Magazine article Public Finance

Home Improvements?

Magazine article Public Finance

Home Improvements?

Article excerpt

Social housing has been a vital fixture of the welfare state for decades, with residents enjoying the comfort of a secure tenancy for life. Almost 4 million people now live in council or housing association homes in England.

Yet over the past 20 years, as resources have been squeezed with funding cuts and housing sell-offs, the composition of those living in social housing has changed markedly. Instead of the mixed-income households of old, today 70% of social tenants are among the poorest two-fifths of the country and half of all households of working age are economically inactive or unemployed, twice the national rate. Many are lone parents or on disability allowances. These figures reflect an increasingly polarised society, within which a significant minority - the poorest and most vulnerable - are still stuck in a cycle of dependency.

The New Labour government - under whoever's political leadership - is determined to push ahead with its welfare reform agenda of reducing spending and meeting its child poverty and employment targets. But, on the way, many old assumptions are being questioned and final taboos challenged: notably those that revolve around the 'right' to social housing and benefits. The ideas being floated are as controversial in their own way as those that surrounded earlier debates over the right to buy.

It has taken an academic from the London School of Economics to make the link between social housing, worklessness and poverty - and, in the opinion of some, provide the Trojan Horse for Communities Secretary Ruth Kelly's more radical proposals on the way welfare and housing are provided.

Professor John Hills' March report, Ends and means: the future roles of social housing in England, pointed out that rather than helping people back into work social housing provides perverse incentives that keep them benefit dependent. 'There is no sign of a positive impact on employment of the kind that sub-market rents might be expected to give,' says Hills. 'Housing and employment tend to operate in separate boxes, but what often initially appears as a housing problem may have its roots in problems in the labour market.'

He adds that housing benefit is a major contributor to the 'poverty trap'. Hills also found that there was little mobility for social tenants, with only a few thousand moving areas a year. And, perhaps more starkly, 80% of those living in social housing today were in it ten years ago.

Hills' report has been described as 'devastating' in its analysis of the root problems of social housing, but he is very clear that it still has a vital role - it just needs . to work better. He suggests a more flexible approach, \ including a 'menu of options' that moves away from \ the traditional 'one size' secure tenancy for life. This in- E eludes more routes into shared ownership, as well as S integrated support with employment, and a system to review residents' financial situation every few years to · assess their real need, rather like a Jobcentre Plus in- { terview. Kelly has already given Hills her backing and \ has suggested measures such as a 10% shared equity s scheme to help people on to the housing ladder. [

Significantly, the Department for Work and Pensions is singing from the same hymn sheet when it comes to flexibility and tackling hard-to-reach groups. Its recent i review of the welfare state, conducted by former Financial Times journalist David Freud, suggests more local support to ensure those on the 'revolving door' of work and welfare get into long-term employment. He looked at largely the same groups of people as Hills and came to similar conclusions: that more targeted and flexible support was needed. He also talked about using the private and voluntary sectors to create an employment market, just as Hills suggested that social landlords could play a wider role in job creation.

'This is a radical reform designed to reduce the social dependency of the most disadvantaged,' Freud promised at the launch in March. …

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