Mayor says welfare reforms are ‘forcing Londoners onto the street'
- City Hall report shows cuts to housing-related benefits have hit Londoners hardest
- Welfare cuts have directly led to overcrowding, rent arrears, evictions and homelessness
- Sadiq reiterates call for Universal Credit roll-out to be stopped
The Mayor of London, Sadiq Khan, has called on the government to stop the roll out of Universal Credit, after new analysis from City Hall showed welfare cuts over the last decade have led to a rise in the number of people in London forced into homelessness. Last year, 8,855 people were seen sleeping rough on the streets of London by outreach workers – more than double the number in 2010/11.
Since 2010, governments have made a series of cuts to welfare which have hit people’s ability to sustain a tenancy. These include cuts to Local Housing Allowance, the Benefit Cap, the ‘Bedroom Tax’ and the introduction of Universal Credit*.
The new analysis from City Hall shows that private renters claiming Housing Benefit, including those who work, will receive an average of £1,400 less a year by 2020/21 than would have been the case without the changes in Local Housing Allowance introduced over the last nine years. It also shows that:
- In Inner East and North London, this figure rises to £3,950;
- Households also subject to the Benefit Cap face a shortfall of £5,450;
- Social housing tenants subject to the Bedroom Tax will receive an average of £1,050 less.
These reductions in support contrast with steep rent increases in the private rented sector over the same period. The average rent for a two-bedroom private rented home in London was £6,600 a year higher in 2018/19 than in 2010/11.
The creation of Universal Credit in 2013, introduced to replace a range of existing benefits including Housing Benefit, has led to further barriers to claimants maintaining a secure, long-term housing tenancy. As well as increasing the use of sanctions, the introduction of Universal Credit has meant:
- It takes longer for claimants to receive support than was the case with Housing Benefit, which may make landlords more reluctant to let to them;
- Monthly payments can make budgeting more difficult, because low-income households typically budget over time periods shorter than a month; and
- The amount of money to which some claimants are entitled, from elements of Universal Credit other than housing support, is lower than it would have been previously. This puts a further squeeze on household budgets, potentially forcing claimants into arrears.
Research shows that households receiving Universal Credit are much more likely to receive help from a local authority because they are homeless, than households receiving Housing Benefit3. Meanwhile, landlords have reported that the roll out of Universal Credit and the associated delays in assessment and payment make them even more reluctant to let to benefit claimants. The full impact of Universal Credit will not become clear until the roll out is complete in 2023.
The Mayor of London, Sadiq Khan, said: “The Government’s introduction of Universal Credit has been an unmitigated disaster and should be stopped before it forces any more Londoners onto the streets.
“This report sets out in stark detail the brutal impact of nearly a decade of welfare cuts on the lives of Londoners. Whilst it is the actions of central government that is causing the rise in rough sleeping, it’s London that is left to pick up the bill. That’s why these draconian cuts must be reversed immediately.
"We are doing all we can to help Londoners affected by high rents, but without the powers to do more we need the Government to play their part. They should urgently reverse their damaging benefit cuts, overhaul tenancy laws to make them fit for purpose, and give me the power to bring in the rent controls Londoners so urgently need."
Earlier this year Sadiq published a landmark report setting out a detailed blueprint of how tenancy laws should be overhauled, including the introduction of open-ended tenancies, and the new powers he wants from Government to introduce rent control. Under these proposals, the Mayor would establish a new London Private Rent Commission, with renters on its board, to implement and enforce measures to reduce rents and keep them at lower levels.
Dan Wilson Craw, Director of Generation Rent: “Without a reliable housing benefit system, Londoners on low incomes are getting into debt, going without food and heating or being forced to move out of neighbourhoods they grew up in.
“This is fuelling physical and mental ill-health, and, by disrupting educations, devastating the prospects of thousands of children. The government might think it has saved money by stripping renters of support, but the costs of the human misery it creates, through temporary accommodation, the NHS, and social services, are mounting. The government must now scrap the benefit cap so that everyone can cover their essential payments.”
Councillor Victoria Mills, Southwark Council Cabinet Member for Finance, Performance and Brexit, said: “We have long been aware of the impact that Universal Credit is having on our most vulnerable residents. Our ‘Safe as Houses’ reports highlight that Universal Credit is still creating poverty and stress for those already on the breadline. All three waves of research show the biggest problem is the five week waiting period and the fact Universal Credit payments are made monthly in arrears.
“How is anyone expected to survive in London with no money for five weeks, not least those who are already seriously struggling financially?
“More fundamental change is needed to Universal Credit – people shouldn’t be waiting so long to get their payment and there’s no reason they should have to be paid monthly. We will continue to urge government and the DWP to make radical changes to tackle this broken system.”
Mayor of Tower Hamlets, John Biggs, said: “The Government’s austerity policies have hit my residents hard and this report highlights the human cost. People are being forced to live in overcrowded housing, are falling into rent arrears and are facing evictions and homelessness.
“This report should be a wakeup call that the welfare safety net is broken and needs fixing urgently. Homelessness was all but eradicated under the previous government because it was a political priority and it’s a disgrace that the most vulnerable in society have had to shoulder the burden of austerity.
“I’ve called for Universal Credit to be scrapped and we need a reversal of these welfare reforms to protect those most in need.”
Notes to editors
* Local Housing Allowance – Local Housing Allowance rates are used to determine how much Housing Benefit claimants receive if they rent privately. There have been changes in how Local Housing Allowance rates are determined, including reducing basic rates from median market rent to the 30th percentile, and subjecting them to further caps of between £250 and £400 a week, both with effect from April 2011.
The Benefit Cap – With effect from summer 2013, households below State Pension age whose total benefit entitlement exceeded £500 a week, or £350 a week for single people, became subject to deductions from their Housing Benefit.
The ‘Bedroom Tax’ - From April 2013, the Department for Work and Pensions’ bedroom standard was applied in calculating the Housing Benefit to which social sector tenants of working age were entitled. Those living in homes larger than the standard assessed their household needed were subject to deductions – of 14 per cent of total rent for tenants with one additional bedroom and 25 per cent for tenants with two or more.
Universal Credit - Universal Credit is a single benefit that is intended to replace some existing benefits and Tax Credits, including Housing Benefit.
 CRESR, Sheffield Hallam University. Funded by the JRF and Oxfam. The uneven impact of welfare reform: the financial losses to places and people. March 2016.
2 Suzanne Fitzpatrick, Hal Pawson, Glen Bramley, Steve Wilcox, Beth Watts & Jenny Wood, Institute for Social Policy, Environment and Real Estate (I-SPHERE), Heriot-Watt University; City Futures Research Centre, University
3 Patching the Safety Net - Measuring the Impact of Universal Credit on tenants and landlords (2019) - NFA and ARCH survey into the impact of Universal Credit – 2019
Sadiq is using all the resources and powers at his disposal to tackle the wider London housing crisis, and last year started a record 14,544 affordable homes, including nearly 4,000 at social rent levels – more than in any year since City Hall took control of housing investment in the capital, and exceeding the target of 14,000 agreed with Government ministers.
The full report ‘The impact of welfare reform on homelessness in London’ can be found here: www.london.gov.uk/welfare-homelessness