U.K. housing benefit cut may change London's social diversity

New housing rises above a block of flats due for demolition in Limehouse in London, United Kingdom.


Bob Moon: We all know housing prices have fallen in the past few years, but even now, accommodation doesn't come cheap. Especially in some hot spots -- New York and L.A., for example. It's the same in Britain. London is one of the world's most expensive cities. So when the government recently announced plans to cap subsidies for people on welfare, to help control the huge national deficit, there was an outcry. Critics worry it could destroy London's diverse social fabric.

From Islington in north London, Marketplace's Stephen Beard reports.

Stephen Beard: This is one of London's more fashionable and expensive districts. But like many parts of this city, there are poor as well as rich people here.

Patricia Radcliffe is poor. A single mother with five children, she rents a house here with the help of government housing benefit. She's very worried about the looming benefit cuts.

Patricia Radcliffe: Well, to me, it's like they want me to put myself in debt and then maybe to see me and my family on the street.

She won't be on the street, but the new cap on housing benefit means that she may have to move to a cheaper district.

Radcliffe: I would love to find somewhere cheaper but not too far, because my kids like going to school and they have their friends around here.

She'd be lucky. The new housing benefit cap, $640 a week, means that she may well have to uproot herself and move far away from the center of the city. The same could happen to thousands of poor households in the capital.

Radio show: This is BBC London on 94.9, Vanessa Feltz...

On this radio phone-in show, the mayor of London, Boris Johnson, vowed to fight what he called "social cleansing."

Boris Johnson: We will not accept any kind of Kosovo-style social cleansing of London. You are not going to see on my watch, thousands of people being evicted from the place where they've been living and have put down roots.

Boris is famous for his vivid imagery, but Kosovo? Evoking the Balkan war in which thousands of people were driven out of their villages on the because of their ethnicity -- isn't that a bit over the top? I went to meet someone who should know.

Bujar Haxhiu: OK, this is our office; it's one of our offices. We've got two of them.

Bujar Haxhiu is a Kosovan who was ethnically cleansed by the Serbs and came to Britain as a refugee. He now owns this letting agency in North London and has a wide range of properties for rent.

Beard: Do you have any properties on your books that somebody could afford with the new housing benefit?

Haxhiu: No.

Beard: None at all?

Haxhiu: None at all.

Bujar says the new $650-a-week cap on housing benefit will cause a major upheaval.

Haxhiu: People are gonna move out, and they're gonna have to search for cheaper properties and that's gonna have to be out of London. Because in the London area, it's going to be very difficult to live.

Beard: Would you describe this as Kosovo-style cleansing?

Haxhiu: I would say yes, I could call it social ethnic cleansing.

Beard: Without the bloodshed?

Haxhiu: Of course.

Critics of the cap say it will turn London into a city like Paris where the poor -- most of them immigrants -- are banished to the outskirts and only the rich can live in the center.

David Cameron: These are difficult changes...

Angry shouts

Cameron: I think this is right.

But Prime Minister David Cameron has been fighting back in the House of Commons. He says he must cut the cost of a benefit that's spiralling out of control.

Cameron: Are we happy to go on paying housing benefit of £30,000, £40,000, £50,000 ?

The total annual cost of this benefit jumped by 50 percent over the past five years to more than $35 billion, reflecting the huge boom in London property prices. And that, says Cameron, has priced many ordinary, working people who are not on benefits out of the central London rental market.

Cameron: Are constituents working hard to give benefits so people can live in homes they couldn't dream of?

And these commuters who can't afford to live in central London certainly support the benefit cap.

Man 1: Of course, I'd love to live in the nicer areas of London. But because I have to live within my means, I can't do that.

Man 2: No, I think it's right to cut the benefits. The likes of you and I wouldn't be to afford to live in these sort of places, and yet they're being housed at taxpayers's expense.

The government is pressing ahead with the cut in housing benefit, dismissing what it calls the "hysterical" claims that it will ruin the social fabric of the capital. London, said a government spokesman, is always in a state of flux.

In London, this is Stephen Beard for Marketplace.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.


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