The Housing Benefit cap will push down rents

Cllr Philippa Roe, the Cabinet Member for Housing on Westminster City Council, says contrary to reports that thousands of children will have to move school due to the Housing Beneft cap that landlords will take lower rents

Implementing the reforms to the housing benefit system are undoubtedly a huge challenge for local authorities with numerous stories recently appearing in the press around the impact upon households with children.

In Westminster we estimate that there are around 4,000 children in households currently living significantly above the caps.  However, we have already taken significant steps to limit the impact upon affected households, providing support to negotiate down rents with landlords, signposting into accommodation which is available within easy reach of essential services and within the caps.  

Furthermore we will be looking to support the most vulnerable and households with children at critical stage of education remain in their homes through the use of Discretionary Housing Payments.  It is also worth noting the context that at present more than 50% of Westminster’s secondary school children and 20% of primary school children already live outside the borough, commuting in to school and there is an annual population churn in the borough of around 30%.

It is also vital to remember the reason for the reforms and the context of a £20bn national housing benefit bill - a bill which had been growing exponentially in recent years, particularly since the introduction of the Local Housing Allowance in 2008.

Whilst the principles of giving recipients the responsibility to manage their own finances and source their own accommodation are laudable, the Local Housing Allowance has also supported households on housing benefit to freely choose to live in some of the most expensive real estate in the world, despite having had no prior connection to the area, and find themselves a private sector property with a rent value of up to £2,000 a week.

To put the cost to the taxpayer in context, in Westminster we have more than 100 households receiving in excess of £1,000 per week in housing benefit, and more than 1,000 households receiving in excess of £500 per week.  Clearly this position is unsustainable, with more than £276m spent on housing benefit in the borough in 2010/11 – an increase from £247m in 2009/10.  Furthermore, there had been a 60% increase in the number of households living in private sector accommodation and claiming housing benefit in the borough since the introduction of the LHA in 2008.

The sheer scale of these numbers also raises the question of how can it be fair that lower income, working households are expected to commute for work whilst a family claiming housing benefit can elect to live in a house costing up to £104,000 a year to rent, at the taxpayers’ expense?

Supporting people to find and live in accommodation that is beyond the means of 96% of the working population is therefore socially unjust and economically irresponsible.

Neither do we ascribe to the concerns that there will be a likely mass-migration or that the changes will signal the end of low income households living in central areas.  For example, there will still be almost 25,000 affordable properties provided within Westminster, which will not be impacted on by the new caps and many of these households are on housing benefit. Furthermore, these figures need to be set within the context of a London-wide population of more than 7.5m.

Longer term the solution still undoubtedly rests in providing more affordable housing across the capital. Westminster has a strong record in this area of late having already surpassed the agreed 3-year (to March 2011) target for additional affordable housing which was set by the Mayor.

We also have plans to build more than 2,500 new properties, the majority of which will be affordable, across the borough over the next 10 years. In many respects the full impact of the changes is unknown at this stage.  The volume of households who move will of course depend on their discussions with their landlord, the Discretionary Housing Payment allocation, the raft of forthcoming housing legislation and personal circumstance.  

With the introduction of the regulations local authorities can however prepare, develop a strategy for managing the transition and help return the housing benefit system to a fairer footing from next January.