The Government’s welfare reforms have been hailed as the “greatest since Beveridge” by Iain Duncan Smith. But a recent Crisis report has warned that the reforms already in place are increasing homelessness and the changes later this year will accelerate this. Local government is in the front line of dealing with the impact of this and we have grave concerns about the impending changes and are preparing for the worst.
In the Summer austerity will truly hit. Households claiming benefits will have their budgets capped at £500 a week, reducing their ability to pay their rent overnight. The reason? Because it is unfair for people on benefits to earn more than the average family. At first sight this seems a compelling argument, one of apparent fairness. But dig a little deeper and it becomes clear that this will make some of the poorest people in our communities shoulder a lot more than their fair of the burden.
This is a fine example of George Osborne putting politics before policy. It attempts to position opponents as ‘defenders of a something for nothing’ culture, and plays into the hands of a press obsessed with promoting hostility toward “scroungers” and “skivers”. Yet there is precious little evidence that the policy will save the tax payer money overall nor help people get back into work. The key assumptions behind the policy are untried and untested.
Those in urban areas will be hit hardest, with 49% of affected households in Greater London. As Labour MPs and Councillors overwhelmingly represent inner cities, it will be us who see the impact of these changes in our surgeries and case work. It’s unlikely our Tory colleagues in Oxfordshire or Surrey will see such an influx and are therefore much less likely to raise it as an issue.
The consequences have clearly not been thought through, despite warnings from a wide range of experts. The Government has estimated as many as 56,000 households will be affected across the country, in which around 190,000 children live.
In Lewisham we have identified more than 900 households who will be directly affected by the cap. More than two thirds of these are single parents and the majority live in the private rented sector. Some of those identified will lose just a few pounds a week, but others will see hundreds of pounds wiped from their weekly budget.
It is the staggering cost of renting a home in London which pushes most of these families above the cap. By taking away their housing benefit first, thousands of families will be forced to choose between paying their rent and feeding their children. The government thinks the solution is simple – find a cheaper place to live. But in London, in the middle of a housing crisis, finding a home to rent underneath the cap will be all but impossible.
As benefits are cut and rent arrears increase, we’re expecting families will turn to their council for help. We’ll have no option but to accept them as homeless and may have to place them in expensive temporary accommodation, incurring additional costs ourselves. We will have the same difficulty finding properties below the benefit cap when identifying a more permanent home. A ready supply of social housing would help alleviate the issue, but this just does not exist. The new social homes that are being built under this government’s housing policies, which allow ‘affordable rents’ at up to 80% of the market, will make no difference to this problem.
As the Crisis report identifies, previous changes to housing benefit have already forced some London councils to seek homes for families outside of the Capital, something which they have already been attacked for. No one in their right minds thinks it’s a good idea to move families on mass hundreds of miles away from their home borough, but the impending changes make this scenario increasingly likely. If the Housing Minister is serious about preventing this, he should raise it with his colleagues in the Department for Work and Pensions and stop blaming local authorities.
These consequences are completely uncosted. Government has made no attempt to estimate how much local government and other bodies may spend supporting affected households, nor any of the impacts of household behaviour – there is no assessment as to what happens if any those 190,000 affected children have to move schools. How will it affect their life chances? How will it affect their health? Are different agencies prepared?
Of course, the best solution to the rising benefit bill is to get people into work as Labour has argued, but at the moment the right jobs are not available. For single parents, who would likely have to pay high childcare costs on top of their rents, a well paid job would be needed. A cursory glance at the Job Centre adverts will tell you how hard they are to come by.
The household benefit cap is just one part of the government’s welfare ‘reforms’. Cuts to council tax benefit, the social fund and the new under occupation rules are all about to be implemented. Our best estimates are that these will impact upon the same groups of people as the benefit cap.
The increasing costs of the welfare state do need to be tackled. But Ministers need to recognise that the cause of this is rooted not in ‘lazy benefit scroungers’, but in high housing costs, unemployment and low pay. The solutions need to focus on reducing private rents, building significant numbers of genuinely affordable homes (which will also create jobs) and a promoting a living wage. A focus on jobs and growth should be the main priority of any government.
As the debate on the Welfare Benefit Up-rating Bill has shown, commentators are quick to sight welfare as a vulnerable area for Labour, noting that public opinion is apparently more supportive of the Tory position. But this takes little notice of the policies that are about to be enacted. By the time of the 2015 election the benefit cap will have been in place for two years. The reality of the consequences will be hitting home. Families being forced out of their homes. More people living on the streets. Children going hungry. If this happens, the public will rightly demand something is done to tackle it. Labour must ensure it has a policy which does just that.
Sir Steve Bullock is Mayor of Lewisham and leads on housing issues for London Councils.