The Conservatives have lost control of the economy this autumn. The party of so-called “sensible, steady, tested-ages-old-financial-prudence” gave up the pretence at competence and steered the Great British economy headlong into a wall. For those of us living in East Kent, the media headlines are hitting right now, but it is the pain of the winter to come that will really drive it home. Here’s a summary of what’s going wrong with the economy under this car crash of a government and how it affects our area. Sorry for the technical bits – they are necessary!

Pensions

East Kent has an aging population. The average age in the area is 42.6, which is 6% higher than the UK average. That’s a lot of people sitting on pensions (not final salary pensions) or about to receive their pensions. Thanet and Folkestone have a particularly high concentration of older residents. In recent days since the pound plummeted and bond yields soared, pensions need ready access to liquid cash. Many of pension providers’ investments are tied up in hedges that at the moment they are having to consider unwinding early in order to have enough liquidity to avoid defaulting. Without intervention from the Bank of England some pension providers might lose too much of their funds and could have gone (or potentially still go) under.

Housing

When people on fixed rate mortgages come to the end of their fix, they may find in the next few months and years that the amount they were paying back each month has more than doubled. This is because interest rates have been put up to try and combat inflation. It is a vortex of no-good-choices: Don’t put up interest rates and inflation will get out of control which means that food will become inviably expensive; more money will have to be printed. That never ends well.  Many people will not be able to sustain these new, sky-high payments and will have to sell their homes. This means house prices will drop. Some people will find their homes are repossessed. Many people who have bought in recent years will be plunged into negative equity. There is a whole generation of home owners out there than do not remember the repossessions of the end of the 1980s when interest rates doubled to 15%. However, it is worse this time: See why by reading this excellent Twitter thread on interest rates versus affordability.

Meanwhile, due to cuts in the money given from central government to local authorities, there has never been greater pressure on social housing. Some local authorities in Kent now say that you must first wait six months before you can even get on the list to bid for council homes; many people in our area are now homeless, sofa surfing with friends and relatives, because the wait to be housed is longer than in living memory. Because of rising inflation, house builders – including the builders of social housing – are struggling; the cost of raw materials means that the incentive to build is low. As an example of how long many people are having to wait for help with housing: the longest wait for a Band B home in Swale is – according to February 2022 data – 118 months. Whilst the average wait is nearer two years, many families across East Kent have certainly been waiting nearer 5 years for suitable housing. As more and more people are plunged into debt with the forthcoming financial crisis, the pressure on social housing will only increase. Those in private rentals have already seen rents climbing steadily over the past 10 years, even with wages depressed. The average 3-bedroom rental in Kent is now £1594pcm. These rents in the private sector have risen over 2.5% in the past year.

Social Housing in East Kent
Social Housing in East Kent

 Benefits

People on benefits will likely have their payments squeezed next year. According to The Times, ministers are reviewing their previously pledges to raise benefits in line with inflation. It is now more likely that the Conservative government will only raise benefits by half the rate of inflation. This makes people poorer in real terms.

In Kent there are many districts where around 40% of the population collect at least one benefit. In Thanet (as of July 2022), 42.8% of the population claimed at least one benefit. In Folkestone and Hythe this was 38.9%; in Dover this was 37.7% and in Swale, this was 35%. Those figures suggest that the government rolling back their promises to keep raising benefits in line with inflation will hit these areas hard.

Cost of Living and Wages

The cost of food has soared 10% in only one year, yet take home wages are – on average across East Kent – stagnant. Thanet is the district in Kent with the lowest average salary (according to November 2021 data), followed by Canterbury – where there are a lot of people employed on insecure contracts in the hospitality sector. The average wages in all, aside from two, Kent local authorities are significantly lower than the UK average, yet we are seeing the same rising costs on food, heating, housing and other essential spend as elsewhere in the UK. People already have little-to-no money to spend on luxuries, needing to save every pound to cover that essential spend; for towns such as Margate, Canterbury, Broadstairs, Deal, Herne Bay and Whitstable where the tourism and hospitality sector accounts for a significant proportion of the micro-GDP of the area, people not having extra money to spend on nights out, a trip to the pub, a weekend away, a meal out etc will be disastrous for our local towns’ economies.

What can be done?

Obviously, a change of government is the long-overdue solution.  The Conservatives have been in power for 12 years. They have lost all financial credibility. This government outrageously binned the top rate of tax for the highest earners. Whilst the population of East Kent gets and feels poorer and poorer, the Chancellor decided that the richest should get richer and that his hedge fund manager friends who bet against the pound would reap rewards whilst the rest of the UK suffers.

The Campaign Group Enough is Enough is having their first National Day of Action tomorrow on October 1st to make the government hear loud and clear that the cost-of-living crisis has gone too far. In Kent, you can attend a demo at:

Gillingham (2pm, War Memorial, ME7 1HL)

Canterbury (1pm, Canterbury Baptist Church, CT1 1UT)

You can also email your local Conservative MPs and Councillors. If you voted Conservative in 2019, tell them if they’ve lost your vote; Whichever way you voted, tell them what this calamity of a government is doing to your family and your area. Tell them what the mood of the nation is. Enough really is enough. Tell them, we need things to change. Fast.

 

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