Something For Nothing

I listened to a chap on the BBC the other day explaining how the artifically low interest rates - have been saving him £700 a month (net) on his mortgage for the past three years or so.

Now that's a fair old amount of money - in anyone's language - £8,400 in a single year or £25,200 over three years.

Or to put it another way - much more than the average salary in the UK - especially when you consider this is money in the chap's hand - net of tax and national insurance.

I've been banging on about this for a long time of course - as regular readers will know from previous posts on the blog site.

Yet so far at least - I've not heard a single politician remark on how unfair it is that so many people benefit so greatly - for doing absolutely nothing in return. 

£20 Billion Windfall (5 January 2012)

I read something the other day - a claim by an organisation know as the Family and Parenting Institute (FPI) - of which I know very little.

Presumably it does what it says on the tin - seeks to speak up for families with children - because the FPI claims that average income of households with children will drop between 2011 and 2016.

By 4.2% would you believe or around £1,250 a year - depending on the exact income of the household in question.

But I say - so what - what does that have to do with the price of mince?

Because unless you factor in other things - such as how much some households have benefited from our artificially low mortgage rates - then the FPI's claim is completely meaningless.

I know some folks - some with others without children - who are saving hundreds of pounds every month necause of low interest rates - worth many thosuands of pounds a year.

So spare me all this special pleading from special interest groups - as ever they are concerned with their own narrow agenda - and have no time for the big picture.

And the big picture means big savings - not for everyone - but for those paying mortage interest when rates dropped like a stone - and the bigger the mortage the bigger some people's windfall.

Here's what I had to say on the issue in 2011 - no doubt the £20 billion figure now needs to be revised - in an upwards direction.

'All in this together' (September 15th 2011)

When people start urging us to take the view that 'we are all in this together' - it's time to stop and think.

Who's 'we'? - will do for a start.

The fact is that not everyone in the UK has been doing badly in these hard economic times - in fact people who are in a secure job and who have been paying a mortgage off - are doing very nicely thank you very much!

Compared to lots of other people anyway.

And just to demonstrate this point here's something I wrote back in March 2011 - arguing for a 'windfall tax' on the £20 billion that mortgage payers have saved in recent years - as a resul tof artificially low interest rates.

Now the people who are not part of this £20 billion windfall are - typically - the less well off and those on fixed incomes who rely on their savings - which produce little or no interest these days - to help pay the bills.

So why don't we hear any of this at the TUC conference - where delegates are good at telling everyone else what to do - but seldom come up with practical ideas for resolving problems

A special windfall tax would recoup just some of the £20 billion that mortage payers have gained - simply through sheer luck - and it would seem to embrace the 'were all in this together approach'.

Which the present government and the trade unions both espouse - when it suits their own argument of course.

I imagine most union leaders are paying mortgages - because most live in private housing - and most will have benefited hugely out of the artifically low interest rates - we have witnessed in recent times.

Ironically the one union leader who would escape a special 'windfall tax' on mortgages - would be Bob Crow - who has been living in subsidised social housing in London for years.

But a windfall tax on mortgages would be redistribute income between the 'haves' and 'have nots'.

A windfall tax would be progressive because it would tax 'unearned income' - and would be likely to affect the majority of delegates this year's TUC.

In other words - a real life demonstration of solidarity - that we really are 'all in this together'.

Windfall Tax On Mortgages (March 4th 2011)

I read a remarkable statistic the other day - which made me stop and think.

The Financial Services Authority (FSA) has apparently calculated that the UK's artifically low interest rates in recent years - have meant an unexpected windfall of £20 billion to the nation's mortgage payers.

Yet another example of the old saying - 'It's an ill wind that blows nobody any good'.

In this case £20 billion to the good - and the bigger the mortgage - the bigger the killing people have made - without any effort or risk.

While those who can't afford or no longer need a mortgage (e.g. low paid workers and pensioners) - have lost out big time, comparatively speaking.

So I have a suggestion for the government and our policy makers.

Bring in a special windfall tax on mortgages which claws back some of this £20 billion - and use the money to reintroduce the 10p tax rate to help the low paid.

Low paid workers will spend the money - because they don't have a lot to start with - and that will help to boost the economy.

Readers will remember that the 10p tax rate was abolished by the 'man with a moral compass' - Gordon Brown - in one of his worst decisions as Prime Minister.

But here's a chance to right a great wrong - help the lower paid - boost our flagging economy - and with money that has simply fallen into people's laps by sheer luck - nothing else.