Posted on November 1, 2010

London’s Fabled Mix of Wealth and Grit Under Threat by Housing Cuts

David Stringer, Canadian Business, October 31, 2010

It’s been at the heart of London’s identity for decades: Bakers and bankers live on the same city streets in patchwork neighbourhoods where swank mansions sit in the shadow of grim tower blocks, and residents from all walks of life mingle in shops, schools and subway stations.

Now Britain’s debt-shredding austerity measures will slash housing benefit payments used to subsidize rents for the low-paid, threatening to price tens of thousands of poor families out of their homes and force them toward the fringes of the country’s capital–an exodus that could permanently erode London’s famed ethnic, economic and cultural mix.

Outspoken London Mayor Boris Johnson likens the plan to “Kosovo-style social cleansing.” Some fear London will become more like Paris, where rich elites monopolize the city centre and the poor stagnate in decaying housing projects ringing the capital.

But in tough times, others wonder if Britain can still afford to help ordinary workers find homes in a city centre that keeps getting pricier, even as the overall economy shows only sluggish growth.

As part of 81 billion pounds (US$128 billion) of spending cuts announced last week to help wipe Britain’s crippling debts, limits will be placed on the amount given to the poor to help them pay their rent.

One estimate predicts an exodus of about 200,000 people from central London, with low earning families forced toward down-at-heel outer suburbs and far-flung commuter towns–leaving the capital’s streets reserved for the rich.

Critics worry the famously rowdy working class enclaves of London’s East End–which gave Britain its defiant wartime spirit of the Blitz–will fall silent, and that the city’s multicultural character could be lost.

“One of the best things about London is precisely that it is not like Paris–you have very rich people and people in social housing all living along the same street,” said Sian Berry, a former candidate for London mayor and part of the “No Shock Doctrine” campaign protesting against the government’s cuts.

“Those people all use the same public services, the same shops, the same schools and the same transport–it helps make people more tolerant of each other,” she said.

Under the government’s plans, which will be debated in Parliament and are yet to be finalized, a new limit will be set for the maximum amount families can claim to pay for privately rented homes, and no family will be able to use welfare payments to rent a home with more than 4 bedrooms.

Britons who earn less than 16,000 pounds ($25,500) per year and have only limited savings are entitled to claim housing benefit–which can be used to rent a house or flat, but not for mortgage payments.

Those who rent from private landlords have their benefits calculated using an average rental price in their local area. Until now, benefits have helped make sure people can afford the cheapest 50 per cent of properties up for rent in their district; next October that will be reduced to the cheapest 30 per cent. From April, payments will be capped at 250 pounds ($400) per week for a one-bedroom apartment and at 400 pounds ($640) per week for a four-bedroom house.

If rents are higher than the cap, tenants must make up the difference–or leave town.