The general election HB figures released – Welfare Reform costs MORE and not a penny saved

The DWP released the latest housing benefit statistics yesterday (18 February 2015) and these are significant as these figures become the General Election figures given the next release is after the May 7th General Election date.

The Housing Benefit figures are of special interest to the welfare benefit debate as the 4 policies of the bedroom tax, the overall benefit cap and the caps on private sector housing benefit in the LHA cap and SAR cap were all aimed at reducing the overall Housing Benefit bill.

These latest figures I have compared to the inherited position at May 2010.  All of these 4 policies were aimed at achieving the coalition stated aim from June 2010, released in its own HB Direct magazine, a month after they took office, to reduce the HB bill by £2 billion per year by 2015, or by today.

The Chancellor announced a package of Housing Benefit (HB) reforms in his Budget statement on 22 June. It is the most significant and comprehensive reform programme for HB since the scheme was introduced ….Ministers are clear that the overall cost of HB, forecast to be around £20 billion this financial year, must be controlled and reduced. The package of reforms will save nearly £2 billion by 2014/2015. There are also important policy considerations around fairness and work incentives that lie behind the reforms”

Q) Has the bedroom tax, benefit cap, LHA cap and SAR cap saved £2 billion per year?

No.

  • The inherited HB bill at the last election when we inflate that with CPI over the period and take account of the 2.78% increase in the numbers claiming Housing Benefit the like-for-like comparison figure should be £23.46 billion.
  • Then if we take off the £2 billion per year savings these 4 policies the coalition said would achieve the target figure for Housing Benefit would be £21.46 billion.
  • The latest figures reveal that there are 4,883,485 HB claimants each receiving an average of £92.98 per week which gives the cost of the overall HB bill at £23.693 billion.
  • The bedroom tax, the overall benefit cap, the local housing allowance cap and the shared accommodation rate cap, the 4 policies that aimed to reduce the HB bill have in fact INCREASED the HB bill by some £230 million or so per year.
  • Instead of reducing the HB bill by £2 billion per year, these 4 policies have increased the overall bill in REAL TERMS and the HB bill is therefore “£2.23 billion MORE than the coalition target.

In any terms the welfare reform policies of the bedroom tax and overall benefit cap and LHA cap and SAR cap have failed.  The fact that in real terms these policies have actually INCREASED the overall HB bill never mind save a penny is startling.

The policies simply DO NOT WORK as they do not save a penny on the HB bill.

These 4 policies ALL deduct HB at source and that can ONLY mean (a) they ‘should’ reduce the overall HB bill BUT (b) the policies MUST increase the HB bill in other areas.  For example, the increase could be in added homelessness HB or that tenants have moved from social housing into higher cost private renting housing or some similar reasons.

Lets look a bit deeper into the latest data.

Claimant count

Since the May 2010 inherited position the overall number of HB claimants has increased by 131.959 cases. The number of social tenants claiming HB over the same period has in fact fallen by 79 households. The number of private rented sector claimants has increased by 132.413.

ALL of the increase in HB claimants, in fact 100.34% of the increase in claimants since the last election live in the private rented sector or PRS.

The average housing benefit received in the PRS is £107.19 per week and is £21.17 more in housing benefit than received by the social tenant at £86.02. Extrapolate that and that accounts for £146 million or so more per year.

Lazy Scoungers or Hardworking Families?

The number of in-work claimants has risen from 650,551 to 1,094,392 an increase of 443,841 households or an INCREASE OF ONE MILLION men women and children in working households need housing benefit in order to sustain working

Under this coalition the number of hardworking families needing to claim HB to be able to afford their low paid employment has increased by 68%

At May 201o the amount of HB paid to the in-work claimant was £2.8 billion per year and this has now increased to £5.3 billion per year.  Housing Benefit is a subsidy for low paying employers and this is now worth £5.3 billion per year.  A comparison is that in 2013/14  low paying employers were subsidised by this £5.3 billion and the amount paid out in Job Seekers Allowance was £4.3 billion.  So much for the jobs miracle!

Here, by comparison, is a simple graphic showing just HOW MUCH Housing Benefit subsidies the UK’s low paying employers! (Wonder who they vote for…ahem!!)

ukemployershb

 

Yes that means the taxpayer gives low paying UK employers over £100 million per week!!

Where have these increases in HB claimants taken place? 

Housing Benefit regionally sees the increase at 3.06% in NE; 2.1% in NW; 3.85% in Yorks & Humber; 2.72% in EM; 1.56% in WM; 3.82% in SE; 3.51% in SW and 3.51% in London – so remarkably uniform across England….or at least at first glance!

London

  • Inner London has had a 0.65% FALL in Housing Benefit claimants since May 2010
  • Outer London has had a 7.93% INCREASE in Housing Benefit claimants since May 2010

Of the 14 Inner London boroughs 50% have seen a fall in claimants.  In Outer London it is just 5% with 18 out of the 19 boroughs in Outer London seeing an increase in HB claimants.  In fact 4 of these Outer London boroughs have had a greater than 10% increase in Barnet, Ealing, Enfield and Harrow

LB Westminster has seen a fall of a staggering ten per cent in those claiming HB since the election.  It is self-evident that over 3,000 HB claiming families have been moved to Outer London boroughs from Westminster alone in the period May 2010 to November 2014 in these latest figures.  That’s about 13 families per week and every week since the last election.  That is a huge HB diaspora from Westminster alone.

In May 2010 London, inner and outer, had 799,559 HB claimants with 52% of these being in inner London and 48% in outer London.  At the latest figures the overall London claimant count is 827,639 with 418,651 or 51% being in outer London and 49% in inner London.  Inner London claimant count fell by 2,667 yet outer London’s claimant count increased by 30,759.

A simple comparison between LB Westminster (inner) and LB Barnet (outer) shows this really began to happen in early 2012 when the LHA caps were introduced.

london hb claimant count

The simple graph comparing two London boroughs of approximately the same HB claimant count size in May 2010 starkly illustrates what has happened generally across the capital with the HB claimants forming a diaspora from inner to outer London

Bedroom Tax

The latest bedroom tax figure is given in Table 3 and the question we have to ask is where have 200,000 or so bedroom tax households gone?

btaxnov2014

The bedroom tax will affect 660,000 households proclaimed the DWP in their June 2012 (purported) impact assessment and they have never changed this estimate ever.  In fact they still cite the bedroom tax as saving £480 million per year which is based on this claimed 660,000 households having a £14 per week deduction.  £480 million is 660,000 weekly lots of £14 over a year.

Reader get a calculator and work out 464,551 lots of the £14.94 bedroom tax cut that the official DWP figures show above.  In a year you will see this is at most a theoretical maximum saving of £362 million.  Yet IDS and Mark Harper at the last bedroom tax debate said abolishing it would cost £1 billion per year!  Regularly IDS and McVey and Freud and before that Webb have said it saves £480 million per year and have even quoted the OBR who say the same errant figure.

Clearly Iain Duncan Smith is lying and has been lying all along with regard to any savings claimed for the bedroom tax.  As indeed has been Steve Webb, Esther McVey, Lord Freud and Mark Harper when they constantly cite to Parliament and to the news media that the bedroom tax saves this amount of money.  These are the official DWP figures after all so all of the above MUST BE DELIBERATELY AND KNOWINGLY LYING and REPEATEDLY LYING over the bedroom tax ‘saving’ (sic).

As you can see from above the overall Housing Benefit bill has INCREASED and so not realised a penny of saving whatsoever!!  And it has increased in real terms allowing for both inflation and for the increase in the claimant count too.  The DWP’s own official figures show that the bedroom tax et al has increased the HB bill overall and that is the ONLY figure that matters.

The welfare reform policies aimed at reducing the HB bill have all increased it.

Finally, for now, as there is much that can be made of this HB data which will be pored over in the general election run up, I have a bemusing question.

Given that there has been a reduction of 200,000 bedroom tax affected households from the original DWP estimate why hasn’t IDS tried to say his bedroom tax has reduced the scourge or under occupancy by this whopping 30 per cent?

If IDS can claim credit for anything at all he does.  So why hasn’t he claimed any purported ‘success’ given there are the best part of half a million less men women and children under occupying the scarce national resource that is social housing?

Hmmm!

 

 

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