Why would a PSL rent to a benefit claimant? Makes no sense

Renting from a private sector landlord (PSL) increasingly make up the only option for many in the UK given the chronic shortage of supply of social housing and the lack of mortgage and buying options.

That position is well known outside of the social housing sector and amongst the general public. Yet what isn’t well known generally is that if you live in a private rented property and claim benefit toward your rent is that on average you will receive less than 70% of the rent the private landlord sets and charges. The other 30% you will have to make up from other benefits, savings or pay.

The chart below from the official figures reveals the percentage of the rent that is paid for through housing benefits if you live in a private rented property and the specific housing benefit paid is known as Local Housing Allowance or LHA.

One very simple question this raises is why should a private landlord rent to a benefit claimant?

If you reader were a private landlord with a few properties you rented out hoping that your costs are met or provide a small return hoping that the capital appreciation and asset value will provide equity for you pension – which sums up the majority of private sector landlords – would you take the risk of renting to someone, working or not, that you knew would only receive 68% of that rent cost in benefit? I doubt you would.

Look at the chart more closely and you see this reduces to around 60% of the rent on your pension no less by the end of this parliament and around 55% by the end of the next. Would you seriously rent to anyone on housing benefit? Of course not the risk of non-payment or arrears is a step too far.

The chart above was first published in a previous post which covers all the detail of the above chart yet the simple question Why would a private landlord risk renting to a benefit claimant can get lost in the other factors mentioned there. Why I have remade the point is that the simple point that it is a risk too far for a private landlord is largely lost on the social housing sector and the average social housing professional.

The private rented sector (PRS) invariably gets a bad press and while much of it is deserved and some of their practices horrific as the PRS is unregulated – a national scandal that reflects the political ideology of the right – the risk to renting to benefit claimants and why it is such a risk too far gets lost in portraying the PRS and the PSL as the bogey man. That is far too simplistic and frankly an easy ‘out’ in terms of viewing the PRS.

The social housing sector and many commentators on it, me included, castigate the system that allows the unregulated PRS to charge exorbitant comparative rent levels which cost the taxpayer about £3bn more per year than the equivalent number of social housing properties in housing benefit. Yet it is the system that is bust and broken and needs reform and crucially needs to see the PRS fully regulated; not for the sake of regulation or because of some leftist ideology, but because the system is dead as a Dodo. If PSLs will no longer rent to benefit claimants the system is well and truly buggered and all indications suggest it will be well and truly buggered sooner rather than later – the risk to a PSL of taking a benefit claimant is a risk too far as the simple chart shows. The laissez faire system of letting housing benefit take the strain is systemically flawed and collapsing.

However the real problem with the social housing view of the PRS is that it allows this rightist government to portray the social housing sector as leftist dinosaurs holding on to the great council housebuilding boom after WW11. That leads to Tory arguments such as the only reason the PRS charges 50% more in rent than social housing is because social housing is subsidised through housing grant.

There is some merit in that yet recently it has been mooted that this government is mooting taking away all ‘subsidy’ from (leftist?) social landlords. I commented on this last week saying the removal of ‘subsidies’ would create a level playing field, create a true ‘market’ so beloved by this rightist government and would see social landlords become private organisations … who would surely raise their rent levels to those of the existing PRS…. and add about £6bn per year to the taxpayer through increased HB in one fell swoop!

‘Subsidising’ social housing is one hell of an ‘invest to save’ programme as it save the taxpayer about £30bn per parliament!

Yet of course it is never seen or perceived that way and whose fault is that?

Regulated social landlords deliver much higher standards of housing, a better quality product than the PRS; they provide greater service levels too than the PRS, so they would inevitably charge at least the same as the PRS in this ‘free’ market. They would also blow the competition – the PRS – out of the water in competition terms and so rents would increase further too. Isn’t that the way markets work? Why would social housing landlords provide the same high service they do now for the same income as the PRS? That is also illogical in free market thinking and practice. So would the security of tenure reduce, would repair times reduce, would tenant involvement and tenant rights to involvement reduce to their levels in the PRS – ie none at all?

So reader, please tell me another sector or industry that delivers a much higher level of product and service at a massively reduced cost that is so castigated?  No I can’t think of any other example either!

In summary, portraying the PRS and the PSL as the bogey man is not only deeply flawed and lazy thinking by the social housing, it allows disingenuous rightist arguments over ‘subsidy’ and ‘leftist thinking’ to prevail. The social housing sector is doing itself a huge disservice in not understanding and recognising that the PSL not taking benefit claimant is anything more than a sensible business decision by the PRS.

Exporting homelessness – very very bad news for Shapps

Exporting homelessness cases from London boroughs to cheaper housing rent areas such as the Newham to Stoke case this week has attracted a huge amount of media attention.  For once, some may say, housing news is national news, but more importantly this is the first impact and consequence of the welfare and housing reforms that has become evident to the general public and the general news media.

I develop the first impact issue below and argue that exporting homelessness:

(a) It doesn’t alleviate homelessness at all in fact it increases homelessness;

(b) It won’t save public money through reduced HB costs but will cost more, and

(c) It simply won’t work and can’t work.

Over the past few days much has been written and said about this ‘exporting’ of London’s homelessness which has mainly focused on the human interest element of homeless persons being uprooted and dumped over a hundred miles away.  It holds a significant human interest of course but it’s much more than just another human interest story. It is a highly emotive issue so perhaps unsurprisingly the primacy of the human interest element is understandable. However, prior to the Newham letter asking for private landlords to accommodate their homeless cases, such matters were just projections or probable impacts in the minds of the housing sector but not known to the general public.

The first impact is therefore very significant as the general public now know what the social housing sector have been saying, that the welfare reforms and Housing Benefit caps cannot work.  74% of the general public asked a few months back whether the HB caps and the overall benefit caps were right to set a £400 limit on rent and a £500pw cap on all benefit was a good thing agreed.  Now that the general public has seen the first impact of what a cap means in the widely reported Newham to Stoke issue, I would suggest that if a poll were conducted on whether they still thought caps were a good idea we would see a radically different figure in support of the caps. Yet before they are polled the public know a tiny fraction of the issue as because the media furore focuses upon the human interest angle it doesn’t discuss the simple question of will it work?

It can’t work, it increases homelessness as a direct consequence and it will cost more to the public purse in increased HB costs. 

I state that very definitively and don’t simply argue or proffer an opinion on that because that is what WILL happen and has to happen and why it will happen.

The Newham Plan holds some cost and operational detail of the exporting homeless proposal.  Newham plan to pay a private landlord in Stoke 90% of the (LHA) benefit level and an additional £60pw on top of this.  This comes to £142pw / £615pcm for a 2 bedroom property in Stoke and this is considerably less than Newham pay to accommodate these homeless cases in Newham.  So this is a cost saving to the benefit bill appears the economic rationale.  However what impact will that have in Stoke or wherever else homeless cases are shipped out to?

Imagine you a private landlord in Stoke where a 2 bed property attracts a market rent of £400 pcm.  Get rid of your existing tenant in Stoke, which is easily done in the unregulated private rented market, and replace your £400pcm income with a monthly income of £615.  Such a 54% increase in income is a no-brainer and private landlords will be queuing up to accommodate London’s homeless families.

However, it means for every one of London’s homeless families imported into the PRS in Stoke creates one homeless case in Stoke.

This has many consequences or impacts:-

• It creates duties and costs upon Stoke to deal with the new found homeless case in Stoke.
• It creates increasing demand in Stoke for housing which sees the market rent level increase which always happens when supply remains the same and demand increases.
• The 8,000 or so HB claimants living in the private rented sector in Stoke face higher rent levels and increases the HB cost there.
• All other tenants living in private rented accommodation in Stoke, those who are working for example, are also hit with higher rent costs.  This is likely to create even more homelessness in the local population as housing costs become more and more unaffordable (107% of new HB claimants are in work), arrears build up, and working in Stoke becomes less worthwhile as people are better off out of work.

Exporting London’s homeless CREATES homelessness.

All of the above will happen and of course Stoke will see increased costs and pressures on NHS, Police, Schools and all public services meaning council tax will need to increase in Stoke.  Simple but obvious consequences of how exporting homelessness with see increases in cost for all Stoke residents, home owners as well as those who rent – or in lay terms London boroughs are exporting their high housing rent costs and high rent inflation to Stoke and other areas of the country.

Exporting London’s homeless CREATES homelessness and creates additional cost.

But wont London boroughs save a huge chunk of public money by moving people to cheaper rent areas?

The answer to that is no as well as they too will have increased costs. This is explained by what is happening in London boroughs when private landlords there evict existing tenants due to the caps.  A classic case of this was reported in the Guardian yesterday.  A 4 bedroom private property had a rent of £450pw yet the cap will only pay £400pw and so the private landlord reclaimed the property.  The council found the existing tenants homeless and in priority need  but can only accommodate them in 2 rooms of a B&B hotel (due to London’s chronic shortage of property) and is paying out £69 per night for each room for this unsuitable but only available accommodation.  This is a cost of £966pw and £566 more per week than they were paying after the caps.

A direct impact of the cap is that in this one case a London council having to pay out £29,533 MORE per year in benefit.  The irony is not lost that the HB cap is less than £21k per year and yet as a result of that cap the council is forced to pay out £50,404 per year in benefit in this one case.

The benefit cap CREATES more homelessness and INCREASES London boroughs cost as well as creating more homelessness in Stoke and increasing cost in Stoke.

The direct result of the benefit cap is that it increases public purse cost of Housing Benefit and so we the taxpayer pay out more.

This temporary alleviation plan of exporting homelessness that is going to create more homelessness and homeless and HB cost and is a solution that cannot work, is only permissible due to this Coalition changing homeless legislation and allowing councils to discharge their duties by accommodating homeless cases into the PRS.

While the real underlying problem of the chronic housing shortage cannot be blamed at this Coalition’s door, their policies in not regulating the PRS, in imposing HB caps, the other HB reforms such as the bedroom tax which also create arrears that lead to more homelessness and their policy of allowing councils to discharge their homelessness duties by shipping families to Stoke is correctly blamed at their door.  DWP policy of the HB caps increases the DWP HB Bill.  CLG policy of changing homeless legislation creates higher HB cost for the DWP.  Such incompetence increases taxpayer cost for all.

While I have used the Newham to Stoke example here it’s not a matter of playing politics by Labour-run) Newham.  Westminster which is a flagship Tory-run council is exporting homelessness to Luton or Walsall or Ramsgate and Croydon have been looking to do the same to Hull.

In summary, I return to the first impact point I started with.  The Tory-led Coalition achieved widespread public support with the (superficial) idea of setting a cap on welfare and housing benefits.  The superficiality of the cap policy is what the first impact of the cap policy, exporting homelessness and socially dumping vulnerable people, reveals to the general public or more correctly the electorate.   Even more correctly the ignorant and gullible electorate who believed the Coalition spin that the caps were to prevent immigrant Somali families from claiming £100k per year in HB and other pithy but errant spin that the Coalition would ensure “work will always pay more!”  As the brief consideration of the exporting homelessness above shows this first impact reveals will create homelessness as rents spiral out of control and make employment unaffordable in even the low rent areas such as Stoke and directly because the market is reacting to the conditions this Coalition has put in place.

Wait until Universal Credit comes in, that is a nightmare of Kafka proportions and again will cost more. Wait until the risibly misnamed ‘affordable rent’ model comes in and adds a further £1bn+ to the HB bill. Wait until this governments planned council house rent rises of 41% have their first impact revealed to the electorate.

First impressions count so says the old maxim.  This coalition believe this means that the superficial spin of ‘work will always pay more’ will sway the ‘gullible’ public who now see that the cap policy sees displaced white-faced British people transported oop North.

 

Of course I don’t believe the general public will remember this government saying that the HB caps will only hit 14,303 of the then 4,751,530 HB claimants being affected by the HB caps.  Extrapolate that and the government policy will only affect 0.3% of HB claimants and not affect 99.7% they claimed back in May 2010.  If the general public is up in arms over just 500 families and 500 HB claims – just 0.01% of the current HB claimants – imagine how much worse the political fallout will be for the Coalition!

The Newham to Stoke 500 doesn’t affect 99.99% of HB claimants – it is one hell of a first impact though as the general public see this incompetent policy for what it really is!

UPDATE – Link for Guardian article explaining the £966pw HB cost is here

London exports rent inflation – HB bill set to rocket right across the UK

London exports rent inflation – that for me is the issue with the Newham to Stoke story.

I have made many posts and comments on the HB diaspora since the summer of 2010 when the HB reforms and caps were announced. It was therefore no surprise to read today the LB Newham story all over the media over moving up to 500 homeless families to Stoke, or at least attempting to. It is now being mentioned across media sites that Westminster are looking to do the same homeless exporting to Derby.

In recent times we have also read many articles that Croydon is doing the same with Hull, and before that many London Boroughs trying to block book hotels and B&Bs in Brighton, Hastings and many other areas. All of these issues I have commented on before and the latest blog from Jules Birch recounts these admirably here (saving me the time to reference!) and in yet another must read he states the crucial issue is the suitability of the homeless placement, in Stoke or elsewhere.

I disagree on the crucial issue as I see this as the exporting or rent inflation and rent levels of London to lower cost areas. This will add a huge amount to the overall HB bill. This is the HB diaspora – not a shock, but shocking nonetheless and today’s media led by the BBC is clearly shocked at this and for once, housing and the manifestations of the near-sighted and superficial reforms has become national news and not just housing news!!!

What is really going on here if the London Boroughs HB diaspora plans happen is many things many have commented upon already today. Are there enough schools in Stoke to accommodate these 500 families? What will the impact be on the NHS there? Are there any jobs in Stoke? Isn’t it  a disgrace to uproot families and move them away from friends, family and other support networks? And I could go on with many similar and obvious questions.

However the real issue for me is:

LONDON BOROUGHS ARE EXPORTING THE CHRONIC PRS RENT LEVELS AND RENT INFLATION THERE TO THE REST OF THE UK.

Yes I’m ‘shouting’ and I need to shout with that capitalisation. Here’s why using the scenario that Newham exports 500 families to Stoke (or Westminster to Derby):

The families will be housed in the private rented sector (PRS) as the private sector landlords (PSL) will love this idea as it increases their income massively. A 2 bed house in Stoke will typically be rented after a quick look at letting agent sites at £400 per calendar month and now attracts LHA of £91pw or £395pcm. Supply and demand are well balanced.

Yet the Newham plan (one of many HB diaspora plans) is to pay PSLs in Stoke 90% of the LHA rate (presumably Stoke LHA rate) of £91pw and then a further £60pw on top. This comes to £142pw. Imagine you are a PSL in Stoke. Do you accommodate a local family in a 2 bed property for a monthly rent of £400 pcm or let your property to a Newham family for £615pcm? That is a no-brainer and more than a 50% increase in rental income!!! The same percentage increase will apply to a 3 bed property in Stoke too.

The HB diaspora plan creates a huge increase in demand for PRS properties in Stoke yet with a stagnant supply. We have an imbalance and when demand exceeds supply we have a cost increase. So Stoke with its 8,000 PRS tenants in receipt of HB now will see a general increase in market rents due to this upsurge in demand. But LHA is frozen this year and so the rent increase this surge in demand creates will mean average rental prices of PSR properties in Stoke will rise sharply.

Additionally 500 of existing local private renters in Stoke will be displaced through eviction as the PSLs clamour to free up 500 properties so they can receive the £615pcm income rather than the £400pcm income.

We see 500 locals in Stoke becoming homeless at a huge additional cost to the local council. The same local council that is hit with a rapidly reducing capacity due to the huge increased demand because of the Newham plan!

Stoke and its environs will undoubtedly see a huge surge in the necessary but inappropriate use of B&B by the council to accommodate its newly increased local homeless surge. The PSLs that run such B&Bs are also in a very pretty financial negotiating position. They have the council over a barrel and can charge what they like cant they? Further rent inflation being exported from London.

It doesn’t matter whether its Newham to Stoke, Westminster to Derby or Croydon to Hull, the result is still the same – it is exporting higher rent and benefit levels from London to wherever the HB diaspora end up.

The actual impact on the HB bill is difficult to quantify. It will undoubtedly raise rent levels in the PRS in every area outside of London and also bugger up every housing strategy of every council like Stoke and put huge strain on NHS, Police and Council Tax (amongst many others) in all of those areas.

PSLs in all areas outside of London will be bombarding every London council with offers of PRS accommodation in their locales. The obvious place to look for London councils is those areas of the country that have high levels of PRS benefit claimants. Nationally, the HB figures reveal that 72% of HB  claimants reside in social housing and 28% in the PRS. Yet these average figures hide many discrepancies. Blackpool for example has 71% of it benefit claimants in the PRS. So basically if you are responsible for the Housing Strategy in Blackpool this means you are well and truly buggered.

The PSLs there will seek to entice London boroughs to accommodate London’s homeless there so they can get 50% increased income! My apologies if the language offends but the HB diaspora will bugger up all local housing strategies and will put strain on NHS, schooling, all other local services, the local employment prospects and will increase rents across the board as demand increases hit the stagnant supply. It will inevitably push up Council Tax in these locales.

The same applies to every area whose LHA rates are low in comparison to London boroughs and have even moderate levels of PRS provision in their areas – Stoke has only 31% of its HB claimants in the PRS. Neighbouring authorities to Stoke include Shropshire with 32%, Hereford with 33% and Telford with 34% of its claimants in the PRS. All more than Stoke… cue outcry from Council Tax payers in those areas next year as costs rocket to pay for the London homeless HB diaspora, outcry as their private rent levels rocket and cause more unemployment and local homelessness.

In simple terms the direct result of the HB and welfare reforms to London on those unlucky enough to live there and become homeless or unemployed is in plain language bugger off and live somewhere else, we don’t care about you or about the city or town we are dumping you on and where we are exporting the rent inflation and rent levels of the greedy London PSLs….. that of course the Housing Minister won’t regulate!!

Shapps won’t regulate and won’t deal with the problem of the ridiculously high London PRS rent levels created by London PSLs because it doesn’t fit with his political ideology. He also changes the homelessness guidance to allow London boroughs to meet their homeless duties by exporting their local homeless through the HB diaspora to Stoke, Derby, Hull and so many other places – Jules Birch’s suitability pointssumed here.

Now today we see Shapps having the hypocrisy to blame this on Newham because they are a Labour run council. Has he said the same over Tory flagship Westminster City Council? Of course not! Those in housing know the major issue in housing, there is not enough supply. The HB diaspora simply creates PRS demand and PRS rent increase in all areas outside of London. It increases HB cost which means more taxpayer money. It simply moves people from one area to another and does nothing for supply.

The 500 homeless families in Newham will see replacements there at same HB cost, the 500 displaced in this diaspora will see 50%+ added costs in LHA paid to Stoke PSLs. The hundreds or thousands displaced from Westminster, Croydon and all those other London boroughs that follow will see the same – a massive increase in PRS and LHA costs wherever they are dumped. What a truly farcical consequence of the housing policies of this Coalition – well unless you are a private landlord of course, those well known Tory party donors.

I don’t think this is by deliberate design, IDS and his cronies at DWP simply aren’t that clever; rather their incompetence in pursuing policies that can a priori be easily spun – Somali families getting £100k per annum in HB, all on benefits receive £26k per annum, et al – have massive negative consequences for housing and for the economy – consequences the balding Numbskulls at the DWP in IDS and Grayling simply didn’t foresee. Yet they will again blame on tenants and the vulnerable as the political attacks on Labour-run Newham are an own goal once Westminster and the other Tory-run ‘radicals’ implement the HB diaspora.

In May 2010 and early June the incoming Coalition expressed outrage at the £20bn HB bill they inherited from the last lot and promised to reduce this by £2bn by 2015. Will we see May 2015 seeing a Labour Minister saying the £30bn HB bill we inherited from the Tories is a disgrace? I don’t know whether Labour will return to office in 2015 but whoever does will have to deal with a £30bn per year HB bill!

UPDATE Wednesday 25th April

If my comments above see Private Sector Landlords with dollar signs in their eyes – which they do – then the updates today see lawyers with the same dollar signs.  A recently bereaved widow in Walthamstow has been given a “reasonable” take-it-or-leave-it offer from her council to rehouse her and her daughter in Walsall some 130 miles away.  Listen to it here as she explains the situation on Radio 4 this morning.  It is 4 minutes of incredulous listening.

It cannot be ‘reasonable’ in legal terms for a council in London to discharge their duty to a local person by offering them a property 130 miles away.  It certainly isnt in moral terms obviously.

Another interesting aspect of London ‘exporting’ its homeless ‘oop North’ is that this is likely to be the first impact of the Housing Benefit caps that we were informed 74% of Joe Public agreed with.   Why should the workless and feckless and indolent get £500pw in benefits and live in areas they, the working population not afford and other pithy and superficial spin was much in evidence at the time.   Aside from the superficiality that London is a desirable place to live - it has many areas I wouldnt want my worst enemy’s dog  to reside – like areas of any major city, Joe Public is most definitely outraged at the social cleansing of London that Newham to Stoke or Westminster to Derby entails. It would be interesting if the same people polled them were asked today if their views had changed on this!

Unfortunately, superficial spin and ideology characterises all of the current governments HB reforms and its only when the IMPACTS of these policies are known by Joe Public that they realise what they mean for them – as the council tax payers of Stoke are beginning to wake up today!  Some of these manifestations or impacts were not even discussed in the House of Lords or Commons such as will the SAR apply to social housing through the backdoor of the bedroom tax, which many in the social housing sector now believe to be likely.  Or the fact that extending the shared accommodation rate (SAR) to under 35s will adversely affect a women with no children fleeing domestic violence.  Not only were these aspects not discussed in parliament, they were not mentioned or considered in any impact assessment on thes HB reforms.

That is a worrying and all too common characteristic of much of this coalitions social policy and not just the HB reforms which is one of ’this sounds good, the electorate will swallow it and not realise the impact.’

I’m sure the private landlords and the lawyers will though…kerching, kerching!!

Latest HB figures – £4bn over target and PRS largesse

Yesterday the latest official Housing Benefit figures were released by the DWP and these detail the position at 12 January 2012. As I have said before why we need a 3-month lag on official figures for HB when we can have just a one month lag on unemployment figures, also released today, is puzzling and simply tardy.

1. Claimant count - 4,976,210 now claims and receives HB and this is up 23,950 from the previous month and an increase of 142,740 year on year. A year on year increase of 2.9%

- Of the total count 67.6% reside in social housing and 32.4% in the private rented sector (PRS)

- Of the 23,950 monthly increase from December 2011 to January 2012 13,120 or 55% reside in the PRS

- Of the yearly 142,700 increase in claimant numbers 91,220 come from the PRS or 64%

The ever increasing role the PRS plays in rented housing is there for all to see.  The average payment to PRS tenants is 41% more than to a social tenant at £108.18pw to £76.56.  This added cost of £31.62 per week for less secure and often lower quality PRS accommodation is paid to 1,613,200 claimants meaning us the taxpayer fork out £2.7bn more per year for PRS properties than we do for social housing ones.

This £2.7bn is revenue subsidy in the unregulated PRS yet is rarely mentioned when anyone talks of housing ‘subsidy’ and it needs to be rightly discussed and viewed in that context.

If we compare LHA directly to council house HB we see a 54% difference from £71.27 to £109.86.  Put simply we pay £38.59 more per week for each PRS property than we do for a council property of in a year £3.25bn more for a lower quality product.

Yet again, all we read is social housing is subsidised with capital grant and there is no discussion of the opportunity or alternate cost of paying £3.25bn more in revenue subsidy to the PRS than we do to council housing.  That’s not healthy for discussion and especially not healthy for the public purse bill and even in these straitened times of austerity, housing is unique in that political arguments defeat economic ones.

Refusing to regulate the PRS, the lack of invest to save in social housing and letting “HB take the strain” has a massive economic cost.

2. HB overall cost – the total HB bill is now £22.6bn comprising the 4,976,210 claimants each receiving an average weekly payment of £86.86. This is a year on year increase of £1.2bn from the January 2011 figure of £21.361bn to £22.553bn.

3. HB target cost – the latest cost of £22.6bn is over £4bn more than the target cost of circa £18.5bn set by the Coalition in their June 2010 announcement.

Target Cost of HB – In June 2010 the overall cost target for the HB reforms was save ‘nearly £2bn’ by 2015 from the then known February 2010 figure of £20.48bn giving a Coalition 2015 target of £18.5bn.

The latest figure of £22.6bn is therefore more than £4bn per year over the Coalition target

That is chronic mismanagement and economic incompetence by this Coalition.  In every other area of welfare spend we see feckless workshy claimants being blamed for the benefit cost.

In housing we even see workshy tenants being blamed for the social housing element of the HB bill, they are all underoccupiers taking advantage of a scarce national resource, indeed a privileged one, and so the feckless workshy social housing tenant is having their housing benefit reduced with the bedroom tax.  This according to government ideology levels the playing field with the private renting tenant who is paid on average 54% more in benefit than the council house tenant!

The HB statistics only need a cursory glance to reveal the chronic incompetence of paying so much more in ever increasing revenue subsidy for privately rented properties.  Where else does government or even an individual pay 54% more for an inferior product?

It’s time for a radical rethink of HB policy and time to regulate the largesse of the PRS.

UPDATE 19 April 2pm

Just a quick update on the ‘subsidy’ issue.  In the last week or so it has been mooted that social landlords should get used to receiving no capital grant subsidy in the future.  If this ever comes to pass then all social landlords could not be said to be public bodies and why would they not then raise rent levels to those in the private sector?  After all they deliver a better product so let the market reign and we would see 1.46m council rents rise by £38.69 per week and 1.9m HA rents rise by £29.31 per week.

If councils and HAs received the same benefit level as PSLs the HB bill would rise by £5.85bn per year.  In other words the investment in capital subsidies saves £5.85bn per year in HB revenue subsidy – over £29bn per parliament.

If that isn’t an invest to save policy I dont’ know what is!!  Yet why is the social housing sector not making that argument?  Why is there no discussion of this with the CLG or the DWP in the public arena?

As I mentioned above, housing is only discussed in political ideological terms and not in economic terms – that needs to change too.  If social housing is a privilege as the Coalition maintains forcefully then it should be apolitical.  It shouldnt see the defence of the merits of social housing being perceived as a left-wing argument (ie a political one) which it always is.  Social housing is an economic argument of invest to save not some dinosaur from a byegone age that is out of place.

Shapps is calling for ‘transparency’ at every turn, yet his glass house just like his ideology is opaque. Time for a rethink!

 

 

 

 

 

 

 

 

 

Hurrah, hurrah – lets ban under 25s from HB!

When Johnny comes marching home again hurrah, hurrah. Perhaps the song is most remembered in the Clash version, the English Civil War. Yet it is a great deal older than that and has its origins in the American Civil War. The sentiment of the song is still here today as it always will be – hoping our brave soldiers return home and how grateful we are as a people and a nation for their service.

Yet I see the government is discussing banning the under-25s from receiving Housing Benefit so lets look at how we treat our returning heroes!

I wrote about this last week and commented that it would mean the end of single homeless hostels and of domestic violence refuges – sorry Miss Jones you can’t be suffering domestic violence you are only 23 go away and come back in a few years! It was and has to be kite-flying by this coalition who actively fosters the image of heartless bastards when in reality they are really incompetent ones.

Yet an article in Inside Housing today seems to go further than the vague announcements we had a week or so ago and says:

“A Number 10 spokesperson confirmed the Downing Street policy unit is examining a proposal to withdraw the right of unemployed people under 25 years of age to claim benefit to cover their housing costs”

The article goes on to quote both the CIH and National Housing Federation responses to this. My response is it is still kite-flying and unbelievable incompetence and adds to the hostel and DV refuge issue with Johnny coming marching home.

Imagine the scene at Royal Wooton Bassett – Johnny returns home to a rapturous and deserved welcome from a grateful nation, bunting strewn everywhere, though not sure whether he likes the choir, but hey ho having served in Afghanistan and Iraq he’s done his bit a 6-year stint straight from school and now 22 years of age, having seen so many unspeakable horrors, remembering many colleagues that won’t ever come home – the ultimate sacrifice – and looking forward to post army life in civvy street.

I’ll get my own place and rebuild my life he thinks and after all I’m a hero and my country says so.

Shouldn’t be much of a transition Johnny thinks after all my grateful government is making those incompetent bastards in local councils give priority in allocation to us brave soldiers. What a rude awakening for Johnny when he tries to get a flat!

Sorry sir you don’t qualify for Housing Benefit for another three years. I do appreciate your sacrifice and you are a hero sir, but even 6 years fighting for your country, paying your taxes while you did isn’t enough to qualify for Housing Benefit!

How nice that this coalition’s policy is to call Johnny feckless indolent and workshy.

Soldier; get a job you unworthy lazy bastard!

Anyone still think this kite flying proposal will ever see the light of day?

UPDATE Saturday 23rd June

Apparently this heap of bollocks has resurfaced.  Just watched Spain v France and switched over and Sky News runnign the story with a pic of front page of Mail.  Go there (Mail Online) and no sight of story. Back to twitter and a link takes me to the Telegraph.  So the Mail has pinched the usual kite-flying story from the Telegraph something Sky seems unaware of – sloppy, sloppy journalism and as you can see above in my comments on this RESURFACED story it just aint gonna happen folks!!

Banning under 25s from Housing Benefit – why do we give this credulity?

Let’s ban Housing Benefit for the under 25s and make them stay at home.

This is the latest ‘radical’ kite-flying ‘announcement’ from the Tories and met as you would expect with howls of derision from the usual suspects.  Yet why do they react this way and aren’t they merely playing into Tory hands? Yes they are.

The Tories have always had their own version of How to win friends and influence people – get yourself portrayed as a heartless bastard, from Thatcher, Thatcher, school milk snatcher to Gove shrinking school meal portions there are plenty of examples of attacking public sector profligacy.  In an age of austerity this really comes to the fore with every Minister competing to come up with yet more and more ‘radical’ ideas as they jockey for their own positions amongst the Tory faithful.  The more austere they are the greater and longer the standing ovation at the party conference and the better chance of higher cabinet office at the next reshuffle, usually after the latest ministerial scandal. The more of a heartless bastard that you are portrayed, the greater the career advancement in the Tory party.

Yet in this proposal to ban the under 25s from receiving Housing Benefit the Tories have moved from heartless to truly incompetent bastards and this is where the correct focus should be.

Barely scratch the surface and you realise this can’t work and is yet another example of how this Tory-led Coalition develop policy by spin without thinking it through. In the governments view they will stay at home with mum and dad.  They all have a mum and dad don’t they? They don’t leave the family home because there is a new stepdad on the scene despite the huge anecdotal evidence that this is a main reason for young single homelessness.  No lets propel and advance the the Tory myth and blame game that all young people are indolent feckless criminal scum and not worthy.  That inept approach of course conveniently hides the fact we can tax YPs at 16 but woe betide them receiving HB at 24 if they have paid taxes for 8 years!

Let’s look at this farce of an idea in a bit of detail.

Homelessness – up and down the country we see single homeless hostels many of which have age groups of 18 to 25 year-olds.  They all receive Housing Benefit.  Are these to be exempted from this proposed age ban or will homeless hostels close?  How many of these young single homeless have had to leave home?  Plenty as anyone who has any knowledge of this ‘client group’ will know.  So where are they to go – the street perhaps?

Domestic Violence and abuse – Sorry Ms Smith you are only 23 go back and be beaten for a further couple of years and then you will qualify for entry into a refuge… unless of course you can pay the rent at the refuge out of your own means.

Care Leaver – Sorry young Johnny you are only 16 (or 21) you will have to find a nice sofa to sleep on for the next four to nine years until you qualify for HB!

Yet if hostels or refuges are to be exempt would this represent the only viable option for the under 25s? Will that cost more than the average £82.87 per week in Housing Benefit the under 25s receive now?  You can double that figure so there’s no cost saving and a huge cost increase in fact. But even that wouldn’t work would it?  No under 25s would leave the hostel or refuge as they wouldn’t qualify for HB in their own place would they.  In fact they wouldn’t be able to get in would they as hostels and refuges would be permanently full? So where would they go?

This HB age criteria being proposed just cannot work as it denies the right to a home to all 25s unless they are working.  And which age group has over a million unemployed, yes the under 25s! So no human rights challenges and a million new jobs going to happen? Oh and how will this affect the bedroom tax?  Is this not a plan to over-occupy what is now under-occupied and see 23 and 24 year old brothers sharing bunk beds?

I could go on with reams of this stuff about how this policy proposal just cannot work.  Yet the problem is that the opponents of it are not taking this line.  Instead they are simple saying how the Tories are heartless bastards and not how truly incompetent bastards winging knee-jerk inept policy on the fly.

Has it really got to the stage that we give credulity to any of the lunatic machinations coming out of Downing Street? Has the level of challenge sunk so low by the opposition and in doing so simply plays into the Tories hands by giving any ridiculous proposal automatic credulity?  That any objection to however hare-brained scheme they propose just shows that whosoever opposes is denying the need for cuts and more austerity, and that the Tories are the only ‘realists’ to the economic recession!

It’s time to expose their incompetence not pander them with faint praise over their heartlessness, which is what they want!

What you read in March

January views to my blogs saw 2020 views a 40% increase on December. It was the first time I had started looking at what you, kind reader (grovel, grovel) are all looking at and I produced the top ten posts. February was even busier with a 60% increase with 3240 recorded.

March saw 4642 views of my blogs a further 43% increase.

The shared accommodation rate or SAR issue saw 2015 views alone from six 6 blog posts on various aspects of the, as yet to be clarified, issue of whether it will apply via the backdoor of the bedroom tax.

The bedroom tax or underoccupation HB reform tends to focus minds right across the sector given its impact and one very good and informed source on how this will be implemented and other HB and welfare reforms is Ian Savigar.   If you dont follow him you should. One of his tweets today was very interesting (and was confirmed shortly afterwards by the National Housing Federation):

Ian Savigar‏@Bigsavi

DWP confirm 2 me that under occ regs by June. guidance on No’s unlikely as they have no data! LAs will have 2 engage claimants affected!

How can this or any government rely on an impact assessment on the bedroom tax or project any semblance of an accurate figure on the savings from the bedroom tax if they don’t have the bloody data!! 

Unfortunately it’s all too typical of the coalition who releases policy by ideological spin and only looks at the consequences after it has become statute.  I think dear reader we will be hearing a lot more about the bedroom tax and other WRB issues in the very near future. My blog entitled Kafka on LSD couldn’t have imagined the UC nightmare is very much in that vein as it details the farcical and unworkable processes of Universal Credit in the interim period until the housing payment element that replaces Housing Benefit comes fully integrated, which we are told will be in 2017 – a 4 year nightmare!!

The curiously titled blog “107% of new tenants on HB are working” simply states the official HB statistics under this coalition and was released on 30th March in response to the BSHF report released that day which errantly has got up the noses of the DWP

Once again a big thank you to all those who read or retweeted my blogs, it is much appreciated.  A special thank you to the 319 emails I have received directly from right across the sector on the SAR issue with many stating that I can put my head above the parapet and say what you would like to but can’t.  I am very fortunate in that respect.

Table below

March 2012 Speye Blog views

Will SAR apply to social tenants – Yes it seems! Will it or   wont it?		1028
SAR Wars? Why we must assume it will apply to social housing More on   what the guidance documents say		353
107% of new tenants on HB are working – You what? Clarifies   and details that increasing number of working tenants need to claim HB		226
Kafka on LSD couldnt have imagined the UC nightmare Universal   Credit 2013 – 2017 – a real nightmare!		202
SAR – An open letter to Grant Shapps A backdoor   way of getting an answer on an unintended consequence?		202
SAR – is the social housing sector appeasing the DWP? SAR – nah don’t   worry it can’t mean that – Can it?		193
SAR will destroy hostels and refuges The real   supported housing consequences – death of emergency accommodation?		145
Some sheet facts about affordable rent in Shapps constutuency Interesting   and curious facts about HB in the Housing Ministers constituency (and   a spelling mistake in the title to boot!)		120
Singalonga Shapps Don’t read   as you won’t get the song out of your head. I warned you!		116
The Great Affordable Rent Con Plenty of factual   detail on why AR can’t work and the horrendous public purse cost		114