New research shows councils in London fear housing crisis fuelled by welfare reform

June 11, 2014

Cuts to benefits have left families in London struggling and unsure how they will afford to stay living in their area, according to a new CPAG report released today.

Based on interviews with councils, advice services and parents as well a review of existing evidence, the report highlights that these key groups share the same fear: a housing crisis uprooting families from their homes and communities, with children’s education facing huge disruption by these forced moves.

Welfare reform has hit London harder than any other part of the country. High housing costs means that households in London on average have lost 22% more than the rest of the country, losing almost £7 more per week than households outside of London. Almost half of all households hit by the benefit cap are from London.

This report reveals that councils and families fear that this situation is set to get worse. They are already seeing a shortage of properties that are affordable to rent on housing benefit. Rents in London are set to rise considerably faster than housing benefit, meaning the pool of affordable properties is getting smaller and smaller.

CPAG is concerned about the impact that these cuts will have on child poverty in London where we already see the highest rates of child poverty in the country. The high cost of living in the capital means that the experience of the capital’s children of growing up in poverty is one of particular hardship. The Institute for Fiscal Studies projects a significant rise in child poverty by 2020, and this is likely to hit London hard.

Issues highlighted in the report are:

• Councils are struggling to find local housing for local families already and believe it is only going to get harder. Sixteen London boroughs already have more households claiming housing benefit than there are affordable properties. Many said that they were seeing a large number of families taking on tenancies above housing benefit caps and were making up the shortfall.

• High childcare costs in London make it harder for work to pay. New analysis in the report shows that a parent with four children working part time and paying average childcare costs in London will be £65 worse off per week than the same families outside of London.

• Financial work incentives alone have not been enough to enable parents to start work. Only 13% of households hit by the benefit cap have entered work.

• Low income families feel that they are no longer welcome in London and fear being forced to move somewhere far away and unknown.

• Families are relying on short term, discretionary payments from councils in stay in their homes.

• There has been 1000% increase in homeless families moved outside London between 2011/12 and 2013/14. Councils are struggling to house homeless families in-borough or even in London and believe that this figure will continue to rise.

• Council run benefits schemes for Council Tax reduction, Discretionary Housing Payments and the localised Social Fund create a possible postcode lottery

• Welfare reform is hitting working and workless families, and families who have previously not been expected to work. This includes lone parents with very young children.

• This research is based on interviews with 10 local authorities, 5 organisations providing advice to families, and focus groups and interviews with 47 parents.

CPAG are calling on central government, the Mayor and Greater London Authority, and councils in London to renew efforts to mitigate negative impacts from the reforms. They are asking for:

• Housing benefit allowances to match rent levels in the capital

• Funding for childcare to recognise and match London’s costs to make it easier for parents to work

• Parents who are not expected to work to be made exempt from the benefit cap – currently even breast-feeding mothers are subject to the cap

• Reinstate funding to protect poorest residents from paying council tax and maintain access to Local Welfare Assistance funding

• Ongoing monitoring of the effects of welfare reform in London to enable action to be taken to mitigate any negative effects

Alison Garnham, Chief Executive of Child Poverty Action Group, said:

“Councils and families are telling us that a crisis is just around the corner in London. It will cause tremendous disruption to children’s lives for families to have to leave their city, their extended families, schools and support networks. It also risks destroying the mix and diversity London prides itself on. Londoners need a housing benefit system where allowances match local rents and we need better quality services for helping parents find work, stay in work and progress onto higher pay. This must include improving the supply of high quality childcare and ensuring families can afford to pay for it.”

 

Notes to editor

1. Full report available at www.cpag.org.uk/content/families-brink-london. For more information or to arrange an interview with a CPAG spokesperson please contact Megan Jarvie on 020 7812 5210 or 07966 036 378 or Tim Nichols on 07816909302.

2. CPAG is the leading charity campaigning for the abolition of child poverty in the UK and for a better deal for low-income families and children.

3. This research was funded by Trust for London.

4. 592,000 children living in London are below the poverty line, 37 per cent of all children in the capital. While poverty rates are higher for everyone in London than nationally, this gap is larger for children than for any other group. London has the highest rate of child poverty of any English region. There are as many poor children in London as in all of Scotland and Wales.