Lunchtime news Tuesday 21 October 2015

Lunchtime news Tuesday 21 October 2015

The gap between rich and poor in the UK has decreased ‘remarkably’ since 2000, a survey by the Organisation for Economic Cooperation and Development (OECD) has found. However, while ‘the poor have been getting richer more rapidly than the rich’ the UK still had one of the highest levels of income inequality in the developed world. The main reason that fewer people were living in poverty, the report said, was higher employment rather than the redistribution of wealth.

However, the number of children living in poverty has risen for a second time this year. The amount of children in poverty rose by 100,000 in 2013/07 to 2.9 million before housing costs, while the level of pensioner poverty increased for the first time since 1998, rising by 300,000 to a total of 2.5 million. These numbers increase once costs such as rent and mortgages are taken into account; with the number of children living in poverty up by 100,000 to 3.9 million. The increase may threaten the government’s target of halving child poverty by 2017.

Work and pensions secretary James Purnell has ordered an enquiry into a local housing allowance loophole that pays local councils to house people in properties ‘they would not be able to afford if they were in work’. Mr Purnell said new rules for claiming housing allowance should include a cap in rent for houses with five bedrooms or more by next April; and he wants council leaders to be given the power to move a family after a year if a cheaper home becomes available. Mr Purnell also ordered that the council finds a cheaper home for an Afghan family of eight, living in a house costing the council more than £12,000 a month in rent.

In London, two of the main venues at the Olympic Park may have to be nationalised if they are to continue being built. The £1 billion athletes’ living accommodation and the £400 million media centre are both facing funding shortages due to a lack of investment and the government is resisting allocating more money. So far, no money has been guaranteed from the private sector or housing associations who were expected to fund up to £850-£900 million needed to complete the Olympic village.

Meanwhile some of Britain’s biggest companies have deferred paying business taxes, creating a £2.5 billion ‘black hole’ in council budgets. Many businesses are rescheduling their payments, but around 8,000 businesses have closed since January, resulting in a cashflow problem for councils that may cause higher council tax bills or cuts in services for residents. Local authorities receive more than £17.5 billion from businesses.

Analysts fear that more money will be taken out of the housing market than is put in by the end of the year. Figures from the Council of Mortgage Lenders showed a 10 per cent decline from August, and a year on year drop of 42 per cent in gross mortgage lending.

First-time buyers are being warned that private sector shared equity schemes do not offer the same level of protection as government funded schemes. Notting Hill Housing, a housing association, said that private schemes are designed to lure in the most vulnerable sector of the market, and can leave buyers severely out of pocket once the initial deals have run their course.