LONDON PLAN At heart of the debt, hunger, homelessness and ill health among poorest Londoners is lack of clarity about what is meant by “affordable housing”. LINK RENTS TO LIVING WAGE

23 February 2018
Dear all,
 
Although this letter is about the London Plan and is advocating the principle of linking rents to the London Living Wage of £10.20 an hour we believe the principle ought also to apply to the UK living wage of £8.75 an hour to make housing affirdable for all. The level of those real living wages is set by the Living Wage Foundation. 
 
The National Living Wage, now £7.50 an hour, was launched by George Osborne, who nicked the name but not the substance. The UK housing market does even more damage to the health of tenants on that National Living Wage.
 
An explanation of how the real living wage is based in the cost of living and the national living wage is not  by Professor John Veit-Wolson is at the end of this post  
 
Best wishes - Paul
 
 

Dear Mayor Kh​a​n, 

ABSOLUTELY NO CLARITY ABOUT WHAT IS MEANT BY "AFFORDABLE HOUSING IN THE LONDON PLAN - SO LINK RENTS TO LIVING WAGE. 

 
 
Rents charged in the chaotic London housing market (and council tax) drive a coach and horses through the Rowntree calculations of the minimum needed for food, fuel, clothes, transport and other necessities underpinning the London Living Wage. ​That damages the health and well-being of the tenants. 
 
When incomes stagnate and rents (and council tax) are increased faster than incomes, by the councils, RSL's or the market, they use up the income needed for food, fuel, clothes, transport and other necessities so creating debt, hunger homelessness and ill health
 
Therefore any building projects should remove the land from the calculations and ought to make affordable rents broadly fit the London living wage.
 
I am attaching a model of how affordable housing can be built to fit the London living wage calculated by a developer and the late Professor Peter Ambrose in 2007 when the LLW was £7.20 an hour, it is now £10.20 an hour. 
 
It assumes zero land costs and underlines the fact that truly affordable housing cannot be achieved for all until land is removed from the calculation, as with the Walterton and Elgin Community Housing, Community Land Trusts & Council Housing.  That principle should of course apply UK wide.
 
 

Why a ‘national living wage’ is not a Real Living Wage.

John Veit-Wilson

What’s the problem?

In his 2015 Budget the Chancellor George Osborne proposed an increased statutory minimum wage rate with a new name, the ‘national living wage’ [NLW]. Unlike the real Living Wage, his minimum wage rate does not relate to what households need to live decently. The NLW is a misuse of the idea and name of the real Living Wage; Mr Osborne has stolen the brand name of an established idea known in policy circles for many years. Public discussion of ‘living wages’ shows confusion between Mr Osborne’s minimum wage rate which is not calculated as enough to live on decently, and the real Living Wage which is.

How are minimum wage rates set?

The government’s Low Pay Commission  discusses with employers and  employees what pay rates they think business can afford. It then makes recommendations to government which sets the minimum rates employers must pay. Evidence about people’s minimum decent living standards or needs is not part of this process.

How is the real Living Wage set?

The real Living Wage is based on what ‘Living’ means. ‘Living’ means freedom to choose the real, socially inclusive life which the public in the UK, not politicians, think is needed for a minimum acceptable standard of living for everybody. That includes not only warm clothing, shoes, adequate bedding and a healthy diet but also spending on things like sports and presents for children as well as normal shopping and other bills. Groups of ordinary people discuss what the minimum standard is with each other and with experts in fields like nutrition, housing and heating until they arrive at agreement. The costs of this minimum acceptable living standard are then calculated for various household types and published as the minimum income standard (MIS).

Household incomes needed to pay for this minimum acceptable standard don’t only come from earnings. They also come from the mixture of tax allowances, child benefits and social security benefits for which households may be eligible. So if government reduces the value of allowances and benefits, then earnings levels have to rise to compensate. In principle, if government raised the levels of allowances and benefits, then the part of household income needed to reach the minimum acceptable standard which comes from earnings could fall, but this hasn’t yet happened.

The Living Wage is calculated as the hourly rate of earnings which the majority of workers need to earn for a week’s work to reach the MIS or equivalent level in London or in the rest of the UK, taking account of their households’ other income from personal or household allowances and benefits. Because it is part of households’ total income which is needed to afford the minimum acceptable standard agreed by the public for everybody, it is thus completely different from the government’s NLW which has no connection with minimum living standards.

Should there be a target?

Government proposes the NLW should rise to 60 percent of over-25s' median hourly earnings. That says nothing about what earnings are needed to reach real Living Wage levels for most households, because it takes no account of other government sources of household income. It risks confusion with the official ‘poverty line’, 60 percent of median household incomes. Both percentages measure income inequalities, not how much is enough. In reality, empirical poverty research  in the UK 2008-15 shows that 60 percent of median household incomes continues to be too low to cover the public’s minimum acceptable living standards for families. Similarly, there is no evidence that 60 percent of median hourly earnings would be high enough to meet them, even with other current income from government sources. At best, statistical indicators of this kind are mileposts but not goalposts, good for showing how far we have got but not for where we need to get to.

 


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