Rising Rents And Low Incomes Pushing People Onto Benefits

windows_121213We’ve recently been sent three new studies that reinforce what a mess London’s housing situation is in, particularly if you’re on a low income.

A Joseph Rowntree Foundation report on poverty and social exclusion covers the whole of the UK, and notes that median incomes have fallen over the last two years, pushing the measurement of poverty down (you’re in poverty if you earn below 60% of the national median income), so just because the ‘poverty rate’ is the lowest since 2004/05, that doesn’t mean people are suddenly better off. Ah, statistics. Nationally, around half of households in poverty have at least one adult working, the proportion of low paid jobs is rising and while there are 100,000 fewer underemployed over the last year for which we have figures, that’s still more than five or ten years ago.

When it comes to London, Real London Lives is a project from 15 of London’s biggest housing associations with research done by the University of York, which aims to give a voice to people living in housing association homes. They’ve found that 79% of their residents have jobs, but low incomes mean 60% of these need housing benefit to help with the rent. (And let’s not forget that housing association rents are lower than private rents.)

One in ten Londoners live in a housing association home, and 43% of those who are subject to the spare bedroom subsidy, or bedroom tax, find it a constant struggle to keep up with their bills. Even of those who haven’t had their housing benefit reduced since April, 25% find it hard to pay their bills. The website also has a section dedicated to real Londoners and their stories.

Then we come to the National Housing Federation (NHF), representing housing associations, whose report Home Truths doesn’t pull its punches.

With house prices set to rocket by 35% by 2020, an entire generation will be locked out of home ownership forever and be forced to rent for life. A stable and affordable rental market would ease the pressure and be a good alternative, but England’s housing market is broken… The dysfunctional housing market is having severe financial consequences for the taxpayer.

Across England, 310 people a day are having to claim housing benefit to keep up with rising rents. In London since 2009, there’s been an increase of 110% in working people claiming housing benefit and a fall of 2.1% in unemployed people claiming the same. Even more terrifyingly, the NHF believes average house prices in London could reach £647,500 by 2020 (it’s £452,400) now, and that rents could rise by 24%-33% by 2020, taking the average London rent to £22,249 a year, up five and a half grand from current figures. You do the maths.

Photo by tributory from the Londonist Flickr pool

Tags: , , ,

LondonistPortraits-14

Article by Rachel Holdsworth | 2,232 Articles | View Profile | Twitter

  • Richard

    For every person paid housing benefit so they can continue to live in their central London property there is someone else who would have been able to afford to live there at their own expense, but now can’t. That doesn’t seem fair to me.

    • http://www.stormkeeper.net/ Andrew Kennett (Stormkeeper)

      How about those not living in Central London (in supposed “cheap areas”) in the same situation? Is it fair that they have to move further out of London or out of it entirely? The capital is in serious danger of being a playground for the rich, which doesn’t bode well for the local job market because who will fill up the menial (low-paid) jobs that require people? The people on a good income certainly won’t because they’re in a well-paid job or they think such work is below them, or they too will be forced to move out. This would therefore mean that only foreigners and rich people would reside in London.

      • Richard

        The example you give would never happen as the market would adjust to keep things in balance.

        If there are less people to do the lower paid jobs then either they will be replaced by technological solutions (such as self-check out) or the wages will rise for everyone so the job gets done. (Plenty of jobs servicing a playground for the rich.) Looked at this way paying people things like housing benefit is simply subsidising employers to pay lower wages.

        I think you are right about indigenous British people believing that certain jobs are beneath them. This is down to a culture of a culture of entitlement (as exemplified by a Tower Hamlets poster campaign encouraging people to “claim to the max” and people rioting to steal the latest iPads and Nike trainers). I am saddened by celebrity culture that fuels unachievable (for most) dreams and I am appalled by the crazy income traps that mean people ‘cannot afford to get a job’. This is the fault of lily-livered liberal governments who are afraid of the consequences of empowering people to look after themselves.

        I would prefer a low, un-means-tested citizen payment that could pay for the bread line basics (with empowerment grants for the disabled) and have people responsible for the rest of their income. To make this work there needs to be work available. Here again the market provides the best solution: scrap the minimum wage and make it really easy for us to employ each other on flexible contracts. This way those who want to work will certainly be able to find a job – even if it is on less money than they would like (for now).

        I see living in London is a privilege and not a right. If people have to look elsewhere for a cheaper cost of living then those other places could become very attractive for companies looking for lower cost workforces. British manufacturing could compete more easily with foreign competitors and create real jobs for people making real things.

        This way Britain could work out of the recession rather than printing money, pretending there isn’t a real problem, and hoping that our children (or immigrants) will eventually pick up the bill.

        • Dan

          Your vision of Britain terrifies me.

          • Richard

            I think it would be frightening for a lot of people. It would be frightening for the benefit addicts who see their way of life being taken away from them. Many of them would probably react with anger towards the state which had been giving the handouts and to the tax payers who had been supplying the money. If it resulted in civil unrest (it probably would in certain places) then that would be frightening for many people – especially politicians.

            To develop as people and as a society I believe that we have to face our fears and take responsibility for ourselves. This is where our greatest power lies. A power that resides in all of us – including the ones who we currently treat as victims.

            Let’s stop defending the status quo and get Britain working.