Families on the brink: welfare reform in London

London’s housing crisis is well publicised and well discussed. We're used to reading about extortionate rents being charged for box properties or a generation that is likely to be priced out of buying.

But there is another side to this crisis which is getting discussed less. Our new report, Families on the Brink, shows a London becoming unaffordable for people on housing benefit, leaving families at risk of being forced out of their communities and London at risk of losing its social mix.

Changes to the benefits system have set limits on how much households can claim in benefits and housing benefit and more generally have weakened social security help for low income families, including those in low paid jobs. London’s rents are skyrocketing. All this is proving to be a toxic combination for low income Londoners.

We spoke to councils, services and parents as part of this research. Their stories painted a picture of fear and anxiety about what was happening now and what was still to come.

Families are convinced they are no longer welcome in the capital. Some say they suspect a plan to ship them out to be replaced by richer families.

Councils fear that the situation is only going to get worse as rents continue to rise and their funding for discretionary support has an uncertain future.

Many Londoners – both families and professionals – are rising to this challenge and working hard to find solutions. Some parents have moved into work and so are no longer caught by the benefit cap. But this is not the story across the capital, and numbers moving into work are low.

We heard as many stories about families moving into overcrowded or poor quality accommodation to reduce their rent as of moving into work. There's scepticism about work as a route out of poverty for these families. If your rent is above housing benefit limits and you are working on a low income, you still have to make up the shortfall.

The cost and supply of childcare also proved to be a barrier for families in the capital. Childcare costs in London are so high that a low income parent working part time in London would on average be paying an extra £65 per week than the UK average. This is enough to tip the balance to whether or not they would be better off working.

This paints a bleak picture, but there are a number of changes that can make this more manageable for families.

- Restoring the link between housing benefit levels and local rents.

- Ensuring financial support for childcare matches costs in London.

- Exempting people not expected to work – such as single parents with babies – from the benefit cap.

Welfare reform presented a huge challenge and risk for councils. Many of them have developed impressive mechanisms for managing this risk, which can now be continued with an expanded remit of tackling local poverty.

Most importantly, we all need to recognise the risk that welfare reform poses to London. London is a diverse city where poverty and affluence live cheek by jowl.

We desperately want to see poverty eradicated from London, but we want this to happen through families moving out of poverty, not by moving the poor out of London.