An Unnecessary Role

embracing false choices

Want to make Universal Credit work in London? Just make stuff cheaper

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I posted a little while ago about the risk to London posed by the lack of regional variation in the way Government funding is being allocated and benefit rates are calculated. I was suggesting that in order to avert real-terms funding discrepancies and, even more importantly, the likelihood of thousands of benefit claimants (many of whom are in work) being forced to move the Government should ensure that their decisions reflect the cost of living and working in particular areas of the country.

It turns out that I couldn’t have be more wrong. This London Councils report  indicated that the Universal Credit reforms did not reflect the cost of living in London and would ultimately prove a disincentive to work. Responding to it, the company Policy In Practice (an unbiased lot given it was “was established to help the government deliver its welfare reforms”) makes clear that actually all those of us worrying about the impact of this policy are looking at this from completely the wrong direction:

A better policy response would be to reduce the costs of childcare, transport and housing to improve conditions for all Londoners and make the capital more competitive.

I cannot deny, this would make a lot of difference. If stuff cost less, then benefits would go further. If the cost of living wasn’t so high, then the Government’s plans wouldn’t be faulty on a grand scale. At this point if I was being politically mischievous I could point out that when you have a Mayor that does this:

Public transport users in London are being reminded that fares across the capital’s range of services are set to increase by 6.8 per cent next week in line with changes first announced in October.

The new fares come into effect from Sunday 2 January 2011 and will see the cost of a single Oyster bus fare rise to by 10p to £1.30. On the Tube the Zone 1 pay as you go fare will also increase by 10p to £1.90 while “overall” Travelcard season ticket prices will go up by RPI plus two per cent.

The increases are the third implemented by Mayor of London Boris Johnson since he took office in 2008.

Leads a London housing sector like this:

The problem is illustrated by two examples provided by London and Quadrant to the London Assembly planning and housing committee back in March. If a tenant were charged 65% of the market rent on a one bed home in Haringey their rent would be around £137 per week, a full £52 higher than a social rented home.

There is obviously a demand for housing let at these intermediate rents. But London and Quadrant told us that 77% of their residents earn less than £15,000 a year. The mayor’s own research shows that some 14% of Londoners in work earn less than than this threshold, and that this group is in the most acute housing need. This new “affordable” housing isn’t affordable for them.

Families on low incomes are even worse off. The mayor wanted 42% of social rented homes to have three or more bedrooms, but only 29% of the affordable rent homes will be that size. The likely result will be more overcrowding. As for rent, a family seeking a four bed property in Haringey would need to pay £293 per week if it were let at 65% of market rent, 132% higher than a social rent of £126 per week.

Or this:

Boris Johnson today urged the coalition to leave London’s rising house prices alone or risk worsening the housing crisis.

And did this:

The Conservative threat to affordable childcare and frontline services was highlighted in London today following the news that Tory mayor Boris Johnson has disbanded London’s dedicated childcare unit.

Then you probably aren’t going to stand much of a chance of making all that stuff cheaper. As I’m not being mischievous I’ll simply say this is a hopelessly naive way of looking at the problem. These changes are coming, they will cause chaos for London’s housing sector, local authorities and the people they serve. And airy theories without the policy to back it up won’t solve anything.


Written by samelliot

August 4, 2011 at 10:53 am

Posted in Finance, London, Welfare

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