It is for these reasons that mechanisms to lessen the distorting effect of the market on housing are so important; it is why Housing Benefit is so vital a component in delivering a fairer society and why the coalition’s dog-whistle opening attack on welfare in the budget must be exposed and opposed.
So despite the headlines focussing on the regressive hike in VAT, the freezing of certain benefits or a corporation tax cut that sees the burden of taxation shifted from big business to the shoulders of the poor, it is the trailed shakedown of housing benefit that presents the most underhand threat to a fairer society.
Housing benefit was not perfect under Labour; almost half of claimants had to find an average of £100 a month to make up a shortfall in their rent. Under the coalition’s plans, payments will be capped at £400 a week for large families requiring large homes. In many parts of the country this simply won’t cover the bills. This will tip families already struggling over the edge. Homelessness will rise.
The Chancellor also spoke of ensuring that working age families lived only in houses that were of a suitable size: sound innocuous enough, but it raises the spectre of families forced to downsize every time a child reaches adulthood, forcing vulnerable families to live within the indignity of permanent reach of a suitcase.
The coalition budget, according the the OBR’s own figures will see an increase in unemployment of some 100,000 in each year of the Parliament above the level it would have been at if Labour’s deficit reduction plan had been kept.
Does the coalition’s budget envisage supporting people thrown out of work by their cuts? No: instead, housing benefit will be cut by 10% for people who haven’t found a new job after one year on JSA. The chancellor claims this will help incentivise people back into work but only one in eight recipients of Housing Benefit are unemployed.
Under this Coalition we won’t just see more people unnecessarily lose their jobs, they’ll lose their homes too. Making it harder to pay the rent won’t incentivise a return to work, it’ll push families, pensioners and children into poverty and it will increase homelessness with families forced into expensive temporary accommodation at the expense of hard-pressed local authorities.
By a clever sleight of hand, the Chancellor shifted the indexing of benefits from RPI to CPI. This moves Housing Benefit onto an index which doesn’t take into account the cost of housing. With CPI several points lower than RPI it will see the rate at which this benefit is paid fall further and further behind the true cost on the market.
As Shelter pointed out on budget day, the vast majority of claimants are pensioners, people with a disability, carers on a reduced income or hardworking, low income families who won’t be able to make up the shortfall. It’s a cruel, short-sighted and low blow.
And it will no doubt exacerbate the trend for inner London Councils like Westminster to house people on their waiting lists in outer Boroughs where rents are cheaper. Buy-to-let landlords are already buying up new housing in places like Barking & Dagenham and renting to other Councils and this will get worse, plus once people have moved they typically want to transfer to the waiting list of the Local Authority they now live under, putting pressure on the social housing stock there as well.
Good news for buy-to-let landlords, inner London Councils who are probably keen to get rid of these people anyway, and as you say, the BNP.
Very good article. There is still a long way to go before the housing bubble is completely deflated. As it stands, the average house price is still far above its long term trend, especially if compared with earnings. This explains all the issues this country is facing, in terms of housing.
Some measures need to be taken, so that the price to earning ratio can become reasonable again. First and foremost, the length of mortgages should be reduced. Second, instead of building low rises (2-3 storeys) interspersed with very high rises (10 storeys or more), which is typical of the Tory ideology of separating people and uses, there is a need to densify the urban fabric by building reasonable mid-rises throughout: 5-8 storeys, as is typical of comparable cities worldwide (New York, Paris, Rome etc.) A denser and more regular urban fabric will also mean that essential services (transport, schooling, refuse collection) can be conducted more efficiently, at a lower cost and benefit the whole of the community.
Thatcher build nearly half a million council homes, it was labour that decided it was better to have a right to buy, so that Banks could flog a mortgage to people that could ill afford it.
I love the idea New labour is dead newer labour can paper over the fact that housing welfare reforms are all theirs.
Robert, at least get your facts right! It was Thatcher who bought in Right to Buy (at incredible discounts) thus robbing Housing Associations and Councils of valuable stock. Labour actually limited this policy and shifted Housing to the top of the political agenda.
The Thatcher government brought in “Right to Buy” and, if my memory serves me, that brought several problems, not only increasing the pressure on housing stock as properties were removed from Council stock (at a discount) but trapping at least some of those who bought.
Lenders would give a mortgage to the tenant who bought but would NOT offer a mortgage to next buyer. Those who bought flats that were part of a Council street, block or estate were assessed and charged for their share of cyclical repairs and decorating, etc. at the vastly inflated local authority prices and I got the impression that a lot of people were trapped and ruined.
Being an owner-occupier was no protection against having a problem family housed next door and some estates became no-go areas when the Thatcher government cut the police…
I wonder what happened to those buyers in the long term.