Just About Managing (JAM)

Nick Clegg referred to such a group as “alarm clock Britain – the bleary-eyed grafters struggling to raise families, while getting out to work, with little money left over to pay for luxuries.”

Resolution Foundation thinks tank suggest there are six million working-age households on low to middle incomes spread across the country. Such households will have at least one person in work, but they are not always low-income families. They may, for example, have an annual income of £50,000 but have a large family to support with high housing cost and very little disposable income at the end of the month.

Although most of the income for JAM families comes from work, it is, in many cases, topped up by welfare support. Two-thirds of all families receiving children tax credit are JAM families. Home ownership for people in this group fell from 59 per cent to 26 per cent last year pushing many of them into long term rental tenancy. The reason for this fall was that they were using 25 per cent of their income for housing over a decade where we had little or no income growth. The cap on benefits has also adversely affected housing benefits up to £100 a week. Since 2010 housing benefits have not risen in line with private rents and current benefits will remain frozen at 2016 levels until 2020. On top of all this is the increases in living costs and the very low if any pay rises – to stay as they are JAM families have to find hundreds of pounds extra for rents.

Many families like these fall back on payday loans and credit card and end up trapping themselves in loans they effectively can’t pay off.

The prime minister has talked about helping such families, but Gingerbread was critical of governments efforts as they don’t address obstacles for single families like childcare, training and flexible working. The plight of JAM families is further exasperated with local authorities continuing to cut services to adult social care and children services.

There is some hope. Although, households have been squeezed between high prices and weak wage growth with low inflation and slow but upward movement in wages householders, in general, are likely to see an improvement in their wallets (for a while).

However, Bank of England governor Mark Carney has again warned against a no deal Brexit he says “A no-deal would be an economic shock for this country”. He further warns about the slow down of the Chinese economy and the impact of tariff increases by the USA against China – both of which may have an overall impact of 2 per cent fall for the world economy.

There is little sign of relief for JAM families either from this government’s austerity policies, its Brexit position or possibly from the emerging global economic situation. I can’t help but think that we are one of the wealthiest countries in the world and thousands of families in this country are just getting by – the priorities for this government must change to better support families just about managing.

 

* Cllr. Tahir Maher is a member of the LDV editorial team

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34 Comments

  • Tahir Maher, Quite an achievement writing an article about JAMs without, once, mentioning ‘Universal Credit’.

  • Tahir Maher Tahir Maher 13th Feb '19 - 3:11pm

    Not sure if you are being cynical (take no offense) but I did want to give a different perspective. Universal Credit has been covered a lot on this site. I was hoping to highlight some of the other areas that impact JAM families. It becomes difficult to include diverse content and give it it’s proper due in what is essentially a short article – you take things out, you shorten others!!

  • Tahir, the big problem as you rightly highlight is housing costs. Homeownership has been falling, while both property prices and rents have increased relative to incomes. Britain has built proportionately less new housing than other countries and seen bigger price increases as a result.
    There are a number of problems to be tackled but the single biggest issue is housing supply. We need to, as a first priority, give councils borrowing power to buy land and grant themselves planning permission, to enable councils to capture more of the gains from development. We will need Reform of the 1961 Land Compensation Act to clarify that local and central government can purchase land at current use values, not inflated or speculative ‘hope’ values and reform of Sectio 106 to relax constraints on what councils can charge.
    Secondly, we need to increase home ownership by redirecting demand away from housing as an investment asset – and towards more productive assets. The Land Value Tax solution.
    Thirdly, the government can’t shield the UK from a global slowdown in economic growth, but we can take steps to close the productivity gap with other advanced economies with a focus on investment in R&D and infrastructure that develops the productive capacity of the economy.

  • Tahir Maher, I was being a bit cynical (apologies) but I had just written a response on another thread about UC.
    As you say UC has been addressed many times on here but, in my defence, it is probably the greatest factor in creating many more JAMs and turning existing JAMs into NMATs (not managing at all).

  • Tahir Maher Tahir Maher 13th Feb '19 - 4:03pm

    @Expats – no offence taken.

  • Peter Martin 13th Feb '19 - 4:36pm

    Tahir may have managed to avoid mention of UC but I notice JoeB has managed to include LVT. 🙂

    Other countries with much more available land for building, and I’m thinking of Australia and NZ, who have also managed to contrive to have unaffordable house prices for their young people so it’s probably not all about supply side problems.

    Their governments, too, have handed over their monetary policy to their central banks and have set a goal of balancing their budgets. The usual neoliberal cr*p in other words! Consequently their fiscal policy has been way too tight and the central banks have tried to compensate by running a monetary policy which has been way too loose. The result will be quite disastrous as the bubble deflates and their economy suffers from debt deflation.

    They won’t be able to blame it all on Brexit. So maybe we should spare a thought for our friends down under!

    https://www.news.com.au/finance/real-estate/buying/value-of-sydney-and-melbourne-properties-tipped-to-fall-dramatically/news-story/a53b9afe8d0a3c46a60a144d8b62bea2

  • David Evershed 13th Feb '19 - 4:42pm

    House prices are high (and thus rents also) because the interest rates on mortgages are so low.

    Higher interest rates will bring down house prices (and thus rents) whilst mortgage interest payments will rise as they are renewed unless they have been fixed long term.

    We should be grateful that inflation has been brought under control by recent governments and allowed inteest rates to be maintained at the low level introduced to stimulate the economy after the 2008 crisis.

  • Peter Martin/David Evershed

    the area of the country is not what determines supply. It is the supply of land for development in cities where people congregate to work. Only about 6% of the UK is built on but we still have a chronic shortage of land available to build on on the right places.
    The UK saw the largest growth of real house prices of any OECD country between 1970 and 2016. That is not explained only looking as financial liberalisation, globalisation or lower global interest rates that other OECD countries experience in equal measure.
    In terms of growth in the number of homes between 1990 and 2010, Britain ranked 24th out of 28 OECD members. Most of the cost of a new home stems from the cost of the Land it sits on. Data from the ONS suggests that the proportion of the cost of home in England and Wales accounted for by the land underneath it increased from around 50% in 1995 to 70% in 2016. Over the longer-term an international study suggests that three quarters (74%) of the increase in the cost of housing in Britain between 1950 and 2012 is accounted for by increases in Land prices.
    Real House price increases from 1970-2015 in the UK have been 480% with average GDP growth of 2.3% in that period. TFor the same period, this compares with France (real house price increase of 232% and average GDP growth of 2.3%) and the Netherlands (real house price increase of 240% and average GDP growth of 2.4%). These countries face the same economic environment as the UK. The single factor accounting for real house prices increasing by double the level of these countries is the Land market in the UK.

  • Peter Martin 13th Feb '19 - 8:04pm

    @ JoeB,

    “The single factor accounting for real house prices increasing by double the level of these countries (Netherland, France Germany?) is the Land market in the UK.”

    Well no it isn’t. None of these countries have relied on the creation of private credit to keep their economies moving to anywhere the same extent as the UK. None of these countries, as euro users, have control over their own monetary policy in any case. The Netherlands and Germany, as large exporters, have a steady inflow of euros so don’t need to encourage more private borrowing. In fact they need to do the opposite and discourage it to prevent inflation.

    In the longer term we can expect housing prices in the UK, and countries who have similar neolib economic policies like Australia and NZ, to equalise with prices in countries like the Netherlands and Germany. That means some painful downwards adjustment as we are starting to see in London, Sydney and Auckland.

  • Joseph Bourke 13th Feb '19 - 10:15pm

    There are few people who would argue that the supply of new homes does not make any long run difference to the price of homes for sale or the cost of rent , and none who should be taken seriously. The laws of supply and demand apply to housing just as they do to other goods. The difference with Land is that supply cannot easily expand to meet demand. The real price of cars does not go up or down with interest rates, production increases to meet demand. The supply of land is inelastic and cannot increase in proportion to demand.
    The Barker review estimated that a major increase – a doubling of the supply rate of new housing – would more than halve the rate of house price growth, reducing it to the European average.
    The UK saw the largest growth in real house prices of any OECD country (including Australia and NZ) between 1970 and 2016. Analysis by the House of Commons Library suggests that from the 1960s to the early 1980s private renters spent on average 10% of their income on rent in most of the country, and around 15% in London. Today those figures have increased to over 30% and nearly 40% respectively.
    This is where the money has gone and why Tahir can cite a large family with an annual income of as much as £50,000 with high housing cost having very little disposable income at the end of the month to manage on.

  • The housing bubble is driven by lack of supply and speculation. If you wish to educate yourself I would suggest visiting wolfstreet.com or http://housingbubble.blog. A word of warning some of the posters are delusional tin foil wearers, but hey we have one or two of them on this blog too.

  • Peter Martin 13th Feb '19 - 10:52pm

    @ JoeB,

    If the price of land is the primary factor why haven’t house prices increased at the same rate in the Netherlands? Land is a problem there too with the Netherlands having a similarly high population density.

    Also, why aren’t houses on leasehold much cheaper than freehold? The only experience I have of this was, some years ago, considering a house which was on a 99 year lease. I didn’t actually go for it. Largely as my wife chose a different one 🙂 , but I don’t remember thinking it was significantly cheaper than it would have been on freehold.

    I think you have it the wrong way around. The price of land is high because of the demand for housing – or rather the amount of debt individuals are encouraged to take on to buy the housing. There is a bubble effect because of a belief that prices will always rise and so there’s no such thing as a bad buy.

    If land had been nationalised, before the boom, and all new housing had been on a leasehold basis with the ground rent paid to government it probably wouldn’t have made any significant difference. Yes the prices might have been a little less because buyers would have had to factor in ground rents, but overall the costs would have been the same. Housing wouldn’t have been any more ‘affordable’.

  • Katharine Pindar 14th Feb '19 - 1:01am

    Thanks for highlighting the latest report on workers living in poverty, David (Raw), as a comment on Tahir’s useful article. Those workers at the business ministry at least have solidarity with others similarly circumstanced, and the chance of publicity because they are in a very relevant government department. They will have to represent hundreds of other people at work up and down the land who have no chance of being heard themselves. It is essential that our party presses this spring for the benefit increases we have been calling for, and also for revision of council-tax banding and reform in that area, since council taxes are due to rise as steeply as is permitted, to help hard-pressed councils try to pay for the essential services for children and for social care.

  • Tahir, imagine paying benefits every two weeks at the poverty level, a £50 a week minimum disregard and a tapper of 63%. Then no one would live in poverty in the UK. Those in work would have more money and there would be fewer JAMs. Imagine having regional minimum wages of 70% of that regions medium earnings. Everyone in full employment would earn above the poverty level. Imagine allowing single people under 35 to claim housing benefit for more than one bedroom, and that there was no benefit cap and that LHA were restored to their pre-2010 link to local average rents.

  • Peter Martin 14th Feb '19 - 9:45am

    @ frankie,

    “The housing bubble is driven by lack of supply and speculation……”

    Well wonders never cease! You’ve actually said something I agree with. We can always blame lack of supply, and that is certainly a factor, but when such a large proportion of new housing in London, especially, is bought up by the wealthy and kept empty purely for speculative purposes then it should be obvious that there’s a problem with an obvious solution.

  • Joseph Bourke 14th Feb '19 - 9:48am

    Peter Martin,

    the examples quoted of the Netherlands and France have maintained buildig rates in proportion to the growth in new households. France has a simiiar size population to Britain. But over the long-term, France has built roughly twice as new homes each year as Britain. This is why real house price growth in France since 1970 has been roughly half that of Britain and the proprtion of people who spend more than 40% of their income on housing is twice as high in Britain as in France.
    Between 1970 and 2015, France bult around 7.8 million more homes than the UK. That difference in building is equivalent to every existing home in Greater London, Scotland and Wales put together.
    Cities like Sydney, Vancouver, London, Paris etc are affected by large inflows of Internatiional capital invested in high price property in these locations that make them statistical outliers in the national housing market.

  • Peter Martin 14th Feb '19 - 10:27am

    Cities like Sydney, Vancouver, London, Paris etc are affected by large inflows of Internatiional capital invested in high price property in these locations that make them statistical outliers in the national housing market.

    It’s not much comfort to hear this argument if you’re a young person from one of these cities who cannot afford a home. The high prices aren’t confined to the cities alone. In London, high prices in the city, fuelled by speculation, spill out and affect the whole of the SE. Possibly even further afield geographically as workers now commute amazingly long distances.

    There’s no point building ever increasing numbers of flats and houses if they fail to become homes due to property speculation.

    https://www.independent.co.uk/voices/housing-crisis-london-high-rise-luxury-developments-property-local-councils-austerity-a8618171.html

  • David Raw 14th Feb ’19 – 9:52am……………….Given that Sir Vincent Cable was the Business Minister for five years it would be interesting to know what he knew about Aramark as the outsourcing firm for his ministry. Maybe if you go to Conference you could ask this questiuon. It might concentrate a few minds……….

    Now whose being a ‘naughty boy’, David.

    Regarding Vince’s stint as business secretary; his concern for employees was conspicuous by its absence. From ‘Health and Safety’, through ‘Wrongful Dismissal’ to the ‘Working Time Directive’ his actions were against those hard won rights.

    Still, never mind, current LibDem promises on these, and many other issues, ‘more than make up’ for hardships caused during the coalition.

  • Joseph Bourke 14th Feb '19 - 1:34pm

    Property in big cities has bcome an alternative investment to low yielding Treasury bonds https://www.economist.com/finance-and-economics/2018/11/08/why-house-prices-in-global-cities-are-falling. As the economist points out homes in the posher parts og global cities have become a distinct asset class. The infuence of Internatinal capital is particularly marked in financial centres that are open to capital flows, such as London, New York, Toronto and Sydney. Chinese buyers have been a big force behind the booms in Australian and Canadian cities.
    The cities boom however is not the real issue. It is speculation in land by domestic investors that is the real driver. The average value of agriultural land in England is £21,000 per Hectare. With planning consent the average value increases 100 fold to £2,100,000. It is these gains that attract speculators to the land market. In the South-Easr, gaining permission for housing on just one hectare of land (about the size of a football pitch) generates a average profit of £3.6 million. There is no agricutural land to speak of that is avaliable for development in London. Analysis by the Centre for Progressive Policy suggests that the total uplift in Land Values arising from acquiring from the grant of planning consent for residential development alone was £12 billion in 2015, the great majority of which accrues to landowners and developers. The Netherlands in contrast with the UK manages to capture aroud 90% of this uplift in Land Values to develop the infrastructure and affordable housing that communites need.

  • Peter,

    I’m not surprised you got something right, after all l a stopped clock is right twice a day. As to you astonishment that I understand speculation. Why bless poor Peter I’ve been aware of it for years, why I even knew it before the last Housing Bubble; by the way we are at the start of the popping of the second bubble, that started popping last year. No doubt the bankers will try to put a sticking plaster on the bubble, they may even succeed, they are after all very resourceful, but eventually it will go pop.

  • Steve Trevethan,

    that’s a well-written article in Counterpunch. Alexandria Ocasio-Cortez, Elizabeth Warren and Bernie Sanders certainly seem to be shaking things up on the other side of the pond.

  • Katharine Pindar 15th Feb '19 - 10:41am

    David, thank you for telling us about another group of JAM people who aren’t getting their fair share of the pot. (Sorry – 🙂 ) I think most Lib Dems do care about such people, when we hear about them, and grieve over our lack of power to help. I’d personally rather be told about left-out people who shouldn’t be forgotten than think about the possible failings of our Coalition ministers, who I suppose did their best. Lib Dem councillors, candidates, MPs and peers alike – I am grateful for your efforts and all your hard work. Reading Kirsten’s thread on how impossible it seems to find enough time to do everything she wants to, I know that feeling even in my own semi-retired life, so don’t find it hard to admire our workers in the heart of the fray.

  • Peter Martin 15th Feb '19 - 12:07pm

    There was a story on the One Show last night concerning a school which specialises in training people with Downs syndrome for jobs in the catering and restaurant industries. It was really quite touching. The young people involved wanted nothing more than to be able to work for a living- just like anyone else. And as the program showed they are capable of doing just that with a little bit of training. Yet, according to the program only some 5% of Downs syndrome people are currently engaged in paid employment.

    Anyone engaged in running a business, and whose first, second, and third priority is to make a profit is unlikely employ a Downs syndrome worker. Anyone who pushes the idea of a Unconditional Basic Income is unlikely to help these young people fulfill their ambitions. They’ll be given just enough money to survive and told to go back to their tower blocks and stop bothering anyone.

    There can only be the job guarantee coupled with a political commitment to full employment which can make a difference. If the only applicant for a job is a Down’s syndrome worker they should be allowed the chance to succeed. Having a situation of full employment will force employers to be less picky.

  • Peter, I agree with you that having full employment would force employers to be less picky, but I disagree with your other points. The state should not force a business to employ anyone. Just in the same way it shouldn’t force anyone to take a job or a “guaranteed job”. I would provide incentives for businesses to employ people who might be considered more challenging to employ. If everyone was given an income at the poverty level excluding housing costs this should not mean everyone will give up work. It is quite possible that the young people shown on the One Show would still want to have paid employment, even if they received a Citizens Income.

    Having a Citizens Income at the poverty level is a liberal policy as it gives people more choices. The issue would then become what conditions should apply for a person’s housing costs to be paid by the state. I would add studying and training to looking for a job and being ill or having a health issue which makes it difficult to be employed.

  • >Peter, I agree with you that having full employment would force employers to be less picky,

    Sorry I disagree, to me full employment is very similar to a skills shortage; something the IT industry has had for it’s entire life. However, what I suggest full employment does, particularly if supported by tough controls and levies on the use of imported labour, is to encourage businesses to invest in their people, this may include having to make adaptions to enable a deaf person to work in the CAD office. I don’t regard this as being less ‘picky’ just more enlightened ‘pickiness’.

  • @David Raw

    Thanks for raising the issue of the mineworkers’ pension scheme. Clearly as a nation we owe much to the miners who did a difficult job that significantly affected their health – mining the coal that power our industrial prosperity. We also owe much to other workers – dockers, women poisoned by phosphorus working in match stick factories etc.

    On the debate and Lib Dems, the Parliament website says that only speakers in an adjournment debate are the person who called the debate and the minister who responds – although there does seem to have been a very short second speech in this one. Obviously interventions can be made – in general I suspect most Lib Dem MPs have at least 10 very useful things they could be doing at any one time and I am not sure that the time taken to make a short intervention (which may not be allowed by the person making the speech at the time) is absolutely top of that list.

    On the MPS the independent House of Commons Library does note that it was the last Labour Government who confirmed the 50/50 split on surpluses between the Government and the scheme. http://researchbriefings.files.parliament.uk/documents/SN01189/SN01189.pdf

    On Brexit, I appreciate the point but it is my view that it will cost the public finances at least £70 billion a year which could go a long way towards helping JAMs, pensioners and alleviating poverty.

  • @David Raw

    Thanks for your further points and your thanks!

    It is true that the scheme was set up on privatisation by the Conservatives in 1994 – as a very minor quibble it was essentially a continuation of the scheme that operated under nationalisation with the Government acting as guarantor.

    The independent House of Commons library’s briefing paper on the MPS which I referenced states: “In the 2000s the Coalfield Communities Campaign argued for a review of the surplus-sharing arrangements, arguing that the guarantee had been struck on actuarial advice which, with hindsight, may have been too cautious. It said a “50% share of an unexpectedly large surplus is too much.” The Labour Government did agree to look at the arrangements again but in March 2003 said that, against the background of large falls in world stock markets, it would not be right to adjust the current 50/50 surplus-sharing arrangements.”

    So Labour did have the opportunity to change it when in power and didn’t. If you read through the briefing paper there are a number of aspects in which the scheme is a pretty good deal for the miners. BUT there is an issue where people only have small occupational pensions. And that there is particular issue for the miners given the tough job that they did – and personally I wouldn’t be against giving them more. But this does apply to many other people with small pensions who did difficult and health impairing jobs.

    In general the diligent and good if not perfect work that Steve Webb as Lib Dem pensions minister in the coalition did in raising the basic state pension helped those with small occupational pensions.

    PS I agree with your granddad on Churchill. Clearly a great war time leader but deserving of criticism on things like Tonypandy and the General Strike etc. Probably he ultimately helped give Labour a bigger majority in 1945 by accusing them of being a “gestapo” in a radio speech which was very neatly rebuffed by Attlee the following day.

  • Joseph Bourke 16th Feb '19 - 1:09pm

    Libdem MPs were present in force this week for the Special Educational Needs Funding debate in Westmister Hall https://www.libdemvoice.org/liblink-vince-cable-ministers-must-properly-address-the-special-educational-needs-and-disability-funding-crisis-59935.html#comments.
    They included Vince Cable leading the debate, Tim Farron, Ed Davey, Layla Moran and Stephen Lloyd. There were excellent intervations from Labour MPs like David Drew and others.
    When it comes to just about managing you won’t find much more of a deserving case for state support than the parents of special needs children or young special needs adults aged 18-25 that have become the responsibility of local authorities since 2014.

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