This week's National news (December 9 - December 13)
- NATIONAL:Most below UK poverty line are working families
- NATIONAL:MPs to probe Iain Duncan Smith over Universal Credit delays
- NATIONAL:£5m Council Tax discount ‘will help increase affordable housing’
- NATIONAL:Sanctuary Group returns to bond market to raise £150m
- NATIONAL:Blog: Geography makes the housing crisis more complex
- NATIONAL:Federation and ERSA launch new Housing and Employment Forum
Monday 09 December 2013
NATIONAL:Most below UK poverty line are working families
For the first time, there are more people in working families living below the poverty line (6.7 million) than in workless and retired families in poverty combined (6.3 million), having suffered a sustained and ‘unprecedented’ fall in their living standards.
The annual Monitoring Poverty and Social Exclusion 2013, published by the Joseph Rowntree Foundation (JRF) and written by the New Policy Institute (NPI) reveals that almost 13 million people are living in poverty in the UK.
The report tracks the changes in poverty across a range of indicators. It found people remaining in poverty despite moving in and out of work, with some facing very severe hardship. At the same time the report finds that the support on offer to people who fall on hard times is increasingly threadbare.
The report found that job insecurity is common for millions of people, with one in six of the workforce claiming Jobseekers’ Allowance (JSA) at some point in the last two years.
There have also been big shifts in terms of which groups are experiencing poverty. The largest group in poverty are working age adults without dependent children - 4.7 million people are in this situation, the highest on record. Pensioner poverty is at its lowest level for 30 years.
The report found:
- The fall in median income over the last two years has wiped out all the gains of the previous decade. But incomes for the poorest 10 per cent have been falling for much longer, since 2004/05.
- Around 6.7m people, over half of all those in poverty, live in a family with at least one adult who is working – an increase of 500,000 on last year.
- The proportion of low-paid jobs increased in 2012, with three fifths of them being done by the over 30s.
- Alongside the 13 million living in poverty, a further two million people have incomes that while above today’s poverty line, would have been below the poverty line in 2008.
- Among those in work, the number paid below the living wage rose from 4.6 million to five million in 2012. Half of working families in poverty have an adult paid below the Living Wage.
- The number of job seekers who have been referred for sanctions (1.6 million) and the actual number who had their JSA stopped or reduced (800,000) both doubled between 2010 and 2012.
- 400,000 families have been hit by overlapping benefit cuts from the under-occupation penalty (commonly known as the ‘bedroom tax’) and council tax benefit. Two thirds of these families were already in poverty.
- Those receiving benefits are not a different group from those in work. Around one in six of the workforce have claimed JSA in the past two years (five million) – two-fifths of these had never previously claimed.
Young adult unemployment has peaked at 21 per cent, and unemployment among the whole population has begun to fall while the number of people underemployed – either unemployed, economically inactive and wanting work or working part time but wanting a full time job - fell by 100,000 over the last year.
The proportion of pupils in receipt of free school meals not attaining at least five GCSEs A*– C has fallen by 15 percentage points in the last 5 years.
Julia Unwin (pictured), Chief Executive of JRF, said: “This research shows millions of people are moving in and out of work but rarely out of poverty. Hard work is not working. We have a labour market that lacks pay and protection, with jobs offering precious little security and paltry wages that are insufficient to make ends meet.
“While a recovery may be gathering momentum in the statistics and official forecasts, for those at the bottom, improving pay and prospects remain a mirage. Recent economic improvements do not outweigh the damage inflicted during the downturn to the incomes of the poorest people across the country.
“Our report demonstrates there has been progress in some areas and the tide has turned on employment, but this not been matched by improvements in wages. We must strengthen our efforts to reduce poverty – it is damaging to the people who experience it and harmful to our economic prospects.”
Peter Kenway, Director at NPI and an author of the report, said: “Poorer members of society are under more pressure than at any time since the birth of the welfare state. The value of the safety net for working age adults is now sinking steadily. The support on offer to people who fall on hard times is increasingly threadbare, with benefit levels on a downward spiral. A strong safety net to catch those who fall is vital for social mobility – millions are saved by it every year even now – yet no leading politician will defend it.”
NATIONAL:MPs to probe Iain Duncan Smith over Universal Credit delays
Work and Pensions Secretary Iain Duncan Smith will today answer questions from MPs on the problems surrounding the implementation of Universal Credit.
The minister admitted last week that the programme of changes to the welfare system may not be complete by 2017 as planned.
The Work and Pensions Select Committee will also ask about IT system problems.
Mr Duncan Smith (pictured) told the Work and Pensions Select Committee in July and the Commons in September that the 2017 plan remained in place. But he has now said some 700,000 people receiving Employment Support Allowance may not be transferred in time.
Both Mr Duncan Smith and the official in charge of the project, Howard Shiplee, will give evidence to the committee alongside Lord Freud, Minister for Welfare Reform.
Shadow work and pensions secretary Rachel Reeves said last week that Duncan Smith and Prime Minister David Cameron have “completely failed” to get to grips with their flagship welfare reform and “millions of pounds of taxpayers' money have been written off as a result”.
Watch the inquiry on Parliament TV from 4.30pm.
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NATIONAL:£5m Council Tax discount ‘will help increase affordable housing’
The government has proposed a discount level at 50 per cent so that properties with annexes should pay more than those without but removing the double taxation that existed previously.
This reflects the level of Council Tax that would be due on a property and annexe if it were banded as 1 property.
It is believed that ending the Council Tax surcharge will ensure that annexe owners will save an average £485 a year on a typical £2,427 combined yearly bill.
With both an ageing population and young people finding it difficult to get on the housing ladder, the government hopes the move will remove barriers to extended families that live together.
Ministers believe the tax cut will ultimately save taxpayers’ money by helping reduce adult social care costs in the long-term while delivering against the government’s commitment to help more people live independently.
Eric Pickles (pictured) said: “I believe the government should be supporting hard-working families who do the right thing. Removing the family tax penalty on annexes and home improvements will help provide more affordable housing and strengthen the bonds that tie society together.
“By cutting town hall taxes on family annexes, extensions and home improvements, we are supporting aspiration and choice, as well as giving a boost to the construction sector and local traders.
“These common sense tax cuts will increase the provision of affordable housing to those on lower and middle incomes. Encouraging extended families to stay together will reduce social care costs to the taxpayer, and protect independence and dignity for the young and old.”
The government has also removed the community infrastructure levy on self-build properties, including all extensions, family annexes and home improvements. Ministers also intend to remove Section 106 housing levies on such annexes and extensions - the Autumn Statement has announced proposals that such levies may only be charged on developments larger than 10 units.
The government’s commitment to consult on reducing affordable housing contributions for small developments has been welcomed by the Federation of Master Builders (FMB).
Brian Berry, Chief Executive of the FMB, said: “The government has responded positively to the FMB’s argument that SME house building could be given a major boost by reducing the burden of Section 106 requirements on smaller developments. Despite the welcome pick-up in the housing market over the past six months, the economic environment facing most SME house builders remains extremely challenging.
“As the FMB continues to tell Ministers, for many small developers, accessing finance on reasonable terms remains difficult to impossible, and the availability of suitable and viable sites for smaller housing developments is severely restricted. These barriers to doing business are exacerbating an ongoing decline in smaller local house building firms, which has seen the proportion of new homes built by SME developers decline from two thirds in 1988 to less than one third, with a knock-on effect for the industry’s capacity to deliver new homes.”
Berry added: “This trend has been exacerbated by a rise in the level of contributions towards affordable housing being demanded of small developers. While smaller sites typically used to be exempt from these requirements, as the need for affordable housing has become more pressing, local authorities have steadily pushed down their thresholds. It is now not uncommon to see affordable housing requirements placed on a site for as few as one or two new homes.”
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NATIONAL:Sanctuary Group returns to bond market to raise £150m
Sanctuary Group has issued a public bond to raise £150 million of investment cash to fund its ongoing development programme.
The latest bond markets venture, advised on by Barclays and Lloyds Bank, brings the total amount raised by Sanctuary in the past two years to £450 million following the original issue of a £300 million bond, due in 2047, in April 2012.
Sanctuary, headquartered in Worcester, employs over 10,000 staff and manages 95,000 properties across England and Scotland, including social housing, sheltered accommodation, market rent, care homes and home ownership schemes.
The provider said it will use the funds to continue to develop its housing portfolio and enhance current stock for tenants.
“This latest round of funding will ensure that our residents continue to receive the best possible service and see the quality of their homes improved,” said Craig Moule, the organisation’s chief financial officer.
“The strong credit ratings we have been awarded, along with the appetite for the bond, demonstrate the confidence investors have in our business plan and prospects for the future. We will continue to consider the bond markets as a way to raise finance for our development plan.”
Barclays and Lloyds Bank acted as joint lead managers on the transaction, for which Sanctuary was awarded credit ratings of AA- from Standard & Poor’s and A1 from Moody’s.
Grant Vaughan, associate director in Lloyds Bank Commercial Banking’s corporate debt capital markets team, said: “Having previously accessed the market in April 2012, investors know Sanctuary well and were attracted by the group’s strategy for growth and its experienced management team. As a geographically-diverse provider with a mixed-tenure business model, it offers a robust choice to investors in a consolidating and rapidly-changing sector.”
Jeremy Froud, managing director of debt capital markets at Barclays, added: "This transaction proved the tremendous support that exists within the Sterling bond market for both Sanctuary Group and the broader housing association sector. Sanctuary was able to complete this transaction at an historically attractive price despite recent credit ratings downgrades across this sector and continuing uncertainty about the implementation of welfare reforms. This is testament to the strength of Sanctuary and its consistency of approach to the bond markets.”
NATIONAL:Blog: Geography makes the housing crisis more complex
Unfortunately for those of us who try to come up with neat policy solutions to our housing problems, there isn’t just one housing market. That means policies need to reflect local variation.
Ever-increasing house prices are a result of a range of complex and interconnected issues: the amount of land brought forward for development; investment and speculation on land and housing; employment and wage levels; credit availability; interest rates and consumer confidence, to name but a few. Policies that recognise these complexities can be more targeted and better informed.
But there is another vital and often overlooked factor to throw into the mix – geography. Arguably, there is no such thing as the ‘English housing market’, rather it is made up of many local markets. Unfortunately national governments of all stripes, and despite the recent localism drive, have never recognised this sufficiently. This tends to lead to centrally-created policies that won’t deliver on housing where the demand is the highest.
Local housing markets reflect the strength of the local economy in terms of jobs, investment, wages, desirability – i.e. demand side factors – and the local availability of land, finance, regulations – i.e. supply side factors. This is shown in the graph below, which compares the sub-regions covered by Local Enterprise Partnerships. It shows how much buying or renting an average dwelling costs compared to the average salary (with the size of bubble representing how many empty homes there are).
This can be seen in various current housing policies such as Get Britain Building and Help to Buy I (the equity loan scheme).
Get Britain Building is a fund created by the Government and administered by the Homes and Communities Agency to stimulate house building. With limited funds, different people will have different views on how or where to spend this money as there is no one single housing market. The graph below shows the proportion of units assisted by Get Britain Building by region as a proportion of the total. Development costs vary by region too, so while London has a smaller proportion of total units helped, it will have received a higher proportion of the cash than shown here. But is it really sensible for the scheme to support homes in the north than the high demand areas or the south?
Arguably the most important intervention so far is the Help to Buy (Equity loan scheme). This allows buyers to purchase a new built home (worth up to £600,000) with a five per cent deposit which the government tops up with a loan up to 20 per cent of the house value, reducing the mortgage to 75 per cent. Again, with limited funds the question is ‘where best to spend it?’ The most pressing need for more homes is in the South East and London, yet this scheme, which has at its core the link between credit and new homes, seems to work most effectively elsewhere, as the map below shows.
This raises the question of whether this policy is suitable for all areas, and whether it might be better and more efficient to create a different policy for London.
Fundamentally, Shelter wants to see more houses being built across the country to keep pace with growing demand. But we also know that different areas face different challenges. Following our recent Solutions to the housing shortage report we are creating a suite of policy options – for launch in Spring 2014 – for both national government and that local authorities and their partners could take up on an individual basis.
We can’t assume that blanket policies will work everywhere across the country, so we will ensure that specific interventions are right for getting homes built on a local level.
NATIONAL:Federation and ERSA launch new Housing and Employment Forum
The Forum will be jointly run and chaired by the Federation and ERSA, the sector body for the welfare to work industry, and provides a unique platform for the membership of both to engage, collaborate and communicate across the sectors.
The Forum will develop a representative and collaborative voice to government on behalf the housing and employment related services sectors. It will represent both sectors equally, sharing the opportunity to build on existing good practise and develop further working partnerships between them to bring the most consistent, high quality and sustainable outcomes possible for the communities that both the Federation and ERSA serve.
Kirsty McHugh, Chief Executive, ERSA, said: “We are seeing increasing interest from both housing and employment worlds in working closer together. While successful collaborations are taking place across the country, far more can be done to build relationships. The new ERSA/Federation Housing and Employment Forum will help these two sectors collaborate more effectively, providing a conduit for the sectors to talk to government about the support they need and sharing models of best practice and lessons learnt – all with the aim of benefiting residents and jobseekers.”
David Orr, Chief Executive, the National Housing Federation, said: "We know that the case for collaboration between the housing and employment related services sector is strong and growing. As we seek to mitigate the impact of welfare reform we want to help those that can work towards a sustainable and rewarding employment outcome. We can surely achieve more and better outcomes for all by working together, in the spirit of a genuine partnership, and I am pleased to support the Forum as a practical means of realising this."
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