London's Newest Export: The Poor?

The Olympics promised a fresh start for deprived East London. But they may end up forcing the poor out.

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First came the Olympics, now come the evictions.

Last week housing officers in the London borough of Newham, which hosts London’s new Olympic Park, admitted that they can no longer afford to privately house tenants on its waiting list for public housing. The Olympics have pushed the borough’s rents up, and now Newham is considering exporting unemployed residents eligible for rent relief to Stoke on Trent, a cheaper post-industrial city three hours north of London. 

So far, no displacements have taken place, but the news is starting to make Olympic legacy claims look shaky before the games even begin. While the Olympics promised a fresh start for deprived East London, it seems they may end up redrawing London’s poverty map not through creating jobs, but through shunting the poor elsewhere.

To be fair, it isn’t really Britain’s games that have landed Newham in deep water. It’s the country’s government. As part of its austerity program, David Cameron’s cabinet has capped Housing Benefit, the rent relief paid to unemployed and low-income claimants living in private housing, many of whom are waiting indefinitely to be housed in oversubscribed state-run projects. The government says that the Housing Benefit paid to these people pumps up rental prices. By capping it, they hope both to save money and to pressure private landlords into readjusting their rents to more reasonable levels.

This might happen in some areas, but London is proving particularly resistant to the government’s thesis. With an average rent rise of 7 percent last year – fueled by London property’s popularity as a safe haven for international investors – even Londoners on average incomes are being squeezed by Britain’s double dip recession. Private landlords can therefore safely evict benefit claimants whose handouts no longer cover the rent, knowing that they still have a large pool of other potential tenants to turn to. Admittedly property prices are actually going down in Newham – despite the proximity of hipper Hackney, its many housing projects and peripheral position in the city don’t make it an obvious gentrification hotspot. But as the number of people who can apply for mortgages has dropped even further, Newham’s rental market shows no signs of deflating yet. This pattern is repeated across the city. As this London affordability map created by housing charity Shelter shows, London’s lower rent neighborhoods are being eaten away so fast that benefits caps will struggle to stop the rot.

Newham is not the only London borough considering moving out its poorest residents to Northern England – it just happens to be the poorest so far. While doing so might ease the borough’s fiscal nightmares in the short-term, the policy’s long-term problems are obvious. Gritty northern cities like Stoke don’t have low rents for nothing. Their housing is cheap because they have few jobs to suck new residents in, and shifting London’s poorest there is unlikely to lift them out of poverty. Instead, the proposed exodus looks uncomfortably like the “Kosovo-style social cleansing” London’s mayor Boris Johnson once vowed to prevent.

Blaming the Olympics for these problems seems harsh. Though the Olympics have pushed up Newham’s rents, it wasn’t international athletics that created the recession. The Games will bring money to the borough, while the Olympic Village will ultimately provide some much needed new housing (at as-yet-unspecified "affordable" rents). What Newham’s housing difficulties show, nonetheless, is that expecting money from prestige projects like the Olympic Park to just trickle down unimpeded is simplistic.  Without careful planning, such projects can actually help to displace the people they were supposed to benefit.

Photo credit: Padmayogini/Shutterstock.com

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