Cameron’s ‘typical family’ is a rich one
1:47 am - October 3rd 2009
| Tweet | Share on Tumblr |
If you missed yesterday’s edition of The Sun – which I guess means most of you – then I’d suggest that pop over to Tom Watson’s blog, where you’ll find a copy of David Cameron’s ‘10 Key Pledges‘ for the upcoming General Election, much of which the FT’s Westminster blog has already neatly picked to pieces.
However, one thing that did intrigue me was the very first pledge on the list…
We will work with councils to freeze council tax for two years – saving over £200 for the typical family.
Oooh, a saving of £200 in just two years – can that be right?
And if it is then exactly how typical does a family have to be to make this kind of saving?
Let’s crunch a few numbers shall we…
First off, we need to figure out how the Tories arrived at this figure of £200 a year, which it claims that the typical family will save, which means estimating how much the Tories think council tax will be going up if they don’t get the chance to put this idea into practice.
So, in cash terms, to make a saving of £200 over two years, there needs to be a saving of about £65 in the first year, followed by a saving of £135 in year two, consisting of a second £65 from not putting on the previous year’s expected increase again plus another £70 as the saving for year 2 – assuming the same level of expected increase in both years.
65+65+70 gives us our £200.
Next we need to relate these saving back to current level of council tax in percentage terms, i.e. we need to work out exactly what the percentage increases would have been in each of the two years to give our typical family the £200 saving, based on what that family is actually paying now – all of which means that we now have to start figuring out just exactly what the Tories mean by ‘the typical family’.
Typical could be taken to mean ‘average’, and when it comes putting numbers to council tax bills governments typically quote two different averages, the average council tax bill for all properties (currently £1175 p/a) and the average bill for Band D properties (currently £1414 p/a).
Remembering that our typical family needs to save £65 in the first year of the Tory’s freeze, if a typical family pays the average bill for all households then they’d looking at increase of 5.5%, but if the Typicals live in a Band D property, then the increase would be only 4.6%. This seems fairly plausible, except…
If we look at recent trend in average council tax rises then the average annual increase over the last five year is only 4% and the general trend has been downwards for the last three years, all of which suggests that it would be unreasonable to base our calculations on anything greater than a projected 4% annual increase in each of the two years covered by the Tory’s proposed tax freeze, and if we limit our increases to this figure then, in order for our typical family to make their saving of over £200 they much currently be paying a minimum of £1600-£1650 per year in council tax.
Across most of England, that would put our typical family in a Band E property, and when we look at how properties are distributed between the current 8 council tax bands we find that the Typical’s home is actually amongst the 20% most valuable properties in England, although regional variations mean that it would only be in the top 30% in London while, in the North East, it would fall into the top 14%.
Is that really typical?
If it is, then it certainly isn’t average as the average family home in England falls on the cusp of Bands B & C.
Knowing what we now know about the Typical’s family home, we can actually take a stab at estimating what it might actually be worth.
In 1991, when the current council tax bands were set, the average price of a house in England was around £52,000, which is also the boundary between bands B & C. A Band E property, in 1991, would have been valued at between £88,000 and £120,000, anything from 70-130% higher than value of the average property.
Currently (according to the Land Registry) the average value of a house in England stands at £155,000, and if we scale up the value of the Typical’s Band E property by the same amount (198%) we find that today, their house should be worth anything from £262,000 to £357,000.
Now we have some idea of what their house is worth we can actually take a stab at estimating our typical family’s household income by way of figuring out just how much Mr & Mrs Typical (remember, they are Tories) would need to pulling down in order to get a mortgage for their property.
As far as making that calculation goes, we have none of the pre-credit crunch silliness that screwed up the banking system. We’re going to be prudent lenders, so there’s no 125% mortgages or borrowing 6-8 times household income herre, thank you very much.
For our purposes, the Typicals will have put down a healthy 10% deposit and have prudently borrowed no more than 3.5 times their annual household income, so when when we feed those numbers into the calculation we can estimate that their annual household income, before tax, is likely to be somewhere between £67,000 and 92,000 per year (and I am rounding the figures here before anyone tries coming the smart-arse).
Mmm…
According the Office of National Statistics, the average household income for the UK in 2008, before tax, was £34,382 per year.
Again, we seem to have just a bit of a discrepancy between ‘typical’ and average as, yet again, our typical family has an estimated annual income which puts them in the top 20% highest earners in the UK.
I guess this all comes down to a question of just exactly how you define a typical family.
Most people would, I suspect, think that typical is more or less synonymous with average, in which case a typical family will earn around £35,000 a year, live a house worth around £155,000 and pay around £1200 a year in council tax at Band B/C, in which case the Tory’s proposed council tax freeze is going to net them a saving of about £145 over two years.
David Cameron and his colleagues in the Tory Party, on the other hand, appears to regard a typical family as having an annual income in excess of £67,000 a year and a £260,000+ house, both of which make Mr and Mrs Typical-Tory amongst the 20% most wealthy people in England.
Yep, D-Cam most certainly does have the common touch, doesn’t he…
| Tweet | Share on Tumblr |  |
'Unity' is a regular contributor to Liberal Conspiracy. He also blogs at Ministry of Truth.
· Other posts by Unity
Story Filed Under: Blog ,Conservative Party ,Economy
Sorry, the comment form is closed at this time.
Reader comments
£67,000 a year and a £260,000 + house.
Have you been to London? You get a 1 bed flat for that.
Have you been to London? You get a 1 bed flat for that.
In the suburbs that can get you a three bedroom apartment. The average wage is way below 67k.
“Typical” family in London or “Typical” family throughout the UK?
D-Cam is doing the gig for London only? I am so fucking confused! I thought he was the caring NuTory that wanted all of the UK to be on an up if and when he takes No10.
“For our purposes, the Typicals will have put down a healthy 10% deposit and have prudently borrowed no more than 3.5 times” Unfortunately between 2000-2007 that wasn’t very typical http://news.bbc.co.uk/1/hi/business/3222053.stm
Excellent point, Unity, something I hadn’t even thought of. Hope this will be made wider known.
This just fits in with how biased call me Dave is going to be to the better off. He is scrapping inheritance tax and stamp duty on share dealing which will result in a nice hand out to the middle classes. And now he is going to allow them to not have to pay for their old age in care homes. Nice!
If you are in the bottom 60% of earners and you vote tory you are going top get screwed. Either through higher taxes or lower services.
These average salaries mean nothing because they are kept artificially high by the huge amounts that the very rich earn. Much more relevant figure is the number of people who earn less than 30 thousand a year. It is well over 75% of the population.
I’m not sure that “typical family” should be defined by an average taken from data based on “households”, not families. I’m not sure how large the difference is, but household data includes young people living with no dependents, and retired people too, doesn’t it?
I like what you’ve done. The Tories announce a council tax freeze, and you manage to make a class-warfare argument about their assumptions.
By the way, while you’re feeling in an investigative mood, could you have a look around and see if you can find where Labour’s “we’ve saved 500,000 jobs in this recession” comes from. You wouldn’t only scrutinize Tory estimates, right?
Great post Unity.
This must be one of the most convoluted and tenuous arguments I’ve ever seen.
It might be better to wait for some details rather than factoring in an endless stream of assumptions?
Just because the valuation “agency” (what is it about that word that reeks New Labour evilness?) scam hasn’t hit England yet. In Cardiff, there are loads of terraced houses that are Band E. And when you consider that most people bought their houses before Labour’s scamming quango turned up, it’s really not that incredible.
Cameron hasn’t gone far enough: how about a promise to reduce all bandings in Wales by at least one band?
“Most people would, I suspect, think that typical is more or less synonymous with average, in which case a typical family will earn around £35,000 a year”
An average family = 2 working parents, and with median incomes at around £25k, that means a family income of circa £50K, and if they have kids a coupld of K on top in tax credits.
The problem with council funding is that business rates (a potentially huge source of local govt income) are creamed off to national govt and then occasionally given back for the odd scheme that meets some spurious central agenda (e.g in Bristol the roads can only be “improved” with central govt funding if the improvements include bus/cycle lanes). Any govt that is serious about giving power back to the people needs to allow local taxes to be spent locally. and in a way that local people, rather than whitehall, decide.
Matt – actually the median income is more like 23k. And in most families where both are earning, one works part-time or for lower wages than the other. There’s no escaping the fact that if your household income is more than 67k, you’re pretty well-off.
@ 15 wouldn’t dispute that £67K is a comfortable/middle class household income. I was questioning the assertion that £35K is an “average household income”, it seems low to me, when you consider that a family of four where no one works would get that in benefits.
@6 Median is not the same as average, median means (in simple terms) the value that comes up the most often in a data range. I.e more people eran £23k than any other single amount, it is therefore not directly affected by very high/low numbers, which an average would be
Matt, median is not the ‘value that comes up most often’ – that is the mode.
The median income is the the ‘middle’ income, i.e. where 50% earn less than the median and 50% earn more. Seems the appropriate way to garner what the most typical wage is.
The mean average is inappropriate because two thirds of people earn less than it and if Bill Gates moves to England the mean average would shoot up despite the fact nobody else is any better off. The median hardly moves because of one person’s massive wage, which is why it is so good at measuring a meaningful average.
It is really annoying that people are so crap at basic maths – especially the media – but I suspect they do it deliberately and the public follow it hook line and sinker – no wonder people don’t understand that 60k is not average.
“It is really annoying that people are so crap at basic maths” Yup!
I don’t know if it was a real Daily Fail headline or just Ted Wragg’s witticism but he said the DM once had a headline screaming ‘over one third of our children achieve below average results’. I guess the fact that it was only ‘one third’ as opposed to one half means we’re going right somewhere!
“median means (in simple terms) the value that comes up the most often in a data range”
EPIC DALE!
(Matt Munro is an accountant)
Anyone who saw the deplorable Paxman (he is becoming increasingly ridiculous) interview BoJo last night on Labour Press Office / Newsnight will notice his strong pushing of the Labur Toffs smear line verbatim.
As the Producers of Newsnight feel this is relevant, and are NOT just harping directly from the Labour Electioneering Playbook, I presume their will be some political balance in this?
After all if the “Tory Toffs” line is designed to show who is in “in touch” with the voters, presumably they will ask the following:
Are the Labour Leadership “in touch”, let’s see:
Top Dog – Gordon Brown – son of the manse, degree and PhD at a precocious age. Normal?
His Boss – Lord Mandelson of Foy and Hartlepool – someone who is “in touch with the common man” if ever there was one. Doesnt everyone live in a Minimalist interior designed Notting Hill Penthouse worth £2.5 Million with no mortgage on it? Long live the Workers!!
The official Labour Deputy Leader – Harriet Harperson – Niece of (I think) The Countess of Milford Haven, Daughter of a Harley Street Physician, educated at uber posh St. Paul’s.
Let’s not forget of course our future unelected
Euro-Tsar too, ………..The Rt, Hon Anthony Charles Lynton Blair, who was educated at Fettes Academy (The “Eton of Scotland”).
How, How, How do they get away with this nonsense?
Reactions: Twitter, blogs
-
Liberal Conspiracy
Article:: Cameron’s Typical Family http://bit.ly/81SmF
[Original tweet] -
Andrew Skudder
More impeccable logic from Unity RT @tweetmeme Liberal Conspiracy » Cameron’s Typical Family http://bit.ly/81SmF
[Original tweet] -
Tek Loong Lee
Property | Liberal Conspiracy » Cameron’s Typical Family: Across most of England, .. http://bit.ly/tOtm7
| Read More…[Original tweet] -
Colm Quinn
RT @tweetmeme Liberal Conspiracy » Cameron’s Typical Family http://bit.ly/81SmF
[Original tweet] -
Liberal Conspiracy
Article:: Cameron’s Typical Family http://bit.ly/81SmF
[Original tweet] -
Andrew Skudder
More impeccable logic from Unity RT @tweetmeme Liberal Conspiracy » Cameron’s Typical Family http://bit.ly/81SmF
[Original tweet] -
TWEET_ANYTHING
Liberal Conspiracy » Cameron’s Typical Family: … all of which suggests that it would be unreasonable to b.. http://bit.ly/tOtm7
[Original tweet] -
Mark Pack
Liberal Conspiracy » Cameron’s ‘typical family’ is a rich one http://bit.ly/yO8Bz
[Original tweet] -
Tek Loong Lee
Property | Liberal Conspiracy » Cameron’s Typical Family: Across most of England, .. http://bit.ly/tOtm7
| Read More…[Original tweet] -
Colm Quinn
RT @tweetmeme Liberal Conspiracy » Cameron’s Typical Family http://bit.ly/81SmF
[Original tweet] -
TWEET_ANYTHING
Liberal Conspiracy » Cameron’s Typical Family: … all of which suggests that it would be unreasonable to b.. http://bit.ly/tOtm7
[Original tweet] -
Mark Pack
Liberal Conspiracy » Cameron’s ‘typical family’ is a rich one http://bit.ly/yO8Bz
[Original tweet] -
The Sun newspaper: David Cameron | Tom Watson MP
[...] 2. Liberal Conspiracy on Cameron’s typical family. [...]
-
Opinion: A frightening party of selfishness and reactionism
[...] would seem if you look at what the Tory party regards as a “typical family”. Extrapolations on Liberal Conspiracy reveal that the Conservatives regard such a family as “having an annual income in excess of [...]
-
Web links for 3rd October 2009 | ToUChstone blog: A public policy blog from the TUC
[...] Cameron’s ‘typical family’ is a rich one Liberal Conspiracy analyses David Cameron's Council Tax pledge Related posts (automatically generated):Where were the shareholders in the financial crisis?Time for a wider debate on shortingInvestor pressure over human rights pays off [...]
-
StopTheRight
Cameron’s ‘typical family’ is a rich one http://alturl.com/hz5c
[Original tweet]
Sorry, the comment form is closed at this time.
3 Comments
1 Comment
27 Comments
7 Comments
40 Comments
10 Comments
9 Comments
79 Comments4 Comments
20 Comments
70 Comments
14 Comments
8 Comments85 Comments
26 Comments
43 Comments
46 Comments
40 Comments30 Comments
57 CommentsNEWS ARTICLES ARCHIVE