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Sunday, February 10, 2019

Universal Housing vs Bank Bailouts in the UK

It was suggested to me that rather than Universal Basic Income, which is being envisioned as a welfare payment slashing tool, Universal Basic Services would be a much better idea.

And that although democratic socialist states are provided services, they are not providing housing - and that housing should also be provided for free.

I pointed out that this would be expensive, but was told that bank bailouts were more so:

"the NAO in 2007 reported the UK had committed 1.162 trillion to bank bailouts. Based on the government’s own forecast (2007-11), that 1.4 billion was needed to build 40,000 homes, that some could just about covered the cost of free state housing for everyone in the UK."

So I did the sums:

According to the National Audit Office, in 2017 all but 5% of the bank bailout money had been recovered. That's 58 billion pounds.

Let's write off this 58 billion pounds. But bear in mind that this was a one-off cost, so we can amortise it over 10 years (2007 to 2017). So that's 5.8 billion pounds a year without the time cost of money (for simplicity).

Now let us consider the cost of providing universal housing. As the name suggests this is for everyone - not limited to 40,000 households.

Since it's supposed to be universal housing, the best way to proxy the cost of this would be with rents.

Average rent in the UK varied from about 1600 pounds a month for London to about 500 pounds a month in the North East.

For simplicity let's take a simple average of the two for countrywide rent, at about 1000 pounds.

In 2017 there were 27.2 million households in the UK. So it would've cost 27.2 billion pounds a year in 2017 to provide housing for everyone in the UK.

This is more than 4x the cost of bank bailouts.

Bear in mind that this is just the monetary cost side of the equation.

Now we must consider what would be (or would have been) the cost of not providing bank bailouts or universal housing.

Without bank bailouts, there might've been a depression.

On the other hand, without universal housing, there're at least 320,000 homeless people in the UK and some people have difficulty paying the rent.

But we know that with a depression a lot more people would be suffering than are now.

Therefore we can see that the UK bank bailouts were both cheaper and more important than providing universal housing in the UK would be.
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