How housing traps people in unemployment

If we're to move away from using housing benefit to prop up a dysfunctional housing market, we desperately need to think much more carefully about rent levels and wages, writes Rebecca Tunstall.

Housing benefit is preventing poverty and homelessness, but propping up a dysfunctional system and hindering work incentives. We need lower housing costs to make work pay and close the unemployment trap.

The traditional role of housing policy has been to improve living conditions, but over the past 20 years policy-makers have tried to extend its impact. A report for the Joseph Rowntree Foundation shows that housing benefits, housing costs, location and options for mobility can affect job opportunities and incomes.

Housing benefit, claimed by four million households, has a positive impact on living conditions, and it is hard to see how millions of households could avoid homelessness or hardship without it. But cuts for private tenants have already meant people going without essentials, and there is widespread concern over the changes for social tenants from April.

But like many other benefits, and in combination with them, housing benefit creates an unemployment trap.

For each extra £1 in earnings, people lose 65p in Housing Benefit. Those claiming other benefits too can lose 90p in the pound or more, and the effect lasts nearly until earnings reach average levels. So unless good wages are in command, people receiving housing benefit may be no better off in than out of work.

There is a trade-off between support to prevent homelessness and deprivation on the one hand, and maintaining an incentive to work on the other. Universal Credit, to be introduced in phases from April at great organisational cost, will redesign the unemployment trap somewhat although the effects may be lost in other benefit changes.

There appears to be precious little by way out of this conundrum. That is unless you have more low-cost housing, such as that providing by councils and housing associations, which makes it markedly easier to make work pay.

For a typical household, for each £10 less rent they have to pay per week, they can escape the unemployment trap by at £50 less in gross earnings. However, over the past ten years increasing numbers of those with low skills and low income prospects have been housed in higher rent private tenancies. In 2010 the average private rent in England was £150 a week, compared to council rent at £67. This has introduced a new structural difficulty in making work pay.

If regional location is seen as an attribute, it is an important contributor to a 'housing effect' on employment, since different labour markets offer very different opportunities. Evidence suggests that the ability to move home does have effects on employment, but the effects are modest, because most moves are local, and because low-paid (and often insecure) jobs may not justify taking a whole household from one end of the country to another.

Policymakers have focused concern on perceived low mobility of social tenants, part of the inspiration behind benefit reforms. It's true that these reforms encourage affected tenants to move—but to do so in a specific direction: towards cheaper areas, which are likely to have worse job opportunities. Home owners are also trapped, and no more mobile than social tenants. Research has suggested that high rates of home ownership lead to higher structural unemployment rates by preventing mobility.

Wages rather than housing circumstances provide the main financial work incentive, and higher wages would help people jump any shape of the unemployment trap. The trouble is overall work incentives have been falling for a long time—since the 2000s due to stagnant real wages for people with lower skills.

Is it fair to ask the housing system to pick up the slack? Probably not. But if we're to move away from using housing benefit to prop up a dysfunctional housing market, we desperately need to think much more carefully about rent levels and wages.

Photograph: Getty Images

Rebecca Tunstall is Professor of Housing Policy at the University of York. She wrote the latest Joseph Rowntree Foundation report on housing and poverty.

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The joy of only winning once: why England should be proud of 1966

We feel the glory of that triumphant moment, 50 years ago, all the more because of all the other occasions when we have failed to win.

There’s a phrase in football that I really hate. It used to be “Thirty years of hurt”. Each time the England team crashes out of a major tournament it gets regurgitated with extra years added. Rather predictably, when England lost to Iceland in Euro 2016, it became “Fifty years of hurt”. We’ve never won the European Championship and in 17 attempts to win the World Cup we have only won once. I’m going to tell you why that’s a record to cherish.

I was seven in 1966. Our telly was broken so I had to watch the World Cup final with a neighbour. I sat squeezed on my friend Colin’s settee as his dad cheered on England with phrases like “Sock it to them Bobby”, as old fashioned now as a football rattle. When England took the lead for the second time I remember thinking, what will it feel like, when we English are actually Champions of the World. Not long after I knew. It felt good.

Wembley Stadium, 30 July 1966, was our only ever World Cup win. But let’s imagine what it would be like if, as with our rivals, we’d won it many times? Brazil have been World Champions on five occasions, Germany four, and Italy four. Most England fans would be “over the moon” if they could boast a similarly glorious record. They’re wrong. I believe it’s wonderful that we’ve only triumphed once. We all share that one single powerful memory. Sometimes in life less is definitely more.

Something extraordinary has happened. Few of us are even old enough to remember, but somehow, we all know everything that happened that day. Even if you care little about the beautiful game, I’m going to bet that you can recall as many as five iconic moments from 50 years ago. You will have clearly in your mind the BBC commentator Kenneth Wolstenholme’s famous lines, as Geoff Hurst tore down the pitch to score his hat-trick: “Some people are on the pitch. They think it’s all over. It is now”. And it was. 4 - 2 to England against West Germany. Thirty minutes earlier the Germans had equalised in the dying moments of the second half to take the game to extra time.

More drama we all share: Geoff Hurst’s second goal. Or the goal that wasn’t, as technology has since, I think, conclusively proved. The shot that crashed off the cross bar and did or didn’t cross the line. Of course, even if you weren’t alive at the time, you will know that the linesman, one Tofiq Bakhramov, from Azerbaijan (often incorrectly referred to as “Russian”) could speak not a word of English, signalled it as a goal.

Then there’s the England Captain, the oh-so-young and handsome Bobby Moore. The very embodiment of the era. You can picture him now wiping his muddy hands on his white shorts before he shakes hands with a youthful Queen Elizabeth. Later you see him lifted aloft by his team mates holding the small golden Jules Rimet trophy.

How incredible, how simply marvellous that as a nation we share such golden memories. How sad for the Brazilians and Germans. Their more numerous triumphs are dissipated through the generations. In those countries each generation will remember each victory but not with the intensity with which we English still celebrate 1966. It’s as if sex was best the first time. The first cut is the deepest.

On Colin’s dad’s TV the pictures were black and white and so were the flags. Recently I looked at the full colour Pathe newsreel of the game. It’s the red, white and blue of the Union Jack that dominates. The red cross of Saint George didn’t really come into prominence until the Nineties. The left don’t like flags much, unless they’re “deepest red”. Certainly not the Union Flag. It smacks of imperialism perhaps. In 1966 we didn’t seem to know if we were English or British. Maybe there was, and still is, something admirable and casual about not knowing who we are or what is our proper flag. 

Twelve years later I’m in Cuba at the “World Festival of Youth” – the only occasion I’ve represented my country. It was my chance to march into a stadium under my nation’s flag. Sadly, it never happened as my fellow delegates argued for hours over what, if any, flag we British should walk behind. The delegation leaders – you will have heard of them now, but they were young and unknown then – Peter Mandelson, Trevor Phillips and Charles Clarke, had to find a way out of this impasse. In the end, each delegation walked into the stadium behind their flag, except the British. Poor Mandelson stood alone for hours holding Union Jack, sweltering in the tropical sun. No other country seemed to have a problem with their flag. I guess theirs speak of revolution; ours of colonialism.

On Saturday 30 July BBC Radio 2 will commemorate the 50th anniversary of the 1966 World Cup Final, live from Wembley Arena. Such a celebration is only possible because on 16 occasions we failed to win that trophy. Let’s banish this idea of “Fifty years of hurt” once and for all and embrace the joy of only winning once.

Phil Jones edits the Jeremy Vine Show on BBC Radio 2. On Saturday 30 July the station celebrates the 50th anniversary of the 1966 World Cup Final live from Wembley Arena, telling the story of football’s most famous match, minute by minuteTickets are available from: www.wc66.org