Osborne announces overall benefit cap at £400 per week outside of London.
Severe Disablement Allowance does NOT exempt you from the benefit cap and neither does receiving Incapacity Benefit exempt and neither does Carer’s Allowance…
Assuming no related cuts take place such as the speculated 10% further Housing Benefit cut across the board for those of working-age and/or a limitation on Child Tax Credits to the first 2 children then the following all hold.
- Couple with 2 children will receive at most £132.58 pw / £574 pcm in housing benefit
- Lone parent with 3 children will receive at most £107.30 pw / £464 pcm in housing benefit
- A couple with 3 children will receive £63.44 pw / £274 pcm in housing benefit
- Lone parent with 4 children will receive £41.14 pw / £178 pcm in housing benefit
- A couple with 4 children will receive zero in housing benefit
The overall benefit cap reduces housing benefit first and that is how it works. THEN, but only then it reduces other social security benefits.
- The couple with 4 children will have all of their housing benefit removed and lose £1.72 per week in other benefits.
- The lone parent 5 child household will lose all housing benefit and then a further £27.01 per week and the couple with 5 children will lose all housing benefit and a further £68.87 per week
Housing Benefit as first to be cut
These families will then need to pay the difference between the rent level and the amount they receive as the maximum in housing benefit from other benefit income. Welfare benefit levels are the minimum needed to live on and these levels were set before any notion of an overall cap on total benefit was ever discussed.
In other words, welfare benefit levels are the minimum needed to live on excluding housing costs as before the cap housing costs were paid in full, at least in council and housing association housing and additional to other subsistence level welfare benefit.
A 3 bedroom property will have an average social rent outside of London around £100 per week.
- The couple with 3 children household will need to somehow find £36.56 per week / £158.41 per month and £1900.97 per year to prevent eviction and homelessness and find that from subsistence level welfare benefit.
- The single parent with 4 children in the same 3 bed property will need to find £58.86 per week / £254.86 per month and £3,058.37 per year from subsistence level welfare benefits to prevent homelessness.
It is inevitable given the figures above that tenant households with 3 or more children will be evicted and made homeless even if they live in the cheapest form of rented housing which is council housing.
Currently the often labelled pernicious bedroom tax averages £15.05 per week or £65 per month and £783 per year for comparison purposes and those much lower levels of housing benefit reduction is seeing tenants unable to afford and being evicted and homeless.
Who and how many will be affected?
(a) Tenants – The figures above say all social tenants with 3 or more children can be affected outside of London and the South East. All households with 2 children or more in the private rented could be affected as well as all social renting households in London with 2 or more children. After reducing the maximum numbers that could be affected by those who will not be affected such as the pensioner and ….
…those of working age on DLA and PIP and in ESA support group and a few others such as those in receipt of Armed Forces Compensation Scheme and Widow(ers) Allowance who partly make up the unable to work category
A good estimate of who is then liable and likely to be hit will be around 200,000 households containing circa 300,000 adults and 700,000 children and many of these will also come into the unable to work category too such as those on ESA and not in the support group and those in receipt of all or any of the benefits below
It will surprise a great deal of people that if you receive Incapacity Benefit or Carer’s Allowance or indeed Severe Disablement Allowance and of working age you are liable for the benefit cap!
(b) Landlords – will have no choice but to evict given the financial risk these arrears levels of between 2 and 7 times the bedroom tax cuts pose.
(c) Local councils – the real big loser as they will have inescapable mandatory duties towards these families who have been evicted and their costs will be huge and way in excess of any housing benefit saved. As a simple example the couple with 3 children may cost £35 per night or £245 per week to house in temporary homeless accommodation.
Of that £245 the local council will receive back from central government the £63.44 of housing benefit the family is entitled to and so incur an additional cost of £181 per week or £9,400 per family per year and that is just in accommodation cost. If my home city of Liverpool has 2000 such families then that is an additional £18.8 million per year.
Unable to work?
Above I used this categorisation and the same is used in the English Housing Survey and as you can see it includes many families in receipt of disability welfare benefits yet who are still liable for the overall benefit cap and not exempted from it.
Here is a pie chart representing those who receive housing benefit at the latest official figures from February 2015 and note the unable to work prominence
37% of all Housing Benefit recipients fall into the total unable to work category and from complex extrapolations made from the Family Resources Survey and other detailed data that only nerds look at in the real detail needed which is way beyond what the latest in vogue think thank in the IFS have done reveals that at least half of this 37% will NOT be exempted from the overall benefit cap.
Those in receipt of ESA and not in the exempted support group account for over 70% of all ESA recipients for one example. A high percentage of exempted DLA recipients are already exempt as they are pensioners is also largely missed by the all too cursory ‘investigations’ made even by think tanks such as the IFS and so the numbers affected will be much higher than most believe.
Many even believe that receipt of any ‘disability’ benefit makes the household exempt from the benefit cap yet as the DWP themselves state those in receipt of Incapacity Benefit and even Severe Disablement Allowance are NOT exempt from the benefit cap.
Far too many buy into the political rhetoric which sees the Conservatives and even Labour MPs say the disabled are exempt from the benefit cap which is a patent falsehood and a further example of naive, negligent and incompetent thinking from our politicians.
Let’s see what Wednesday’s budget brings?
I strongly doubt we will see the full detail as the Conservatives are delivering this policy on political rhetoric and not on fact or evidence base – seeking approval to cut the burgeoning “welfare” bill and attempting to convince the public via a complicit media happy to report on think tanks when it suits but not when it doesn’t in the hope that the public perceive that savings have been made and made fairly.
A classic example if that in the speculative frenzy we have seen since the election the media have latched onto (alleged) detail provided by the (allegedly) independent IFS think tank…but only when it suits! I leave you with what the IFS have said unambiguously about housing benefit under the Conservatives since 2010 – the period which has seen the benefit cap and the bedroom tax and the LHA and SAR caps; a period which has seen IDS and every other DWP minister say we have cut housing benefit; a period which has seen Cameron say he has cut housing benefit as well as saying the bedroom tax does not apply to the ‘disabled’ which is also false yet believed; a period in which the BBC, ITV, the leftist and rightist press and even the Labour and other opposition parties say the benefit cap is right and th bedroom tax and benefit cap saves money…and so much more.
Yet in all that time can you remember any media outlet at all reporting that the housing benefit bill has INCREASED BY A BILLION POUNDS PER YEAR IN SPITE OF THE BENEFIT CAP? No neither can I find such an article in the mainstream TV news or mainstream newspapers that quotes this gem from the dahlings called the IFS: –
PS While the IFS is correct that the overall housing benefit bill has increased in real terms the reason is not the private rented sector who despite getting 24% more than social landlords receive per housing benefit case have seen their level of HB received fall and been overtaken by housing associations as the biggest recipients in cash terms and percentage terms. The in-work housing benefit paid has also increased from £2.8 billion per year inherited in May 2010 to £5.3 billion per year (both in nominal terms yet still a huge real term increase) at February 2105.
PS1 – Did you know that working-age people receive less as a percentage of UK GDP in welfare benefits today than they did under Thatcher which official DWP figures prove? Probably not as you believe the Conservative statement that the welfare benefit bill is ‘burgeoning’ and we cannot afford it blah blah blah
PS2 – Does anyone actually give a shit that that is what they are being fed knowingly by the Conservatives….Probably not, ah plus ca change! Pesky facts eh!
2014/15 DWP figures sees the number of claimants as:
Carer’s Allowance 1,151,000
ESA (not in support group) 1,618,560
Incapacity Benefit – 137,000
Severe Disablement Allowance – 166,000
In total 3,072,560 either with a disability or looking after someone with a disability and they are expected to work under the benefit cap else they could be evicted. Osborne & IDS says this is FAIR!