Wednesday, 16 April 2014

The year of reckoning

From: Inside edge

I’m kicking off my blog with five key questions for 2012. There is only one place to begin.

Two days into the new year and already it’s clear that 2011 was merely a dress rehearsal for the changes to come.

Last year was dominated by battles over a welter of legislation and cuts that will dramatically transform the prospects of anyone living in or looking for rented housing. 2012 sees those changes start to take effect across the country.

Chartered Institute of Housing research reported in The Guardian today concentrating on just two of the changes makes the point only too clearly.

The CIH estimates that bedroom caps (starting yesterday for existing claimants) and 30th percentile (from April) restrictions will make 800,000 private rented homes unaffordable for anyone on the local housing allowance.

As this map shows, the effects will be greatest in inner London. In Westminster 20,700 homes will disappear, leaving 8,700 families on LHA chasing just 3,200 homes.

But the effects ripple out to supposedly more affordable Outer London, with 5,500 homes disappearing in Croydon and 16,900 families chasing 9,600 homes and 5,400 going in Newham to leave 14,400 families after 7,800 homes.

And this is not just an issue for London or even the South East. In Birmingham, 34,500 families will be left chasing 23,300 homes, in Liverpool 21,000 families will be after 12,000 homes and in Glasgow 14,800 will be competing for 13,600 homes.

In total 1.3m private tenants around the country are facing a choice between cutting spending on other essentials, going into rent arrears or moving to a cheaper home or a cheaper area. Or perhaps between staying where the work is and making up the rent shortfall or moving to where there are fewer jobs and having the rent paid in full.

That in turn will have a knock-on effect on cheaper areas that the CIH warns are at risk of becoming benefit ghettoes. Interim chief executive Grainia Long warns that the whole of the South East has only a few low-cost places like Margate and Hastings that could face increased social problems and a breakdown in community cohesion.

The Department for Work and Pensions counters that ‘early indications are that people are not moving out of cities in their droves to cheaper rural areas’ and that ‘for the vast majority of areas except the most expensive parts of inner and central London, at least 30 per cent of all private rented properties will be affordable’.

However, note the careful choice of words employed there - I’m not sure anyone has ever suggested people would move in droves to rural areas, more that they would be uprooted to cheaper urban ones.

And this study reflects only two of the cuts that start to bite this year. From yesterday, the age threshold for the shared accommodation rate was extended from 25 to 35. The DWP estimates that 62,500 people will lose an average of £41 per week as a result. As Crisis points out, that will almost double the number of people on the shared rate and force tens of thousands of people in self-contained homes to look for shared accommodation that will be in short supply in most areas and simply not available in some.

Exactly how all this will pan out remains to be seen. Some tenants and landlords will adapt and find ways to cope. Perhaps much of the problem will be hidden in overcrowded homes and yet more rented sheds and garages. But it’s hard to believe that these cuts will not add to an already growing problem of homelessness and lead to escalating pressure on public services in areas that become benefit ghettoes.

And all this will be happening at the same time as last year’s cuts in housing investment reduce the supply of affordable homes, unemployment is rising, household incomes are falling and changes in the Localism Bill allow local authorities to discharge their homelessness duty into a private rented sector with thousands more tenants than there are homes.

So 2012 will be the year of reckoning - with more cuts to come in 2013.

Readers' comments (33)

  • Melvin Bone

    Were there 5 questions in there?

    Surely the one place to begin in reality is the Eurozone calalmity as this may have the biggest effect on the UK...

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  • Jules Birch

    You're right about the Eurozone of course, Melvin, but was trying to confine myself to problems specific to housing. The other four are to come in the next few days.

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  • F451

    You could take a leaf out of the book of Shapps Jules and re-blog each of the five several times over the entire year, never quite completing any statement, but always promising more detail at the next pass.

    Your first point is very appropriate, especially as this single act of barbarism will knock on to add even more pressure on the few affordable properties and cynically make them less affordable as a result. Simply capping the maximum rent would have ensured housing available to all with reductions in total housing benefit and freeing working tenants from the hideous benefit trap.

    Building rapidly new homes for social rent, capping private rents, removing the social rent escalator, and paying Ministers on outcomes only are the key changes required this year. Instead we will get virtually no new social homes for rent, virtual new homes for the poor, and hypertext hyperbole from the Minister.

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  • Melvin Bone

    Ahh. Ok Jules. Sorry for my ignorance.

    I look forward to the next four.

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  • Rick Campbell

    I shall be less polite and briefer than Jules:

    If you think 2011 was bad in the 'housing arena'
    --- think again because it may be that the Crazy Gang in government may have only been practicing cocking things up and worse is to come.

    If tenants thought they got a raw deal in 2011 -- there's worse to come from the apologists and Central office acolytes especially on IH threads.

    Please note the absence of a question mark.

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  • Melvin Bone

    I'm afraid we are all too young to remember the original 'crazy gang' Rick...

    I remember the Muppets though.

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  • F451

    I knew I recognised you from somewhere Melvin!

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  • Rick Campbell

    Nice one Melvin!

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  • Alpha One

    Personally I think we have little choice but to accept the ghettoisation of society. We are one of the few countries in the world that strives to make people live together, under the misguided ideal that we can somehow create communities from disparate members of different social strata simply by making them next door neighbours.

    If you want an example of the failure to create communities you only have to look at Kevin McCloud's Swindon estate, the Triangle. He tried to force people into a community they didn't want, and it didn't work. The irony was that when he left it alone, left the people to their own devices, they found common ground and became a community.

    Pepperpotting does not create communities, neither does forcing us to accept a situation where a person on benefits can live next to an oligarch. Can you really see Frank Gallagher and Roman Abramovich sharing a can of Skol on Roman's luxury yacht?

    Most other countries tend to group different types of people together and let them worry about building communities. Sure this sometime leads to actual ghettos, but what the government is proposing is about creating ghettos.

    People who are reliant on benefits are being given the same choices as those who pay their own rents. Most of us could only dream of living near our jobs, most have to commute substantial distances daily, so why should the affordable sector be any different? Yes I know this is a run for the bottom, but when we're trying to cut spending, it maybe necessary to create a level playing field for all.

    Why should I pay for my neighbour to enjoy the same lifestyle as I have? If you want a prediction for this year, I predict more of this sentiment coming to the fore, no matter how much the Guardianistas try to hide it. Many people will start asking why they are paying for someone else to enjoy the same lifestyle they do whilst the other person sits on the behind all day.

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  • F451

    I think you prediction is likely to be accurate Alpha - that does not make it correct however.

    What is so wrong about offering someone less well off than yourself a hand up? How better to help someone understand what a better life they can give themselves than by allowing them to learn from their neighbour?

    Do you forget that before zoning not only did you work in the factory down the road, but the factory owner had the house at the end of the street, as well as their nice little one in the country (check out the history of Bermondsey, for instance). The fact that the miserable little toad was often the slumlord as well does not detract from the fact that the working and middle classes lived side by side, and in sight of their 'betters'.

    The exclusionist, individualist approach is what is at odds to human social history. Not since the invention of cities has Man lived apart from those with difference. Diversity has been the foundation of the most successful cities, not their cause of failure.

    Shapps Social Cleansing will make life unbearable for many who will either have to give up their work, or use every penny earned to commute there. This will also cause a little local stink for the 'betters' who are intended for the cleared homes, as there will be few to provide the essential services to them.

    Mix and balance are essential. Apartheid was hardly a success Alpha, however much you may wish that it was.

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  • Rick Campbell

    A lot of people on IH threads offer people less off a hand up.

    Actually, to be precise, they offer only a part of the hand' up.

    Usually two fingers.

    Thatcher would be proud!

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  • It was Churchill who used two - Thatcher only needed one!

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  • Rick Campbell

    I bow in appreciation and acknowledgement to you Anonymous!

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  • anyone who is dumb enough to think creating ghettos is good should rush out soon and get a gun licence before it's too late

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  • Your assuming a shed load of highly paid workers are going to be able to take up the slack. IDS and LHA are the market, and unemployed people like myself are merely pawns used to transfer taxes to landlords via the state in a highly bureaucratic manner.

    As a housing benefit claimant I welcome these changes, rents can be forced down. Us tenants will have more money in our pockets in the long run, to spend on other things, the odd takeaway, a pint of beer etc. Hell, maybe we'll be able to afford to put the heating on come 2013!

    Next thing they need to do is reduce social housing rents every year for a decade, relatively speaking at least. My rent has gone up by RPI+0.5% (+£2/week) for 9 years now. Come 2013 it would be nice for it to increase by RPI-0.5% (-£2/week) for a decade. And the economy will be booming.

    Sod Rachman, that dirty parasite does nothing productive, the only thing he did was price me out of work, as all I have been working for is to pay the rent.
    All that has happened is that men and women have made a rational economic decision to sign on as unemployed.

    The next transition is to one of being self employed, ready to take advantage of the growing economy. As money which would have previously been funneled into rent payments is pushed into the hands of the consumer.

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  • Alpha One

    On the contrary Apartheid actually was successful in the short-term. However, to compare telling someone that they may not be able to live near to where they work with a regime that made all black people an inferior class of person, is somewhat disingenuous to those who suffered under Apartheid. As it referring to the scheme as social cleansing, Shapps is not going around exterminating the poor and needy, no matter how much you want to believe he is.

    Let me get one thing straight, I'm a massive supporter of the idea of people living near where they work, I actually love the Chinese idea of employers providing housing for workers FOC.

    Personally I think this is the future, housing provided as a commodity rather than as an investment. It's not going to happen over night, but I can see the likes of Tesco blazing a trail with housing on site for their staff through a Tesco HA. Other employers may follow suit.

    To me it makes sense, employers providing housing as part of the employment contract, when you retire you move to retirement communes where services are provided by housing associations.

    Issac Asimov's visions of the future, for me, is going to become suprisingly more accurate than we ever thought (for those who have never read Caves of Steel, I'd advise doing so, its not the grim dark future of the likes of Orwell and Huxley, but a bright future where humanity lives in big cities).

    For the moment though, I think we have little choice but to accept a situation where people may have to move out of town to afford their property. If it's any consolation, I do believe that this will be the event that will see employers looking to house workers on site or nearby, reducing the effect of housing as an investment.

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  • F451

    A good idea in the short term Alpha - in a nutshell all that has been wrong with policy over the past 30 years.

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  • I thought the problem with Kevin McCloud's Triangle is that the sums didn't work. Basically the level of zero carbon features he wanted to put in could only be funded by making the houses available for intermediate rent, social housing or other forms of subsidised housing. Building to a high sustainability specification is too expensive for the private sector. They aren't even required at the moment to build to a Code 3 so generally, unlike the social / 'affordable' sector they don't.

    Presumably Right To Buy was a policy that worked in the short term. Shame we're all still alive (even Maggie) to see the catastrophe it has caused.

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  • Alpha- "Apartheid actually was successful " ? For Who??
    you really sound like a Spacer -living on another planet.

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  • Loving the optimism Alpha One! The proles will be housed thanks to the philanthropy of employers. These will be the very same employers that selflessly provide workplace and subsidised childcare in recognition of the fact that many of their employees are unable to work otherwise. Oh, hang on a minute...

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