The number of homeless people is rising rapidly and is likely to continue to grow. With no sign of an upturn in the economy, a perfect storm is brewing
Are we seeing the first signs of panic? Practically every commentator has pointed out what an immense gamble the government’s various policies towards housing represent, because no one has stirred so many new ingredients into the policy mix at the same as drastically cutting both capital and revenue funding.
Knowing last week’s homelessness figures would be bad (they showed a 17% increase on the same quarter last year), housing minister Grant Shapps launched a call to the top 50 housing associations to ‘offer their experience and expertise to help those in greatest need across the country’. The associations, of course, are likely to believe that the offer has long been on the table, the obstacle being that they can only do so much to stretch their own resources when in four years government investment will have fallen to only a quarter of what it was last year.
In theory they can raise more money by increasing rents, which is what the government wants them to do. But this is where the policy mix fails to gel: increased rents, especially in the south-east, take homes out of the reach of many households, and housing benefit, which should correct this, is being cut back. Added to this, lenders of course are well aware of the potential for associations to expose themselves by setting rents that people can’t afford, and start to factor the increased risk into their loan prices.
Grant Shapps’ other hope is that builders will start producing more homes in response to his planning reforms. But again there are problems. One, of course, is hostility towards the reforms, which means that in many places they will be implemented reluctantly and it will take some time for them to have much effect.
But more fundamentally, Shapps wants to build enough homes to stabilise prices, while the builders see a market in which prices are only rising slowly and homeownership levels are forecast to continue to fall as hardly conducive to investment. If the policy ingredients won’t deliver more social housing, they’re also unlikely to produce more private development in a market which - outside London, at least - is currently flat.
New housing, of course, can only ever make a small difference. But the policy mix for the existing stock doesn’t look likely to work either. More than ever, the government needs the private rented sector to fill the gaps. It’s already grown by over a million properties in the last decade, but supply can no longer keep pace with demand. Rents have already gone up by 7% in the past year in London.
Even more disturbingly, one in four landlords are saying they no longer want tenants who depend on housing benefit, especially because in future it’s unlikely to pay the whole rent. A new report from CIH and the BPF now shows that one of the premises for cutting housing benefit – that it led to rent increases – is misconceived. Benefit costs have gone up because the recession has made more families dependent on it in high-cost areas.
So it is hardly surprising that there is growing homelessness, something which genuinely offends the housing minister. The figures are bad enough in themselves, of course, but the policy mix for assisting the homeless isn’t working either.
The minister keeps insisting he’s maintained the budget for homelessness, but he refers only to the small budget held by his department. Homelessness services are provided by local authorities and the voluntary sector, and have suffered dramatically from cuts in the General Fund and in Supporting People. This means fewer hostels, fewer specialist services for people with complex problems, and less advice on how to avoid homelessness.
To make matters worse, both government policy and local pragmatism are pushing more of those accepted as homeless into private lettings, increasing the pressure there. It is not surprising that the numbers in temporary accommodation, which have fallen each quarter for the last five years, have started to rise, and within that rise there has been a significant increase in those having to use bed and breakfast hotels.
Worryingly, the biggest increase in reasons for homelessness was registered among those being forced to leave a private letting.
If this looks bad, a report from Crisis suggests it could get even worse. There is already pressure building from significantly increased numbers of ‘concealed’, sharing and overcrowded households, which don’t yet show up in the homelessness figures. With no sign of an upturn in the economy, a perfect storm is brewing. Time to panic?
