Cameron confirms SAR will apply to social housing at PMQs?

I watched PMQs yesterday and Cameron was asked a question about Housing Benefit to be withdrawn from under 25s.  This is the well flown kite in my view that I have always insisted would not happen that I have gone on further to say wont happen and that the Coalition would introduce the Shared Accommodation Rate or SAR restrictions to the social rented sector to even up the playing field with the private rented sector.  That posit caused a huge kerfuffle back in February and March 2012 yet know many in the SRS believe it’s a case on when and not if the SAR is introduced.  Not only does SAR level the playing field but it would bring more financial savings to the HB bill thus conforming to the Coalitions agenda

Camerons response was truly bizarre and bemusing.  He said that currently the HB system is perverse as it allowed a non-working under 25 on JSA to claim HB but not a working person living at home to claim HB.

The only impediment in the Housing Benefit regulations that prevents a young person claiming HB is the SAR in the private rented sector which limits HB or more correctly its LHA variant to the shared rate of benefit.  There is no benefit impediment to a working person claiming HB in the social rented sector.

If Cameron is wanting to remove the alleged perverse impediments in the HB system then:

  • (a) he either takes away the SAR – a policy his government increased by applying to those under 25 from under 25 – OR
  • (b) he takes away (automatic) entitlement to HB if the young person is in receipt of JSA.

I’m sure that Cameron wont abandon the SAR as in (a) above  That would increase the HB bill significantly and runs totally contrary to any of the coalition aims.  This leaves (b) and it would appear that Cameron is considering removing HB completely to the under 25s if they are on JSA.

In simple terms you can only rent a property if you are under 25 if you are working.  I can see how that would be spun by this Coalition to the public as a matter of fairness and moral right yet it holds many huge problems.

Firstly, what about working HB claimants? If the young person (ie under 25) is a striver and takes a low paid job and still qualifies for HB.  Would he or she not be able to claim HB? It would seem so as they are not claiming JSA or dole.

However, if that striving young person loses his or her job then they would be claiming JSA.  So would they be denied HB then?  If so that means losing job equates with losing home and having to move back in with mum and dad assuming that is possible.  If it is not possible then the young striver would be forced to move into a homeless hostel where he would still receive JSA but would he receive HB?  If not he cannot reside at the hostel and so his choice becomes find a job or sleep rough.  What a great incentive to a young striver that is!! Of course that would happen anyway if he was found intentionally homeless.

Removing the automatic link between JSA and HB creates a massive disincentive for any young person to seek and take-up employment!

Underlying any such break with JSA and HB is the assumption that mum and dad are responsible for their children until they reach 25 if they live in social housing and responsible for their children until they are 35 if they live in the private sector.  One assumes then that Cameron will remove non-dependent deductions for 18 to 24 year olds if they live with parents in social housing and for 18 – 34 year olds if their parents live in private rented?

No I thought not and that is not going to happen is it as it will significantly add to the overall HB bill. So yet again we see another ill-thought through comment from Cameron on HB to the under 25s.

You begin to see why Cameron’s remarks about perverse incentives in the HB regulations are themselves perverse and bemusing.  Yet again we see this to be ill-thought through and since Cameron himself announced he would be stopping HB to under 25s you can imagine that he wants to follow through with this kite-flying policy which he believes has public support – the acid test for any Coalition welfare reform however superficial in impact and reality.

I could go on with many additional reasons and examples why banning the under 25s from receipt of HB is a non-runner politically as well as economically.  Yet all today’s perverse and baffling comments suggest to me is my original posit that the banning of HB to the under 25s wont happen but Cameron will level the playing field by introducing SAR to social housing meaning that the under 35s, whether they live in social or private rented accommodation, will receive a reduced level of benefit.

Of course there will need to be exemptions for those that work, those with children, those who live in supported housing.  Yet such exemptions will need to be factored in whether it’s a ban on under 25s or on under 35s.

In political terms applying the SAR currently at play in just the private rented sector to the social rented sector is a straightforward ‘sell’ to the public.  Why should (taxpayer subsidised?) social housing receive (even more?) preferential treatment from the government that the private rented sector – is the line of spin that will be stated and easily stated.

SAR being applied to social housing will have a devastating impact. Typically the SAR is between 50% – 75% of the 1 bed rate and so this becomes a 25% – 50% cut in HB for all single persons under 35 residing in social housing.  A huge arrears impact for landlords.  Social housing has little HMOs (shared accommodation) which is what becomes the ONLY affordable housing option for single under 35s.  Hence the tenant profile in social housing changes rapidly and all single under 35s move to the private rented sector – or in Daily Mail speak are actively incentivized by this to ‘drop a sprog!’

Yes the application of SAR to social housing is not without such dangers but it does level the playing-field and so is an easy sell and promotes the Coalition cause the Daily Mail et al to write more blame stories about ‘dropping a sprog to get council housing’ etc.  That causal link will be deflected as we will see more scorn and blame passed onto feckless young persons and so the Coalition won’t be blamed by the general public.

Reader, I feel like the harbinger of doom lately. The OBC having a greater financial impact than the bedroom tax on social landlords.  The systemic flaw in the OBC making this worse over time and now repeated again is my view that SAR will be applied to social housing.  That is more a reflection of the ill-thought through nature of the coalition ‘welfare reforms’ which all cut Housing Benefit and Housing Benefit alone and, critically, DO NOT CUT WELFARE BENEFITS. And for a fascinating glimpse at how successive governments have treated the payment of housing costs and how Beveridge saw it read Jules Birch’s excellent piece in the Guardian today.

Given that Housing Benefit is the lifeblood of the social housing model and currently it pays social landlords over £14.5bn per year then the ‘welfare reforms’ (sic) are a misnomer for what is clearly an attack on social housing and the social housing model.  This is a political set of changes not an economic one and can only increase the overall public purse bill just as Pickles PPS was correct back in July 2011 that the OBC will cost the public purse more than it save in added homelessness costs - that same principle applies here.

When you undermine and attack the social housing model you also undermine its key rationale that it provides genuinely affordable rents so that a tenant can afford to take up employment and in the coalition jargon work can pay more.  So when you take that away by forcing all under 35s into higher cost private rented housing then you massively disincentivise and make unaffordable the option of taking up employment. In short it massively increase the costs of day-to-day living and prevents employment take-up and it massively increases the public purse benefits bill.  It is economic madness and government policy by dogma and party interests over the best intersts of the country as a whole.

No wonder IDS is seeking to redefine ‘poverty’ as his reforms will create far more of it!

Let’s not forget the right-wing readers of this blog who say but we need welfare reform as we can’t afford it and can’t afford to do nothing.  I fully agree with you we can’t afford it and something should be done but that means genuine reform that have an economic imperative and economic incentives built-in not the other way around as these ‘reforms’ hold.  It means that attacking the social housing model which reduces social housing also reduces the £170 per annum tax reduction that social housing provides to every individual taxpayer. Above all it means basing ‘reforms’ on economically reliable arguments and underpinnings and not on political whim.

It means basing policy not on pre-determined ill-thought through comments such as we will stop HB to under 25s that spare Cameron’s blushes and form the basis of this most recent farcical comments and means that Cameron and the coalition need to rethink.  Yet like any politician and any government of any persuasion they wont do that and so the social housing sector needs to prepare itself for SAR to be applied by this naive politically motivated coalition.

Cameron’s bemusing comments only reaffirm my view that the SAR will be applied to social housing

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2 thoughts on “Cameron confirms SAR will apply to social housing at PMQs?

  1. Bill Kruse November 22, 2012 at 1:30 pm Reply

    Of course we can afford welfare, we’re one of the richest countries in the world. However, much of the wealth the country produces is creamed off by the banks as interest and big companies as unpaid taxes. That’s why we’re short, if indeed we are at all. Address those issues and most of our supposed problems disappear.

    • joehalewood November 22, 2012 at 1:53 pm Reply

      I agree. My point was that we dont have ‘welfare reform’ in its usual definition we have hosuing benefit cuts and an attak on social housing which relies upon it to the tune of £14bn+ per year.
      Welfare like any system should always be looked at to provide genuine reform and improvement and not have policy that is determinedd by soundbite and what superficiality the public will believe – “work will always pay more” etc

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