Minutes:
Question from Councillor Twomey:
“In light of the new London Housing Allowance (LHA) reduction implemented by the coalition government limiting payments to a maximum of £400 for a 4 bedroom property, how do we as a borough propose to deal with the inevitable increase in tenants arriving from other boroughs looking for cheaper rents?
Westminster and Hackney in particular have over 6,000 properties that will be adversely affected by the LHA cap compared to approximately 5 properties in Barking & Dagenham. What proposals will be put forward to combat this problem, ensuring that Barking & Dagenham is not flooded with tenants from other boroughs, particularly those homeless families from these boroughs who have been placed in private sector accommodation? "
Response from Councillor P Waker, Cabinet Member for Housing:
“I would like to thank Councillor Twomey for raising this important question.
You may have noted that the Leader had a press release put out very quickly after the announcement and shortly after that I did an interview with Time FM about the dangers of the Housing Benefit cap for the Borough.
Partly because Barking & Dagenham has the lowest average income per household in London and therefore lower than average property prices, we are often highlighted more than most of the Outer London Boroughs that are in a similar position.
Essentially this is the latest development in the private renting nightmare that this country is now in, with high private rents that cost the taxpayer shed-loads of money in Housing Benefit.
The lack of Council house building over many years is the big factor and the real cause of the problem and I will return to this point in a minute.
The so called progressive Conservatism, as apparently practised by
this Tory Government, and supported by the always Tory Liberal
Democrats has decided to try to tackle the Housing Benefit
burden. This is totally understandable,
but typically they have merely tackled one of its symptoms –
but none of its causes.
To use a phrase, they have been hard on a symptom of Housing Benefit costs, but soft on its causes.
A cap on Housing Benefit of £400 for bigger houses means that those on Housing Benefit in Inner London and areas such as Hackney and Tower Hamlets will no longer be able to pay their current rents.
So rather than be homeless they will move to areas with cheaper private sector rents.
Now, one theory is that the rents in Inner London will become cheaper and the taxpayer will not have to pay out such outrageous sums of money to, in my words, greedy grasping private landlords.
That to me would be a nice thought, but the problem with this theory, is that Inner London is the one area where wealthy people from across Britain and indeed from across the world are both willing and able to pay higher rents so as to be in or near to the centre of London.
So, while there might be, and I stress might be, a small fall in the level of private rents, the reality is that they are unlikely to fall by very much and certainly not to the level of the cap and therefore by enough to make rents more affordable in the Inner London area. To show the size of the problem the Inner London average 4 bedroom rent is around £1,000 per week at the moment, £600 per week above the new cap.
And when I say more affordable, by the way, for most people in ordinary jobs even the more reasonable private rent level of say £1,000 per month in Barking & Dagenham is not affordable for most working people living in this Borough. In 2006 I found people in my own Ward, dumped at the time by Newham, paying £350 a week for a small 2 bedroom flat. At that time, even more naïve than I am now, I didn’t believe what they were saying until they showed me the paperwork.
That is why, even here in Barking and Dagenham, private renting is a disincentive to working and coming off Housing Benefit.
Having said that, many recipients of Housing Benefit are working and on low pay or at least relatively low-ish pay and do get some benefit.
And that is why it is not just the 6,000 in Westminster and Hackney that are likely to be affected by this.
London Councils have estimated that 18,645 households will be hit in the central areas of London, 14,661 with children, and that around 10,500 households will have to move, some 7,000 with children.
And while I am on figures, there are, it is estimated, 650,000 privately rented homes across London, a third of which are likely to be detrimentally affected by other changes in what is called the Local Housing Allowance.
Also, we should be clear, that this is not just about other Councils in London continuing to dump their Temporary Accommodation problems on us. It is people independently of any council being forced to up-sticks and move out of their own areas, and often people with high social care needs and extra health care needs, which is often why they are not working in the first place.
When I said that the Government has only attacked a symptom of this problem, the increasingly widely recognised fact is this - if they really wanted to save on Housing Benefit they would spend money to help us, and other Boroughs, to launch a massive programme of new council house building.
That is the way to put outrageous rents under pressure and save massively on Housing Benefit payments.
Most people who privately rent would love to be in a good quality council house and investment today in this will pay off massively tomorrow. It was the lifting of most laws on private renting in the 80s and the lack of council house building that has caused the problem and we have always said, as a Council, that the Labour Government should have tackled it when it had the opportunity.
Having finally got past the previous Tory years and then the Blair years both determined to prevent councils building houses, it was a breath of fresh air when, last year, we were able to start building again, and our 142 new house building programme is probably one of the largest in all local authorities across the country, but this Government plans to slash the money for council house building and so the Housing Benefit problem will stagger on.
It is a stupid and short-sighted approach and the new cap just moves the problem around, from one part of London to another.
If I am honest it means that every new house built for sale will mean that another potential private renting property comes on the market.
I actually think that we now have no choice but to review our policies and look to minimising private house building in this Borough. We can’t avoid some of it if we are to go ahead with our estate renewal programme, but not only does it not help us with our Council waiting list, every private sale could mean someone else from central London landing on our doorstep in an uncontrolled way, privately renting.
And even when they are not put out to private rent, many times now children of the buyers grow up and say, “I can’t afford to buy like my parents did, please help me Council”.
So, on top of all of this, the cap problem means that private sale places in this area, could well add to the problem and we have to think about changing policies to slow private house building and maximise Council build.
As I have said, we will have to have some for sale to get our estate renewal etc. to stack up, but I see no gain in seeing loads of for sale properties such as in Lymington, Frizlands or even on Barking Riverside, if the private renting nightmare is to continue and make things worse for the outer London areas, particularly when this Government is also trying to restrict our primary school building and our secondary school renewal.
As a council we have always said that facilities such as medical and education needs should accompany home growth, but there are now even more significant dangers for us.
Clearly, our fight for council housing is key, but we will continue to highlight the effect to the Government, we will tell the self-dubbed quiet man, Work and Pensions Secretary, Iain Duncan Smith, that we will not be quiet about this. We will also work constructively with London Councils and the Mayor to raise the issues surrounding this problem and look with them for solutions.
And finally, I would ask ALL Members of the Council, particularly those on the Development Control Board, to look critically at every proposal from house conversions to private developments to see if they are likely to add to the problem rather than house local people, and that we do all we can to develop our stock of decent housing for local people.
We will also see if we can put restrictions on the homes that are built for sale to try to stop the private renting problem. That already applies to part-buy properties to some extent, but people still get round that in my experience, so it is not necessarily the full answer.
I am sure that we will all do our best to develop our stock of decent council housing for local people and go ahead with our estate renewal. Council housing is the real answer to cutting Housing Benefit and the best way of giving people a decent life.”