Wednesday, September 22, 2010

The bleating as the tit is taken from the mouths of the dependent

As the UK Conservative-Liberal Democrat coalition undertakes its comprehensive spending review (which unlike that in New Zealand is about finding opportunities to cut spending almost across the board), more and more of the absurdities of the British welfare state are appearing.

The latest case to cause bleating from the "government is good" left of the Labour Party are payments of mortgage interest to the unemployed.  Yes, you see if you are eligible for the unemployment benefit in the UK, you too are protected from not making your mortgage payments by the state paying for the interest on your mortgage!

So you're not exactly poor, you have property and you expect other taxpayers, property owners and others to maintain your "investment"?   The effect on this is to keep property values inflated about true market value.   It disincentivises people from taking out insurance on mortgage repayments or income, and keeps them as homeowners when some would ultimately decide to bail out, putting their homes on the market lowering prices.   It penalises first time home buyers once again, because it is part of New Labour's programme of middle class welfare, exacerbating the housing price bubble and making it more difficult to people who actually do want to own their own home.

However, the coalition didn't announce it was cancelling this absurd benefit, but reducing the interest rate which would be paid.  You see the state has been paying 6% across the board in interest to mortgage holders on the unemployment benefit even though floating mortgage rates are currently tracking below 4%.   It isn't just welfare, it's a future taxpayer (public debt) funded windfall!   The government simply wants to reduce it to the prevailing market rate.

Still there are plenty moaning about how "unfair" this is, the same who completely ignore where the money comes from (borrow it) and ignoring the impact of being "kind" with other people's money has on those whose money it was in the first place, or on the markets they distort.

The comprehensive spending review wont abolish the welfare state, but it hopefully will completely destroy the middle class components of it.  The universal child benefit (or "you've been breeding, congratulations, here's some other people's money to reward you for having a fuck"), the winter fuel allowance (or "you're old and you forgot it gets cold in winter, so you blew your money on that trip to Barbados"), the "freedom bus pass" (or you haven't even reached pension age, but you're earning a 6 figure sum so how about getting half of your daily commute for free) etc etc, all need to be severely curtailed.

The worst deceit of the last 13 years of New Labour has been how it has used stealth to get so many of the British public dependent on state handouts for part of their income, funded almost entirely on borrowing from their children and grandchildren.   Well Gordon Brown's fiscal profligacy chickens have come home, they can't be evaded and the growth of that debt must be curtailed.

It is one thing to claim the welfare state is about addressing poverty, but it has become a form of insurance to cover people's investment and lifestyle choices.  That should now be coming to an end.

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