, so buyers don’t need as much in savings. But ultimately if you’re borrowing that much, your monthly repayments will be huge.”

“Ultimately, the only sustainable way the government can help people buy a home is to throw everything they have at reducing rents. That means building more homes where people want to live, and more council homes.”

A government spokesperson said: “Our economy is on track to reach pre-pandemic levels around the turn of the year and wages are rising in real terms.

“We know how important it is for people to own their own home, which is why we have supported over 700,000 households into ownership through shared ownership and help to buy since 2010, and our new First Homes scheme will provide homes at a discount of at least 30% for local first-time buyers.

“We’re also investing over £12bn in affordable homes over the next five years –the largest investment in affordable housing in a decade, alongside increasing skills funding and the national living wage.”

Social Care new clause – how did our MPs vote?

Despite a significant rebellion from his own MPs, Boris Johnson’s much-criticised changes to social care have been approved on a day to forget for the prime minister.

The new clause in the Health and Social Care Bill, which critics say will hit the poorest hardest, passed with just 272 votes – almost 90 short of the total number of Conservative MPs.

Meanwhile 246 MPs, including 19 Tories, voted against the changes, with many arguing it could lead to people living in cheaper houses having their assets wiped out.

The rebellion capped off a day that began with the prime minister fumbling a speech at the Confederation of British Industry (CBI). (www.itv.com)

Owl has scanned the record of votes cast and finds Simon Jupp voted “aye” but Neil Parish has no vote recorded so he either abstained or was not present.

This, like the sewage bill, may be subject to amendment by the Lords and to the court of public opinion.

Reset planning policy to ban developers from building new homes in high-risk flood areas -Think Tank urges

Exeter, Teignbridge and East Devon are among the 5% of local authority districts in England with the highest percentage of properties at risk of flooding. In Exeter, for example, more than 10% of properties are at risk.

Planning for climate change and flood resilience

localis.org.uk 

Housing secretary Michael Gove should reset planning policy to ban developers from building thousands of new homes in high-risk flood areas, the think-tank Localis has argued.  In a report published today entitled ‘Plain Dealing – building for flood resilience’ the place experts set out how deepening climate change pressures and rising housing demand have resulted in an increase in flooding on properties in at risk areas.

In original research undertaken for the report, Localis discovered that almost 200 planning permissions have been granted on floodplain land so far this year for some 5,283 new homes in the highest-risk local authorities in the country, the overwhelming majority some 4,255 in areas pre-identified as highly likely to flood.

Among its key recommendations, Localis calls for government commitment to empowering communities to manage flood risk locally in a ‘resilient’ way that allows them to pursue their local ecological, economic and social goals. In this context resilience means flood strategies that focus on living with floods instead of just preventing them and involve a flexible approach to flooding and a rapid recovery from inundation.

Other report recommendations for policy and regulatory changes include suggestions to: –

  • Make developers liable for the sustainability and insurability of any new developments built in floodplain areas.
  • Support effective collaboration between the public, private and civil society with the aim of reinvigorating and re-incentivising flood insurance schemes and partnerships – for example comprehensive risk management in at risk urban regeneration zones.

In Detail

The report notes that Exeter, Teignbridge and East Devon are in the top half of the top 10% of local authority districts in England with the highest percentage of properties at risk of flooding (i.e. in the 5% of districts most at risk). In Exeter, for example, more than 10% of properties are at risk.

The report also paints a gloomy picture of the ability of the current planning system to stop making the problem worse: under resourcing; divided responsibilities amongst multiple agencies and lack of overall control.

Read this extract from the Executive Summary:

Problems with the current system

While national planning policy in England should steer development away from current flood risk areas and advises that future risk should be considered, at present there is no clear policy for how local authorities should effectively account for the flood risk associated with increasing climate change in plans and development decisions. Thus, faced with competing interests and institutional agendas such as constraints on building on protected land (e.g. the green belt around urban areas in England) and pressure to meet national housing targets, local authorities frequently permit new developments in flood zones. The complex nature of this issue – local authorities, under-resourced and under pressure to deliver housing targets, working in something of a grey area – highlights the asymmetrical central-local relationship that exists in this area of governance. 

There is a huge mismatch between central and local relations regarding flood risk management, one affecting the entire journey from local plan to development control. This has led to data gaps, a lack of ambition and subsequent lack of effective action and change. Complexity is borne from the multitude of bodies involved in flood risk and service management. In England, local authorities are responsible for housing (district councils in county/district areas), with the county council (if it is a two-tier authority) responsible as the statutory consultee for surface water drainage. Meanwhile the EA is responsible for flood risk and a private water company is responsible for drainage. When there is an emergency, these roles are slightly different and don’t align in the same manner. The district council is responsible for evacuation, with the county council focusing on provision of alternate accommodation. 

The defunding of local authorities since 2010 has naturally had an impact on the ability of councils to manage this complex issue. Just 12 percent of local authorities strongly agree that they have the skills and expertise to take account of flood risk now and in the future in planning decisions. Despite over 60 percent of councils declaring climate emergencies, local authorities have a critical shortage of skills and expertise in relation to planning for climate change. For example, only two percent of local authorities are considering future insurance availability and affordability when making planning decisions, and only a third of local authorities are seriously considering the impacts of climate change when deciding whether to grant planning permission. As local decision-makers, it is paramount that local authority planning departments are better resourced to deal with the flood risk challenges they are facing, both now and into the future.