TH Fairness Commission :Layout 1 - Tower Hamlets€¦ · Sufia Alam Wapping Women’s Centre and...

TOWER HAMLETS FAIRNESSCOMMISSIONChair: Dr Giles Fraser

Dr Abdul Hayee MurshadHeadteacher at Bigland Green Primary School

K M Abu Taher Choudhury

Rt Revd Adrian NewmanBishop of Stepney

Andy Brent

Graham FisherChief Executive of Toynbee Hall

Lindsay MackieNew Economics Foundation

Mike SmithReal

Muhammad Habibur RahmanLondon Metropolitan University and EastLondon Mosque

Mustafa IbrahimTower Hamlets Somali Organisations Network

Rys FarthingChild Poverty Action Group and OxfordUniversity

Steve TurnerUnite the Union

Sufia AlamWapping Women’s Centre and Muslim Women’sCollective

2 TOWER HAMLETS FAIRNESS COMMISSION

COMMISSION

TOWER HAMLETS FAIRNESS COMMISSION 3

INTRODUCTION “Its not fair!” is amongst the earliest moralinterventions we make as a child. Mostly, it ispresented in the form of a complaint over thedistribution of limited resources – toys, food,space, attention etc. And whilst the precisenature of fairness remains a matter ofconsiderable philosophical debate, especiallyamongst political philosophers, there is a basiclevel on which most of us clearly recogniseunfairness when we see it. Simply put: unfairnessis easier to recognise than fairness itself.

The Tower Hamlets Fairness Commission was setup in November 2012, at the instigation of theMayor, Lutfur Rahman, as a way of taking abroad and alternative view of a number ofurgent and pressing social problems. TowerHamlets and many areas like it are at acrossroads. The political and financial climateand a rapidly changing policy landscape meanthat public services can no longer be delivered inthe same way. Public opinion of big business,particularly some of those companies based inthe borough, is at an all-time low. The borough’spopulation is growing and the demographychanging into something less familiar. Givendrastic cuts in central government funding thechallenge of addressing social problems locallyhas changed and become more difficult. TheCommissioners were asked to consider these bigand difficult issues and the current fairnessdebate and make recommendations as to howTower Hamlets, one of the most unequal placesin the country, could become a fairer place tolive.

The first Fairness Commission was set up byIslington Council in 2010, drawing heavily uponthe work of Richard Wilkinson, who chaired the

Islington Commission and whose groundbreaking book The Spirit Level (co-authored withKate Pickett) insisted that inequality is not just aproblem for the poorest but for all of society.Unequal societies "have more violence, they havehigher teenage birth rates, they have moreobesity, they have lower levels of trust, they havelower levels of child well-being, community life isweaker and more people are in prison," arguesProfessor Wilkinson. In other words, inequality isbad for the wealthy as well.

The East End of London has historically been aplace where deep-seated social issues have risento public consciousness. Even before theVictorian age, the east side of London was poorerthan the west, with a predominance of dirtyindustries like tanning being situated downwindfrom the City of London where they werebanned. But as the British Empire expandedunder Victoria, so did the volume of tradecoming in and out of the East End via theThames. The new St Katherine’s Docks opened in1827, creating the need for large numbers ofdockworkers. Immigrants from all around theworld came here for political sanctuary. FrenchHuguenots had arrived from the 16th century,followed by Jews escaping the Tsarist pogroms,and the Irish and more latterly people fromSouth East Asia, Eastern Europe and Somalia.

From the mid nineteenth century onwards, theEast End became increasingly overcrowded, arabbit warren of run down and insanitaryalleyways and so called rookeries. In 1866, acholera epidemic killed 3000 people. And later in1889, Charles Booth published his famouspoverty map of London, with many streetsshaded black - depicting what he called “Lowest

Class. Vicious, semi-criminal” - and dark blue -“Very poor, casual. Chronic want”.

From the end of the 19th century, the socialproblems of the East End generated much publicand political concern. Then, as indeed now, thepoverty in the area was widely regarded as amoral outrage and called for a political responseon many levels. In response to the growingnumber of immigrants, Parliament set up theAliens Commission in 1903 and passed the AliensAct two years later. In response to poverty, thefirst social housing in the country was opened atArnold Circus in Shoreditch 1900, replacing thenotorious Old Nichol rookery. This history hasbecome the stuff of legend, with its ownparticular romance and temptation towardsnostalgia.

Tower Hamlets today is very different. Whilstsome issues remain the same, not least that ofrelative poverty, poor health and shortage ofaffordable housing, there has been majorinvestment, especially in education, yieldingimpressive consequences with GCSE results nowconsistently above the national average. Themost visible symbol of investment in TowerHamlets though is the shining towers of CanaryWharf. Now a global financial hub it has createdhundreds of thousands of jobs and broughtconsiderable wealth to the borough: The TowerHamlets economy is worth £6billion per year,more than Monaco, Malta and Jersey, andprovides 230,000 jobs, 60,000 more than thereare working age residents. That wealth has nottrickled down to most of its residents though. 49percent of children in the borough live inpoverty, the highest proportion in the country,there are significant health inequalities within the

population. A fifth of households have an annualincome of under £15,000, wheras the averagesalary of people who work in the borough is£78,000, the 2nd highest rate in UK. 10% ofworking age residents earn £100,000 or more,compared to 2% in London. Arguably, no otherpart of the country contains such an astonishinggap between rich and poor.

Tower Hamlets continues to change, dramaticallyand quickly. The population is growing, boththrough a high birth rate and inward migration.Property prices and rents are rising, driven by therelentless demand for property in inner London.Development is fast-paced and the economycontinues to grow and evolve. In 2012 anaverage income of £75,000 was needed to rentprivately in the borough and spend no morethan a third of your income on housing costs.This gentrifying trend shows no sign of slowingdown. The current Government’s welfare reformswill further exacerbate this. The impact of thebenefit cap, bedroom tax and other changes arehaving a particularly damaging and unfairimpact in inner London boroughs like TowerHamlets. The Commission has not made arecommendation to Government to abolishthese reforms, but disagrees with themthoroughly, as I hope is evident throughout thereport.

With a limited stock of social housing, ‘affordablerents’ now defined as 80% of the market rate,high private sector rents and government cuts tohousing benefit, Tower Hamlets is becomingincreasingly unaffordable for those on low oreven medium incomes. Poorer families not insocial housing are being forced out of the area,further away from the centre of London and, in


INTRODUCTION


INTRODUCTIONmany cases, away from their support structuresof community, friends and family. Thisweakening of community ties is exacerbated bythe predominance of short term lets, creating apopulation churn on many of the borough’sestates and turning neighbours into strangers.During the course of this Commission, theoverriding concern from a great many peoplewas the availability of long term and affordablehousing. The shifting population that thissituation has created raises the broader morephilosophical question of what sort of a cityLondon is becoming and whether it isincreasingly becoming exclusively for the welloff, with those on low and medium incomeseffectively being forced out of the borough. TheCommission agreed that such a shift would beprofoundly unwelcome.

One of the positive effects of gentrification is thatTower Hamlets is regarded as an exciting andvibrant place to live. And rightly so. But just asthe bars, restaurants and galleries tell one part ofthe story, so too the pawnbrokers and queuesoutside the advice agencies tell another. Manyfeel that the economic activity that centres onCanary Wharf does little to benefit local peoplein terms of jobs and that the business worldcould take a great deal more responsibility forthe wellbeing of the area in which they arebased. Debates over responsible business are, ofcourse, a subject of much national andinternational concern. Indeed, there inevitablyremains much widespread disquiet that thoseseen as responsible for the financial crisis of2007/8, many of whom have offices in CanaryWharf, are not the ones bearing its harshestconsequences. All this seems especially importantin a situation where local government, facing

dramatic and unprecedented cuts in fundingfrom central government, is increasingly less ableto mitigate the financial pressure on many of themore vulnerable members of the community.The Commission was therefore keen to involvethe business community from the start, andarticulate through its recommendations whatmore responsible, and more local, businesscitizenship could look like, finding ways for thatwealth to cross a great divide, in a way thatmatched the needs of the local community.

Not that this report is aimed exclusively at thebusiness community. There arerecommendations here for national government,for the council and for community and faithgroups. The Commission seeks to offerchallenges to all of these parties. The guidingidea is that fairness is inextricably linked to theflourishing of the whole community, pullingtogether to care for itself and especially thosethat are most vulnerable. In this regard TowerHamlets is already well endowed, with a verylarge and vibrant voluntary sector, rich with ahistory of pioneering social action, and strong,well-engaged faith groups and public serviceswith an excellent track record. And there is somuch good work on which to build - TowerHamlets has an enviable record of communitycohesion. Despite being a place of considerableethnic and religious diversity, relationshipsbetween different groups remain good, withwhat community tension there is often beinggenerated by people coming into the boroughfrom elsewhere.

But there is much work to be done. This reportseeks to chart some of the most pressingchallenges affecting Tower Hamlets and is a call

to action for those who live and work here – aswell as to those whose political decisions affectits life - to continue to press for a fairerflourishing community. To that end, theCommission’s ‘big idea’, is of new, more active,innovative collaborations between differentorganisations and sectors, across the borough,particularly involving the business community,who have been missing from much public andthird sector ‘partnership’ working in the past.Effecting a step change in the issues identifiedwithin this report will require a reimagining oforganisational roles and boundaries, creating anew public sphere.

In the last 15 years there has been significantinvestment in public services to mitigate theeffects of poverty. But people are still living onreally low incomes, in overcrowded, expensivehousing and many can’t get a job. Whilst this hasbeen a persistent and familiar experience for EastEnd residents for many years, the culmination ofdevastating and unfair welfare reforms, risingcosts of living and an acute local housing crisismean that this situation is getting a lot worseand quickly. Significant action is required. In aneffort to address these most pressing challenges,which underpin equality and fairness, theFairness Commission has deliberately focusedmost of its attention on the underlying issues:money, jobs and housing. The chapters andrecommendations in this report take each ofthose in turn.

Tower Hamlets has been the birthplace of someof the most radical and seminal ideas in Britishsocial history. Collaborative political andcommunity leadership is now urgently needed toaddress the current crisis with the same energyand vigour.

Dr Giles FraserChair of the Tower Hamlets FairnessCommission


INTRODUCTION


THE FUTURE

TOWER HAMLETS NOWAND IN THEFUTURETower Hamlets has long been a place with highlevels of deprivation, and where rich and poorlive alongside one another. What is so pressingnow is the pace of change the borough isexperiencing. It is becoming harder and harderto live in Tower Hamlets on a low income ascosts of living rise and welfare reforms bite. Thischapter considers the changing demography ofthe borough, how costs are rising and whywelfare reforms are so damaging for TowerHamlets residents. Finally, it will set out thedevastating cuts to local authority funding andthe impact these could have. They provide thecontext for the recommendations of the TowerHamlets Fairness Commission.

POPULATION GROWTH AND CHANGEThe 2011 Census showed us how fast thepopulation of Tower Hamlets grew over theprevious decade, by 29% since 2001 to 256,000.Population projections (SNPP in the diagrambelow) suggest it will increase at a similar pace inthe coming years, rising to 330,000 by 2021 and400,000 by 2041.

As the population grows, the type of peopleliving in the borough is also changing. Much ofthe recent growth has been driven by peoplecoming to the borough to work, from all overthe UK and the world. The chart above showshow population growth will come from increasesin the working age population over the next 10years. One of the defining features of TowerHamlets is its multi-cultural population, whichhas evolved through waves of immigration goingback hundreds of years, and continues to do so.Tower Hamlets has the largest Bangladeshipopulation in the UK, comprising 32% of thepopulation. More than two thirds of thepopulation belong to minority groups (i.e. notWhite British). 55% are from black and minorityethnic groups and 14% are from white minoritygroups. There are significant Somali and Chinesepopulations. Today many migrants are arriving inthe borough seeking economic opportunities inLondon. This working age population is verymixed, with people arriving in the borough fromall over the world.

HEALTH AND WELLBEINGAnother feature of the population, of concern tothe Commission, is the stark health inqualities.There are significant differences in lifeexpectancy between the poorest and richestresidents of the borough. There is 11.2 yearsdifference in life expectancy for men, and 6.5years difference for women, between the richest

and poorest peple in the borough. 9% of allbabies are born with a low birth weight, anindicator of maternal health, compared with aLondon average 7.5%. It is as high as 11.5% inthe most deprived ward in the borough.

WELFARE REFORM Two broad strands run through theGovernment’s welfare reforms, the desire toreduce the number of people who can claim aform of social security and a desire to reduce thepayment amounts to those that still receivethem.

Changes to disability benefits have meantreassessing millions of recipients of IncapacityBenefit (IB) and moving them on to eitherEmployment and Support Allowance (ESA) orJobseekers Allowance (JSA) and assessing theirfitness to work. So far the Government havedeclared 23% of those claiming IB as ‘fit forwork’ taking them off disability related benefits.The Government has also stated that reducingeligibility for Disability Living Allowance, whichwill become the Personal Independence Payment(PIP), is set to reduce payments by 20%.Eligibility changes also affect young singlepeople, as they will no longer be able to claimhousing benefit for a self-contained dwelling ifthey are under 35 and will only be supporting inshared accommodation, even if they havedependents who will visit.

In reducing payment amounts the Governmenthave focused on the most significant workingage benefit – housing benefit. Rather thanaddress the root cause of high housing costs byincreasing supply and restricting profiteering

through rents the Government has focused itsreforms on those coping with high rent.Government is reducing the benefits paid toprivate rented sector tenants by capping LocalHousing Allowance to the lowest third of rents.Housing benefit paid in the social housing sectoris being reduced for those deemed to be ‘over-occupying’ by having more bedrooms than theyneed, the so-called ‘bedroom tax’. Non-dependent deductions, have substantiallyincreased. Finally a ‘benefit cap’ has beenimposed, limiting the total social security ahousehold is eligible for to £500 per week, at atime when private rents in the borough average£400 a week and higher.

A recent response to central government byLondon Councils shows that Local HousingAllowance caps (the amount of housing benefityou can claim to live in the private sector) havebeen set too low and the bedroom tax (affecting2,500 Tower Hamlets households) is purelypunitive as there are not enough one and twobedroom properties for people to move into. Thebenefit cap is likely to further increasehomelessness, driving up costs as residents areevicted from the private sector and moved toexpensive temporary accommodation and B&Bs.In Tower Hamlets approximately 1000households will lose around £65 a week onaverage through the cap or around £3,400 ayear. The most vulnerable tenants, in homelesstemporary accommodation, will be hit by anaverage £105 a week loss - around £5,500 ayear. These figures make the situationcompletely unsustainable across most of thecapital and will lead to thousands of families andtens of thousands of children to be forced out ofLondon.


THE FUTURE


THE FUTUREFinally, those not affected by the changes indisability and housing benefit will still have theirbenefits capped to a 1% rise a year for the nextthree years. This includes working tax credit andchild benefit and so affects households in workand will increase in-work poverty, furthersqueezing living standards. The total loss toresidents through welfare reform is estimated ataround £8m per annum in Tower Hamlets.

RISING COSTSit is becoming more and more difficult to live inTower Hamlets on a low income. Costs of living –food, energy, transport - are rising and there is acrisis in the availability of affordable housing.With some of the highest house prices inLondon, driven by overseas investment in theLondon property market, home ownership is outof the question for all but the highest earnersand accounts for only 24% of households. Theprivate rented sector has grown dramatically,accounting for a third of homes in the boroughand 87% of new houses built since 2001. Rentsin the private sector are high and completelyunaffordable to many local residents - £1280 permonth for a 1 bedroom home, and £2080 for a3 bedroom home. Research undertaken by theborough indicates that you would need to earnaround £50,000 to rent an average 1 bedroomflat in Tower Hamlets. Over the last 12 months,average monthly rental prices have increased inall property size categories in the borough. Theaverage private rent increased by 16.7%compared to a London average increase of 8.9%.

Until recently housing benefit has kept pace withmost market rents, but that will no longer be thecase as social security levels are capped. Demandfor more affordable social housing far outstripssupply and waiting lists are long. This is despitethe borough currently delivering the mostnumber of affordable homes in the country.There are already too many families living inproperties that are too small for them, in severelyovercrowded conditions. Demand for largefamily housing is very high in Tower Hamlets:22,000 families are on the housing waiting listwith over 7,000 families waiting for 3 bed orlarger properties, the majority of whom are inthe top two priority bands on the waitinglist. Those not in social housing have to rent inthe private sector where increases in rents andthe cap in housing benefit mean that largerproperties are unaffordable to most of thepeople who need to live in them, exacerbatingthe crisis further. A family renting in the privatesector will pay, on average, 5 times as much as afamily renting a council-owned property. Thecouncil have already seen a 10% rise inhomelessness applications and evictions since2012.

PUBLIC FINANCE AUSTERITYThe country faces an unprecedented squeeze onpublic spending. The Coalition Government’sSpending Review in November 2010 set outunprecedented cuts to the funding of publicservices. In his 2012 Autumn Statement, theChancellor confirmed that the Governmentwould maintain the same pace of spending cutsfor three further years beyond the end of thecurrent Spending Review, into 2017-18. Recentmodelling by the Local Government Association

shows a likely national funding gap for localauthorities of £16.5 billion a year by 2019/20 - a29% shortfall between revenue and spendingpressures. For Tower Hamlets this is likely tomean that over the seven years of the austerityperiod, from the emergency budget in theautumn of 2010 to 2017/18, the council’sbudget, excluding schools funding, will havebeen cut by around 50% in real terms.

The graph below sets out the pressure on localgovernment finance in London resulting fromthe combined impact of: continued austerity;accelerating population growth and; a projectedincrease in social care need. One Londonborough has predicted that, if nothing elsechanges, the cost of social care will rise so muchthat by 2028 this will account for all of thecouncil’s net budget. The following graph,illustrates this concern.

In many ways, Tower Hamlets is at a tippingpoint. Trends of demographic change haveestablished themselves and national policies thatcould have significant effects on thedemography of the borough are beingimplemented now. This situation raises importantquestions about who can live here, who wants tolive here and who has the right to live here.Starting from the point of view that TowerHamlets should remain an area where peoplefrom different backgrounds and with differentincomes should be able to live together, thenwhat we are seeing now is more than a tippingpoint, it is a crisis. And we’ll soon start to see theimpact of that crisis on residents, as healthproblems, particularly mental health, domesticviolence, debt problems and homelessnessinevitably begin to rise at a time when thecapacity of public services to respond to suchproblems is severely constrained.


THE FUTURE

Source: London Councils, 2013


MONEYThis chapter is about poverty, about makingends meet on a very low income. 49% of TowerHamlets children live in poverty, the highest ratein the UK, and a fifth of households have anincome of under £15,000. Whilst Tower Hamletshas long been home to large numbers of peopleon low incomes, the current economic andpolitical environment means that people alreadystruggling to get by from month to month arefinding it harder to cope, as their costs of livingrise. There is now a lot less margin when thingsgo wrong. Working age benefits will only rise 1%for the next three years, much lower than therate of inflation. The linking of most benefits andtax credits to the Consumer Price Index ratherthan the Retail Price Index is also expected toadd to downward pressure on the income ofbenefit recipients. The average annual 2012electricity bill has risen by £26 since 2011, to£479. Meanwhile, the average annual 2012 gasbill across all payment types has risen by £81since 2011, to £800. Across the country therehas been a rise in the number of people usingfood banks, particularly as a result of benefitsanctions and delays in social security payments.The ‘bedroom tax’ is leaving people unable topay their rent. It is estimated that 33,000 TowerHamlets residents are in arrears with their debts.Welfare reforms are forcing people intoimpossible choices as they try to feed theirfamily, keep a warm roof over their heads, paytheir bills and get to school and work.

The council and local organisations have made areally proactive and positive start in respondingto this increasingly difficult situation, assessingneed, providing clear information to affectedresidents and co-ordinating support. This hasbuilt on strong borough-wide work in recent

years to promote financial inclusion andcapability. The council is also providing financialsupport to those in need, offering crisis loans aswell as providing funding to support familiesliving in temporary accommodation.

In this chapter the Commission makes a numberof recommendations which it hopes will have asignificant impact on people’s ability to copewith financial stress and weather the storm ofwelfare reform. These recommendations call forstrong leadership and clear changes in localfinancial services. The Commission wants to seedramatically improved access to and awarenessof good, affordable financial products; aborough-wide commitment to financialeducation from an early age; and effectivesupport when things go wrong.

The first recommendation is an overarching one,relating to the ‘poverty premium’, the extra costsyou often pay if you’re poor, particularly if youcan’t access mainstream financial products. TheCommission wants to see that premiumeradicated. The second recommendation, ondigital inclusion, is linked. Financial exclusionoften means digital exclusion too. The next threerecommendations seek to limit the impact ofpayday lenders and other sources of high-costcredit in the borough, and promote lower costalternatives, including the Credit Union. The finalrecommendation in this chapter is about localorganisations providing the best possible supportto those who do find themselves at crisis point.

These recommendations will all require differentorganisations to come together, including somewho perhaps haven’t been involved in theborough-wide financial inclusion agenda before,


MONEYto collaborate and effect change. What is clear isthat Tower Hamlets is in a unique position giventhe global financial centre within its borders, fullof expertise and resources which could make animpressive impact on the issues which will beraised in this chapter. The Commission stronglybelieves that the City and Canary Wharf’s statusas global leaders in financial services shouldsimilarly apply to financial inclusion and that thelocally based banking sector is in a primeposition to take a stronger leadership role inembedding fairness and equality as underlyingprinciples of the British banking system.

THE POVERTY PREMIUM In 2007 Save the Children introduced theconcept of a ‘poverty premium’ to describe theextra costs that families living on low incomescan pay for essential goods and services. Food,fuel, credit, telephone services and insurance canall cost more if your income level prevents youfrom accessing cheap credit, mainstreambanking services such as direct debit, or buyingup front or in bulk. For example, if you have apre-payment key arrangement to buy electricityor you can’t pay by direct debit you will paymore per unit for your electricity. In 2010 Savethe Children estimated that the povertypremium paid by a household was £1280 peryear.

Toynbee Hall is currently undertaking in-depthresearch to gain a more sophisticatedunderstanding of the level and nature of thepoverty premium in Tower Hamlets. It has revealed that the poverty premium is not afixed figure for all low-income families. Peoplemake decisions and trade-offs about what, how

and the price at which they buy the goods andservices they need, based on their own individualcircumstances. Some people prefer not to pay bydirect debit for utilities, although they know itcosts more, for fear of becoming overdrawn andbeing charged by their bank. Paying as andwhen they choose to gives them more control.Some people are able to borrow money andother resources from friends and families, othersare more isolated and can’t. Some families go togreat lengths to shop around for food, buyingdifferent items from the cheapest availablesource, although were still unable to takeadvantage of bulk-buying options.

The Commission believes the poverty premium isindicative of a structural unfairness for certain,largely low income groups. We recommend thatthe council and its partners work together toeliminate the poverty premium in TowerHamlets. Given the nature of the povertypremium, this will require work at a nationallevel with energy, water and telecommunicationcompanies to address their financial inclusivity, aswell as with financial service providers to addressthe costs and access to credit. The Commissionenvisages this that work will be led locally by theexisting Tower Hamlets financial inclusionpartnership, significantly raising the ambition ofthat work.

The Toynbee Hall research illustrates the stronglink between ‘financial capability’ and whether ornot a household pays a poverty premium. Theother strand of work to eliminate the premium inTower Hamlets must therefore be financialeducation. For young people this should bethrough schools; the Commission is pleased tonote that financial education will soon be on the


MONEYnational curriculum for secondary schools, buthopes that all schools develop a strong approachto this, starting in primary school. For olderpeople, this will be through communityprogrammes which have real impact. Forexample, the Money Mentors programme,delivered by partners across the borough has hadsignificant positive impact for adults who hadlittle ability or confidence in financial matters,who have now improved not only their ownabilities in navigating financial processes, but areable to share that knowledge and confidencethroughout their community.

DIGITAL INCLUSIONAchieving digital inclusion in Tower Hamlets is anessential element in creating a fairer environmentin terms of both money and jobs. Access to theinternet should be regarded in similar terms asaccess to water, electricity and gas – afundamental utility that households should notbe without. Tower Hamlets will not effectivelytackle the poverty premium nor maximise accessto job opportunities without reducing thenumber of people who can’t access the internet.There is good evidence from cities such asLiverpool that a locally led digital inclusionstrategy can have a significant impact atrelatively low cost.

We therefore recommend that Tower Hamletsbecomes an online borough and that apartnership is developed in which localuniversities, and or the creative and digitalindustries, take the lead in making free access towireless internet universal in Tower Hamlets.Such a campaign should seek to involve localyoung people to better link them to the localdigital economy, and use housing estates and

the hubs they create to promote universalaccess, especially as digital exclusion is higheramongst those living in social housing. Animportant element of becoming an onlineborough would be developing the skills of allresidents to use IT and access online informationand services. This would ensure that everyone inTower Hamlets could make the most of thiscapability.

AN UNHEALTHY SAFETY NET:PAYDAY LOANS AND HIGH COST CREDITThere is significant public concern regarding thesignificant expansion of the payday loan market,its practices and impact, and this concern hasbeen voiced by a number of MPs, trade unions,Citizens Advice Bureau, faith and communityorganisations. One of the most powerful imagesof this in Tower Hamlets was during aCommissioner visit to Bethnal Green: on just oneblock of Bethnal Green Road there was a cashconverter, a payday loan shop, a pawnbrokerand a betting shop.

Payday loans are a focal point of a much widerdysfunctional and unfair credit market. TheCommission strongly believes that Government,regulators and the banking sector will not beable to effectively rebuild the financial servicessector reputation in the minds of many lowincome households whilst there is increasingevidence of exploitation and bad practice acrossthe payday loan sector. The Commission issupportive of the Competition Commission andthe Financial Conduct Authority’s review of thepayday loan sector. It is important that both of

these reviews take a holistic view of theaffordable credit and payday loan sector andseriously consider a cap on interest rates for thesector. At a local level the Commission wouldwelcome further research into the use of paydayloans in Tower Hamlets.

Local authorities around the country are doingwhat they can to limit the number and impact ofpayday lenders, gambling outlets andpawnbrokers, particularly on local high streets.The Commission has seen how the proliferationof these businesses, alongside fast food outletsand off licences selling low price alcohol, cancreate an environment in which the negativeimpacts on poverty and health accumulate.Unfortunately, the current legislation, particularlyin relation to use classifications, makes it verydifficult to use planning laws to prevent these‘unhealthy’ businesses from opening andcouncils have struggled to effect change, losinglegal battles when they are challenged. Earlierthis year Newham Council refused to allowanother betting shop on a street they felt alreadyhad too many, but their refusal was overturnedon appeal. The Commission would like to seecentral government better support localauthorities in this goal of making localenvironments healthier and more financiallyresponsible and therefore recommends thatGovernment gives local authorities greater powerto limit unhealthy businesses, including paydayloan and gambling outlets.

A recent London Councils report on improvingLondon’s high streets called for changes to theUse Classification Order system which wouldempower local communities. Specifically theyrecommended that betting shops, pawnbrokers

and ‘cash for gold’ shops be moved from useclass A2 (financial services) to a new use class oftheir own. The Commission supports thisrecommendation.

CREDIT UNIONS AND AFFORDABLE CREDITIn the current political and media campaignagainst high cost and exploitative paydaylenders, credit unions are regularly held up as theaffordable and responsible alternative. They arecertainly one part of the solution to providinglow-income families with access to affordablecredit, but at the moment, they cannot be thewhole solution. For credit unions to succeed andhelp more people on low-incomes, they need tobe used by more people – people of all incomes,high, middle and low, need to save and mostimportantly, borrow, from credit unions tosupport their growth.

2010 legislation which allowed credit unions toexpand their common bond and receiveinstitutional investment has enabled many creditunions to expand their reach, attract newmembers and develop new products, but theystill have some way to go to rival mainstreambanks and payday lenders. One of the mainbarriers to expansion is the interest rates thatthey can charge, which are currently capped at2% per month, or 26.8% APR, and their inabilityto recover administration charges on loans. Thislimits their ability to make small loans over ashort period as they can’t cover their costs.

Improving the legislative framework in whichcredit unions operate, by removing orsignificantly raising the interest rate cap and


MONEY


MONEYenabling them to recover their costs, wouldenable them to grow further, develop moreproducts and compete on a level playing fieldwith other lenders. A number of credit unions,such as London Community Credit Union andLondon Mutual, and other organisations such asUnite, are exploring in detail what would berequired to enable credit unions to provideshort-term loans and the Fairness Commissionhopes the Government and financial institutions,as well as other credit unions, will consider thesereports carefully. MPs proposed that the interestrate cap be raised to 3% per month, this wasrecently agreed and will come into effect in April2014. The Commission believes that this is stilltoo restrictive and does not go far enough inenabling credit unions to make competitive shortterm loans. Raising the cap further would enablecredit unions to provide more affordable andsustainable loans, as a viable alternative to payday loan companies.

In many ways the residents of Tower Hamlets arelucky in that the borough has a relatively welldeveloped credit union. London CommunityCredit Union has three branches in the borough(and one in Hackney) and has developed newproducts such as current and ‘jam jar’ accounts.Credit unions like this do not exist in every partof the UK. But London Community Credit Union,like credit unions in many areas, still needssupport to grow and succeed. The credit unionsector needs investment in staff and volunteersto improve their ability to understand and assessrisk, their knowledge of sound business practicesand marketing skills. The Commission believesthe financial services sector is well placed andhas a responsibility to do this. The Post Officenetwork is now linked to credit unions and can

also offer current accounts. The Post Officebanking system could be built up more toprovide local banking to people on low incomes.We recommend that the government and thefinancial services sector make a seriouscommitment to supporting the development ofthe credit union sector so it can provide a viablealternative to payday loans and competitivebanking services for people on low incomes. Thismeans the Government should significantly raiseor abolish the interest rate cap for credit unionsand allow credit unions to recover theiradministration costs in addition to interest.Furthermore, the market should be opened toensure that clearing banks provide sort codesand ‘own account’ facilities to credit unions. Thisrecommendation also requires that banks andother providers of financial services share theirexpertise and provide support to credit unionsacross the country, providing much neededtraining and business development support.

A NATIONAL CAMPAIGNThe Commission believes that the Government,the financial industry regulators and the financialservices sector needs to take a strongerleadership role in creating access to fairer andmore affordable credit products for low incomehouseholds. The Money Advice Service inparticular could focus on affordable credit supplyas well as addressing issues of individual financialcapability and advice.

The Commission therefore recommends thatGovernment commission a national media andmarketing campaign highlighting theimplications of high cost credit and promotingpublic awareness of alternatives such as credit

unions. The Commission feels that payday loansshould be considered a social problem, andaddressed in similar terms to a public healthissue and that credit unions should be promotedas alternative source of credit and bankingservices to everyone, not just people on lowincomes.

As part of this campaign there are a number ofactivities which could be done locally. Largeemployers such as the NHS organisations, thecouncil, and businesses should all enableemployees to join the borough’s credi union,London Community Credit Union, through theirworkplace to broaden its reach and support itsdevelopment. Individuals in receipt of personalbudgets or local support grants from the councilcould be given information about credit unionaccounts. Public, third sector and faithorganisation services could warn against the useof high cost credit and provide information toservice users on affordable credit alternatives.The Money Advice Service website already has arange of information which can be used tosupport this.

HELP WHEN THINGS GO WRONGEven in a perfect world of financially inclusiveservices things will go wrong and people willexperience problem debt as a result of incomeshock, ill-health or family breakdown. Demandfor financial advice indicates that 72% ofresidents in the Bromley-by-Bow ward are inneed of financial advice compared to 9% in Stkatherine’s and Wapping. There is alreadygrowing evidence of increasing levels of rentarrears and other problem debt facing localhouseholds as welfare reforms kick in. Recent

changes in legal aid funding alongsidereductions in a range of funding for third sectoradvice agencies mean that there is growingpressure on the ability of existing agencies tomeet the needs of local residents. Residentsimpacted by welfare reform come to adviceagencies for help, or they may be turning up atthe homeless service, their GP, a children’s centreor the Jobcentre, seeking help as things becomemore difficult. It is important that there is ‘nowrong door’ and those who are struggling canbe directed to the right support, no matterwhere they initially present themselves.

The Commission recommends that the councilworks closely with local organisations whosupport people in financial crisis and otherfrontline services to develop a holistic responseto residents affected by welfare reform. Thisshould not just support them at their moment ofcrisis, but provide longer-term support. It willbuild on the work of the Tower HamletsCommunity Advice Network and Welfare ReformTask Group.


MONEY


MONEYThis box summarises the Commission’srecommendations for making thedistribution of MONEY fairer in TowerHamlets.

RECOMMENDATION 1:That the ‘poverty premium’ be eradicated inTower Hamlets.

RECOMMENDATION 2:Tower Hamlets becomes an online boroughand that a partnership is developed in whichlocal universities, and or the creative anddigital industries, take the lead in making freeaccess to wireless internet universal in TowerHamlets.

RECOMMENDATION 3:That Government gives local authoritiesgreater power to limit unhealthy businesses,including fast food, payday loan and gamblingoutlets, particularly in terms of the UseClassification Order system.

RECOMMENDATION 4:That the government and the financial servicessector should support the development of thecredit union sector so it can provide a viablealternative to payday loans and competitivebanking services for people on low incomes.

RECOMMENDATION 5:That there is a local and national campaign toraise awareness of the impact of high costcredit, promoting alternatives.

RECOMMENDATION 6:That the council works closely with localorganisations who support people in financialcrisis and other frontline services to develop aholistic response to residents affected bywelfare reform.

This chapter is about Tower Hamlets residentsbeing in good, sustainable and well-paidemployment. The Commission strongly believesthat having more residents in work is one of themost effective ways of addressing inequality.People affected by welfare reforms will be muchbetter off if they are in work and there is strongevidence that people in work are healthier andhappier. Employment levels in Tower Hamlets arelow. The employment rate, at 60.5% of theworking age population, is the second lowest inLondon. Female employment is even lower at47.6%, again the second lowest in London. Thiswas particularly worrying to the Commissiongiven the significant investment andimprovement in educational attainment, whichdoesn’t seem to have translated into improvedjob outcomes for many local young people.

During the evidence gathering process thecommissioners were struck by the sheer numberof organisations working across the employmentagenda, many of whom are doing excellentwork. However, the Commission also heard thatthese organisations do not always work togetherwell enough to provide the best support possibleto the people seeking work. There was asurprising amount of competition amongstorganisations and not enough sharing ofinformation. The Commission felt that thiscontributed to a failure in the support for thosewho are furthest from the labour market and inneed of the most help to find successfulemployment. These issues are very pressinggiven the drive towards work explicit within thewelfare reforms; now more than ever peopleneed good quality support to get back into work.The stakes are high: if people fail to engage withemployment support they risk losing their

benefits and ultimately their home. TheCommission was particularly concerned aboutthe tougher benefit sanctioning regime beingimplemented by Jobcentre Plus. Over two thirdsof visitors to food banks are there because ofJobseekers Allowance sanctions and this policy isclearly leaving people in desperate situations.

Some of the issues identified by the Commissionare national issues. Many areas are experiencinghigh levels of unemployment as the economyhas struggled to recover from recession. Thereare significant frustrations with the Departmentfor Work and Pensions, and particularly the WorkProgramme, being voiced around the country.But what marks Tower Hamlets has differentfrom other places of high unemployment is thatthere are jobs - 233,060 at the last count.Department for Work and Pensions data fromSeptember 2012 showed 900 vacancies and it isestimated this only accounts for 30% of allvacancies. The Tower Hamlets economy is doingwell and growing, with growth sectors creatingmore and different opportunities. 55% of jobsare in the financial , IT and other businessservices but there are almost 18,000 jobs in thecreative and cultural industries. However, lessthan one fifth of jobs are taken by Tower Hamletsresidents and the Commission is concerned thatmany of these new opportunities are inaccessibleto local residents, with structural inequalities inthe local job market which need to be addressed.

The reasons residents don’t access these jobopportunities are many and varied: they mayhave poor English language skills; can’t findaffordable childcare or have other caringresponsibilities; many people don’t have socialnetworks that reach into these employment


JOBS


JOBSsectors; some people have mental health needsor poor physical health; many lack the skillswhich these jobs require.

The Commission heard about two broad groupsof local jobseekers, and noted that each requiresa different approach in terms of localprogrammes to support them into work. Firstly,there are young people, leaving school anduniversity, often with good qualifications and lotsof potential. What they lack is not aspiration, butwork experience and social networks which areso often part of the route into the top jobs in theborough – whether with a financial servicescompany or a digital start-up. These youngpeople do secure work, but we believe many ofthem are ‘underemployed’, not fulfilling theirpotential and not bringing the benefits of a localand diverse workforce to businesses in theborough.

The second group is more varied, womenreturning to work after having children, older ordisabled residents or people with healthconditions. What they have in common is thatthey experience one or more barriers inaccessing employment – poor English skills,suitable and affordable childcare, lack of workexperience and skills, maybe health issues or adisability, all of which need addressing beforethey can successfully secure and sustainemployment. A number of the people in thisgroup have voiced their frustrations at theemployment ‘system’ in Tower Hamlets, whichdoesn’t seem to understand and meet theirneeds. In turn, employment advisors say theyfind some people in this group reluctant ordifficult to engage. This feedback suggests thatmore complex needs are not always well catered

for, and that there are improvements to be madein support which responds to the individualneeds of a person seeking employment. Thisindividual approach needs to be central to anynew model of delivery.

This chapter discusses each of these issues,setting out the Commission’s findings andrecommendations in relation to education,employment services and the role andresponsibilities of business in relation to localemployment. It also addresses low pay and callsfor all local employers to pay the London LivingWage. Finally, it considers childcare. Early yearseducation is crucial to future educationalattainment and therefore employmentopportunities for the borough’s children, butchildcare is also an important factor for mostparents’ ability to work. The Commission’srecommendation aims to address the marketfailure in the supply of affordable, good qualitychildcare locally. As in the previous chapter, allthese recommendations will require significantand ambitious collaboration between employers,the council, schools and other localorganisations.

SUCCESS IN EDUCATIONEducational achievement is a key determinant oflife chances for all people. It is of particularsignificance for those living in inner city areassuch as Tower Hamlets and is rightly held up asan important route out of poverty. Nonetheless,despite the massive improvement that has takenplace in education in the borough since 1997,the reality is that this investment has nottranslated into employment for many of theborough's young people.

Tower Hamlets is widely regarded as a successstory in the context of school level education ininner cities in the United Kingdom. In 1997,only 46% of the borough’s children achieved theexpected level in English at the end of primaryschool and only 26% of GCSE students achievedan A*-C grade in English, and 22% in maths. Butwith significant investment and attention, thissituation has been successfully addressed. By2006 the primary results overtook the nationalaverages and have sustained that position todate. GCSE results are now above the nationalaverage. In 2013 74% of students achieved A*-Cin English, and 75% in maths.

But despite this record of success, there remaintwo outstanding issues. Firstly, success at GCSElevel is not matched by equivalent successespost-16, nor reflected in entry into further andhigher education. Secondly, pre-16 educationalattainment has not yet translated into jobprospects and career advancement for many ofthe young people living and attending schools inTower Hamlets. Explanations for these issuesvary. With regard to the first issue, theCommission has heard from those who believethat post-16 education has not receivedequivalent investment as pre-16, and, conversely,that the problem is precisely that the extent ofpre-16 intervention has made it is more difficultfor post-16s to flourish in an educationalenvironment that requires more independentlearning.

The Commission has also heard from those whobelieve post-16 education has not beenparticularly effective at providing young peoplewith the skills that are needed for the jobs thatare available. It has also heard from those who

argue that many young people are reluctant totravel away from east London to go to intohigher education. Those who make this point arenot saying there is a lack of aspiration amongstyoung people, but rather that there cansometimes be an apprehensiveness, especiallyamongst parents.

The Commission feels strongly that youngpeople should be given opportunities to expandtheir horizons through their education andconsider the work opportunities available tothem within and beyond the borough. Workexperience is an important part of a student’seducation which all Tower Hamlets schools offer.Every year nearly 3000 students aged 14-17undertake work experience with local employers,almost all of which are arranged by the TowerHamlets Education Business Partnership. Themajority of their placements are in small andmedium-sized companies. EBP has struggled formany years to provide sufficient numbers of‘aspirational’ work experience placements inlarge businesses such as those in Canary Wharfand the City Fringe – whilst there are a few goodexamples, they are limited in number. Offeringwork experience placements can benefit thecompany as well as the student and theCommission believe that all local businesses,large and small, should help to make more workexperience opportunities available to localstudents.

Meaningful partnerships between schools andbusinesses, with aspirational work experienceplacements available, is all part of offering a wideand varied curriculum to the young people ofTower Hamlets. This should also include accessto the arts, the opportunity to learn a musical


JOBS


JOBSinstrument, to visit the theatre and the chance toplay and compete in sports. These things shouldbecome the norm for children from low-incomebackgrounds, not the exception. All theseexperiences will broaden the horizons andaspirations of children and their parents. TheCommission therefore recommends that allschools offer wide curriculum and provideaspirational opportunities to young people. Therole of business in providing work experienceplacements is addressed below.

EMPLOYMENT SERVICES THATWORK FOR RESIDENTSThere are lots of organisations working hard tosupport people into employment in TowerHamlets – the council, Jobcentre Plus, housingassociations, a vast array of community andvoluntary sector organisations in addition to theWork Programme providers. Whilst there areclearly examples of good partnership workingand referrals between organisations, asenvisioned by the council’s Routeway to Workmodel, it quickly became apparent toCommissioners that as a ‘system’ this work is notwell co-ordinated, overlapping and duplicatingeffort, with limited sharing of information andbest practice. This creates a confusing picture forjobseekers and employers and suggests thatcollectively, limited resources are not being usedmost effectively to harness opportunities andprovide the best support possible to residents.

What has emerged strongly from the work of theCommission is that locally developed schemesappear to offer more personalised and effectivesupport than those schemes that are being

commissioned nationally, particularly the WorkProgramme. This is also the finding of a recentLondon Councils report which argues for morelocal commissioning and delivery of employmentprogrammes. The Commission also heard thatwhere organisations work together in a‘community hub’ model to provide a range ofsupport based on the needs of an individual or afamily, that support is more effective.

Jobcentre Plus is clearly the biggest provider ofemployment services and job brokerage in theborough. They support several thousand peopleinto work each year and will need to be afundamental part of any system change.However, the role of the Jobcentre Plus servicehas been raised as a concern in many of theCommission’s conversations, despite theimprovements they have made over the last fewyears. Business sector representatives,employability providers, job seekers and otherstakeholders such as English language trainingproviders have all raised concerns that JobCentrePlus do not effectively address the job supportneeds of local people and there is a poorperception of their job brokerage service bysome of the employers we spoke to. Onediagnosis is that they suffer from reputationalissues which prevent some employers fromrecruiting through them, often linked to thehuge volume of inappropriate applicationsemployers have received when recruitingthrough Jobcentres in the past, as too manycandidates attempt to hit their job application‘target’ and prevent benefit sanctions.

It is the Commission’s view that the benefitsanctioning role of JobCentre Plus should bedecoupled from its jobseeking services. The

convenience of having both services in one placeis recognised, but it can be damaging to therelationship between the advisor and their clientif the same person who is supporting them backinto work, also wealds the threat of withdrawingbenefits. The Commission believes sanctionsshould be used as an absolute last resort, andtheir use is an indication that the support hasfailed the person, rather than the other wayround.

Although there have been no moves to separatebenefit ‘policing’ from jobseeking support, theCommission heard from Jobcentre Plus about thesignificant improvements in their offer toemployers and in making their support packagesmore tailored. In terms of support to clients, theycan refer to a variety of provision, includingEnglish language classes, work placements andtraining, although the Commission also heardadvisors’ frustration with the quality andsuitability of some of this provision. There isobviously a long way to go in making sure thatresidents, particularly those a long way frombeing job-ready, are given the support theyneed. The Commission recognises thatjobseekers need to demonstrate they are workingtowards employment, but a daily or weeklytarget of applications is not necessarily a usefulexercise – time spent developing skills is just asproductive.

English language training in the borough issymptomatic of a mismatch between provisionof services and local need. Tower Hamlets has ahigh proportion of residents for whom English isnot their first language, 34% compared with22% in London and 8% national. There are alarge number whose English language skills are a

significant barrier to employment. Whilst thereare places on courses at most levels, and fundingavailable to deliver these, the Commissionlearned of the shortage in ‘pre-entry’ courses,the most basic courses aimed at those who havelimited literacy skills, even in their first language.There is a higher demand for these courses thanis currently being met as the Government havewithdrawn funding for such courses. It becameclear to the Commission that a more localapproach to English language training, matchingsupply to demand, is required to enable faireraccess to employment.

In conclusion, it appears to the Commission thatthere is a significant opportunity forGovernment, the council, business and widercivil society to come together to reimagineemployability support to be much more locallyfocused, delivering more tailored personalsupport and maximising local job opportunities.In their discussions, the Commission looked backto the original labour exchanges, first introducedin London over 100 years ago. They were struckby the basic notion of a place where workerswere matched to jobs and felt this also could bea guiding principle of a new local approach(obviously without the queues and smokeyrooms), alongside the tailored support. TheCommission therefore recommends thatJobcentre Plus and other employment serviceproviders, together with employers, reimaginelocal services so they work better for local peopleand businesses, creating a ‘modern labourexchange’ and decoupling benefit sanctioningfrom job seeking activities.


JOBS


JOBSAt its most ambitious, this means devolution offunding and responsibilities from the national tothe local level. It requires that all local partners –Jobcentre Plus, Work Programme providers, thecouncil, Tower Hamlets College, localuniversities, housing associations, communityand voluntary sector organisations – worktogether to create a more co-ordinated systemwhich uses resources most effectively andprovides personalised support to individualjobseekers. This will create a place, physical orvirtual, where employers can come tosuccessfully recruit and jobseekers can accesssupport if required and secure employment.

THE ROLE OF BUSINESSES INLOCAL EMPLOYMENTThe Commission’s discussions frequently turnedto the sense of ‘other worldness’ of both CanaryWharf and the City from the perspective of manylocal residents. The Commission was concernedas a Commission is that this local perceptioncreates a barrier to residents accessingemployment opportunities. Although some firmsdo offer local engagement opportunities,especially though not exclusively for youngpeople, and there is good participation involunteering schemes with schools theCommission believes businesses haveresponsibility to do more. The recommendationabove called for schools to ensure that all youngpeople have access to a wide range ofopportunities, including opportunities to engagewith business and employers. This should includemore aspirational work experience placements.The Commission also believes more effort couldbe made by the businesses in Canary Wharf to

recruit locally, and they could engage with localemployment brokerage services to do this, as perthe previous recommendation.

The Commission believes that Canary Wharfbusinesses alone could provide 25% of theborough’s young people with aspirational workexperience placements. This would equate to atleast 750 placements a year every year, adramatic increase from the number whocurrently get such an opportunity. The EducationBusiness Partnership could work with thesebusinesses to make these placements a success.

The Commission therefore recommends thatlocal businesses, especially the large businessesbased in Canary Wharf, effect a step change intheir engagement with local people,guaranteeing to provide 25% of work experienceplacements every year and committing toincreasing apprenticeship and other localemployment opportunities.

ADDRESSING IN-WORK POVERTYThe Commission shares the growing localconcerns about the levels of in-work poverty andbelieve this is a structural problem which causeshigh and persistent levels of poverty in TowerHamlets. In-work poverty among adults hasbecome more prevalent due to the above-inflation increase in benefits for pensioners andchildren, and the relative stagnation of benefitsfor those in work. The Trust for London’s PovertyProfile cites in-work poverty as one of the mostserious aspects of poverty due to its scale andbecause it has got steadily worse despiteincreasing financial support via tax credits. The Commission is very supportive of the


JOBScampaign for a London Living Wage that hasbeen successfully initiated by London Citizensand local trade unions and has been pleased tonote the significant corporate support that hasbeen secured for the implementation of theLondon Living Wage in Tower Hamlets. Thecouncil, which has implemented the LondonLiving Wage for all employees and contractors,has an important flagship and leadership role inthis campaign and should become an accreditedLondon Living Wage employer, embedding itacross its supply chains, which it has alreadybegun to do.

Though many organisations have alreadycommitted to paying the London Living Wage inTower Hamlets, there is still a long way to go toaddress the levels of in-work poverty experiencedin the borough. As the council is doing, largeorganisations who have commited themselves tobeing London Living Wage employers can usetheir procurement power to call on suppliers todo the same.

The Commission therefore recommend that allemployers in Tower Hamlets adopt the LondonLiving Wage. The Commission recognises this ismore difficult for small and medium-sizedbusinesses, and those with large proportions oflow wage staff but feel very strongly that this isan essential element of creating a fairer TowerHamlets. Recommendations to implement theLiving Wage have been part of every FairnessCommission report published to date who havealso noted the important benefits that employerscan get from paying the Living Wage particularlyin terms of improvements in productively andstaff retention. Research by IPPR and theResolution Foundation finds that it will be more

difficult for low wage sectors like retail andhospitality to pay the London Living Wage, butsuggest a rate of 90% of the Living Wage couldbe introduced initially, phasing the impact.

CHILDCAREThere are three reasons why the Commission feltstrongly that they wanted to make arecommendation about childcare. First,affordable childcare is inextricably linked withmany parents being able to work. Second, thereis substantial evidence that the provision of atleast 15 hours of good quality early educationcan have a significant positive impact on a child’sdevelopment and educational outcomes. TheCommission recognised that these twoimperatives don’t necessarily match up in termsof the type of provision – working parents oftenneed a lot more than 15 hours a week, andsometimes non-typical hours to enable them towork. Finally, it became apparent that there is amarket failure in the supply of affordablechildcare in Tower Hamlets, as there is nationally.

The Government has recently expandedprovision of free early years education. FromSeptember 2014, all two year olds from thelowest income families are entitled to 15 hours ofchildcare per week. This will provide free earlyyears education for around half of two year oldsin Tower Hamlets, the highest proportion in thecountry.

Finding these extra childcare places is proving tobe a huge challenge for the borough, for tworeasons. The first is space. The Commission feelsthe council could do much more to prioritise theprovision of new childcare spaces in its planning


JOBSand development, and there continues to bebureaucratic problems which prevent existingspaces being turned into a childcare facility.Whilst the council is concentrating on findingthe statutorily required places through schoolnurseries and childminders, the Commissionbelieves that there is scope to consideralternative models of provision such as workplacechildcare settings, provision co-produced withparents and staff co-operatives, supported by thecouncil’s early years team. A wider variety ofpremises need to also be considered, working inpartnership with employers, housing associationsand other landlords. The second challengerelates to the childcare workforce. Expandingprovision and ensuring good quality childcarerelies on a well-trained and motivated workforce.Unfortunately the low pay and low status ofchildcare work makes it hard to attract goodquality staff. There are low minimum standardsin the qualifications that staff are required tohave, many looking to come into the professionlocally have poor English skills and loweducational attainment themselves, and there issignificant turnover of staff. New and alternativemodels of provision could attempt to bettermatch the local people who want to work inchildcare with suitable training and developmentopportunities.

The Fairness Commission believes that goodquality early years education is an imperative forthe young children of Tower Hamlets, and aneffective way of addressing the unfairnesses theyface. The affordability and hours of provision isalso an important factor in enabling parents toreturn to work. This could be addressed throughalternative models. The Commission thereforerecommends that the council sets ambitious

targets for the expansion of childcare provisionand leads work to develop new and alternativemodels of provision such as workplace childcare,co-produced and co-operative provision.

The quality of this provision is really important.Good quality childcare requires staff to staylonger in their job. This is linked to salary -childcare staff are often not well paid, given theskills required (most are paid at or slightly abovethe London Living Wage) and this affects theirmotivation, how long they stay in a role andtherefore the quality of provision. The councilshould work with providers and employers toimprove professional development, staffretention and promote the benefits of payingchildcare staff higher wages. Centre-basedprovision is the ideal, as this makes it easier toprovide a range of activities and encourageschildren to be more social, but this can beachieved in other ways, such as clusters ofchildminders meeting regularly to do differentactivities.


JOBSThis box summarises the Commission’srecommendations for making thedistribution of JOBS fairer in Tower Hamlets.

RECOMMENDATION 7:That all schools offer a wide curriculum andprovide aspirational opportunities to students.

RECOMMENDATION 8:That Jobcentre Plus, employers and providersof employment services, ‘reimagine’ localemployment services so they work better forlocal people and businesses, creating a modernlabour exchange, which is separate frombenefit sanctioning activities.

RECOMMENDATION 9:That local businesses, especially the largebusinesses based in Canary Wharf, effect a stepchange in their engagement with local people,guaranteeing to provide 25% of workexperience placements every year andcommitting to increasing apprenticeship andother local employment opportunities.

RECOMMENDATION 10:That all employers in Tower Hamlets becomeaccredited London Living Wage employers.

RECOMMENDATION 11:That the council sets ambitious targets for theexpansion of childcare provision and leadswork to develop new and alternative models ofprovision such as workplace childcare, co-produced and co-operative provision.


HOMESThis chapter is about homes, about fair access tosuitable and affordable housing, for the peoplewho want to live in Tower Hamlets. There aresignificant local and regional factors which createmuch unfairness in relation to housing, but it isclear to Commissioners that we are facing anational crisis in the supply and demand foraffordable housing and particularly in the supplyof social homes: 4.5 million people are currentlyin housing need and 1 million children are livingin overcrowded accommodation and nationalhouse building is at its lowest level since the1920s. Every Fairness Commission so far hashighlighted housing as a driver of poverty and asource of unfairness. This chapter makesrecommendations for action at the local andregional level, but ultimately Governmentintervention is required to unlock an increasinglydesperate situation.

In Tower Hamlets the housing landscape haschanged significantly over the last 30 years, ashas the population. This is due to very high levelsof development in the borough which isprojected to continue. The number of homes isgrowing by over 3000 a year, the quickest rate inthe country, and there are now around 111,000homes, up from 82,300 in 2003. Projectionssuggest this will rise to 140,000 by 2026. Largeswathes of the borough have regenerated,particularly along the river. In 1981 97% ofhomes were in the social sector with the councilowning 86%. Now the council own only 12% ofthe stock and just under half of homes are in thesocial sector. There has been huge growth in theprivate rented sector, which now accounts for33% of homes.

Tower Hamlets has prioritised building of newaffordable homes and builds more than anyother local area, but demand far outstrips supply.The 2011 Census identified Tower Hamlets as thefastest growing borough in London, with 50,000more residents since 2001. There are 23,500households in the housing register and 1500households in temporary accommodation,placed by the council after they’ve becomehomeless. Many households live in a low income,high rent environment and overcrowding iscommonplace. Most new homes areunattainable to low-income residents, and theimpact of the benefit cap and the AffordableRent model could be particularly devastating forTower Hamlets.

The Commission took as a starting point thebelief that people have a right to a secure homein the place where they have put down roots ofcommunity and family and that this right shouldnot be subservient to a housing market whichlinks property only to investment values. TheCommission rejects the argument that parts ofLondon which are ‘too expensive’ should beunavailable to poor Londoners. Tower Hamletshas both new and long established sets ofresidents. Both have a right to secure housing. Itis the mix of communities which creates a fairand sustainabile society.

The recommendations in this chapter considerthe barriers to increased investment by localauthorities and housing associations in socialhomes and innovative ways of increasing that.The impact of the wider London property marketon Tower Hamlets is also considered, as well asimprovements which could be made to make theprivate rented sector fairer.

As in the previous two chapters, most of theserecommendations require collaboration,ambition and commitment from a range oforganisations. To secure the continued existenceof mixed income communities and to create arange of affordable housing options for localpeople will require state intervention. The marketand its attendant forces will not on its ownsupply enough decent housing to people on lowincomes.

Freedom for local authorities to build and investThe council and housing associations currentlydevelop on the edges of significant private sectordevelopment and the number of affordablehomes they can provide has diminished as aproportion of the overall number of homes in theborough. The Government’s funding model forbuilding affordable homes has shiftedfundamentally. They have redefined affordablerents as up to 80% of market rents, anddrastically reduced grant funding, receipt ofwhich is dependent on charging the higherrents. The Government has also introducedborrowing caps for councils, to prevent rises inpublic sector borrowing. A campaign to removethe cap is backed by a number of organisationsincluding the National Federation of ALMOs, theChartered Institute of Housing and the NationalHousing Federation, as well as the Mayor ofLondon’s Finance Commission.

A large number of council and other socialrented properties have been sold through theRight to Buy programme, and many of them arenow let in the private rented sector, having beensold on or let by the original tenant. TheCommission believes that Right to Buy has had amalign impact in Tower Hamlets. It has reduced

the stock of much needed social housing andincreased the ‘churn’ of private sector tenants onestates. Furthermore, the share of proceedswhich councils receive from right-to-buy salesdoes not cover the cost of replacing the housingstock lost.

The Fairness Commission believes that localauthorities should be given more freedom toinnovate in the housing sector and ultimatelybuild more genuinely affordable homes. Our firsthousing recommendation is therefore that theGovernment reduce restrictions on localauthority borrowing to build social housing,abolishing the Housing Revenue Account debtcap, does not ‘topslice’ the New Homes Bonusand allows local authorties to keep all theproceeds from Right to Buy sales, to reinvest innew homes. Also that covenants be introducedto Right to Buy sales to limit the ability ofleaseholders to convert properties into buy-to-let. Research by London Councils suggests thatremoving the Housing Revenue Account debtcap alone could deliver £1.4 billion investment inhousing and 54,000 new homes.

THE LONDON PROPERTY MARKETAt the regional level, London faces some specificchallenges. Its population is growing faster thananywhere else meaning demand for housing isvery high. There are many very deprived areaswith exceptionally high demand for socialhousing, such as Tower Hamlets. And whilsthomes are being built in the capital , many areluxury developments, driven by demand fromoverseas investors and sold at prices way beyondthe reach of many ordinary Londoners. 60% ofnew homes in central London are bought by


HOMES


HOMESoverseas investors, who spent £5.2 billion onLondon property in 2011, more thangovernment investment in affordable housing forall of England. Many of these properties are leftempty, creating ‘ghost towns’ in some parts ofthe City. This relentless demand for propertieskeeps house prices and private sector rent levelsvery high, meaning many families are forced tolive in overcrowded properties, becomehomeless or leave the city altogether.

The next housing recommendation is thereforethat Tower Hamlets Council takes the lead inillustrating the negative impact on residents ofLondon as a property investment market,working with other London boroughs, LondonCouncils and the GLA to develop pan-Londonsolutions. This work would follow on from thefindings of the London Finance Commission.One solution already being implemented inborough such as Camden, Southward andLewisham is higher council tax on emptyproperties and high value homes. A land valuetax has also been suggested by a number ofpolicy think tanks.

RENTS BASED ON INCOME, NOTTHE MARKETThe high value of land and properties in TowerHamlets makes the market rental value also veryhigh, skewing any calculations of affordabilitybased on market rents, as with the Government’snew Affordable Rent model. This requires thathousing providers charge up to 80% of marketrates for new social homes. Grant funding is onlyavailable on this basis. Given the very high rent

levels in Tower Hamlets, 80% of market rate iscompletely unaffordable for almost allprospective tenants on the housing waiting list.The council and its partners have commissionedresearch which shows that an affordable rent formost people would be 65% of market rent for a1 bedroom property, 55% for a 2 bed and 50%for a 3 bedroom property. The Commissionsupport this research and the charging of theselower, genuinely affordable rents, which arebased on the average incomes of residents inTower Hamlets. This is one way of ensuring thatrents are based on the income of tenants, ratherthan the market. Other ways of doing this are byconsidering individual tenants’ incomes andsetting a rent that is fair for them, reviewingperiodically in case their circumstances havechange. The Commission feels strongly that thisis an important principle. The Commissiontherefore recommendations that rent models arebased on the principle that social rents shouldrelate to the income of tenants, not the marketrate.

INNOVATION IN INVESTMENT INLOCAL HOUSINGWhilst the first three recommendations willprovide longer term solutions to the housingcrisis in Tower Hamlets and beyond, we alsobelieve there are fruitful, but more local,solutions that could be implemented now.Financial institutions and social investmentorganisations could collaborate with localauthorities and housing providers to create newand innovative partnerships for the social good,working together to create new financial models


HOMESfor investment in affordable housing. This couldinclude social investment in housing, and ‘specialpurpose vehicle’ partnerships which would bejoint ventures between the council and housebuilders.

There are a range of small pieces of underusedland around Tower Hamlets on existing TowerHamlets Homes estates which, with the rightinvestment model, could be developed toprovide affordable homes without grant funding.To this end we recommend that financialinstitutions work with the council andhousebuilders to develop new models of long-term investment in social housing, particularlyon council-owned ‘micro sites’. FairnessCommissioners have already begun to explorethis with Barclays Bank who have committed toworking with the council’s housing team toexplore different options. This will enable thebuilding of significant numbers of new homes, tobe let at rents affordable to local people, withownership and management linked back to ademocratic mandate. In addition, theCommission believes these new homes should bebuilt to lifetime homes standards.

THE PRIVATE RENTED SECTORApart from the unaffordability of much housingin Tower Hamlets, one of the biggest issuesraised by residents when they spoke to theFairness Commission was the instability andinsecurity faced by residents in private rentedsector housing, and the impact that theincreasing number of private rented propertieswas having on communities and estates. A familyrenting in the private sector will pay around five

times as much as a family renting a councilowned property and their tenancy is much lesssecure, with landlords able to raise rentsregularly. Not all private landlords are motivatedsolely by profit but it would be stabilising if thecouncil were able to create better relationshipswith private landlords and have more influencein the sector.

The Commission heard about and was impressedby the landlord registry scheme recentlyintroduced in Newham to improve standards ofaccommodation in the private rented sector, andbetter protect tenants. We recommend that alandlord registry scheme is introduced in TowerHamlets. As well as protecting tenants,promoting higher standards of accommodation,it could also promote more stable tenancies andaffordable or ‘living’ rents.


HOMESThis box summarises the Commission’srecommendations for making thedistribution of HOMES fairer in TowerHamlets.

RECOMMENDATION 12:That the Government reduce restrictions onlocal authority borrowing to build socialhousing, abolishing the Housing RevenueAccount debt cap, does not ‘topslice’ the NewHomes Bonus and allows local authorities tokeep all the proceeds from Right to Buy sales,to reinvest in new homes. Also that covenantsbe introduced to Right to Buy sales to limit theability of leaseholders to convert propertiesinto buy-to-let.

RECOMMENDATION 13:That financial institutions work with the counciland house builders to develop new models oflong-term investment in social housing,particularly on council owned ‘micro sites’.

RECOMMENDATION 14:That Tower Hamlets takes a lead in illustratingthe negative impact of investment in theLondon property market.

RECOMMENDATION 15:That rent models are based on the principlethat social rents should relate to the income oftenants, not the market rate.

RECOMMENDATION 16:That the standard of private rentedaccommodation is improved, and tenantsbetter protected, through a landlord registryscheme for Tower Hamlets.


CONCLUSIONTower Hamlets is certainly at a cross roads. Manyresidents are already at crisis point, swimmingagainst a strong tide of rising costs, reducingincome and a national Government committedto reducing the state’s safety net.

The Commission has come up with 16recommendations. Some require Government tolisten, understand and take action. But many ofthem can be achieved locally with enoughcommitment, creativity and ambition from localpublic and third sector organisations, businessesand invidivuals. Whilst Tower Hamlets does faceoverwhelming challenges, it is also a place ofsuch energy and opportunity that I am confidentthese recommendations can be realised here ifpeople are willing. Tower Hamlets has a betterchance than most of making a difference.

As set out in the introduction to this report, if theCommission has had one ‘big idea’ it is this senseof collaboration, the creation of a new publicsphere and reimagining of organisational rolesand boundaries, in which all sectors must have asense of social responsibility and come togetherto address unfairness. The alternative is the thestatus quo, and as I hope this report makes itclear, that is not a sustainable option.

To the public sector and community andvoluntary organisations I’d say reach out, to eachother, to residents and to business. Share ideasand start small but think big. Lead others whenyou know you can and should. To the businesscommunity I’d say join in, do more, give more.Work with local organisations to addressunfairness in your local community, understandwhere you can be most effective and act uponthat. Tell others what you’re doing, so they’ll do

it too. Think about how your workforce couldbetter reflect the local community, because thenit all means more. Encourage your customersand suppliers to do the same.

The Fairness Commission, over the course of thelast 11 months has learned what anextraordinary place Tower Hamlets is. What itnow needs is an extraordinary response fromeveryone here. This report is a call to action. It’snow time to act.

Dr Giles Fraser


REFERENCES– Community Links, 2010, The Work

Programme: Helping the Hardest to Reach – Community Links, 2013, I Don’t Understand It

At All– Chartered Institute of Housing, 2011, Briefing

on the Affordable Homes ProgrammeFramework

– Greater London Authority, 2013, HousingAssociations and the Delivery of AffordableHousing in London: An Issues Paper

– Greater London Authority, 2013, Raising theCapital: Report of the London FinanceCommission

– IPPR, 2011, Making the Case for UniversalChildcare

– IPPR and Resolution Foundation, 2012, WHATPRICE A LIVING WAGE? Understanding theimpact of a living wage on firm-level wagebills

– London Councils, 2013, Streets Ahead?:Putting high streets at the heart of localeconomic growth

– London Councils, 2013, The London HousingChallenge: A London Councils DiscussionPaper

– London Councils, 2013, Getting LondonWorking

– Local Government Innovation Unit, 2013,House Proud - how councils can raisestandards in the private rented sector

– Local Government Association, 2013, Fundingoutlook for councils from 2010/11 to2019/20: Preliminary modelling

– National Childcare Campaign Daycare Trust,2012, 2012 London Childcare Report

– New Philanthropy Capital, The Smith Instituteand Peabody Housing, 2013, Rebuilding therelationship between affordable housing andphilanthropy

– Office of Fairtrading, 2013, Payday Lending,Compliance Report, Final Report

– Save the Children, 2007, The PovertyPremium: How poor households pay more foressential goods and services

– Save the Children, 2010, Policy Brief: Endingthe poverty premium

– Shelter, 2012, A better deal: Towards morestable private renting

– The Smith Institute, 2012, Local AuthorityPension Funds: Investing for Growth

– Trust for London, 2011, London’s PovertyProfile

NEWSPAPER ARTICLES– http://www.insidehousing.co.uk/news/

finance/hca-cuts-threaten-7000-homes/6509986.article

– http://www.insidehousing.co.uk/tenancies/hca-restricts-affordable-rent-re-lets-following-benefit-bill-concerns/6516926.article

– http://www.44financial.co.uk/2013/05/09/unlocking-local-authority-pension-funds-could-build-20000-homes/

– http://www.bbc.co.uk/news/uk-scotland-23155904

– http://www.mirror.co.uk/news/uk-news/right-to-buy-housing-shame-third-ex-council-17433380

– http://www.bbc.co.uk/news/uk-england-london-22934278

EVIDENCE PACKSThe Fairness Commission produced a series ofevidence packs summarising key informationwhich has been drawn on in this report. Thesecan be found at:

www.towerhamlets.gov.uk/fairness


ACKNOWLEDGEMENTSThe Commissioners would like to thank all the following people and organisations for sharing theirexperiences and expertise:

Alan Benson Greater London AuthorityAnand Shukla Family and Childcare TrustAndrea Baker Babu Bhattacherjee and Terry Marsh, Poplar HarcaCllr Andy Hull Islington Fairness CommissionDr Anne Kershen Queen Mary University of LondonProfessor Anne Power London School of Economics and Political ScienceBharat Meta Trust for LondonProfessor David BlaineDharmendra Kanani Big Lottery FundDick Mortimer Family MosaicDuncan Bowie University of WestminsterProfessor Edward Melhuish Birkbeck, University of LondonFarida Yesmin Limehouse ProjectProfessor Geoff Green Sheffield Hallam UniversityGraeme Price St Paul’s Way Trust SchoolHelen Samson Tower Hamlets Education Business PartnershipHoward Dawber Canary Wharf GroupJamie Carswell Tower Hamlets HomesJane Earl Rich MixJo Hancock Providence RowJohn McLoughlin Tower Hamlets UnisonJashoda Pindoria Department for Work and Pensions, and the team at City

Tower Jobcentre PlusJudith Moran Quaker Social ActionPenny Wilkinson Newcastle Fairness CommissionProfessor Karen Rowlington Birmingham UniversityKate Bell Child Poverty Action GroupKatharine Sax-Jones CrisisKhadiru Mahdi Tower Hamlets Council for Voluntary ServiceKristine Harris Doctors of the WorldLyn Middleton The Carers Centre in Tower HamletsMaeve McGoldrick and Ellie Roberts Community LinksMatt Skinner FutureGovMaureen McEleneyMichelle Dawson East London Business Alliance


Mother LondonNina Mguni The Young FoundationPaul Hackett Smith InstituteRachel Findlay and Dan Corry New Philanthropy CapitalRebecca Roberts-Hughes Royal Institute of British ArchitectsProfessor Richard WilkinsonRob Trimble and Dan Hopewell Bromley-by-Bow CentreRuhana Ali London CitizensDr Sam Everington Tower Hamlets Clinical Commissioning GroupSian Williams Toynbee HallSandra Fawcett Swan Housing Group and Tower Hamlets Housing ForumSheron Carter Gateway HousingSocial Action for HealthSonal Shah London Community FoundationStepney Green Maths and Computing CollegeSteve HilditchTom MacInnes New Policy InstituteTony WinterbottomTower Hamlets Community HousingTim Kiy Barclays BankTower Hamlets Federation of Tenants and Residents Associations

Ayesha, Chris, Daisy, Emma, Jahanara, Rany Sazia and Shazia – all local young people who gave up aSaturday to talk to the Commissioners

Many Tower Hamlets Council officers provided information, met with Commissioners and gaveevidence at meetings including Alison Thomas, Andy Scott, Anne Canning, Chris Holme, ChrisNaylor, Faisal Butt, Jackie Odunoye, Jo Green, Louise Russell, Maura Farrelly, Michael Bell, MonicaForty, Nikki Bradley, Owen Whalley, Pauline Hoare, Sharon Gentry and Somen Banerjee.

Research support was provided by Max Stanford, Frederick Pitts, Ngoc Anh Mao, Chris Diskin andTom Cowan all at Toynbee Hall

Secretariat support was provided by Frances Jones, Sarah Barr, Ellie Kuper Thomas and Louise Russell,Tower Hamlets Council

The Commissioners would like to thank Barclays Bank for sponsoring the production of the reportand launch event.

ACKNOWLEDGEMENTS

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