Here's how we can translate London’s housing benefit bill into affordable housing

Those were the days. Image: Hulton Archive/Getty.

London’s housing market is an anomaly.  House prices are high, the population is continuing to rise, and we are told that global investors see London property as one of the few ways to make money in today’s low-interest environment. But none of this seems to feed through to building more bloody houses; house prices and rents continue to push upwards every year.

The result is more and more Londoners being priced out of the city, and a rising housing benefit bill, as government pays more and more subsidy over to private landlords – more than £6bn in 2014-15, 15 times more than the annual sum allocated to support affordable house building.

You have to ask yourself whether this money could be better spent. In No Uncertain Terms, a report published last week by the Centre for London, suggests that it could. Our paper, written by Jamie Ratcliff, argues that developers could borrow money to build more affordable housing, repaying these loans through rent, supported by the housing benefit that would otherwise go to existing landlords. 

There is plenty of money out there; the key is getting the right terms. Institutional investors – like pension funds and insurance companies – are keen to invest in London property; what they crave above all is a reliable rate of return that keeps pace with inflation. Our paper argues that a government guarantee that housing benefit levels would rise in line with inflation would give lenders certainty, and bring the cost of borrowing down.

We estimate that guaranteeing an annual £2.4bn of housing benefit in this way could fund the construction of 250,000 affordable homes over ten years, each of which would be let for 45 per cent less than average market rents.

The guarantee would need to be rock-solid to get the best interest rates, and would be in place for 60 years, rising in line with the consumer price index each year. Initially, it would cost government nothing more than their existing expenditure on housing benefit; over time, however, if rents continued to rise faster than inflation, it would actually save money year on year.

Westminster has traditionally been cautious about giving guarantees; civil servants worry about making long-term commitments of government resources, post-dating cheques decades into the future. But every government makes such commitments – for major transport projects, for investment in power stations, for military hardware.

We need to start seeing housing as infrastructure, every bit as essential as these, giving the guarantees that will unlock many billions of capital investment – and translate London’s housing benefit bill into an investment in the city’s future.

Richard Brown is Research Director at Centre for London. He tweets as @MinorPlaces.

Want more of this stuff? Follow CityMetric on Twitter or Facebook.


Mayor Marvin Rees' hope for Bristol: A more equitable city that can 'live with difference'

“I call on everyone to challenge racism and inequality in every corner of our city," Bristol Mayor Marvin Rees says. (Matt Cardy/Getty Images)

When the statue of 18th century slave trader Edward Colston was torn from its plinth and dumped in Bristol’s harbour during the city’s Black Lives Matter protests on 7 June, mayor Marvin Rees was thrust into the spotlight. 

Refraining from direct support of the statue’s removal, the city’s first black mayor shared a different perspective on what UK home secretary Priti Patel called “sheer vandalism”:

“It is important to listen to those who found the statue to represent an affront to humanity,” he said in a statement at the time. “I call on everyone to challenge racism and inequality in every corner of our city and wherever we see it.”

48 year-old Rees, who grew up in the city, has since expanded on his approach to the issue in an interview with CityMetric, saying “wherever you stand on that spectrum, the city needs to be a home for all of those people with all of those perspectives, even if you disagree with them.”

“We need to have the ability to live with difference, and that is the ethnic difference, racial difference, gender difference, but also different political perspectives,” he added. “I have been making that point repeatedly – and I hope that by making it, it becomes real.” 

What making that point means, in practice, for Rees is perhaps best illustrated by his approach to city governance.

Weeks after the toppling of Colston’s statue, a new installation was erected at the same spot featuring Jen Reid, a protester of Black Lives Matter. However, the installation was removed, as “it was the work and decision of a London-based artist, and it was not requested and permission was not given for it to be installed”, Rees said in a statement.

Bristol may appear a prosperous city, logging the highest employment rate among the UK’s “core cities” in the second quarter of 2019. But it is still home to many areas that suffer from social and economic problems: over 70,000 people, about 15 percent of Bristol’s population, live in what are considered the top 10 percent most disadvantaged areas in England. 

In an attempt to combat this inequality, Rees has been involved in a number of projects. He has established Bristol Works, where more than 3,000 young people from economically disadvantaged backgrounds are given work experience opportunities. And is now setting up a commission on social mobility. “Launching a Bristol commission on social mobility is not only about social justice; it [should not be] possible for a modern city to leave millions of pounds worth of talent on the shelf, just because the talent was born into poverty,” he says.

The mayor is also a strong supporter of the UN’s Sustainable Development Goals (SDGs), explaining that SDGs offer a way to talk about sustainability within a framework of many issues, ranging from climate change and biodiversity to women’s issues, domestic violence, poverty and hunger.

“What we want to achieve as a city cannot be done as a city working alone,” he insists. “We don’t want to benefit only people inside Bristol, we want to benefit the planet, and the SDGs offer a framework for a global conversation,” suggesting that a vehicle should be launched that allows cities to work together, ideally with organisations such as the UN, the World Bank and the International Monetary Fund involved. 

Greater collaboration between cities would be “beneficial in terms of economies of scale,” he argues, “as cities could get more competitive prices when buying materials for building houses or ordering buses, rather than each city acquiring a few of them at a higher price.”

In an attempt to focus on the long term, Rees launched One City Plan in January 2019, setting out a number of goals for Bristol to achieve by 2050.

Investing in green infrastructure to meet 2030 carbon emission targets spelled out in the SDGs is a key area here, with the mayor noting that transport, mass transit and energy are important sectors looking for further investment and government funding: “The sooner we meet our targets, the sooner we will benefit from them, and invest in sectors that will provide people with jobs.”

Jobs, especially following the outbreak of Covid-19, are of paramount importance to Rees. Bristol’s council wants to ensure that any government money given to the city will be quickly passed on to businesses to help prevent redundancies, he says, though given that mass job losses seem inevitable, reskilling options are also being looked into, such as through a zero-carbon smart energy project called City Leap.

Another important area for investment in Bristol is affordable housing, with 9,000 homes already built under Rees’s term of office. “People could build a base for life with affordable housing, [and this would mean] their mental health would be better because they have a safe place,” he explains. “Children in families that have a home that is affordable are more likely to able to eat and to heat, [and they are more likely to enjoy a] better education.”

Taken in the round, Rees’s agenda for Bristol is its own blueprint for shaping history. The Colston statue now lies in safe storage, with a local museum likely to play host to the controversial monument. But the Black Lives Matters protestors were fighting for a fairer, more equal future, and it is here where Rees is determined to deliver.

Sofia Karadima is a senior editor at NS Media Group.