Overall benefit cap: terrorising the poor

This is an updated version of an article published in October/November 2016 issue of Fight Racism! Fight Imperialism! (No 253)

‘We need to be heard as one, not individually – there are 88,000 of us.’ (Steve, a single parent with four children, whose housing benefit is to be cut by £70 per week by the benefit cap, talking to FRFI)

From 7 November, according to DWP calculations, 88,000 families, each with three or more children, will start to lose an average £60 per week in housing benefit because of a reduction in the Overall Benefit Cap (OBC). When the OBC was introduced in April 2013 it was set at £26,000pa; it will now be cut to £23,000pa for families living in London, and to £20,000pa for those living outside. 80% of those affected will be single parent families (67% women, 13% men). Some larger families will lose all their housing benefit. Single people or couples without children have their benefit capped at two-thirds the level for families with children: many in temporary accommodation (which can cost £250 per week) will be hit by the reduction.

There are some exemptions: where the parent(s) qualify for working tax credits (ie, work more than 16 hours a week if single, or more than 24 hours a week if a couple); where the family receives carer’s allowance, or where one of the family members is on a disability benefit. However, those in receipt of Employment Support Allowance in the work related activity group are not exempt even though they are incapable of working. Nor are single parents exempt if they have a child aged under five and are therefore not required to seek work.

Anyone already capped at the higher level of £26,000 will be subject to the lower cap on 7 November. This will immediately hit 8,500 London families with an additional benefit cut of £60 per week, and 11,500 families outside London with an even larger £115 cut per week. To manage the adverse publicity that the measure is starting to receive, the government is staging the implementation of the reduction for previously unaffected families, starting with local authorities with the fewest cases. Hence, DWP figures show that just over 5,000 new families will be hit right away on 7 November. The roll-out will conclude in January 2017 when nearly 40% of the families newly hit by the reduction will suffer this vindictive cut. However, as claimants have received letters over the summer telling them the cut will start from 7 November, few know that they may not be affected for another two months. Figures from six London authorities show that the official DWP projection of the number of families facing the huge reduction in their housing benefit is 20% less than the number of families who have received warning letters that they will be subject to the measure.

The effect of the housing benefit cut on these families, the poorest in the country, will be immediate. Half live in private rented accommodation: no private landlord will accept tenants who demonstrably cannot pay their full rent. Families will be subject to court proceedings or summary eviction, and forced into emergency accommodation. The costs of this will fall on local authorities. Families in social housing will not fare much better. A single parent with four children in social housing on Merseyside like Steve, for instance, will lose £70 of £100 weekly housing benefit. In three months he or she will have exceeded the eight weeks’ rent arrears which will trigger court action by the housing association. A single parent with three children in private rented accommodation will lose £30 a week, and eviction may come sooner. 2,500 families on Merseyside will be hit, 3,900 in Birmingham and over 1,000 in many London authorities from January 2017.

The government claims that that the reduction will encourage more parents into work. Yet all it will do is terrorise single parents into accepting casualised, poverty pay conditions at best, and destitution at worst. The 88,000 families include more than 300,000 children: it means that over 400,000 people may face eviction within weeks of the implementation dates, with many children being taken into care. Emergency accommodation, already inadequate, will be swamped. Homelessness will soar. The vast majority of Labour MPs support the OBC because more than two-thirds of the electorate want it. Neither Jeremy Corbyn nor Shadow Work and Pensions Secretary Debbie Abrahams mentioned it in their Labour Party conference speeches, let alone opposed it – just six weeks before its introduction. This is one of the most vindictive attacks on the poor to date, and socialists must organise with those families who want to resist its appalling, punitive impact. As Steve says, ‘we need to throw ourselves out there and fight back.’

Robert Clough


Savills: scouting for capital

CressinghamThe banner here was made by Andrew Cooper with young people in Brixton from threatened housing estates for a youth housing march from the centre of Brixton to Cressigham Gardens (threatened with demolition) with the RCG and the rapper Potent Whisper.

Savills presents itself as ‘a global real estate services provider’, with 700 offices and associates and 30,000 staff operating in the UK, the Americas, Europe, Asia, the Pacific, Africa and the Middle East.  It functions as a scout for international capital, identifying land and property where surplus funds can be profitably invested. In January 2016, Savills delivered a report to the British government on the future of council housing estates in London and it has been commissioned by London boroughs to survey and advise on their council housing stock and estate management. Savills presents what it claims are solutions to London’s housing crisis that have to appeal both to local authorities and expand the role of private finance in housing provision. The housing crisis and land prices provide opportunities for profits with the sale of public land that Savills and the corporations it serves cannot resist and towards which London’s councils are lured. TREVOR RAYNE reports. 

Who are Savills?

Savills is a listed company on the London Stock Exchange and a constituent of the FTSE 250 index. It serves the interests of its shareholders and Savills’ directors are drawn from City finance firms and multinational corporations. Savills acts as an instrument for the corporate takeover of London’s council housing stock and, as Savills says, there is no reason why it should not be applied beyond London.     

Savills’ major shareholders are City and international investment companies, including Black Rock, a US firm which is the ‘world’s largest asset manager’, commanding $4.89 trillion. Other shareholders are international corporations, combining banking, investment and insurance businesses; they include Edinburgh-based Standard Life Investments; Old Mutual Plc, which operates across Africa; Artisan Partners, a primarily US investment company; Heronbridge Investment Management, a British business; and Norway’s central bank, Norges Bank.     

Most of Savills’ board of directors have been appointed since 2007 and either currently serve on the boards of or were drawn from the directorships of the following companies: Goldman Sachs (Asia); HSBC Holdings; Sky Plc; Dresdner Kleinwort; Citigroup; the London-based hedge fund Rubicon Fund Management; EMF Capital Partners, a private equity firm; Tullet Prebon, the money brokers, and so on from the City. Savills chair is also chair of Sky Plc (Britain) and chair of the Courtauld Institute of Art. Savills’ global headquarters, in London’s West End, is owned by Great Portland Estates whose boss is Toby Courtauld, heir to the Courtauld textile empire. The head of Savills’ audit committee, Liz Hewitt, also sits on the boards of the Danish pharmaceutical firm Novo Nordisk and Melrose Industries plc, a British-based investment company, ‘specialising in acquiring and improving the performance of underperforming businesses’. She is also chair of the House of Lords audit committee. Savills’ chief executive, Jeremy Helsby, spent three years at the Royal Agricultural College and says that it was a natural step to find employment in trading land; ‘The countryside is still where his heart lies, although he spends much of his time away from the family home, which is a farmhouse and “a few acres” in Dorset,’ (Financial Times 21 December 2014). Savills has been constructed to be a multinational property developer and estate agent. It represents the City of London with all the power it wields in Britain and abroad.

As surplus funds have poured into property ownership around the world so Savills’ profits have risen; profits are up 141% from 2011 to 2015 and total shareholder return is up 170% over the same period. Profits in 2015 rose 21% on 2014’s figure to £121.4m. In 2015, 56% of Savills’ profits were made outside the UK, (Savills Annual Report 2015) and in the same year Savills won the UK Property Industry Super-brand of the Year award for the eighth consecutive year and the award for Best Real Estate Agency in China and Vietnam. The chief executive’s total income from Savills for 2015, (including salary, pension contributions and share receipts), was £2.298m.            

City Villages and Completing London’s Streets

Introducing an Institute of Public Policy Research report, City Villages,  in March 2015, former Labour Cabinet minister Lord Adonis proposed knocking down council housing and building ‘mixed communities’ that would function as ‘city villages’. ‘The scale of council-owned land is vast and greatly under-appreciated. There are particularly large concentrations of council-owned land in inner London, and this is some of the highest-priced land in the world,’ says Lord Adonis, (Financial Times 22 March 2015). Lord Adonis reckoned that London councils own on average 25% to 30% of the land in their boroughs; Southwark Council owning 43% of the land it governs and Islington Council about a third. This land is worth a potential fortune and is the prize Savills and multinational finance are after; public ownership is a barrier to the realisation of enormous profits.

In his introduction, Lord Adonis foresees a doubling of the density of housing in any given area, and ‘new forms of partnership between the public, private and voluntary sectors’. Adonis lumps council estates with ‘Brownfield land [that] needs to be mobilised for housing more ambitiously’. The term ‘Brownfield sites’ is customarily used to describe land that had previously been developed which has potential for redevelopment, and is often land previously used for industrial and commercial purposes that had become derelict and possibly contaminated. Of the proposed city villages Adonis writes, ‘Diversity of tenure promotes diversity of residents and helps build successful, socially mixed communities. It also makes it possible to build large developments faster.’ City Villages is a marketing strategy to promote privatisation of council land and estates, population removal or social cleansing and low cost construction with increased housing revenues.

Savills’ contribution to the report noted that council estates in Britain house two million people but ‘occupy land that could, theoretically, supply homes for many more people’. London council estates ‘represent valuable reservoirs of increasingly scarce land in a global city’, Savills said, adding that ‘The failures of social housing estates in the UK have been particularly well documented…’ Other contributors to the City Villages report included Peter John, Labour leader of Southwark Council; Steve Bullock, Labour leader of Lewisham Council; Jules Pipe, former Mayor of Hackney and now Deputy Mayor of London for Planning, Regeneration and Skills; Stephen Howlett, the chief executive of Peabody housing association, annual salary £225,000; assorted architects, including Richard Rogers, and property development firms.           

Savills’ model for the future of London’s council estates was submitted to the Cabinet Office on 7 January 2016. It is contained in a report entitled Completing London’s Streets: how the regeneration and intensification of housing estates could increase London’s supply of homes and benefit residents. Savills claim that their Complete Streets approach could result in several hundred thousand new homes on ‘Brownfield sites’. The government and local authorities in London are taking up Savills’ proposals as policy.

The Complete Streets approach is contrasted with a Contemporary Regeneration model and the renovation of existing stock approaches. Contemporary Regeneration would replace old blocks with new blocks, while Complete Streets creates ‘new streets of terraced housing and mid-rise mansion blocks with the occasional retention and re-use refurbishment of old blocks   where appropriate’. These terraces are typically four to six storey high rows. The end product, according to Savills, is a higher density of occupation with lower building, management and maintenance costs and higher end value of property. Typically, across London, the density of housing on any given area of land would be increased by about 35% to 40%, although the estimates Savills provide vary. The result is higher incomes and reduced costs from the housing stock, and all achieved while ‘tackling London’s growing housing problem’; very seductive, and very profitable. However, Savills does not include in its costs decanting: the cost of relocating, either temporarily or permanently, the existing inhabitants of the affected properties. On its web site Savills promote itself as being experts in advising on compulsory purchase orders.

Savills estimates that about 8,500 hectares contain London’s 660,000 households occupying Local Authority Housing Estates and that with the deployment of their model another 480,000 households could be housed. It stresses that council housing regeneration will require ‘a new group of long term investors’ to take a stake in the projects and that ‘a new generation of public/private partnership delivery vehicles will need to be created, potentially backed by public/private debt and equity’. Savills provides examples of schemes involving investments by British and Japanese multinational financial service companies and property developers.

In 2015 the Department for Communities and Local Government stated that the value of residential land in Islington was £52m per hectare, in Southwark £41m per hectare, Tower Hamlets £19m per hectare, Lambeth £25.4m per hectare and in Greenwich £28.4m per hectare. The average value across London was £26.44m per hectare which would make the 8,500 hectares of council-owned land occupied by council housing worth approximately £225bn. The average value of residential land in the twelve inner London boroughs was £41.69m. The determination of multinational capital to get this land, and the temptation for councils to sell it off should not be underestimated. Brownfields would be turned into goldfields for property developers, estate agents, banks and other financiers. 

Savills states that broadening the ‘socio-economic range of households on estates’ raises property values as it reduces the ‘Index of Mass Deprivation’. Presumably, deprived people are not raised out of their deprivation but are moved away and replaced by people who are not deprived. Similarly, where transport is more accessible locations have ‘more potential value uplift than more remote ones’, consequently ‘more central and accessible Local Authority Housing Estates should be prioritised in order to be self-funding’, and the end result: property values could rise by up to 125%! Thus we can understand the priority given to redeveloping Southwark and Lambeth council estates. Those estates that are most easy to develop, according to Savills, are those that have not had a large amount of recent building work performed on them, those with a low level of right to buy take up and estates with a low average housing density.

Southwark Council

In 2014 Labour-controlled Southwark Council commissioned Savills to undertake an ‘Asset Performance Evaluation’. Savills examined 50,000 properties in the borough and valued them both financially and socially. Savills presented a report on 21 July 2015. It calculated council properties’ ‘net present value’, arrived at by calculating how much money would need to be spent on them over the next 30 years in repairs and maintenance costs, compared to the amount of income the Council could expect to receive through rent and service charges. Savills also provided a ‘social sustainability’ score based on indicators such as household incomes, levels of deprivation, fuel poverty, crime and anti-social behaviour, resident satisfaction, transport accessibility and health, (Southwark News 23 July 2015). 4,167 homes, 11.5% of the stock, were awarded a negative number below £0 per property as their financial value; homes considered to be worth less than nothing. This means that the Council would have to spend more on the management and upkeep of the homes than it would get in rent and other charges over 30 years. Nearly 10,000 properties were given ‘marginal value’ estimations, meaning a positive score of up to £10,000 over the 30 years. Southwark News produced a list of 52 estates and properties which Savills deemed ‘below average’ in terms of their ‘net profit value’ and also ‘below average’ in terms of ‘social sustainability’, (Southwark News 23 July 2015). 

Savills’ report proposes options to deal with ‘poor performing estates’ such as rent and service reviews, ‘diversification’ - changing them from council flats to shared ownership or private rented properties, transferring them to another housing provider and ‘small scale regeneration’. In summary: make more money or dispose of them.      

The chair of the Tenants’ and Residents’ Association of the Silverlock Estate in Rotherhithe, one of the estates deemed ‘below average’ in terms of ‘net profit value’ and ‘below average’ in terms of ‘social sustainability’, said that residents were ‘devastated’ to see their estate ranked as ‘poor performing’ in the Savills report, and said that he recognised that there were ‘a lot of issues’ on the estate, but that the Council had allowed them to happen. (Southwark News 23 July 2015). Rotherhithe is a prime location for gentrification, being next to the River Thames and close to the financial districts of Canary Wharf and the City; one bedroom flats can sell for £1m.

Southwark Council leader Peter John described council estates as ‘symbols of inner city neglect, with crime, unemployment and antisocial behaviour the only things that flourish there’. Southwark Labour Council, with Savills, has sold off 7,639 council homes in the past ten years. Southwark Council has demolished the Heygate council estate, near the Elephant and Castle, with a net loss of 1,000 social rented homes; on the site a newly built private one bedroom apartment has sold for £569,000 and a two bedroom flat fetched £801,000: profits to be made excite property developers’ appetites for more council estates. Councils are under pressure to offer up estates to developers and this process will be accelerated by the 2016 Housing and Planning Act.   

While Savills conducted their survey, one of Southwark Council’s Interim Development Delivery Managers, responsible for managing a team delivering a building programme of 1,500 new Council homes joined Savills.  While still with Southwark Council she worked as a Senior Consultant for Savills, acting as a project manager and providing advice to housing associations. By co-opting council staff Savills not only win (or buy) goodwill from the council, they can more effectively shape and implement council policy.  

It is worth asking why Southwark Council did not use its own staff to conduct the housing stock survey; how much was Savills paid for the report and out of which account it was paid?  

Lambeth Council

In March 2016, Lambeth Council appointed Savills to give it advice on how to register two new companies under Homes for Lambeth as a private developer intending to build, own and manage properties ‘for council rent, intermediate rent and private rent’. By establishing the companies Lambeth can get additional funds from central government. In a move similar to that employed by Savills in Southwark, Savills appointed the vice-chair of Lambeth Leasehold Council to be an associate director, responsible for project management, namely the Lambeth Council contract.

Currently, Lambeth Council plans to demolish and redevelop six council estates. One of these is Cressingham Gardens Estate, close to Brockwell Park and with good access to London’s West End, the City, Gatwick Airport and St Pancras International. The estate was built in the early 1970s and was submitted to be given listed status on grounds of historical interest and as an important architectural model. The submission was rejected. Lambeth Council’s plan is to replace 306 houses with 464 apartments, mostly one and two bedroom flats; 274 apartments would be for sale. If the new flats sold for an average of £500,000 each that is £137m revenue.

Cressingham Garden Estate residents have campaigned to stop the destruction of their estate. On 25 October 2016 they won a court order preventing Lambeth Council from demolishing the estate until the conclusion of a legal challenge. The order also prohibits the Council from beginning possession proceedings and compulsory purchases. A judicial review hearing will be held in the High Court on 15-17 November 2016.

Lambeth Council is being advised in setting up Homes for Lambeth by Pinsent Masons, as well as by Savills. Pinsent Masons is an international law firm with 21 overseas offices. It has rapidly expanded its business abroad since 2007, with offices in China, Hong Kong, Australia, Singapore, the Middle East, across Europe, Britain and the Falkland Islands (Islas Malvinas). Pinsent Masons was winner of the Financial Times Innovative Law Firm of the Year award in 2015 and was awarded Law Firm of the Year in 2016 by the business magazine Legal Business. Lambeth Council is willing to pay a high price to knock down the estates and convert itself into a property developer.

Greenwich Council

In October 2016 Greenwich Council sent out a letter to council tenants informing them that the Council had appointed a firm of surveyors, Savills, to undertake a stock condition survey on their behalf. The Council explains that it has appointed Savills because it has, of course, carried out stock condition surveys for other local authorities and are industry specialists in this area of work. The Savills survey resembles that produced for Southwark, including ‘performance modelling’, ‘investment planning’, ‘procurement’ and ’30 year investment information’. When questioned, Greenwich Council gave an assurance that the survey has nothing to do with selling off council housing.   

In many London boroughs the Labour Party faces little opposition in councils. What questioning there has been of Labour councils’ proposals to remove council housing and install private developers has often come from Conservative, Liberal Democrat and other councillors, and above all, from the residents whose homes are under threat. Behind Savills and their like, stand enormous concentrations of wealth and power to which Labour councils have made themselves subordinate. A section of the labour aristocracy stands to benefit from the privatisation of public land. It will take organised and determined resistance, with mobilisation on the streets, to reverse the march of the bulldozers and property magnates.


Savills Annual Report 2015

Financial Times 21 December 2014

Financial Times 22 march 2015

Southwark News 23 July 2015

Institute of Public Policy Research City Villages: More homes, better communities March 2015

Savills Completing London’s Streets: how the regeneration and intensification of housing estates could increase London’s supply of homes and benefit residents

Department for Communities and Local Government Land value estimates for policy appraisal February 2015

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The residents are demanding safe and decent homes, and an official investigation into the suitability of Boundary House as family accommodation. They want the council to break off its contract with private management company Theori. Join the protest outside Theori on Friday 28 October, 11am-5pm, 840 High Road, Leyton E10 6AE.

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