from an FT article
Benefit cuts risk to London households
By Jim Pickard, Political Correspondent
Published: September 21 2010 23:24 | Last updated: September 21 2010 23:24
Up to 82,000 households in London are at risk of losing their homes as a result of the government’s imminent cuts to housing benefit, according to analysis by a group representing the capital’s 33 local authorities.
A survey of hundreds of landlords by London councils, seen by the Financial Times, suggests that few will cut their rent for those tenants who can no longer afford to pay. That could mean large numbers of families forced to find cheaper accommodation elsewhere, the group says. “The cuts will have an immediate impact on inner London boroughs which will essentially become no-go areas for anyone on housing benefit,” it says in a report published on Wednesday.
That could put pressure on outer suburbs of the city, which would see thousands of incomers needing schools, public transport and other services, according to the report. The survey finds an unyielding attitude among landlords letting to benefit recipients, with 60 per cent saying they will not reduce their rent even a small amount. More than 90 per cent say they will evict any tenant failing to keep up with payments by more than £20 a week – either immediately or by not renewing the tenancy.
Changes to local housing allowance were announced in George Osborne’s June Budget and are expected to save £1.8bn a year from Britain’s annual benefits bill of £21bn. From April, the maximum weekly rate payable will be capped at £250 for a one-bed home or £400 for a four-bed property.
From October 2011, the method of calculating the benefit will change, from the 50th percentile of the market to the 30th percentile, reducing the number of properties eligible for claiming. Many tenants will also lose out from the removal of a £15 weekly housing benefit “excess” paid to those who find cheaper properties. When justifying the move, ministers cite figures showing that some families receive up to £100,000 a year. Those examples have since been shown to be extreme instances rather than the norm, however.
London Councils reaches its figure of 82,000 evictions by applying the probability of eviction, based on its survey results, to data from the Department for Work and Pensions. It presumes, however, that those families receiving the benefit will not be able to make up the shortfall, which might turn out not to be the case. But the group says: “Housing benefit is means-tested, so it is not as if these are people with spare income swilling about.”
Campbell Robb, chief executive of Shelter, says the research undermines ministers’ “baseless as-sumption” that landlords will lower rents to keep tenants. The housing charity chief adds: “We are extremely concerned that so many of London’s landlords say they will evict tenants who fall into arrears, while some will stop renting to local housing allowance claimants altogether. This will not only make it even more difficult for claimants to find a place to live, but will add to the already significant levels of homelessness and overcrowding in this city.”
The DWP says it is right for ministers to reform an “out of control” system that traps people in a cycle of dependency. “It is not right that some families on benefits were able to live in homes that hardworking families could not afford,” it says. “We are absolutely committed to supporting the most vulnerable and have tripled our discretionary housing payments to provide a safety net.”
Both Shelter and London Councils are urging the government to pay the local housing allowance directly to landlords rather than tenants, which would be likely to persuade many to remain in the market.