Our recent Equality Impact Assessment highlighted some interesting points and raises questions around the ‘levelling up’ agenda. Brian Moran, Deputy Chief Executive at Jigsaw explains.
“The nation continues to be in the grip of a cost-of-living crisis. Inflation has increased to a level unseen for 40 years and the drivers of inflation – primarily food and fuel – mean it’s the lower income households who are facing the most severe cost pressures.
In this context, like many organisations, it is vital that the Jigsaw Group’s board is fully informed about the wider implications and the impact its decisions might have on our residents.
One of the ways to do this is via Equality Impact Assessments and last year, when considering the rent increase to apply for the 2022/23 financial year, the board was presented with a particularly interesting Impact Assessment.
One of the things this showed was that the average rents charged to ethnic minority tenants, when measured across bedroom sizes, were lower than those charged to White British tenants.
But overall rents were reported to be higher for ethnic minority tenants than for White British tenants when looked at in aggregate.
This left a few people in the board room scratching their heads. How could average rents for equivalent property sizes be lower for one group of tenants compared to another, but then the overall rents be higher when rolled together? The result appeared to be contradictory and needed further investigation.
There is a straightforward answer of course. Rents are higher in properties with more bedrooms, so tenants renting a three-bed house will pay more than if they rent a two-bed house. Proportionally more of our ethnic minority tenants live in three and four bed homes than White British tenants, as can be seen in the above chart. So, one problem solved: we were at least assured that the results we reported were accurate and made sense.
Simple enough so far. But wider questions remained: to what extent did this explain the differences in overall rents? And why were the rents paid by ethnic minority tenants lower on average for the same sized properties?
Our approach to answer these questions was to build a mathematical model – a multiple linear regression model – to enable us to examine the individual factors that were influencing our rents.
Although the model gave the board assurance that Jigsaw rents were being set correctly, the results were eye opening.
In short, our model found that rents were on average lower for ethnic minority tenants in equivalent sized homes to White British tenants because they were more likely to be living in more deprived, lower valuation areas as measured today.
As can be seen from this table – Click here>> , this is an issue affecting our Asian or Asian British Bangladeshi and Asian or Asian British Pakistani tenants the most.
However, the social rents we charge are set according to a “formula rent” and part of the formula uses the value of properties… as they were in 1999.
So the disturbing conclusion is that our rents reflect inequalities that existed over two decades ago, and these are inequalities that are still very real to this day.
Is it right that lower value properties attract lower rents? I think it is. For all the faults of the current rent setting formula – chief of which is a failure to reflect the whole house cost of heating a home – lower valued homes should attract lower rents in my opinion.
Is it right that deprived areas from 1999 are still deprived today? Definitely not.
This work demonstrates how ingrained inequality can be and how the government’s “levelling-up” agenda must face this fact head on to have any hope of turning around social deprivation which decades of government policy and the well-meaning piecemeal efforts of others, including ourselves, have been unable to properly address.”
These finding are unlikely to be unique to Jigsaw. If you work for another organisation and would like to repeat the analysis please get in touch via press@jigsawhomes.org.uk
If you want to read more about understanding the April 2022 inflation, go to https://www.resolutionfoundation.org/publications/cap-off/
