Housing benefits and the Olympics

How housing benefit caps exacerbate the effects of the Olympics.

When the Government announced its cap on housing benefits, it dismissed critics who said that this would lead to increased social segregation and a displacement of the poor from inner city housing. Nothing of the sort would happen, but instead, the size of the welfare bill would go down and there would be lower rents for poor people renting from a private landlord. In reality, the critics were right: the poor are driven out of their communities, and rents continue to rise as fewer and fewer people can afford to buy. Nowhere can this be better observed than in the Olympic boroughs, where high-speed gentrification meets the benefit cap.

Hardly anyone expected that the Olympic Games would leave the population of Hackney, Newham and Tower Hamlets unchanged. The billions of pounds that poured into three of the most deprived boroughs in England led to upgraded infrastructure and housing stock and brought new shopping and leisure facilities. Many people on higher incomes will consider moving there where few would have done so before. Consequently, housing values and rents are on the up. Post-Olympics, the poor would have always found it hard to find affordable accommodation, and people on housing benefits would have struggled to find a private landlord willing to rent to them rather than a more affluent tenant.

But the housing benefit cap is massively exacerbating this development. Housing benefit is paid in the form of the Local Housing Allowance (LHA) to people on low incomes who rent from a private landlord (as opposed to a social landlord, such as a housing association).  Prior to the reform, the maximum amount was pegged at the median level of a given rental market area, meaning that private landlords would get a similar rent than if they let out their property to a more affluent tenant. The newly introduced cap limits the LHA to the 30th percentile, and also specifies an absolute cap, for example £250 per week for a one bedroom property. This may appear high – but in London, it is not an unusual price.

Since the introduction of the cap, landlords in East London quickly realised that they can charge the same or much higher rents in the open market rather than renting to LHA recipients. It is very tempting even for the most socially inclined of private landlords to do so, given that the system is fraught with complications: payments are made in arrears, and often arrive late. LHA recipients whose income level crosses and recrosses the eligibility threshold have their benefit payments stopped and restarted, making the system even more unreliable. The general demonisation of LHA recipients (or benefit recipients in general) does not help. The result: a shortage of housing for the poor. As a Guardian investigation has shown, there are hundreds of properties within the limits of the housing cap in Newham, but many of these are not available to people on LHA. Queue the exodus of LHA recipients. Newham Council has already asked a housing association in Stoke if they could take on 500 families for which the council has been unable to find properties. The legacy of the Games will be a homogenous island of wealth interspersed with remnants of social housing rather than the mix of rich and poor that is still the norm in most parts of London.

The developments here are a sign of the shape of things to come across the country – at different times, at different speeds, but it will happen elsewhere, as the rental market is rapidly overheating: people cannot afford to buy anymore and renting ceases to be the preserve of the poor. Landlords can chose who to let to, and unsurprisingly will chose richer tenants. It was always a complete folly to introduce price controls on a small segment of an overheating market – it simply means that this market segment will not be served. What is happening in the Olympic boroughs should act as a warning to the rest of the country: if we don't want ghettos of rich and poor, the cap has to be repealed. If we don't want to spend increasing amounts of money on housing the poor, we have to reform the whole of the housing market, not just that part that is meant to serve the vulnerable (and that serves them badly already). At the moment, it is barely working for most, and it isn't working for the poor at all.

Photograph: Getty Images

Veronika Thiel is a researcher and writer in the field of social economics and health policy. She tweets from @veronikathiel.

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We can't rush to war in Syria without a plan for peace

A recent visit to Iraq has left me doubtful that the Prime Minister's plan can suceed, says Liam Byrne.

As shock of the Paris lifts and the fightback starts, all eyes are now the prime minister and, at last, the 'full spectrum response' we were promised months ago.

But what's needed now is not just another plan to bomb the ground -  but a plan to hold the ground we win. Four days in Northern Iraq has made me deeply sceptical about air strikes alone. It's convinced me that after the mistakes of Iraq and Libya, we cannot have yet another effort to win the battle and lose the war. Without politics and aid, projectiles and air-raids will fail. It's as simple as that.

After the horror of Paris it's easy to ignore that in Iraq and Syria, Isil is now in retreat. That's why these animals are lashing out with such barbarism abroad. In the ground war, Kurdistan's fighters in particular, known as the Peshmerga - or 'those who face death' -  have now shattered the myth of Isil's invincibility.

A fortnight ago, I travelled through Northern Iraq with a group of MP's arriving on the day the key town of Sinjar was stormed, cutting the umbilical cord - route 47 - between Isil's spiritual home of Mosul in Iraq and Isil HQ in Raqqa. And on the frontline in Kirkuk in north west Iraq, two miles from Isil territory, Commander Wasta Rasul briefed us on a similar success.

On the great earthwork defences here on the middle of a vast brown plain with the flares of the oil pumps on the horizon, you can see through binoculars, Isil's black flags. It was here, with RAF support, that Isil was driven out of the key oil-fields last summer. That's why air cover can work. And despite their best efforts - including a suicide attack with three Humvees loaded with explosives - Isil's fight back failed. Along a 1,000 km battle-front, Isil is now in retreat and their capitals aren't far from chaos.

But, here's the first challenge. The military advance is now at risk from economic collapse. Every political leader I met in Iraq was blunt: Kurdistan's economy is in crisis. Some 70% of workers are on the public payroll. Electricity is free. Fuel is subsidised. In other words, the Government's bills are big.

But taxes are non-existent. The banks don't work. Inward investment is ensnared in red tape. And when the oil price collapsed last year, the Government's budget fell through the floor.

Now, in a bust up with Baghdad, cash has been slashed to Kurdistan, just as a wave of 250,000 refugees arrived, along with over a million internally displaced people fleeing Da'esh and Shiite militias in the south. Nearly 6,000 development projects are stalled and people - including the Peshmerga - haven't been paid for months.

We have brave allies in the fight against Isil - but bravery doesn't buy them bullets. As we gear up the battle against Isil, it's now vital we help boost the Kurd's economic strength - or their sinews of war will weaken. There's an old Kurdish saying; 'the mountains are our only friends'. It's an expression born of years of let-down. In the fight against Da'esh, it's a mistake we can't afford to repeat today.

Second, everyone I met in Iraq was clear that unless the Sunni community can find alternative leadership to Isil then any ground we win may soon be lost, if not to Isil, then “Isil II”. Let's remember Isil didn't just 'emerge'. It grew from a tradition of political Islam decades old and mutated like a Frankenstein monster first by Al-Qaeda, then Al-Qaeda in Iraq, then the Al-Nusra front and now Isil.

Crucial to this warped perversion has been the total breakdown of trust between Iraq's Sunni residents - and the Shi'ite dominated government in Baghdad. In Mosul, for instance, when the Iraqi security forces left, they were stoned in their Humvees by local residents who felt completely humiliated. In refugee camps, it's not hard to find people who didn't flee Da'esh but Shi'ite militia groups.

Now, tracking surveys in Mosul report tension is rising. The Isil regime is sickening people with an obsessive micro-management of the way everyone lives and prays - down to how men must style their beards - with brutal punishment for anyone stepping out of line. Mobile phone coverage is cut. Food prices are rising. Electricity supplies are sporadic. Residents are getting restless. But, the challenge of gaining - and then holding a city of 3 million people will quite simply prove impossible without alternative Sunni leaders: but who are they? Where will they come from? The truth is peace will take politics.

There's one final piece of the puzzle, the PM needs to reflect on. And that's how we project a new unity of purpose. We desperately need to make the case that our cause is for both western and Islamic freedom.

I serve the biggest Muslim community in Britain - and amongst my constituents, especially young people, there's a profound sense that the conduct of this debate is making them feel like the enemy within. Yet my constituents hate Isil's violence as much as anyone else.

In Iraqi Kurdistan, I heard first-hand the extraordinary unity of purpose to destroy Isil with total clarity: “Your fight,” said the Kurdistan prime minister to us “is our fight.” In the refugee camps at Ashti and Bakhara, you can see why. Over a million people have been displaced in Kurdistan - grandparents, parents, children - fleeing to save their children - and losing everything on the way. “Da'esh,” said one very senior Kurdistan official 'aren't fighting to live. They're fighting to die. They're not battling a country or a system. They're battling humanity".

Here in Europe, we are hardwired to the fortunes of Central Asia, by trade, energy needs, investment and immigration. It's a vast region home to the seminal struggles of Israel/Palestine, Sunni/Shia and India/ Pakistan. Yet it's a land with which we share traditions of Abrahamic prophets, Greek philosophy and Arabic science. We need both victory and security. So surely we can't try once again to win a war without a plan for winning a peace. It's time for the prime minister to produce one.

Liam Byrne is Labour MP for Birmingham Hodge Hill, cofounder of the UK-China Young Leaders Roundtable and author of Turning to Face the East: How Britain Prospers in the Asian Century.