Benefit Cap reduction – Are social landlords ignorant as to impact? Hmm!

The social rented sector is negligent and ignorant about Housing Benefit from which council landlords get £5.8 billion pa and housing associations receive £9.04 billion making SRS welfare benefit income of £14.84 billion per year at the latest figures. [PRS gets £8.88bn]

That is a bold statement yet a necessary and valid one which is aimed at getting the SRS to think properly about it and given that HB represents a majority of SRS landlord income it means if I reveal their ignorance of it below then the negligence is proven?  Hmm!

I will name-check a number of high-profile figures within social housing below not because of who they are or they are to blame but because of their link with geographic areas in the UK which will become apparent.  There is a silo mentality of leading SRS figures and that is no longer good enough if it ever was.

Note that I make no claims about being a Housing Benefit expert although working primarily in supported housing for over 20 years with its many specific regulations pertaining to it and often perverse ones I do have a bloody good knowledge of it.

Many within social housing will only know of my outspoken and vociferous campaigns against the bedroom tax and the benefit cap which are both policies which ONLY cut HB and as such present huge problems for core social housing operations.  Yet most recently when revealing the impacts of the proposed benefit cap the same SRS landlord is sitting up and (finally) taking notice of what this will do to them.

While on a national basis 41% of benefit cap evictions will be social tenants and 59% private tenants I can reasonably predict few will be surprised at that.

Yet I am sure that Tony Stacey will be surprised that in Sheffield 58% will be social tenants and just 42% private tenants.  Just as Nick Atkin will probably be just as surprised that in Halton the figures – the evidence base of the HB data – suggests that 51% of benefit cap evictions will be social tenants.

Please do not misunderstand me here I am not having a go at either I am merely saying this surprising aspect shows the huge interregional and intraregional aspects of local housing conditions and of one policy yet most in social housing errantly assume still that the benefit cap is a North-South issue and even then there is bound to be more private tenants evicted directly due to it than social tenants. Such thinking is patently false.

I am pretty sure that Colin Wiles will be hugely surprised that the HB evidence suggests 69% of all benefit cap evictions in Cambridge will be social housing tenants too and Colin was one of the first to agree with my positions that the benefit cap is a huge core issue for social landlords and it is potentially worse than the proposed RTB2 issue for housing associations.

What those surprising evidence-based figures reveal is that the SRS thinks far too shallowly about welfare reform impacts from not knowing how HB affects their locale and has many more implications even if those LSVTs such as Halton Housing Trust who operate in only one LA only believe they need to think in a one LA bubble. Again I am nt saying HHT does merely using them for illustration purposes given the high national profile of its CEO Nick Atkin.

The benefit cap and its proposed reduction to £23k per year and/or £20k per year outside of London and the South East is a classic illustration of the ignorance of the social rented sector to the HB issues it raises and the impacts on their business.

Leaving aside SRS landlords especially outside of London have ignored this for the past two years despite original DWP estimates that 46% of tenants affected live in the SRS, many SRS landlords still see this as not a huge problem for them despite the proposed reduction(s) and will maintain that this will affect the PRS more given they have higher rent levels.

That is generally true and my inordinately complex number crunching on this suggests that nationally the split will move to 41% SRS and 59% PRS tenants affected.

However, a detailed look at all of the proposed options, £23k or £20k or £20k plus 10% working-age HB cut, reveal very much the same overall 41%:59% split but with some huge regional and intraregional variations and some very notable ones as I have touched on above.

The North East data suggests a 44% to 56% SRS:PRS affected household split in the benefit cap yet just 30% of SRS tenants in Darlington will, ceteris paribus, be evicted while South Tyneside will see 58% of evicted benefit cap tenants being in the SRS.  The differences are largely due to the proportion of HB claimants in the SRS and PRS in each locale but not exclusively so and significant differences emerge in all regions and if we look at the North West on a sub-regional basis too.

In the ten Greater Manchester LA areas and its new responsibility for all housing there  – you can’t have the trains but the Northern Powerhouse can take the housing blame…er… – we see the HB data suggests 38% of benefit cap evictees in Bury will be SRS tenants yet 52% in Trafford. That’s a 37% difference so how can a GM-wide housing assembly have a standard response to that GM wide?

I’m sure Matthew Gardiner at THT will have something to say there or will he be more concerned that the 10% across the board HB cut to those of working-age will give huge problems for sheltered housing tenants aged between 55 and state pension age.  Given that in many parts of the North West a 1 bed SRS sheltered property is often a higher rent than a 3 bed SRS general needs house then how many SRS landlords have thought through the implications of that proposed HB change?

The situation in the Merseyside sub-region is even more stark with 29% SRS evictees in Wirral yet 51% in both Knowsley and St Helens – a huge 76% differential.

So will we see Brian Simpson of Magenta the former council landlord in Wirral have far less worries over spoiling his relationship with the council than Bob Taylor at KHT in Knowsley, or Nick Atkin at HHT should Halton finally become part of Merseyside / Liverpool City Region.  Further if the Greater Merseyside / Liverpool City Region is seeking to have more autonomy over housing issues they too will have the same but worse problem that the GM Region is going to have over area wide housing responsibilities.

Moreover, it means that Wirral Council will have to internally transfer more of its allocated DHP for its 71% of private tenants there caught by the benefit cap and so spend less on bedroom tax DHP in Wirral than Halton and Knowsley will do thus storing up more bedroom tax evictions in Halton and Knowsley than in Wirral?

This is why SRS landlords who have thought of the benefit cap in a North South paradigm need to go much deeper to a regional and then a sub-regional basis in their thinking and what has prevented them from doing that in the past is an ignorance of the very different housing conditions each LA has and for which HB data gives a significant and reliable evidence base.

To stick with the SRS landlord to LA relationship many private conversations have revealed the inevitability of a huge increase in the use of Ground 8 arrears evictions and all the known and many unknown implications that will bring – unknown due to its use to date being anathema.

If housing associations take the view that the proposed benefit cap weekly reductions which even in low rent Merseyside average £56 per week and 4 times the bedroom tax means they have to evict and in essence dump the ‘financially toxic benefit tenant’ onto the local councils, then this again – ceteris paribus – mean greater strain on the landlord to LA relationship in Knowsley and Halton than in Wirral.

In Liverpool the ex-council stock unlike the rest of Merseyside was split between three LSVTs in LMH, Cobalt and SLH and that is 3 separate landlord to council relationships to consider so will that mean Steve Coffey, Alan Rogers and Julie Fadden have less to worry about by evicting the benefit cap household than the CEO of a sole LSVT in KHT or Magenta or HHT or OVH in Sefton?

The benefit cap and all other welfare reforms even the LHA based reforms critically impact on the silo mentality of single LA housing associations. Using HHT for illustration they not only need to know how many 2 Parent 4 Child households they accommodate and all other household compositions internally, they need to know that breakdown by all social and private landlords within Halton itself.

HHT may well have 55% or so of all SRS stock in Halton yet the largest HA in Liverpool LMS have just under 20% and may take differing positions because of that on evictions on benefit cap households.

Will LAs such as those in Merseyside which has no council housing at all firstly regret that they have no housing stock yet still have many inescapable housing and homeless mandatory duties and say we can’t stop you dumping financially toxic benefit cap households on us but you know when you come to us for land and other issues you can go hang.

Will the 5 Merseyside councils get together and become a landlord who knows as there is nothing to stop them from doing so legally?

That may sound incredibly perverse though my cautious estimates could see the 5 Merseyside Councils have an added cost of up to £100 million between them if the cap goes to £400 per week and a 10% across the board HB cut is applied as was suggested the other day.  Such an off-the-wall suggestion seems much more sensible given that context and may save them collectively tens of millions of pounds per year.

If that happens will they then look to HAs to partner or will they expand further and rival even the largest HAs in the region?

Similarly perverse or does circa 8,000 benefit cap households made homeless due to the benefit cap in Merseyside alone in the first full year of a £20k cap mean that feasibly means such a landlord construct could happen and would be a major player in the SRS?

Yet both of those last two suggestions are as speculative as the cap reduction, the banning of under 21s from receiving HB, the RTB2 proposal, the tax credits speculation, the 10% across the board HB cut et cetera and to name just a few of the radical changes being flown as kites or not.  The radical nature of the welfare reforms  – and I haven’t even mentioned monthly and direct payments yet or UC – means that SRS landlords have to be considering such radical hypotheses and responses planned for and ready to operate.

What is most definitely not radical is that SRS landlords need to know social housing better, they need to know local housing conditions better and they definitely need to know Housing Benefit much better and one Chief Executive I spoke with a few weeks ago didn’t even know that the benefit cap ONLY cuts HB!

SRS landlords knowledge in all of these areas is negligent and is largely ignorant and saying that is not radical at all, but unfortunately all too valid.

On a general point any chance that SRS landlords can for once NOT be led by the mere 13% of SRS landlords who operate in London and think about social housing and put forward the case for the other 87% of the SRS not in London?

No, that really would be radical wouldn’t it!


Errata – I said UK Housing above when I have just noticed that almost 60% of benefit cap evictions in Scotland (59.6%) would be of SRS tenants.

There are also some Inner London Boroughs which will be evicting more SRS than PRS tenants too as bizarre as it may read and Torfaen in Wales is also an aberrantly high figure in Wales at 60% compared to 31% average for SRS benefit cap evictions.

Wednesday’s budget will be very interesting indeed housing peeps and when we (hopefully) are informed then I can widen this rambling post to how group structures and Super HA’s such as Riverside in the North West with SRS properties in dozens of Northern LAs may take a corporate view of Ground 8 evictions and so many more HB / welfare reform derived strategic and operational issues… let’s wait and see...

Oh dear I have been in housing too long with that stock expression haven’t I!!

6 thoughts on “Benefit Cap reduction – Are social landlords ignorant as to impact? Hmm!

  1. I don’t know the % of hb tenants the likes of Riverside have (in Liverpool), but say it’s 20%, that’s a lot of evictions. It’s going to cost a fortune in court costs & loss of rental income. They can’t let the empty 3 beds now so what will happen? Will they carry on selling all their stock? {Bearing in mind they are currently spending a fortune on voids to make them attractive to buyers & tenants with good jobs}. Will the well to do take over ex-council estates?

    1. Riverside probably have closer to 15% of the 40k SRS HB tenants in Liverpool, yet unlike other landlords they have a lower % of 3bed+ properties in the city.

      On a more general point if cap is £400pw and 10% HB cut comes in too then avg shortfalls per year for capped tenants will be £4k+. Landlords using Ground 8 will see total eviction costs be circa £4.5k (court, refit, void loss of £3k and arrears on top) so its a financial no brainer to evict.

      If its 100 or 500 Riverside tenants then pretty easy to get 2 – 10 new working tenants per week to replace them with

  2. Great post as ever Joe.
    I know that the implementation of Universal Credit is moving at the same speed as IDS’ mirror neurones, but, for those who are benefit capped on UC, it isn’t a HB cap it is a cap.of your entire entitlement: HB, or Housing Element, of UC isn’t paid separately, it’s paid each calendar month with everything else directly to the claimant. This is said to help prepare us scroungers for the world of work, where, obviously all and sundry are salaried rather than waged. IDS & Co. obviously haven’t ever met anyone who is paid weekly.
    Anyway the obvious problem with this is that this creates a tug of war within the parental conscience ie shall I feed and clothe my kids this month or shall I pay the rent: ie well-fed and (eventually) homeless vs comfortably housed and (eventually) malnourished. A stark choice if ever there was one.
    I particularly like the way they print each child’s full name right next to their own individual Child Element,: this helped me to see how many children I would not be able to feed that month. Our cap was £625 so that would be 2-3 children (@£232/child). That’s why I call the UC Benefit Cap the Child Cap. (obviously mum would go without first, but there’s still not enough even for the kids after paying the rent).

  3. wow I’m speechless, I didn’t know it was that low. But this is what IDS says is the future of benefits. I suppose it explains why no one ever seems to understand what I am going on about with UC benefit cap, but I know that you are familiar with that feeling Joe.

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