Article

Comment

Community

Hospitality

30 October 2024

3 min read

Fairytale housing is building up new problems

Solve one social problem but don't cause another crisis.

Imogen Ball

Imogen is a writer, mum, and priest on a new housing development in the South-West of England.

A CGI of a new housing estate viewed from above.

Home Builders Federation.

This time last year Labour promised 1.5 million new homes as part of its election campaign. Now plans are afoot to get these houses well and truly off the ground. New housing is seen as the salvific answer to one of Britain’s greatest social problems. The housing crisis sees rent-avoiding sofa surfers, impossibly high interest rates (except from the bank of mum and dad), and a scarcity of social housing.

New builds are to the housing crisis what the fairy godmother was to Cinderella. Adequate and safe housing is an essential infrastructure for any society and is a fundamental human right. With an influx of new properties on the market, prices fall, social and affordable housing increases, and people are able to buy before their inheritance arrives. Families on housing waiting lists can live in a home somewhere they know. New housing offers Britons opportunities to find, purchase, and live in their forever, fairytale homes. In theory.

It could turn out to be a nightmare. We are instead sentencing them to social and spiritual isolation. By focusing on building houses, we fail to meet the essential human need for community, social interaction, and connection. (Wo)man is not, and never will be an island. Building homes is not enough. We must also build communities.

As we build community we safeguard against the epidemic of loneliness, segregation, and isolation

On new housing developments, organic community creation is challenging. Momentum is required to create communities. The government’s house building target does recognise the need for infrastructures such as doctor’s surgeries and schools. But these are not developers’ priorities. And they are also not enough to embed community into those new developments.

Can you imagine your fairytale home without the corner shop for an emergency pint of milk? Or without the café for bleary eyed mums and babes? Or without the play park, pub, poo bin, and postbox? Can you imagine your happily ever after will be without a local hall for big birthday celebrations, for scout groups, and for Pilates? What about a church, with bells ringing out the universal soundtrack of Sunday mornings, offering a space to breathe, to pray, and to explore your own spiritual journey?

We have recently moved onto a new housing development and have seen firsthand the need for community amongst these supposedly dream homes. We are also part of a new church here, writing a different story and weaving community throughout the development. Knowing our neighbours’ names and giving and receiving help are part of embracing social interaction. Our pop-up coffee bike is a place where people can gather and get to know one another around a nearly-expertly brewed beverage. This is the beginning of human connection within a community.

But the church also offers a place for spiritual connection. New housing without the opportunities for human and spiritual connection leave residents on a cliffhanger. The church offers people another ending to their fairytale. Because the dream-like show-home does not become our own and we are left with the disappointment of reality. The story of Jesus speaks of miracles not magic wands, redemption not Red Riding Hood, the Prince of Peace not Prince Charming. In the void left by developers, Jesus can speak, the Spirit can move, and the church can show up to offer human and spiritual connection and meaningful community.

Though these new builds may solve the housing crisis, they may also contribute to a crisis of community across our nation. But as we build community we safeguard against the epidemic of loneliness, segregation, and isolation. We imagine spaces into being so that community can flourish. Perhaps then we can look forward together to a different kind of happily ever after.

Explainer

Comment

Economics

29 October 2024

6 min read

How to tax ethically to avoid a two-tier society

From income tax to property and inheritance taxes, which is fairer?

Laurence Fletcher

Laurence Fletcher is a journalist at the Financial Times.

Sarah Agnew on Unsplash.

Few doubt that Chancellor Rachel Reeves will be putting up taxes when she presents her first Budget on October 30th.

The political narrative of recent months has very much been of an alleged fiscal “black hole” of £22bn - or is it £40bn? - that somehow needs to be filled.

While the size of the shortfall and the identity of those responsible are both hotly disputed, and despite a lack of detail from the Treasury about what it actually consists of, the questions now being asked are not whether taxes will rise but which ones and by how much.

Months of speculation have focused on employer National Insurance, capital gains tax and freezing income tax thresholds as areas that Reeves could look to for the additional revenue.

But beyond the immediate issue of raising enough revenue to make good any shortfall, lies a deeper, trickier question about the way in which taxes should be levied for the good of society. If a government is to force people and companies to hand over their money, then what is the most ethical way to do this? Who should pay and who shouldn’t? How can tax be used to reduce inequality and build a better society?

Answering such questions is, of course, far from straightforward, because there are plenty of other factors in play.

For instance, some taxes are surely levied because they are simpler to collect. Take income tax - an unpopular measure introduced in 1799, then abolished before being reintroduced as a supposed temporary measure. It could certainly be argued that taxing people’s income - their attempt to get on in life and improve their lot in life - is less “fair” than taxing wealth that has been accumulated by someone’s ancestors years ago. Working hard and earning income is often surely a way of breaking down class divisions. But income tax - contributing 28 per cent of UK government tax take in 2023-24, according to The Institute for Fiscal Studies - has the advantage that it is relatively difficult for the average worker at a UK company to avoid it. Ease of levying it is surely a driver.

Equally, some taxes that might seem “fairer” have deliberately not been levied because of the difficulty in collecting them, and/or because to try to do so could be counterproductive.

A wealth tax, for instance, would be “economically damaging”, according to one of the UK’s highest profile tax experts Dan Neidle.

Or take the politically contentious issue of non-doms, a colonial era tax break allowing rich foreigners to avoid UK tax on overseas income. It would be fairer, the argument goes, to tax them on the whole of their income. If they are going to be resident in the UK, then surely they should be taxed like a UK resident whose home is here?

Former Chancellor Jeremy Hunt abolished this regime earlier this year but left a number of concessions that the incoming Labour government pledged to abolish. But non-doms are tax-sensitive and highly mobile, and a number of jurisdictions compete to attract them. Many are entrepreneurs and wealth creators that many countries need. Reports have suggested a clampdown could raise no money or even cost money and could drive people away.

“Housing is being treated as a commodity. The problem is, it’s not; it’s not just an asset. It has utility value and a communal and quasi-spiritual value, enabling people to feel rooted.”

Paul Williams

So, what can be done to use tax in an ethical way? Paul Williams, research professor of marketplace theology and leadership at Regent College, Vancouver and chief executive of the Bible Society, takes a Biblical perspective that he believes offers some solutions.

He takes as his starting point a story from the gospel of Matthew, where Jesus is asked whether people should pay taxes to Caesar. The question is a trap - either Jesus gives his backing to taxation that is highly unpopular with the Jewish people, or he rejects the tax in an act of rebellion against the Romans.

Jesus replies that they should “pay to the Emperor what belongs to the Emperor, and pay to God what belongs to God.” We are to pay our taxes to those in authority, but we are also to honour God.

While Williams believes that too much emphasis is placed on the Budget and political parties’ promises to be able to fix everything, and that a more radical rethink of our economy is required, he also sees room for positive tweaks to the current system.

One key area is the property market, the manifestation of so much inequality in society, with some people owning multiple houses while others cannot afford to buy one.

Williams argues that the ready availability of debt finance has allowed those who already hold assets to easily acquire properties, turning real estate into an investable asset class to the detriment of many of the poorer in society.

“The reason there’s so many homeless people and empty houses is due to debt finance. It makes it easy for a relatively small proportion of the population to acquire a large percentage of the assets.

“The system has allowed a structure in which a small advantage in the beginning can lead to big, big differences over time.”

Williams highlights parts of Devon and Cornwall that have been, he says, “completely ruined” by wealthy people from elsewhere buying second homes, leaving property “out of reach of anyone who lives and works there”.

Nevertheless, he believes taxation can be used in this area to help level the playing field.

He proposes a “pretty punitive” marginal rate of tax on ownership of more than one home. (Stamp duty only partly does the job and is a blunt instrument also affecting people moving homes, thereby makes mobility expensive).

“You want to disincentivise the way the housing market is used for speculation,” he said.

“Housing is being treated as a commodity. The problem is, it’s not; it’s not just an asset. It has utility value and a communal and quasi-spiritual value, enabling people to feel rooted.”

Buy-to-lets, meanwhile, are better than having empty second or third homes, but “wouldn’t it be better if occupiers could buy that house?” he adds.

Meanwhile, research by the Financial Times recently found a huge wealth gap between the average millennial and the top 10 per cent of millennials, who are benefiting from family wealth to accumulate substantial housing assets.

So, would increasing the rate of inheritance tax - one of the most hated of taxes - and/or lowering the threshold also help reduce some of this inequality? After all, how is it fair that one child in the UK is born to inherit large property wealth while another is born to inherit little or nothing? Or, even worse, that second child will only ever be able to afford to be the tenant of the first, paying them rent for the rest of their lives?

Williams is not a fan of inheritance tax per se, arguing that it is “not part of the package” in a Biblical image of a flourishing economy.

But he adds an important caveat: “the playing field is not level.

“There might be circumstances to impose a one-off tax on the very wealthy… if you want a transition to a more equitable society.”

Such steps are not easy to take. It is, he admits, probably “career suicide” for a politician to adopt such views. But if we are to take steps towards a fairer way of life, and avoid a two-tier society in decades to come, then maybe the conversation needs to shift this way. Perhaps the Budget could be the time to start.