Stuck at home

Ahmed Osman has not worked for three years. It’s not because he doesn’t want to – he simply can’t afford it. When his wife died suddenly in August 2001, Osman gave up his driving job to look after his three young children. Now they are older, he wants to find a job, but he knows that his wages would not be enough to cover the rent for his family’s three-bedroom semi in the east London borough of Redbridge. So instead, he is forced to stay at home and subsist on state benefits.

“I’m just taking the children to school and going to the job centre looking for work.

If I go to the supermarket all my money’s gone. I desperately want to go back to work but on this rent I don’t know how. It’s very frustrating.”

Osman is caught in the “poverty trap”, one of the most intractable and perplexing social problems of our age. It means his rent is so high that, were he to take a job and lose his housing benefit, he would be considerably worse off. It’s a problem that particularly affects the 100,000 families the government says are living in temporary accommodation, half of whom deputy prime minister John Prescott has pledged to rehouse by 2010 (HT 28 January, page 8). Rents are much higher than those for social housing, and it is a major cause of entrenched social exclusion. Research by the charity Shelter in 2003 found that 77% of homeless households living in temporary accommodation were without work, compared with between 40% and 50% of those allocated social housing.

The enduring problem for politicians, academics and the housing sector has been how to plug the gap between the income from lower-paid jobs and the high rents people must pay for temporary housing.

But there may now be hope for families like Osman’s, thanks to a radical pilot project, to be announced on Monday. Working Future, developed by East Thames Housing Group, the Greater London Authority and Waltham Forest, Redbridge and Newham councils, aims to free 100 single people, couples and families in east London from the trap. The question is whether the scheme really is a viable solution.

Figures from the ODPM indicate that a couple with three children in temporary accommodation, paying the east London average of £300 a week in rent, would need to have combined earnings of about £960 a week before they made any significant gain from taking a job.

But £960 a week is far beyond Osman’s grasp. His temporary accommodation rent of £320 a week is paid with housing benefit and he receives £132 a month in income support and £482 a month in child benefits, a grand total of £614 a month. Recently he has applied for a post with a security company, which would pay about £350 a week, and a job at the Post Office for £520 a week – both uneconomic compared with benefits. If he were living in social housing, the gap would be much smaller – he has applied, but in London, openings are scarce.

“It’s really hard to get a council house in this area, especially because I’d need three bedrooms,” he says.

The Working Future scheme will help households who have applied for housing through the council and who are currently living in homes rented from private landlords by East Thames. The scheme will subsidise their rents down to £97 – low enough to allow them to stop claiming housing benefit when their pay reaches a modest £385 a week.

A further 100 households in East Thames’ temporary accommodation in the area will be monitored as a control group. The project will be run by a coordinator, two case workers and a team of researchers, who will be involved in selecting the participants between now and May and collating the results in May 2007.

I just take the kids to school and go to the job centre. I desperately want to go back to work but on this rent I don’t know how

A website will detail progress from June.

The pilot will be funded by £2.28m, transferred from the Department for Work and Pensions to the ODPM. Victor da Cunha, managing director of East Homes, the East Thames Groups general needs housing division, says it represents much better value than simply “top slicing one form of spend and moving it to another”. Best of all from the government’s point of view, it promises a reduction in the housing benefit bill and increased income from tax.

“There are also a lot of softer issues we’re going to try and measure,” da Cunha adds. “Black and minority-ethnic people are over-represented in temporary housing in the area and we’ll be looking at whether there’s a reason behind things like that too, on what’s having that impact.”

According to homelessness minister Lord Rooker at the ODPM, the government is motivated by more than just the financial benefits of the scheme. “Employment is one of the key interventions that can empower people who have experienced homelessness to begin turning their lives around. Regular work can be a stabilising influence that enables people to build the self-esteem and independence they need to make the move from temporary to settled accommodation. Working and training for work also helps tackle the sense of exclusion and isolation that unemployed people in temporary accommodation can experience.”

So can Working Future really deliver all these benefits while being financially viable in the long term? In addition to the DWP grant, the five project partners have contributed £600,000 towards administration costs and have received match funding from the European Social Fund. All eyes will be on the scheme to see whether the savings in housing benefit and the increased taxation will be enough to balance these costs. Steve Wilcox, professor of housing policy at York University, thinks the scheme will stack up. “The administrative costs of paying a subsidy to an association are much lower than of administering housing benefit. With social rents there’s a realistic chance for people to get into work and off benefits. There would be very considerable savings compared to housing benefit.”

On its own, Working Future is not the panacea for such an entrenched social problem. “People aren’t going to rush out and find work,” says Berwyn Kinsey, head of the London Housing Federation. “Many have been unemployed for a long time and may not have the skills and experience. They need support to get reskilled, and that’s not a quick process. It’s not a criticism of the project, but it may take time to yield results and people must be patient.”

Da Cunha concedes there are other barriers to work, including childcare, mental health and drug issues, that should be addressed as part of the scheme, but adds that those who fail to find work will receive continued support: “For a variety of reasons, there may be households that, at the end of two years, aren’t able to sustain independent living. East Thames will be looking at ways to still provide move on accommodation through its own housing routes,” he says.

“At the end of most temporary housing tenancies the only route available to us is affordable rented housing. One of the key things I’d like to see is an increase in the extent to which we provide people with a range of housing options, including key worker housing, shared ownership and private sector renting independently.”

Karen Buck, MP for Regent’s Park and Kensington, believes Working Future should form part of a joined-up approach focusing on better and wider housing choices for those who have experienced homelessness: “I think we should be converting temporary housing into permanent,” she says. “It won’t be in the near future because of this terrible dearth of affordable housing but we need to be working hard on a permanent solution to meeting the housing needs of the poorest.”

For Osman, despite the question marks hanging over its future, the Working Future pilot offers a glimmer of hope. If accepted onto the scheme, he hopes to return to his former career as a bus conductor, though he says he would accept any work. “I’m very keen to be part of the scheme and build my rent and my life,” he says. “I’m really looking forward to the future.”