At the tail end of last year, the story of Somali fraud in the American welfare system exploded into the mainstream. Tales about the exploitation of Minnesota’s generous welfare system included the abuse of sickness benefits and the allocation of subsidized housing schemes to the benefit of a specific minority community noted for clannish behavior.
While this had been going on for years, its exposure on a national (and international) scale has clearly shocked the American public. But to British readers the story is depressingly familiar. The modern British welfare state has morphed from being a safety net available to working Britons in time of need into a subsidy scheme for immigration and joblessness, paid for by a shrinking tax base.
Nowhere is this more clearly exemplified than London’s social housing, Britain’s answer to America’s housing projects. Our capital city’s social housing is often located in some of the most expensive neighborhoods in the country. The reality of this caused a storm online in Britain in 2023, with the publication of “The Social Housing Phenomenon” by Pimlico Journal on Substack. The Journal followed this piece with a number of additional, detailed articles which examined the extent to which social housing is subsidized by the taxpayer and who are its primary beneficiaries.
Around 20 percent of housing in Britain is offered at subsidized rent—either owned by local government or charitable housing associations—above the European average of around 7 percent, and the American average of 4 percent. Before Margaret Thatcher embarked on a sell-off of social housing, 32 percent of all households in Britain were rented from local councils. Despite the decline in social housing nationally, London, particularly inner London, bucks the trend. In London boroughs such as Hackney, Southwark, Lambeth, and Tower Hamlets—all near the beating heart of the city—around 40 percent of all housing is subsidized, either rented by local councils themselves or through housing associations.
The geographic centrality of social housing in London is another thing that makes the city an outlier. Rather than existing in peripheral banlieues as is the case in large cities in France, London’s social housing is wedged into the city’s most expensive and most in-demand neighborhoods. While this has probably reduced the social ills and potential for disorder seen in the suburbs of Paris, it has also contributed to the scarcity of housing for the city’s working population and results in the subsidy of worklessness and criminality in neighborhoods which should, by all accounts, be occupied by law-abiding people in employment. According to research published in 2019, Londoners spend the most time commuting of all British people on average, at around 1 hour and 19 minutes per day, largely thanks to the high cost of housing in the city’s center.
Who benefits from this arrangement? The unemployed and immigrants. The lead tenant in 47 per cent of London social housing is somebody born overseas. Even accounting for the fact that some British people were born abroad—Boris Johnson is the name often used—this is a disproportionate figure. It means that British people are subsidizing immigrants to live in their own capital city, a city where it costs over £1,000 per month to rent a room on average, and the median house price is around £500,000, 10 times the city’s median salary.
While London’s social housing used to be offered to the working population, today the picture is rather different. Those who are of working age and economically inactive in London social housing receive an implied rental subsidy of over £2 billion a year, according to Pimlico Journal’s analysis of the figures from the 2021 census. In some boroughs, this equates to up to £19,000 per household per year. There is no public policy justification for such a subsidy, especially in an era of flatlining economic growth and a beleaguered middle class which has suffered the twin punishment of high taxes and high housing costs.
So how has this happened? Social housing has transformed from a widely used utility where it was normal for people to rent from the council to the preserve of those at the margins of society and, increasingly, immigrants. In the 1970s, the law around the eligibility for social housing was changed. Social housing was to be awarded on a “needs” basis to those who were a “priority” for local government assistance. As Prosperity Institute’s Matthew Bowles recently argued, this changed social housing from being something that the state offered Britain’s working population, in part for their sacrifice during the Second World War, into a benefit to which can be demanded by right.
The move to a needs-based approach to social housing is creating malign outcomes. For example, while most migrants to the UK are not allowed to receive public funds until they secure permanent residency, local councils offer a range of exemptions to these rules. This was highlighted in a 2025 paper from the think tank Onward, Loophole Nation, which examined how a range of loopholes—such as the risk of destitution and the vulnerability of children—have been bolstered by human rights case law and international obligations like the European Convention on Human Rights and the Refugee Convention to create a system in which migrants can gain priority access to subsidized housing in Britain. Regrettably, this legal architecture incentivizes dysfunction and dishonesty from both British citizens and migrants alike.
Policies such as the London Plan, which sets housing rules in the city, entrench this further, by mandating that new developments must contain particular quotas of subsidized housing and follow DEI regulations, which explicitly refer to the needs of “new arrivals to the UK.” While this sort of social engineering is ordered by the Mayor of London, the corrupt awarding of social housing along ethnic lines has also been exposed at a more local level . A famous example was in Tower Hamlets, where the Mayor Lutfur Rahman was found to have funneled public money and awarded social housing to the benefit of the borough’s Bengali community, many of whom originally secured social housing in the borough after a lengthy and illegal campaign of squatting, which was rewarded with an amnesty in the late 1970s.
What is to be done? Ideally, remove eligibility for social housing from those who are not British citizens, apply work-search and working conditions on working age tenants, and begin a process of selling off social housing in inner London, starting with properties which become vacant after a tenant dies and targeting the most expensive neighborhoods. The planning system should be deregulated in general to enable the quicker construction of private homes, and affordable housing quotas in new developments which only serve to increase the cost of private housing should be abolished. Large scale social housing is an expensive anachronism in modern London, and it has become a corrosive symbol of how the social contract no longer works for Britain’s working population.
London is, for better or worse, the engine room of the British economy. The living—and therefore the working—conditions of the British people in the city have ramifications for the entire country. Today, the city has become increasingly unaffordable and inefficient for the next generation of its middle class, the backbone of the country’s workforce and taxpayers. Four thousand miles may separate London from Minneapolis. One may be Europe’s largest metropolis and the other a secondary city in a cold corner of the United States. But when it comes to the allocation of subsidized housing and other benefits, and the naked exploitation of an out of touch welfare system, the two cities have a tragic amount in common.
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