The PM wants to put age restrictions on housing benefit. But if young people are penalised for moving out of their parents’ home, and the only jobs available are low-paid ones in high-rent areas, what can they do?
One of David Cameron’s ideas for the next Tory manifesto is to stop anyone under 25 from receiving housing benefit. You can see the superficial logic behind this: surely if a young person doesn’t have a job, the last thing they should have is a state-subsidised home of their own? Furthermore, if the welfare budget has got to take another big hit, taking benefits off young people is politically a lot easier than walloping pensioners. However, this latest idea surely needs to be justified by a bit more than superficial logic.
For a start, housing benefit goes to a lot of low-paid workers as well as to those without jobs. As the Chartered Institute of Housing pointed out, over 800,000 claimants are working and the number of working tenants has grown by 95% in the last three years.
While unemployment is a factor in the growth of the housing benefit budget, four more factors are also pushing up benefit costs: the historically low availability of new social lettings, the increased dependence on the private rented sector, rising rents across all sectors and the growth in low-paid or part-time work that doesn’t pay enough to cover the rent.
Latest DWP figures show that the housing benefit caseload has grown by a quarter of a million since May 2010, and that the majority of this growth has been in new claimants in the private sector. So the cost to DWP has gone up by 9% over the same period despite the drastic cuts in housing benefit entitlement which have already started to take effect and will get progressively bigger.
The growing welfare bill is being blamed on the ‘millions of working-age people sitting at home on benefits’ when in fact the picture is much more complicated. For example, the government has been anxious to show that ‘work pays’ and the housing minister in particular has been keen to facilitate mobility so that people can move more easily to places where jobs are available.
Yet if young people are penalised for moving out of their parents’ home, and the only jobs available are low-paid ones in areas with high rents, what are they supposed to do? An in-work benefit which brings down their housing costs is surely exactly what they need. It also, of course, saves the state money if only their rents (and council tax) are subsidised and they don’t have to claim jobseeker’s allowance as well.
The issue that should exercise the prime minister is one that he mentioned in his speech: that almost three million people below their mid-thirties are living with their parents. While forcing more young people to stay in or return to the parental home may be a sort of rough justice, it is adding to this total not reducing it.
Withdrawing state help simply opens up an even bigger gap between fortunate first-time buyers who can rely on the ‘bank of mum and dad’ for their deposit, and those who can’t and either have to wait on average a further four years before buying or can never afford to buy at all.
An evidence-based approach to this problem might start with a look at what is likely to happen to young people and their housing if current trends continue. Fortunately, the Joseph Rowntree Foundation has recently done just that. It estimates that by 2020 around 1.5 million more young people aged 18–30 will be pushed towards living in the private rented sector, reflecting growing problems of accessing both homeownership and social renting.
Those facing most difficulties are young families, those on low incomes and those who are vulnerable due to their support needs. The foundation concludes that policies focused solely on boosting young people’s access to housing will only push up prices unless there is a sustained and long-term increase in supply.
Two further pieces of recent research have confirmed that the young are already bearing the brunt of the recession whereas the position of pensioners has been protected or has even improved.
Neither this nor the last government have succeeded in restoring overall housing supply to the levels from which it fell after 2007, and within that total neither have built sufficient social housing. In the absence of sufficient places to live, it is clear that we are all going to have to squeeze up a lot more.
Cameron used what appear to be made-up examples in his speech to make his case that young people on low incomes (and their parents) are the ones best placed to feel the squeeze. Housing professionals would be delighted to show him some real cases of how young people are coping with low incomes and high housing costs.
One is provided by this blog by a disabled 30-year-old. As a result of previous cuts she now has to find an extra £70 towards the rent of her one-bedroom flat. She explains that she got the flat through her local council’s ‘move on’ scheme, which was designed to free up homeless accommodation and provide more stable private-rented homes for those who had made frequent moves.
Yet this is just the kind of good practice that is being threatened by the combination of housing and welfare cuts.