News Shorts & Other Busyness

People On Welfare "Too Comfortable"

Squall 8, Autumn 1994, pg. 8.

When Jonathan Aitkin, Chief Secretary to the Treasury, recently claimed that people drawing benefit were living “too comfortably”, announcing his intention to cut housing benefit, the phrase ‘seriously out of touch’ seemed too mild.

In 1988, the Government introduced a housing act that deregulated rents; removing the official ceiling on the rent chargeable by landlords and sending the greedy private rented sector into exorbitancy. As a result “rents have been rising faster in the UK than in any other European country except Greece,” according to John Perry, Policy Director of the Institute of Housing. And yet the Government still insist that the stimulation of the private rented sector is the solution to Britain’s housing crisis.

What makes this position difficult for the Government to justify, as it attempts to cut public spending, is the fact that the cost to the country of housing benefit has doubled over the last six years, partly due to increases in homelessness and partly due to the rapid rent rises following the 1988 Act.

Up until now, when a tenant applied for housing benefit, a local authority rent officer would inspect the property and determine the level of benefit according to how much they consider a particular property should be rented out for. If the rent officer considers that a landlord is charging more than the property is worth, the tenant has to either pay the difference or find somewhere else. But where else?

With dramatic increases in the rent that private landlords are charging, the gap between rent officers’ assessments and the actual cost is increasing. According to the Association of London Authorities (ALA), 72% of rents examined by rent officers in Brent were considered too high, 69% in Haringey, 68% in Enfield, and 53% in Waltham Forest. In a quarter of cases in the boroughs of Enfield, Kensington and Chelsea, Redbridge and Westminster, the gap between the landlord’s rent and the rent officers assessment, was more than £2,000 a year.

“Either the rent officers are totally out of touch with the realities of the market, or some of them think they are still in the business of setting a fair rent. In fact they are actually determining a reasonable level of return for the purposes of housing benefit. The huge disparities which are emerging underline the total inability of the private rented sector to meet housing need,” said Will Tuckley, an ALA housing officer.

However, the Government, hell bent on allowing the private rented sector free reign, does not agree with his assessment. The reason why rents are rising, according to Jonathan Aitkin, is because landlords charge large amounts knowing that housing benefit will pay for it. “If you look closely, you find that quite a lot of people on housing benefit are living in houses which are too big for them, there is a question of whether landlords are pushing up rents in the private sector particularly, just to meet the level of housing benefit and not to meet the level of real market price.”

Translated, Aitkin is saying that ‘free’ market greed is not responsible for rent rises, but that the payment of housing benefit is. Therefore, according to Aitkin’s astounding logic, it's a good idea if he cuts it.

In the light of the reported discrepancies between what local authority rent officers are agreeing to pay for and what landlords are charging, it is difficult to see how Aitkin can stand by his seriously flawed assessment. However, no one is under the illusion that Aitkin’s theorising is anything more than a feebly weaved argument, attempting to smooth the public’s reception of more government cuts in welfare spending.

Aitkin's predecessor at the Treasury, Michael Portillo, had already suggested that he might introduce a standard ceiling limit on housing benefit, regardless of the level of market rent. It now looks as if Jonathan Aitkin is to establish benefit capping as a national policy.

As ‘free’ market greed continues to force up rents, the gap between homeless people and affordable housing will widen dramatically. Aitkin himself has two houses, for him to further suggest that even having a spare room, which most housing benefit claimants have never had in their life, is “too comfortable” needs no further comment.

The phrase ‘seriously out-of-touch’ is becoming a cliche.