The OBC will directly break up families (short version)

I have been writing a lot about the OBC recently and with good reason.  Briefly I have said:

Unfortunately the more you look into the overall benefit cap the more that unforeseen consequences emerge and one of these is that it will directly create a need for even more houses that first thought or generally recognised.  This came to mind when working on the family break-up issue I have been drafting this week with Nick Boles comments covered in detail by Colin Wiles in Inside Housing who says “Planning Minister Nick Boles flew the flag for a step change in development this week, when he called for England’s developed area to increase from 10 percent to 12 percent in order meet the country’s future housing needs.”

A change from 10 to 12 per cent is a 20% increase and a very significant one and the CPRE rightly have concerns although I do strongly share the view they are using every emotional trick in the book not to appear NIMBY which is in fact what they are being.

Yet even CPRE don’t dispute we need 250,000 new homes per year and that generally accepted estimate needs to be revised upwards and directly because of the OBC.

In all the many posts I have drafted about the OBC I have asked a serious but up until now largely rhetorical question: Where the hell will large families live?

Briefly because HB is the ONLY benefit to be cut families with 5 or more children in social housing (SRS) and families with 3 children or more in the private rented sector (PRS) will from April next year begin to get evicted rapidly due to arrears and become homeless families with Local Authorities then having statutory duties to (a) accommodate in the meantime in temporary accommodation (TA); and (b) re-house them from TA to fulfil their statutory duties.  Yet if the OBC directly cause the arrears build-up by only cutting HB then simply placing such families back into rented accommodation will see the same thing happen again and all at the same significantly higher cost to LAs and to the public purse that TA brings.  So where are large families going to live?  The only comments and views thus far would appear to be get a job paying enough or reside in TA permanently, both of which seem highly unlikely prospects.

What the OBC will force is the direct break up of large families.

This is out of pragmatic necessity which will therefore increase the need for more housing as one family becomes two.  As the OBC will affect 171,000 families next year and I expect 130,000 or so to become homeless then we could be looking to add 50,000 or more to the new build housing need figures next year alone.  Then because the OBC will affect more families each year thereafter due to the systemic flaw in the OBC the housing need figure that is generally accepted at 250,000 per year could rise to 400,000 per year within a few years. (How CPRE will react to that is one thing. How Daily Mail / Telegraph / UKIP et al will react and in light of 70,000 less net migration into UK this year and can’t blame this on Johnny Foreigner is another!)

So why will the OBC directly cause the break-up of families?

Take the Smiths a two parent 5 child family living in a 3 bed SRS property with a rent of £120pw.

To take away the morality deflection arguments we hear so much about Mr Smith was a sole earner who recently lost his job and like many is a proud man who doesnt want to claim benefits and earned just enough to live week-to-week when working. He could equally be a lazy feckless benefit claimant of the like so beloved by the Daily Mail fraternity – the how they got there doesn’t matter its the what will happen to them that concerns me here

The Smiths up until end of March 2013 receive £463 per week in welfare benefits and get the £120pw rent paid in full by housing benefit, a total of £583pw in all benefits.  In April this is cut to £500pw because of the OBC and so they lose £83pw.  The £83pw will mean they still receive all their welfare benefits at the same rate but HB will be cut to £37pw and set against a rent of £120.  The inevitable arrears will build up leading ultimately to eviction in the SRS (and much more quickly in the PRS), the family being declared unintentionally homeless and in priority need and placed in temporary accommodation.  So where do they go from there is the question!

They can’t be placed in council housing which is the cheapest housing option as the same situation will recur and that assumes availability of very scarce council properties anyhow and of course a potential challenge to the ‘suitability’ unless homeless legislation. Yet they will be costing the local council and the public purse a comparative fortune in temporary accommodation costs whether that is in one of the few remaining council run homeless families units or in a dingy privately run bed and breakfast ‘hotel’ and so the local council will be urgently seeking a solution when there appears to be no solution.

The ONLY practical solution is for the Smiths to split up and become two households or in simple terms Mrs Smith and her 2 daughters reside together and Mr Smith and his 3 sons reside in a separate household.  Perhaps in the same street or even next door to one another yet still two separate households! That way we have doubled the number of households yet created a solution because they become a single parent household with 2 children and a further single parent household with 3 children.  Both of these will not be hit by the OBC figure of £500pw and of course the overall benefit bill also increases! Yes dear reader yet another well thought-through policy from this Coalition!!

I will discuss the issue that the OBC will directly cause the break-up of large families in more detail in a separate blog.  It is suffice for this argument to say I believe this to be a very high probability and a practical matter that will happen and what other option is there?

My concern is firstly personal for the poor sods who will be in this situation and note that will include 3 child families currently living in the PRS anywhere in the UK and 2 child families in London. This is not a high private rent issue in the capital alone it is a national issue for social and private renting tenants that impacts nationwide to 171,000 families next year alone

In practical housing terms and for the country at large, the need for new housing which all parties seemingly agree upon at 250,000 units per year will have to increase and be re-evaluated.  If my argument holds that the OBC could create an additional 130,000 homeless families next year alone (out of the 171,000 the DWP say it will affect) which it does then it could add a further 130,000 new homes to the 250,000 figure!  If just 30% of these families are forced to break up by the OBC then it adds 50,000 families to that figure in the first year (2013/14) alone.  As the OBC will affect and cap or cut benefit to more families each year then the need for new homes increases year on year IF as I contend here has to be the case, that the OBC will break-up families.

In summary, while there is some conjecture here inevitably on the numbers of households forced to break-up, the OBC will if only out of practical necessity break up families and this will add to the 250,000 new homes per year figure. I can easily see that figure rising by 50,000 per year and so in the first year this increases the new build demand by a staggering 20% alone!

I need not elaborate on how that will impact on all involved in housing.  It’s time for much more consideration by all involved to look at the consequences for housing that the OBC will directly cause in the next few years and also confirms my long-stated view that the OBC is the most damaging ‘welfare reform’ of all the raft of reforms.


4 thoughts on “The OBC will directly break up families (short version)

  1. Hi

    While I would agree with you about the impacts of this on some families I don’t see where your figures are coming from. I have been back through the October release from DWP and I can’t see the figure of 171,000 that your analysis is predicated on. You also seem to be using figures for individuals instead of households. This means that, for example, both partners in a couple are counted separately even though they are part of the same household.

    In fact the figure for households that the DWP wrote to in May is 62,680 and that seems to me to be the like-for-like figure to compare against the impact assessment figure of 56,000 families, which was based on December 2011 data. Taken together these two figures give an indication of the trends in affected claimants: an increase of 6,680 in 5 months is around 16,000 per year not the 100,000 that you got from the figure of 17,000 individuals in two months. This is because again you have used individuals instead of households and also because you have not taken account of households coming off the list whereas this is implicit in the May figure and comparison with the December figure therefore shows the “net” trend.

    If 56,000 families would result in a saving of £270M then 62,680 would save £302M and since 40% of affected tenants are social tenants the saving/arrears risk in social housing is £121M in the first year. Assuming 40% of the 16,000 additional cases per year are in social housing this adds about £13M per year to the saving.

  2. I explained the figures in my previous post here ( and they show the numbers DWP has written to are 119,000 households or so and increasing each and every month to make the 171,000 figure by end of 2013/14. I have also updated these with a new post today by looking at a FOI request given to Full Fact about the August 2010 figures (in October 2012) which show over 172,000 HB claims in excess of £10,000 per year for HB households with an average of 3 children. That is 172,000 households not individuals. A 3 child family will have just £8,800 per year left out of the cap to pay towards rent after deducting the welfare benefit amounts.

  3. Thanks Joe.

    I have read through the previous post you linked to but I can’t see the 171,000 figure. It does show though that you have compared family figures with individuals, four paragraphs down from the table it says:

    “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!”

    The 56,000 figure was familes while the 119,980 figure is individuals. The latter is also a sum of a point estimate plus ongoing cases whereas I prefer to use point estimates only because there is no estimate for cases coming out of the cap to offset against the new cases going on. Given the much larger number of in-work benefit claimants now, that will have an impact as people increase their hours/earnings. In particular if they come into Working Tax Credit then the cap will be removed.



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