The row over housing benefit

The government's proposed changes to the housing benefit system will lead to "Kosovo-style" cleansing in the capital, according to the London mayor, Boris Johnson. But is there any truth to this claim? Simon Wilson reports.

Proposed changes to housing benefit will lead to "Kosovo-style" cleansing, according to the London mayor, Boris Johnson. Is there any truth to this? Simon Wilson reports.

What are the proposed changes?

Housing benefit has ballooned to £21bn a year (more than Britain spends on policing and higher education combined). Now it is to be capped at £400 a week for a house with four or more bedrooms, or £250 for a two-bed property. Single people under 35 will only be able to claim benefit for shared accommodation; currently the threshold is 25 years old.

For those renting in the private sector, the local housing allowance (LHA) will be calculated based on the 30th percentile of all the rents for the same-sized property in the area; currently it is the 50th percentile (ie, the median). The government reckons this will affect 774,970 UK households, losing an average of £9 a week. But clearly the impact will be greater in high-rent areas.

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Will this drive people out of London?

Yes, says Boris Johnson, London's mayor, who was quickly slapped down by a spokesman for David Cameron over his ill-advised comparison of the housing benefit changes to "Kosovo-style" cleansing. (Labour's Chris Bryant also railed against "social cleansing", while The Guardian's Polly Toynbee wrote up the Tories' plans as a "final solution" for the poorest in society.)

Hyberbole aside, some mainstream Tories are worried. Mark Field, the Conservative MP for the City of London and City of Westminster, reckons more than 80% of housing benefit recipients in his constituency currently get more than the cap; that the changes are being driven through too fast; and that people will be forced out of central London.

So why change the rules?

Because some landlords have been milking the system. Under the Local Housing Allowance (LHA) rules piloted in 2002 and rolled out nationally in 2008, the state pays money direct to tenants. So they can find a property they like, sign a contract, then claim the money back, providing it meets their needs-based criteria which some say are overly generous.

For example, they include a rule that a bedroom should never be shared by more than two children, no matter how big it is, and that all over-16s have their own room. As Ross Clark put it in The Times, these are conditions that "are not even met at £25,000-a-year boarding schools".

How is the system abused?

Examples include landlords colluding with tenants to split the difference after making excessive claims. And jobless people with big families being funded by working taxpayers to rent high-end housing at way over the market rent.

James Purnell, then the work and pensions secretary, cut the weekly limit in London to £2,000 after an infamous case in Ealing. Toorpakai Saindi, an out-of-work Afghan woman with seven children, was living in a large house in Acton paid for by Ealing Council at £2,875 a week, twice the rent for similar properties. Another case involved Abdi Nur, an out-of-work bus driver, who moved into a £2.1m townhouse in Kensington on a £2,000-a-week lease, when the house had actually previously been advertised at half that rate.

Are these cases typical?

They are extreme examples of the way the LHA system has encouraged the subsidised private sector to bump up rents. Since LHA tenants account for 1.2 million of Britain's 3.3 million rented properties, the level of LHA is not just determined by market rents, as was the intention: it helps determine them.

That said, according to The Daily Telegraph, which surveyed 24 of the 33 London councils (including the two most expensive areas), just three families claim £2,000 a week (all in Westminster), 168 claim over £1,000 and 3,618 claim more than £500. Some outer boroughs have no families claiming more than the £400 limit. Based on its survey, the newspaper reckons around 17,000 people in London claim more than £400 a week.

So even if figures from the housing charity Shelter are right, and 82,000 people face some form of higher rental payments as a result of the changes, that doesn't mean 82,000 will have to move.

Are the reforms unfair?


The current system might look overgenerous, but in central London £400 a week is not a high rent, and for a large property it's a low one.

Even with the various adjustment funds and special case exceptions that councils and central government are planning, some people will inevitably be forced to leave their homes.

The rental market is strong for a range of macro reasons, not just housing benefit and is unlikely to see big price falls as the result of benefit changes.


If you can't afford to live in a particular area, why should taxpaying workers subsidise you to do so? Cutting back benefits is fiscally necessary and morally right.

Wild talk of "social cleansing" is not backed up by the numbers, and wrongly assumes that the private rental sector is the main form of subsidised housing: it isn't.

Landlords have been abusing the system for too long by artificially boosting rents. Cutting back housing benefits will help by putting downward pressure on rents.

Simon Wilson’s first career was in book publishing, as an economics editor at Routledge, and as a publisher of non-fiction at Random House, specialising in popular business and management books. While there, he published, a bestselling classic of the early days of e-commerce, and The Money or Your Life: Reuniting Work and Joy, an inspirational book that helped inspire its publisher towards a post-corporate, portfolio life.   

Since 2001, he has been a writer for MoneyWeek, a financial copywriter, and a long-time contributing editor at The Week. Simon also works as an actor and corporate trainer; current and past clients include investment banks, the Bank of England, the UK government, several Magic Circle law firms and all of the Big Four accountancy firms. He has a degree in languages (German and Spanish) and social and political sciences from the University of Cambridge.