A few days ago I tweeted that current housing policy was a “right mess”. That was in part a response to the news, reported in Inside Housing, that there is going to be an increase in the distribution of tents for homeless ex-offenders in Nottingham, in lieu of settled accommodation. But it was a more general observation that the intersection of the various current initiatives don’t seem to sum to anything bordering on coherent. A key element of the current agenda is the reform of the Local Housing Allowance (LHA) for private tenants. And we’re now moving into the implementation phase of the reforms.
I’ve written about the LHA before (here and here). But I return to it because the more I think about it the more I think there has been something missing from the debate.
It is quite striking that there is an absence of strong arguments to counter the narrative the Government has constructed to justify constraining benefit entitlements.
The Government has a relatively simple message with three components:
- it is necessary to make the benefit system ‘fairer’ by reducing its generosity and, correspondingly, the burden on the taxpayer
- no one should be better off on benefit than in work
- expenditure on the LHA needs to be constrained. And the way to do that is to implement caps on maximum entitlement, restrict assistance to those under 35 years old to help with shared accommodation only, and recalibrate benefits so they are based on the 30th percentile rather than the 50th percentile.
The second of these components seems to command broad support. Yet even then there are, of course, two ways of achieving the objective: you can either cut benefits or increase remuneration in work. While the Government has modestly uprated the minimum wage, most of the focus has been on reducing benefits.
The third component of the argument is more problematic. It isn’t clear that restricting the LHA to 30th percentile will reduce the benefit bill as much as the Government anticipates. The economic effects of this policy are a huge unknown. No one, including the Government, knows how this is going to play out. Research has just been commissioned, but it will take months before we see what sort of impacts the changes have set in train.
It depends on how we think tenants will respond to the reduction in their purchasing power. Will they pay more from their own pocket or will they trade down to cheaper property? And if lots of tenants try to trade down to cheaper property, what impact will that have on rents at the bottom of the price distribution? If it compresses local rent distributions – reducing the gap between the 30th and 50th percentiles – then the impact on the benefit bill will be reduced. It also depends on the supply response. Will landlords reduce rents in recognition that tenants no longer have the same financial resources available or will they opt out of the market entirely or move to the non-benefit dependent sector of the market? The response will differ in different localities.
Critics are concerned that the policy will result in households dependent on LHA being excluded from high cost locations. There are forecasts of mass migration from central London to the suburbs. It has been estimated, on the basis of reasonable assumptions about inflation rates and rent increases, that large parts of the country will be inaccessible to households needing assistance with their housing costs within a decade or so. There’s a prediction that if the policy doesn’t lead directly to an increase in homelessness then it will lead to an increase in overcrowding. We’re expecting more poor households to be living in accommodation that falls below existing statutory minimum standards.
Assuming the critics are right, why is that a problem? What are the arguments against this future? It is here that there is a gap. We’re lacking a strong, coherent statement of why the direction the Government appears to be taking is folly.
We could approach the issue at a practical level. There are arguments about the need for low wage workers in high cost areas. And there are related arguments about increased commuting costs for poorer households. But these arguments could only justify assistance for those in low paid employment. What about those who aren’t in work (although the boundary between those in and out of work is not so easily distinguished)?
There are certainly valid arguments to be made against enforced mobility. These involve the importance of not disrupting social networks and social support, access to services, and children’s education. Similarly there are arguments to be made about how appropriate it is for poorer households to live in poor quality and overcrowded accommodation. There is plenty of evidence that this has longer term impacts upon health, educational attainment, and impairs the performance of the economy.
These can surely be aggregated into an argument that the net social cost of the consequences of restricting LHA will be considerably greater than the money saved by restricting it.
But these are all rather utilitarian arguments. Should those seeking to challenge current policy directions seek to frame the argument more broadly? There is a case to be made about social cohesion and social identification – the value of mixing communities and contact with those in different social locations. These are arguments that do not focus upon poorer households alone, but make the case that mixing is beneficial to the relatively well placed as well. And there are, of course, human rights arguments about entitlement to appropriate accommodation, although the parameters of ‘appropriate’ are malleable and can revised downwards – as the Government is attempting to do.
At the Housing Studies Association Annual Conference last week Professor Chris Hamnett mentioned the idea of ‘the right to the city’ in a discussion of the LHA changes. That seems like a potentially interesting connection to make. The idea originates with Henri Lefebvre and he developed it from the 1960s onward. It has been picked up by critical social scientists, particularly in human geography, and developed in a number of directions. It is an argument that has been used to challenge the clearance of squatter settlements in developing countries. It has been used to make the case against the gentrification of working-class areas and displacement of poorer households in cities of the developed world.
It is an argument that goes beyond residential location to political structures. The claim is that political structures need reordering – that a city’s inhabitants, not simply a nation’s citizens, should play a role in decisions that shape urban space. Not just decisions made by representative local government, but also by the private sector and voluntary sectors. Lefebvre argues that a city’s inhabitants should also have a right of appropriation. This places the argument squarely in conflict with capitalist notions of property rights and the priorisation of exchange value over use value. The realisation of Lefebvre’s original ideas in practice also presents some ferocious problems. For those who have access, papers by Mark Purcell here and here and David Harvey here are a good place to start on ‘the right to the city’ argument.
However, in its attempt to develop a position that sits in opposition to the prevailing neoliberal social order the ‘right to the city’ approach almost certainly dramatically limits its leverage over mainstream political debate. Yet, the language of rights is a promising approach. So can ‘the right to the city’ approach be domesticated in the service of an argument that is likely to have traction on current policy? That’s the big question. A recent paper by Joanna Duke attempts to frame a justification for mixed income housing developments using the ‘right to the city’ approach, but broadening the concept of rights to include the right to diversity (here for those with access). This looks like a step in the right direction. But only a step.
The key now has got to be to return to the first component of the Government’s argument. To bring the tax payer back into the picture. In engaging with the LHA reforms we are not talking about resisting the displacement of poorer people who are ‘inconveniently’ occupying high value areas of the city, but seeking a justification for the tax payer to facilitate poorer households to live in locations they would otherwise not be able to afford. The case would need to be made that the right to the city for poorer households is more compelling than the perceived imperative to minimise the squeeze on the tax-paying middle.
Utilitarian arguments can get you so far. But an argument anchored in principle has the potential to provide a firmer foundation for building an alternative narrative. There is plenty of work still to be done for those seeking to craft an effective response.
Ordinarily I would use my real name for this comment but because I work in housing (and in the private rented sector too) I want to express an opinion without having it bite me unfairly later.
I agree with much of what you’ve written and I like the concept of a ‘right to the city’ (if you have links for further reading that would be great). But I wanted to pick on the inherent contradictions in the Government’s approach to LHA/housing benefit/welfare that come into sharp focus when considering housing.
The first has got to be the concept of a national ‘average family’ which sets the bar for the second of the three markers for Government policy you identified. Most jobs, heck even MP’s staff, recognise the necessity for salary differences for those working in London and those working outside. So I don’t understand how Ministers and the PM justify this arbitrary ceiling on benefits.
It’s an idea that chimes with public mood but that doesn’t make it obvious, we should be calling on it to be fleshed out properly. It sits uncomfortably with me that a single person in Lancashire warrants the same ceiling as a seven-person family living in Camden.
The second is that the Government assumes that the suburbs will be able to accomodate an influx of movers from high-expense areas. But the economics of housing seem to have been forgotten since the competition for housing will increase, as will its price, pricing people even further from anything other than the most-riskiest of situations.
The third is that the Government has already accepted that even with the implementation of it’s reform agenda the cost of Housing Benefit will continue to increase. That is because without access to employment people will naturally seek out welfare, the number of claimants continues to grow in LHA precisely because we are still in a dicey economic situation. Moreover, for in-work benefits like LHA where the cost of housing is not being met by work – and rents are outpacing wage growth – then people will claim housing benefit to help meet that cost.
I don’t understand why the Government has sought to simply depress expenditure instead of growing the market and then regulating it properly to ensure that costs can sustainably be controlled?
Hope that’s not rambling, it’s been a long day.
@V – Thanks for your comment.
I’ve added links to a few articles on the right to the city argument. I hope you’re able to access them. It’s quite a big literature now, so these are only a starting point.
I agree with much of what you write.
The impact of linking entitlements to comparisons with the average very much depends on how the ‘average’ is defined. And at the moment it is being defined rather coarsely.
I think that it is likely that the impact of the LHA changes on the overall LHA bill will be less than the Govt anticipates.
One scenario is that lots of poorer families try to relocate to the suburbs which pushes up the rents in the suburbs and, as a consequence, reduces the savings in the LHA bill. An alternative scenario is that in the longer term we’ll see a re-sorting of households. Those on benefits will be pushed out of high cost areas in search of lower cost accommodation, while those in work who can afford the rents without the aid of LHA will move in the opposite direction. So overall rent levels won’t change so much, but you’ll ended up with less social mixing and more people out of work located at a distance from employment opportunities.
The latter scenario means that we’re less likely to end up with significant additional housing pressures in the suburbs. But it relies on an assumption that all these households are operating in the same segments of the private rented sector and hence are in the market for the same properties. It may be that working households won’t migrate to more central locations because the quality of the property on offer for the rents being charged is inadequate. So over the medium term we could see quality upgrading, rents falling or property being sold out of private renting because the demand just isn’t there from people who are paying from their own pocket. The latter seems unlikely, but we’ll have to wait and see.
Has any modelling been done on whether reducing the LHA to the 30th percentile could contract the difference between 30th and 50th percentile – i.e. lower rents rise closer to the average to protect the income of landlords (or at least those dependent upon housing benefit).
That’s a good question. I’m not sure I can give a definite answer. I’m not aware that the research that has been done so far has modelled things at that level of detail. We really don’t have a very good idea of how either tenants or landlords will respond. The DWP IA conceded that the govt had absolutely no idea how many people would move as a consequence of the change in LHA. That’s probably an accurate reflection of the current state of knowledge. Certainly how landlords and tenants respond is going to depend on local market conditions, so I am not sure that a general answer is possible.
In principle the rent distribution could be compressed from above (demand for properties at median rent reduces as the LHA is cut) and from below (demand for cheaper properties pushes up the rent at the 30th percentile). Clearly, the former isn’t a problem from the point of view of overall LHA bill.
I’ll have to think about it a bit more.