A really interesting complaint about Universal Credit

There is much being said about the rights and wrongs of Universal Credit and we find this specific criticism to be particularly interesting

Thousands – perhaps even millions – of people could have trouble obtaining a mortgage because of problems with the way the government’s universal credit system and banks and building societies “talk” to each other.

A Guardian Money investigation into the difficulties experienced by a homebuyer living in one of the areas chosen to test the new benefit has revealed that some recipients could be at risk of being turned down for a mortgage. Some lenders are saying they will not accept universal credit at all when calculating how much they will lend, while others have apparently not amended their IT systems to deal with it – leading to problems and delays. On its published list of acceptable income types, Halifax’s website simply gives a blunt “no”.

The problem is not on the government side here, it's within the banks. They are not defining Universal Credit as viable income to count when determining the size of a mortgage that might be offered. Ho hum, well, lenders should be able to decide what they wish to consider - some will undoubtedly decide differently which is one of the joys of markets.

It is possible to dig a little deeper into this though. Even to start pondering the age old goose and gander point. For when we consider wealth and its distribution (say, the canonical Saez and Zucman paper) we are told that all of the things which government does to redistribute wealth don't count.

A life long under market rate rent is not a form of wealth (of course it is), the existences of free at the point of use education or health care are not wealth (of course they are), the various insurances provided by the welfare state are not wealth (Oh Yes they are!) and even the state old age pension, an index linked annuity, is not wealth in the way that a privately funded index linked annuity is wealth (it is).

The reason these are not to be counted is that government might change its mind. Therefore all of these sources of wealth are conditional upon politics and should not be counted.

The Universal Credit is clearly and obviously conditional upon future electoral politics for whatever amount might be paid so using our Goosey Gander test it seems fair enough that it shouldn't be counted as a reliable part of income.  

That is to assume that we're all playing fair in our determinations of inequality and redistribution which might, we agree, be something of a stretch.

It is however the underlying point which we find truly interesting. We all know that there is going to be a welfare state of some form - leaving aside the odd cultist it's entirely obvious that the modern polity is going to have some form of safety net. We can and do argue about how and how generous but the basic existence is simply a reality. Given that reality the provision is going to include a roof over the heads of those who otherwise, without redistribution, cannot afford one.

The underlying claim here is that those being redistributed to should be able to buy a house on what is forcibly taken from others through the tax system. Which we do think is an interesting claim. Is there actually any substantial, or even minimal, part of the Vox Populi which would agree with this assertion? 

That the children aren't sleeping on park benches is something that near all Britons will sign up to. That the system should enable those being housed at our expense to purchase does seem to be a significant extension there and not one we'd expect to be widely supported. Given that, where did this underlying assumption come from? 

Why should people on welfare be able to get a mortgage?