And the rest matey, and the rest

Grandparents are spending nearly £3,000 a year helping their children raise their own family and cope with the credit crisis, it emerged today.

20 thoughts on “And the rest matey, and the rest”

  1. Most of the things mentioned are in no way essentials. Weddings, new cars, school trips, holidays. Deposits to buy overpriced boxes to live in, having bought their own much larger box for peanuts and sat and watch it rise colossally in value.

    This article actually says: rich thirty-somethings get a shock when they realise raising kids is expensive, but fortunately their wealthy parents chip in.

    Boo fucking hoo.

  2. As Tim has assured us that incomes are rising this problem is, therefore, impossible. Could n’t be the result of falling real wages and rising housing costs leading to eye-watering rents and mortgages could it? Perish the thought. That would imply that markets don’t work efficiently, or, if they do work, do so at a non-survivable level .

  3. DBC Reed, I see what you did there. Neat sleight of-hand: “markets”, instead of “free markets”.

  4. Be careful. Politicians will find a way to tax us loving and prudent grandparents even more than now, on what we try to do for our families.
    I thought one of the ways in which homo sap differs from “other animals” is that he has a better and longer sense of time, and some understanding of the need to assist in the preservation and improvement of the lives of his successors?
    One significant outcome of longer life expectancy is that we oldies will increasingly (by demographics in the electoral context) gain greater control over governments. I for one (at nearly 80) can wait – and look forward to this.

  5. Well, in the real world – as distinct from DBC Reed’s – not so long ago I used my car to help my 23-year-old son move into a “new” (i.e.different) flat that was a lot bigger and better than the one that my big sister and her car moved me to when I was 25. No, seriously, I should really have liked that flat. Notable difference: I needed two trips, mostly because he has so many books whereas C packed me and all my possessions into a Hillman Minx for a single journey.
    Falling real wages – poppycock. Rising housing costs because New Labour reduced housebuilding by 70% compared to SuperMac’s performance in the early 50s – well yeah – on the face of it that sounds likely; but I seriously doubt that many actuaries are currently living in a converted attic as I was under Wilson.

  6. John 77
    “Falling real wages – poppycock” and you accuse me of not living in the real world. BTW The housing industry has pretty well been thoroughly privatised since Macmillan’s day( somebody to the left of the current Labour party ,let alone his own). Now market forces dictate that builders do n’t want to build too many houses as house prices will collapse across the board. Never mind: lets plough on I reckon with a few thousand casualties we could advance a hundred yards.

  7. A non-survivable level? Remind me of the catastrophic famines and disasters suffered by western capitalist nations.

  8. In the real world, GDP per head has more than doubled since I was my son’s age.
    In DBC Reed’s world this has been accompanied by a fall in real wages.
    SuperMac got housebuilding going by having a bonfire of controls. In DBC Reed’s world that is left-wing.
    Market prices will not collapse if housebuilding doubles for the rest of this decade because there will still be a shortage and no individual housebuilder will be worse off as a result of building more since the profit per house will decline by less than the number they build increases – the only losers would be a housebuilder who did not join in the expansion and so sold the same number of houses at a lower margin.

  9. @John 77
    GDP has gone up ,but real wages have fallen by circa 10%.We have had a minimum wage since 1999 when Gordon Brown had the temerity to stop working- people getting below a liveable rates of pay and, since 2003,we have had working tax credits by which the tax payers fork out to pay families to live because employers won’t pay properly ,as they should if you believe in the free market capitalist system).
    Macmillan worked in the old mixed economy system where the greater part of building was done by the State (of new towns ) and local authority council housing. Even the private sector was severely controlled by taxation: house price inflation was taxed as income by Schedule A until 1963 (the beginning of the end for the British economy; Enoch Powell had fought to maintain Schedule A).
    There is a shortage of houses now and has been for years.
    Why doesn’t the current free market system , (house building has been thoroughly privatised) spring into action now and clear up the shortage? How has the shortage arisen? Could it be that the free market in housing has been a costly failure, ending up with young parents paying extortionate mortgages (so they rely on their parents see above) and don’t have enough over after rents and mortgage repayments to spend freely in the shops? So screwing up the entire economy? Would appear so .

  10. People contributing in various ways towards the well-being of their grandchildren is a new development? Really?

  11. @ DBC Reed
    Wage share of GDP (excluding NI contributions) is over 45%. GDP/head has risen by 109%
    So in the DBC Reed world wages (excluding pensions and unemployment benefit and capital investment and profits) took more than 105% of GDP when I was young.
    You just make yourself look stupid.
    You also display ignorance – under Attlee local authorities did most of the building – of prefabs which needed to be replaced in the 50s. MacMillan got the private sector moving and in the latter 50s and 60s most housing was built by private sector housebuilders. The largest builder of council houses was called Wimpey (aka we imploy more paddies every year)
    Schedule A was NOT house price inflation – it was a tax on imputed rent not paid by owner-occupiers.
    MacMillan was *alive* when most new towns were built but Letchworth dates to when he was 9 and the majority (eleven) were commissioned by Attlee. There was NOT A SINGLE NEW TOWN started when Mac was Housing Minister and just one started during his premiership (Telford was designated in 1963 but the first house was occupied in 1967).
    The problem is NOT the free market: it is planning constraints – haven’t you read Tim’s blog? Attlee wanted to avoid poor people being crammed together in slums so his government legislated for a maximum density of dwellings per acre which applied equally to tower blocks of flats like 41-storey Shakespeare Tower that houses Scargill’s luxury long apprenticeship started under the Tories was completed and 2011, when the first short apprenticeship started under the Coalition ended, 3,8 million people born overseas entered the UK to fill job vacancies due to local skill shortages.
    Oh, and the NMW was passed in 1998 when Blair was PM. And I started work on £6 per week, so I am not going to fall for the ridiculous claim that it “stopped working- people getting below a liveable rates of pay”
    If you can’t get a life, try checking your facts before wasting my time.

  12. @ Michael Jenkins
    I acquired my signature because my grandmother sent me a cheque as a reward for passing the 11+ and I had to endorse it using the same format for my name to pay it into my Post Office Account, prior to using the money to buy my first chess set.
    Everyone else will think that Jacob’s benevolence to Manasseh and Ephraim in Genesis XLVIII is more significant

  13. @John 77
    A friend should take you aside and warn you that you are making a fool of yourself in this exchange.
    As to real wages: the last thing I watched on telly last night was Chancellor Osborne being challenged with the fact, (which he did n’t disagree with), that working families are £1300 down on spending power on his watch or, to put it another way, that real wages are down for 40 months since the crunch. I don’t know where you have got information to the contrary: it is not conform with the reality.
    Perhaps you don’t understand the concept of real wages: you certainly don’t understand imputed rent (as in Schedule A ).After some skimpy “research”, you appear to have latched onto the word “rent ” and triumphantly converted this into evidence that it would not, therefore, have been paid by owner occupiers. But it was, because it was not real rent but imputed: what the owner occupier saved in rent. This was downright weird but it did keep house prices steady for decades , during which time owner occupiers had money to spend in the shops. ” Never had it so good” and all that.
    Talking of Macmillan , he was responsible for a surge in building to 300,000 a year in a mixed economy system .This total included 200,000 council houses ( in 1953 :figures from Inside Housing 15 th April 2013 tagged Harold Macmillan).
    I cannot follow the long rant which includes references to Scargill and Shakespeare Tower and apprentices (spliced in from another e-mail?) because it is incoherent, to say the least.
    The minimum wage was Gordon Brown’s creation: Blair was not allowed near domestic policy. His rejection of the internal market in the NHS, followed by his 180 degree conversion to it , shows what happened when he got near domestic affairs. (see Wikipedia : History of the National Health Service( England).Blair was left to show his public school love of violence in foreign affairs where he was an unmitigated and still unfinished disaster. Brown would n’t give Blair a hint what was in the Budget the day before.(BBC documentary).
    You have got all your facts wrong: it might be an idea to reconsider this rash ad hominem enterprise.

  14. @ D B C Reed
    “In the real world, GDP per head has more than doubled since I was my son’s age.” is met by “GDP has gone up ,but real wages have fallen by circa 10%.” and then later by a reference to a TV programme. You seem to think that “when I was my son’s age” was 40 months ago.
    I quote data from the Office of National Statistics and you say it does not conform with reality.
    You say : “house price inflation was taxed as income by Schedule A until 1963” so I point out that schedule A was a tax on imputed rent – the rent that would have been paid by a tenant to a landlord for an identical house but was not paid by an owner-occupier because he/she/they owned the house. I never said the tax was not paid – you seem to have imagined a non-existent semi-colon. The abolition of Schedule A was not the reason for the rise in house prices – if it had been house prices would have taken off in 1964.
    I did not have to do any research on Schedule A (at least, not in the last forty years) in order to know it was not a tax on house price inflation.
    If you were previously unaware may I inform you that Wimpey (now part of Taylor Wimpey) was a private sector housebuilder that built built similar number of houses for councils and for sale. A majority of councils had “direct labour” organisations that could build houses but many of these were notoriously inefficient and most councils contracted out most of their housebuilding to Wimpey, John Laing, Taylor Woodrow and a host of smaller. To suggest that I got my facts wrong because out of more than 300,000 houses built 200,000 were council houses either shows your ignorance of 1950s councils and housing or is just deliberate suggestio falsi. That you choose to quote a data item for 1953 as a refutation of my statement that “in the latter 50s and 60s most housing was built by private sector housebuilders” could be viewed as implying the latter.
    I apologise for failing to spot that a cut and paste went wrong – I was trying to say that the same rules on number of dwellings per acre applied to Tower blocks and bungalows. Scrapping this rule would permit much more sensible use of space and ease the housing shortage.
    “Never had it so good” referred to the handful of pensioners whose pensions under MacMillan were higher than their wages had been when they were in work. It is not relevant to the spending power of owner-occupiers.
    You don’t know the difference between 1998 and 1999, After I point out half-a-dozen mistakes you made *you* claim that I have got all my facts wrong. That sounds like chutzpah.

  15. @John 77
    This exchange gets nowhere because you refuse to acknowledge that real wages are in decline. You seem to be overwhelmed by the fact that GDP has increased in your son’s lifetime .You assume GDP growth translates straight into wage growth. But the share of GDP taken by wages has gone down, relatively. The country is affected by lack of the demand provided by good wages, which Osborne is trying to correct by straight Keynesian measures of pouring money into housing and indirectly into the economy (supply side) through QE.
    Much of the rest is argument on the details of your initial challenge “Supermac got house building going by having a bonfire of controls”.(24.vii.13). In fact, Macmillan worked within the controls ,as you call them. The two overarching sets of regulations were the Town and Country Planning Act and the New Towns Act passed by the post-war Labour Government in the 1940’s.The powers, not burdens, created by the New Towns Act, saw the onset of mass building with work on Stevenage beginning in 1946 and Hemel Hempstead in 1947.Ten new towns were designated within two or three years. The powers contained in the Town and Country Planning Act were effective more widely and allowed for the compulsory purchase of private land but co-operation with private developers, subject to a charge levied on the increase in land value wrought by the permission to build. In some cases local authorities simply issued contracts for the likes of Wimpey to build huge estates.
    None of these measures can be considered “a bonfire of controls.” Rather the reverse (in both senses; they were not controls but powers and they were not put on a bonfire but implemented by Supermac and others)
    The bonfire got started with the abolition of Schedule A which taxed house price increases straight out income. You quibble about the details e.g. what is meant by your mangled statement “Schedule A was NOT house price inflation-it was a tax on imputed rent not paid by owner occupiers” (25.vii.13) but there is little doubt that Schedule A worked as a control of house-price inflation.
    ( And some proof reading on your part would not go amiss!)
    Free of “controls” by local authorities and the State and left to its own devices, housebuilding has declined into control by a cartel of developers who fulfil the very definition of a cartel by artificially restricting supply to keep up house prices.
    Problems started as soon as half-arsed neo liberal theories of freeing the big commercial interests to do what they want gained ground. And all notion of democratic control of house building got binned.
    You have had a world credit crunch caused by housing bubbles globally (see bubble,bubble com.) What does it take to shake the confidence of the neo-liberals ?You would have thought nearly destroying capitalism would have given them some pause for thought.

  16. @DBC Reed
    “There are none so deaf as those who will not hear”
    Your insults in lieu of honest answers have gone from offensive to irritating to just plain boring.
    Your obsession with lying about Schedule A – how many times do I have to tell you that it was on “imputed rent” not on capital value? – is possibly a side-effect of an interest in LVT but shows an ignorance (perhaps) willful of the realities of the housing market (e.g.impact of equality legislation which, by forcing building societies to offer mortgages to bachelors, had a far bigger impact on house prices – an order of magnitude greater than could plausibly, by the most enthusiastic honest advocate be attributed to to a tax related to rent rather than capital value).
    Maybe I need to proof-read – you need just to *read*. I have previously pointed out that current wages per head (excluding pensions etc) take more than total GDP per head at my start date
    If you think that demand that is *still* several % greater than earnings – under the glorious Brown it was more than 10% greater than national income – is a “lack of demand” then your English teacher should be reprimanded.
    Your history teacher is also at fault for failing to tell you about the Attlee government’s 1947 development charge on building land that MacMillan repealed which in some cases raised the price six-fold. To allege that the bonfire started 9 years after Churchill moved him to Defence is to call a dead man a liar knowing that he can no longer sue you. The word “despicable” comes to mind.
    May I introduce you to the Halifax House Price index? It shows that house prices rose by 145.6% under New Labour – i.e. 45% more in 13 years than in the previous 13 millennia.
    There have been several housing bubbles in my lifetime – one was a result of Nigel failing to a correct a typing error by some subordinate in his budget speech so a restriction on joint mortgages was deferred from April to August creating a rush to take out joint mortgages, but most have been due to panics about the effect of inflation – none of which could be due to your imaginary cartel. There are far too many small companies who would build a few houses each if planning controls were lifted.
    The world credit crunch was due to a lot of things, such as Brown running a structural budget deficit of 8% (optimistic view) to 14% (pessimistic view) of GDP but the housing component of the cause was not anything to do with neo-liberals or neo-cons, however much I dislike them, but with poor people in the USA lying through their teeth (encouraged by mortgage brokers) after the Clinton administration mandated excessively favourable terms for “disadvantaged” citizens. That part was DUE to democratic (in particular Democratic) control of house buying.

  17. Do you think that there is a disconnect between capital values of housing and (imputed) rental values : that now that house prices are going up rents are not going up also? Back then pre -1963 owner-occupiers of my parents’ age were haunted by the idea (probably mistaken) that if they built an extension this would increase the value of their property and hence their income tax. This is why I said Schedule A acted as a tax on house price inflation ,which was flat for a decade : because people worried that house price increases would blow back on them.
    Schedule A was not a tax on rent but imputed rent and they imputed the rent by working backwards from the capital values , private rental properties being relatively scarce and being rented out at some fraction of the capital value anyway.
    This argument is about a mere detail: please remember this argument stared about accounting for why modern oldsters have to help their offspring with buying houses and basic living expenses. I ventured to suggest there was downwards pressure on real wages , which you ,alone in this country ,dispute ; I also suggested that house prices had become impossible and that a tax like Schedule A had restrained price inflation in the past. .You only want to argue about how it did so.

  18. @ DBC Reed
    Complete and utter tripe.
    Why cannot you admit that you are wrong?
    I actually know what i am talking about: what were *you* doing in 1963 – I was collecting 3 ‘S’ levels and a scholarship to Oxford, representing the school at Chess and Boxing and scoring for the 1st XI while the rest of my form played (hardly the easiest way to get good ‘A’ levels, let alone ‘S’ levels), campaigning for local elections, studying Economics, getting my first job at £6 per week. Were you actually talking to home-owners about building extensions? None of those who did so or might have done so told me that Schedule A affected their thoughts, let alone their decision.
    The hard facts are that property price inflation is a consequence of Labour government: 145% house price inflation from 1997-2010 is just one example; Harry Hyams made a fortune thanks to the Labour party he financed; Land Securities, Met Estates, Hammerson etc also made millions thanks to Wilson’s policies.
    Well, yes there is a connection between house prices and rental values: the price that a BTL investor should pay is the dcf value of future rents.
    Sometime someone with more spare time than me might get you to understand which is cause and which is effect. However I need to work and do a significant minority of the housework so until you are willing to listen I have no wish to spend the odd millennia on a wild goose chase.

  19. @ DBC Reed
    Separately, you lie.
    “I ventured to suggest there was downwards pressure on real wages , which you ,alone in this country ,dispute” Downwards pressure on real wages has applied for most of the time since the end of the Black Death – for much of the period upward pressure has been greater: where did I dispute that? I stated, quite clearly, that real wages had doubled (actually more than doubled) between the time that my sister had helped me to move into a flat and I helped my son to do so.

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