Would Rent Caps help?
Would it not help the UK economy to have local Rent Caps? Its beloved that Rent control exists in approximately 40 countries around the world. I believe its even used in the USA too.
At the moment rent is high in the UK and often people work to pay the rent and have not much cash left over. Its high because demand is high for places to rent. Its also high as many bought houses at high costs to rent them out.
By putting a cap the result would mean people paying far less and thus having more cash, the result is people would spend and the economy improves.
The other benefit I would suggest is that we no longer have a property boom as people who bought property to rent would know that they could not charge what they wanted for rent, thus the price of property would be unlikely to shoot up.
But the downside to begin with would probably mean property would drop a lot in value. For instance landlords may find that they are having to pay out more in there mortgage payments than they are getting in rent and may be forced to sell. As rent property will not be as profitable then it will keep the house prices down. But… And this is the big but. It is probable that house prices will drop possibly by 50% or more anyway in the next few years so this could be an ideal time to implement this system anyway.
Today many who work simply have not much or any cash at the end of the month. In fact those who have not and do not work are much better off. In fact it does not make sense to work. Once you pay your rent, travel, heating, food, many people have little cash at the end (those who work) and we now see lots and lots of firms offering short term loans. Even the local council tries stealing cash (and I do consider it stealing) from people by fining them for speeding (say 33 in a 30 zone) or parking and so on.
In truth I suspect governments can do very little to get a country out of hard times. There is very little it can do to improve employment. Sure it can make up pointless jobs like Labour did, but these are artificial and simply cost a fortune to do. Also these artificial jobs often make problems and make systems inefficient. For instance I find that when you deal with tax your dealing with lots of offices all over the UK, and none appear to have a clue what the others are doing, and every communication takes weeks. Its the same for many UK agencies, they all seem to have thousands of staff, and everything takes ages to do anything, and often mistakes are made. Getting rid of most of these people is not just about saving money, its about making things run better.
To me there is only really two things the UK government can do to improve things. (1) Set up rent caps as I have stated. And (2) make employment easer for firms and drop the pointless minimum wage.
Yes I have said it, I find the minimum wage pointless.
Why?
Well market forces set wages not governments. No one forces people to work for low wages. Firms that offer low wages will probably not do well. Before the min wage started I worked for a soil testing firm in Leeds. They paid very low wages, but all we did was phone in sick and mess about. I went to university and quit. Many people would leave. So by paying not much it cost the firm more to train people every few weeks. But as people were in work it made it easer for them to get jobs with firms who paid a decent wage.
Now for those who still believe the min wage is a good idea, let me ask you this. Why not set it to £20 per hour or £200 per hour or even £10,000 per hour. The answer is simple, it would not work. But that’s the point you cannot say what amount should work as there is no real answer.
Has it helped anyone? Well supermarkets seem now to have less staff and have automated it so you no longer have people working on the cash tills. So it would seem that all its done is create fewer jobs, and those who work, now have to work harder. I suspect its also made some items more expensive. Food in supermarkets has increased (though this could be down to other factors too), so now the poor seem to have less cash than they did. Many people no will not take jobs as they do not want to work for the min wage. So I do not see how its really helped anyone.
But think this way too. If I wanted to set up a business and wish to employ my graduate friends who may not be working. I may have said lets set up a business but as I cannot get a bank loan and have no real funds it may mean working for a token sum of a £1 a week. But after a few months we may get some clients and I can afford to pay everyone a good wage. I could not do that even though my friends would be happy to do so. So rather than set up a business we would have to stay on unemployment benefit.
I know many graduates who would be happy to work for next to nothing for a firm, knowing that in time it would lead to a well paid job, but the firms are saying at the moment they could not pay even min wage. Many firms are going bust as they in these times cannot afford to pay staff.
Some people are just shutting there business down as they just no longer can be bothered. And can you blame them?
When they introduced the min wage I said at the time that as soon as things go bad it will make problems. At the time they brought it in the economy was doing well and paying the min wage for most firms was no big deal. Many simply just cut a few staff and made others work harder to cover the costs.
Before I forget I would also suggest dropping all VAT from food. It seems wrong to charge tax on something people have no option to buy. Food is a necessity, not a luxury. Also I would have thought that it may even make the government more cash in tax. By this I mean that if food is cheaper in supermarkets (having no VAT on food) people may buy more and so the government would make more from the increased profits from the supermarkets. Just a thought.