How to challenge and appeal against the bedroom tax decision

I have placed this on my website in MS Word so you can simply cut and paste and fill in the blanks.  The link is below and it is the only MS Word file there called Standard Letter.

http://www.hsmonline.co.uk/downloads-jobs/housing-policy/

The same download can be used to print off as a two page letter to circulate if you wish. It was written this way and for that purpose and hence oversimplifies some aspects.

The wording is below and as you can see it also gives strong pointers about what to ask in the initial request for information which will also give you a strong indication of some legitimate appeal grounds for the follow-up appeal letter.

You can see why I have always maintained that all 660,000 bedroom tax affected tenants have legitimate grounds or reasons to appeal.  The bedroom tax decision-making process is so riddled with holes and, for example, how can a HB Officer decide what is a bedroom when there is no legal definition and this will tax the very learned legal minds of judges?  More in-depth detail and standard appeal arguments will follow

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THE BEDROOM TAX APPEAL

If every tenant affected by the bedroom tax decision appealed then the system is brought to its knees.  The government expects just 3% to appeal and estimates an appeal costs the local council £200.  It wont and it will cost the council £1500 for everyone that appeals and about £18m to Liverpool City Council if all 12,000 appeal.

Do I have a right to appeal?

Yes.  You have a right to ask the council to reconsider which is pointless.  You also have a right to ask the council for more information and explanation or simply HOW they made the decision and then put in a formal appeal after this which is the way to do it.

A standard letter (overleaf) asking for HOW the council made the decision means the council has to answer and provide you with information in writing.  So one question you must ask the council is “Please tell me how the council defines a bedroom and provide that in writing?”

The reason for that is there is NO LEGAL DEFINITION of a bedroom.  So how can you tax something you can’t define?  Every council will have a different definition of a bedroom!  It is up to the individual Housing Benefit officers to decide what a bedroom is and how many bedrooms your home has.  It is NOT up to your landlord even if your tenancy agreement says you have a 3 bedroomed property that doesn’t mean you have 3 bedrooms.  Janet Bell has a 3 bedroomed property that only has 2 bedrooms and will NOT be hit by the bedroom tax.

Once you get a response from the council you then write another letter which is the APPEAL.  This then gets heard at a tribunal – an informal court – and they decide whether the bedroom tax applies or not.  Remember each one of these appeals will cost the council £1500 to defend the bedroom tax decision which the government forced them to make.

If everyone APPEALS then ask yourself why would Liverpool City Council spend £18m of council money defending the bedroom tax decision which takes £20m out of the city!  If the council does not defend the APPEAL at the tribunal then ask the tribunal to overturn the decision and the bedroom tax does not apply!  If the council disgracefully does defend the bedroom tax decision at the tribunal there are still plenty of good arguments you can use to have the decision overturned.

This is why you have asked the council for their definition of a ‘bedroom.’  If the council says your landlord told us it was a 3 bedroomed property then that is not the same as having 3 bedrooms in a property just like Janet Bell (the lady in Echo and on Granada Reports and Look North with a vertical lift through the ceiling).  If your smallest bedroom is less than 70 square feet is this a bedroom?  Maybe not.  If your smallest bedroom is less than 50 square feet then it definitely IS NOT a bedroom in law.  Anyway how does the HB officer at the council know the size of your bedrooms?  He doesn’t and so how can he make the decision in the first place?  He or she can’t make any decision they can rely on in court as they have not seen your bedrooms!!

STANDARD LETTER – asking for more information

Date

HB Address

Your HB reference number

Dear Sirs,

(insert you name, address and postcode here)

Please provide the following information in writing so that I can submit a formal HB appeal with the given time.  Please advise when that date is by return.

1. A copy of the council’s written policy that includes a definition of a bedroom.
2. Failing that a copy of the councils informal or working definition of what is a bedroom for under occupation / bedroom tax purposes.
3. A copy of the council’s written policy which states precisely how the council makes a bedroom tax decision.
4. A copy of any letter or other correspondence you sent to my landlord (insert landlord name) asking for information about my property.
5. A copy of any correspondence you received back from my landlord in response to your request.
6. Does the council’s policy in making a bedroom tax decision differ from the guidance given by central government in the A4/2012 HB circular and/or the SI 3040 of 2012.

Yours faithfully

Etc

NOTES

1. How can a HB Officer decide what a bedroom is if there is no legal definition?
2. If defining a bedroom would tax the minds of the most learned judges then how does IDS expect a HB officer to make such a decision!
3. Has the council seen your property or how many bedrooms it has?  No – so a 3 bedroomED property does NOT mean you have 3 bedrooms does it?
4. A property is not the same as the number of bedrooms it has!!
5. Has the HB Officer simply accepted your landlord’s word that you have 3 bedrooms? Yes.  So this is a decision taken without the HB officer knowing is this is true or not!!
6. The government (DWP) issue very detailed guidance (48 pages long!) on this and if you council has not followed this then this is also grounds for appeal.

Simply put in your details on the first standard letter asking for more information and hand in to a council office such as a one-stop shop and get a receipt for it.  I will draft standard APPEAL letters ready for when this information comes back and then submit the APPEAL

The APPEAL – You can attend in person and doesn’t need a lawyer and is free to do so a welfare rights officer or anyone else will do and the tribunal is at 36 Dale Street Liverpool.  This court is very informal (no wigs on judges etc) will last an hour and they will take between 3 to 8 months to decide or likely much longer if all appeal.  This is your LEGAL RIGHT SO USE IT!

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The above is as simple as I can make it and is written so that it can be handed out as a one-page flyer printed on both sides.

This and the previous version has been viewed read or downloaded over 150,000 times on my blog or website and many thousands of times more elsewhere.  How strange that IDS and the DWP think that only 20,000 will appeal!

I would also advise you look at the “How to Appeal” brochure the tribunals produce and you can access this here  - Note well it says last year there were 200,000 appeals heard and that is for every benefit.  Imagine what adding 660,000 will do to that figure for just the bedroom tax appeals and to the time it takes to be heard and what cost that will bring.  Imagine what it will be like to have your say in court too!

You may also wish to look at the views of a leading QC and what he thinks of the simple question What is a bedroom here - Ask yourself does my local HB officer know more about this than a leading barrister?

If you want some more questions you could ask and some more legitimate grounds for appeal then have a look at this lengthy post here

It all boils down to the tenant submitting an appeal over the bedroom tax.  The more that do the quicker this nasty unfair policy is history.

Cameron finally admits he lied on HB

In PMQs today David Cameron said in response to a question from Jack Dromey about homelessness :-

“…and even under our plans Housing Benefit will increase”

Back in January 2012 at PMQS Cameron said Housing Benefit has reduced and then claimed when challenged on this that it had fallen and consistently maintained that line.  What he said in January 2012 was

“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”

Now he admits what we all knew then and no know for certain that:

• Housing Benefit has increased
• Housing Benefit will continue to increase
• Housing Benefit cost given as justification for the ‘welfare reforms’ which largely only cuts HB was wrong
• There is no underpinning justification for welfare reforms which he now admits will cost more to the public purse
• Cameron lied to Parliament about Housing Benefit falling

But lets not stop there.  Back in June 2010 a month after taking office Cameron’s government said they would cut the HB bill by nearly £2bn per year.  The HB bill from official figures was in May 2010 £20.8bn per year thus setting a target of £18.8bn.  The same official figures say the latest figure for August 2012 is £23.6bn and almost £5bn over target and now Cameron admits today it will increase even further!

The HB bill under Cameron has increased massively by £37.85p PER SECOND since he took office, that’s  £136,260 PER HOUR 24 HOURS PER DAY EVERY DAY since the election.  Yes that’s the same Housing Benefit bill that Cameron said “…had reduced” back in January and which he now admits will rise even more!

It will rise more despite the fact that the overall benefit cap (OBC) process works by deducting all welfare benefits from the cap figure and leaving a residual to pay for housing costs which sees Housing Benefit as the ONLY benefit to be cut. The DWP now state that this will affect 171,000 families in 2013/14 and triple the original 56,000 estimate.

It will rise even further despite the bedroom tax cutting 14% or 25% from social housing tenants Housing Benefit because they cannot downsize.

It will rise even further as an ever higher percentage of all rented housing will be private sector landlords who receive £107pw in HB compared to the £81pw social landlords receive as the official HB data shows (and that figures doesn’t include the doubling of arrears that direct payment pilots show will be the minimum impact either!)  That’s £2.2bn more per year we the taxpayer give to private landlords over and above what we pay to social landlords for the same properties. Yet Cameron and his government wouldnt dream of looking at or regulating private landlords!

Yet despite this the Housing Benefit bill will still rise says Cameron. Yes the same man who said Housing benefit “has been reformed and reduced!”

Cameron lied.

A QUICK UPDATE

• If as Cameron said Housing Benefit will cost more and,
• as he also said at PMQs more public money will be spent on disability benefits, and
• as we know more money will be spent on pensions with the triple lock guarantee

then – how can the welfare benefit reduce?  It can’t can it?

FURTHER UPDATE

Silly me I forgot to add that Cameron said he has increased Child Tax Credit at £390pa more than inflation too.

SO HOW THE FCUK CAN THE WELFARE REFORMS SAVE MONEY TO THE PUBLIC PURSE

No dont tell me the government have been fibbing all along and misleading everyone in the country?  Yet it all the main benefit send areas are increasing as Cameron says then how can the raft of welfare reforms which this government has used to stigmatise and blame on the feckless scroungers (pensioners excepted despite receiving two-thirds of the overall welfare benefit spend!) and will place even more children and families into real poverty save the country money?

 

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!

 

 

 

 

 

 

 

 

 

107% of new tenants on HB are working – You what?

There are plenty of false perceptions coming out about Housing Benefit claimants today and mainly thanks to an article in Inside Housing entitled “Majority of new Housing Benefit claimants in work.”  This factually correct headline stems from a research report published by the Building and Social Housing Federation (BSHF).

I have seen many tweets today stating the majority of HB claimants are in work and this is not the case at all.  Of the 4.95m HB claimants only 865,200 are definitively in work and this represents just 17.5% and so the majority of HB claimants are clearly not in work, yet even that is misleading as the 4.95m figure includes non-working groups such as pensioners which make up about one-third of the total figure and so approximately 26% of working age HB claimants are in work.

The IH article cites the correct figures from the official DWP statistics that since BHHF report states that since January 2010 the HB claimant numbers have increased by 300,160 and the number of HB claimants in work has risen by 279,470 in this time – so 93.11% of new claimants since January 2010 are in work.

The BSHF research simply reports the official DWP figures and throws in ONS and DWP projections to recommend that DWP commissions some further research into a number of issues.   These are the same issues I have been raising in my blogs on each month’s HB figures such as (a) increased cost to HB bill (from September 2011); (b) rising trend of working claimants in December 2011; and (c) the emerging evidence of a HB diaspora from London boroughs I mentioned in November 2011

The BSHF report doesn’t note or comment that the coalitions HB cost target is £18.8bn this being £2bn less than the inherited £20.8bn from May 2010 which was set out in June 2010 by the DWP and as it now stands at £22.5bn it is already £3.7bn above this target and has risen every month since the election.

It’s of note here that last week’s budget included the vague almost throwaway comment that a further £10bn per year savings will be needed in 2016.  We must presume that this £10bn figure assumes that forecasts for savings will be met yet with HB already £3.7bn over target and the affordable rent model likely to add over a billion pounds a year more than DWP of Shapps expects then the £10bn figure is a chronic underestimate.

However the trend of more and more working claimants needing to claim HB is significant.  In my monthly posts I have always used the election date of May 2010 as a reference point and not January 2010 as in the BSHF report.  To keep that consistent we see that from May 2010 to December 2011 (latest HB figures) that the number of overall HB claimants has risen by 200,730 (4.751m to 4.952m) yet the number of working claimants has risen by 214,650 from (650,550 to 865,200).

Can hardly draft a headline that 107% of new HB claimants are in work can you?  Yet that is what has happened.

More information on the latest official HB stats here

SAR WARS – the return of the SN/SP/5889?

At times in the past week or so I wish I’d never raised the possibility that the shared accommodation rate or SAR could apply to social housing tenants through the backdoor of the under-occupation HB reform also known as the bedroom tax.

Yet I’m glad I did.  Despite the hundreds of emails and other correspondence I have received eating into my workload and time; despite condescension from certain quarters attempting to attack my reputation and professionalism; and despite beating myself up at what must be my lack of articulation as some still don’t get the issue, and despite the House of Commons library today reissuing the same SN/SP/5889 standard note from 24 October 2011 detailing the SAR issue but with today’s date –a truly bizarre coincidence(?) the raising awareness of the SAR issue has been worth it.

Thankfully I have metaphorical broad shoulders, else the “Have you ever even spoken to the DWP” comments or the “this is just an example of the ever increasing problem of paranoia created by blogs” ones or the “you just want to create a story where there isn’t one” comments could be damaging professionally.  Yet the problem is a real one and the application of the SAR to social tenants post April 2013 could happen through the backdoor of the bedroom tax process. It’s also a problem that can’t be ignored and the housing sector can’t simply rely upon this just being an unintended consequence that DWP officials say orally that we don’t expect this to happen.

What is to stop a council HB officer in May 2013 from determining that a 28 year-old social tenant in a 1 bed flat is underoccupying it? Or any of the new super-qualified HB staff from October 2013 when they begin to administer Universal Credit for a planned 4-year interim period from making such a decision?  There’s nothing at all preventing this.  Just as one HB department a few years ago deciding that the HB regulations on sheltered housing were to be interpreted in a very narrow way and created the £1000+ per annum disability rent tax issue?

If a 28 year old in the private sector lives in a 1 bed flat he is overoccupying and will only receive the shared accommodation rate or SAR under LHA.  While we now the SAR regulations state clearly the SAR won’t apply to social housing tenants, the bedroom tax regulations which will replicate the LHA provisions to social housing in 2013 could see the same outcome being achieved – SAR by the backdoor.

What I find interesting and revealing in the 200+ emails I have received from housing assistants to housing Chief Executives is that the impact of SAR applying to social tenants in 2013 hasn’t been stated and significantly doesn’t need to be stated – we all know it would have a horrendous impact and drastically change the face of all rented housing.

The number of emails and the huge increase in blog views all show the level of the concern right across the sector.  Many have stated that I am raising an issue they would want to raise but can’t afford to be seen doing so which just reinforces my view that luckily I can and I should raise such issues.

There is nothing to stop a shared accommodation rate being applied at any time in the future after April 2013 is also a common consensus and the political and economic inequality of the SAR applying to just the private tenant is a major issue.  Go back and read the HoC paper from October 2011 republished today to see unambiguously that the rationale behind SAR is to reduce the HB bill.  The £214m saving from just the 88,000 single 25-34 year olds in the private sector would triple if the 177,000 social housing tenants were added – a £430m per year saving is not to be sniffed at and especially when the budget stated incredibly vaguely that a further £10bn of savings will be needed from the welfare bill by 2016. That £10bn must also assume that this government achieves welfare savings it seeks from the bedroom tax and other reforms and that the affordable rent model won’t cost any more yet my post last month revealed that AR may end up costing well over a billion pounds a year more.

My strongly held view is that we need to seek DWP confirmation in writing ahead of 2013 that a backdoor version of SAR won’t apply or be introduced through the bedroom tax regulation.  That has to be a sensible way to proceed.  If it is just an unintended consequence, if it is so easy for DWP to state orally it won’t apply or even if it is just paranoia from a blog we need an unambiguous written answer ahead of 2013 and the introduction of the bedroom tax. That is why I posted the open letter to Grant Shapps on this issue.  His remit as Chair of the Homelessness prevention ministerial working group which also includes Lord Freud has a specific aim of looking at unintended policy consequences.

One final point with which some in social housing may take umbrage is the impact upon rented housing if SAR does apply.  The unanimous consensus that it would be highly damaging can be seen as social housing doesn’t give a jot that SAR has massive negative impact in the private rented sector to those 34 and under.  With the PRS taking up more and more of new lettings and having more and more of an impact on rented housing, the knock-on effect of that affects social housing more and more every day.  This increased impact on social housing is exacerbated by the SAR extension to 22 -34 year olds that is already in force and the social rented sector can no longer be as blasé about SAR in the PRS as they have been in the past.

The Great Affordable Rent Con

The Great ‘Affordable Rent’ Con 

I’ve started using graphs in my blogs and judging by the views, which have increased significantly you like them.  Below is the graph (Chart 1) that shows Coalition policy is one of social housing and private housing rent convergence. It has the added point that HB for social housing is on such a marked trend that it will overtake LHA paid to private landlords, which as it starts from about two-thirds of it is a very significant trend.

Chart 1

Using blog views as the benchmark you clearly like the graph below that shows how much private tenants will have to make up their rent and how LHA will pay less and less of the rent level. “If a picture paints a thousand words” indeed as Chart 2 reveals!

Chart 2 – How much more private tenants will have to pay each year for rent

Or put as in Chart 3 below what percentage of private rent will LHA pay the ‘picture’ the graph reveals is starker:

Chart 3 – Diminishing LHA as a percentage of gross market rent

The use of graphs or pictures really does hit home and I imagine the Housing Minister Grant Shapps’ face will be a real picture when he looks at the picture on his ‘Affordable Rent’ model. This you will recall is the grand plan of Grant Shapps to solve the crisis in supply of social housing (aka real ‘affordable’ housing) – a form of housing his political dogma dislikes so much he is attempting to sell ‘up to’ 100,000 of them off cheap. Although it must be said this is less than his plan to sell ‘at least’ 100,000 of them off which he tweeted at Tory conference in October 2011. Shapps believes and is on record as stating that private tenants will move from private renting to his new ‘affordable rent’ model which is set at up to 80% of gross market rent levels. I have posted many times before on how this will cost the public purse so much more in HB with the latest being here and this refers back to many previous posts that it could cost as much as £1.3bn per year more.

When he announced this in 2011 I argued immediately that it would cost more to the public purse yet Shapps denied this. The graph above shows that currently in 2011/12 LHA pays 66% of the gross market rent (GMR) which of course means that his misnamed “Affordable Rent” model at up to 80% of GMR will mean a higher HB bill. 80% is more than 66% whichever way you look at it Mr Shapps.

Ah but hold on I hear you say didn’t Shapps reveal in the Housing Strategy that some of the AR models were at 65% of GMR? He did you are right, well in part. It was only some of them of course but Shapps would retort that 65% is less than 66% and that is correct. What he said on page 24 of the Housing Strategy was :-

“The new homes created under the Affordable Homes Programme will be offered at a range of different rents up to 80 per cent of market levels, according to local circumstances. Affordable rents in London are on average 65 per cent of local market rents, and 95 per cent of Affordable Rent properties in London will be made available at rents lower than 80 per cent of market level”

So in London which is 16% of the housing stock nationally average AR levels will be 65% but not in the rest of the UK. So in the other 84% of the country in housing terms they will be 80%. [Bizarrely if 95% of London AR levels are below 80% then 5% are above 80%!!!]

However, since the Housing Strategy we have seen DWP cut Shapps plans off at the kneecaps by announcing a freeze in LHA in 2012/13 and then each year after LHA to increase by 2% while GMR levels will rise by 4%. Confused with all this talk of numbers? Don’t be dear reader rest assured I have a simple picture for you!! Yes its worth waiting for!!

Chart 4 – Affordable Rent with LHA freeze and below inflation increases included

Notes to Chart 4 above:

The above lines on the graph represent benefit levels.

So the blue line which is highest and represents Affordable Rent at 80% of GMR pays out the most benefit.

That blue line (ar 80%) is way above the purple LHA line and so ar80% pays out far higher housing benefit.

The ar80% (blue) line rapidly climbs well above the purple (LHA) line Eventually even the normal common or garden social rent line (green) climbs above the LHA line

Even on Shapps best case scenario (ar65%) or the red line, we see this rising way above the purple LHA line and so costing the taxpayer and public purse far more in HB.

Sorry did I say Shapps face will be a picture? Personally I prefer ‘the face that blanched a thousand Shapps” (it seems Kylie has become Helen of Troy!) Now the housing reader will also recall that each new Right to Buy sale (aka RTB2) that is another of Shapps and Cameron’s plans sees every RTB2 sale replaced with an affordable rent replacement….at 80%. So look again at the gap between the blue line (AR80%) and the green line (existing social housing soon to be RTB2). How much more will we pay out in HB? A significant amount and the figures are (2011/12) £70.95 for social rent: £135.09 for AR80% and this is a 90% increase for a RTB” property sold today. Yet still Shapps maintains this will cost less!!!

There is an easy way to confirm the above and guess what its in a graph!  Chart 5 below plots AR at 80% and AR at 65% against the LHA cost and shows the extent over time over the excess HB that will be paid to AR properties over private properties receivng LHA.

Chart 5 – added cost of AR over LHA

As you can see both the afforable rent models, AR at 80% (AR80) and AR at 65% (AR65) exceed the LHA figure which is zero in the above with the graph just representing the excess potential HB to be paid. Chart 6 below puts a monetary value on this excess cost to the public purse.

Chart 6 – Added cost of HB bill of Affordable Rent

Over the period that we have the DWP /CLG projections for the AVERAGE excess cost of AR at 80% of gross market rent is £1.2bn per year and it reaches £2.3bn extra by 2030.  The AVERAGE excess cost of AR at 65% of gross market rent  is £480m per year and rises to £1.25bn by 2030.

But of course Grant Shapps denies it will cost more, he is after all a consummate politician!   And note well that this is the best case scenario for Shapps with the new AR tenants being in their ‘affordable’ properties rather than the costly private ones!

Chart 7 below looks at the excess between AR80 and AR65 against social rent levels

As is apparent the excess of HB paid out is more initially and close to £1.3bn per year I stated in previous blogs for AR80 on the issue yet rises to £2.2bn per year by 2030.  This is due to the huge increases in social rent levels that Shapps and this Coalition plan.  Yet it still has an average excess HB cost per annum of £1.53bn over that time. So the AVERAGE excess cost each year till 2030 is between £1.2bn and £1.5bn at AR80.

The AR65 figure is always higher than social rent figure from a current figure of £750m extra per year rising to £1.15bn extra per year by 2030.  The AVERAGE increase to the HB bill here is £800m per year and so the AVERAGE increase to the HB bill at AR65 is between £480m and £800m per year.

Note that all of the above assume the AR model does NOT continue after 2015.  If it does then more numbers of AR properties will mean even greater cost to the public purse in higher HB payments!

I leave you with the words of that consummate politician Grant Shapps from an article in the Guardian on 31st March 2011.  He said in this question and answer session:

@indigoshrimp

QUESTION

Please can you explain what the understanding is between yourself/CLG and Iain Duncan Smith/DWP on how the total housing benefit bill will stack up in the future?

Affordable rent will inevitably mean housing benefit payments will rise, and yet IDS seems set on reducing the HB bill. How do you square that circle?

ANSWER FROM SHAPPS

I appreciate that at first sight your logic seems sensible. Build affordable rent, allow all of the up to 80% rent to be covered by Housing Benefit (HB) and surely the bill must rise.

However, this misses out an important factor from the equation. Many of the people likely to move into Affordable Rent homes are living in the Private Rented Sector and may be receiving HB for all of their current higher rent. Therefore in HB terms there isn’t much impact through our Affordable Homes programme.

There isnt much impact Minister?  I somehow think that the figures and graphs above show we differ on the definition of ‘much impact’ as we do on the definition of ‘affordable!’

Joe Halewood (speye@hsmonline.co.uk)

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 – It is not sweet and noble to lie to your country Mr Shapps – Updated 20 September 2011

Housing Benefit reforms were first outlined very soon after this coalition took office in May 2010.  The extract below from the July 2010 Housing Benefit Digest issued by the DWP explains:

The Chancellor announced a package of Housing Benefit (HB) reforms in his Budget statement on 22 June. It is the most significant and comprehensive reform programme for HB since the scheme was introduced in the 1980s. The background is the budget deficit and the reductions in public expenditure that the Government is making to tackle it. Ministers are clear that the overall cost of HB, forecast to be around £20 billion this financial year, must be controlled and reduced. The package of reforms will save nearly £2 billion by 2014/2015. There are also important policy considerations around fairness and work incentives that lie behind the reforms”

http://www.dwp.gov.uk/docs/issue-103-july-2010.pdf

I’ll leave aside the socio-political policy considerations around fairness and work incentives, not because they are not important or as important, and many believe they are more important as I do, but because the financial savings claimed are simply not going to materialise.  Instead I address the statement that: -

“Ministers are clear that the overall cost of HB, forecast to be around £20 billion this financial year, must be controlled and reduced. The package of reforms will save nearly £2 billion by 2014/2015.”

The definite use of ‘will’ as in the “…package of reforms will save nearly £2 billion by 2014/2015” is very assertive but highly unrealistic I argue using the latest statistics and figures. (http://research.dwp.gov.uk/asd/index.php?page=hbctb)

The £20 billion or so forecast with nearly £2bn saving sets the coalition aim of the overall HB cost to be circa £18 billion per year – an ambitious and I argue an unattainable target

At the time of the announcement of these reforms in May 2010 the coalition were working on the basis of the February 2010 HB figure which was £20.48bn and the “…forecast to be around £20 billion this financial year” quoted concurs with this.  Or simply if it is a forecast for 2009/2010 financial year then the latest figures didn’t include March 2010 and so must be February 2010 figure.

The latest (June 2011) overall figure is £22.345 billion and so has already risen by £1.87 billion.  As such the “…nearly £2 billion by 2014/2015” aim or target needs to find £4.345 billion pounds of savings to meet the target HB figure.

HB costs have risen by approximately £120m per calendar month in that time and the first reforms don’t come into effect until January 2012 (and even then with a phased implementation) and based on current trends the overall HB bill will increase by a further £840 million or £0.84 billion to reach £23.2 billion and this is £5.2bn above the target figure.  The HB reforms will therefore start from a position of being £5.2 billion and 29% above the target figure.

As I blogged late yesterday http://wp.me/p1vuvL-1y in an update to the original article there is deep hypocrisy and duplicity in the inactions of the Housing Minister Grant Shapps to regulate private tenancies, and if he did then the figures show we pay £2.7bn more for unregulated private tenancies than we do for regulated ones.  Yet in June 2010 when he announced the HB reforms Shapps ruled out any regulation of private landlords – see http://www.guardian.co.uk/money/2010/jun/10/landlord-regulation-proposals-scrapped and one can only assume this was a political decision and the economic rationale is simply not there as the official SBHE figures prove.

UPDATE 20 September 2011 – The venerable Mr Shapps has been tweeting today that John Prescott’s plan to regionalise fire services wasted £496m and thereby cost every tax paying family £20 a year.  Ergo his failure to regulate PSLs that costs £2.7bn per year at the test figures and rising must cost the average tax payer £110 per year!!

Rather Shapps has developed the contrived and ineptly named “Affordable Rent” model of social housing which will see social housing rents increase from £76.17 per week as a national average to £130.16 http://wp.me/p1vuvL-2l an increase of 71%.  So much for ‘affordable!’  As a further update as at today 16 September 2011 a report (see http://www.bbc.co.uk/news/business-14934316)  states that the national average ‘gross market rents’ have increased yet again meaning the 80% AR figure for social  lets will be £131.64 and an increase of 73% on national average social rents.

Finally, it is time for the social housing lobby to stop making argument about the impact of the HB cuts.  Yes they are offensive and will have a life-changing impact, but such arguments as to social impact are not working.  As is ever the case undermining the bottom-line financial argument made by government is a stronger argument in my view.  And as some of my earlier blogs reveal we currently spend £3.27 billion more on private tenancies than we do for the same number of council tenancies.  Joe Public is horrified with the 10 cases (yes thats all and this is 0.00002% of all cases!) out of 4.9m claimants getting over £100k per annum in HB as this amount to over £1 million per year, I’m sure they will be just as angry at the £9 million PER DAY excess their taxes pay to one type of landlord over another, and especially when they provide a lower quality product and service.

The fact that we now pay more in HB per property to Housing Associations (av. £80.11 per week) than we do to regulated private landlords at £79.45 per week just exposes the madness of paying £113.74 pw for an unregulated private tenancy.

It’s time for the housing sector to expose the financial duplicity of this coalition and hold the coalition and Shapps in particular to their oft-stated aim of getting value for money with the public purse.

non dulce et decorum est pro optimus frustro vestri patria

Rent cuts of 24% – 65% for hostels and refuges

The proposed changes to rent payments in supported housing are a real concern.  I have detailed 5 examples below and these reveal that even on a generous interpretation of the proposals that cuts range between 24% and 65% and all services become non-financially viable and will close.

All of these services currently receive less than the national average ‘exempt and supported accommodation’ rent or ESA rent of £184 per week and so those that are on average or above the national average ESA rent will lose even more.

I give worked examples below of five real services comparing their rental income now and what is proposed by these imposed DWP changes.  The scale of these reductions is stark and these huge cuts are additional to reductions in support income, the only other funding stream in all these cases, through SP cuts.

Existing payments are based on a transparent and highly scrutinised look at the costs of running hostels and refuges such as the furnished accommodation and other expenditure costs not lest being staffed on a 24/7 basis for emergency admissions and resident safety.

Proposed changes the DWP wants to implement are a flat-rate payment based on local housing allowance (LHA) to take away the complexity and ease of understanding they claim the current system has.  The options include LHA alone or LHA and a percentage on top and I have used 20% and 40% enhancements in the table below.

Table 1 – Worked examples

	Service A	Service B	Service C	Service D	Service E
Current £	£158,000	£281,000	£179,000	£552,000	£124,000
LHA only	£68,000	£153,000	£73,000	£252,000	£43,000
LHA + 20%	£82,000	£183,000	£88,000	£303,000	£51,000
LHA + 40%	£95,000	£214,000	£102,000	£353,000	£64,000
Min cut	£63,000 (40%)	£67,000 (24%)	£77,000 (40%)	£199,000 (36%)	£60,000 (52%)
Max cut	£90k (57%)	£128k (59%)	£106k (59%)	£300k (54%)	£81k (65%)

All of the above services are either homeless hostels or refuges for women fleeing violence and are necessarily furnished and have staff on duty 24/7 as they are all emergency or direct access services.

The DWP paper on ESA rent changes states that overall the impact will be cost neutral and this must mean that DWP wish to sweep money away from what it calls ‘conventional’ supported housing, which the above are, to what it labels ‘specialist’ supported housing such as provision for those with disabilities.

Yet that is perverse.  According to DWP these ‘conventional’ supported  housing services have higher (intensive) housing need than the ‘specialist’  services which have higher support and care needs.  So DWP is intent on paying higher housing funding to those services with lower intensive housing management need!

Intensive housing management (IHM) is the term used to describe the higher housing management services and its higher expenditure cost and temporary provision such as hostels and refuge provide a simple explanation.  These need:

• To be furnished – you don’t flee violence with the kitchen sink strapped to your back,
• To have each room furnished and communal areas including kitchen and laundry,
• Often open 24/7 to admit on an emergency access basis and hence need staff 24/7,
• To have shorter repair response times due to health and safety and according to HCorp guidelines
• To have higher decoration and wear and tear budgets due to turnover of residents
• To have higher all-round housing management input due to turnover of residents.

So what the DWP labels as ‘conventional’ supported housing has much higher intensive housing management costs than ‘specialist’ supported housing such as disability services (Supported Living) which doesn’t need such furnishings and are a long-term provision.  Note that under Housing Benefit Regulations (HBR) anything that becomes  the property of the resident is not claimable and only furnishings that don’t  become the residents property (such as in a hostel and refuge) are claimable and paid for.

Why will (‘conventional’) hostel and refuge provision close – It’s not just the severity of the financial reductions to rental income, or even the  added cuts such services face in its only other funding which is SP for support.  It’s the fact that even if they remodel drastically and scale back staffing they can’t fulfil their purpose.

Hostels and refuges can’t meet their purpose if they are unfurnished, if they are not open 24/7 and if they don’t have staff attendance it’s that simple.  Cuts of 24% – 65% in their housing income mean they can’t operate and  function as they need to do.  Some refuges do operate without 24/7 staffing using on-call systems out of hours I hear you say.  Yes they do but these 24% - 65% cuts to such services definitively mean savage cuts to Monday to Friday ‘office hours’ and so such refuges become non-functional.  Residents would spend longer there and so bed-block those wanting and needing to go there.  How many more would be forced to continue to be abused due to non-availability?

The DWP proposals to replace ESA rent with LHA simply can’t work for hostels and refuges (and a refuge is a hostel under HB regulations.)

The DWP’s own LHA website www.direct.gov.uk/en/Diol1/DoItOnline/DG_196239) even says that LHA is not suitable for hostels when it says “LHA direct is not suitable for everyone” and goes on to mention in a bullet point “someone living in a hostel.”

While the DWP paper on ESA rent says that a percentage may be needed on top of LHA to ensure that such services have the income they need to function reasonably the table above shows this would need to be LHA+84% in Service B right up to LHA+188% in Service E – not the figures that DWP care to admit or will pay, and remember all these services are currently BELOW the national average ESA rent of £184pw so higher levels would be needed than these!

Unless hostel and refuge providers rally together and fight this perverse and offensive and ill-thought through set of proposals from DWP they will close.