Housing minister Grant Shapps has been seeking to defend his government, and the Coalition, from responsibility for Newham Council’s attempts to rehouse residents, no longer eligible for housing benefit, over 100 miles oustide the borough, in Stoke.
To most people this looks like blatant social engineering. Poor people are having to leave the areas in which they live, because the price of private-sector rents has gone up so sharply that the council can no longer afford to house them. Not so, says Shapps, who blames Newham. According to the BBC, “Grant Shapps said there were nearly 1,000 rental homes in Newham which fell within the cap and suggested Newham council were “playing politics” ahead of the elections.”
While the primary definition of the people who are being moved is that they are poor, it doesn’t take too much genius to grasp that the demographics of those being moved will be in many ways different from those who stay behind. In London, the working poor are predominantly white. That no longer remains true as you look lower down the ladder: the poorer Londoners get, the more likely they are to be black, Muslim, etc.
A bit of context is needed: until the 1980s, housing benefit was a relatively modest part of the total welfare bill. The cost of housing benefit, to local authorities, and to the state generally, has since risen enormously, essentially because in the mid-1980s, the previous Conservative government brought an end to 60 years of legislation limiting private sector recents.
The “cap” referred to by Shapps is the government’s attempt to limit housing benefit by saying that no family may receive housing benefit in excess of certain limits (including an overall limit of £500 per week per family, for all benefits). Now, when these caps were introduced, they were applauded by the tabloids, because it just does seem obscene that anyone should be able to receive more in benefits than the average wage. The problem is London rents, which for a 2-bedroom house very often are in excess of £1500 per month.
I have described the process elsewhere:
“The Tory-Lib Dem coalition is cutting housing benefit, for example by placing (from April 2011 for new tenants, and for existing tenants from January 2012) an absolute cap on the amount of housing benefit that can be paid depending on the size of the property: £250 per week for a one-bedroom property, £290 per week for a two-bedroom property and so on. This is intended to be accompanied by a new measure that no family may receive a total of more than £500 per week in welfare benefits. The measures are supposed to reduce the growing housing benefit budget, but the costs of housing benefit have risen in circumstances where landlords are able to charge what they like. They will do nothing to reduce landlords’ power to charge ludicrously inflated rents to the state, but will leave many thousands of tenants with a shortfall. In due course, they will be in arrears with their rent. Inevitably, a large number will be evicted. Civil servants have estimated that the £500 cap alone will result in 20,000 families being made homeless.”
ie Government policy, faced with a spike in private-sector rents, is not to reduce rents, but to compel people to leave their properties and (inevitably) to move to cheaper (i.e. poorer) areas.
Shapps is lying, in short, when he disclaims responsibility for Newham: they are doing exactly what government policy asks of them.
Now, probing a little deeper, what really interests me is the part played in all this by the Olympics. One Newham resident interviewed on Radio 5 explained the matter as follows: many private-sector landlords have been pushing up their rents in 2012 in particular. Their motives are that they see the Olympics as a potential windfall. There will be many people moving to be near the Olympics for just a few weeks, and ladlords hope to rent out their flats at hotel-type prices – i.e. not £40 per night, but £100 or £200 per night. Clearly, no housing benefit system could “compete” with rents of this level.
At one point, the Olympic organisers were promising the residents of Newham, Stratford, etc better jobs and housing. By spring 2012, their primary promise is that at least the area will be left a giant shopping mall, the Westfield. But once you look at the units, presently in that shopping centre, you see a very similar problem. A significant proportion are going to companies like Jimmy Choo, Gucci, Tiffany, etc. As a boutique, you really don’t have to sell too many pairs of shoes at £10,000 each before you’ve paid off a year’s rent.
The flats in which the friends of LOCOG will be staying are homes being taken out of the reach of working people. What the story shows, most clearly, is that you can’t create a playground for the rich in a bubble of its own.