Benefits Cap Could Force 15,000 Families Out Of Central London

Rachel Holdsworth
By Rachel Holdsworth Last edited 88 months ago
Benefits Cap Could Force 15,000 Families Out Of Central London

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Photo by szen_volta from the Londonist Flickr pool
Poor families in inner London are likely to be forced to the outer boroughs because of changes to the welfare system. Chancellor George Osborne announced yesterday that the maximum amount any family will be able to claim in all benefits - housing benefit, working tax credit, income support - is £26k a year, working out at £500 a week.

This still sounds like a lot for our cash-strapped economy, but consider that a cleaner on minimum wage takes home around £200 a week and that median rent on a three bedroom flat in Westminster borough is £650 a week. He might have a couple of children, he might be supporting a partner taking care of a young baby. There is no way this family would be able to continue to live in central London, meaning a move out to zone 5 or 6 - leaving friends, school, support networks and increased travel costs to work.

The London Councils group estimates that 15,000 households could be forced to move. This isn't just bad for the families in question, it's bad for the community. The inner boroughs will become middle class ghettos while the outer suburbs risk ending up with all the poor, like Paris. Boris Johnson wants a government hardship fund largely ringfenced to help poor Londoners, and Ken Livingstone says he would introduce rent control and build more houses if he's elected in 2012. But with the benefits cap coming into force next April, London needs action now to help prevent a mass exodus of low earners which will be bad for everybody.

Last Updated 05 October 2010

jamesup

I feel a bit sick to say it, but I'm kind of with the Tories...

We all have to make decisions on where we want to live according to what we can afford. The quality of life for a lot of these families may be better in the suburbs, where there is more open space and usually better schools. As heartless as it may be to say to anyone they have to find a new house, isn't it equally cruel to say to someone else who can't get one that they should pay tax so that other people can?

London is not Paris, they're not proposing a ring of tower block slums beyond the reach of the Underground. There will still be vast numbers of council and HA properties in the centre boroughs (more than 50% of properties in Lambeth and Southwark).

Chris

I am happy to hear that people who can't afford to live in London are being moved out of London.

I work in the City, but I can't afford to buy a place there. Not even an ex-council flat, the likes of which are offered free to people that contribute less (or nothing) to the economy.

Why should I be forced to commute from the suburbs, whereas cleaners and unemployed people get to live in the heart of the city I love, subsidised by my money?

DeanN

and you're suddenly massive adding transport costs where it was minimal before, which could eat up most of the savings from the move

You're assuming that anyone who lives in central London is able to easily walk to work without recourse to public transport, which simply isn't the case.

Cubik

Okay, so SOME low wage earners in central London may be in the predicament you describe (i.e. on a low wage and with children) and may end up relocating further out. But frankly, what are they doing living in central London with kids and living on subsidies from the tax payer anyway?

I'm sure we'd all love to live centrally and enjoy a short stroll to work, receiving govt money to do so but the fact is it's not realistic or fair. You have to live within your means, especially these days. Most of us accept it and make the most of where we CAN afford to live. Now these centrally living, low wage owning parents will have to as well.

Lewis

Hang on - so those of us who live out in Zone 6 because it's nice and clean and civilised will now be surrounded by poor people?

Surely some mistake... ;)

macaonghus

That kind of choice, or tough lack of choice, is what life in a capitalist democracy is about.

Why does your sample family need a three bedroom flat unless they have 6 or more children - if you want to live in the heart of one of the world's top cities, the least you can do is have your kids share bedrooms. And Zones 5/6 isn't hell, there are perfectly fine places to live there. Yes the families may have to move away from their social circle (although if their social circle is in a similar economic class, they may already live in 5/6), but that can happen for all sorts of reasons in life and is hardly the end of the world.

Nor will the centre become a middle class ghetto (ignoring your use of an emotionally charged word) - middle class, wealthy people and all the council estates. So a good mix.

ahab

The issues here can be analysed purely economically without getting into the social and moral aspects.
Firstly Central London is an attractive place to live hence lots of people want to live there and why it is expensive to do so. The nice bits are vastly over subscribed.
Unfortunately I have to spend 50% of my modest monthly income to live in central London and that is a choice which I have made.
People will always try and live in the best possible place they can - whether they are born in Knightsbridge or Sierra Leone. If you are from Knightsbridge you are simply luckier than your fellow man.
If I earned less money or wanted to spend less or preferred to live elsewhere then I would. Just because you are born somewhere does not give you a right to remain there.
If I could live in central London for free then that would be great, unfortunately I can't - and so the question is why should someone else?
No one has a right to live in London, you should have to earn that right by being able to at least support yourself and your family without state intervention.
The provision of council housing distorts the housing market making rents for those who do have to pay it, much higher, as the supply of available housing is restricted.
Everyone talks about a fairer society. This does not seem too fair to me.

djhworld

The problem is really just a matter of supply and demand, the housing supply in London is really really limited and market forces are pushing the prices of rent/house prices up and up and up.

It doesn't help that most of the properties in London are owned by the very wealthy and rented out to poorer people for a good investment return.

Ryan

Yes, I agree with most of the comments above.
This is a poorly thought out article regurgitating other poorly thought out and briefly researched stories appearing in the papers and online yesterday.

This article is less than useful: it's fodder for inflaming an already tense situation. Housing is the single biggest repository of misery in this country, and the above piece does nothing to reflect on the wider issue or document an individual case study.

"But this is just a community blog" I hear you cry. True.

A person is entitled to whatever opinion she wishes – but as a news source we expect more from the Londonist.

fjj

But how does this work? If there is a low wage earner in the household supplemented by benefit, does the £26k limit take their earnings into account? i.e. is it the total amount of benefit including the earnings or the total amount of benefit they can receive? In any event, I read that the cap is lifted for anyone working above 16 hours/wk.

RachelH

The trouble with taking a purely economic view of this issue is that it ignores the fact we're talking about people's lives. Whatever the reason poor people are in inner London, they are there, it's where their support networks are - and a support network is not the same as a social circle, these aren't the people you go down the pub with, it's the people who watch the kids after school, who you trust with an extra set of keys, who you turn to when you have a problem, it's where the schools and doctors are. Please see this case study from the Guardian.

Here some details Dave Hill has unearthed:
<ul><li>Of the 59,270 households in London who receive Local Housing Allowance (the housing benefit paid to people who rent privately), 6,500 are occupied by pensioners
<li>The cross-party London Councils organisation says that of the 18,645 households likely to be hit by the cap (this was back when just housing benefit was going to be capped), 14,661 contain children
<li>A quote from London Councils chair Jules Pipe; "In some Inner London boroughs as many as half the families in receipt of this benefit work for a living, but if they are forced away they may have to give up their jobs."
<li>Direct quote from Dave Hill: "London Councils reckons that in total more than one in every three of the 650,000 homes rented through the private sector is occupied by a family in receipt of Local Housing Allowance." (Note: if there are only 650,000 private rental homes available across all of London, an extra 15,000 in specific areas will make a lot of difference.)
<li>A London Plan meeting at City Hall yesterday produced a consensus that the housing benefit changes "will create chaos"</ul>

If people are taking an "I'm alright Jack" approach to this, the "I can't afford to live in zone 1 so why should someone earning less than me", consider this. Forcing the poor into the same areas will place more pressure on local services - schools, council staff (housing benefits are administered via councils), social services... in other words, the things that your council tax pays for, as well as more pressure on your local NHS services. Not bunching poor people into the same areas, spreading the costs across the capital means the burden doesn't fall on particular councils / council tax payers. There's an economic way of looking at it.

Plus, these moves are only anticipated to save £250m a year across the whole country - tightening up rules on tax avoidance would bring in much more than this; Vodafone alone was told to pay £1.25billion this summer.

(Incidentally, this 'don't live where you can't afford' argument reminds me of another government suggestion earlier this summer, of relocating the long-term unemployed to places where there are jobs. A lot of the same arguments were used in favour of / against that, too. Should we ship London's poor to Lancashire? They could probably afford to live there.)

@fjj - You're right, I've got the £26k cap mixed up with the wider housing benefit cap of £400 a week, but that will still have the effect I'm talking about.

MaxC

If a whole third of the privately rented accomodations are in receipt of housing allowance doesn't this mean that the housing allowance system is having a major inflationary effect on rents for all?
We should really aim to have enough social housing so that housing allowance becomes only a temporary and emergency type of intervention.
The solution is to build social housing, not cap the existing ones to an arbitrary level that will impact so many.

Robert Woodhouse5

Assuming your cleaner on minimum wage stays in his flat for 25 years with 2% inflation in rents the taxpayer will give him £1.2 million to subsidise his right to stay in Westminster; you can rent a 3 bedroom flat in zone 2 for £300 a week; the cap is fair; none of my school friends could afford to live where they grew up in zone 6 they all had to move out and pay higher travel costs when they got married and had families; such is life