The ugly spectre of welfare reforms has raised it’s head again this week with Iain Duncan Smith (left) , minister at The Department for Work and Pensions (DWP) increasingly in the spotlight over what appear to be rash decisions concerning housing benefits.
I have raised the issue of the cap on housing benefits and the implications to Hillingdon before on this site (‘Silent implications of the housing benefit clampdown’ – 30/12/10)
It would now appear that the genie is out of the bottle. According to The Observer on Saturday, a letter was sent from the office of Communities Secretary Eric Pickles to Prime Minister David Cameron that the cap will increase the burden on taxpayers ‘because thousands of families will be unable to pay their rent and will have to seek local government help’. In plain terms, those living in the higher priced areas of West London will no longer be able to afford their rents on housing benefits, so will be made homeless and then have to move to outer London boroughs to find affordable property. These tenants will not be intentionally homeless, so will automatically go to the head of the queue for housing ahead of local people on the list based on ‘need’. This will also shift the burden for payment from national to local government, so meeting ‘targets’ but effectively costing more money in the long term (According to the memo, the £270 million saved will be wiped out by the money needing to be diverted to help the newly homeless)
Penalising the local working man and the disabled
Trying to obtain a mortgage on a property in Hillingdon as a first time buyer is next to impossible in the current economic climate, and council accomodation is virtually non-existent.
This leaves many working people (including my own family) in the private rented sector, and we are already seeing rent increases and an above inflation rise in rental prices in the borough fuelled by the market anticipation of these dislocated families moving from central to outer London. According to the memo from Nico Heslop, Pickle’s private secretary (As quoted by both The Observer and The Guardian) ‘40,000 families will be made homeless by the reforms’.
Whilst some of these families have been playing the system, there are also those who are local people who are living on low incomes but need to remain in their home areas for the sake of their children’s ongoing education, and others who are disabled and rely on benefits to afford them a decent standard of life. This is not taken in to account in the legislation, which is a blunt instrument that does not look at individual circumstances.
The Underlying Faults in the system
The biggest issue that needs to be looked at is that house pricing in London has outstripped wages by a massive percentage. My sister and her husband bought their 3 bedroom house in North Uxbridge in the early eighties for under £30,000 – The same property now is worth over £300,000, even taking in to account the downturn. Wages have not come anywhere near that kind of inflation – Indeed, because of the influx of cheap labour from other EU countries wages have been held down whilst house prices have risen drastically.
This has pretty much killed off first time buyers in the area.
That same influx has caused a shortage of affordable rented accommodation because of supply and demand, so suitable properties on the private market have seen a subsequent rise in their market value. This is now being exacerbated by the possibility of the influx from central London, added to the pressures already loaded on the borough by immigration from Heathrow Airport.
The reality, as I found out to my cost when my family was evicted again recently at the end of a 12 month lease by a landlord eager to take advantage of the ‘boom’, is that ordinary families are being pushed aside in the rush of the private owner to make the maximum profits. A three bedroom house that we were paying £900 per month rent for is now rated just 12 months later at £1200 per month.
The destruction of communities
I brought up the subject of the lack of affordable housing with London Mayor Boris Johnson at a recent Talk London event. He spoke of 50,000 new affordable homes being built in London, but failed to mention that the waiting list already stands at 300,000.
Another problem is that many parts of London are now being marketed to foreign investors for ‘holiday’ homes, so the pricing has gone through the roof in certain post codes. A spokeswoman for the Tideway village (A houseboat community on the Thames) stated that the local community had disappeared and the riverfront property was now all second and third homes for overseas visitors at the same event – This came home to me on Monday when I took a riverboat trip from Westminster to Kew with my wife, and the captain when calling out places of interest was telling us the pricing of the myriad of new riverfront properties that were springing up.
There was not a one bed apartment under £750,000, and many of the flats were £3 million plus – His commentary pointed out many of the famous names who had properties in such exclusive Thames facing developments as Chelsea Village. With these prices in mind, what hope have local families of getting any form of housing without some support from the state, or a massive downturn in pricing in the private market?
The Heart of the problem
For too long, successive governments have been fixated on inflating prices in the housing market to boost the economy but have lost sight of the fact that any market needs customers who can afford the product. The end result of this policy is that we now have a market where the predominent customers in Hillingdon are buy to let landlords, and their customers are increasingly dependent upon welfare payments in the form of housing benefit.
This has seen, as Boris Johnson mentioned at Talk London, the rise of the landlord who is making a killing on our tax money.Indeed, Patrick O’Flynn in the Daily Express yesterday pointed out the rampant overcharging that private landlords in central London are indulging in, but I feel that his hope that they will have to reduce rents in the face of the proposed cap is a forlorn one.
Mr O’Flynn also quotes Labour MP David Lammy, who told the Commons in November that most of the families claiming the big benefits in London are from Turkey and Africa, notably Somalia – A situation that cannot be allowed to continue on the back of taxes from the working man.
Part of the memo from Mr Heslop warns about new build social housing – ‘Of the 56,000 affordable rent units up to 23,000 could be lost’ due to the impact of the housing cap. Well, here’s an idea – Rather than relying on the private sector to provide overpriced housing at a profit to housing associations who (supposedly) operate on a non-profit basis, how about building new council houses to replace those sold off under right to buy?
This is what English Democrat elected Mayor Peter Davies (left) is proposing in Doncaster, and may just give families the start that they need in an era of austerity.
The second part to the solution is to stop mass immigration, and only allow in those who can support themselves and contribute to our economy. This will cut back massively on the housing benefit bill if Mr Lammy’s assertions are correct, and hopefully stop the distortion in market prices that Mr O’Flynn has pointed out in the Express.
Thirdly, where foreign nationals are buying up expensive riverside properties for second and third homes and pushing up the prices of both purchase and rental in an area for local people, why not look at a percentage of the sale price having to be donated to the local authority and put in to a fund ringfenced for provision of social housing in that borough?
Finally, the allocation process in terms of social housing needs to be reformed. My ED Colleague, London Chairman Roger Cooper, pointed out in a previous post that the allocation of housing on ‘need’ as switched to in the late seventies has been massively abused and must change. Local people and their families need to be put to the top of the list ahead of newcomers, both to improve the fairness of the system and to put local communities back at the heart of who the council serve. By keeping communities together, we can rebuild the pride in our neighbourhoods that I remember when growing up in the seventies and make Hillingdon a better place to live for all of us.
What do you think? Should the coalition stick to it’s guns on welfare reform, or should they look at the bigger picture? We want to hear YOUR views
Important Notice – The views expressed in this article are those of the author, and do not necessarily reflect the policy of The English Democrats