I have no doubt tomorrows media will focus on headline grabbing aspects of Osborne’s Spending Review such as having to wait a week for dole and all other benefits when you lose your job: The Wonga week as it has already been dubbed as the pay day loan sharks will further crawl out of the woodwork (and presumably donate more to Tory Party coffers as well!)
Yet the real key issue in the spending review is the death of the social housing model which Osborne confirmed today when he put the final touches to the benefit cap and that is not hyperbole!
This will also totally f*ck the British economy but given the Daily Telegraph called Osborne the incompetent innumerate perhaps that is not surprising at all. Yet what will surprise is if social landlords recognise just how much Osborne has f*cked over social housing today with the detail on social rent increases (CPI no longer RPI) and the overall benefit cap the OBC will rise with wage inflation (AWE).
Could a benefit couple with 2 children living in a 2 bed council flat in London afford to pay £53 per week at today’s prices towards their rent?
Of course not as this is 20% of their welfare benefit and at least triple the average bedroom tax in London. Yet that is what today’s announcement from Osborne in the spending review will mean in 30 years for the social tenant.
This also means:
- A couple with 2 children cannot afford the cheapest rent
- A social landlord cannot afford to house such a family given the risk of arrears
- Where the hell will such a family live if they lose work or are on benefit?
- Yet no doubt social landlords will still continue to build 3 bed houses today and will not adjust their business plans which need to look (at least) 30 years forward.
And you thought the overall benefit cap which begins in 3 weeks was about large families and only affected the high rent private tenant and despite the fact that DWP figures show 46% of those affected are social tenants?
Of course it means that if such a family was living in higher privately rented housing they cannot afford to lose a job and will not be given a private property to rent if they are on benefits. It means employment MUST pay enough to see those working afford even the cheapest rents and so wages will have to rocket to do this, yet that won’t happen and can’t happen with any reality. So where the hell are families on benefit going to live?
The private rented sector is definitely out and the social landlord can’t afford the risk of arrears by expecting an increasingly smaller sized family to top up their social rent with 20% of their ever reducing welfare benefit.
Note that from next month when the overall benefit cap starts the same 2 parent 2 child couple in a London council flat will receive £390 per week in welfare benefit AND Housing Benefit, or over £100 per week BELOW the cap figure!
For those who want to check out the numbers this is simple. The amounts of welfare benefit each family composition receive is easy to find and a national figure. We knew before today that welfare benefits are to rise by 1% over the next few years. Today Osborne revealed the cap figure will rise by wage inflation known as AWE and currently 0.9% and also revealed that social rent setting formula will become CPI plus 1% and CPI is currently 2.4%.
For those who struggle with numbers and because rent levels rise faster than the cap and welfare benefits – the systemic flaw argument I developed last year – in simple terms it means (a) more and more social tenants will get caught by the overall benefit cap each year; (b) smaller family units will get caught each and every year; (c) the risk of rent arrears to social landlords increases each and every year; and in very simple terms the social housing model is well and truly f*cked
Outside of London and from next month when the overall benefit cap begins a 2 parent 5 child family (2P5C) will need to find £69 per week from their welfare benefits to top up their social rent. By 2020 that becomes £114 per week. Such a family cannot afford ANY rented housing and so lose a job or already on benefit becomes an arrears eviction and homeless.
A 2P4C family outside of London will be about £9 per week under the cap when it begins next month yet by 2020 will have to find £22 per week to top up their social rent. (In London this becomes £38 per week or more than double the bedroom tax!)
By 2025 this becomes £62 per week in the provinces and £87 per week in London – that is homeless and the 2 parent 4 child family can’t afford the cheapest social rent.
By 2027 the 2 parent 3 child family will have to top up their social rent in the lowest rent area (the provinces) yet the London social renting family will need to find £67 per week by that time and again cannot afford to live in social housing and all because of the benefit cap and its systemic flaw.
Social landlords develop new properties and need to project rent levels far in advance to make the finances stand up and borrow. They project rental income over a 30 year to 60 year period as this is the lifespan of a rented property and that is obvious and hardly rocket science to any non-housing reader and makes sense. Yet the systemic flaw argument I first developed last year within the overall benefit cap and confirmed with Osborne’s detail today means that the position in 30 years time in 2043 is alarming and no social landlord will be able to finance developments as the numbers just don’t stack up!
I could dazzle the reader with huge amounts of figures for every different family unit that will happen in 30 years time in 2043. Yet one suffices and that is for the 2 parent 2 child family who we know today will struggle to pay the average £18 per week bedroom tax deduction in London will need to pay £137 per week towards their rent – and that is in today’s figures.
In other words a 2 parent family with 2 children cannot afford social housing and a social landlord cannot afford to house them – so where are they going to live Mr Osborne?
- It means nobody on benefit will be able to afford to rent. So where will they live?
- It means any social landlord who is planning to build now would be naive to build 3 or even 2 bed properties.
- It means social landlords cannot afford to house any tenant on benefit.
- It means social housing is dead as a dodo.
It also means George Osborne is not just the incompetent innumerate that the Daily Telegraph called him; it means he is a buffoon. It means IDS is not just an idiot with his overall benefit cap policy it means he is a dangerous idiot. It means this coalition central government seek to transfer huge cost to local councils as they will have to pay for the cost of accommodating homeless families and the number of homeless families will equate to the numbers out of work – or from 53,000 or so today to millions in 30 years time as it means no job no roof over your family’s head.
Doubtless Lord Fraud and IDS will now promote this as Tory full employment policy!!
And doubtless social landlords will carry on saying we are worried about the bedroom tax and remaining blasé about the overall benefit cap. Carry on with the affordable rent model with its 60% higher rents which make the above nightmare scenario must worse and much quicker to come to fruition. And doubtless carry on with developing 3 bed houses and ignoring the bellowing elephant in the room!
Or are they too busy at the CIH conference proclaiming social housing is a priority for this government?