Living standards crisis is a housing crisis
The daytrippers take in the sun on the south Devon coast. It’s the height of the summer holidays in Teignmouth. No one’s talking economics, but here in the district of Teignbridge, the squeeze is everywhere.
A typical middle-earning worker takes home just £311 per week, a hundred pounds less than the national average, so the district is in the bottom 10 in the country for weekly wage packets. And last year they fell a further 4% (according to an ASHE survey).
But in the west country it goes further than that. Low wages are combined with high living costs. There has been a political epiphany on living standards over the past couple of years (now encompassing the whole political elite). Its physical embodiment is in Devon and Cornwall. Water bills are nauseously high here, as a result of the high cost of coastal clean-up being shunted on to users. But here, more than anywhere you see the truth behind the political games on living standards. The living standards agenda is about the high cost of housing. But politicians don’t want to talk about that, because they perceive existing homeowners to be high on the crack of rising house prices.
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The real issue here: that the high cost low wage nexus seen in seaside towns such as Teignmouth is becoming the norm rather than the exception. I met Janette Parker, who works at a supermarket. Her huge bills leave her with £15 per week out of her salary. She has no option to increase the 28 hours work she is given a week, even then its the next generation with even larger housing bills she’s really worried about.
“If you listen to the women talking in the canteen it’s about the childcare that they’re providing to their grandchildren” – Janette Parker, supermarket worker
In Devon and across the country, wages are largely set by the employers. Low-skilled workers, and unions have very little bargaining power to raise wages at or just above the minimum wage.
At a recruitment agency Recruitment Solutions in Exeter, Steve Williams says that even though he has skills shortages in trained skilled trades, workers have no pricing power. There is a massive skills mismatch between vacancies and jobseekers. Steve says the gap between wages and huge costs like housing are getting wider by the day.
At Exeter Council’s recycling sorting plant there are nearly 30 workers sifting out plastic and paper from cans trying to help the environment and earning close to the minimum wage – just above £6.75 an hour. John Selfridge has been working for 11 years here, and has felt the squeeze. He tells me he has been visiting 5 supermarkets to get the best value tea.
“If prices keep going up, wages need to go up as well otherwise it’s just not going to work. Clothing, food, I’d quite happily go to four or five different shops just to find what was the cheapest tea at that time” – John Selfridge, council worker, Exeter
So the challenge for Britain is how to get living standards and real wages rising again. Isn’t it?
Well if you translate central bankers, they often suggest “pride” in the fact wages have failed to grow, for example. So does Mark Carney want Britain’s real wages to rise? I asked him precisely this is my interview this month.
“We are well aware that real wages have been negative for most of the course of the past 5 years,” he told me. He said the two ways to change “that dynamic” were 1. getting inflation to target and 2. to get productivity growth up across the economy.
“Not just people into jobs, but into jobs where businesses are investing, and they are more productive and as a consequence they’re paid higher wages. From what the Bank of England can do, and we can’t do everything… by helping secure the recovery we can help deliver growth in real wages” – Mark Carney, Governor, Bank of England
It was a fascinating quote, I thought. The Bank cannot do everything, he says. So what about the government?
Rosie Denham, a Labour councillor in Exeter has helped deliver a new living wage scheme for about five dozen of the council’s most poorly paid staff. It will mean a 15% pay rise for dozens of low paid workers, funded by cuts to executive pay, including John. I caught up with John Selfridge at home in Exeter with his wife Barbabra and daughter Chloe. The living wage means that from January he gets £100 a month more in wages, and he can start to think about moving house.
Longer term, the logical answer would seem to be housebuilding. Near Exeter Airport there is an extraordinary sight. A new town rising from the hills, planned in a way that I have only previously seen in China. The bypass roads are already built but opened, as are schools, a new community centre, and there’s a nearby science park, and a mainline train station is under construction. Welcome to Cranbrook. There will be over 6,000 new homes. They were bitterly opposed by locals. But the scheme was pushed through under the Labour government, and championed by local Conservative leader Paul Diviani. It took £40m of public funding. I put it to Mr Diviani that these giant developments were not going to deliver higher living standards and cheaper housing to locals. He emphatically denied it and pointed to a myriad of schemes that should mean 40% of the new stock is “affordable”. Let’s see. The bigger picture is that developments like this stopped in their tracks all across Britain after Eric Pickles sent his famous 2010 letter dismantling Labour’s “top down” planning system.
Will Britain’s recovery provide rather slim pickings for working families? In Devon where wages are low and property prices sky high, the living wage and mass housebuilding may point to wider answers well away from the west country.
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