How should the state treat social tenants on higher incomes?by Ben Rogers / June 26, 2013 / Leave a comment
Politicians often become closely associated with controversial policies that they have helped introduce. No surprises there. But poor Frank Dobson is heavily associated with a policy he has had next to no role in creating or maintaining – although it is one he does support. The Camden MP and his wife – a university lecturer – have happened to live in a council flat in a handsome Edwardian mansion block not far from the British Museum for many years.
Every time anyone raises a question about whether it’s fair that higher earning council or housing association tenants get to enjoy a home for life at a sub-market rent, Dobson’s name comes up.
It has to be said, however, that Dobson’s name does not come up that often – the general assumption has been that he and the few other well known higher earning social tenants, like Lee Jasper, Bob Crow and Baronness Udin, are very much the exception to the rule. Social housing is allocated on the basis of need. So don’t most people who live in it need it?
By and large they do. Half of social renting households have no earned income, due to disability, age, or unemployment, and a further 25 per cent have such low earned income that their already heavily subsidised rent needs to be supplemented with Housing Benefit. Yet a new report, published by Centre for London, suggests that around 16 per cent of all London council and housing association households – around 116,000 households in all – have an income of above the London average wage of £27,000 a year.
The Government is about to introduce reforms that will answer public concerns about the Dobsons of this world. The chancellor announced in his last budget that he would be allowing councils and housing associations to start charging a market rent of all social households earning over £60,000,
But this policy is arguably largely an exercise in political positioning. Less than one in 50 London social households have incomes above £60,000. Pete Redman, the report’s author, estimates that charging them a market rent would raise only around £30m a year. At the same time, hiking rents up in this way creates an obvious problem. In effect any household moving from income of less than £59,000 to £60,000 is going to be a great deal worse off – hardly an encouragement for aspiration.
Our report puts forward an alternative approach. We argue that social landlords should be allowed to raise rents incrementally on higher earning social tenants. Most of the 115,000 tenants earning above London average income would pay only a very slightly increased rent. Yet this scheme would raise around £300m a year in London alone, to spend on new housing, paying for more than 3,000 new social homes a year.
We don’t want to squeeze higher earning tenants out of social housing. On the contrary, we argue that nobody should face losing their home because their income goes up. On our proposals higher earning tenants should always be offered the right to buy their homes or stay on at a market rent.
But the public is increasingly concerned to know that the welfare spending is directed to those who need it most. We need a fair deal for social tenants, with higher earning tenants contributing a little more.