Last Wednesday, the UK Chancellor Phillip Hammond put forward the government’s Autumn statement; his first major economic policy announcement, post the Brexit vote last June.
The headline grabber announcement was a ban on letting agents charging excessive referencing and admin fees. These fees had long become symbolic of rip off Britain and the stacking of the odds against the “have nots.”
The statement did put forward plans for increased spending on infra structure. To be exact one of the specific policies is going to be £2.3 billion to act as a Housing Infrastructure Fund to build up to 100,000 new homes. Additionally there were also minimal rises to the minimum wage and plans for increased spending on the transport network. But these steps towards greater investment came with an austerity tinged sting in the tail that “it restates our commitment to living within our means.”
But most memorable has been the coining of the phrase “Jam” or families that are “just about managing”.
We had “hard working families” under Gordon Brown. The “squeezed” middle, as referred to by Ed Miliband. Now make way for the Jam. But who are the “just about managing?”.
When Teresa May entered Number 10 Downing street last July, she pledged to help ordinary working families, that were just about managing. In terms of rhetoric , there is recognition that the brazen and unapologetic austerity of the Osbourne era had become politically toxic and perhaps played a pivotal role in the fate of the government’s “Remain” campaign.
According to the Resolution Foundation, there are approximately 6 million “just about managing” families in Britain. Some estimates have pointed to families that are earning between £16,000 and £28,000, but that could be on as much as up to £50,000; if they have several children to feed, clothe and pay childcare for. The Resolution Foundation says that home ownership amongst this group has plummeted from 59% in 1995 to 26% last year, meaning that many more after a lifetime of working, will face poverty as they pay rent into old age.
“Jam” is actually the category that I believe that I fit into as a working parent, with childcare costs on my income bracket. Families that are either working class or lower middle class that are in work, trying to make ends meet but left have very little in terms of money left over or savings should a broken boiler or car repair hit.
But does this coining of a new social class category represent anything beyond political rhetoric from the Tories? The beauty and the problem with coining a phrase like Jam is that it resonates with just about everybody. Across the social class spectrum, people collectively feel that they are “just about managing”.
This was made all the more apparent when within days of the Autumn statement, a case study feature appeared in the Daily Mail, claiming that families on £50,000 and in fact £100,000 were the just about managing. In one case this was by merit of the fact that two parents working full time were struggling to pay their mortgage and childcare payments with a combined income of £100k. In another case study, the family are having to take on extra shifts to also pay some of the costs on a buy to let property. Now call me a cynic, but equating people having difficulty with paying off mortgages that will later act as nest eggs, with others struggling to pay market rent and less than a month’s savings, for their entire future, represents a conflation of the issues.
Undoubtedly, people across the social class spectrum have felt a squeeze on their living standards and incomes over the past 6 years.
But this is where the government’s reluctance to define these widely resonating umbrella terms becomes a stroke of populist genius. Everybody from the double income £100k households down to low earners who have seen tax credits cut, feels like they are “just about managing”, comparatively speaking to pre 2008 living standards. Problematically, abbreviations like “jams” also project a level of emotional and intellectual disconnect from people. They can now be talked about as if they are defined by membership to a neatly defined category.
This budget did not go anywhere near far enough to address the legacy of the shameful lack of investment in Britain and the contraction of local economies that the politics of austerity has produced over the past 6 years.
The sobering reality of the situation is that according to the Institute of Fiscal Studies, UK workers have suffered the most sustained pay squeeze since the 1920s.
Rises to the minimum wage are a positive step, however one that is minimal. A large majority of “just about managing” workers are paid more than the minimum wage, in some cases up to almost £10 per hour more and still struggling.
As we know, three key areas impacting most severely upon people’s living standards are lack of housing and excessively high market rents, childcare costs, stagnating wages and freezes on benefits/Local Housing Allowance.
In many areas, market rent has now soared several hundreds of pounds per month over and above Local Housing Allowance levels. Meanwhile, Tax Credits, a benefit supposed to have lifted families out of poverty and compliment paid work, have instead become a necessity to plug the gaps between declining wages, sky-high rents and soaring living costs. And this is before consideration is given to how continued freezes, reductions in the taper rate and outsourcing of eligibility to firms like Concentrix have made Tax Credits increasingly precarious and of less value.
In the public sector, austerity has meant that wages have been capped and frozen. Workers have seen the real term value of their salary fall through the floor since 2010.
Recent analysis by the TUC shows that nurses and other public sector professionals will be £4,000 worse off by 2021, as a result of continuing pay freezes and a current 1% cap.
Putting the brakes on letting agents rip off fees is a welcome move that ironically was initially called for by Ed Miliband and deemed unworkable by the Conservatives, who now appear to have stolen Labour’s clothes in terms of rhetoric. But just like coining the phrase “jam,” this move was also effective headline grabbing PR. Letting agents have long fallen victim to their own greed as these non-refundable fees have spiralled into what can amount to £100s simply for printing off and overseeing a bog standard tenancy agreement. The Tories can now look like they are Robin Hood speaking for the “jams” by implementing this policy amdist a backdrop of very little structural reform in the economy.
Slight raises to the minimum wage, token building of a measly 100,000 homes and cannot address the deep structural inequalities and collapse in any kind of mobility that a housing crisis, sprinkled in with 6 years of counterproductive austerity have produced.
One of the only welcomed and talked about policies of George Osbourne, which has yet to come into fruition, was the pledge to provide 30 hours of term time free childcare to the families of 3 and 4 year olds with parents in work. But with only 10 months to go until this should be going live, no one on the ground seems to know how it will be paid for or even if it is still going ahead.
Looking around another nursery last week for my son who will be 3 in September 2017, I was once again advised that the rate of payment put forward by the government is so low that many nurseries simply will not be signing up to the scheme.
Addressing the real causes of poverty and the legacy of under investment in the British economy, post austerity is going to be a long and rocky road that the government will have to show real commitment to.
Lets hope that it is a commitment that runs deeper than just populist rhetoric.