Agent151: Homelessness and the economic solution
0The DCLG local government select committee’s report on homelessness disappoints on a gargantuan scale, as it misses, or perhaps more accurately dodges, the fundamental point that the housing crisis has been greatly stoked by government policy over many years.
It is of no help whatsoever to recommend that local authorities must treat the homeless more kindly. Many local authorities are at their wit’s end.
Having no local solution for the problem, they are able only to triage; using expensive and unsuitable accommodation simply to ensure that the homeless have a roof over their heads.
Councils expand the supply of temporary accommodation and it fills up faster than it can be emptied. They cannot build fast enough to meet the demand. Consequently, they have to apply criteria strictly in order to prioritise those cases that are in greatest need.
I can only admire the council staff who, day after day, face the wrath and, even worse, despair, of those who do not meet the criteria. They are not choosing to treat people badly. They are in an impossible situation.
Right to buy
The position has been considerably worsened by government policy on right to buy (RTB), which has significantly reduced the supply of public sector rented accommodation.
Much of the former RTB stock is now in the private sector rental market at much higher rent levels, with much higher overcrowding and lower maintenance standards. The reinvigoration of RTB has also undermined the business case for estate regeneration schemes, slowing the process of increasing the density of existing estates.
It has also been worsened by welfare reform policies. There was a time when some councils made a tidy surplus on homelessness, because they were able to set the temporary accommodation rent levels high — knowing they would be fully covered by tenant housing benefits — but were leasing properties at a much lower cost.
Those days are long gone. The opposite now applies: benefits do not cover the cost. In short, in many areas council tax payers are subsidising temporary accommodation. At a time when austerity-bitten councils are wondering how to make ends meet, it is small wonder that they are stewarding their homelessness resources as tightly as all their other budgets.
We should be grateful that the committee did spot one obvious flaw in the welfare reform agenda: the fact that universal credit as a direct payment can only have a disastrous impact upon rent arrears levels in public sector housing. Their recommendation on this issue, at least, is helpful.
Supply and demand
So, if the government’s policies are rowing in the wrong direction, what might it do that would actually help?
Well, if you ask a housing expert, they will tell you that the answer lies in housing supply. This is a tenet that the committee seems to have swallowed hook, line and sinker.
But the fact is that in many urban areas this is not a credible option. The opportunities are limited because land is in short supply, and building cannot keep pace with demand. Providing accommodation in another area where the housing is affordable is being tried, but the courts are working against this and few councils feel comfortable with what is effectively forced relocation of the poor. Supply solutions are only part of the picture.
Many councils have reached the conclusion that the answer to the problem lies in managing the demand for temporary accommodation. However, the local levers that they can pull in order to achieve this are limited in number.
Paying additional rent subsidies to those in the spiralling private sector rental market who are at risk of losing their home is one option. Providing access to employment so that benefit caps do not bite is another. But in many cases these tactics only serve to put off the evil day and are not real solutions.
There is plenty of cheap and available public sector housing in areas of the country where there is little economic activity, but of course, no-one wants to live there. Most people want to live in a thriving, vibrant community.
This is hardly degree-level science. The areas that are most under pressure from homelessness are victims of their own success.
The only true solution is an economic one: creating employment and opportunity in the neglected parts of the country where housing can currently be had for £1.
People will willingly migrate to where the economic opportunity is good. Until such time as this can be achieved, the crisis will continue and councils will continue to triage the impact, and the arguments about who should pick up the bill will occupy the space that should be filled by people working on the economic solution.
When will the government admit this, and stop pretending that councils have the ability to solve the problem locally? You know the answer to that.
Agent 151 is a senior local authority finance director and S151 officer. The agent writes exclusively for Room151 and is licensed to speak candidly.
