The economic costs and real life consequences of the social housing crunch


 

Kevin Gulliver is the director of Birmingham-based research charity the Human City Institute and chair of the Centre for Community Research but writes in a personal capacity; his interests are social and economic policy, especially relating to housing, health, communities and inequalities

Wednesday’s autumn statement by George Osborne will be delivered against the backdrop of failures in austerity, welfare reform and housing policy.

The government’s public debt reduction strategy, the accompanying austerity, the collapse in social house building, and poorly considered welfare reform have created a ‘social housing crunch’ where housing demand outstrips supply, labour mobility is restricted within an economy in and out of recession, and the viability of social housing communities is called into question.

George-OsbornePolicy failure can be tracked back to the chancellor’s decision to cut two thirds of funding to the social house building programme in the 2010 comprehensive spending review. This triggered a collapse in new housing starts which accelerated the long-term decline of the UK’s social housing stock.

Today there are 1.2 million fewer social homes than 30 years ago at a time when the demand for social housing is growing, evidenced by ballooning waiting lists and rising homelessness.

Partly to combat the effects on the UK labour market of reduced numbers of social homes, the government created a National Mutual Exchange Scheme to stimulate mobility to support tenants’ efforts to find work. Yet social housing tenants are less able to move home than at any time for a generation.

The costs of this reduced mobility to the economy and the welfare system are estimated in excess of £1 billion each year.

A second policy failure is the government’s claim the fall-out from its relentless pursuit of austerity is being shared fairly – Osborne’s “we’re all in it together” mantra.

Yet austerity is hitting some of the country’s most vulnerable households – social tenants – hard. Tenants’ incomes – at less than £9,000 per annum on average and already low in comparison with even the median wage – have seen their purchasing power eroded by at least 10 per cent since 2008, equating to a total loss of real terms income circulating in social housing communities of more than £3bn over the intervening four years.

The cause is above inflation increases in necessities – such as food and fuel – which take up disproportionate amounts of tenants’ incomes.

Welfare reforms announced so far will remove a further £2bn from tenants’ pockets by 2015. Planned changes in some benefits – especially the ‘bedroom tax’, the benefit cap, the introduction of universal credit and the 10 per cent cut in council tax benefit – have left many tenants living on the margins.

But government proposals to cut a further £10bn from the welfare budget, if enacted, will push many vulnerable tenants over the edge.

Behind the figures are the human consequences of austerity and welfare reform.Tenants’ incomes are stretched to breaking point. Many can’t buy enough food to last the week, have to queue for bargains at-cut price supermarkets, rely on food banks or live on toast in the days before wages or benefit cheques are received.

Most are struggling with escalating fuel bills, having to put on extra layers of clothes to keep warm, only boil enough water for a single cup of tea, or go to bed early because they can’t afford to feed the meter.

The government’s aim of eradicating the structural deficit over the lifetime of a parliament – a target which has already slipped because of negative economic growth – has resulted in this ‘social housing crunch’. The disproportionate burden being borne by social tenants is greater than they can realistically endure. Geographical and social mobility have come to a standstill. And already poor tenants are getting poorer.

The combined effects of government policies will continue to affect the wellbeing of tenants, their life chances and the sustainability of social housing tenancies and communities unless the chancellor seeks another way on Wednesday.

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  • LB

    My heart cries out for Bob Crowe. 145,000 pounds a year and he still needs help paying the rent.

    People on 145,000 deserve government subsidies.

    Likewise, poor Frank Dobson, on 66,000 pounds a year deserves your help.

    If you’re on minimum wage, you can be assumed that every pound you pay in tax, all 2,500 pounds of it, is going to a worth while cause.

    We’ll let you know when either of the above die, and their children, because their children will inherit the subsidy.

  • LB

    Meanwhile, those accounting frauds carry on.

    Nothing like hiding 6 trillion off the books so you can carry on getting the money in from people for their pensions, knowing full well you can’t pay out.

    Got to keep paying Bob and Frank to get rich.

  • mikems

    I’m sure Mr Crow believes that council housing is for everyone. That was the original aim so that society and the people could grow closer together and know each others lives better.

    We need to return to that spirit in this country. Narrow-minded bitterness, baseless cynicism and active malice has grown too common here – partly as a result of us being split apart and knowing nothing about each others’ lives.

    Let’s try to drop this empty propaganda and hostility from our political debate, shall we?

    Also council housing is not ‘subsidised’, it is rent controlled by the landlord. In the face of a massive housing shortage, increasing council rents to market levels is going to be a disaster for millions and will increase poverty and losses to the taxpayer in increased benefit bills.

    Why do you want that to happen?

  • Newsbot9

    Yes, you’re a fraud, claiming that accounts which are known are hidden. And yes, you and you buddies will keep raking in the cash.

  • Newsbot9

    That’s right, throwing people out their houses and into poverty if they accept a pay rise is idiotic. A more sensible strategy is and remains a low level of withdrawal of the subsidy, to the market rate, at say 2%.

    People on the minimum wage don’t pay £2,500.00 tax. At minimum wage, working 37.5 hours a week, it is £1,330.52 for tax and NI combined. And that’s right, you’ll chose when people die and how much you’ll be charging them because you refuse to pay tax.

  • Newsbot9

    Oh, an easy question! Because he wants cheaper foreigner workers for his factories.

  • mikems

    I’m sorry I wasted my time with you.

  • Newsbot9

    Ah right, having problem with the reality? Right. You know, I was agreeing with you, but hey!

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