The Overall Housing Benefit Cap – v – The Bedroom Tax

Social housing is damned if it does and damned if it doesn’t!  If the property is under occupied the tenant and landlord face the bedroom tax reduction in housing benefit.  If the property is fully occupied the tenant and the landlord both face an even greater reduction in housing benefit with the OHBC.

To explain just how much worse the benefit cap – overall HOUSING benefit cap – is than the bedroom tax below is a graph which illustrates the comparison for a 3 bed property over time.

In any 3 bed:

  • We could have the household deemed to have 1 bedroom spare and they get 14% of their housing benefit deducted and have to find that amount – a tenant top up – from other benefits. The amount of the tenant top up to the average regional 3 bed rent of £98 per week is shown in red in the graph below
  • We could have the household deemed to have 2 bedrooms spare and they get 25% of their housing benefit deducted and have to find that amount – a tenant top up – from other benefits. The amount of the tenant top up to the average regional 3 bed rent of £98 per week is shown in green in the graph below
  • We could have the couple with 3 children who today pay no bedroom tax and do not have a reduction in HB with the cap set at £500 per week.  Yet IDS and the Tory government have said the OHBC figure will reduce to £440 per week in London and lower – illustrated here at the likely £400 per week – in the regions. The amount of the tenant top up to the average regional 3 bed rent of £98 per week is shown in blue in the graph below 

The graph assumes that (a) the cap remains constant; (b) that welfare benefits rise by CPI of 1.5% per year; and (c) social rent rises by CPI+1% which is the set formula.

The tenant top-up figures

btohbc comparison

The position could not be more starkly seen than in the tenant top-up graph below and the OHBC is much worse for the social tenant and the social landlord than the bedroom tax.

As we know the bedroom tax is unaffordable even at the low red figures of 14% and is leading to arrears evictions on a regular basis, we can only imagine the horror of the Tory OHBC and what it will mean.  Simply saying no job no house or lose job lose house is simply not enough although 100% accurate as it also means no job or lose job and there is nowhere to live except in a homeless B&B which means your children have had their life chances irreparably damaged for ever!

The assumptions of the cap figure remaining constant is not improbable.  The assumption of CPI inflation being 1.5% is also not improbable and we know that social rent is pegged to the formula of CPI+1% for 10 years – the same period covered by the graph.

Today the couple with 3 children will have to find £33 per week to afford the £98 per week social rent and of course more in higher rent areas in the regions.  By the end of this parliament in May 2020 this rises to £72 per week!  By the end of the following parliament it rises to £114 per week when the 3 bed social rented property will be £126 per week.

I could produce graph after graph for all household compositions such as 1 parent 3 children and a couple with 2 children yet the above graph is more than sufficient to reveal the horrors of the overall HOUSING BENEFIT cap to give it its most apt title as it is housing benefit which is the only benefit cut.

Do I need to repeat the simple questions I have often posed?

1. How many CHILDREN will social landlords be FORCED to evict and make homeless due to the Tory OHBC?

  • Yes it runs into the hundreds of thousands and increases every year

2. Just where are families who are unemployed or other inactive (sick, disabled, unable to work) going to live except in what will become permanent ‘temporary’ homeless accommodation at a huge increase to the public purse?

  • There is nowhere else and will see the couple with 3 children above living – if they are lucky – in two rooms in a Travelodge for which the taxpayer will be paying £50 each room per night of £700 per week and with no cooking facilities and with nowhere for the children to do their homework from the new school they have been forced to move to!

Is there still any imbecile out there who thinks the benefit cap saves money and is a good policy.  Perhaps now the above will make you realise that a welfare benefit CAP invariably leads to a huge increase in welfare benefit spend and all borne by the incredibly naive taxpayer who think a cap must mean a reduction in cost!!

Still, watching CHILDREN being evicted and made homeless by this callous and ill-conceived back of a fag packet policy will at least provide some entertainment for the rabid right-wing voters and supporters of this Tory government.

Though perhaps with Gove as the Minister for Justice and his penchant for capital punishment the masses will be able to congregate in their thousands to watch public hangings again as they once did…now there’s another reason to but some G4S and Capita shares reader…!!

Of course that is misdirection reader, all my investments are going into the new private workhouses!!

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