Housing Benefit under the Coalition – failure and deceit

Housing Benefit under the Coalition

Overall Costs.

  • May 2010 £20.88bn has risen to March 2012 £22.78bn
  • This is a rise of £1.9bn (£1,899,107,461)
  • In percentage terms the bill has risen by 9.1%
  • The rise of HB has been £2.851m per day
  • IF continued HB bill will increase by a further £1.1bn to stand at £23.88bn by end of March 2013 and when the overall benefit cap comes into force
  • As such HB will be nearly £6bn per year above the coalitions original target set in June 2010

Coalition HB reforms to date have not had the intended and stated effect which was reducing the overall HB benefit bill by nearly £2bn per year

Changes

  • Overall number of claimants has increased by 5.54%
  • In numbers this is an additional 263,120 and of these:
  • 180,860 have come from private sector (69%)
  • 124,180 have come from Housing Associations (47%)
  • -42,230 have come from council housing (-16%)
  • 81,750 from social housing (HA and councils combined) 31%
  • Overall a 2.48% increase in social housing claimants
  • Overall a 12.43% increase in private rented sector claimants

A very significant rise in the number of HB claimants from the private rented sector which is more than double the number of new claimants in social housing.  In percentage terms the number of private tenants newly claiming HB was 5 times that of the social rented sector at 12.43%:2.48%

Of the 263,120 increase in claimants

  • 232,340 are working (88.3%)
  • 60,940 are not working (23.16%)
  • -46,290 are on pension credit (-17.6%)
  • 16,130 are unaccounted for (6.14%) passported onto HB but no record why

Almost 9 in 10 of all new HB claimants since the election are working and this reflects Britain’s low-wage economy and shows that HB is an in-work benefit and not just an out-of-work one.  16,130 unaccounted for doesn’t hold out much encouragement for when HB becomes just one of many benefits under the Universal Credit IT system.

Of the total 5,014,650 claimants by tenure March 2012 (May 2010)

67.3% are in social housing (69.5% at election)

32.7% are in private rented housing (30.5% at election)

The increasing percentage of private rented sector claims also reflects the higher cost as HB in-payment there averages £107.04 compared with an average of £77.20 in the social rented sector.  This SRS £77.20 figures sees council average figure of £71.82pw and £81.34pw in HAs.

  • If PRS in-payment figures were paid at SRS average the bill would reduce by £2.56bn
  • If PRS in-payment figures were paid at Council average bill would reduce by £3.01bn
  • If SRS was paid at PRS rates then overall HB bill would increase by £5.26bn per year.

This £5.26bn per year is the saving the SRS produces to the taxpayer for its £1.2bn per year of subsidy or investment- something the SRS is inept at getting out in the public psyche.  Yet social housing is a simple invest to save programme and the social housing model should be looked at in purely economic terms as the ‘invest to save’ aspect above for example but always has been viewed as a political football. Strip the political dimension out of the model and it becomes the most efficient model for the chronic UK housing shortage.  Yet currently merely suggesting that gets the proposer labelled as some left-wing dinosaur wedded to a byegone age.

Of total claimants by age and cost

                     Age                                             Numbers                            Cost (£) per year

Under 25

385,010

£1.85bn

25 – 34

888,320

£4.27bn

35 – 44

962,380

£4.81bn

45 – 49

467,290

£2.37bn

50 – 54

378,810

£1.80bn

55 – 59

309,800

£1.31bn

60 – 64

334,780

£1.38bn

65 +

1,288,100

£5.01bn

The recent nonsense of proposing to ban the under 25s from receiving HB I maintain is a smokescreen for intorducing the shared accommodation rate (SAR) to social housing.  The figures used allegedly to support the proposal to ban the under 25s from HB stated it costs nearly £2bn per year.  That is correct as the above table shows the cost to be £1.85bn per year.  The cost of pensionable age HB is £6.39bn per year almost four times the cost – that is just a statistic and I am not advocating banning pensioners from receiving HB, though an interesting statistic is below.

Rent Increases by age May 2010 to March 2012

Average HB award to 65+ rose from £69.92 to £74.50 – a 6.55% increase

Average HB award to <65 rose from £89.46 to £91.40 – a 2.17% increase

We see that average HB awards to those 65 or over have increased at three times the rate than for those claimants under 65.  Does this show that sheltered housing is becoming less cross subsidised from general needs rents than in previous years, the same subsidies that Supporting People was intended to outlaw?

That said sheltered-age rents are 23% below the average rents for under-65s yet must still be subsidised from all other rents.

What percentage of working-age HB claimants are working?

This cannot be an exact answer as what is working-age?  Is it the under 65s or the under 60s?  Women retire at 60 and men also become entitled to Pension Credit at that age so some if not all male 60-65 year old HB claimants could be not working.

So if you take the under 65s to be the definition of ‘working-age’ then we have 3.726m working-age claimants of which 882,000 are in employment so it’s 23.7% of HB claimants in employment and 76.3% out of work. If you define ‘working-age’ as the under 60s we see 3.39m working-age claimants and the 882,000 in work becomes 26% in work and 74% out of work.

So 1 in 4 working-age claimants are working and 3 out of 4 are not as a good approximation. However, this excludes those of ‘working-age’ who cannot work or who are deemed unfit to work.  Interestingly only 1.8m HB claimants claim IS or JSA and so an argument can be made that only 1.8m are out of work.  This gives a figure of 1 in 3 in work and 2 in 3 out of work. Alternately you could add on almost 400,000 ESA claimants making 2.2m HB claimants out of work which gives 3 in 10 in work and 7 in 10 out of work.

So between 1 in 4 and 1 in 3 HB claimants of working age are in work is my best guess.  If that seems vague then note that DWP state that they do not collect these figures!

I have been commenting every month on the Housing Benefit (HB) statistics for some time now.  The main reason being when the coalition took office they released HB reforms almost immediately and said these reforms would save £2bn on the HB total they inherited which they expected to be £20bn per year.

The latest figures released last week detail the position at March 2012 and show the HB total cost to be £22.77bn and show rather than falling by £2bn they have in fact rose by £2bn per year. When any party of government sets targets and uses them as a rationale for cuts they risk getting egg on their face when these targets fail and it is easy (and correct) to argue that the changes brought about to attempt to make cuts were inept.

Currently HB is a separate named benefit and produces its own statistics but as it merges into Universal Credit as ‘housing payment’ we won’t see the HB stats being released as now; rather we will see total figures for UC. Even if the UC figures are broken down into ‘housing payment’ these will not and cannot be the same or used as a comparator.  This is because what is now paid as HB is the only benefit to be cut when applying the overall benefit cap.

To explain – If currently a 4 child family receives say £460pw or so in welfare benefits – which they do – and £140pw in HB they receive £600pw in total or overall benefit.  Yet when the cap of £500pw comes in they will lose £100pw.  How this works is they will still receive the £460pw of welfare benefits but only £40pw in HB.  Hence it is HB which is the ONLY benefit being cut and we will no longer be able to compare the ‘housing payment’ element of UC with what is now paid in HB. The ‘overall benefit cap’ is more correctly labelled a rent cap as that is what it is.

Nice and convenient for the coalition as the stated aim of reducing HB by £2bn cannot be disproved after next year.

SOURCES & NOTES (In response to requests)

Latest HB figures released 20 June here from which facts above are derived.

(a) Overall costs – look at table 4 and 5 – these give claimants numbers per month from Nov 2008 to latest (Table 4) and average cost per claimant (Table 5).  Simply multiply the 2 to get weekly £cost figure then multiply by (365.25/7) to get yearly cost.

(b) Also the HB stats breakdown detail of numbers of claimants by tenure every month (Table 4) ie how many claimants in council, HA and PRS etc.

(c) Also breakdowns by age and costs by age (Table 9a)

(d) Table 6 has numbers of claimants in work and also what passported benefits being received showing that at May 2010 650,550 no-passported claimants in work (cell E30) and (cell E54) shows 882,890 the figure for March 2012

(e) Table 2 gives the breakdown by local authority area of claimants by local authority area so you can check your own locale if you wish.  For example since election numbers of claimants has increased by 3.26% in Great Britain but by 9.93% in Ipswich – make of that what you will.  Or that the lowest is -4.15% (a decrease) that just happens to be in Housing Minister Shapps’ deputy Jake Berry’s constituency

(f) Or Table 3 which breaks down percentage of claimants by tenure in each constituency.  This will means that Blackpool with 72% of claimants from PRS has a very different housing policy and strategy from say Welwyn (Shapps constituency!) with only 12% of claimants in the PRS.  The national average is at 32% in PRS.

Finally you can make of these what you will but as I mention above because HB as it is now will be incomparable with ‘housing payment’ in Universal Credit their use will soon be limited not to whether the govt has achieved its aims but more on issues like point (f) above in determining response to the many challenges the welfare reforms creates for the housing sector.

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