Beside a glamorous retail centre, a new community is forming. The growing homelessness crisis is the legacy of austerity

They share the same postcode but are very different developments. Coal Drops Yard, a new retail district boasting some 50 designer outlets and restaurants, opened last week in the gentrified area spreading from London’s King’s Cross station, a landscaped urban redoubt of Victorian warehouses and glass apartments bisected by the Regent’s Canal.

Home to corporate tech titans such as Google, the area, which only a couple of decades ago was synonymous with drugs, prostitution and warehouse raves, has become one of capital’s most desirable places to live. Flats in the new blocks mushrooming along the canal sell for millions, reflecting a housing market out of control, one that is stretching the term “affordability” to breaking point, with devastating consequences for those right at the bottom of the ladder – people such as Obi Ojang.

How universal credit is fuelling Britain’s homeless crisis Read more

A resident of the second new development to open along the canal this month – a makeshift camp visible from the Observer’s offices – Ojang, 47, has been homeless since January, when he came out of prison having served a sentence for drug dealing. Ojang lived on the streets in King’s Cross before the turn of the century, when it was a much rougher area: “King’s Cross was the place back in the day. It’s where a lot of homeless people grew up very quickly. Many then moved on to the West End.”

Now, as Westminster pushes back against street begging, many like Ojang are leaving the borough and returning to where they started out. This time round, though, a gentrified postcode offers fewer places to set up home unobserved. It’s a similar story in other major cities. The street homeless population is becoming increasingly visible.

Ojang is typical of many who have been street homeless for a long time. By 14 he was in care, having been used as a courier by drugs gangs. His teenage cannabis use switched to cocaine and then to crack. He was diagnosed with acute personality disorder and paranoia in 1999.

Facebook Twitter Pinterest Obi Ojang has been homeless since he came out of prison in January. Photograph: Amy Walker/The Observer

“The year before last I got nicked for attempted murder. I believed I was being set upon, people were planning to set upon me. I took a chopstick and it ended up in someone’s neck. Ended up in Thameside prison on remand.” The police dropped the case.

“There’s a huge number of [homeless] people with real significant mental health issues like schizophrenia, bipolar,” said Kevin Porter, chief executive officer at Signposts, an organisation that provides supported accommodation in Luton. “There just isn’t the sort of support for those people like there used to be. You could give them additional support about 10 years ago – the money just isn’t available for it now.

“We’re finding that people are a lot more challenging in terms of their mental health,” said Kevin Merry, concierge officer at St Anne’s hostel in Birmingham.

“I can only presume that there’s no specialist places for them so, unfortunately, instead they’re put into just everyday hostels now.”

These are the luckier ones.

Q&A What does 'homeless' mean? Show Hide Exactly how many people are classed as rough sleepers – or street homeless – is a contentious issue. In London, the number is based on counts by homeless charities and outreach teams. But outside the capital, the numbers are almost exclusively provided by local authorities who base their assessment – often estimated – on the numbers on one particular night of the year. What is agreed is that rough sleepers are at the apex of a housing crisis in Britain. Research by Crisis suggests that there is a vast army of ‘invisible’ homeless – people who are not on the streets but whose circumstances are cause for concern: people sofa surfing, squatting, living in hostels and other forms of temporary accommodation, as well as cars, tents and night shelters. A report by the charity last year suggested that across Britain in 2016, 160,000 households were either sleeping rough or in one of these forms of homelessness, with the figure set to rise by more than 25% in the next decade.

Ojang and his partner, Donna, who has just lost her social housing accommodation for reasons he won’t explain, can’t get into a hostel. They don’t want to be separated, which is a problem for local housing teams who can find them separate housing but nothing as a pair. He shakes his head, points at his clothes: “I bought these about two weeks ago. I’ll go and change them next week and put them in a bin. No point buying stuff because you’ve got nowhere to put it.”

He gestures around the camp, towards another tent: “Guy who lives in there, he’s up at the crack of dawn, goes somewhere, don’t know where.”

A few yards away is some flattened cardboard. “Got an old boy who lives there – he’s 69. He rolls in about four or five in the morning, has a little sleep until six or seven and is gone by eight,” said Ojang.

Ojang is supposedly in a diminishing group. Official estimates suggest that there was a 169% national increase in street homelessness between 2010 and 2017, a period when the number of people sleeping rough in London for at least one night of the year rose from 3,673 to 8,108. But for the year up to April 2018, the number in the capital had dropped to 7,484, the first decline for 10 years.

Ojang, though, doesn’t believe the figures. “I’m seeing more and more people on the streets who are homeless. They’re getting younger and younger. They’re getting older and older.” Rough sleepers in other cities also believe their numbers are growing.

Facebook Twitter Pinterest Scores of councils across England have handed out fines and convictions to homeless people who are begging on the streets. Photograph: Andy Rain/EPA

On Friday at Cornerstone in Manchester, a day centre which also provides some emergency accommodation, David Alder explained that he had been homeless for eight years, since he was evicted from his flat: “I just sleep wherever I can. Rough sleeping in Manchester has doubled in the past year, there’s no support for anyone. The council can’t help.

“I’ve been on the housing waiting list for seven months now and I’m a priority because of my background.”

Another visitor to the centre, Ash Hussain, 45, was sleeping in his sister’s car outside her house. “The house is really crowded and I can sense they don’t want me there if I stay inside, so I sleep in the car. I can’t get social housing through the council because I’m not considered a priority. I’ve not been institutionalised.”

Lisa, who is sleeping in a hostel, but slept rough two weeks ago, questions how Manchester’s mayor, Andy Burnham, will meet his pledge to give everyone a bed this winter: “What’s he going to do – chuck them all in Strangeways? If he can do it for winter, why can’t he do it for good?”

It won’t be until the results of next month’s official homelessness count are published that the true picture of what is happening on Britain’s streets will emerge. But evidence from homeless charities, hostels, outreach teams and shelters across the country suggests demand for their services is rising just as temperatures are starting to fall. Last winter, at least 78 homeless people died on the streets and in temporary accommodation, according to figures compiled by the Bureau of Investigative Journalism – a national total that is likely to be a significant underestimate.

Facebook Twitter Pinterest David Alder has been homeless since he was evicted from his flat eight years ago. Photograph: Jon Super/The Observer

Dominic Williamson, executive director of policy and strategy at homelessness charity St Mungo’s, which works in London and several other cities in the west and south of England, said an increasing number of people on the streets were former rough sleepers. Since 2015, London alone has seen a 27% rise in the number of people returning to rough sleeping after spending at least a year off the streets.

Spiralling property prices are the central villain in this story.

“People are being priced out of the private sector,” Williamson said. “There’s very little social housing now and the private sector is a very unstable place to be. Many people are on six-month tenancies. If the landlord feels they can get more money elsewhere, these people are vulnerable.”

The housing charity Shelter points out that local housing allowance rates have been frozen until 2020, with the result that many people on benefits are priced out of private rentals altogether. This has ramifications right across the housing market.

Those rough sleepers who are helped off the streets are remaining in hostels because they cannot move into rented accommodation. A similar logjam saw the number of homeless families and individuals placed in temporary accommodation jump to 78,000 last year, an 8% rise on the year and a 60% rise since 2012.

In 2009, the government removed the ring-fencing around the funding of the Supporting People programme, which was supposed to help people remain in their tenancies. Charities say this has resulted in the programme being heavily cut back in many areas, and so more people are falling through the net.

Malcolm Page, assistant director homelessness services at the Salvation Army, said universal credit had also emerged as a major factor. Studies show that four-fifths of people on universal credit are in arrears before they move to the controversial new system, which lumps a series of benefit payments into one and is gradually being rolled out across the country. Around 700,000 households have been moved on to universal credit so far, out of the projected seven million total.

“When you switch to universal credit, it takes between five and eight weeks to get your first payment,” Page said. “Landlords are going to be quite choosy and say ‘if you don’t pay your rent then you’re going to be evicted’.”

Facebook Twitter Pinterest Tony Carson and Sue Rimington found themselves homeless when the work dried up, but they have been rehoused by the Salvation Army. Photograph: Handout

Web designer Tony Carson, 51, and fiancée Sue Rimington, 52, a chef, ended up living in a hostel in York when work dried up. They received £430 a month towards the cost of housing via universal credit but the hostel cost them £528.

“If you find yourself homeless, universal credit doesn’t work,” Carson said. “The local council sent us demanding letters because we didn’t have any money. We had to borrow from friends and family.

“A phrase we heard in the hostel is ‘you can never be in credit on universal credit’. The council demand you are in credit when you rent, even though universal credit pays a month in arrears and won’t actually cover your monthly rent. If you are homeless and have no money whatsoever it throws you into a debt situation. We were on a budget of £4 a day to feed ourselves and Buster [their dog]. We ended up in a tent for eight weeks.”

Thanks to help from Church Action on Poverty and the Salvation Army, the pair are now in a council flat. But the experience has left them scarred: “You feel very quickly that you’ve lost control of your situation and your dignity. There’s no one you can go to.”

Denis Tully, chief executive of Emmanuel House, which operates a winter shelter in Nottingham that – like many others contacted by the Observer – will open earlier this year to cope with increased demand, said welfare reform was the major factor in the rise in homelessness in the city.

“But there’s also been a reduction in the move-on options,” Tully said. “Years ago, if you were in a hostel for six weeks, someone would sit down with you and go through your options. In Nottingham now, the option is usually the private rented sector. But short-term tenancies and evictions are one of the main drivers of homelessness.”

And as more homebuyers are priced out of the major cities, housing stock elsewhere becomes more attractive – further reducing choice in the private rented sector.

“People are moving down from London,” said Annie Whelan, chief officer of Seaview, a homeless charity operating in Hastings and St Leonards in East Sussex. “Gentrification is happening a lot to the coastal communities and this is having a negative impact on the housing stock, too. There needs to be more suitable accommodation for single adults.”

Seaview, which costs £500,000 a year to run, half of which it has to raise itself, goes out three times a week to count rough sleepers.

Last year, on any given day, Whelan said they would estimate there were 40 people living rough in the area. Today, it’s 49. “In terms of the gangs preying on vulnerable people, that’s increasing too,” Whelan said. “The use of spice decreased a bit when they made it non-legal, but it’s things like Xanax and Risperdal – prescription drugs – used in conjunction with alcohol, heroin and other things that are now more common.”

She said the current system for helping rough sleepers was too inflexible. “Rough sleepers trying to access support might miss two appointments and then they’re discharged from a service so you have to start all over again.

“When someone is living chaotically, it’s very hard for them to be ordered in their life. You want services to be a bit more forgiving and not discharge people so easily.”

Facebook Twitter Pinterest Angela Macintyre and volunteer Frank Gaunt making up beds in sleeping pods at the Cornerstone day centre in Manchester. Photograph: Jon Super/The Observer

Amid an increasing clamour for action, Theresa May has pledged to halve rough sleeping by 2022 and eliminate it by 2027. The government has established a high-level taskforce supported by an expert panel and is speeding up universal credit payments.

“We are investing £1.2bn to tackle all forms of homelessness and our Homelessness Reduction Act will ensure that more people are helped, much sooner,” said the housing minister, Heather Wheeler.

But increasingly it’s charities and voluntary organisations who are having to plug the gaps.

“More and more, the Salvation Army is having to pick up the difference between what local authorities are prepared to fund and what we think is needed within a community,” Page said.

Back in the makeshift camp in King’s Cross, Ojang said he didn’t know what he would do when the weather worsened: “We used to stay further down there, by the bridge, but it was a bit too full on there so we’ve come in here and it’s only now you see us. But where were you in February when it snowed?”

His eyes were glazed and his speech a little slurred. While he had been talking, several well-dressed young men with backpacks had entered the camp and made their way to one of its tents. Within seconds the deals were done and the men were back on the Regent’s Canal, walking towards St Pancras, walking towards Coal Drops Yard.

Homelessness around Britain

Nottingham “There has been a rise in homelessness in Nottingham and a significant increase in the complexity of needs” – Denis Tully, CEO, Emmanuel House Winter Shelter

Manchester “What we’re finding, certainly over the last 12 months, is that there seems to be a lot of people who want to live in the city. They come in from all areas and homelessness tends to be a big problem” – Angela Mcintyre, Cornerstone, Manchester

Stockport “It’s risen every year for probably the last 20 years. But over the last three years there have been dramatic rises. Three years ago we had 15 people sleeping rough, today we’ve got 70” – Jonathan Billings, chief executive officer, the Wellspring

Luton “We get a lot of homeless people dumped in Luton and there’s a lot of deprivation. There’s a lot of low-quality private rented accommodation, but even that is taken up by people from outside the area” – Kevin Porter, chief executive officer at Signposts

Cambridge “We end up picking up the pieces for people who come to us every single day. In 2009-10 we were 80% statutory funded and the rest was donations but now we’re seeing the opposite” Simon Pickering, fundraiser at Wintercomfort

Grimsby “Primarily it’s British people on the streets here. The people we work with are mainly single males between ages 25-54, white, with multiple needs. They have drug and alcohol and mental health issues – it’s that toxic mix” – Dave Carlile, project coordinator at Harbour Place

Bristol “You will find a lot of people enter temporary accommodation but leave because they can’t handle it, they can’t handle the responsibilities – like keeping up with bills” – Naseem Talukdar, CEO at Feed the Homeless Bristol

Hastings “Benefit changes are creating problems. There are fewer services. The nearest rehab beds are in London” – Annie Whelan, chief officer at Seaview

London “We are seeing more people experiencing real problems with the way that universal credit is working for them” – Bill Tidnam, chief executive at Thames Reach