Will the Tory benefit cap cost £5bn more pa or is it £10bn more in housing benefit alone?

The Tories won.  The bedroom tax has a further 5 years. Yet the much much worse Tory benefit cap will apply by the end of June and God help the social housing tenant and the social landlord and of course the taxpayer who will see an increased benefit bill of at least £5 billion per year!  Yes I did say INCREASE!

The bedroom tax with its official average of £14.90 per week in HB cut is unaffordable and has led to arrears evictions and many more will come.  Yet the bedroom tax, the UNDER occupation charge, by definition puts the social households without children at risk and targets them; whereas the benefit cap – more correctly the overall housing benefit cap or OHBC – directly and explicitly targets the social household WITH children and the HB cut it holds ranges from 33% to 100% of HB so far worse than the bedroom tax too.

Today social media sites especially Facebook are full of messages saying a bedroom tax eviction is taking place at 1 Any Street, Anytown please help form a ring of steel when the bailiffs turn up at 11am on DD/MM/YY to effect the warrant.

Now imagine how much more that will happen and the implications for social landlords when these FB and other messages say a couple with 4 school age children are being evicted over OHBC arrears!

The OHBC directly targets the eviction of children!

That is a huge difference to the bedroom tax and given that these families will NOT be rehoused by private or social landlords but wil have to remain in temporary homeless accommodation at hugely increased public cost and with 2 adults and 4 children in 2 rooms at a Travelodge with no privacy, no cooking facilities, nowhere for the children to do homework and the high likelihood the children will have had to change schools due to the OHBC evictions which are an inevitability with the OHBC policy, then….

Yes the shit really does hit the fan

Yet social landlords are apoplectic over the right to buy for housing associations and do not realise that the OHBC will impact on all areas of operational activity as well as strategically and financially.

Even worse the general public love the benefit cap as they wrongly assume an overall cap must mean that the benefit bill will reduce and save their taxes when in fact it will massively increase the benefit bill and the taxtes they pay towards that.

The above example is illustrative of that.  The couple with 4 children will from the end of June under the Tory OHBC not receive a penny in housing benefit and will be expected to find all of their rent from their welfare benefit and child tax credits.  The housing benefit reduction will be £90 or so per week in the low rent areas across the North or more than 6 times the cut of the bedroom tax.

To keep just with the costs surely that means the benefit bill has reduced by £90 per week?

No! No! No!  This family will be given two rooms at a Travelodge at £50 per room per night and so cost £700 per week in housing costs to the taxpayer and the housing benefit bill will rocket.

Note well that the benefit cap – the OHBC – applies to private and social tenants and so these massive additional housing benefit costs will apply to all rented households.

Note extremely well that because these evicted households have children the local council has an absolute legal duty to rehouse these families under the 1996 Housing Act.  Even if it finds them intentionally homeless, the local social services department will have to come in and pay the cost of the temporary accommodation (Travelodge) until the family can be rehoused.

On the back of a fag packet basis I can easily see the housing benefit bill increasing by at least £5 billion per year due to the OHBC and that is why the policy just in financial terms is idiotic never mind the fact it will damage the children’s life and education chances irreparably and all the other amoral aspects of it.

The benefit cap policy is the problem as it simply cannot EVER work yet the real problem is that the general public who love the policy and give it a 78% approval rating, do so because they cannot (or refuse to) get their head around how a cap or limit on benefit can lead to an increased cost!  It simply cannot be the case yet as the above example explains it does.

The couple with 4 children receive £401 per week in welfare benefits and child tax credits and so currently with the benefit cap set at £500 per week they can receive £99 per week in housing benefit.  Yet in about 6 weeks time the cap will reduce to £440 per week in London and a lower figure as yet to be decided but likely to be £400 per week in Hull or Liverpool or Newcastle or anywhere outside of London, i.e. the regions.

We have had a forerunner of the OHBC in the private rent cap (LHA cap) introduced in January 2012 in the attempt to reduce the housing benefit bill.  You may recall IDS saying we are paying £100,000 per year of taxpayer money in housing benefit for families as justification for this policy.  Now superficially that sound fine….


What happened was:

  • Private landlords evicted a huge number of private tenants in London and other high rent areas meaning the councils there had to house in temporary accommodation such as B&Bs and hotels
  • It was subsequently discovered that just 5 families out of then 4.751 million HB recipients got £100k per year in housing benefit (or rather their landlords did!)
  • The upshot of the policy was London councils spending on homeless cases went through the roof and saw up to 700 cases in LB Westminster alone where the new HB for the hotels and B&Bs was more than £100k per year and some over £150k per year.

The BBC London TV programme (link here) evidenced all of this in a 2 minute film which can be seen here and if you want to know (a) what the OHBC will do and/or (b) how and why a benefit CAP or limit sees an increase in the welfare benefit bill then please watch.

Below is a screenshot from that BBC London programme – the beeb showing a nice ‘ethnic’ family just to hammer home their prejudice – yet of course this applies to White Anglo-Saxon pure-bred UKIP-voting families too!  It even says on the screenshot that families are costing over £12,000 per month in housing benefit to be housed in temporary homeless accommodation and £12,768 per calendar month or £153k per year and all as a direct result of IDS’s LHA cap.

bbclondon lha cap


Earlier this year I put out a blog here which showed in unambiguous terms that the 4 Tory-led coalition policies which aimed to directly reduce the housing benefit bill (Bedroom Tax, Benefit Cap, LHA cap and SAR cap) actually resulted in the housing benefit bill going up by £440 million per year, and that is after allowing for inflation and after allowing for the increase in HB claimants.

It is a direct like for like comparison which reveals the welfare reforms of bedroom tax, benefit cap etc actually cost the country and the individual taxpayer MORE.

So if you want to see children evicted en masse by landlords, private and social, and have no objections to the morality of this and no objections to forking out billions more per year in taxes so this can happen they carry on supporting the IDS policy of the overall housing benefit cap as this is what will UNDOUBTEDLY happen.

Every year Shelter have a campaign saying is it right xxx number of children are homeless at Christmas which in 2014 was 93,000 children and from memory about £82,000 in Christmas 2013.  When this OHBC policy with its cap reduction comes in at the end of June, those Shelter posters may be saying it is an outrage we have 200,000 or even 300,000 children homeless at Christmas 2015.

That is not hyperbole, that is a very realistic projection as without any doubt the private landlords will evict all benefit families with 2 or more children they currently house and all local councils will have a massive increase in the number of homeless families they are paying hoteliers a fortune for with your taxes to stay there as there is simply nowhere else they can afford to live because of the Tory benefit cap.

The couple with 3 children will have to find £30 or so per week to top up the rent and so this means the 3 child family cannot afford even the cheapest social housing and of course even  council landlords with the cheapest rent levels cannot afford to house the 3 child family given the financial risk of arrears.

The bedroom tax has been horrendous for households right across England & Wales yet the benefit cap, more correctly called the OHBC, is far worse than the bedroom tax.  It is incredibly difficult to estimate just how many households will be affected by the Tory reduced cap and as is par for the course the Tories have not undertaken any impact assessment to find out how many will be affected!

Even with my access to  a heap of relevant research any figure will be speculative yet a cautious (or should that be conservative?) estimate will be 200,000 households hit by the OHBC cut and could be as many as 350,000 households and all with between 2 and 7 times the bedroom tax cut in HB.

The OHBC or benefit cap as it is called is not just a nightmare for social tenants and social landlords it is a nightmare and huge cost increase for local councils and for the individual taxpayer and hundreds of thousand of CHILDREN will be made homeless.

Welcome to Tory Britain reader. This is what you have just voted for



4 thoughts on “Will the Tory benefit cap cost £5bn more pa or is it £10bn more in housing benefit alone?

Please leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s