Is the rise of UK homelessness a product of austerity?

Written by James Bate

We walk past them every day. We ignore their cries for help. Morally, it is time we face the facts: UK homelessness is on the rise.

Becoming homeless is complex, triggered by personal characteristics and structural causes, like the housing market [1]. Drug addiction, family problems and other individual factors influence vulnerability. Nevertheless, following the financial crash the UK has experienced a steady rise in homeless figures, as national rough sleeping rates have quadrupled [2].

Coincidently since 2010, the British government embarked on an era of post-crisis recovery, as private investment was prioritised over social welfare to reduce public deficit (debt). The UN recently described these inequitable pricing (policy) mechanisms as “punitive and callous” [3], as 14 million people currently live in poverty [4].

Supply of affordable housing is a possible cause. With focus on Manchester, out of 14,667 residential units granted planning permission last year, not one development met governmental standards of affordable (whereby rent is no more than 80% of the market rate) [5]. In addition, since 2010 Manchester’s statutory homelessness rate has increased ten-fold [6]. There is a clear correlation between rough sleeping figures and affordable housing supply, as unfair distribution has permitted wealthier individuals to take ownership of property. Naturally, inequality has forced society’s most vulnerable civilians out of shelter, and onto the streets.

Since 2010, the cost of privately rented accommodation has accelerated three times faster than earnings [7]. Mainstream economic theory states that efficient allocation of price aggregately produces human wellbeing, as relative prices in competitive markets maximise utility [8]. However, inflated asset prices inherit quite the opposite, heightening wealth inequality [9]. A national shortage of affordable housing ensued and has now reached crisis status, as supply could not sustain growing demand [10].

The 2011 Localism Act played a pivotal role in reducing housing supply. As opposed to the top-down approach of meeting house-building targets, a localised ‘ring-fenced’ funding model was implemented. This cost-cutting policy mechanism shifted vulnerability from national to local level [11], as Local Authorities assessed the need for affordable housing without actually needing to meet targets [12]. As a result, higher rental prices intensified housing benefit reliance.

Housing Benefit is the largest subsidy for affordable living, providing a safety net for low-income earners. Despite overwhelming dependence for financial support, austerity welfare reforms removed existing means-tested benefits by introducing a ‘universal’ tax, which typically incurs a 5-week delay [13]. Universal Credit (UC) replaced benefits with a single monthly payment issued to low-income earners or the unemployed.  However, it has been recorded that 3.2 million families will lose £48 per week following implementation – equating to £2,500 per year [14]. According to Crisis, the number of 2016/17 benefit claimants tripled [15], demonstrating the failure of UC to distribute monetary resources equitably.

Another callous reform to Housing Benefit included the Spare Room Subsidy, or ‘bedroom tax’ as it was commonly known. This manipulative piece of legislation cuts benefits by 14% if the tenancy has a spare room, or 25% with two [16]. It is evident welfare reforms and fiscal austerity have intensified risk of eviction, as arrears (late rental payments) are increasingly frequent following gentrification.

Austerity Britain has become a ‘dystopian nightmare’ for the unprivileged, where vulnerable communities are pushed to the margins [17]. Physical and mental effects of homelessness are particularly damaging and in some respects inhumane, as average life expectancy for a homeless individual is just 47 [18]. This is morally unacceptable, but subsequent social problems continue to persist.

For example, lack of health service provision [19, 20] and regulatory legislation of psychoactive substances [21] has sparked a spice epidemic. Currently, 95% of Manchester’s homeless community are addicted to the drug [22]. So what are the feasible solutions that can prevent austerity-fuelled homelessness?

Supply of affordable housing has potential to lessen rough sleeping figures, as loss of private tenancy is the biggest cause of statutory homelessness. To establish efficient allocation, a higher land tax would drive down property value and reduce income streams of the wealthy [23]. Additionally, decrease in asset prices would make it more cost-effective to build affordable homes [24], thus weakening existing wealth inequality by equitably redistributing ownership of property rights [25]. The allocation of affordable housing is imperative to ensure homelessness is reduced, but all is well… Theresa May has pledged to end rough sleeping by 2027 [26]. Did somebody say “snap election”.

Is the prime minister fully aware of the problem’s complexity? Does the cabinet understand that more investment will not target the root cause? The government needs to holistically look at the evidence, epitomised by elongated queues at food banks or the prevalence of spice addicts occupying hospital space. Our most vulnerable civilians are lonely, alienated and fed up with current Britain. Something structurally, needs to drastically change.



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