The Living Wage is Commendable but what about Housing Costs for Tenants?
It is commendable that Boris Johnson, the mayor of London, showed support for what is now the new London Living wage set at £8.55 an hour.
However if we look at what that means in practical terms this rate is not nearly enough to ensure that families will not find themselves in debt, needing loans to support even the most basic of lifestyles or prevent them from being poverty stricken. It seems that the current coalition government takes one step forward and immediately several back. One wonders whether any policy that is put in place is ever completely thought out taking into account all of the factors associated with it.
Cost of Housing in London is Astronomical
The reality is that the cost of housing in London is astronomically high and in consequence so is the housing benefit bill for the capital including those people who are entitled to the benefit from working households on low incomes.
Tenants on Living Wage will Pay 83 per cent of income on Rent in London
Shelter’s way of calculating how affordable housing costs are is that the costs should not exceed more than a third of a household’s net income. For example; if a family with two children has one parent earning the Living Wage in full time work at 40 hours weekly their yearly income would be £16,446 in London. Outside of London it would be £14,882 annually including national insurance and income tax deducted with the addition of child benefit. Renting a two bedroomed property in the London Borough of Brent, taking the lowest rental price in the area, this family would be paying 83% of their net income on rent alone. This example makes it easier to understand why such families get into debt and have to take out loans.
Government need to invest in Affordable Housing
Hence, although the Living Wage is a step in the right direction to begin to resolve some of the problems for tenants in London and other areas what needs to be addressed is how to reduce the cost of housing which in turn would reduce the housing benefit bill.
Low income families need affordable housing and if the government isn’t prepared to invest in providing such homes then they can only expect the housing benefit bill to continue escalating.