Austerity in Britain

Camden council plans to move 761 poor families from London

Council says welfare cuts force shift of 2,816 adults and children to areas up to 200 miles away with lower housing rents

the Guardian,

13 February, 2013

A council is planning the largest single displacement of poor people from London in the wake of the coalition government's controversial welfare reforms, singling out more than 700 families to be moved up to 200 miles away.

Camden council said that it would shortly be contacting 761 households, comprising 2,816 adults and children, because the coalition's benefit cap – which limits total welfare payments to £500 a week for families – will mean that they will be unable to afford their current accommodation or any other home in the south-east.

The Labour-controlled council warns that the majority of these families have three children and, once the cap is imposed this summer, will need to find on average an additional £90 a week for rent to remain in their homes – which means "sadly the only long-term solution for some households will be to move".

The local authority says it has been forced to look as far afield as Bradford, Birmingham and Leicester and warns that 900 schoolchildren – more than one child for each class as an average across the borough's schools – face having their education disrupted by the move.

Camden's admission that it is prepared to think the unthinkable and shift large numbers of people out of the capital will be a reality check for ministers who have in the past claimed no one will have to move as a result of coalition cuts.

Other London councils have warned about the numbers of families that will be affected by the introduction of the household benefit cap.

Last month Westminster, a Conservative-run borough, estimated 2,327 households would be affected. In Haringey, one of the four councils chosen to test the changes in April, "temporary accommodation" teams are beginning to collect information about the "income, employment status, personal circumstances and household composition" of 1,000 families who may, according to papers seen by the Guardian, have to move to "lower-cost areas outside of London".

Some authorities have also looked at buying properties outside the south-east. In nearby Brent, where 1,100 households will lose £100 a week after the household cap is introduced, the council has "assessed the costs of procurement in different areas of the country such as the Midlands — including Coventry and Birmingham. We have procured properties so far in Luton, Slough, High Wycombe and Hertfordshire."

Camden says it has been forced to act because the government's policy does not recognise the capital's local circumstances. The borough has the fourth-highest rents in the country. Councillors argue work is no route out of poverty because London has the second-highest childcare costs in the world and house prices are pushed up because Camden's average wage is £37,000, 42% higher than the national average.

The result is that rents of three-bedroom properties in Camden are at least double the government's maximum welfare payment of £340 a week for such properties in north London. Yet three-children families in Camden, said the council, will have a £175 a week limit for housing benefit due to the cap. The local authority says it has no more council housing available – it has a waiting list – so has no alternative but to "explore out-of-borough housing options. The local housing allowance [government welfare subsidy] in Birmingham and Leicester for a three-bed is £127 a week."

One single mother in Camden with four children, all under the age of 10, told the Guardian: "I want to stay where I am for my children's education. What it seems like is the government just want London for the rich. They want to move people on benefits to poor areas." Her rent is £340 for a two-bedroom flat in Camden. When the cap comes into effect, the government will reduce her housing subsidy to £204. This leaves a shortfall of £136. The council has offered to rehouse her in Liverpool.

She said: "Not being given that option to choose where you want to live and where your children go to school isn't fair. The government is taking away people's homes and the places where they've made friends. To think that someone has the power to do that over you … Obviously the government made a lot of mistakes and now everyone is taking the brunt of their mistakes. My children are my priority. If I have to move I will but obviously I'm trying to resolve this."

The leader of Camden council, Sarah Hayward, said: "We are deeply concerned with the continued cuts to welfare benefits and how this will impact on Camden. The very high housing costs in Camden and across London mean that low-income households will find it increasingly hard to find affordable accommodation if they are not in social housing.

"I can guarantee that no vulnerable people will be moved from Camden and we will step up our efforts to engage with those most at risk of losing their homes due to these changes. We will need to set aside additional funding to deal with the fallout of this policy as more people present themselves as homeless but sadly the only long-term solution for some households will be to move."

"Camden is a much better place because of the diverse population that make up its social mix and sadly these changes mean that some low income households will be moved further away from their communities, their jobs and their support networks such as friends and family."

The benefitcap has been dogged by fears of the chaos that might ensue from such a momentous change to welfare policy. Last December ministers conceded that there would be no national roll-out and that changes would only apply to four councils — Haringey, Croydon, Enfield and Bromley – from 1 April and not to everywhere at the same time as widely expected. However last night sources said that because of the fear of a legal challenge, the coalition's welfare minister Lord Freud was planning to bring forward the date at which the rest of country implement the policy.

Stephen Timms, Labour's employment spokesman, said: "This government's incompetence is in danger of creating a cap on benefits that actually ends up costing more than it saves. It is becoming increasingly evident that hapless ministers haven't got the first idea what is going to happen when their changes come in or how much hardship will be caused."

A Department of Work and Pensions spokesperson said: "It's not right that benefit claimants can receive higher incomes than families who are in work. That's why we're introducing a cap on benefits – to restore fairness back into our welfare system while ensuring that support goes to those who need it. Local authorities must consider the individual circumstances of the household and they must absolutely not apply a blanket policy of moving homeless families to different districts.

UK set for low GDP growth for at least two years, Bank of England warns

Inflation is forecast to remain above the central bank's 2% target until at least the end of 2015 – peaking at 3.2% later this year

the Guardian,

13 February, 2013

Britain will suffer low growth and a squeeze on average incomes for at least another two years, the Bank of England warned on Wednesday, signalling that the economy will remain weak until the next election.

The Bank's governor, Sir Mervyn King, put the institution on a collision course with the Treasury after he blamed the government for pushing inflation above its 2% target for the fourth consecutive year and warned that growth in the economy would not gain momentum until 2015.

King accused the chancellor, George Osborne, of scoring "an own goal" following steep rises in university tuition fees and hikes in energy bills linked to green subsidies, which pushed up inflation by at least one percentage point.

The outgoing governor said inflation would be higher than expected as a result of "administrative decisions" and made the monetary policy committee's job of hitting the 2% benchmark much harder.

Treasury sources said it was unfair of the governor to blame the government when it had made every effort to limit price rises in key areas, including freezing fuel duty and council tax.

King made his comments as he delivered the bank's quarterly inflation report, which predicted inflation would remain above the central bank's 2% target until at least the end of 2015, peaking at 3.2% in the second half of this year, from 2.7% currently. With wage rises regularly averaging less than 2%, household incomes are likely to remain under pressure. The economy will regain the size it last achieved in 2007 as growth is not expected to get above 1% this year.

Sterling tumbled on the gloomy outlook and the prospect that the Bank's monetary policy committee, ignoring recent good news from higher construction output, will inject more funds into the economy through quantative easing – where the Bank enters the market to buy UK government debt. The pound fell to $1.55, down a cent on the previous day.

Lord Oakeshott, a former Liberal Democrat Treasury spokesman, said King's intervention amounted to an attack on the government's economic strategy.

"The governor is blaming the chancellor for pushing up prices and blowing the MPC off course, which is unprecedentedly direct criticism of the government by a serving governor."

King insisted a "recovery is in sight", but warned the path ahead for the UK economy would not be smooth, in part because there were limits to what more economic stimulus could achieve.

Nevertheless, he said, the central bank remained ready to do more to help the economy if needed.

"We must recognise there are limits to what can be achieved via general monetary stimulus – in any form – on its own," he said.

Business leaders responded to the inflation report with demands that Osborne, who is preparing his March budget, boost infrastructure spending to generate high quality jobs and spur growth.

The Confederation of British Industry, which represents thousands of the UK's biggest private sector employers, warned that without a push from the Treasury the economy would continue to crawl out of recession.

CBI boss John Cridland said: "We've called for the government to boost capital spending by digging a bit deeper on current expenditure, and to get investment spending flowing in the short term, for example on much-needed repair and maintenance of the roads system."

Labour said the prospect of low growth and falling real wages at least until the next general election showed the government's economic policies had failed.

Official figures showed that low wages and high inflation over recent years have badly hit household incomes. The Office for National Statistics said the real value of average earnings has fallen back to 2003 levels after 30 years of strong growth. It said new research had revealed average earnings peaked in 2009, but since then wage increases had been outstripped by inflation. Wage growth is currently running at 1.8% a year, though some areas of the economy remain buoyant.

The ONS said the economy was no larger than it was in 2005 after growth, which began to rise in the latter part of 2009 and the first half of 2010, flat-lined.

King said the MPC was committed to "looking through" the current high inflation because some of the rise came from one-off factors, such as the near trebling in university tuition fees, and the risk that higher interest rates would crash the economy and push inflation below its target.

"Attempting to bring inflation back to target sooner would risk derailing the recovery and undershooting the target in the medium term," he said.

The bank has spent £375bn on buying government bonds but has held off from increasing the programme. The incoming governor, Mark Carney, hinted last week he may press for the bank to be more aggressive in attempts to boost growth.