CSR housing cuts risk deepening homelessness and poverty

Homelessness and poverty will rise on the back of cuts to housing funding and benefits announced in this week’s comprehensive spending review (CSR), sector leaders have warned.

Spending on building social housing will be slashed by 60%, new social tenants will face steeper rents and fixed-term tenancies and housing benefit, will be cut further following cuts in the June Budget.

The plans have raised concerns that the target to end rough sleeping by 2012 will be missed, with London and the South East facing the biggest problems.

“We are deeply concerned that these cuts could, firstly, penalise people recovering from homelessness and, secondly, lead to a potential increase in the numbers left hanging on by their fingertips, with a knock on effect for rough sleeping numbers,” said Charles Fraser, chief executive of homelessness charity St Mungo’s.

“People will be returning to the streets more quickly,” warned Thames Reach chief executive Jeremy Swain.

The government will spend £4.4bn on building social housing from 2011-15, down from £8.4bn over the previous three years. New social tenants will face rents of up to 80% of market levels, an increase on current social rents, as well as fixed-term tenancies, while people aged 25-34 will in future only receive housing benefit for living in a shared flat, rather than on their own.

This builds on cuts to previously announced housing benefit cuts totalling £1.8bn a year by 2014-15 and plans announced before the CSR to cap overall benefits for non-working families to £26,000 a year. Housing will also be hit by 28% cuts to council budgets included in the spending review.

The National Housing Federation said social landlords would be forced to put up rents because of the cuts to capital budgets, trapping thousands of tenants in poverty and increasingly dependent on benefits.

It calculated that thousands could end up having to pay £9,000 extra a year in social housing rents, though with the benefit cap this could be unaffordable for many.

“It will be more difficult than ever for people to escape the poverty trap and benefits dependency that the government has repeatedly said it wants to tackle,” said chief executive David Orr.

London Councils’ executive member for housing, Steve Bullock, said: “The government has now put in place the ingredients for a swiftly escalating housing crisis across the capital – one that will touch the lives of the majority of Londoners and place council budgets under severe pressure.”

There were also concerns over plans to reduce spending on Supporting People and roll funding into councils’ general grant.

Housing charity Sitra raised concerns that councils would use the money on other services, adding: “Sitra has already received information from a number of authorities who are proposing radical reductions to spending on housing related support.”

The government insisted it remained committed to combating homelessness. It pointed to work it was undertaking with voluntary organisations such as Crisis in which ex-offenders and single homeless people will be given help to find and maintain a new home in the private rented sector.

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