Osborne’s Budget: Hugely fictitious ‘welfare’ savings and hugely delusional estimates!

There is a lot for social tenants and social landlords to consider in this politically clever budget.  A lot of isolated tinkering to housing and welfare benefit and tax credit policy which all interact and intertwine to make a very different picture altogether.

This budget is a farrago, a charade and masquerades as something it is not which is deliberate and part of its political cleverness. As long as the public believe cuts are being made nobody will scrutinise the figures yet they are devoid of an informed evidence base and claimed savings figures are delusional as I will explain below.

Though here is Osborne letting off a bit of steam in his budget (or is that IDS fist-pumping?)

wizard-of-oz-gif-500

I only need to quickly detail why one of the projected figures is so alarmingly delusional to prove the point as the one I am about to reveal below is so delusional it shows that all of the estimate and projections need to be ripped up and started again

Let’s look at the claimed cut and saving for the reduced benefit cap policy to start in April 2016 when the cap limit reduces from £500 per week nationally to £440 per week in London and £400 per week in the rest of the UK.

1. The spreadsheet accompanying the budget says in 2016/17 when the reduced benefit cap will start will see a saving to HB of £100 million at cell E51 as I have highlighted where the red lines meet.

bcapbollockssaving

2. The average benefit cap cut per week was £70 in November 2013 as the DWP report (pdf) states below and it will have increased since then and we increase some more given the reductions.

obc avg loss nov 2013

3. Now the very simple bit of number crunching to see that this projection is the crockiest of crocky crocs!

(a)Divide the budget projected saving of £100 million for the year into a weekly figure and this becomes £1.923 million per week.

(b) Then divide the weekly HB projected saving of £1.923 million by the admittedly low £70 per week average weekly cut and that says that 27, 473 households will be the number of benefit cap households affected by the reduced benefit cap at an average of the low £70 per week cut in HB.

That is 27,473 households in total according to this wholly disingenuous budget estimate.

It is just another 2,000 or so more than we have at the average point in time over the past year of 25,245 households this being the Mar 14 to Feb 15 average as DWP official figures reveal.

So this £100 million saving from the reduced benefit cap assumes just 2,000 more households will be hit by the reductions and is the biggest pile of equine faeces

Quod erat demonstrandum

Likely numbers affected?

a) The NHF said it would be 90,000 households (based just on £23k cap figure) which the Guardian reported here

b) 3 Northern social landlord in low rent areas independent of each other estimated their own households affected at an average of 3.6% of all households which extrapolated meant 144,000 in social housing and 169,000 in private rented for a 313,000 total.  A crude extrapolation yet it forced the NHF to then ask its members to get a better estimate which has yet to be published.

c) I looked at huge depth at this complex area and took into account actual data on the numbers of household composition types from a single person to a couple with 5 or more children; actual data from English Housing Survey; from Family Resources Survey – which says how many tenants claim DLA and other welfare benefits broken down by type; and cross referenced each of these with the housing regulators Statistical Data Return…and some more official data and arrived at a median figure of 205,000 with a confidence range of plus or minus 20%

d) The CAB in a report a week or so ago said:-

  • An estimated 150,000 adults and 395,000 children will be affected by the £23,000 cap, including those who are already capped at £26,000.

Note that CAB figure assumes a £23k cap outside of London when it is now confirmed to be £20k so this CAB estimate of 3 July 2015 is a significant underestimate too of the actual numbers

So does anyone believe the DWP / George Osborne budget estimates which say it will be just 2,000 or so more households affected by the reduction in the benefit cap?

Altogether now let’s singalongaosborne…

I could while away the hours
Conferring with the flowers
Consulting with the rain
And my head I’ll be scratching
While my thoughts were busy hatching
If I only had a brain…

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10 thoughts on “Osborne’s Budget: Hugely fictitious ‘welfare’ savings and hugely delusional estimates!

  1. slightly off topic Joe and i’m sure your’ll make any corrections in that today’s announcement for the living wage. we already have a living wage so today’s announcement is in respect to the minimum wage? so over the next 5 years the minimum wage will be as today’s living wage. does anyone else here agree with my small detail

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