Chancellor Philip Hammond delivered his eagerly anticipated post-Brexit Autumn Statement Wednesday. Eastlondonlines has explored how the statement will affect local people in key areas such as the increase in the minimum wage and the investment in affordable housing.
Increase in Minimum Wage
In his statement, Hammond announced a 4% rise in the minimum wage for over-25s – which ministers have branded the ‘National Living Wage’ – to £7.50 an hour from April 2017.
This is set to rise to £9 by 2020, but the current rate is still well below the London Living Wage of £9.75, the amount the Living Wage Foundation estimates is required to survive in the capital.
Katherine Chapman, director of the Living Wage Foundation, said: “We welcome any pay rise for low-paid workers, especially now in these uncertain times with speculations about food and other prices set to rise.”
“The reality, however, is that a fifth of UK workers aren’t paid enough to live on. There’s still a gap between the Government minimum and our real Living Wage of £9.75 in London, which is based on what families need to earn to meet everyday costs.”
The current national minimum wage is the same nationally: higher living costs in London are not taken into account. The minimum for under 25s is £6.70, and £5.30 for under 21s.
After analysing the Autumn Statement, the Institute of Fiscal Studies said workers face the biggest squeeze on their pay for 70 years as Brexit is likely to stunt wage growth and stoke inflation. According to the IFS, real wages, pay adjusted for inflation, will still be below their 2008 level in 2021.
Lewisham and Croydon Councils are encouraging local businesses to commit to paying their employees £9.75 by cutting business rates for accredited London Living Wage Employers.
We asked Lewisham residents if £7.50 an hour is enough to live on in 2016.
Investment in affordable housing
Also included in the statement yesterday is a government plan to invest £3.15 billion into building 90,000 homes in London.
Eastlondonlines boroughs (Hackney, Tower Hamlets, Lewisham and Croydon) would no doubt benefit from increased investment in housing. Tower Hamlets currently has 19,000 people on the waiting list for social housing, with the council only available to grant 1800 new tenancies each year. In an attempt to tackle this, they have committed to building 5,500 new homes by 2018.
Affordable housing is particularly a problem in Lewisham with soaring house prices, falling availability of affordable lets, and rising demand for temporary accommodation.
Hackney Council has recently announced a new ‘Housing Supply Programme’ that will provide 400 new homes, 70 per cent of which will be council housing.
Mayor of London, Sadiq Khan, will be responsible for the allocation of funds to build the new 9,000 homes. How the houses will be distributed is yet to be confirmed.
Campbell Robb, chief executive of housing charity Shelter said: “The extra investment in affordable homes for London is positive news for the millions of people struggling to keep up with the capital’s sky high housing costs.”
“A one size fits all approach to house building across the country simply doesn’t work, so giving the Mayor the flexibility to build homes that will actually be affordable for Londoners is a big step in the right direction when it comes to fixing the housing shortage.”
“Ministers still need to work with boroughs, the GLA and developers to ensure permitted housing is built out in the city – and that the Government’s housing policy works for all Londoners.” – Sir Steve Bullock, Mayor of Lewisham
Sir Steve Bullock, Mayor of Lewisham and London Councils’ executive member for housing, said: “This specific cash injection for affordable homes will allow the Mayor of London, boroughs and other partners to carry out and extend ambitious plans to properly tackle the capital’s housing crisis.”
“London Councils will continue to make the case for boroughs to be given the tools they need to meet the huge challenges they face. Councils are pulling their weight by granting planning permission for tens of thousands of houses across a range of tenures each year.
“However, the completion rates for housing remain low,” said Bullock. “Ministers still need to work with boroughs, the GLA and developers to ensure permitted housing is built out in the city – and that the Government’s housing policy works for all Londoners.”
Lou Rose, a 47-year-old teacher, who lives in Lewisham said: “A lot of people I know are moving out past Bromley, way out into Kent because they cant afford to live here.”
Ban on Agency fees
Hammond also announced a ban on letting agency fees for tenants. Teacher Rose said: “It’s a tricky one isn’t it? Because then people who rent their flats or houses will be covering the cost for the letting agents and so there might be less housing on the market.”
Another Lewisham resident Litchi Friedrich, a performer and life model, 22, said: “I think it’s a good idea, but it’s only the tip of the iceberg. I’m from Germany where the government has caps on certain areas where the square meter is only worth so much and can’t be sold for more, which I think is a really good way of keeping things affordable for everybody – and hopefully that will happen here.”
“Rent tends to be the main thing that makes it extremely difficult and also in this area the rent is rising steadily, because of all the new stuff coming up, which is obviously fine but only if you give people the financial base to cover that … we all know there are empty flats around here.”
Yedi Odunaiya, a 26-year-old student and part time chef, living in Lewisham, said: “I saw it on the news yesterday and I think it’s a good idea. I don’t know why I should pay fees to rent a house when I’m paying rent anyway to the landlord. I think those letting agents see the fee as their pocket money. They get paid anyway to do their job, so why should I pay you more money to do your job?”
In the Autumn Statement, the government has said that it wanted to make Britain “open for business.”
It promised £1.8bn to Local Enterprise Partnerships (LEPs), £492m of which will go to London and the South East. LEPs are voluntary partnerships between local authorities and businesses. They were devised in 2011 by the Coalition Government to aid economic growth and job creation in local areas.
Louis Wigston, joint owner of Paradise Cycles in Bethnal Green, said: “The investment will probably help a certain type of business that has the time and money to lobby for investment. We’re very busy and simply don’t have the time or manpower to do that.”
Krissy Nicolson, from the East End Trades Guild said: “My view is that LEP funding opportunities are too top down in their design to fully support small businesses during the difficult times ahead. This money could end up being wasted in London if the small business community is not included in deciding what this money should be used for, and how it should be spent.
“I’m angered that nothing has been done to ease the pain of the new rate revaluations that will cripple London’s small businesses if no action is taken. A higher rateable value threshold is needed while local government gets to grips with fiscal devolution, and the possible opportunities that it presents for a fairer more entrepreneurial rates system.”
Businesses in Hackney are expected to be the worst affected in England by the government’s proposed revaluation of business rates.
Despite Hammond’s £6.7bn business rates reduction package announced during the Autumn Statement, businesses in Hackney are expected to see an overall average increase in rateable value of 46 per cent, starting next April.
Awards to individual LEPs will be announced in the coming months.
The reduction in corporation tax from 20 to 17 per cent also represents a big boost for the financial sector in the City, and Canary Wharf.
Reaction on Twitter
— London Councils (@londoncouncils) November 23, 2016
— Tony Newman (@CllrTony) November 23, 2016
We won! Letting agents fees have been banned! Join us this Mon, 7pm to plan next moves! New Kingshold Community Centre E9 7JE @JosieLong
— Digs (@Hackney_renters) November 23, 2016
— Diane Abbott MP (@HackneyAbbott) November 23, 2016