After the costs of food, fuel and debt have been covered, each tenant household has £6.51 per day
Although the NHS, the economy and immigration remain key topics for the General Election, the Tories are determined that the UK’s public debt, together with austerity and welfare reform policies ostensibly aimed at reducing the structural deficit, remain front and centre.
The Tories hope that the ‘strivers versus skivers’ narrative will capture enough blue collar votes to give David Cameron a majority, or at least be head of the largest party post in May.
This is worrying for low income households, many of whom live in social housing, since they have already taken the brunt of austerity and welfare, and face further cuts in benefits and local services in the Tories’ rush to ‘balance the books’ in the next parliament. Social tenants are also the chief target for demonisation by the Tories as exemplifying the feckless poor.
Yet a closer look reveals that the Tories have an ambivalent attitude towards debt. While public debt is seen as undesirable, growth in personal debt is being positively encouraged through low interest rates and interventions to shore-up the housing market. The Office for Budget Responsibility (OBR), the government’s independent economic watchdog, has actually built in expansion of personal debt as a key factor in supporting further economic growth over the next four years.
Personal debt currently stands at 142 per cent of household income (or £2tr). While still lower than the 170 per cent recorded at the peak of the economic boom in 2007, today’s 142 per cent is still very high in historical terms. The OBR predicts that personal debt will rise even further to 166 per cent by 2019 with further economic growth contingent upon debt-fuelled consumer spending.
In contrast, the UK’s public debt to GDP (gross domestic product) ratio is around 80 per cent (or £1.3tr). Yet we are told that there is a pressing need to reduce public debt mainly through the mechanism of austerity and welfare reform, which have the greatest impact on those on the lowest incomes, including many social housing tenants.
The Human City Institute and Compass, through in-depth interview surveys of more than 800 social tenants in urban and rural areas, have underscored the effects of austerity and welfare reform on social tenants in a new report.
Tenants are being squeezed by stagnant wages, rapidly rising living costs and pressures to take up high-cost credit. Alongside, changes to welfare benefits have begun to eat into already low incomes – four fifths are surviving on less than £200 per week – with further cuts in the offing.
Almost one third of tenants say that their standard of living has fallen in the last two years and half say it has remained the same. Few have seen improvement. After the costs of food, fuel and debt have been covered, each tenant household has £6.51 per day to cover all other costs. Over one third of tenants say that their financial circumstances are poor and worsening.
Two-thirds have no savings and of those who do, half have less than £1,000. Just 7 per cent of all tenants have savings over £5,000. So tenants have few assets on which to rely in a crisis. Day-to-day living is also under pressure. Almost two thirds of tenants have problems making ends meet until pay day or benefit payments are due. Inevitably, many rely on high-cost credit through pay day lenders or shops supplying household goods at ruinous rates of interest.
The surveys reveal that almost half of tenants are servicing debts, despite their low incomes. More than half of indebted tenants owe over £1,000. One third indicate that their debts are unmanageable with two thirds always or sometimes having problems with debt repayments. One in five say they always have to go without necessities to make debt repayments.
When asked what government could do to alleviate their financial plight, increased benefits, a Living Wage, better job security, tighter caps on the interest charged by payday lenders, and access to community finance topped the list of tenants’ priorities. Not unreasonable demands in the world’s fifth largest economy.
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