The impact on students of the Autumn Statement given by the Chancellor of the Exchequer, Philip Hammond
Ok, hands up who thought the Autumn Statement (sorry, now the Autumn ‘Budget’) was going to be a complete non-event and have no impact on students whatsoever? Yes, I thought as much. Ok, hands down. As it turned out, there was some great news for UK students in Chancellor Philip Hammond’s speech, particularly regarding student accommodation. That said, we still think there’s plenty more he could be doing for students.
Ban on letting agent fees
Let’s start with the good news. Lettings agents’ fees are going to be made illegal. Rejoice! This is a victory for everyone in the rental market, and for students especially. In the last two years, rent increases for students have been big news. The cost of university accommodation has risen by 18% in that time, which has led to many high-profile student demonstrations.
The private sector hasn’t fared much better. When private landlord rents come with excessive lettings fees on top, this creates a huge financial strain on student affordability.
It’s also, let’s face it, money for old-rope. It seems baffling to me that you have to actually pay for the privilege of putting down a hefty deposit and several week’s advance rent.
Paying the rent
It’s become more difficult than ever for students to find safe, affordable accommodation – their biggest annual expense after tuition fees. This has, sadly, priced many out of higher education, or led them towards inappropriate forms of credit, like high-cost bank overdrafts and payday loans, just to cover the next month’s rent.
We think we offer a much smarter, more responsible way of financing your way through university – if you need that extra help with your student funding – but many students aren’t aware of the full range of finance options they can apply for.
Minimum wage gets a boost
There was also welcome news for those eyeing up casual work over the summer or to supplement their student loans during term-time. The National Living Wage will go up from £7.20 an hour to £7.50 an hour from April 2017. This is equivalent to a £500 annual salary increase if you were to be working full-time hours – not that we recommend you should when you’ve got your studies to focus on too, of course.
For anyone looking for future trends in the UK graduate job market, Hammond gave plenty of indicators as to where he sees the focus and expansion. He’s passionate about growing UK productivity per se and sees that happening primarily in technology, innovation, broadband and 5G infrastructure, and research and development. He has budgeted a further £23bn over the next few years for these areas.
It was also interesting to see that he seems very committed to accelerating growth outside London. Right now, there’s a huge London-bias when it comes to graduate jobs. Is that set to change somewhat in the years ahead as he throws extra money at the northern cities and smaller businesses in more rural areas?
Please sir, can I have some more?
So, some excellent news for students in there. But we think there’s plenty more Mr Hammond could be doing for students. The biggest pre-Statement rallying cry was for him to u-turn the freeze on the £21,000 income threshold – the minimum annual salary at which you have to start paying back your government student loans, which was previously linked to the rise in average earnings. Unsurprisingly, he didn’t back down on this one. Martin Lewis won’t be happy either.
On the letting fees ban, let’s not forget too the fact that landlords of student properties are in a great position. They get a rolling wave of demand every academic year, particularly in the big cities, and from a business perspective that is of great value and something they shouldn’t take advantage of. We believe there should be fair and reasonable caps on any rent increases these landlords want to make in order to protect students who are always going to be on tight budgets. This would also prevent letting agents and landlords simply ramping up their rents now to balance out the ban on agency fees.
Household bills are another ‘ouch!’ for students and we urge the government to be more active in forcing the big utility providers to cap any rate increases they want to make, be more transparent as an industry-collective and offer preferential terms to deserving students.
There’s also a lot more the government can be doing to help new graduates who are in a fiercely-competitive job market, particularly as those just starting to pay back their government student loans have suddenly had the goalposts shifted and now find their repayment terms are a lot worse than they’d signed up to because of the freeze on the earnings threshold. For starters, we’d urge the government to look at giving graduates additional tax benefits once they start earning enough to pay back their student loans, to reward them for reaching that milestone and help them chip away at their debts quicker and easier. It’s a win-win. We’d also welcome the introduction of three-month repayment breaks for graduates repaying their government student loans, which is a popular feature of Future Finance student loans.