London housing crisis: why the Living Wage alone is not enough
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Version 0 of 1. Shelter's Antonia Bance on the new London Living Wage rate: All help for low-income families to afford a home is welcome. But reading the coverage of the Living Wage announcements, I was struck by the assumption that all that is needed to make a life free of poverty possible is to raise wage rates. The fact is, though, that the Living Wage on its own is not enough to guarantee someone a life free of poverty. She points out that the GLA's own Living Wage Unit report (pdf) recognises that if means-tested benefits were not available, the London rate would need to be far higher - £10.70 per hour, rather than the new rate of £8.55 to enable low-paid Londoners to make ends meet. Accommodation costs, of course, are a huge contributor to the capital's unaffordability and its consequent, gigantic, housing benefit bill (which includes increasing numbers of households in work.) Shelter's rule of thumb is that housing costs are affordable if they account for less than a third of a household's take-home pay. Bance continues: Let's take a family with two children and one parent working 40 hours per week on the Living Wage. In London, they would have an annual income of £16,446 or £14,882 outside of London, once child benefit is added and income tax and national insurance are taken off. If this family were to rent a two bedroom home in the cheapest quartile of local rents, this would take 83 per cent of their take home pay in the London borough of Brent. And even if the second parent took a 20 hours-a-week job on the London Living Wage, residing in that home in Brent would still devour more than half their income, meaning that if that family was renting privately they'd probably still need help from housing benefit and more. Bance's conclusion? If politicians are thinking about "predistribution"...then they have to think about how they cut housing costs in the first place to avoid subsidising them later. Shelter recommends encouraging longer private sector tenancies with rents pegged to inflation and, most importantly, a switch from spending money on benefit top-ups to help people meet housing costs to investing in homes that low-income families can afford. This government is capping the top-ups <strong>and</strong> the investment in affordable homes, especially those that low-income families can afford - and at the same finding that the benefit bill in London is getting higher. Hello, Boris Johnson. Anything to say? <em>Read the whole of Antonia Bance's article here.</em> |