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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The failed French presidential candidates who refuse to endorse Emmanuel Macron

While the candidates of the main left and right parties have endorsed the centrist from nowhere, others have held back. 

And breathe.

At 8pm on Sunday night France, Europe, and much of the West let out a huge sigh of relief. After over a month of uncertainty, scandals, rebounds, debates and late surges, the results of the first round of the French Presidential Election was as predicted: Emmanuel Macron (24 per cent) will face off against Marine Le Pen (21 per cent) in the second round of the election on the 7 May.

While polls have been predicting this face-off for a while, the shocks of Brexit and the election of Donald Trump had thrown polling predictions into doubt. But France has a good track record when it comes to polling, and their surveys are considered some of the most reliable in the world. The irony is that this uncertainty has meant that the polls have never been so central to a campaign, and the role of polling in democracies has been a hot topic of debate during the election.

The biggest surprise in many ways was that there were no surprises. If there was a surprise, it was a good one: participation was higher than expected: close to 80 per cent – on par with the Presidential Elections of 2012 – whereas there were concerns it would be as low as 70 per cent. Higher participation is normally a bad sign for the extremes, who have highly motivated voters but a limited base, and who often do better in elections when participation is low. Instead, it boosts the traditional parties, but here instead of the traditional right-wing Republican (Fillon is at 20 per cent) or Socialist parties (Hamon at 6 per cent), it was in fact the centre, with Emmanuel Macron, who benefited.

So France has so far not succumbed to the populist wave that has been engulfing the West. The contagion seemed to be spreading when the Italian Prime Minister Matteo Renzi lost a referendum on reforming the constitution, but the fightback started in Austria which rejected the far-right candidate Norbert Hofer in its Presidential election and voted for the pro-European, former-Green independent candidate Alexander Van der Bellen. Those hopes now rest on the shoulders of Macron. After having dubbed Angela Merkel the leader of the free world during his farewell tour of Europe, Barack Obama gave his personal blessing to Macron last week.

Many wondered what impact Thursday night’s shooting on the Champs-Elysées would have. Would it be a boon for Marine Le Pen’s anti-immigration platform? Or even right-wing François Fillon’s more traditional law and order approach? In the end the effect seems to have been minimal.

In the second round, Macron is currently predicted to beat Marine Le Pen by more than 60 per cent of the vote. But how does Le Pen almost double her vote in the second round, from around 20 per cent to close to 40 per cent? The "Republican Front" that saw her father off back in 2002, when he received only 18 per cent of the vote, has so far held at the level of the two traditional political parties. Both Hamon and Fillon have called to vote for Macron in the second round to stop the Front National - Hamon put it nicely when he said he could tell the difference between political opponents, and opponents of the Republic.

But not everyone is toing the line. Sens Commun, the anti-gay marriage group that has supported Fillon through thick and thin, said that it will not call to vote for either party – a thinly veiled invitation to vote for Le Pen. And Nicolas Dupont-Aignan, a conservative, Catholic and anti-EU right wing candidate, whose 5 per cent is the reason Fillon didn’t make it to the second round, has also abstained from calling to vote for either. It is within this electorate that Le Pen will look to increase her vote.

The other candidate who didn’t call to vote for anyone was Jean-Luc Mélenchon, who fell back on a demagogic position of saying he would follow the wishes of his supporters after having consulted them. But as a spokesperson for the FN pointed out, there are remarkable congruities between their respective platforms, which can be categorised as a populism of the left and a populism of the right.

They in particular converge over the question of Europe. Aping Brexit, both want to go to Brussels to argue for reform, and if none is forthcoming put membership of the Eurozone to the electorate. While Le Pen’s anti-Europeanism is patent, Mélenchon’s position is both disingenuous and dangerous. His Plan A, as he puts it, is to attempt reform at the European level. But he knows fine well that his demands, which include revoking the independence of the European Central Bank and putting an end to austerity (the ECB, through its massive programme of quantitative easing, has already been trying to stimulate growth) will not be met. So he reverts to his Plan B, which is to leave the European Treatises and refound Europe on a new basis with like-minded members.

Who those members might be he hasn’t specified, nor has he explained how he would leave the EU - at least Le Pen had the decency to say she would put it to a referendum. Leaving the European Treatise has been in his programme from the beginning, and seems to be the real object of his desires. Nonetheless, having set himself up as the anti-Le Pen candidate, most of his supporters will vote for Macron. Others will abstain, and abstention will only help Le Pen. We’ve been here before, and the last thing we need now is complacency.

 

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