The Comprehensive Spending Review an Oxfordshire Letting Agent’s view
The Comprehensive Spending Review has been comprehensively reviewed by journalists and analysts, and no doubt you have been reading, watching and listening.
It is early days and certainly we have read the phrase “we must wait for the details to come to understand the full impact” a few times.
However it was, and is, a big day for the UK. So, writing from the narrow context of the private rental sector rather than a political or moral standpoint, here are some thoughts from an Oxford letting agent.
Being optimistic by nature, let’s start with some (relatively) good news:
• The supposed ‘ring-fencing’ of the NHS budget is positive if that carries through to our dominant PCT, the group of John Radcliffe Hospitals
• The Diamond Light Source project at Harwell has been recognised as truly global and innovative and is to (still) receive £69 million in funding to support Phase 3.
• Stating the obvious: the headline 490,000 job losses and 7.1% cuts to local authority budgets are clearly going to affect the Oxfordshire economy and blunt tenant demand. When we know the quantifiable details we can have more insight into the extent of the impact.
• 60% cuts to social housing budgets is a strange decision in a country lacking in housing stock generally
• The new kind of ‘affordable rent’ appears to be a mechanism to reduce public spending rather than anything game-changing. According to news reports, it will force social housing tenants to increase their co-payment up to 80% of the total rent value. At first glance this might not change much for those private rental sector landlords wary of two key factors with social housing: a) council tend not to provide a deposit to guarantee the tenancy, b) ‘claw back’ looms large – this enables the council to claw back rent paid to the landlord if it deems the tenant’s circumstances to have changed. We have not read anything regarding affordable rent and a) and b) yet. Also, there seems to be an assumption that social housing tenants will be able to fund the co-payments – this appears to be a fairly high-risk assumption.
• The impact of the 40% cut in higher education budgets from £7.1 billion to £4.2 billion was introduced to a certain extent last week, with the onus of funding moving from state to student. This is a very emotive issue in a city such as Oxford with up to 40,000 students who form the lifeblood of the city’s economy, culture and energy. Two good articles discuss this from slightly different points of view, see The Independent or Guardian.
• The void left by the scrapping of the Regional Spatial Plan 2006-2026 (which took 6 years of public sector money to write) and the South East Development Agency has not been filled. This document and agency led the policy development for the economic prosperity of Oxfordshire.
• The CSR mentions a £1.4 billion Regional Growth Fund to help boost innovation in areas previously highly dependent on the public sector. While the latter pervades Oxfordshire our instinct is that we are far less dependent than other areas (BBC News quoted that Margate has 30% of all jobs in the public sector) and so may see little of the £1.4 bn.
• The CSR mentions “reforming the planning system so it is more efficient, effective and supportive of economic development.” The decentralisation of planning policy has been talked about at length, and is part of the government’s desire to remove perceived bureaucracy. This is a non-trivial point given that planning policy is arguably the greatest influence on our local environment. We have yet to come across any detail regarding to the planning issue.
• Slightly hidden yesterday was the 30% reduction in the Arts Council’s budget. For context the Arts Council apportionates central government funding into cultural institutions. 30% is a big number and a range of Oxfordshire institutions could be affected.