Tenants affected by the bedroom tax and all social landlords need to take note that it is highly unlikely any discretionary housing payments (DHP) will be given to bedroom tax cases after July this year.
The reason is the inevitable consequence of the reduction in the benefit cap and all local councils will have no choice but to divert DHP to benefit cap cases and away from bedroom tax cases and this also means that the majority of DHP awards will go to the private tenant not the social tenant.
Local councils are given DHP money from central government and they are free to spend 1% or 100% of it on bedroom tax or benefit cap or LHA cap and frankly, whatever they deem to be the priority.
The reduced benefit cap means private landlords will seek to evict all families on benefit firstly and soon to be followed by social landlords having to evict social tenant families. The social and private tenants will need to find at least double the bedroom tax average reduction in HB and some will not get a penny in housing benefit at all. Hence the only way for them to remain in their properties and avoid becoming homeless – a huge cost to local councils – is to receive a DHP.
Local councils will simply and inevitably shift DHP payments to benefit cap households and away from bedroom tax households as to do will save the local councils money in temporary homeless costs.
The bedroom tax tenant who is angry that the bedroom tax has a further 5 years of operation need to worry far more about NOT receiving a DHP as that is the inevitable consequence of the reduced overall housing benefit cap that will come in by the end of June or early July 2015.
The social landlord who has not re-evaluated its position and expects the same level of bedroom tax DHP this year is living in cloud cuckoo land. And just for good measure let’s not forget that DHP in total has received a £40m cut this year too!
For those who can be bothered to read further and to enquire more deeply into the logic here we only have to look at how the DHP monies were spent in 2013/14 for which the DWP produced a breakdown over a year ago. While £60m was ‘allocated’ for bedroom tax DHP, councils spent £80m in DHP for bedroom tax cases.
Yet when you look at the London local councils who all had to face the LHA cap which in many cases drastically reduced the housing benefit payable to tenants, those councils spend the overwhelming majority of their DHP money on LHA cases and have done since because the benefit cap reduces the amount of housing benefit these households can receive even further.
This is precisely what will happen across the rest of England & Wales come July 2015 when the reduced benefit cap will take effect. Below is the summary of the DHP spend for all councils in 2013/14 and at first glance does not support the above argument. Yet this was before the reduced OHBC comes into play and we need to look at individual councils especially the London councils who were affected by both the LHA cap and the original £500 per week overall benefit cap due to the perversely high rents in the capital. Below is LB Westminster DHP actual spend and as you can see the spending on bedroom tax DHP is miserly at £101,907 or just 1.72% of its total DHP allocated. By comparison it spend £2.49 million on LHA cap DHP and £1.32m on benefit cap cases.
Yet come July when the reduced overall housing benefit cap will see the 3 child SRS household lose £30 per week in HB and the lone parent 4 child SRS household lose £65 per week in HBand the couple with 4 children get nothing at all in HB, then Liverpool as an example of a low rent area will have exactly the same HB pressures that LB Westminster had a year or so ago.
Liverpool City Council as an example of all councils will have the choice of carrying on with bedroom tax DHP payments or face much higher cost in temporary homeless provision for the thousands of families evicted and made homeless from the reduced benefit cap (OHBC) Its a no-brainer for ALL local councils to do as LB Westminster and many other London councils did and pay DHPs just to benefit cap cases and NOT to bedroom tax cases. This will save local councils money and that is simply why they will do this.
Liverpool added to their allocation from central government and in fact spent 110% of its DHP allocation on bedroom tax cases at £2.25 million yet spent just £36k on the benefit cap and just £229k on the LHA caps. Yet the overall (housing) benefit cap will be a major issue for DHP in Liverpool (and all other councils) when the OHBC is reduced.
It will be an even bigger issue in neighbouring Wirral which has a far higher percentage of private tenants on housing benefit than Liverpool and thus have a higher top up to their rent than a social tenant; and a monstrous issue in Blackpool with over 72% of all housing benefit recipients living in the PRS compared to the 32% national average.
For the same reasons the OHBC will see a massively reduced amount of DHP spent on bedroom tax cases right across England and Wales as councils divert it to benefit cap cases and more so in areas of higher than average private tenants on HB such as Darlington at 44% compared with Redcar at the 32% national average and similarly will happen more in NE Lincolnshire than in Hull and more in Doncaster rather than Rotherham and in South Derbyshire but much less in North East Derbyshire.
I still strongly maintain that even in those councils with a high level of SRS HB claimants that bedroom tax DHPs will plummet..I am merely saying in areas with higher than average proportions of PRS claimants that DHPs for bedroom tax will be as rare as hen’s teeth.
The same will follow in the tiny pockets of high rent areas spread around the UK such as York and Altrincham and Cambridge and others which have far higher rent levels than neighbouring councils. Yet the general picture is that bedroom tax DHPs will be as rare as hen’s teeth very soon and right across the country.
That means that social housing evictions will increase more sharply from bedroom tax cases and all down to the reduced overall (housing) benefit cap cases attracting DHP and taking it away from the bedroom tax cases.
Local councils will not be too fussed about this as they have far less legal homeless duties to single persons rather than to children so bedroom tax under-occupiers are far less likely to incur councils higher homeless costs but homeless families with children will.
This is just one of the less obvious implications for social tenants and social landlords from the reduced overall benefit cap policy – also it was Labour Party policy so no political point except to say Labour can’t argue against it in the Commons because it was also their policy too – and one of many such consequences not first apparent in the reduced overall HOUSING benefit cap.
A few have commented that this is a Tory policy and Labour will challenge it on various social media sites. That will not happen as this was Labour policy too! I drafted this a month or so ago before election that explains all – Just replace Miliband with whoever wears a blue tie and is put in post as the next Labour Party leader
So yes there can be no effective opposition to this in the House of Commons and remember the benefit cap is a hugely popular policy with a staggering 78% approval rating by the public in some polls. Yet as it has actually increased benefit cost to date – yes this cap and the LHA and SAR cap along with the bedroom tax all cost MORE in housing benefit in real terms – there is little chance of any public opposition to it….until they see child upon child being evicted and made homeless because of it. Even then they will not care about the effective removal of DHP from the bedroom tax tenant.
If you think this is alarmist wake up! This is a racing certainty to take DHP away from bedroom tax households and to evict hundreds of thousand of children! Finally because the benefit cap targets families with children it also means that when DHPs get switched from bedroom tax to benefit cap that far fewer disabled households will receive a DHP which of course will provoke and rile the disability lobbies, as it should. But hey I am just the messenger forewarning you of this not the person or party(s) who came up with the bloody stupid idea of the benefit cap in the first place!
UPDATE – Just a thought and with my usual liking for numbers – The above table on actual DHP spend revealed almost £81 million spent on bedroom tax DHP in the first year and if this does all get transferred to benefit cap DHP then that is £43.6 million per year less going to social housing in DHP if the 54%:46% ration of private to social tenants affected by the benefit cap is still valid from the original impact assessment. Or £43.6 million more social housing arrears and the resultant increase in evictions…