Cameron announced two policy changes should the Tories remain in office after the May General Election. That the overall benefit cap figure would reduce from £26,000 per year to £23,000 per year and secondly that all those under 21 would be banned from receiving Housing Benefit if they are in receipt of JSA.
These are hugely significant in their impacts and this post looks at in length, and unusually, for a blog prompts the need for a short executive summary.
The decision to reduce the overall benefit cap from £26,000 to £23,000 per year will mean that:
- Social landlords are no longer able, financially, to accommodate any family with three children or more anywhere in the country
- London social landlords cannot afford to accommodate a single parent with two children.
- Many tens of thousands more social tenants will be evicted
- Many thousands of single, ie childless, women not being able to flee domestic violence and abuse and be effectively barred from entering refuges
The decision to ban those aged under 21 from receiving Housing Benefit will mean:
- Greater risk of arrears for existing tenants through non-dependant deductions
- Greater levels of anti social behaviour in social housing
- A huge increase in Housing Benefit cost as homeless temporary accommodation rockets
These are just some of the inevitable consequences and I focus upon the affordability issues for social housing as these two policy changes alone, and ignoring all other contextual cumulative factors such as bedroom tax, council tax replacement schemes etc., will lead to a massive cultural change that will see the end of the social housing model as we now know it.
Social landlords will NOT be able to afford to accommodate the tenants it now does and this is a huge increase in the ill-considered political attack this coalition has placed on the social housing model through its welfare reform (sic) policies.
In October 2012 I gave a presentation at a CIH South East housing conference in which I said the overall benefit cap means social landlords would not be able to afford to accommodate the social tenant. This was met with the response that social landlords will always house those in need as that is what we do, what we were set up for and is our ethos, etc., as you can imagine. Yet, I was right then despite the unpopularity of the message and Cameron’s announcements today not only confirm that, they mean it will happen much quicker and affect even more current social tenants too.
- The overall benefit cap (OBC) does not and never has been limited to the private rented sector in high rent areas such as London. According to DWP figures 44% of all OBC affected tenants are social tenants and they stated as much in the (purported) impact assessment issued over a year before it was fully implemented.
- The OBC is now set at £500 per week for families and 70% of that or £350 per week for single persons. Cameron announced today that should the Tories remain in power the OBC figures will fall to £23,000 per year or £440.79 per week for families and £308.56 for single persons.
- The way the OBC works is to take the cap figure and deduct from this the amount of certain welfare benefits leaving a maximum residual amount of benefit payable as housing benefit.
- Those welfare benefits I have tabled below according to household composition and these figures are national figures and include the 1% uprating for the 2015/16 financial year.
- Note too that social housing is where the majority of those ‘workless’ – the sick and disabled and those seeking work – reside and the figures apply right across the country as these welfare benefits are the same in London as in Land’s End to John O’Groats.
The table below quickly reveals many obvious impacts for the social landlord and the social tenant in terms of future allocation and for existing social tenants with many more likely to be hit by the OBC.
Some not so obvious yet inevitable impacts will also occur and it should be noted too that Cameron also announced no HB for those aged 18 -21 who are in receipt of JSA which will impact on social housing as many such tenants are forced to give up private rented accommodation and return to the parental household (when possible) leading to existing social tenants having new non-dependant deductions and thus become an increasing arrears risk..
|Household Composition||Welfare Benefit (£)||Residual HB (£)|
|1 Parent 1 Child (1P1C)||£158.39||£282.40|
|2 Parent 1 Child (2P1C)||£200.26||£240.53|
|1 Parent 2 Children (1P2C)||£225.55||£215.24|
|2 Parent 2 Children (2P2C)||£267.42||£173.37|
|1 Parent 3 Children (1P3C)||£292.70||£148.09|
|2 Parent 3 Children (2P3C)||£334.56||£106.23|
|1 Parent 4 Children (1P4C)||£359.86||£80.93|
|2 Parent 4 Children (2P4C)||£401.72||£39.07|
|1 Parent 5 Children (1P5C)||£427.01||£13.78|
|2 Parent 5 Children (2P5C)||£468.87||**|
** The 2P5C household will lose £28.09 of welfare benefit and receive zero HB
Note: – All figures assume no bedroom tax element
- Existing social tenants will see an absolute cut in their welfare benefit income and will not receive any HB at all. This household will quickly fall into arrears as their income has reduced by £31.13 per week and possession actions and eviction will inevitably flow
- Existing 2P4C households can quickly become 2P5C households with a planned or unexpected pregnancy and that factor has to be considered. That also applies to the 1P4C and 1P5C households.
Allocation policy for future tenants?
- Given the two simple and obvious points above Registered Providers will have to become much more risk averse to the allocation of social housing out of financial practicality and not out of design.
- The ethos of the social landlord changes rapidly and it DOES become a situation that RPs cannot afford to accommodate existing or future households of this size.
- Even prospective tenants of this household composition with 1 working parent become an increased risk with the level of job insecurity and the stark increase in zero-hour contracts
The above applies right across the UK in low rent areas and high rent areas whether the tenure is traditional social rent or the AR model and means that ALL registered providers cannot afford to accommodate the 2P5C family or the 2P4C household and even if they currently work.
Extend that to the current 1P3C household who the table reveals in 2015/16 will have up to £148.09 payable in Housing Benefit. The 1P3C household is one pregnancy away from becoming unaffordable to accommodate by any social landlord in low rent areas of Liverpool or the North East or Scotland etc.
The 1P3C household is already in danger in London and other high rent areas and across the country where AR is at play. Such a household will need a 3 or a 4 bed property and the maximum HB payable will be £148.09 per week.
If we look at the HCA Statistical Data Return issued in September 2014 we find that 4 bed AR properties in low rent Sefton in Merseyside being more than this figure and in a higher rent area such as Brighton are over £200 per week. So any family composition that would be allocated a 4 bed from a 1P3C upwards will not be able to afford and the landlord would not be financially able to allocate such a property to.
In London we find many 2 bed AR level of £273 per week which would see a single parent with 2 children be unaffordable to house for a registered provider as the tenant would need to make up £58 per week towards rent from their welfare benefit.
Let me state that again for effect.
The benefit cap reduction planned by the Tories post the May 2015 general elections means that a registered provider, a social landlord, operating the AR model cannot afford to house a 1P2C household in a 2 bed property in London.
This is a massive cultural change for the social landlord and social tenant and I return to my opening discussing the OBC at a CIH conference back in 2012 and the still and errant notion among many social landlords that the OBC only affects the private tenant and in high rent areas. That errant dismissive notion needs to change.
The HCA’s Statistical Data Return gives average social rent figures for all LA areas which typical sees a 3 bed London social rent at circa £140 per week and the national average will be just under £99 per week at 2015/16 figures.
So in London the 2P3C household that has a maximum of £106.23 in HB under this reduced OBC will not be able to afford a social housing 3 bed property at a social rent level.
London social landlords will NOT be able to afford to house the 2 parent 3 child household with the Tories planned benefit cap policy.
Provincial social landlords will NOT be able to afford to house the 2 parent 4 child family and perhaps not even the 1P4C family too if they are ‘workless’ (sick, disabled, seeking employment). And of course take one child off that household size given the financial risk should a 2 parent 3 child household see a pregnancy.
It really is time that social landlords woke up and smelled the coffee over the overall benefit cap as hitherto they have dismissed its impact as only affecting the private sector in high rent areas. The above briefly outlines the huge dangers in that approach and the huge danger that the reduction in the OBC holds for the social housing model, the social landlord and of course the social tenant.
Yet the above only scratches the surface of the announced OBC reduction plans of Cameron and the Tory Party.
For example the impacts on the single persons OBC cut to £308 or so per week are not readily apparent unless you have experience and knowledge of supported housing.
- Single homeless hostels can have weekly rent levels in excess of £308 alone and so can single homeless hostels afford to accommodate the single homeless?
- From admittedly anecdotal evidence of my working with more than 20 domestic violence refuges which sees rents there of £300+ per week AND that about a third of all women fleeing domestic violence and abuse and entering refuges are single, ie childless.
- Cameron’s benefit cap reduction plans confirmed today will see a childless single woman unable to enter a refuge and that refuge unable to afford to accommodate them!
I could draft 10,000 words on what that means for supported housing providers, the social landlords and managing agents and of course the supported housing resident in accommodation based provision such as hostel and refuge.
Also note here that Cameron also announced a ban on 18 – 21 year olds receiving HB if they are claiming JSA. That will prevent hostels and refuges from accepting those aged under 21 years of age too out of financial necessity for such provision to be able to survive.
Put another way under 21 and suffering domestic violence and abuse? Then your partner can beat the shit out of you and you have nowhere to flee to young woman! Under 21 and your new stepfather is abusing you? Tough young man (or woman) sleep rough or find a friend to take you in or remain and carry on getting abused.
All those existing persons under 21 in a homeless hostel or DV refuge? – Yes you will have to stay there until you are 21 assuming the HB change is NOT retrospective else you’re out on your ear! You will be anyway when the new yearly decisions are made in any case.
- Cue social landlords pulling out altogether from accommodation based supported housing in hostels and refuges whether they are service providers of have typical managing agent agreements with support providers running such services.
- Cue social landlords having a huge increase in ASB as angry young people are forced by this to return to the family home.
- Cue some estates becoming no-go areas.
- Cue a huge increases in arrears as families now have non-dependant deductions taken out for both returning 18 – 21 years olds and for all 18 -21 year olds still at home having no option but to stay or find work paying enough for them to afford to rent privately without any HB.
Returning to families :
- Cue local council homeless departments putting more pressure on social landlords to accommodate the huge increase in homeless cases and;
- Cue social landlords refusing to take many families as they can’t afford to take. Will social landlords face more costs by arguing such a discharge from homeless duties as being not suitable due to unaffordability?
- Cue social landlord welfare departments expanding in this area and
- Cue the social landlord local government relationship souring because of all this!
- Cue – these two policies are back of a fag packet nonsense that will see huge increases in homeless costs of expensive temporary provision for the many more newly evicted families and the HB bill will increase not decrease.
Unfortunately the above points are not new and I discussed them all at the CIH conference back in 2012 and in huge depth in numerous blogs on my Speye site throughout 2011 and 2012. The only difference is then these points assumed the £500 and £350 per week cap figures would increase by wage inflation (AWE).
Yet now we see these cap figures FALLING by 12.5% in real terms and that rapidly hastens the impacts. Added to that is the banning of those under 21 from receiving Housing Benefit and note again the above figures all assume no other impact such as bedroom tax or council tax replacement schemes seeing more cost for the tenant or even any impact of the ten-fold increase in sanctions.
It is not hyperbole to say this means get a job or get evicted and that applies whether you are the stereotypical immature and feckless 18 – 21 year old to the middle aged social tenant with chronic illness or disability that prevents any form of employment take up.
When you then add in that the SODS (Sick, Old, Disabled, Supported) can ONLY live in social housing as the PRS does not accommodate them this huge cultural change and huge attack upon the social housing model becomes self-evident.
Mainstream social housing professionals need to wake up to the facts that (a) welfare reforms all attack the social housing model, and (b) that they change social housing from being about bricks and mortar and becoming truly social and being about the person, the tenant.
Social landlords need to find a backbone and need to find a way to challenge these reforms else their sector will be no more. Social housing will well and truly be dead and again that is not hyperbole. It is pathetic apathy for social landlord to say oh this is political and we can’t be seen to be involved in that. You have no choice and you have to challenge these changes which are political and are political attacks on the social housing model, the social landlord and the social tenant.
Doubtless the social housing ‘great and good’ with their notorious conservatism will adopt a let’s sit and wait policy together with an unofficial one of increasing the allocation of new social housing only to those in work. Yet even that won’t work as a tenant in employment today is far more likely than a tenant of yesterday to be in insecure low paying employment of the zero hours contract type.
Dear social landlord and especially for those of you who only deal in business jargon… just who is your new customer target market? Do you really have a clue?
It took you over a year after the bedroom tax to realise that all those empty 3 beds and higher in the North could be used for other niche target customers and that was after 2 years warning the bedroom tax was coming in and you publicly stating you were ready for it. By comparison you have about 4 months to formulate a response to the benefit cap reduction and the banning of under 21s from getting HB! Are you ready or will you just deflect the agenda onto drones and the wonders of social media and the self conceit of those Chief Executives who want to be personally seen as innovators and worthy of competing with the privateers of the free market direction you are taking HAs?
I haven’t even mentioned direct payments yet and put all of the above in that context as bet your bottom dollar should the Tories not be voted out then UC and direct and monthly payments will roll out very quickly indeed.
Unusually, I have not discusses the plight of the social tenant here. That is for one blindingly obvious reason: If the Tories are not voted out and the reduced OBC comes in and UC roll out is ramped up then you are well and truly DEKCUF! You have a simple equation of get a job or lose the roof over your head. It is your fault there are no jobs there and your fault you are sick or disabled or without employment – That is the Cameron Tory line.
The social housing tenancy is no more. The state providing or making provision for affordable housing for those unable to work for any reason and in need of support will disappear. It has begun to happen with the bedroom tax and other welfare reforms to date. It will be significantly ramped up with the electorally popular OBC cut and electorally popular banning of HB to the under 21s if the Tories are not voted out on May 7th.
Yes it really is that simple and a vote for the Tories is a vote for the death of social housing and that is an apolitical point.
I make no claims to be Mystic Meg as all of the above impacts of the benefit cap I have stated from 2011 and for 3 to 4 years yet the great and the good of social housing has ignored because they do not want to believe it. Many of the points above pre-date my development of the systemic flaw theory of the OBC I released in September 2012 and they are all obvious common and business sense and even to those with little experience of social housing and how it works.
I have been critical albeit constructively of the efforts of social housing to wake up and smell the coffee. The SHOUT campaign and Real Life Reform and #4SocialHousing and even marches for social housing with the aim of building enough within a generation are not even a drop in the ocean compared to what is needed if social housing as we know it is to survive. I have been criticised for saying all that but now those who have need to revise their opinions given just the impacts of the OBC cut and HB ban above. I have only skimmed the surface on most of these inevitable consequences. The great and the good of the claimed social housing ‘sector’ are allowing the social housing model to die through torpor and ignorance and apathy.
Yet of course they continue in their self delusion that ‘housing’ will be a general election issue and hold out naive hope it will be. One thing is for sure even if ‘housing’ is an election issue that does not mean ‘social housing’ it means house prices and queuing at 4am in the morning to snap up £400k 2 bed apartments in London and nothing else. The general public do not give a flying fig about social housing as only 1 in 7 live there and 6 in every 7 do not.
Social housing’s ‘great and good’ has allowed the benefit cap reductions to be electorally popular as they have done bugger all to challenge that perception.
It only affects private rented and in London after all eh? How many times has that moronic phrase been uttered by social housings great and good – the benefit cap doesn’t affect us.