Rising homelessness shows the damage caused by welfare cuts

Homelessness has now risen by 34% since 2010, with measures including the benefit cap and the bedroom tax blamed by the Joseph Rowntree Foundation and Crisis.

As the economy continues to recover and as George Osborne declares that Britain is "on the mend", it will become even more important to remember those left behind. Today's Joseph Rowntree Foundation/Crisis report reminds us of one of the most worrying trends of recent years, that of rising homelessness. The study found that the number sleeping rough rose again last year by 6% in England and by 13% in London. Over the same period, the number in temporary accommodation increased by 10%, with a 14% rise in B&B placements. In total, homelessness has increased by 34% in the last three years (having fallen in the previous six), with 185,000 now affected in England.

While emphasising the long-term structural problem of the mismatch between housing demand and supply (the subject of my interview with Sadiq Khan this week), the report also makes it clear that the coalition's benefit cuts have made the situation worse. It states: "welfare benefit cuts, as well as constraints on housing access and supply, are critical to overall levels of homelessness." In London, in particular, the introduction of the £20,000 housing benefit cap, and the £26,000 total benefit cap, has made it "more difficult to secure new private tenancies for those on low incomes."

The report is also sharply critical of the bedroom tax, warning that "the size criteria is far too restrictive, and fails to make allowances for households where health and other factors mean it is unreasonable to expect household members to share a room." It adds: "Most fundamentally, in many parts of the country, social landlords simply do not have sufficient stock available to transfer tenants willing to move to smaller accommodation, and in some cases have estimated that it would take from five to thirteen years to transfer all the tenants affected."

The DWP has responded by insisting that "There is no evidence that people will be made homeless as a result of the benefit cap, the removal of the spare room subsidy or any of our welfare reforms." It added: "We have ensured councils have £190m of extra funds this year to help claimants and we are monitoring how councils are spending this money closely."

But the Discretionary Housing Payments funded by the coalition do not even come close to filling the gap in support. As the report points out, "the issues raised are more deep-seated than can be adequately dealt with by a declining discretionary top-up budget that assumes that these problems are very short-term." It reports that the bedroom tax was "viewed by most of our local authority interviewees as the most 'overwhelming' of all of the welfare reform issues", with a severe rise in arrears, often among households that had never previously fallen behind with their rent. It is further confirmation of why it was morally right, as well as politically astute, of Labour to pledge to abolish the bedroom tax if elected.

While some might expect the crisis to ease as the economy grows at its strongest rate since the crisis, the report warns that the reverse is the case. It points out that policy decisions, most notably welfare cuts, "have a more direct bearing on levels of homelessness than the recession in and of itself." In this regard, it notes that most of those interviewed expect a "new surge in homelessness" as welfare cuts continue to bite and as specialist homelessness funding programmes come to an end. But judging by its response today, the coalition is content to remain in denial.

The number sleeping rough rose last year by 6% in England and by 13% in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.