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Archive for the category “Inheritance”

Open Letter to Older Voters

As an ‘older voter’ myself I feel qualified to write this open letter to my contemporaries many of whom, it seems, tend to become more right wing and vote Tory in elections. Why this should be is somewhat puzzling and the purpose of this missive.

Older people it is generally recognised tend to be more set in their ways but political leanings fly in the face of this generalisation. Could it be that as life expectancy diminishes resistance to change increases along with a desire for security as represented by continuity, money and assets? If so and I can think of no other reason, this is illusory.

People of my generation, those born in the 40’s 50’s and early 60’s were indeed very fortunate in that during their early and middle years they had security of housing, they bought houses or were more or less assured of a Council house for life. They had good ongoing health care from the newly formed NHS, good and free education up to and beyond a university degree and perhaps most importantly, employment was all but guaranteed as soon as ceasing formal education. For those who trod the craft or trade route apprenticeships were long, meaningful, detailed and effective training with a long experienced time served craftsman leading to a worthwhile and life long well paid career.

In the early 1980s under Tory Prime Minister Thatcher, the big con trick of the Right to Buy Scheme was started, not because she thought it would be ‘nice’ but because of the ideology that people with a mortgage are de facto in debt, heavily in debt and that means over a 25 plus year period they will be handing over a huge amount of their earnings to Tory friends, the bankers. In addition people whose home may be at risk if they fail to make the repayments become servile and compliant and unless pushed to the limit will not go on strike for better pay or conditions; in fact will even accept a cut in income without much dissent. As more and more of the social housing was sold off, much of it incidentally ending up in the hands of Tory landlords, an obvious shortage of homes was created leading to ever increasing house prices that is unabated to this day.

Much has been written about housing, including some of my blogs here, so I wont go deeper into it except that the dash for home ownership resulted in and was encouraged by not only the Tories but also the Blair government, a slight feeling of superiority by owners over renters. It was interesting at the time to see some of my friends who had voted Labour all their life until getting a mortgage, almost overnight becoming Tories. Little did they know that they would be working harder, longer, for less and that it would eventually require two of them to work to pay the one debt. Mortgages today can now stretch beyond a lifetime into the next generation; the transfer of wealth from ordinary people to the rich elite gathers pace.

No one likes to be proved wrong or admit to being duped and so it is natural for most to close their minds to even that possibility, to cling to that superior feeling that brings comfort which by default means a resistance to change. This is how older voters come to be more right wing and how they come to vote for a Tory government and their ‘austerity’ that only applies to the working and middle classes but not them.

Wait a minute though my older voting friends! Most of you will have children and grandchildren perhaps even great grandchildren, what of them? ¬†Perhaps you are thinking you can leave them your house albeit split between however many offspring you have, less tax and fees etc. so they’ll still need a mortgage and a big one with prices increasing way above inflation. The same people that made you pay roughly twice the sale price for your home will happily do the same for your descendants. These same people also want the destruction of our NHS for their profit, do you want your descendants to have to pay for private health care or go without and do you want them to be denied the education they would like on the grounds of cost? Of course you don’t but to ensure their safety you have to admit to yourself, no one else, that you were duped and make the changes necessary in the polling booth.

 

 

 

 

 

UK Housing Prices & Inheritance

The Governor of The Bank of England has again warned of the risk to our faltering small recovery and of the need to build more houses or the increasing likely hood of raising interest rates to dampen down house price inflation. Also in the news is the widening gap between the rich and the relatively poor.

Political attention is likely to focus on the house price boom because for politicians this is the easy option but this is allied to increasing inequality of not just wealth but also inequality of opportunity. The main cause of inequality is inheritance and if this were tackled the housing inflation problem would largely solve itself. Many of the last generation bought homes at more or less sensible prices and have seen their value increase many times over the general inflation rates, an increase that is not earned. When they perhaps down size or die they can pass on to their children large sums which their offspring can use to buy their own homes; homes that without this unearned windfall they could not otherwise contemplate. This of course helps to both maintain and fan the fires of house inflation.

In addition to passing on their inflated homes, the wealthy also can afford to give their children the best start in life with all the advantages that money can bring and bequeath their accumulated funds that enable the offspring to acquire even more and so the cycle continues. Apart from a few exceptional individuals the poor will remain poor and indeed, become even more deprived as wealth becomes more concentrated in the hands of a small minority. The result of this imbalance is that the nation as a whole will lose out on ideas, businesses and social benefits due to the suppression of the less well off who cannot make or even recognise the best use of their talents or from lack of capital to advance their ideas.

What we need, but is at present anyway, unlikely to be done, is a strong inheritance tax which some may say is even punitive. If someone builds up huge wealth there is no reason that he/she should not enjoy a rich lifestyle for as long as they live but equally there is no reason why their children should continue to enjoy that lifestyle simply by being born into that family. Money raised from this taxation could then be used to improve the conditions of the many and provide start up funding for brilliant new ideas and enterprises.

There would be many arguments against a firm inheritance tax and it’s implementation would be difficult but not impossible. How it could be done is what we pay politicians for.

 

 

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