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Austerity: the false economy increasing homelessness (part two)

Second article in ‘The Meteor Explores: Homelessness in Manchester‘ series. Part one of this story can be viewed here:

 

The safety net of the ‘cradle to grave’ welfare state, implemented by Atlee’s government after the Second World War, is becoming increasingly threadbare due to the economic and humanitarian degradations of austerity. Increasing numbers in the cradle are falling through gaping holes in the safety net, plunging them into poverty, homelessness and often temporary private rented accommodation not fit for human habitation and highly detrimental to their health. While misery and an early grave faces the growing number of destitute adults sleeping on the streets, with women dying at the average age of 47 and men at 43.

The latest report from Shelter calculates that 307,000 are homeless in Britain, a 4% rise since 2016, which means across the country one in every 200 people are currently homeless. London, unsurprisingly, has the highest level of homelessness with one in 25 afflicted, but Manchester is described as a homeless “pressure zone” by Shelter with 3511 people homeless meaning one in 154 are without a home.

An unpleasant synergy

The rising numbers are due to a negative synergy between a steadily increasing housing crisis and sharply decreased spending on public services and social security, since austerity UK was initiated by the Conservative/Liberal Democrat coalition government in 2010. The roots of our current housing crisis were established under Margaret Thatcher’s government in the 1980s. Five million council house tenants were given the Right to Buy their homes at discount prices, the government promised that council homes sold would be replaced like for like – they lied. Following Labour governments also failed to rebuild lost council housing. Only one new home is being built to replace every five sold under Right to Buy.

Source – Dept for Communities and Local Government, via BBC News

The same Tory government also placed restrictions on local authorities borrowing money to build council housing (AKA social housing). This resulted in council housing, which had made up a large proportion of national house builds annually, being reduced to paltry amounts by the mid 90s.

Since the Right to Buy was introduced in 1980, when there were 6.5 million council homes, the number of council houses in Britain has fallen by 69%.

These policies have led to a gigantic shift of tenure, in favour of private rented accommodation. In 1979, 42% of Britons lived in good quality, safe, secure, lifetime tenancy council housing. In 2016 that figure had dropped to just under 8%.

Chancellor Philip Hammond’s Budget announced yesterday, will do nothing to reverse the decline in social housing. In fact his promise of £400 million extra for the Estate Regeneration Scheme is likely to lead to greater loss of social housing (rents at around 60% of market rate), as previously reported in The Meteor regarding the regeneration plans for estates in Rochdale. And his promises of extra money towards building affordable housing (at around 80% of market rate), will create homes beyond the reach of people affected by the cuts reported below.

The other element of this unpleasant synergy is public service cuts. Savage cuts to local authority services affecting homelessness were covered in the previous instalment of this story. But it is the cuts to social security that are putting the greatest pressure on those living in poverty, and pushing many of them over the edge into homelessness.

Rise in private rented sector evictions

Local authorities record that the single leading cause of homelessness is the loss of a private tenancy, and that three in ten households have sought housing assistance for this reason, according to Shelter. It is ironic that almost 40% of the homes sold under the Right to Buy are being let in the private rented sector, with some rents being up to seven times the cost of average social rents.

Polly Neate, chief executive of Shelter, said: “It’s shocking to think that today, more than 300,000 people in Britain are waking up homeless. Some will have spent the night shivering on a cold pavement, others crammed into a dingy, hostel room with their children. And what is worse, many are simply unaccounted for.

“On a daily basis, we speak to hundreds of people and families who are desperately trying to escape the devastating trap of homelessness. A trap that is tightening thanks to decades of failure to build enough affordable homes and the impact of welfare cuts.”

To read part one of this story, which focuses on cuts to local authority budgets affecting homelessness, click the image above.

Welfare Reform Act 2012: Cuts, Cuts, Cuts…

The Welfare Reform Act of 2012 is one of the major pieces of legislation that has imposed austerities mark on social security payments.

One element of this act was the under-occupancy penalty, better known as the Bedroom Tax. Under which tenants of social housing with a spare room, such as an unoccupied bedroom due to a child leaving home, face a reduction of over 14% to their housing benefit. With two spare bedrooms that figure raises to 25%. The tenants have to find the extra money from their own pocket.

The tax is universally despised by the tenants it affects and those who care about them. The late MP for Gorton, Sir Gerald Kaufman, called the Bedroom Tax “One of the nastiest taxes that has ever been imposed”. Patrick Butler, social policy editor for The Guardian, described the Bedroom Tax as, “a turbo-generator of avoidable stress and human misery”.

The policy’s stated aim was to solve the problem of overcrowding by freeing up under-occupied social housing, and save £500m on the housing benefits bill. It failed on both counts. The government later estimated the saving at £360m which did not take into account the significant costs of dealing with the debt, evictions and supporting households affected by the policy; or the extra cost to housing benefit due to people moving into dearer private rented tenancies. Only 6% of people affected by the bedroom tax have moved to a smaller home, mainly because they are not available. In England, in 2014, there were 180,000 tenants under-occupying two bedroom homes, but only 85,000 smaller homes available.

Local Housing Allowance

The Local Housing Allowance (LHA) was initially introduced by a Labour government in 2007. It is a way of calculating how much housing benefit a household is entitled to in a specific area of the country. The amount was capped at the median value of local market rents, initially covered up to 5 bedroom houses, and people under 25 were only entitled to the LHA rate towards a room in a shared house.

The LHA terms were tightened in the coalition’s emergency budget of 2010. The cap came in using the lowest third of market rents locally, rather than the median, or lowest half used previously as the cap. Only four bedroom houses were accepted for LHA submissions, negatively affecting large families. The age which claimants are only allowed the LHA rate for a room in a shared house, was raised from 25 to 35 years.

Campaigners against austerity at the Conservative Party Conference 2017, in Manchester. Source: The Meteor

This severely limits the number of homes available, with rents under the LHA, to those receiving benefits. In the Central Greater Manchester LHA area the rates for a two bedroom property are £519.91 pcm. Searches for two bedroom properties to rent on the property listing website Rightmove, for Manchester postcodes M14, M11 and M8, returned only two properties, out of a total 175 listed, (1.1 %) below the Central Greater Manchester LHA rate.

So if you lived in this area with a fairly average £700 pcm rent, and laid low with a long term illness, you would have to fork out the £180 pcm difference to stay in your home or move, maybe out of the area, as it would be extremely difficult to find something under the LHA nearby.

Under 21s housing benefit cut

Apparently not happy with limiting young people to LHA rates for a room in a shared house only, the government then imposed a further complete removal of housing benefit entitlement for 18 – 21 year olds. The DWP justified this by saying the cut would “make sure that 18 – 21 year olds do not slip straight into a life on benefits”.

Head of campaigns for Shelter, Roger Harding, said of the cut:

“They have failed to heed the dire warning that tampering with this vital safety net will result in more young people being left to fend for themselves on the streets.

“The option of being able to live with your parents is not one that is open to everyone. These cuts will affect those who, through no fault of their own, find themselves in desperately difficult situations.”

Researchers at Heriot Watt University calculated that the policy could save a maximum of £3.3 million a year. But if the cuts led to just 140 more young people becoming homeless, it would incur a net drain on public finances due to the costs incurred in other areas.

Benefits capped and frozen as rent increases overheat

The benefits cap, introduced in 2010 by then Chancellor George Osborne, puts a maximum limit on how much a household can claim, when all their benefits, including housing, are combined. Initially the cap was set at £26,000 outside London, and working a minimum of 16 hours a week means you are exempt.

The new cap, introduced in 2016, dropped to £20,000 a year (£385 a week). The Chartered Institute of Housing (CIH) estimates 116,000 families, both social and private renters, will be worse of by up to £115 a week. The North West is the third worst hit region with 13,000 families affected, according to the CIH. It is particularly detrimental to large families and single parents, and whoever is affected by it has to pay more rent out of their own pocket.

Emma Bradley, a single mother with four children including a baby, said she would be £76 a week short on her rent due to the cap. Bradley explained that she would “quite happily work” but the childcare costs and the work involved bringing up four children made it harder to do so. She described having sleepless nights due to worrying about finding suitable work to accommodate her family, saying: “If I lose the house, which could happen, it is scary to think ‘what would I do?’.”

Artists depiction of a family in temporary private rented accommodation. Source: Homelessness Health and Housing.

As well as the benefits cap, Osborne also introduced a four year benefits and tax credits freeze in 2015. The Joseph Rowntree Foundation calculates that a couple with two children claiming Universal Credit, which contains a housing benefit element, is £832 worse off a year due to the freeze. They also predict an additional 470,000 people in the UK, many from working households, will be living in poverty by 2020/21 due to the higher than expected inflation rates, we are now beginning to see.

While struggling households across the UK endure these cuts, freezes and caps they also have to contend with stagnating wages and rocketing housing rent. The 2010s are set to be the worst decade for growth in wages for 210 years, and the Manchester region is regularly seeing the second largest rent increases across the country, driven in a large part by the lack of housing stock. Average rents across Greater Manchester rose by 22.4% in the twelve months up to 2015, and rental prices are predicted to rise another 20.5% by 2021.

Benefit sanctions

Benefit sanctions, although not directly affecting housing benefit, have also been linked to increases in homelessness. Social security recipients not adhering to certain conditions laid out by the job centre, such as looking for work or attending appointments, can be arbitrarily sanctioned with a reduction in their payments or having them stopped altogether. Since 2012 there has been a doubling of the rate of sanctions towards vulnerable groups, such as disabled people and lone parents; and many sanctioned have had their housing benefits stopped in error.

A report by Crisis in 2015 claimed one in five people made homeless over the last year were due to the effects of being sanctioned. Not only does sanctioning increase the likelihood of becoming homeless, the homeless are also more likely to be sanctioned than those who are housed, putting another obstacle in their way to finding a home.

Universal Credit

Universal Credit is the latest element of the Welfare Reform Act 2012, which from initial problem ridden pilot schemes is to be rolled out across the country.  The new benefit, rolling six old benefits into one, will also continue issuing benefit sanctions with the added twist that due to the inclusion of tax credits in UC, those in low paid work will also be subject to sanctions.

It has come under intense widespread criticism for the initial minimum 42 day wait for payments claimants have to endure, and some have had to wait up to 60 days. The benefit is also paid directly to the claimant unlike housing benefit previously which could be paid straight to the landlord; thus risking poverty stricken tenants spending their money on debts other than rent.

The long waits are increasing the amount of rent arrears UC claimants are mounting up. Housing association surveys have shown that up to 90% of tenants on Universal Credit either increase their level of pre-existing rent arrears or run up new ones.

Laurie Goss works for the homeless charity Shelter, in Greater Manchester, which claims to have helped a plethora of people facing eviction due to the long waits. Goss says he assisted a single mum who had been evicted due to the switch from housing benefit to Universal Credit:

“Delays in payments of Universal Credit led to her being evicted for rent arrears…By the time we saw her, it was too late to do anything about it.”

In Tameside the social landlord New Charter has 82% of its tenants in rent arrears – the figure was 18% under the old housing benefit system. And like benefit sanctions, UC is another double whammy for the homeless: not only are you at greater risk of homelessness if claiming UC, the homeless claiming UC are now being refused accommodation by some landlords due to the fear of associated rent arrears.

Mhairi Black, MP for Paisley and Renfrewshire South, summed up the problems with UC in a powerful speech she gave (see video above) to the Commons during a UC debate:

“I have sat in the Chamber and heard over and over again from Tory MPs that the social security reforms have been put in place to incentivise work … to justify their choosing to keep slashing money for the poor.… I have heard it used to justify the sanctions regime while I have stood in this very Chamber and implored the Government to make it more humane…. let me take this opportunity to say as loudly and as clearly as possible to everybody in here: plunging people into debt does not incentivise work; forcing people into hunger does not incentivise work; causing anxiety and distress, and even evicting some families from their homes, does not incentivise work.”

Hammonds Budget announced a 7 day reduction in the waiting time for Universal Credit, but that still leaves claimants with a 35 day wait (5 weeks), and the possibility of missing two monthly rent payments.

Austerity, for how long?

The government has always tried to portray austerity driven cuts as being beneficial to those they are imposed on, generally the poorest in society. Osborne argued that social security cuts would incentivise work, and also played his part in demonising those without work by saying:

“For too long, we’ve had a system where people who did the right thing – who get up in the morning and work hard – felt penalised for it, while people who did the wrong thing got rewarded for it.”

But the irony of Tory government support for hard working families leaving record levels in poverty and in fear of homelessness, seems to be lost on Osborne, his successor Chancellor Phillip Hammond and the rest of the party of ‘home ownership’; which has also seen home ownership drop to its lowest levels in 30 years, on its watch, due to its failure to address the market failure responsible for the housing crisis.

Token gestures such as Theresa May’s promise of £2bn towards social housing, described as “chicken feed”, has done little to loosen austerity’s grip and reverse the decades long failure to build social housing.

Hammond squandered his chance of steering the country away from its austere course in yesterday’s budget. He failed to give councils greater powers to lend money for the purpose of building social housing. And the £28 million he promised towards tackling rough sleeping, is dwarfed by the austerity driven cuts to local authority Housing Services, across the UK who usually provide services for them. Manchester’s annual Housing Services budget alone was £67.5 million 2009-10 before austerity began to bite, it had dropped (£48.3 million) to £19.2 million by 2012-13, and has stayed around that level ever since.

There are good local initiatives underway in Greater Manchester (GM) to reduce homelessness in spite of the national austerity agenda. Mayor Andy Burnham has pledged to end rough sleeping in GM by 2020, and started the GM Mayor’s homelessness fund which will go towards helping frontline services through the GM Homelessness Action Network. And Manchester City Council have also announced initiatives to reduce homelessness, including buying homes to house them and opening a 24 hour homeless shelter in Chorlton.

But unless the deep fault lines undermining our society nationally are addressed, by providing sufficient investment, these local initiatives may prove no more than public relations exercises. Papering over the local cracks emanating from these national fault lines, ever widening due to the wedge of austerity.

 

Conrad Bower

Austerity: the false economy increasing homelessness (part one), can be read by clicking here

If you would like to find help for people who are homeless, and see what you can do to help, check out: www.streetsupport.net

Part of ‘The Meteor Explores: Homelessness in Manchester‘ series. The rest can be reached by clicking here

Feature image: Homeless people on the streets of Manchester city centre, who kindly gave permission for their photos to be published in The Meteor.

 

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