Social landlords are stupid enough to let the Tories kill off social housing as they simply don’t get what the welfare reform policies are all about. None more so than the Overall Benefit Cap which social landlords stupidly believe is only a problem for the private landlord and in high rent areas. Here is why social landlords are that stupid and why their apathy and lack of thought and lack of challenge will see the social housing model as we know it now disappear. Time social landlords got angry and time they got off their backsides to challenge the highly dangerous and ill-conceived welfare reform policies rather than say there is nothing we can do! Read on.
The Tories are set to announce that the overall benefit cap will reduce from £26,000 per year to £23,000 and thus ensure the end of social housing as we know it. It is about time the apathetic social housing sector woke up and smelled the coffee as this proposal means they can no longer AFFORD to accommodate the same families they do now and they cannot AFFORD the risk of accommodating any family with 3 or more children.
Tens of thousands of families will have their benefits slashed by up to £60 a week under a new welfare cap, David Cameron will propose today.
Households would be unable to claim more than £23,000 a year in handouts for housing and living costs if the Conservatives win the next election.
And jobless youngsters would be stripped of benefits altogether under radical plans to save £300million.
Two years ago I spoke at a number of housing conferences in Birmingham and London and I told each audience that the overall benefit cap (OBC) would mean they could no longer afford to accommodate the larger family. That argument was supported with detailed figures and based on the assumption then that the cap figure of £500 per week would rise with wage inflation and rents and welfare benefit levels would rise faster than this – the systemic flaw in the OBC I developed in 2012 which has not been disproved and cannot be.
The proposal to reduce the cap figure to £23k of £440 per week is an 11.5% further drop and makes the position of social housing so much worse than the systemic flaw I detailed.
The posit that social housing could not afford to house the larger family went down like a lead balloon with these housing audiences who (a) maintained the OBC only affected private rented housing and then only in the like of London and this is despite the OBC impact assessment saying 46% of those affected lived in social housing; and (b) social landlords maintaining that it is our ethos and we will always house those most in need – a laudable principle yet one that social landlords cannot sustain financially with a £26k cap and at £23k per year means radical change and the end of the social housing model as we know it.
Let’s look at the very basics of the OBC and social landlords once they see the figures this reduced cap figure gives WILL get the point that they cannot AFFORD to house the larger family any longer.
The overall benefit cap – How it works
How the cap works is very simple as you start with the cap figure and then take away the amount of welfare benefits received to leave the maximum residual HB or LHA that is payable. With the current £500 per week cap take away the £396.69 of welfare benefits received which leaves a maximum and residual HB contribution of £103.31
The £396.69 per week is an exact figure which is the national amount of welfare benefit a couple with 4 children receive and note well that welfare benefits are at the same level whether you live in Land’s End or John O’Groats.
The £103.31 maximum HB payable will now reduce by a further £60 per week as the cap figure reduces from £500 to £440 per week and we have a couple with 4 children getting a maximum HB amount of £43.31 to pay for rent.
That couple cant afford social or any form of housing with the obvious outcome of get a job or get evicted.
Couple with 3 children – This 2 Parent 3 child (2P3C) household receives £330.32 in welfare benefits leaving £109.68 per week as the maximum HB payable if and when the cap figure reduces to £440 per week. That will afford most social housing in the provinces, unless this household lives in an AR tenancy or in London.
The 1 parent 4 child (1P4C) household – receives £355.43 in welfare benefit leaving £84.57 as the maximum payable in housing benefit which is unlikely to cover rent in any social housing property across England.
Other factors play a key part to for social landlords.
The introduction of direct payment to the tenant that in and of itself creates huge financial risk to the social landlord needs to be viewed even more circumspectly in this reduced cap context.
Monthly payment of benefit to the social tenant and the ability of managing money is another factor.
The increased demands on social landlords as private tenants will undoubtedly be evicted and local councils will only be able to place these homeless families in social housing as that is the only suitable provision. The 2P3C household with a maximum HB of £109.68 per week cant afford private housing right across the country.
The 2P2C household will have a maximum HB/LHA entitlement of £176.04 which will afford a social housing rent for a 3 bed property yet is not enough for a 3 bed private rented property right across the whole of the South East, Oxfordshire, Berkshire, Bath, Bournemouth, Hertfordshire, Southampton and Edinburgh to name but a few. Such 2 parent 2 child households will undoubtedly be evicted from the PRS and local councils will be demanding social landlords take these homeless families. Yet what if they then have another child and their maximum HB reduces from £176.04 per week to £109.68 per week?
Forget any moralising here that such a family should not have any more children as quite often many children are unplanned and these things happen. The same issue can be seen with a working family with 3 existing children and one on the way and then the lone breadwinner loses his or her job. Or the sole breadwinner gets sick or is disabled with diabetes or COPD or some other issue – their social housing tenancy becomes hugely at risk and it is these risks that social landlords have to look at very closely rather than brush aside the overall benefit cap thinking wrongly this is only a high rent private housing matter.
Of course what the benefit cap reduction means is that the public purse pays out more in temporary housing for those made homeless. Yet central government don’t give two hoots for that as this is just (another) transfer of cost and financial risk from central to local government, yet still a public purse cost increase. Social landlords who are not council landlords are and will be coming up with more and more ways to put two fingers up to councils who will want these housing associations to take these higher risk cases – not because HAs want to do that, but because they will have to do that in order to survive financially!
Yes the relationship between councils and housing associations is going to become very strained with the OBC reduction and is yet another example of how the welfare reforms are a direct attack on the social housing model itself.
And of course the systemic flaw is still there too as it appears highly unlikely that the cap figure will rise along with wage inflation or rise at all. Then throw into the mix that the Tories are proposing to increase HB by just one per cent from 2016 onwards regardless of how much the landlord increases the rent level. Yes that means no social tenant will be getting full rent paid and the social landlord will have to incur far greater rent collection costs too to get this shortfall (a mini bedroom tax anyone?) from all tenants including the pensioner – and I can’t see social landlords harassing them with red-inked letters as they have done with the bedroom tax household can you?
To cut to the chase the social landlord is in the shit if the Tories are not voted out and the benefit cap is reduced to £440 per week. The social landlord will have to become acutely risk averse and cannot afford to house the larger family household as they do now and do now in massive proportion to the PRS.
These dimwitted Tories with their back of a fag packet policies are dictating that social housing no longer takes the type of households that social housing is now the only option for. So where will such households go? There is nowhere for them to live! Outside of sterilising every female or selling the odd child to Madonna in order to keep a roof over one’s head where the hell will such families live!!!
Get a job or get evicted – I don’t care if you’re disabled – get a job or get evicted – I don’t care if your child is disabled and you have to care for them – get a job or get evicted – I don’t care if you are your partners full time carer and you are saying the public purse hundreds of thousands – get a job or get evicted!
That is Tory policy – get a job or get evicted – cue unscrupulous employers rubbing their hands with glee as the cannon fodder of National Minimum Wage workers has just grown dramatically so they can expand dramatically just as workfare expands as God knows how many more households will get sanctioned and social housing becomes ever more a financial risk too far and social landlords have to red-ink and doorstep the social tenant just as the social tenant takes control of the payment of rent with direct payment!
So dear social landlord, if you think the benefit cap only affects private rented properties in high rent areas keep making the annual pilgrimage to Cloud Cuckoo Land!
I haven’t discussed the even more naive proposal to stop HB to 18 – 21 year olds as the proposal is bizarre and under developed. The Daily Fail suggests this will affect 30,000 single people yet that bears no correlation to the number of 18 -21 year old claiming HB currently as they record 130,361 single people under 25 with no child dependents and also 14.207 couples under 25 with no child dependents making 144,000 or thereabouts. The 18 – 21 year olds should make up 4/7ths of this figure or about 82,000 of them so how the 30,000 figure is arrived at is anyone’s guess and a clear and obvious guess of the Daily Fail and the Tories.
Yet as PRS landlords will stop housing any young person because of this and also because such a policy is an incentive to have a child in order to get a roof over ones head….Yes you begin to see just how fucking naive and stupid this policy is too don’t you reader!
No need to say it also means 16 – 21 year olds can pay tax but not get HB; that soldiers injured and unable to work can’t get HB; that single women aged 16 – 21 can’t flee domestic violence and abuse as a refuge can’t afford for them to stay there given they will get no HB….oh and what about all those non-dependent deductions your tenants with 18 – 21 year olds at home will now get and they cant afford the rent?
Yes its a really fucking insanely stupid idea isn’t it reader and one dreamt up because the Tories believe the general public are stupid enough to believe their myth and spin about the benefit claimant …which the general public and the social landlord have done bugger all to challenge when they should have done… Oops this is turning into a rant…just as it did two years ago when social landlords ignored what the OBC means and told me that their ethos will mean they will always house the vulnerable!
Naivety writ large. Apathy writ large. Inability to see the woods from the trees writ large. Oh but please carry on blaming this messenger and carry on developing AR units with foundations in quicksand as it mirrors your abilities in thought over the benefit cap.
Stop and think social landlord. I rant because I am angry at what ill-considered and highly dangerous policy is doing to social housing. You should get bloody angry about it too!