Return of the single end? back to the future for UK social policy

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1 Public Meeting at The Pearce Institute, Govan Thursday, 18 October 2012 at 7pm Return of the single end? back to the future for UK social policy The rationale for housing benefit cuts for under-occupied homes in the social rented sector is simple. The UK Government want to reduce the overall cost of housing benefit so the bedroom tax is essentially just another tentacle of the austerity agenda. An agenda that almost all respected political economists around the world will tell you is nuts. 1 If everyone does something at the same time, like implement cuts and reduce spending which is what the austerity agenda is all about the economy will go on a downwards spiral and UK debt will actually grow. This is known in economics as the fallacy of composition principle. 2 Chancellor Osborne has got it wrong, GDP has gone down, and our economic growth is more or less flat lining. 3 The cuts don t work George. Yet, there are other equally powerful reasons why implementing a bedroom tax is just plain wrong and not in the public interest. It s not joined up housing or social policy. Two immediate problems are created: first, you create a dynamic to force people to downsize. The DWP estimate that 660,000 people across the UK will be affected by these changes. The changes only apply to claimants under the age of Some 81% of those affected are under occupying by just one bedroom See this short video by Professor Mark Blyth of the Watson Institute, Brown University, entitled Austerity : Although that figure will rise to 66 by 2020, see paragraph 6 of the Impact Assessment: 1 P age

2 That means most people affected will be liable to a 14% cut in their existing housing benefit from April 2013 the equivalent of 624 per annum or 12 per week. And the DWP already accept there will be many communities where there is insufficient smaller homes to downsize to. 5 So strategically speaking, forcing tenants to downsize won t necessarily help anyone if the spread of housing stock isn t there. Unless existing social housing infrastructure fits your policy, you end up trying to force a square peg into a round hole. We all know there is a dearth of affordable housing across the UK, and the bedroom tax does nothing to help that. It will create nothing; it will cause misery, stress and serious worry for many tenants, and extra administrative costs and problems for social landlords. The second major difficulty with the Government s policy is this. If we accept that there are not going to be enough smaller properties for tenants to downsize to and the DWP already appears to accept that, then this policy is going to lead to an increase in eviction and homelessness in Scotland and across the UK. Curiously, the updated DWP Impact Assessment for the bedroom tax dated 28 June 2012 does not examine the consequential costs to the taxpayer for an increase in homelessness. It predicts a saving of 980m over two years 6 but how realistic can that be when you take into consideration the costs the policy will have on local authorities and the NHS over the period ? From GLC s own research we know that the estimated economic cost of a typical homelessness case is 24,000. It can be as high at 83,000 for the most complex case. The cost of each case to local authorities and housing providers is 5 DWP Impact Assessment (February 2011) ia.pdf P age

3 15, An exacerbating factor is that from next October, most benefits - including housing benefit - will be replaced by a Universal Credit, to be paid directly into a person s bank account, monthly in arrears as a single payment. The National Housing Federation in England and Wales estimates that around 15% of tenants do not have a bank account and have no access to direct debits to pay their rent. 8 Alarm bells should be ringing now. Some people prefer cash budgeting and mistrust banks because of a past badbanking experience. Being trapped in a cycle of monthly bank charges and fees is part of the problem, not the solution, for financially distressed tenants. We have to acknowledge that there are those who do not wish to use banking services, would not benefit from them, and who should not be forced to do so; rather the alternatives to mainstream banking such as credit union accounts should be better explored and developed. History teaches us many things. For example if we look back at the 18 th century across Britain we see that the poorest people lived in just one room. Fastforward to 1911 and half of the population of Scotland lived in one or two roomed homes while the figure in England was 7%. 9 In Glasgow the figure rose to 66%, while in Dundee it was 72%. The one roomed bedsit home the single end in Glasgow was alive and well in Scotland, and indeed the UK. Such substandard, miserable living conditions were only tackled through progressive social change for example - the Rents and Mortgages Restriction 7 See Scottish Council for the Single Homeless Briefing Tenancy failure how much does it cost and Crisis How Many, How Much? Single homelessness and the question of numbers and cost by Crisis and New Policy Institute; and GLC s Prevention of Homelessness report: A history of the Scottish people: Urban housing in Scotland , W.W Knox: 3 P age

4 Act 1915 which fixed rents at pre-1914 levels; and the 1924 Wheatley Act 10 introduced by the then Minister of Health Glasgow s John Wheatley - which saw over half a million council houses built. Much of the early 20th century programme was aimed at slum clearance. 11 So it is incredible to think that the UK Government is going back to the future recreating the conditions for the emergence of high cost slum housing by driving people into smaller and more cramped homes as they tax the low paid and poor. Victorian values recreating Victorian housing conditions. Besides the poll tax, the last time Scotland saw such a regressive housing tax on the low paid and poor, was back in 1748 when you were taxed on the number of windows your house had. The phrase day-light robbery was coined, and people bricked up their windows to escape it. Sadly, escaping the regressive bedroom tax won t be so easy. Where will people in homes with an extra room go when there is insufficient capacity in the social rented sector? The private rented sector has already expanded and the Scottish Government has helped this by allowing homelessness duties to be met by them 12. But private landlords when interviewed about their planned responses to housing benefit cuts have not said they will increase supply by building more houses; 10 The Housing (Financial Provisions) Act 1924 (14 & 15 Geo. V c. 35). 11 In Glasgow in 1851 there were 64,000 houses at almost 13 per acre; by 1951 almost 300,000 houses but at 7.4 per acre; in 1946 about 60% of these houses were at 95 to the acre of which 83% were only 1 or 2 room. 91% were without proper sanitary facilities. In 1866 there was a private Act of Parliament, the City Improvements Act, empowering the council in Glasgow to acquire land by agreement and to clear insanitary streets. However it was 1894 before the first large scheme was complete with 100,000 square yards of streets demolished and rebuilt with the displacement of 51,000 people. With thanks to Nigel Sprigings of the Urban Studies Department of the University of Glasgow. 12 By regulations made under section 32A, Housing (Scotland) Act 1987: 4 P age

5 rather they will sub-divide existing houses to recreate the Victorian conditions. That is their plan. So while the overall housing benefit budget may be cut, an increasing proportion of it will go on private sector profit from individuals and small families sharing bathrooms in sub divided houses. If I can finish on some positive ideas to help prevent an increase in homelessness and misery in Scotland. An extra 30m across the UK has been promised for the Discretionary Housing Payments scheme, but that will not be enough to counter the savage cuts on housing benefit for the low paid and poor. We need additional solutions. An obvious one would be for the Scottish Government to set up its own special fund to be used to help prevent evictions and personal hardship. Alternatively local councils and the Scottish Government could explore the idea of setting up local Homelessness Prevention Funds. For example in England, South Staffordshire Council has set up a scheme where interest free loans are provided to households who would otherwise be evicted or repossessed due rent or mortgage arrears. 13 Why aren t we doing this in Glasgow and Scotland? A more controversial, but morally fair solution would be to amend the 2001 Housing (Scotland) Act 2001 to prevent social landlords relying upon rent arrears accrued through the bedroom tax being founded upon in court actions for eviction such debts could be pursued through other civil debt recovery /homelessness_prevention_fund.aspx 5 P age

6 routes. How can it be fair that people are made homelessness from their homes of many years because of a change in UK Government policy? Whatever we do, we need solutions. And we need them before April Mike Dailly Principal Solicitor Govan Law Centre Glasgow 18 October P age