Contrary to the impression often given by government, social landlords are far from complacent about tenants who are out of work. In fact, four out of five London social landlords offer into-work services.
Family Mosaic and Home housing associations are to be congratulated on commissioning a very topical piece of research, Home-work: Helping London’s social tenants into employment, carried out by the Centre for London, which reviews what social landlords do and how they could do more. It’s hardly necessary to explain its topicality at a time when benefit cuts and welfare reform, rising rents, a housing crisis and stagnant incomes for those in low-paid jobs combine into a perfect storm affecting London’s poor.
It’s worth bearing in mind how unequal London is: some of the richest people in the world live in the same city as many of Britain’s poorest. London has above average proportions of both unemployment and poverty (a poverty rate of 28% compared with the UK average of 22%). It also has a quarter of its population in social housing compared with a national average of one-fifth. While London’s social tenants are no more likely to be unemployed than those elsewhere, those without jobs tend to be somewhat different. Older and ethnic minority tenants do better in London, but lone parents do worse. It so happens that there are more lone parent tenants in London too, so that a significant proportion of jobless social tenants are single mothers with children, and this group also does worse in terms of getting part-time work.
The researchers review the explanations for these differences. They find no evidence that ‘lifetime tenancies’ have any detrimental effect. They are less sure whether there may be neighbourhood effects, e.g. concentrated poverty within social housing estates. But they think the main barriers are poor qualifications among many tenants, the unclear gains from working compared with benefits, the uncertainty linked with moving off benefits into low-paid jobs and possibly back again, and the costs of childcare.
Some remedies like the Living Wage could make a big impact in overcoming these barriers, but the report concentrates on action that can be taken by landlords themselves. They welcome the fact that most already have into-work services of different kinds, but suggest they are often not evidence-based, are poorly co-ordinated and often not evaluated. The implication is that these services should move into the mainstream and not be add-ons, and there is guidance from the London Development Agency (pdf) on how to do this. They are keen too that more landlords provide childcare facilities for tenants as this cost is another significant barrier.
They also look at the implications for rents. While dismissing the government’s ‘pay-to-stay’ scheme as creating a disincentive to work, they come up with some controversial proposals of their own. They suggest that while social landlords shouldn’t impose higher rents in a single step as pay-to-stay envisages, they might progressively increase rents with earnings, charging higher increments of rent not big enough to be a work disincentive.
The scheme is shown in the diagram. The green columns show tenants’ income bands (based on UK figures, in £1000s). The blue line shows what tenants pay on average at the moment: zero if on full housing benefit, with a sharp taper leading to whatever the full social rent is for their home. Pay-to-stay would add a vertical step (red dots) for tenants earning more than £60k. The Centre for London suggests a less steep taper, starting at the median wage and reaching to just below market rent levels for tenants earning about £32k.
The extra rental income, which would be more than the small sums that would result from pay-to-stay, could finance more into-work services. Interestingly, they also suggest that part is reserved to create a fund for those who lose their jobs and have difficult paying their rent, and suggest ways that this could be done. The money might also be used to reduce rents for tenants who go on training courses.
These ideas need a lot more thought and would be demanding to implement. Nevertheless, there are some straws in the wind here. The Chartered Institute of Housing (CIH) has published a report with L&Q housing association looking at similar issues and promising more research. Furthermore, the recent Let’s Get Building report showed that many local authorities are contemplating higher rents to fund new build.
The Chancellor insisted in the Autumn Statement that pay-to-stay would be introduced, despite the very real objections and the obvious problems of imposing it on an unwilling sector. It seems most unlikely that the government will get its way. Nevertheless, we might have to accept that the old model of highly affordable rents based on substantial grants, which is still producing attractive new developments like the mixed community created by Hyde in the Packington estate, is unlikely to be fully restored by a future government. So might ideas like those put forward by the Centre for London be worth debating?