1. Governance
May 22, 2019updated 03 Aug 2023 1:49pm

Here’s how the government’s welfare policies are sending homelessness soaring

By Chaminda Jayanetti

To truly appreciate England’s housing crisis, the number you need to know is 1,264.

That is the number of households that Leeds City Council judged it owed a homelessness duty to between April and June last year, the most recent period for which data is available.

Leeds, you will have noticed, is not London. It is a long way from London. It has built plenty of new flats in its city centre, and has ambitious house-building plans for the future, albeit subject to opposition from Green Belt campaigners.

Data from home.co.uk suggests one-bed apartments renting at around £600 a month. Rooms in shared housing are going for £400 a month. It’s not cheap, if money is tight – but it’s still not close to London prices.

And yet, 1,264. In three months. That’s nearly 15 households a day, judged to be either homeless or at risk of it.

If the housing crisis was just about house-building, this shouldn’t be happening.

Labour’s approach to tackling the housing crisis is based on mass house-building, with an emphasis on council housing, and periodic flirting with rent control.

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The party’s house-building proposals for England are appealingly meaty – a million new “genuinely affordable” homes over ten years, most of them for social rent. Under these plans, a Labour government would be building at the rate of 100,000 affordable homes a year by the end of its first five-year term in office – part of a promise to build 250,000 homes a year of all tenures.

That would represent a major uptick in affordable house-building: fewer than 50,000 affordable homes were delivered in 2017-18, and that’s going by the current definition of “affordable”, which many critics argue is anything but.

They would not arrive quickly, however. Five years is a long time in a housing crisis. The current social housing waiting list stands at more than a million. If Labour only reaches 100,000 new affordable homes a year by the end of its first term in office, those struggling to pay the rent will be living in precarious circumstances for well over half a decade to come.

England’s housing crisis isn’t uniform: different regions have different problems. The £95m that American hedge fund billionaire Ken Griffin blew on a 20,000 square foot luxury home near Buckingham Palace could buy entire housing estates in other parts of the country.

But the universal truth is that if you cannot make the rent, you’re in trouble, be you in London or Leeds, Maidstone or Manchester. Local housing conditions determine how many people need help paying the rent, but so do local economic conditions – where unemployment is higher, more people will need assistance, even if housing is cheap.

This is where the benefit system steps in – or where it used to, at least. Before austerity kicked in, Local Housing Allowance (housing benefit paid to private tenants) was set in line with median local rents – the 50th percentile – and would cover claimants’ rent up to that level on a means tested basis.

However, in April 2011 LHA was cut to the 30th percentile of local rents. From that point on, it only covered the rent in roughly the cheapest third of housing in any area, be it prosperous or not. At a stroke, swathes of housing were rendered unaffordable to those on low incomes, as part of an onslaught on the welfare system that was – lest we forget – popular with the public at the time.

It didn’t stop there. LHA rates were first raised below the rate of inflation, and then frozen from 2016 onwards. So having been cut to the bottom 30 per cent of local rents, the amount of housing benefit paid to private tenants didn’t even keep pace with them.

As a result, more and more properties across the country have been rendered unaffordable to low earners, helping drive up rent arrears and, inevitably, homelessness.

This is the housing crisis that unites every corner of England. LHA no longer covers cheaper rents – those at the 30th percentile – In ninety percent of areas. The situation is of course worst in London, but monthly three-figure rent shortfalls on housing benefit have spread throughout much of southern England and the Eastern region; and fewer than a fifth of local properties are fully covered by benefits throughout much of the Midlands and Yorkshire.

Labour’s policy is to end the welfare freeze and increase benefits in line with inflation.

But even this will not be enough. Labour’s social house-building programme would take years to come to fruition, with low earners struggling to pay private rents in the meantime. That means years of England’s housing crisis rumbling on under Jeremy Corbyn.

There’s little chance of the Tories reversing the benefit cuts they enacted. But if Labour is serious about addressing the housing crisis for low earners, it must wind the clock back, boost housing benefits above the rate of inflation, and restore them to median local rents.

This will cost money – but it should be top of John McDonnell’s shopping list. Because it will take more than building more houses to fix the housing crisis.

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