Has David Cameron invoked two-nation Toryism?

What the Dickens? 

Plans to cap and cut Housing Benefit have sent more than just the housing sector reeling. The implications of what the NHF has already called “an onslaught on the vulnerable” are still sinking in, but it is feared the measures will ‘ghettoise’ deprivation and harden social inequalities, writes Mark Cantrell 

 First published in a 2010 edition of Northern Housing

Charles Dickens
"TWO nations," they said of the divide between London’s rich and poor. For the speakers, poles apart politically, the words encapsulated the inequalities inherent in the city – but also throughout Britain – and the words retain a tragic resonance with modern society that is expected to strike an ever-deeper chord in the wake of stringent benefit cuts.

The first speaker was Benjamin Disraeli, the man regarded as the ‘founding father’ of the modern Conservative Party and the One Nation Tory strand of its philosophy – of which, in some respects, David Cameron’s ‘Big Society’ and ‘compassionate Conservatism’ is considered the latest iteration. The second, however, was that notorious rabble-rouser Vladimir Illich Ullianov, better known as Lenin, the founding father of Bolshevism, who found much fuel for his ruthless cause in the social conditions he observed.

While Disraeli uttered the words as a lament on the condition of life, Lenin hissed them through the clenched teeth of anger. And so, one might say, the die was cast for the generations that followed.
History has absorbed both men, of course, along with the Dickensian conditions they both observed, but alas the stark inequalities they perceived have persisted in one form or another to make their ‘two nation’ curse as pertinent today as it was in their respective heydays.

Since their time, however, a host of individuals, political creeds, and social movements, both moderate and extreme, have sought to close the gap. Broadly speaking, especially in the post-war welfare state era, the gap indeed narrowed. Though in recent decades the gap between the affluent and – to use modern parlance – the deprived and socially excluded has widened again, still efforts have continued to address the problem.

Bridge over a troublesome divide

The housing world, of course, has found itself at the forefront of such efforts, sat amidst a myriad of partnerships to overcome this lingering tendency towards ‘two nations’, but the onset of recession and Government measures to reduce the country’s spending deficit, has created a situation that many fear may lead to a drastic reversal of fortune in the efforts to overcome deprivation and poverty.

Many factors account for this, but one of the single biggest blows is the proposal for the reform of Housing Benefit and Local Housing Allowance (LHA) contained in Chancellor of the Exchequer George Osborne’s Emergency Budget in June. He outlined his key points to reduce the country’s housing benefits bill by £1.8 billion over the course of this Parliament. In the wake of this, the housing sector – and many in wider society –has become concerned at the grim prospect of a 21st Century version of those Dickensian-style conditions emerging to blight modern Britain for generations to come.

Poverty is a complicated beast, of course, its causes legion, but high housing costs are an intrinsic factor and the worry is that the Government’s approach to reducing the housing benefit bill will in fact only exacerbate the symptoms while not tackling the underlying problems that have generated the undeniably breath-taking level of rental subsidy.

Welfare measures formed a significant part of Osborne’s Budget package, especially Housing Benefit, where he said that “costs are completely out of control” having risen from £14 billion 10 years ago to £21 billion today, while welfare spending as a whole he said had risen 45 per cent in the same period from £132 billion to £192 billion.

To place it under control, the Chancellor announced that from April 2011, the amount of Local Housing Allowance (LHA) that people receive is to be capped to between £250 for a one-bedroom flat and £400 for a family-sized home. From the same time, there will be increased deductions for non-dependents. From October this year, the LHA people receive will be calculated to match the bottom 30 per cent of the local private sector rental market rather than the bottom half of the market as it is currently. Increases of the benefit are to be linked to the Consumer Prices Index (CPI), which does not include housing costs, from April 2013, rather than the Retail Prices Index (RPI) as it is now.

Down the line, from April 2013, a time limit will be applied to the payment of Housing Benefit or LHA to those on Job Seekers’ Allowance (JSA), so that it will be cut by 10 per cent after a claimant has spent a year on the dole, leaving them to make up the shortfall on their rents. From the same period, the payment of housing benefits to working age tenants will be limited to the size of property they are judged to need.

All told, these measures are expected to claw back £1.8 billion in savings for the Treasury by 2014/15. Understandably, although nobody can deny the Housing Benefit bill is staggering, these measures have caused – at the very least – some disquiet for its potential social impact, which social landlords will be expected to address at a time when they themselves are facing financial restrictions.

Housing Minister Grant Shapps, at Harrogate, tried to alleviate some of the sector’s worries, by pointing out the lead time on many of these reforms – by then the economy is expected to have picked up, he said, thereby creating employment opportunities. This, he claims, will soak up the feared social consequences of the changes, but for many people contemplating the measure, it is, if it can be put that way, forward planning on something of a hope and prayer.

No more mister nice-guy?

The Prime Minister, David Cameron has said that “we are all in this together” when it comes to efforts to cut the nation’s budget deficit, and he has promised that the most vulnerable in our society will be protected. However, there is concern that the impact of the reforms reveals Cameron’s rhetoric as distinctly hollow.

“This cut in housing benefit will make a real difference to some of our poorest and most vulnerable families, and will affect nearly one million households,” said TUC general secretary Brendan Barber. “The Chancellor promised ‘not to hide any hard choices from the British people or bury them in the small print of the Budget documents’, but this is another reminder that we are definitely not all in this together. While the rich have been let off, families are being left to pick up the cost of the recession.”

Liz Phelps, housing policy officer for Citizens Advice said: “There can be no doubt that the combined effects of these cuts will lead to a sharp increase in rent arrears and homelessness, with the potential to spark a housing crisis in places such as London, where the cuts will have the biggest impact. Among those worst affected will be some of the most vulnerable households and people doing low paid but vital work in the capital. Only seven per cent of rents in central London will be affordable within the new housing benefit limits.

“We already see many people on very low incomes who are renting in the private sector – often through necessity rather than choice – and who struggle to make up a shortfall between their housing benefit and their rent, getting into arrears as a result. Added to this, many private landlords are already unwilling to let to anyone on housing benefit, and these cuts will make them even more reluctant to do so. People on housing benefit will find themselves between a rock and a hard place – unable to afford their rent, but unable to move because they can’t find another landlord prepared to take them on, so much more likely to become homeless.

“Worryingly, the Government’s impact assessment skates over some potentially major effects of the changes. Rent arrears and evictions are likely to rise sharply once the changes come into force, yet there is little consideration of the impact on local councils, whose homelessness services will be under enormous increased pressure, with reduced scope to find housing solutions in the private rented sector because of the cuts – and all this at a time when local authorities themselves will be facing budget cuts.”

More than 750,000 people are at risk of losing their homes in London and the South East because of the housing benefit capping, the National Housing Federation (NHF) has said. The organisation warned that not all of them will be able to find alternative accommodation in the region that meets the restrictions placed on the levels of Housing Benefit or LHA they require to meet their rents. Many will therefore be ‘forced’ to leave the capital or indeed the region, while up to 200,000 people will be put at risk of homelessness.

“The housing benefit caps could see poorer people effectively forced out of wealthier areas and ghettoised into poorer neighbourhoods,” said David Orr, the NHF’s chief executive. “Some people affected by housing benefit caps may successfully find a home in cheaper areas, but many will end up in expensive bed and breakfast accommodation, while thousands will simply become homeless. Unless ministers urgently reconsider these punitive housing benefit cuts, we may see more people sleeping rough than at any stage during the last 30 years.”

There’s no place like home

The organisation added to its fearful homage to this grim future, by stating the caps and cuts will see more people go into arrears – resulting in eviction. This may lead them to be seen as ‘intentionally homeless’ and therefore lose any entitlement to emergency accommodation from a local authority. The new rules may also make vulnerable people easy prey for loan sharks, further fuelling a cycle of poverty, fear and debt.

“Quite frankly, the proposals are disturbing and unfair,” Orr added. “Forcing people already on the breadline to take a huge cut in their disposable income will push low income groups out of prosperous areas like London and the South East – and further away from jobs, therefore increasing unemployment and the concentration of social problems in deprived, marginalised areas.”

For some commentators in the media, the prospect of these measures ‘evicting the poor’ out of London is a positive and welcome outcome. A cursory glance through the public comment boards of a broad spectrum of the nation’s daily newspapers soon shows the existence of a tendency that suggests that if people can’t afford to live in the capital out of their own pocket, then they shouldn’t be living there at all. The accusations of ‘social cleansing’ have already been lobbed at the Government for its proposed reforms.

It’s one point of view, of course, among many, but it harks back to the ‘two nations’ and the notoriety of London’s divide: the city has long had the wealthy and the impoverished living effectively side by side. At the risk of bad satire, no city lives by fatcat financiers and high flying professionals alone; somebody has to do the hard work that keeps the civic wheels turning – many of which cannot adequately support the cost of living in the nation’s high-flying capital.

Simply put, poverty isn’t just about those who are out of work. There is the working poor too, and among those it is feared will be forced to leave London, for the outskirts, or even further afield, are many who will not simply be leaving behind a home and a community – the situation will be forcing them to leave behind a job.

Research conducted by the NHF indicates some 308,000 low-paid workers will be affected by the ‘new deal’ on housing benefit.

“These cuts will have a huge impact on thousands of households in London, the majority being pensioners, those with disabilities, people caring for a relative or hardworking people on low incomes,” said Campbell Robb, Shelter’s chief executive.

“The increased rental costs people will now have to find each month will force many Londoners to leave the homes and communities they work in, and often grew up in, and move further out in search of cheaper rents. Long term this could see clusters of poverty and inequality, creating an even bigger gap between rich and poor.”

London is expected to be hit hardest by the change to Housing Benefit and Local Housing Allowance, but the issue affects more than just people living in the capital. Indeed, in some respects, this focus represents the typically London-centric view of the UK that could be considered a further aspect of the ‘two nations’ divide.

Get outa town

An analysis carried out by the NHF shows that while London and the South East will be the hardest hit, it is not the only city or region that will feel the pain of the cuts. All told, according to the organisation, nearly one million people are at risk of being driven into debt, falling into arrears or losing their home.

In London, 159,370 people could lose out, while across the South East a further 123,000 may lose, but in the North West some 130,900 people could be affected by the cuts. In the Midlands, 18,780 people can expect to be affected in Birmingham, and 5,840 people in Nottingham. In Leeds, the NHF says 15,610 people may lose out, 10,210 in Manchester, 12,620 in Liverpool and 8,630 in Bristol. People forced to move out of their area will, of course, only add to the pressures faced by the neighbourhoods, towns and cities where they end up moving in search of a home they can afford – and indeed new employment.

In terms of the people who are set to lose out – to the tune of an average £624 a year from their housing support – are 431,000 women, 299,800 single parents, 205,500 unemployed people, 178,000 black and Asian people, and 75,000 older people.

The Government, of course, hasn’t set out to cause such mayhem – if indeed such mayhem eventually does come to pass – but that will be of little consolation to those affected, or to those left to pick up the pieces. Ministers will – and do – point to the staggering size of the budget deficit, the high Housing Benefit bill, and the lack of money that has forced such austerity measures on the country.
They may say ‘no pain no gain’, but the critics of the move suggest that it will create a great deal of pain, for no gain at all – indeed, they warn it will cost the Government and society a great deal more than it saves.

Ironically, housing professionals, among others, have accepted the need – and argued for – reform of the housing benefit system to help overcome so-called benefits dependency, where taking on work can leave claimants facing greater financial hardships than if they simply remained on benefits, but in light of the current changes to the system, it may well turn into a case of ‘be careful what you wish for’. Certainly, the sector has not been arguing for this “onslaught on the vulnerable” as the NHF has referred to it.

“Ministers have said consistently since taking office that they will do their utmost to protect the vulnerable – and yet the introduction of the housing benefit caps will clearly lead to an onslaught on some of the most vulnerable groups in society,” said the NHF’s Orr. “The changes could see hundreds of thousands of vulnerable people fall into debt, forced out of their homes and neighbourhoods and crammed into over-crowded ghettoes.”

Two nations, indeed, and what the Dickens will we do about it then?

This article first appeared in Northern Housing magazine, circa April or May 2010. It was subsequently republished on the Housing Excellence website, 10 August 2010

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