Caps, cuts and moving home

Donald Rumsfeld would call it an unknown unknown: how many people will be forced to move miles away from home as a result of the government’s housing and welfare reforms?

As a new law allowing local authorities to discharge their duty to homeless people into the private rented sector comes into force from this Friday (November 9) and the countdown continues to sweeping cuts in benefit from April 2013, it’s a question that will be asked over and over again.

The furore first arose in 2010 when the bedroom caps in the private rented sector prompted accusations that the poor were being ‘socially engineered and sociologically cleansed’ out of central London as councils looked as far afield at Stoke, Derby and Nottingham for cheap accommodation.

It flared up again in April 2012 when it emerged that Newham council had written to housing organisations across the North and Midlands offering to pay a premium to lease homes for its homeless families in their area.

And it happened again this week when a survey by The Guardian revealed that homeless families will be ‘expelled’ from London as councils across the capital secure properties as far afield as Nottingham, Manchester and Merthyr Tydfil.

The idea of homeless people being shipped miles away from friends and family and especially of children being moved away from school provokes a strong emotional response that cuts through all the detail about the cuts. Hence the use of charged terms like cleansing, expulsion and clearance with all their historical connotations.

In the process, even Conservatives have found themselves oscillating between accusing their opponents of gross exaggeration and demanding stricter controls on what councils can do. London mayor Boris Johnson fanned the flames in 2010 with a statement that he would not accept ‘Kosovo-style social cleansing’ of the poor in London and he said this week that he was ‘concerned’ about the plans revealed in the Guardian survey. Former housing minister Grant Shapps told the Today programme in April that local authorities must take into account the welfare of tenants ‘and that includes not packing them up and sending them to Stoke’ and he backed that up with a consultation on a new Homeless (Suitability of Accommodation) order. This strengthens existing legislation and guidance on out-of-area placements by requiring local authorities to take into account the distance from its area and disruption to employment and caring responsibilities and schools, doctors and social workers.

The problem for councils in London is that the supply of accommodation affordable within existing housing benefit rates is already drying up and they fear the situation will go from acute to critical come April 2013. As I blogged on Monday for Inside Housing, a report just published by the Child Poverty Action Group says councils will be caught ‘between a rock and a hard place’, forced by housing benefit rates to look outside their area yet knowing they will face legal challenges under the homelessness rules. It remains to be seen how the courts will see things.

The government’s defence is, as always, that the critics are exaggerating, there are systems in place and things will not be as bad as everyone fears. Ministers point to the experience so far of the April 2011 local housing cuts (caps by bedroom size and restriction to the 3oth percentile). Work and pensions secretary Iain Duncan Smith told the Commons on Monday that research by Sheffield Hallam University ‘has found so far that only 2 per cent of claimants – less than people thought – of claimants moved because of eviction or a landlord refusing housing to housing benefit tenants, and few claimants gave financial reasons for actually moving’.

But is that quite as reassuring as it sounds? How far does that form of words cover people whose tenancy comes to an end and cannot afford the rent on a new one or an alternative nearby? The CPAG report points out that existing tenants had transitional protection from the bedroom caps and so they are only really biting around but many affected so far seem to be choosing to stay put and make up the shortfall from other benefits or move locally into cheaper but more over-crowded and sub-standard accommodation rather than move. It’s surely not a surprise that people will do everything they can to stay in their home and their community – especially if they have children at school.

However, figures on the increase in local housing allowance (LHA) claims obtained by Labour MP Karen Buck show big differences between different parts of London. Here are the figures for April 2010 and April 2012 ranked according to the increase in LHA claims:

What strikes me immediately is that the biggest increases were concentrated in outer London, especially in east and south London, while the smallest increases came in inner London, and especially West London. It’s the pattern that might be expected from the local impact of the bedroom caps and it’s largely in line with forecasts made for Shelter by Cambridge University researchers last year that the effect of the bedroom caps would initially be localised in central and inner west London. This report forecast that the proportion of London neighbourhoods affordable to LHA claimants would fall from 75 per cent in 2010 to 51 per cent in 2011 and then to 36 per cent by 2016 as the April 2013 cuts (the overall benefit cap and restriction to CPI inflation) take effect.

The figures may well also reflect an economy doing better in inner than outer London (the national figures show that most of the biggest increases are in the north and most of the smallest in the south) and the rise of the working poor. It’s also true that every borough apart from the City of London (where the number of claimants is tiny) saw an increase in LHA claimants. However, could the figures also be an indication at least that movement between – or diversion from – areas has been higher than the IDS is making out? And, even if many tenants are holding on for now or moving into sub-standard accommodation or even sharing (the number of multi-family households is up 20 per cent in the last two years) in their local area, will they be able to once the next round of cuts hits in 2013?

The situation will be further complicated by this week’s change in the homelessness legislation. As I understand it, only people entering the system from Friday will be affected but to give some idea of the scale of the impact these are the numbers for last year. There were 50,000 households accepted as unintentionally homeless and in priority need by local authorities, 52,000 households (37,000 of them in London) in temporary accommodation and 199,000 households helped to stay in their home or find alternative accommodation under homelessness prevention and relief work.

Back with former US defense secretary Rumsfeld, the known unknown in all this is the impact of this will be on local authorities and on homeless people themselves. The result will be a complex interaction between formal and informal policies made by local authorities, decisions made by homeless people themselves and potentially rulings made in the courts. Decisions made in one local authority will impact on others, creating knock-on effects that could just intensify deprivation and put extra stress on services that are already under pressure.

The known knowns are the next wave of housing benefit cuts. The government says the overall benefit cap will affect 56,000 households, half of them in London, with the impact split between the private and social rented sectors. CPI indexation will turn the screw over time so that a decreasing amount of the actual rent is covered by the local housing allowance. The bedroom tax will mean that an estimated 660,000 social tenants will face an average loss of £14 a week and their own decisions to make about whether to stay put and make up the shortfall, move or find some other way like taking in a lodger. While any moves would usually be within the same area, there is not remotely enough smaller accommodation available, so the only choice could be a smaller private tenancy with a higher rent.

The unknown unknowns were summed up by the National Audit Office in typically under-stated language with subliminal echoes of Rumsfeld in a report on the housing benefit changes last week: local authorities face a ‘major challenge’; there will be severe shortfalls in homes affordable for people on benefit by 2017; the whole thing ‘may produce some extreme impacts’; and the DWP faces ‘unplanned and perhaps un-plannable challenges’.