There are times when writers give us an example of what they clearly see to be an iniquity, expecting us to agree with them. Just such an example here, talking about the decision that council (and social) rents should now be 80% of market rents:
Across England as a whole, 80% of the average weekly market rent for a three-bedroom property is £249, which rises to £350 in London. The comparable social rents are £84.56 across England and £110 in London.
My reaction is that this is indeed iniquitous: that there are any such subsidies to social rents at all. Council rents should be at 100% of market rents and, given my well known practice of listening to dissenting views, I shall scream in rage at anyone who dares differ.
Now note, I'm entirely happy with the idea of subsidising housing for those who otherwise would not be able to afford housing, I am after all a bleeding heart liberal. It's just that I'm a bleeding heart classical liberal and I want such subsidies to be out there in the open, not hidden as opportunity costs. One report tells me that there are about 4 million social housing units in England. No, they're not all 3 bedders, but taking that average discount to market rent of about £200 a week that's....eek! That's £40 billion a year in subsidies. And yes, charging lower than market rent really is a subsidy, it's money foregone.
So I would argue that such rents should be entirely market rents: we may end up having to pay that £40 billion back again as housing benefit but I'd still prefer to have such subsidies out in the open, not hidden away where no one notices them.
And of course we wouldn't have to pay out that £40 billion again, not all of it. For the crazed way in which we allocate social housing is that if at some point in your life you do need it, if you are too poor to be able to afford market prices, then we give you that subsidy for the whole of your life (and yea, even on into your childrens' lifetimes as well). It's as if you, once requiring taxpayers' cash because you're out of work, those checks will just keep rolling in over the generations even when you've found another job.
As I find myself continually repeating these days: yes, I'm quite happy with the idea that we'll ameliorate some of the rougher edges of market outcomes. Subsidise, for example, those left grasping firmly the ordure stained end of the stick. But I still want us to be using markets as the pricing and allocation mechanisms: precisely so that we don't get these absurdities as we do with social housing, where we've a £40 billion subsidy that no one seems to even recognise, let alone acknowledge.
