3 August 2023

Why shouldn’t people on benefits move to Middlesbrough?


In a recent episode of the News Agents podcast, Lewis Goodall reported a striking discovery: that London estate agents are advertising, to people on benefits, homes in Middlesbrough. Apparently ‘they’ (it wasn’t clear whether he meant the agency or the local authority) ‘would facilitate purchase in Middlesbrough as well’.

The debate touched on several important issues, but the benefits angle is an especially interesting one. On the face of it, it seems absurd – and the fact that London is increasingly unaffordable for people on low- and middle-incomes is yet further testament to the urgent need to solve the housing crisis.

In an ideal world, we would solve this by building lots more houses. Were he so minded Michael Gove could start making that happen tomorrow, either by calling in and approving (rather than vetoing) developments or by issuing development orders to Year Zero the planning code in the many areas of London where the Conservatives are entirely uncompetitive.

He is not, however, so minded. Indeed, just today he stepped in to block the Church of England from building houses in church land. Forget pretty AI images of New Cambridge – on current trends, Gove’s legacy as Housing Secretary looks set to be banning sash windows and stoops, and (in terms of his personal impact) a number of new housing starts with a minus sign in front of it.

Which means we have to face up to the likely reality of an ongoing shortage of housing – and that means that the thorny question of efficient distribution of scarce resources becomes harder and harder to avoid.

This is itself a failure. I have actually challenged Gove on the wisdom of fixating on efficiency: a young professional in a spacious flat, or a family with a big garden, are both less efficient (in terms of people/m2) than four strangers crammed into an HMO, or a tower block.

But that’s a question of the ideal – that we need more spacious flats and homes with gardens. Until we get them, efficiency really matters.

I previously addressed one dimension of this when I floated the idea of a ‘Boomer bedroom tax’. If we aren’t building enough family homes, then the serial under-occupation of family dwellings by older people is a social problem. A community stake cuts both ways – if it grants a homeowner the right to object to new housing in their neighbourhood, it grants their neighbourhood a legitimate interest in making the best use of their own home.

In that, I was writing about a cohort who are generally (albeit by no means universally) better off, and often own outright. But a variation on the same reasoning applies at the other end of the spectrum: the benefit claimants being pitched to by that south London estate agency.

London has a deep shortage of housing and (as Robert Colvile must be hoarse from shouting by now) it is only set to get steeper. The average price of a first-time purchase already exceeds the arbitrary cap on the Government’s abysmal Lifetime ISA. Rents are also spiralling, and the process of even finding a let increasingly sounds like the Hunger Games.

This is not just very bad news for younger and working Londoners, of whom there are millions, it also hurts the entire economy. Whatever the virtuous ambitions of Levelling Up, the capital remains the UK’s most dynamic and productive region, generating the wealth upon which our increasingly rickety state depends. Sky-high living costs make it harder to attract talent and deliver growth; diverting ever more of southerners’ post-tax income into rent or mortgage repayments leaves them with less disposable wealth to spend in the economy.

Given all that, and without any imminent hope of change, it is irresponsible not to think carefully about whether or not London’s existing housing stock is being used efficiently. Or to put it another way: why wouldn’t you encourage someone on benefits to move to Middlesborough?

There’s surely a case for it, whichever end of the telescope you prefer. If an individual is, for whatever reason, not seeking work, many of the advantages of the capital – proximity to jobs, the cultural scene, and so on – are either immaterial or, by dint of being expensive, inaccessible. Yet many of the costs, especially housing costs, are spread much more widely. Why wouldn’t you trade a small flat for a house with a garden, without the imperative of a nearby job that ties so many working people to London?

From the State’s perspective, there are obvious so-called ‘deadweight costs’ to any policy that effectively subsidises people staying in the city. Every pound spent on welfare goes less far than it would elsewhere; every home occupied by what the Government has taking to calling the ‘economically inactive’ exacerbates the shortage in the rest of the London housing market.

That isn’t an abstract problem either, but the sort of thing voters can personally notice.

In the bit of West London where I have lived for the past two years, my rent has gone up in that time by 25%. Had I stayed there, I would now be paying almost as much for my small ground-floor room as I could have rented a one-bedroom flat a few streets away for in 2021; a couple of weeks ago, one of my housemates was told that her rent and bills will rise by £250pcm when she renews. 

Meanwhile, several properties on our street are council owned. Does it make sense to price young(ish) professionals further and further out, whilst others continue to live there at state expense? Even if you think so, those young professionals might not, and they vote.

Absent fixing the system and getting social housing rates down to the sort of levels we see in Japan, the capital is always going to need some of it; this isn’t an argument for taking the ~20% of London housing that is currently in the social sector and privatising it all.

But at a bare minimum, policies designed to facilitate people making the move voluntarily make sense. 

The obvious candidate would be implementing Flexible Right to Buy, which gives council tenants cash to the value of their RtB discount to put towards another home, funded by the sale of a London property so fabulously valuable as to be out of reach, discount or no. Profits from each sale would greatly exceed the cost of the grant, and could be ploughed into building new housing stock and redeveloping old sites.

Perhaps this sounds unfair. Why should people have to move out of their neighbourhood? Surely there are other bonds than the mere economic. What about the community they’re part of? Proximity to family and friends?

It’s a good point. But the problem is, all of that is also true of working people in the private market, and yet time and again they are told to like it or lump it. If they aren’t being told to move to the North by the more obnoxious sort of Tory MP, they are being sagely told that there are plenty of affordable options – for now – if they’d just stop being babies about an 80-minute commute.

This is a very sensitive subject – even organisations which take a close interest in the housing crisis tend to be strenuously ‘tenancy neutral’ for fear that the hue and cry (slums! banlieues!) will go up. But such resentment can have real political power, whether policymakers like it or not.

If you doubt it, look no further than the extraordinary popularity of the two-child welfare limit. Beyond saving money, the case George Osborne made at the time was ‘to ensure that families in receipt of benefits faced the same financial choices about having children as those supporting themselves solely in work’. 

Whatever you think about the policy, the moral argument there is difficult to challenge. Personally, I would have resolved the tension in the pro-children direction, but it isn’t hard to see why voters strongly prefer the cap out of the options the Treasury gave them. Why should they feel any differently about having to move, and having more and more of their income eaten by housing costs?

The Government is currently on a mission to try and get as many of the economically inactive as possible into work. Presumably, that effort will involve determining who among them is not, for whatever reason, going to rejoin the workforce. To put it in anti-human terms the Treasury might grasp: thought should be given as to where and how that latter group – and, by extension, those whirring GDP cogs, workers – could be more efficiently stored.

Living in London is a necessity for many. That does not mean that it is, or should be, a right for others.

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Henry Hill is Deputy Editor of ConservativeHome.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.