Progress | Centre-left Labour politics

A rock and a hard place

London local authorities are stuck between a rock and a hard place, according to a new report published today by CPAG and Lasa examining the early and predicted impact of welfare reforms on London.

The report, based on interviews with local authorities and advice agencies in the capital, finds that when it comes to their treatment of homeless families under the reforms, local authorities face black holes in their budgets if they don’t seek accommodation outside the capital, and legal challenges if they do. Most importantly, the report indicates the disruption and difficulty that many families will face as a result of reforms brought in under the Welfare Reform Act 2012.

Perhaps the most controversial part of that act was the proposal to cap benefits at £500 a week for families with children. And it’s this reform that the report shows will be causing families with children, and in turn local authorities, significant difficulties when it comes into force in April. The benefit cap includes support with housing benefit. With private rents in the capital 36 per cent higher than the national average, it’s therefore unsurprising that nearly half of those affected (49 per cent) by the cap live in London. DWP impact assessments suggest that some 27,440 households in London will see their total benefits capped.

Many of these families may find themselves unable to pay their rent. Their options at that point are to move into work, find cheaper accommodation, or to present as homeless to the local authority. While we found many authorities trying hard to help families back into employment, the high cost of childcare in London – in this case 23 per cent higher than the national average – meant that for many this would not leave them much better off. Finding cheaper accommodation in a city where rents rose by seven per cent last year is also well-near impossible; at this point families’ only option may be to turn to the local authority.

Local authorities, however, don’t have a magic wand with which to make the problem of unaffordable rents in London go away. What’s more, not only will they need to help those families forced out of their own homes by the benefit cap, but those that they themselves have housed in temporary accommodation, who will also see their benefits capped. When the welfare reform bill was debated in parliament, Lord Freud acknowledged this problem, stating that: ‘We need to get a solution to this so that we do not have a ludicrous go-round of people moving into expensive temporary accommodation which they can no longer pay for because of the cap. We are absolutely aware of this and have measures in train to get a solution in the round to that issue.’

Unfortunately no solution has yet materialised, and families find themselves facing exactly that ‘ludicrous go-round’, with councils actively considering procuring temporary accommodation outside of London in order to house homeless families and avoid having to find funds to make up the gap between capped benefits and the cost of temporary accommodation. Additional research by the Guardian found that councils were looking as far afield as Manchester, Hull, Derby, Nottingham, Birmingham and Merthyr Tydfil. We don’t think that moving families away from their homes, schools, and social networks seems fair; and, in fact, nor does the government. When Newham council suggested procuring accommodation in Stoke back in May, the then housing minister Grant Shapps, responded strongly:  ‘Not only do I think it’s unfair and wrong, I have also made the legislation and guidance very clear that they are not to do this.’ Quite what local authorities can do in these circumstances without facing legal challenges remains uncertain. Even more uncertain is quite how these reforms will help ministerial ambitions to help families back to work and to escape poverty.


Kate Bell is Child Poverty Action Group’s London Poverty Project coordinator. She tweets @kategobell


Photo: Alex_Pink

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Kate Bell

is a visiting fellow at the Center for American Progress

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