Lots of outrage was sparked this week when it was revealed that tickets to the highly-sought-after performance of La Forza Del Destino at the Royal Opera were selling for as much as £3,435 each on the ticket re-selling site, Viagogo. Tickets with a cover price of around £125.
The demand for seats at London’s operatic event of the year means that only 100 seats for each performance over the four nights it is running (8% of the auditorium) have been available for sale to the public. Viagogo is the only option for anyone who missed out on those.
While the opera house prohibits its members and others lucky enough to bag tickets in the first run from re-selling them, it is, in fact, a practice that is impossible to police.
Ticket resellers are effectively making a killing on the back of the taxpayer.
Alex Beard, the Royal Opera House’s chief executive, proclaimed himself “spectacularly cross” that such profiteering goes on. But unless people buying the tickets come forward to complain about being ripped off (at which point they would be barred from entry – double whammy), there isn’t much he can do about it.
What’s interesting in this case is that the Royal Opera House receives £24 million a year in public subsidies, so ticket resellers are effectively making a killing on the back of the taxpayer.
This may be nothing new, but it seems strange that a similar level of outrage is rarely aimed at other instances of near-profiteering.
Take private rentals, for instance. According to the most recent report from the Office for Budget Responsibility, Government paid out nearly £22 billion in housing benefit in the year 2017/18.
The same level is predicted for the current year. The Government’s own website says “Housing Benefit can help you pay your rent if you’re unemployed, on a low income or claiming benefits.” – i.e. it is a subsidy paid to private landlords who charge rent which an awful lot of people cannot afford.
Let’s have a look at the figures.
Despite stagnant wage growth in the UK for the past few years, the cost of renting property has continued to rise. The latest Homelet Rental Index data (December 2018) shows that average rents across the UK rose by 1.5% in December, compared to the same month the previous year, with the average monthly rent now £921.
That’s a little north of £11,000 per year. Out of your taxed income.
Is it time for rent controls? Other countries do it – even turbo-libertarian economies like the US.
According to the Office for National Statistics, the average salary in the UK last year was just over £27,000 – after tax, that is £21,700-ish (handy calculator at income-tax.co.uk). Anyone can see that £11,000 is a sizeable chunk of this, regardless of whether you are eligible for government assistance.
The average house price in 2018 was £226,000, so for a private landlord starting from scratch right now, that provides an annual yield of more than 5% – nice if you can get it.
Of course landlords who bought at lower prices in previous years will be earning even more.
So what is the answer? Accept that a free market means landlords can charge what they like while the taxpayer pays their mortgages? Well, free markets depend on supply and demand which might be disrupted without the Government subsidy.
Abolish private housing altogether? A tad extreme for the taste of your average Brit, I suspect.
Or bring in some middle ground in the form of rent control? Other countries do it – even turbo-libertarian economies like the US.
So why don’t we?