Osborne and IDS conspire to kill social housing with ‘welfare’ changes says BBC

The BBC report that the Chancellor is looking at killing off social housing or that is what the alleged proposals amount to.

• Firstly, the BBC reports that the benefit cap is set to be reduced to £20,000 per year outside of London and the South East
• Secondly that housing benefit will see a 10% across the board cut for all (?) tenants in social and privately rented housing.

The BBC then quotes the IFS think tank with regards to possible savings this will have as part of the £12 billion ‘welfare’ bill and as usual gets these wrong…unless of course Osborne plans to cut 10% of housing benefit to pensioners which I strongly doubt.

I discuss each of these alleged proposals below and in turn and I say alleged as every day Uncle Tom Cobleigh and all and now Auntie to speculate as to where the ethereal £12 billion per year ‘welfare’ (note well not welfare benefits) cuts will come from.

Note well too that the discussion below of these alleged cuts and especially with regard to the benefit cap also has to assume that tax credits will remain the same as they are now and that has also been the preserve of speculation of Uncle Tom Cobleigh and all ever since the election 8 weeks ago.

It further assumes that most welfare benefits remain as we have been told and frozen until April 2018 that was contained in the Queens Speech and that full details of all the above will spring forth from the misnamed emergency budget next Wednesday and we will not have to wait until the Autumn Statement that curiously tends to be in November each year.

I am being very circumspect here (and yes unlike me) as where there is no doubt is if these changes do come in as that will be the end of the social housing model as created by and a key part of the Welfare State in 1948.

Enough caveats (and waffle) I’ll get on with it.

The 10% across the board cut to housing benefit?

 

The 10% across the board cut in housing benefit will be ADDITIONAL to any existing cut such as bedroom tax and/or benefit cap else and I will leave aside here whether this affects the pensioner or they are exempt.

Instead I put the 10% cut and the £400 per week proposed benefit cap limit into one simple table below and I use a low rent area to graphically explain why this is the death of social housing and it will cause much more than the 1 million men women and children made homeless I estimated back in April 2015 after Cameron, Osborne and IDS had all mooted this regionally lower cap limit.

I have used rent figure as below to illustrate

• 3 bed Social Rent £100 pw: 3 Bed AR rent £120pw 3 bed Private Rent £150 pw
• 4 bed Social Rent £115 pw: 4 bed AR rent £136pw: 4 bed Private Rent £170 pw

Table 1 – £400 benefit cap limit in “the North”

The table reading from left to right see Column 1 being the household unit and so the first entry is 2P2C – 3PR which is 2 parent 2 children in a 3 bed Private Rented property at £150 per week rent which is £650 per calendar month

The figure in the final (rightmost) column in red is the amount of shortfall this household will have of £32.42 per week which assumes that LHA previously covered the full rent.  Given that the average bedroom tax in the UK is £14.93 per week and not affordable then the 2P2C household in privately rented will have more than double this rent shortfall and is at high risk of eviction and homelessness.

Hence couples with 2 children and more in the PRS will likely be evicted across the North in low rent areas.

I move on in the table to the 1P3C – AR household – the lone parent with 3 Children in a 3 bed affordable (sic) rent property who will have a rent shortfall of £24.70 per week and again at risk of eviction and homelessness.

Hence the 1 Parent 3 Child household in a 3 bed affordable rent property will likely be evicted across the North in low rent areas

I move on to the 1Parent 3 Child household in a 4 bed social rent property and they have a weekly shortfall of £19.20 if not under occupying and if they are a shortfall of £35.30 if they are under occupying.  Yes the 1P3C and the 2P3C in a 4 bed can be hit by the benefit cap and the bedroom tax and the 10% deduction and a triple whammy if you will.

I then move on to the couple with 3 children (2P3C) in a 3 bed social rent property and they have a weekly shortfall of £44.56 or three times the current bedroom tax average.

What this means is the projections of the 3 Northern social landlords in SYHA, CCHA and New Charter who on average estimated that 3.5% of all its households would be affected based on the social tenants with 4 children or more will be significant underestimates and all social rented households with 3 or more children will be affected when it was 4+ children in these estimates.

Statistically from official HB data there are 3 times as many households with 3 children than there are with 4 children – the figures go from 4.01% of all HB recipients with 4 or more children up to 11.9% of all HB recipients having 3 or more children.  The Stat-Xplore data tool DWP provide can confirm this.

As such the estimates that SYHA, CCHA and New Charter and by now all other social landlords will need to be effectively tripled as to the numbers affected.  Extrapolating from these 3 social landlords only a figure of 144,000 social households was derived and a further 169,000 private ones making the reduced cap at £440 per week affect – at least in this crude way – 313,000 households in total.

I then looked at some extremely complex number-crunching and said the total figure based on £440 per week cap for social and private would be circa 205,000 households but with 20% either way or in the range of 164,000 to 246,000 households.  This would mean based on 3.75 children per household some 615,000 to 922,500 CHILDREN potentially evicted and a transfer of cost from central to local government of around £2.7 billion of ADDITIONAL cost per year.

Frightening figures indeed and bear in mind this is less than the 1.2 million CHILDREN potentially made homeless in the 313,000 household extrapolated figure.

Now that it is apparently being proposed to reduce the regional overall cap to £400 per week AND a 10% across the board HB cut as well I dread to think what the numbers of homeless children will be and I will use the same complex number-crunching method I used before to update the numbers of children made homeless and of course the cost to local government will be way in excess of £5 billion more per year.

I have commented scores of times over the last 4 years that the benefit cap will be far worse than the bedroom ta for tenants and landlords.  I have also said again scores of times that the DWP headed by the zealous Iain Duncan Smith does not do evidence based policy and simply does policy by spin.

The figures above reveal both of those key and consistent points and I have also said that while IDS plays the hard-hearted pantomime villain (and you can imagine what he gets called on social media!) he is in all reality an incompetent dangerous financial buffoon which these figures also reveal.

I have also been regularly castigating the defeatist and apathetic social landlord and their umbrella organisations for failing to challenge welfare reforms and of focusing on much lesser dangers such as RTB2 – which again the above figures prove.

I have also had the odd tirade against some housing chief executives and especially Guardian journalists who have said there is nothing to fear for social housing with Conservative policy and again the above figures confirm and again say I have been right all along despite being castigated by those working within social housing.

There are also some very subtle issues that space prevents me from stating but if you are a social landlord with a decent sized sheltered housing service then just how many people of working-age live there?  A 10% cut to the housing benefit of all those typically aged between 55 and state pension age means you will be running how many more sheltered voids in the future.

By the way social landlords receive £15 billion per year in housing benefit and 75% of that is for working-age households so a 10% cut to just working-age social tenants gives a £1.125 billion per year added financial risk to social landlords – by perverse coincidence this is exactly what social housing has been receiving in grant (subsidy) which the last Conservative government reduced by 60% to £4.5 billion over 4 years or £1.125 billion per year.

A sobering point to end on then – the 10% HB cut proposal to working-age social rented households is the same as social grant!  The benefit cap reduction is a far greater financial arrears risk to social landlords at £400 per week than any RTB2 issue so it’s about time you finally thought for once!

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I make no reference at all to the social tenant above simple because you are 100% fucked and nothing more needs to be said except:

• Get a job or lose your home and,
• Lose your job and you will lose your home.

As I say totally 100% fucked and this messenger wishes it was anything but…

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UPDATE 3 JULY 14:30

Below is a table which shows the average shortfall for each household per week.  I have used Liverpool as an example of a low rent area, Bristol as a medium rent area and London as a high rent area.

The figures show the lowest shortfall and all larger households and all same sized households in larger sized properties will have higher shortfalls

Rent figures from Housing Regulators 2013/14 figures adjusted with 3.7% increase for 2014/15 and a 2.2% increase for 2015/16

 

 

Liverpool as low rent area example

• A couple with 2 children in a 3 bed private rented property will have a £32.42 per week shortfall. Average bedroom tax in Liverpool is £15.05 pw for comparison.
• The lone parent with 3 children has a £2.70pw shortfall in a 3 bed social rent property and £24.70 in a 3 bed affordable (sic) rent property and the couple with 3 children a weekly shortfall of £44.56 in a 3 bed social rent and £66.56 in a 3 bed affordable (sic) rent property

Bristol as a medium rent area example

• The lone parent with 2 children in a 3 bed private rent will need to find £40.05 per week to keep the roof over the family head
• The lone parent with 3 children in a social rent 3 bed will have a £15.90 pw shortfall and a huge £64.30 per week in a 3 bed affordable (sic) rent property with a housing association

London (£440pw family / £308pw single person)

• A single person aged over 35 will have a £67.60 per week rent shortfall and is expected to pay that out of £73.10 per week JSA in a 1 bed private rented property = work or homeless
• Lone parent with 1 Child in a 2 bed private rent will have a weekly rent shortfall of £103.29 in a 2 bed private rent and expected to pay this out of £158.39 per week
• Couple with 2 Children in a 2 bed affordable (sic) rent has a weekly shortfall of £78.72 rising to £106.82 if in a 3 bed affordable (sic) rent property with a housing association

Conclusions

1. Private landlords will flee the benefit tenant market
2. Affordable (sic) Rent model is financially toxic for housing associations.
3. Households with 3 children plus will be affected nationally even in lowest social rent areas
4. Private and Social landlords will evict in droves  – hundred of thousands of families per year -passing the problem benefit tenant onto LAs to deal with with their inescapable homeless duties
5. The use of Ground 8 for arrears eviction by social landlords will become the norm (8 weeks / 2 months arrears and judge has NO discretion)
6. Base any projections of CHILDREN made homeless in the first full year at around 800,000 – 93,000 at Christmas 2014
7. A transfer in excess of at least £4 billion per year in homeless cost from central to local government
8. LAs stop giving bedroom tax DHPs and transfer all DHP budget to benefit cap cases
9. Sheltered housing for tenants of working age becomes a no no and huge voids and arrears there
10. The leaders and great and good of social housing realise just how incredibly stupid and negligent they have been in not challenging welfare reforms (sic)
11. The social housing model created in the Welfare State just died
12. IDS is found out to be the dangerous financial idiot he is as he costs the country and the taxpayer billions more in ‘welfare’ each year
13. No job then no house for the tenant – private and social housing
14. Lose job lose house for the tenant – private and social housing
15. Not expected to work – tough lose house for the tenant even if for lone parent with children below school age or those deemed NOT DISABLED ENOUGH to qualify for DLA / PIP or be in the ESA Support Group
16. The white as a sheet man crying in the corner of the pub is a LA Finance Director

Sorry number 12 was clearly a joke above…as was number 10 as that will never happen either!