Return to the slums /FRFI 226 April/May 2012

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Fight Racism! Fight Imperialism 226 April/May 2012

Previous issues of FRFI have covered the death of council housing, the result of decades of sell-offs, privatisation, stock transfers and a lack of new building. The resulting housing crisis, characterised by rising homelessness, overcrowding and sub-standard conditions, will worsen with the government’s most recent proposals. BARNABY MITCHEL reports.

In his October 2010 spending review, Chancellor George Osborne announced that the housing budget for England would be slashed from £8.4bn a year to £4.4bn, with new ‘social’ homes building funded through increasing housing association rents to 80% of market rents. He also announced the end of life-long security of tenure for council tenants. Two new measures in particular will transform council housing, a pillar of the system of state welfare established after the Second World War, into unaffordable and insecure housing: extending the right to buy to housing association properties, and cutting Housing Benefit* (HB) and Local Housing Allowance (LHA).

Under Osborne’s new right to buy proposals, housing association tenants can qualify for a 35% discount on their home after five years’ occupation up to a maximum of £75,000. He claims revenue raised from these sell-offs will be invested in affordable housing. This is double-speak for unaffordable given the housing association rent increases he authorised 18 months ago. The original right to buy policy, introduced by the Thatcher’s government in 1980, decimated the supply of council housing in Britain creating the crisis of affordable housing today. Tenants who do not have adequate income to qualify for a mortgage will be encouraged to take out high risk loans, guaranteed by the government and lenders such as Barclays and NatWest, to buy their homes. With 1.8 million people on the waiting list for social housing, in the absence of new building, further sell-offs will deepen their despair. This will be compounded by the fact that the government is forcing local authorities to increase council rents by 8% this year.

Local Housing Allowance (LHA), the benefit paid to private tenants, has been capped. Previously tied to the median market rent in an area, it is now cut to 30% of local market rents. This affects 774,970 households across Britain, who are going to lose an average of £9 a week. There is also a 10% cut in housing benefit for those out of work for more than a year, and new limits on the amount paid according to the size of a property (eg a maximum £250 a week for a two-bedroom home and a cap of £400 a week on a four-bedroom house) which will affect 21,060 families who will lose on average £74 per week. The result is that in many towns and cities there will not be enough affordable homes to rent for those claiming LHA.

In some areas the impact of the cap will be devastating. The percentage of privately-rented properties available to HB claimants in central London will fall from more than 50% to just 7%. In two of the country’s richest boroughs, Westminster and Kensington & Chelsea, where income inequalities are massive, over 35,000 homes will be put out of reach of those on HB. In Croydon, South London 17,000 people will be chasing 10,000 properties and in Newham, east London, there will be twice as many claimants as there are low-cost homes. The cuts will force many working class families out of central London into less unaffordable areas, creating ghettoes of poor quality housing in depressed towns outside the city. They will have their friendship and support networks disrupted, their children will have to move school, and they will be cut off from the job and training opportunities and vital services they are linked into.

According to The Guardian, before these cuts Birmingham had more than 37,000 homes with rents affordable for people claiming welfare benefits. Now 34,500 HB claimants are chasing 23,000 low-cost houses. In Liverpool, 21,000 people claiming LHA are only able to afford 12,000 homes. Simultaneously, the minimum age at which a single person can claim benefit for a one-bedroom flat has been raised from 25 to 35: there are now very few private properties available on a shared accommodation basis. Overall, homelessness increased by 14% and rough sleeping by 23% in the year autumn 2010 to autumn 2011.

The HB cuts are hitting people barely able to make ends meet, who are being forced to cut back on food and essentials in order to pay high rents, and are falling further into debt to finance housing spending. By March 2012, the number of tenants being evicted through the courts by private landlords increased by 17% since the credit crunch began at the end of 2007. According to the LSL Property Services, who own the largest UK network of lettings agents, rents have risen by 8% since 2009, reaching a record high at the end of 2011.

These measures are typical of a ruling class committed to class war against the poor. The inevitable result will be increased poverty, overcrowding and homelessness with all the associated social hardship. Chancellor Osborne and housing minister Shapps, like their Labour predecessors, are fully committed to dismantling the state welfare system of which council housing is a crucial part.

*The current housing benefit (HB) system – created through the 1986 Social Security Act – played a central role in the privatisation agenda. By re-directing public subsidy towards low-income ‘housing consumers’, rents in both social and private sectors were allowed to rise sharply, so that the state subsidised private landlords’ profit margins instead of directly providing affordable public housing. Over time, the decline in social rented housing, the rise in housing prices, and the stagnation of real wages have forced more and more people on to HB in order to afford a roof over their heads – in 1981, around 1.5 million households claimed HB compared to today’s figure of nearly five million. (For more information see Corporate Watch’s excellent report Housing Crisis? Corporate Watch Issue 50/51).