The Tories have laid the foundations of disaster in London

26th April, 2012 11:39 am

And so it begins. Newham Council’s decision to attempt to rehouse 500 families 160 miles away in Stoke-on-Trent is the first in a line of much predicted fall-out events from the double whammy of the Localism Act and the Welfare Reform Act.

Welfare reform is an incredibly tricky and complicated subject. The threads of it are jumbled and complex, and the effects can be unexpected and affected by such multiple factors that sorting out cause and effect is incredibly difficult. It is an area that requires delicacy, nuance and imagination.

Unfortunately, politically there is little space for nuance and this Government has no desire to create any. The Tories have a very set attitude towards welfare and welfare recipients. They believe that reliance on welfare is damaging to a person’s moral fibre and ability to develop and grow into self-sufficiency, no matter what their circumstances. In some circumstances, I agree. Being on Job Seeker’s Allowance was not good for me and I don’t believe that any Government should be ok with the lives of its citizens being that small and confined. Welfare should be about empowering, not merely continued existence. But it also needs to be flexible enough to take account of individual needs which can vary to a greater and lesser extent.

But much as the Tories are wedded to a morality of self-sufficiency, and a doctrine based around bootstraps, they are equally committed to only ever addressing one side of a problem. Their naive belief that markets will sort themselves out without direction or level pulling from the Government has led to them implementing changes to every aspect of welfare in the blind faith that by removing benefits people will become more self-sufficient rather than simply less able to cope. They never think to apply solutions before simply declaring problems to no longer exist, which leads to measures like cutting housing benefit in the midst of a housing supply crisis.

It is hardly surprising that the first high-profile, large-scale example of the fallout from Government’s attitude to welfare is about housing. Because there are few who believe in the Tory muscular, patrician, almost bullying approach to it of our most ideological of ministers, Grant Shapps.

In many ways, Grant Shapps is the anti-Costner. In Field Of Dreams, Kevin Costner’s character is told “if you build it, they will come”. Shapps’ attitude has been “If I don’t build it, that will damn well incentivise them to build it themselves or to at least sort themselves out” (in fact, Shapps is obsessed with self-build, an extremely limited solution available only to those with at least some capital). Shapps, a minister who has said that “tackling homelessness and rough sleeping is what first got [him] into politics”, accepted – even gleefully championed – a 63% cut to social housing. By doing so at a time of ever spiralling housing need, has forced many housing providers into at least in part accepting the new 80% market rent scheme. This scheme makes “affordable” rent unaffordable in the south where rents are sky-high, and brings in little money for new housing in the north where social rents were never that far behind market rates, so no additional revenue is raised.

The Welfare Reform Act capped the amount tenants could receive in rent support, without ever addressing the amount that landlords could charge. A transaction that was going straight from Government to landlord is being used not to reduce rent or encourage greater supply, but to force people out of areas they’ve lived in all their lives because they are no longer able to afford the rent.

Given Shapps and the Tories’ childlike faith in the market, they don’t seem to understand very well how it works. They continue to insist that rents will come down as they lower the amount of housing benefit people receive without understanding or taking account for the enormous levels of demand that exist and are increasing. Basic market economics prove them wrong.

They can’t say they weren’t warned. Even Boris Johnson spoke out against the Government’s “Kosovo-style social cleansing”. With Westminster and Hillingdon rumoured to be the next councils to be forced to make this kind of move, London will be emptied of all but the very richest.

I myself grew up in an area that started out very typical of working class North London and is now so fashionable, I couldn’t dream of being able to afford to live there until I earn at least three times what I do now; an unlikely prospect with wages stagnating. This wasn’t a rich area I choose to move to, it’s the home that grew unaffordable around me until I was a forced out.

Between the 80% market rents in social housing, the bedroom tax and housing benefit capped at 30% of LHA there will simply be nowhere for poor families to live in London anymore. This doesn’t stop there being a demand for people to work jobs on low wages travelling from further and further afield and paying ever more for the privilege of doing so.

And this isn’t just a problem that will affect London and the South East. As rents continue to overcook here, more and more boroughs like Newham will be forced into situations where they try to move their waiting tenants, en masse, to other areas of the country, which will then put far greater pressure on their schools, hospitals and other local services. Pressures that will be exacerbated by having removed people from the support networks they had previously developed which do remove some of the need for these services.

It comes as no surprise to anyone interested in housing that the Government’s first tranche of legislation is having exactly this kind of effect. But those who think – or hope – that Newham is going to be an anomaly, that it is a politically motivated ruse, are going to continue to have their faith in this Government and their childlike faith in a wish-fulfilling market sorely tested.

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