The social cost of the benefits cap

Since the government’s welfare reforms came into effect, a family can now claim a maximum of £500 a week in benefits. It may sound a lot, being slightly higher than the UK average weekly wage of £449, but it won’t get you far in London. The average weekly rent for a family home in London is £379 a week, compared to £166 in the UK as a whole. When a home costs more than twice as much in London, does it make sense to cap benefits at the same level as everywhere else?

As rents are so high in the capital, a family with two children and two parents each working a 35 hour week on the London Living Wage still qualify for housing benefit. However, as the amount is now capped, their total income falls, leaving them precariously close to the breadline. An unemployed couple with two children, claiming benefits, would be excluded from renting an average property in all but seven of the capital's 32 boroughs.

What an unemployed family on benefits in London might afford, if anything, would be poor quality and likely to be riddled with damp, mould and vermin. Families affected by the cap are then forced to relocate either to these seven poorer boroughs, quite possibly further from more promising sources of employment, or to inadequate housing, or other parts of the country altogether.

This can be at an immense social cost, with people moving away from work opportunities, family support networks, and children’s schools.

Alternatively, local authorities may re-house families made homeless by the benefits cap in emergency accommodation. But this is often an arrangement far less temporary than the name would suggest, as families are increasingly left there by councils for longer than the maximum six weeks. Private landlords are now at the heart of the emergency rental sector. In the past, tenants housed on an emergency basis were in their rights to insist on social housing but this is no longer the case. The kind of housing used for emergency accommodation is therefore often that which is too substandard to let out commercially.

As poorer London families, many of whom are in work, are caught out by the benefits cap, made homeless, forced to migrate, or put up with cramped ‘temporary’ living conditions, the problem of housing is brought into sharp relief.  Potential solutions range from raising the benefits cap within the M25 to building more social housing. Labour's idea of long-term tenancy agreements (with a six month probationary period, as in Ireland) to prevent landlords evicting tenants just to let the property for more money certainly has mileage. There's also something to be said for rent control as putting a ceiling on rent, rather than housing benefit, is surely a more effective way to contain government expenditure on housing.

We urgently need an honest debate on progressive solutions to the looming housing crisis in London. Even the Conservative Mayor of London, Boris Johnson, notoriously warned of "Kosovo-style social cleansing" as key workers and less well-off families are forced to leave London. Mayoral candidates know that ‘generation rent’ is a powerful electoral force. According to a YouGov poll in April, housing has now overtaken transport as the biggest concern for Londoners.

With over half polled saying housing should be a priority for the Mayor of London, housing could be one of the key issues that decides the mayoral election in 2016

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