Presentation by Cllr Dick Cliffe, ex Mayor of Penzance and ex chair of Penzance Chamber of Commerce. Cllr Cliffe was speaking in a personal capacity and not on behalf of the town council or any other organisation
“High housing costs, low paid insecure work, eviction and homelessness are all issues that blight local communities in Cornwall, including Penzance. How can we as a community come together to address these issues?”
My presentation will focus on the justification for my proposed resolution concerning giving a much higher priority to building social rented housing within Cornwall and within Penzance Parish. I am happy to take questions on the employment issues but there is nowhere near enough time to cover both.
I propose to look at the national picture first because, despite the implication in the question, ‘the blight’ (both housing and insecure work) is absolutely not unique to Cornwall or Penzance even if local factors add additional twists. It is necessary to understand the national context concerning housing because of the extraordinary level of centralization of Government in the UK and the limited freedom of primary councils like Cornwall Council to diverge from guidance from Westminster.
The UK has a housing crisis comprising multiple overlapping housing crises.
House ownership has dropped significantly in the last 10 years and will continue to drop because high property prices and stringent mortgage lending criteria (large deposits) restrict entry to the housing market by first time buyers. This is an acute political problem for the Government given the national attachment (obsession?) with home ownership . The issue is driven by:
- Extraordinarily low (historically low) interest rates resulting from 10 years of “quantitive easing (printing money – £436 billion of it).
- Strong demand for housing in the south of England generally.
- Strong Buy-to-let demand due to loss of confidence in private pensions.
- Stagnation in wages – limited real growth in value of wages, especially for younger people.
- House building lagging demand (disputed by a minority of academics)
- Cautiousness given risk of a severe re-adjustment in interest rates/house prices at some point
Fig. Housing Tenure by Region (South West England)
Resolution Foundation (website 5 Nov 19) https://www.resolutionfoundation.org/data/housing/
Lack of Social Rented Housing.
Affordable, secure, decent social housing continues to wither away as an option for many in housing need (see Fig 1).
Source: Institute of Fiscal Studies Briefing Note BN178 Nov 2015
The reasons for loss of social housing are:
- Impact of Right-to-Buy (see Fig 2).
- Low rate of building of new social rent housing (‘Cinderella’ of housing policy).
- Govt antipathy to Social Housing reflected is cuts to funding (see IFS BN178 pg 11)
Chaotic Private Rental Market filling Social Housing Void
The void caused by loss of social housing has been filled by expansion of private rental market. This has resulted in:
- Sharply increased rents.
- Loss of security of tenure.
- Decline in standard of housing (weak regulation).
- Ex- Right-to-Buy properties re-appearing as private rental properties.
- Spiralling Housing Benefit costs – ~ £23.4 billion in 2018/9
We expect overall housing benefit spending in 2018-19 to total £23.4 billion, with 4.6 million recipients paid an average of £5,035 each. That would represent 2.9 per cent of total public spending and 1.1 per cent of national income.
Source: Office of Budget Responsibility – from website 5 Nov 2019 “Welfare Spending -Housing Benefit”
Source: ONS website 5 Nov 19 (yellow element paid to claimants of pension age)
Changes (Cuts) to Housing Benefit Entitlement
Housing Benefit has been a victim of Central Government cuts:
- Local Housing Allowance rates to be based upon “30th percentile” rather than average rent making two thirds of properties in a size category unaffordable on Housing Benefit.
- Imposition of ‘bedroom tax’ on social rented tenancies for working age claimants.
- Withdrawal of entitlement for single adults to receive HB for independent one bedroom accommodation until aged 35 (previously age 25).
Impacts of National Housing & Benefit Policies
Young people having to pay high private sector rents cannot save up deposits to become first time buyers as their parents often did.
Single individuals under age 35 vulnerable to substance abuse or suffering mental health problems only receive ‘room rate’ (the lowest rate of HB) and have to find others prepared to share a tenancy with them. This is often problematic and such individuals are at high risk of becoming homeless. A substantial percentage of homeless people have mental health issues.
Recipients of HB often end up topping up HB from what is ‘subsistence income’ (for food) to meet rent because two thirds of properties in their size category will have rents higher than the maximum HB payable.
High levels of rent arrears from policy changes has undermined the finances of Social Landlords and dissuades private landlords from accepting Housing Benefit claimants as tenants. Other Govt policies have undermined the finances of Social Landlords and this has restricted funds available to build new social rented housing. (see reference to Govt decision to reduce social rents in the Jul 2015 Budget in reference IFS BN page 22 – re Jul 2015 budget).
Cornwall – Affordability (Average full time pay/Average house price)
The following rhetorical questions will be asked and answered in my presentation:
How different is Cornwall from the gloomy national picture and what of Penzance?
Cornwall: Housing Affordability ratio 9.27
How does this compare with the rest of the South West?
How does this compare with Torbay, Hastings, North Summerset South End on Sea?
Chelsea & Kensington is the most unaffordable of 347 local authority with a ratio of 44.51. Copeland ( N England) is the most affordable at 2.5. Where is Cornwall in this scale from “1” (most affordable) to “347” “most unaffordable”?
Cornwall – Social Rented Housing Provision
Cornwall never had, historically, a high level of social housing provision. It has seen what social housing it had whittled away by Right to Buy like other local authorities.
Penzance’s employment profile means it is probably suffering a little more than then the average for Cornwall. What makes matters worse in Penzance? Is it significantly worse than the rest of Cornwall or coastal towns in general?
What is the employment outlook for Penzance?
That the Citizens’ Panel press the case for priority to be given to building Social Rented Housing to improve security of tenure, affordability and housing standards for the community. Social Rented Housing should a housing option to all residents, not a last resort available only to households who qualify with multiple indicators of deprivation. It is an opportunity to build highly environmentally sustainable homes which have low running costs. We should follow the example of Norwich City Council with its award winning Goldsmith Street social housing development.
- Institute for Fiscal Studies. Briefing Note BN178 Nov 2015 https://www.ifs.org.uk/uploads/publications/bns/BN178.pdf#page=9
- Office of National Statistics: Housing affordability in England and Wales: 2018 https://www.ons.gov.uk/peoplepopulationandcommunity/housing/bulletins/housingaffordabilityinenglandandwales/2018
- Resolution Foundation. https://www.resolutionfoundation.org/data/housing/