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We could all benefit from real housing solutions

The Coalition government’s plan to cap housing benefits for private sector tenants will undoubtedly lead to more homelessness, especially in London. But a lasting solution to Britain’s housing crisis involves more than just opposing Lib Dem-Tory cuts.

Some 4.7 million households get housing benefit (HB) to help pay their rents. The average HB in February 2010 was £83.51 a week. The annual bill for HB is around £16 billion and that is why it is a prime target for spending cuts.

The Coalition is imposing limits on what private sector tenants can claim against – £400 a week for a four-bedroom property and £250 a week for a two-bedroom house. But thousands of properties in London have much higher rents than these.

Shelter estimates that some families could face a shortfall each month of over £1,500. Campbell Roth, Shelter’s chief executive, says: “If this support is ripped out suddenly from under their feet, it will push many households over the edge, triggering a spiral of debt, eviction and homelessness.”

This spiral has, however, been in evidence for some time. And it gathered momentum during the Blair/Brown governments. So we should take New Labour squealing about Tory “savagery” with a dose of salts.

In 2010, there are 800,000 more recipients of HB than there were in 2001. That’s a rise of about 20% in under a decade. The causes are not difficult to establish. About 70% of people claiming HB actually live in council or housing association properties. And the rents for these soared during the New Labour governments.

Blair/Brown set out to bring social housing rents into line with market rents by withdrawing subsidies and dictating to nominally independent housing associations that are dependent on government grants. As a result, more and more tenants had no choice but to claim HB.

With the supply of new social housing for rent reaching rock bottom – and the cost of buying in the capital way beyond most people’s reach – increasing numbers had no alternative but to rent in the private sector. But average rents in this sector in London have increased by 65% since 2000 – far more than the rise in the cost of living.

Of course, the background is New Labour’s obsession with the market and the way it encouraged the bubble in house prices that not only put ownership beyond reach of many people but also led to a rapid rise in repossessions when the crash came.

The real issues about HB is about who ultimately receives the benefit because it is an expression of high rents and shortages rather than a solution. In the private sector it is the landlord/private property owner who get the HB. This group can only be described as social parasites who gain from the misery of others by raising rents to extortionate levels.

In the housing association sector, HB is the income stream that perversely allows associations to borrow from banks to help them fund new schemes. The HB comes from central government, is collected by associations from residents and is then effectively recycled to the banks who have lent against the stock of housing. Amazing but true.

Housing policy clearly requires a revolutionary approach because capitalism has a way of recreating shortages over and over again. In opposing the Coalition’s HB cuts we should fight for:

Paul Feldman
Communications editor
13 July 2010

Your Say


Laurence says:

You did say to cap H/B could increase homelessness, what we should do is stop all housing benifit in the private sector. The next time a house becomes empty, rents would then drop, We have a case here where a house becomes empty the land lord gets 700 a month, and does nothing, if people could not get H/B on the house they would lower the price, we need to build council houses with the money saved on not paying housing benifits to greedy landlords.


Dean says:

Yes, ultimately 'it is the landlord/private property owner who get the HB.' An important point that needs to be stated loud and clear. And of course, as always, it's the banks who pocket a fair amount too. Now if only more people - and more ethically inclined lenders - could be convinced of the positive potential of starting more independent housing co-operatives...


Phil says:

This is an excellent article. My own opinion, which could be wrong, is that we also need a major housebuilding programme in Britain to raise the stock of housing. I also think this needs to be done on brownfield sites and greenfield sites that are well away from existing conurbations. Would AWTW agree with this?


Corinna says:

You have described the real benefit racket! The big benefit cheats are the banks and the rotten government that places people on the dependency treadmill


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