Universal Credit – A RENT cap not a welfare benefit cap at all

I have posted two blogs on Universal Credit in the last 48 hours both of which have attracted a large number of views.  In fact the first blog – the systemic and fundamental flaw – has become my highest read blog ever, surpassing the SAR blogs which caused such consternation a few months back and my revealing that LHA would be frozen in 2012/13 earlier.  This has happened in less than 48 hours compared to the others and the SAR blog and subsequent discussion and debate ran for weeks and still attracts views.

A huge issue that has arose from comments and discussion on the UC systemic flaw blog and from earlier face-to-face primary research I have conducted with housing professionals is the level of ignorance of what UC and especially what the ‘overall benefit cap’  actually is and means!

‘It is not acceptable for those on benefit to get more than the average take home pay of working families’ is what the government state is the rationale for the cap of £500pw for families – They call this the ‘overall benefit cap’ and it is the central plank at the heart of Universal Credit which the government cite as a radical shake-up of the burgeoning welfare benefits bill.

It is not and the overall benefit cap is purely a rent cap – nothing more nothing less.

We already have in place today an overall welfare benefit cap.  JSA or dole and other welfare benefits are set at a national level and are the same amount whether you live in Land’s End or John O’Groats.  If a family gets £400pw now in welfare benefits they will still receive £400pw in Universal Credit there is no difference.

The ONLY difference is that now if the same family get £400pw in welfare benefits and £150pw to pay for rent in housing benefit the receive £550pw in total .  In UC they will get the same £400pw in welfare benefit but only £100pw in housing benefit.  They will have to make up the £50pw reduction in their HB –the shortfall – from their welfare benefit – nationally set at subsistence level – if not they ultimately will be evicted.

Note my example in the systemic flaw blog reveals a £99pw shortfall for a 5 child family in London and an £82pe shortfall elsewhere – huge amounts and just at UCs introduction next year. The level increases year on year!

So in September 2013 such a family will get all their rent paid and contribute zero towards it, the next week they will need to find £99pw to pay for their rent from their welfare benefit.

What is now paid for rent called Housing Benefit is the ONLY benefit that is varied in UC, it is the ONLY benefit that will be reduced.  No welfare benefit is reduced only HOUSING benefit.

The overall benefit cap is merely a RENT cap 

For some who have looked at UC the above is stating the bloody obvious yet I amazed by the numbers of housing professionals who dont realise this.  I dont know and havent met any tenants who realise this yet either.

The comments and correpondence I have had from the blogs often say Universal Credit is welfare benefit reform and universally “I didn’t realise this is what it meant”

Note:

Yes the government are trying to reduce some welfare benefits by other devices such as the ATOS test – fit for work test in simple terms – which the government state will reduce the current 2.2m DLA claimants down by 500,000 to 1.7m PIP claimants (PIP is the replacement welfare benefit for DLA) – BUT in theory concept and practise the overall benefit cap is only there to reduce housing benefit and not welfare benefits.  It is a RENT cap nothing more nothing less.

My second blog is just one probable consequence of hundreds

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2 thoughts on “Universal Credit – A RENT cap not a welfare benefit cap at all

  1. I have been saying this from the start, since the first thing you have to do is pay your rent you could end up with a family of 5 or more on £100 a week, when JSA for one is £70. The housing benefit cap can be up to £350 a week in London but that means you will only ever have £150 no matter how many in your family and thats not counting if council tax is included either.

    Where if you have a family with 9 children living in a council house in the north where rents are under £100 week they could in theory get £400 in benefits- which is the same amount they get now in income support, child benefit, tax credits etc.

    1. Yes and No.

      The first blog I reference says that a family with 5 children on the average welfare benefits for such a family will:
      – in London have to pay £99pw towards their rent, and
      – anywhere else in the country pay £82pw towards their rent

      So assuming the family with 9 children are getting what they are entitled to in welfare benefits they will
      (a) receive much less than this in welfare benefits, and
      (b) not receive a penny towards the rent costs which they will have to find from their welfare benefits else be evicted

      Both of the above are directly related to Universal Credit which comes in October 2013.

      The HB cap you state is already in place across the country though largely limited to London and the private rented sector with caps set at £250 – £400 pw for a 1 bed to a 4 bed + property

      The UC issues I describe will happen in social housing and mean that they apply to all renting tenants so a council tenant with 5 children will have to pay £99pw from their welfare benefits to pay the rent in Oct 2013 that they now get paid in full through Housing Benefit . So in September 2013 their rent is free in October 2013 it costs them £99pw in London and £82pw elsewhere, even Oop North

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