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01.12.12

A perverse localism

Source: Public Sector Executive Nov/Dec 2012

Joe Penny, a researcher in the social policy team at the new economics foundation (nef), explains how the true cost of welfare ‘reform’ is being borne by local authorities, community organisations and people.

When the Coalition Government formed back in the summer of 2010 the changing of the guard at Whitehall seemed to promise new opportunities for local authorities, alongside the seemingly inevitable challenges. The challenges were known early on; this Government made no secret of its plans to reduce the national deficit, nor of the sacrificial role it expected the public sector to play. Yet, for a while at least, it seemed that budget cuts would be tempered by the promise of a much-needed end to the overly centralised and prescriptive days of New Public Management and its replacement with an agenda of localism and the Big Society.

Today however, as the new economics foundation’s report ‘Everyday Insecurity’ describes, it is clear that the speed and severity of the cuts are undermining what may have been the very best of intentions. In the place of a genuine localism or Big Society, where communities are supported to make choices and take action, we are seeing the emergence of a ‘perverse localism’.1 That is to say, a localism where the costs and responsibilities for people’s welfare are transferred to the narrowing shoulders of local authorities and increasingly beleaguered voluntary organisations.

Nowhere is this perverse localism more apparent than with the Coalition’s benefit cap, due to come into effect in April 2013. On the face of it the benefit cap seems reasonable and will no doubt garner popular support. After all, it is predicated on the seemingly sound judgment that no one should earn more on benefits than they do in work. However, putting aside the fact that the real issue here is one of unsustainably low wages, rather than luxuriously generous social security payments, the benefit cap makes very little sense. Indeed, it is set to lead to a human and social catastrophe for which local authorities, community organisations and ultimately people themselves are going to pay.

Take an area such as Tottenham in Haringey for example. Here the benefit cap is projected to affect more than 1,300 families, making it almost impossible for those families to meet their basic needs. For example, a modest three bedroom house in Tottenham, valued within the 30th percentile of local rents, will set you back around £300 per week. The benefit cap of £500 per week will leave families with three children in Tottenham with just £200 per week to live on – £200 to cover food, clothing, heating, electricity, water and transport for five people. Given that the Government’s own estimate for how much money a family of this size need to live is around £324 per week, the choices for these families will be stark: either pay your rent and go hungry, or eat and lose your home. In an area where rent arrears are already rising and where 24 people in every 1,000 received repossession orders in 2011 (the second highest level in London3), the prospect of rising homelessness is very real.

And perversely, the benefit cap won’t generate significant savings in an area like Tottenham. Rather, it will just move the costs of meeting people’s basic needs from Central Government to the local authority – who are obliged to meet the housing needs of families in their area. For many local authorities in London the benefit cap, and the predicted rise in rent arrears and homelessness, will inevitably mean housing people in private, and very expensive, temporary accommodation.

Some families might, quite literally, be moved from one end of the street to another, the only difference being that the local authority now foots the bill out of its already stretched budget. In Haringey, housing officers estimate that the benefit cap will save DWP around £8m. However, the council estimates that it will cost them up to £6m in unrecovered rents and associated costs in 2013/14, rising to £10m the following year. With a dearth of local housing options, and private temporary accommodation prohibitively expensive, it is not surprising that the majority of London councils are planning to start moving benefit claimants4 out of the city to areas as far-flung as Merthyr Tydfil where the rents are cheaper.

Meanwhile, where local authorities have no duty to house people (as with single homeless people for example), community organisations are left to pick up the pieces of welfare ‘reform’ and public service cuts. The Highway of Holiness Church for example has in recent years turned its warehouse-like location from a youth centre into a makeshift shelter for over 50 homeless men who have nowhere else to go.

They regularly receive referrals from London’s major hospitals needing a safe place to discharge homeless patients to. Since the hospitals don’t have the beds, and local authorities – already under increasing pressure to house more and more families – are unable to provide assistance to those they are not statutorily obliged to, it is left to places such as the Highway to step in. The church receives no public funding for this critical service. They pay for it through donations from their congregation, made up of poor immigrant families for the most part, and by digging deeper into their reserve funds.

Rather than the promise of community rights, neighbourhood planning and more local choice and control, this is what localism looks like in many communities across the UK. What’s more, with further rounds of local authority budget cuts planned and another £10bn reduction in welfare spending expected to be announced in the autumn statement, things look set to get worse. A perverse localism indeed.

References 1 I believe this term was coined by John Tizard in the Guardian: tinyurl.com/NEF-guardian-perverse 2 DWP (2012) Schedule of proposed benefit rates from April 2012: www.dwp.gov.uk/ docs/benefitrates2012.pdf 3 London’s Poverty Profile (2012) Landlord Repossessions by Borough: tinyurl.com/NEFlandlord- repossessions 4 tinyurl.com/NEF-guardianexpelled

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