This week's budget will reshape the South East of England - for the worse
Three years ago, Boris Johnson was criticised when he suggested that changes to housing benefit could result in 'social cleansing' in London. Yet the changes announced by Osborne in his summer budget could have far more significant and far-reaching effects, forcing low-income families to move out of pretty much every city in the South East of England - or face destitution.
First, Osborne has announced that council and housing association tenants with a household income of £40,000 or more in London, and (arbitrarily, it seems) £30,000 elsewhere, will have to pay a market rent 'or one close to it', from 2017-18. This is part of an attempt by Osborne to paint social housing as a handout, when in fact it is cheaper to run per tenant than private rented sector housing (as it requires less housing benefit subsidy per tenant).
The average rent in the South East of England is £940 a month (or almost £12,000 a year), so a couple whose combined income amounted to £30,000 would end up paying nearly half their income on rent under the new plans. This becomes even more of a problem in high cost areas like Oxford.
The second problem comes from the increasingly massive gap between housing benefit rates and real rent bills. Disingenuously, Osborne tried to paint this in his summer budget speech as the fault of the social housing sector. The increasingly large housing benefit bill has been pushed just as much by increases in private rents and in the number of people needing help with paying them, especially in expensive areas like the South East.
Conservative changes to the 'Local Housing Allowance' have already restricted what tenants in Oxford (for example) are allowed to receive in housing benefit, to £997 a month for a three bedroom property. According to the estate agents' website 'Rightmove', there is not a single property in the whole of Oxford with a rent that low. The same applies in the city of Brighton.
As of Osborne's announcement, this problem will get even worse with Local Housing Allowance rates being frozen for four years. Even outside London, the average rent increased by over 7% just over the last year, and the market shows no sign of cooling down.
We know, from experience with the Bedroom Tax, that people on low incomes are often the strongest believers in trying to get a job and earning more - but they are often simply unable to, due to a lack of decent work or childcare opportunities. Now, many people on the lowest incomes are going to find that they get no tax credits, and that at the same time the support they receive will be capped at incredibly low levels due to the new lower benefit cap. That makes the new system nothing less than a ban on low-income families being able to live in Oxford, Brighton and much of the rest of urban areas (and some rural areas) in the South East.
All this is being introduced, of course, with no serious attempt to either increase housing supply or provide more security for private tenants.
Osborne may be happy for cities like Oxford and Brighton to become rich peoples' ghettos. He may not spare a thought for the person who serves him his latté in the morning, who increasingly will have to commute for mile upon mile because they cannot afford to live where they work. But I don't believe this is what most British people want. We must not be timid in resisting these plans to polarise our society.