2017 Housing Perspectives #1: ‘Housing must be central to attempts to tackle poverty’
by Brian Robson
In the first of a number of exclusive articles which shine a light on the link between poverty and housing, Brian Robson, from the Joseph Rowntree Foundation, argues housing must be at the heart of any plan to solve poverty in the UK.
In 2016, the Joseph Rowntree Foundation called for a new consensus that poverty in the UK is real, matters to all of us, and can be solved. Our plan to Solve UK Poverty called for a long-term deal between government, businesses, communities and citizens, so that no matter where people live, everyone has the chance of a decent and secure life.
Housing provides the foundation on which to build that decent, secure life. It must be at the heart of any plan to solve UK poverty. Housing has a significant influence on the costs that drive poverty. This influence has been heightened in recent years as aspects of the housing system which have traditionally buffered against poverty have begun to be eroded. If we’re to solve poverty, policy should instead focus on reforming and augmenting those buffers, to make them still more effective.
Secure housing provides a stable platform for work, learning and life. Evidence shows that frequent moves, and particularly involuntary or negative moves, can result in behavioural problems and lower educational attainment among children, threatening their life chances. In the context of a dynamic labour market, stability at home is so important, and international evidence has positively linked it to employment. The case for decent quality housing is well-understood, with a substantial body of evidence showing the impact of poor housing on health. This is a housing and poverty success story – we have largely broken the automatic link between poverty and squalor.
Less attention has been paid to the important impact of high costs on poverty. This is true across a range of areas, including in relation to childcare and energy costs. But housing is the biggest single cost for most low-income households in the UK. Its high cost pushes an additional 3.4m people into relative income poverty, a figure that has increased over the last two decades. Many of these households live in the private rented sector, where 70% of households spend more than a third of their income on housing costs.
High costs aren’t just a consideration in the private rented sector, though. Housing association rents are increasingly linked to market rates via the ‘Affordable Rent’ model. Analysis commissioned by JRF suggests the move to Affordable Rents will result in a further 1.3m people living in poverty by 2040.
The fact that poverty levels are so sensitive to the level of these rents reflects the traditional importance of low-rent social housing to mitigating poverty. The tenure has been highly-targeted in recent years, and has been labelled ‘The most ‘pro-poor’ and redistributive major aspect of the entire welfare state’. There just isn’t enough of it – social housing is now only housing one in seven in England, and even without extensions of right to buy and other associated sales, the tenure was likely to decline to housing just one in ten over the next 25 years. The lack of social housing is pushing people into insecure and often expensive private rented sector accommodation, with the result that there are now as many private renters in poverty as social renters.
Housing benefit has long been the safety net for those who struggle to meet their housing costs. It has been a far from perfect system – there is good evidence it has reduced financial work incentives and created unemployment and poverty traps. Universal Credit has the potential to reduce the long-standing issues with take-up and taper rates in support for housing costs. However, measures ‘bolted on’ to the system, like the household benefit cap and the freeze on uprating while rents continue to rise, create a situation where some households are forced to choose between living in sub-standard accommodation, or meeting a large share of their housing costs from benefits which are intended to cover other living costs. Forthcoming research for JRF shows that these choices are proving extremely challenging and are contributing to a rise in evictions and forced moves, especially in London and the south east.
Follow the 2017 Housing Perspectives series: Housing, poverty and the good society – what can we achieve by 2025?
So, what’s to be done? First, we should remember the UK’s borders don’t stop at Berwick or Bristol. Some parts of the UK are setting ambitious targets for the development of low-rent social housing, and these are to be welcomed. Scotland, Wales and Northern Ireland are all well on their way towards meeting the independently assessed need for affordable housing in their jurisdictions.
In England, though, we have a peculiar form of exceptionalism. Notwithstanding some welcome recent flexibility, housing investment is still focused on home ownership tenures, which serve a very different group to traditional low-rent social housing. Just 3% of new social renters could afford shared ownership or starter homes instead – these are products with very different markets.
Existing investment in England should be refocused, and supplemented, to deliver a package that can meet the independently assessed need for affordable housing. JRF has worked with Savills and the National Housing Federation to develop a new framework for affordable housing, which can deliver the 80,000 homes per year we need. The majority of government investment for this package could come from existing spending plans, and over a five-year period the package could deliver 40% of the government’s housing aspirations.
At least half of these homes would be let at a new ‘Living Rent’ pegged to the earnings of low-paid workers in the local area. This would also become the default rent for existing affordable rented homes when they are re-let. A ‘Living Rent’, set at 28% of local lower quartile earnings, would ensure that rents are affordable to those on low incomes whether they’re in or out of work. It shares the pro-poor elements of social housing, but reflects the realities of today’s increasingly dynamic labour market.
But if we’re to make a credible case for capital investment in low-rent affordable housing, we must ensure that its effectiveness as an anti-poverty measure goes beyond low rents, important though they are. We know the security and stability it offers is crucial for children’s life chances. For adults, investment in skills and employability for social housing tenants must be maintained – but initiatives need reform to ensure they are evidence-based. JRF’s research in this area has found a lack of solid evidence underpinning existing interventions. This is why we are investing in match-funding robust trials within housing organisations to discover what works.
We must also recognise that the location of some of our existing stock of social housing reflects the employment patterns of the past. Linking these disconnected neighbourhoods to today’s employment opportunities is a challenge we must meet if our cities are to deliver on the promise of inclusive growth. Over the next year, JRF will be conducting participatory research in three cities to identify practical ways to overcome this disconnection.
Solving poverty in the UK means strengthening the traditional anti-poverty buffers in the housing system – low-rent social housing and the system of support for housing costs. But strengthening these interventions isn’t a call for a better yesterday. It means addressing their flaws and reforming them in line with the best evidence on what works. Poverty in the UK is real, but there’s nothing inevitable about it. Housing policy must be at the heart of any plan to solve it.
Brian Robson is Policy and Research Programme Manager at the Joseph Rowntree Foundation
This piece was written for the Webb Memorial Trust and the All-Party Parliamentary Group on Poverty as part of the 75th anniversary of the Beveridge Report and is part of a series of articles we will be running in the coming weeks. It has also been published by the Chartered Institute of Housing.