The overall HOUSING BENEFIT cap – What the Dickens? – Starring IDS reprising Mr Micawber

Picture the scene reader a social housing Chief Executive has asked me to come and talk to him or her about this benefit cap thingy I have been ‘banging on about’ for over 3 years and that now everyone in housing is talking about.

Yes a little far-fetched as they still have their heads up their backsides over RTB for housing associations and have tunnel vision on that and can’t see anything else but that….read on…


LL – Joe thanks for coming in and tell me about this benefit cap reduction and how it may affect me as a Northern social landlord whose housing circumstances are the 83% of housing conditions outside of the truly perverse London housing market which dominates all housing thought

Joe – You mean the reducing overall housing benefit cap?

LL – Call it what you will but does it affect us, isn’t it just a London thing and then only for the PRS

Joe – Let’s not beat around the bush. Here’s the figures, numbers, unlike politicians, don’t lie

LL – No there must be something wrong in your figures, we are in a low rent social housing area and oop North

Joe – Do more a favour, look again….humour me if you must but have another little look

LL – Oh shit!!!!

Joe – Yes it means your affordable (sic) rent programme is unworkable and toxic

LL – Yes I see that

Joe – And if you fully occupy a 3 bed or larger which is 36% of your stock on average your tenants will be capped

LL – Yes … and we have about 40% being 3 bed or larger I think as we took over the old council stock and they only built family homes for decades as you know

Joe – No its 54% here’s your stock profile

LL – Shit, shit and double shit (Yes too many in housing watched the Wacky Races!)

Joe – And you realise that your council will transfer its DHP budget to OHBC cases meaning less DHP for bedroom tax? So that £400k you got last year in bedroom tax DHP will probably be more like £50k this year

LL – Sh…

Joe – And the cap actively targets children who you will be evicting as you have no choice…

LL – No we’d never do that…

Joe – You have no choice you can’t afford them and they cannot afford even your social rent level.  Its one thing evicting adults in the bedroom tax but hows your PR and reputation going to be when you are evicting children?

LL – Shit hadn’t thought of that

Joe – What about the context?

LL – Go on…

Joe – Well, the banning of under 21 from HB will see them return to their parents who become a larger household and more liable to be hit by the cap, which, after all, is a HOUSEHOLD benefit cap and not a single income

LL – F**k

Joe – And you do realise how the cap actually works?  You know it takes the welfare benefit and child tax credits away from the cap meaning the only benefit reduced is Housing Benefit?

LL – So it should be called the Overall HOUSING BENEFIT Cap then?

Joe – Yes you’re getting there, oh and it mean the couple with 4 children will only get a maximum of £39 per week in HB

LL – Oh we don’t have that many of them thank God…

Joe – The DWP official figures show that just over 4% of working age HB claimants have 4 or more children

LL – 4% you say that’s not a lot…

Joe – Yes but as you have 10,000 properties that 400 households who can’t afford your lowest social rent and you can’t afford to house and they cannot afford your rent and you will have to evict…

LL – But Joe we are social landlords we have always housed those in need…

Joe – Yet you can’t afford to. Have a look at the figures again. Oh and 400 households with at least 4 children that will be 1600 children you are evicting and making homeless as what else can you do…

LL – (sharp intake of breath) Er…

Joe – The private landlords will evict first naturally as their rents are higher and they are more risk averse

[Phew – SRS CEO now happier we are talking of the enemy in the PRS – but I digress]

LL – So the council will be putting us under pressure to rehouse them yet we can’t afford to?

Joe – I see you are beginning to get this but in low rent areas they, the private landlords, have a huge advantage over you

LL – Go on…

Joe – The private landlord will deliberately under occupy their 3 bed properties to avoid the benefit cap and unlike you they are not hit by bedroom tax

LL – Run that by me again

Joe – Take Liverpool where the 2 person LHA rate is £454 per month. There are more than a hundred 3 bed PRS properties available now at that price (or less) and that is always the case.

LL – So a couple with 2 boys would get all their rent paid I see

Joe – More than that if you think it through

LL – Go on

Joe – The government is going to ban single people under 21 from receiving HB yet they can’t ban it for those with children obviously….

LL – …Obviously….

Joe – So the 19 year old girl gets pregnant and hey presto is entitled to £454 per month in LHA and go gets a 3 bed PRS house

LL – So the government’s own policy incentivises young girls to get pregnant to get a house

Joe – Absolutely – and the private landlord is delighted as his 3 bed properties the OHBC makes toxic he can now occupy long term with such a tenant and give her the security of tenure previously only available in social housing

LL – But that’s ridiculous and so not thought through

Joe – Yes, but that is typical of this government’s housing policy

LL – But surely they will stop it as the housing benefit bill will rocket

Joe – Yes and No.  Yes the 19 year old girl will receive £2500 more per year in housing benefit than she does now and about £4400 more in welfare benefits per year so about £7,000 more per year.

LL – So where is the ‘No’ part?

Joe – The NO would be the government admitting they are wrong which isn’t going to happen and also NO as it would mean regulating private landlords and applying the bedroom tax to them which won’t happen

LL – You think private landlords will take on so many new young people?

Joe – No they are not that soft and they will also target current social tenants in their 50s for their 3 beds

LL – Eh? How do you work that one out?

Joe – You will have many such tenants who have been there for years, the ones who brought their kids up and who have now flown the coop – what you call lifers?

LL – Yes

Joe – And they are left paying 25% bedroom tax of about £105 per month on these £95 per week 3 beds

LL – Yes

Joe – And on their estates possibly 15% or so of the stock is former RTBs in the hands of private landlords?

LL – Yes and in some cases about 20%

Joe – The private landlord would love them as tenants and is charging £450 per month for the property next door to where they have lived for 30 years.  The couple will get £395 per month in LHA meaning they would only pay £55 per month to top up the rent rather than the £105 per month now

LL – Ok c’mon Joe that’s a bit far-fetched don’t you think?

Joe – It’s not when you work it through….

  • The private landlord would love such tenants who he knows are not going to give him any trouble.
  • They say 90% of private landlords are ordinary folk who have less than 5 properties each – the builder, the factory worker, the civil servant, even social landlord housing officers with the boom in buy to let using it as equity for their pensions
  • He bases his £450 per month rent on being occupied 10.5 months of the year and now he knows it will be occupied all months of the year – that’s a 14% increase in income and means he could charge £387 per month.
  • He may reduce the rent to £435 per month because of that as he will get £5220 pa in rent compared with £4725 pa before.
  • The tenants in their 50s will be paying out £70 less per month in rent top ups and have so much more money to spoil their grandkids who will be excited at Nanny’s new house which has a bigger garden too as it’s a corner plot and suddenly there are always more chocolate biscuits in the cupboard..

LL – Ok Joe stop there you’ve made the point and you are saying that private landlords will target my bedroom tax tenants?

Joe – Yes it’s already happening

LL – So that will leave me with more empty 3 beds I can’t fill?

Joe – I see you are getting the government’s welfare reforms!

LL – You clearly know your stuff Joe, do you fancy going for a curry?

Joe – No I’m not that type of consultant

LL – So what do we do as this is a serious financial mess and affects our core business and I see what you’re saying know about this being worse then RTB2 as we won’t be in any position to develop new stock to solve the housing crisis in a generation…

[At this point I do lapse into consultant mode as c’mon people what Chief Executive doesn’t like their ego boosted?  They are human after all, well okay nearly….and they like Ant & Dec too!! Eh?]

Joe – I see you are finally beginning to get this welfare reform mess, unlike the majority of housing people who wouldn’t know an original thought if it jumped up and bit them on the backside…

Joe – …the housing people who buy into London’s perverse housing conditions and pricing which dominates all housing thought… (I cough for effect)… yet that perverse London housing market accounts for just 17% of all social housing the other 83% of social housing never gets a look in

LL – Yes

Joe – It’s not as simple as us and them of course and even outside of London we have 320 or so local authority areas each with very different housing conditions all requiring different housing responses to reflect local conditions.

LL – Eh?

Joe – You are a LSVT working in one local authority area which as your rightly say yourself manage 100% of the former council housing stock which is full of family sized homes and more at risk than say one of the super HAs who have stock in 100 or more local authority areas and not as much at risk from the OHBC as you.  That’s one example.

Joe – In your LA 70% of all HB claimants are in the private rented sector which is a very different set of housing conditions than the average LA which only has 32% of all HB claimants in the PRS and 68% in the SRS.  So your locale is going to experience radically different consequences of these new reforms (sic).  Given that 3 in every 4 under 25s live in the PRS then the banning of housing benefit to the under 21s is a huge issue here and far greater than in the neighbouring council

Joe – And luckily for you the AR model only sees 1% of you stock being AR unlike the 2% national average at the end of 2013/14 yet one of your neighbouring areas has a LSVT who has over 5% of their stock being AR and incredibly financially toxic…

LL – Oh I see and I also see why you said numbers unlike politicians don’t lie and a marry in haste repent at your leisure scenario with all this knee jerk immediate term policy responses the sector has been doing recently…

Joe – Yes…and not just recently…but every time I dare say housing should start thinking for once or be proactive for once or wake up and smell the coffee the same sector slates me

LL – Well they are listening know and have to and your numbers … You’ve clearly done your research on these numbers and what they mean…

Joe – Yes you would be amazed that so many social landlords pay so little attention to these key numbers, though, then again, they have never had to in the past…er…and while I hate to admit that Shapps was right he was and there is and has been a lazy consensus… and if you dare tell anyone I ever said that I’ll deny it!!

LL – Of course haha! You sure you don’t fancy going for a curry?

Joe – No thank you.  Yet I see you want to progress this and see what you can do in readiness and in response to these huge financial threats to your survival.

LL – Yes

Joe – Right.  Now who is the geeky one in your IT department who can give us some real meaningful data such as tenant household compositions of how many 2 Parent 3 child households you house?  We need him or her to get that information and drill down even further and all be locked away in a darkened room with no phones and a permanent on tap supply of tea and coffee… let’s get to know really know our tenants that you call customers and whom thee rest of the sector say they know….

LL – Yes Joe I always thought solving the housing crisis in a generation was a bit vague.  We need to move on this yesterday I’ll see how many of the 50 staff we have working full time on responding to RTB2 we can spare….haha gotcha!

Joe – Nearly…I thought you were going to spare the other 50 looking at the regulators misguided VfM agenda or even the 80 you have looking at how drones are going to save the world and reduce your maintenance costs…

LL Touche. Now tell me what you need this is priority number one.

Joe – Like any issue we need to scope what the problem is first so at least we, unlike government, can adopt an evidence base for our policy. They have no idea of the consequences and even if I am wrong about that, which I am not, then they also only look at London’s perverse housing conditions and stupidly assume that policies put in place to ameliorate the issues there will work for the other 83% or 5 in every 6 social housing properties that are not in London.

LL – Yes I’ve been in housing xx years and London’s housing conditions do dominate policy yet every time you mention it you get accused of housing regionalism or some other term…

Joe – Precisely and the London-centric housing view has to stop as it does only account for 1 in 6 of the UK’s rented housing and what works there won’t work oop North

LL – Yes and going back to your housing consequences of being radically different I suppose that’s why we in the North experience a glut of void 3 beds when the bedroom tax started and they didn’t in London.  That would be part of your different impacts you talked about earlier?

Joe – Yes and also as the bedroom tax affected twice as many in the North as in London we saw little opposition to it there and at the other end of the scale why social landlords up North have always seen the overall HOUSING BENEFIT cap as just a London issue and paid little regard to it…

LL – Never thought of it that way…

Joe – Hey unlike most other social landlords you are at least thinking about it….but putting the housing world to rights we can do another time we need to stay focused on fully considering what the benefit cap reduction and the under 21 ban on HB and of course the fact that your tenants will not have their benefits or tax credits changed until 2 April 2018 with the 2 year freeze announced in the Queens Speech

LL – Wasn’t that two years Joe?

Joe – Yes but its 3 years in reality as the policy is to freeze for the next two financial years starting in 2016/17 and through 2017/18 so your single tenant on £73.10 dole will be getting that same amount of £73.10 per week up to and including 1 April 2018 while your rents will have been increased in 2016 and 2017 making the bedroom tax and benefit cap even more unaffordable and seeing more being evicted

LL – Woe, woe and thrice woe (Yes housing people watched Up Pompeii as well as Wacky Races!)

Joe – OK I’ll leave out for now that we will have had the EU referendum about 6 months before the next tenant benefit rise and how if we are stupid enough to leave then we will have a massive recession and the calls on social housing will double the waiting lists and double the number of tenants you can’t afford to house because of the benefit cap and the housing benefit bill will increase by billions per year and IDS will go more into his Mr Micawber alter ego of something will always turn up because he believes it to be so

Joe – And let’s also skip over the just as perverse suggestions of the IFS who say that a 10% across the board cut to housing benefit may come in as part of the Holy Grail ethereal search for the missing £10 billion+ of the £12 billion welfare cuts in the next two years…you know that will make the benefit cap and bedroom tax and AR even more unaffordable…

LL – Yes let’s stay focused on what the real problems are and how we can make ready and respond.  Let’s get ready to rumble!

Joe – You ARE getting there!


Reader I have just had the most perverse dream, perhaps Freudian?, all about IDS dressing up as Mr Micawber that had an even weirder yet highly lucid conversation with a housing chief exec that somehow morphed into a PJ & Duncan appreciation by way of Dick Dastardly and Frankie Howerd…What the Dickens is going on?









3 thoughts on “The overall HOUSING BENEFIT cap – What the Dickens? – Starring IDS reprising Mr Micawber

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