Labour Press | “Osborne must use the Budget to turn round spiralling homelessness figures”

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13 March 2016

Labour warn Osborne must use the Budget to turn round spiralling homelessness figures

Ahead of the Budget on Wednesday Labour has released new figures showing that on current trends the number of homeless families is set to reach almost 400,000 by 2020.

Headline ‘statutory homelessness’ statistics only capture those people who fall into a small number of so-called ‘priority need’ groups containing the most vulnerable applicants like pregnant women and young people leaving care. Along with charities and academics, Labour has argued that a much better measure also includes ‘prevention and relief’ cases where councils step in to stop families becoming homeless.

This more comprehensive measure reveals that homelessness rose to 275,000 families last year, up 75,000 from 2010, and is set to hit 369,000 by 2020 on current trends.

This is in addition to rough sleeping figures which records people sleeping on the streets and has doubled in the last five years.

This rise can be traced directly to decisions taken by George Osborne in previous Budgets which have led to big cuts in housing support over the last five years, including:

·         cuts to housing benefit support worth over £5bn since 2010 – 13 separate cuts to housing benefit over the last five years, including the bedroom tax and breaking the link between private rented sector housing benefit and private rents;

·         cuts to ‘supporting people’ funding for homelessness services – the National Audit Office have revealed that vital funding for homelessness services fell by 45 per cent between 2010 and 2015;

·         soaring private rents – averaging over £1600 extra each year than in 2010; and

·         the loss of affordable homes – with over 100,000 fewer council homes than in 2010.

Without a change of direction from George Osborne, cuts in this Parliament are set to hit housing services and support on an even bigger scale:

·         the further impact of cuts to housing benefit is set to total almost £11bn between 2015 and 2020, plus a new cap on housing benefit announced in the Autumn Statement which homelessness organisations say will lead to the mass closure of their services;

·         further cuts to local authority support meaning homelessness services unable to cope – the IFS calculate further real terms cuts of around 7 per cent to council budgets over the next five years;

·         private rent rises are set to continue with Savills predict an inflation-busting 16.5 per cent increase in average rents over the next five years; and

·         A further loss of 300,000 social rented homes predicted over the next five years.

Commenting, Labour’s Shadow Secretary of State for Housing and Planning John Healey MP said:

“Rising homeless figures carry the starkest warning for the Chancellor ahead of the Budget.

“This spiralling scale of homelessness shames us all when Britain is one of the richest countries in the world. It is a test of our basic humanity. It should shake the Chancellor from his complacency about the growing homeless crisis and shock him into action.

“The homeless figures hide personal stories of hurt and hopelessness; thousands of people whose ordinary lives have fallen apart from illness, debt, family break-up, addiction or redundancy.

“His failure to control housing costs and crude cuts to housing support over the last five years are making the problem much worse. The Government have no long-term housing plan for the country.

“George Osborne must use the Budget this week to stop the upward spiral of homelessness which is being driven by the government’s own housing policy failures.

“He must now re-think the multi-billion pound cuts to housing and homelessness support which are set to bite during this Parliament, as well as strengthening the law to help prevent homelessness happening in the first place as Labour has done in Wales.”



·         The wider measure of homelessness used here – including homelessness ‘prevention and relief’ cases as well as ‘statutory homeless’ acceptances – was developed and is used by leading housing academics in the annual ‘Homelessness Monitor’ commissioned by Crisis and the Joseph Rowntree Foundation :

·         Between 2009/10 and 2014/15 the average annual increase in this wider measure of homelessness was 6%. If the rate of increase in the last five years continued over the next five years this would mean 369,124 homelessness cases by 2019/20.

Source: DCLG statutory homelessness and homelessness prevention and relief statistics: 2009/10 – 2014/15.

·         In addition, the latest rough sleeping figures collected in Autumn 2015 show that the number of people sleeping on England’s streets has doubled since 2010 with 3,659 people recorded sleeping rough on one night:

·         Figures on housing benefit cuts for the last Parliament, and planned over the next were supplied by the House of Commons Library.

·         The National Audit Office have revealed that cuts to supporting people funding for homelessness services averaged 455.3% between 2010/11 and 2014/15:

·         Average private market rents were £1,608 a year more expensive in January 2016 than at the same point in 2010, according the LSL rental index:

·         There were 117,000 fewer council homes in England in 2014 than in 2010:

·         IFS figures suggest cuts to local authority budgets of around 7% over the next five years:

·         Savills have predicted UK-wide increase in rents of 16.5% over the next five years:

·         The Chartered Institute of Housing have said that as many as 300,000 homes for social rent could be lost over the next five years:

·         More information on the measure the Welsh Government have taken on homelessness are available here:


I’m bitter about #austerity

I’m bitter about austerity.

I’m bitter because the people most responsible for causing the world economic crisis – the investment bankers – seem to have got off scott free; while it’s the little people –  teachers, nurses, doctors, lollipop ladies, disabled people, you and I – seem to be  paying.

I didn’t cause the stock market to crash. I didn’t wipe out the banks. I haven’t taken billions in bonuses. And I’ve been paying my tax.

So what did happen in September 2008 to cause this pain?

“The 2008 crisis was a banking crisis pure and simple. Excessive risk had built up in the system; the regulators failed to appreciate the scale of that risk or risk or to address it.”

That’s not my view, but that of William Keegan – Senior Economics Commentator for The Observer – expounded in his book Mr Osborne’s Economic Experiment – Austerity 1945-51 and 2010-  (Searching Finance, 2015).

He goes on to to say the global financial crisis was caused by excessively light regulation of the banks rather than profligate government deficits and in truth it was “a failure of the Group of Seven economic policymaking Establishment”.

That seems to contradict current thinking from Conservatives that Labour caused the crash by excessive spending – even leading Britain to the brink of bankruptcy.

Perhaps this view has gained currency due to a note left by outgoing Chief Secretary to the Treasury to his successor.

The letter says: “Dear Chief Secretary, I’m afraid there is no money. With kind regards – and good luck! Liam.”

Liam Byrne's handover note
Liam Byrne’s handover note

It was meant as a joke – albeit, not a very funny one. But a joke non the less and one in a long traditional line of jokey handover notes – in 1964,  Reggie Maudling left a note to Jim Callaghan saying. “Sorry to leave it in such a mess, old cock.” 

Back in 2010, Liam Byrne even admitted in was a joke in a Guardian article – Ex-Treasury secretary Liam Byrne’s note to his successor: there’s no money left [17 May 2010], but David Cameron seemed to have overlooked that during the recent General Election campaign [David Cameron fury as Ed Balls says ‘no money left’ note was a joke Daily Telegraph 16 April 2015]

It’s a joke that ultimately fell flat, possibly because Byrne’s successor wasn’t his Shadow opposite number from the Tory benches, Philip Hammond, with whom Byrne was friendly, and expected the note to be a private joke between the two of them.

Yet it wasn’t Hammond that became Chief Secretary to the Treasury – so the note was actually seen by the incoming Chief Secretary, Lib Dem’s David Laws.

So bankruptcy then might be the narrative now, but back in 2008 Labour’s spending plans were actually backed by the Tories (and matching Labour’s spending plans, and at times hinting they would spend more than Labour).

Indeed, at the Tory Party conference following the Lehmann Brothers crash in 2008, David Cameron said, “We must set aside our differences and work together with the Government in the short term to ensure stability. But that must not stop us telling the truth about the mistakes that have been made.”

He went on to say, “We will need to do difficult and unpopular things for the long term of the country,” signalling widely that the Tories should brace itself for a bruising start to Government, which could even lead to tax rises. [Guardian Cameron: judgment better than experience in a crisis 01 October 2008]. The whole speech can be found HERE.

But if only that stayed true. Within weeks Cameron had changed his tune and started their long rewrite on history – shifting the blame from the banking sector onto the public sector which was spending too much.

Owen Jones in his book The Establishment – and how they get away with it [Allen Lane, 2014] attributes this Tory U-turn to influence from the Taxpayers Alliance [see p32 -34].

So by the time that the Tories failed to win the 2010 General Election the stage was set for George Osborne’s Emergency Budget presented on 22 June 2010 and introduced the “Age of Austerity.”

Osborne cut public spending by an additional £6bn and nullified the progressive measure of raising the threshold at which income tax became payable by a regressive hike in VAT rates, from 17.5% to 20%  – a measure that was denied during the campaign – indeed a rise was used as a stick to beat Gordon Brown [VAT rise is a risk under Labour Daily Telegraph 12 April 2010]. As ever, an increase in VAT hit the low-paid much harder than those on higher salaries.

The Institute of Fiscal Studies’ Director, Robert Chote, said the UK faces the “longest, deepest, sustained period of cuts to public services spending at least since World War II”

The reference to WW2 is interesting – the previous “age of austerity”. A time where, despite rationing, there was a political will to change the status quo. A time to introduce the Welfare State and the NHS.

The Second Age of Austerity seems to be time to dismantle the Welfare State and privatise the NHS.

The Second Age of Austerity seems to less a case of “all in it together”, more a chance to go further than even Thatcher did impose a Tory ideology of a smaller public sector.

“We don’t export enough; we don’t train enough; we don’t save enough; we don’t invest enough; we don’t manufacture enough; we certainly don’t build enough; and far too much of the economic activity in our nation is concentrated here in the centre of London.”

That was George Osborne’s prelude to an Emergency Budget – not the one presented back in 2010, but the one he is to present to Parliament on 08 July 2015,

The quote is from the Chancellor of the Exchequer’s Mansion House speech on 10 June 2015 – yet he still continues to blame Gordon Brown, as there’s not a hint that he’s been in charge of the Exchequer for the past 5 years.

Blaming a previous Government makes good political sense, particularly in the first few years of a new adminstration – some 5 years on, and after winning a General Election with a outright majority, it smacks of despairation!

Perhaps it’s an admission that your own ideas haven’t worked out as you’d planned?

Over those 5 years, Osborne could have chosen differently. He could have taken different paths. But the trouble is he didn’t – and his choices resulted in the slowest recovery in 300 years and the third slowest in 650 [Danny Blanchflower, Britain has taken longer to recover from recession than at any time since the South Sea BubbleIndependent 04 August 2014]

So has austerity worked?

Back in 2010, Osborne was very precious about Britain’s AAA rating, saying safeguarding the rating was his “first benchmark” and a “measure of success”. He has also warned that a credit rating downgrade would be “humiliating” and that it is “absolutely essential” that Britain does not have one [Some things George Osborne has said about the AAA credit rating, LabourList 14 December 2012].

Yet when Britain was finally stripped of its precious AAA-rated debt status for the first time ever on 22 February 2013 Osborne, who had pledged to use his austerity measures to protect the rating,  said: “Far from weakening our resolve to deliver our economic recovery plan, this decision redoubles it.” [George Osborne under pressure as Britain loses AAA rating for first time Guardian 23 February 2013]

That doesn’t sound like “Sorry, folks I was wrong” to me!

That’s because he’s not sorry – the whole of  George Osborne’s economic policy is based upon his determination to remove the government deficit.

Richard Murphy often explores this in his excellent Tax Research blogs – 2 relating to 2014 Autumn Statement are worth a read:

Osborne’s class warfare drives his fixation with austerity [04 December 2014]

I could go on, presenting more evidence on why I think this Second Age of Austerity isn’t working. We hear monthly of more and more people getting back into work, yet here’s no corresponding increase in tax receipts, in fact they’re falling – because these are low-paid jobs, or jobs on zero-hours contracts. More people on the minimum wage, subsidising low paying employers. More people in need of Housing Benefit to pay for outrageously high rents – often in former social housing properties sold off under Right To Buy.

The arguments are there, the arguments are being made, but too few are hearing them.

Tweet from George Aylett
20/06/15 | Tweet from George Aylett


That’s just one fact in a number that emphasises what has happened since 2008.

Perhaps the responses are too nuanced? [Sunny Hundal, Why Labour never won the argument over austerity and the cuts LabourList 30 July 2014]

Perhaps the responses sounded too similar to the direction of travel that the Tories were taking? [Sunny Hundal, It’s time to end the lie that Labour and Tories are ‘the same’ on austerity LabourList 25 March 2015].

It’s time for Labour to sound different.

In her response to the Queen’s Speech, Harriet Harman said:
“We support a cap on household benefit entitlement. {The Government are now planning to reduce it.] We are sympathetic to that.”

The trouble is all we heard in the media was that Labour was “sympathetic to a cap on household benefit entitlement” but nothing the fear about Tory proposals to reduce that cap from £26k to £23k not on the conditions for that sympathic view:
but it makes it even more important that:
·         The jobs are there for people to move into
·         The childcare is there, particularly for lone parents
·         And there are adequate funds for discretionary housing payments.
All that is necessary to ensure that this doesn’t put children into poverty, increase homelessness or end up costing more than it saves.
On housing, we want to see more people able to own their own home. And more affordable housing that people can afford to rent.

We must learn to read the source, not the reportage.

Here’s the final lines of Harman’s speech:
So as the dust settles, the real question for this Queen’s Speech is – will it improve our country, our communities and people’s lives?

That is the test that will be set for this Government.

And that is the standard to which we, as the Opposition, will hold them to account.

As we strive to hold the Government to account, we must make clear that there is another route to the one proposed by Osborne.

And as we talk about austerity do we actually know what we’re talking about?

An article, Money creation in the modern economy by Michael McLeay, Amar Radia and Ryland Thomas of the Bank’s Monetary Analysis Directorate published in BoE Quarterly Bulletin 2014 Q1 discussed how money is created in the modern economy.
The authors say that most of the money in circulation is created, not by the printing presses of the Bank of England, but by the commercial banks themselves: banks create money whenever they lend to someone in the economy or buy an asset from consumers.
David Graeber writing in the Guardian [The truth is out: money is just an IOU, and the banks are rolling in it , 18 March 2014\ thinks they “stated outright that most common assumptions of how banking works are simply wrong, and that the kind of populist, heterodox positions more ordinarily associated with groups such as Occupy Wall Street are correct. In doing so, they have effectively thrown the entire theoretical basis for austerity out of the window.”
We need to understand austerity if we are to challenge the rhetoric in the future.

It’s going to be hard…and we must use all the tools at our disposal, even humour.

David Schneider | Austerity works?
David Schneider | Austerity works?

Yet in that humour, there’s a truth. A real truth.

That’s why I’m bitter about austerity

Further reading:
Steve Hart  Austerity Illusions and Debt Delusions [Centre for Labour and Social Studies 2013]

Paul Klugman The Austerity Delusion  [Guardian 29 April 2015]

There’s also a good explanation on the blunt instruments at the disposal of a Chancellor to control the economy – fiscal and monetary policy – in:
John Crace I Never Promised You A Rose Garden [ Corgi, 2014] pp75-79 in the chapter “Money, Money, Money

Some common definitions:
Austerity – Economic measures taken by a government to reduce spending to a minimum on nonessential items, usually in response to an unsustainable deficit.

Budget Deficit  –  A budget deficit results when revenue (income) is lower than expenses in a given year.

National Debt – The total amount of money the federal government owes to those countries, people, organizations, and programs within the government (intragovernmental debt) from which it has borrowed to finance itself.

Gross Domestic Product (GDP) – An estimate of the total money value of all final goods and services produced in a given one-year period using the factors of production located within a particular country’s borders.