What does the Autumn Statement mean for London students?
We’ve gone through all 69 pages of this years Autumn Statement so you don’t have to. Announced on Wednesday by the Chancellor of the Exchequer and ex-second hand car salesmen, Philip Hammond, this is the first budget statement of Theresa May’s government and we’ve worked out what it all means for the students of London.
The first three points are aspects of the statement that will affect living costs within the city and the following are structural changes to funding of Higher Education.
Letting Agency Fees Outlawed
Undoubtedly the best news for the capital’s students was a ban on upfront fees charged by letting agents to be instigated “as soon as possible”. The majority of students rent on the private market through letting agents and the average rent per week for a room in student accommodation in London is £226.
Up until now, letting agents have charged tenants for a variety of mandatory services, including drawing up a contract, running credit checks, carrying out an inventory and obtaining references. Research by the housing charity Shelter suggests that on average fees are almost £350, whilst one in seven households pay over £500. According to Shelter, the average upfront cost faced by renters using a letting agency in the capital is over £2000, including a deposit.
The announcement has been welcomed by the likes of Shelter and Ed Miliband, the latter of whom was quick to point out the policy had been proposed in Labour’s 2015 manifesto. Criticism of the decision came from the managing director of the Association of Residential Letting Agents, David Cox. He echoed the concerns of the Minister of State for Housing and Planning, Gavin Barwell, who in September tweeted that the proposal was a “bad idea” because “landlords would pass costs to tenants via rent”.
Increased National Living Wage
The National Living Wage is increasing from £7.20 to £7.50 per hour. This will apply to those 25 or over supporting their studies through work. Before we get the party hats out, this is still a long way short of the £9.75 per hour set by the Living Wage Foundation as the “rates calculated based on what people need to live” in the capital.
The National Minimum Wage (£5.55 for 18-20 year olds, £6.95 for 21-24 year olds) remains unchanged. This is a kick in the teeth for the majority of students, who fall in these brackets and face the ever rising costs of living in the city.
Long Term Rent Prices Affected by Fresh Investment in Housing
The government has also confirmed the Greater London Authority’s (GLA) affordable housing settlement, meaning that the GLA will receive £3.15 billion to deliver over 90,000 housing starts by 2020-21. The building of affordable housing will help slow the ever-rising price of property in London, and begin to address the record low affordability rate of housing in London, where house prices are currently 14.2 times the average salary. Despite the benefits from this investment being passed onto the rental market, the anticipated gain for students is five years down the line and likely to be slight.
Investment in Research and Development
A large £2bn boost in investment for research and development (R&D) was treated sceptically when it was announced by Theresa May after years of austerity, but on examination this proves to be a genuine commitment. This is an initial yearly increase of a fifth on the existing spending and will ramp up year on year up to £4.7bn in 2020. The Treasury were happy to boast this was the largest increase in R&D investment since 1979.
As well as direct investment into research this investment will also go towards supporting collaboration between business and academia. With five London universities in the UK’s top ten for research (Imperial, LSE, KCL, UCL and Queen Mary) the capital’s research institutes will see a boost.
Hopefully this investment will allay the significant uncertainty around EU investment, which will be lost post-Brexit. The EU provided 2.6% of universities’ total income in 2013/14 and 16% of their total research funding. In the run up to the EU Referendum the Russell Group described the EU as “an irreplaceable source of funding for UK universities”.
A financial commitment was made towards the promise made by Jeremy Hunt, the Secretary of State for Health, for the provision of funding a further 1,500 additional medical training places each year. This will apply from the 2018-19 academic year onwards. Although it is not yet finalised which institutions will receive funding, with five prestigious medical schools in London, some are bound in end up here.
Devolved Adult Education Budget
Government will devolve the adult education budget to London from 2019-20, subject to ‘readiness conditions’. This will allow the GLA to prioritise how funding is spent on adult further education -it could for example overturn the enormous cuts to ESOL (English as a second language) courses at Lewisham and Southwark College. However, this is only a decentralisation not an increase, in a budget that has been aggressively cut.
Despite campaigning from activists, the Chancellor failed to reverse a five year freeze on the £21,000 threshold at which student loans have to be paid back. Students had originally been promised that the £21,000 figure would raise annually in line with inflation, however the freeze was announced by Osborne in the 2015 Autumn Statement and described by Martin Lewis of MoneySavingExpert as “absolutely disgraceful”.
The focus on this Autumn Statement has been the gloomy OBR forecasts as the country lurches towards Brexit. While the Chancellor’s policy give-aways have been few and he has avoided Osborne-style flashy headlines, the abolition of letting agency fees and to a lesser extent the increase in National Living Wage will be felt in many students’ pockets. However, institutional investment will do little to achieve financial security for many universities, or to assuage students’ fears in the face of increased tuition fees, post-Brexit instability and the looming Teaching Excellence Framework.