I knew people would get confused about the Shelter report

You know  the one, rents are too damn high? For example, Dave Hill (who is usually better with numbers than this):

Oh dearie me.

\”They\’ll be paying their landlord £825 per month. Let\’s say that one of the parents is working, as is the case with two-thirds of private renting households in the country. Shelter reckons that 43% of that Havering parent\’s take home pay will have to be spent on paying the rent.

That\’s a big chunk of their money. Shelter\’s report notes that \”there is no standard or official definition of housing affordability in England,\” but says that in other countries the threshold of affordable housing costs tends to be set at between 25% and 35% of net household income (which, in practice is much the same as individuals\’ take-home pay in this part of the housing sector).\”

No, you\’re confusing two very different concepts. There are:

1) Take home pay.

2) Household income.

The two are absolutely not the same. You see, we have this thing called the \”welfare state\”. Child tax credits, working tax credits, housing benefit and a plethora of other things.

Household income includes all of those and take home pay does not. F minus Mr. Hill, see me after class.

Now go away and do your sums again.

Yes, I have indeed read the Shelter report and they are only, but only, looking at rents as a proportion of median wages: they are not including any at all of the impacts of the welfare state. Which is just fine in their report, for they tell us that that\’s what they\’re doing. They even note that they\’ll talk about HB etc in another, later, report.

But you absolutely cannot make the leap that is made here. Take home pay simply isn\’t the same as household income.

It\’s the same old, same old. If you want to consider what needs to be done about the welfare system then you need to measure what the welfare system currently does.

For example, \”the unemployed are all starving to death! They\’ve got no take home pay, have they? Nada, zilch, so they must all be starving, right?\”

\”But, but, they get unemployment pay, help with their rent, a bit for the kiddies, we need to measure what, if anything, we should be doing more for them after this, no?\”

\”Nonsense! The unemployed must be starving because they don\’t have any take home pay!\”

Measuring the affordability of housing against median wages, as Shelter has just done, is just fine. Claiming that take home pay is the same as household income when we spend £20 billion on housing benefit and further tens of billions on child benefit, in work tax credits and all the rest is simply nonsense.

1 thought on “I knew people would get confused about the Shelter report”

  1. Mind you, all that doesn’t alter the fact that The Rent Is Too Damned High. Really, I’d happily man the barricades shoulder to shoulder with Mark Wadsworth, if he promises not to start on with the Georgist/Ricardian theory of why The Rent Is Too Damned High.

    I personally take the view that a government that deliberately forces up the price of the most basic human necessities, far above free market levels, such as housing- which both Laboru and Tory administrations have been doing for generations- are very much deserving of the hempen rope/lamp post treatment.

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