Why your rent keeps going up

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written Stewart examines state sub ing.

About a year is subsidies A NEW pamphlet published bv the Labour Group and by Lambeth councillor Lansley the system of idies to housspent on these for some five million council tenant households and 5¼ million owner-occupier households. How is it distributed? What are the effects? What changes should Labour propose? These are the questions the pamphlet discusses.

We publish extracts to help begin a discussion on these questions - and on whether they are the right questions for Labour to be asking.

Why subsidies!

Subsidies are needed to ensure that all households can obtain housing of some minimum standard. Without financial assistance to reduce housing costs, a significant proportion of households would be unable to pay for decent housing. Leit to itself, the private market would produce both insufficient homes, often of an inadequate standard, and produce a very unequal distribution of housing resources.

Lower income groups would be concentrated in poor quality and overcrowded conditions, often paying rent accounting for an unacceptably high proportion of income. This is indeed just the kind of housing situation that prevailed in nineteenth-century Britain. Moreover, despite 60 years of government intervention in housing markets, we have still not eliminated such problems.

What about the 'subsidy' to moneylenders through debt charges?

It is sometimes argued by socialists that such debt payments are exploitative, that housing problems could be solved if they were abolished. This is not so. It is in fact more economical to finance housing investment by borrowing if interest rates are lower than inflation as they often have been in the last two decades., This means that the real cost of borrowing is actually negative, That the total cost of debt chargés over time can be much higher than the original cost of building is an illusion created largely by inflation. Even if jeal interest rates are positive, there are still reasons for financing capital spending by borrowing. Another factor concerns who receives the interest on such borrowing.

Often it accrues to working people who take out life insurance and towards pension contribute schemes.

Who gets the subsidies?

Cash assistance received is the conventional way of defining housing subsidies, and includes exchequer subsidies, rate fund contributions and rent rebates in the case of public tenants; option mortgage subsidy and tax relief in the case of owner occupiers; and rent allowances in the case of private tenants. In 1981/2, on average, council tenants received £183 p.a., excluding rent rebates, and £241 p.a. including them. The average subsidy to owner occupiers with a mortgage was somewhat higher at £285 p.a. Private tenants, on the other hand, received minimal state assistance.

Subsidies reduce the housing costs of the great majority of households but in a wholly indiscriminate way.

April 1979 6.40 April 1980 7.71 April 1981 11.39 April 1982 13.14 April 1982 13.89 ment's guideline for April 1982.

On average, owner occuhousehold incomes which tion. are nearly twice as high as those of local authority tenants, live in larger accommodation, yet receive more subsidy on average.

Cuts for tenants. owners protected.

In 1981/2 this inequity •has been further accentuated by a cut of 45% in subsidies to public: tenants while owner occupier tax concessions have been protected.

In 1982/3 local authority subsidies are to be cut agaın by an estimated 285 while tas concessions are again protected. This has led to Authority Rents, England ar Average weekly rent index SUBSIDIES

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-210 OCCUPIER