Overall Benefit Cap – It should be abandoned not just delayed

I spent much of 2012 arguing successfully that the overall benefit cap or OBC:

And have many other impacts including it will directly break up families out of financial necessity and others all of which are negative.

Now it has seen its April 2013 introduction delayed until the summer (it’s as vague as that) and from April 2013 will be piloted in 4 London Boroughs which we are told is where it will impact the most. That last statement has to be false and there are many more London Boroughs where the OBC will impact much more severely as I explain below.

The four London Boroughs chosen see 1 in Inner London which is Haringey (39% – 14,480) and 3 in Outer London, namely Bromley (30.61% – 5,960), Croydon (48.16% – 17,450) and Enfield (53.74% – 18.470) and the numbers here are the percentage of all HB claims in payment in those areas and the numbers of them in the private sector.  The national average from the official HB statistics (see Table 3) is 32.7% with 67.3% being paid to social landlords and can be as high as 72% private landlords in Blackpool.

The Outer London Boroughs simply cannot hold the most affected by the OBC as many other boroughs have (a) a higher percentage of PRS claimants and (b) a higher number of PRS claimants.  For example:

Brent is (45.04% – 17,290) in the private sector – compare that with Bromley with 30.61% and 5,960 claims and Brent must have far more claimants likely to be affected by the OBC than Bromley.  Apart from a 50% higher percentage of private sector LHA claims it has 3 times the number of claimants at 17,290:5,960

Merton at (58.4% – 7,820) Ealing at (43.14% – 13,970) and Harrow (58% – 9,630) must also have a higher likelihood of PRS tenants caught by the OBC.  There are a few more but the point is made and begs the question…How can these be the 4 London Boroughs most likely to be adversely affected by the OBC?

Of course what is also self-evident from the above and I have never seen in any analyses of any of the ‘welfare reforms’ is the social and private rented split and this is important.  Forget the welfare reforms for a second and imagine you are a Housing Strategy Officer who has worked in Welwyn (Shapps’ constituency) where the split of rented housing is 88% social and 12% private and you move to Blackpool to take a similar post yet the split there is 72% private and only 28% social rented housing.  All of the strategies you put in place for allocations in Welwyn will not work at all in Blackpool given this fundamental change in the composition of the local housing market.  The same of course goes the other way around.

On a more general scale and can be seen in the English Housing Survey London’s housing market is an anomaly.  It has approximately 50% of property owned or mortgaged compared with 67% in all other UK areas; it has 25% social housing which is 50% above the national average of 17%; and it has 25% privately rented which compares to 17% again across the UK and is also 50% above the national average and housing market composition of every other region in the country.

One of my major bugbears – and not just because I’m a Northerner – is that national housing policy tends to be dictated by the perverse London housing conditions and issues.  That is simply madness yet doesn’t change at all even with a new government…in short it is an apolitical point.

Yet even when a housing policy is called into question, and make no mistake the OBC is a housing not a welfare issue as the ONLY benefit ut is housing benefit, as it has been her with the OBC and the coalition have delayed it by putting in place a pilot study, it still chooses a London-centric pilot area.

Why not include areas such as Trafford in Greater Manchester?

Trafford is out of kilter with the rest of the Greater Manchester authorities and not because it has a high percentage of PRS claimants, in fact it only has 26%, but because its PRS rent levels from the official VOA figures show its PRS rent levels are over 45% higher at £766 pcm than the Greater Manchester average of £527 pcm – a huge disparity.  As such Trafford is the ONLY area not just in Greater Manchester but in the entire North West of England that has average PRS rent levels above the national average.  Hence the OBC will impact there very differently to the rest of the North West.

I could have used Cambridge City compared to Cambridgeshire or York compared to Yorkshire and a few others for the same point.  We have a massively complex housing market composition with many distinct variables so even if the pilot study for the OBC was not just limited to London – surprise, surprise! – it would still fail to reflect what will happen in many pockets of the country.

I could have used Torbay at 70% instead of Blackpool in the PRS/SRS split too or Thanet (61%) or Shepway (57%) in Kent which has 34% PRS claimants overall and near the national average of 33%.  These two areas stick out like sore thumbs in Kent and the same is replicated in many areas across the UK.

So, in summary, if the OBC pilot areas do like the direct payment pilot areas do and show a massive change from the coalition original impact assessments (and those pilots all exclude likely non-payers too and so are contrived) the use of pilot areas needs a lot of caution.  The simple truth is the OBC is so ill thought through it doesn’t need a pilot study or a delay, it needs to be halted immediately.  There are so many holes in its theory and whats more the Pickles letter reveals the coalition knew it would cost more than it could ever save back in July 2011 yet they are still pressing ahead with it.

Yet as I have argued successfully it will cost more to the public purse, it will also harm the tenant, harm the landlord (social and private) and it will harm the economy, and it will harm the electoral chances of the Tories who developed it.  So why the hell is it going ahead?  There can only be one reason and that is the coalition thinks Joe Public are gullible and by the next election will still believe that a benefit cap saves money.

Joe Public is not as gullible as you think IDS!

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