Shaky Foundations

Date
March 22, 2021
Organisation
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Bright Blue, the independent think tank for liberal conservatism, has today published new analysis, entitled Shaky foundations, showing that the economic fallout from the Covid-19 pandemic is exacerbating the housing crisis in urban areas, with London boroughs in particular experiencing the biggest rise in England in the proportion of all households claiming state support for housing costs.

This analysis comes at the same time as Bright Blue launches a high-profile cross-party, cross-sectoral commission to advise on reforms to the social security system to support the post-Covid-19 economic recovery and strengthen the UK’s safety net in the long-term, which includes the former Secretary of State for Work and Pensions, the Rt Hon Stephen Crabb MP, and the award-winning food writer Jack Monore.

The analysis compares the increase in the proportion of all households claiming state support for housing costs between February and November 2020, the first nine months of the pandemic, in each English local authority. The data on the number of claims for state support for housing costs is derived from two official DWP data releases on both Housing Benefit and the Housing Element of Universal Credit claims.

The main findings from the analysis include:

  • While on average the proportion of all households receiving state support for housing costs has increased by 2.8 percentage points across all English local authorities outside of London in the first nine months of the pandemic, this rises to an average of 5.9 percentage points in London.
  • There has been, on average, a 3.7 percentage point rise in the proportion of all households claiming state support for housing costs in the average urban English local authority in the first nine months of the pandemic as opposed to a 2.3 percentage point rise in the average rural English local authority.
  • 17 of the 20 English local authorities with the highest increases in households claiming state support for housing costs in the first nine months of the pandemic were in London.
  • The increases in all households claiming state support for housing costs has led to a situation where in four London boroughs (Newham, Haringey, Brent, and Hackney), a startling 40% of households or more are in receipt of state support for housing costs.
  • The growth in claims for state support for housing costs is driven mostly by those renting privately. In February 2020, 53.3% of households on Universal Credit which received the Housing Element were renting socially, while 45.5% were renting privately. By November 2020, the proportion reversed, with 45.1% of households renting socially, while 53.5% were renting privately.
  • In 212 out of 317 English local authorities (66.8%), the proportion of new claimants of state support for housing costs in the first nine months of the pandemic who are privately renting is above 60%.

Anvar Sarygulov, Senior Research Fellow at Bright Blue and analysis author, commented:

“The pandemic has led to many more people receiving state support with their housing costs, especially in London.

“Last year, the Government made the correct decision to once again link the level of support to local rental prices, as eroding the level of state support for housing costs relative to rental market prices in previous years have placed low-income households in a worse financial position.

“But the overall numbers claiming state support for housing costs and the total amount being spent by the government should make policymakers think deeply about the sustainability of rising state subsidies for housing costs, especially for those residing in the private rented sector.”

Bright Blue’s cross-party, cross-sector commission will advise on the think tank’s research and policy formulation on social security reform. The project will examine the effectiveness of welfare reforms introduced during the early stages of the pandemic, consider which principles and approaches should guide future policies on social security, and develop a policy programme supported by the public and policymakers from across the political spectrum.

Bright Blue’s new commission includes:

  • The Rt Hon Stephen Crabb MP, former Secretary of State for Work and Pensions
  • Shaun Bailey MP, Member, Work and Pensions Committee
  • The Rt Hon Baroness Lister of Burtersett CBE, Emeritus Professor of Social Policy, Loughborough University
  • Jack Monroe, award-winning writer and campaigner
  • James Johnson, Former Head of Polling, Number 10 Downing Street, and Co-founder, J.L. Partners
  • Graeme Cooke, Director of Inclusive Growth, London Borough of Barking and Dagenham
  • Anela Anwar, Chief Executive, Z2K Trust
  • Chi Kavindele, Director, Community Links
  • Anjum Klair, Policy Officer, Trades Union Congress
  • Virraj Jatania, Co-founder and Chief Executive, Pockit
  • Professor Ken Mayhew, Emeritus Professor of Education and Economic Performance, University of Oxford
  • Dr Abigail Mcknight, Director of the Centre for Analysis of Social Exclusion, London School of Economics
  • Deven Ghelani, Founder, Policy in Practice
  • Ryan Shorthouse, Chief Executive, Bright Blue
  • Duncan Shrubsole, Director of Policy, Partnerships and Communications, Lloyds Bank Foundation
  • Manny Hothi, Director of Policy, Trust for London

The proposals made by Bright Blue in our social security project will not necessarily imply endorsement from the commissioners listed.

Ryan Shorthouse, Chief Executive, Bright Blue, commented:

“After the last economic crisis in the late 2000s, those claiming working-aged benefits experienced deep and disproportionate cuts to their incomes as the Government repaired the public finances.

That can’t happen again. The pandemic has proven that almost all of us can fall on hard times because of random, unpredictable events. A strong social security system is a necessary part of a liberal society and market-based economy because of the level of risks that quite rightly exist – indeed, a popular and effective welfare system is needed to maintain participation in and support for our socio-economic system.”

Shaun Bailey MP, Member, Work and Pensions Committee, commented:

“I am thrilled to be a part of such an exciting project. The conversation surrounding social security will no doubt increase in the coming weeks following the turbulence of the last 12 months, however, I am hopeful that this commission can be a balanced and constructive voice in that conversation.”

The Rt Hon Baroness Lister of Burtersett CBE, Emeritus Professor of Social Policy, commented:

“The pandemic has exposed and aggravated the extent of economic insecurity in our society as well as the cracks in the social security system, which mean that it is failing to provide genuine security. The establishment of this non-partisan, independent commission is thus both timely and welcome and I’m delighted to join it.”