Housing Benefit reforms were first outlined very soon after this coalition took office in May 2010. The extract below from the July 2010 Housing Benefit Digest issued by the DWP explains:
The Chancellor announced a package of Housing Benefit (HB) reforms in his Budget statement on 22 June. It is the most significant and comprehensive reform programme for HB since the scheme was introduced in the 1980s. The background is the budget deficit and the reductions in public expenditure that the Government is making to tackle it. Ministers are clear that the overall cost of HB, forecast to be around £20 billion this financial year, must be controlled and reduced. The package of reforms will save nearly £2 billion by 2014/2015. There are also important policy considerations around fairness and work incentives that lie behind the reforms”
I’ll leave aside the socio-political policy considerations around fairness and work incentives, not because they are not important or as important, and many believe they are more important as I do, but because the financial savings claimed are simply not going to materialise. Instead I address the statement that: -
“Ministers are clear that the overall cost of HB, forecast to be around £20 billion this financial year, must be controlled and reduced. The package of reforms will save nearly £2 billion by 2014/2015.”
The definite use of ‘will’ as in the “…package of reforms will save nearly £2 billion by 2014/2015” is very assertive but highly unrealistic I argue using the latest statistics and figures. (http://research.dwp.gov.uk/asd/index.php?page=hbctb)
The £20 billion or so forecast with nearly £2bn saving sets the coalition aim of the overall HB cost to be circa £18 billion per year – an ambitious and I argue an unattainable target
At the time of the announcement of these reforms in May 2010 the coalition were working on the basis of the February 2010 HB figure which was £20.48bn and the “…forecast to be around £20 billion this financial year” quoted concurs with this. Or simply if it is a forecast for 2009/2010 financial year then the latest figures didn’t include March 2010 and so must be February 2010 figure.
The latest (June 2011) overall figure is £22.345 billion and so has already risen by £1.87 billion. As such the “…nearly £2 billion by 2014/2015” aim or target needs to find £4.345 billion pounds of savings to meet the target HB figure.
HB costs have risen by approximately £120m per calendar month in that time and the first reforms don’t come into effect until January 2012 (and even then with a phased implementation) and based on current trends the overall HB bill will increase by a further £840 million or £0.84 billion to reach £23.2 billion and this is £5.2bn above the target figure. The HB reforms will therefore start from a position of being £5.2 billion and 29% above the target figure.
As I blogged late yesterday http://wp.me/p1vuvL-1y in an update to the original article there is deep hypocrisy and duplicity in the inactions of the Housing Minister Grant Shapps to regulate private tenancies, and if he did then the figures show we pay £2.7bn more for unregulated private tenancies than we do for regulated ones. Yet in June 2010 when he announced the HB reforms Shapps ruled out any regulation of private landlords – see http://www.guardian.co.uk/money/2010/jun/10/landlord-regulation-proposals-scrapped and one can only assume this was a political decision and the economic rationale is simply not there as the official SBHE figures prove.
UPDATE 20 September 2011 – The venerable Mr Shapps has been tweeting today that John Prescott’s plan to regionalise fire services wasted £496m and thereby cost every tax paying family £20 a year. Ergo his failure to regulate PSLs that costs £2.7bn per year at the test figures and rising must cost the average tax payer £110 per year!!
Rather Shapps has developed the contrived and ineptly named “Affordable Rent” model of social housing which will see social housing rents increase from £76.17 per week as a national average to £130.16 http://wp.me/p1vuvL-2l an increase of 71%. So much for ‘affordable!’ As a further update as at today 16 September 2011 a report (see http://www.bbc.co.uk/news/business-14934316) states that the national average ‘gross market rents’ have increased yet again meaning the 80% AR figure for social lets will be £131.64 and an increase of 73% on national average social rents.
Finally, it is time for the social housing lobby to stop making argument about the impact of the HB cuts. Yes they are offensive and will have a life-changing impact, but such arguments as to social impact are not working. As is ever the case undermining the bottom-line financial argument made by government is a stronger argument in my view. And as some of my earlier blogs reveal we currently spend £3.27 billion more on private tenancies than we do for the same number of council tenancies. Joe Public is horrified with the 10 cases (yes thats all and this is 0.00002% of all cases!) out of 4.9m claimants getting over £100k per annum in HB as this amount to over £1 million per year, I’m sure they will be just as angry at the £9 million PER DAY excess their taxes pay to one type of landlord over another, and especially when they provide a lower quality product and service.
The fact that we now pay more in HB per property to Housing Associations (av. £80.11 per week) than we do to regulated private landlords at £79.45 per week just exposes the madness of paying £113.74 pw for an unregulated private tenancy.
It’s time for the housing sector to expose the financial duplicity of this coalition and hold the coalition and Shapps in particular to their oft-stated aim of getting value for money with the public purse.
non dulce et decorum est pro optimus frustro vestri patria