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Benefit cap makes large parts of UK unaffordable

housingterracedBenefit cap undermines the government’s housebuilding plans, says deputy chief executive of the Chartered Institute of Housing, Gavin Smart

It has been a promising couple of months for housing but the government must be careful its bold ambitions to tackle our housing crisis are not undermined by its own policies.

The housing minister, the communities secretary, the chancellor and the prime minister have all spoken of the government’s commitment to build more homes that people can afford.

The most obvious issue is, of course, supply. We need to build 250,000 new homes every year to meet newly emerging and existing unmet housing demand; in 2014/15 we built just 170,000.

Affordability is also a major issue. In recent years government funding has been diverted away from low-cost renting and towards the private market and home ownership. Just 4% of the £45bn dedicated to housing is intended to be spent on below-market rented housing. Yet we know that around a third of households are not homeowners and that this hasn’t changed for 20 years.

The government should look no further than what is missing for inspiration– we need housing options that people of all incomes can afford.

The problem is the government’s new commitment risks being undermined if policies which penalise vulnerable families run alongside new measures to boost house building. The lower benefit cap, which comes into effect on November 7, is one such policy.

The cap restricts the total amount of benefit any household can receive to £20,000 and £23,000 in London – reducing it further following the previous cap of £26,000.

When the previous cap was introduced in 2013 it was mainly an issue for families in London or much larger families. As of February 2016, around 20,000 families were hit by the cap – almost half of which were in London and 7,000 of which were families with five or more children.

Our new research shows the lower cap will affect 120,000 families across Great Britain, most of which are two or three children families, and their benefits will be cut by up to £115 a week.

This is one of a number of policies which risk seriously undermining Theresa May’s commitment to creating a country ‘which works for everyone’.

The families who have their weekly income cut when this measure comes into effect will be at serious risk of homelessness. In fact our analysis shows that the measure will make large proportions of the country virtually unaffordable for them.

Housing is back on the agenda and that can only be a good thing, but the government must be careful that its own welfare policies don’t short circuit what looks like a really positive new approach to building new homes for people who need them most.

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