Tackling the £20bn housing benefit bill is without doubt a huge challenge. The system is evidently broken.
Under the Local Housing Allowance, which was introduced in 2008, households on housing benefit can freely choose to live in some of the most expensive real estate in the world, despite having had no prior connection to the area, and find themselves a private sector property with a rent value of up to £2,000 a week.
This raises the question of how can it be fair that lower income, working households are expected to commute for work whilst a family claiming housing benefit can elect to live in a house costing up to £104,000 a year to rent, at the taxpayers’ expense?
The current system allows people to live in accommodation that is beyond the means of 96% of the working population. This is not only unjust, but also economic madness.
The intention of the cap is not to force claimants from central London and other city centres, but to cut the housing benefit bill which has spiralled out of control and driven up private sector rents. Contrary to opponents of the £400 weekly cap, this is still a generous amount as working people would need a household income of £60,000 a year to afford this rent.
We estimate that there are more than 5,000 households renting in the private sector in Westminster who will be above the proposed cap. However we do not accept the concerns that there will be potential 'cleansing' given there will still be almost 25,000 affordable properties provided within the borough, which will not be impacted on by the April 2011 caps and many of these households are on housing benefit. Furthermore, these figures need to be set within the context of a London-wide population of more than 7.5m.
We will of course ensure that the most vulnerable who are affected by the caps are protected and support is given, particularly through the Discretionary Housing Payment allocation, to households with a genuine priority and need to remain in the area. To support any households who may become statutorily homeless as a result of the changes, we are also looking to procure additional high quality temporary accommodation which will, wherever possible, be located within the borough.
Longer term we believe that the solution rests in providing more affordable housing across the capital. Westminster has a strong record in this area of late having already surpassed the agreed 3-year (to March 2011) target for additional affordable housing which was set by the Mayor. We also have plans to build more than 2,500 new properties, the majority of which will be affordable, across the borough over the next 10 years.
In a period of austerity every penny of public money that is spent must be rigorously scrutinised and the cap marks a return to fairness and common sense. The state should not be providing accommodation on the public purse that working people cannot afford themselves.