Racking up rents

It looks like there will be a mini-revolt on the Government benches in the House of Lords later today over the Welfare Reform Bill. Lib Dem peer Paddy Ashdown has said he will vote against proposals to cap benefits at £26,000 per household per year and others are likely to join him, including it appears at least some of the twenty-six Anglican bishops who sit in the Lords.

The Government are appealing to a number of right-wing tabloid myths in the Welfare Reform Bill. Ashdown's specific objection is to the capping of Child Benefit which in the Tory mindset is about stopping the feckless poor overbreeding and punishing the moral failings of single mothers. The Bill is essentially a divide and rule tactic, telling workers that their enemy is not the bosses but other workers who are living it up at their expense by having lots of children or swinging the lead on Incapacity Benefit.

£26,000 is equivalent to £500 a week. A large percentage of that will be taken up by Housing Benefit. Nowhere in all the media coverage is there any discussion as to where that money goes, not to benefit claimants but to their landlords. The root problem is not that benefits are too generous but that rents in private rented accommodation are too high.

The situation is especially acute in London, especially in central London where demand for housing far outstrips supply. Two things could be done to tackle this: regulation of the housing market by the Government introducing strict rent control and building more council houses.

Another point overlooked by the media is the circular relationship between the Government, banks and private landlords. The boom in building private flats in the 2000's was funded by credit and many of them were bought by private landlords on buy to let mortgages so at least part of the money paid out in Housing Benefit ends up via interest payments in the hands of banks bailed out by the taxpayer.