Welfare cuts could force low income residents out

Chancellor George Osborne introduced the Comprehensive Spending review on 20 October. Photo: © altogetherfool

Some of Hackney’s poorest residents will be disproportionately affected by the welfare cuts announced in the  government’s Comprehensive Spending Review. A series of changes to housing and benefits in chancellor George Osborne’s Comprehensive Spending Review (CSR) last month (20 October) adds up to a significant hike in housing costs that could force Hackney residents out of the borough.

The chancellor announced a cap on housing benefit, new shorter-term tenancies for families on council housing waiting lists and cuts to housing benefit payments for anyone on Job Seekers’ Allowance for more than twelve months.

Hackney Housing Group, part of the London Coalition Against Poverty campaigning for more social housing, said the cuts will put families in danger of losing their homes.

Spokesperson Ellie Schling said, “The planned [Housing Benefit] cuts and the removal of security of tenure for social housing will drive low income people out of Hackney, and remove hope for people who are waiting to get social housing.”

A week before the CSR was announced, concerns were raised by Meg Hillier, MP for Hackney South and Shoreditch, that those in receipt of housing benefit will cease to be entitled to the full amount after twelve months, with payments dropping to 90 per cent of the original rate.

The Citizen spoke to Ms S, who is in her 40s and lives in a housing association flat. When asked what social housing meant to her, S said, “It is the only security I have, I have nothing else behind me, no safety net. Even when I was working it was a struggle to pay rent in the private sector.”

S asked not to be named in this article but said that the government’s plan to move long-term sick pay claimants onto Jobseekers’ Allowance after one year will have a negative affect on people with mental health problems. It will also mean a reduction in benefits of approximately a third in cash terms.

“People on sickness benefits are often scapegoated, and the wish to drive us off such benefits will serve to compound the stigma and discrimination that is already a destructive force on the lives of those who have depression or other mental health illnesses,” she said.

“A lot of these measures are aimed at people who are marginally holding on and this is going to tip them over and will lead to a spike in the numbers of mental health disorders.”

The third prong of the government’s changes to housing benefit is that single people under the age of 35 will not be able to claim housing benefit for anything other than shared housing. Currently the age cut off is 25. So, for example, if you were 30 years’ old and living in a one-bedroom council flat, this new rule would make you ineligible for housing benefit unless you moved in with friends.

The Citizen also spoke to Shian Housing Association on Mare Street about the effect of the cuts on their tenants. We were given a four-page written response to the CSR on behalf of London BME directors, a group representing ethnic minority housing needs in London.

It said, “There is ample evidence of economic disadvantage in [black and minority ethnic (BME)] communities to suggest that BME households are likely to be disproportionately affected by the cuts. There will be adverse impact and there are no clear proposals on how this will be mitigated.

“There is a real risk that the cuts could put back the clock to a time when there was civil unrest because of the disadvantages being experienced within some communities.. It is important that some safeguards are put in place to stop a return to that era.”

The last aspect of the reforms to housing benefit  will, at present, only affect new social housing tenants. The government is proposing to allow housing associations to charge up to 80 per cent of market value for their properties.

The Citizen spoke to local estate agents to ask about market rent on a one bedroom flat. The first estate agent quoted £250 per week and the second quoted £1100 per calendar month. The rent for a one-bedroom housing association flat in the north of the borough is £98.66 per week, so the difference could be over £100 per week.

North London Action for the Homeless provides services for homeless and vulnerable people in Hackney and wider north and east London. Manager Mike Tomes, said, “We feel that the new pressures on social housing will make it that much harder for many tenants to sustain their tenancies.

“We believe that the CSR will have a negative impact on our clients’ quality of life (which is quite low anyway) and could, in some cases, even lead to an increase in homelessness…We will be watching developments with interest and some trepidation.”

National housing and homelessness charity Shelter echoes these views. Campbell Robb, chief executive, said, “It is a huge blow to see that housing, one of the most basic needs for every single person in this country, is facing some of the biggest cuts.”

“These measures show that the government is completely out of touch with the fact that Londoners already face a continual struggle with their housing costs. With the cost of housing so high in the capital, social housing is particularly vital in ensuring that people can access an affordable place to live.”

The cuts to the welfare budget have gone up twice since George Osborne’s Emergency Budget in June, from an initial £11 billion to a total of £18 billion by the time of the Comprehensive Spending Review was announced.

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Housing benefit: what’s changed

Caps to housing benefit of £400 a week on any property with four or more bedrooms, and £250 a week for a two bedroom home – the National Housing Federation says this will put 425,000 people in London at risk of losing their home.

The proportion of housing benefit that can be claimed on private rentals will fall from up to half of the local market average rent to one third.

Housing benefit payments will be cut by 10 per cent for anyone on Job Seekers’ Allowance for more than twelve months.

The eligible age for single people to claim housing benefit for anything other than shared housing will be moved up from 25 to 35 from April 2012.

New social housing tenants will be subject to housing association rents of up to 80 per cent of market value for their properties.

Shorter-term tenancies will be offered to families on council housing waiting lists.