True cost of cutting housing benefits

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Published: 23 September, 2010
LEGAL EYE – RICHARD STEIN

FROM April next year many of Camden’s poorer residents will be facing the prospect of having to move out of the borough and out of central London because of massive cuts to their housing benefit through restrictions to the Local Housing Allowance (LHA).

The cut to housing benefit, announced in the coalition government’s emergency budget, for those who live in private rented accommodation, will have particularly dramatic consequences for people living in Camden and other central London, high-rent areas.  

The government’s cut places a cap on the rent which councils can pay to private landlords.  

The level at which it is set means that thousands of households, including many families, will be unable to afford to stay in their present accommodation. They will be unable to find other accommodation under the capped limit and, as a result, will be forced to move out of Camden into lower rent areas in outer London.

Contrary to the myths about benefit claimants, many of the households in receipt of LHA are working.  Their wages, however, are not high enough to cover the cost of renting property in Camden. 

It is only with the help of the LHA that they have been able to continue to live in the area, in their community, close to their work, friends and families.  We all benefit from the broad mix of people who live in Camden from all classes, backgrounds and cultures, a mix which is made possible partly thanks to benefits such as the LHA. It is worth bearing in mind that many of these people work for low wages (eg restaurant staff, cleaners, hospital and transport workers) keeping our city going. Many work anti-social hours and need to live close by. The government’s proposed cuts place all this under threat.

The tenants are not, of course, responsible for the high rents in the borough. The high rents are caused by the shortage of affordable housing in Camden. With the sale of council houses and the failure to build adequate replacement social housing, the pressure on the private rented sector has increased dramatically, resulting in an associated rise in rent levels. 

For example, Camden Council has successfully dealt with much of the homelessness in the borough by moving people into private rented accommodation. This itself will have played a part in increasing the rents. Many of those people, who suffered from homelessness, will now be in dire straits again. It is also of concern that many of those who will be affected are families with children. 

The suggestion that people should “shop around” for cheaper accommodation will not ring true as a possible solution to anyone who has tried to find a flat in Camden. Those who currently receive LHA who are likely to be made homeless as a result of the government’s cut will be forced to move to temporary or seriously overcrowded accommodation or leave their families and communities and move to outer London. The concession to increase discretionary housing payments will have little effect other than to slightly delay the inevitable.

As well as causing great suffering to these households and harm to our communities, there is a real risk that any savings resulting from the cut will not be as great as forecast by the government. With an increase in the number of homeless families and individuals, the council will have the cost of providing additional temporary accommodation and there will of course be a knock-on effect on Camden’s 16,000-strong housing waiting list as well as in outer London areas where rents are likely to increase as more and more people are forced to move there. The likely result will be increased LHA payments in those areas.

• Richard Stein is a partner at Leigh Day & Co solicitors
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