Why the benefit cap will COST £billions and not save a penny

Anyone care to read a rational argument why the proposed £290m benefit cap saving will end up costing the government up to £8.34 billion more per year?

Let’s start with a few facts which I have blogged about previously:

1.  75% of the new HB claimants since the election are working – 127,000 of the 170,000

2. The £290m proposed saving is 0.15% of the £192 billion per year welfare bill

3. It is only HB that is to be cut no other benefit such as unemployed benefits (JSA/IS) or sick benefits (ESA) is going to be cut or capped.  This is reaffirmed below

Section 3 on page 5 of the impact assessment says:

“Initially the intention is that that cap will be delivered by Local Authorities through Housing Benefit payments. Ultimately it will be administered as part of the new Universal Credit system. Before the introduction of Universal Credit, this cap will apply to the combined income from the main out of work benefits, Housing Benefit, and other benefits such as Child Benefit, Child Tax Credit and Carer’s Allowance.”

What the above tells us is that it will be HB departments who make the initial cuts and this means that the HB departments must have full detail of every welfare benefit the claimant gets, and every other benefit the claimant could get!  This is from 2013 and before Universal Credit comes into play.  The overall benefit cap or OBC is part of Universal Credit.

The ‘every other benefit the claimant COULD receive is very significant as section 4 page 5 of the impact assessment says:

“Households entitled to Working Tax Credit will be exempt from the cap. This policy is intended to encourage claimants to move into work or increase the hours they work; it will increase the incentive for people to find employment, because once they are in receipt of WTC their benefits will no longer be subject to the cap, furthermore they will also gain from earning once they enter work. Conversely, were recipients of Working Tax Credit to be among those affected by the cap, this would reduce incentives to work.”

My earlier point above says that 75% of the new HB claimants since the election are working means (a) that if 75% of them are entitled to HB they will be likely entitled to Working Tax Credit (WTC), and possibly Child Tax Credit (CTC) and possibly child care payments and; (b) that HB departments will have to assess these claimants for WTC.

If HB officers dont assess each working claimant for WTC and CTC then each individual decision must be wrong and must be open to appeal, review and ultimately legal challenge.

Just as I have blogged previously that the DWP know that up to £6.7bn per year of HB goes unclaimed it should surprise the reader that up to £8.04bn per year of WTC and CTC goes unclaimed according to 2007/08 figures and the latest figures I could see for 2008/09 have this at £8.24bn.  And for 2009/10 the non take-up rate becomes £8.34bn if we look at the table on page 13 which I reproduce below.

	Expenditure (£m)	Lower £U/C	Central £U/C	Upper £U/C
CTC	26.230	2,160	3,040	3,920
WTC	16,600	2,720	3,570	4.420
TOTALS	£42.83bn	£4.88bn	£6.61bn	£8.34bn
NTUR%	-	11.4%	15.4%	19.5%

This table reveals that up to £8.34bn of WTC & CTC go unclaimed and remember that is the known figure.  The NTUR% figure is the percentage rate of non take up NTU rate.

The impact assessment says that HB departments need to assess every person for all benefits in receipt and those not in receipt which could be claimed.  Simply HB departments MUST have to assess every working HB claimant who is not in receipt of WTC and CTC for those benefits to see whether they are and whether they then become exempt from the overall benefit cap.

With 75% of new HB claimants working and eligible to claim HB a very high proportion of these will be eligible for WTC and CTC.  If just 3.5% of them are eligible for WTC and/or CTC and are currently not claiming those benefits then the increase in WTC/CTC will be £292million and that will wipe out any of the savings the cap is said to produce.

Given that the NTUR is in the range of 11.4% to 19.47% it’s a given that more than 3.5% of those working and claiming HB will be eligible but not in receipt of WTC and/or CTC.  This means that the benefit cap won’t produce any saving whatsoever.

This immoral policy as many see it will in fact cost the public purse far more.  This is the same economic and financial argument I used previously to show that Universal Credit can’t work using the non-take up of HB.  Even in theory Universal Credit and the overall benefit cap which is part of UC can’t work as its one-stop assessment of what benefit is being claimed and what could be claimed means it considers and assumes a full 100% take-up rate of all benefits!

The argument above is rationale and the cost figures use official DWP documents.  I stumbled across the argument as it is similar to previous ones about the non take-up rate (NTUR) of Housing Benefit.  My argument simply looks at the process HB departments must take first, ie what is being claimed and what could be claimed, and this is the same process that the Universal Credit officers will have to take.

My plans for today’s blog had been why the regional overall benefit cap that Labour are seemingly arguing is wrong; and further that a better proposition would be a reduced national one taking out all rent or HB costs.  All other benefits than HB are at national rates and HB is the only regionalised one after all.  That would have exposed again that HB is the only benefit to be cut and also of the need for regulating the excess rent levels of the unregulated private sector landlords.  That latter point builds again upon a much earlier blog from last year which shows the cost of not regulating to be in excess of £2.3billion per year.

Yet the above argument shows that the cap won’t produce any savings at all and will cost the public purse billions of pounds each year.  It is a much stronger argument though of course we still need to regulate against the excesses of the PSLs!

joe@hsmonline.co.uk

 

Universal Credit MUST fail

Cameron says Universal Credit will fail!

A headline easy to write after Sue Cameron in the Daily Telegraph said it will fail and specifically there isn’t a hope in hells chance of the IT working or on time.

What the Telegraph didn’t write is that even in theory Universal Credit is bound to fail as no government could ever afford it.  There is a fundamental flaw in UC that its creator Iain Duncan Smith, who funded and started the think-tank that came up with it, must know.

Very simply UC is a one-stop assessment for all benefits.  So a one-time IT or perhaps phone-based based interview which assesses the applicant for Income Support, Carers allowance, Employment Support Allowance and every other welfare benefit as well as Housing Benefit and Council Tax Benefit.

If such as system could work then what a great idea you might think?  Massively reduced administration costs and every claimant getting what and only what they are entitled to!  Even setting aside teething troubles as all new systems have the idea is so good.  Yet it is so incredibly and fundamentally flawed.

In June 2011 the DWP published reports which revealed the take-up of benefits by the general public.  One of these for example stated that the DWP (a) know what percentage this is meaning they know how many are entitled to it, and (b) they know that up to £6.7bn per year of Housing Benefit goes unclaimed.

So the Universal Credit proposal for a one-stop assessment of all benefits would see a massive increase in the total benefits the government would have to pay.   This would see HB payments alone increase by 30% from £22.4bn to £29.1bn overnight. It alone would add increase the overall £192bn benefit bill by 3.5%.  Add on the non take-up of Income Support, ESA and all other benefits and…You get the picture!

The inevitable IT problem Sue Cameron discusses (and the inevitable cost overruns in every large public sector IT development she doesn’t) are frankly inconsequential compared to the massive increase the Universal Credit MUST mean for the overall welfare benefit bill.

 

Arise Lord Terry Wogan – further welfare reform bull

Would you pay 22p a week to keep 200,000 children out of poverty in the UK?

Clearly 76% of Joe Public wouldn’t given they believe the propaganda this government put out before yesterdays welfare reform bill debate in the House of Lords.

22p per week I hear you say?

In October 2011 Grant Shapps the housing minister put out a barbed tweet at John Prescott the former Deputy Prime Minister in which he said that the failure of Prescott’s Fire Brigade plan cost £496m and meant every UK taxpayer was paying £20 extra per year in tax for this.  Work out the maths and we arrive at it costs the UK taxpayer £1per year for every £25m of government spend.

Yesterday the government claimed the savings from all these ‘workless benefit scroungers’ who ‘all get more in benefits than the average wage’ and other meaningless an errant statements will save £290m to the welfare benefits bill.  (This is £192bn and so the saving is just 0.15% by the way!)  £290m equates to 22p per week in tax or £11.60 per year.

The government also admitted that it would affect 67000 families that comprised 94000 adults and 200,000+ children who would lose an average of £83pw. There is no doubt whatsoever that taking £83pw out of each family budget will force children in the UK into poverty.

Simple message for Joe Public – next time you sit in a bath of beans or dress up as vicars and tarts (or is that Bishops and tarts?) or abseil down a building for Children in Need or just simply give £25 to it remember that £25 will keep 200,000 disadvantaged UK children out of poverty for 2 years!

Terry Wogan as a Labour Lord anyone?

Note to Joe Public – The longer and more detailed version of why this is caused by the excesses of private landlord rents is covered here ( 
http://wp.me/p1vuvL-7m
 )but of course you clearly dont want to read or believe that.

Playing the system my arse – welfare benefit myths

I am still amazed at the naivety of the general public or maybe I am grudgingly admiring the Tory-led coalition’s marketing strategy over the welfare benefit reforms.  76% are apparently in favour of the government reversing the welfare reform defeat from yesterday and the pithy ‘how dare you get more in benefits than the average wage’ seems to emanate from every news bulletin.

 

Currently the welfare benefit bill stands at £192bn per year and yesterday the savings sought were £290m per year.  This £290m per year saving – assuming it is not all swallowed up in additional cost of homelessness – will take an average £83 per week from 67,000 families which comprise 94,000 adults and 200,000 or so children.

 

In reality we have placed 200,000+ children in poverty for a saving of 0.15% of the benefit bill.  If the figures stay the same the welfare benefit bill will be 99.85% of what it is now, a whopping saving I’m sure you will agree!!

 

A major factor Joe Public doesn’t still get is that the impact is directly because of high rents in the private sector in and around London that will take these families above the overall benefit cap.  Of course it’s not the first time that national policy has been set because of 16% of the housing supply in London, but it’s the most pernicious.

 

Some explanation is needed as to why it is London private sector rents that will cause this.

 

(a)   National average rent levels in the private sector were £718 pcm in December 2011 and this includes London which increases the national average figure to this £165.71 per week. In London itself average private sector rent levels are far higher than this.

 

(b)   Last year when HB reforms announced CIH and NHF produced research which was not contested to say that a family with 3 children gets a total of £317 per week in all benefits and reliefs and this excluded Housing Benefit.

 

Work out the maths (a) plus (b) above comes to £482.71 and is below the overall benefit cap (OBC) threshold of £500pw.  Given that welfare benefits such as income Support, JSA and ESA are all the same rate anywhere in the country, unlike rents, then a non-working family with two adults in private sector accommodation with 3 children would not exceed the OBC. That example includes the highest form of rent and the lowest state of employment or in the usual jargon the workless and feckless scrounging off the state in the highest cost property.

 

The average private rental figure in London varies according to surveys but it usually stated to be between £1100 and £1200 per calendar month (though some have it as high as £1800pcm) and so taking a midpoint of £1150 this equates to about £266 per week which is we add on to the £317pw in all other benefits from the CIH /NHF figures comes to £583pw.

 

It is therefore the added cost of private rent in London that sees tenants break above the OBC and will be penalised.  Tenants not in London are likely to see their overall benefit (welfare benefits and housing benefit) fall below the OBC.

 

Even the Bishops who launched the amendment argued that the Bill didn’t factor in children’s issues and they won their amendment to take Child Benefit out of the calculation.  They too were misguided in that view and argument as this does discriminate against children in the capital but unlikely to elsewhere.  The issue was and is not children it is the high rents charged in the private rented sector in the capital that is the issue.

 

Perhaps the Bishops and everyone else can be excused that oversight, although it is abundantly and unambiguously clear, by the fact the impact assessment was only published yesterday morning – an affront to democracy and parliamentary democracy if ever there was one.

 

Yet to return to my opening statement, we have had months and months of the government telling Joe Public (without having the full figures which were released yesterday anyone?) that it is outrageous that benefit claimant get on average a £35k per annum gross wage.  That is a wonderful piece of propaganda of which Goebbels would have been proud and with 76% support in the public at large for putting 200,000+ children in poverty for a saving of 0.15% doesn’t back up the rhetoric and sophistry.

 

Finally this government could have sought to reduce the overall benefit bill by capping private rents at a more realistic figure yet the 3bed cap is £340pw or more than double the national average private rent figure!  It chose not to out of political dogma an instead chose to spin some propaganda and blame ALL of those on benefits.

 

These same people have no choice on the level of rent which this government conveniently never said is decided by the private landlord.  More importantly these tenants have no alternative such as choosing lower cost (and better standard) social housing due to a chronic shortage of supply.  The government also conveniently forgot that these tenants that ‘play the system’ as they were labelled would surely have chosen the better quality and more secure social housing as part of ‘playing the system’ if that choice was open to them.

 

You don’t play the system to get an £83pw loss do you?

 

 

 

 

 

 

Perverse disincentives of the overall benefit cap?

Is it in social landlords best interests NOT to ensure their tenants receive all their welfare benefits?

Yes that does seem a bizarre question but it may hold a lot of validity.  Here’s why:

a) The (OBC) overall benefit cap of £350pw / £500pw for singles and families includes HB

b) The Universal Credit we are informed will work by deducting all welfare benefits and reliefs from the OBC figure and the remaining amount will be the maximum that can be paid in HB.

Hence by social landlords working to ensure their tenants receive the welfare benefits they are entitled to is by doing that reducing the amount that can be paid in HB.

The government plans for rent inflation contained in the draft impact assessment published with RTB consultation see council rents rising by 41% by 2015 and HA rents rising by 24%.  This is set against RPI inflation of around 16% in that time.

So as social rent levels rise by these staggering amounts then more  tenants will see their residual amount of OBC not covering 100% of the rent. Add in to this mix that direct payments will go to tenants and not to landlords and the impact on arrears will likely be very significant. Add in that we expect the OBC to rise by CPI which is forecast to be 10.2% by 2015 in the same draft impact assessment and this further impacts on the likelihood of arrears.

In figures average social rent (using HB in-payment figures) is now 15.2% of the OBC at £500pw.  Using the rent inflation plans above average social rent (excluding the higher AR model) will by 18.1% of the OBC figure of £551 by 2015. That is a 19% increase by 2015.

Food for thought

Latest HB figures – Hey Landlord you want 23% more income?

Housing Benefit Facts (as at 19 January 2012)

1. Latest overall HB bill is £22.4bn at the end of October 2011 the same as at end of September 2011 HB bill has risen by £1.6 billion since May 2010 (16 months HB figures) and has risen by £100m per month since the coalition took office

2. National averages:

Council house in-payment figure is £71.27pw up from £70.95 last month and there are 3,410 less claimants

Housing Association in-payment is £80.43pw up from £80.32 last month and there are 3,710 less claimants

Private rent is £173.60 pw – HB pays £111.69 down from £112.25 and there are 3,920 fewer claimants

Comments

The first notable aspect of the figures is that the claimant numbers have fallen from 4,934,110 to 4,921,920 a fall of 12,330 and 0.25%. Other similar tiny percentage falls occurred in April and June 2011 and yet the yearly figures have risen by 132,430 since October 2010.

The claimant in-payment numbers have risen by 170,390 since the last election.

Looking at the 170,390 increase more carefully we see that 47,150 new claims are in social housing (a 1.435% increase) yet 122,950 are in the private rented sector an 8.4% increase in PRS tenant numbers.

In percentage increase terms the higher PRS claimant numbers could be argued that they come from a much lower base and percentage of tenants claiming HB than the social sector. However, more significantly 72.2% of the yearly increases in claimant numbers come from the private rented sector. That is not a statistic that can easily be dismissed in the same way.

There is no reason why private tenants will suffer more from the recession than social tenants after all so the rise in private sector claimants is undoubtedly a trend and not a statistical blip. As I stated in my comments on last month’s figures the percentage of PRS tenants claiming HB has risen from 34% to 47% in the last three years or from a third to half of all PRS tenants.

Because the PRS is the principal tenure for new claims and because LHA pays on average £111.25 per private sector claimant which is £35.48 more per week compared to the average HB payment to a social tenant the HB bill has rocketed. The LHA payment is 46% more per claimant from the public purse than a social tenant receives.

One genuinely interesting aspect of the 170,390 increase in claimant numbers since the election is that 75% of them, 126,960, come from people in work.

One would expect the numbers of unemployed to increase in a recession as indeed they have yet just 25% of the additional HB claims since the last election are from people not working and 3 times that number are from people in work. So what does this tell us?

1. It tells us that an increasing number of those in work are so low paid that they need to claim housing benefit

2. That those who are in low paid work are increasingly claiming HB.

This is a separate point and must be as the numbers in work have reduced as the number of HB claimants has increased. Further, as the DWP admit in their official statistics from June 2011 reveal that up to £6.7bn of HB is known to be unclaimed which I discussed last month. So whether that huge amount of money that would add 30% to the overall HB bill is not claimed through pride or lack of awareness it would show that a trend is emerging to claim the HB that the claimant is entitled to and take-up rates will increase from the 77% – 86% rates and edge closer to full take-up.

3. This is a serious trend and one that will have very significant implications for the overall HB bill. It also provides significant counter-argument to the politicking and the blame labelling culture of this government. This consideration and investigation into the rising HB claimant numbers reveals that those claiming HB are not workshy feckless ne-er do wells after all. They are in low paid employment.

As I commented on last month we are working with landlords on cost-effective ways for landlords to ensure the HB take-up by their tenants increase.

The current HB bill is £22.4bn and up to a further £6.7bn is known to go unclaimed. In figures the real known HB bill is £29.1bn, the current £22.4bn plus the £6.7bn unclaimed.

Statistically it means on average that landlords seeking to ensure all their tenants get what they are entitled to will increase their HB income by 23%. These figures mean one thing.

That if you are a landlord from the smallest private one to the largest social one, and you are not seeking to maximise your tenants claiming HB now, you will be very soon.

I wonder if Grant Shapps the housing minister still feels that letting HB take the strain is a good policy when the HB bill rockets even further. I wonder whether the sector will finally realise that this policy is in fact ongoing revenue subsidy replacing the initial capital subsidy of the traditional social housing model … and all to pay for low paid employment.

19 January 2012

joehalewood@msn.com

Shapps latest knee-jerk wheeze – Plenty of freespace between Shapps ears!

Is there no depths to which Grant Shapps will stoop with his political bullshit?  Yes I know I should be more diplomatic and professional than that but sweet Jesus the man is a buffoon in dogmatic blinkers who wouldn’t win a debating contest with himself!

His latest nonsense is surprise, surprise, an article in the Telegraph today citing another knee-jerk superficial policy based on the “this-is-easy-to-sell-to-the-great-British-public-as-I-go-on-every-media-possible-and-tell-a-lie-often-enough-and-they-will-believe-it” strategy.  (Now you know why I used ‘bullshit!’)

The article begins “Grant Shapps, the housing minister, said councils should offer to help pensioners move to more suitable accommodation to create space for families.” Well who can argue with that?

Yet as we shall see this doesn’t stack up at all and proves yet again that Shapps myopic dogma over announcing knee-jerk policy to nice sound bites that work well in the media such as this.  Note well that it doesn’t stack up financially even when the older person leaves a 4/5 bedroom property in London, keeps the highly inflated rental income that London has by moving into a 1 bed sheltered unit out of London!! Yet of course that doesn’t stop Shapps from lauding this scheme!!!

The article presents an overview of the latest big idea –

“Local authorities would then take over responsibility for maintaining and renting the vacated properties at affordable rates, transferring any profit from the rental income back to the elderly person or their estate. The Government believes the proposal would provide support for the elderly to move without having to sell their homes at a time when there is a shortage of affordable housing for young families.”

Just sounds so plausible doesn’t it?  Well apart from the renting the property at affordable rates. This means Shapps misnamed affordable rent model, the model that charges rent at 80% of market rent in this case by a council at 90% higher rent level than the normal council rent!

Sorry I’m digressing the Telegraph article goes on:

“Research released last year estimated that 25million bedrooms in England were empty, largely because elderly couples do not move out of family homes to smaller properties.  At the same time, young families are increasingly being squeezed into small homes and overcrowded flats as a result of the country’s high property prices”

This is a report issued in November 2011; the significance of which I will return to later on, but for now Shapps is using this to justify this latest wheeze.

The Telegraph explains that this has the full backing of the DCLG – ““A government-backed pilot scheme run by Redbridge council, in east London, has won support from the Department for Communities and Local Government for helping elderly residents to downsize while retaining ownership of their homes” before Shapps goes on in full rhetorical bullshit flow from this point:

“Mr Shapps told The Daily Telegraph that councils should look to replicate the Redbridge “FreeSpace” project. (Again I’ll return to this pilot project later but for now note Shapps has named the pilot project that has been ongoing for at least 12 months and well before the November 2011 research Shapps uses to justify this latest wheeze!!

Sorry, I digress again and deprive the reader of Shapps in full bullshit rhetorical flow -

“For too long the housing needs of the elderly have been neglected,” he said.

Nice positioning there and it’s all about giving the elderly what they need.  That Mr Shapps is such a nice man isn’t he?

 “Older people who should be enjoying their homes have watched helplessly as their properties have become prisons, and many have been forced to sell their homes and move into residential care.”

So older people live in prisons now do they?  A tad of overselling there Grant!  Still where would we be without your hyperbole? This continues apace… “With nearly a fifth of our population expected to be over 65 by 2020, radical and urgent change is needed to ensure the nation’s housing needs are met.”

So what radical change is this? Oh yes the FreeSpace project which Shapps says “…shows what can be achieved” and illustrated that helping some older people move to more suitable accommodation can make a “life-changing difference”.  Wow that Mr Shapps really is a very nice young man isn’t he!

“They can live independently for longer and enjoy more disposable income without selling their home, and other families can benefit from living in an affordable home,” he said. “Many homeowners with large properties and modest incomes are unable to downsize without selling their homes”.

What a nice man Grant Shapps is helping those poor asset rich homeowners with a government backed quasi-equity release scheme as he can’t get enough homes built. Sorry excuse my cynicism let’s move on to this fabulous FreeSpace scheme run by the London Borough of Redbridge.

The Telegraph is positively effusive about this latest wheeze and fully supportive of that nice young Mr Shapps.

“The local authority foots the bill for moving costs, renovations and financial advice. In return, the council is able to rent the house to families in need and manage that tenancy directly. A four-bedroom house managed by the council would be rented at a typical rate of £1,300 per month, £300 less than the average market rate for a privately rented home.

Pensioners who take up the council’s offer use the rental income from their former home to pay for their new accommodation. Lower council tax, utility bills, and the income from their former home mean they can save more than £7,000 a year.”

The Telegraph even cites some independent (?) research evaluating this once in a lifetime offer “Analysis of the project, conducted by Cambridge University, said the Redbridge scheme was “financially astute”.  It goes on: – “There are clear financial gains for the owner-occupier and family from this arrangement,” the report said. “There is also scope for the council to charge a rate of interest on its investment as the margins would allow this”

The Telegraph you may note fails to state what research this was or who at Cambridge University conducted it.  Am I picking at straws reader? Let’s have a look on their website to see how good this scheme is shall we?

The council website is very open and honest about this pilot… oh dear Mr Shapps won’t like that!

“The pilot scheme is showing that ‘the devil is in the detail’ when it comes to implementing the scheme. Legalities around agreements and unusual financial situations, personal requirements of individuals and of course finding alternative accommodation for the owner all have to be addressed and are unique to each case.”

So it’s not a universal generic model that can be adapted and developed in any easy manner then.  It can be complex and is labour intensive as each case is different and will have numerous variables to consider. Hmm!

London Borough of Redbridge  webvsitecontinues: -

This scheme particularly suits the London Borough of Redbridge. As an outer London borough with the least social housing stock in London we need more private rented accommodation in order to take people out of temporary accommodation or overcrowding conditions. Redbridge is 90% private sector, mainly owner occupied and suburban in nature so the FreeSpace scheme, if it is viable, could prove to be very popular. We can manage private rented supply and rent levels to some extent through this scheme.”

Oh I see so it’s suited to the very peculiar circumstances that operate in LB Redbridge with its very high concentration of homeowners at 90% privately owned.  Hang on it must still work as it’s been evaluated by Cambridge University after all I hear you say.  Ah!

The LB Redbridge website reveals that “Cases in the pilot to date have been varied:”

It goes on:

“1. A retired couple moved from LBR where their family live to a 3 bedroom bungalow in Basildon but unfortunately soon after the husband died. His wife is desperate to move back to Redbridge and the Council has agreed to offer her a 1 bedroom shelter flat in exchange for managing her property under the FreeSpace scheme. She is delighted. The issue raised here is that the property is not in the Borough. Properties in the Borough can be managed by an in-house team or our ALMO adding further economies of scale. However officers addressed the problem by negotiating management by a housing association operating in Basildon at a very reasonable cost. Redbridge Council will have no problem finding suitable Redbridge residents in need who will be happy to move to Basildon, which is less than 20 miles distance.”

Hardly a ringing endorsement is it?  Still it fits in with the benefit diasporas from London that we all know will happen.  How forward thinking of LB Redbridge to use this pilot scheme as a trial run for moving many others in the near future!  Surely the second case study must be better!

“2. One client has a 4-5 bedroom house and initially was interested in a high standard sheltered unit nearby. This seemed a straight forward case until the financial assessment showed there to be a loss of unusually high pension credit, which means the owner would be slightly worse off financially if she moved even after receiving the rent. However she is still happy to proceed because of the overall benefits of moving to a more suitable property, especially in terms of company and warmth.”

So moving from a 4-5 bedroom house into a sheltered unit makes the older person worse off financially!!!  Even after receiving the rent!!!  What was that you were saying Mr Shapps? Let me repeat it for you?

“Pensioners who take up the council’s offer use the rental income from their former home to pay for their new accommodation. Lower council tax, utility bills, and the income from their former home mean they can save more than £7,000 a year”

So downsizing from a 4/5 bed house to renting a 1 bed sheltered unit raking in £1300 per month in rent on your property still doesn’t stack up financially!  And you are promoting this scheme as being suitable and efficient and as yet another inept housing solution?  What about the provinces that will see the rental income nearer £750 per calendar month, some £550pcm less than it is in LB Redbridge? 

What did you say about that again nice Mr Shapps?

“They can live independently for longer and enjoy more disposable income without selling their home, and other families can benefit from living in an affordable home”

More disposable income?  Oh dear!! A 4/5 bed home in London let at £1300 per month and still the model doesnt stack up!  An elderly person leaves a 4/5 bed family home to live in a 1 bed sheltered scheme and worse off financially!!

Shameful!

Now its Philippa Roe misleading on HB – AKA doing a Cameron

Philippa Roe of Westminster City Council has been up to her usual statistical sophistry concerning the HB cuts and caps in an article in the Telegraph, the voice of the Tory Party as it is rightly known.

The usual opening of the article is fire and brimstone as to how outrageous it is that the public purse is paying huge amounts of HB for ‘some’ properties, and of course not stating:-

• it is private landlords that set rent not tenants and,
• that private landlords have the choice whether to allocate the property to a HB claiming tenant or not.

So much for Shapps comments on tenants playing the system this week!

Ms Roe then goes on to say: -

“Much has been reported about the potential impact of the caps upon families living in the capital due to fears they may be priced out of their current area; Westminster in particular has been highlighted because the rents are substantially higher than elsewhere in the UK. We have 50,000 rented properties in Westminster and, of those, 5,000 households are affected by the new caps. However, not all of these households will need to move. There is substantial evidence that rent levels have been driven by the Housing Benefit levels.”

This needs some further investigation:

(A)   “We have 50,000 rented properties in Westminster and, of those, 5,000 households are affected by the new caps”

Here we see Ms Roe intimating that just one in ten will be affected by stating 5,000 out of 50,000 rented properties. What she doesn’t say is that would be 5,000 out of the 8510 HB claims in the private sector that the official HB statistics released by the DWP show for Westminster.  The HB caps of course don’t affect social lettings it is only the private rented tenant and only then if they are claiming HB/LHA.  Surely Ms Roe knows that the HB caps only affect private sector lettings, she has just highly conveniently forgot to say that! An error both of omission and of commission or in common parlance a deliberate lie.

The fact she is attempting to hide is that the HB caps will affect 59% of the private rented properties in Westminster that are claiming HB / LHA – the same ones that the HB caps target and ONLY affect.

(B)   “However, not all of these households will need to move. There is substantial evidence that rent levels have been driven by the Housing Benefit levels”

The assertion that not all of these households will need to move Ms Roe has cleverly stated after and directly following her errant intimation that it affects just 10% of HB claimants in Westminster.  It affects 59% of the private tenants, the ONLY ones the caps affect.   That’s a huge non sequitur Ms Roe as well she knows.

Ms Roe then goes on to say “Whilst we do not doubt some households may need to move, they may not have to move very far.” So tell us what number of the 59% affected will need to move then Ms Roe?  Of course she doesnt do that as it would expose the extent of this benefit diaspora

Ms Roe goes on to say “Even if larger families do need to move further afield, Westminster has excellent transport links which will allow those who move an easy trip back to visit friends or to go to work.”  No comments or discussion on the added costs of getting to work Ms Roe?

All of these comments come after Ms Roe has deliberately misled the reader to believe it is only 10% of people that will be affected but as I’ve explained above its 59%.  She goes on with some succour and comfort for the 59%

“The council is committed to offering support to households affected by these changes wherever possible through our Housing Options Service, which provides advice to families to find suitable properties both within Westminster and other London boroughs, will help negotiate rent levels with landlords and assist parents with changing schools. “

So her council is committed to offering support, ‘wherever possible’ then? When is it possible and when is it not Ms Roe.  She goes on with some other caveats

“For those families that have a genuine need to remain in Westminster, such as those with children at crucial stages in their education or those with social care packages, we can allocate a discretionary Housing Payment to them to allow them to stay in the borough.”

So the caveats then are families, and do we assume that WCC is not going to offer support to single persons?  And within these ONLY families it is only certain families in certain situations!  To those families with social care packages (Nice to see WCC uses unregulated PRS to house those it has a duty of care for!) And even then this limited succour to 6 times the number of persons than Ms Roe admits, it is limited to DHPs that ‘can be allocated’ and not will be allocated I note!

Ms Roe has been deliberately engaged in sophistry in this article to downplay a problem that is six times higher than she is making out.  She and her council know:

• HB caps ONLY affect private sector tenants that are claiming HB/ LHA.
• They DON’T affect social housing tenants and tenants not claiming HB
• That 5000 WILL be affected by the HB caps in Westminster and
• That 8510 private tenants in Westminster (59%) claim HB/LHA
• So the percentage affected by the caps in Westminster is 5000 of 8510 or 59%

Philippa Roe has misled her constituents and the general public just as David Cameron misled parliament and the general public this week at PMQs.  Like Cameron her dissembling over HB is easily proven as the above discussion shows.

Shapps Private rent plans – bizarre and unworkable

The consultation paper on RTB issued late December had a draft impact assessment (DIA) attached and it contains some serious implications for rented housing. I blogged about the 41% increase this holds for council tenants a few days ago which is three times the RPI inflation rate by 2015.  Here I look at the impacts on the private sector which has massive implications for social housing.

The DIA is a turgid document, written in economic jargon and with as much technical data and tables as possible. On Page 15 we find Table 3 ‘Macroeconomic assumptions’ – the expected rent increases from now until the end of this Parliament in 2015 and beyond till end of next Parliament in 2010. The inflation figures adapted to current national average rent figures are in a simple table below incorporating the policy the DIA states.

” Policy

• RPI + 0.5% beyond

• • Local Authority rent = RPI + 2.5% to 2015 as      part of the Local Authority rent convergence criteria,

• • Local Housing Allowance rent = RPI + 0.5%      2012, beyond, CPI 2013-15
• • Market rent = RPI + 0.5%“

HB   FIGURES	COST	2012	2013	2014	2015	2020
COUNCIL	£70.95	£77.07	£83.23	£89.89	£99.44	£119.25
HA	£80.32	£85.37	£90.27	£95.52	£99.44	£119.25
LHA	£112.01	£116.27	£118.71	£121.08	£123.50	£136.36
GMR	£168.86	£175.28	£181.24	£187.76	£195.46	£234.40
PTMU	£56.85	£59.01	£62.53	£66.88	£71.95	£98.04
LHA   % GMR	66.33%	66.33%	65.50%	64.49%	63.19%	58.17%
LA   % LHA	63.34%	66.28%	70.11%	74.24%	80.52%	87.45%

GMR – gross market rent:

PTMU – Private tenant make up – the difference between LHA benefit and the gross market rent figure

LHA % GMR – what proportion of total rent the LHA benefit will pay as a national average

LA % LHA – council and HA rent HB as a proportion of LHA which is HB paid to private tenants /landlords

Comments:

The rent inflation assumptions are all about convergence of rent levels.  The forced convergence of council rent up to housing association rent levels are well known yet what isn’t and id new in these official government plans is the convergence of social rent with private levels, albeit on a much slower basis.

By 2020 social rent HB levels will move from 63% of private HB levels (LHA) to 87% and this is planned by keeping LHA levels below market rent inflation and increasing social rent benefit levels way above inflation.  This is a significant trend of increasing social rent to meet private rent levels in simple terms and something that the publicity hungry housing minister Grant Shapps has kept very quiet about.

However, what the table above exposes is the fact that these government plans or rents won’t come to pass as if they did private sector landlords would stop taking tenants on benefits.  They may like to do this but with the latest official HB figures showing nearly 1.6 million HB/LHA claimants in the private sector they can’t suddenly stop taking them.  If they did it would see many more properties being sold yet this would have to be at below the already depressed market rates.

Maybe that catch 22 situation is the coalition government’s cunning plan for their oft-stated assertion that private rent levels will come down.  I doubt it as while they are that cynical, they are not that clever.

One of the factors in the current rental system that is not often discussed is private landlords maintaining a cost differential between their rent levels and that of social housing ones.  The above government rent plans show that differential being wiped away and PSLs will be seeking to maintain or even increase that differential.  Yet for all government power or influence the fact remains that PSLs have the supply of property that government and the country needs and so I fully expect PSL rent levels to increase by far more than the government plans, which in reality is a wish list that can’t and won’t be achieved.

Even arguing against myself here look at the PTMU in the table above.  Currently as a national average the private tenant makes up £56.85 of the market rent, the difference between the market rent and what HB or LHA pays.  This is planned by government to rise to almost £72pw by 2015 and to a staggering £98pw by 2020.  It’s as much as case of tenants not being able to afford to live in private rented properties as PSLs not wanting to accommodate them.

Private sector landlords (PSLs) will not allow these official coalition plans to come to pass as they are incredulous and beggar belief in the ‘market’ they laud on a daily basis.  The market will always win out is another of the governments dogmatic mantras so why is their plans for rent levels and the benefits they attract the exact opposite in thinking?

I do expect an increasing percentage of PSLs will stop accommodating benefit claimants yet it would be a stampede and mass fleeing of that market if these plans come to pass.  Even if they do the increased pressures it would place on social housing landlords, already pressed, will be astronomical.

In summary, the rent inflation projections and attempts to limit LHA to below market rent figures just won’t happen and this just exposes that the government plans are built on sand and have no credulity whatsoever.

HB cost – Cameron lies to Parliament at PMQs

Cameron lies about Housing Benefit at PMQs today. He said:

“All parties are committed, as I understand it, to reform housing benefit. That was Labour’s commitment before the last election. The housing benefit bill is completely out of control. Labour’s own welfare spokesman said last week that at £20 billion, it was unacceptable and it had to change and what we’ve seen so far, as housing benefit has been reformed and reduced, is that actually we have seen rent levels come down. So we’ve stopped ripping off the taxpayer.”

Cameron said “…as housing benefit has been reformed and reduced”

Housing Benefit has indeed undergone reform and as some of the HB changes have become operational it is correct to say that HB has been reformed.  Yet;

Has Housing Benefit has been reduced?  No it hasn’t and that must be a knowing lie by Cameron.

The official HB figures produced by DWP reveal that this is not the case.  They reveal at May 2010 that there were 4.751,530 HB claims in-payment (see tab 4) each receiving £84.20 (see tab 5).  This makes an ‘inherited’ overall HB bill of £20,875,541,599 or £20.88 billion

Whereas the latest official figures for the position at September 2100 reveal that 4,934,110 HB claims are in-payment (tab 4) each receiving £87.01 (tab 5) making an overall HB bill of £22,401,143,111 or £22.4 billion.

This is an increase of £1,525,601,512 or £1.53billion since the coalition took office 610 days ago and means the HB bill has been rising by £2,500,986, or £2.5million pounds per day.

In summary the facts prove Cameron has misled Parliament with this statement.  The  HB issue was raised as a patsy question by a Conservative MP (Nick Boles) and Cameron must have known what the question was in advance, and hence could have this researched, proves to me that it must be a lie rather than a simple mistake by Cameron.

UPDATE 23 APRIL 2012

The above post was issued within an hour of Cameron’s lies above back in January 2012.  It’s pertinent to revisit the claim by Cameron that “…housing benefit has been reformed and reduced…” as we are now three months on and have the official figures for January 2012 published last week.  We can now see if Cameron’s assertion that the HB bill has reduced was based on information we, the general was not privy to, and he was.

The HB bill for January 2012 shows that HB has increased yet again and has done every month and so Cameron did lie and Cameron did mislead Parliament at PMQs in January. 

The latest official figures issued by the DWP I commented upon last week  not only show that the HB bill has risen, but that it now stands at £22.6bn and massively above the Coalition target. They are a tale of chronic mismanagement by this Coalition.

However, the key issue is that Cameron no has no defence whatsoever to the claim he did not mislead Parliament at PMQs back in January.  Cameron was either ineptly briefed or he chose to deliberately mislead Parliament and the public.

Mislead is of course a euphemism that means someone has lied or misinfomed.  Cameron has lied and did lie to Parliament and the public and he needs to correct that.  What we cannot be sure of is whether he did this wittingly or unwittingly but there is no doubt he did lie.   The fact it may have been an unknowing lie still doesnt detract from the fact that Cameron did lie.  He is the Prime Minister and the leader of our country and the parliamentary democracy we have.  I restate he has lied to Parliament, and has now categorically and unequivocally been proven to have lied given the official figures produced by his own government that have been released.

When Labours Shadow Housing Minister Jack Dromey raised this at a subsequent PMQs, Cameron was rudely dismissive of the charge and of Jack Dromey.  Now he cant be as dismissive as his own official figures unambiguously show and has no defence to the charge that he did not mislead Parliament.

If Cameron does not apologise to the House, as I suspect he will not, then we need to question whether we indded have (a) a parliamentary democracy and (b) whether we have any form of opposition.  Here is a smoking gun for Labour.  It is not just a case of getting dates wrong, of a pasty tax, or inept or dangerous advice to keep jerry cans full or petrol in your kitchen or numerous other gaffes or ineptitude, this is the Prime Minister being caught out in a lie and far more serious than any of the above.

The same PM that claimed to buy a pasty in a shop that had closed at least 4 years earlier no less