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11 December 2021updated 10 Dec 2021 4:52pm

Jonn Elledge

The British state offers socialism for wealthy homeowners and higher taxes for everyone else

Merry Christmas, peasants.

Perhaps the most damaging thing about the, very possibly terminal, mess currently engulfing Downing Street is the overwhelming sense that this is unfair. At a point when the country was locked down, its inhabitants bracing themselves for the fact they’d have to cancel Christmas itself on pain of fines or even arrest, the people around the Prime Minister were literally throwing a party, and deciding to lie about it. (The Metropolitan Police have made it quite clear that there will be no fines or arrest on this occasion.)

The governing class clearly don’t see themselves as bound by the rules they’re imposing on the rest of us; and the apparent attempt to brief friendly right-wing papers that what happens in Downing Street literally isn’t bound by the rules imposed on the rest of us, because of the Crown Estate something something, doesn’t so much address the situation as fire up a neon sign reading, “LOOK THIS IS EXACTLY THE PROBLEM”.

I mention all this partly because I’m furious (I mean, really), but mostly because it resonates so nicely with the topic of this week’s sermon. In a different realm of society, too, there’s a chasm between one group which politics protects but does not bind, and another which it binds but does not protect. And it’s causing things to break. The difference here, though, is that the two groups are much more equal in size. That makes it a lot harder to solve.

Almost forgotten this week among the chaos in Downing Street – and the new baby, and the wallpaper scandal, and the attempt to redefine British nationality, and, and, and – was a report on the housing market from the Resolution Foundation. The think tank found that roughly one fifth of the country’s entire wealth – some £3trn, which is, to be clear, three million million – stems from the boom in house prices seen since the year 2000.

[See also: Who made more this year: you or your house?]

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This is not an increase that means that anything is actually getting better, remember: most of it reflects simply a willingness to pay more money for something that was already there. It’s also of course horrendously unfair in its distribution. The average gain was £76,000 in London, but just £21,000 in the north-east. The least wealthy third of households have gained less than £1,000 per adult from the boom; the wealthiest 10 per cent, an average of £174,000.

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The key divide, though, is generational. The beneficiaries of this boom have largely been those old enough to have already bought homes before the century started. Those who bought later – if they can buy; by no means a given, of course – won’t benefit from the boom at all. Instead, it’s their hard work and their debt that are paying for the bloody thing. This increase in wealth is an illusion. It’s money borrowed from our children.

The researchers at the Resolution Foundation raise this issue not to gloat about the fact that the little place they bought in the Nineties is now worth three quarters of a million and aren’t they clever, but to highlight some possible ways of addressing it. Reforming – that is, increasing – inheritance tax could raise as much as £3bn a year. A carefully designed tax on the increase in the value of people’s main residences could raise far more, potentially up to £11bn. In terms of fairness, something of this sort would be a no-brainer. At the moment, most tax rises are being targeted at the young, poor and houseless, through increases in student loan repayments or national insurance. Much better, surely, to target necessary tax hikes on the huge rise in unearned wealth?

[See also: How to crash the housing market]

But of course, we won’t do it: we won’t even seriously discuss it. A Conservative government whose electoral success was built on appeasing the over-50s is never going to touch housing wealth in a million years; electoral expediency means it’s hard to imagine Labour going near it either, and after the storm that accompanied Ed Miliband’s proposals for a mansion tax, who can blame them. The group who’ve benefited from the boom see that money they never earned as theirs, and there are a lot of them, and they are settled rather than transient – and they vote.

This is the crippling unfairness that’s warping our political debate, on everything from tax increases to social care reform to amending the planning system to ensure we have enough homes. There is one group, whose unearned wealth our political classes will bend over backwards to protect, and another expected to foot the bill. The longer this goes on, the more unfair it has become – and the more irrationally brave a politician would need to be to address it.

Maybe Boris Johnson will fall soon. Maybe the “another rule for them” problem will finally finish him off. But don’t expect whatever comes next to seem any fairer. The rot goes much deeper than one Christmas party.

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