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Cameron’s clearances

The political – and human – costs of housing benefit reform may be higher than anyone in the government has guessed

6 November 2010

12:00 AM

6 November 2010

12:00 AM

James Cummings could never refuse a drink. Even after his boss — a Watford publican — threatened him with the sack he couldn’t lay off the bottle. He’d worked his way through the profits of a family business, two houses and a marriage by then. He eventually awoke in a tunnel under the Elephant and Castle three weeks after he was sacked from the pub. That was the winter before last.

Now, having recovered sufficiently to rent a flat, fight his addiction and get some qualifications, James is doing everything we expect of those on unemployment benefit. He is teetotal and has avoided debt; he does voluntary work with other addicts and is applying for jobs.

The trouble is, as a result of George Osborne’s radical overhaul of housing benefit, his already stretched household finances may be about to snap. Next year, his housing benefit will be cut by £7 a week and at that point his income from welfare payments — which just allow him to live on £50 a week — will no longer cover the cost of bills, food, and the bus to and from job interviews. His only option will be to move out of his one-bedroom attic flat in Redbridge.

‘Even if I wanted to move into a cheaper flat I couldn’t because I can’t afford the deposit,’ he says when we meet. ‘The council doesn’t help with that kind of thing anymore. If I find a job, I can keep the flat. But the worst-case scenario is that I don’t find a job — and end up back in a B&B or a hostel with other addicts. For a guy like me, that’s very risky.’

It was in the April Budget that Osborne decided that housing benefit would take the brunt of the extraordinary welfare cuts he will implement over the next few years. Politically, this is a soft target: the newspapers are full of stories of immigrant families living in £2 million Kensington mansions. And housing benefit really is expensive: it has grown by £5 billion over the last five years. So something had to give.

So far, the debate has been one of statistics, spiced up by phrases like ‘Kosovo-style social cleansing’ from the Mayor of London. Ministers have argued that the cuts are all about fairness: that no family on welfare should receive more than a family with an employed breadwinner; that the state should pay two thirds of the average rental value (to a maximum of £400 a week) rather than the average rental value. Working families often move to cheaper areas when their families expand or when money is tight — so is it not fair to ask welfare-dependent families to do the same?

This sounds terribly persuasive. As so often with government policy, however, there will be plenty of unintended victims of the kind who are very hard to answer if they turn up in a Question Time audience.

The government has not published any estimate of how families will be affected, although campaign groups and political parties have tried. Unpublished figures by Alex Fenton, a researcher at Cambridge University’s land economy department, give some perspective. He estimates that as many as 135,000 households will be forced to move from their homes after the cuts — and they are by no means scroungers. Some 23,000 of these households include low-paid workers, and another 20,000 include pensioners whose rent to private landlords is more than the new threshold.

These are, of course, estimates — but ones derived using the government’s own figures. And they are backed up by anecdotal reports of councils preparing for the great clearances. Last month it emerged that some London boroughs are already booking cheap hotel rooms in Hastings, Kent and Luton in readiness for evictions brought about by the new rules. MPs in central London warn of a kind of ‘Paris effect’ — in which poor Londoners are dispatched to temporary accommodation in the suburbs, creating our very own banlieues. Roger Gale, Tory MP for Thanet, has already warned against Kent reprising its 1980s reputation as ‘Dole-on-sea’.

The housing benefit cuts are intended to save £2 billion — 10 per cent of the benefits budget. Of this, just £60 million is being put into a fund for councils to soften the blow for the most vulnerable. Few think such a sum will suffice. In private, civil servants say that the housing shake-up is chaotic, too hasty and a world away from what many in Westminster expected a modern Conservative party would do in government. And the effect will be felt not just in London but in Brighton, Bristol, Aberdeen and Leeds — any city where property is expensive and the economy is supposed to be thriving.

In Bristol, I meet Ben Sansum outside the single-room office where he and two colleagues give benefit advice. ‘These reforms will reap a whirlwind,’ he begins. ‘We’re estimating that as many as 7,000 households here will receive a cut — many could face eviction. After that, who knows? I suspect they’ll end up on the council’s doorstep actually, asserting their rights under homelessness law. If they end up in hotels, the taxpayer won’t be saving a penny.’

One can argue that this is yet another aspect of Labour’s rotten legacy. In office, it failed to build more social housing and allowed buy-to-let to eat into the housing stock; it also put more people on the dole. But if housing benefit has become a scandal, it is a scandal which has benefited landlords, rather than their tenants. James Cummings, for example, now pays his landlord £173 a week. The government hopes that by cutting these benefits, recipients will be turned into an army of negotiators, ready to tame the rental markets one tenancy contract at a time. Sansum is sceptical that this will happen in Bristol: he points to the city’s two universities and buoyant housing market. ‘The Department for Work and Pensions know that it’s not benefits that are driving this,’ he says.

Britain’s benefits bill now represents a quarter of government spending — it has to be cut. But to cut so quickly and radically will throw up anomalies with human faces. No one, yet, has admitted just how many low-paid workers and pensioners are affected. If Alex Fenton’s figures are even close to the reality, then the row over housing benefit is just beginning.

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