To reform means to improve and make better NOT to make things worse – WELFARE REFORM (sic) DO MAKE THINGS WORSE.
The welfare reform policies of the bedroom tax, benefit cap, LHA and SAR caps actually cost more than they save as I detailed here. WELFARE REFORMS COST MORE
The key rationale for the bedroom tax is to free up under occupied social housing properties for those living in overcrowded accommodation. Yet the benefit cap actually prevents that as detailed here. WELFARE REFORMS CAN’T WORK.
Here I explain why worse it still to come in the form of the Universal Credit roll out of paying tenants their welfare benefits monthly rather than weekly / fortnightly – known as monthly payment; and paying Housing Benefit directly to the tenant not the landlord as now known as direct payments.
Late last week a purposeful research report on direct payments was released by the Centre for Regional Economic and Social Research (CRESR) at Sheffield Hallam University. I say purposeful as while its findings do not surprise anyone cognisant of direct payments its research results are very usefully in one place and it should be read by all social tenants and especially social landlords.
I will (correctly?) assume that many will NOT read the report despite only being 14 or so pages in length and I reproduce Table 9 of it below and then comment upon it to highlight some very significant matters for social tenants and social landlords
As you can see the researchers asked social landlords for their views as to the impacts of direct payments and the landlord responses are significant in many ways.
The obvious first point is will direct payments increase rent arrears. A staggering 98% said yes it will – staggering because it WILL without a shadow of a doubt increase rent arrears and so should it be 100%. The direct payment pilots revealed non-payment of rent went up to 6.6% compared with typically 0.5% historically – a huge thirteen-fold increase – and this will not only increase arrears but lead to social landlords going bust. (See here, here, here and here for example.)
The next few questions all confirm additional extra cost that social landlords will face such as increased staffing, increased rent collection costs, increased restructuring costs and increased IT costs. The bloody obvious is that social landlords will have less income due to increased arrears AND it will cost them more to get less money in.
This double whammy reveals direct payments to be a targeted attack on the social housing model itself AND means that social landlords will have to recoup such costs through higher use of higher rent products such as AR and/or reduce service levels that they provide. Yet they can’t use AR as this means their ‘customers’ will get caught by the benefit cap and is too financially risky for social landlords and of course shows that the welfare reform policies contradict one another. There is no alternative to this and any ‘efficiency measures’ can only barely touch the added costs and reduced income position of social landlords.
The most surprising response is that only 76% of social landlords think this will change the landlord to tenant relationship as it definitely will as the tenant is now IN CONTROL of the payment of rent as HB no longer goes direct to the landlord. I make no excuse for the language in saying that social landlords are shitting themselves over direct payments as that removes any ambiguity and also correctly states the position.
That is so much more than HB just going to the tenant who then has to pay his or her rent. It means the tenant becomes as close to a customer as they can be. They will pay their rent as one of many competing bills they have to pay and, critically, two simple issues arise.
Firstly, rent does NOT attract interest payments unlike the non payment of other household bills and so, logically and understandably, the tenant will prioritise those household dents that DO attract interest penalties first. That is a systemic impact of this policy.
Secondly, the social tenant WILL take into consideration their perception of the social landlord. For example many social tenants were and are very aggrieved their landlords failed to support them in challenging the bedroom tax. Those landlords who have supported such as Coast & Country Housing Association in the North East WILL see their tenants paying more rent and prioritising their rent more than other tenants because their landlord did support them and is still doing so. That could translate into hundred of thousands more in rent being paid each year. That view which I have expressed many times before has even more credence now that the Chartered Institute of Housing has said social landlords SHOULD be supporting their tenants to appeal the bedroom tax. Imagine those tenants whose landlord has not supported them in appealing the bedroom tax. If CCHA can do it why didn’t my landlord is the view that will be taken and rightly so by the social tenant.
Yet let’s return to the findings above and one response really alarms and this report confirms the view I have expressed many times before and not least just last week when I said the benefit cap policy PREVENTS social landlords allocating the bedroom tax properties that have been freed up as it is too much of a financial risk.
The table above asks will direct payment lead to social landlords changing their allocation or letting policy and finds:
More social landlords at 41% say direct payment WILL enforce a change in how and who they let new properties to which is more than say allocation will not change. The 20% who don’t know means 1 in 5 social landlords have not considered the reality of just how big an impact Direct Payment will have! (Social landlords are hardly known for their perspicacity in reacting to welfare reform!)
Direct payment will see, however much denied by social landlords, a move to only allocating to more of those in work and then only if the bedroom tax is not an issue and the benefit cap will not become an issue should the tenants lose employment. In simple terms the less financially risky tenant which of course means less to the problem or benefit tenant.
This is hugely significant and I am not having a go at social landlords as they need to do this and such a strategy is an inevitability of the welfare reforms, yet this exposes the bag of a fag packet nature of those reforms more than anything.
IF social landlords, councils and housing associations do become more risk averse – and they already are and will become more so – then where the hell are the sick, disabled, unemployed and other ‘benefit tenants’ going to live?
The welfare reform (sic) policies are driving social landlords down the more commercial route and take no account of the fact that social housing is the ONLY place where the SODS can live and see here for further explanation that the private rented sector does not accommodate the SODS in their business models: SODS being sick, old, disabled, supported.
The welfare reforms take no account of what social housing is and always has been – the ONLY place where the SODS can live and in doing so social landlords and the social housing model saves the country an absolute fortune each year as its rent levels are half that of the private landlord. IF social landlords are no longer ABLE to afford the SODS, and that is what the welfare reform policies are driving, then no doubt they will be accommodated by the private rented sector in much worse accommodation and at a doubling of the Housing Benefit bill. We are talking billions of pounds of extra cost per year here and again the paucity of the welfare reforms is exposed.
The still to come reforms of monthly payments and direct payments will significantly increase the Housing Benefit bill and cost the taxpayer more in this area. Additionally, last year saw the highest number of social housing evictions a record year and each one then costs the taxpayer far more in homelessness costs and much higher HB for the temporary homeless accommodation that goes with it. Direct payments and monthly payments will increase social housing evictions and that adds to the benefit cap reduction which will see SRS and PRS increased evictions and the huge rise in homeless HB costs.
Then of course we have the slow burning effect of the bedroom tax which has led to more evictions and began the process for social landlords becoming more risk averse in their allocations and lettings policies. As the research above shows social landlord allocation policies will become much more risk averse due to direct payments and this for now slow burner and piecemeal impact will be ratcheted up significantly.
What the allocation policy risk averse process means is that housing associations will be more risk averse with councils too and refuse to accept homelessness cases as they are too risky which leaves local authorities with longer duration and much more higher cost temporary housing HB costs. Again the HB bill increases. We then see councils having to procure more housing such as LB Westminster has done in buying up £6m worth of property out of borough in East London or by councils across the country having to lease more and more properties for temporary homeless provision from the private sector. In other words the welfare reforms are driving the social tenant into the hands of the (Tory donating?) private landlords which again increases the overall HB bill.
One of my repeated criticisms of the social housing ‘sector’ is that they do not promote what they do and never have thus ‘allowing’ this coalition particularly to engineer its welfare reform policies to remove the social housing model altogether. The ‘sector’ has never promoted how much of a public service it provides in accommodating the ‘problem’ cases of the SODS that the private sector does not and the fact it saves the country billions per year in doing so.
Social housing is a social AND economic good, a fantastic invest to save product and service that those who work within it fail to mention.
That negligence and incompetence does allow the acutely targeted and radical attack on the social housing model which the welfare reform policies are. To hell with the fact this is already costing the taxpayer more and will cost significantly more in the next parliament, the public BELIEVE that social housing is the housing of last choice, the housing where all the feckless scrounging White Dees live, and now they are all drug addicts, alcoholics and obese fat bastards too according to the latest blame game tactics of Cameron over the weekend.
Cameron, IDS and the rest know they will not face any challenge to the hugely negative public perception of the social housing tenant as the sector – the great and the good of social housing – never challenge that perception and couldn’t fight their way out of a wet paper bag!
So we see a rapidly increasing removal of anything resembling the social housing model that adds to the crisis of housing generally in the UK and while the Tories blame the feckless scroungers and UKIP blame it on the immigrant, the apathetic social landlords do nothing. One day, and soon, they will bemoan where is the social housing model…where has it gone… and then followed with a smug assertion that you never know what you miss until its gone!
Social housing is in terminal decline because there is no spine in social landlords and no will to fight for the social housing model and they both either fail to see what is happening and or if they do see, they do bugger all about it.
The great and the good of social housing cannot even be bothered to counter the welfare dependency myth the coalition and indeed the opposition too associate with social housing.
As the private tenant has to take a job paying at least £6k more per annum so he can afford his rent over the lower rent paying social tenant then the private renting tenant has to be far MORE welfare dependent that the social tenant and the PRS is far more welfare dependent than the SRS!!
Finally, do not mistake my arguments above as either political ones or some naive nostalgic view of the social housing model. Social housing NEEDS to be seen in the correct ECONOMIC context of saving the individual taxpayer and the wider public purse billions each year. Do away with social housing or do away with the misnamed and misinterpreted ‘subsidy’ social housing receives of £1.13 billion per year and the HB bill will increase by over £4 billion per year as social landlords would have to receive the same in HB as the private landlords receive in HB.
Yet while the great and the good of the claimed ‘sector’ do nothing to promote the huge economic benefits of the social housing model and do nothing to challenge the radical attacks on it that the welfare reforms are then the social housing model will disappear. The current welfare reforms of the bedroom tax and the benefit cap sees them costing the country MORE and when direct payments comes in it will cost the taxpayer and the public purse far more. Yet as the politicians don’t see that and the general public don’t either as they both believe social housing is a ‘subsidy’ and a drain on them then the social housing model will disappear.
Hey lets promote the social housing model once a year and direct that internally (#HousingDay)..er….
Hey lets all #SHOUT about the social housing model …internally and not to an external audience….er…
Hey lets solve the housing crisis within a generation (#HomesforBritain)…oh hang on IDS wants to destroy it in just 4 years regardless of the fact who the hell looks 25 years ahead!!
Hey lets….oh sod it…just carry on tugging your forelocks and not challenging …..