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.

ANDREY BORODULIN/AFP/GETTY IMAGES
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Letter from Donetsk: ice cream, bustling bars and missiles in eastern Ukraine

In Donetsk, which has been under the control of Russian backed rebels since April 2014, the propaganda has a hermetic, relentless feel to it.

Eighty-eight year-old Nadya Moroz stares through the taped-up window of her flat in Donetsk, blown in by persistent bombing. She wonders why she abandoned her peaceful village for a “better life” in Donetsk with her daughter, just months before war erupted in spring 2014.

Nadya is no stranger to upheaval. She was captured by the Nazis when she was 15 and sent to shovel coal in a mine in Alsace, in eastern France. When the region was liberated by the Americans, she narrowly missed a plane taking refugees to the US, and so returned empty-handed to Ukraine. She never thought that she would see fighting again.

Now she and her daughter Irina shuffle around their dilapidated flat in the front-line district of Tekstilshchik. Both physically impaired, they seldom venture out.

The highlight of the women’s day is the television series Posledniy Yanychar (“The Last Janissary”), about an Ottoman slave soldier and his dangerous love for a free Cossack girl.

They leave the dog-walking to Irina’s daughter, Galya, who comes back just in time. We turn on the TV a few minutes before two o’clock to watch a news report on Channel One, the Russian state broadcaster. It shows a montage of unnerving images: Nato tanks racing in formation across a plain, goose-stepping troops of Pravy Sektor (a right-wing Ukrainian militia) and several implicit warnings that a Western invasion is nigh. I wonder how my hosts can remain so impassive in the face of such blatant propaganda.

In Donetsk, which has been under the control of Russian-backed rebels since April 2014, the propaganda has a hermetic, relentless feel to it. If the TV doesn’t get you, the print media, radio and street hoardings will. Take a walk in the empty central district of the city and you have the creeping sense of being transported back to what it must have been like in the 1940s. Posters of Stalin, with his martial gaze and pomaded moustache, were taboo for decades even under the Soviets but now they grace the near-empty boulevards. Images of veterans of the 1941-45 war are ubiquitous, breast pockets ablaze with medals. Even the checkpoints bear the graffiti: “To Berlin!” It’s all inching closer to a theme-park re-enactment of the Soviet glory years, a weird meeting of propaganda and nostalgia.

So completely is the Donetsk People’s Republic (DPR) in thrall to Russia that even its parliament has passed over its new flag for the tricolour of the Russian Federation, which flutters atop the building. “At least now that the municipal departments have become ministries, everyone has been promoted,” says Galya, wryly. “We’ve got to have something to be pleased about.”

The war in the Donbas – the eastern region of Ukraine that includes Donetsk and Luhansk – can be traced to the street demonstrations of 2013-14. The former president Viktor Yanukovych, a close ally of Vladimir Putin, had refused to sign an agreement that would have heralded closer integration with the EU. In late 2013, protests against his corrupt rule began in Maidan Nezalezhnosti (“Independence Square”) in Kyiv, as well as other cities. In early 2014 Yanukovych’s security forces fired on the crowds in the capital, causing dozens of fatalities, before he fled.

Putin acted swiftly, annexing Crimea and engineering a series of “anti-Maidans” across the east and south of Ukraine, bussing in “volunteers” and thugs to help shore up resistance to the new authority in Kyiv. The Russian-backed rebels consolidated their power base in Donetsk and Luhansk, where they established two “independent” republics, the DPR and its co-statelet, the Luhansk People’s Republic (LPR). Kyiv moved to recover the lost territories, sparking a full-scale war that raged in late 2014 and early 2015.

Despite the so-called “peace” that arrived in autumn 2015 and the beguiling feeling that a certain normality has returned – the prams, the ice creams in the park, the bustling bars – missiles still fly and small-arms fire frequently breaks out. You can’t forget the conflict for long.

One reminder is the large number of dogs roaming the streets, set free when their owners left. Even those with homes have suffered. A Yorkshire terrier in the flat next door to mine started collecting food from its bowl when the war began and storing it in hiding places around the flat. Now, whenever the shelling starts, he goes to his caches and binge-eats in a sort of atavistic canine survival ritual.

Pet shops are another indicator of the state of a society. Master Zoo in the city centre has an overabundance of tropical fish tanks (too clunky to evacuate) and no dogs. In their absence, the kennels have been filled with life-size plastic hounds under a sign strictly forbidding photography, for reasons unknown. I had to share my rented room with a pet chinchilla called Shunya. These furry Andean rodents, fragile to transport but conveniently low-maintenance, had become increasingly fashionable before the war. The city must still be full of them.

The bombing generally began “after the weekends, before holidays, Ukraine’s national days and before major agreements”, Galya had said. A new round of peace talks was about to start, and I should have my emergency bag at the ready. I shuddered back up to the ninth floor of my pitch-dark Tekstilshchik tower block. Shunya was sitting quiet and unruffled in his cage, never betraying any signs of stress. Free from Russian television, we girded ourselves for the night ahead.

This article first appeared in the 05 February 2015 issue of the New Statesman, Putin's war