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Squeezing the poor out of London

From April 2013 major changes to benefit provision in Britain will likely change both the social and spatial make-up of our cities. The squeezing out of poorer residents from London and elsewhere, raises an important question: exactly who has the ‘right’ to the city in contemporary Britain?

Since their election in May 2010 the coalition government have attempted to respond to political-economic crisis and a perceived deficit crisis, by restructuring the welfare state. In doing so, a broad range of cuts to benefits, including a cap on housing and council tax benefits, as well as a ‘bedroom tax’ – a tax on unused bedrooms for benefit applicants, have been introduced. The primary justification for these cuts from the coalition and their supporters is that it will ease Britain’s financial deficit by putting a squeeze on Britain’s welfare bill. Time will tell whether this questionable justification actually comes to fruition. However, what seems more certain is the negative impact these cuts will have for those low-income households in UK cities and in particular, the capital.

Chris Hamnett, a leading British researcher on housing and social polarisation, has already stated that cuts to welfare will have marked consequences for low-income households in regard to access to housing, income and general well-being. However, what most popular reaction to the cuts seems to have missed is the long-lasting and damaging geographical impact likely to emerge, an impact advocates of the cuts at best do not seem readily concerned with, and at worst actively support: the long-term restructuring of the social and physical fabric of Britain’s cities through a squeezing out of low-income individuals and families from the city.

The geographical impact of reform

Britain's current housing benefit scheme was introduced in 1988, and followed the passing of the Social Security Act in 1986, with the Social Security Contributions and Benefits Act 1992 currently the primary legislation governing Britain's housing benefit scheme. The scheme has been designed to subsidise the cost of rental accommodation for low-income tenants in the social-rented and private-rented housing sectors. Leading on from the Housing Benefit Regulations 2006 Britain's housing benefit scheme is currently administered by local authorities. These local authorities determine the appropriate level of housing benefit to be distributed to individuals and families by comparing their household needs and resources with their household rent payments. 

The cost of Britain's housing benefit scheme increased from £2.5 billion in 2001/2002 to £20 billion 2009/2010, at the same time that Britain's public deficit increased from £19 billion to £156.3 billion. It is within this isolated economic context which the Coalition have attempted to justify the introduction of housing benefit caps: 'we have chosen to cut the waste and reform the welfare system that our country can no longer afford' (Chancellor George Osborne, introducing the Comprehensive Spending Review in Parliament (October 2010).


Chancellor George Osbourne delivering the Comprehensive Spending Review, October 2010.[1]

Osborne and co’s solution to Britain’s ‘unaffordable welfare bill’ unfairly punishes low-income groups who, despite tabloid opinion, themselves are not primarily responsible for the huge increases in Britain’s welfare bill.

What the Coalition government largely ignore is that Britain’s increases in welfare spending directly correlate to the development of a housing market bubble, which from 1997-2008 saw Britain’s average house price increase from just under £90,000 to just over £180,000 –during the same period average London house prices tripled. Such dramatic increases have not only reduced home ownership, but have been compounded by falling levels of publically-owned housing. This dual problem of short housing supply and rising costs of private housing, have forced low-income households into the increasingly unaffordable private-rental sector, subsequently increasing Britain’s welfare bill.  

Current changes in the housing benefit system look only to compound the situation. The changes will significantly reduce housing benefit allowances provided to low-income households. For example, under the current bedroom tax claimants would see their housing benefit payment reduced by 14% for under-occupation by one bedroom and by 25% for under-occupation by two or more bedrooms. Therefore, there will be an increased pressure for claimant households to look to other financial sources for their rent payments, without consideration by the Coalition of whether or not the households in question can afford this.

While supporters of the tax claim the changes will free up larger properties for overcrowded households, together with the housing benefit cap, low-income overcrowded households are unlikely to be able to afford to move out of overcrowded accommodation.

The case of London

A geographically crucial aspect of Britain's housing benefit distribution is that it is disproportionately concentrated in London.

 

Total Recipients

% total Recipients

Rate per 1000 adults

Average HB (£pw)

HB total amount (£ million)

% total HB expenditure

London

803,080

16.85

128

128

5184.6

25.95

South East

513,310

10.77

75

93

2373.6

11.88

North West

602,690

12.65

108

73

2205.6

11.04

West Midlands

441,040

9.25

101

74

1613.8

8.08

Scotland

468,330

9.83

109

67

1555.9

7.79

East

369,210

7.75

79

84

1515.8

7.59

South West

353,700

7.42

82

81

1415.6

7.09

Yorkshire and the Humber

415,440

8.72

97

67

1384.1

6.93

East Midlands

304,940

6.40

84

69

1035.3

5.18

North East

257,200

5.40

121

67

862.8

4.32

Wales

236,790

4.97

97

71

831.3

4.16

Total GB

4,765,730

100.00

98

84

19,978

100.00

Housing Benefit (HB) distribution and amount by nation and region, 2009-2010. Source: House of Commons Library.[2]

Taking into consideration the above average rent prices (within a British context) found in London's social-rent and private-rent housing sectors, the coalition's proposed housing benefit changes will have particularly immediate spatial implications for London that will have concurrent spatial implications for other urban and rural parts of Britain. 

The Camden squeeze

Consider Camden where the rents of 3 bedroom properties in the borough are at least double the government's maximum welfare payment of £340 a week for such properties in London. Under housing benefit changes the maximum housing benefit available will be limited to just £175 a week, with the Labour-run council saying that on average the affected families will have to find an extra £91 a week to remain in their household. In response the Labour-run council has announced that they will contact 761 low-income families (2816 people) about moving them outside of the borough, and even out of London. Highlighting how changes to UK's housing benefit allowances will directly and economically 'squeeze' low-income people out of certain boroughs in London, and into other British cities.


Local Housing Allowance Claimants in Camden. Source: LB Camden, 2012. Click to enlarge.

It is also important to consider whether such economic ‘squeezing’ will result in an indirect and longer term impact on low-income families in boroughs like Camden. Peter Marcuse has coined a term ‘displacement pressure’ which refers to an indirect process of displacement ‘when a family sees its neighbourhood changing dramatically, when all their friends are leaving, when stores are going out of business and new stores for other clientele are taking their place.’[3]

Forcing the intended 761 families out of Camden and bringing in families on higher incomes, who may or may not initiate changes in the urban landscape, may make Camden feel less liveable for its long term low-income residents. Consequently, there is a real possibility that the aforementioned economic ‘squeezing’ will also result in families-left-unsqueezed being socially and culturally ‘squeezed’ out of Camden.

The right to the city

Camden council’s decision, influenced by the coalition’s housing benefit changes, raise an important question regarding just who Camden, and in fact London, is intended for.

Housing policy decisions are being made by government at local and the national scale with little room within the democratic process for residents to consistently contest housing decisions. It has become clear that government actors in the contemporary city do not view, to use Henri Lefebvre’s terminology, the city as catering at all times for all those who inhabit it.

In London, as well as other British cities, private real estate has increasingly captured the rental housing market since the late 1970s as a result of the marketisation of public housing through government introduced schemes such as ‘Right to Buy’. The ‘Right to Buy’ scheme allowed council tenants to buy their council housing at a discounted value – dependant on the amount of rents already paid by tenants. This scheme facilitated the transfer of social to private housing, which was increasingly profitable for rolled-back local council’s post 1980s. It was also increasingly profitable for speculating property developers as they were able to buy up council properties through deferred transaction agreements. The scheme therefore increased the level of private housing at the expense of social housing, leading to a domination of private housing across London over the past 30 years and strengthening of property-led economic strategy in the city.

Schemes such as the ‘Right to Buy’ have led to British housing policy and consequently the ‘right’ to live in London (and other British cities) being increasingly influenced and rationalised according to private or quasi-private real estate interests rather than the interests of inhabitants. Thus we are left with a city captured and enamoured not by human value but by the cold, rationalising logics  of capital.

In this light, even though the housing benefit caps may result in a contraction of the government’s financial deficit, it may be more accurate to view the introduction of these caps as a long term neoliberal strategy to facilitate continued capital accumulation through the built environment of British cities. This accumulation will take place as higher-income tenants, who can afford and therefore may pay higher rents, occupy the housing that will be left after low-income families, like the aforementioned families in Camden, are economically and socially squeezed out.

Little London

Going forward, it is important to consider whether and how low-income groups, who will be harmfully affected by these caps, can resist the processes and decisions that will ‘squeeze’ them out of their city.

Stuart Hodkinson’s analysis of Private Finance Initiatives in Leeds (PFI) is useful in thinking through such possibilities.[4] Under PFIs, through long term service contracts (usually 30 years), responsibility for financing, managing and maintaining public assets (particularly social housing estates) shifts from the government to consortia of private sector institutions. Proponents argue that the PFI results in improved quality and cost-effectiveness of public services. Hodkinson, however, notes that PFI imposes huge additional costs on to the taxpayer.

These additional costs have led to local level action against the PFI, such as that seen in Little London, a council estate in Leeds’ inner city. In response to what they saw as the deliberate gentrification of Little London, which would see a portion of the existing community traded in for a more affluent group of tenants, the Little London Tenants and Residents Association (LLTRA) placed constant legal pressure on their local Council to alter their original vision of the implementation of the PFI in Little London.


Little London. Wiki Commons.

Hodkinson notes that although continued opposition to the PFI scheme in ‘Little London’ did not prevent the scheme from being rolled out, the opposition did result in an important cumulative time effect, creating delays that have gradually forced significant changes to the PFI scheme. For example, local activists forced the local council into holding a ballot during the initial consultation process in 2001-2002 which eventually contributed to the 3-year moratorium on the scheme. This opened up the opportunity for new and affordable council housing to be built. This example demonstrates how everyday activism by local community actors can successfully influence and contest how neoliberalism is put in practice on the ground by networks of state actors and private property developers within real estate.

The case of Little London demonstrates that although, the coalition’s housing benefit changes have already been introduced, collective, diverse and everyday activism by households being squeezed out of London, such as the aforementioned in Camden, can meaningfully contest the socially destructive housing benefit reductions.

Through varied activism at different scales, benefit reliant households can concretely display their right to live in their city in ways that challenge the ‘rights’ of private property and the profit rate to the city, that have been championed under contemporary neoliberalism.  This challenge will mark an essential first step in forcing a rolling back of the neoliberal influenced housing benefit reductions, which will consequently also mark an important first step in reimagining the city as catering for all of those who inhabit it.


[1] http://www.guardian.co.uk/commentisfree/2010/oct/20/spending-review-economists-experts-respond

[2] House of Commons Library (2010). Housing Benefit –  Summary Statistics for Local Authorities

Standard Note SN/SG/5699

[3] Marcuse, P. (1986) ‘Abandonment, Gentrification and Displacement: The Linkages in New York City’ in Gentrification and the City, N. Smith and P. Williams (eds), London: Unwin Hyman.

[4] Hodkinson, S. (2011) ‘Housing Regeneration and the Private Finance Initiative in England: Unstitching the Neoliberal Straitjacket’, Antipode, vol. 43, no. 22, pp. 358-383.

About the author

Cecil Sagoe is a freelance writer whose work focuses on the social impacts of urban development in London. He is also a deputy-editor of e-International Relations.


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