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Going up - rents, poverty, homelessness

Karen Buck on the impact of cuts to Housing Benefit

A year ago, Iain Duncan-Smith said in the House of Commons debate on Housing Benefit: “The purpose of these (HB) changes is to give a real impetus to getting the rents down to make affordable housing more available in some areas. Through the emergency Budget and spending review, we proposed a set of housing benefit reforms designed to bring back under control a system that has been out of control. I accept that the responsibility of Government is always to get the balance right as we protect, incentivise, and ensure fairness in the system. Critically, for housing, that means getting the rents down. There should be no need, with the discretionary allowance, for people to be made homeless. That is just the nonsense with which Labour Members want to scare everybody.”

One year on, we now know that the mean rent increase in London was around 12%. We are facing an unprecedented crisis of supply and affordability. This has not all occurred since May 2010 – and some of the present problems have roots in the decision to switch subsidy from 'bricks and mortar' to personal subsidy three decades ago. Still, recent developments have intensified the problem acutely. Over the last year, homelessness has risen sharply, reversing a fairly steady medium term decline. The recent pattern by which homelessness/temporary accommodation has been diverted via the prevention and relief of homelessness strategy is faltering, because families are reluctant to abandon future security as the Private Rented Sector becomes increasingly unaffordable. (Meanwhile, there are over 100,000 households to which local council accepted homelessness duties but then diverted them into the private sector, who will be at risk of re-presenting as rents rise and benefits fall).

The central issue remains one of the supply of affordable homes, especially for rent, but we are seeing the final wave of new supply coming through as a result of the Labour government's investment, the future looks less hopeful because of the Orwellian 'affordable rent' model and housing benefit cuts. 'Affordable rents' as the means of filling the grant gap mean not just places like Westminster become unaffordable – an 'affordable rent' set at 65% of market rents would require a household income of £65k to cover the cost without benefit – but so do poorer places like Haringey and Newham. In Haringey, a rent set at 80% of local market rents would require a household income of £31k for a 1 bed flat. In Newham a 2 bed flat would require a household income of £27k. This is at a time when the median income for social housing tenants is £12k.

The Household Benefit Cap and Housing Benefit cuts, meanwhile, are estimated in a recent report by London Councils to leave 133,000 households unable to pay their current rents. Even if this proves to be an over- estimate, staggering numbers of households face a dramatic shortfall in their income and are at risk of upheaval and homelessness as private rents continue to soar. Boroughs with lower housing costs can anticipate a sharp increase in numbers of incomers, many with high service and support needs. It is worth noting that unemployment, the freeze in real wages and rising housing costs have already contributed to a rise in the number of private sector Housing Benefit claimants. This is especially noticeable in the suburbs— the London Borough of Redbridge, which includes part of the constituency of the Secretary of State for Work and Pensions, saw a 65% increase in Local Housing Allowance claims in a little over a year; the largest increase in the country.

The areas facing the biggest cost pressures are places like Hillingdon and Croydon, not Knightsbridge and Mayfair. While Newham will be amongst the places worst hit by the overall Benefit Cap. Supply may be the solution over the medium and longer term, but in the very short term we need the Department of Communities and Local Government and the Department of Work and Pensions to sort out their differences and develop an integrated approach to housing need and homelessness before they escalate.

Reprinted with permission from redbrickblog.wordpress.com

Karen Buck is Labour MP for Westminster North

Chartist 254 January/February 2012