Housing benefit caps could hurt outer London

It was Newton, wasn’t it, who posited that every action has a reaction? It wouldn’t take an Einstein to work out, though, that if you take away housing benefit from people living in an “expensive” area of a city, that they will have to move somewhere else.

Now, the Grauniad‘s Dave Hill has found that this policy has already lead to an increase in rent levels in outer London, including Croydon, because of an increase in demand as families relocate from the centre of the city.

Back in the dark, Thatcherite days of the 1980s, Shirley Porter, the leader of Westminster council, tried a form of “social engineering” through manipulating the council-owned housing stock. She shipped people out of council accommodation in some wards in her borough, allowing Yuppies (all the rage then) to take their place, thus carefully turning “red” areas “blue”.

Ultimately, Porter was prosecuted for gerrymandering, using public money to rig election outcomes, and she was forced to pay £12 million, although this was about £30 million less than had been properly due. Not for nothing was Porter  dubbed “the high priestess of Tory sleaze”.

Might it be that the housing benefit policy is altering London’s political landscape, and all just before a Mayoral election next May?

The housing benefit changes are largely based on the premise that the recipients – the tenants – have been the ones, literally, benefiting from the hand-outs. In fact, what housing benefit has done is to make already well-off private landlords even wealthier. Many of these landlords have been riding the London property bubble as buy-to-let “investors”, secure in the knowledge that if they are prepared to take council-funded tenants, they can charge pretty much what they like as rent.

Certainly, as Hill notes today, altering benefit levels does nothing to alter the under-lying problem: overwhelming demand for housing in London.

He writes:

I often wonder if those receptive to the “fairness” defence the government has made cunning use of in justifying its policy … recognise where housing benefit goes. Even the handful of unemployed claimants living in posh bits of Kensington who get gawped at by the Tory press aren’t spending it on Chelsea tractors or splashing out at Harvey Nicks. However affluent their surroundings, they’re still struggling to get by.

A point well made at last week’s launch of Trust for London’s new poverty profile is that housing benefit doesn’t, in the end, increase a household’s spending power. True, that money might be borrowed from to pay for more immediately pressing necessities, but the rent still has to be coughed up eventually. Recipients might be seen as essentially intermediaries between their local authority and whoever they rent their accommodation from, rather as businesses registered for VAT collect the tax from those they supply with goods or services but in the end are required to hand it over to customs and excise – or else. They are given the money, but in an important sense it isn’t really theirs.

Read Hill’s article on the London rented housing market by clicking here: Inner London housing benefit caps could hurt Outer London | Politics | guardian.co.uk.

Advertisements

About insidecroydon

News, views and analysis about the people of Croydon, their lives and political times in the diverse and most-populated borough in London. Based in Croydon and edited by Steven Downes. To contact us, please email inside.croydon@btinternet.com
This entry was posted in Housing, London-wide issues, Mayor of London and tagged , , , , . Bookmark the permalink.

Leave a Reply