Today there is an article in the Daily Mail which is titled “Jobless with big families could lose benefits” – There is no “could” about it as this is exactly what Universal Credit and the Overall Benefit Cap will do and what I have previously termed the fundamental flaw in UC.
Read the article and it says Osborne is considering stopping benefit payments for each extra child YET IT IS ALREADY POLICY AND FOR THE TORIES TO SUGGEST OTHERWISE IS A KNOWN LIE!
Very specifically the vast majority of families will lose one benefit, namely housing benefit and only those two parent families that have 6+ children will lose some welfare benefits – and they will lose HB on top of this too,
The £500 per week total overall benefit cap for families is the central issue and the starting point. From this cap the total amount of welfare benefits is deducted leaving a residual amount that can be paid for housing benefit. So if a family gets £400pw of welfare benefits then the maximum that can be paid towards housing costs is £100pw (£500 less £400).
In April 2013 the overall benefit cap comes into force and below are the welfare benefit amounts a two-parent family can claim nationally.
- 3 child family – £325.56 – leaving £174.44 for maximum housing benefit
- 4 child family – £395.81 – leaving £104.19 maximum housing benefit
- 5 child family – £466.05 – leaving £33.95 maximum housing benefit
- 6 child family – circa £534 pw – leaving zero for HB
- each additional child about £69 pw in welfare benefits
As you can see from above a two-parent family with 6 children already exceeds the £500pw cap and so will lose approximately £34pw in welfare benefit AND will not get a penny paid in benefit towards rent, or what is now paid in HB or LHA.
The OBC is a fundamental flaw as it financially penalises large families. A 6 child family will lose £34 or so per week in welfare benefits and if they are lucky to live in social housing a further £105 – £140 pw in Housing Benefit. So up until next March a 6 child family living in social housing may continue to get a total of £675 or so per week in welfare and housing benefits but the month after will lose £175 per week.
Note well this is ALREADY known to happen – so the DM article saying they COULD lose benefit either means the DM, George Osborne and IDS are ignorant of EXISTING policy or they are LYING and retrospectively realise they need to cover their backsides on this by once again blaming the vulnerable – VOX POPULI JUSTIFICATION AFTER THE FACT.
You may think the above is an extreme case but if that 6 child family is living in private rented accommodation in London and paying the already capped LHA figure of £400 pw then they currently receive £934pw or so which will reduce to £500 pw in April 2013 – a weekly reduction of £434!!!
The fundamental flaw that does ALREADY attack large families is a huge issue as work through what will happen come next April. The 6 child family in private rented (6CPRS) and the 6 child family in social housing (6CSRS) will be evicted for rent arrears as no family can afford to find £134 – £434 pw from their welfare benefit to pay rent. So what happens?
Make a homeless application, local authority will have mandatory duties and will need to place them in temporary accommodation. Leave aside the huge (added ) cost of this for a minute and ask…How can they ever leave temporary accommodation?
Even in a 6CPRS family are found social housing they still will not get a penny in housing benefit so how can they pay the rent? They cant unless they get a job. If they take a low paid job at National Minimum Wage and so qualify for working tax credit they will be exempt from the OBC. So the simple answer is work and you have a roof over your head, don’t work and you are in temporary accommodation for life.
In simple terms a large family cannot live in the lowest cost social housing unless they are working. That is the EXISTING policy…which of course assumes such larger social housing properties exist, which of course they don’t. Further, IF the NMW wage earner loses the job they rapidly become homeless as the OBC will kick in again Moreover, large families therefore become a risk too far for even a social landlord.
Imagine the impact on the children of a large family, on their education, their health, their all-round welfare…its a stark and frankly offensive thought.
Yes the same will also apply to a 3 child family living in the PRS. The OBC sees them left with £174.44 pw in LHA or £755pcm as the maximum amount of housing benefit (LHA) that can be paid.
The VOA official survey of last month revealed the average 3 bed PRS rent in England was £765 pcm so while this is higher it is only £10 pcm…still hard for a family to find but lets says – on average – this is manageable. However, London has an average 3 bed PRS rent of £1745 pcm, £2281 in Inner London and £1384 in Outer London. So in the cheapest part of London a 3 child family would need to find £629pcm to pay the rent and that is not going to happen.
If we say a 3 child family could find £30pw from welfare benefits to pay towards rent then this says a maximum monthly rent of £895 can be ‘afforded.’ The average rent price across the entire South East (excluding London) is £933 and hence unaffordable. So a 3 child family cannot afford to live in a 3 bed PRS property in the entire South East – cue the homeless pogrom and diaspora to Stoke and Hull again! (You can also add in parts of Cambridgeshire, Hertfordshire, Essex and many areas of SW such as Dorset, Bath, Bristol etc)
This is a 3 child family I am discussing here and not a LARGE family. God forbid they become unemployed!
Yet that is the real issue. As if a now working family suddenly becomes out of work and however temporarily dependent on benefits then they face homelessness very quickly if they reside in the PRS. So why the hell would a PRS landlord take the risk of a potentially unemployed person? Will this extend the increasing reluctance of PRS landlords to take on benefit claimants to working families with one wage earner?
Yes it will. It has to as the risk of that one wage-earner becoming unemployed and therefore building up rent arrears very quickly is much too high, it is a risk too far for a PRS landlord. (And no doubt an increase in letting agents fees as they take up two working references rather than one!)
Of course we then have to look at the huge cost of temporary accommodation for large families. A 6CSRS or 6CPRS family can easily exceed £1500pw nationally and even £2000pw in London. So the OBC and the fundamental flaw will catch a huge number of large families from next April and lead to a massive INCREASED cost that is higher than the existing cost which the OBC is allegedly aimed at reducing!
This also assumes that Universal Credit will operate properly too, yet note well it doesn’t start to come in until October 2013 and six months AFTER the OBC kicks in. What happens to these large families between April and October 2013…oh yes 6 months of temporary accommodation! And you thought reader that the Newsnight piece last week which showed that greater than 6 weeks was unlawful and unacceptable – how does a minimum of 26 weeks grab you!!
Dear Joe Public, you thought the Newham to Stoke issue was unacceptable! That will be a small-scale exercise compared to the huge HB and OBC diaspora this will create!
So coming to the title of this blog…just what the hell does Osborne know of this or the Daily Mail? You can bet your life IDS realises this and knows this will happen and despite this being the silly season of political conferences, todays “we-may-have-to contemplate-stopping-paying-benefits-for-each-new-child” spin is either complete ignorance by the Tories of their existing policy, which cannot hold at all, OR it is deliberate lies being placed in the Tory press by the Tory Party!
The Tory Party is KNOWINGLY LYING to the press and the public with this blame game of attacking large families. It also doesn’t affect just large families either, it affects 3 child families in the PRS, hardly a large family! Goebbels would be proud of such propaganda