The Overall Benefit Cap will cut or cap 3 times the number of tenants than the figure the DWP estimated it would just 3 months ago in July 2012. As the OBC will ONLY cut or cap HB and not any welfare benefits (unless you have 6 or more children) then this is a huge risk to rent arrears. The detail I discuss below:
The Overall Benefit Cap (OBC) I have called the most punitive of all the welfare changes. Specifically I have said it holds a fundamental flaw in that the crudeness of the cap punishes large families and secondly that the systemic flaw means more and more smaller families will be hit by the cap each year. Collectively I have argued the OBC is a greater risk to arrears and eviction and homelessness than other welfare ‘reforms’ such as the bedroom tax or direct HB payment to tenant rather than landlord.
Today I note a DWP release of information concerning letters DWP have sent out to those they believe will be affected by it. The attached spreadsheets contain an interesting table which I reproduce below:
|Mail shot exercise|
|GB breakdowns||May-13||Jul-13||Sep-13||Total contacted|
|1 to 4 Children||52,850||10,070||10,730||73,650|
|5 or More Children||24,190||4,070||4,760||33,020|
|Couple With Children||47,130||9,460||10,860||67,440|
|Couple With no Children||740||260||160||1,160|
|Loss – Up to £50||35,600||9,360||9,610||54,560|
|Loss – Over £50, up to £100||20,350||3,900||3,740||27,980|
|Loss – Over £100, up to £150||11,660||1,730||1,770||15,150|
|Loss – Over £150||18,220||2,080||1,980||22,280|
|Unknown Tenure Type||4,420||320||190||4,930|
There are a huge number of avenues of analysis from the above and in general terms we see 89% of those affected are families and especially larger families with 5 children or more. This is hardly news as a 2 parent 5 child family getting full their full welfare benefit entitlement will receive about £463pw thus leaving only £37 or so per week as the maximum allowable towards paying rent. It supports strongly the fundamental flaw posit I have repeatedly made and also the point I have repeatedly made that the OBC is nothing more than a housing benefit cap as HB (or LHA its private sector variant) is the ONLY benefit to be cut or capped.
Social landlords may (?) have a family composition breakdown of existing tenants which would show for example how many tenants have 5 children or more. I doubt this would exceed 5% of tenants yet over 20% of those affected by the OBC will be these ‘large’ families and the fundamental flaw becomes apparent in context. What will really worry them however is that 61% of those DWP see affected by the OBC have between 1 to 4 children, small or smaller families, though it is unfortunate (and perhaps deliberate?) that the DWP figures don’t break this down any further. Why DWP didn’t break down this 73,650 figure into 1, 2, 3 and 4 children and by tenure type I will leave with you to consider as it would have provided much more interesting data on which landlords (social and private) could have used as meaningful information.
It would also have exposed the real risk to arrears that family composition has for private and social landlords which will affect allocation policies in social landlords and undoubtedly so in the PRS. It may come as a surprise to some that 45% of tenants affected are in the social rented sector (SRS) as they errantly believe the OBC will only affect private tenants with the much higher rent levels in the PRS. Yet the last impact assessment of July 2012 had SRS tenants at 46% of those affected.
However this last OBC impact assessment had just 56,000 persons affected and this one just a few months later has 119,980 affected more than double the estimate of just 3 months ago!
This is a chronic case of underestimation by DWP officials (ie chronic incompetence) and it also means that parliament has NOT given this policy any semblance of correct scrutiny, more correctly parliament has not had the opportunity to scrutinise the OBC for what it means in practice!
Perhaps now social landlords WILL look at the OBC and realise the OBC is a far bigger threat to them through arrears than the bedroom tax and direct HB payment to tenants as I have stated repeatedly? Wake up and smell the coffee indeed!
They they should and also recognise the systemic flaw posit which makes this starting position much worse over time and is also revealed in even these ‘abstract’ figures which makes the risk of arrears (social landlord problem) becoming eviction (a local government problem) and then homelessness (a local and central government problem particularly with cost).
When the DWP drill down into its data to send out the letters every two months they see an additional 17,000 persons affected each time which when extrapolated suggests an additional 100,000 tenants affected by the OBC each year! This is the systemic flaw in operation though even I did not see it as starkly as this!
Perhaps I am over-egging the figures here and it is more to do with the lack of quality of DWP data and I tend to agree with that. Though think on that for a second and you see the nightmare of all the welfare reform policies and especially the Universal Credit policy due in October 2013 – DWP data is wholly inadequate and the mistakes this will create in terms of errant benefit payments is a nightmare!
In political terms the more than doubling of those affected by the OBC in just 3 months reveals that the policy is unbelievably ill-thought through, has not been subjected to any real parliamentary scrutiny and was issued by the coalition without them knowing what the consequences were. That, in apolitical terms, is a disgrace and is inept governing that is also an affront to democracy in its lack of scrutiny.
Let’s talk about numbers and savings. The July 2012 impact assessment had the OBC broken down in Chart 2 on page 11 which projected a £270m saving in 2013/14. If we use the same average figure of £93 pw cut this becomes in today’s version a saving of almost £582m in the first year to government, and of course £582m more of an arrears risk to landlords.
It means the DWP estimate in July 2013 just 3 month ago has increased by 116%!!!
For social landlords who thought that only 25,760 social tenants would be hit (46% of the 56000) it is now 53,460 tenants (by September 13) – more than double and rising by 4217 per month to make over 78,500 by March 2013 – or triple the estimate of just 3 months ago.
3 times the number of social tenants will be hit next year by the OBC than the DWP said just 3 months ago!
Extrapolate that and it is 100,000 social tenants hit by the OBC by September 2014!
(Better throw a stiff whisky in that double espresso!)
What may go unnoticed is that 2,550 people in Temporary / Short Term Accommodation will be hit by the OBC. A comparatively small number yes but TA can only mean single homeless, homeless families or refuge residents. What else can it mean? And what about double this number in “Unknown tenure type?” What does that mean apart from the DWP have chronically incomplete data…upon which this coalition are basing policy which will affect some incredibly vulnerable people…
What about 12,160 single people being affected by the OBC? Where are they and who are they? £250pw LHA cap on a 1 bed property in London and £71pw dole only makes £321pw of the £350pw cap. Oh they are only single people Joe who give a stuff…Quite!
In summary the DWP have this data and can release it without any risk to the anonymity of those involved. Yet that would just prove their incompetence even more but would allow landlords, social and private, to make much more informed decisions and it seems DWP must be scared of the consequences which would likely see all landlords becoming much more risk averse in their allocation policies.
Now who do we know that is good at getting FOI releases from the DWP?
UPDATE 14th November 2012
I have just seen the slides from a presentation given by the DWP to the South West Observatory conference yesterday – the date is important. The link to all slides is here
At this link you will find a powerpoint presentation by Alan Sullivan, Managing Consultant, Universal Credit Prgramme, Department for Work and Pensions whom you would think would know how many people would be affected by the OBC. From my reporting of the DWP notice on 18 October – 25 days ago – that the DWP spokesperson would know the figures the department that employs him releases wouldnt you? Yet in his presentation he says it will be 56,000 and not the 171,000!
Please see slide 7 of his presentation below
the benefit cap will be introduced from April 2013 and will apply to the combined income from the main out-of-work benefits, plus Housing Benefit, Child Benefit and Child Tax Credits
•the benefit cap levels will be:
–£500 per week for couples and lone parents
–£350 per week for single adults
•56,000 households will be affected by the cap in 2013/14
•the average benefit reduction is £93 per week per household
I dont need to comment on this incompetence / errant information do !?