John Hemming MP writes… The Rent’s too damn high

Why the housing benefit changes are not about social cleansing, but instead about getting rents reduced for all tenants.

In New York there is a political party named “The Rent’s too damn high”, founded by Jimmy McMillan. What he argues is that life is difficult in New York because rents are too high. It is important to recognise that private sector rents are also an issue in the UK as well as those funded by the state.

Since November 2008 private rents have gone down by 5% and private rents funded by Local Housing Allowance (LHA) have gone up by 3%. The government changed the housing benefit system for private landlords a few years ago replacing Housing Benefit with a Local Housing Allowance. As LHA will be paid regardless of how high the rent actually is, this has driven up the rents paid in this sector. In comparison to the rents on the old Housing Benefit an additional 10% is being paid through LHA.

It is worth noting that the upward pressure on rents from LHA has also driven up rents paid by people who don’t get Housing Benefit. This is neither helpful to the country, where money is being borrowed to overpay landlords nor is it helpful to the lower paid who are renting privately.

The government, therefore, has a number of objectives in controlling housing benefit: The first one is to reduce the poverty trap. The higher that rents are the harder it is to benefit from working: if your LHA-paid rent is above what the average working family could afford, there is a disincentive to find a job and get off benefits. The second one is to reduce the benefit. There is no sense in the government borrowing money to landlords artificially inflated rents. The third one is to keep rents down generally as this is important to private tenants.

The debate about Housing Benefit reform has been muddied with confusion. Most of the fuss has been about the cap of around £20,000 per year on housing benefit. This was in fact a policy supported in principle by the Labour manifesto.

The more complex issue is the one of taking the maximum rent payable under LHA from the median in an area to the lower third of rentals. This is the area where people have talked about social cleansing.

There are quite a few tenants across the country that would be affected by this. It will not, however, affect any tenants who are in Council Housing or Housing Association properties. In London, for example, there are 790,000 such properties where nothing will change.

The question, then is what happens where the LHA is perhaps £10 less than the rent that is currently being paid. What I would suggest is that the government offers to pay landlords directly if the landlords agree to charge a lower rent without a top-up from the tenant. This, as a proposal, is attractive to the landlords as they would find a value in the certainty of being paid. Many landlords today won’t accept tenants on Housing Benefit because they are worried about not being paid. Hence this would open up more properties to tenants.

In essence this is a reversal of the system to that which existed before. The evidence currently is that this would see a reduction in rents of around 10% – because that is the difference between rents paid today on Housing Benefit and those on LHA.

It is true that some flexibility will be needed and there may be some landlords who will not accept a rent cut and tenants will need to move. There has also been an increase proposed in Discretionary Housing Payments, which allow councils to top up housing benefit. However, if landlords can keep higher rents merely by being intransigent then no progress will be made in getting rents reduced.

There are other changes also being proposed. They are all based around the concept of ensuring that the deal offered to people on benefit is not one that traps them in poverty. Those NGOs that continually argue for higher benefit payments for the unemployed are also arguing a case that traps people in poverty, whereas the opposite appears to be true. The Universal Credit will be able to deal with much of this but we should not make things worse before that gets introduced.

Hence it is nonsense to talk about Social Cleansing. Jimmy McMillan is right “The rent’s too damn high”.

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55 Comments

  • toryboysnevergrowup 11th Nov '10 - 5:33pm

    John, just a thought New York has rent controls, rather than trying to reduce rents by forcing tennants to move why not reduce the rents that landlords can charge. Or does your alliance with the Tories now mean that you now share their craven belief in free markets in all cases?

  • .
    “Since November 2008 private rents have gone down by 5% and private rents funded by Local Housing Allowance (LHA) have gone up by 3%. “

    Do you have a source for these figures please?

  • Dominic Curran 11th Nov '10 - 5:37pm

    @toryboysnevergrowup

    the problem is that rent controls massively restrict the number of properties that come on the market as landlords decide its not worth their while. so while supply is in one sense allied more closely to what most people can afford, there is in fact so little supply that things are still very difficult for would-be tenants. the aim has to be to increase supply – ie build more social housing.

    We need to build a bigger pie, not find new ways to slice the small one.

  • Mike(The Labour one) 11th Nov '10 - 5:38pm

    This is becoming a running theme- Lib Dems addressing a fictional complaint in order to ignore the real issue while pretending to have answered Labour. The issue is in having housing benefit capped without taking into account the special circumstances that make some areas more expensive- which will lead to the places where affordable housing is available becoming fewer and fewer.

    In other words, certain areas will become ghettos, certain areas will become the preserve of the rich. Do you want the ‘two nations’ to become literal distinguishable geographical areas? There are already huge regional differences, this will only make that worse.

    Have a look at this, try and understand the actual issue, and post about it if you do- http://www.guardian.co.uk/society/interactive/2010/nov/08/housing-benefit-housing

  • Good post John. However, the Labour Party seems to have an agenda of making sure the subsidy to Daily Mail reading buy-to-let landlords continues forever. Strange but true.

  • Barry George 11th Nov '10 - 6:05pm

    why not reduce the rents that landlords can charge

    Exactly the point.

    The vulnerable person in all this is the benefit claimant. Who is loosing 10% of their housing benefit. Being forced to move. The physically and mentally disabled are being to they are fit for work (on the basis that they can pick up a piece of paper) when the medical evidence clearly states that they are not. They are then punished with three months starvation if they are too unwell to go to an interview…

    Truly sickening policies….

    If it is high rents you are concerned about then for goodness sake cap the landlords!

    Hence it is nonsense to talk about Social Cleansing

    Targeting the poor in this way is considered ‘social cleansing’ and I resent the fact that you describe it at nonsense.

    Please don’t take the voter for fools. If the landlord is problem then for goodness sake go after the landlord and leave the poor (who are nothing but victims in this vendetta) alone.

    I am truly ashamed of what we are doing to the poor.

  • Reading your piece it appears the coalition plan is a hamfisted attempt at rent control. If you want to control rent just do it. Landlords may threaten to sell but who to ? If the golden goose is removed they cease to be an attractive investment.

    The only long term answer is as Domic Curran states, we need more social housing and a change in the law so that it remains publically owned. Stop giving people discount that pervert the rest of the housing market upwards when they move on and ensure an adequate supply of rented housing.

    As for the policy, stop pandering to the right wing (I mean the Government rather than this piece) and accept this benefit (if not directly) goes to Landlords not claiments.

    You mention the linkage with the lowest 30% of rent in an area but give no defence or explanation of this other then to say it will not affect those lucky enough to be in social housing, what about the rest ??

    The truly vile piece of the plans, which you neglect to mention, is the plan to cut the benfit by 10% if someone is out of work for 1 year. No thought as to whether there are any jobs. I live in Plymouth and the combination of public sector jobs, defence cuts and a weak private sector mean many may find themselves in this position through no fault of their own. As at least 500,000 jobs are about to be shed in the public sector alone this just smacks of spite..

  • Barry George 11th Nov '10 - 6:34pm

    4. BarryGeorge – few tenants will have to move. However, the problem cannot be ignored. It exacerbates the poverty trap. trapping people in poverty is not a good policy for anyone.

    I fail to see how you can justify that statement when 100 percent of the unemployed will lose 10 % of their housing benefit after 12 months.

    I pay £1300 (for a 3 bed property) a month for my family to live in a not very affluent part of London. If I lost my job and could not find another I would be set to find £130 a month towards my rent out of my £60 a week benefit.

    Thanks , you have just made me homeless!

    Also, before you suggest I move, I would be forced to find this 10% regardless of how cheap my rent is…

    Like I saId , truly sickening policies.

  • john stevenson 11th Nov '10 - 7:00pm

    steve way. Very well said.

    Your post is depressing on so many levels; that the author of this piece is in a position of power, while you (presumably) are not is merely another one.

  • In other words, certain areas will become ghettos, certain areas will become the preserve of the rich. Do you want the ‘two nations’ to become literal distinguishable geographical areas?

    Mike(The Labour one), I can think of better things to spend the taxpayers money on, than paying anyone to live in Chelsea.

  • @ john stevenson –

    We have elections. Hemming won one. That’s why he’s in “a osition of power”.

    I checked the LHA level for my area. £504. I checked available private sector homes to let. Almost all were £495.

    If the LHA went up to £554 do you think they would still be on offer at £495? If reduced to £474 would they stay at £495?

    Discuss.

  • Anthony Aloysius St 11th Nov '10 - 7:14pm

    crewegwyn

    That’s the second time you’ve posted that comment. We discussed it the first time, but you were nowhere to be seen:
    https://www.libdemvoice.org/adrian-sanders-writes-the-cap-that-doesnt-fit-21839.html#comment-149596

    The two immediate comments were this from AndrewR:
    “LHA is currently set at the median rent for a given area. If the LHA is £506 then either the level has not been set correctly or you are wrong that the vast majority of houses in your area are available at £495pm.”
    and this from me:
    “And in fact if crewegwyn’s suggestion that rents will drop in line with LHA is correct, then the proposal to lower it from the median to the 30th percentile will obviously be unworkable!”

  • ( pay £1300 (for a 3 bed property) a month for my family to live in a not very affluent part of London. If I lost my job and could not find another I would be set to find £130 a month towards my rent out of my £60 a week benefit. )

    As predicted it’s a London problem. This whole cap thing is to do with the fact other regions outside London and perhaps SE are sucking the life out of the other regions. What should happen is companies saying `sod this for a game of soldiers – we’re setting up Manchester/Birmingham etc – we’ll pay lower wages and office costs are lower`. Instead, due to London being a prestigious International city they set up in London.

    Well, I have an answer for all this. Boris can go direct to Osborne and say `lift the cap` and anything above the 2k a month will be funded by London sales tax/business rate increase/tourist tax etc. People where I live find it astonishing these sky-high rents exist and feel aggrieved at subsidising the lifestyles of others with all the advantages that London has to offer including opportunities.

    My advice is those that can’t move be given the discretionary payments – everyone else has to move – unless of course the private landlords just do what is predicted. The lack of imagination on the hard left is just shocking.

  • No mention of the role of a land tax in controlling rent. I’m disappointed.

  • Andrew Duffield 11th Nov '10 - 7:35pm

    Introduce LVT and start bringing 1 million empty homes back into play. Then watch as rents fall automatically and housing becomes affordable. The less government distorts the market – however well-intentioned – the better. The law of unintended consequences always applies and the property rich just get richer as ever more public money is indirectly privatised.

  • Barry George 11th Nov '10 - 8:15pm

    John

    As predicted it’s a London problem.

    I don’t deny that London rents are a problem and the following is not in reply to your previous comment..

    However the 10 percent reduction in Housing Benefit will affect 100 percent of unemployed people who fail to find employment within 12 months, regardless of where they live.

    The 3 month ban on the consumption of food ( it walks like a duck) will affect all mentally ill and disabled claimants once they inevitably fail the ridiculous ATOS medicals (which 90 percent do even though only 1 percent are fraudulent) and are too unwell to attend an interview.

    The compulsory requirement to pick up the dog mess of the pets of the employed for 120 hours, will affect all unemployed (and disabled now they are all being deemed fit enough to work) people who fail to find employment.

    As I have said in a previous thread. I have more faith in the European courts of Human rights then I do in any Liberal MP to stand up and protect the poor.

    The Conservatives only have 307 MP’s. These sickening policies are only possible with our complicit support or silence.

    Please tell us Mr Hemming, how did you vote when the benefit changes were brought up in parliament the other day ?

    If you abstained then many of us will not forgive you for betrayal of the sick, the disabled and the poor.

    Though I am willing to hear your justification if you have one ?

  • toryboysnevergrowup 11th Nov '10 - 8:45pm

    Perhaps those worrying about rent controls reducing the supply of property might want to look at reducing the reliefs given to unoccupied properties, or even taxing people on rented properties. But as always all the onus for dealing with high rents is placed on the claimants rather than the actual beneficiaries. Don’t you also think that reducing the amount that claimants may claim by 10% after onbe year may also reduce the supply of property?

    I find it strange why if you are going to interfere in a market why you should be limited to interering on one side only.

    I’m afraid you will find most urban areas in the West have rent controls.

  • toryboysnevergrowup 11th Nov '10 - 9:03pm

    Strangely enough the “Rent’s 2 damn high” Party in New York want tighter rent controls – for some reason they don’t seem to be proposing to adopt the rather circuitous route proposed by the Coalition.
    I know LibDem MPs are very keen to jump on bandwagon’s but before doing so perhaps a little examination of what they are calling for might be warranted in future.

  • Anthony Aloysius St 11th Nov '10 - 9:20pm

    “The truly vile piece of the plans, which you neglect to mention, is the plan to cut the benfit by 10% if someone is out of work for 1 year. No thought as to whether there are any jobs. I live in Plymouth and the combination of public sector jobs, defence cuts and a weak private sector mean many may find themselves in this position through no fault of their own.”

    I really wish John Hemming – or any supporter of this coalition – would explain the justification for this, if there is any.

    As far as I can see, it is simply pandering to the hard-right Tory agenda that attempts to eliminate public sympathy for the poor and vulnerable by portraying the unemployed as work-shy scroungers, living a life of luxury on state hand-outs – and so on and so forth – thereby minimising the electoral consequences of cutting welfare spending.

    The shameful thing is that so much of what we hear from the government is playing to this agenda – and that includes Lib Dem ministers – Nick Clegg above all. This scapegoating of the poor in order to kick them as hard as possible is something the Lib Dems would have fought against tooth and nail in the past. Now it seems they are willing participants in the whole cowardly game.

  • toryboysnevergrowup 11th Nov '10 - 10:38pm

    Not only is the 10% reduction pernicious but for all those worried about supply to the housing market, as Hemming claims to be, surely they can see that it will discourage landlords from entering into rentals if they see that the tenant’s ability to pay is reduced after a year?

  • I work in Housing Benefit and have done for 12 years. For what its worth this is the worst article I’ve read anywhere on Housing Benefit, and I’ve read a lot of them.
    It seems a muddled explanation of the coalition’s HB policy almost written in the style of a story. I’ve had to read it 3 times and it still makes little to no sense to me?
    Where are you getting your figures from and how on earth do you know what private landlords are going to do when the LHA rent levels are reduced?
    Do you think these private landlords are nice liberal voting people who will understand and happily reduce the rent they charge?
    Do you know what they do now when claimants have a shortfall in their rent? I can tell you from my experience they don’t lower the rent and some will resort to any tactics to recover what’s owed to them.
    I regularly see rents that are exactly £10 above the LHA levels for terrible property’s that people only rent as they have no deposit. Either they then pay the difference from their JSA/IS or tax credits or they go into debt and then become trapped with the same landlord and they can’t move anywhere else as they are in arrears. Then if they get a particularly bad landlord they may get moved to another property, owned by the same landlord that’s in an appalling state of repair and get charged a tenancy fee of anywhere up to £250, which they can’t pay, which puts them in to more debt.
    As for Discretionary Housing Payments, it’ll only be a drop in the ocean compared to the shortfall in people’s benefit. And do you know how time consuming it is, people have to detail everything in their expenditure in minute detail to see if they qualify.
    And you think this is the coalition’s plan to get rents lowered so it’s ok then? But just who is going to pay the price for this policy? Luckily not the people in safe, secure Council or HA tenancy’s. Well that’s all right then isn’t it?
    Is that what you’re trying to say?
    Like I said I really don’t understand this article.

  • patrick murray 12th Nov '10 - 8:02am

    loved jimmy mcmillan in the ny race, he was brilliant, so great title!

    not sure about the rest of the article though. iagree that the main immediate problem is around the lha. but the fundamental problem is that for 30 years we have shifted the supply of affordable housing from building genuinely affordable homes to subsidising genuinely unaffordable private rents through housing benefit. this is a costly waste of money, and doesnt solve the problem. short term fixes never do, and we are reaping what has been sown.

    as dominic says we basically looking at ways to share out a tiny pie. we need a bigger one. and yes i am aware we plan to build more homes, but a quarter of them at least will be at 80% rents, which are instantly not affordable, so the reality is less rosy. 155,000 over 5 years doesnt make much of a dent, but i accept it is better than labour. the problem is i didnt get into politics to be slightly better than labour. i want to see problems solved.

    the figure of families waiting is 1.8m (4.5m people in total). that is the scale of the problem.

  • Anthony Aloysius St 12th Nov '10 - 9:06am

    “For me personally the jury is still out on the 10% after one year thing.”

    What I asked was whether anyone could explain the justification for it.

    With respect, saying “the jury is still out” doesn’t really do that.

  • toryboysnevergrowup 12th Nov '10 - 9:36am

    If the jury was still out on the 10% – can we presume that Mr Hemmings will abstain on any vote on this measure rather than giving his suuport?

  • @matt

    Do you mean the Housing Benefit debate on Monday? The motion was:

    “That this House believes that, whilst housing benefit is in need of reform, the Government’s proposals will mean significant losses for hundreds of thousands of working families and pensioners and risk spending an additional £120 million on the cost of providing temporary accommodation; and calls on the Government to bring forward revised proposals for the reform of housing benefit which do not penalise those who have been unable to secure employment within 12 months, and which ensure that any proposals are implemented on a revised timetable which allows councils, tenants and landlords to adjust, allows the impact on rents to be observed and understood, and avoids additional spending on temporary accommodation”

    If so, It was defeated 319 to 258.

    The only Lib Dem to vote in favour was Bob Russell.

    Lib Dems voting against were:

    Danny Alexander, Norman Baker, Sir Alan Beith, Gordon Birtwistle, Tom Brake, Annette Brooke, Jeremy Browne, Malcolm Bruce, Paul Burstow, Lorely Burt, Sir Menzies Campbell, Alistair Carmichael, Mike Crockart, Ed Davey, Tim Farron, Lynne Featherstone, Don Foster, Andrew George, Stephen Gilbert, Duncan Hames, Mike Hancock, Nick Harvey, David Heath, John Hemming, Martin Horwood, Simon Hughes, Mark Hunter, Dr Julian Huppert, Charles Kennedy, Michael Moore, Greg Mulholland, Alan Reid, Dan Rogerson, Sir Robert Smith, Andrew Stunell, Ian Swales, Jo Swinson, John Thurso, David Ward, Steve Webb, Roger Williams, Stephen Williams, Jenny Willott, Simon Wright.

  • Mike(The Labour one) 12th Nov '10 - 11:32am

    http://www.birminghampost.net/news/politics-news/2010/11/11/millionaire-birmingham-mp-defends-paying-off-office-mortgage-with-expenses-65233-27646163/

    The millionaire Birmingham MP is of course John Hemming. How about we tighten the cap on what millionaire leeches like yourself can claim?

  • @John Hemming

    I’m sorry bit when does the Jury come in. If you vote in favour of the measure will you come back and specifically answer the points in relation to the 10% reduction ?

    The alternative is to follow your leaders example and not answer questions that may be uncomfortable….

  • Poppie's mum 12th Nov '10 - 4:43pm

    Will I be moderated as ‘off topic’ for mentioning today’s Daily Mail story about John Hemming’s expenses ?
    It is relevant because he is supporting policies that will adversely affect people who do not have the privileges he does.

  • Poppie's mum 12th Nov '10 - 4:46pm

    Barry @ “I am sorry, but I really fail to see how that is not abusing parliamentary standards, Are you going to refer yourself to the commission on this?”

    Can a member of the public report him ? A bit like the benefit cheat phone lines ?

  • Poppie's mum 12th Nov '10 - 5:24pm

    Does anyone know how Mark Williams [Lib Dem MP Ceredigion] voted on Monday’s motion ?

    Thanks.

  • Poppie's mum 12th Nov '10 - 5:30pm

    Mr Hemming

    The Coalition mantra appears to be ‘Don’t Do What I Do, Do What I Say’.

    We’re all in it together ? ….hollow laugh.

    I’m ashamed that I encouraged people to vote Lib Dem. Never again.

  • Barry George 12th Nov '10 - 5:55pm

    The idea is one of encouraging people to get a job. An objective I agree with

    Encouraging ? That’s a nice way of putting it.

    How about…

    The idea is one of punishing people who are unable to get a job during a world wide recession that they didn’t cause ?

    Look at the number of available jobs Mr Hemming. Look at the number of people claiming out of work benefits..

    Yet you think it is ‘encouragement’ that people need !

    I know people who have literally applied for hundreds of jobs without success. ‘Most’ of the unemployed are desperate for work.

    Why punish them in this twisted way.

    We already have proposals to punish those who fail to apply for jobs or go to interviews. So the victims of this 10 percent reduction in Housing Benefit will be those that are actively seeking work.

    Those who are not actively seeking work would have already had their benefit stopped for at least 3 months.

    Therefore, by the coalition’s own admission, it will be those who are looking hard for work that will be punished by the 10 percent cut…

    Shockingly Orwellian Mr Hemming… You wish to encourage people who are already desperately looking for work by taking away 10 % of their housing benefit.

    It’s an ideological crusade against the poor you are supporting and to claim that this policy will ‘encourage’ them to look harder for work then they already are is clearly misleading.

    They are already looking hard for work. The current system doesn’t tolerate people not actively seeking work.

    I fail to see how an intelligent member of parliament can believe this kind of pseudo logic. Worse still, try to convince the public that the intention of this policy is to help the poor.

    We are not stupid Mr Hemming, please don’t take us for fools!

  • The idea is one of punishing people who are unable to get a job during a world wide recession that they didn’t cause ?

    As the claimant count has only gone up by about ~10% during the recession, I infer that most of the people claiming benefits are not doing so due to the recession.

    And I notice that these people managed to avoid finding any work before the recession, although a couple of million east europeans managed it in a foreign country.

    And I remember that when I was looking for temp jobs in an area of high unemployment, it never took more than a week to find something, even when all I did was register with an employment agency.

  • Barry George 12th Nov '10 - 7:31pm

    Ad

    You can infer what you like,

    You infer that the increase is only 10 percent but you don’t deduct the number of people who actually found work in that time. So for all you know, 80 percent of them could have lost their job due to the recession

    There are considerably less than a million vacancies in the UK and around 5 million on out of work benefits…

    So shall we infer that 4 out of every 5 people on benefits will not find employment as there is no employment for them to find.

    4 out of every 5 people on benefits will be punished for failing to find a job that doesn’t exist.

    4 out of every 5 will be at risk of loosing 10 percent of their housing benefit.

    4 out of every 5 pushed further into poverty and humiliation

    4 out of every 5 eventually being told to do mandatory community work

    4 out of every 5 punished and humiliated by this coalition

    But hey , you found a job ok so what’s the problem…

    Shall I infer that as long as you have a job you don’t care about the fact that for the majority there are no jobs to be found.

    And if they lose their benefits, through no fault of their own, then that’s ok is it ?

  • Barry George 12th Nov '10 - 7:56pm

    RE me @ 7:34

    I will post my comment again removing the line that may have caused contention…

    to bring forward revised proposals for the reform of housing benefit which do not penalise those who have been unable to secure employment within 12 months

    Lib Dems voting against were:

    ….John Hemming ….

    Yet Mr Hemming claims…

    So, If the jury is still out then why did you vote against the motion Mr Hemming ?

    You are the jury and you voted to block the motion brought before the house.

    Truly shameful !

    As for your answer to us…

    How do you sleep at night ?

  • Barry George 12th Nov '10 - 7:59pm

    “Yet Mr Hemming claims” should read…

    Yet Mr Hemming claims the jury is still out.

  • You infer that the increase is only 10 percent but you don’t deduct the number of people who actually found work in that time. So for all you know, 80 percent of them could have lost their job due to the recession

    If that is the case, then the claimant count would have fallen by about 80%, if not for the recession. Since the claimant count remained almost exactly the same for the preceeding decade, I feel safe in excluding that possibility.

    But hey , you found a job ok so what’s the problem…/i

    I found no jobs when I was temping, except the permanent position that ended my period of temping. An employment agency found the temp jobs, without my ever having to do anything other than turn up to whatever job they found for me.

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